My name is Francis and I will be your coordinator for today.At this time, all participants are in listen-only mode. We will conduct a question-and-answersession toward the end of this conference. (Operator Instructions) As areminder this conference is being recorded for replay purposes. I will now liketo turn the call over to Christina Kmetko, Manager of Finance. Please proceed.

Thank you. Good afternoon, everyone, and thank you forjoining us today. Early this morning, a press release was distributed outliningNACCO's results for the third quarter ended September 30, 2007. Anyone has notreceived a copy of this earnings release or would like a copy of the 10-Q,please call me at 440-449-9669, and I will be happy to send you thisinformation. You may also obtain copies of these items on our website atwww.nacco.com. Our conference call today will be hosted by Al Rankin, Chairman,President and Chief Executive Officer of NACCO Industries. Also in attendancerepresenting NACCO Industries is Ken Schilling, Vice President and Controller.Al will provide an overview of the quarter and then open up the call to yourquestions. Before we begin, I would like to remind participants thatthis conference call may contain certain forward-looking statements. Thesestatements are subject to a number of risks and uncertainties that could causeactual results to differ materially from those expressed in the forward-lookingstatements made here today. Additional information regarding these risks anduncertainties was set forth in our earnings release and in our 10-Q. In addition, certain amounts discussed during this call areconsidered non-GAAP numbers. The non-GAAP reconciliations of these amounts areincluded in our 2007 third quarter earnings release, which is available on ourwebsite. I will now turn the call over to Al Rankin. Al?

Good afternoon. I'll begin with an overview of the earningsrelease, which was sent out this morning, as Christie indicated thiscomplements the 10-Q, which was also released this morning and which isavailable on the NACCO website. As you probably seen already NACCO's third quarter netincome was $21.1 million or $2.55 a share, compared with $18.8 million or $2.28a share last year. Our key highlights include a number of points. At NACCOMaterials Handling Group, wholesale's net income was $5 million, compared with13.3 a year ago. In August 2007, NACCO Materials Handling Group announced amanufacturing restructuring program, it resulted in a restructuring charge of$5 million or $3.5 million net of taxes and additional cost for the thirdquarter of $300,000 net of taxes. NACCO Materials Handling Group Retail had net income of $1.8million compared to a net loss of 2.8 in the quarter a year ago. Net income in2007 included a total gain of $3 million or $2.6 million net of tax from thesale of a European retail dealership in the third quarter. Hamilton Beach reported net incomeof $6.3 million for the third quarter, compared with a net income of $5 millionin 2006. Ham Beach's 2006 net income included acharge for environmental expense of $1.3 million net of tax last year. And netincome for 2007 was negatively affected by the increased interest expensepayable in or paid in 2007 due to increased borrowings related to the $110million special cash dividend paid in May of this year. Kitchen Collection's net loss of $900,000 increased $200,000from quarter a year ago as a result of two months of seasonal losses of$900,000 or $0.5 million net of taxes from Kitchen Collection's acquisition ofcertain Le Gourmet Chef stores in late August of 2006. North American Coal's net income increased to $7.8 millionfrom $5.9 million primarily as a result of a…

(Operator Instructions) Your first question comes from theline of Frank Magdlen with Robins Group. Please proceed.

Good afternoon.

Good afternoon.

When I look at your longer-term strategy, what is thecapital expenditure program, what does it looks like in the future, and what isthe maintenance CapEx going forward?

Well, I'd answer that in a general way as follows, and Iwill do it business by business. At NACCO Materials Handling Group Wholesale,we don't expect major change in our level of capital expenditures. Really theissue there is focus around the profitability programs into the extent that wehave additional capital expenditures associated with enhancing our Berea, Sulligent, andRamos Arizpe operations. They are set byreduced capital expenditures for the plant in Scotland which will no longer needthem. With the NACCO Materials Handling Group Retail, we don'texpect significant capital expenditures. At Hamilton Beach capital,expenditures will continue at a very low level having withdrawn frommanufacturing, those capital expenditures are associated mainly with newproduct tooling, in certain instances, and that is not a very major capitalexpenditure. At Kitchen Collection, capital expenditures will stay at afairly modest level, despite expansion of the Gourmet Chef format at bothfactory outlet malls and at enclosed malls over the next few years. The one that is very difficult to call is the Coal Company.Our existing coal mines will not require particularly large capital investment.That will be pretty stable, and at not a very high level. The part that is hard to call is the part that is related tonew deal opportunities in those businesses. We do expect that we will havesome, we hope substantial expansion opportunities in the coal business. And inmany of those we may have to supply a significant portion of the capital. It is worth noting, however, that those projects are all backed by the way we do business, and bylong-term contractual commitments. 20, 30, 40 years from now customersthat they serve and to that extent, capital expenditures have a self financingaspect to them. This is because they allow the individual company entities thatare involving creating new mining operations to borrow money on the back of thecapital expenditures that are being put in place to carryout the contractcommitments. But that's the one area where you really can't call it till youget a deal and other than that I can't, that's about as far as I can go.

Well, could you put a minimum in size or maximum or a rangeof what a major project might entail?

Well, it depends so much on how they are structured, it'svery difficult to do that. The one thing I would say is that, we don't enterinto speculative contractual arrangements in terms of pricing structure. We arewilling to take the risk that is associated with being an effective miner. Wereally don't take price risks in those. And so, as I said there is aself-financing element, they could be very substantial, we certainly hope sobecause it would be wonderful to be able to use the free cash flow of a companyfor constructive high returning investment opportunities. But we can't reallypredict what those will involve and some will be financed by customers, somewill be financed by us. It really has to be built with on an individual mind bymind basis, as those deals come alone.

Well, could you characterize irrespective of who financesit, what would be the magnitude of the total capital needed, whether youprovide it or whether the customer provides?

No, an individual new coal mine today, if you add all thepieces together, we're typically quite an expensive preposition, and many ofthem could exceed a $100 million in capital investment, depending on whetherthe draglines are new or used pieces of equipment and a number of things ofthat nature.

Alright.

I think in terms of the information we've given in therelease, we've incurred $42 million of CapEx to date and we've got a forecastof 25 for the rest of the year. I don't know if that's helpful to you.

That's helpful. What is your maintenance CapEx goingforward? You have a lot of moving pieces as you expand capacity in certainparts of the world and contract in others. But I guess I have loss side alittle bit as total to what the ongoing…

Well, I think, our maintenance, level of maintenance capitalexpenditures is going to be something below those numbers. And I don't knowthat I have, off hand, a specific number, but if you think around the system isgoing to be more alike, it is less than $50 million.

Okay. So…

It is just from a depreciation perspective, we are runningat about $16 million of depreciation, if you think about that in terms ofreplacement capital.

$16 million.

$16 million a quarter.

Okay, so…

$64 million.

And I think, we're probably, at this point given the stateof our facilities, they are all in good condition. Our mines are establishedand it's a number that's well below that.

Alright. And then, back to Materials Handlings a little bit.You talked about the lead costs that have increased and Al, I am not quite surewhat lead cost means, other than I keep thinking of the commodity cost going upand there is a surcharge involved, does that mean...

You mean lead?

Well, I'm sorry. Its lead, I am sorry, it's lead. I am areally bad reader.

I think its lead cost, and lead has gone through the roof,and our position is that there are no selected product lines that require theuse of lead. And that whatever the cost is, we are going to pass it onto thecustomer. And we just put it on as a surcharge, and if the price of lead goesdown, we'll reduce it immediately by the same amount. We are going to keep thecompany hold, and we just don't have any other way of dealing with those kindsof things that are involved in somewhat specialized parts of the product line.

Can you give me an idea, how much that's fluctuated in thelast year or two?

I don't know exact, lead is up three or four times. I forgotwhat the number is. But it's a huge amount.

Alright.

In lieu to the fact that a lot of products we sell areelectric products that use a lead-acid battery. That's where a lot of the leadis, as well as sometimes in counter weights.

Counter weights is a big issue though.

Alright. Thank you gentlemen.

Okay.

(Operator Instructions) Your next question is from the lineof Amy Bloom with Stanfield. Please proceed.

Hi. On the Hamilton Beach subsidiaries, I waswondering if you could talk about the improvement in year-over-year sales.Where is that from any particular product category or any particular customer?

There are product categories that have gone up, and productcategories that have gone down. In general, the most important single thing wehave done is to continue to try to have innovative new products come out. Forexample, our Toastation has been out for a while that's been a very successfulproduct. Our BrewStation family of products have been a real leader in thecoffee maker area. Other product lines, sometimes with smaller, lower unitprices, like can openers, have been much less robust and have declined alittle, and to some degree as it's been a movement away from cans that have tobe open with the can opener, but generally speaking it's more higher priceproducts and fewer opening price point products that have moved the revenuestructure up. Now, we have had some other selected categories that have beendoing well this last year, but it's fairly broad.

Thanks for the color. How many new products were introducedin 2007 and how many do you plan to introduce in 2008?

I think, those are not numbers that I have on the tip of mytongue. I think Christie can probably get some perspective on that and give youa sense of those numbers. But there is a great deal of innovation that goes onand the level of new product activity continues to be extremely high. I have arecollection that we have 40 to 50 major programs going on at any one-time withthe sort of [cadre] of engineering people that we have. We have a collaborativearrangement that we use which involves a combination of deep knowledge of the U.S.market by the engineering group. And here, the headquarters of the business in Richmond at Virginia,which very much is in tune with the needs and requirements of Americanconsumers. But we complement that withsome of our own engineering capabilities in China, in Shenzhen, at our ownfacility and our people that are very much in touch and were close with oursuppliers' engineering groups. So, we are trying to leverage the whole systemwhile keeping innovation coming through for our particular products. Maybe thatgives you a little bit more field force.

Got. Thank you. And has there been any change in theordering patterns of your larger customers? I've heard a lot that some of thebig customers keeping inventory levels tight?

Our big customers have kept inventory levels pretty tightfor a very long period of time. Wal-Mart, KMart Series target those kinds ofcustomers. Certainly, a while back Wal-Mart explicitly reduced its inventoriesacross the Board for everyone. And we find there is a general pattern that oursales to our customers, or sale in the fall selling season are coming closerand closer to the actual sales, and there's less and less accumulation ofinventory in anticipation. So, the whole system is quite highly geared andpushed back toward the end of the year. So, the months of October and Novemberare, the Hamilton Beach are just enormousmonths and November and December for Kitchen Collection.

Thank you and just one last question. Is there any update onthe spin-off of Hamilton Beach? Is that still onhold?

The update is really the one that we gave a while back whenwe made our formal press release, which is if we cancelled the spin-off ofHamilton Beach market conditions were extremely unsettled. We concluded itdidn't make sense and I think we said at the time that well we might go backand revisit that sometime in the future, we have no plans to do that at thistime.

Okay, thank you.

Your next question comes from the line of [David Rubin withSAC]. Please proceed.

Hi, I just wanted to understand the basis for your, not theexemptions, you said net income is going to be for '07 to '08 or is it fixed'07?

As '07 compared to '06, what we said is, and I think, if westick by the very specific language that we used which was in the generalrange, as opposed to just flat. It's in the general range in '07 of '06, takinginto account the elimination of the extraordinary income item that we had in'06, it was literally, an extraordinary item. And secondly, we also noted thatand have throughout the year, it would exclude the charges associated with therestructuring decision that NACCO Materials Handling Group, but that's thegeneral framework that we have used for '07 in comparison to '06.

As of '06, would that exclude a one-time charge number? Whatis that that you are, what is that net income that '06 number that you areusing as a comparison?

The '06 numbers that excluding the extraordinary charge was,I think, $93.4 million, it was an extraordinary item in '06, a $12.8 millionand we had total net income in '06 of a $106.2 million and what we excluded wasthat $12.8 million.

Got you.

And restructuring charge that we also mentioned, however,about 3.5 or there about.

That's the 3.5 for fiscal '07.

'07, right.

Okay. And just thinking about the general machinery, what doyou think it will take you guys to get to above the last year's numbers versuswhat would happen to get you modestly below last year's numbers?

I really don't want to comment anymore on forecast. There isa general rule. We really don't make forecasts of our earnings. I do think thatI would just make the obvious comment that both Hamilton Beachand Kitchen Collection are highly dependent on having a strong Christmas andThanksgiving selling season. The stronger it is, the better they do, the weakerit is the less well that they might want to do. So, North America CoalCorporation is not terribly dependent on that and NACCO Materials HandlingGroup. It's really question of completing the year with the strong fourthquarter, which has got a lot of working days in it. The third quarter is always a little bit muddled becauseit's a vacation quarter, and so we have. But it's not much more of the situation in our hands than it is in thetwo consumer based businesses.

And a final question, in this again, and I apologize I knowsomeone has just asked this question but it relates to the spin-off in Hamilton Beach. And I know you said at that pointthat it was because of market conditions, I mean, I guess, in the equitymarkets the market has basically kind of normalized. I mean, stocks are notmuch up their highs. I am just trying to understand why the issue would be themarket, I mean, there is another reason why you decided not to go through it,just because it seems to make a lot of strategic sense as part of the business.

Well, I think, what we meant in what we said, it's unsettledmarket conditions. It's not justequities it's debt. We are not sure how that's all going to play out. These arevery tricky times in financial markets. Then there are lot of issues associatedwith smaller companies, valuations being spun off, the kinds of pressures thatcome up and markets where hedge funds are playing a significant role in termsof market movements. It's just a whole variety of issues that kind of came to '04and are still unsettled in terms of the situation that may be playing out infront of us and I think you see it pretty much every day with disclosures, notjust about some sub-prime mortgage issues, but also about specializedinvestments vehicles of the banks, the implications for the bank's lending andso on and so forth. So, I think all of that went into our thinking and we juststand on what we said and what was. I think Christie not only in press releasebut in 8-K filing and that's the way we would kind of stick with it.

Okay, thank you very much.

Your next question comes from the line of [Steve Thomas withPasscode Outlook]. Please proceed.

There is a mission made of a decline in coal sources due toan extended power plant outage. I was wondering, what plant that was theylinked about it versus the plant outage and the affected the tonnage?

We really don't get into the specifics usually. We haveoutages from time-to-time. I think the best way to think about the Coal Companyis to take a full year and we think the prospects for the Coal Company for thefull year are very sound. We feel comfortable with those. We do try to indicatethe narrow and special conditions that effect one quarter or another, as matterof explanation. But the outages are, on the one hand, often planed, but on theother hand, never known in terms of duration until the power plant owners getin there to do the maintenance when they have an outage and see what theconditions are. Sometimes, they have more work to do and sometimes they haveless work to do. We have, but it is just sort of a random thing that we simplydeal within that. Keep in mind that, almost all of our coal operationseffectively are paying a profit per tons. So that on the margin some of thosefluctuations have, well they have an impact, not necessarily a dramatic impact because they just reduced the numberof tonnes that are sold in any one quarter but the base for the year is still avery, very high number. And so, most of the profit comes on through. So, thereis not a lot of fixed cost to cover in most of our operations in that sense.

Thank you.

And your next question comes from the line of [Jason McCabwith Plutose]. Please proceed.

Yes, hi. I guess the stock is down about a third for thequarter. And I guess, I haven't heard any discussion on the phone call, Iapologize if I missed it but I haven't heard any discussion about that decline.Do you have thoughts on the decline and how would you get the stock back upright. And I guess, kind of second point that I've heard, themiddle market buyouts are getting done. They are still getting done at the samepace that they did in the previous two quarters of the year. So, I guess, Idon't understand the thought behind the market turmoil sub-prime, specialpurpose vehicles. I'm not sure have anything to do with middle market buyoutsbut shopping you feel as to buyout funds or strategic players. Though, I guesswhat I am saying is I don't understand, I don't hear a sense of urgency aboutdramatic decline in the share price.

My guess, there are couple of factors, first of all, if youare referring to Hamilton Beach, we never proposedto sell the company. And so, there never were questions of buyouts or anythingof that nature. We were spinning it after the same shareholders who own ittoday. So in that sense, there was no transaction involved, this is a questionof the ownership vehicle. Our objective at the time was simply to find a moreflexible vehicle to accomplish kinds of things that we had previously had triedto accomplish including the merger with Applica. So, that's the broadest answeras far as that kind of an aspect is concerned. With regard to the stock price, I really can't answer yourquestion. We have had earnings that have been pretty much what we anticipatedthat they would be. We haven't really changed our view, with regard to thecompany and its prospects, since early this year. So, in that sense, nothinghas happened. The stock price, I suppose and perhaps you all are in a betterposition than us to say, as made by the folks that are either buyers or eithera combination of buyers and sellers in the marketplace.

But it was an…

And I think to the extent that the market turmoil broughtpressure to bear on certain funds that own our company, so they needed toliquidate shares at regardless of the price in order to raise liquidity toprovide more collateral for the banks or to meet liquidation needs in theparticular funds. There could easily be a situation where there weresubstantial selling price pressures on the price of the stock. The company isvery thinly traded. The market is one that can go up or down for the stockwithout over regard to the performance of the company. We have a long-term viewthat is focused on performance of our individual businesses. And so, we tend toput it in that perspective and hopefully the market will recognize theperformance of the businesses. But in the meantime, we simply are continuing tocarry-out our efforts with the individual businesses.

But if the market is saying that the company is worth moreseparated, and then that seems to be the indication because then the market isback over where it was in July but the stock is still down, which seems to methat it is de-coupled from the market. The market seems to be suggesting thatthe company is worth more separated than together. I don't hear anything tosay, okay, well, if we're not to going to separate, if we're not going to spinit out or we're not going to sell pieces of the business, how do we get back upto where we were before? How do we get back that share price performance kindof corollary behind that, is it a $1 billion market cap or over a $1 billion?And do you have any ideas about getting coverage from investment banks fromthis company or getting more exposure for the company.

It is a subject that we discuss from time-to-time theeconomics of the business of coverage in today's world are not highlysupportive of a thinly traded security. And the expensive coverage in terms ofwhere the revenue is derived from is complex. Certainly, if there areoperations in which we are interested, and being covered, we would beinterested in trying to support that within the limits of the clearrequirements for making information broadly public to all investors. But it's not something that has, I would say coveragecondition. The coverage, in general, for small cap companies has deterioratedrather than improved, it's a problem. And my hope is in the broader question ofvaluation that as markets continue to settle down, people will look at ourparticular company, get interested in it. And the price can go back up just asfast as it went down. But it's probably going to be more a function of individualinvestors than interest in the company, particularly, institutions that dothere own research and analysis.

And there are no other questions in the queue at this time.I would like to turn the call over to Mr. Al Rankin for closing remarks.

I think if you do have further questions that ChristieKmetko, I would be happy to try to answer those for you. We appreciate all ofyou being a part of the telephone conference that we've had. And we look forward to continuing to carry onprograms that we've been carrying on for the last few years that are outlinedin our annual report and our other various publications, and if we think aregoing to create real long-term value for all of our shareholders. So, thosewould be my closing thoughts. Christie is there anything you want to say?

I just want to say, thank you for joining us today and ifyou do have a follow-up question, please call me at 440-449-9669. Thanks andhave a great day.

Thank you for your participation in today's conference. Thisconcludes the presentation. If you wish to access the replay, you may do so bydialing 617-801-6888 or 888-286-8010 and enter a pass code 58506257. You maynow disconnect and have a great day.