Retirement Benefit Plans

12 Months Ended

Dec. 31, 2012

Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract]

Retirement Benefit Plans

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 mine employees. 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:

	2012	2011	2010
United States Plans
Weighted average discount rates	3.50% - 3.90%	4.30% - 4.55%	5.10% - 5.30%
Expected long-term rate of return on assets	7.75%	8.25%	8.50%
Non-U.S. Plan
Weighted average discount rate	4.00%	4.25%	5.25%
Rate of increase in compensation levels	3.50%	3.50%	3.50%
Expected long-term rate of return on assets	6.00%	6.25%	6.50%

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:

	2012			2011			2010
United States Plans
Interest cost	$	3.1		$	3.4		$	3.6
Expected return on plan assets	(4.3		)	(4.4		)	(5.0		)
Amortization of actuarial loss	2.8			2.3			1.6
Amortization of prior service credit	(0.1		)	(0.1		)	—
Net periodic pension expense	$	1.5		$	1.2		$	0.2
Non-U.S. Plan
Interest cost	$	0.2		$	0.2		$	0.2
Expected return on plan assets	(0.2		)	(0.3		)	(0.3		)
Amortization of actuarial loss	0.1			—			—
Net periodic pension benefit expense (income)	$	0.1		$	(0.1	)	$	(0.1	)

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

	2012			2011			2010
United States Plans
Current year actuarial loss	$	3.1		$	7.0		$	1.6
Amortization of actuarial loss	(2.8		)	(2.3		)	(1.6		)
Current year prior service credit	—			—			(0.2		)
Amortization of prior service credit	0.1			0.1			—
Total recognized in other comprehensive income (loss)	$	0.4		$	4.8		$	(0.2	)
Non-U.S. Plan
Current year actuarial loss	$	—		$	1.2		$	0.3
Amortization of actuarial loss	(0.1		)	(0.1		)	(0.1		)
Total recognized in other comprehensive income (loss)	$	(0.1	)	$	1.1		$	0.2

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:

	2012						2011
	U.S. Plans			Non-U.S. Plan			U.S. Plans			Non-U.S. Plan
Change in benefit obligation
Projected benefit obligation at beginning of year	$	69.8		$	4.9		$	65.8		$	4.4
Interest cost	3.1			0.2			3.4			0.2
Actuarial loss	5.3			0.2			4.8			0.7
Benefits paid	(5.2		)	(0.1		)	(4.2		)	(0.3		)
Foreign currency exchange rate changes	—			—			—			(0.1		)
Projected benefit obligation at end of year	$	73.0		$	5.2		$	69.8		$	4.9
Accumulated benefit obligation at end of year	$	73.0		$	5.2		$	69.8		$	4.9
Change in plan assets
Fair value of plan assets at beginning of year	$	51.6		$	4.6		$	53.2		$	5.2
Actual return on plan assets	6.5			0.4			2.2			(0.2		)
Employer contributions	7.1			—			0.4			—
Benefits paid	(5.2		)	(0.1		)	(4.2		)	(0.3		)
Foreign currency exchange rate changes	—			0.1			—			(0.1		)
Fair value of plan assets at end of year	$	60.0		$	5.0		$	51.6		$	4.6
Funded status at end of year	$	(13.0	)	$	(0.2	)	$	(18.2	)	$	(0.3	)
Amounts recognized in the balance sheets consist of:
Current liabilities	$	(0.5	)	$	—		$	(0.7	)	$	—
Non-current liabilities	(12.5		)	(0.2		)	(17.5		)	(0.3		)
	$	(13.0	)	$	(0.2	)	$	(18.2	)	$	(0.3	)
Components of accumulated other comprehensive income (loss) consist of:
Actuarial loss	$	32.2		$	2.3		$	31.8		$	2.5
Prior service credit	0.2			—			0.1			—
Deferred taxes	(13.3		)	(0.9		)	(12.2		)	(1.0		)
	$	19.1		$	1.4		$	19.7		$	1.5

The prior service credit and actuarial loss included in accumulated other comprehensive income (loss) expected to be recognized in net periodic benefit cost in 2013 are $0.1 million (less than $0.1 million net of tax) and $2.5 million ($1.6 million net of tax), respectively. No transition obligation is expected to be recognized in net periodic benefit cost in 2013.

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 does not expect to contribute to its U.S. or non-U.S. pension plans in 2013.

The Company maintains one supplemental defined benefit plan that pays 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. Plan
2013	$	4.4	$	0.1
2014	4.5		0.2
2015	4.5		0.2
2016	4.5		0.2
2017	4.6		0.2
2018 - 2022	23.6		1.1
	$	46.1	$	2.0

The expected long-term rate of return on defined benefit 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. In establishing the expected long-term rate of return assumption for plan assets, the Company considers the historical rates of return over a period of time that is consistent with the long-term nature of the underlying obligations of these plans as well as a forward-looking rate of return. The historical and forward-looking rates of return for each of the asset classes used to determine the Company's estimated rate of return assumption were based upon the rates of return earned or expected to be 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:

	2012 Actual Allocation		2011 Actual Allocation		Target Allocation Range
U.S. equity securities	52.0	%	52.6	%	41.0% - 62.0%
Non-U.S. equity securities	12.5	%	11.8	%	10.0% - 16.0%
Fixed income securities	34.5	%	34.6	%	30.0% - 40.0%
Money market	1.0	%	1.0	%	0.0% - 10.0%

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

	2012 Actual Allocation		2011 Actual Allocation		Target Allocation Range
Canadian equity securities	34.0	%	33.0	%	28.0% - 38.0%
Non-Canadian equity securities	37.0	%	34.0	%	27.0% - 37.0%
Fixed income securities	29.0	%	33.0	%	25.0% - 45.0%
Cash and cash equivalents	—	%	—	%	0.0% - 5.0%

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
	2012		2011		2012		2011
U.S. equity securities	$	31.4	$	27.2	$	—	$	—
Non-U.S. equity securities	7.4		6.1		3.5		3.1
Fixed income securities	20.6		17.9		1.5		1.5
Money market	0.6		0.4		—		—
Total	$	60.0	$	51.6	$	5.0	$	4.6

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 June 30, 2010, the parent company eliminated its subsidized retiree medical plan. Effective September 1, 2010, HBB eliminated its retiree life insurance plan and the Company no longer maintains 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:

	2012		2011		2010
Weighted average discount rates	3.05	%	3.90	%	4.70	%
Health care cost trend rate assumed for next year	7.0	%	7.5	%	7.5	%
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	2022		2018		2018

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, 2012:

	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:

	2012			2011			2010
Service cost	$	0.1		$	0.1		$	0.1
Interest cost	0.1			0.2			0.2
Amortization of actuarial loss	0.1			—			0.1
Amortization of prior service credit	(0.2		)	(0.2		)	(0.3		)
Plan amendments	—			—			(0.9		)
Net periodic benefit income (expense)	$	0.1		$	0.1		$	(0.8	)

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

	2012			2011		2010
Current year actuarial loss	$	0.3		$	—	$	0.6
Amortization of actuarial loss	(0.1		)	—		(0.1		)
Amortization of prior service credit	0.2			0.2		0.3
Total recognized in other comprehensive income	$	0.4		$	0.2	$	0.8

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:

	2012			2011
Change in benefit obligation
Benefit obligation at beginning of year	$	3.1		$	3.2
Service cost	0.1			0.1
Interest cost	0.1			0.2
Actuarial loss	0.3			—
Benefits paid	(0.3		)	(0.4		)
Benefit obligation at end of year	$	3.3		$	3.1
Funded status at end of year	$	(3.3	)	$	(3.1	)
Amounts recognized in the balance sheets consist of:
Current liabilities	$	(0.2	)	$	(0.2	)
Noncurrent liabilities	(3.1		)	(2.9		)
	$	(3.3	)	$	(3.1	)
Components of accumulated other comprehensive income (loss) consist of:
Actuarial loss	$	0.5		$	0.2
Prior service credit	(0.5		)	(0.7		)
Deferred taxes	0.7			0.2
	$	0.7		$	(0.3	)

The prior service credit included in accumulated other comprehensive income (loss) expected to be recognized in net periodic benefit cost in 2013 is $0.1 million (less than $0.1 million net of tax). No transition obligation or actuarial loss is expected to be recognized in net periodic benefit cost in 2013.

Future postretirement benefit payments expected to be paid are:

2013	$	0.2
2014	0.3
2015	0.3
2016	0.3
2017	0.3
2018 - 2022	1.4
	$	2.8

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 $6.7 million, $5.3 million and $6.6 million in 2012, 2011 and 2010, respectively.