Retirement Benefit Plans

Defined Benefit Plans: The Company maintains various defined benefit pension plans that provide benefits based on years of service and average compensation during certain periods. The Company's policy is to make contributions to fund these plans within the range allowed by applicable regulations. Plan assets consist primarily of publicly traded stocks and government and corporate bonds.

Pension benefits are frozen for all employees other than certain NACoal unconsolidated mines' employees and NMHG employees in the United Kingdom and the Netherlands. All other eligible employees of the Company, including employees whose pension benefits are frozen, receive retirement benefits under defined contribution retirement plans.

The assumptions used in accounting for the defined benefit plans were as follows for the years ended December 31:



	2011		2010		2009
United States Plans
Weighted average discount rates	4.30% - 4.55%		5.10% - 5.30%		5.65% - 5.90%
Expected long-term rate of return on assets	8.25	%	8.50	%	8.50	%
Non-U.S. Plans
Weighted average discount rates	4.25% - 5.00%		5.25% - 5.50%		5.70% - 6.00%
Rate of increase in compensation levels	2.50% - 3.50%		2.50% - 3.90%		2.50% - 4.00%
Expected long-term rate of return on assets	5.00% - 8.00%		5.50% - 8.25%		3.50% - 8.50%

Each year, the assumptions used to calculate the benefit obligation are used to calculate the net periodic pension expense for the following year.

Set forth below is a detail of the net periodic pension expense for the defined benefit plans for the years ended December 31:



	2011			2010			2009
United States Plans
Service cost	$	—		$	—		$	0.3
Interest cost	7.4			7.9			8.4
Expected return on plan assets	(9.5		)	(8.5		)	(8.8		)
Amortization of actuarial loss	5.5			4.8			4.8
Amortization of prior service cost (credit)	(0.4		)	(0.4		)	0.1
Net periodic pension expense	$	3.0		$	3.8		$	4.8
Non-U.S. Plans
Service cost	$	2.2		$	1.6		$	1.4
Interest cost	7.7			7.0			6.9
Expected return on plan assets	(9.4		)	(8.6		)	(8.3		)
Amortization of actuarial loss	3.7			2.9			1.6
Amortization of prior service credit	(0.2		)	(0.1		)	(0.1		)
Amortization of transition liability	0.2			0.2			0.1
Net periodic pension expense	$	4.2		$	3.0		$	1.6

Set forth below is a detail of other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for the year ended December 31:



	2011			2010			2009
United States Plans
Current year actuarial loss	$	18.6		$	2.6		$	0.2
Amortization of actuarial loss	(5.5		)	(4.8		)	(4.8		)
Current year prior service credit	—			(0.2		)	(2.9		)
Amortization of prior service (credit) cost	0.4			0.4			(0.1		)
Total recognized in other comprehensive income (loss)	$	13.5		$	(2.0	)	$	(7.6	)
Non-U.S. Plans
Current year actuarial loss	$	7.8		$	3.4		$	11.4
Amortization of actuarial loss	(3.7		)	(2.9		)	(1.6		)
Amortization of prior service credit	0.2			0.1			0.1
Amortization of transition liability	(0.2		)	(0.2		)	(0.1		)
Total recognized in other comprehensive income (loss)	$	4.1		$	0.4		$	9.8

The following table sets forth the changes in the benefit obligation and the plan assets during the year and the funded status of the defined benefit plans at December 31:



	2011						2010
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Change in benefit obligation
Projected benefit obligation at beginning of year	$	146.0		$	139.9		$	140.8		$	132.6
Service cost	—			2.2			—			1.6
Interest cost	7.4			7.7			7.9			7.0
Actuarial (gain) loss	11.6			(2.5		)	7.0			8.7
Benefits paid	(10.0		)	(7.1		)	(9.5		)	(5.2		)
Employee contributions	—			0.7			—			0.7
Plan amendments	—			—			(0.2		)	—
Foreign currency exchange rate changes	—			(0.7		)	—			(5.5		)
Projected benefit obligation at end of year	$	155.0		$	140.2		$	146.0		$	139.9
Accumulated benefit obligation at end of year	$	155.0		$	133.1		$	146.0		$	138.0
Change in plan assets
Fair value of plan assets at beginning of year	$	107.1		$	119.1		$	90.1		$	107.8
Actual return on plan assets	2.4			(1.1		)	12.8			14.0
Employer contributions	13.0			5.2			13.7			6.4
Employee contributions	—			0.7			—			0.7
Benefits paid	(10.0		)	(7.1		)	(9.5		)	(5.2		)
Foreign currency exchange rate changes	—			(0.5		)	—			(4.6		)
Fair value of plan assets at end of year	$	112.5		$	116.3		$	107.1		$	119.1
Funded status at end of year	$	(42.5	)	$	(23.9	)	$	(38.9	)	$	(20.8	)
Amounts recognized in the balance sheets consist of:
Noncurrent assets	$	—		$	—		$	—		$	0.8
Current liabilities	(0.7		)	—			(0.3		)	—
Noncurrent liabilities	(41.8		)	(23.9		)	(38.6		)	(21.6		)
	$	(42.5	)	$	(23.9	)	$	(38.9	)	$	(20.8	)
Components of accumulated other comprehensive income (loss) consist of:
Actuarial loss	$	84.5		$	51.7		$	71.4		$	47.6
Prior service credit	(2.0		)	(0.1		)	(2.4		)	(0.2		)
Transition obligation	—			0.6			—			0.7
Deferred taxes	(29.9		)	(1.5		)	(24.9		)	(1.1		)
Change in statutory tax rate	(1.2		)	(10.6		)	(1.2		)	(10.6		)
Foreign currency translation adjustment	—			(0.8		)	—			(0.8		)
	$	51.4		$	39.3		$	42.9		$	35.6

The transition obligation, prior service credit and actuarial loss included in accumulated other comprehensive income (loss) expected to be recognized in net periodic benefit cost in 2012 are $0.1 million (less than $0.1 million net of tax), $0.3 million ($0.2 million net of tax) and $10.3 million ($6.7 million net of tax), respectively.

The projected benefit obligation included in the table above represents the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated future pay increases. The accumulated benefit obligation also reflects the actuarial present value of benefits attributable to employee service rendered to date, but does not include the effects of estimated future pay increases.

The Company expects to contribute $8.0 million and $5.0 million to its U.S. and non-U.S. pension plans, respectively, in 2012.

The Company maintains two supplemental defined benefit plans that pay monthly benefits to participants directly out of corporate funds. All other pension benefit payments are made from assets of the pension plans. Future pension benefit payments expected to be paid from assets of the pension plans are:



	U.S. Plans		Non-U.S. Plans
2012	$	10.8	$	4.7
2013	10.5		4.9
2014	10.6		5.6
2015	10.7		6.6
2016	10.8		6.6
2017 - 2021	53.6		39.9
	$	107.0	$	68.3

The expected long-term rate of return on 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.

Expected returns for pension plans are based on a calculated market-related value of assets. Under this methodology, asset gains and losses resulting from actual returns that differ from the Company's expected returns are recognized in the market-related value of assets ratably over three years.

The pension plans maintain an investment policy that, among other things, establishes a portfolio asset allocation methodology with percentage allocation bands for individual asset classes. The investment policy provides that investments are reallocated between asset classes as balances exceed or fall below the appropriate allocation bands.

The following is the actual allocation percentage and target allocation percentage for the U.S. pension plan assets at December 31:



	2011 Actual Allocation		2010 Actual Allocation		Target Allocation Range
U.S. equity securities	52.6	%	52.8	%	41.0% - 62.0%
Non-U.S. equity securities	11.8	%	13.1	%	10.0% - 16.0%
Fixed income securities	34.6	%	33.6	%	30.0% - 40.0%
Money market	1.0	%	0.5	%	0.0% - 10.0%

The following is the actual allocation percentage and target allocation percentage for the NMHG U.K. pension plan assets at December 31:



	2011 Actual Allocation		2010 Actual Allocation		Target Allocation Range
U.K. equity securities	34.9	%	34.5	%	33.5% - 36.5%
Non-U.K. equity securities	34.4	%	36.0	%	27.5% - 42.5%
Fixed income securities	30.7	%	29.5	%	25.5% - 34.5%

The following is the actual allocation percentage and target allocation percentage for the HBB Canadian pension plan assets at December 31:



	2011 Actual Allocation		2010 Actual Allocation		Target Allocation Range
Canadian equity securities	33.0	%	36.0	%	28.0% - 38.0%
Non-Canadian equity securities	34.0	%	33.0	%	27.0% - 37.0%
Fixed income securities	33.0	%	31.0	%	25.0% - 45.0%
Cash and cash equivalents	—	%	—	%	0.0% - 5.0%

NMHG maintains a pension plan for certain employees in The Netherlands, which has purchased annuity contracts to meet its obligations.

The defined benefit pension plans do not have any direct ownership of NACCO common stock.

The fair value of each major category of U.S. plan assets for the Company's pension plans are valued using quoted market prices in active markets for identical assets, or Level 1 in the fair value hierarchy. The fair value of each major category of Non-U.S. plan assets for the Company's pension plans are valued using observable inputs, either directly or indirectly, other than quoted market prices in active markets for identical assets, or Level 2 in the fair value hierarchy. Following are the values as of December 31:



	Level 1				Level 2
	2011		2010		2011		2010
U.S. equity securities	$	59.2	$	56.7	$	12.6	$	12.4
U.K. equity securities	—		—		35.7		35.6
Non-U.S., non-U.K. equity securities	13.3		14.0		25.7		28.1
Fixed income securities	38.9		35.9		32.9		32.0
Annuity contracts	—		—		9.4		11.0
Money market	1.1		0.5		—		—
Total	$	112.5	$	107.1	$	116.3	$	119.1

Postretirement Health Care and Life Insurance: The Company also maintains health care plans which provide benefits to eligible retired employees. All health care 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. Effective January 1, 2010, NMHG eliminated its retiree life insurance plan for non-union retirees. Effective June 30, 2010, the parent company eliminated its subsidized retiree medical plan. Effective September 1, 2010, HBB eliminated its retiree life insurance plan. Effective December 31, 2011, NMHG eliminated all retiree life insurance plans and its subsidized retiree medical plan for employees who have not retired before such date. As of January 1, 2012, the Company will no longer maintain any retiree life insurance plans.

The assumptions used in accounting for the postretirement benefit plans are set forth below for the years ended December 31:



	2011		2010		2009
Weighted average discount rates	3.90	%	4.70	%	5.30	%
Health care cost trend rate assumed for next year	7.5	%	7.5	%	6.0	%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate)	5.0	%	5.0	%	5.0	%
Year that the rate reaches the ultimate trend rate	2018		2018		2012

Each year, the assumptions used to calculate the benefit obligation are used to calculate the net periodic benefit cost for the following year.

Assumed health care cost trend rates can have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in the assumed health care cost trend rates would have the following effects at December 31, 2011:



	1-Percentage-Point Increase		1-Percentage-Point Decrease
Effect on total of service and interest cost	$	—	$	—
Effect on postretirement benefit obligation	$	0.2	$	(0.2	)

Set forth below is a detail of the net periodic benefit income for the postretirement health care and life insurance plans for the years ended December 31:



	2011			2010			2009
Service cost	$	0.1		$	0.2		$	0.2
Interest cost	0.3			0.4			0.6
Amortization of actuarial (gain) loss	0.2			(0.3		)	0.7
Amortization of prior service credit	(0.1		)	(0.3		)	(3.3		)
Plan amendments	(2.9		)	(0.9		)	—
Net periodic benefit income	$	(2.4	)	$	(0.9	)	$	(1.8	)

Set forth below is a detail of other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) for the year ended December 31:



	2011			2010		2009
Current year actuarial (gain) loss	$	0.2		$	0.2	$	1.6
Amortization of actuarial gain (loss)	(0.2		)	0.3		(0.7		)
Current year prior service credit	(2.9		)	—		(3.1		)
Amortization of prior service credit	3.0			0.3		3.3
Total recognized in other comprehensive income (loss)	$	0.1		$	0.8	$	1.1

The following sets forth the changes in benefit obligations during the year and the funded status of the postretirement health care and life insurance plans at December 31:



	2011			2010
Change in benefit obligation
Benefit obligation at beginning of year	$	7.1		$	8.3
Service cost	0.1			0.2
Interest cost	0.3			0.4
Actuarial gain	0.2			0.1
Plan amendments	(2.9		)	(0.8		)
Benefits paid	(0.6		)	(1.1		)
Benefit obligation at end of year	$	4.2		$	7.1
Funded status at end of year	$	(4.2	)	$	(7.1	)
Amounts recognized in the balance sheets consist of:
Current liabilities	$	(0.5	)	$	(0.7	)
Noncurrent liabilities	(3.7		)	(6.4		)
	$	(4.2	)	$	(7.1	)
Components of accumulated other comprehensive income (loss) consist of:
Actuarial gain	$	0.2		$	0.2
Prior service credit	(0.7		)	(0.8		)
Deferred taxes	0.2			0.2
	$	(0.3	)	$	(0.4	)

The prior service credit included in accumulated other comprehensive income (loss) expected to be recognized in net periodic benefit cost in 2012 is $0.2 million ($0.1 million net of tax). No transition obligation or actuarial loss is expected to be recognized in net periodic benefit cost in 2012.

Future postretirement benefit payments expected to be paid are:



2012	$	0.4
2013	0.4
2014	0.4
2015	0.4
2016	0.3
2017 - 2021	1.6
	$	3.5

Defined Contribution Plans: NACCO and its subsidiaries have defined contribution (401(k)) plans for substantially all U.S. employees and similar plans for employees outside of the United States. For NACCO and those subsidiaries, other than HBB, the applicable company matches employee contributions based on plan provisions. In addition, NACCO and certain other subsidiaries have defined contribution retirement plans that generally provide for a stated minimum employer contribution. These plans also permit additional contributions whereby the applicable company's contribution to participants is determined annually based on a formula that includes the effect of actual compared with targeted operating results and the age and compensation of the participants. Total costs, including Company contributions, for these plans were $24.8 million, $12.7 million and $5.4 million in 2011, 2010 and 2009, respectively. During 2010 and 2009, the Company and certain subsidiaries of the Company suspended or reduced the company match of employee contributions and the employer contributions to its defined contribution retirement plans.