NACCO Industries, Inc. Annual Report 2009

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FY2009 Annual Report · NACCO Industries, Inc.

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NACCO Industries, Inc.

2009 Annual Report

NACCO Industries, Inc. at a Glance

Principal Businesses

2009 Financial Results

Market Positions

NACCO Materials Handling Group (“NMHG”)
Headquarters: Cleveland, Ohio

NMHG:
Revenues:

NMHG 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. Lift trucks
and component parts are manufactured in the
United States, Northern Ireland, The Netherlands,
China, Italy, Japan, Mexico, the Philippines, Vietnam
and Brazil.

$1.5 billion
Operating loss:
$31.2 million

*Net loss:

$43.1 million

Hamilton Beach Brands (“HBB”)
Headquarters: Richmond, Virginia

HBB is a leading designer, marketer and distributor
of small electric household appliances, as well as
commercial products for restaurants, bars and hotels.

HBB has a broad portfolio of some of the most
recognized and respected brands in the small electric
appliance industry, including Hamilton Beach®,
Proctor Silex®, eclectrics®, Traditions®, TrueAir®
and Hamilton Beach® Commercial.

HBB:
Revenues:

$497.0 million
Operating profit:
$50.4 million

*Net income:

$26.1 million

Kitchen Collection
Headquarters: Chillicothe, Ohio

Kitchen Collection is a national specialty retailer of
kitchenware and gourmet foods operating under
the Kitchen Collection® and Le Gourmet Chef®
store names in outlet and traditional malls
throughout the United States.

Kitchen Collection:
Revenues:

$213.9 million
Operating profit:
$6.7 million
*Net income:
$3.9 million

NMHG:
NMHG is a world leader in
the lift truck industry with an
estimated 8 percent market
share worldwide, including
a 21.5 percent market share
in the Americas market.

Lift trucks are distributed
through a worldwide
network of independent
Hyster and Yale dealers
and a limited number of
wholly owned dealers.

HBB:
HBB is one of the leading
companies in retail and
commercial small appliances,
with strong share positions
in many of the categories in
which it competes.

HBB products are primarily
distributed through mass
merchants, national depart-
ment stores, wholesale
distributors and other retail
sales outlets.

Kitchen Collection:
Kitchen Collection is the
nation’s leading specialty
retailer of kitchen and related
products in factory outlet
malls with 296 stores
throughout the United States
in 2009.

North American Coal (”NACoal“)
Headquarters: Dallas, Texas

North American Coal mines and markets coal
primarily as fuel for power generation and provides
selected value-added mining services for other
natural resources companies. North American Coal
operates five surface coal mining operations and
has three additional coal mines under development.

The company also provides dragline mining services
operating under the name “North American Mining
Company” for independently owned limerock
quarries in Florida.

NACoal:
Revenues:

$129.5 million
Operating profit:
$42.6 million

*Net income:

$53.2 million

NACoal:
North American Coal is the
nation’s largest miner of
lignite coal and among the
ten largest coal producers.
Coal is delivered from mines
in Louisiana, Mississippi,
North Dakota and Texas to
adjacent or nearby power
plants.

*For purposes of this annual report, discussions about net income/loss refer to net income/loss attributable
to stockholders.

NACCO Industries, Inc. is an operating holding company with subsidiaries in the following principal
industries: lift trucks, small appliances, speciality retail and mining. In 2009, total revenues were
$2.3 billion and net income* was $31.1 million.

Competitive Advantages

Financial Objectives

Key Strategies

NMHG:
Achieve a minimum
operating profit margin
target of 9 percent at
the peak of the market
cycle

NMHG:
• Leading market share positions in the

Americas and worldwide

• Highly recognized Hyster® and Yale® brand

names

• Large installed population base of lift trucks;
an estimated 804,000 Hyster® and Yale® lift
trucks in operation worldwide

• Highly diverse customer base with more than
600 different end-user applications in more
than 600 industries

• Comprehensive global product line
• Strong dealer network
• Industry-leading national account coverage

in the Americas

• Globally integrated operations with significant

economies of scale

HBB:
• Strong heritage brands with leading market

• Strong relationships with leading retailers
• Highly professional and experienced

management team

• Successful track record of product line
expansion and new product innovation

• Industry-leading working capital management

HBB:
Achieve a minimum
operating profit margin
target of 10 percent

Kitchen Collection:
• Highly analytical merchandising skills and

disciplined operating controls

• Two well-established, complementary retail

store formats –Kitchen Collection® and
Le Gourmet Chef®

Kitchen Collection:
Achieve a minimum
operating profit margin
target of 5 percent

NMHG:
• Innovation in our products and services

- Lowest cost of ownership
- Application-focused solutions

• Quality and efficiency

- Improve operational effectiveness while delivering

high-quality products

- Continually reduce manufacturing and supply chain costs
- Manufacturing in market of sale

• Sales and service excellence

- Independent dealer networks with dual brand representation

if dealerships meet criteria

- Strong national account direct sales group to support large,

geographically dispersed customers

• Global coverage with local tailoring of products, services,

processes and systems
• Organizational excellence
- People development

HBB:
• Innovation in our products
• Sales and marketing excellence

- Professional and efficient sales and marketing teams,

processes and systems

- Building brand equity of our current brands and

increasing the number of brands

• Quality and efficiency

- Ensure operational excellence while delivering

high-quality products

- Continually reduce supply chain costs
• Partnerships with our customers and suppliers
• Organizational excellence

- People and processes development

Kitchen Collection:
• Unique, high-quality, widest variety of affordable products

in creative store environments

• Store improvement and expansion

- Kitchen Collection® outlet mall expansion
- Le Gourmet Chef® outlet and traditional mall expansion
- Internet channel expansion

• Cost control

- Continually reduce store and warehousing costs
- Control capital costs

• Partnerships with our suppliers
• Organizational excellence

- People and processes development

NACoal:
• Coal mines provide steady income and cash

flow before financing activities and high return
on equity

• Contracts are structured to minimize exposure

to market fluctuations of coal prices

• 2.2 billion tons of lignite coal reserves, of
which approximately 1.2 billion tons are
committed to current customers

• Outstanding operational and technological

mining skills

• Highly efficient heavy equipment utilization
• Excellent record of environmental responsibility

and employee safety

NACoal:
Earn a minimum return
on capital employed of
13 percent and attain
positive Economic
Value Income from all
existing consolidated
mining operations
and any new projects,
while maintaining
or increasing the
profitability of all
existing unconsolidated
mining operations

NACoal:
• Mining and reclamation expertise
- Innovative and low cost
- Equipment maintenance
- Efficient processes and systems

• Safety focus
• Long-term partnerships with current and future customers
• Pursue new business opportunities
- Domestic and international
- Coal and value-added mining services

• Organizational excellence
- People development
- Highly disciplined mine management teams

Selected Financial and Operating Data

NACCO Industries, Inc. and Subsidiaries

2009

2008(1)

Year Ended December 31
2007
(In millions, except per share data)

2006

2005

Operating Statement Data :
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) from continuing operations . . . . . . . . . .
Discontinued operations, net-of-tax(2) . . . . . . . . . . . . . . .
Extraordinary gain, net-of-tax(3) . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (income) loss attributable

to noncontrolling interest . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to stockholders . . . . . . . .

Basic Earnings (Loss) per Share:
Income (loss) from continuing operations

attributable to stockholders . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net-of-tax(2) . . . . . . . . . . . . . . .
Extraordinary gain, net-of-tax(3) . . . . . . . . . . . . . . . . . . . .
Basic earnings (loss) per share . . . . . . . . . . . . . . . . . . . .

Diluted Earnings (Loss) per Share:
Income (loss) from continuing operations

attributable to stockholders . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net-of-tax(2) . . . . . . . . . . . . . . .
Extraordinary gain, net-of-tax(3) . . . . . . . . . . . . . . . . . . . .
Diluted earnings (loss) per share . . . . . . . . . . . . . . . . . . .

Per Share and Share Data:

Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market value at December 31 . . . . . . . . . . . . . . . . . . . .
Stockholders’ equity at December 31 . . . . . . . . . . . . . .

Actual shares outstanding at December 31 . . . . . . . .
Basic weighted average shares outstanding . . . . . . .
Diluted weighted average shares outstanding . . . . .

Balance Sheet Data at December 31:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2,310.6
59.1
$

$ 3,665.1
(389.5)
$

$ 3,590.0
139.2
$

$ 3,327.6
171.1
$

$ 3,144.2
107.9
$

$
$
$

8.4
22.6
–
31.0

0.1
31.1

1.03
2.72
–
3.75

2.068
49.80
47.82

8.294
8.290
8.296

$
$
$

(439.7)
2.3
–
(437.4)

(0.2)
(437.6)

(53.12)
0.28
–
(52.84)

2.045
37.41
43.05

8.286
8.281
8.281

89.7
0.6
–
90.3

0.1
90.4

10.87
0.07

–

10.94

10.86
0.07
–
10.93

90.5
2.8
12.8
106.1

0.7
106.8

11.07
0.34
1.56
12.97

11.06
0.34
1.56
12.96

56.9
1.4
4.7
63.0

0.1
63.1

6.93
0.17
0.57
7.67

1.980
$
$
99.69
$ 107.80

1.905
$
$ 136.60
96.05
$

1.848
$
$ 117.15
85.21
$

8.269
8.263
8.272

8.238
8.234
8.242

8.226
8.223
8.226

$ 1,488.7
377.6
$
396.6
$

$ 1,687.9
400.3
$
356.7
$

$ 2,427.3
439.3
$
891.4
$

$ 2,154.5
359.9
$
791.3
$

$ 2,091.6
406.2
$
700.9
$

(1) During 2008, NACCO’s stock price significantly declined compared with previous periods and the Company’s market value of equity was below its book value of

tangible assets and book value of equity. The Company performed an impairment test, which indicated that goodwill and certain other intangibles were impaired at
December 31, 2008. Therefore, the Company recorded a non-cash impairment charge of $435.7 million in 2008.

(2) During 2009, the Company’s North American Coal subsidiary completed the sale of certain assets of the Red River Mining Company. The results of operations of

Red River for 2009 and all prior periods have been reclassified to reflect Red River’s operating results as discontinued operations.

(3) An extraordinary gain was recognized in 2006 and 2005 as a result of a reduction to Bellaire Corporation’s estimated closed mine obligations relating to amounts

owed to the United Mine Workers of America Combined Benefit Fund arising as a result of the Coal Industry Retiree Health Benefit Act of 1992.

Cash Flow Data:
Operating Activities

NACCO Materials Handling Group . . . . . . . . . . . . . . .
Hamilton Beach Brands . . . . . . . . . . . . . . . . . . . . . . . . .
Kitchen Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North American Coal Corporation . . . . . . . . . . . . . . .
NACCO and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provided by operating activities . . . . . . . . . . . . . . . . . . . .

Investing Activities

NACCO Materials Handling Group . . . . . . . . . . . . . . .
Hamilton Beach Brands . . . . . . . . . . . . . . . . . . . . . . . . .
Kitchen Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North American Coal Corporation . . . . . . . . . . . . . . .
NACCO and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provided by (used for) investing activities . . . . . . . . . .

Cash Flow before Financing Activities(4)

NACCO Materials Handling Group . . . . . . . . . . . . . . .
Hamilton Beach Brands . . . . . . . . . . . . . . . . . . . . . . . .
Kitchen Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North American Coal Corporation . . . . . . . . . . . . . . .
NACCO and Other . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Cash Flow before Financing Activities . . .

Provided by (used for) financing activities . . . . . . . . . . .

Other Data:
Adjusted EBITDA(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total employees at December 31(6) . . . . . . . . . . . . . . . . .

2009

115.9
35.5
5.4
42.0
(41.8)
157.0

5.8
(2.1)
(1.1)
34.5
(14.0)
23.1

121.7
33.4
4.3
76.5
(55.8)
180.1

(64.1)

111.5

8,600

2008(1)

Year Ended December 31
2007
(In millions, except employee data)

2006

(27.3)
18.0
(6.4)
23.2
(2.6)
4.9

(37.5)
(5.7)
(6.0)
(15.9)
(6.3)
(71.4)

(64.8)
12.3
(12.4)
7.3
(8.9)
(66.5)

(83.2)

106.6

9,500

34.6
19.5
(10.9)
44.7
(6.5)
81.4

(33.9)
(3.7)
(3.9)
(18.2)
(0.2)
(59.9)

0.7
15.8
(14.8)
26.5
(6.7)
21.5

64.4

201.7

10,600

84.8
28.7
17.2
38.7
4.1
173.5

(30.6)
7.2
(16.1)
4.2
–
(35.3)

54.2
35.9
1.1
42.9
4.1
138.2

(105.8)

213.8

11,300

2005

11.9
31.8
0.1
26.4
5.0
75.2

(30.1)
(3.8)
(1.0)
(21.4)
–
(56.3)

(18.2)
28.0
(0.9)
5.0
5.0
18.9

(1.8)

175.5

11,100

(4) Cash Flow before Financing Activities is equal to net cash provided by operating activities less net cash used for investing activities.
(5) Adjusted EBITDA is provided solely as a supplemental disclosure with respect to liquidity because management believes it provides useful information

regarding a company’s ability to service its indebtedness. Adjusted EBITDA does not represent cash flow from operations, as defined by U.S. generally accepted
accounting principles. You should not consider Adjusted EBITDA as a substitute for net income or net loss, or as an indicator of our operating performance or whether
cash flows will be sufficient to fund our cash needs. NACCO defines Adjusted EBITDA as income before goodwill and other intangible assets impairment charges,
income taxes, non-controlling interest (income) expense, discontinued operations and extraordinary gain plus net interest expense and depreciation, depletion and
amortization expense. Adjusted EBITDA is not a measurement under U.S. generally accepted accounting principles and is not necessarily comparable with similarly
titled measures of other companies. Net cash flows from operating, investing and financing activities as determined using U.S. generally accepted accounting
principles are presented above. A reconciliation of cash flow provided by operating activities to Adjusted EBITDA is presented below.

(6) Includes employees of the unconsolidated mining subsidiaries and excludes employees of Red River.

Reconciliation of Cash Flow Provided by

Operating Activities to Adjusted EBITDA(5)

Cash flow provided by operating activities . . . . . . . . . .
Change in working capital items . . . . . . . . . . . . . . . . . . . .
Gain on sale of assets and businesses . . . . . . . . . . . . . . .
Discontinued operations(2) . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Difference between deferred income

taxes and income tax provision (benefit) . . . . . . . . .
Other non-cash items . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Calculation of Adjusted EBITDA(5)
Net income (loss) attributable to stockholders . . . . . . . .
Goodwill and other intangible

assets impairment charges . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net of tax(2) . . . . . . . . . . . . . . .
Extraordinary gain, net-of-tax(3) . . . . . . . . . . . . . . . . . . . .
Noncontrolling interest (income) loss . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, depletion and amortization expense . . . .
Adjusted EBITDA(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2009

2008(1)

Year Ended December 31
2007
(In millions)

2006

2005

157.0
(114.9)
10.0
8.4
(9.3)

(4.6)
35.9
29.0
111.5

31.1

–
(22.6)
–
(0.1)
20.5
32.2
(3.2)
53.6
111.5

4.9
96.6
0.1
(4.6)
(9.1)

(1.6)
(12.7)
33.0
106.6

(437.6)

435.7
(2.3)
–
0.2
18.7
40.6
(7.6)
58.9
106.6

81.4
77.2
1.3
(2.0)
(8.6)

19.1
4.6
28.7
201.7

90.4

–
(0.6)
–
(0.1)
24.3
40.7
(12.0)
59.0
201.7

173.5
(21.6)
25.6
(4.8)
(0.8)

19.4
(11.8)
34.3
213.8

106.8

–
(2.8)
(12.8)
(0.7)
28.5
41.8
(7.5)
60.5
213.8

75.2
46.0
0.6
(2.6)
(2.7)

21.1
(5.4)
43.3
175.5

63.1

–
(1.4)
(4.7)
(0.1)
13.8
47.5
(4.2)
61.5
175.5

This Annual Report contains references to non-GAAP financial measures. Presentations of, and quantitative reconciliations to, the most directly comparable
financial measures calculated and presented in accordance with GAAP appear on this page and page 16.

To Our Stockholders

Introduction

The global recession made 2009 very

challenging for NACCO Industries, Inc. and
its subsidiaries, particularly in the first half
of the year. NACCO’s lift truck business
faced extraordinarily depressed markets
worldwide. Consumer goods markets were
well below earlier peak levels. And while
lignite mining markets remained steady, the
limerock mining markets in Florida were
extremely depressed.

Given these market conditions,
consolidated revenues for NACCO
decreased substantially in 2009 to $2.3
billion compared with $3.7 billion in 2008.
As a result, NACCO Materials Handling
Group (“NMHG”) had a significant loss in
2009 as its revenue declined 48 percent
because global lift truck markets remained
very weak for the entire year. However, at
Hamilton Beach Brands (“HBB”), despite
a decrease in revenues, operating results
were exceptional. Kitchen Collection also
experienced a promising turnaround in
2009, reporting significantly improved
results. North American Coal (“NACoal”)
had an excellent year with improved
results. Overall, we implemented
aggressive actions in 2009 to combat the
recession and made sound progress on
our key improvement programs.

Economic and market conditions
appeared to stabilize in the second half of
2009, with some isolated signs of limited
recovery beginning to emerge. The forklift
truck market appears to have stabilized at
the end of 2009, but at very depressed
levels in NMHG’s largest markets. These
depressed levels are expected to continue
into 2010. NACCO continues to operate
on the assumption that the global lift truck

markets will not improve significantly in
the first half of 2010, and is cautiously
optimistic a moderate recovery in that
market will begin in the second half. The
consumer goods markets appear to be
recovering, although consumers continue
to struggle with high unemployment rates
and lower income levels. The lignite
market is expected to remain stable, and
the limerock market in South Florida is
expected to continue to be depressed by the
weak housing and construction markets.
Aggressive cost containment actions, such
as reduced employee salaries and benefits
and spending and travel restrictions,
remain in effect at NMHG and NACCO
headquarters, and will be phased back in
only as NMHG’s financial results permit.
At the consumer products subsidiaries,
employee-related benefit programs
suspended at the beginning of 2009 were
partially phased back in during the fourth
quarter of 2009 and have been fully
reinstated in 2010.

NACCO and its subsidiaries continue
to be financially secure. In 2009, NACoal
refinanced its credit agreement on favorable
terms. Each of the other subsidiaries
currently has attractive financing in place.
Further, each of NACCO’s subsidiaries
generated extraordinary cash flow before
financing activities in 2009, with
Consolidated NACCO in total generating
$180.1 million. We will continue to focus
on maximizing cash flow before financing
activities in 2010, although levels lower
than in 2009 are expected because 2009’s
significant reductions in working capital
are not expected to reoccur.

NACCO continues to have flexibility

in capitalizing its subsidiaries, an option

we believe to be a key advantage of our
operating holding company organization
structure. In 2009, additional capital
contributions of $79.7 million and $3.2
million were made to NMHG and Kitchen
Collection, respectively.

Subsidiary Financial Objectives

Each of NACCO’s subsidiary
companies has specific long-term financial
objectives (see sidebar for specific goals).
In 2009, NACoal and HBB achieved their
targets. However, if HBB had not suspended
certain employee benefits, the company
would have been short of its operating
profit margin target. Looking forward,
HBB is expected to continue to do very well,
but it will need additional sales volume to
achieve its target. Kitchen Collection made
substantial progress toward its financial
objectives in 2009. Kitchen Collection®
stores were at target, but the Le Gourmet

Chef® stores are not expected to achieve
the target objective until 2012 to 2013
as sales volume increases and certain
underperforming stores are closed. Due
to the unprecedented depressed market
conditions in the forklift truck market and
the continuing uncertainty regarding the
timing of an upturn in that market, it is
difficult to provide a timetable for achieving
NMHG’s target. However, NMHG’s
programs created substantial operating
leverage, establishing a strong position to
achieve its operating profit margin target
when the market does peak. Each of
NACCO’s subsidiaries is proceeding with
specific programs designed to achieve its
targets. As market conditions improve, the
Company expects that the subsidiaries’
operating fundamentals and the maturation
of the programs that have been put in place
will position each of them to achieve their
long-term financial goals.

Subsidiary
Financial Objectives:s
• NACoal: Earn a minimum return on
capital employed of 13 percent and
attain positive Economic Value
Income from all existing consolidated
mining operations and any new
projects while maintaining or
increasing the profitability of all
existing unconsolidated mining
operations

• NMHG: Achieve a minimum

operating profit margin of 9 percent
at the peak of the market cycle
• HBB: Achieve a minimum operating

profit margin of 10 percent
• Kitchen Collection: Achieve a

minimum operating profit margin
of 5 percent

• All subsidiaries: Generate

substantial cash flow before
financing activities

Discussion of Results

In late 2009, NACoal completed the sale of certain
assets of the Red River Mining Company for cash proceeds of
$41.4 million. Because of this sale, the financial information in
this Annual Report has been reclassified to reflect the Red River
Mining Company operating results as discontinued operations.
As a result, net income (1) for 2009 includes earnings from
discontinued operations of $22.6 million, comprised of the after-
tax gain on the sale of $22.3 million and Red River’s full-year
after-tax earnings of $0.3 million.

Overall, NACCO reported consolidated income from
continuing operations of $8.5 million in 2009, compared with
a consolidated loss from continuing operations of $439.9 million
in 2008. Results for 2008 were negatively affected by a non-cash
write-off of goodwill and certain other intangible assets at
NMHG, HBB and Kitchen Collection totaling $435.7 million,
or $431.6 million net of taxes of $4.1 million, and the recognition
of non-cash charges totaling $29.8 million against certain
accumulated deferred tax assets at NMHG. Including these
charges, in 2008 NMHG incurred a net loss of $376.0 million,
HBB reported a net loss of $73.3 million and Kitchen Collection
reported a net loss of $10.0 million.

Excluding these charges, consolidated adjusted net income

for the year ended December 31, 2008 was $23.8 million, or

$2.87 per share, which includes earnings from discontinued
operations of $2.3 million. “Adjusted net income or loss” in this
letter refers to net income or net loss results that exclude the
goodwill and intangible assets impairment charges as well as
the charges against the accumulated deferred tax assets. (For
reconciliations from 2008 GAAP results to the adjusted 2008
non-GAAP results, see page 16.) The remaining discussion of
2008 results in this letter relates only to adjusted net income or
adjusted net loss unless otherwise noted. Management believes
a discussion of adjusted net income or adjusted net loss is more
reflective of NACCO’s underlying business operations and assists
investors and the subsidiaries' lenders in better understanding the
results of operations of NACCO and its subsidiaries.

During 2009, NACoal reported income from continuing

operations of $30.6 million compared with income from
continuing operations of $19.8 million in 2008. NMHG had a net
loss of $43.1 million in 2009 compared with adjusted net income
of $1.1 million in 2008. HBB had 2009 net income of $26.1
million compared with 2008 adjusted net income of $7.4 million.
Finally, in 2009 Kitchen Collection reported net income of $3.9
million compared with an adjusted net loss of $6.4 million in
2008. Further discussion of these results is contained in each
subsidiary’s section of this letter.

(1) For purposes of this annual report, discussions about income/loss from continuing operations and net income/loss refer to income/loss from continuing

operations attributable to stockholders and net income/loss attributable to stockholders.

North American Coal
2009 Results

NACoal has had strong, stable
performance over the years and 2009 was
no exception. The long-term nature of
NACoal’s coal supply agreements and the
low cost of power provided by the power
plants it serves resulted in minimal effect
from the recession on the company’s coal
mining operations. Positive financial
developments in 2009 included the sale of
the Red River Mining Company for cash
proceeds of $41.4 million and an after-tax
gain of $22.3 million, the receipt of lease
bonus payments of $7.1 million pre-tax for
leasing certain oil and gas mineral rights
controlled by NACoal to a third party

the downturn in the Florida housing and
construction markets and an unfavorable
legal ruling for the Florida lake belt region
that terminated NACoal’s customers’, as
well as others’, existing mining permits at
most of the limerock dragline mining
operations. The nature of the company’s
limerock mining services agreements did,
however, limit the financial impact on
NACoal. In addition, inclement weather in
Mississippi in the fourth quarter reduced
efficiency at that mine and unscheduled
outages throughout the year at the Sabine
Mining Company’s customer’s power plant
resulted in fewer deliveries at that mine.
NACoal entered into a number of
new coal mining contracts in 2009. These

and significantly improved deliveries and
operations at the Mississippi Lignite Mining
Company compared with 2008. As a result
of the favorable events of 2009, NACoal
generated cash flow before financing
activities of $76.5 million compared with
cash flow before financing activities of
$7.3 million in 2008.

Nevertheless, 2009 did have challenges.
Minimal limerock was mined as a result of

projects are in development phases and
will not be fully operational for several
years. NACoal’s new subsidiary, Camino
Real Fuels, entered into a contract mining
services agreement to mine approximately
2.7 million tons of coal annually with initial
deliveries expected to commence in 2012.
NACoal’s new subsidiary, the Demery
Resources Company, entered into a
contract mining services agreement to

Above: One of the draglines

at The Falkirk Mining Company

in North Dakota.

Right: At the Falkirk Mine in

North Dakota, an electric shovel

loads overburden into a fleet of

Caterpillar end dump trucks

to expose the coal for extraction.

mine approximately 300,000 to 400,000
tons of coal annually, with initial deliveries
expected to commence in 2010. Finally,
NACoal’s new subsidiary, Caddo Creek
Resources Company, entered into a
contract mining services agreement to
mine approximately 650,000 tons of coal
annually for a customer that currently
purchases its coal from The Sabine Mining
Company, with initial deliveries expected to
commence in 2013. In addition to the new
coal mining agreements, NACoal entered
into a new limerock mining services contract
for deliveries of approximately 1.0 million
cubic yards annually when the quarry is
at full capacity once the Florida market
improves. NACoal commenced limerock
mining at this quarry during 2009.

Market Outlook for 2010

NACoal expects steady performance at
its coal mining operations in 2010 provided
that customers achieve their planned power
plant operating levels. As a result, tons
delivered at its coal mines in 2010 are
expected to be comparable to 2009.

Limerock deliveries are expected to

be significantly higher in 2010 than in
2009. In early 2010, the U.S. Army Corps
of Engineers began issuing new mining
permits for NACoal’s limerock customers
in the Florida lake belt region where an
unfavorable legal ruling terminated the
customers’ previous mining permits. Most
of the company’s limerock operations are
expected to be operating again by the end
of the first quarter of 2010. However,
production will ramp up slowly and not all
mining permits will be issued at once. In
addition, production levels are expected to
continue at low rates in 2010 because of the
continued depressed levels of the South
Florida housing and construction markets.
Delivery levels are not expected to return to
2008 levels until those markets recover.

Actions Being Taken to Move
Forward in 2010

NACoal prides itself on its intense
focus on safety, the environment and its
continuous improvement programs. These
well-established programs form a solid
foundation for operations to be relatively
stable at all of its coal mines in 2010.
Results may improve at certain mines,
providing no significant unplanned outages
occur at any of its customers’ power plants.
High productivity levels are expected to
continue at all mining operations, especially
at the Mississippi Lignite Mining Company,
where the company expects to build up
safety stock inventory during 2010 and
achieve a steady operating level beginning
in 2011.

NACoal’s exemplary reclamation
practices reflect a long-term commitment
to outstanding land reclamation efforts.
During 2009, the Mississippi Lignite
Mining Company was one of three mines
awarded the 2009 Office of Surface
Mining Gold Good Neighbor Award in
recognition of its outstanding commitment
to establishing good working relations
with surrounding communities.

NACoal is working on three important

new project opportunities for which it
expects to continue to incur substantial
expenses in 2010. First, permitting is under
way in the Otter Creek Reserve in North
Dakota in expectation of opening a new
mine. A permit is anticipated to be issued in
mid-2010. Second, construction is complete
on coal dryers and a coal load-out facility
adjacent to the Falkirk Mine. This project is
expected to improve market potential for
the Falkirk Mine by extending the distances
lignite coal can be economically shipped,
beginning with shipments expected to
start in the second quarter of 2010 to the
Spiritwood Power Plant, now under
construction. Finally, NACoal is working

Sunflowers ready for harvesting

bask in the midday sun on reclaimed

land at The Coteau Properties

Company’s Freedom Mine in

North Dakota. One of Freedom

Mine’s draglines works in the

background to remove overburden

at the mine site.

on a project with Mississippi Power to
provide lignite coal to a new plant expected
to be built in Mississippi.

Overall, NACoal expects full-year

income from continuing operations to
increase moderately in 2010 over 2009
after excluding lease bonus payments of
$7.1 million pre-tax received during 2009.
However, the company anticipates receiving
receive significant royalties on the leased
reserves over time. Cash flow before
financing activities is expected to be
positive in 2010, but down significantly
from 2009, after excluding the effect of
the Red River Mining Company sale and
the lease bonus payments, as a result of
changes in working capital.

NACoal’s contract at the San Miguel

Lignite Mine expires at the end of 2010. The
company intends to respond to San Miguel
Electric’s “Request for Proposal” to operate
the mine beyond 2010.

Longer-Term Perspective

NACoal expects to continue its
record of operational excellence in safety,
environmental stewardship and production
at each of its mining operations and, over
time, to deliver profitability that exceeds
its financial objectives.

NACoal’s vision is to continue to
be the leading low-cost miner of coal used
in power generation, coal gasification and
coal-to-liquids plants and to provide
selected value-added mining services for
companies in the aggregates business.
However, significant growth for NACoal
in the United States will depend on the
United States adopting a balanced energy
policy in which coal continues to play a key
role. The company believes that coal must
remain an integral part of the energy mix if
the United States is going to continue to be
fully competitive in a global economy.
NACoal will continue taking a
leadership role in helping balance energy

needs with environmental responsibility.
The company is actively associated with
several organizations involved in evaluating
and studying various clean-coal technologies,
some of which are funded by the federal
government. Also, one of NACoal’s
customers, Basin Electric, is a pioneer in
the carbon capture process, which it employs
at its Dakota Gasification facility to put
CO2 into a pipeline for export to Canada for
enhanced oil and gas recovery. Further, most
of NACoal’s potential coal-fired power
plant customers, such as Mississippi Power,
include carbon capture in their new coal
project plans. The company continues to
believe that new power plant technologies,
such as integrated gasification combined
cycle power generation, and production
of alternative fuels made from coal, will
provide important opportunities in the future,
and it will continue to monitor the economic
feasibility of coal-to-liquid technologies.
Importantly, the company is

encouraged that more value-added mining
services projects for coal and other
aggregates may become available in the
international arena, as evidenced by the
company’s recent agreement for mining
services in India. NACoal also continues
to pursue non-coal mining opportunities
outside the United States.

Overall, NACoal sees sound long-

term prospects for additional mining
opportunities and has several promising
business opportunities currently in various
stages of negotiation.

NACCO
Materials Handling Group
2009 Results

Like most companies in the industrial
equipment sector, NMHG faced extremely
challenging market and operating conditions
in 2009 as a result of extraordinarily
depressed global lift truck markets. The lift
truck market saw an unprecedented decline

Hyster’s new electric-rider lift truck

series, the Hyster® J45-70XN

pneumatic tire series, has lifting

capacities of 4,500 to 7,000 pounds.

These trucks have been designed for

overall productivity at lower costs.

The 5,000 pound lift truck model

is shown below.

in the beginning of 2009 before reaching
a bottom in mid-2009, where it remained
almost through year end. As a result of these
market conditions, NMHG experienced a
52 percent drop in lift truck unit shipments
and a corresponding 48 percent decline in
revenues in 2009 compared with 2008.
The company reported a significant net loss
for the year ended December 31, 2009.
However, as a result of aggressive programs
to reduce inventories and receivables,
NMHG generated significant cash flow
before financing activities of $121.7 million
in 2009.

NMHG acted early and aggressively to
counteract the market decline. In late 2008,
NMHG implemented cost containment
measures that included reduced salaries and
other employee-related benefits, capital
expenditure restraints, and travel restrictions,
all of which remained in place throughout
2009. In addition, in late 2008 and through-
out 2009, the company implemented
reductions-in-force and plant restructurings
to properly size the organization for the
reduced market levels. Over the year, NMHG
restructured its American and European
sales and marketing work forces to enhance
the effectiveness of these organizations while
at the same time reducing expenses. In
October 2009, the company announced the
shutdown of its Modena, Italy, manufacturing
plant and the transfer of production to its
Masate, Italy, manufacturing plant. These
restructurings were essentially complete
by the end of 2009.

NMHG was fortunate that some key
programs undertaken well in advance of the
downturn were completed in the first quarter
of 2009. A manufacturing restructuring
program, which included the transfer of
the 2.0 to 3.5 ton internal combustion
engine pneumatic lift truck to the Berea,
Kentucky, plant, the closure of the plant in
Irvine, Scotland, and a plant consolidation
in Greenville, North Carolina, all produced

a smaller total plant footprint with
significant efficiencies and enhanced
throughput capacity.

Unlike prior years, currency exchange

rates and material costs had a significant
favorable effect on operating results in 2009
as the dollar strengthened against the British
pound and Australian dollar for the greater
part of the year and as commodity costs
declined compared with 2008. These
benefits were compounded by the favorable
effects of price increases implemented in
prior periods. In addition, current-year
results benefited from the effect of LIFO
liquidations at lower prior-year inventory
costs compared with current-year purchases.

During 2009, NMHG sold its
Australian fleet rental business and the
majority of its Australian retail dealerships,
which has resulted in retail becoming a very
small portion of overall NMHG results. The
company will continue to look to divest
its remaining retail dealerships to strong
independent dealers in the coming year.
NMHG’s market share of factory

bookings declined in 2009 in each area
of the world, largely due to NMHG’s
commitment to reducing dealer inventories
as quickly as possible to market-appropriate
levels and to the disproportionate decline
in the internal combustion engine counter-
balanced truck market in which NMHG has
a more significant share.

Market Outlook for 2010

Global market levels for units and
parts volumes appear to have stabilized in
the second half of 2009. However, NMHG
is not anticipating a market upturn of any
significance in the first half of 2010. The
Chinese market, in which NMHG is not a
significant player, is the only market to
have recovered to pre-recession levels. The
Brazilian market also appears to be turning
up. Latin America and the critical North
American market, as well as European

The new European Hyster®

pneumatic tire, J3.5XN electric lift

truck, with all-weather cab, shown

above, has a lifting capacity

of up to 3.5 metric tons.

The new Yale® GP170-190 Veracitor™

VX, with lifting capacities from

17,000 to 19,000 pounds, features

a 3.3L high output turbo diesel

engine and custom transmission

for maximum performance.

markets, continue at low but stable levels.
NMHG is cautiously optimistic a moderate
recovery will begin in the second half of
2010 for these regions. Recovery is also
anticipated to be stronger in Eastern Europe,
the Middle East and Asia than in Western
Europe, which is expected to be flat in
comparison with 2009. The North American
market is expected to improve moderately.

properly prepared to achieve its financial
targets as the recovery strengthens.

In 2009, the company’s actions were

successful in reducing NMHG’s overall
cost structure to appropriate levels for
prevailing market conditions. The company
plans to continue to manage its business
very conservatively until it is confident the
upturn will be enduring. Cost containment

The Yale® MPE 060-080 rider-walkie

pallet truck, with capacities up to

8,000 pounds, is available in single,

double or triple pallet configurations.

The MPE is designed to meet the

horizontal transporting dock needs

in warehouse environments.

Parts volumes showed only a slight
improvement in the second half of 2009
over the first half of 2009, and early 2010
indicators show a continued weak recovery.
Generally, the pace of the upturn is difficult
to forecast. Overall, the company expects
moderate increases in bookings, unit
shipment levels and parts sales in 2010
compared with 2009, with gradual increases
each quarter.

Actions Being Taken to Move
Forward in 2010

Given these market prospects,
NMHG’s team is overseeing a focused
agenda that balances near-term challenges
of revenue generation in a severely
depressed market with the longer-term
objective of ensuring that the company is

actions, such as conservative plant schedules,
plant vacation periods, administrative
cost control measures, reduced salaries
and capital expenditure constraints, will
continue in 2010 and will be adjusted only
as conditions improve.

Overall, NMHG’s product develop-

ment, supply chain, manufacturing
processes and quality and reliability
programs are quite mature and are in a
phase of continuous improvement. The
company expects significant benefits from
these areas as the market returns. These
programs, in conjunction with strengthened
sales and marketing capabilities and a focus
on enhanced distribution effectiveness,
set the stage for gaining additional market
share in the next cycle. In 2009, NMHG
announced that it would permit its dealers

to represent both the Hyster® and Yale®
brands under controlled conditions. This
new policy is expected to enhance sales
effectiveness through specialization around
end customer application needs. Another
priority will be to continue to strengthen
NMHG’s competitive pricing strategy based
on more regularly updated product costs
and value-selling around base products
and bundled features.

The company believes it currently

has a broad grouping of the right products
available at appropriate cost and price
structures as a result of programs imple-
mented in earlier years. The introduction of
a number of additional products in 2010
will largely complete this major effort.
Also, despite some recent 2010 commodity
cost increases, material costs are expected
to remain flat over the course of the year.
However, the lift truck market is currently
very price-competitive, with significant
pricing pressures in all markets due mainly
to the excess capacity that results from
current low market levels.

Overall, NMHG expects a net loss in
the first half of 2010, with a difficult first
quarter. However, the net loss is expected to
be much smaller than the loss realized in the
first half of 2009. Modest market improve-
ments from improved parts and unit volumes
anticipated in the second half of 2010 are
expected to lead to about break-even results
for the full year, based on the company’s
current forecast of market conditions. Cash
flow before financing activities for 2010 is
expected to be positive, but significantly
lower than 2009 because the working
capital reductions achieved in 2009 will
not be repeated in 2010.

Longer-Term Perspective

NMHG’s vision continues to be to

ensure its place as a leading globally
integrated designer, manufacturer and
marketer of a complete range of high-

quality, application-tailored lift trucks,
offering the lowest cost of ownership,
outstanding parts and service support and
the best overall value.

As a result of mature improvement
programs, NMHG is well-positioned to
maintain its global competitiveness. The
company’s focus on its product pipeline
is also expected to help enhance the
company’s competitiveness and market
share. A continuous stream of new product
innovations and product introductions is
on track. The new electric-rider lift truck
program is bringing a full line of newly
designed products to market. The company
is expected to introduce the remainder of
its new electric lift truck line in 2010 and
early 2011. The company introduced the
2 to 3 ton four-wheel electric trucks
in Europe in early 2010 and expects to
introduce five additional series over the
remainder of the year. In addition, NMHG
plans to introduce a 25 to 32 ton big truck
and several warehouse trucks. Finally,
NMHG is developing a new base-model
internal combustion engine lift truck aimed
at the medium-duty segment of the market.
The first lift trucks in this series are expected
to be introduced in mid-2010, with a
complete rollout by 2012.

Overall, NMHG believes its products,

supply chain, manufacturing, quality,
pricing, distribution and sales and marketing
programs will position the company well in
the global lift truck market. As the market
turns up, these programs are expected to
move the company’s financial performance
to target levels and to an enhanced market
share position.

Hamilton Beach Brands
2009 Results

Despite the global recession and its
negative effects on retail markets, which
unfavorably affected sales volumes in 2009,
HBB operated exceptionally well during

The new Yale® ERP-045-070VL electric-

rider lift truck, with lifting capacities of

up to 7,000 pounds, shown above,

provides a zero-emissions alternative

for indoor and outdoor applications.

The innovative component design and

the “Drop Battery Box” allows for

pneumatic tires on an electric truck.

The new Hyster® H550-700HD

series of big trucks with lifting

capacities up to 70,000 pounds,

shown below, features a

redesigned hydraulic system

for optimal reliability and

lower operating costs.

2009, generating a substantial increase in
operating profit and net income compared
with 2008. Sales volume was constrained
by job losses and an uncertain economy,
and, in the second half of 2009, by lost
placements and promotions at certain key
retailers. Nonetheless, improved margins
from sales of innovative, higher-priced
products, reduced product and supply

the retail sales levels of 2006 and 2007
as consumers continue to struggle with
financial concerns and high unemployment
rates. Importantly, the company is well
positioned at mass merchants who tend to
serve price-conscious consumers and who
performed better in 2009 than higher-end
retailers. HBB is not significantly dependent
on the higher-end segments, which are

Above: Hamilton Beach®

Commercial Tempest®

high-performance blender.

Right: Clockwise from top:

Hamilton Beach Brands’ newest

products include: Hamilton Beach®

6-quart programmable Set & Forget®

slow cooker with spoon rest and

clip-tight gasket lid, Hamilton Beach®

BrewStation® Summit Ultra 12-cup

coffeemaker, Hamilton Beach®

6-Speed classic hand mixer,

Traditions® by Proctor Silex iron

and Hamilton Beach® Premiere

cookware electric skillet.

Below: True Air® Allergen Reducer.

chain costs and lower advertising expenses
more than offset the impact of the decline in
revenues. Additionally, as a result of strong
profitability and effective working capital
management, HBB generated cash flow
before financing activities of $33.4 million
in 2009.

Market Outlook for 2010

The small kitchen appliances market

appears to be recovering. Although consumer
confidence and other key indicators have
improved in early 2010 compared with
2009, the pace and sustainability of the
upturn in consumer markets are uncertain.
Although the market is expected to be
stronger in 2010, it is still not yet back to

expected to continue to experience weak-
ness in 2010. Accordingly, HBB anticipates
revenues in 2010 to be comparable to or
slightly lower than 2009.

Actions Being Taken to Move
Forward in 2010

HBB entered the recession operationally

strong and emerged even stronger. The
company is entering 2010 with expectations
for above-average growth in the international
and commercial markets. However, U.S.
consumer markets will be more challenging
in 2010. While HBB’s position with mass
merchants was stable and helped to mitigate
the effects of the global recession in 2009,
in 2010 the company will continue to invest

in innovative products and value-added
services for its key customers to ensure
HBB products maintain their current strong
market position in those accounts. In 2010,
HBB also plans to strengthen its focus on
the higher-end U.S. consumer market.
The company expects to launch a line of
Melitta-branded beverage appliances under
its new licensing agreement in the third
quarter of 2010.

HBB will continue to monitor
commodity costs closely and will adjust
product prices and placements as
appropriate. The company will continue to
have an intense focus on improving market
share while maintaining or improving
product margins.

Certain employee-related benefit
programs that were suspended at the
beginning of 2009 were partially phased
back in during the fourth quarter and have
been fully restored in 2010. Nevertheless,
HBB will continue to manage its operating
expenses aggressively.

Overall, full-year 2010 net income
and cash flow before financing activities
are currently expected to be lower than
2009 on roughly comparable revenues, as
expenses are expected to be higher in 2010
compared with the unusually low levels
achieved in 2009.

Longer-Term Perspective

Product quality, customer service and
fact-based professional sales and marketing
remain areas of excellence for HBB.
Important promotional campaigns designed
to support HBB’s brands and new products
are expected to continue. The company’s
product and placement track record
continues to be impressive due to innovation
processes centered on understanding and
meeting end-user needs. New products
introduced in 2009, as well as further new
product introductions in the pipeline for
2010 and future years, are expected to
improve revenues.

At the end of 2009, HBB’s Chief
Executive Officer, Dr. Michael J. Morecroft,
retired and was succeeded by Gregory H.
Trepp, previously the Vice President of
Marketing and a long-time member of the
executive management team. The transition
was extremely smooth, with the company
continuing to be led by a strong and
experienced management team. This team
is focused on ensuring HBB continues to be
a leading designer, marketer and distributor
of small electric household and commercial
products sold worldwide under strong
brand names and achieving profitable
growth from innovative solutions that
improve everyday living. The company
will continue to work to increase revenues
and profitability by gaining placements,
improving efficiencies, reducing costs, and
pursuing strategic growth opportunities,
including growth through royalty and
branding agreements, growth throughout
Latin America and growth in commercial
products. The company is well-positioned
to continue its leadership position in the
small kitchen appliances industry and to
operate close to its long-term financial
objectives in the years ahead.

Kitchen Collection
2009 Results

Despite much economic uncertainty, a
weak consumer market and an environment
in which discretionary spending on
entertaining contracted, Kitchen Collection
achieved a major turnaround in 2009,
delivering increased revenues, income
and cash flow before financing activities
compared with 2008 and significantly
outperforming expectations held at the
beginning of 2009. Favorable results in both
store formats, as well as benefits from lower
product and freight costs, the full-year
benefit of an efficiently run distribution
center owned and operated by Kitchen
Collection rather than by a third party,
and administrative cost control measures

Proctor Silex® 8-Speed Blender,

Hamilton Beach® Ensemble™

2-slice bagel toaster

(shown in red) and Hamilton Beach®

stainless steel kettle.

implemented in early 2009 all contributed
to Kitchen Collection’s turnaround. The
company generated positive cash flow
before financing activities of $4.3 million
in 2009.

The Kitchen Collection® stores, which

sell more basic kitchen items, had very
strong results in 2009 as consumers sought
value brands and items for basic needs.
While the average sales transaction value
was lower, the Kitchen Collection® stores

Chef® stores, focused more on food,
tabletop and on-trend merchandise, was
fully implemented as the fourth quarter
holiday season opened, helping drive
customer visits, sales volumes and
improved margins.

Market Outlook for 2010

Despite uncertain consumer spending,

which remains constrained by financial
concerns and high unemployment rates, the

experienced more sales transactions due to
an increase in customer visits. The Kitchen
Collection® stores also benefited from
new and seasonal stores and improved
merchandising and promotional activities
in the second half of the year that resulted
in improved margins. The Le Gourmet
Chef® stores, which sell higher-end goods
focusing on entertaining themes, struggled
in the early part of 2009 but ended the
year much stronger with an increase in
transactions and a higher average sales
transaction value. A new, revitalized store
format and website for the Le Gourmet

outlet mall market appears to be improving.
Against this backdrop, Kitchen Collection
expects a modest increase in revenue in 2010
compared with 2009, despite the planned
closing of a number of under-performing
stores. Favorable sales and margin trends
that occurred in the reformatted Le Gourmet
Chef® stores in the second half of 2009 are
expected to continue into 2010.

Actions Being Taken to Move
Forward in 2010

In 2009, changes in upper management

at Kitchen Collection strengthened a
seasoned team with significant consumer

Le Gourmet Chef® stores

display goods in theme-oriented

sections featuring Spices, Barbeque,

Cookware, Snacks, Tex-Mex,

Baking, Breakfast and Seafood.

Featured is the storefront

for the Paramus, New Jersey, store.

and retail merchandising experience. This
new team redirected the focus of the
company toward enhancement of the
separate identities of its two store formats.
On January 1, 2010, Robert LeBrun,
previously Senior Vice President General
Merchandise Manager, became President
of The Kitchen Collection, Inc.

In 2009, the company invested
significantly in improving the Le Gourmet
Chef® store format and moving toward
profitability by focusing on an enhanced
product assortment in reformatted stores.
These steps increasingly took effect in the
second half of 2009 and are expected to
continue to improve results in 2010. Kitchen
Collection will continue to refine the
merchandise mix in the Le Gourmet Chef®
stores in 2010. The company expects to
continue to test and implement programs
to improve Kitchen Collection’s sales and
profits as well.

Rent levels at certain stores will be
another area of concentration in 2010. The
company intends to close stores when rent
levels result in stores becoming unprofitable
in the long term. Kitchen Collection intends
to capitalize on the weak commercial real
estate market to negotiate acceptable leases
in underperforming stores. Also, as a result
of favorable short-term leasing rates,
Kitchen Collection was able to keep nine
2008 seasonal stores open in 2009 and
2010, and an additional five seasonal
stores, which opened in late 2009, open in
2010. The company also opened 11 new
traditional stores in 2009. While growth in
the number of Kitchen Collection® and
Le Gourmet Chef® stores continues to be
a long-term goal, the expected closure of
underperforming stores in 2010 will result
in a near-term reduction in the number of
Le Gourmet Chef® stores.

Certain employee-related benefit
programs that were suspended or reduced at

the beginning of 2009 were partially phased
back in during the fourth quarter of 2009,
and have been fully restored in 2010.
Kitchen Collection will, however, continue
to manage its operating expenses carefully.
Overall, Kitchen Collection anticipates
a moderate increase in full-year net income
for 2010 compared with 2009. Cash flow
before financing activities is expected to
be comparable with 2009.

Longer-Term Perspective

Kitchen Collection’s vision is to be the

leading specialty retailer of kitchen, home
entertaining and gourmet food products
in outlet malls and other retail channels
for consumers seeking a large selection
of unique, high-quality products at an
exceptional value. The company has two
strong store formats and plans to leverage
this strength with strong, separate brand
identities for each.

Overall, the company has moved from
recovery into a growth phase. The Kitchen
Collection® store format is strong and
Le Gourmet Chef® continues to improve.
Going forward, management plans to
focus on revenue growth through further
enhancement of its merchandise mix, store
displays and appearance. The company will
also strive to expand the number of outlet
malls in which Kitchen Collection® and
Le Gourmet Chef® have stores and to ensure
store footprint sizes are appropriate to
enhance its ability to achieve target profit
levels. Kitchen Collection also continues to
work on developing a profitable traditional
mall strategy for the Le Gourmet Chef®
stores, where expansion potential is very
high. The Le Gourmet Chef® website was
updated in 2009 and the Kitchen Collection®
website is expected to be updated in 2010.
These websites are expected to provide
ongoing revenue growth opportunities.

The Le Gourmet Chef ® store in

Paramus, New Jersey, shown above,

features higher-margin, brand-name

kitchenware and gourmet foods.

The Kitchen Collection® store in

Edinburgh, Indiana, shown below,

features higher-margin, brand-name

kitchen gadgets, small electric

appliances and a variety of

other kitchen- and

housewares-related products.

Conclusions and NACCO
Outlook

The economic environment has
improved substantially from where it was
a year ago, but a number of uncertainties
still remain. NACCO’s companies will
manage cautiously until evidence of a solid
economic recovery becomes clear. As
markets and volumes turn up, NACCO’s
businesses expect to gain the benefits of
previously established programs. NACCO’s
businesses are well-positioned to achieve
their minimum financial goals when markets
fully recover.

We believe that appropriate plans are
in place for a challenging 2010 at NMHG
and for maintaining the three other
subsidiaries at sound levels in 2010. While
NMHG is planning for about break-even
performance in 2010, it is poised to begin
achieving its financial goals as its markets
recover. We expect continued strong
performance from NACoal and HBB, which
are operating well and either achieving or
close to their targets. Improved results at
Kitchen Collection are expected to continue.
NACCO plans to continue to focus on

maximizing cash flow before financing
activities in 2010 and later years. Capital
expenditures are expected to be modest
in the years ahead unless new growth
opportunities develop. NACCO’s cash on
hand provides flexibility with respect to
capitalizing its subsidiaries, although no
further significant capital injections are
anticipated at this time.

NACCO continues to have great

confidence in the management teams at
each of the Company’s subsidiaries. The
many experienced and capable people who
worked so closely together in a most
challenging 2009 were the key to the
Company’s achievement of strong results
at each company, given the state of each
subsidiary’s markets.

Early in 2009, NACCO’s stock price

reached a remarkable low. Although the
price has recovered significantly since then,
we hope that further price increases will
come as the Company’s income improves as
a result of its strong improvement programs
and the return of stronger market conditions.

In closing, we would like to give

special acknowledgment to Dr. Michael
Morecroft, who retired in December 2009
as President and Chief Executive Officer of
HBB. Throughout Mike’s 22-year career
with the company, he was an outstanding
leader with a particularly approachable
personal style. This was most evident
during the last eight years when Mike led
HBB. We are pleased to continue to have
the benefit of Mike’s leadership on the
HBB Board as Vice Chairman. We all thank
Mike for his commitment to HBB and wish
him the very best in his retirement.

We would also like to take this
opportunity to express sincere thanks to
Dr. Ian Ross, who is choosing to retire from
NACCO’s Board this May after serving for
15 years. Ian brought unique and extremely
valuable perspectives and insight to the
NACCO Board. His contributions will
be missed.

Finally, we would like to take this
opportunity to thank all of our subsidiaries’
customers, retailers, dealers and suppliers
and all NACCO stockholders for their
continued support, and to thank all NACCO
and subsidiary employees most sincerely
for their hard work, sacrifices and
commitment in meeting the challenges of
2009. We hope for a sustained global
economic recovery and look forward
to a successful 2010.

Alfred M. Rankin, Jr.
Chairman, President and
Chief Executive Officer
NACCO Industries, Inc.

Robert L. Benson
President and Chief Executive Officer
The North American Coal Corporation

Michael P. Brogan
President and Chief Executive Officer
NACCO Materials Handling Group, Inc.

Gregory H. Trepp
President and Chief Executive Officer
Hamilton Beach Brands, Inc.
Chief Executive Officer
The Kitchen Collection, Inc.

Robert A. LeBrun, Jr.
President
The Kitchen Collection, Inc.

Supplemental Data
NACCO Industries, Inc. and Subsidiaries

Reconciliation of 2008 Net Income (Loss) attributable to stockholders “As Reported” to
2008 Adjusted Net Income (Loss) attributable to stockholders Excluding “Special Items”
(in millions, except per share data)

Year Ended 2008

Pre-tax

After-tax

Diluted
EPS

2008 Consolidated Net Loss attributable to stockholders, as reported . . .

$ (437.6)

$ (52.84)

Goodwill and other intangible assets impairment charges . . . . . . . . . . . .
Charges against accumulated deferred tax assets. . . . . . . . . . . . . . . . . . . .

435.7

431.6
29.8

52.12
3.59

Net effect of special items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008 Consolidated Adjusted Net Income attributable to stockholders

435.7

$
$

461.4
23.8

2.87

Year Ended 2008

Pre-tax

After-tax

2008 NMHG Net Loss attributable to stockholders, as reported . . . . . . . . .

$ (376.0)

Goodwill and other intangible assets impairment charge . . . . . . . . . . . . .
Charge against accumulated deferred tax assets . . . . . . . . . . . . . . . . . . . .

351.1

347.3
29.8

Net effect of special items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

351.1

2008 NMHG Adjusted Net Income attributable to stockholders

$
$

377.1
1.1

2008 Hamilton Beach Net Loss attributable to stockholders, as reported . .

(73.3)

Goodwill impairment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

80.7

2008 Hamilton Beach Adjusted Net Income attributable to stockholders

7.4

Year Ended 2008

Pre-tax

After-tax

2008 Kitchen Collection Net Loss attributable to stockholders,

as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10.0)

Goodwill and other intangible assets impairment charge . . . . . . . . . . . . .

3.9

3.6

2008 Kitchen Collection Adjusted Net Loss attributable to stockholders

(6.4)

Year Ended 2008

Pre-tax

After-tax

Adjusted Net Income/Loss attributable to stockholders is a measure of income that differs from Net Income/Loss attributable to stockholders
measured in accordance with U.S. generally accepted accounting principles (”GAAP“). Adjusted Net Income/Loss attributable to stockholders
is Net Income/Loss attributable to stockholders adjusted for the exclusion of goodwill and intangible asset impairment charges at NMHG,
Hamilton Beach and Kitchen Collection and charges against the accumulated deferred tax assets of NMHG in 2008. Management believes that
both Net Income/Loss attributable to stockholders and Adjusted Net Income/Loss attributable to stockholders assist the investor and the
subsidiaries’ lenders in understanding the results of operations of NACCO Industries, Inc. and its subsidiaries. In addition, management evaluates
results using Net Income/Loss attributable to stockholders and Adjusted Net Income/Loss attributable to stockholders.

Officers and Directors

Officers and Directors of NACCO
Industries, Inc.
Officers:

Alfred M. Rankin, Jr.
Chairman, President
and Chief Executive Officer
Charles A. Bittenbender
Vice President, General Counsel
and Secretary
J.C. Butler, Jr.
Vice President-Corporate Development
and Treasurer
Lauren E. Miller
Vice President-Consulting Services
Kenneth C. Schilling
Vice President and Controller
Mary D. Maloney
Assistant General Counsel
and Assistant Secretary
Suzanne S. Taylor
Associate General Counsel
and Assistant Secretary

Directors:

Owsley Brown II
Retired Chairman,
Brown-Forman Corporation
Dennis W. LaBarre
Partner, Jones Day
Richard de J. Osborne
Retired Chairman and Chief Executive
Officer, ASARCO Incorporated
Alfred M. Rankin, Jr.
Chairman, President and Chief
Executive Officer, NACCO Industries, Inc.
Ian M. Ross
President Emeritus, AT&T Bell
Laboratories
Michael E. Shannon
President, MEShannon & Associates, Inc.
Retired Chairman, Chief Financial and
Administrative Officer, Ecolab, Inc.
Britton T. Taplin
Self employed (personal investments)
David F. Taplin
Self employed (tree farming)
John F. Turben
Chairman,
Kirtland Capital Partners
Eugene Wong
Professor Emeritus
University of California at Berkeley

Officers of Subsidiaries

Officers of Hamilton Beach Brands, Inc.

Officers of NACCO Materials
Handling Group, Inc.
Corporate:

Alfred M. Rankin, Jr.
Chairman
Michael P. Brogan
President and Chief Executive Officer
Colin Wilson
Vice President and Chief Operating
Officer and President, Americas
Lauren E. Miller
Senior Vice President, Marketing
and Consulting
Kenneth C. Schilling
Vice President and Chief Financial
Officer
Charles A. Bittenbender
Vice President, General Counsel
and Secretary
James M. Phillips
Vice President, Human Resources
Rajiv K. Prasad
Vice President, Global Product
Development
Victoria L. Rickey
Vice President, Asia-Pacific
Michael E. Rosberg
Vice President, Global Supply Chain
Michael K. Smith
Vice President, Finance
and Information Systems
Gopi Somayajula
Vice President, Counterbalanced
Engineering
Daniel P. Gerrone
Controller
Jeffrey C. Mattern
Treasurer

Americas:

Donald L. Chance, Jr.
Vice President, President, NMHG Sales
Raymond C. Ulmer
Vice President, Finance Americas

Europe, Africa and Middle East:

Ralf A. Mock
Managing Director, Europe, Africa
and Middle East

Asia-Pacific:

Nobuo Kimura
President, Sumitomo NACCO Materials
Handling Co., Ltd.

Alfred M. Rankin, Jr.
Chairman
Dr. Michael J. Morecroft
Vice Chairman
Gregory H. Trepp
President and Chief Executive Officer
Gregory E. Salyers
Senior Vice President, Global Operations
R. Scott Tidey
Senior Vice President, North America
Sales and Marketing
Keith B. Burns
Vice President, Engineering and
Information Technology
Kathleen L. Diller
Vice President, General Counsel
and Secretary
James H. Taylor
Vice President, Chief Financial Officer
and Treasurer

Officers of The Kitchen Collection, Inc.

Alfred M. Rankin, Jr.
Chairman
Dr. Michael J. Morecroft
Vice Chairman
Gregory H. Trepp
Chief Executive Officer
Robert A. LeBrun, Jr.
President
Emil S. Wepprich
Vice President-Supply Chain
Karen E. Cavender
Controller
L.J. Kennedy
Secretary and Treasurer

Officers of The North American
Coal Corporation

Alfred M. Rankin, Jr.
Chairman
Robert L. Benson
President and Chief Executive Officer
J.C. Butler, Jr.
Senior Vice President-Project
Development and Administration
Bob D. Carlton
Vice President and Chief Financial Officer
Douglas L. Darby
Vice President-Southern Operations
Michael J. Gregory
Vice President-Engineering, Human
Resources and International Operations
Thomas A. Koza
Vice President-Law and Administration,
and Secretary
John D. Neumann
Assistant General Counsel and
Assistant Secretary
K. Donald Grischow
Treasurer
John R. Pokorny
Controller

Corporate Information

Annual Meeting

NACCO Industries Website

The Annual Meeting of Stockholders of NACCO
Industries, Inc. will be held on May 12, 2010, at
9:00 a.m. at the corporate office located at: 5875
Landerbrook Drive, Suite 300, Cleveland, Ohio 44124

Additional information on NACCO Industries may be found
at the corporate website, www.nacco.com. The Company
considers this website to be one of the primary sources of
information for investors and other interested parties.

Form 10-K

Additional copies of the Company’s Form 10-K filed with
the Securities and Exchange Commission are available
through NACCO’s website (www.nacco.com) or
by request to:

Investor Relations
NACCO Industries, Inc.
5875 Landerbrook Drive, Suite 300
Cleveland, Ohio 44124
(440) 449-9669

Stock Transfer Agent and Registrar

Computershare
7530 Lucerne Drive, Suite 305
Cleveland, Ohio 44130
1-800-622-6757
Legal Counsel
Jones Day
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Independent Auditors
Ernst & Young LLP
1300 Huntington Building
925 Euclid Avenue
Cleveland, Ohio 44115
Stock Exchange Listing

The New York Stock Exchange
Symbol: NC

Investor Relations Contact

Investor questions may be addressed to:
Investor Relations
NACCO Industries, Inc.
5875 Landerbrook Drive, Suite 300
Cleveland, Ohio 44124
(440) 449-9669
E-mail: ir@naccoind.com

Subsidiary Company Websites

The websites of several subsidiary companies and their
brands can be found at the following locations:
NACCO Materials Handling Group:

www.nmhg.com
Hyster North America:

www.hysteramericas.com

Hyster Europe:

www.hyster.co.uk

Hyster Asia-Pacific:

www.hyster.com.au

Hyster China:

www.hyster.com.cn

Yale North America:
www.yale.com

Yale Europe:

www.yale-forklifts.eu

Yale Asia-Pacific:

www.yale.com.au

Hamilton Beach Brands–U.S.:
www.hamiltonbeach.com
www.proctorsilex.com
www.buytraditions.com
www.commercial.hamiltonbeach.com

Hamilton Beach Brands–Mexico:

www.hamiltonbeach.com.mx

Kitchen Collection:

www.kitchencollection.com
www.legourmetchef.com

North American Coal:
www.nacoal.com

Environmental Benefits
This Summary Annual Report and Supplemental Package is printed using post-consumer waste recycled paper and vegetable-based inks.
By using this environmental paper, NACCO Industries, Inc. saved the following resources:

125 trees
preserved for
the future

362 lbs.
water-borne
waste not created

53,177 gal.
wastewater
flow saved

5,884 lbs.
solid waste
not generated

11,585 lbs. net
greenhouse
gases prevented

88,672,000 BTUs
energy not
consumed

The FSC Trademark identifies wood fibers coming from forests which have been certified in accordance with the rules of the Forest Stewardship Counsel.

5875 Landerbrook Drive, Suite 300 • Cleveland, Ohio 44124
An Equal Opportunity Employer

Printed in U.S.A.