Income Taxes

The income tax provision includes U.S. federal, state and local, and foreign income taxes and is based on the application of a forecasted annual income tax rate applied to the current quarter's year-to-date pre-tax income or loss. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company's annual earnings, taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the Company's ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives. Discrete items, including the effect of changes in tax laws, tax rates and certain circumstances with respect to valuation allowances or other unusual or non-recurring tax adjustments are reflected in the period in which they occur as an addition to, or reduction from, the income tax provision, rather than included in the estimated effective annual income tax rate. Additionally, the Company's interim effective income tax rate is computed and applied without regard to pre-tax losses where such losses are not expected to generate a current-year tax benefit as reflected in the interim adjustment line in the table below.

A reconciliation of the Company's consolidated federal statutory and effective income tax is as follows:



	THREE MONTHS ENDED						SIX MONTHS ENDED
	JUNE 30						JUNE 30
	2011			2010			2011			2010
Income before income taxes:	$	26.3		$	16.9		$	113.3		$	31.9
Statutory taxes at 35%	$	9.2		$	5.9		$	39.7		$	11.2
Interim adjustment	—			(0.7		)	—			0.1
Discrete items:
NMHG sale of foreign investments	—			—			—			(2.0		)
NMHG change in tax law	—			(1.8		)	—			(1.8		)
Other	(0.2		)	(0.2		)	(0.1		)	0.2
	(0.2		)	(2.0		)	(0.1		)	(3.6		)
Other permanent items:
NACoal percentage depletion	(0.5		)	(1.0		)	(3.3		)	(2.3		)
Foreign tax rate differential	(1.1		)	(2.2		)	(5.0		)	(3.0		)
Valuation allowance	(0.8		)	0.1			(2.3		)	0.8
Other	0.6			0.8			2.4			1.1
	(1.8		)	(2.3		)	(8.2		)	(3.4		)
Income tax provision	$	7.2		$	0.9		$	31.4		$	4.3
Effective income tax rate	27.4		%	5.3		%	27.7		%	13.5		%

During the first quarter of 2010, NMHG sold an investment in a subsidiary in Australia. Due to the difference between the book basis and tax basis of the investment in the subsidiary, the Company recognized a tax benefit related to the sale during the first three months of 2010.

During the second quarter of 2010, the Company recognized a tax benefit for the reduction in a required reserve for uncertain tax positions related to certain foreign tax law changes which became effective and reduced the statute of limitations for certain items.