Related Party Transactions

Nine of NACoal's wholly owned subsidiaries, Coteau, Falkirk, Sabine, Demery, Caddo Creek, Camino Real, Liberty, NoDak and NACC India each meet the definition of a variable interest entity. See Note 1 for a discussion of these entities. The taxes resulting from the earnings of the unconsolidated mines and NoDak are solely the responsibility of the Company. The pre-tax income from the seven unconsolidated mines is reported on the line “Earnings of unconsolidated mines” in the Consolidated Statements of Operations, with related taxes included in the provision for income taxes. The Company has included the pre-tax earnings of the unconsolidated mines above operating profit as they are an integral component of the Company's business and operating results. The pre-tax income from NoDak is reported on the line "Other" in the "Other (income) expense" section of the Consolidated Statement of Operations, with the related income taxes included in the provision for income taxes. The net income from NACC India is reported on the line "Other" in the "Other (income) expense" section of the Consolidated Statements of Operations. The investment in the unconsolidated mines and related tax asset was $22.0 million and $21.6 million at December 31, 2011 and 2010, respectively, and is included on the line “Other Non-current Assets” in the Consolidated Balance Sheets. The Company's maximum risk of loss relating to these entities is limited to its invested capital, which was $6.3 million, $5.0 million and $3.5 million at December 31, 2011, 2010 and 2009, respectively.

Summarized financial information for the unconsolidated mines is as follows:



	2011		2010		2009
Statement of Operations
Revenues	$	502.6	$	461.7	$	421.1
Gross profit	$	71.7	$	71.7	$	63.7
Income before income taxes	$	47.0	$	43.4	$	38.6
Income from continuing operations	$	36.5	$	33.1	$	29.8
Net income	$	36.5	$	33.1	$	29.8
Balance Sheet
Current assets	$	144.1	$	130.9
Non-current assets	$	685.2	$	633.6
Current liabilities	$	162.1	$	115.2
Non-current liabilities	$	660.9	$	644.3

NACoal received dividends of $35.2 million and $31.6 million from the unconsolidated mines in 2011 and 2010, respectively.

In addition, NMHG maintains an interest in one variable interest entity, NFS. NFS is a joint venture with GECC formed primarily for the purpose of providing financial services to independent Hyster^® and Yale^® lift truck dealers and National Account customers in the United States. NMHG does not have a controlling financial interest or have the power to direct the activities that most significantly affect the economic performance of NFS. Therefore, the Company has concluded that NMHG is not the primary beneficiary and will continue to use the equity method to account for its 20% interest in NFS. NMHG does not consider its variable interest in NFS to be significant.

Generally, NMHG sells lift trucks through its independent dealer network or directly to customers. These dealers and customers may enter into a financing transaction with NFS or other unrelated third-parties. NFS provides debt financing to dealers and lease financing to both dealers and customers. NFS’ total purchases of Hyster^® and Yale^® lift trucks from dealers, customers and directly from NMHG, such that NFS could provide lease financing to dealers and customers, for the years ended December 31, 2011, 2010 and 2009 were $337.3 million, $243.9 million and $266.7 million, respectively. Of these amounts, $38.7 million, $23.7 million and $38.0 million for the years ended December 31, 2011, 2010 and 2009, respectively, were invoiced directly from NMHG to NFS so that the dealer or customer could obtain operating lease financing from NFS. Amounts receivable from NFS were $4.9 million and $3.2 million at December 31, 2011 and 2010, respectively.

Under the terms of the joint venture agreement with GECC, NMHG provides recourse for financing provided by NFS to NMHG dealers. Additionally, the credit quality of a customer or concentration issues within GECC may necessitate providing recourse or repurchase obligations of the lift trucks purchased by customers and financed through NFS. At December 31, 2011, approximately $112.9 million of the Company's total recourse or repurchase obligations related to transactions with NFS. NMHG has reserved for losses under the terms of the recourse or repurchase obligations in its consolidated financial statements. Historically, NMHG has not had significant losses with respect to these obligations. During 2011, 2010 and 2009, the net losses resulting from customer defaults did not have a material impact on NMHG's results of operations or financial position.

In connection with the joint venture agreement, NMHG also provides a guarantee to GECC for 20% of NFS’ debt with GECC, such that NMHG would become liable under the terms of NFS’ debt agreements with GECC in the case of default by NFS. At December 31, 2011, loans from GECC to NFS totaled $684.7 million. Although NMHG's contractual guarantee was $136.9 million, the loans by GECC to NFS are secured by NFS’ customer receivables, of which NMHG guarantees $112.9 million. Excluding the $112.9 million of NFS receivables guaranteed by NMHG from NFS’ loans to GECC, NMHG's incremental obligation as a result of this guarantee to GECC is $114.4 million. NFS has not defaulted under the terms of this debt financing in the past and although there can be no assurances, NMHG is not aware of any circumstances that would cause NFS to default in future periods.

In addition to providing financing to NMHG's dealers, NFS provides operating lease financing to NMHG. Operating lease obligations primarily relate to specific sale-leaseback-sublease transactions for certain NMHG customers whereby NMHG sells lift trucks to NFS, NMHG leases these lift trucks back under an operating lease agreement and NMHG subleases those lift trucks to customers under an operating lease agreement. Total obligations to NFS under the operating lease agreements were $6.0 million and $7.3 million at December 31, 2011 and 2010, respectively. In addition, NMHG provides certain subsidies to its customers that are paid directly to NFS. Total subsidies were $1.4 million, $4.0 million and $5.4 million for 2011, 2010 and 2009, respectively.

NMHG provides certain services to NFS for which it receives compensation under the terms of the joint venture agreement. These services consist primarily of administrative functions and remarketing services. Total income recorded by NMHG related to these services was $7.3 million in 2011, $5.0 million in 2010 and $7.6 million in 2009.

NMHG has a 50% ownership interest in SN, a limited liability company that was formed primarily to manufacture and distribute Sumitomo-Yale branded lift trucks in Japan and export Hyster^®- and Yale^®-branded lift trucks and related components and service parts outside of Japan. NMHG purchases products from SN under normal trade terms based on current market prices. In 2011, 2010 and 2009, purchases from SN were $105.5 million, $66.9 million and $44.7 million, respectively. Amounts payable to SN at December 31, 2011 and 2010 were $21.6 million and $30.7 million, respectively.

During 2010 and 2009, NMHG recognized $1.1 million and $1.8 million, respectively, in expenses related to payments to SN for engineering design services. These expenses were included in “Selling, general and administrative expenses” in the Consolidated Statement of Operations. No expenses were recognized for these services in 2011. Additionally, NMHG recognized income of $1.6 million, $1.2 million and $0.4 million for payments from SN for use of technology developed by NMHG that are included in “Revenues” in the Consolidated Statement of Operations for the years ended December 31, 2011, 2010 and 2009, respectively.

Summarized financial information for both equity investments is as follows:



	2011		2010		2009
Statement of Operations
Revenues	$	444.3	$	358.6	$	310.6
Gross profit	$	126.9	$	106.7	$	88.5
Income from continuing operations	$	23.7	$	7.1	$	1.5
Net income	$	23.7	$	7.1	$	1.5
Balance Sheet
Current assets	$	138.8	$	128.6
Non-current assets	$	997.2	$	1,038.0
Current liabilities	$	122.8	$	119.0
Non-current liabilities	$	875.7	$	925.9

The Company's percentage share of the net income or loss from its equity investments is reported on the line “(Income) loss from other unconsolidated affiliates” in the “Other (income) expense” portion of the Consolidated Statements of Operations.

At December 31, 2011 and 2010, NMHG's investment in NFS was $13.6 million and $12.1 million, respectively, and NMHG's investment in SN was $34.2 million and $30.3 million, respectively. NMHG received dividends of $2.3 million and $2.9 million from NFS in 2011 and 2010, respectively. No dividends were received from SN in 2011 and 2010.

Legal services rendered by Jones Day approximated $4.9 million, $14.3 million and $2.7 million for the years ended December 31, 2011, 2010 and 2009, respectively. The significant increase in services rendered during 2010 related to the Applica litigation discussed further in Note 5. A director of the Company is also a partner of this law firm.