Good day ladies and gentlemen and welcome to the Q3 2010 NACCO Industries Earnings Conference Call. My name is Steve, and I will be your operator for today. At this time all participants are in listen-only mode. We will be conducting a question and answer session towards the end of today’s conference. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Christina Kmetko.

Thank you. Good morning, everyone, and thank you for joining us today. Yesterday, a press release was distributed outlining NACCO's results for the third quarter, ended September 30, 2010. If anyone has not received a copy of this earnings release or would like a copy of the Q, 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 the NACCO website at nacco.com. The conference call today will be hosted by Al Rankin, Chairman, President, and Chief Executive Officer of NACCO Industries. Also in attendance, representing NACCO Industries is Ken Schilling, Vice President and Controller. Al 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 the earnings release and in the Q. In addition, certain amounts discussed during this call are considered non-GAAP numbers. The non-GAAP reconciliations of these amounts are included in our 2010 third quarter earnings release, which is available on the website. I will now turn the call over to Mr. Al Rankin.

Good morning to all of you. As our press release indicated, NACCO had consolidated net income of 13 ½ million or $1.62 per share for the third quarter of 2010. On revenues it’s $665 million. That compared with a net loss for the third quarter of 2009 of 3.9 million or $0.47 per share on revenues of $528 million. The net loss for the third quarter of last year includes earnings from discontinued operations of $400,000 after tax as a result of the sale in 2009 of certain assets of North America Coals Red River Mining Company. In overview for the quarter, net income increased very significantly at NACCO Material Handling. Net income was down a bit at Hamilton Beach in Kitchen Collection, our consumer oriented business and at North America Coal Corporation net income was flat. At the NACCO level, there was a significantly larger loss. That loss was on – largely related to litigation expenses and about $4 million after tax, and an increase in employee related expenses, which results from the partial restoration of compensation benefits were produced in 2009. The company reported consolidated net income for the nine months $41.1 million or $4.93 a share, a net compared with a net loss in the previous year of $11.4 million or $1.38 a share. Turning to results at the individual subsidiary companies, NACCO Materials Handling Group reported net income of $3.8 million on revenues at 442 million in the third quarter, compared to a net loss of $22.4 million on revenues at 328 billion in the previous year. Operating profit was 8.2 million in comparison to an operating loss of 20.4 million in 2009. At third quarter of 2009, operating loss and the net loss include restructuring charges totally 6.9 million both before and after tax for…

(Operator Instructions). And your first question comes from the line of Schon Williams with BB&T Capital Markets. Schon Williams – BB&T Capital Markets: Hi. Good morning.

Good morning. Schon Williams – BB&T Capital Markets: Congratulations on the quarter. I’d like to maybe start off with material handling. It looks like, you know, shipments were obviously up significantly versus second quarter. And I think the last time we had talked we had, I guess the tone was kind of slow and steady pace in terms of ramping up the shipments. You know seasonally Q3 is expected to be down versus Q2, but again it looks like you were ramping up. Can you give me a little bit of color on what your thoughts are in terms of in Q4 and moving into next year? How quickly can you ramp up shipments in order to get them more in line with where your order rate is right now?

Well, we’re now moving our shipment levels up in the fourth quarter and we’ve been adding, as I indicated, we’ve been hiring additional employees, adding some shifts. Again, we’re doing this in a careful manner in order to ensure that our suppliers can match their ability to ramp up with our ability. Obviously, whether backlogs continue to increase will depend on the incoming flow orders and that’s very difficult to predict. There are a lot of timing issues, there are uncertainties as to how quickly the economy will continue to recover, but we feel very comfortable that the level that we’re moving to are levels we can sustain for a good period of time and ensure that the economy has time to fully catch up with us. Schon Williams – BB&T Capital Markets: Okay. And then I was wondering if you could give us a little bit of update on the new dealers that you’ve acquired? I mean, obviously there was announcements back in Q2 in the UK, there’s been announcements in Russia. Are you starting to see any benefits from that in our order rates, or is that going to take a little bit – is that going to take several quarters to play out?

It depends on which dealers you’re talking about; dealer in Russia have been in place for a while and there’s combination of orders for shipments and orders for stock that have come through. We feel that a number of those additional dealers have been performing very well. Eastern Europe has been a good area of strength for us. Some of the other dealers, you mentioned the UK, I think it’s going to take a somewhat longer period for them to come fully online, but the best way to think about it is that we certainly don’t expect to lose any ground in terms of bookings and shipments and overtime to – we expect these strengthened dealers to contribute substantially to our overall position in the UK, in particular, the dealers that converted to our Yale brand from another brand and we would certainly expect that many of those customers would come along with us and stay with their dealers. So I think that’s the case in a number of areas in different parts of the world and generally speaking, the new dealers we’ve been adding are increasing our volume and doing well. Schon Williams – BB&T Capital Markets: Okay. And then I guess you mentioned some change going on within a dealer network. Can you give us an update on I guess the progression of some of the dealer consolidations between the two brands? It seems like I see, you know, an announcement every couple of weeks now. Is the pace of the consolidation, is that accelerating? And maybe how do you see that playing out over the next six to 12 months?

I think it’s going to be a slow-steady process. I think the logic and economics lie behind that approach. But we have many very good Signal brand dealers and I think the overall objective is to ensure that we have strong dealers throughout our distribution network and that is one of the tools that we’re providing that not only allows us to have stronger dealers, but also to have more focused sales and marketing efforts in order to serve the customer base that’s out there more effectively. So I don’t anticipate that there’s going to be a large number of these taking place all at once. I think this is much more in the nature of a continual progression and focused around strong excellent dealers. Schon Williams – BB&T Capital Markets: Okay. And then lastly on material handling, it looks like you put through some pricing this summer. There’s possible some more additional pricing going through in Q4. Can you give me an order of magnitude or is it kind of – are we talking about kind of low single digits?

Oh yeah, you’re talking about very low single digits. These are not really large price increases. And we feel comfortable that we can move those into the marketplace and it’s worth keeping in mind that we have a lot of competitors who have a significant amount of Japanese content, Yen content in their trucks. We certainly have some, but we have competitors who have a considerable amount more. And as you can imagine with the Yen trading around $0.80 to the dollar, those components that are coming from Japan are very, very expensive. So I think may of the competitors are facing the same cost increases and some more because of their currency position. So we have been moving forward with the kinds of low single digit numbers that you suggest. Schon Williams – BB&T Capital Markets: Okay. And kind of moving onto Hamilton Beach, it looks like there’s some new product lines that are coming out within Hamilton Beach related to, I guess there’s some new coffee offerings. Can you quantify exactly how much material those will be going forward? Are those, you know, are those kind of at the fringes, they’re going to help, but these aren’t really needle movers? Or I guess just give me some order of magnitude as new product introduction.

You know, I’d rather answer the question, I think, by saying that it’s an industry that requires constant renewal of products. And while there are some new products that can carve out fundamentally new positions as our brew station did a number of years ago, and as we certainly hope that some of our single-serve coffee offerings will do in the future. Many of these new products are replacements for older products that are either lower cost or improved features in performance, or new to the consumer in a way that we think will be attractive to them and helpful to our customers in terms of getting sell through for them. So I don’t have at my fingertips what the percentage is of new products in – what the percentage is of products that we sell that have been developed in the last three or four years. But there’s a very high degree of renewal going on all the time. I think that sales volume increases in the near term will come more from promotional activities and fourth quarter placements that we have been selected for by our customers which we think will be advantageous for us in the fourth quarter. But I think increasingly over the course of the next year or so, you’ll see additional new products come out that will also be helpful in the sense of expanding the participation level and approach that we participate in. Schon Williams – BB&T Capital Markets: Okay. And then, you know, Hamilton Beach has made significant progress in terms of the operating process. You are significantly ahead of where you were kind of going into the downturn. Are you or the Board considering any strategic alternatives for that unit? I know at one point it was a possible spin off candidate. What’s your current thinking there?

Well, I think the best way to answer the question is to say we are always thinking about strategic alternatives. And we’ve certainly demonstrated that in the case of Hamilton Beach over time. I would simply say that from our perspective, perhaps the more important aspect is that we do feel overtime that the industry will continue to consolidate and that should provide opportunity for Hamilton Beach one way or the other. We keep our eyes open and we’ll continue – we’ve been doing that in the past and we’ll continue to do that in the future, but that’s as much as I would want to comment on. Schon Williams – BB&T Capital Markets: Okay. All right. I appreciate the update. And then just a couple questions on coal. When I talk to a number of coal producers, especially with Central Appalachia, there seems to be kind of a significant regulatory [inaudible] hanging over the industry right now after kind of following the Massey incidents. Have you seen any productivity issues because of increased regulation at any of your limerock minds?

You know, the sort answer to your question is not to my knowledge. Now, has it been an environment which is more difficult to deal with, I think probably the answer to that is yes. I would point you to a couple things. However, our safety record is truly extraordinary. We have – safety is number one, number two and number three for us. And we have a terrific record. We are way, way below the industry levels in terms of watch time, accidents and time loss. We have incentives that are tied to safety. So to the extent that regulators are concerned about mine safety, first of all we’re not in the underground business and second, in the service mining business. We have an exemplary record. You can’t continuously improve and we strive to do that. But our record is extremely good. You may remember that we had one mine that went for 15 years without a single loss-time accident. That’s sort of unheard of. So on the safety side, I think there’s no question that the individuals are doing the examinations at the mines, they’re under a lot of pressure to identify problems and show that they’re being efficient and capable in regulation. But we feel good about that. All right, in the environmental area, we have always also had an exemplary record. We have won many awards for the quality of the work that we do in terms of returning the land to its previous or better state to managing water, to doing all of the kinds of things that one has to do in the coal mining industry. So we have a very important and focused program on ensuring environmental compliance, being the best possible citizen in the states where we operate. And so again, I feel that there’s no loss of productivity that there’s certainly an intense focus on environmental compliance, but frankly we already had that in our own operations anyway. So I don’t think it’s a particularly pleasant environment right at the moment in terms of the way it’s operating. I think it’s more contentious in some ways than perhaps is beneficial. On the other hand, we think our record is outstanding and we are determined to keep it that way. And that’s how we’ll respond and I don’t think it’s having any significant impact on our ability to do an effective and productive job for our customers. Schon Williams – BB&T Capital Markets: Okay. And can you talk a little bit about the – it looks like you exited the investment with Great American Energy. Is that related to the coal drying technology and maybe talk about why you decided to sell off some of those assets?

Well really, it is related to a portion of the coal drying technology. We have kept a small investment in a portion of that activity which would allow us to participate in broad-based commercial sales, which have a different coal fine structures and the part that we have been – where we’ve recovered our investment. I think the best way to think about the reason for us having recovered our investment is that our customer who owns the coal-fired plant that we’ll use that dried coal from the load-out facilities and the rest that were represented by those investments, for their own reasons wanted to delay those and to restructure them in a way that made it not all that sensible for us to continue to participate, economics simply changed and we have a very constructive relationship with the power plant owner and they recognize that the basic underpinnings that shifted in a way that made sense for them to reimburse us or investment in that operation. So that’s what happened. Schon Williams – BB&T Capital Markets: Yeah, but you still had to take a loss on that investment. Is that right?

No, we were reimbursed for all of our money, but the accountant require us to capitalize a portion of that as interest and so there was really no loss from our point of view. It was the time value of money, nothing else. Schon Williams – BB&T Capital Markets: Okay. And then last question for me, can you just give us an update on where the litigation stands? It looks like costs continue to accelerate into the quarter. Can you give me any sense of when, you know, kind of time frame of how this is going to progress and maybe where the dollars go from here? Do we continue to see those dollars move up?

Well, I think we’ve been through a particularly intense time period in terms of the litigation and therefore the cost have been higher. I would expect that if we stay on the track that is the currently-planned track that this matter would go to trial in the early part of next year. And there will be, obviously, trial preparation expenses and so on; in large measure, a lot of the deposition work is completed by both sides so there’ll be some change in the costs there. But it’s very hard to predict exactly how much will be involved and I think you just have to look through to the end of the period when the litigation is over at this point. Schon Williams – BB&T Capital Markets: Okay. Thank you for the update.

Okay.

(Operator Instructions)

Okay. If there are no other questions, at this point I’d just close it up by saying that we feel that we had a good third quarter, that our operations are all increasingly normalized, that we’re operating really without the special programs that we put in place during the downturn at three of our business; NACCO Materials Handling Group. In 2011 all of those will be back in place and most of them are back in place in the fourth quarter of 2010. And we’re hopeful that the economy will continue to strengthen and that’s what we’re watching most carefully is to see exactly what the trajectory of the economy is as we move forward. Does it move up more quickly, or is it a slower upturn. So we’re watching that very carefully, and I thank you all for joining us this morning.

Ladies and gentlemen, that concludes today’s conference. There will be a replay of today’s call, posted shortly. You may access the replay for the next ten days by dialing 1-888-286-8010 and entering the passcode 30149859. Once again, that concludes today’s conference. Thank you for your participation. You may now disconnect.