CLEVELAND, March 13 /PRNewswire-FirstCall/ -- NACCO Industries, Inc. (NYSE: NC) today announced financial results for the fourth quarter and full year 2008.

Revenues for the fourth quarter of 2008 were $949.4 million, 13 percent lower than the $1.1 billion in the prior-year period. The sales decline was primarily attributable to lower volumes at all of NACCO's subsidiaries primarily as a result of the deteriorating global economy.

Because the Company's stock price at December 31, 2008 was significantly below the Company's book value of tangible assets and book value of equity, accounting rules required that the Company take a non-cash write-off of goodwill and certain other intangible assets totaling $435.7 million, or $431.6 million net of taxes of $4.1 million. The Company recorded the pre-tax charges as follows: $351.1 million at NACCO Materials Handling Group ('NMHG') Wholesale, $80.7 million at Hamilton Beach and $3.9 million at Kitchen Collection. The goodwill and intangibles were incurred largely as a result of acquisitions in the late 1980s and early 1990s. Also in the fourth quarter, the Company recognized a non-cash charge of $15.3 million against the accumulated deferred tax assets for the European operations of NMHG's Wholesale and Retail subsidiaries. Including these charges, for the 2008 fourth quarter, the Company incurred a net loss of $428.2 million, or $51.69 per share, NMHG Wholesale incurred a net loss of $364.0 million, NMHG Retail incurred a net loss of $1.8 million, Hamilton Beach reported a net loss of $74.1 million, and Kitchen Collection reported net income of $0.2 million.

The Company believes that current stock market valuations, which were the basis for the impairment testing under existing accounting rules, are generally reflective of broader global macro-economic and stock market conditions rather than a reflection of the operating fundamentals and the programs being implemented at each of our subsidiaries. As market conditions improve, the Company expects that these fundamentals and the programs in place at our subsidiaries will position each of them to move positively toward achievement of sound long-term financial returns.

Consolidated fourth-quarter 2008 adjusted income, which excludes the goodwill and intangible asset impairment charges as well as the charge against the deferred tax assets, was $18.7 million, or $2.26 per share. This compares with consolidated net income for the fourth quarter of 2007 of $51.9 million, or $6.27 per diluted share. 'Adjusted income/loss' in this press release refers to net income/loss results that exclude the goodwill and intangible asset impairment charges as well as the charges against the accumulated deferred tax assets. For reconciliations from GAAP results to the adjusted non-GAAP financial results, see the supplemental data schedules at the end of this release. The remaining discussion of 2008 fourth quarter and full year results in this release relates only to adjusted income/loss unless otherwise noted. Management believes a discussion of adjusted income/loss is more reflective of NACCO's underlying business operations and assists investors and our subsidiaries' lenders, who often exclude non-cash charges from their analyses, in better understanding the results of operations of NACCO and its subsidiaries.

NACCO and Subsidiaries Consolidated Fourth Quarter Highlights

Economic conditions deteriorated further in the fourth quarter of 2008, significantly affecting consolidated results. Key perspectives on NACCO's fourth quarter non-GAAP adjusted results are as follows:

    -- NMHG Wholesale's adjusted loss was $1.6 million in 2008, compared with
       net income of $23.8 million in 2007.  The key drivers for the change
       in results at NMHG Wholesale were a decrease in market volume for
       units and parts, unfavorable foreign currency movements and costs
       associated with reductions-in-force.
    -- NMHG Retail had an adjusted loss of $1.6 million in 2008, compared
       with a net loss of $1.1 million in 2007.  The key driver for the
       increased loss at NMHG Retail was an increase in income tax expense,
       partially offset by improved operating results due to reduced spending
       and reduced interest expense.
    -- Rising product costs and a weak North America consumer market had an
       adverse effect on results at both Hamilton Beach and Kitchen
       Collection.
       - Hamilton Beach's adjusted income decreased to $6.6 million in 2008
         from net income of $12.8 million in 2007. The decrease in 2008
         primarily resulted from increased product costs net of price
         increases, lower unit volumes and reduced sales of higher-margin
         products.  During the fourth quarter of 2008, Hamilton Beach changed
         its method of valuing inventories from the last-in, first-out
         ('LIFO') method to the first-in, first-out ('FIFO') method.
         Financial information for prior periods for Hamilton Beach and
         Consolidated NACCO has been revised to reflect this change.
       - Kitchen Collection's 2008 adjusted income of $3.8 million decreased
         compared with net income of $5.9 million in 2007 as a result of a
         decrease in Kitchen Collection(R) and Le Gourmet Chef(R) comparable
         store sales due to fewer store transactions and a lower average
         sales transaction value.
    -- North American Coal's net income decreased to $4.9 million in 2008
       compared with $6.6 million in 2007 primarily due to fewer tons sold at
       the Mississippi Lignite Mining Company.

Consolidated Full Year Results

Revenue for 2008 was $3.7 billion compared with $3.6 billion for 2007. Results for the year ended December 31, 2008 include the non-cash impairment charges previously discussed and the recognition of non-cash charges totaling $29.8 million against the accumulated deferred tax assets for European and Australian operations and for certain U.S. state taxing jurisdictions at NMHG's Wholesale and Retail operations. Including these charges, for the year ended December 31, 2008, the Company incurred a consolidated net loss of $437.6 million, or $52.84 per share, NMHG Wholesale incurred a net loss of $365.6 million, NMHG Retail incurred a net loss of $10.4 million, Hamilton Beach reported a net loss of $73.3 million and Kitchen Collection reported a net loss of $10.0 million.

Consolidated adjusted income for the year ended December 31, 2008 was $23.8 million, or $2.87 per share. This compared with net income of $90.4 million, or $10.93 per diluted share, for the year ended December 31, 2007.

All subsidiaries had lower results for the year ended December 31, 2008. North American Coal declined the least and reported net income of $22.1 million. Overall, 2008 adjusted income was negatively affected by increased material costs not recovered by price increases, adverse foreign currency movements and reduced volumes as the global recession unfolded.

In light of the current difficult economic conditions, NACCO increased the capitalization of three of its subsidiaries by contributing $68.3 million to NMHG, $29.0 million to Hamilton Beach and $25.3 million to Kitchen Collection during the year ended December 31, 2008.

Consolidated Outlook for 2009

Economic and market conditions deteriorated dramatically in 2008 with a deep global recession likely to continue through 2009. The depth and duration of this downturn is quite uncertain. The consumer markets in which Hamilton Beach and Kitchen Collection participate have declined as consumers reduce purchases. The forklift truck capital goods market in which NMHG participates has moved into a significant global downturn that has resulted in a decline in bookings in the Americas, Europe and Asia-Pacific. Price increases, changes in product positioning and product cost reductions were implemented in 2008 and early 2009 to offset higher material and transportation costs and adverse currency movements at NMHG and Hamilton Beach in order to achieve more acceptable margin positions. While North American Coal's lignite coal operations continue to be strong, the company expects limerock production and limerock deliveries to be significantly lower in 2009 compared with 2008 due to a continued drop in demand in the housing and construction markets in southern Florida and an unfavorable legal ruling that terminated customers' existing mining permits at most of the limerock mining operations. Limerock customers are expected to reduce inventory levels until they return to production under new permits that are expected to be issued toward the end of 2009.

The Company is operating on the assumption that the economic environment will not improve in 2009. Accordingly, NACCO has moved promptly and aggressively to put plans in place to help meet the challenges of 2009. Cost containment actions, which include spending and travel restrictions, personnel reductions, suspension of incentive compensation and profit-sharing, benefit reductions, wage freezes and salary reductions, have been taken at our consumer and capital goods subsidiaries and at NACCO headquarters. At NMHG, these cost containment actions are unlikely to overcome the effect of reduced volumes in the early part of the year, particularly the first quarter. NMHG's 2009 net income is expected to be about break-even assuming market conditions do not deteriorate further than currently expected. NMHG Retail's objective is to achieve break-even results in 2009. While the consumer businesses anticipate weak markets in 2009, both Hamilton Beach and Kitchen Collection expect 2009 results to improve increasingly over the course of the year, especially at Kitchen Collection, where the new Le Gourmet Chef store format is in place and no further large product clearance program is needed. North American Coal expects 2009 net income to be comparable to 2008.

Overall, NACCO expects its subsidiaries to generate substantial cash flow before financing activities. Currently NACCO has substantial cash available, which provides the Company flexibility with respect to capitalizing its subsidiaries.

Detailed Discussion of Results

NMHG Wholesale - Fourth Quarter Results

NMHG Wholesale reported an adjusted loss of $1.6 million on revenues of $646.6 million for the fourth quarter of 2008 compared with net income of $23.8 million on revenues of $759.5 million for the fourth quarter of 2007.

Revenues decreased in the fourth quarter of 2008 compared with the fourth quarter of 2007 primarily as a result of a decrease in units and parts volumes in all geographic regions due to the downturn in each of these markets. Worldwide shipments in the fourth quarter of 2008 declined to 20,830 units from shipments of 25,946 units in the fourth quarter of 2007. Also contributing to the decrease in revenues were unfavorable foreign currency movements as the U.S. dollar strengthened against the euro and British pound. A favorable shift in sales mix to higher-priced lift trucks in the U.S. and Europe and the effect of unit and parts price increases implemented during late 2007 and early 2008 in the Americas and Europe partially offset the decrease in revenues.

NMHG Wholesale's worldwide backlog was approximately 14,900 units at December 31, 2008 compared with approximately 30,500 units at December 31, 2007 and approximately 26,000 units at September 30, 2008.

The significant decrease in results in the fourth quarter of 2008 compared with the fourth quarter of 2007 was primarily the result of a decline in gross profit, unfavorable foreign currency movements of $15.0 million pre-tax, mainly due to adverse currency revaluations, and a $6.0 million pre-tax charge for reductions-in-force at all NMHG locations because of the downturn in forklift truck markets. Gross profit declined as a result of reduced volumes and lower sales of higher-margin units and parts and an increase in manufacturing costs as less fixed cost was absorbed due to lower production volumes. These unfavorable items were partially offset by the effect of a LIFO liquidation at lower prior year inventory costs of $6.7 million pre-tax, reduced warranty costs resulting from lower sales volumes, and benefits totaling $21.5 million pre-tax from price increases implemented in prior periods, although the benefits of these price increases were partially offset by material cost increases of $17.1 million pre-tax, primarily from increased steel costs.

NMHG Wholesale - Full Year Results

For the year ended December 31, 2008, NMHG Wholesale reported adjusted income of $4.5 million on revenues of $2.7 billion, compared with net income of $48.2 million on revenues of $2.6 billion for the year ended December 31, 2007. Lift truck shipments in 2008 decreased to 87,250 units from 90,899 units in 2007.

The significant decrease in adjusted income in 2008 compared with 2007 was primarily attributable to unfavorable foreign currency movements of $39.2 million pre-tax and an increase in material costs of $65.0 million pre-tax from increased commodity and transportation costs, partially offset by benefits totaling $48.3 million pre-tax from price increases implemented in late 2007 and 2008. Also contributing to the decline was an increase in manufacturing costs, as less fixed cost was absorbed due to lower production volumes, and higher warranty expenses. These unfavorable items were partially offset by a decrease in selling, general and administrative expenses resulting primarily from lower employee-related costs and lower product liability expense as a result of favorable claim settlement experience.

NMHG Wholesale - Outlook

NMHG Wholesale expects significant declines in all lift truck markets in 2009 compared with 2008, with very little recovery until 2010. As a result, the company expects lower unit booking and shipment levels and a reduction in parts sales in 2009 compared with 2008.

NMHG has taken a number of steps to respond to the market outlook, which include capital expenditure restraints, planned plant downtime, reductions-in-force, restrictions on spending and travel, suspension of incentive compensation and profit-sharing, wage freezes and salary and benefit reductions.

Benefits from price increases implemented in late 2007 and 2008 to offset material cost increases are expected to be fully realized in 2009. Further, NMHG Wholesale is actively monitoring commodity costs and other supply chain drivers to ensure timely implementation of reductions in procurement costs because material costs, specifically steel, and fuel and freight costs have moderated in the fourth quarter of 2008 and early 2009. The company's goal is to improve near-term margins while still maintaining market positions.

Unfavorable foreign currency movements continued to affect 2008 results significantly. To offset these effects, NMHG Wholesale implemented a manufacturing restructuring program in 2007, which is expected to be completed in early 2009, in order to lessen NMHG Wholesale's exposure to future currency exchange rate fluctuations, reduce the manufacturing footprint of NMHG Wholesale's European manufacturing operations, provide additional opportunities to source components from lower-cost countries and reduce working capital. This program and other related manufacturing restructuring programs are anticipated to improve results beginning in 2009, and, at maturity, generate benefits of approximately $17 million in annual cost savings.

NMHG Wholesale's warehouse truck and big truck product development programs, and its important new electric-rider lift truck program, are progressing as planned. The new electric-rider lift truck program is expected to bring a full line of newly designed products to market, including the introduction of two series in the second quarter of 2009.

Overall, NMHG Wholesale expects earnings in the first half of 2009 to be well below the first half of 2008, with an especially difficult first quarter. Modest market improvements expected in the second half of 2009, along with benefits from new product introductions and restructuring and reductions-in-force actions are expected to lead to about break-even results, assuming market conditions do not deteriorate further, and significantly improved cash flow before financing activities for 2009 compared with 2008 primarily as a result of the cost containment actions, plant restructurings and a reduction in working capital.

NMHG Retail - Fourth Quarter Results

NMHG Retail, which includes the required elimination of intercompany transactions between NMHG Wholesale and NMHG's wholly owned retail dealerships, reported an adjusted loss for the fourth quarter of 2008 of $1.6 million on revenues of $14.9 million compared with a net loss of $1.1 million on revenues of $16.5 million for the fourth quarter of 2007.

Revenues decreased primarily because of unfavorable foreign currency movements due to the weakening of the Australian dollar and lower unit volumes in Asia-Pacific. These decreases were partially offset by a decline in intercompany sales transactions, which caused a decrease in the required intercompany revenue elimination compared with the prior year quarter.

NMHG Retail's increased loss was primarily the result of an increase in income tax expense, partially offset by improved operating results due to reduced spending and reduced interest.

NMHG Retail - Full Year Results

For the 2008 full year, NMHG Retail reported an adjusted loss of $3.4 million on revenues of $84.2 million, compared with a net loss of $8.9 million on revenues of $137.8 million in 2007. The 2007 net loss includes a gain of $3.0 million, or $2.6 million net of taxes of $0.4 million, from the sale of a European retail dealership.

NMHG Retail's 2008 adjusted results improved significantly over 2007, excluding the prior year gain on sale, as a result of actions taken to improve the operational effectiveness of the Asia-Pacific Retail operations.

NMHG Retail - Outlook

NMHG Retail's key improvement programs, especially those implemented in Asia-Pacific during 2007, are expected to have an increasingly favorable effect on 2009 results and cash flow before financing activities and to assist the company in meeting its strategic objective of achieving at least break-even results while building market position. However, as economic conditions in the United Kingdom and Australia deteriorate further, sales of units and services are expected to decline further, which could adversely affect revenues and profit margins.

Hamilton Beach - Fourth Quarter Results

Hamilton Beach's adjusted income was $6.6 million for the fourth quarter of 2008 on revenues of $186.5 million, compared with net income of $12.8 million for the fourth quarter of 2007 on revenues of $200.2 million. During the fourth quarter of 2008, Hamilton Beach changed its method of valuing inventories from the LIFO method to the FIFO method. Prior year financial information has been revised to reflect this change.

Revenues decreased in the 2008 fourth quarter compared with 2007 primarily because unit sales volumes declined as a result of a significant drop in consumer spending stemming from the weak global economy. Adverse foreign currency movements caused by a weakening Canadian dollar and Mexican peso also contributed to the decrease.

Although revenues decreased approximately 7%, adjusted income declined almost 50%. The most significant contributing factors to the decrease in adjusted income were increased product and freight costs of $7.6 million pre-tax, net of price increases of $1.8 million, lower unit volumes and reduced sales of certain higher-margin products. Adjustment of certain inventories to market value, an increase in the company's environmental liability due to the bankruptcy of a co-responsible party and the absence of a favorable product liability adjustment recognized in the fourth quarter of 2007 also contributed to the decline in adjusted income. Partially offsetting these unfavorable items were lower employee-related costs, favorable foreign currency movements and lower interest expense compared with 2007.

Hamilton Beach - Full Year Results

For the year ended December 31, 2008, Hamilton Beach had adjusted income of $7.4 million on revenues of $528.7 million compared with net income of $19.5 million on revenues of $540.7 million in 2007.

Adjusted income decreased in 2008 compared with 2007 substantially due to increased product and freight costs of $18.7 million pre-tax, net of price increases of $3.9 million pre-tax, and reduced unit volumes driven by a decrease in sales to key retailers in a weak consumer market, moderately offset by increased revenues from new product introductions and placements. The decline in adjusted income was partially offset by reduced selling, general and administrative expenses as the company initiated cost containment actions in reaction to the weakening economy.

Hamilton Beach - Outlook

The global recession and other consumer financial concerns are among factors creating an extremely challenging retail environment as consumer confidence continues to decline. As a result, consumer spending is expected to be significantly reduced in 2009, particularly in the first half, with Hamilton Beach revenues in 2009 expected to be lower than in 2008.

As a result of anticipated lower volumes, Hamilton Beach took aggressive cost containment actions in the fourth quarter of 2008, including personnel reductions, spending and travel restrictions, suspension of incentive compensation, benefit reductions and wage freezes. In addition to these actions, Hamilton Beach is actively working to improve pricing, improve product positioning and reduce product costs in light of softening commodity costs for resins, copper, steel and aluminum, as well as reduced transportation costs, to return to a more acceptable operating margin position. Hamilton Beach is monitoring commodity costs closely and currently negotiating with suppliers and retailers on costs, prices and product placement programs.

While economic factors are expected to continue to affect consumer spending unfavorably over the near term, Hamilton Beach is placing continued focus on strengthening its market position through product innovation, promotions and branding programs. Hamilton Beach anticipates continued strong placements in 2009, with increased placements and distribution at some retailers. The current economic environment also provides the company with opportunities for renewed focus and positioning of the company's Proctor Silex(R) brand in the quality, value brand segment. In addition, Hamilton Beach plans to move forward with consumer advertising campaigns. New products recently introduced in 2008, as well as further new product introductions in the pipeline for 2009 and beyond, are also expected to improve revenues. However, uncertainty in U.S.