diff --git a/lib/compress.js b/lib/compress.js
index 2b63851b..c55cf115 100644
--- a/lib/compress.js
+++ b/lib/compress.js
@@ -1569,7 +1569,6 @@ merge(Compressor.prototype, {
         if (compressor.has_directive("use asm")) return self;
         var toplevel = compressor.option("toplevel");
         if (compressor.option("unused")
-            && (!(self instanceof AST_Toplevel) || toplevel)
             && !self.uses_eval
             && !self.uses_with) {
             var assign_as_unused = !/keep_assign/.test(compressor.option("unused"));
@@ -1596,16 +1595,14 @@ merge(Compressor.prototype, {
             var scope = this;
             var tw = new TreeWalker(function(node, descend){
                 if (node !== self) {
-                    if (node instanceof AST_Defun) {
+                    if (node instanceof AST_Defun || node instanceof AST_DefClass) {
                         if (!drop_funcs && scope === self) {
                             var node_def = node.name.definition();
-                            if (!(node_def.id in in_use_ids)) {
+                            if (node_def.global && !(node_def.id in in_use_ids)) {
                                 in_use_ids[node_def.id] = true;
                                 in_use.push(node_def);
                             }
                         }
-                    }
-                    if (node instanceof AST_Defun || node instanceof AST_DefClass) {
                         initializations.add(node.name.name, node);
                         return true; // don't go in nested scopes
                     }
@@ -1613,7 +1610,7 @@ merge(Compressor.prototype, {
                         node.definitions.forEach(function(def){
                             if (!drop_vars) {
                                 var node_def = def.name.definition();
-                                if (!(node_def.id in in_use_ids)) {
+                                if (node_def.global && !(node_def.id in in_use_ids)) {
                                     in_use_ids[node_def.id] = true;
                                     in_use.push(node_def);
                                 }
@@ -1754,8 +1751,8 @@ merge(Compressor.prototype, {
                             }
                         }
                     }
-                    if (drop_funcs && (node instanceof AST_Defun || node instanceof AST_DefClass) && node !== self) {
-                        var keep = (node.name.definition().id in in_use_ids) || node.name.definition().global;
+                    if ((node instanceof AST_Defun || node instanceof AST_DefClass) && node !== self) {
+                        var keep = (node.name.definition().id in in_use_ids) || !drop_funcs && node.name.definition().global;
                         if (!keep) {
                             compressor.warn("Dropping unused function {name} [{file}:{line},{col}]", {
                                 name : node.name.name,
@@ -1767,11 +1764,11 @@ merge(Compressor.prototype, {
                         }
                         return node;
                     }
-                    if (drop_vars && node instanceof AST_Definitions && !(tt.parent() instanceof AST_ForIn)) {
+                    if (node instanceof AST_Definitions && !(tt.parent() instanceof AST_ForIn)) {
                         var def = node.definitions.filter(function(def){
                             if (def.is_destructuring()) return true;
                             if (def.name.definition().id in in_use_ids) return true;
-                            if (def.name.definition().global) return true;
+                            if (!drop_vars && def.name.definition().global) return true;
 
                             var w = {
                                 name : def.name.name,
@@ -1833,12 +1830,14 @@ merge(Compressor.prototype, {
                         }
                         return node;
                     }
-                    if (drop_vars && assign_as_unused
+                    if (assign_as_unused
                         && node instanceof AST_Assign
                         && node.operator == "="
                         && node.left instanceof AST_SymbolRef) {
                         var def = node.left.definition();
-                        if (!(def.id in in_use_ids) && self.variables.get(def.name) === def) {
+                        if ((drop_vars || !def.global)
+                            && !(def.id in in_use_ids)
+                            && self.variables.get(def.name) === def) {
                             return node.right;
                         }
                     }