UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

(Mark One)

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-9172

NACCO INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)		34-1505819 (I.R.S. Employer Identification No.)
5875 Landerbrook Drive, Cleveland, Ohio (Address of Principal Executive Offices)		44124-4069 (Zip Code)

Registrant’s telephone number, including area code: (440) 449-9600

Securities registered pursuant to Section 12(b) of the Act:

		Name of Each Exchange
Title of Each Class		on Which Registered
Class A Common Stock, Par Value $1.00 Per Share		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock, Par Value $1.00 Per Share
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

     YES o     NO þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

     YES o     NO þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

     YES þ     NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

     YES o     NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

     YES o     NO þ

Aggregate market value of Class A Common Stock and Class B Common Stock held by non-affiliates as of June 30, 2009 (the last business day of the registrant’s most recently completed second fiscal quarter): $164,849,612

Number of shares of Class A Common Stock outstanding at February 26, 2010: 6,730,656

Number of shares of Class B Common Stock outstanding at February 26, 2010: 1,598,653

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s Proxy Statement for its 2010 annual meeting of stockholders are incorporated herein by reference in Part III of this Form 10-K.

 

 

NACCO INDUSTRIES, INC.
TABLE OF CONTENTS

								PAGE
PART I.
				Item 1.		BUSINESS			1
				Item 1A.		RISK FACTORS			19
				Item 1B.		UNRESOLVED STAFF COMMENTS			27
				Item 2.		PROPERTIES			27
				Item 3.		LEGAL PROCEEDINGS			29
				Item 4.		RESERVED			29
				Item 4A.		EXECUTIVE OFFICERS OF THE REGISTRANT			30
PART II.
				Item 5.		MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES			34
				Item 6.		SELECTED FINANCIAL DATA			36
				Item 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			38
				Item 7A.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			80
				Item 8.		FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			81
				Item 9.		CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE			81
				Item 9A.		CONTROLS AND PROCEDURES			81
				Item 9B.		OTHER INFORMATION			81
PART III.
				Item 10.		DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE			81
				Item 11.		EXECUTIVE COMPENSATION			82
				Item 12.		SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS			82
				Item 13.		CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE			82
				Item 14.		PRINCIPAL ACCOUNTANT FEES AND SERVICES			82
PART IV.
				Item 15.		EXHIBITS AND FINANCIAL STATEMENT SCHEDULES			82
SIGNATURES									83
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA									F-1
EXHIBIT INDEX									X-1
EX-10.24
EX-10.25
EX-10.26
EX-10.41
EX-10.42
EX-10.86
EX-10.87
EX-10.88
EX-10.117
EX-10.118
EX-10.119
EX-21
EX-23.1
EX-24.1
EX-24.2
EX-24.3
EX-24.4
EX-24.5
EX-24.6
EX-24.7
EX-24.8
EX-24.9
EX-31.I.1
EX-31.I.2
EX-32
EX-99

PART I

Item 1. BUSINESS

General

NACCO Industries, Inc. (“NACCO” or the “Company”) is a holding company with the following principal businesses: lift trucks, small appliances, specialty retail and mining.

(a) NACCO Materials Handling Group. NACCO Materials Handling Group consists of the Company’s wholly owned subsidiary, NMHG Holding Co. (“NMHG”). 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. NMHG manages its operations as two reportable segments: wholesale manufacturing (“NMHG Wholesale”) and retail distribution (“NMHG Retail”).

(b) Hamilton Beach Brands. The Company’s wholly owned subsidiary, Hamilton Beach Brands, Inc. (“HBB”), is a leading designer, marketer and distributor of small electric household appliances, as well as commercial products for restaurants, bars and hotels.

(c) Kitchen Collection. The Company’s wholly owned subsidiary, the Kitchen Collection, Inc. (“KC”), 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.

(d) North American Coal. The Company’s wholly owned subsidiary, The North American Coal Corporation and its affiliated coal companies (collectively, “NACoal”), mine and market coal primarily as fuel for power generation and provide selected value-added mining services for other natural resources companies.

Additional information relating to financial and operating data on a segment basis (including NACCO and Other) and by geographic region is set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II of this Form 10-K and in Note 17 to the Consolidated Financial Statements contained in this Form 10-K.

NACCO was incorporated as a Delaware corporation in 1986 in connection with the formation of a holding company structure for a predecessor corporation organized in 1913. As of January 31, 2010, the Company and its subsidiaries had approximately 8,200 employees, including approximately 1,000 employees at the Company’s unconsolidated mines.

The Company makes its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports available, free of charge, through its website, http://www.nacco.com, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).

Significant Events

During the fourth quarter of 2009, NACoal completed the sale of certain assets of the Red River Mining Company (“Red River”). As a result of the sale, the Company recognized a gain of $35.8 million ($22.3 million after taxes of $13.5 million) in 2009. In addition, the Company received $41.4 million of cash proceeds related to the sale.

During the third quarter of 2009, NACoal received bonus payments for the lease of certain oil and gas mineral rights to a third party. The Company recorded a gain of $7.1 million in the third quarter of 2009 related to these payments.

During 2009, NMHG took various actions worldwide including reducing its number of employees, closing a facility and selling certain assets in response to the downturn in the economy. NMHG incurred charges of $9.3 million in 2009 related to these actions. NMHG continues to evaluate the appropriate size of its workforce worldwide to match market demand for lift trucks in response to the decline in economic conditions.

BUSINESS SEGMENT INFORMATION

A. NACCO Materials Handling Group

     1. NMHG Wholesale

General

NMHG Wholesale designs, engineers, manufactures and sells a comprehensive line of lift trucks and aftermarket parts marketed globally under the Hyster^® and Yale^® brand names.

Manufacturing and Assembly

NMHG Wholesale manufactures components, such as frames, masts and transmissions, and assembles products in the market of sale whenever practical to minimize freight cost and balance currency mix. In some instances, however, it utilizes one worldwide location to manufacture specific components or assemble specific products. Additionally, components and assembled lift trucks are exported to locations when it is advantageous to meet demand in certain markets. NMHG Wholesale operates 14 manufacturing and assembly facilities worldwide with five plants in the Americas, three in Europe and five in Asia-Pacific, including joint venture operations.

Sales of lift trucks represented approximately 73% of NMHG Wholesale’s annual revenues in 2009, 82% in 2008 and 82% in 2007. Service, rental and other revenues were approximately 8% in 2009, 5% in 2008 and 4% in 2007.

Aftermarket Parts

NMHG Wholesale offers a line of aftermarket parts to service its large installed base of lift trucks currently in use in the industry. NMHG Wholesale offers online technical reference databases specifying the required aftermarket parts to service lift trucks and an aftermarket parts ordering system. Aftermarket parts sales represented approximately 19% of NMHG Wholesale’s annual revenues in 2009 and 13% in 2008 and 14% in 2007.

NMHG Wholesale sells Hyster^®- and Yale^®-branded aftermarket parts to dealers for Hyster^® and Yale^® lift trucks. NMHG Wholesale also sells aftermarket parts under the UNISOURCE™, MULTIQUIP™ and PREMIER™ brands to Hyster^® and Yale^® dealers for the service of competitor lift trucks. NMHG has entered into a contractual relationship with a third-party, multi-brand, aftermarket parts wholesaler in the Americas, Europe and Asia-Pacific whereby orders from NMHG Wholesale dealers for parts for lift trucks are fulfilled by the third party who then pays NMHG Wholesale a commission.

Marketing

NMHG Wholesale’s marketing organization is structured in three regional divisions: the Americas; Europe, which includes the Middle East and Africa; and Asia-Pacific. In each region, certain marketing support functions for the Hyster^® and Yale^® brands are combined into a single shared services organization. These activities include sales and service training, information systems support, product launch coordination, specialized sales material development, help desks, order entry, marketing strategy and field service support. In addition, NMHG is currently aligning other specific aspects of its sales and marketing activities that have historically been brand specific, including dealer consulting and new lift truck unit and aftermarkets parts transaction support.

Patents, Trademarks and Licenses

NMHG Wholesale relies on a combination of trade secret protection, trademarks, copyrights, and patents to establish and protect its proprietary rights. These intellectual property rights may not have commercial value or may not be sufficiently broad to protect the aspect of NMHG Wholesale’s technology to which they relate or competitors may design around the patents. NMHG Wholesale is not materially dependent upon patents or patent protection; however, as materials handling equipment has become more technologically advanced, NMHG and its competitors have increasingly sought patent protection for inventions incorporated into their products. NMHG is the owner of the Hyster^® and Yale^® trademarks and believes these trademarks are material to its business.

Distribution Network

NMHG Wholesale distributes lift trucks and aftermarket parts through two channels: dealers and a National Accounts program.

     Dealers

          Independent Dealers

The majority of NMHG Wholesale’s dealers are independently owned and operated. In the Americas, Hyster^® had 57 independent dealers and Yale^® had 68 independent dealers as of December 31, 2009. In Europe, Hyster^® had 63 independent

dealers and Yale^® had 109 independent dealers as of December 31, 2009. In Asia-Pacific, Hyster^® had 12 independent dealers and Yale^® had 13 independent dealers as of December 31, 2009. During 2009, NMHG adjusted its policy to permit common ownership of dealers for its two brands in defined territories.

          Owned Dealers

NMHG has acquired, at times on an interim basis, certain independent Hyster^®, Yale^® and competitor dealers and rental companies to strengthen Hyster^®’s and Yale^®’s presence in select territories. See “2. NMHG Retail” for a description of NMHG’s owned dealers.

     National Accounts

NMHG Wholesale operates a National Accounts program for both Hyster^® and Yale^®. The National Accounts program focuses on large customers with centralized purchasing and geographically dispersed operations in multiple dealer territories. The National Accounts program accounted for 18%, 15% and 14% of new lift truck unit volume in 2009, 2008 and 2007, respectively. The dealer network described above supports the National Accounts program by providing aftermarket parts and service on a local basis. Dealers receive a commission for the support they provide in connection with National Accounts sales and for the preparation and delivery of lift trucks to customer locations. In addition to selling new lift trucks, the National Accounts program markets services, including full maintenance leases and total fleet management.

Customers

NMHG Wholesale’s customer base is diverse and fragmented, including, among others, light and heavy manufacturers, trucking and automotive companies, rental companies, building materials and paper suppliers, lumber, metal products, warehouses, retailers, food distributors, container handling companies and domestic and foreign governmental agencies.

Financing of Sales

NMHG Wholesale is engaged in a joint venture with General Electric Capital Corporation (“GECC”) to provide dealer and customer financing of new lift trucks in the United States. NMHG owns 20% of the joint venture entity, NMHG Financial Services, Inc. (“NFS”), and receives fees and remarketing profits under a joint venture agreement. This agreement expires on December 31, 2013. NMHG accounts for its ownership of NFS using the equity method of accounting.

In addition, NMHG Wholesale has entered into an operating agreement with GECC under which GECC provides leasing and financing services to Hyster^® and Yale^® dealers and their customers outside of the United States. GECC pays NMHG a referral fee once certain financial thresholds are met. This agreement expires on December 31, 2013.

Under the joint venture agreement with NFS and the operating agreement with GECC, NMHG’s dealers and certain customers are extended credit for the purchase of lift trucks to be placed in the dealer’s floor plan inventory or the financing of lift trucks that are sold or leased to customers. For some of these arrangements, NMHG provides recourse or repurchase obligations to NFS or to GECC. In substantially all of these transactions, a perfected security interest is maintained in the lift trucks financed, so that in the event of a default, NMHG has the ability to foreclose on the leased property and sell it through the Hyster^® or Yale^® dealer network. Furthermore, NMHG has established reserves for exposures under these agreements when required. In addition, NMHG amended its agreement with GECC during 2008 to limit its exposure to losses at certain eligible dealers. Under this amended agreement, losses related to guarantees for these certain eligible dealers are limited to 7.5% of their original loan balance. See Notes 13 and 20 to the Consolidated Financial Statements in this Form 10-K for further discussion.

Backlog

As of December 31, 2009, NMHG Wholesale’s backlog of unfilled orders placed with its manufacturing and assembly operations for new lift trucks was approximately 13,200 units, or approximately $307 million, of which substantially all is expected to be filled during fiscal 2010. This compares to the backlog as of December 31, 2008 of approximately 14,900 units, or approximately $356 million. Backlog represents unfilled lift truck orders placed with NMHG Wholesale’s manufacturing and assembly facilities from dealers, National Accounts customers and contracts with the U.S. government.

Key Suppliers and Raw Materials

At times, NMHG Wholesale has experienced significant increases in its material costs, primarily as a result of global increases in industrial metals including steel, lead and copper and other commodity products including rubber, due to increased demand and limited supply. While NMHG Wholesale attempts to pass these increased costs along to its customers in the form of higher prices for its products, it may not be able to fully offset the increased costs of industrial metals and other commodities, due to overall market conditions and the lag time involved in implementing price increases for its products. NMHG Wholesale believes there are comparable alternatives available for all suppliers.

Competition

NMHG is one of the leaders in the lift truck industry with respect to market share in the Americas and worldwide. Competition in the lift truck industry is intense and is based primarily on strength and quality of dealers, brand loyalty, customer service, new lift truck sales prices, availability of products and aftermarket parts, comprehensive product line offering, product performance, product quality and features and the cost of ownership over the life of the lift truck. NMHG competes with several global full-line manufacturers that operate in all major markets.

The lift truck industry also competes with alternative methods of materials handling, including conveyor systems and automated guided vehicle systems.

NMHG’s aftermarket parts offerings compete with parts manufactured by other lift truck manufacturers as well as companies that focus solely on the sale of generic parts.

     2. NMHG Retail

General

From time to time, NMHG, through NMHG Retail, has acquired, at least on an interim basis, certain independent Hyster^®, Yale^® and competitor dealers and rental companies to strengthen Hyster^®’s or Yale^®’s presence in select territories. NMHG’s long-term strategy is to identify strategic buyers for owned dealers that represent “best-in-class” dealers to support the Hyster^® and Yale^® brands.

As of December 31, 2009, NMHG Retail owned one dealer operation in each of Europe, Australia and Singapore.

Company Operations

An NMHG Retail dealership is authorized to sell and rent either Hyster^® or Yale^® brand materials handling equipment. These dealerships will typically also sell non-competing allied lines of equipment from other manufacturers pursuant to dealer agreements. Allied equipment includes such items as sweepers, aerial work platforms, personnel carts, rough terrain forklifts and other equipment as well as racking and shelving. The number and type of products available will vary from dealership to dealership. In addition to the outright sale of new and used equipment, dealerships provide equipment for lease and for short- or long-term rental. Dealerships also derive revenue from the sale of parts and service related to equipment sold, leased and/or serviced by them. Service is performed both in-shop and at the customer’s site.

NMHG Retail dealerships are granted a primary geographic territory in which they operate by NMHG Wholesale. NMHG Retail operations are conducted at facilities located in major cities within NMHG Retail’s assigned area of operations.

Competition

The materials handling equipment sales and rental industry is highly dispersed and competitive. NMHG Retail’s competitors include dealers owned by original equipment manufacturers, original equipment manufacturer direct sales efforts, independently owned competitive dealerships and lift truck rental outlets, independent parts operations, independent service shops and, to a lesser extent, independent Hyster^® or Yale^® dealers.

The lift truck industry also competes with alternative methods of materials handling, including conveyor systems and automated guided vehicle systems.

Customers

NMHG Retail’s customer base is highly diversified and includes large and small businesses in a substantial number of manufacturing and service industries. NMHG Retail’s customer base varies widely by facility and is determined by several factors, including the equipment mix and marketing focus of the particular facility and the business composition of the local economy.

Financing of Sales

NMHG Retail dealerships have a preferred relationship with GECC. NMHG Retail dealerships may obtain wholesale and retail financing for the sale and leasing of equipment through GECC. This affords these dealerships a wide variety of financial products at competitive rates. Financing through GECC is further described in “1. NMHG Wholesale — Financing of Sales” above.

     3. NMHG — General

Cyclical Nature of Lift Truck Business

NMHG’s lift truck business historically has been cyclical. Fluctuations in the rate of orders for lift trucks reflect the capital investment decisions of NMHG’s customers, which depend to a certain extent on the general level of economic activity in the various industries that the lift truck customers serve. During economic downturns, customers tend to delay new lift truck purchases.

Research and Development

NMHG’s research and development capability is organized around four major engineering centers, all coordinated on a global basis by NMHG’s global executive administrative center. Comparable products are designed for each brand concurrently and generally each center is focused on the global requirements for a single product line. NMHG’s counterbalanced development center, which has global design responsibility for several classes of lift trucks for a highly diverse customer base such as industrial, warehouse, transportation and food processing applications, is located in Fairview, Oregon. NMHG’s big truck development center is located in Nijmegen, The Netherlands, adjacent to a dedicated global big truck assembly facility. Big trucks are primarily used in handling shipping containers and in specialized heavy lifting applications. Warehouse trucks, which are primarily used in distribution applications, are designed based on regional differences in stacking and storage practices. NMHG designs warehouse equipment for sale in the Americas market in Greenville, North Carolina, adjacent to the Americas assembly facility for warehouse equipment. NMHG designs warehouse equipment for the European market in Masate, Italy adjacent to its assembly facilities for warehouse equipment. In addition, NMHG has an engineering office in India to support its global drafting and design activities for its four major engineering centers.

NMHG’s engineering centers utilize a three-dimensional CAD/CAM system and are connected with one another, with all of NMHG’s manufacturing and assembly facilities and with some suppliers. This allows for collaboration in technical engineering designs and collaboration with suppliers. Additionally, NMHG solicits customer feedback throughout the design phase to improve product development efforts. NMHG invested $43.6 million, $55.2 million and $55.5 million on product design and development activities in 2009, 2008 and 2007, respectively.

Sumitomo-NACCO Joint Venture

NMHG has a 50% ownership interest in Sumitomo-NACCO Materials Handling Group, Ltd. (“SN”), a limited liability company that was formed in 1970 to manufacture and distribute lift trucks in Japan. Sumitomo Heavy Industries, Ltd. owns the remaining 50% interest in SN. Each shareholder of SN is entitled to appoint directors representing 50% of the vote of SN’s board of directors. All matters related to policies and programs of operation, manufacturing and sales activities require mutual agreement between NMHG and Sumitomo Heavy Industries, Ltd. prior to a vote of SN’s board of directors. As a result, NMHG accounts for its ownership in SN using the equity method of accounting. NMHG purchases Hyster^®- and Yale^®-branded lift trucks and related components and aftermarket parts from SN under normal trade terms for sale outside of Japan. NMHG also contracts with SN for engineering design services on a cost plus basis and charges SN for technology used by SN but developed by NMHG.

Employees

As of January 31, 2010, NMHG had approximately 4,500 employees, approximately 4,300 of whom were employed by the wholesale operations and approximately 200 of whom were employed by the retail operations. A majority of the employees in the Danville, Illinois parts depot operations (approximately 90 employees) are unionized. NMHG’s contract with the Danville union expires in June 2012. Employees at the facilities in Berea, Kentucky; Sulligent, Alabama; and Greenville, North Carolina are not represented by unions. In Brazil, all employees are unionized. NMHG’s contract with the Brazilian union expires annually in October, at which time salaries are negotiated for the upcoming year. In Mexico, shop employees are unionized.

In Europe, some employees in the Craigavon, Northern Ireland and Masate, Italy facilities are unionized. Employees in the Nijmegen, The Netherlands facility are not represented by unions, but the employees have organized a works council, as required by Dutch law, which performs a consultative role on employment matters. All of the European employees are part of works councils that perform a consultative role on business and employment matters.

In Asia-Pacific, three locations have certified industrial agreements for hourly employees and unions for their employees.

NMHG believes its current labor relations with both union and non-union employees are generally satisfactory. However, there can be no assurances that NMHG will be able to successfully renegotiate its union contracts without work stoppages or on acceptable terms. A prolonged work stoppage at a unionized facility could have a material adverse effect on NMHG’s business and results of operations.

Environmental Matters

NMHG’s manufacturing operations are subject to laws and regulations relating to the protection of the environment, including those governing the management and disposal of hazardous substances. NMHG Retail’s operations are particularly affected by laws and regulations relating to the disposal of cleaning solvents and wastewater and the use of and disposal of petroleum products from underground and above-ground storage tanks. NMHG’s policies stress compliance, and NMHG believes it is currently in substantial compliance with existing environmental laws. If NMHG fails to comply with these laws or its environmental permits, then it could incur substantial costs, including cleanup costs, fines and civil and criminal sanctions. In addition, future changes to environmental laws could require NMHG to incur significant additional expense or restrict operations. Based on current information, NMHG does not expect compliance with environmental requirements to have a material adverse effect on NMHG’s financial condition or results of operations.

In addition, NMHG’s products may be subject to laws and regulations relating to the protection of the environment, including those governing vehicle exhaust. Regulatory agencies in the United States and Europe have issued or proposed various regulations and directives designed to reduce emissions from spark-ignited engines and diesel engines used in off-road vehicles, such as industrial lift trucks. These regulations require NMHG and other lift truck manufacturers to incur costs to modify designs and manufacturing processes and to perform additional testing and reporting. While there can be no assurance, NMHG believes the impact of the additional expenditures to comply with these requirements will not have a material adverse effect on its business.

NMHG is investigating or remediating historical contamination at some current and former sites caused by its operations or those of businesses it acquired. NMHG has also been named as a potentially responsible party for cleanup costs under the so-called Superfund law at several third-party sites where NMHG (or its predecessors) disposed of wastes in the past. Under the Superfund law and often under similar state laws, the entire cost of cleanup can be imposed on any one of the statutorily liable parties, without regard to fault. While NMHG is not currently aware that any material outstanding claims or obligations exist with regard to these sites, the discovery of additional contamination at these or other sites could result in significant cleanup costs that could have a material adverse effect on NMHG’s financial conditions and results of operations.

In connection with any acquisition made by NMHG, NMHG could, under some circumstances, be held financially liable for or suffer other adverse effects due to environmental violations or contamination caused by prior owners of businesses NMHG has acquired. In addition, under some of the agreements through which NMHG has sold businesses or assets, NMHG has retained responsibility for certain contingent environmental liabilities arising from pre-closing operations. These liabilities may not arise, if at all, until years later.

Government and Trade Regulations

In the past, NMHG’s business has been affected by trade disputes between the United States and Europe. In the future, to the extent NMHG is affected by trade disputes and increased tariffs are levied on its goods, its results of operations may be materially adversely affected.

B. Hamilton Beach Brands

General

HBB is a leading designer, marketer and distributor of small electric household appliances, as well as commercial products for restaurants, bars and hotels. HBB’s products are marketed primarily to retail merchants and wholesale distributors.

Sales and Marketing

HBB designs, markets and distributes a wide range of small electric household appliances, including blenders, can openers, coffeemakers, food processors, indoor grills, irons, mixers, slow cookers, toasters and toaster ovens. HBB also markets a line of air purifiers and odor eliminators. In addition, HBB designs, markets and distributes commercial products for restaurants, bars and hotels. HBB generally markets its “better” and “best” segments under the Hamilton Beach^® brand and uses the Proctor Silex^® brand for the “good” segment and its opening price point products. HBB markets premium products under the Hamilton Beach^® eclectrics^® brand. HBB also markets air purifiers, allergen reducers and home odor elimination products under the TrueAir^® brand.

Furthermore, HBB supplies Wal-Mart with certain GE-brand kitchen electric and garment-care appliances under Wal-Mart’s license agreement with General Electric Company. HBB also supplies Target with certain Michael Graves-brand kitchen appliances under Target’s store-wide Michael Graves line. In addition, HBB supplies Kohl’s with certain Food Network-branded kitchen appliances. HBB has licensed the Melitta^® brand from Melitta, North America, Inc., for a unique line of coffee and hot beverage appliances. In Canada, HBB supplies Canadian Tire with small kitchen appliances under the Lancaster^® brand.

HBB markets its retail products primarily in North America, but also sells products in Latin America. HBB commercial products are sold worldwide. Retail sales are generated predominantly by a network of inside sales employees to mass merchandisers, national department stores, variety store chains, drug store chains, specialty home retailers and other retail outlets. Wal-Mart accounted for approximately 38%, 40% and 37% of HBB’s revenues in 2009, 2008 and 2007, respectively. HBB’s five largest customers accounted for approximately 61%, 60% and 58% of HBB’s revenues for the years ended

December 31, 2009, 2008 and 2007, respectively. A loss of any key customer could result in significant decreases in HBB’s revenue and profitability.

Sales promotion activities are primarily focused on cooperative advertising. In 2009, HBB also promoted certain of its innovative products through the use of television, web and print advertising. In 2009, HBB licensed certain of its trademarks to various licensees for use with cookware, kitchen tools and gadgets and electronic products for the kitchen.

Because of the seasonal nature of the markets for small electric appliances, HBB’s management believes backlog is not a meaningful indicator of performance and is not a significant indicator of annual sales. Backlog represents customer orders, which may be cancelled at any time prior to shipment. Backlog for HBB was approximately $11.7 million at December 31, 2009 and 2008.

HBB’s warranty program to the consumer consists generally of a limited warranty lasting for varying periods of up to three years for electric appliances, with the majority of products having a warranty of one year or less. Under its warranty program, HBB may repair or replace, at its option, those products found to contain manufacturing defects.

Revenues and operating profit for HBB are traditionally greater in the second half of the year as sales of small electric appliances to retailers and consumers increase significantly with the fall holiday selling season. Because of the seasonality of purchases of its products, HBB generally uses a substantial amount of cash or short-term debt to finance inventories and accounts receivable in anticipation of the fall holiday selling season.

Patents, Trademarks, Copyrights and Licenses

HBB holds patents and trademarks registered in the United States and foreign countries for various products. HBB believes its business is not dependent upon any individual patent, trademark, copyright or license, but that the Hamilton Beach^® and Proctor Silex^® trademarks are material to its business.

Product Design and Development

HBB spent $6.8 million in 2009, $7.3 million in 2008 and $7.1 million in 2007 on product design and development activities.

Key Suppliers and Raw Material

The majority of HBB’s products are supplied to its specifications by third-party suppliers located in China. HBB does not maintain long-term purchase contracts with suppliers and operates mainly on a purchase order basis. HBB generally negotiates purchase orders with its foreign suppliers in U.S. dollars. The weakening of the U.S. dollar against local currencies could result in certain manufacturers increasing the U.S. dollar prices for future product purchases.

During 2009, HBB purchased approximately 98% of its finished products from suppliers in China. HBB does not currently depend on any single supplier. HBB believes that the loss of any one supplier would not have a long-term material adverse effect on its business as there are adequate third-party supplier choices available that can meet HBB’s production and quality requirements. However, the loss of a supplier could, in the short term, adversely affect HBB’s business until alternative supply arrangements are secured.

The principal raw materials used by HBB’s third-party suppliers to manufacture its products are plastic, glass, steel, copper, aluminum and packaging materials. HBB believes that adequate quantities of raw materials are available from various suppliers.

Competition

The small electric household appliance industry does not have onerous entry barriers. As a result, HBB competes with many small manufacturers and distributors of housewares products. Based on publicly available information about the industry, HBB believes it is one of the largest full-line distributors and marketers of small electric household appliances in North America based on key product categories.

As retailers generally purchase a limited selection of small electric appliances, HBB competes with other suppliers for retail shelf space. HBB conducts consumer advertising for the Hamilton Beach^® and Proctor Silex^® brands. HBB believes the principal areas of competition with respect to its products are product design and innovation, quality, price, product features, merchandising, promotion and warranty.

Government Regulation

HBB is subject to numerous federal and state health, safety and environmental regulations. HBB’s management believes the impact of expenditures to comply with such laws will not have a material adverse effect on HBB.

As a marketer and distributor of consumer products, HBB is subject to the Consumer Products Safety Act and the Federal Hazardous Substances Act, which empower the U.S. Consumer Product Safety Commission (“CPSC”) to seek to exclude products that are found to be unsafe or hazardous from the market. Under certain circumstances, the CPSC could require HBB to repair, replace or refund the purchase price of one or more of HBB’s products, or HBB may voluntarily do so.

Throughout the world, electrical appliances are subject to various mandatory and voluntary standards, including requirements in some jurisdictions that products be listed by Underwriters’ Laboratories, Inc. (“UL”) or other similar recognized laboratories. HBB also uses the ETL SEMKO division of Intertek for certification and testing of compliance with UL standards, as well as other nation- and industry-specific standards. HBB endeavors to have its products designed to meet the certification requirements of, and to be certified in, each of the jurisdictions in which they are sold.

Employees

As of January 31, 2010, HBB’s work force consisted of approximately 500 employees, most of whom are not represented by unions. In Canada, as of January 31, 2010, 16 hourly employees at HBB’s Picton, Ontario distribution facility were unionized. These employees are represented by an employee association which performs a consultative role on employment matters. None of HBB’s U.S. employees are unionized. HBB believes their current labor relations with both union and non-union employees are satisfactory.

C. Kitchen Collection

General

KC 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.

Sales and Marketing

KC operated 296 retail stores as of December 31, 2009, including nine seasonal stores kept open in 2009 after the 2008 holiday selling season. KC stores are located primarily in factory outlet malls and feature merchandise of highly recognizable name-brand manufacturers, including Hamilton Beach^® and Proctor Silex^®. Le Gourmet Chef^® stores are located primarily in outlet and traditional malls throughout the United States and feature gourmet foods and home entertainment products, as well as brand name electric and non-electric kitchen items.

Seasonality

Revenues and operating profit for KC are traditionally greater in the second half of the year as sales to consumers increase significantly with the fall holiday selling season. Because of the seasonality of purchases of its products, KC incurs substantial short-term debt to finance inventories in anticipation of the fall holiday selling season.

Product Design and Development

KC, a retailer, has no expenditures for product design and development activities.

Product Sourcing and Distribution

KC purchases all inventory centrally, which allows KC to take advantage of volume purchase discounts and monitor controls over inventory and product mix. KC purchases its inventory from approximately 200 suppliers, one of which represented over 10% of purchases during the year ended December 31, 2009. KC does not currently depend on any single supplier. KC believes that the loss of any one supplier would not have a long-term material adverse effect on its business as there are adequate third-party supplier choices available that can meet KC’s requirements. However, the loss of a supplier could, in the short term, adversely affect KC’s business until alternative supply arrangements are secured.

KC currently maintains its inventory for distribution to its stores at two distribution centers located near its corporate headquarters in Chillicothe, Ohio.

Since the outlet mall channel of the retail industry is approaching maturity, KC continues to explore alternate areas of growth and diversification. For the past several years, KC has been testing alternative store formats both within the outlet mall industry and in the more traditional retail environments, including the traditional mall store format. Because not all of these formats have met KC’s rigorous financial performance standards, KC continues to explore alternate channels of distribution, including distribution through the internet. In addition, KC is exploring alternatives for Le Gourmet Chef^® stores in outlet malls, traditional malls and distribution through the internet.

Competition

KC competes against a diverse group of retailers ranging from specialty stores to department stores and discounters. The retail environment continues to be extremely competitive. Widespread Chinese sourcing of products allows many retailers to offer value-priced kitchen products.

KC believes there is growth potential in kitchenware retailing, but only through offering unique, high quality products at prices affordable to most consumers. While a number of very low-end and very high-end kitchenware retailers participate in the marketplace, there is still an opportunity for stores offering mid-priced, high-quality kitchenware.

Patents, Trademarks, Copyrights and Licenses

KC holds trademarks registered in the United States for the Kitchen Collection^® and Le Gourmet Chef^® store names. KC believes that the Kitchen Collection^® and Le Gourmet Chef^® store name trademarks are material to its business.

Employees

As of January 31, 2010, KC’s work force consisted of approximately 1,700 employees. None of KC’s employees are unionized. KC believes their current labor relations with employees are satisfactory.

D. North American Coal

General

NACoal mines and markets lignite and sub-bituminous coal primarily as fuel for power generation and provides selected value-added mining services for other natural resources companies. Lignite and sub-bituminous coal are or will be surface mined in Louisiana, Mississippi, North Dakota and Texas. NACoal has two consolidated mining operations: San Miguel Lignite Mine (“San Miguel”) and Mississippi Lignite Mining Company (“MLMC”). NACoal has six unconsolidated mining operations: The Coteau Properties Company (“Coteau”), The Falkirk Mining Company (“Falkirk”), The Sabine Mining Company (“Sabine”), (collectively, the “project mining subsidiaries”), Demery Resources Company, LLC (“Demery”), Caddo Creek Resources Company, LLC (“Caddo Creek”) and Camino Real Fuels, LLC (“Camino Real”). Demery, Caddo Creek and Camino Real are developing plans to build mines and therefore do not currently mine or deliver coal. NACoal also provides dragline mining services for independently owned limerock quarries in Florida. During 2009, NACoal completed the sale of certain assets of Red River.

The contracts with the project mining subsidiaries’ utility customers allow each mine to sell lignite coal at a price based on actual cost plus an agreed pre-tax profit per ton or cost plus a management fee.

At December 31, 2009, NACoal’s operating mines consisted both of mines where the reserves were acquired and developed by NACoal, as well as mines where reserves were owned by the customers of the mines. It is currently contemplated that the reported reserves will be mined within the term of the leases for each of the mines NACoal operates and controls the reserves. In the future, if any of the leases are projected to expire before mining operations can commence, it is currently expected that each such lease would be amended to extend the term or new leases would be negotiated. Under these terms, NACoal expects coal mined pursuant to these leases will be available to meet its production requirements.

Because each coal mining operation has a contract to provide coal to its customer, a significant portion of NACoal’s revenue is derived from a single source, which exceeds 10% of NACoal’s revenues. The loss of any of these customers would be material to NACoal.

Sales, Marketing and Operations

The principal coal customers of NACoal are electric utilities, an independent power provider and a synfuels plant. The distribution of coal sales, including sales of the unconsolidated mines, in the last five years has been as follows:

		Distribution
		Electric
		Utilities/
		Independent				Synfuels
		Power Provider				Plant
2009			82	%			18	%
2008			82	%			18	%
2007			82	%			18	%
2006			82	%			18	%
2005			82	%			18	%

The total coal production by mine (in millions of tons) for the last three years and the weighted average prices per ton delivered for the last three years are as follows:

		2009				2008				2007
Unconsolidated Mines
Freedom			15.0				14.6				15.0
Falkirk			8.1				7.5				7.8
Sabine			3.8				4.1				4.2
Consolidated Mining Operations
San Miguel			3.2				3.1				2.9
Red Hills			3.4				2.8				3.6
Total continuing tons produced			33.5				32.1				33.5
Oxbow (discontinued operations)			0.7				0.6				0.5
Price per ton delivered		$	16.42			$	15.22			$	13.21

The contracts under which certain of the unconsolidated mines were organized provide that, under certain conditions of default, the customer(s) involved may elect to acquire the assets (subject to the liabilities) or the capital stock of the subsidiary for an amount effectively equal to book value. NACoal does not know of any conditions of default that currently exist. In one case, the customer may elect to acquire the stock of the subsidiary upon a specified period of notice without reference to default, in exchange for certain payments on coal mined thereafter. NACoal does not know of any current intention of any customer to acquire the stock of a subsidiary or terminate a contract for convenience.

The location, mine type, reserve data, coal quality characteristics, customer, sales tonnage and contract expiration date for the mines operated by NACoal in 2009 were as follows:

LIGNITE COAL MINING OPERATIONS ON AN “AS RECEIVED” BASIS

						2009																								2008
						Proven and Probable Reserves (a)(b)
						Committed Under												Tons				Owned				Leased				Total Committed				Tons
						Contract				Uncommitted				Total				Delivered				Reserves				Reserves				and Uncommitted				Delivered				Contract
Mine/Reserve		Type of Mine				(Millions of Tons)												(Millions)				(%)				(%)				(Millions of Tons)				(Millions)				Expires
Unconsolidated Mining Operations
Freedom Mine (c)		Surface Lignite					573.6				—				573.6				15.1				2	%			98	%			579.9				14.7				2017	(d)
Falkirk Mine (c)		Surface Lignite					469.9				—				469.9				8.1				1	%			99	%			473.8				7.5				2045
Sabine Mine (c)		Surface Lignite					(e	)			(e	)			(e	)			3.3				(e	)			(e	)			(e	)			4.1				2035
Five Forks Mine (c)		Surface Lignite					(e	)			(e	)			(e	)			(g	)			(e	)			(e	)			(e	)			(g	)			2030
Marshall Mine (c)		Surface Lignite					(e	)			(e	)			(e	)			(g	)			(e	)			(e	)			(e	)			(g	)			2043
Eagle Pass Mine (c)		Surface Sub-bituminous					(e	)			(e	)			(e	)			(g	)			(e	)			(e	)			(e	)			(g	)			2012	(h)
Consolidated Mining Operations
San Miguel Lignite Mine (c)		Surface Lignite					(e	)			(e	)			(e	)			3.2				(e	)			(e	)			(e	)			3.1				2010
Red Hills Mine		Surface Lignite					132.3				99.4				231.7				3.7				28	%			72	%			249.9				3.0				2032
Total Developed							1,175.8				99.4				1,275.2				33.4												1,303.6				32.4
Undeveloped Mining Operations
North Dakota			—				—				595.7				595.7				—				0	%			100	%			578.9				—				—
Texas			—				—				165.1				165.1				—				52	%			48	%			176.9				—				—
Eastern (f)			—				—				28.6				28.6				—				100	%			0	%			28.3				—				—
Mississippi			—				—				142.2				142.2				—				0	%			100	%			142.2				—				—
Total Undeveloped							—				931.6				931.6																926.3
Total Developed/Undeveloped							1,175.8				1,031.0				2,206.8																2,229.9

						Coal Formation or				Average Seam				Average				Average Coal Quality (As received)
Mine/Reserve		Type of Mine				Coal Seam(s)				Thickness (feet)				Depth (feet)				BTUs/lb				Sulfur (%)				Ash (%)				Moisture (%)
Unconsolidated Mining Operations
Freedom Mine (c)		Surface Lignite				Beulah-Zap Seams					18				130				6,700				0.9	%			9	%			36	%
Falkirk Mine (c)		Surface Lignite				Hagel A&B, Tavis Creek Seams					8				60				6,200				0.6	%			11	%			38	%
Sabine Mine (c)		Surface Lignite					(e	)			(e	)			(e	)			(e	)			(e	)			(e	)			(e	)
Five Forks Mine (c)		Surface Lignite					(e	)			(e	)			(e	)			(e	)			(e	)			(e	)			(e	)
Marshall Mine (c)		Surface Lignite					(e	)			(e	)			(e	)			(e	)			(e	)			(e	)			(e	)
Eagle Pass Mine (c)		Surface Lignite					(e	)			(e	)			(e	)			(e	)			(e	)			(e	)			(e	)
Consolidated Mining Operations
San Miguel Lignite Mine (c)		Surface Lignite					(e	)			(e	)			(e	)			(e	)			(e	)			(e	)			(e	)
Red Hills Mine		Surface Lignite				C, D, E, F, G, H Seams					4				150				5,200				0.6	%			14	%			43	%
Undeveloped Mining Operations
North Dakota			—			Fort Union Formation					13				130				6,500				0.8	%			8	%			38	%
Texas			—			Wilcox Formation					8				120				6,800				1.0	%			16	%			30	%
Eastern (f)			—			Freeport & Kittanning					4				400				12,070				3.3	%			12	%			3	%
Mississippi			—			Wilcox Formation					12				130				5,200				0.6	%			13	%			44	%

Unconsolidated Mines

Freedom Mine — The Coteau Properties Company

The Freedom Mine, operated by Coteau, is located approximately 90 miles northwest of Bismarck, North Dakota. The main entrance to the Freedom Mine is accessed by means of a paved road and is located on County Road 15. Coteau holds 388 leases granting the right to mine approximately 40,148 acres of coal interests and the right to utilize approximately 27,404 acres of surface interests. In addition, Coteau owns in fee 29,933 acres of surface interests and 4,345 acres of coal interests. Substantially all of the leases held by Coteau were acquired in the early 1970s with terms totaling 40 years. Many of these leases were amended or replaced with new leases which extend the lease terms for a period sufficient to meet Coteau’s contractual production requirements.

The Freedom Mine generally produces approximately 15 million tons of lignite coal annually. The mine started delivering coal in 1983. All production from the mine is sold to Dakota Coal Company, a wholly owned subsidiary of Basin Electric Power Cooperative. Dakota Coal Company then sells the coal to Great Plains Synfuels Plant, Antelope Valley Station and Leland Olds Station, all of which are affiliates of Basin Electric Power Cooperative.

The reserves are located in Mercer County, North Dakota, starting approximately two miles north of Beulah, North Dakota. The center of the basin is located near the city of Williston, North Dakota, approximately 100 miles northwest of the Freedom Mine. The economically mineable coal in the reserve occurs in the Sentinel Butte Formation, and is overlain by the Coleharbor Formation. The Coleharbor Formation unconformably overlies the Sentinel Butte. It includes all of the unconsolidated sediments resulting from deposition during glacial and interglacial periods. Lithologic types include gravel, sand, silt, clay and till. The modified glacial channels are in-filled with gravels, sands, silts and clays overlain by till. The coarser gravel and sand beds are generally limited to near the bottom of the channel fill. The general stratigraphic sequence in the upland portions of the reserve area consists of till, silty sands and clayey silts.

Falkirk Mine — The Falkirk Mining Company

The Falkirk Mine, operated by Falkirk, is located approximately 50 miles north of Bismarck, North Dakota on a paved access road off U.S. Highway 83. Falkirk holds 334 leases granting the right to mine approximately 52,780 acres of coal interests and the right to utilize approximately 34,640 acres of surface interests. In addition, Falkirk owns in fee 31,466 acres of surface interests and 897 acres of coal interests. Substantially all of the leases held by Falkirk were acquired in the early 1970s with terms totaling 40 years, many of which can be or have been further extended by the continuation of mining operations.

The Falkirk Mine generally produces between 7 million to 9 million tons of lignite coal annually for the Coal Creek Station, an electric power generating station owned by Great River Energy. All production from the mine is used by Coal Creek Station. The mine started delivering coal in 1978.

The reserves are located in McLean County, North Dakota, from approximately nine miles northwest of the town of Washburn, North Dakota to four miles north of the town of Underwood, North Dakota. Structurally, the area is located on an intercratonic basin containing a thick sequence of sedimentary rocks. The economically mineable coals in the reserve occur in the Sentinel Butte Formation and the Bullion Creek Formation and are unconformably overlain by the Coleharbor Formation. The Sentinel Butte Formation conformably overlies the Bullion Creek Formation. The general stratigraphic sequence in the upland portions of the reserve area (Sentinel Butte Formation) consists of till, silty sands and clayey silts, main hagel lignite bed, silty clay, lower lignite of the hagel lignite interval and silty clays. Beneath the Tavis Creek, there is a repeating sequence of silty to sand clays with generally thin lignite beds.

Sabine Mine — The Sabine Mining Company

The Sabine Mine, operated by Sabine, is located approximately 150 miles east of Dallas, Texas on FM 968. The entrance to the mine is by means of a paved road. Sabine has no title, claim, lease or option to acquire any of the reserves at the Sabine Mine. Southwestern Electric Power Company controls all of the reserves within the Sabine Mine.

The Sabine Mine has two active pits generally producing between 3 million and 5 million tons of lignite coal annually based upon Southwestern Electric Power Company’s demand for its Henry W. Pirkey Plant and other contractual requirements. The mine started delivering coal in 1985.

Five Forks Mine — Demery Resources Company, LLC

The Five Forks Mine, to be operated by Demery, is in the development stage and will be developed near Creston, Natchitoches Parish, Louisiana. Access to the Five Forks Mine is by means of a gravel road. Demery will have no title, claim, lease or option to acquire any of the reserves at the Demery Mine. Five Forks Mining, LLC will control all of the reserves within the Demery Mine.

Marshall Mine — Caddo Creek Resources Company, LLC

The Marshall Mine, to be operated by Caddo Creek, is in the development stage and will be developed near Marshall, Texas in the counties of Harrison and Panola. Access to the Marshall Mine is by means of a paved road. Caddo Creek will have no title, claim, lease or option to acquire any of the reserves at the Caddo Creek Mine. Marshall Mine, LLC will control all of the reserves within the Caddo Creek Mine.

Eagle Pass Mine — Camino Real Fuels, LLC

The Eagle Pass Mine, to be operated by Camino Real, is in the development stage and will be developed near Eagle Pass, Maverick County, Texas. Access to the Eagle Pass Mine is by means of a gravel road. Camino Real will have no title, claim, lease or option to acquire any of the reserves at the Eagle Pass Mine. Dos Republicas Coal Partnership will control all of the reserves within the Eagle Pass Mine.

Consolidated Mines

San Miguel Lignite Mine — The North American Coal Corporation

San Miguel, operated by NACoal, is located approximately 60 miles south of San Antonio, Texas. Access to the mine is by means of an unpaved road from FM 338. San Miguel has no title, claim, lease or option to acquire any of the reserves at the San Miguel Lignite Mine.

NACoal has operated San Miguel since July 1, 1997 under a Contract Mining Agreement with San Miguel Electric Power Cooperative, Inc. (“San Miguel Electric”). Prior to July 1, 1997, another company operated the mine under a similar contract mining arrangement. Since the development of the project in the late 1970s, San Miguel Electric has owned the reserves and mine facilities and held all the permits and authorizations necessary to operate the power generating station and the adjacent lignite mine. The mine started delivering coal in 1980.

San Miguel generally produces between 3 million and 4 million tons of lignite coal annually. Mine staff and workforce utilize an office building and a maintenance facility that includes a parts warehouse. Roads and drainage control facilities have been built to access the lignite deposit and control runoff. Walking draglines owned by San Miguel Electric are used to uncover the lignite seam in each pit. Front-end loaders and other mining equipment are used to load belly dump coal haulers and end-dump trucks are used to deliver the lignite coal to the power plant. The same complement of equipment is used to reclaim topsoil and subsoil materials. Dozers are used to grade the land once the lignite coal has been removed.

Red Hills Mine — Mississippi Lignite Mining Company

The Red Hills Mine, operated by MLMC, is located approximately 120 miles north of Jackson, Mississippi. The entrance to the mine is by means of a paved road located approximately one mile west of Highway 9. MLMC holds 129 leases granting the right to mine approximately 7,710 acres of coal interests and the right to utilize approximately 7,505 acres of surface interests.

In addition, MLMC owns in fee 2,387 acres of surface interests and 1,906 acres of coal interests. Substantially all of the leases held by MLMC were acquired during the mid-1970s to the early 1980s with terms totaling 50 years.

The Red Hills Mine generally produces between 3 million and 4 million tons of lignite coal annually for the Red Hills Power Plant. The mine started delivering coal in 2000.

The lignite deposits of the Gulf Coast are found primarily in a narrow band of strata that outcrops/subcrops along the margin of the Mississippi embayment. The potentially exploitable tertiary lignites in Mississippi are found in the Wilcox Group. The outcropping Wilcox is composed predominately of non-marine sediments deposited on a broad flat plain.

Florida Dragline Operations — The North American Coal Corporation

NACoal’s Florida Dragline Operations operate draglines to mine limerock at the following quarries in Florida pursuant to mining services agreements with the quarry owners:

						Year NACoal
						Started Dragline
Quarry Name		Location		Quarry Owner		Operations
White Rock Quarry — North		Miami		WRQ		1995
White Rock Quarry — South		Miami		WRQ		2005
Krome Quarry		Miami		Cemex		2003
Alico Quarry		Ft. Myers		Cemex		2004
FEC Quarry		Miami		Cemex		2005
Pennsuco Quarry		Miami		Tarmac		2005
SCL Quarry		Miami		Cemex		2006
Card Sound Quarry		Miami		Cemex		2009

Vecellio & Grogan, Inc., d/b/a White Rock Quarries (“WRQ”), Cemex S.A.B. de C.V. (“Cemex”) and Tarmac America LLC (“Tarmac”) control all of the limerock reserves within their respective quarries. WRQ and Cemex perform drilling programs occasionally for the purpose of redefining the bottom of the limerock bed.

Access to the White Rock Quarry is by means of a paved road from 122nd Avenue, access to the Krome Quarry is by means of a paved road from Krome Avenue and access to Pennsuco Quarry is by means of a paved road from NW 121^st Way. Access to the FEC Quarry is by means of a paved road from NW 118^th Avenue and access to the Alico Quarry is by means of a paved road from Alico Road. Access to the SCL Quarry is by means of a paved road from NW 137^th Avenue and access to the Card Sound Quarry is by means of a paved road from SW 408^th Street. Florida Dragline Operations have no title, claim, lease or option to acquire any of the reserves at the White Rock Quarry (North and South), the FEC Quarry, the Krome Quarry, the Pennsuco Quarry, the SCL Quarry, the Alico Quarry or the Card Sound Quarry.

North American Coal Royalty Company

No operating mines currently exist on the undeveloped reserves in North Dakota, Texas and Mississippi. NACoal Royalty Company does receive certain royalty payments from unrelated third parties for production or advance royalty payments for oil and gas, as well as coal reserves located in Ohio, Pennsylvania, North Dakota, Louisiana and Texas.

During the third quarter of 2009, NACoal received bonus payments for the lease of certain oil and gas mineral rights to a third party. The Company recorded a gain of $7.1 million in the third quarter of 2009 related to these payments.

General Information about the Mines

Leases. The leases held by Coteau, Falkirk and MLMC have a variety of continuation provisions, but generally they permit the leases to be continued beyond their fixed terms. Under the terms of the leases held by these companies, each respective company expects that coal mined pursuant to its leases will be available to meet its production requirements.

No Previous Operators. There were no previous operators of the Freedom Mine, Falkirk Mine, Sabine Mine or Red Hills Mine.

Exploration and Development. The Freedom Mine, Falkirk Mine, Sabine Mine, San Miguel and Red Hills Mine are well past the exploration stage and are in production. Additional pit development is underway at each mine. Drilling programs are routinely conducted for the purpose of refining guidance related to ongoing operations. For example, at the Red Hills Mine, the lignite coal reserve has been defined by a drilling program that is designed to provide 500-foot spaced drill holes for areas anticipated to be mined within six years of the current pit. Drilling beyond the six-year horizon ranges from 1,000 to 2,000-foot centers. Drilling is conducted every other year to stay current with the advance of mining operations. Demery, Caddo Creek and Camino Real are in the mine planning and design phase. Demery and Caddo Creek are involved in initial mine permitting. Camino Real is involved in substantial revisions to an existing mine permit. Geological evaluation is in process at all three locations.

Facilities and Equipment. The facilities and equipment for each of the mines are maintained to allow for safe and efficient operation. The equipment is well maintained, in good physical condition and is either updated or replaced periodically with the latest models or upgrades available to keep up with modern technology. As equipment wears out, the mines evaluate what

replacement option will be the most cost efficient, including the evaluation of both new and used equipment, and proceed with that replacement. The majority of electrical power for the draglines, shovels, coal crushers, coal conveyors and facilities generally is provided by the utility customer for the applicable mine. Electrical power for the Sabine facilities is provided by Upshur Rural Electric Co-op. Electrical power for the Sabine draglines is provided by the Pirkey Power Plant. The remainder of the equipment generally is powered by diesel or gasoline. The total cost of the property, plant and equipment, net of applicable accumulated amortization and depreciation as of December 31, 2009, for each of the mines is set forth in the chart below.

		Total Historical Cost of Mine
		Property, Plant and Equipment
		(excluding Coal Lands, Real Estate
		and Construction in Progress), Net of
		Applicable Accumulated
Mine		Amortization and Depreciation
		(in millions)
Unconsolidated Mining Operations
Freedom Mine — The Coteau Properties Company		$	96.6
Falkirk Mine — The Falkirk Mining Company		$	91.0
Sabine Mine — The Sabine Mining Company		$	155.9
Five Forks Mine — Demery Resources Company, LLC		$	—
Marshall Mine — Caddo Creek Resources Company, LLC		$	—
Eagle Pass Mine — Camino Real Fuels, LLC		$	—
Consolidated Mining Operations
San Miguel Lignite Mine — The North American Coal Corporation		$	0.3
Red Hills Mine — Mississippi Lignite Mining Company		$	30.0
Florida Dragline Operations — The North American Coal Corporation		$	3.2

Predominantly all of San Miguel, Demery, Caddo Creek and Camino Real’s machinery and equipment is owned by NACoal’s customers. A substantial portion of MLMC’s machinery, trucks and equipment is rented under operating leases. Two Florida draglines are also rented under operating leases. All other draglines were purchased used and have been or will be updated with the latest technology.

Government Regulation

NACoal’s coal mining operations and dragline mining services are subject to various federal, state and local laws and regulations on matters such as employee health and safety, and certain environmental laws relating to, among others, the reclamation and restoration of properties after mining operations, air pollution, water pollution, the disposal of wastes and the effects on groundwater. In addition, the electric utility industry is subject to extensive regulation regarding the environmental impact of its power generation activities that could affect demand for coal from NACoal’s coal mining operations.

Numerous governmental permits and approvals are required for coal mining operations. NACoal or one of its subsidiaries holds the necessary permits at all of NACoal’s coal mining operations except San Miguel, Demery and Camino Real, where NACoal’s customers hold or will hold the permits. The Company believes, based upon present information provided to it by NACoal’s customers, that NACoal’s customers have or will have all environmental permits necessary for NACoal to operate San Miguel, Demery and Camino Real; however, the Company cannot be certain that NACoal’s customers will be able to obtain and/or maintain all such permits in the future.

At the coal mining operations where NACoal holds the permits, NACoal is required to prepare and present to federal, state or local governmental authorities data pertaining to the effect or impact that any proposed exploration for or production of coal may have upon the environment and public and employee health and safety.

The limerock quarries where NACoal provides dragline mining services are owned and operated by NACoal’s customers. All environmental permits for the limerock quarries are held by NACoal’s customers. During 2007, the U.S. District Court for the Southern District of Florida (“District Court”) issued an unfavorable decision that affected NACoal’s customers’ limerock mining permits in South Florida. The decision was appealed and upon appeal, the litigation was remanded back to the District Court.

On January 30, 2009, the District Court issued an order that set aside certain existing mining permits in the South Florida lake belt region where NACoal provides limerock mining services. By setting aside the existing mining permits previously issued by the U.S. Army Corps of Engineers, this order essentially prohibited mining in the lake belt region. An appeal of the District Court’s ruling was filed by the limerock producers, some of whom are NACoal’s customers. The appeal was unsuccessful.

In response to the District Court’s ruling, the U.S. Army Corps of Engineers issued a Final Supplemental Environmental Impact Statement (“FSEIS”) in May 2009. The requisite Department of Army Record of Decision (“ROD”) and statement of findings on the May 2009 FSEIS was released on February 1, 2010. Project-specific mining permits for limerock mining in

the lake belt area were issued for the FEC Quarry and White Rock Quarry — North during 2010. Additional mining permits are expected to be issued to the Company’s other customers in the near future.

Some laws, as discussed below, place many requirements on NACoal’s coal mining operations and the limerock quarries where NACoal provides dragline mining services. Federal and state regulations require regular monitoring of NACoal’s operations to ensure compliance.

Mine Health and Safety Laws

The Federal Mine Safety and Health Act of 1977 imposes safety and health standards on all coal mining operations. Regulations are comprehensive and affect numerous aspects of mining operations, including training of mine personnel, mining procedures, blasting, the equipment used in mining operations and other matters. The Federal Mine Safety and Health Administration enforces compliance with these federal laws and regulations.

Environmental Laws

NACoal’s coal mining operations are subject to various federal environmental laws, including:

	•		the Surface Mining Control and Reclamation Act of 1977 (“SMCRA”);
	•		the Clean Air Act, including amendments to that act in 1990 (“CAA”);
	•		the Clean Water Act of 1972 (the “Clean Water Act”);
	•		the Resource Conservation and Recovery Act; and
	•		the Comprehensive Environmental Response, Compensation and Liability Act.

In addition to these federal environmental laws, various states have enacted environmental laws that provide for higher levels of environmental compliance than similar federal laws. These environmental laws require reporting, permitting and/or approval of many aspects of coal mining operations. Both federal and state inspectors regularly visit mines to enforce compliance. NACoal has ongoing training, compliance and permitting programs to ensure compliance with such environmental laws.

Surface Mining Control and Reclamation Act

SMCRA establishes mining, environmental protection and reclamation standards for all aspects of surface coal mining operations. Where state regulatory agencies have adopted federal mining programs under the SMCRA, the state becomes the primary regulatory authority. All of the states where NACoal has active coal mining operations have achieved primary control of enforcement through federal authorization.

Coal mine operators must obtain SMCRA permits and permit renewals for coal mining operations from the regulatory agency. These SMCRA permit provisions include requirements for coal prospecting, mine plan development, topsoil removal, storage and replacement, selective handling of overburden materials, mine pit backfilling and grading, protection of the hydrologic balance, surface drainage control, mine drainage and mine discharge control and treatment, and revegetation.

Although NACoal’s permits have stated expiration dates, SMCRA provides for a right of successive renewal. The cost of obtaining surface mining permits can vary widely depending on the quantity and type of information that must be provided to obtain the permits; however, the cost of obtaining a permit is usually between $1,000,000 and $5,000,000, and the cost of obtaining a permit renewal is usually between $15,000 and $100,000.

The Abandoned Mine Land Fund, which is part of SMCRA, imposes a tax on all current lignite coal mining operations. The proceeds are used principally to reclaim mine lands closed prior to 1977. In addition, the Abandoned Mine Land Fund also makes transfers annually to the United Mine Workers of America Combined Benefit Fund (the “Fund”), which provides health care benefits to retired coal miners who are beneficiaries of the Fund. The fee is currently $0.09 per ton on lignite coal produced.

SMCRA establishes operational, reclamation and closure standards for surface coal mines. The Company accrues for the costs of current mine disturbance and final mine closure, including the cost of treating mine water discharges, where necessary. These obligations are unfunded.

SMCRA stipulates compliance with many other major environmental programs. These programs include the CAA, Clean Water Act, Resource Conservation and Recovery Act, Comprehensive Environmental Response, Compensation and Liability Act, and Emergency Planning and Community Right-To-Know Act. The U.S. Army Corps of Engineers regulates activities affecting navigable waters, and the U.S. Bureau of Alcohol, Tobacco and Firearms regulates the use of explosives for blasting.

The Company does not believe there are any significant issues that pose a risk to NACoal’s ability to maintain its existing mining permits or hinder its ability to acquire future mining permits.

Clean Air Act

The process of burning coal can cause many compounds and impurities in the coal to be released into the air; including sulfur dioxide, nitrogen oxides, mercury, particulate matter and others. The CAA and the corresponding state laws that extensively regulate the emissions of materials into the air affect coal mining operations both directly and indirectly. Direct impacts on coal mining operations occur through CAA permitting requirements and/or emission control requirements relating to air

contaminants, especially, particulate matter. Indirect impacts on coal mining operations occur through regulation of the air emissions of sulfur dioxide, nitrogen oxides, mercury, particulate matter and other compounds emitted by coal-fired power plants. The United States Environmental Protection Agency (“EPA”) has imposed or attempted to impose tighter emission restrictions in a number of areas, some of which are currently subject to litigation while others are pending. The general effect of tighter restrictions could be to reduce demand for coal. Any reduction in coal’s share of the capacity for power generation could have a material adverse effect on the Company’s business, financial condition and results of operations.

States are required to submit to EPA revisions to their state implementation plans (“SIPs”) that demonstrate the manner in which the states will attain national ambient air quality standards (“NAAQS”) every time a NAAQS is issued or revised by the EPA. The EPA has adopted NAAQS for several pollutants. In July 1997, the EPA adopted new, more stringent NAAQS for particulate matter that required some states to change their existing SIPs. Coal mining operations and coal-fired power plants that emit particulate matter are, therefore, affected by changes in the SIPs. In 2006, the EPA adopted a new NAAQS for particulate matter, which a number of states and environmental advocacy groups challenged as not sufficiently stringent to satisfy CAA requirements. In February 2009, the United States Court of Appeals for the District of Columbia Circuit agreed that the EPA had inadequately explained its decision regarding several aspects of these 2006 NAAQS and remanded those to the EPA for reconsideration. This process could lead to a more stringent NAAQS for particulate matter. In addition, in March 2008, the EPA also adopted a more stringent NAAQS for the ozone. NACoal’s coal mining operations and utility customers may be directly affected when the revisions to the SIPs are made and incorporate the new NAAQS for ozone and particulate matter. In addition to the SIP process, the CAA allows states to assert claims against sources in “upwind” states that allege emission sources, including coal-fired power plants, in the “upwind” states are preventing “downwind” states from attaining the applicable NAAQS. The new NAAQS for ozone and particulate matter and claims by “downwind” states may restrict NACoal’s ability to develop new mines or could require it to modify its existing operations. NACoal’s utility customers may also be required to install additional emission control equipment to meet the SIPs. The extent of the potential impact of the new NAAQS on the coal industry will depend on the policies and emission control strategies associated with the SIPs under the CAA but could have a material adverse effect on NACoal’s business, financial condition and the results of operations.

The CAA Acid Rain Control Provisions were promulgated as part of the CAA Amendments of 1990 in Title IV of the CAA (“Acid Rain Program”). The Acid Rain Program required reductions of sulfur dioxide emissions from coal-fired power plants. The Acid Rain Program is now a mature program and the Company believes that any market impacts of the required controls have likely been factored into the coal market.

The EPA promulgated a regional haze program designed to protect and to improve visibility at and around Class I Areas, which are generally National Parks, National Wilderness Areas and International Parks. This program may restrict the construction of new coal-fired power plants whose operation may impair visibility at and around the Class I Areas. Additionally, the program requires certain existing coal-fired power plants to install additional control measures designed to limit haze-causing emissions, such as sulfur dioxide, nitrogen oxide and particulate matter. States were required to submit Regional Haze SIPs to the EPA by December 2007; however, many states did not meet that deadline.

Under the CAA, new and modified sources of air pollution must meet certain new source standards (the “New Source Review Program”). In the late 1990s, the EPA filed lawsuits against many coal-fired power plants in the eastern United States alleging that the owners performed non-routine maintenance, causing increased emissions that should have triggered the application of these new source standards. Some of these lawsuits have been settled with the owners agreeing to install additional emission control devices in their coal-fired power plants. The remaining litigation and the uncertainty around the New Source Review Program rules could adversely impact demand for coal.

In March 2005, the EPA issued two related rules designed to significantly reduce levels of sulfur dioxide, nitrogen oxide and mercury: the Clean Air Interstate Rule (“CAIR”) and the Clean Air Mercury Rule (“CAMR”). CAIR sets a “cap-and-trade” program in 28 states and the District of Columbia to establish emissions limits for sulfur dioxide and nitrogen oxide, by allowing utilities to buy and sell credits to assist in achieving compliance with the NAAQS for eight-hour ozone and particulates. CAMR is designed to reduce mercury emissions by nearly 70% by 2018 through a “cap-and-trade” program. Both rules have been challenged in numerous lawsuits. The United States Court of Appeals for the District of Columbia vacated CAMR and remanded it to the EPA for reconsideration in February 2008. In February 2009, the EPA announced its intention to develop a technology-based standard to address mercury emissions rather than pursue the “cap-and-trade” approach of CAMR. The United States Court of Appeals for the District of Columbia vacated CAIR in July 2008, but subsequently remanded the matter to the EPA for reconsideration. The EPA is preparing its response to the remand, but the court did not impose a response date. Regardless of the outcome of litigation on either rule, stricter controls on emissions of sulfur dioxide, nitrogen oxide and mercury are likely. Any such controls may have an adverse impact on the demand for coal, which may have an adverse effect on the Company’s business, financial condition or results of operations.

The cost of controlling mercury emissions from coal combustion will be significant. NACoal’s utility customers may incur substantial costs in order to switch to other fuels which may require expensive modifications to their existing plants. If NACoal cannot offset the cost of mercury removal by lowering the costs of delivery of its coal on an energy equivalent basis, the Company’s business, financial condition and results of operations could be materially adversely effected.

Global climate change continues to attract considerable public and scientific attention and a considerable amount of legislative and regulatory attention in the United States. Congress is considering climate change legislation that would reduce greenhouse gas (“GHG”) emissions, particularly from coal combustion by power plants. The EPA is also developing regulations to control GHG under the CAA without new legislation. Enactment of laws and passage of regulations regarding GHG emissions by the United States or some of its states, or other actions to limit carbon dioxide emissions, such as opposition by environmental

groups to expansion or modification of coal-fired power plants, could result in electric generators switching from coal to other fuel sources.

Congress continues to consider a variety of proposals to reduce GHG emissions from the combustion of coal and other fuels. These proposals include emission taxes, emission reductions, including “cap-and-trade” programs, and mandates or incentives to generate electricity by using renewable resources, such as wind or solar power. Some states have established programs to reduce GHG emissions.

The EPA has begun to establish a GHG regulation program under the CAA by issuing a finding that the emission of six GHG, including carbon dioxide and methane, may reasonably be anticipated to endanger public health and welfare. After issuing this finding, the EPA is proceeding to develop other regulations under the CAA, which could impact coal-fired power plants and reduce the demand for coal or increase our own energy costs.

The United States has not implemented the 1992 Framework Convention on Global Climate Change (“Kyoto Protocol”), which became effective for many countries on February 16, 2005. The Kyoto Protocol was intended to limit or reduce emissions of GHG, such as carbon dioxide. The United States has not ratified the emission targets of the Kyoto Protocol or any other GHG agreement. Because the Kyoto Protocol will expire in 2012, there have been efforts to reach an international agreement, including a meeting in Copenhagen, Denmark in December 2009, to construct a successor to the Kyoto Protocol. Even though the United States has not accepted these international GHG limiting treaties nor has it enacted domestic legislation to control GHG, numerous lawsuits and regulatory actions have been undertaken by states and environmental groups to try to force controls on the emission of carbon dioxide; or to prevent the construction of new coal-fired power plants. The implementation by the United States of an international agreement or the adoption of legislation to control GHG emissions, could have a materially adverse effect on the Company’s business, financial condition and results of operation.

NACoal has obtained all necessary permits under the CAA at all of its coal mining operations where it is responsible for permitting.

Clean Water Act

The Clean Water Act affects coal mining operations by establishing in-stream water quality standards and treatment standards for waste water discharge. Permits requiring regular monitoring, reporting and performance standards govern the discharge of pollutants into water.

Federal and state regulations establish standards for water quality. These regulations prohibit the diminution of water quality. Waters discharged from coal mines will be required to meet these standards. These federal and state requirements could require more costly water treatment and could materially adversely affect the Company’s business, financial condition and results of operation.

The Company believes NACoal has obtained all permits required under the Clean Water Act and corresponding state laws and is in compliance with such permits.

Bellaire Corporation, a wholly owned non-operating subsidiary of the Company (“Bellaire”), is treating mine water drainage from coal refuse piles associated with two former underground coal mines in Ohio and one former underground coal mine in Pennsylvania, and is treating mine water from a former underground coal mine in Pennsylvania. Bellaire anticipates that it will need to continue these activities indefinitely and has accrued a liability of $13.3 million as of December 31, 2009 related to these matters.

In connection with Bellaire’s normal permit renewal with the Pennsylvania Department of Environmental Protection, it was notified during 2004 that in order to obtain renewal of the permit it would be required to establish a mine water treatment trust. Bellaire is currently negotiating the terms of the timing and amount of funds necessary to establish this trust. It is also expected that once this trust is fully funded, the income from the trust would then be utilized to fund the future cost of treatment of mine water drainage from the idled mining operations.

Resource Conservation and Recovery Act

The Resource Conservation and Recovery Act affects coal mining operations by establishing requirements for the treatment, storage and disposal of wastes, including hazardous wastes. Coal mine wastes, such as overburden and coal cleaning wastes, currently are exempted from hazardous waste management.

Comprehensive Environmental Response, Compensation and Liability Act

The Comprehensive Environmental Response, Compensation and Liability Act and similar state laws create liabilities for the investigation and remediation of releases of hazardous substances into the environment and for damages to natural resources. The Company also must comply with reporting requirements under the Emergency Planning and Community Right-to-Know Act and the Toxic Substances Control Act.

From time to time, the Company has been the subject of administrative proceedings, litigation and investigations relating to environmental matters.

The Company’s subsidiary, Sabine, has been named as a potentially responsible party for cleanup costs under the so-called Superfund law at a third-party site where Sabine disposed of waste oil in the past. The Company believes Sabine’s liability will be de minimis.

The extent of the liability and the cost of complying with environmental laws cannot be predicted with certainty due to the lack of specific information available with respect to many sites, the potential for new or changed laws and regulations and for the development of new remediation technologies and the uncertainty regarding the timing of work with respect to particular sites. As a result, the Company may incur material liabilities or costs related to environmental matters in the future, and such environmental liabilities or costs could adversely affect the Company’s results of operations and financial condition. In addition, there can be no assurance that changes in laws or regulations would not affect the manner in which NACoal is required to conduct its operations.

Competition

The coal industry competes with other sources of energy, particularly oil, gas, hydro-electric power and nuclear power. In addition, it competes with subsidized green energy projects, such as wind and solar projects. Among the factors that affect competition are the price and availability of oil and natural gas, environmental considerations, the time and expenditures required to develop new energy sources, the cost of transportation, the cost of compliance with governmental regulation of operations, the impact of federal and state energy policies and the current trend toward deregulation of energy markets. The ability of NACoal to market and develop its reserves will depend upon the interaction of these factors.

Based on industry information, NACoal believes it was one of the ten largest coal producers in the United States in 2009 based on total coal tons produced.

Employees

As of January 31, 2010, NACoal had approximately 1,500 employees, including approximately 1,000 employees at the unconsolidated mines. NACoal believes its current labor relations with employees are satisfactory.

Item 1A. RISK FACTORS

NMHG

NMHG’s lift truck business is cyclical. Any downturn in the general economy could result in significant decreases in the Company’s revenue and profitability and an inability to sustain or grow the business.

NMHG’s lift truck business historically has been cyclical. Fluctuations in the rate of orders for lift trucks reflect the capital investment decisions of NMHG’s customers, which depend to a certain extent on the general level of economic activity in the various industries the lift truck customers serve. During economic downturns, customers tend to delay new lift truck and parts purchases. Consequently, as a result of the current economic environment, NMHG is currently experiencing, and in the future may continue to experience, significant reductions in its revenues and net income. If the current downturn continues or worsens, the Company’s revenue and profitability could decrease significantly and the Company’s financial results will be adversely affected.

If the capital goods market worsens, the cost saving efforts implemented by NMHG may not be sufficient to achieve the benefits NMHG expects.

If the current general economy or the capital goods market further declines, NMHG’s revenues will decline. If revenues are lower than expected, the programs implemented at NMHG may not achieve the benefits NMHG expects. Furthermore, NMHG may be forced to take additional cost savings steps that could result in additional charges that materially adversely affect its ability to compete or implement its current business strategies.

The pricing and costs of NMHG’s products have been and may continue to be impacted by foreign currency fluctuations, which could materially increase the Company’s costs, result in material exchange losses and materially reduce operating margins.

Because NMHG conducts transactions in various foreign currencies, including the euro, the British pound, the Australian dollar, Brazilian real and the Japanese yen, its lift truck pricing is subject to the effects of fluctuations in the value of these foreign currencies and fluctuations in the related currency exchange rates. As a result, NMHG’s sales have historically been affected by, and may continue to be affected by, these fluctuations. In addition, exchange rate movements between currencies in which NMHG purchases materials and components and manufactures certain of its products and the currencies in which NMHG sells those products have been affected by and may continue to result in exchange losses that could materially reduce operating margins. Furthermore, NMHG’s hedging contracts may not offset current risks from changes in currency exchange rates.

The cost of raw materials used by NMHG’s products has and may continue to fluctuate, which could materially reduce the Company’s profitability.

At times, NMHG Wholesale has experienced significant increases in its materials costs, primarily as a result of global increases in industrial metals including steel, lead and copper and other commodity prices including rubber, as a result of

increased demand and limited supply. NMHG manufactures products that include raw materials that consist of steel, rubber, copper, lead, castings and counterweights. NMHG also purchases parts provided by suppliers that are manufactured from castings and steel or contain lead. The cost of these parts is impacted by the same economic conditions that impact the cost of the parts that NMHG manufactures. The cost to manufacture lift trucks and related service parts has been and will continue to be affected by fluctuations in prices for these raw materials. If costs of these raw materials increase, the Company’s profitability could be reduced.

NMHG depends on a limited number of suppliers for specific critical components.

NMHG depends on a limited number of suppliers for some of its critical components, including diesel and gasoline engines and cast-iron counterweights used to counterbalance some lift trucks. Some of these critical components are imported and subject to regulation, such as inspection by the U.S. Department of Commerce. The Company’s results of operations could be adversely affected if NMHG is unable to obtain these critical components, or if the costs of these critical components were to increase significantly, due to regulatory compliance or otherwise, and NMHG was unable to pass the cost increases on to its customers.

If NMHG’s current cost reduction and efficiency programs, including the introduction of new products, does not prove effective, the Company’s revenues, profitability and market share could be significantly reduced.

Changes in the timing of implementation of its current cost reduction, efficiency and new product programs may result in a delay in the expected recognition of future costs and realization of future benefits. As such, because future industry demand levels are lower than historical industry demand cycles as a result of the current economic environment, the actual annual cost savings could be lower than expected. If NMHG is unable to successfully implement these programs, the Company’s revenues, profitability and market share could be significantly reduced.

The failure of NMHG to compete effectively within its industry could result in a significant decrease in the Company’s revenues and profitability.

NMHG experiences intense competition in the sale of lift trucks and aftermarket parts. Competition in the lift truck industry is based primarily on strength and quality of dealers, brand loyalty, customer service, new lift truck sales prices, availability of products and aftermarket parts, comprehensive product line offerings, product performance, product quality and features and the cost of ownership over the life of the lift truck. NMHG competes with several global full-line manufacturers that operate in all major markets. These manufacturers may have greater financial resources and less debt than NMHG, which may enable them to commit larger amounts of capital in response to changing market conditions, and lower costs of manufacturing. If NMHG fails to compete effectively, the Company’s revenues and profitability could be significantly reduced.

NMHG relies primarily on its network of independent dealers to sell its lift trucks and aftermarket parts and has no direct control over sales by those dealers to customers. Ineffective or poor performance by these independent dealers could result in a significant decrease in the Company’s revenues and profitability and an inability by NMHG to sustain or grow the business.

NMHG relies primarily on independent dealers for sales of its lift trucks and aftermarket parts. Sales of NMHG’s products are therefore subject to the quality and effectiveness of the dealers, who are generally not subject to NMHG’s direct control. As a result, ineffective or poorly performing dealers could result in a significant decrease in the Company’s revenues and profitability and NMHG may not be able to sustain or grow its business.

NMHG‘s actual liabilities relating to pending lawsuits may exceed its expectations.

NMHG is a defendant in pending lawsuits involving, among other things, product liability claims. NMHG cannot be sure that it will succeed in defending these claims, that judgments will not be rendered against NMHG with respect to any or all of these proceedings or that reserves set aside or insurance policies will be adequate to cover any such judgments. The Company could incur a charge to earnings if reserves prove to be inadequate or the average cost per claim or the number of claims exceed estimates, which could have a material adverse effect on the Company’s results of operations and liquidity for the period in which the charge is taken and any judgment or settlement amount is paid.

NMHG is subject to repurchase or recourse obligations with respect to financing arrangements of some of its customers.

Through arrangements with GECC and others, dealers and other customers are provided financing for new lift trucks in the United States and in major countries of the world outside of the United States. Through these arrangements, NMHG’s dealers and certain customers are extended credit for the purchase of lift trucks to be placed in the dealer’s floor plan inventory or the financing of lift trucks that are sold or leased to customers. For some of these arrangements, NMHG provides recourse or repurchase obligations such that it would become obligated in the event of default by the dealer or customer. Total amounts subject to these types of obligations at December 31, 2009 were $140.2 million. Generally, NMHG maintains a perfected security interest in the assets financed such that, in the event that it becomes obligated under the terms of the recourse or repurchase obligations, it may take title to the assets financed. NMHG cannot be certain, however, that the security interest will equal or exceed the amount of the recourse or repurchase obligations. In addition, NMHG cannot be certain that losses under the terms of the recourse or repurchase obligations will not exceed the reserves that it has set aside in its consolidated financial statements. The Company could incur a charge to earnings if its reserves prove to be inadequate,

which could have a material adverse effect on the Company’s results of operations and liquidity for the period in which the charge is taken.

NMHG is subject to risks relating to its foreign operations.

Foreign operations represent a significant portion of NMHG’s business. NMHG expects revenue from foreign markets to continue to represent a significant portion of NMHG’s total revenue. NMHG owns or leases manufacturing facilities in Brazil, Italy, Mexico, The Netherlands and Northern Ireland, and owns interests in joint ventures with facilities in China, Japan, the Philippines and Vietnam. It also sells domestically produced products to foreign customers and sells foreign produced products to domestic customers. NMHG’s foreign operations are subject to additional risks, which include:

•		potential political, economic and social instability in the foreign countries in which NMHG operates;
•		currency risks, see the risk factor titled “The pricing and costs of NMHG’s products have been and may continue to be impacted by foreign currency fluctuations, which could materially increase the Company’s costs, result in material exchange losses and materially reduce operating margins;”
•		imposition of or increases in currency exchange controls;
•		potential inflation in the applicable foreign economies;
•		imposition of or increases in import duties and other tariffs on NMHG’s products;
•		imposition of or increases in foreign taxation of earnings and withholding on payments received by NMHG from its subsidiaries;
•		regulatory changes affecting international operations; and
•		stringent labor regulations.

Part of the strategy to expand NMHG’s worldwide market share and decrease costs is strengthening its international distribution network and sourcing basic components in lower-cost countries. Implementation of this strategy may increase the impact of the risks described above and there can be no assurance that such risks will not have an adverse effect on the Company’s revenues, profitability or market share.

NMHG‘s actual liabilities relating to environmental matters may exceed its expectations.

NMHG’s manufacturing operations are subject to laws and regulations relating to the protection of the environment, including those governing the management and disposal of hazardous substances. NMHG Retail’s operations are particularly affected by laws and regulations relating to the disposal of cleaning solvents and wastewater and the use of and disposal of petroleum products from underground and above-ground storage tanks. If NMHG fails to comply with these laws or its environmental permits, then it could incur substantial costs, including cleanup costs, fines and civil and criminal sanctions. In addition, future changes to environmental laws could require NMHG to incur significant additional expense or restrict operations.

In addition, NMHG’s products may be subject to laws and regulations relating to the protection of the environment, including those governing vehicle exhausts. Regulatory agencies in the United States and Europe have issued or proposed various regulations and directives designed to reduce emissions from spark ignited engines and diesel engines used in off-road vehicles, such as industrial lift trucks. These regulations require NMHG and other lift truck manufacturers to incur costs to modify designs and manufacturing processes and to perform additional testing and reporting.

NMHG is investigating or remediating historical contamination at some current and former sites caused by its operations or those of businesses it acquired. NMHG has also been named as a potentially responsible party for cleanup costs under the so-called Superfund law at several third-party sites where NMHG (or its predecessors) disposed of wastes in the past. Under the Superfund law and often under similar state laws, the entire cost of cleanup can be imposed on any one of the statutorily liable parties, without regard to fault. While NMHG is not currently aware that any material outstanding claims or obligations exist with regard to these sites, the discovery of additional contamination at these or other sites could result in significant cleanup costs that could have a material adverse effect on NMHG’s financial conditions and results of operations.

In connection with any acquisition made by NMHG, NMHG could, under some circumstances, be held financially liable for or suffer other adverse effects due to environmental violations or contamination caused by prior owners of businesses NMHG has acquired. In addition, under some of the agreements through which NMHG has sold businesses or assets, NMHG has retained responsibility for certain contingent environmental liabilities arising from pre-closing operations. These liabilities may not arise, if at all, until years later and could require NMHG to incur significant additional expenses, which could materially adversely affect the Company’s results of operations and financial condition.

Hamilton Beach Brands

HBB’s business is sensitive to the strength of the U.S. retail market and weakness in this market could adversely affect its business.

The strength of the retail economy in the United States has a significant impact on HBB’s performance. Weakness in consumer confidence and poor financial performance by mass merchandisers, warehouse clubs, department stores or any of HBB’s other customers would result in lost revenues. A general slowdown in the retail sector would result in additional pricing and marketing support pressures on HBB.

The market for HBB’s products is highly seasonal and dependent on consumer spending, which could result in significant variations in the Company’s revenues and profitability.

Sales of HBB’s products are related to consumer spending. Any downturn in the general economy or a shift in consumer spending away from small electric household appliances would adversely affect its business. In addition, the market for small electric household appliances is highly seasonal in nature. HBB often recognizes a substantial portion of its sales in the last half of the year. Accordingly, quarter-to-quarter comparisons of past operating results of HBB are meaningful, if at all, only when comparing equivalent time periods. The continued economic downturn and the decrease in consumer spending or a shift in consumer spending away from small electric household appliances may significantly reduce revenues and profitability.

HBB is dependent on key customers and the loss of, or significant decline in business from, one or more of its key customers could materially reduce its revenues and profitability and its ability to sustain or grow its business.

HBB relies on several key customers. Its five largest customers accounted for approximately 61%, 60% and 58% of revenues for the years ended December 31, 2009, 2008 and 2007, respectively. Wal-Mart accounted for approximately 38%, 40% and 37% of HBB’s revenues in 2009, 2008 and 2007, respectively. Although HBB has long-established relationships with many customers, it does not have any long-term supply contracts with these customers, and purchases are generally made using individual purchase orders. A loss of any key customer could result in significant decreases in HBB’s revenues and profitability and an inability to sustain or grow its business.

HBB must receive a continuous flow of new orders from its large, high-volume retail customers; however, it may be unable to continually meet the needs of those customers. In addition, failure to obtain anticipated orders or delays or cancellations of orders or significant pressure to reduce prices from key customers could impair its ability to sustain or grow its business.

As a result of dependence on its key customers, HBB could experience a material adverse effect on its revenues and profitability if any of the following were to occur:

	•		the insolvency or bankruptcy of any key customer;
	•		a declining market in which customers materially reduce orders or demand lower prices; or
	•		a strike or work stoppage at a key customer facility, which could affect both its suppliers and customers.

If HBB were to lose, or experience a significant decline in business from, any major retail customer or if any major retail customers were to go bankrupt, HBB might be unable to find alternate distribution sources.

HBB depends on third-party suppliers for the manufacturing of all of its products, which subjects the Company to risks, including unanticipated increases in expenses, decreases in revenues and disruptions in the supply chain.

HBB is dependent on third-party suppliers for the manufacturing of all of its products. HBB’s ability to select reliable suppliers who provide timely deliveries of quality products will impact its success in meeting customer demand. Any inability of HBB’s suppliers to timely deliver products or any unanticipated changes in suppliers could be disruptive and costly to the Company. Any significant failure by HBB to obtain products on a timely basis at an affordable cost or any significant delays or interruptions of supply would have a material adverse effect on the Company’s profitability.

Because HBB’s suppliers are primarily based in China, international operations subject the Company to additional risks including, among others:

	•		currency fluctuations;
	•		labor unrest;
	•		potential political, economic and social instability;
	•		lack of developed infrastructure;
	•		restrictions on transfers of funds;
	•		import and export duties and quotas;
	•		changes in domestic and international customs and tariffs;
	•		uncertainties involving the costs to transport products;
	•		long distance shipping routes dependent upon a small group of shipping and rail carriers;
	•		unexpected changes in regulatory environments;
	•		regulatory issues involved in dealing with foreign suppliers and in exporting and importing products;
	•		difficulty in complying with a variety of foreign laws;
	•		difficulty in obtaining distribution and support; and
	•		potentially adverse tax consequences.

The foregoing factors could have a material adverse effect on HBB’s ability to maintain or increase the supply of products, which may result in material increases in expenses and decreases in revenues.

Increases in costs of products may materially reduce the Company’s profitability.

Factors that are largely beyond the Company’s control, such as movements in commodity prices for the raw materials needed by suppliers of HBB’s products, may affect the cost of products, and HBB may not be able to pass those costs on to its customers. As an example, HBB’s products require a substantial amount of plastic. Because the primary resource used in plastic is petroleum, the cost and availability of plastic varies to a great extent with the price of petroleum. In recent years,

the prices of petroleum, as well as steel, aluminum and copper have increased significantly. These price increases may materially reduce the Company’s profitability.

The increasing concentration of HBB’s small electric household appliance sales among a few retailers and the trend toward private label brands could materially reduce revenues and profitability.

With the growing trend towards the concentration of HBB’s small electric household appliance sales among a few retailers, HBB is increasingly dependent upon fewer customers whose bargaining strength is growing as a result of this concentration. HBB sells a substantial quantity of products to mass merchandisers, national department stores, variety store chains, drug store chains, specialty home retailers and other retail outlets. These retailers generally purchase a limited selection of small electric household appliances. As a result, HBB competes for retail shelf space with its competitors. In addition, certain of HBB’s larger customers use their own private label brands on household appliances that compete directly with some of HBB’s products. As the retailers in the small electric household appliance industry become more concentrated, competition for sales to these retailers may increase, which could materially reduce the Company’s revenues and profitability.

The small electric household and commercial appliance industry is consolidating, which could reduce HBB’s ability to successfully secure product placements at key customers and limit its ability to sustain a cost competitive position in the industry.

Over the past several years, the small electric household and commercial appliance industry has undergone substantial consolidation, and further consolidation is likely. As a result of this consolidation, the small electric household and commercial appliance industry primarily consists of a limited number of large distributors. To the extent that HBB does not continue to be a major participant in the small electric household and commercial appliance industry, its ability to compete effectively with these larger distributors could be negatively impacted. As a result, this condition could reduce HBB’s ability to successfully secure product placements at key customers and limit the ability to sustain a cost competitive position in the industry.

HBB’s inability to compete effectively with competitors in its industry, including large established companies with greater resources, could result in lost market share and decreased revenues.

The small electric household and commercial appliance industry does not have onerous entry barriers. As a result, HBB competes with many small manufacturers and distributors of housewares products. Additional competitors may also enter this market and cause competition to intensify. For example, some of HBB’s customers have expressed interest in sourcing, or expanding the extent of sourcing, small electric household and commercial appliances directly from manufacturers in Asia. The Company believes competition is based upon several factors, including product design and innovation, quality, price, product features, merchandising, promotion and warranty. If HBB fails to compete effectively with these manufacturers and distributors, it could lose market share and experience a decrease in revenues, which would adversely affect the Company’s results of operations.

HBB also competes with established companies, a number of which have substantially greater facilities, personnel, financial and other resources. In addition, HBB competes with retail customers, who use their own private label brands, and importers and foreign manufacturers of unbranded products. Some competitors may be willing to reduce prices and accept lower profit margins to compete with HBB. As a result of this competition, HBB could lose market share and revenues.

Kitchen Collection

The market for KC’s products is highly seasonal and dependent on consumer spending, which could result in significant variations in the Company’s revenues and profitability.

Sales of products sold at KC stores are subject to a number of factors related to consumer spending, including general economic conditions affecting disposable consumer income such as unemployment rates, business conditions, interest rates, levels of consumer confidence, energy prices, mortgage rates, the level of consumer debt and taxation. The weak economic environment, a worsening of the general economy or a shift in consumer spending will adversely affect KC’s business. In addition, KC often recognizes a substantial portion of its sales in the last half of the year. Accordingly, any economic downturn, decrease in consumer spending or a shift in consumer spending away from KC’s products could significantly reduce revenues and profitability.

KC faces an extremely competitive specialty retail market, and such competition could result in a reduction of KC’s prices and loss of market share.

The retail market is highly competitive. KC competes against a diverse group of retailers, including specialty stores, department stores, discount stores and catalog retailers. Many of KC’s competitors are larger and have significantly greater financial, marketing and other resources. This competition could result in the reduction of KC product prices and/or a loss of market share.

KC may not be able to forecast customer preferences accurately in its merchandise selections.

KC’s success depends in part on its ability to anticipate the tastes of its customers and to provide merchandise that appeals to their preferences. KC’s strategy requires merchandising staff to introduce products that meet current customer preferences and that are affordable and distinctive in quality and design. KC’s failure to anticipate, identify or react appropriately to

changes in consumer trends could cause excess inventories and higher mark-downs or a shortage of products and could harm KC’s business and operating results.

KC depends on third-party suppliers for all of its products, which subjects KC to risks, including unanticipated increases in expenses, decreases in revenues and disruptions in the supply chain.

KC is dependent on third-party suppliers for all of its products. KC’s ability to select reliable suppliers who provide timely deliveries of quality products will impact its success in meeting customer demand. Any inability of KC’s suppliers to timely deliver products or any unanticipated changes in suppliers could be disruptive and costly to KC. In addition, KC may not be able to acquire desired merchandise in sufficient quantities on acceptable terms in the future. KC’s business would also be adversely affected by any delays in product shipments due to freight difficulties, strikes or other difficulties at its principal transport providers. Any significant failure by KC to obtain products on a timely basis at an affordable cost or any significant delays or interruptions of supply would have a material adverse effect on KC’s profitability.

North American Coal

Termination of long-term mining contracts could materially reduce the Company’s revenues and profitability.

Substantially all of NACoal’s revenues and profits are derived from long-term mining contracts. The contracts for certain of NACoal’s unconsolidated mines permit the customer under some conditions of default to acquire the assets or stock of the subsidiary for an amount roughly equal to book value. In one case, the customer may elect to acquire the stock of the subsidiary upon a specified period of prior notice, for any reason, in exchange for payments to NACoal on coal mined at that facility in the future. If any of NACoal’s long-term mining contracts were terminated, revenues and profitability could be materially reduced to the extent that NACoal is unable to find alternative customers at the same level of profitability.

NACoal’s unconsolidated mines are subject to risks created by changes in customer demand, inflationary adjustments and tax rates.

The contracts with the unconsolidated mines’ utility customers allow each mine to sell coal at a price based on actual cost plus an agreed pre-tax profit per ton or cost plus a management fee per ton. Unconsolidated mine customers pay on a cost-plus basis only for the coal they consume and use. As a result, reduced coal usage by customers, including, but not limited to, unanticipated weather conditions and scheduled and unscheduled power plant outages, could have an adverse impact on the Company’s results of operations. Because of the contractual price formulas for the sale of coal and mining services by these unconsolidated mines, the profitability of these operations is also subject to fluctuations in inflationary adjustments (or lack thereof) that can impact the per ton profit or management fee paid for the coal and taxes applicable to NACoal’s income on that coal. In addition, any changes in tax laws that eliminate benefits for percentage depletion would have a material adverse effect on the Company.

NACoal’s other mining operations, including its consolidated mining operations, are subject to risks created by its capital investment in the mines, the costs of mining the coal and the dragline mining equipment, in addition to risks created by changes in customer demand, inflationary adjustments and tax rates.

The consolidated mining operations are comprised of MLMC and San Miguel, dragline mining services, royalties from mineral leases to other mining companies and other activities. The profitability of these consolidated mining operations is subject to the risk of loss of its investment in these mining operations, as well as increases in the cost of mining the coal. At MLMC, the costs of mining operations are not passed on to its customer. As such, increased costs at MLMC could materially reduce NACoal’s profitability. NACoal’s operations are also subject to customer demand, including but not limited to fluctuations in demand due to unanticipated weather conditions, the emergence of unidentified adverse mining conditions, power plant outages, inflationary adjustments and tax risks described above with respect to its unconsolidated mines. In addition, any changes in tax laws that eliminate benefits for percentage depletion or eliminate the expensing of exploration and development costs would have a material adverse effect on the Company. These factors could materially reduce NACoal’s profitability.

Mining operations are vulnerable to weather and other conditions that are beyond NACoal’s control.

Many conditions beyond NACoal’s control can decrease the delivery, and therefore the use, of coal to NACoal’s customers. These conditions include weather, the emergence of unidentified adverse mining conditions, unexpected maintenance problems and increased costs of replacement parts which could significantly reduce the Company’s revenues and profitability.

Government regulations could impose costly requirements on NACoal.

The coal mining industry is subject to regulation by federal, state and local authorities on matters concerning the health and safety of employees, land use, permit and licensing requirements, air quality standards, water pollution, plant and wildlife protection, reclamation and restoration of mining properties after mining, the discharge of materials into the environment, surface subsidence from underground mining and the effects that mining has on groundwater quality and availability. Legislation mandating certain benefits for current and retired coal miners also affects the industry. Mining operations require numerous governmental permits and approvals. NACoal is required to prepare and present to federal, state or local authorities data pertaining to the impact that production of coal may have upon the environment. Compliance with these requirements may be costly and time-consuming.

New legislation and/or regulations and orders may materially adversely affect NACoal’s mining operations or its cost structure. New legislation, including proposals related to environmental protection that would further regulate and tax the coal industry, may also require NACoal or its customers to change operations significantly or incur increased costs. Possible limitations on carbon emissions and requirements for a specific mix of fuel sources for energy generation methods may reduce potential coal demand. All of these factors could significantly reduce the Company’s revenues and profitability.

NACoal is subject to federal and state mining regulations, which place a burden on it.

Federal and state statutes require NACoal to restore mine property in accordance with specified standards and an approved reclamation plan, and require that NACoal obtain and periodically renew permits for mining operations. Regulations require NACoal to incur the cost of reclaiming current mine disturbance. Although the Company believes that appropriate accruals have been recorded for all expected reclamation and other costs associated with closed mines, future profitability would be adversely affected if accruals for these costs are later determined to be insufficient or if changed conditions, including adverse judicial proceedings or revised assumptions, require a change in these reserves.

NACoal’s operations are impacted by the Clean Air Act Amendments on coal consumption.

The process of burning coal can cause many compounds and impurities in the coal to be released into the air; including sulfur dioxide, nitrogen oxides, mercury, particulate matter and others. The CAA and the corresponding state laws that extensively regulate the emissions of materials into the air affect coal mining operations both directly and indirectly. Direct impacts on coal mining operations occur through CAA permitting requirements and/or emission control requirements relating to air contaminants, especially, particulate matter. Indirect impacts on coal mining operations occur through regulation of the air emissions of sulfur dioxide, nitrogen oxides, mercury, particulate matter and other compounds emitted by coal-fired power plants. The EPA has imposed or attempted to impose tighter emission restrictions in a number of areas, some of which are currently subject to litigation while others are pending. The general effect of tighter restrictions could be to reduce demand for coal. Any reduction in coal’s share of the capacity for power generation could have a material adverse effect on the Company’s business, financial condition and results of operations.

States are required to submit to EPA revisions to their SIPs that demonstrate the manner in which the states will attain NAAQS every time a NAAQS is issued or revised by the EPA. The EPA has adopted NAAQS for several pollutants. In July 1997, the EPA adopted new, more stringent NAAQS for particulate matter that required some states to change their existing SIPs. Coal mining operations and coal-fired power plants that emit particulate matter are, therefore, affected by changes in the SIPs. In 2006, the EPA adopted a new NAAQS for particulate matter, which a number of states and environmental advocacy groups challenged as not sufficiently stringent to satisfy CAA requirements. In February 2009, the United States Court of Appeals for the District of Columbia Circuit agreed that the EPA had inadequately explained its decision regarding several aspects of these 2006 NAAQS and remanded those to the EPA for reconsideration. This process could lead to a more stringent NAAQS for particulate matter. In addition, in March 2008, the EPA also adopted a more stringent NAAQS for the ozone. NACoal’s coal mining operations and utility customers may be directly affected when the revisions to the SIPs are made and incorporate the new NAAQS for ozone and particulate matter. In addition to the SIP process, the CAA allows states to assert claims against sources in “upwind” states that allege emission sources, including coal-fired power plants, in the “upwind” states are preventing “downwind” states from attaining the applicable NAAQS. The new NAAQS for ozone and particulate matter and claims by “downwind” states may restrict NACoal’s ability to develop new mines or could require it to modify its existing operations. NACoal’s utility customers may also be required to install additional emission control equipment to meet the SIPs. The extent of the potential impact of the new NAAQS on the coal industry will depend on the policies and emission control strategies associated with the SIPs under the CAA but could have a material adverse effect on NACoal’s business, financial condition and the results of operations.

The Acid Rain Program required reductions of sulfur dioxide emissions from coal-fired power plants. The Acid Rain Program is now a mature program and the Company believes that any market impacts of the required controls have likely been factored into the coal market.

The EPA promulgated a regional haze program designed to protect and to improve visibility at and around Class I Areas, which are generally National Parks, National Wilderness Areas and International Parks. This program may restrict the construction of new coal-fired power plants whose operation may impair visibility at and around the Class I Areas. Additionally, the program requires certain existing coal-fired power plants to install additional control measures designed to limit haze-causing emissions, such as sulfur dioxide, nitrogen oxide and particulate matter. States were required to submit Regional Haze SIPs to the EPA by December 2007; however, many states did not meet that deadline.

In the late 1990s, the EPA filed lawsuits against many coal-fired power plants in the eastern United States alleging that the owners performed non-routine maintenance, causing increased emissions that should have triggered the application of these new source standards. Some of these lawsuits have been settled with the owners agreeing to install additional emission control devices in their coal-fired power plants. The remaining litigation and the uncertainty around the New Source Review Program rules could adversely impact demand for coal.

In March 2005, the EPA issued two related rules designed to significantly reduce levels of sulfur dioxide, nitrogen oxide and mercury: CAIR and CAMR. CAIR sets a “cap-and-trade” program in 28 states and the District of Columbia to establish emissions limits for sulfur dioxide and nitrogen oxide, by allowing utilities to buy and sell credits to assist in achieving compliance with the NAAQS for eight-hour ozone and particulates. CAMR is designed to reduce mercury emissions by nearly 70% by 2018 through a “cap-and-trade” program. Both rules have been challenged in numerous lawsuits. The United States

Court of Appeals for the District of Columbia vacated CAMR and remanded it to the EPA for reconsideration in February 2008. In February 2009, the EPA announced its intention to develop a technology-based standard to address mercury emissions rather than pursue the “cap-and-trade” approach of CAMR. The United States Court of Appeals for the District of Columbia vacated CAIR in July 2008, but subsequently remanded the matter to the EPA for reconsideration. The EPA is preparing its response to the remand, but the court did not impose a response date. Regardless of the outcome of litigation on either rule, stricter controls on emissions of sulfur dioxide, nitrogen oxide and mercury are likely. Any such controls may have an adverse impact on the demand for coal, which may have an adverse effect on the Company’s business, financial condition or results of operations.

The cost of controlling mercury emissions from coal combustion will be significant. NACoal’s utility customers may incur substantial costs in order to switch to other fuels which may require expensive modifications to their existing plants. If NACoal cannot offset the cost of mercury removal by lowering the costs of delivery of its coal on an energy equivalent basis, the Company’s business, financial condition and results of operations could be materially adversely effected.

Global climate change continues to attract considerable public and scientific attention and a considerable amount of legislative and regulatory attention in the United States. Congress is considering climate change legislation that would reduce GHG emissions, particularly from coal combustion by power plants. The EPA is also developing regulations to control GHG under the CAA without new legislation. Enactment of laws and passage of regulations regarding GHG emissions by the United States or some of its states, or other actions to limit carbon dioxide emissions, such as opposition by environmental groups to expansion or modification of coal-fired power plants, could result in electric generators switching from coal to other fuel sources.

Congress continues to consider a variety of proposals to reduce GHG emissions from the combustion of coal and other fuels. These proposals include emission taxes, emission reductions, including “cap-and-trade” programs, and mandates or incentives to generate electricity by using renewable resources, such as wind or solar power. Some states have established programs to reduce GHG emissions.

The EPA has begun to establish a GHG regulation program under the CAA by issuing a finding that the emission of six GHG, including carbon dioxide and methane, may reasonably be anticipated to endanger public health and welfare. After issuing this finding, the EPA is proceeding to develop other regulations under the CAA, which could impact coal-fired power plants and reduce the demand for coal or increase our own energy costs.

The United States has not implemented the Kyoto Protocol, which became effective for many countries on February 16, 2005. The Kyoto Protocol was intended to limit or reduce emissions of GHG, such as carbon dioxide. The United States has not ratified the emission targets of the Kyoto Protocol or any other GHG agreement. Because the Kyoto Protocol will expire in 2012, there have been efforts to reach an international agreement, including a meeting in Copenhagen, Denmark in December 2009, to construct a successor to the Kyoto Protocol. Even though the United States has not accepted these international GHG limiting treaties nor has it enacted domestic legislation to control GHG, numerous lawsuits and regulatory actions have been undertaken by states and environmental groups to try to force controls on the emission of carbon dioxide; or to prevent the construction of new coal-fired power plants. The implementation by the United States of an international agreement or the adoption of legislation to control GHG emissions, could have a materially adverse effect on the Company’s business, financial condition and results of operation.

Global climate change continues to attract considerable public and scientific attention and a considerable amount of legislative and regulatory attention in the United States. Congress is considering climate change legislation that would reduce GHG emissions, particularly from coal combustion by power plants. EPA is also developing regulations to control GHG under the CAA without new legislation; however, these draft regulations are not yet finalized. Enactment of laws and passage of regulations regarding greenhouse gas emissions by the United States or some of its states, or other actions to limit carbon dioxide emissions, could result in electric generators switching from coal to other fuel sources.

NACoal is subject to the high costs and risks involved in the development of new coal and dragline mining projects.

From time to time, NACoal seeks to develop new coal and dragline mining projects. The costs and risks associated with such projects can be substantial. In addition, any changes in tax laws that eliminate the expensing of exploration and development costs will increase the cost of building a mine and make the cost of coal less competitive with other power generation fuels.

General

The current economic environment may adversely affect the availability and cost of credit and business and consumer spending patterns.

The ability of the Company’s subsidiaries to make scheduled payments or to refinance their obligations with respect to indebtedness will depend on their operating and financial performance and credit availability, which in turn are subject to the weak economic conditions. The economic recession, subprime mortgage crisis, decline in housing markets and disruptions in the financial markets, including the bankruptcy, restructuring, sale or acquisition of major financial institutions, may adversely affect the availability of credit already arranged, and the availability and cost of credit in the future. In the event that the Company’s subsidiaries seek to refinance or modify existing financial arrangements with their lenders, there is no assurance that such creditors will agree to refinance or to modify existing arrangements on acceptable terms or at all. The disruptions in the financial markets has had an adverse effect on the United States and world economies, which has and may continue to negatively affect business and consumer spending patterns. These disruptions could result in continued reductions in sales of the Company’s subsidiaries’ products and services, reductions in asset values, longer sales cycles, and

increased price competition, as well as reductions in the borrowing base under the credit facilities of the Company’s subsidiaries. There can be no assurances that U.S. and non-U.S. governmental responses to the economic recession and disruptions in the financial markets will restore business or consumer confidence, stabilize the markets or increase liquidity and the availability of credit.

The Company may become subject to claims under foreign laws and regulations, which may be expensive, time consuming and distracting.

Because the Company has employees, property and business operations outside of the United States, the Company is subject to the laws and the court systems of many jurisdictions. The Company may become subject to claims outside the United States based in foreign jurisdictions for violations of their laws with respect to the foreign operations of NMHG and HBB. In addition, these laws may be changed or new laws may be enacted in the future. International litigation is often expensive, time consuming and distracting. As a result, any of these risks could significantly reduce the Company’s profitability and its ability to operate its businesses effectively.

The Company is dependent on key personnel and the loss of these key personnel could significantly reduce its profitability.

The Company is highly dependent on the skills, experience and services of its respective key personnel and the loss of key personnel could have a material adverse effect on its business, operating results and financial condition. Employment and retention of qualified personnel is important to the successful conduct of the Company’s business. Therefore, the Company’s success also depends upon its ability to recruit, hire, train and retain additional skilled and experienced management personnel. The Company’s inability to hire and retain personnel with the requisite skills could impair its ability to manage and operate its business effectively and could significantly reduce its profitability.

The amount and frequency of dividend payments made on NACCO’s common stock could change.

The Board of Directors has the power to determine the amount and frequency of the payment of dividends. Decisions regarding whether or not to pay dividends and the amount of any dividends are based on earnings, capital and future expense requirements, financial conditions, contractual limitations and other factors the Board of Directors may consider. Accordingly, holders of NACCO’s common stock should not rely on past payments of dividends in a particular amount as an indication of the amount of dividends that will be paid in the future.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2.		PROPERTIES

A. NACCO

NACCO currently leases office space in Mayfield Heights, Ohio, a suburb of Cleveland, Ohio, that serves as its and NMHG’s corporate headquarters.

B. NMHG

      1. NMHG Wholesale

The following table presents the principal assembly, manufacturing, distribution and office facilities that NMHG owns or leases for use in the wholesale operations:

				Owned/
Region		Facility Location		Leased		Function(s)
Americas		Berea, Kentucky		Owned		Assembly of lift trucks and manufacture of component parts
		Danville, Illinois		Owned		Americas parts distribution center
		Greenville, North Carolina		Owned		Divisional headquarters and marketing and sales operations for Hyster® and Yale® in Americas; Americas warehouse development center; assembly of lift trucks and manufacture of component parts
		Fairview, Oregon		Owned		Counterbalanced development center for design and testing of lift trucks, prototype equipment and component parts
		Portland, Oregon		Leased		Global executive administrative center
		Ramos Arizpe, Mexico		Owned		Manufacture of component parts for lift trucks
		Sao Paulo, Brazil		Owned		Assembly of lift trucks and marketing operations for Brazil
		Sulligent, Alabama		Owned		Manufacture of component parts for lift trucks

				Owned/
Region		Facility Location		Leased		Function(s)
Europe		Craigavon, Northern Ireland		Owned		Manufacture of lift trucks; cylinder and transmission assembly; mast fabrication and assembly for Europe
		Fleet, England		Leased		European executive center; marketing and sales operations for Hyster® and Yale® in Europe
		Irvine, Scotland		Leased		European administrative center
		Masate, Italy		Leased		Assembly of lift trucks; European warehouse development center
		Nijmegen, The Netherlands		Owned		Big trucks development center; manufacture and assembly of big trucks and component parts; European parts distribution center
Asia-Pacific		Shanghai, China		Owned (1)		Assembly of lift trucks by Shanghai Hyster joint venture
		Sydney, Australia		Leased		Divisional headquarters and sales and marketing for Asia-Pacific; Asia-Pacific parts distribution center
India		Pune, India		Leased		Engineering design services

(1)		This facility is owned by Shanghai Hyster Forklift Ltd., NMHG’s Chinese joint venture company.

SN’s operations are supported by five facilities. SN’s headquarters are located in Obu, Japan at a facility owned by SN. The Obu facility also has assembly and distribution capabilities. In Cavite, the Philippines and Hanoi, Vietnam, SN owns facilities for the manufacture of components for SN products. SN also has one wholly-owned and seven partially-owned dealerships in Japan.

     2. NMHG Retail

As of January 31, 2010, NMHG Retail’s three dealer operations were in six locations. Of these locations, three were in Europe and three were in Asia-Pacific, as shown below:

Europe		Asia-Pacific
United Kingdom (3)		Australia (2)
		Singapore (1)

Dealer locations generally include facilities for displaying equipment, storing rental equipment, servicing equipment, aftermarket parts storage and sales and administrative offices. NMHG leases all six locations. Some of the leases were entered into or assumed in connection with acquisitions and many of the lessors under these leases are former owners of businesses that NMHG acquired.

C. Hamilton Beach Brands

The following table presents the principal distribution and office facilities owned or leased by HBB:

		Owned/
Facility Location		Leased				Function(s)
Glen Allen, Virginia		Leased				Corporate headquarters
Geel, Belgium			(1	)		Distribution center
Memphis, Tennessee		Leased				Distribution center
Mexico City, Mexico			(1	)		Distribution center
Picton, Ontario, Canada		Leased				Distribution center
Southern Pines, North Carolina		Owned				Service center for customer returns; catalog distribution center; parts distribution center
Shenzhen, China		Leased				Representative office
Toronto, Ontario, Canada		Leased				Hamilton Beach Brands Canada sales and administration headquarters
Washington, North Carolina		Leased				Customer service center

(1)		This facility is managed by a third-party distribution provider.

Sales offices are also leased in several cities in the United States, Canada and Mexico.

D. The Kitchen Collection

KC currently leases its corporate headquarters building, the KC warehouse/distribution facility and two retail stores in Chillicothe, Ohio. KC also currently leases the LGC distribution center in Circleville, Ohio. KC leases the remainder of its

retail stores. A typical Kitchen Collection^® store is approximately 3,000 square feet and a typical Le Gourmet Chef^® store is approximately 4,300 square feet.

E. NACoal

NACoal currently leases its corporate headquarters office space in Dallas, Texas. NACoal’s proven and probable coal reserves and deposits (owned in fee or held under leases, which generally remain in effect until exhaustion of the reserves if mining is in progress) are estimated at approximately 2.2 billion tons (including the unconsolidated project mining subsidiaries), all of which are lignite coal deposits, except for approximately 28.6 million tons of bituminous coal. Reserves are estimates of quantities of coal, made by NACoal’s geological and engineering staff, which are considered mineable in the future using existing operating methods. Developed reserves are those which have been allocated to mines which are in operation; all other reserves are classified as undeveloped. Information concerning mine type, reserve data and coal quality characteristics for NACoal’s properties are set forth on the table on page 11 under “Item 1. Business — C. North American Coal — Sales, Marketing and Operations.”

Item 3. LEGAL PROCEEDINGS

Neither the Company nor any of its subsidiaries is a party to any material legal proceeding other than ordinary routine litigation incidental to its respective business.

Item 4. RESERVED

Item 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

The information under this Item is furnished pursuant to Instruction 3 to Item 401(b) of Regulation S-K.

There exists no arrangement or understanding between any executive officer and any other person pursuant to which such executive officer was elected. Each executive officer serves until his or her successor is elected and qualified.

The following tables set forth the name, age, current position and principal occupation and employment during the past five years of the Company’s executive officers.

EXECUTIVE OFFICERS OF THE COMPANY

Name		Age				Current Position		Other Positions
Alfred M. Rankin, Jr.			68			Chairman, President and Chief Executive Officer of NACCO (from prior to 2005), Chairman of NMHG (from October 2008), Chairman of HBB (from January 2010), Chairman of KC (from January 2010), Chairman of NACoal (from February 2010)
Charles A. Bittenbender			60			Vice President, General Counsel and Secretary of NACCO (from prior to 2005), Vice President, General Counsel and Secretary of NMHG (from October 2008)
J.C. Butler, Jr.			49			Vice President — Corporate Development and Treasurer of NACCO (from prior to 2005), Senior Vice President — Project Development and Administration of NACoal (from January 2010)		From May 2008 to January 2010, Senior Vice President — Project Development of NACoal.
Mary D. Maloney			48			Assistant General Counsel (from October 2005) and Assistant Secretary of NACCO (from May 2007)		From prior to 2005 to October 2005, Partner, Jones Day (law firm).
Lauren E. Miller			55			Vice President — Consulting Services of NACCO (from prior to 2005), Senior Vice-President, Marketing and Consulting of NMHG (from October 2008)
Kenneth C. Schilling			50			Vice President and Controller of NACCO (from prior to 2005), Vice President and Chief Financial Officer of NMHG (from October 2008)
Suzanne S. Taylor			47			Associate General Counsel and Assistant Secretary of NACCO (from December 2008)		From April 2007 to December 2008, Vice President, General Counsel and Chief Compliance Officer, Keithley Instruments, Inc. (developer, manufacturer and marketer of electronic instruments). From January 2006 to April 2007, Assistant General Counsel, Platinum Equity, LLC (a private equity firm). From prior to 2005 to November 2005, Senior Vice President, General Counsel, SourceOne Healthcare Technologies Inc., a Platinum Equity Company (distributor of imaging equipment).

PRINCIPAL OFFICERS OF THE COMPANY’S SUBSIDIARIES

A. NMHG

Name		Age				Current Position		Other Positions
Michael P. Brogan			59			President and Chief Executive Officer of NMHG (from June 2006)		From October 2005 to June 2006, Executive Vice President of NMHG. From prior to 2005 to October 2005, Senior Vice President, International Operations and Development of NMHG.
Daniel P. Gerrone			60			Controller of NMHG (from prior to 2005)
Jeffrey C. Mattern			57			Treasurer of NMHG (from prior to 2005)
Ralf A. Mock			54			Managing Director, Europe, Africa and Middle East of NMHG (from February 2006)		From January 2005 to February 2006, Independent Business Consultant. From prior to 2005 to January 2005, President, Villeroy & Boch AG (an international industrial enterprise).
James M. Phillips			61			Vice President, Human Resources of NMHG (from prior to 2005)
Rajiv K. Prasad			46			Vice President, Global Product Development of NMHG (from July 2007)		From November 2005 to July 2007, Vice President, Global Product Development, International Truck and Engine Corporation (an industrial company). From prior to 2005 to November 2005, Director, Engineering, International Truck and Engine Corporation (an industrial company).
Victoria L. Rickey			57			Vice President, Asia-Pacific of NMHG (from October 2008)		From February 2006 to October 2008, Vice President, Chief Marketing Officer of NMHG. From October 2005 to February 2006, Vice President, Marketing of NMHG. From prior to 2005 to October 2005, Vice President, Marketing and Retail Operations, EAME of NMHG.
Michael E. Rosberg			60			Vice President, Global Supply Chain of NMHG (from November 2006)		From May 2005 to February 2006, Vice President of Supply Chain Management, Brunswick Boat Group (an industrial company). From prior to 2005 to May 2005, Vice President of International Procurement, Maytag Corporation (an international industrial enterprise).
Michael K. Smith			65			Vice President, Finance and Information Systems of NMHG (from October 2008)		From prior to 2005 to October 2008, Vice President, Finance and Information Systems and Chief Financial Officer of NMHG.
Colin Wilson			55			Vice President and Chief Operating Officer of NMHG (from October 2005)		From prior to 2005 to October 2005, Vice President of NMHG; President, Americas of NMHG.

PRINCIPAL OFFICERS OF THE COMPANY’S SUBSIDIARIES

     B. HBB

Name		Age				Current Position		Other Positions
Gregory H. Trepp			48			President and Chief Executive Officer of HBB (from January 2010), Chief Executive Officer of KC (from January 2010)		From June 2008 to January 2010, Vice President, Global Marketing of HBB. From prior to 2005 to June 2008, Vice President, Marketing of HBB. From April 2009 to January 2010, Interim President and Chief Executive Officer of KC.
Keith B. Burns			53			Vice President — Engineering and Information Technology of HBB (from June 2008)		From prior to 2005 to June 2008, Vice President — Engineering and New Product Development of HBB.
Kathleen L. Diller			58			Vice President, General Counsel and Secretary of HBB (from May 2007)		From June 2006 to May 2007, Vice President, General Counsel and Human Resources, and Secretary of HBB. From February 2005 to June 2006, Vice President, General Counsel and Human Resources of HBB. From prior to 2005 to February 2005, Vice President, General Counsel and Secretary of HBB.
Gregory E. Salyers			49			Senior Vice President, Global Operations of HBB (from January 2010)		From May 2007 to January 2010, Vice President, Global Operations of HBB. From February 2005 to May 2007, Vice President — Operations and Information Systems of HBB. From prior to 2005 to February 2005, Vice President — Operations of HBB.
James H. Taylor			52			Vice President, Chief Financial Officer and Treasurer of HBB (from January 2007)		From February 2005 to January 2007, Vice President — Finance and Treasurer of HBB. From prior to 2005 to February 2005, Vice President — Treasurer of HBB.
R. Scott Tidey			45			Senior Vice President, North American Sales and Marketing of HBB (from January 2010)		From July 2008 to January 2010, Vice President, North America Sales of HBB. From March 2007 to July 2008, Vice President, U.S. Consumer Sales of HBB. From January 2005 to March 2007, Vice President, International and National Account Sales of HBB. From prior to 2005 to January 2005, Vice President, National Account Sales of HBB.

     C. KC

Name		Age				Current Position		Other Positions
Robert A. LeBrun, Jr.			53			President of KC (from January 2010)		From February 2009 to January 2010, Senior Vice President, General Merchandise Manager of KC. From prior to 2005 to January 2009, Vice President, Divisional Merchandise Manager, Linens ‘n Things, Inc. (an international retailer).

PRINCIPAL OFFICERS OF THE COMPANY’S SUBSIDIARIES

     D. NACOAL

Name		Age				Current Position		Other Positions
Robert L. Benson			62			President and Chief Executive Officer of NACoal (from March 2006)		From September 2005 to March 2006, Executive Vice President and Chief Operating Officer of NACoal. From prior to 2005 to September 2005, Vice President — Eastern and Southern Operations of NACoal; General Manager of MLMC.
Bob D. Carlton			52			Vice President and Chief Financial Officer of NACoal (from May 2008)		From March 2005 to May 2008, Vice President — Financial Services of NACoal. From prior to 2005 to June 2006, Controller of NACoal. From prior to 2005 to March 2005, Director of Tax of NACoal.
Douglas L. Darby			58			Vice President — Southern Operations of NACoal (from May 2008)		From June 2006 to May 2008, Vice President — Engineering and Eastern Operations of NACoal. From prior to 2005 to June 2006, President of Sabine.
Michael J. Gregory			62			Vice President — Engineering, Human Resources and International Operations of NACoal (from May 2008)		From June 2006 to May 2008, Vice President — Southern Operations and Human Resources of NACoal. From prior to 2005 to June 2006, General Manager of San Miguel.
K. Donald Grischow			62			Treasurer of NACoal (from prior to 2005)
Thomas A. Koza			63			Vice President — Law and Administration, and Secretary of NACoal (from prior to 2005)
John R. Pokorny			54			Controller of NACoal (from October 2009)		From June 2006 to October 2009, Director of Accounting and Financial Planning of NACoal. From prior to 2005 to June 2006, Accounting Manager of NACoal.

PART II

Item 5.		MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

NACCO’s Class A common stock is traded on the New York Stock Exchange under the ticker symbol “NC.” Because of transfer restrictions, no trading market has developed, or is expected to develop, for the Company’s Class B common stock. The Class B common stock is convertible into Class A common stock on a one-for-one basis. The high and low market prices for the Class A common stock and dividends per share for both classes of common stock for each quarter during the past two years are presented in the table below:

		2009
		Sales Price								Cash
		High				Low				Dividend
First quarter		$	41.71			$	13.66				51.50¢
Second quarter		$	44.80			$	25.59				51.75¢
Third quarter		$	63.09			$	27.09				51.75¢
Fourth quarter		$	73.54			$	47.91				51.75¢

		2008
		Sales Price								Cash
		High				Low				Dividend
First quarter		$	107.00			$	68.84				50.00¢
Second quarter		$	95.46			$	74.35				51.50¢
Third quarter		$	125.50			$	70.43				51.50¢
Fourth quarter		$	95.22			$	25.88				51.50¢

At December 31, 2009, there were approximately 850 Class A common stockholders of record and approximately 200 Class B common stockholders of record. See Note 19 to Consolidated Financial Statements contained elsewhere in this Form 10-K for a discussion of the amount of NACCO’s investment in subsidiaries that was restricted at December 31, 2009.

Sales of Unregistered Company Stock

Pursuant to the Non-Employee Directors’ Equity Compensation Plan, the Company issued an aggregate of 6,399 shares of its Class A common stock on January 1, 2009, April 1, 2009, July 1, 2009 and October 1, 2009 for payment of a portion of the directors’ annual retainer fee. In addition, pursuant to the terms of such plan, directors may elect to receive shares of Class A common stock in lieu of cash for up to 100% of the balance of their annual retainer, meeting attendance fees and any committee chairman’s fees. An aggregate of 1,891 shares of Class A common stock were issued under voluntary elections on January 1, 2009, April 1, 2009, July 1, 2009 and October 1, 2009. The issuance of these unregistered shares qualifies as an exempt transaction pursuant to Section 4(2) of the Securities Act of 1933.

Pursuant to the Non-Employee Directors’ Equity Compensation Plan, the Company issued an aggregate of 2,907 shares of its Class A common stock on January 1, 2008, April 1, 2008, July 1, 2008 and October 1, 2008 for payment of a portion of the directors’ annual retainer fee. In addition, pursuant to the terms of such plan, directors may elect to receive shares of Class A common stock in lieu of cash for up to 100% of the balance of their annual retainer, meeting attendance fees and any committee chairman’s fees. An aggregate of 856 shares of Class A common stock were issued under voluntary elections on January 1, 2008, April 1, 2008, July 1, 2008 and October 1, 2008. The issuance of these unregistered shares qualifies as an exempt transaction pursuant to Section 4(2) of the Securities Act of 1933.

Pursuant to the Non-Employee Directors’ Equity Compensation Plan, the Company issued an aggregate of 1,899 shares of its Class A common stock on January 1, 2007, April 1, 2007, July 1, 2007 and October 1, 2007 for payment of a portion of the directors’ annual retainer fee. In addition, pursuant to the terms of such plan, directors may elect to receive shares of Class A common stock in lieu of cash for up to 100% of the balance of their annual retainer, meeting attendance fees and any committee chairman’s fees. An aggregate of 560 shares of Class A common stock were issued under voluntary elections on January 1, 2007, April 1, 2007, July 1, 2007 and October 1, 2007. The issuance of these unregistered shares qualifies as an exempt transaction pursuant to Section 4(2) of the Securities Act of 1933.

Pursuant to the Supplemental Executive Long-Term Incentive Bonus Plan, the Company issued an aggregate of 567 shares of its Class A common stock on December 5, 2008 to certain employees who were participants in the annual compensation plans of NACCO’s subsidiaries as of October 15, 2008. The issuance of these shares was not registered because such issuance of shares was a “no sale” pursuant to the federal securities laws.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Issuer Purchases of Equity Securities

														(d)
														Maximum
														Number of Shares
										(c)				(or Approximate
		(a)								Total Number of				Dollar Value) that
		Total Number				(b)				Shares Purchased as				May Yet Be
		of Shares				Average Price				Part of the Publicly				Purchased Under
Period		Purchased				Paid per Share				Announced Program				the Program (1)
Month #1 (October 1 to 31, 2009)			0				0				0			$	100,000,000
Month #2 (November 1 to 30, 2009)			0				0				0			$	100,000,000
Month #3 (December 1 to 31, 2009)			0				0				0			$	100,000,000
Total			0				0				0			$	100,000,000

Item 6.		SELECTED FINANCIAL DATA

		Year Ended December 31
		2009				2008(1)				2007				2006				2005
		(In millions, except per share data)
Operating Statement Data:
Revenues		$	2,310.6			$	3,665.1			$	3,590.0			$	3,327.6			$	3,144.2
Operating profit (loss)		$	59.1			$	(389.5	)		$	139.2			$	171.1			$	107.9
Income (loss) from continuing operations		$	8.4			$	(439.7	)		$	89.7			$	90.5			$	56.9
Discontinued operations, net-of-tax(2)			22.6				2.3				0.6				2.8				1.4
Extraordinary gain, net-of-tax(3)			—				—				—				12.8				4.7
Net income (loss)		$	31.0			$	(437.4	)		$	90.3			$	106.1			$	63.0
Net (income) loss attributable to noncontrolling interest			0.1				(0.2	)			0.1				0.7				0.1
Net income (loss) attributable to stockholders		$	31.1			$	(437.6	)		$	90.4			$	106.8			$	63.1
Amounts Attributable to Stockholders
Income (loss) from continuing operations, net of tax		$	8.5			$	(439.9	)		$	89.8			$	91.2			$	57.0
Discontinued operations, net of tax(2)			22.6				2.3				0.6				2.8				1.4
Extraordinary gain, net of tax(3)			—				—				—				12.8				4.7
Net income (loss) attributable to stockholders		$	31.1			$	(437.6	)		$	90.4			$	106.8			$	63.1
Basic earnings (loss) per share attributable to stockholders:
Continuing operations		$	1.03			$	(53.12	)		$	10.87			$	11.07			$	6.93
Discontinued operations (2)			2.72				0.28				0.07				0.34				0.17
Extraordinary gain (3)			—				—				—				1.56				0.57
Basic earnings (loss) per share		$	3.75			$	(52.84	)		$	10.94			$	12.97			$	7.67
Diluted earnings (loss) per share attributable to stockholders:
Continuing operations		$	1.03			$	(53.12	)		$	10.86			$	11.06			$	6.93
Discontinued operations (2)			2.72				0.28				0.07				0.34				0.17
Extraordinary gain (3)			—				—				—				1.56				0.57
Diluted earnings (loss) per share		$	3.75			$	(52.84	)		$	10.93			$	12.96			$	7.67

		Year Ended December 31
		2009				2008(1)				2007				2006				2005
		(In millions, except per share and employee data)
Balance Sheet Data at December 31:
Total assets		$	1,488.7			$	1,687.9			$	2,427.3			$	2,154.5			$	2,091.6
Long-term debt		$	377.6			$	400.3			$	439.3			$	359.9			$	406.2
Stockholders’ equity		$	396.6			$	356.7			$	891.4			$	791.3			$	700.9
Cash Flow Data:
Provided by operating activities		$	157.0			$	4.9			$	81.4			$	173.5			$	75.2
Provided by (used for) investing activities		$	23.1			$	(71.4	)		$	(59.9	)		$	(35.3	)		$	(56.3	)
Provided by (used for) financing activities		$	(64.1	)		$	(83.2	)		$	64.4			$	(105.8	)		$	(1.8	)
Other Data:
Per share data:
Cash dividends		$	2.068			$	2.045			$	1.980			$	1.905			$	1.848
Market value at December 31		$	49.80			$	37.41			$	99.69			$	136.60			$	117.15
Stockholders’ equity at December 31		$	47.82			$	43.05			$	107.80			$	96.05			$	85.21
Actual shares outstanding at December 31			8.294				8.286				8.269				8.238				8.226
Basic weighted average shares outstanding			8.290				8.281				8.263				8.234				8.223
Diluted weighted average shares outstanding			8.296				8.281				8.272				8.242				8.226
Total employees at December 31(4)			8,600				9,500				10,600				11,300				11,100

Item 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Millions, Except Per Share and Percentage Data)

OVERVIEW

NACCO Industries, Inc. (the parent company or “NACCO”) and its wholly owned subsidiaries (collectively, the “Company”) operate in the following principal industries: lift trucks, small appliances, specialty retail and mining. Results of operations and financial condition are discussed separately by segment, which corresponds with the industry groupings. The Company manages its lift truck operations as two reportable segments: wholesale manufacturing (“NMHG Wholesale”) and retail distribution (“NMHG Retail”). Results by segment are also summarized in Note 17 to the Consolidated Financial Statements contained elsewhere in this Form 10-K.

NMHG Holding Co. (“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, primarily to independent and wholly owned Hyster^® and Yale^® retail dealerships. Lift trucks and component parts are manufactured in the United States, Northern Ireland, The Netherlands, China, Italy, Japan, Mexico, the Philippines, Vietnam and Brazil. Hamilton Beach Brands, Inc. (“HBB”) is a leading designer, marketer and distributor of small electric household appliances primarily in the United States, Canada and Mexico, as well as commercial products for restaurants, bars and hotels. The Kitchen Collection, Inc. (“KC”) 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. The North American Coal Corporation and its affiliated coal companies (collectively, “NACoal”) mine and market coal primarily as fuel for power generation and provide selected value-added mining services for other natural resources companies in the United States. Coal is delivered from NACoal’s mines in Louisiana, Mississippi, North Dakota and Texas to adjacent or nearby power plants. Dragline mining services are provided for independently owned limerock quarries in Florida.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities (if any). On an ongoing basis, the Company evaluates its estimates based on historical experience, actuarial valuations and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates.

Due to the continuing challenging economic conditions of the global economy that have adversely affected all industries, the Company has placed increased emphasis on monitoring the risks associated with the current economic environment, particularly the collectability of receivables, the fair value of assets and the Company’s liquidity. The Company will continue to monitor the risks associated with the current economic environment and any effect on the Company’s results.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Revenue recognition: Revenues are generally recognized when title transfers and risk of loss passes as customer orders are completed and shipped. For NMHG’s National Account customers, revenue is recognized upon customer acceptance. National Account customers are large customers with centralized purchasing and geographically dispersed operations in multiple dealer territories. Under its mining contracts, the Company recognizes revenue as the coal or limerock is delivered. Reserves for discounts and returns are maintained for anticipated future claims. The accounting policies used to develop these product discounts and returns include:

Product discounts: The Company records estimated reductions to revenues for customer programs and incentive offerings, including special pricing agreements, price competition, promotions and other volume-based incentives. At NMHG, lift truck sales revenue is recorded net of projected discounts. The estimated discount amount is based upon historical trends for each truck model. In addition to standard discounts, dealers can also request additional discounts that allow them to offer price concessions to customers. From time to time, NMHG offers special incentives to increase retail share or dealer stock and offers certain customers volume rebates if a specified cumulative level of purchases is obtained. At HBB, net sales represent gross sales less cooperative advertising, negotiated price allowances based primarily on volume purchasing levels, estimated returns and allowances for defective products. At KC, retail markdowns are incorporated into KC’s retail method of accounting for cost of sales. If market conditions were to decline or if competition was to increase, the Company may take actions to increase customer incentive offerings, possibly resulting in an incremental reduction of revenues at the time the incentive is offered. If the Company’s estimates of customer programs and incentives were one percent higher than the levels offered during 2009, the reserves for product discounts would increase and revenue would be reduced by $0.1 million. The Company’s past results of operations have not been materially affected by a change in the estimate of product discounts and although

Item 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Millions, Except Per Share and Percentage Data)

there can be no assurances, the Company is not aware of any circumstances that would be reasonably likely to materially change its estimates in the future.

Product returns: Products generally are not sold with the right of return. However, based on the Company’s historical experience, a portion of products sold are estimated to be returned due to reasons such as buyer remorse, duplicate gifts received, product failure and excess inventory stocked by the customer which, subject to certain terms and conditions, the Company will agree to accept. The Company records estimated reductions to revenues at the time of sale based on this historical experience and the limited right of return provided to certain customers. If future trends were to change significantly from those experienced in the past, incremental reductions to revenues may result based on this new experience. If the Company’s estimate of average return rates for each type of product sold were to increase by one percent over historical levels, the reserves for product returns would increase and revenues would be reduced by $0.1 million. The Company’s past results of operations have not been materially affected by a change in the estimate of product returns and although there can be no assurances, the Company is not aware of any circumstances that would be reasonably likely to materially change its estimates in the future.

Retirement benefit plans: The Company maintains various defined benefit pension plans that provide benefits based on years of service and average compensation during certain periods. Pension benefits for all parent company, HBB and NACoal employees in the United States, excluding certain project mining subsidiary employees, have been frozen since at least 2004. Pension benefits were frozen for employees covered under NMHG’s U.S. plans, except for those NMHG employees in the United States participating in collective bargaining agreements, in 1996. Pension benefits for the remaining NMHG collectively-bargained employees were frozen effective December 31, 2009. As a result, no employees in the United States, other than certain project mining subsidiary employees, will earn retirement benefits under defined benefit pension plans after December 31, 2009. Effective January 1, 2009, pension benefits for HBB employees in Canada were frozen. Only certain grandfathered NMHG employees in the United Kingdom and the Netherlands still earn retirement benefits under defined benefit pension plans. All other eligible employees of the Company, including employees whose pension benefits are frozen, receive retirement benefits under defined contribution retirement plans. The Company’s policy is to periodically make contributions to fund the defined benefit pension plans within the range allowed by applicable regulations. The defined benefit pension plan assets consist primarily of publicly traded stocks and government and corporate bonds. There is no guarantee the actual return on the plans’ assets will equal the expected long-term rate of return on plan assets or that the plans will not incur investment losses.

The expected long-term rate of return on defined benefit plan assets reflects management’s expectations of long-term rates of return on funds invested to provide for benefits included in the projected benefit obligations. The Company has established the expected long-term rate of return assumption for plan assets by considering historical rates of return over a period of time that is consistent with the long-term nature of the underlying obligations of these plans. The historical rates of return for each of the asset classes used by the Company to determine its estimated rate of return assumption were based upon the rates of return earned by investments in the equivalent benchmark market indices for each of the asset classes.

Changes to the estimate of any of these factors could result in a material change to the Company’s pension obligation causing a related increase or decrease in reported net operating results in the period of change in the estimate. Because the 2009 assumptions are used to calculate 2010 pension expense amounts, a one percentage-point change in the expected long-term rate of return on plan assets would result in a change in pension expense for 2010 of approximately $2.0 million for the plans. A one percentage-point increase or decrease in the discount rate would have lowered by approximately $2.7 million or raised by approximately $2.4 million, respectively, the plans’ 2010 expense and would have lowered by approximately $30.6 million or raised by approximately $36.7 million the plans’ projected benefit obligation as of the end of 2009.

The Company also maintains health care and life insurance plans which provide benefits to eligible retired employees. All health care and life insurance plans of the Company have a cap on the Company’s share of the costs. These plans have no assets. Under the Company’s current policy, plan benefits are funded at the time they are due to participants.

The basis for the selection of the discount rate for each plan is determined by matching the timing of the payment of the expected obligations under the defined benefit and health care and life insurance plans against the corresponding yield of high-quality corporate bonds of equivalent maturities.

See Note 16 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company’s retirement benefit plans.

Product liabilities: The Company provides for the estimated cost of personal and property damage relating to the Company’s products based on a review of the Company’s historical experience and consideration of any known trends. Reserves are recorded for estimates of the costs for known claims and estimates of the costs of incidents that have occurred but for which a claim has not yet been reported to the Company, in excess of available insurance coverage. While the Company engages in extensive product quality reviews and customer education programs, the Company’s product liability provision is affected by the number and magnitude of claims of alleged product-related damage and the cost to defend those claims. In addition, the

Item 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Millions, Except Per Share and Percentage Data)

Company’s estimates regarding the magnitude of claims are affected by changes in assumptions regarding medical costs, inflation rates and trends in damages awarded by juries. Changes in the Company’s assumptions regarding any one of these factors could result in a change in the estimate of the magnitude of claims. A one percent increase in the estimate of the number of claims or the magnitude of claims would increase the Company’s product liability reserve and reduce operating profit by approximately $0.2 million. During 2007, as part of its periodic review of product liability estimates, the Company reduced its product liability accrual by $6.7 million. This change in estimate was based upon historical trends identified within recent favorable claim settlement experience that indicated both the frequency and severity of claim estimates should be reduced. The reduction in the product liability accrual was primarily the result of a reduction in the estimate of the number of claims that had been incurred but not reported and the average cost per claim. This adjustment was not necessarily indicative of trends or adjustments that may be required in the future to adjust the product liability accrual and although there can be no assurances, the Company is not aware of any circumstances that would be reasonably likely to materially change our estimates in the future.

Self-insurance liabilities: The Company is generally self-insured for product liability, environmental liability, medical claims, certain workers’ compensation claims and certain closed mine liabilities. For product liability, catastrophic insurance coverage is retained for potentially significant individual claims. An estimated provision for claims reported and for claims incurred but not yet reported under the self-insurance programs is recorded and revised periodically based on industry trends, historical experience and management judgment. In addition, industry trends are considered within management’s judgment for valuing claims. Changes in assumptions for such matters as legal judgments and settlements, inflation rates, medical costs and actual experience could cause estimates to change in the near term. Changes in any of these factors could materially change the Company’s estimates for these self-insurance obligations causing a related increase or decrease in reported net operating results in the period of change in the estimate.

Product warranties: The Company provides for the estimated cost of product warranties at the time revenues are recognized. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the Company’s warranty obligation is affected by product failure rates, labor costs and replacement component costs incurred in correcting a product failure. If actual product failure rates, labor costs or replacement component costs differ from the Company’s estimates, which are based on historical failure rates and consideration of known trends, revisions to the estimate of the cost to correct product failures would be required. If the Company’s estimate of the cost to correct product failures were to increase by one percent over 2009 levels, the reserves for product warranties would increase and additional expense of $0.4 million would be incurred. The Company’s past results of operations have not been materially affected by a change in the estimate of product warranties and although there can be no assurances, the Company is not aware of any circumstances that would be reasonably likely to materially change its estimates in the future.

Deferred tax valuation allowances: The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. A valuation allowance has been provided against certain deferred tax assets related to non-U.S. and U.S. state jurisdictions including net operating and capital loss carryforwards. Management believes the valuation allowances are adequate after considering future taxable income, allowable carryforward periods and ongoing prudent and feasible tax planning strategies. In the event the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount (including the valuation allowance), an adjustment to the valuation allowance would increase income in the period such determination was made. Conversely, should the Company determine that it would not be able to realize all or part of its net deferred tax asset in the future, an adjustment to the valuation allowance would be expensed in the period such determination was made.

See Note 15 to the Consolidated Financial Statements in this Form 10-K for further discussion of the Company’s income taxes.

Inventory reserves: The Company writes down its inventory to the lower of cost or market, which includes an estimate for obsolescence or excess inventory based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Upon a subsequent sale or disposal of the impaired inventory, the corresponding reserve for impaired value is relieved to ensure that the cost basis of the inventory reflects any write-downs. An impairment in value of one percent of net inventories would result in additional expense of approximately $3.4 million.

Allowances for doubtful accounts: The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. These allowances are based on both recent trends of certain customers estimated to be a greater credit risk as well as general trends of the entire customer pool. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. An impairment in value of one percent of net accounts receivable would require an increase in the allowance for doubtful accounts and would result in additional expense of approximately $3.2 million.

Item 7.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NACCO INDUSTRIES, INC. AND SUBSIDIARIES (Tabular Amounts in Millions, Except Per Share and Percentage Data)

CONSOLIDATED FINANCIAL SUMMARY

Selected consolidated results of the Company were as follows:

		2009				2008 (2)				2007
Consolidated results:
Income (loss) from continuing operations attributable to stockholders		$	8.5			$	(439.9	)		$	89.8
Discontinued operations, net-of-tax (1)			22.6				2.3				0.6
Net income (loss) attributable to stockholders		$	31.1			$	(437.6	)		$	90.4
Basic earnings (loss) per share
Income (loss) from continuing operations attributable to stockholders		$	1.03			$	(53.12	)		$	10.87
Discontinued operations, net-of-tax (1)			2.72				0.28				0.07
Basic earnings (loss) per share		$	3.75			$	(52.84	)		$	10.94
Diluted earnings (loss) per share
Income (loss) from continuing operations attributable to stockholders		$	1.03			$	(53.12	)		$	10.86
Discontinued operations, net-of-tax (1)			2.72				0.28				0.07
Diluted earnings (loss) per share		$	3.75			$	(52.84	)		$	10.93