Good day ladies and gentlemen and welcome to the fourth quarter 2007 NACCO Industries earnings conference call. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Miss Christina Kmetko, Manager of Finance.

Good morning, everybody, and thank you for joining us today. This morning, a press release was issued, outlining NACCO’s results for the fourth quarter and year ended December 31, 2007. Anyone who’s not received a copy of this earnings release or would like a copy of the 10-K, please call me at 440-449-9669, and I will be happy to send you this information. You may also obtain copies of these items on our website at www.nacco.com. Our conference call today will be hosted by Al Rankin, Chairman, President and Chief Executive Officer of NACCO Industries; also in attendance representing NACCO is Ken Schilling, Vice President and Controller. I will provide an overview of the quarter and full year and then open up the call to your questions. Before we begin, I would like to remind participants that this conference call may contain certain forward-looking statements. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements made here today. Additional information regarding these risks and uncertainties was set forth in our earnings release and in our 10-K. In addition, certain amounts discussed during this call are considered non-GAAP numbers. The non-GAAP reconciliations of these amounts are included in our 2007 fourth quarter earnings release which is available on our website. I will now turn the call over to Al Rankin.

Good morning. I’ll begin with an overview of the earnings release which was sent out this morning, and that earnings release complements the 10-K, which as Christy indicated, was also released this morning. As you’ve probably seen, NACCO’s fourth quarter net income was $51.7 million or $6.24 per share, compared with $70 million or $8.48 per share for the fourth quarter of 2006. 2006, importantly, did include in its fourth quarter an after-tax extraordinary gain of $12.8 million, which did not re-occur in 2007. As a result, income before extraordinary gain, as I indicated in 2007 was $51.7 million or $6.24, and that compared with comparable 2006 numbers before extraordinary gain of $57.2 million or $6.93 per share. The decrease in consolidated income before the extraordinary gain is primarily the result of the absence of a gain of $21.5 million, or $13.1 million net of taxes, $8.4 million from the sale of two draglines, which occurred in the fourth quarter 2006 operating results. Other key highlights of NACCO’s fourth quarter included net income at NACCO Materials Handling Group, which was $23.8 million, compared to $22.4 million in the previous year. I should note that in August of 2007, NACCO Materials Handling Group announced a manufacturing restructuring program that added additional restructuring charges during the fourth quarter of $0.5 million pretax, and additional costs in the fourth quarter of $1.7 million pretax. Included in the 2006 net income was a $7.9 million reduction in income tax expense related to the recognition of the tax benefit of previously-recorded capital losses. The NACCO Materials Handling Group retail business had a net loss of $1.1 million in 2007, compared with a loss of $4.3 million in the previous year. Programs put in place in mid-2007 affected operations positively in the fourth quarter, resulting in…

(Operator Instructions) Your first question comes from the line of Amy Bloom - Stanfield.

Yes, you talked about your guidance for Hamilton Beach was significantly reduced results for 2008, could you give us, maybe, a little bit more clarity on that? You’re talking about the top or the bottom line, and, maybe, give us a range of, maybe, mid single-digits, high single-digits; I just want to get a little bit more clarification on the guidance?

Well, as you know, we don’t provide earnings guidance and have not for many years as a general matter. This is a particularly difficult year in which to have a sense of how economic conditions will affect our various businesses. At Hamilton Beach, like many other companies that are selling into the consumer retail environment, December sales were weak. We did have comparable sales in 2007 in the fourth quarter to the previous year, and I think we certainly don’t see at this time any upturn in the consumer demand environment. So we would work hard to try to maintain the placements that we have and hope for good sell-through and to gain some additional new placements. The bigger impact, really, in terms of the difficulty of the environment, is more at the operating profit level, and of course, we have the full year of the interest expense associated with the $110 million dividend. So I think you can expect that there are factors that are going to affect operating profit. I mentioned, particularly, the cost pressures that are coming through in the business, and I think we’re in the same position that essentially all companies are that have established supply stores in China. That was a tremendous cost reduction opportunity over a good many years, but now the supply business is very competitive in China. And the global upturn particularly in China and India has put tremendous pressure on price increases of commodities, and it’s very difficult to come up with cost reduction programs to offset those. So I think there is an element of change here in moving into a more inflation-driven environment in terms of the cost profile in businesses such as Hamilton Beach’s than has been the case in previous years. The suppliers’ margins simply don’t permit the absorption of those increased costs, and, obviously, we work very closely to try to pass on appropriate cost increases to our customers. But as I intimated in my comments, the customer cycle for negotiation is, to some degree, different from the cycle of negotiation with our suppliers. And the cost increases that we are receiving from our suppliers, based on accelerating commodity cost increases, have been increasing above our anticipation of just six months ago. So there’s likely to be a lag time that affects 2008, when some of those factors are coming through. It’s also fair to say that we had some placements in 2007 with margins that were attractive; we hope for those kinds of opportunities in 2008, but it’s very difficult to count on them. And at this point, we think that, given the cost pressures and the weak consumer market, that products with higher margins may have a tougher time selling through than perhaps was the case in 2007 and 2006. As far as specifics are concerned, I wouldn’t go any farther than to give you the general perspective that I just outlined.

Do you have a number on how many new products were introduced in 2007, and maybe what’s on the docket for ‘08, is that higher or lower than 2007?

I don’t have those numbers at hand. I think we’ll probably talk about those in our annual report to some degree, and certainly the innovation commitment of the business continues to be very high. We have a high proportion of our products that are renewed every year, and I see no change in that. We don’t have a substantial tradeoff as some businesses might in terms of capital and expense associated with tooling for new products, because those expenses more often than not are borne by our suppliers and then by us over time in the cost of the products. So we don’t have a trade-off that either permits or provides a profit improvement that comes from changing the pace at which those activities are going on.

I noticed in the 10-K that your CapEx guidance is higher for 2008 for tooling. You had just mentioned that, is that for new products or that’s for existing products and is that already committed on spending that capital?

You’re talking about for the total company not for Hamilton Beach.

It was for Hamilton Beach.

The numbers are pretty low levels in Hamilton Beach in total, and there may be some modest increase in those. But it’s really a very small number, maybe, $1 million or $1.5 million.

Yeah, I think you’re talking about the schedule we have on page 61, where we’re going from $3.9 to $5.4. That, in part, is tooling as well as some other activities at Ham Beach. And again, there are some new tooling for new products that we have in our budget, and that’s what we’re forecasting.

We’ll see how the numbers come in. It is often the case that the intentions early in the year are not fully carried out during the course of the year, but that’s the number we have at the moment.

Your next question comes from the line of Brian Rosenhouse - Sidoti.

In regards to operating margins in NMHG I have 3.8% for this quarter which third quarter of ‘07 was a record low of 1.3%. I was just wondering if you wanted to talk about, basically, the snap back in operating margins.

Well, we had enhanced volume. We had good results in Europe, and, of course, that’s very helpful to us. That’s the flip side of the problems we have in the U.S., where we’re sourcing the products from Europe. There are so many factors that have come in to bear on the operating margins that they can swing in the short-term substantially. To me, the more important issues are the following. Number one, that we have the whole set of restructuring activities that I described in some detail are coming to pass that will reduce our Euro content, reduce our manufacturing footprint, and, therefore, our fixed-cost content which happens to be in pound-based currency. And a number of things that are really quite favorable from that point of view. In addition, we have continued efforts in procurement to find lower-cost sources in mainly in low-cost countries. And we have, importantly, a new electric truck line coming out, that will begin to affect results over the course of 2008 and in 2009. And it’s important to understand, I think, with regard to those new electric trucks, that we expect them not only to have significantly enhanced performance and capability levels in comparison to the existing products, but also give us a broader product line, especially in the European market, and to have significantly lower costs than we currently have today. We also have cost reduction efforts underway in our big truck facilities in Nijmegen in the Netherlands. And I would say that beyond the programs that have already been strictly identified in the narrow sense that those have, that we have value improvement programs that have very specific targets and very specific content that are being implemented that affect our various product lines. So all of those things start to begin to…

Regarding the coal division, do you see any plant shutdowns in 2008?

You mean power plant shutdowns. Well, we see a number of scheduled outages in that business. And we see more scheduled outages than have been typical in the past, and that’s part of a cycle. Major maintenance causes greater down time. In addition, there have been operating issues at some of the power plants or even the gas plant in North Dakota that have affected the coal that they need for their operations. And those are sort of unplanned outages, if you will, and those have been up already this year. In addition, in one of our operations, Mississippi Lignite Mining, last year, the outages, including the unplanned outages, were significantly greater than the forecast on which the mining production took place. The result was that as we built or mined at the level that the customer had indicated was appropriate, we actually ended up building inventory over the course of the year. And this year, we need to reflect in the operating schedule for that mine where there are very heavy fixed costs that are absorbed by additional volume will, of course, create additional expense with less volume. We’ve got to bring our production levels down in line with what we think the power plant is actually going to operate at. And our hope is that the power plant increasingly over the next couple of years will begin to operate more efficiently and have a much higher up time than it currently has. But it’s, to a large degree, a factor that is outside of our control. And we want to try to do everything we can to help our customer with the maintenance issues that they face in their operation and try to get the higher up time. But in the meantime, it’s just we have to re-adjust, and so we expect in that operation that there’ll be somewhat lower shipments of coal and that the on-going production level will be significantly below, so that we don’t actually increase inventories this year and actually reduce them to some degree as we look into 2008.

Your next question comes from the line of Frank Magdlen - The Robins Group.

Could you talk a little bit about your market share, where you think you are in North America, and how different is the European and Asian market compared to North America?

Well, our market share has been pretty constant in the Americas over the course of the last few years. We hope with our new product line up that we’ll be able to enhance our share position in coming years. And we certainly have programs that we hope will have those outcomes. North America is by a significant margin the highest share area for us. After that, we have lower shares in the European theater, and those have actually improved a little bit over the last year or so in many countries. Then we have our position in the Asia-Pacific area. We have some real strength in Australia and New Zealand, but our position in the Asian countries, as opposed to the Pacific countries, is not as strong as we’d like it to be. We’ve been increasing in Japan on a steady but slow basis from a lower level than many of our other competitors. But the biggest issue in Asia is that we have a small share in China. We have a manufacturing plant in China, and we are working diligently to expand our distribution operations and have product that is appropriate for that market. But it has been exploding at an extraordinary rate. And to some degree, that same trend exists in Eastern Europe, and although our share is higher there than it is in China, these very rapid growth markets are not markets where we have as established a distribution position. So that’s a challenge and an opportunity for us as we look forward, and we’re very much focused on that, but the fact is that as the market expands in areas of the world where we have lower share, our global share position does decrease, unless we are able to establish a distribution that is more comparable to what we have in the more developed parts of the world.

Are there any component shortages in the lift truck market at this time?

No, I think my recollection is that there were some issues, sort of, a year ago, but we haven’t seen fundamental component shortages in recent times. We have our continuous efforts to try to ensure that the quality of our components is what we expect and what our suppliers want to deliver to us, and that’s not always the case. And I think we can do a better job of making sure that the right components at the right quality, gets to the plants at the right moment. And we’re working very hard on that.– We’ve put in place a new supply chain management organization, which is more centralized than we have had in the past. It gives us greater focus and visibility on a global basis with our suppliers. And we’ve supported that new organization with a new supply chain management IT system, which we think is going to give us increasing benefits in that area over the next couple of years. So that’s a very important factor in driving the enhanced productivity and efficiency that we expect from our forklift truck plants around the world. We’ve simplified the designs considerably over the last two years, and our new product made them more manufacturable. But at the end of the day, an efficient plant really requires that the components all be there absolutely on time, and so that’s a major focus of effort, of course.

Is there any guidance on the tax rate for ‘08?

Again, we really don’t give guidance on the tax rates or on individual components of our earnings, no.

At this time, there are no further questions in the queue.

Obviously, much of what we look forward to in ‘08 is going to be highly dependent on the state of the economies, especially in the U.S. And I think at this point, it’s more difficult to predict what economic conditions are going to be in both consumer and capital goods markets than it has been for a very long period of time.

Thank you for joining us today. We appreciate your interest, and if you do have any additional questions, please call me at 440-449-9669. Thank you.