Hamilton Beach, Inc. Expected to be the Largest U.S. Public Company
Focused on the Small Electric Household Appliance Industry
CLEVELAND, Ohio, and MIRAMAR, Fla., July 24 /PRNewswire-FirstCall/
-- NACCO Industries, Inc. (NYSE:NC) and Applica Incorporated
(NYSE:APN) today announced that NACCO, Hamilton Beach/Proctor-Silex
and Applica have entered into definitive agreements whereby NACCO
will spin off its Hamilton Beach/Proctor-Silex business to NACCO's
stockholders and, immediately after the spin-off, Applica will
merge with and into Hamilton Beach/Proctor-Silex. The combined
public company will be named Hamilton Beach, Inc., and will be
headquartered in Richmond, VA. Hamilton Beach, Inc. will apply to
list its Class A common stock on the New York Stock Exchange. The
outstanding shares of Applica common stock will be converted into
the right to receive a number of shares of Hamilton Beach, Inc.
Class A common stock equal to 25 percent of the aggregate number of
shares of Hamilton Beach, Inc. common stock outstanding immediately
following the merger. The proposed transaction is expected to
create the largest U.S. public company focused on the small
electric household appliance industry. The company is estimated to
have annual sales of approximately $1.1 billion and a broad
portfolio of some of the most recognized and respected brands in
this industry, including Black & Decker(R), Hamilton Beach(R),
Proctor Silex(R), eclectrics(R), Traditions(R), Windmere(R),
TrueAir(R), LitterMaid(R), Hamilton Beach(R) Commercial and
Belson(R). Hamilton Beach, Inc. plans to design, market and
distribute a wide range of products under these brand names,
including coffee makers, irons, blenders, toaster ovens, indoor
grills, food processors, air purifiers, personal care appliances
and accessories, and automatic self-cleaning cat litter boxes. The
combination of Hamilton Beach/Proctor-Silex and Applica is expected
to provide enhanced scale, improved competitive positioning and
increased capital structure flexibility, which are anticipated to
deliver opportunities for considerable cost synergies and future
growth. In addition, the merger is expected to create a company
with a strengthened international presence through the combination
of complementary positions in Mexico, Latin America and Canada.
Following the spin-off, stockholders of NACCO will also maintain
ownership in a strong operating holding company with leading
positions in the forklift truck and coal mining industries through
its NACCO Materials Handling Group and North American Coal
subsidiaries, respectively, which have clear objectives and
established profit improvement and growth initiatives that are
increasingly providing visible improvements to operations and
results. In addition, the transaction will enable investors in
NACCO to have a more focused investment in the materials handling
and coal mining businesses. NACCO will also continue to own and
operate the Kitchen Collection retail business. Commenting on the
transaction, Alfred M. Rankin, Jr., Chairman, President and Chief
Executive Officer of NACCO, said, "The proposed spin-off of
Hamilton Beach/Proctor-Silex and merger of Applica into Hamilton
Beach/Proctor-Silex is a strategically and financially compelling
transaction that is expected to create the opportunity for
significant value enhancement for stockholders of both Applica and
NACCO, as well as benefit customers and employees. We believe NACCO
stockholders will benefit from direct ownership in Hamilton Beach,
Inc., a company that is expected to have strong brands, a solid
business platform, outstanding leadership, capital structure
flexibility and enhanced financial performance." Following the
completion of the merger, in light of the continued substantial
long-term ownership interest of NACCO stockholders in Hamilton
Beach, Inc., Mr. Rankin will become the Non-executive Chairman of
Hamilton Beach, Inc.'s Board of Directors. Harry D. Schulman,
Applica's Chairman, President and Chief Executive Officer, stated,
"Earlier this year, we launched a review of strategic alternatives
to deliver enhanced stockholder value, and today we are pleased to
announce this exciting combination that clearly meets this
objective. We have made solid progress in our restructuring
initiatives over the past year and our efforts are beginning to
yield positive results, particularly when taking into account
non-recurring items, as you will see in our upcoming second-quarter
earnings release on August 3, 2006. I'm encouraged that our
financial performance has been improving steadily due to what we
believe are some very proper and responsible actions to control
costs and enhance performance. We have solidly restructured the
organization and the results are becoming evident. I'm also
encouraged by our prospects for the second half of 2006,
particularly in regard to progress on our restructuring program."
"However, in addition to performance improvement programs, we
believe that enhanced scale is critical to succeed in today's
environment," Mr. Schulman stated. "The proposed merger will enable
us to become part of a larger organization with a greater breadth
of products, a strengthened international presence and an expanded
retailer network. We believe this combination will allow us to
better realize the value of our existing assets and take advantage
of our strong brand equity. In addition, we and Hamilton
Beach/Proctor-Silex share a dedication to the development of
innovative products that serve consumers' needs. We are confident
that this transaction will enable us to continue to utilize our
knowledge and abilities to deliver exceptional benefits to
customers, while offering stockholders the opportunity to
participate in substantial value creation through Hamilton Beach,
Inc." The objective is to complete this transaction by the end of
the third quarter, subject to obtaining required regulatory and
Applica stockholder approvals. Upon completion of the spin-off and
merger, stockholders of both NACCO and Applica will receive shares
in Hamilton Beach, Inc. Hamilton Beach, Inc.'s capital structure
will have dual classes of stock similar to NACCO's capital
structure. -- In the spin-off, NACCO stockholders, in addition to
retaining their shares of NACCO stock, will receive one-half of a
share of Hamilton Beach, Inc. Class A common stock and one-half of
a share of Hamilton Beach, Inc. Class B common stock for each share
of NACCO common stock they own. -- The outstanding shares of
Applica common stock will be converted into the right to receive a
number of shares of Hamilton Beach, Inc. Class A common stock equal
to 25 percent of the aggregate number of shares of Hamilton Beach,
Inc. common stock outstanding immediately following the merger. --
Upon closing of the merger, NACCO stockholders are expected to own
75 percent of the outstanding common stock of Hamilton Beach, Inc.
and Applica stockholders are expected to own 25 percent. -- Under
the terms of the proposed transaction, immediately prior to the
spin-off, NACCO will receive a cash dividend of $110 million from
Hamilton Beach/Proctor-Silex. Commitments for financing have been
secured to provide Hamilton Beach, Inc. with funding to finance
ongoing operations and growth, the repayment of Applica's and
Hamilton Beach/Proctor-Silex's existing debt and the cash dividend
to NACCO. On a pro forma basis for the transaction, Hamilton Beach,
Inc. would have had debt of approximately $295 million as of March
31, 2006, including the $110 million dividend and payment of
estimated transaction fees and expenses. The transaction, which was
approved by the Boards of Directors of NACCO, Hamilton
Beach/Proctor-Silex and Applica, will be tax-free to stockholders
of NACCO and Applica. The transaction is subject to approval by
Applica's stockholders and to regulatory approvals and other
customary closing conditions. According to Mr. Rankin, "The
combination of Hamilton Beach/Proctor-Silex and Applica represents
a compelling strategic opportunity. We believe Hamilton Beach, Inc.
will have the size and industry focus to realize significant
economies of scale and greater efficiencies, which should allow the
company to be more competitive in this consolidating and highly
competitive industry. Because both companies have historically had
strong relationships with leading U.S. retailers, we believe
Hamilton Beach, Inc. will have an even greater ability to provide
important value-added services to its customers. Additionally, as a
public company, Hamilton Beach, Inc. is expected to have greater
capital structure flexibility to support additional growth should
opportunities arise." Dr. Michael J. Morecroft, Hamilton
Beach/Proctor-Silex's current President and Chief Executive
Officer, will lead Hamilton Beach, Inc. as President and Chief
Executive Officer following the merger and will be supported by
Hamilton Beach/Proctor-Silex's strong core management team,
reinforced by Applica personnel. Dr. Morecroft has more than 30
years of experience in the U.S. and European small electric
household appliance industry, and he and his team have a proven
track record of improving operations and generating significant
improvements in cash flow. Commenting on the transaction, Dr.
Morecroft said, "Both Hamilton Beach/Proctor-Silex and Applica
share a commitment to high-quality products, innovation and
customer service. This commitment will remain unwavering at
Hamilton Beach, Inc. In today's highly competitive environment, we
recognize that delivering successful products and reliable services
to retailers is critically important, and we believe Hamilton
Beach, Inc. will have an enhanced ability to meet these needs. We
believe employees of Hamilton Beach/Proctor-Silex and Applica will
also benefit by being part of a larger, more dynamic enterprise. We
at Hamilton Beach/Proctor-Silex look forward to working with the
combined team to realize these significant opportunities." "In
addition, with our larger size and greater efficiencies, the new
company is expected to achieve pre-tax annual run-rate cost
synergies of approximately $40 million to $50 million, as well as
improved working capital efficiency of up to approximately $40
million, by the end of 2008. In combination with the underlying
profitability of the business, this improved efficiency is expected
to provide significant cash flow to de-leverage the balance sheet,
fund the costs to achieve synergies and help facilitate future
growth opportunities," said Dr. Morecroft. UBS Investment Bank
acted as financial advisor and Jones Day acted as legal advisor to
NACCO. Banc of America Securities LLC acted as financial advisor
and Greenberg Traurig acted as legal advisor to Applica.
McGuireWoods LLP acted as legal advisor to Hamilton
Beach/Proctor-Silex. Richards, Layton & Finger advised the
Directors of NACCO and Jefferies & Company, Inc. delivered an
opinion in connection with this transaction. Conference
Call/Webcast In conjunction with this news release, the managements
of NACCO, Hamilton Beach/Proctor-Silex and Applica will host a
joint conference call and webcast for the investment community this
morning, July 24, 2006, at 9:00 a.m. Eastern time to discuss the
proposed transaction. To participate in the conference call, please
dial (866) 800-8649 (within the U.S.) or (617) 614-2703 (outside
the U.S.), Passcode: 74836097, 10 minutes prior to the start of the
call. A replay of the conference call will be available shortly
after the end of the conference call through July 31, 2006. To
access the playback, please dial (888) 286-8010 (within the U.S.)
or (617) 801-6888 (outside the U.S.), Passcode: 60353672. A live
webcast of the conference call will be available over the Internet
through NACCO's website at http://www.nacco.com/ and at Applica's
website at http://www.applicainc.com/. Please allow 15 minutes to
register, download and install any necessary audio software
required to listen to the broadcast. An online archive of the
webcast will be available on the NACCO, Hamilton
Beach/Proctor-Silex and Applica websites. About NACCO NACCO is an
operating holding company with three principal businesses: lift
trucks, housewares and mining. NACCO Materials Handling Group, Inc.
designs, engineers, manufactures, sells, services and leases a
comprehensive line of lift trucks and aftermarket parts marketed
globally under the Hyster and Yale brand names. NACCO Housewares
Group consists of Hamilton Beach/Proctor-Silex, a leading designer,
marketer and distributor of small electric kitchen and household
appliances, as well as commercial products for restaurants, bars
and hotels, and The Kitchen Collection, Inc., a national specialty
retailer of brand-name kitchenware, small electric appliances and
related accessories. The North American Coal Corporation mines and
markets lignite coal primarily as fuel for power generation and
provides selected value-added mining services for other natural
resources companies. Additional information about NACCO is
available at http://www.nacco.com/. About Hamilton
Beach/Proctor-Silex Hamilton Beach/Proctor-Silex is a leading
designer, marketer and distributor of small electric kitchen and
household appliances, as well as commercial products for
restaurants, bars and hotels. The company's well- known brands
include Hamilton Beach(R), eclectrics(R), Proctor Silex(R),
Traditions(R), TrueAir (R) and Hamilton Beach(R) Commercial, with
distribution at premier retailers in the United States, Canada and
Mexico. Hamilton Beach/Proctor-Silex has a track record of
successful new product innovation. Additional information about
Hamilton Beach/Proctor-Silex is available at
http://www.hamiltonbeach.com/. About Applica Applica and its
subsidiaries are marketers and distributors of a broad range of
branded and private-label small household appliances. Applica
markets and distributes kitchen products, home products, pest
control products, pet care products and personal care products.
Applica markets products under licensed brand names, such as Black
& Decker(R); its own brand names, such as Windmere(R),
LitterMaid(R), Belson(R) and Applica(R); and other private-label
brand names. Applica's customers include mass merchandisers,
specialty retailers and appliance distributors primarily in North
America, Mexico, Latin America and the Caribbean. Additional
information about Applica is available at
http://www.applicainc.com/. FOR FURTHER INFORMATION, CONTACT: NACCO
Industries, Inc. (including Hamilton Beach/Proctor-Silex) Christina
Kmetko Manager-Finance (440) 449-9669 Applica Incorporated Terry
Polistina Chief Operating Officer and Chief Financial Officer (954)
883-1599 The statements contained in the news release that are not
historical facts are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. These forward-looking
statements are made subject to certain risks and uncertainties,
which could cause actual results to differ materially from those
presented in these forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. NACCO, Hamilton
Beach/Proctor-Silex and Applica undertake no obligation to publicly
revise these forward-looking statements to reflect events or
circumstances that arise after the date hereof. Among the factors
that could cause plans, actions and results to differ materially
from current expectations are, without limitation: (1) the ability
to obtain governmental approvals of the proposed spin-off and
merger on the proposed terms and schedule, (2) the failure to
obtain approval of the merger from Applica stockholders, (3) the
ability of the two businesses to be integrated successfully, (4)
the ability of the new company to fully realize the cost savings
and any synergies from the proposed transaction within the proposed
time frame, (5) disruption from the spin-off and merger making it
more difficult to maintain relationships with customers, employees
or suppliers, (6) the failure to obtain New York Stock Exchange
approval for the listing of Hamilton Beach, Inc.'s Class A common
stock, (7) customer acceptance of the new combined entity, (8)
changes in the sales prices, product mix or levels of consumer
purchases of kitchenware and small electric household appliances,
(9) bankruptcy of or loss of major retail customers or suppliers,
(10) changes in costs, including transportation costs, of raw
materials, key component parts or sourced products, (11) delays in
delivery or the unavailability of raw materials, key component
parts or sourced products, (12) changes in suppliers, (13) exchange
rate fluctuations, changes in the foreign import tariffs and
monetary policies, and other changes in the regulatory climate in
the foreign countries in which NACCO, Hamilton Beach/Proctor-Silex
and Applica buy, operate and/or sell products, (14) product
liability, regulatory actions or other litigation, warranty claims
or returns of products, (15) customer acceptance of changes in
costs of, or delays in the development of new products, (16) delays
in or increased costs of restructuring programs, (17) increased
competition, including consolidation within the industry; as well
as other risks and uncertainties detailed from time to time in
NACCO's and Applica's respective Securities and Exchange Commission
("SEC") filings. Investors and security holders are urged to read
the registration statement on Form S-4 and the proxy
statement/prospectus/information statement included within the
registration statement on Form S-4 when it becomes available and
any other relevant documents to be filed with the SEC in connection
with the proposed transaction because they will contain important
information about HB-PS Holding Company, Inc. ("Hamilton
Beach/Proctor- Silex"), Applica Incorporated and NACCO Industries,
Inc. and the proposed transaction. Investors and security holders
may obtain free copies of these documents when they become
available through the website maintained by the SEC at
http://www.sec.gov/. In addition, the documents filed with the SEC
by Applica Incorporated may be obtained free of charge by directing
such requests to Applica Incorporated, 3633 Flamingo Road, Miramar,
Florida 33027, Attention: Investor Relations ((954) 883-1000), or
from Applica Incorporated's website at http://www.applicainc.com/.
The documents filed with the SEC by Hamilton Beach/Proctor-Silex
may be obtained free of charge by directing such requests to HB-PS
Holding Company, Inc., 4421 Waterfront Drive, Glen Allen, Virginia
23060, Attention: Investor Relations ((804) 527-7166), or from
Hamilton Beach/Proctor-Silex's website at
http://www.hamiltonbeach.com/. The documents filed with the SEC by
NACCO Industries, Inc. may be obtained free of charge by directing
such requests to NACCO Industries, Inc., 5875 Landerbrook Drive,
Cleveland, Ohio 44124, Attention: Investor Relations ((440)
449-9669), or from NACCO Industries, Inc.'s website at
http://www.nacco.com/. Applica Incorporated, Hamilton
Beach/Proctor-Silex and their respective directors, executive
officers and certain other members of management may be deemed to
be participants in the solicitation of proxies from Applica
Incorporated stockholders with respect to the proposed transaction.
Information regarding the interests of these officers and directors
in the proposed transaction will be included in the registration
statement on Form S- 4 and proxy statement/prospectus/information
statement included within the registration statement on Form S-4.
In addition, information about Applica Incorporated's directors,
executive officers and members of management is contained in
Applica Incorporated's most recent proxy statement, which is
available on Applica Incorporated's website and at
http://www.sec.gov/. Additional information regarding the interests
of such potential participants will be included in the registration
statement on Form S-4, the proxy statement/prospectus/information
statement contained therein and other relevant documents filed with
the SEC. Facts About NACCO Industries, Inc. Company Overview
(http://www.nacco.com/) An operating holding company with three
principal businesses: lift trucks, housewares and mining. Revenues
Year Ended 1st Quarter Ended 12/31/05 3/31/06 NACCO Materials
Handling Group (Wholesale) $2.2 billion $572.8 million NACCO
Materials Handling Group (Retail) $185.8 million $46.0 million
NACCO Materials Handling Consolidated $2.4 billion $618.8 million
North American Coal Corp. $118.4 million $33.7 million NACCO
Housewares Group * $639.1 million $117.9 million Consolidated NACCO
$3.2 billion $770.4 million Consolidated NACCO (excluding Hamilton
Beach/Proctor-Silex) $2.6 billion $674.9 million Net Income (Loss)
NACCO Materials Handling Group (Wholesale) $26.0 million $10.0
million NACCO Materials Handling Group (Retail) $(7.9) million $1.4
million NACCO Materials Handling Consolidated $18.1 million $11.4
million North American Coal Corp. $16.2 million $3.7 million NACCO
Housewares Group * $21.3 million $(1.2) million Consolidated NACCO
$62.5 million $12.7 million Consolidated NACCO (excluding Hamilton
Beach/Proctor-Silex) $42.2 million $12.9 million * Includes
Hamilton Beach/Proctor-Silex & Kitchen Collection Number of
Employees 11,100 (as of 12/31/05) Top Selling Brands Hyster, Yale,
Hamilton Beach(R), Proctor Silex(R), Kitchen Collection(R)
Headquarters Cleveland, OH Chairman and CEO Alfred M. Rankin, Jr.
Company Contact Christina Kmetko, Manager-Finance, NACCO Facts
About Hamilton Beach/Proctor-Silex Company Overview
(http://www.hamiltonbeach.com/) A leading designer, marketer and
distributor of small electric kitchen and household appliances, as
well as commercial products for restaurants, bars and hotels. Year
Ended 1st Quarter Ended 12/31/05 3/31/06 Revenues $527.7 million
$95.5 million Gross Profit $106.9 million $18.7 million Operating
Profit (Loss) (a) (b) $37.0 million $1.2 million Net Income (Loss)
(a)(b) $20.3 million $(0.2) million (a) Operating Profit and Net
Income at 12/31/05 include the following: - Charge of $3.6 million,
pre-tax, for the management fee paid to NACCO - Charge of $3.8
million, pre-tax, for a restructuring program at the Saltillo,
Mexico manufacturing facility (b) Operating Profit and Net Income
at 3/31/06 include a charge of $1.0 million, pre-tax, for the
management fee paid to NACCO Number of Employees 1,100 (as of
12/31/05) Top Selling Brands Hamilton Beach(R), Hamilton Beach(R)
Commercial, eclectrics(R), Proctor Silex(R), Traditions(R),
TrueAir(R) Key Markets United States, Canada and Mexico
Headquarters Richmond, VA President and CEO Dr. Michael J.
Morecroft Company Contact Christina Kmetko, Manager-Finance, NACCO
Facts About Applica Incorporated Company Overview
(http://www.applicainc.com/) Markets and distributes a broad range
of branded and private-label small electric household appliances,
as well as pest control, pet care and personal care products. Year
Ended 1st Quarter Ended 12/31/05 3/31/06 Revenues $556.1 million
$104.0 million Gross Profit (a) (c) $124.2 million $24.6 million
Operating Profit (Loss) $(36.7) million $(9.6) million Net Income
(Loss) (a) (b) (c) (d) $(49.3) million $(13.0) million (a) Gross
Profit and Net Loss at 12/31/05 include: - Manufacturing losses in
Mexico of $19.4 million related to transition from manufacturing to
sourcing from China - Inventory writedowns of $12.8 million related
to an adjustment to the net realizable value of two products -
Product warranty returns expense of $5.2 million for manufacturing
transition issues in Mexico and China - $0.7 million of bad debt
expense related to contract manufacturing in Mexico (b) Net Loss at
12/31/05 includes: - Additional tax expense of $1.9 million related
to the closure of the manufacturing operations in Mexico (c) Gross
Profit and Net Loss at 3/31/06 includes: - $3.7 million related to
a product recall - $1.8 million of capitalized losses related to
the closure of a Mexican manufacturing facility (d) Net Loss at
3/31/06 includes: - $1.1 million in consulting fees related to the
engagement of Alvarez & Marsal, LLP - $0.5 million in
administrative costs related to the Mexican manufacturing
operations. Number of Employees 540 (as of 3/1/06) Top Selling
Brands Black & Decker(R) (1), LitterMaid(R), Belson(R),
Windmere(R), Applica(R) Key Markets North America, Latin America
and the Caribbean Headquarters Miramar, FL President and CEO Harry
D. Schulman Company Contact Terry Polistina, Chief Operating
Officer and Chief Financial Officer (1) Black & Decker(R) is a
trademark of the Black & Decker Corporation, Towson, Maryland.
DATASOURCE: NACCO Industries, Inc.; Applica Incorporated CONTACT:
Christina Kmetko, Manager-Finance of NACCO Industries, Inc.
(including Hamilton Beach/Proctor-Silex), +1-440-449-9669; or Terry
Polistina, Chief Operating Officer and Chief Financial Officer of
Applica Incorporated, +1-954-883-1599 Web site:
http://www.nacco.com/ http://www.hamiltonbeach.com/
http://www.applicainc.com/
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