Hamilton Beach 2007 Annual Report Download - page 12

types of outlet malls. The LGC store format will also enable
KC to expand more effectively in traditional malls, although
KC will also be prudent in pursuing this growth until LGC
improves profitability further at these mall stores and a more
favorable retail sales environment emerges. KC has also been
improving the Internet sales programs for both KC and LGC.
The company focused on integrating the LGC stores and
operations in 2007 and will continue to do so in 2008. It is
expected the implementation of key programs will result in
improved operating profit performance over the course of
2008, primarily in the second half, with increasing impact in
later years. Key improvement programs, in combination with
further improved outlet mall traffic, are intended to return KC
to its 5 percent operating profit margin target. However, since
outlet mall traffic is not likely to improve dramatically in the
current economic environment, reaching this goal will be very
challenging to accomplish in the next several years. During this
period, it is KC’s objective to deliver positive cash flow before
financing activities.
North American Coal
NACoal remains the largest lignite miner in the United
States and among the top ten coal producers nationwide.
Future performance of current mines is expected to be enhanced
by continuous operational improvements, the potential for
additional volume at its Red River Mining Company and,
over time, increased demand at its Mississippi Lignite Mining
Company operations and the Florida limerock dragline mining
operations. In addition, NACoal is encouraged by prospects for
new coal mining projects, particularly in the context of the
domestic energy challenges and opportunities facing the U. S.
NACoal is pursuing a number of potential projects that
reflect lignite coal’s heightened recognition as a domestic
source of energy. Coal is abundant in the United States, and
the emerging availability of new, environmentally responsible
technologies makes it very attractive. New business
opportunities, which leverage NACoal’s extensive lignite coal
reserves, include mining these reserves for direct coal-fired
power generation, coal gasification and coal-based energy
production, utilizing and commercializing lignite coal
beneficiation technologies and contract mining lignite coal
and aggregates for others.
Central to NACoal’s historical success and future strategy
is preservation of its unique approach to structuring mining
contracts to minimize risk – not only from the volatility over
time of the market price of coal – but also from the changing
costs of equipment and supplies required to mine the coal.
Efficiency is crucial in mining operations, particularly at this
time of increasing costs for mining supplies and equipment.
NACoal has repeatedly demonstrated its ability to leverage its
low-cost mining expertise to deliver operational improvements
at mining operations facing specific challenges, such as the
Mississippi Lignite Mining Company.
NACoal and its customers strongly believe in continuously
improving mining operations and having superior reclamation
programs in place at each of the mines. Just as innovation is
important in other NACCO businesses, it is also important for
the mining industry. NACoal strives to meet its customers’
expectations through mining and management innovation and
award-winning safety and environmental achievements.
NACoal had a very good year in 2007, considering 2006
performance was significantly enhanced as the result of pre-tax
gains of $21.5 million from selling two electric draglines.
Underlying performance at all of NACoal’s mines was strong,
although negatively affected by customer power plant outages.
In the near term, further customer power plant outages are
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