UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K/A

Amendment No. 2

ANNUAL REPORT PURSUANT TO SECTIONS 13(a) OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

NMHG HOLDING CO.

(Exact name of registrant as specified in its charter)

Delaware		31-1637659
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)
650 NE Holladay Street, Suite 1600
Portland, Oregon		97232
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (503) 721-6000

		Name of Each
		Exchange
Title of Each Class		on Which Registered
None		None

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES      o      NO      þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

YES      þ      NO      o

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES      þ      NO      o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o      Accelerated filer o      Non-accelerated filer þ

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Act)

YES o      NO      þ

Aggregate market value of the outstanding common equity held by nonaffliiates of the registrant as of June 30, 2005 (the last business day of the registrant’s most recently completed second fiscal quarter): None.

As of February 28, 2006, the registrant had 100 shares of common stock outstanding, all of which was held by an affiliate of the registrant.

DOCUMENTS INCORPORATED BY REFERENCE

None

The registrant meets the conditions set forth in General Instruction I 1(a) and (b) of Form 10-K and is therefore filing this Form 10-K/A with the reduced disclosure format.

 

 

EXPLANATORY NOTE

This Amendment No. 2 to the annual report on Form 10-K for the fiscal year ended December 31, 2005 is being filed to include in Part IV, Item 15, the financial statements with respect to Sumitomo-NACCO Materials Handling Company, Ltd. filed as Exhibit 99.2, which were omitted from the annual report on Form 10-K for the year ended December 31, 2005 filed on March 1, 2006. In accordance with Rule 12b-15 under the Securities and Exchange Act of 1934, as amended, the text of the amended item is set forth in its entirety in this Amendment No. 2.

This Amendment No. 2 does not update any other disclosures to reflect developments since the original date of filing the Form 10-K for the year ended December 31, 2005.

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) (1) and (2) The response to Item 15(a)(1) and (2) is set forth beginning at page F-1 of this Annual Report on Form 10-K.

(a) (3) Listing of Exhibits — See the exhibit index beginning at page X-1 of this Annual Report on Form 10-K.

(b) The response to Item 15(b) is set forth beginning at page X-1 of this Annual Report on Form 10-K.

     (c) Financial Statement Schedules and Separate Financial Statements — The response to Item 15(c) is set forth beginning at page F-50 as well as Exhibits 99.1 and 99.2 of this Amendment No. 2 to the Annual Report on Form 10-K. Exhibits 99.1 and 99.2 present the separate financial statements and notes thereto for NMHG Financial Services, Inc. and Sumitomo-NACCO Materials Handling Company, Ltd., respectively, as required in accordance with Rule 3-09 of Regulation S-X. All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

				NMHG Holding Co.
		By:		/s/ Michael K. Smith
				Michael K. Smith
				Vice President, Finance and Information Systems, and Chief Financial Officer
				(principal financial and accounting officer)

May 12, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Reginald R. Eklund		President and Chief Executive Officer		May 12, 2006
Reginald R. Eklund		(principal executive officer), Director
/s/ Michael K. Smith		Vice President, Finance and		May 12, 2006
Michael K. Smith		Information Systems, and Chief Financial Officer (principal financial and accounting officer)
* Owsley Brown II		Director		May 12, 2006
Owsley Brown II
* Eiichi Fujita		Director		May 12, 2006
Eiichi Fujita
* Robert M. Gates		Director		May 12, 2006
Robert M. Gates
* Leon J. Hendrix, Jr.		Director		May 12, 2006
Leon J. Hendrix, Jr.
* Dennis W. LaBarre		Director		May 12, 2006
Dennis W. LaBarre
* Richard de J. Osborne		Director		May 12, 2006
Richard de J. Osborne
* Alfred M. Rankin, Jr.		Director		May 12, 2006
Alfred M. Rankin, Jr.
* Claiborne R. Rankin		Director		May 12, 2006
Claiborne R. Rankin
* Ian M. Ross		Director		May 12, 2006
Ian M. Ross
* Michael E. Shannon		Director		May 12, 2006
Michael E. Shannon
* Britton T. Taplin		Director		May 12, 2006
Britton T. Taplin
* David F. Taplin		Director		May 12, 2006
David F. Taplin
* Frank F. Taplin		Director		May 12, 2006
Frank F. Taplin
* John F. Turben		Director		May 12, 2006
John F. Turben
* Eugene Wong		Director		May 12, 2006
Eugene Wong

/s/ Michael K. Smith		May 12, 2006
Michael K. Smith, Attorney-in-Fact

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT

The registrant has not sent any annual report covering the registrant’s last fiscal year or proxy material with respect to any annual or other meeting of security holders.

ANNUAL REPORT ON FORM 10-K

ITEM 8, ITEM 15(a)(1) AND (2), AND ITEM 15(c)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

FINANCIAL STATEMENTS

FINANCIAL STATEMENT SCHEDULE

YEAR ENDED DECEMBER 31, 2005

NMHG HOLDING CO.

PORTLAND, OREGON

FORM 10-K

ITEM 15(a)(1) AND (2)

NMHG HOLDING CO. AND SUBSIDIARIES

LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

     The following consolidated financial statements of NMHG Holding Co. and Subsidiaries are incorporated by reference in Item 8:

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm—For each of the three years in the period ended December 31, 2005

Consolidated Statements of Operations and Comprehensive Income —Years ended December 31, 2005, 2004 and 2003

Consolidated Balance Sheets—December 31, 2005 and 2004

Consolidated Statements of Cash Flows—Years ended December 31, 2005, 2004 and 2003

Consolidated Statements of Stockholder’s Equity—Years ended December 31, 2005, 2004 and 2003

Notes to Consolidated Financial Statements

NMHG Holding Co. Report of Management

     The following consolidated financial statement schedule of NMHG Holding Co. and Subsidiaries and separate financial statements are included in Item 15(c):

Schedule II — Valuation and Qualifying Accounts

Separate Financial Statements of Significant Subsidiaries not consolidated and fifty percent or less owned persons

     All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of NMHG Holding Co.

We have audited the accompanying consolidated balance sheets of NMHG Holding Co. (a wholly owned subsidiary of NACCO Industries, Inc.) and Subsidiaries (collectively “the Company”) as of December 31, 2005 and 2004, and the related consolidated statements of operations and comprehensive income, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2005. Our audits also included the financial statement schedule listed in Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of NMHG Holding Co. and Subsidiaries at December 31, 2005 and 2004, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 2, the consolidated financial statements for the year ended December 31, 2004 have been restated.

		/s/ Ernst & Young LLP

Cleveland, Ohio

     February 24, 2006

NMHG HOLDING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

		2005				2004 (a)				2003
		(In millions)
Revenues		$	2,399.9			$	2,056.9			$	1,779.6
Cost of sales			2,055.1				1,748.8				1,467.3
Gross Profit			344.8				308.1				312.3
Operating Expenses
Selling, general and administrative expenses			289.2				272.2				256.2
NACCO management fee			9.3				9.0				8.1
Reversals of restructuring charges			(1.2	)			(1.4	)			(0.8	)
			297.3				279.8				263.5
Operating Profit			47.5				28.3				48.8
Other income (expense)
Interest expense			(34.9	)			(33.7	)			(35.1	)
Loss on interest rate swap agreements			—				(0.2	)			(1.5	)
Income from unconsolidated affiliates			7.3				5.7				3.6
U.S. Customs award			—				6.7				—
Other — net			2.6				0.3				1.8
			(25.0	)			(21.2	)			(31.2	)
Income Before Income Taxes and Minority Interest			22.5				7.1				17.6
Income tax provision (benefit)			4.5				(3.2	)			1.8
Income Before Minority Interest			18.0				10.3				15.8
Minority interest income			0.1				0.4				0.6
Net Income			18.1				10.7				16.4
Other comprehensive income (loss)
Foreign currency translation adjustment			(28.7	)			20.6				35.8
Reclassification of hedging activity into earnings, net of $0.7 tax expense in 2005; ($1.1) tax benefit in 2004 and $0.3 tax expense in 2003.			1.1				(1.7	)			0.5
Current period cash flow hedging activity, net of ($2.5) tax benefit in 2005; $1.1 tax expense in 2004; and $0.8 tax expense in 2003.			(3.9	)			1.7				1.3
Minimum pension liability adjustment, net of ($1.0) tax benefit in 2005; ($5.6) tax benefit in 2004 and ($0.4) tax benefit in 2003			(0.8	)			(8.7	)			(6.5	)
			(32.3	)			11.9				31.1
Comprehensive Income		$	(14.2	)		$	22.6			$	47.5

See Notes to Consolidated Financial Statements.
(a) As restated. See Note 2.

NMHG HOLDING CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

		December 31
		2005				2004 (a)
		(In millions, except share data)
ASSETS
Current Assets
Cash and cash equivalents		$	121.2			$	97.4
Accounts receivable, net of allowances of $8.7 in 2005 and $6.0 in 2004			273.5				254.6
Tax advances, parent company			2.6				7.9
Inventories			333.1				319.6
Deferred income taxes			25.8				15.6
Prepaid expenses and other			25.8				23.2
Total Current Assets			782.0				718.3
Property, Plant and Equipment, Net			225.9				238.1
Goodwill			350.5				353.3
Other Non-current Assets			97.3				95.2
Total Assets		$	1,455.7			$	1,404.9
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities
Accounts payable		$	300.9			$	303.9
Accounts payable, affiliate			20.9				25.2
Revolving credit agreements			23.9				9.2
Current maturities of long-term debt			11.5				11.8
Note payable, parent company			39.0				—
Accrued payroll			29.1				28.2
Accrued warranty obligations			27.7				28.3
Other current liabilities			131.7				117.9
Total Current Liabilities			584.7				524.5
Long-term Debt			267.1				269.5
Self-insurance Liabilities			55.2				46.8
Other Non-current Liabilities			121.1				117.2
Minority Interest			—				0.1
Stockholder’s Equity
Common stock, par value $1 per share, 100 shares authorized; 100 shares outstanding			—				—
Capital in excess of par value			202.6				202.6
Retained earnings			257.0				243.9
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment			17.4				46.1
Minimum pension liability adjustment			(47.9	)			(47.1	)
Deferred gain (loss) on cash flow hedging			(1.5	)			1.3
			427.6				446.8
Total Liabilities and Stockholder’s Equity		$	1,455.7			$	1,404.9

See Notes to Consolidated Financial Statements.
(a) As restated. See Note 2.

NMHG HOLDING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

		Year Ended December 31
		2005				2004 (a)				2003
		(In millions)
Operating Activities
Net income		$	18.1			$	10.7			$	16.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			41.1				41.9				44.1
Deferred income taxes			(8.7	)			(2.1	)			6.2
Reversals of restructuring charges			(1.2	)			(1.4	)			(0.8	)
Minority interest income			(0.1	)			(0.4	)			(0.6	)
Gain on sale of assets			(1.1	)			(0.2	)			—
Other			(0.1	)			8.9				10.1
Working capital changes:
Affiliate receivable/ payable			11.3				17.0				(6.5	)
Accounts receivable			(39.0	)			(14.1	)			(31.9	)
Inventories			(31.6	)			(71.5	)			(5.3	)
Other current assets			(0.6	)			(0.1	)			(0.5	)
Accounts payable and other liabilities			23.8				91.3				18.9
Net cash provided by operating activities			11.9				80.0				50.1
Investing Activities
Expenditures for property, plant and equipment			(43.6	)			(33.4	)			(27.6	)
Proceeds from the sale of assets			9.8				13.4				16.5
Proceeds from the sale of businesses			3.9				—				—
Capital grants			0.9				2.1				—
Other-net			(1.1	)			0.6				—
Net cash used for investing activities			(30.1	)			(17.3	)			(11.1	)
Financing Activities
Additions to long-term debt and revolving credit agreements			31.1				36.7				25.4
Reductions of long-term debt and revolving credit agreements			(21.5	)			(57.2	)			(54.4	)
Cash dividends paid			(5.0	)			(5.0	)			(5.0	)
Notes receivable/payable, parent company			39.0				—				—
Financing fees paid			(0.5	)			(0.8	)			(0.1	)
Net cash provided by (used) for financing activities			43.1				(26.3	)			(34.1	)
Effect of exchange rate changes on cash			(1.1	)			(0.3	)			1.5
Cash and Cash Equivalents
Increase for the period			23.8				36.1				6.4
Balance at the beginning of the period			97.4				61.3				54.9
Balance at the end of the period		$	121.2			$	97.4			$	61.3

See Notes to Consolidated Financial Statements.
(a) As restated. See Note 2.

NMHG HOLDING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

		Year Ended December 31
		2005				2004 (a)				2003
		(In millions)
Common Stock		$	—			$	—			$	—
Capital in Excess of Par Value
Beginning balance			202.6				198.2				198.2
Capital contribution from parent company			—				4.4				—
			202.6				202.6				198.2
Retained Earnings
Beginning balance			243.9				238.2				226.8
Net income			18.1				10.7				16.4
Cash dividends			(5.0	)			(5.0	)			(5.0	)
			257.0				243.9				238.2
Accumulated Other Comprehensive Income (Loss)
Beginning balance			0.3				(11.6	)			(42.7	)
Foreign currency translation adjustment			(28.7	)			20.6				35.8
Minimum pension liability adjustment			(0.8	)			(8.7	)			(6.5	)
Current period cash flow hedging activity			(3.9	)			1.7				1.3
Reclassification of hedging activity into earnings			1.1				(1.7	)			0.5
Total Stockholder’s Equity			(32.0	)			0.3				(11.6	)
		$	427.6			$	446.8			$	424.8

See Notes to Consolidated Financial Statements.
(a) As restated. See Note 2.

NMHG HOLDING CO. AND SUBSIDIARIES

NOTE 1—Principles of Consolidation and Nature of Operations

The Consolidated Financial Statements include the accounts of NMHG Holding Co. (“NMHG Holding,” the parent company), a Delaware corporation, and subsidiaries (“NMHG” or the “Company”). NMHG Holding is a wholly owned subsidiary of NACCO Industries, Inc. (“NACCO”).

NMHG designs, engineers, manufactures, sells, services and leases a comprehensive line of lift trucks and aftermarket parts marketed globally under the Hyster and Yale brand names. The Company manages its operations as two reportable segments: wholesale manufacturing (“NMHG Wholesale”) and retail distribution (“NMHG Retail”). NMHG Wholesale includes the manufacture and sale of lift trucks and related service parts, primarily to independent and wholly owned Hyster and Yale retail dealerships. Lift trucks and component parts are manufactured in the United States, Northern Ireland, Scotland, The Netherlands, China, Italy, Japan, Mexico, the Philippines and Brazil. NMHG Retail includes the sale, leasing and service of Hyster and Yale lift trucks and related service parts by wholly owned retail dealerships and rental companies. The sale of service parts represents approximately 13%, 15% and 15% of total NMHG revenues as reported for 2005, 2004 and 2003, respectively.

The Consolidated Financial Statements include the accounts of NMHG’s wholly owned domestic and international manufacturing and retail subsidiaries. Also included is Shanghai Hyster Forklift Ltd., a 70% owned joint venture in China. All significant intercompany accounts and transactions among the consolidated companies are eliminated in consolidation.

Investments in Sumitomo-NACCO Materials Handling Company, Ltd. (“SN”), a 50% owned joint venture, and NMHG Financial Services, Inc. (“NFS”), a 20% owned joint venture, are accounted for by the equity method. SN operates manufacturing facilities in Japan and the Philippines from which the Company purchases certain components and internal combustion engines and lift trucks. Sumitomo Heavy Industries, Inc. owns the remaining 50% interest in SN. Each shareholder of SN is entitled to appoint directors representing 50% of the vote of SN’s board of directors. All matters related to policies and programs of operation, manufacturing and sales activities require mutual agreement between the Company and Sumitomo Heavy Industries, Inc. prior to a vote of SN’s board of directors. NFS is a joint venture with GE Capital Corporation (“GECC”), formed primarily for the purpose of providing financial services to independent and wholly owned Hyster and Yale lift truck dealers and National Account customers in the United States. National Account customers are large customers with centralized purchasing and geographically dispersed operations in multiple dealer territories. The Company’s percentage share of the net income or loss from its equity investments is reported on the line “Income from unconsolidated affiliates” in the “Other income (expense)” portion of the Consolidated Statements of Operations and Comprehensive Income.

NMHG HOLDING CO. AND SUBSIDIARIES

NOTE 2—Significant Accounting Policies

Restatement: During 2004, NACCO did not charge the NACCO management fees to the Company during portions of the year. Subsequently, it was determined that the 2004 financial results should include the management fees that were not charged as an equity contribution to the Company. The impact of reflecting this change in the Company’s 2004 statement of operations and balance sheet are reflected in the tables below.

		As Previously				Adjustment for
		Reported				NACCO Fee				As Restated
Revenues		$	2,056.9			$	—			$	2,056.9
Cost of sales			1,748.8				—				1,748.8
Gross Profit			308.1				—				308.1
Operating Expenses
Selling, general and administrative expenses			272.2				—				272.2
NACCO management fee			2.3				6.7				9.0
Reversals of restructuring charges			(1.4	)			—				(1.4	)
			273.1				6.7				279.8
Operating Profit			35.0				(6.7	)			28.3
Other income (expense)
Interest expense			(33.7	)			—				(33.7	)
Loss on interest rate swap agreements			(0.2	)			—				(0.2	)
Income from unconsolidated affiliates			5.7				—				5.7
U.S. Customs award			6.7				—				6.7
Other — net			0.3				—				0.3
			(21.2	)			—				(21.2	)
Income Before Income Taxes and Minority Interest			13.8				(6.7	)			7.1
Income tax provision (benefit)			(0.9	)			(2.3	)			(3.2	)
Income Before Minority Interest			14.7				(4.4	)			10.3
Minority interest income			0.4				—				0.4
Net Income		$	15.1			$	(4.4	)		$	10.7

NMHG HOLDING CO. AND SUBSIDIARIES

		As Previously				Adjustment for
		Reported				NACCO Fee				As Restated
ASSETS
Current Assets
Cash and cash equivalents		$	97.4			$	—			$	97.4
Accounts receivable, net of allowances			254.6				—				254.6
Tax advances, parent company			7.9				—				7.9
Inventories			319.6				—				319.6
Deferred income taxes			15.6				—				15.6
Prepaid expenses and other			23.2				—				23.2
Total Current Assets			718.3				—				718.3
Property, Plant and Equipment, Net			238.1				—				238.1
Goodwill			353.3				—				353.3
Other Non-current Assets			95.2				—				95.2
Total Assets		$	1,404.9			$	—			$	1,404.9
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities
Accounts payable		$	303.9			$	—			$	303.9
Accounts payable, affiliate			25.2				—				25.2
Revolving credit agreements			9.2				—				9.2
Current maturities of long-term debt			11.8				—				11.8
Accrued payroll			28.2				—				28.2
Accrued warranty obligations			28.3				—				28.3
Other current liabilities			117.9				—				117.9
Total Current Liabilities			524.5				—				524.5
Long-term Debt			269.5				—				269.5
Self-insurance Liabilities			46.8				—				46.8
Other Non-current Liabilities			117.2				—				117.2
Minority Interest			0.1				—				0.1
Stockholder’s Equity
Common stock, par value $1 per share, 100 shares authorized; 100 shares outstanding			—				—				—
Capital in excess of par value			198.2				4.4				202.6
Retained earnings			248.3				(4.4	)			243.9
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment			46.1				—				46.1
Minimum pension liability adjustment			(47.1	)			—				(47.1	)
Deferred gain on cash flow hedging			1.3				—				1.3
			446.8				—				446.8
Total Liabilities and Stockholder’s Equity		$	1,404.9			$	—			$	1,404.9

NMHG HOLDING CO. AND SUBSIDIARIES

Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and judgments. These estimates and judgments affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities (if any) at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents: Cash and cash equivalents include cash in banks and highly liquid investments with original maturities of three months or less.

Accounts Receivable, Net of Allowances: Allowances are maintained against accounts receivable for doubtful accounts. Allowances for doubtful accounts are maintained for estimated losses resulting from the inability of customers to make required payments. These allowances are based on both recent trends of certain customers estimated to be a greater credit risk as well as general trends of the entire customer pool. Accounts are written off against the allowance when it becomes evident that collection will not occur. See also the Company’s revenue recognition policy regarding allowances for product returns and product discounts.

Inventories: Inventories are stated at the lower of cost or market. Cost is determined under the last-in, first-out (“LIFO”) method for manufactured inventories in the United States and for certain retail inventories. The first-in, first-out (“FIFO”) method is used with respect to all other inventories. Reserves are maintained for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. Upon a subsequent sale or disposal of the impaired inventory, the corresponding reserve for impaired value is relieved to ensure that the cost basis of the inventory reflects any write-downs.

Property, Plant and Equipment, Net: Property, plant and equipment are recorded at cost. Depreciation and amortization are provided in amounts sufficient to amortize the cost of the assets, including assets recorded under capital leases, over their estimated useful lives using the straight-line method. Buildings are depreciated using a 40-year life, improvements to land and buildings are depreciated over 20 and 15 years, respectively, and equipment is depreciated over estimated useful lives ranging from three to 12 years. Capital grants received for the acquisition of equipment are recorded as reductions of the related equipment cost and reduce future depreciation expense. Repairs and maintenance costs are generally expensed when incurred.

Long-Lived Assets: The Company periodically evaluates long-lived assets for impairment when changes in circumstances or the occurrence of certain events indicate the carrying amount of an asset may not be recoverable. Upon identification of indicators of impairment, the Company evaluates the carrying value of the asset by comparing the estimated future undiscounted cash flows generated from the use of the asset and its eventual disposition with the asset’s net carrying value. If the carrying value of an asset is considered impaired, an impairment charge is recorded for the amount that the carrying value of the long-lived asset exceeds its fair value.

Goodwill: Goodwill represents the excess purchase price paid over the fair value of the net assets acquired. The Company evaluates the carrying value of goodwill for impairment annually as of May 1^st and between annual evaluations if changes in circumstances or the occurrence of certain events indicate potential impairment. When evaluating whether goodwill is impaired, the Company compares the fair value of the reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount. Impairment exists when the carrying amount of goodwill exceeds its fair value. The Company estimates the fair value of the reporting unit using a model developed by the Company which incorporates estimates of future cash flows, allocations of certain assets and cash flows among reporting units, future growth rates and management judgment regarding the applicable discount rates to discount those estimated cash flows. The results of the testing indicated goodwill was not impaired.

Self-insurance Liabilities: The Company is generally self-insured for product liability, environmental liability, and medical and workers’ compensation claims. An estimated provision for claims reported and for claims incurred but not yet reported under the self-insurance programs is recorded and revised periodically based on industry trends, historical experience and management judgment. In addition, industry trends are considered within management’s judgment for valuing claims. Changes in assumptions for such matters as legal

NMHG HOLDING CO. AND SUBSIDIARIES

judgments and settlements, legal defense costs, inflation rates, medical costs and actual experience could cause estimates to change in the near term. For product liability, catastrophic coverage is retained for potentially significant individual claims.

Revenue Recognition: Revenues are generally recognized when title transfers and risk of loss passes as customer orders are completed and shipped. For National Account customers, revenue is recognized upon customer acceptance.

Products generally are not sold with the right of return. However, based on the Company’s historical experience, a portion of aftermarket parts sold is estimated to be returned due to reasons such as product failure, which, subject to certain terms and conditions, the Company will agree to accept. The Company records estimated reductions to revenues at the time of the sale based upon this historical experience and the limited right of return provided to the Company’s dealers.

The Company also records estimated reductions to revenues for customer programs and incentive offerings, including special pricing agreements, price competition, promotions and other volume-based incentives. Truck sales revenue is recorded net of projected discounts. The estimated discount amount is based upon historical trends for each truck model. In addition to standard discounts, dealers can also request additional discounts that allow them to offer price concessions to customers. From time to time, NMHG offers special incentives to increase retail share or dealer stock and offers certain customers volume rebates if a specified cumulative level of purchases is obtained. Additionally, the Company provides for the estimated cost of product warranties at the time revenues are recognized.

NMHG sells some lift trucks with multiple deliverables, including future product maintenance. Under these arrangements, the revenue related to the undelivered portion is determined based on vendor specific objective evidence and deferred until it can be properly recognized under company policy in accordance with the Emerging Issues Task Force (“EITF”) Release No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables.” Maintenance revenues are recognized in proportion to expected maintenance expenses.

Advertising Costs: Advertising costs are expensed as incurred. Total advertising expense was $13.4 million, $12.3 million, and $9.3 million in 2005, 2004 and 2003, respectively.

Product Development Costs: Expenses associated with the development of new products and changes to existing products are charged to expense as incurred. These costs amounted to $50.0 million, $50.8 million, and $51.0 million in 2005, 2004 and 2003, respectively.

Foreign Currency: Assets and liabilities of foreign operations are translated into U.S. dollars at the fiscal year-end exchange rate. The related translation adjustments are recorded as a separate component of stockholder’s equity, except for the Company’s Mexican operations. The U.S. dollar is considered the functional currency for the Company’s Mexican operations and, therefore, the effect of translating assets and liabilities from the Mexican peso to the U.S. dollar is recorded in results of operations. Revenues and expenses of all foreign operations are translated using average monthly exchange rates prevailing during the year.

Financial Instruments and Derivative Financial Instruments: Financial instruments held by the Company include cash and cash equivalents, accounts receivable, accounts payable, revolving credit agreements, long-term debt and forward foreign currency exchange contracts. The Company does not hold or issue financial instruments or derivative financial instruments for trading purposes.

The Company uses forward foreign currency exchange contracts to partially reduce risks related to transactions denominated in foreign currencies. These contracts hedge firm commitments and forecasted transactions relating to cash flows associated with sales, purchases and intercompany notes denominated in currencies other than the subsidiaries’ functional currencies. Changes in the fair value of forward foreign currency exchange contracts that are effective as hedges are recorded in accumulated other comprehensive income (“OCI”). Deferred gains or losses are reclassified from OCI to the Consolidated Statement of Operations and Comprehensive Income in the same period as the gains or losses from the underlying transactions are recorded and are generally recognized in cost of sales.

NMHG HOLDING CO. AND SUBSIDIARIES

Prior to refinancing its outstanding debt in May 2002, the Company used interest rate swap agreements to partially reduce risks related to floating rate financing agreements which were subject to changes in the market rate of interest. Terms of the interest rate swap agreements required the Company to receive a variable interest rate and pay a fixed interest rate. The Company’s interest rate swap agreements and its variable rate financings were predominately based upon the three-month LIBOR (London Interbank Offered Rate). Changes in the fair value of interest rate swap agreements that were effective as hedges were recorded in OCI. Deferred gains or losses were reclassified from OCI to the Consolidated Statement of Operations and Comprehensive Income in the same period as the gains or losses from the underlying transactions were recorded and were recognized in interest expense. Prior to the cessation of hedge accounting resulting from refinancing, the balance in OCI for NMHG’s interest rate swap agreements that qualified for hedge accounting was a loss of $4.2 million. This balance was amortized into the statement of operations over the original remaining lives of the terminated interest rate swap agreements in accordance with the provisions in Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities.”

Interest rate swap agreements and forward foreign currency exchange contracts held by the Company which qualified as hedges have been designated as hedges of forecasted cash flows. The Company does not currently hold any nonderivative instruments designated as hedges or any derivatives designated as fair value hedges as defined in SFAS No. 133.

Cash flows from hedging activities are reported in the Consolidated Statements of Cash Flows in the same classification as the hedged item, generally as a component of cash flows from operations.

Recently Issued Accounting Standards

Accounting Standards adopted in 2005:

SFAS No. 153: In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 153, “Exchanges of Nonmonetary Assets — An Amendment of APB Opinion No. 29.” SFAS No. 153 amends APB Opinion No. 29, “Accounting for Nonmonetary Transactions.” The amendments made by SFAS No. 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have “commercial substance.” Previously, APB No. 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. The provisions in SFAS No. 153 are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of SFAS No. 153 did not have a material impact on the Company’s financial position or results of operations.

EITF No. 05-6: In June 2005, the EITF reached a consensus on EITF No. 05-6, “Determining the Amortization Period for Leasehold Improvements.” EITF No. 05-6 requires that leasehold improvements acquired in a business combination or purchased subsequent to the inception of a lease be amortized over the lesser of the useful life of the assets or a term that includes renewals that are reasonably assured at the date of the business combination or purchase. The guidance is effective for periods beginning after June 29, 2005. The adoption of EITF No. 05-6 did not have a material impact on the Company’s financial position or results of operations.

FIN No. 47: In March 2005, the FASB issued Interpretation (“FIN”) No. 47, “Accounting for Conditional Asset Retirement Obligations,” an Interpretation of FASB Statement No. 143, which clarifies that the term, conditional asset retirement obligation, as used in FASB Statement No. 143, “Accounting for Asset Retirement Obligations,” refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. However, the obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and (or) method of settlement. FIN No. 47 requires that the uncertainty about the timing and (or) method of settlement of a conditional asset retirement obligation be factored into the measurement of the liability when sufficient information exists. FIN No. 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN No. 47 is effective for

NMHG HOLDING CO. AND SUBSIDIARIES

fiscal years ending after December 15, 2005. The adoption of FIN No. 47 did not have a material impact on the Company’s financial position or results of operations.

Accounting Standards adopted in 2004:

FSP No. 109-1: In December 2004, the FASB issued FASB Staff Position (“FSP”) No. 109-1, “Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004.” FSP 109-1 is intended to clarify that the domestic manufacturing deduction should be accounted for as a special deduction (rather than a rate reduction) under SFAS No. 109, “Accounting for Income Taxes.” A special deduction is recognized under SFAS 109 as it is earned.

FSP No. 109-2: In December 2004, the FASB issued FSP No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004.” FSP 109-2 provides guidance under SFAS No. 109, “Accounting for Income Taxes,” with respect to recording the potential impact of the repatriation provisions of the American Jobs Creation Act of 2004 (the “Jobs Act”) on enterprises’ income tax expense and deferred tax liability. The Jobs Act was enacted on October 22, 2004. FSP 109-2 states that an enterprise is allowed time beyond the financial reporting period of enactment to evaluate the effect of the Jobs Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying SFAS No. 109. During 2005, the Company repatriated $56.0 million subject to the Dividend Exclusion provisions of the Jobs Act and recorded $2.5 million of tax expense related to this repatriation of foreign earnings.

EITF No. 02-14: In July 2004, the FASB ratified EITF Issue No. 02-14, “Whether an Investor Should Apply the Equity Method of Accounting to Investments Other Than Common Stock.” EITF No. 02-14 addresses whether the equity method of accounting applies when an investor does not have an investment in voting common stock of an investee but exercises significant influence through other means. EITF No. 02-14 states that an investor should only apply the equity method of accounting when it has investments in either common stock or in-substance common stock of a corporation, provided that the investor has the ability to exercise significant influence over the operating and financial policies of the investee. The accounting provisions of EITF No. 02-14 were effective for reporting periods beginning after September 15, 2004. The adoption of EITF No. 02-14 did not have a material impact on the Company’s financial position or results of operations.

FSP Nos. FAS 106-1 and FAS 106-2: In January 2004, the FASB issued FSP No. FAS 106-1 and in May 2004 issued FSP No. FAS 106-2 both titled “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (“FSP 106-1” and “FSP 106-2”). FSP 106-1 allows companies to make a one-time election to defer the accounting for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Medicare Act”) that was signed into law on December 8, 2003. The Medicare Act establishes a prescription drug benefit, as well as a federal subsidy to sponsors of retiree health care benefits that are at least actuarially equivalent to Medicare’s prescription drug coverage.

SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions,” requires presently enacted changes in relevant laws to be considered in current period measurements of the accumulated postretirement benefit obligation and the net postretirement benefit costs. FSP 106-2 supersedes FSP 106-1 and provides guidance on the accounting for the effects of the Medicare Act for employers that sponsor postretirement health care plans which provide prescription drug benefits. FSP 106-2 requires those employers to provide certain disclosures regarding the effect of the federal subsidy provided by the Medicare Act. Under the guidance of FSP 106-1, the Company elected to defer accounting for the effects of the Medicare Act. This deferral remains in effect until the appropriate effective date of FSP 106-2. For entities that elected deferral and for which the impact was significant, FSP 106-2 was effective for the first interim or annual period beginning after June 15, 2004. Entities for which FSP 106-2 did not have a significant impact were permitted to delay recognition of the effects of the Medicare Act until the next regularly scheduled measurement date following the issuance of FSP 106-2. The Company adopted FSP 106-2 at its September 30, 2004 measurement date. The adoption of FSP 106-2 and the effect of the Medicare Act did not have a significant impact on the Company’s financial position or results of operations.

NMHG HOLDING CO. AND SUBSIDIARIES

Revised SFAS No. 132: In December 2003, the FASB issued SFAS No. 132 (Revised) (“Revised SFAS No. 132”), “Employer’s Disclosure about Pensions and Other Postretirement Benefits.” Revised SFAS No. 132 retains disclosure requirements in the original SFAS No. 132 and requires additional disclosures relating to assets, obligations, cash flows and net periodic benefit cost. For pension and post-retirement plans, Revised SFAS No. 132 was effective for fiscal years ending after December 15, 2003, except that certain disclosures were effective for fiscal years ending after June 15, 2004. Interim period disclosures were effective for interim periods beginning after December 15, 2003. The Company has made the required disclosures in these financial statements.

Accounting Standards adopted in 2003:

SFAS No. 143: On January 1, 2003, the Company adopted SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 provides accounting requirements for retirement obligations associated with tangible long-lived assets, including: (i) the timing of liability recognition; (ii) initial measurement of the liability; (iii) allocation of asset retirement cost to expense; (iv) subsequent measurement of the liability; and (v) financial statement disclosures. SFAS No. 143 requires that an asset’s retirement cost should be capitalized as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. The adoption of SFAS No. 143 did not have a material impact on the Company’s financial position or results of operations.

SFAS No. 146: On January 1, 2003, the Company adopted SFAS No. 146, “Accounting for Exit or Disposal Activities.” SFAS No. 146 supersedes EITF No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS No. 146 requires that liabilities for one-time termination benefits that will be incurred over future service periods should be measured at fair value as of the termination date and recognized over the future service period. This Statement also requires that liabilities associated with disposal activities be recorded when incurred. These liabilities should be adjusted for subsequent changes resulting from revisions to either the timing or amount of estimated cash flows, discounted at the original credit-adjusted risk-free rate. Interest on the liability would be accreted and charged to expense as an operating item. SFAS No. 146 may effect the periods in which costs are recognized for workforce reductions or facility closures, although the ultimate amount of costs recognized will be the same as previous accounting guidance.

SFAS No. 149: On April 30, 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies accounting for derivatives and hedging based on decisions made: (a) previously as part of the Derivative Implementation Group process, (b) in connection with other FASB projects and (c) regarding other issues raised, including the characteristics of a derivative that contains a financing component. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on the Company’s financial position or its results of operations.

SFAS No. 150: On May 15, 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 provides guidance on how an entity classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. SFAS No. 150 requires the recognition of a cumulative effect of a change in accounting transition adjustment for financial instruments existing at the adoption date. On October 29, 2003, the FASB deferred indefinitely the application of the requirements of SFAS No. 150 as they apply to noncontrolling interests of a limited-life subsidiary. The adoption of the remaining provisions of SFAS No. 150 did not have a material impact on the Company’s financial position or its results of operations.

EITF No. 00-21: On July 1, 2003, the Company prospectively adopted EITF No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables.” EITF No. 00-21 addresses when and how an arrangement involving multiple deliverables should be divided into separate units of accounting, as well as how the arrangement consideration should be measured and allocated to the separate units of accounting in the arrangement. The adoption of this standard did not have a material impact on the Company’s financial position or its results of operations.

NMHG HOLDING CO. AND SUBSIDIARIES

Accounting Standards Not Yet Adopted:

SFAS No. 151: In December 2004, the FASB issued SFAS No. 151, “Inventory Costs.” SFAS No. 151 requires abnormal amounts of inventory costs related to idle facility, freight handling and wasted material expenses to be recognized as current period charges. Additionally, SFAS No. 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The standard is effective for fiscal years beginning after June 15, 2005. The Company does not expect the adoption of SFAS No. 151 to have a material impact on the Company’s financial position or results of operations.

SFAS No. 154: In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections.” SFAS No. 154 replaces Accounting Principles Board (“APB”) Opinion No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements.” SFAS No. 154 requires retrospective application to prior periods’ financial statements of a voluntary change in accounting principle unless it is impracticable. APB No. 20 previously required that most voluntary changes in accounting principle be recognized by including the cumulative effect of changing to the new accounting principle in net income in the period of the change. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not expect the adoption of SFAS No. 154 to have a material impact on the Company’s financial position or results of operations.

SFAS No. 155: In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and 140.” SFAS No. 155 resolves issues addressed in SFAS No. 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets,” and permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation; clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133; establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of the first fiscal year that begins after September 15, 2006. The Company is currently evaluating the effect the adoption of SFAS No. 155 will have on its financial position or results of operations.

Reclassifications: Certain amounts in the prior periods’ Consolidated Financial Statements have been reclassified to conform to the current period’s presentation. The financial statements for 2004 have been restated to reflect the correction of an error.

NMHG HOLDING CO. AND SUBSIDIARIES

NOTE 3—Restructuring and Other Transactions

Restructuring Charges

The changes to the Company’s restructuring accruals are as follows:

						Lease
		Severance				Impairment				Other				Total
NMHG Wholesale
Balance at January 1, 2003		$	9.3			$	—			$	0.9			$	10.2
Foreign currency effect			0.3				—				—				0.3
Reversal			(0.3	)			—				—				(0.3	)
Payments			(2.6	)			—				(0.3	)			(2.9	)
Balance at December 31, 2003			6.7				—				0.6				7.3
Foreign currency effect			0.4				—				—				0.4
Reversal			(1.1	)			—				—				(1.1	)
Payments			(1.8	)			—				(0.5	)			(2.3	)
Balance at December 31, 2004			4.2				—				0.1				4.3
Foreign currency effect			(0.4	)			—				—				(0.4	)
Reversal			(1.2	)			—				—				(1.2	)
Payments			(0.8	)			—				(0.1	)			(0.9	)
Balance at December 31, 2005		$	1.8			$	—			$	—			$	1.8
NMHG Retail
Balance at January 1, 2003		$	1.5			$	0.1			$	—			$	1.6
Provision (reversal), net			(0.7	)			0.2				—				(0.5	)
Payments			(0.4	)			(0.1	)			—				(0.5	)
Balance at December 31, 2003			0.4				0.2				—				0.6
Reversal			(0.3	)			—				—				(0.3	)
Payments			(0.1	)			—				—				(0.1	)
Balance at December 31, 2004			—				0.2				—				0.2
Payments			—				(0.2	)			—				(0.2	)
Balance at December 31, 2005		$	—			$	—			$	—			$	—

2002 Restructuring Program

As announced in December 2002, NMHG Wholesale has phased out its Lenoir, North Carolina lift truck component facility and restructured other manufacturing and administrative operations, primarily its Irvine, Scotland lift truck assembly and component facility. As such, NMHG Wholesale recognized a restructuring charge of approximately $12.5 million during 2002. Of this amount, $3.8 million related to a non-cash asset impairment charge for a building, machinery and tooling, which was determined based on current market values for similar assets and broker quotes compared with the net book value of these assets, and $8.7 million related to severance and other employee benefits to be paid to approximately 615 manufacturing and administrative employees. Severance payments of $0.8 million, $1.8 million and $1.4 million were made to approximately 51, 122 and 169 employees during 2005, 2004 and 2003, respectively. Payments are expected to continue through 2006. In addition, $1.2 million, $1.1 million and $0.3 million of the amount accrued at December 31, 2002 were reversed in 2005, 2004 and 2003, respectively, as a result of a reduction in the estimate of employees eligible to receive severance payments as well as a reduction in the average amount to be paid to each employee. Included in the table above under “Other” is $0.9 million accrued for post-employment medical benefits, of which $0.1 million, $0.5 million and $0.3 million were paid out during 2005, 2004 and 2003, respectively. Approximately $3.5 million, $6.6 million and $9.3 million of restructuring related costs, which were primarily related to

NMHG HOLDING CO. AND SUBSIDIARIES

manufacturing inefficiencies and were not eligible for accrual as of December 31, 2002, were expensed in 2005, 2004 and 2003, respectively, and are not shown in the table above. Of the $3.5 million additional costs incurred in 2005, $3.3 million is classified as “Cost of sales” and $0.2 million is classified as “Selling, general and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income for the year ended December 31, 2005. Of the $6.6 million additional costs incurred in 2004, $5.9 million is classified as “Cost of sales” and $0.7 million is classified as “Selling, general and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income for the year ended December 31, 2004. Of the $9.3 million additional costs incurred during 2003, $9.0 million is classified as “Cost of sales” and $0.3 million is classified as “Selling, general and administrative expenses” in the Consolidated Statements of Operations and Comprehensive Income for the year ended December 31, 2003.

2001 Restructuring Programs

During 2001, management committed to the restructuring of certain operations in Europe for both the NMHG Wholesale and NMHG Retail segments of the business. As such, NMHG Wholesale recognized a restructuring charge of approximately $4.5 million for severance and other employee benefits to be paid to approximately 285 direct and indirect factory labor and administrative personnel in Europe. Payments of $1.2 million to 17 employees were made in 2003. No further payments are expected.

NMHG Retail recognized a restructuring charge of approximately $4.7 million in 2001, of which $0.4 million related to lease termination costs and $4.3 million related to severance and other employee benefits to be paid to approximately 140 service technicians, salesmen and administrative personnel at wholly owned dealers in Europe. Severance payments of $0.1 million to one employee and $0.4 million to seven employees were made during 2004 and 2003, respectively. In addition, $0.3 million and $0.7 million of the amount accrued during 2001 was reversed during 2004 and 2003, respectively, as a result of a reduction in the estimate of the total number of employees to receive severance as well as a reduction in the average amount to be paid to each employee. No additional severance payments are anticipated under this program. In addition, the lease impairment accrual was increased by $0.2 million during 2003 as a result of additional lease expense. Lease payments of $0.1 million were made in 2003. Final lease payments of $0.2 million were made during 2005.

Other Transactions

NMHG recognized income of $6.7 million in 2004 from U.S. Customs anti-dumping settlements related to certain internal-combustion industrial lift trucks imported from Japan. The settlement is included in “Other income (expense)” in the Company’s Consolidated Statements of Operations and Comprehensive Income for the year ended December 31, 2004. The Company does not expect to receive any additional material awards from U.S. Customs related to the anti-dumping action.

NMHG HOLDING CO. AND SUBSIDIARIES

NOTE 4—Inventories

Inventories are summarized as follows:

		December 31
		2005				2004
Manufactured inventories:
Finished goods and service parts		$	157.9			$	146.0
Raw materials and work in process			184.5				174.2
Total manufactured inventories			342.4				320.2
Retail inventories			30.2				29.9
Total inventories at FIFO			372.6				350.1
LIFO reserve			(39.5	)			(30.5	)
		$	333.1			$	319.6

The cost of certain manufactured and retail inventories, including service parts, has been determined using the LIFO method. At December 31, 2005 and 2004, 65% and 62%, respectively, of total inventories were determined using the LIFO method.

NOTE 5—Property, Plant and Equipment, Net

Property, plant and equipment, net includes the following:

		December 31
		2005				2004
Land and land improvements		$	20.6			$	21.4
Plant and equipment:
NMHG Wholesale			457.9				459.1
NMHG Retail			77.4				107.7
			535.3				566.8
Property, plant and equipment, at cost			555.9				588.2
Less allowances for depreciation and amortization			330.0				350.1
		$	225.9			$	238.1

Total depreciation and amortization expense on property, plant and equipment was $40.8 million, $41.6 million and $43.9 million during 2005, 2004 and 2003, respectively.

NMHG HOLDING CO. AND SUBSIDIARIES

NOTE 6— Intangible Assets

Intangible assets other than goodwill, which are subject to amortization, are as follows:

		December 31
		2005				2004
Gross carrying amount		$	2.3			$	2.4
Less: Accumulated amortization			1.2				0.9
Net Balance		$	1.1			$	1.5

Amortization expense for intangible assets was $0.3 million, $0.3 million and $0.2 million in 2005, 2004 and 2003, respectively. Expected annual amortization expense of other intangible assets is $0.2 million for each of the five years from 2006 through 2010. The weighted average amortization period for other intangible assets is 12 years.

Following is a summary of goodwill by segment at December 31, 2005 and 2004:

		Carrying Amount of Goodwill
		Wholesale				Retail				Consolidated
Balance at January 1, 2004		$	351.3			$	—			$	351.3
Foreign currency translation			2.4				—				2.4
Other			(0.4	)			—				(0.4	)
Balance at December 31, 2004			353.3				—				353.3
Foreign currency translation			(3.8	)			—				(3.8	)
Other			1.0				—				1.0
Balance at December 31, 2005		$	350.5			$	—			$	350.5

NMHG HOLDING CO. AND SUBSIDIARIES

NOTE 7—Current and Long-term Financing

The following table summarizes the Company’s available and outstanding borrowings.

		December 31
		2005				2004
Total outstanding borrowings:
Revolving credit agreements		$	23.9			$	9.2
Capital lease obligations and other term loans			30.4				33.5
Note payable, parent company			39.0				—
Senior Notes			248.2				247.8
Total debt outstanding		$	341.5			$	290.5
Current portion of borrowings outstanding		$	74.4			$	21.0
Long-term portion of borrowings outstanding		$	267.1			$	269.5
Total available borrowings, net of limitations, under revolving credit agreements		$	164.4			$	136.1
Unused revolving credit agreements		$	140.5			$	126.9
Weighted average stated interest rate on total borrowings			9.4	%			9.5	%

Annual maturities of total debt, excluding capital leases are as follows:

2006		$	70.9
2007			3.0
2008			3.0
2009			253.0
2010			2.9
Thereafter			—
		$	332.8

Interest paid on total debt was $32.5 million, $30.7 million and $31.5 million during 2005, 2004 and 2003, respectively.

NMHG’s primary financing is provided by a secured, floating-rate revolving credit facility (the “Facility”) and $250.0 million of unsecured 10% Senior Notes that were issued in May 2002.

The Facility was modified during 2005 to, among other things, increase the size of the facility to $175.0 million from $135.0 million, reduce the applicable interest rate margins and extend the term until December 2010. The maximum availability is governed by a borrowing base derived from advance rates against the inventory and accounts receivable of the borrowers, as defined in the Facility. Adjustments to reserves booked against these assets, including inventory reserves, will change the eligible borrowing base and thereby impact the liquidity provided by the Facility. The borrowers include NMHG Holding Co. and certain domestic and foreign subsidiaries of NMHG Holding Co. Borrowings bear interest at a floating rate, which can be either a base rate or LIBOR, as defined, plus an applicable margin. The current applicable margins, effective December 31, 2005, for domestic base rate loans and LIBOR loans were 1.0% and 2.0%, respectively. The revolving credit facility also requires the

NMHG HOLDING CO. AND SUBSIDIARIES

payment of a fee of 0.375% per annum on the unused commitment. The margins and unused commitment fee are subject to quarterly adjustment based on a leverage ratio.

The domestic floating rate of interest applicable to the Facility on December 31, 2005 was 8.0%, including the applicable floating rate margin. The Facility includes a subfacility for foreign borrowers which can be denominated in British pound sterling or euros. Included in the borrowing capacity is a $20.0 million overdraft facility available to foreign borrowers. At December 31, 2005, there was $15.0 million outstanding under these foreign subfacilities.

The Facility is guaranteed by certain domestic and foreign subsidiaries of NMHG Holding Co. and is secured by substantially all of the assets, other than property, plant and equipment, of the borrowers and guarantors, both domestic and foreign, under the Facility. At December 31, 2005, the borrowing base under the Facility was $126.3 million, which has been reduced by the commitments or availability under certain foreign credit facilities and an excess availability requirement of $10.0 million. There were no domestic borrowings outstanding under this facility at December 31, 2005.

The terms of the Facility provide that availability is reduced by the commitments or availability under a foreign credit facility of the borrowers and certain foreign working capital facilities. A foreign credit facility commitment of approximately U.S. $18.0 million on December 31, 2005, denominated in Australian dollars, reduced the amount of availability under the Facility. In addition, availability under the Facility was reduced by $5.5 million for a working capital facility in China and by $15.2 million for other letters of credit. If the commitments or availability under these facilities are increased, availability under the Facility will be reduced. The $126.3 million of borrowing base capacity under the Facility at December 31, 2005 reflected reductions for these foreign credit facilities.

During 2002, NMHG issued $250.0 million of 10% Senior Notes, which mature on May 15, 2009. The Senior Notes are senior unsecured obligations of NMHG Holding Co. and are guaranteed by substantially all of NMHG’s domestic subsidiaries. NMHG Holding Co. has the option to redeem all or a portion of the Senior Notes on or after May 15, 2006 at the redemption prices set forth in the Indenture governing the Senior Notes. The proceeds from the Senior Notes were reduced by an original issue discount of $3.1 million resulting in an effective interest rate of 10.1%.

Both the Facility and terms of the Senior Notes include restrictive covenants which, among other things, limit the payment of dividends to NACCO to no greater than $5.0 million annually, subject to additional restrictions and limitations. The Facility also requires NMHG to meet certain financial tests, including, but not limited to, minimum excess availability, maximum capital expenditures, maximum leverage ratio and minimum fixed charge coverage ratio tests. The borrowers must maintain aggregate excess availability under the revolving credit facility of at least $10.0 million. At December 31, 2005, NMHG was in compliance with all covenants.

NMHG paid financing fees of approximately $0.5 million, $0.7 million and $0.1 million in 2005, 2004 and 2003, respectively. The fees paid in 2005 and 2004 were related to amendments to the Facility. These fees were deferred and are being amortized as interest expense in the Consolidated Statements of Operations and Comprehensive Income over the respective terms of the financing facilities.

NOTE 8—Financial Instruments and Derivative Financial Instruments

Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturities of these instruments. The fair values of revolving credit agreements and long-term debt, excluding capital leases, were determined using current rates offered for similar obligations. At December 31, 2005, the fair value of revolving credit agreements and long-term debt, excluding capital leases, was $306.5 million compared with the book value of $292.0 million. At December 31, 2004, the fair value of revolving credit agreements and long-term debt, excluding capital leases, was $301.1 million compared with the book value of $275.1 million.

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of accounts receivable and derivatives. The large number of customers comprising the Company’s customer base and their dispersion across many different industries and geographies mitigates concentration of credit risk on

NMHG HOLDING CO. AND SUBSIDIARIES

accounts receivable. To further reduce credit risk associated with accounts receivable, the Company performs periodic credit evaluations of its customers, but does not generally require advance payments or collateral. The Company enters into derivative contracts with high-quality financial institutions and limits the amount of credit exposure to any one institution.

Derivative Financial Instruments

Foreign Currency Derivatives: NMHG held forward foreign currency exchange contracts with total notional amounts of $282.1 million and $276.2 million at December 31, 2005 and 2004, respectively, primarily denominated in British pound sterling, euros, Japanese yen, Australian dollars, Canadian dollars, Mexican pesos and Swedish kroner. The fair value of these contracts was estimated based on quoted market prices and approximated a net liability of $3.4 million and a net asset of $3.0 million at December 31, 2005 and 2004, respectively.

For the years ended December 31, 2005 and 2004, there was no ineffectiveness of forward foreign currency exchange contracts. Forward foreign currency exchange contracts are used to hedge transactions expected to occur within the next 12 months. Based on market valuations at December 31, 2005, the amount of net deferred loss included in OCI at December 31, 2005 of $1.5 million is expected to be reclassified into the Consolidated Statement of Operations and Comprehensive Income over the next 12 months, as those transactions occur.

Interest Rate Derivatives: As a result of the refinancing of NMHG’s floating-rate revolving credit facility in 2002, NMHG terminated all of its interest rate swap agreements in 2002. Prior to the refinancing, however, certain of these interest rate swap agreements qualified for hedge accounting treatment in accordance with SFAS No. 133, as amended. As such, the mark-to-market effect of these interest rate swap agreements was previously recognized in OCI.

Prior to the cessation of hedge accounting resulting from the May 9, 2002 refinancing, the balance in OCI for NMHG’s interest rate swap agreements that qualified for hedge accounting was a loss of $4.2 million. This balance was being amortized into the Consolidated Statement of Operations and Comprehensive Income over the original remaining lives of the terminated interest rate swap agreements in accordance with the provisions of SFAS No. 133, as amended. The amount of amortization of OCI included in the Consolidated Statement of Operations and Comprehensive Income on the line “Loss on interest rate swap agreements” was $0.2 million and $1.5 million for the years ended December 31, 2004 and 2003, respectively. The entire $4.2 million loss was fully amortized as of December 31, 2004.

NOTE 9—Leasing Arrangements

The Company leases certain office, manufacturing and warehouse facilities, retail stores and machinery and equipment under noncancellable capital and operating leases that expire at various dates through 2012. NMHG Retail also leases certain lift trucks that are carried in its rental fleet or subleased to customers. Many leases include renewal and/or fair value purchase options.

NMHG HOLDING CO. AND SUBSIDIARIES

Future minimum capital and operating lease payments at December 31, 2005 are:

		Capital				Operating
		Leases				Leases
2006		$	4.3			$	54.7
2007			2.5				41.7
2008			1.8				28.0
2009			1.2				17.8
2010			0.7				8.6
Subsequent to 2010			2.1				1.6
Total minimum lease payments			12.6			$	152.4
Amounts representing interest			2.2
Present value of net minimum lease payments			10.4
Current maturities			3.5
Long-term capital lease obligation		$	6.9

Rental expense for all operating leases was $58.1 million, $63.9 million and $57.4 million for 2005, 2004 and 2003, respectively. The Company also recognized $73.3 million, $72.9 million and $74.2 million for 2005, 2004 and 2003, respectively, in rental income on subleases of equipment under operating leases in which it was the lessee. These subleases were primarily related to lift trucks, in which the Company derives revenues in the ordinary course of business under rental agreements with its customers. The sublease rental income for these lift trucks is included in “Revenues” and the related rent expense is included in “Cost of sales” in the Consolidated Statements of Operations and Comprehensive Income for each period. Aggregate future minimum rentals to be received under noncancellable subleases of lift trucks as of December 31, 2005 are $156.3 million.

Assets recorded under capital leases are included in property, plant and equipment and consist of the following:

		December 31
		2005				2004
Plant and equipment		$	56.0			$	81.0
Less: accumulated amortization			40.3				57.5
		$	15.7			$	23.5

Amortization of plant and equipment under capital leases is included in depreciation expense in each of the years ended December 31, 2005, 2004 and 2003.

Capital lease obligations of $3.9 million, $4.7 million and $3.4 million were incurred in connection with lease agreements to acquire plant and equipment during 2005, 2004 and 2003, respectively. Included in the 2004 obligation is an airplane lease which was previously accounted for as an operating lease and is now being accounted for as a capital lease. The airplane is now included in property, plant, and equipment on the Consolidated Balance Sheet.

NOTE 10—Guarantees and Contingencies

Various legal and regulatory proceedings and claims have been or may be asserted against the Company relating to the conduct of its business, including product liability, environmental and other claims. These proceedings and claims are incidental to the ordinary course of business of the Company. Management believes that it has meritorious defenses and will vigorously defend itself in these actions. Any costs that management estimates will be paid as a result of these claims are accrued when the liability is considered probable and the amount can be reasonably estimated. Although the ultimate disposition of these proceedings is not presently determinable,

NMHG HOLDING CO. AND SUBSIDIARIES

management believes, after consultation with its legal counsel, that the likelihood is remote that material costs will be incurred in excess of accruals already recognized.

Under various financing arrangements for certain customers, including independently owned retail dealerships, NMHG provides guarantees of the residual values of lift trucks, or recourse or repurchase obligations such that NMHG would be obligated in the event of default by the customer. Terms of the third-party financing arrangements for which the Company is providing a guarantee generally range from one to five years. Total guarantees and amounts subject to recourse or repurchase obligations at December 31, 2005 and 2004 were $216.2 million and $203.7 million, respectively. Losses anticipated under the terms of the guarantees, recourse or repurchase obligations are not significant and reserves have been provided for such losses in the accompanying Consolidated Financial Statements. Generally, NMHG retains a security interest in the related assets financed such that, in the event that NMHG would become obligated under the terms of the recourse or repurchase obligations, NMHG would take title to the assets financed. The fair value of collateral held at December 31, 2005 was approximately $235.3 million, based on Company estimates. The Company estimates the fair value of the collateral using information regarding the original sales price, the current age of the equipment and general market conditions that influence the value of both new and used lift trucks. See also Note 15 for a discussion of the amount of these guarantees provided to related parties.

NMHG provides a standard warranty on its lift trucks, generally for six to twelve months or 1,000 to 2,000 hours. For the new 1 to 8 ton trucks, NMHG provides an extended powertrain warranty of two years or 2,000 hours as part of the standard warranty. In addition, NMHG sells extended warranty agreements which provide additional warranty up to two to five years or up to 2,400 to 10,000 hours. The specific terms and conditions of those warranties vary depending upon the product sold and the country in which NMHG does business. The Company estimates the costs that may be incurred under its standard warranty programs and records a liability for such costs at the time product revenue is recognized. In addition, revenue received for the sale of extended warranty contracts is deferred and recognized in the same manner as the costs incurred to perform under the warranty contracts, in accordance with FASB Technical Bulletin 90-1, “Accounting for Separately Priced Extended Warranty and Product Maintenance Contracts.” Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims and the cost per claim. NMHG also maintains a quality enhancement program under which it provides for specifically identified field product improvements in its warranty obligation. Accruals under this program are determined based on estimates of the potential number of claims to be processed and the cost of processing those claims. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Changes in the Company’s current and long-term warranty obligations, including deferred revenue on extended warranty contracts, are as follows:

		2005				2004
Balance at the beginning of the year		$	40.5			$	40.3
Warranties issued			33.2				32.5
Settlements made			(32.7	)			(32.7	)
Foreign currency effect			(0.7	)			0.4
Balance at December 31		$	40.3			$	40.5

NMHG HOLDING CO. AND SUBSIDIARIES

NOTE 11—Income Taxes

The Company is included in the consolidated federal income tax return filed by NACCO. The Company’s tax-sharing agreement with NACCO provides that federal income taxes are computed by the Company on a separate-return basis, except that net operating loss and tax credit carryovers that benefit the consolidated tax return are advanced to the Company and are repaid as utilized on a separate-return basis. To the extent that these carryovers are not used on a separate-return basis, the Company is required, under conditions pursuant to the tax-sharing agreement, to refund to NACCO the balance of carryovers advanced and not used by the Company.

The components of income before income taxes and provision for income taxes for the years ended December 31 are as follows:

		2005				2004 (a)				2003
Income (loss) before income taxes and minority interest
Domestic		$	(12.3	)		$	0.4			$	6.3
Foreign			34.8				6.7				11.3
		$	22.5			$	7.1			$	17.6
Income tax provision (benefit)
Current tax provision (benefit):
Federal		$	5.2			$	(6.7	)		$	(8.4	)
State			0.3				(0.4	)			0.6
Foreign			7.4				5.1				3.5
Total current			12.9				(2.0	)			(4.3	)
Deferred tax provision (benefit):
Federal			(12.7	)			3.2				9.9
State			1.6				(1.1	)			(1.3	)
Foreign			(2.7	)			(4.4	)			(3.6	)
Total deferred			(13.8	)			(2.3	)			5.0
Increase in valuation allowance			5.4				1.1				1.1
		$	4.5			$	(3.2	)		$	1.8

(a) As restated. See Note 2.

The Company made income tax payments of $18.9 million, $13.4 million and $19.3 million during 2005, 2004 and 2003, respectively. During the same period, income tax refunds totaled $13.7 million, $25.5 million and $17.0 million, respectively.

NMHG HOLDING CO. AND SUBSIDIARIES

A reconciliation of the federal statutory and effective income tax for the years ended December 31 is as follows:

		2005				2004 (a)				2003
Income before income taxes and minority interest		$	22.5			$	7.1			$	17.6
Statutory taxes at 35.0%		$	7.9			$	2.5			$	6.2
Valuation allowance			5.4				1.1				1.1
Foreign statutory rate differences			(10.4	)			(1.8	)			(2.8	)
State income taxes			(0.4	)			(1.0	)			(0.5	)
State law changes			1.6				—				—
Tax controversy resolution			(1.2	)			(1.3	)			—
Export benefits			(0.3	)			(0.7	)			(0.3	)
Equity earnings			(0.2	)			(2.2	)			(1.3	)
Repatriation dividend			2.3				—				—
Other-net			(0.2	)			0.2				(0.6	)
Income tax provision (benefit)		$	4.5			$	(3.2	)		$	1.8
Effective income tax rate			20.0	%			(45.1	%)			10.2	%

(a) As restated. See Note 2.

The tax benefit from controversy resolution recognized during 2005 and 2004 of $1.2 million and $1.3 million, respectively, related to certain tax issues that were provided for in prior years for which the applicable statute of limitations expired or due to settlement of tax audits with various tax jurisdictions. The comparability of the effective income tax rate for 2004 versus 2003 was also affected by the recognition of deferred tax assets for foreign tax credits as a result of the American Jobs Creation Act of 2004 (“Jobs Act”).

The Company does not provide for deferred taxes on certain unremitted foreign earnings. Management has decided that earnings of foreign subsidiaries have been and will be indefinitely reinvested in foreign operations and, therefore, the recording of deferred tax liabilities for unremitted foreign earnings is not required. As of December 31, 2005, the cumulative unremitted earnings of the Company’s foreign subsidiaries are $197.2 million. It is impracticable to determine the amount of unrecognized deferred taxes with respect to these earnings; however, foreign tax credits would be available to partially reduce U.S. income taxes in the event of a distribution.

The 2005 financial results of the Company reflect the impact of the repatriation provisions included in the Jobs Act. The repatriation subject to the Dividend Exclusion provisions of the Jobs Act during 2005 was $56.0 million, and the Company recorded tax expense of $2.5 million related to this repatriation, of which $2.3 million was federal tax expense and $0.2 million was state tax expense. The Company expects that it will meet all of the Domestic Reinvestment requirements during 2005 as set forth in the safe harbor rules as outlined in Section 8.03(b) of IRS Notice 2005-10.

NMHG HOLDING CO. AND SUBSIDIARIES

A detailed summary of the total deferred tax assets and liabilities in the Company’s Consolidated Balance Sheets resulting from differences in the book and tax basis of assets and liabilities follows:

		December 31
		2005				2004
Deferred tax assets
Accrued expenses and reserves		$	55.4			$	49.5
Accrued pension benefits			17.0				17.3
Tax attribute carryforwards			32.9				29.7
Employee benefits			12.9				11.7
Other			1.6				1.8
Total deferred tax assets			119.8				110.0
Valuation allowance			(18.8	)			(15.2	)
		$	101.0			$	94.8
Deferred tax liabilities
Depreciation and amortization		$	24.8			$	24.4
Inventories			4.2				8.0
Total deferred tax liabilities			29.0				32.4
Net deferred tax asset		$	72.0			$	62.4