~~TEREX CORPORATION AND SUBSIDIARIES~~

GENERAL

~~This~~Unless specifically noted otherwise, this Quarterly Report on Form 10-Q filed by Terex Corporation generally speaks as of September 30, ~~2018~~ ~~unless specifically noted otherwise.~~2019 and excludes discontinued operations. Discontinued operations primary relate to the Demag^® mobile cranes business and mobile crane product lines manufactured in our Oklahoma City facility. See Note D - “Discontinued Operations and Assets and Liabilities Held for Sale” for further information. Unless otherwise indicated, Terex Corporation, together with its consolidated subsidiaries, is hereinafter referred to as “Terex,” the “Registrant,” “us,” “we,” “our” or the “Company.”

Forward-Looking Information

Certain information in this Quarterly Report includes forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995) regarding future events or our future financial performance that involve certain contingencies and uncertainties, including those discussed below in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contingencies and Uncertainties.” In addition, when included in this Quarterly Report or in documents incorporated herein by reference, the words “may,” “expects,” “should,” “intends,” “anticipates,” “believes,” “plans,” “projects,” “estimates” and the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean that the statement is not forward-looking. We have based these forward-looking statements on current expectations and projections about future events. These statements are not guarantees of future performance. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. Such risks and uncertainties, many of which are beyond our control, include, among others:

our business is cyclical and weak general economic conditions affect the sales of our products and financial results;

changes in import/export regulatory regimes and the escalation of global trade conflicts could continue to negatively impact sales of our products and our financial results;

our financial results could be adversely impacted by the United Kingdom’s (“U.K.”) departure from the European Union (“E.U.”);

our need to comply with restrictive covenants contained in our debt agreements;

our ability to generate sufficient cash flow to service our debt obligations and operate our business;

our ability to access the capital markets to raise funds and provide liquidity;

our business is sensitive to government spending;

our business is highly competitive and is affected by our cost structure, pricing, product initiatives and other actions taken by competitors;

our retention of key management personnel;

the financial condition of suppliers and customers, and their continued access to capital;

~~our~~exposure from providing financing and credit support for some of our customers;

we may experience losses in excess of recorded reserves;

we are dependent upon third-party suppliers, making us vulnerable to supply shortages and price increases;

~~the imposition of tariffs and related actions on trade by the U.S. and foreign governments;~~

our business is global and subject to changes in exchange rates between currencies, commodity price changes, regional economic conditions and trade restrictions;

our operations are subject to a number of potential risks that arise from operating a multinational business, including compliance with changing regulatory environments, the Foreign Corrupt Practices Act and other similar laws and political instability;

a material disruption to one of our significant facilities;

possible work stoppages and other labor matters;

compliance with changing laws and regulations, particularly environmental and tax laws and regulations;

litigation, product liability claims, intellectual property claims, class action lawsuits and other liabilities;

our ability to comply with an injunction and related obligations imposed by the United States Securities and Exchange Commission (“SEC”);

disruption or breach in our information technology systems and storage of sensitive data;

our ability to successfully implement our Execute to Win strategy; and

other factors.

Actual events or our actual future results may differ materially from any forward-looking statement due to these and other risks, uncertainties and significant factors. The forward-looking statements contained herein speak only as of the date of this Quarterly Report and the forward-looking statements contained in documents incorporated herein by reference speak only as of the date of the respective documents. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained or incorporated by reference in this Quarterly Report to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

TEREX CORPORATION AND SUBSIDIARIES

Index to Quarterly Report on Form 10-Q

For the Quarterly Period Ended September 30, 2019


PART I.	FINANCIAL INFORMATION



ITEM 1.	FINANCIAL STATEMENTS

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in millions, except per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Net sales	$	1,228.5		$	1,111.2		$	3,891.9		$	3,299.8		$	1,024.6		$	1,098.8		$	3,468.1		$	3,468.4
Cost of goods sold	(995.7		)	(892.2		)	(3,148.9		)	(2,687.8		)	(815.0		)	(858.7		)	(2,748.9		)	(2,721.1		)
Gross profit	232.8			219.0			743.0			612.0			209.6			240.1			719.2			747.3
Selling, general and administrative expenses	(160.9		)	(153.1		)	(496.4		)	(473.1		)	(123.2		)	(135.9		)	(407.1		)	(416.4		)
Income (loss) from operations	71.9			65.9			246.6			138.9			86.4			104.2			312.1			330.9
Other income (expense)
Interest income	1.7			1.9			7.1			5.2			1.9			1.7			5.4			7.0
Interest expense	(18.5		)	(15.5		)	(52.7		)	(52.0		)	(22.0		)	(18.4		)	(69.6		)	(52.5		)
Loss on early extinguishment of debt	—			(0.7		)	(0.7		)	(52.6		)
Other income (expense) – net	(4.4		)	5.1			(5.8		)	47.1			1.6			(3.7		)	(2.9		)	(4.1		)
Income (loss) from continuing operations before income taxes	50.7			56.7			194.5			86.6			67.9			83.8			245.0			281.3
(Provision for) benefit from income taxes	(12.3		)	(0.1		)	(52.6		)	5.1			(15.5		)	(14.6		)	(53.8		)	(59.2		)
Income (loss) from continuing operations	38.4			56.6			141.9			91.7			52.4			69.2			191.2			222.1
Income (loss) from discontinued operations – net of tax													(10.1		)	(30.8		)	(151.8		)	(80.2		)
Gain (loss) on disposition of discontinued operations – net of tax	0.2			2.6			4.8			63.7			(20.9		)	0.2			(9.5		)	4.8
Net income (loss)	$	38.6		$	59.2		$	146.7		$	155.4		$	21.4		$	38.6		$	29.9		$	146.7

Basic earnings (loss) per share:
Income (loss) from continuing operations	$	0.52		$	0.64		$	1.86		$	0.96		$	0.73		$	0.94		$	2.69		$	2.91
Income (loss) from discontinued operations – net of tax													(0.14		)	(0.42		)	(2.14		)	(1.05		)
Gain (loss) on disposition of discontinued operations – net of tax	—			0.03			0.06			0.66			(0.29		)	—			(0.13		)	0.06
Net income (loss)	$	0.52		$	0.67		$	1.92		$	1.62		$	0.30		$	0.52		$	0.42		$	1.92
Diluted earnings (loss) per share:
Income (loss) from continuing operations	$	0.51		$	0.63		$	1.82		$	0.93		$	0.73		$	0.92		$	2.66		$	2.85
Income (loss) from discontinued operations – net of tax													(0.14		)	(0.41		)	(2.11		)	(1.03		)
Gain (loss) on disposition of discontinued operations – net of tax	—			0.03			0.06			0.65			(0.29		)	—			(0.13		)	0.06
Net income (loss)	$	0.51		$	0.66		$	1.88		$	1.58		$	0.30		$	0.51		$	0.42		$	1.88
Weighted average number of shares outstanding in per share calculation
Basic	73.7			88.0			76.3			96.2			71.3			73.7			71.0			76.3
Diluted	75.1			90.0			77.9			98.1			71.8			75.1			71.8			77.9

Comprehensive income (loss)	$	22.5		$	91.2		$	81.9		$	673.2		$	8.4		$	22.5		$	14.4		$	81.9

Dividends declared per common share	$	0.10		$	0.08		$	0.30		$	0.24

The accompanying notes are an integral part of these condensed consolidated financial statements.

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(unaudited)

(in millions, except par value)


	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
Assets
Current assets
Cash and cash equivalents	$	326.0		$	626.5		$	470.6		$	339.5
Trade receivables (net of allowance of $15.9 and $16.2 at September 30, 2018 and December 31, 2017, respectively)	679.1			579.9
Trade receivables (net of allowance of $11.6 and $9.1 at September 30, 2019 and December 31, 2018, respectively)							491.7			535.0
Inventories	1,112.3			969.6			858.0			918.9
Prepaid and other current assets	172.7			207.0			198.4			170.1
Current assets held for sale							16.2			459.5
Total current assets	2,290.1			2,383.0			2,034.9			2,423.0
Non-current assets
Property, plant and equipment – net	330.7			311.0			359.4			317.3
Operating lease right-of-use assets							119.3			—
Goodwill	268.1			273.6			259.7			265.2
Intangible assets – net	11.9			13.8			10.0			11.4
Other assets	438.6			481.1			374.6			400.6
Non-current assets held for sale							2.8			68.4
Total assets	$	3,339.4		$	3,462.5		$	3,160.7		$	3,485.9

Liabilities and Stockholders’ Equity
Current liabilities
Notes payable and current portion of long-term debt	$	5.2		$	5.2		$	9.0		$	4.1
Trade accounts payable	652.3			592.4			558.6			687.2
Accrued compensation and benefits							98.9			123.1
Current maturities of operating leases							24.9			—
Other current liabilities	372.6			437.9			222.9			220.8
Current liabilities held for sale							8.0			179.5
Total current liabilities	1,030.1			1,035.5			922.3			1,214.7
Non-current liabilities
Long-term debt, less current portion	1,128.2			979.6			1,166.6			1,210.6
Non-current operating leases							102.2			—
Retirement plans	139.3			151.3			65.1			69.0
Other non-current liabilities	67.1			73.6			36.4			44.1
Non-current liabilities held for sale							1.8			86.5
Total liabilities	2,364.7			2,240.0			2,294.4			2,624.9
Commitments and contingencies
Stockholders’ equity
Common stock, $.01 par value – authorized 300.0 shares; issued 131.2 and 130.4 shares at September 30, 2018 and December 31, 2017, respectively	1.3			1.3
Common stock, $.01 par value – authorized 300.0 shares; issued 82.2 and 81.3 shares at September 30, 2019 and December 31, 2018, respectively							0.8			0.8
Additional paid-in capital	1,338.7			1,322.0			812.6			797.3
Retained earnings	2,121.9			1,995.9			754.9			749.0
Accumulated other comprehensive income (loss)	(304.3		)	(239.5		)	(300.3		)	(284.8		)
Less cost of shares of common stock in treasury – 58.2 and 50.2 shares at September 30, 2018 and December 31, 2017, respectively	(2,183.5		)	(1,857.7		)
Less cost of shares of common stock in treasury – 11.6 and 11.7 shares at September 30, 2019 and December 31, 2018, respectively							(401.7		)	(401.8		)
Total Terex Corporation stockholders’ equity	974.1			1,222.0			866.3			860.5
Noncontrolling interest	0.6			0.5			—			0.5
Total stockholders’ equity	974.7			1,222.5			866.3			861.0
Total liabilities and stockholders’ equity	$	3,339.4		$	3,462.5		$	3,160.7		$	3,485.9

The accompanying notes are an integral part of these condensed consolidated financial statements.

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

(in millions)



	Outstanding Shares	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Common Stock in Treasury			Non-controlling Interest			Total
Balance at December 31, 2018	69.6	$	0.8	$	797.3		$	749.0		$	(284.8	)	$	(401.8	)	$	0.5		$	861.0
Net income (loss)	—	—		—			(66.6		)	—			—			—			(66.6		)
Other comprehensive income (loss) – net of tax	—	—		—			—			(2.3		)	—			—			(2.3		)
Issuance of common stock	0.7	—		21.4			—			—			—			—			21.4
Compensation under stock-based plans – net	0.1	—		(24.7		)	—			—			1.7			—			(23.0		)
Dividends	—	—		0.1			(8.0		)	—			—			—			(7.9		)
Acquisition of treasury stock	—	—		—			—			—			(0.3		)	—			(0.3		)
Balance at March 31, 2019	70.4	$	0.8	$	794.1		$	674.4		$	(287.1	)	$	(400.4	)	$	0.5		$	782.3
Net income (loss)	—	—		—			75.1			—			—			—			75.1
Other comprehensive income (loss) – net of tax	—	—		—			—			(0.2		)	—			—			(0.2		)
Issuance of common stock	—	—		1.5			—			—			—			—			1.5
Compensation under stock-based plans – net	—	—		11.7			—			—			0.1			—			11.8
Dividends	—	—		0.2			(8.0		)	—			—			—			(7.8		)
Acquisition of treasury stock	—	—		—			—			—			(2.1		)	—			(2.1		)
Balance at June 30, 2019	70.4	$	0.8	$	807.5		$	741.5		$	(287.3	)	$	(402.4	)	$	0.5		$	860.6
Net income (loss)	—	—		—			21.4			—			—			—			21.4
Other comprehensive income (loss) – net of tax	—	—		—			—			(13.0		)	—			—			(13.0		)
Issuance of common stock	0.2	—		4.2			—			—			—			—			4.2
Compensation under stock-based plans – net	—	—		0.7			—			—			1.0			—			1.7
Dividends	—	—		0.2			(8.0		)	—			—			—			(7.8		)
Acquisition of treasury stock	—	—		—			—			—			(0.3		)	—			(0.3		)
Divestiture	—	—		—			—			—			—			(0.5		)	(0.5		)
Balance at September 30, 2019	70.6	$	0.8	$	812.6		$	754.9		$	(300.3	)	$	(401.7	)	$	—		$	866.3

The accompanying notes are an integral part of these condensed consolidated financial statements.

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

(in millions)



	Outstanding Shares		Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Common Stock in Treasury			Non-controlling Interest		Total
Balance at December 31, 2017	80.2		$	1.3	$	1,322.0		$	1,995.9		$	(239.5	)	$	(1,857.7	)	$	0.5	$	1,222.5
Net income (loss)	—		—		—			50.3			—			—			—		50.3
Other comprehensive income (loss) – net of tax	—		—		—			—			28.8			—			—		28.8
Issuance of common stock	0.8		—		15.9			—			—			—			—		15.9
Compensation under stock-based plans – net	0.1		—		(23.0		)	—			—			1.7			—		(21.3		)
Dividends	—		—		0.2			(8.0		)	—			—			—		(7.8		)
Acquisition of treasury stock	(5.1	)	—		—			—			—			(209.5		)	—		(209.5		)
Other	—		—		—			2.6			(2.6		)	—			—		—
Balance at March 31, 2018	76.0		$	1.3	$	1,315.1		$	2,040.8		$	(213.3	)	$	(2,065.5	)	$	0.5	$	1,078.9
Net income (loss)	—		—		—			57.8			—			—			—		57.8
Other comprehensive income (loss) – net of tax	—		—		—			—			(74.9		)	—			—		(74.9		)
Issuance of common stock	—		—		0.3			—			—			—			—		0.3
Compensation under stock-based plans – net	—		—		11.2			—			—			0.1			—		11.3
Dividends	—		—		0.2			(7.7		)	—			—			—		(7.5		)
Acquisition of treasury stock	(2.9	)	—		—			—			—			(117.8		)	—		(117.8		)
Balance at June 30, 2018	73.1		$	1.3	$	1,326.8		$	2,090.9		$	(288.2	)	$	(2,183.2	)	$	0.5	$	948.1
Net income (loss)	—		—		—			38.6			—			—			—		38.6
Other comprehensive income (loss) – net of tax	—		—		—			—			(16.1		)	—			0.1		(16.0		)
Issuance of common stock	—		—		0.7			—			—			—			—		0.7
Compensation under stock-based plans – net	—		—		10.9			—			—			—			—		10.9
Dividends	—		—		0.3			(7.6		)	—			—			—		(7.3		)
Acquisition of treasury stock	(0.1	)	—		—			—			—			(0.3		)	—		(0.3		)
Balance at September 30, 2018	73.0		$	1.3	$	1,338.7		$	2,121.9		$	(304.3	)	$	(2,183.5	)	$	0.6	$	974.7

The accompanying notes are an integral part of these condensed consolidated financial statements.

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

(in millions)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2019			2018
Operating Activities
Net income (loss)	$	146.7		$	155.4		$	29.9		$	146.7
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	45.4			48.7			38.6			45.4
(Gain) loss on disposition of discontinued operations	(4.8		)	(63.7		)	9.5			(4.8		)
Deferred taxes	6.8			(22.9		)	(9.6		)	6.8
Impairments							82.2			3.5
(Gain) loss on sale of assets	—			(59.8		)	(8.2		)	(1.8		)
Loss on early extinguishment of debt	0.7			52.6
Stock-based compensation expense	28.1			29.9			31.5			28.1
Inventory and other non-cash charges	20.9			31.8			44.0			19.9
Changes in operating assets and liabilities (net of effects of acquisitions and divestitures):
Trade receivables	(121.2		)	(141.4		)	67.0			(121.2		)
Inventories	(174.6		)	7.9			(11.1		)	(174.6		)
Trade accounts payable	74.8			(7.5		)	(151.5		)	74.8
Other assets and liabilities	(34.2		)	(65.1		)	(46.8		)	(34.2		)
Foreign exchange and other operating activities, net	(8.2		)	(22.1		)	2.9			(8.2		)
Net cash provided by (used in) operating activities	(19.6		)	(56.2		)	78.4			(19.6		)
Investing Activities
Capital expenditures	(63.2		)	(27.2		)	(75.4		)	(63.2		)
Acquisitions, net of cash acquired	(6.9		)	—
Proceeds from disposition of investments	19.8			—			—			19.8
Proceeds (payments) from disposition of discontinued operations	3.0			773.7			172.4			3.0
Proceeds from sales of assets	1.3			803.3
Proceeds from sale of assets							31.5			1.3
Other investing activities, net							—			(6.9		)
Net cash provided by (used in) investing activities	(46.0		)	1,549.8			128.5			(46.0		)
Financing Activities
Repayments of debt	(717.8		)	(1,593.0		)	(1,548.2		)	(717.8		)
Proceeds from issuance of debt	864.6			1,010.5			1,508.8			864.6
Share repurchases	(327.3		)	(761.7		)	(2.4		)	(327.3		)
Dividends paid	(22.6		)	(22.8		)	(23.5		)	(22.6		)
Payment of debt extinguishment costs	(0.5		)	(36.4		)
Other financing activities, net	(14.8		)	(30.7		)	(20.2		)	(15.3		)
Net cash provided by (used in) financing activities	(218.4		)	(1,434.1		)	(85.5		)	(218.4		)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	(16.6		)	34.3			(18.0		)	(16.6		)
Net Increase (Decrease) in Cash and Cash Equivalents	(300.6		)	93.8			103.4			(300.6		)
Cash and Cash Equivalents at Beginning of Period	630.1			501.9			372.1			630.1
Cash and Cash Equivalents at End of Period	$	329.5		$	595.7		$	475.5		$	329.5

The accompanying notes are an integral part of these condensed consolidated financial statements.

TEREX CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE A – BASIS OF PRESENTATION

Basis of Presentation. The accompanying unaudited Condensed Consolidated Financial Statements of Terex Corporation and subsidiaries as of September 30, ~~2018~~2019 and for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America to be included in full-year financial statements. The accompanying Condensed Consolidated Balance Sheet as of December 31, ~~2017~~2018 has been derived from ~~the~~ audited consolidated financial statements as of that date, but does not include all disclosures required by accounting principles generally accepted in the United States. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for ~~the~~ year ended December 31, ~~2017.~~2018.

The Condensed Consolidated Financial Statements include accounts of Terex Corporation, its majority-owned subsidiaries and other controlled subsidiaries (“Terex” or the “Company”). The Company consolidates all majority-owned and controlled subsidiaries, applies ~~the~~ equity method of accounting for investments in which the Company is able to exercise significant influence and applies the cost method for all other investments. All intercompany balances, transactions and profits have been eliminated. ~~Certain prior~~

As further described in Note D - “Discontinued Operations and Assets and Liabilities Held for Sale”, on July 31, 2019, the Company completed the previously announced disposition of its Demag^® mobile cranes business (“Demag”) to Tadano Ltd. and certain of its subsidiaries (“Tadano”). During 2019, the Company also exited the North American mobile crane product lines manufactured in its Oklahoma City facility. As a result, the Company reported these operations, formerly part of the Cranes segment, in discontinued operations in the Condensed Consolidated Statement of Comprehensive Income (Loss) for all periods presented, and in assets and liabilities held for sale in the Condensed Consolidated Balance Sheet at September 30, 2019 and December 31, 2018. Other operations formerly part of the Cranes segment were reorganized to align with the Company’s new management and reporting structure. The utilities business has been consolidated within Aerial Work Platforms (“AWP”), the pick and carry cranes business has been consolidated within Materials Processing (“MP”) and the rough terrain and tower cranes businesses have been consolidated within Corporate and Other. The Company now manages and reports its business in the following segments: (i) AWP and (ii) MP. Prior period amounts have been reclassified to conform with the ~~2018~~2019 presentation. See Note B - “Business Segment Information” and Note D - “Discontinued Operations and Assets and Liabilities Held for Sale” for further information.

In the opinion of management, adjustments considered necessary for the fair statement of these interim financial statements have been made. Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature. Operating results for the three and nine months ended September 30, ~~2018~~2019 are not necessarily indicative of results that may be expected for the year ending December 31, ~~2018.~~2019.

Cash and cash equivalents at September 30, ~~2018~~2019 and December 31, ~~2017~~2018 include ~~$13.3~~$4.1 million and ~~$5.0~~$12.6 million, respectively, which were not immediately available for use. These consist primarily of cash balances held in escrow to secure various obligations of the Company.

~~The following table provides amounts of cash and cash equivalents presented in the Condensed Consolidated Statement of Cash Flows (in millions):~~

September 30, 2018 December 31, 2017
Cash and cash equivalents:
Cash and cash equivalents - continuing operations $ 326.0
$ 626.5
Cash and cash equivalents - held for sale 3.5
3.6
Total cash and cash equivalents $ 329.5
$ 630.1

Recently Issued Accounting Standards

Accounting Standards Implemented in ~~2018~~2019

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (“FASB”) issued ~~ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),”~~Accounting Standard Update (“~~ASU 2014-09”~~ASU”). ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. Subsequently, the FASB issued the following standards related to ASU 2014-09: ASU 2016-08, “Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” (“ASU 2016-08”); ASU 2016-10, “Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing,” (“ASU 2016-10”); ASU 2016-12, “Revenue from Contracts with Customers (Topic 606) Narrow-Scope Improvements and Practical Expedients,” (“ASU 2016-12”); and ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” (“ASU 2016-20”), which provided additional guidance and clarity to ASU 2014-09 (collectively, the “New Revenue Standards”). The Company adopted the New Revenue Standards on January 1, 2018 using the modified retrospective approach and elected the significant financing component and costs of obtaining a contract practical expedients. Adoption of the New Revenue Standards did not have a material effect on the Company’s consolidated financial statements. The Company’s revenue recognition policy adopted as a result of the New Revenue Standards is presented below.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," (“ASU 2016-01”). The amendments in ASU 2016-01, among other things, require equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes~~in fair value recognized in net income; require public business entities to use the exit price notion when measuring fair value of financialinstruments for disclosure purposes; require separate presentation of financial assets and financial liabilities by measurement category and form of~~financial asset (i.e., securities or loans and receivables); and eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate fair value that is required to be disclosed for financial instruments measured at amortized cost. The Company adopted ASU 2016-01 on January 1, 2018. Adoption did not have a material effect on the Company’s consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740) - Intra-Entity Transfer of Assets Other than Inventory,” (“ASU 2016-16”). ASU 2016-16 requires recognition of current and deferred income taxes resulting from an intra-entity transfer of any asset (excluding inventory) when the transfer occurs. This is a change from existing U.S. generally accepted accounting principles which prohibits recognition of current and deferred income taxes until the asset is sold to a third party. The Company adopted ASU 2016-16 on January 1, 2018. Adoption did not have a material effect on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230) - Restricted Cash,” (“ASU 2016-18”). ASU 2016-18 requires a statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted ASU 2016-18 on January 1, 2018. Adoption did not have a material effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” (“ASU 2017-01”). ASU 2017-01 provides guidance in ascertaining whether a collection of assets and activities is considered a business. The Company adopted ASU 2017-01 on January 1, 2018. Adoption did not have a material effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 from the goodwill impairment test. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. The loss recognized should not exceed total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring goodwill impairment. The Company early adopted ASU 2017-04 on January 1, 2018. Adoption did not have a material effect on the Company’s consolidated financial statements.

In February 2017, the FASB issued ASU 2017-05, “Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets,” (“ASU 2017-05”). ASU 2017-05 is meant to clarify the scope of ASC Subtopic 610-20, “Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets” and to add guidance for partial sales of nonfinancial assets. The Company adopted ASU 2017-05 on January 1, 2018 using the modified retrospective approach. Adoption did not have a material effect on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” (“ASU 2017-07”). ASU 2017-07 changes how employers that sponsor defined benefit pension plans and other postretirement plans present net periodic benefit cost in the income statement. An employer is required to report the service cost component in the same line item or items as other compensation costs arising from services rendered by pertinent employees during the period. Other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. The amendment also allows only the service cost component to be eligible for capitalization, when applicable. The Company adopted ASU 2017-07 on January 1, 2018. Adoption did not have a material effect on the Company’s consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” (“ASU 2017-12”). ASU 2017-12 expands an entity’s ability to apply hedge accounting for nonfinancial and financial risk components and allows for a simplified approach for fair value hedging of interest rate risk. ASU 2017-12 eliminates the need to separately measure and report hedge ineffectiveness and generally requires the entire change in fair value of a hedging instrument to be presented in the same income statement line as the hedged item. Additionally, ASU 2017-12 simplifies the hedge documentation and effectiveness assessment requirements under the previous guidance. During the third quarter of 2018, the Company early adopted ASU 2017-12 effective January 1, 2018. Adoption did not have a material effect on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting,” (“ASU 2017-09”). ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance reduces diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. Under ASU 2017-09, an entity will not apply modification accounting to a share-based payment award if the award’s fair value, vesting conditions and classification as an equity or liability instrument are the same immediately before and after the change. The Company adopted ASU 2017-09 on January 1, 2018. Adoption did not have a material effect on the Company’s consolidated financial statements.

In February 2018, the FASB issued ASU 2018-03, “Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities,” (“ASU 2018-3”). ASU 2018-03 clarifies certain aspects of the guidance issued in ASU 2016-01. During the second quarter of 2018, the Company early adopted ASU 2018-03 effective January 1, 2018. Adoption did not have a material effect on the Company’s consolidated financial statements.

~~Accounting Standards to be Implemented~~

~~In February 2016, the FASB issued ASU~~ 2016-02, “Leases (Topic 842),” (“ASU 2016-02”). The ~~new~~ standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize an ROU asset and a lease liability on the balance sheet for all leases with a term longer than 12 months and requires the disclosure of key information about leasing arrangements. Leases ~~will be~~are classified as finance or operating, with classification affecting the subsequent expense pattern and ~~classification~~presentation of expense recognition in the income statement. Subsequently, the FASB issued the following standards related to ASU 2016-02: ASU 2018-01, “Land Easement Practical Expedient for Transition to Topic ~~842,” (“ASU 2018-01”)~~842”, ASU 2018-10, “Codification Improvements to Topic 842, Leases” ~~(“ASU 2018-10”) and~~, ASU 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”), ASU 2018-20, “Narrow-Scope Improvements for Lessors” and ASU 2019-01, “Leases (Topic 842): Codification Improvements”, which provided additional guidance and clarity to ASU 2016-02 (collectively, the ~~“New Lease Standards”~~“Lease Standard”).

The Company ~~plans to adopt ASU 2016-02 in~~adopted the ~~first quarter of fiscal year~~Lease Standard on January 1, 2019 under the ~~new~~alternative transition method permitted by ASU 2018-11. This transition method ~~allows an entity~~allowed the Company to initially apply the ~~New~~requirements of the Lease ~~Standards~~Standard at the adoption date, versus at the beginning of the earliest period ~~presented, and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.~~

presented. The Company ~~expects adoption will have~~elected the transition package of practical expedients, the practical expedient to not separate lease and non-lease components for all of its leases, the short-term lease recognition exemption for all of its leases that qualify and the land easement practical expedient; it did not elect the use of hindsight practical expedient.

Adoption of the Lease Standard had a material effect on ~~its~~the Company’s condensed consolidated financial statements due to the recognition of ~~ROU assets and~~approximately $138 million of operating lease liabilities ~~on the consolidated balance sheet.~~(approximately $6 million related to discontinued operations) with corresponding ROU assets. The Company ~~continues~~implemented a global lease accounting system and updated internal controls over financial reporting, as necessary, to ~~assess changes~~accommodate modifications to its business processes ~~systems~~ and ~~controls to support~~ accounting ~~for leases under~~procedures as a result of the ~~new standard which includes implementation of its newly acquired global lease accounting system.~~Lease Standard.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” (“ASU 2016-13”). ASU 2016-13 sets forth a “current expected credit loss” model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. The guidance in this new standard replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. The effective date will be the first quarter of fiscal year 2020 and early adoption is permitted after 2018. ASU 2016-13 will be applied using a modified retrospective approach. The Company is evaluating the impact that adoption of this new standard will have on its consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” (“ASU 2018-02”). ASU 2018-02 allows reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from H.R. 1 “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” ~~(the “2017 Federal Tax Act”)~~. The ~~effective date will be the first quarter of fiscal year~~Company adopted ASU 2018-02 on January 1, 2019. Adoption isdid not ~~expected to~~ have a material effect on the Company’s consolidated financial statements.

In July 2018, the FASB issued ASU 2018-09, “Codification Improvements,” (“ASU 2018-09”). ASU 2018-09 provides technical corrections, clarifications and other improvements across a variety of accounting topics. Certain amendments were applicable immediately while others provide transition guidance and are effective in the first quarter of fiscal year 2019. The ~~guidance applicable immediately~~Company completed the adoption of ASU 2018-09 on January 1, 2019. Adoption did not have a material ~~impact~~effect on the ~~Company's consolidated financial statements. The Company is evaluating the impact that adoption of amendments with transition guidance will have on its~~Company’s consolidated financial statements.

Accounting Standards to be Implemented

In ~~August 2018,~~June 2016, the FASB issued ASU ~~2018-13, “Fair Value~~2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement ~~(Topic 820), - Disclosure Framework - Changes~~of Credit Losses on Financial Instruments,” (“ASU 2016-13”). ASU 2016-13 sets forth a “current expected credit loss” model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. The guidance in this standard replaces the existing incurred loss model and is applicable to the ~~Disclosure Requirements for Fair Value Measurement,~~measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. Subsequently, the FASB issued the following standards related to ASU 2016-13: ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” (“and ASU ~~2018-13”~~2019-05, “Financial Instruments-Credit Losses (Topic 326) Targeted Transition Relief,” which provided additional guidance and clarity to ASU 2016-13 (collectively, the “Credit Loss Standard”). ~~ASU 2018-13 improves the effectiveness of fair value measurement disclosures by removing or modifying certain disclosure requirements and adding others.~~ The effective date will be the first quarter of fiscal year 2020 and early adoption is permitted. ~~Adoption is~~The Credit Loss Standard will be applied using a modified retrospective approach. During the third quarter of 2019, the Company substantially completed its evaluation of the impact of the Credit Loss Standard and does not ~~expected~~expect adoption to have a material effect on the Company’s consolidated financial statements. The Company continues to assess changes to its business processes, internal controls and policies.

In August 2018, the FASB issued ASU 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans,” (“ASU 2018-14”). ASU 2018-14 adds, removes and clarifies disclosure requirements related to defined benefit pension plans and other postretirement plans. The guidance is effective ~~date will be the first quarter of~~for our fiscal year ~~2021~~ending December 31, 2020 and early adoption is permitted. ~~The Company~~Adoption is ~~evaluating~~not expected to have a material effect on the ~~impact that adoption of this new standard will have on its~~Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, ~~“Intangible-Goodwill~~“Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The effective date will be the first quarter of fiscal year 2020 and early adoption is permitted. Adoption is not expected to have a material effect on the Company’s consolidated financial statements.

In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” (“ASU 2019-04”). ASU 2019-04 provides narrow scope amendments for Topics 326, 815 and 825. The effective date will be the first quarter of fiscal year 2020 and early adoption is permitted. The Company is currently evaluating the impact that ~~adoption of this new standard~~the amendments to Topic 326 will have on ~~its~~the implementation of the Credit Loss Standard. Adoption of the amendments to Topic 815 and Topic 825 are not expected to have a material effect on the Company’s consolidated financial statements.

Accrued Warranties. The Company records accruals for potential warranty claims based on its ~~claims~~claim experience. The Company’s products are typically sold with a standard warranty covering defects that arise during a fixed period. Each business provides a warranty specific to products it offers. The specific warranty offered by a business is a function of customer expectations and competitive forces. Warranty length is generally a fixed period of time, a fixed number of operating hours or both.

A liability for estimated warranty claims is accrued at the time of sale. The current portion of the product warranty liability is included in Other current liabilities and the non-current portion is included in Other non-current liabilities in the Company’s Condensed Consolidated Balance Sheet. The liability is established using historical warranty claims experience for each product sold. Historical claims experience may be adjusted for known design improvements or for the impact of unusual product quality issues. Warranty reserves are reviewed quarterly to ensure critical assumptions are updated for known events that may affect the potential warranty liability.

The following table summarizes the changes in the consolidated product warranty liability (in millions):



Balance as of December 31, 2018	$	39.8
Accruals for warranties issued during the period	32.0
Changes in estimates	4.7
Settlements during the period	(34.8		)
Foreign exchange effect/other	1.5
Balance as of September 30, 2019	$	43.2

Nine Months Ended
September 30, 2018
Balance at beginning of period $ 52.6
Accruals for warranties issued during the period 46.6
Changes in estimates 0.6
Settlements during the period (42.3 )
Foreign exchange effect/other (2.4 )
Balance at end of period $ 55.1

Fair Value Measurements. Assets and liabilities measured at fair value on a recurring basis under the provisions of ~~ASC~~Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement and Disclosure” (“ASC 820”) include foreign exchange contracts, cross currency and commodity swaps and a debt conversion feature on a convertible promissory note discussed in Note J – “Derivative Financial Instruments”, debt discussed in Note K – “Long-term Obligations” and ~~debt~~defined benefit plan assets discussed in Note L – ~~“Long-term Obligations”~~“Retirement Plans and Other Benefits”. These instruments are valued using a market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. ASC 820 establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

Determining which category an asset or liability falls within this hierarchy requires judgment. The Company evaluates its hierarchy disclosures each quarter.

~~Revenue Recognition.~~ ~~The Company recognizes revenue when goods or services are transferred to customers in an amount that reflects~~

Leases. Terex leases approximately 100 real properties, approximately 500 vehicles, and approximately 450 pieces of office and industrial equipment. As the ~~consideration~~lessee, Terex will classify a lease which it expects to receive in exchange for those goods or services. In determining when and how revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (i) identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

In the United States, we have the ability to enter into a security agreement and receive a security interest in the product by filing an appropriate Uniform Commercial Code (“UCC”) financing statement. However, a significant portion of our revenue is generated outside of the United States. In many countries outside of the United States, as a matter of statutory law, a seller retains title to a product until payment is made. The laws do not provide for a seller’s retention of a security interest in goods in the same manner as established in the UCC. In these countries, we retain title to goods delivered to a customer until the customer makes payment so that we can recover the goods in the event of customer default on payment. In these circumstances, the Company considers the following events in order to determine when it is appropriate to recognize revenue: (i) the customer has ~~physical possession of the product; (ii) the customer has legal title to the product; (iii) the customer has assumed~~substantially all the risks and rewards of ownership ~~and (iv) the customer has communicated acceptance of the product. These events serve~~ as ~~indicators, along with the details contained within the contract, that it is appropriate to recognize revenue.~~

a finance lease.

The Company ~~generates revenue through~~determines if an arrangement contains a lease at contract inception. With the ~~sale~~exception of ~~machines, parts~~short-term leases (leases with terms less than 12 months), all leases with contractual fixed costs are recorded on the balance sheet on the lease commencement date as an ROU asset and ~~service, and extended warranties. Revenue from product sales is recorded when the performance obligation is fulfilled, usually~~a lease liability. Lease liabilities are initially measured at the ~~time~~present value of ~~shipment,~~the minimum lease payments and subsequently increased to reflect the interest accrued and reduced by the lease payments affected. ROU assets are initially measured at the ~~net sales price (transaction price). Estimates~~present value of ~~variable consideration, such as volume discounts~~the minimum lease payments adjusted for any prior lease payments, lease incentives and rebates, reduce transaction price when it is probable that a customer will attain these types of sales incentives. These estimates are primarily derived from contractual terms and historical experience.initial direct costs. The Company ~~elected to present revenue net~~does not separate lease and non-lease components of ~~sales tax and other similar taxes and account~~a contract for ~~shipping and handling~~any class of leases. Certain leases contain escalation, renewal and/or termination options that are factored into the ROU asset as ~~activities to fulfill~~appropriate. Operating leases result in a straight-line rent expense over the ~~promise to transfer goods rather than separate performance obligations. Payments~~life of the lease. For finance leases, ROU assets are ~~typically due either 30 or 60 days, depending on geography, following delivery of products or completion of services.~~

~~Revenue from extended warranties is recognized over time~~amortized on a ~~straight line~~straight-line basis ~~because~~over the ~~customer benefits evenly from the extended warranty throughout the period; beginning upon expiration~~life of the ~~standard warranty~~lease and ~~through end~~interest accretes to the lease liability which results in a higher interest expense at lease inception that declines over the life of the ~~term. Revenue from services is recognized based on cost input method~~lease. Variable lease costs are expensed as ~~the time~~incurred and ~~materials used~~are not included in the ~~repair portrays~~determination of ROU assets or lease liabilities.

Short-term leases for real property, vehicles and industrial and office equipment are recognized in the most accurate depiction of completion of the performance obligation. During the nine months ended September 30, 2018, revenues generated from the sale of extended warranties and services were an immaterial portion of revenue.

~~The Company sells equipment subject to leases and related lease payments. Income from operating leases is recognized ratably~~income statement on a straight-line basis over the lease term. ~~Revenue~~

The Company uses its estimated incremental borrowing rate, which is derived from ~~sales-type leases is recognized~~information available at the ~~inception~~lease commencement date, in determining the present value of lease payments, if the rate is not implicit in the lease. Consideration is given to the Company’s recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating incremental borrowing rates.

For detailed ~~sales~~lease information see Note BM - ~~“Business Segment Information”~~“Leases”.

NOTE B – BUSINESS SEGMENT INFORMATION

Terex is a global manufacturer of aerial work platforms, ~~cranes and~~ materials processing ~~machinery.~~machinery and cranes. The Company designs, builds and supports products used in construction, maintenance, manufacturing, energy, minerals and materials management applications. Terex’s products are manufactured in North and South America, Europe, Australia and Asia and sold worldwide. The Company engages with customers through all stages of the product life cycle, from initial specification and financing to parts and service support. The Company operates in ~~three~~2 reportable segments: (i) ~~Aerial Work Platforms (“AWP”);~~AWP and (ii) ~~Cranes; and (iii) Materials Processing (“MP”).~~MP.

The AWP segment designs, manufactures, services and markets aerial work platform equipment, telehandlers, ~~and~~ light towers and utility equipment as well as their related components and replacement parts. Customers use these products to construct and maintain industrial, commercial and residential buildings and facilities, construction and maintenance of utility and telecommunication lines, tree trimming, certain construction and foundation drilling applications, and for other commercial operations, as well as in a wide range of infrastructure projects.

The Cranes segment designs, manufactures, services, refurbishes and markets a wide variety of cranes, including mobile telescopic cranes, lattice boom crawler cranes, tower cranes, and utility equipment, as well as their related components and replacement parts. Customers use these products primarily for construction, repair and maintenance of commercial buildings, manufacturing facilities, construction and maintenance of utility and telecommunication lines, tree trimming and certain construction and foundation drilling applications and a wide range of infrastructure projects.

The MP segment designs, manufactures and markets materials processing and specialty equipment, including crushers, washing systems, screens, apron feeders, material handlers, pick and carry cranes, wood processing, biomass and recycling equipment, concrete mixer trucks and concrete pavers, conveyors, and their related components and replacement parts. Customers use these products in construction, infrastructure and recycling projects, in various quarrying and mining applications, as well as in landscaping and biomass production industries, material handling applications, maintenance applications to lift equipment or material, and in building roads and bridges.

The Company designs, manufactures, services, refurbishes and markets rough terrain and tower cranes, as well as their related components and replacement parts. Customers use rough terrain cranes to move materials and equipment on rugged or uneven terrain and tower cranes, often in urban areas where space is constrained and in long-term or high-rise building sites, to lift construction material and place the material at point of use. Rough terrain and tower cranes are included in Corporate and Other.

The Company assists customers in their rental, leasing and acquisition of its products through Terex Financial Services (“TFS”). TFS uses its equipment financing experience to provide financing solutions to customers who purchase the Company’s equipment. TFS is included in ~~the~~ Corporate and Other.

Corporate and Other ~~category.~~also includes eliminations among the 2 segments, as well as general and corporate items.

Business segment information is presented below (in millions):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Net Sales
Net sales
AWP	$	634.2		$	556.7		$	2,024.2		$	1,622.1		$	628.2		$	729.4		$	2,226.5		$	2,319.2
Cranes	301.2			301.9			950.5			869.6
MP	295.2			259.9			917.2			789.5			338.6			313.6			1,050.0			964.7
Corporate and Other / Eliminations	(2.1		)	(7.3		)	—			18.6			57.8			55.8			191.6			184.5
Total	$	1,228.5		$	1,111.2		$	3,891.9		$	3,299.8		$	1,024.6		$	1,098.8		$	3,468.1		$	3,468.4
Income (loss) from Operations
Income (loss) from operations
AWP	$	72.8		$	57.5		$	234.6		$	140.0		$	45.9		$	81.6		$	191.8		$	263.4
Cranes	(14.1		)	(0.3		)	(36.1		)	(16.8		)
MP	38.5			28.4			119.8			89.5			52.4			41.4			157.9			125.6
Corporate and Other / Eliminations	(25.3		)	(19.7		)	(71.7		)	(73.8		)	(11.9		)	(18.8		)	(37.6		)	(58.1		)
Total	$	71.9		$	65.9		$	246.6		$	138.9		$	86.4		$	104.2		$	312.1		$	330.9

Sales between segments are generally priced to recover costs plus a reasonable markup for profit, which is eliminated in consolidation.



	September 30, 2019		December 31, 2018
Identifiable assets
AWP	$	1,922.7	$	1,983.5
MP	1,156.7		1,160.1
Corporate and Other / Eliminations (1)	62.3		(185.6		)
Assets held for sale (2)	19.0		527.9
Total	$	3,160.7	$	3,485.9

(1) Increase due to cash from the sales of Demag and ASV Holdings, Inc. shares and Section 301 tariff receivables.

(2) Decrease in assets from the sale of Demag. See Note D - “Discontinued Operations and Assets and Liabilities Held For Sale”.

Geographic net sales information is presented below (in millions):

September 30,
2018 December 31,
2017
Identifiable Assets
AWP $ 1,571.5
$ 1,358.5
Cranes 1,592.6
1,685.7
MP 1,254.2
1,219.5
Corporate and Other / Eliminations (1)
(1,078.9 ) (801.2 )
Total $ 3,339.4
$ 3,462.5



	Three Months Ended September 30, 2019									Three Months Ended September 30, 2018
	AWP		MP		Corporate and Other / Eliminations			Total		AWP		MP		Corporate and Other / Eliminations		Total
Net sales by region
North America	$	429.3	$	134.1	$	41.8		$	605.2	$	504.5	$	116.4	$	31.3	$	652.2
Western Europe	77.4		100.7		18.6			196.7		97.7		97.8		16.0		211.5
Asia-Pacific	78.5		69.5		3.5			151.5		79.9		65.7		7.1		152.7
Rest of World (1)	43.0		34.3		(6.1		)	71.2		47.3		33.7		1.4		82.4
Total (2)	$	628.2	$	338.6	$	57.8		$	1,024.6	$	729.4	$	313.6	$	55.8	$	1,098.8

(1) ~~Decrease due~~Includes intercompany sales and eliminations

(2) Total sales include $547.1 million and $606.0 million in 2019 and 2018, respectively, attributable to ~~lower cash balances, primarily related to share repurchases during~~ the ~~first nine months~~United States, the Company’s country of ~~2018.~~

domicile.

Three Months Ended
September 30, 2018
AWP Cranes MP Corporate and Other / Eliminations Total
Net Sales by Product Type

Aerial Work Platforms $ 512.1
$ —
$ —
$ 0.4
$ 512.5
Mobile Cranes —
165.5
—
2.2
167.7
Materials Processing Equipment —
—
210.6
0.5
211.1
Other (1)
122.1
135.7
84.6
(5.2 ) 337.2
Total $ 634.2
$ 301.2
$ 295.2
$ (2.1 ) $ 1,228.5



	Nine Months Ended September 30, 2019									Nine Months Ended September 30, 2018
	AWP		MP		Corporate and Other / Eliminations			Total		AWP		MP		Corporate and Other / Eliminations		Total
Net sales by region
North America	$	1,466.0	$	419.3	$	122.9		$	2,008.2	$	1,547.9	$	387.3	$	95.8	$	2,031.0
Western Europe	369.9		328.6		69.6			768.1		447.8		276.8		58.0		782.6
Asia-Pacific	253.5		208.3		11.1			472.9		205.2		193.2		18.7		417.1
Rest of World (1)	137.1		93.8		(12.0		)	218.9		118.3		107.4		12.0		237.7
Total (2)	$	2,226.5	$	1,050.0	$	191.6		$	3,468.1	$	2,319.2	$	964.7	$	184.5	$	3,468.4

(1) Includes intercompany sales and eliminations.

(2) Total sales include $1,829.5 million and $1,876.0 million in 2019 and 2018, respectively, attributable to the United States, the Company’s country of domicile.

The Company attributes sales to unaffiliated customers in different geographical areas based on the location of the customer.

Product type net sales information is presented below (in millions):



	Three Months Ended September 30, 2019								Three Months Ended September 30, 2018
	AWP		MP		Corporate and Other / Eliminations		Total		AWP		MP		Corporate and Other / Eliminations		Total
Net sales by product type
Aerial Work Platforms	$	426.0	$	—	$	0.5	$	426.5	$	518.8	$	—	$	0.7	$	519.5
Materials Processing Equipment	—		222.7		—		222.7		—		208.4		—		208.4
Specialty Equipment	—		115.4		—		115.4		—		100.8		—		100.8
Other (1)	202.2		0.5		57.3		260.0		210.6		4.4		55.1		270.1
Total	$	628.2	$	338.6	$	57.8	$	1,024.6	$	729.4	$	313.6	$	55.8	$	1,098.8

(1) Includes other product types, intercompany sales and eliminations.


	Nine Months Ended September 30, 2018											Nine Months Ended September 30, 2019								Nine Months Ended September 30, 2018
	AWP		Cranes		MP		Corporate and Other / Eliminations			Total		AWP		MP		Corporate and Other / Eliminations		Total		AWP		MP		Corporate and Other / Eliminations		Total
Net Sales by Product Type
Net sales by product type
Aerial Work Platforms	$	1,707.1	$	—	$	—	$	1.2		$	1,708.3	$	1,581.6	$	—	$	2.2	$	1,583.8	$	1,713.8	$	—	$	2.3	$	1,716.1
Mobile Cranes	—		532.5		—		3.7			536.2
Materials Processing Equipment	—		—		632.8		1.3			634.1		—		670.3		—		670.3		—		637.7		—		637.7
Specialty Equipment												—		377.4		—		377.4		—		307.0		—		307.0
Other (1)	317.1		418.0		284.4		(6.2		)	1,013.3		644.9		2.3		189.4		836.6		605.4		20.0		182.2		807.6
Total	$	2,024.2	$	950.5	$	917.2	$	—		$	3,891.9	$	2,226.5	$	1,050.0	$	191.6	$	3,468.1	$	2,319.2	$	964.7	$	184.5	$	3,468.4

(1) Includes other product types, intercompany sales and eliminations.

Three Months Ended
September 30, 2017
AWP
Cranes
MP
Corporate and Other / Eliminations
Total
Net Sales by Product Type

Aerial Work Platforms $ 458.2

$ —

$ —

$ 0.8

$ 459.0
Mobile Cranes —

173.7

—

0.7

174.4
Materials Processing Equipment —

—

174.5

(0.4 )
174.1
Other (1)
98.5

128.2

85.4

(8.4 )
303.7
Total $ 556.7

$ 301.9

$ 259.9

$ (7.3 )
$ 1,111.2

~~(1) Includes other product types, intercompany sales and eliminations.~~

Nine Months Ended
September 30, 2017
AWP Cranes MP Corporate and Other / Eliminations Total
Net Sales by Product Type

Aerial Work Platforms $ 1,356.4
$ —
$ —
$ 1.9
$ 1,358.3
Mobile Cranes —
491.8
—
1.5
493.3
Materials Processing Equipment 0.6
—
527.9
0.1
528.6
Other (1)
265.1
377.8
261.6
(18.1 ) 886.4
Compact Construction Equipment (2)
—
—
—
33.2
33.2
Total $ 1,622.1
$ 869.6
$ 789.5
$ 18.6
$ 3,299.8

~~(1) Includes other product types, intercompany sales and eliminations.~~

~~(2) Remaining Compact Construction product lines divested in 2017.~~

Three Months Ended
September 30, 2018
AWP
Cranes
MP
Corporate and Other / Eliminations
Total
Net Sales by Region

North America $ 415.8

$ 150.6

$ 116.4

$ 15.3

$ 698.1
Western Europe 98.3

69.9

97.8

0.1

266.1
Asia-Pacific 74.9

42.5

48.3

0.3

166.0
Rest of World (1)
45.2

38.2

32.7

(17.8 )
98.3
Total $ 634.2

$ 301.2

$ 295.2

$ (2.1 )
$ 1,228.5

~~(1) Includes intercompany sales and eliminations.~~

Nine Months Ended
September 30, 2018
AWP Cranes MP Corporate and Other / Eliminations Total
Net Sales by Region

North America $ 1,276.0
$ 441.4
$ 387.2
$ 54.6
$ 2,159.2
Western Europe 447.9
201.3
276.6
0.5
926.3
Asia-Pacific 189.9
120.1
149.2
1.2
460.4
Rest of World (1)
110.4
187.7
104.2
(56.3 ) 346.0
Total $ 2,024.2
$ 950.5
$ 917.2
$ —
$ 3,891.9

~~(1) Includes intercompany sales and eliminations.~~

Three Months Ended
September 30, 2017
AWP Cranes MP Corporate and Other / Eliminations Total
Net Sales by Region

North America $ 331.2
$ 126.6
$ 118.4
$ 26.1
$ 602.3
Western Europe 105.7
77.1
68.9
—
251.7
Asia-Pacific 69.8
36.9
43.9
0.4
151.0
Rest of World (1)
50.0
61.3
28.7
(33.8 ) 106.2
Total $ 556.7
$ 301.9
$ 259.9
$ (7.3 ) $ 1,111.2

~~(1) Includes intercompany sales and eliminations.~~

Nine Months Ended
September 30, 2017
AWP Cranes MP Corporate and Other / Eliminations Total
Net Sales by Region

North America $ 974.4
$ 373.7
$ 386.2
$ 74.8
$ 1,809.1
Western Europe 321.6
213.0
204.1
18.4
757.1
Asia-Pacific 191.0
117.7
111.7
11.9
432.3
Rest of World (1) 135.1
165.2
87.5
(86.5 ) 301.3
Total $ 1,622.1
$ 869.6
$ 789.5
$ 18.6
$ 3,299.8

~~(1) Includes intercompany sales and eliminations.~~

NOTE C – INCOME TAXES

During the three months ended September 30, ~~2018,~~2019, the Company recognized income tax expense of ~~$12.3~~$15.5 million on income of ~~$50.7~~$67.9 million, an effective tax rate of ~~24.3%~~22.8%, as compared to income tax expense of ~~$0.1~~$14.6 million on income of ~~$56.7~~$83.8 million, an effective tax rate of ~~0.2%~~17.4%, for the three months ended September 30, ~~2017.~~2018. The higher effective tax rate for the three months ended September 30, ~~2018~~2019 is primarily due to ~~low-taxed appreciation of Konecranes Plc, a Finnish public company limited by shares, (“Konecranes”) shares and favorable geographic mix of earnings in the three months ended September 30, 2017,~~greater tax expense from uncertain tax positions partially offset by ~~tax benefits from audit settlements and release of reserves for uncertain tax positions in~~favorable jurisdictional mix when compared to the three months ended September 30, 2018.

During the nine months ended September 30, ~~2018,~~2019, the Company recognized income tax expense of ~~$52.6~~$53.8 million on income of ~~$194.5~~$245.0 million, an effective tax rate of ~~27.0%~~22.0%, as compared to income tax ~~benefit~~expense of ~~$5.1~~$59.2 million on income of ~~$86.6~~$281.3 million, an effective tax rate of ~~(5.9)%~~21.0%, for the nine months ended September 30, ~~2017.~~2018. The higher effective tax rate for the nine months ended September 30, ~~2018~~2019 is primarily due to ~~low-taxed appreciation of Konecranes shares, a~~greater tax ~~benefit for a non-U.S. interest deduction, and~~expense from uncertain tax positions partially offset by favorable ~~geographic~~jurisdictional mix ~~of earnings in the nine months ended September 30, 2017,~~ when compared ~~with~~to the nine months ended September 30, 2018.

During the fourth quarter of 2017, the Company recorded provisional amounts for the effects of the 2017 Federal Tax Act pursuant to Staff Accounting Bulletin No. 118. In the third quarter of 2018, the Company recorded measurement period adjustments that did not have a material effect on the Condensed Consolidated Financial Statements. The Company will continue to update its calculations as additional information is obtained and analyzed, interpretations of law and assumptions are refined, and additional guidance is issued. The Company will finalize the 2017 provisional amounts in the fourth quarter of 2018.

NOTE D – DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

~~MHPS~~MOBILE CRANES

On May 16, 2016, Terex agreed to sell its Material Handling and Port Solutions (“MHPS”) business to Konecranes by entering into a Stock and Asset Purchase Agreement, as amended (the “SAPA”), with Konecranes. On January 4, 2017,July 31, 2019, the Company completed the previously announced disposition of ~~its MHPS business~~Demag to ~~Konecranes (the “Disposition”),~~Tadano pursuant to the ~~SAPA, effective as~~terms of ~~January 1, 2017. In connection with~~ the ~~Disposition,~~Asset and Stock Purchase Agreement between the Company and Tadano, dated February 22, 2019. The Company received ~~19.6~~approximately $215 million ~~newly issued Class B shares~~ of ~~Konecranes and approximately $835 million in cash after adjustments~~consideration, as adjusted for estimated amounts of cash, debt, working capital and certain other items. The final consideration will be adjusted based on the actual amounts of cash, debt and working capital. Products divested are Demag^® all terrain cranes and large lattice boom crawler cranes. During the nine months ended September 30, 2019, the Company recognized a charge of approximately $82 million, net ~~working capital at closing and the divestiture~~ of ~~Konecranes’ Stahl Crane Systems business, which was undertaken by Konecranes in connection with the Disposition.~~tax, to write-down Demag to its fair value, less costs to sell. During the three and nine months ended September 30, ~~2017,~~2019, the Company ~~recognized~~recorded a ~~gain~~loss on disposition of discontinued operations, net of tax, of $20.9 million.

The Company’s actions to sell Demag and cease manufacturing mobile crane product lines in its Oklahoma City facility represent a significant strategic shift in its business away from mobile cranes as these businesses constituted a significant part of its operations and financial results. The Company believes these actions were necessary as it continues to execute its Focus, Simplify and Execute to Win strategy as further described in Part I, Item 1. “Business” included in the ~~Disposition (net~~Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

In connection with the disposition of ~~tax)~~Demag, the Company and Tadano entered into certain ancillary agreements, including a Transition Services Agreement (“TSA”), dated as of ~~$2.6 million and $60.7 million, respectively.~~July 31, 2019, under which the parties will provide one another certain transition services to facilitate the separation of Demag from the Company. Agreements covered under the TSA are generally 12 months or less in duration but certain agreements extend for 36 months. Fees related to these agreements are for reimbursement of services provided.

~~During the three months ended September 30, 2017,~~In addition to selling Demag, the Company sold ~~5.2 million Konecranes shares for proceeds of approximately $221~~its boom truck, truck crane and crossover product lines and related inventory previously manufactured in its Oklahoma City facility on April 24, 2019. The Company received notes and receivables totaling $27.7 million and recorded a ~~$3.4~~gain, net of tax, of $12.8 million ~~net gain on sale of shares which included a loss of $2.6 million attributable to foreign exchange rate changes. During~~during the nine months ended September 30, ~~2017, the Company sold 19.6 million Konecranes shares for proceeds of approximately $770 million~~2019.

Income (loss) from discontinued operations

The following amounts related to discontinued operations were derived from historical financial information and ~~recorded a $42.0 million net gain on sale of shares which included a gain of $41.6 million attributable to foreign exchange rate changes. The net gain is recorded~~have been segregated from continuing operations and reported as ~~a component of Other income (expense) - net~~discontinued operations in the Condensed Consolidated Statement of Comprehensive Income (Loss). (in millions):



	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net sales	$	67.7		$	129.6		$	324.8		$	423.4
Cost of sales	(67.9		)	(136.9		)	(330.8		)	(427.7		)
Selling, general and administrative expenses	(12.0		)	(24.9		)	(73.6		)	(80.0		)
Impairment of Mobile Cranes disposal group	—			—			(82.1		)	—
Other income (expense)	(0.8		)	(0.8		)	(4.5		)	(2.5		)
Income (loss) from discontinued operations before income taxes	(13.0		)	(33.0		)	(166.2		)	(86.8		)
(Provision for) benefit from income taxes	2.9			2.2			14.4			6.6
Income (loss) from discontinued operations – net of tax	$	(10.1	)	$	(30.8	)	$	(151.8	)	$	(80.2	)

~~On March 23, 2017, Konecranes declared a dividend~~

Assets and liabilities held for sale

Assets and liabilities held for sale consist of ~~€1.05 per share~~mobile cranes product lines manufactured in Oklahoma City, the Company’s utility hot lines tools business located in South America and Demag, all previously contained in its former Cranes segment. Such assets and liabilities are classified as held for sale upon meeting the requirements of ASC 360 - “Property, Plant and Equipment”, and are recorded at lower of carrying amounts or fair value less costs to ~~holders~~sell. Assets are no longer depreciated once classified as held for sale.

The following table provides the amounts of ~~record as~~assets and liabilities held for sale in the Condensed Consolidated Balance Sheet (in millions):



	September 30, 2019			December 31, 2018
	Cranes			Cranes
Assets
Cash and cash equivalents	$	4.9		$	32.6
Trade receivables – net	7.9			126.9
Inventories	7.8			295.5
Prepaid and other current assets	0.2			9.4
Impairment reserve	(4.6		)	(4.9		)
Current assets held for sale	$	16.2		$	459.5

Property, plant and equipment – net	$	0.5		$	28.8
Intangible assets	2.3			4.3
Impairment reserve	(2.7		)	(2.9		)
Other assets	2.7			38.2
Non-current assets held for sale	$	2.8		$	68.4

Liabilities
Notes payable and current portion of long-term debt	$	—		$	0.6
Trade accounts payable	4.8			101.6
Accruals and other current liabilities	3.2			77.3
Current liabilities held for sale	$	8.0		$	179.5

Long-term debt, less current portion	$	—		$	4.1
Retirement plans and other non-current liabilities	—			71.8
Non-current liabilities	1.8			10.6
Non-current liabilities held for sale	$	1.8		$	86.5

The following table provides amounts of March 27, 2017, which was paid on April 4, 2017. During the nine months ended September 30, 2017, the Company recognized dividend income of $13.5 million as a component of Other income (expense) - netcash and cash equivalents presented in the Condensed Consolidated Statement of ~~Comprehensive Income (Loss).~~Cash Flows (in millions):

~~Loss Contract~~



	September 30, 2019		December 31, 2018
Cash and cash equivalents:
Cash and cash equivalents - continuing operations	$	470.6	$	339.5
Cash and cash equivalents - held for sale	4.9		32.6
Total cash and cash equivalents	$	475.5	$	372.1

Related to the Disposition, the Company and Konecranes entered into an agreement for Konecranes to manufacture certain crane products on behalf of the Company for an original period of 12 months, which was subsequently amended for a total of 36 months on October 11, 2017. The ~~Company recorded an expense of $6.3 million~~following table provides supplemental cash flow information related to ~~losses expected to be incurred over the original agreement’s life during the nine months ended September 30, 2017.~~discontinued operations (in millions):



	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Non-cash operating items:
Depreciation and amortization	$	0.1		$	3.3		$	3.3		$	11.1
Impairments	$	—		$	—		$	82.1		$	0.9
Deferred taxes	$	(7.3	)	$	(4.1	)	$	(5.2	)	$	(3.9	)
Investing activities:
Capital expenditures	$	(0.7	)	$	(2.9	)	$	(3.4	)	$	(10.3	)

Gain (loss) on disposition of discontinued operations - net of tax (in millions):



	Three Months Ended
	September 30,
	2019								2018
	Cranes			Material Handling and Port Solutions		Total			Material Handling and Port Solutions			Other		Atlas		Total
Gain (loss) on disposition of discontinued operations	$	(20.8	)	$	—	$	(20.8	)	$	(0.2	)	$	—	$	—	$	(0.2	)
(Provision for) benefit from income taxes	(0.1		)	—		(0.1		)	—			0.4		—		0.4
Gain (loss) on disposition of discontinued operations – net of tax	$	(20.9	)	$	—	$	(20.9	)	$	(0.2	)	$	0.4	$	—	$	0.2



	Nine Months Ended
	September 30,
	2019									2018
	Cranes			Material Handling and Port Solutions			Total			Material Handling and Port Solutions			Other		Atlas			Total
Gain (loss) on disposition of discontinued operations	$	(7.1	)	$	(1.3	)	$	(8.4	)	$	(0.8	)	$	—	$	3.2		$	2.4
(Provision for) benefit from income taxes	(1.0		)	(0.1		)	(1.1		)	0.1			2.8		(0.5		)	2.4
Gain (loss) on disposition of discontinued operations – net of tax	$	(8.1	)	$	(1.4	)	$	(9.5	)	$	(0.7	)	$	2.8	$	2.7		$	4.8

Three Months Ended
September 30,
2018
2017

MHPS Atlas Other Total
MHPS Atlas Total
Gain (loss) on disposition of discontinued operations $ (0.2 ) $ —
$ —
$ (0.2 ) $ 2.8
$ —
$ 2.8
(Provision for) benefit from income taxes —
—
0.4
0.4
(0.2 ) —
(0.2 )
Gain (loss) on disposition of discontinued operations – net of tax $ (0.2 ) $ —
$ 0.4
$ 0.2
$ 2.6
$ —
$ 2.6

Nine Months Ended
September 30,
2018 2017
MHPS Atlas Other Total MHPS Atlas Total
Gain (loss) on disposition of discontinued operations $ (0.8 ) $ 3.2
$ —
$ 2.4
$ 82.3
$ 3.5
$ 85.8
(Provision for) benefit from income taxes 0.1
(0.5 ) 2.8
2.4
(21.6 ) (0.5 ) (22.1 )
Gain (loss) on disposition of discontinued operations – net of tax $ (0.7 ) $ 2.7
$ 2.8
$ 4.8
$ 60.7
$ 3.0
$ 63.7

NOTE E – EARNINGS PER SHARE



(in millions, except per share data)	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Income (loss) from continuing operations	$	52.4		$	69.2		$	191.2		$	222.1
Income (loss) from discontinued operations–net of tax	(10.1		)	(30.8		)	(151.8		)	(80.2		)
Gain (loss) on disposition of discontinued operations–net of tax	(20.9		)	0.2			(9.5		)	4.8
Net income (loss)	$	21.4		$	38.6		$	29.9		$	146.7
Basic shares:
Weighted average shares outstanding	71.3			73.7			71.0			76.3
Earnings (loss) per share – basic:
Income (loss) from continuing operations	$	0.73		$	0.94		$	2.69		$	2.91
Income (loss) from discontinued operations–net of tax	(0.14		)	(0.42		)	(2.14		)	(1.05		)
Gain (loss) on disposition of discontinued operations–net of tax	(0.29		)	—			(0.13		)	0.06
Net income (loss)	$	0.30		$	0.52		$	0.42		$	1.92
Diluted shares:
Weighted average shares outstanding – basic	71.3			73.7			71.0			76.3
Effect of dilutive securities:
Restricted stock awards	0.5			1.4			0.8			1.6
Diluted weighted average shares outstanding	71.8			75.1			71.8			77.9
Earnings (loss) per share – diluted:
Income (loss) from continuing operations	$	0.73		$	0.92		$	2.66		$	2.85
Income (loss) from discontinued operations–net of tax	(0.14		)	(0.41		)	(2.11		)	(1.03		)
Gain (loss) on disposition of discontinued operations–net of tax	(0.29		)	—			(0.13		)	0.06
Net income (loss)	$	0.30		$	0.51		$	0.42		$	1.88

(in millions, except per share data) Three Months Ended
September 30, Nine Months Ended
September 30,
2018 2017 2018 2017
Income (loss) from continuing operations $ 38.4
$ 56.6
$ 141.9
$ 91.7
Gain (loss) on disposition of discontinued operations–net of tax 0.2
2.6
4.8
63.7
Net income (loss) $ 38.6
$ 59.2
$ 146.7
$ 155.4
Basic shares:

Weighted average shares outstanding 73.7
88.0
76.3
96.2
Earnings (loss) per share – basic:

Income (loss) from continuing operations $ 0.52
$ 0.64
$ 1.86
$ 0.96
Gain (loss) on disposition of discontinued operations–net of tax —
0.03
0.06
0.66
Net income (loss) $ 0.52
$ 0.67
$ 1.92
$ 1.62
Diluted shares:

Weighted average shares outstanding - basic 73.7
88.0
76.3
96.2
Effect of dilutive securities:

Restricted stock awards 1.4
2.0
1.6
1.9
Diluted weighted average shares outstanding 75.1
90.0
77.9
98.1
Earnings (loss) per share – diluted:

Income (loss) from continuing operations $ 0.51
$ 0.63
$ 1.82
$ 0.93
Gain (loss) on disposition of discontinued operations–net of tax —
0.03
0.06
0.65
Net income (loss) $ 0.51
$ 0.66
$ 1.88
$ 1.58

NOTE K – ~~RESTRUCTURING AND OTHER CHARGES~~

The Company continually evaluates its cost structure to be appropriately positioned to respond to changing market conditions. From time to time, the Company may initiate certain restructuring programs to better utilize its workforce and optimize facility utilization to match demand for its products.

~~Restructuring~~

During 2016, the Company established restructuring programs in its Cranes segment to transfer production between existing facilities and close certain facilities in order to maximize labor efficiencies and reduce overhead costs. The programs are expected to cost $57.4 million, result in the reduction of approximately 550 team members and be completed in 2020.

~~The following table provides information for all restructuring activities by segment regarding the amount of expense (income) incurred during the~~ ~~nine months endedSeptember 30, 2018, the cumulative amount of expenses incurred since inception of the programs through~~ ~~September 30, 2018, and the total amount expected to be incurred (in millions):~~

Amount incurred
during the
nine months ended
September 30, 2018

Cumulative amount
incurred through
September 30, 2018
Total amount expected to be incurred
AWP $ —
$ 0.2
$ 0.2
Cranes (3.7 ) 57.4
57.4
MP —
0.1
0.1
Corp & Other 0.9
3.0
3.0
Total $ (2.8 ) $ 60.7
$ 60.7

~~The following table provides information by type of restructuring activity with respect to the amount of expense (income) incurred during the~~ ~~nine months endedSeptember 30, 2018, the cumulative amount of expenses incurred since inception of the programs and the total amount expected to be incurred (in millions):~~

Employee
Termination Costs

Facility
Exit Costs
Asset Disposal and Other Costs Total
Amount incurred during the nine months ended September 30, 2018 $ (4.7 ) $ 1.9
$ —
$ (2.8 )
Cumulative amount incurred through September 30, 2018 $ 40.9
$ 7.0
$ 12.8
$ 60.7
Total amount expected to be incurred $ 40.9
$ 7.0
$ 12.8
$ 60.7

~~During the nine months ended September 30, 2018, restructuring charges (reductions) of ($2.3) million and $(0.5) million, were included in COGS and SG&A, respectively. During the~~ ~~nine months ended~~ ~~September 30, 2017, restructuring charges (reductions) of $(1.2) million and $2.5 million were included in COGS and SG&A, respectively.~~

~~The following table provides a roll forward of the restructuring reserve by type of restructuring activity for the~~ ~~nine months endedSeptember 30, 2018~~ ~~(in millions):~~

Employee
Termination Costs
Restructuring reserve at December 31, 2017 $ 29.7
Restructuring reserve increase (decrease) (4.7 )
Cash expenditures (9.5 )
Foreign exchange (0.4 )
Restructuring reserve at September 30, 2018 $ 15.1

~~Other Charges~~

During the nine months ended September 30, 2018, the Company recorded $0.5 million and $3.0 million as components of COGS and SG&A, respectively, for severance charges across all segments and corporate functions. During the nine months ended September 30, 2017, the Company recorded a $17.8 million reduction to COGS, primarily due to the decrease in severance accruals for our Cranes segment established in the fourth quarter of 2016 as production volumes were expected to exceed earlier forecasts requiring us to maintain a higher headcount. During the nine months ended September 30, 2017, the Company recorded $4.7 million as a component of SG&A for severance charges across all segments and corporate functions.

~~NOTE L –~~ LONG-TERM OBLIGATIONS

2017 Credit Agreement

On January 31, 2017, the Company entered into a ~~new~~ credit agreement (as amended, the “2017 Credit Agreement”), with the lenders and issuing banks party thereto and Credit Suisse AG, Cayman Islands Branch (“CSAG”), as administrative agent and collateral agent. The 2017 Credit Agreement includes (i) a $600 million revolving line of credit ~~as further described below~~(the “Revolver”) and ~~a $400 million~~(ii) senior secured term ~~loan (the “Term Loan”), which~~loans totaling $600 million that will mature on January 31, ~~2024.~~2024 (the “Term Loans”); both are further described below. In connection with the 2017 Credit Agreement, the Company terminated its ~~2014 Credit Agreement (as defined below), among the Company and certain of its subsidiaries,~~previous credit agreement with the lenders ~~thereunder~~party thereto and CSAG, as administrative agent and collateral agent and related agreements and ~~documents.~~documents (the “2014 Credit Agreement”).

The 2017 Credit Agreement contains a $400.0 million senior secured term loan (the “Original Term Loan”). On August 17, 2017, the Company entered into an Incremental Assumption Agreement and Amendment No. 1 to the 2017 Credit Agreement which lowered the interest rate on the ~~Company’s~~Original Term Loan by 25 basis points. On February 28, 2018, the Company entered into an Incremental Assumption Agreement and Amendment No. 2 (“Amendment No. 2”) to the 2017 Credit Agreement which lowered the interest rate on the ~~Company’s~~Original Term Loan by an additional 25 basis points. The Original Term Loan portion of the 2017 Credit Agreement bears interest at a rate of London Interbank Offered Rate (“LIBOR”) plus 2.00% with a 0.75% LIBOR floor. On March 7, 2019, the Company entered into an Incremental Assumption Agreement and Amendment No. 3 (“Amendment No. 3”) to the 2017 Credit Agreement. Amendment No. 3 provided the Company with an additional term loan (the “2019 Term Loan”) under the 2017 Credit Agreement in the amount of $200 million. The 2019 Term Loan portion of the 2017 Credit Agreement bears interest at a rate of LIBOR plus 2.75% with a 0.75% LIBOR floor.

On April 10, 2018, the Company entered into an Incremental Revolving Credit Assumption Agreement to the 2017 Credit Agreement which increased the size of the revolving line of credit from $450 million to $600 million available through January 31, 2022. The 2017 Credit Agreement allows unlimited incremental commitments, which may be extended at the option of the existing or new lenders and can be in the form of revolving credit commitments, term loan commitments, or a combination of both, with incremental amounts in excess of $300 million as long as the Company satisfies a senior secured leverage ratio contained in the 2017 Credit Agreement.

The 2017 Credit Agreement requires the Company to comply with a number of covenants which limit, in certain circumstances, the Company’s ability to take a variety of actions, including but not limited to: incur indebtedness; create or maintain liens on its property or assets; make investments, loans and advances; repurchase shares of its common stock; engage in acquisitions, mergers, consolidations and asset sales; redeem debt; and pay dividends and distributions. If the Company’s borrowings under its revolving line of credit are greater than 30% of the total revolving credit commitments, the 2017 Credit Agreement requires the Company to comply with certain financial tests, as defined in the 2017 Credit Agreement. If applicable, the minimum required levels of the interest coverage ratio would be 2.5 to 1.0 and the maximum permitted levels of the senior secured leverage ratio would be 2.75 to 1.0. The 2017 Credit Agreement also contains customary default provisions. The Company was in compliance with the covenants contained in the 2017 Credit Agreement as of September 30, 2019.

During the nine months ended September 30, 2018, the Company recorded a loss on early extinguishment of debt related to Amendment No. 2 to the 2017 Credit Agreement of approximately $0.7 million.

As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company had ~~$392.4~~$586.8 million and ~~$395.1~~$391.4 million, net of discount, respectively, in ~~the~~ Term ~~Loan~~Loans outstanding under the 2017 Credit Agreement. The weighted average interest rate on the Term ~~Loan~~Loans at September 30, ~~2018~~2019 and December 31, ~~2017~~2018 was ~~4.29%~~4.30% and ~~3.94%~~4.50%, respectively. The Company had ~~$150.3 million~~0 revolving credit amounts outstanding as of September 30, 2019 and $237.0 million outstanding as of December 31, 2018. The weighted average interest rate on the revolving credit amounts at ~~September 30,~~December 31, 2018 was ~~4.63%~~5.98%.

The Company ~~had no revolving credit amounts outstanding as of December 31, 2017.~~

~~The 2017 Credit Agreement incorporates facilities for issuance of~~issues letters of credit up to $400 million. Letters of credit issued under the 2017 Credit Agreement letter of credit facility decrease availability under the revolving line of credit (which was increased to $600 million on April 10, 2018). As of September 30, 2018 and December 31, 2017, the Company had no letters of credit issued under the 2017 Credit Agreement. The 2017 Credit Agreement also permits the Company to have additional letter of credit facilities up to $300 million, and letters of credit issued under such additional facilities do not decrease availability under the revolving lines of credit. The Company had letters of credit issued under the additional letter of credit facilities of the 2017 Credit Agreement that ~~totaled $33.6 million and $34.3 million as of September 30, 2018 and December 31, 2017, respectively.~~

The Company also has bilateral arrangements to issue letters of credit with various other financial institutions. These additional letters of credit do not reduce the Company’s availability under the 2017 Credit Agreement. The Company had letters of credit issued under these additional arrangements of $28.3 million and $23.1 million as of September 30, 2018 and December 31, 2017, respectively.

~~In total, as of September 30, 2018 and December 31, 2017, the Company had letters of credit outstanding of $61.9 million and $57.4 million, respectively. The letters of credit~~ generally serve as collateral for certain liabilities included in the Condensed Consolidated Balance Sheet and guaranteeing the Company’s performance under contracts. Letters of credit can be issued under two facilities provided in the 2017 Credit Agreement and via bilateral arrangements outside the 2017 Credit Agreement.

The 2017 Credit Agreement incorporates secured facilities for issuance of letters of credit up to $400 million (the “$400 Million Facility”). Letters of credit issued under the $400 Million Facility decrease availability under the Revolver. The 2017 Credit Agreement also permits the Company to have additional secured facilities for the issuance of letters of credit up to $300 million (the “$300 Million Facility”). Letters of credit issued under the $300 Million Facility do not decrease availability under the Revolver.

The Company also has bilateral arrangements to issue letters of credit with various other financial institutions (the “Bilateral Arrangements”). The Bilateral Arrangements are not secured under the 2017 Credit Agreement and do not decrease availability under the Revolver.

Letters of credit outstanding (in millions):



	September 30, 2019						December 31, 2018
	Continuing Operations		Discontinued Operations		Total		Continuing Operations		Discontinued Operations		Total
$400 Million Facility	$	—	$	—	$	—	$	—	$	—	$	—
$300 Million Facility	34.7		—		34.7		33.4		—		33.4
Bilateral Arrangements	44.0		—		44.0		32.0		10.4		42.4
Total	$	78.7	$	—	$	78.7	$	65.4	$	10.4	$	75.8

Furthermore, the Company and certain of its subsidiaries agreed to take certain actions to secure borrowings under the 2017 Credit Agreement. As a result, on January 31, 2017, Terex and certain of its subsidiaries entered into a Guarantee and Collateral Agreement with CSAG, as collateral agent for the lenders, granting security and guarantees to the lenders for amounts borrowed under the 2017 Credit Agreement. Pursuant to the Guarantee and Collateral Agreement, Terex is required to (a) pledge as collateral the capital stock of the Company’s material domestic subsidiaries and 65% of the capital stock of certain of the Company’s material foreign subsidiaries and (b) provide a first priority security interest in substantially all of the Company’s domestic assets.

~~2014 Credit Agreement~~

On August 13, 2014, the Company entered into a credit agreement (as amended, the “2014 Credit Agreement”), with the lenders party thereto and CSAG, as administrative agent and collateral agent. The 2014 Credit Agreement provided the Company with a senior secured revolving line of credit of up to ~~$600 million~~ ~~that was available through August 13, 2019, a~~ ~~$230.0 million~~ ~~senior secured term loan and a~~ ~~€200.0 million~~ ~~senior secured term loan.~~

On January 31, 2017, in connection with the 2017 Credit Agreement, the Company terminated its 2014 Credit Agreement, among the Company and certain of its subsidiaries, the lenders thereunder and CSAG, as administrative agent and collateral agent, and related agreements and documents.

~~During the nine months ended September 30, 2017, the Company recorded a loss on early extinguishment of debt related to its 2014 Credit Agreement of $8.2 million.~~

~~6-1/2%~~ ~~Senior Notes~~

~~On March 27, 2012, the Company sold and issued~~ ~~$300.0 million~~ ~~aggregate principal amount of Senior Notes Due 2020 (“6-1/2%~~ ~~Notes”) at par. The proceeds from these notes were used for general corporate purposes. The~~ ~~6-1/2%~~ ~~Notes became redeemable by the Company beginning in April 2016 at an initial redemption price of~~ ~~103.25%~~ of principal amount. The Company redeemed $45.8 million principal amount of the 6-1/2% Notes in the first quarter of 2017 for $47.9 million, including market premiums of $1.2 million and accrued but unpaid interest of $0.9 million. The Company redeemed the remaining $254.2 million principal amount of the 6-1/2% Notes on April 3, 2017 for $266.7 million, including accrued but unpaid interest of $8.4 million and a call premium of $4.1 million (which was recorded as Loss on early extinguishment of debt on that date). The ~~6-1/2%~~ ~~Notes were jointly and severally guaranteed by certain of the Company’s domestic subsidiaries.~~

~~6% Senior Notes~~

On November 26, 2012, the Company sold and issued $850.0 million aggregate principal amount of Senior Notes due 2021 (“6% Notes”) at par. The proceeds from this offering plus other cash were used to redeem all $800.0 million principal amount of the outstanding 8% Senior Subordinated Notes. During the first quarter of 2017, the Company redeemed all $850.0 million of the 6% Notes for $887.2 million including redemption premiums of $25.9 million and accrued but unpaid interest of $11.3 million.

5-5/8% Senior Notes

On January 31, 2017, the Company sold and issued $600.0 million aggregate principal amount of Senior Notes Due 2025 (“5-5/8% Notes”) at par in a private offering. The proceeds from the 5-5/8% Notes, together with cash on hand, including cash from the sale of ~~our MHPS~~the Company’s Material Handling and Port Solutions business, was used: (i) to complete a tender offer for up to $550.0 million of ~~our~~ the Company’s Senior Notes due 2021 (“6% ~~Notes,~~Notes”), (ii) to redeem and discharge such portion of the 6% ~~Senior~~ Notes not purchased in the tender offer, (iii) to fund a $300.0 million partial redemption of the 6% Notes, (iv) to fund repayment of all $300.0 million aggregate principal amount outstanding of ~~our~~the Company’s 6-1/2% ~~Notes~~senior notes due 2021 on or before April 3, 2017, (v) to pay related premiums, fees, discounts and expenses, and (vi) for general corporate purposes, including repayment of borrowings outstanding under the 2014 Credit Agreement. The 5-5/8% Notes are jointly and severally guaranteed by certain of the Company’s domestic subsidiaries.

~~During the nine months ended September 30, 2017, the Company recorded a loss on early extinguishment of debt related to its 6% Notes and its 6-1/2% Notes of $43.7 million.~~

Fair Value of Debt

Based on indicative price quotations from financial institutions multiplied by the amount recorded on the Company’s Condensed Consolidated Balance Sheet (“Book Value”), the Company estimates the fair values (“FV”) of its debt set forth below as of September 30, ~~2018~~2019, as follows (in millions, except for quotes):



	Book Value		Quote		FV
5-5/8% Notes	$	600.0	$	1.03060	$	618
2017 Credit Agreement Original Term Loan (net of discount)	$	388.7	$	1.00333	$	390
2017 Credit Agreement 2019 Term Loan (net of discount)	$	198.1	$	1.00583	$	199

Book Value Quote FV
5-5/8% Notes $ 600.0
$ 0.99000
$ 594
2017 Credit Agreement Term Loan (net of discount) $ 392.4
$ 1.00668
$ 395

The fair value of debt reported in the table above is based on price quotations on the debt instrument in an active market and therefore is categorized under Level 1 of the ASC 820 hierarchy. See Note A – “Basis of ~~Presentation,”~~Presentation” for an explanation of ASC 820 hierarchy. The Company believes that the carrying value of its other borrowings, including amounts outstanding, if any, for the revolving credit line under the 2017 Credit Agreement, approximate fair market value based on maturities for debt of similar terms. Fair value of these other borrowings are categorized under Level 2 of the ASC 820 hierarchy.

NOTE ML – RETIREMENT PLANS AND OTHER BENEFITS

The Company maintains defined benefit plans in ~~the United States,~~ France, Germany, India, Switzerland and the United Kingdom for some of its subsidiaries, ~~including~~as well as a nonqualified Supplemental Executive Retirement Plan (“DB SERP”) in the United States. In Italy, there are mandatory termination indemnity plans providing a benefit that is payable upon termination of employment in substantially all cases of termination. The Company ~~also~~ has several non-pension post-retirement benefit programs, ~~that provide postemployment benefits,~~ including health and life insurance benefits to certain former salaried and hourly employees. Information regarding the Company’s plans, including the DB SERP, is as follows (in millions):



	Three Months Ended September 30,																Nine Months Ended September 30,
	2019								2018								2019								2018
	U.S. Pension			Non-U.S. Pension			Other		U.S. Pension			Non-U.S. Pension			Other		U.S. Pension			Non-U.S. Pension			Other		U.S. Pension			Non-U.S. Pension			Other
Components of net periodic cost:
Service cost	$	—		$	0.4		$	—	$	0.1		$	0.3		$	—	$	0.1		$	1.1		$	—	$	0.3		$	1.0		$	—
Interest cost	0.5			0.8			—		1.2			0.9			—		1.3			2.6			0.1		3.5			2.8			—
Expected return on plan assets	—			(1.1		)	—		(1.5		)	(1.3		)	—		—			(3.5		)	—		(4.5		)	(4.0		)	—
Amortization of actuarial loss	(0.1		)	0.4			—		0.8			0.4			—		(0.4		)	1.2			—		2.5			1.1			—
Other costs	—			—			—		—			—			—		—			—			—		—			0.2			—
Net periodic cost	$	0.4		$	0.5		$	—	$	0.6		$	0.3		$	—	$	1.0		$	1.4		$	0.1	$	1.8		$	1.1		$	—

Three Months Ended
September 30, Nine Months Ended
September 30,
2018 2017 2018 2017
U.S. Pension Non-U.S. Pension Other U.S. Pension Non-U.S. Pension Other U.S. Pension Non-U.S. Pension Other U.S. Pension Non-U.S. Pension Other
Components of net periodic cost:
Service cost $ 0.1
$ 0.7
$ —
$ 0.2
$ 0.7
$ —
$ 0.3
$ 2.1
$ —
$ 0.5
$ 2.1
$ —
Interest cost 1.5
1.1
—
1.7
1.2
—
4.4
3.6
0.1
4.9
3.7
0.1
Expected return on plan assets (2.0 ) (1.2 ) —
(2.0 ) (1.3 ) —
(6.0 ) (3.9 ) —
(5.9 ) (3.7 ) —
Amortization of actuarial loss 1.0
0.8
0.1
1.1
1.0
—
3.1
2.5
0.1
3.4
2.6
—
Other costs —
—
—
—
—
—
—
0.2
—
—
—
—
Net periodic cost $ 0.6
$ 1.4
$ 0.1
$ 1.0
$ 1.6
$ —
$ 1.8
$ 4.5
$ 0.2
$ 2.9
$ 4.7
$ 0.1

Components of Net periodic cost other than the Service cost component are included in Other income (expense) - Net in the Condensed Consolidated Statement of Comprehensive Income (Loss). The Service cost component is included in the same line item or items as other compensation costs arising from services rendered by pertinent employees during the period.

NOTE M – LEASES

Terex has operating leases for real property, vehicles and office and industrial equipment, generally expiring over terms from 1 to 15 years. Many of the leases held by Terex include options to extend or terminate the lease.

Real property leases are used for office, administrative and industrial purposes. The base terms of these leases typically expire over a period of 6 years, with options to renew for an additional 68 months. Most of our renewal options are linked to market conditions and Terex cannot estimate how existing renewal options will affect the monthly payments. Residual value guarantees are not material.

The vehicle leases mainly include cars and trucks. Term length for these leases typically varies between 1 and 7 years.

Office and industrial equipment leases primarily include machinery used for conducting business at office locations and manufacturing sites worldwide. Term length for these leases typically varies between 1 and 6 years.

Operating Leases

Operating lease cost consists of the following (in millions):



	Three Months Ended		Nine Months Ended
	September 30, 2019		September 30, 2019
Operating lease cost	$	9.5	$	25.2
Variable lease cost	1.6		5.0
Short-term lease cost	1.4		4.1
Total operating lease costs	$	12.5	$	34.3

Variable lease costs correspond to future period lease payments which are determined at fair market value at determined points in time. Operating lease obligations consist primarily of commitments to rent real properties.

Supplemental balance sheet information related to leases (in millions, except lease term and discount rate):



	September 30, 2019
Operating lease right-of-use assets	$	119.3

Current maturities of operating leases	$	24.9
Non-current operating leases	102.2
Total operating lease liabilities	$	127.1

Weighted average discount rate for operating leases	5.58		%
Weighted average remaining operating lease term in years	6

Maturities of operating lease liabilities (in millions):



Years Ending December 31,	September 30, 2019
2019	$	8.5
2020	29.7
2021	26.2
2022	23.4
2023	20.5
Thereafter	41.1
Total undiscounted operating lease payments	149.4
Less: Imputed interest	(22.3		)
Total operating lease liabilities	127.1
Less: Current maturities of operating lease liabilities	(24.9		)
Non-current operating lease liabilities	$	102.2

Supplemental cash flow and other information related to operating leases (in millions):



	Nine Months Ended
	September 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	27.8
Operating right-of-use assets obtained in exchange for operating lease liabilities	$	17.2

Disclosures related to periods prior to adoption of the Lease Standard

Future minimum noncancellable operating lease payments at December 31, 2018 are as follows (in millions):



2019	$	30.5
2020	25.8
2021	22.9
2022	18.7
2023	16.4
Thereafter	37.0
Total minimum obligations	$	151.3

Most of the Company’s operating leases provide the Company with the option to renew the leases for varying periods after the initial lease terms. These renewal options enable the Company to renew the leases based upon the fair rental values at the date of expiration of the initial lease. Total rental expense under operating leases was $37.5 million in 2018.

NOTE N – LITIGATION AND CONTINGENCIES

General

The Company is involved in various legal proceedings, including product liability, general liability, workers’ compensation liability, employment, commercial and intellectual property litigation, which have arisen in the normal course of operations. The Company is insured for product liability, general liability, workers’ compensation, employer’s liability, property damage and other insurable risk required by law or contract, with retained liability or deductibles. The Company records and maintains an estimated liability in the amount of management’s estimate of the Company’s aggregate exposure for such retained liabilities and deductibles. For such retained liabilities and deductibles, the Company determines its exposure based on probable loss estimations, which requires such losses to be both probable and the amount or range of probable loss to be estimable. The Company believes it has made appropriate and adequate reserves and accruals for its current contingencies and the likelihood of a material loss beyond amounts accrued is remote. The Company believes the outcome of such matters, individually and in aggregate, will not have a material adverse effect on its financial statements as a whole. However, outcomes of lawsuits cannot be predicted and, if determined adversely, could ultimately result in the Company incurring significant liabilities which could have a material adverse effect on its results of operations.

Securities and Stockholder Derivative Lawsuits

In 2010, the Company received complaints seeking certification of class action lawsuits as follows:

A consolidated class action complaint for violations of securities laws was filed in the United States District Court, District of Connecticut on November 18, 2010 and is entitled Sheet Metal Workers Local 32 Pension Fund and Ironworkers St. Louis Council Pension Fund, individually and on behalf of all others similarly situated v. Terex Corporation, et al.

A stockholder derivative complaint for violation of the Securities and Exchange Act of 1934, breach of fiduciary duty, waste of corporate assets and unjust enrichment was filed on April 12, 2010 in the United States District Court, District of Connecticut and is entitled Peter Derrer, derivatively on behalf of Terex Corporation v. Ronald M. DeFeo, Phillip C. Widman, Thomas J. Riordan, G. Chris Andersen, Donald P. Jacobs, David A. Sachs, William H. Fike, Donald DeFosset, Helge H. Wehmeier, Paula H.J. Cholmondeley, Oren G. Shaffer, Thomas J. Hansen, and David C. Wang, and Terex Corporation.

These lawsuits, which generally ~~cover~~covered the time period from February 2008 to February 2009, alleged violations of federal securities laws and ~~allege,~~Delaware law claiming, among other things, that certain of the Company’s SEC filings and other public statements contained false and misleading statements which resulted in damages to the Company, the plaintiffs and the members of the purported class when they purchased the Company’s securities and that there were breaches of fiduciary duties. ~~The stockholder derivative complaint also alleges waste of corporate assets relating~~

With respect to the repurchase of the Company’s shares in the market and unjust enrichment as a result of securities sales by certain officers and directors. The complaints seek, among other things, unspecified compensatory damages, costs and expenses. As a result, the Company is unable to estimate a possible loss or a range of losses for these ~~lawsuits. The stockholder derivative complaint also seeks amendments to~~claims, the ~~Company’s corporate governance procedures in addition to unspecified compensatory damages from the individual defendants in its favor.~~

On March 31, 2018, the securities lawsuit was dismissed against all of the named defendants except Mr. Riordan and Terex. In addition, certain claims were also narrowed. However, as all claims against Mr. Riordan were not dismissed, the case will continue against both Mr. Riordan and as a result Terex as well. The Company believes that the remaining allegations in the securities suit and allegations in the stockholder derivative claim are without merit, and Terex and the named executive will vigorously defend against them. The Company believes that it ~~has~~ acted ~~and continues to act,~~at all times in compliance with ~~federal securities~~all applicable laws and, ~~Delaware law~~without any admission of wrongdoing or liability, has settled the stockholder derivative and securities lawsuits. The settlement amounts with respect to ~~these matters. However,~~each lawsuit were covered by the ~~outcome~~Company’s insurance policies and did not have a material effect on the Company’s financial results. As part of the ~~lawsuits cannot be predicted and, if determined adversely, could ultimately result in~~stockholder derivative settlement, the Company ~~incurring significant liabilities.~~has agreed to make certain amendments to its corporate governance procedures.

Demag Cranes AG Appraisal Proceedings

In connection with the Company’s purchase of Demag Cranes AG (“DCAG”) in 2011, certain former shareholders of DCAG initiated appraisal proceedings relating to (i) a domination and profit loss transfer agreement between DCAG and Terex Germany GmbH & Co. KG (the “DPLA Proceeding”) and (ii) the squeeze out of the former DCAG shareholders (the “Squeeze out Proceeding”) alleging that the Company did not pay fair value for the shares of DCAG. In April 2018, the Company reached an agreement with the former shareholders of DCAG to settle the DPLA Proceeding for an amount not material to the Company’s consolidated financial statements. The Squeeze out Proceeding will continue and is still in the relatively early stages. While the Company believes the position of the former shareholders of DCAG is without merit and is vigorously opposing it, no assurance can be given as to the final resolution of the Squeeze out Proceeding or that the Company will not ultimately be required to make an additional payment as a result of such dispute.

Terex Latin América Equipamentos Ltda ICMS Proceedings

Terex Latin America Equipamentos Ltda (“TLA”) imports Terex products into Brazil through the state of Espirito Santo to its facility in Sao Paulo. For the 2004 through March 2009 period TLA used a third party trading company, SAB, as an agent to process the importation of Terex products. TLA properly paid the Espirito Santo ICMS tax (Brazilian state value-added tax) to SAB for payment to Espirito Santo, which would produce an ICMS credit to be used against imposition of Sao Paolo ICMS tax. SAB went into bankruptcy and may not have actually remitted to Espirito Santo the ICMS tax amounts paid to it by TLA. The Brazilian state of Sao Paulo challenged the credit against Sao Paolo ICMS that TLA claimed and assessed unpaid ICMS and related interest in the amount of approximately BRL 102 million. TLA challenged the claim of Sao Paulo and learned in October 2019 that the Sao Paulo claim has survived the administrative tribunal process. TLA anticipates that it will receive notice for an amount due from Sao Paulo and expects to protest the Sao Paulo claim in litigation which is likely to commence at the end of 2019 or early 2020. While the Company believes the position of the state of Sao Paulo is without merit and continues to vigorously oppose it, no assurance can be given as to the final resolution of the ICMS litigation or that TLA will not ultimately be required to pay ICMS and interest to the state of Sao Paulo.

Other

The Company is involved in various other legal proceedings which have arisen in the normal course of its operations. The Company has recorded provisions for estimated losses in circumstances where a loss is probable and the amount or range of possible amounts of the loss is estimable.

Credit Guarantees

Customers of the Company from time to time may fund the acquisition of the Company’s equipment through third-party finance companies. In certain instances, the Company may provide a credit guarantee to the finance company, by which the Company agrees to make payments to the finance company should the customer default. ~~The maximum liability~~These may require the Company to: (i) pay-off the customer’s obligations, (ii) assume the customer’s payments or (iii) pay a predetermined percentage of the ~~Company is generally limited to its~~ customer’s ~~remaining payments~~outstanding obligation. The current amount of the maximum potential liability under these credit guarantees cannot be reasonably estimated due to limited availability of the ~~finance company at time~~unique facts and circumstances of ~~default.~~each arrangement, such as customer delinquency and whether changes have been made to the structure of the contractual obligation between the funder and customer.

AsFor credit guarantees outstanding as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the ~~Company’s~~ maximum exposure ~~to such credit guarantees~~determined at inception was ~~$55.5~~$55.8 million and ~~$49.2~~$59.2 million ($20.3 million related to discontinued operations), respectively. Terms of these guarantees coincide with the financing arranged by the customer and generally do not exceed five years. Given the Company’s position as original equipment manufacturer and its knowledge of end markets, the Company, when called upon to fulfill a guarantee, generally has been able to liquidate the financed equipment at a minimal loss, if any, to the Company.

There can be no assurance that historical credit default experience will be indicative of future results. The Company’s ability to recover losses experienced from its guarantees may be affected by economic conditions in effect at the time of loss.

~~Residual Value Guarantees~~

The Company issues residual value guarantees under sales-type leases. A residual value guarantee involves a guarantee that a piece of equipment will have a minimum fair market value at a future date if certain conditions are met by the customer. Maximum exposure for residual value guarantees issued by the Company totaled $3.1 million and $4.2 million as of September 30, 2018 and December 31, 2017, respectively. The Company is generally able to mitigate a portion of risk associated with these guarantees because the maturity of guarantees is staggered, limiting the amount of used equipment entering the marketplace at any one time.

~~The Company has recorded an aggregate liability within Other current liabilities and Other non-current liabilities in the Condensed Consolidated Balance Sheet of approximately $4 million as of~~ ~~September 30, 2018~~ ~~and~~ ~~December 31, 2017, respectively, for estimated fair value of all guarantees provided.~~

There can be no assurance the Company’s historical experience in used equipment markets will be indicative of future results. The Company’s ability to recover losses experienced from its guarantees may be affected by economic conditions in used equipment markets at the time of loss.

NOTE O – STOCKHOLDERS’ EQUITY

Changes in Accumulated Other Comprehensive Income (Loss)

The table below presents changes in AOCI by component for the three and nine months ended September 30, ~~2018~~2019 and ~~2017.~~2018. All amounts are net of tax (in millions).



	Three Months Ended September 30, 2019														Three Months Ended September 30, 2018
	CTA (1)			Derivative Hedging Adj.			Debt & Equity Securities Adj.		Pension Liability Adj.			Total			CTA			Derivative Hedging Adj.			Debt & Equity Securities Adj.		Pension Liability Adj.			Total
Beginning balance	$	(231.7	)	$	(3.5	)	$	2.1	$	(54.2	)	$	(287.3	)	$	(187.8	)	$	(5.2	)	$	0.7	$	(95.9	)	$	(288.2	)
Other comprehensive income (loss) before reclassifications	(51.9		)	(3.5		)	0.4		14.4			(40.6		)	(18.1		)	(1.0		)	0.4		0.7			(18.0		)
Amounts reclassified from AOCI	26.1			2.0			—		(0.5		)	27.6			(0.7		)	1.1			—		1.5			1.9
Net Other Comprehensive Income (Loss)	(25.8		)	(1.5		)	0.4		13.9			(13.0		)	(18.8		)	0.1			0.4		2.2			(16.1		)
Ending balance	$	(257.5	)	$	(5.0	)	$	2.5	$	(40.3	)	$	(300.3	)	$	(206.6	)	$	(5.1	)	$	1.1	$	(93.7	)	$	(304.3	)

Three Months Ended
September 30, 2018 Three Months Ended
September 30, 2017
CTA Derivative Hedging Adj. Debt & Equity Securities Adj. Pension Liability Adj. Total CTA Derivative Hedging Adj. Debt & Equity Securities Adj. Pension Liability Adj. Total
Beginning balance $ (187.8 ) $ (5.2 ) $ 0.7
$ (95.9 ) $ (288.2 ) $ (190.3 ) $ 3.1
$ 1.3
$ (107.7 ) $ (293.6 )
Other comprehensive income (loss) before reclassifications (18.1 ) (1.0 ) 0.4
0.7
(18.0 ) 32.4
(0.1 ) 2.4
(2.0 ) 32.7
Amounts reclassified from AOCI (0.7 ) 1.1
—
1.5
1.9
(1.2 ) (1.0 ) —
1.5
(0.7 )
Net Other Comprehensive Income (Loss) (18.8 ) 0.1
0.4
2.2
(16.1 ) 31.2
(1.1 ) 2.4
(0.5 ) 32.0
Ending balance $ (206.6 ) $ (5.1 ) $ 1.1
$ (93.7 ) $ (304.3 ) $ (159.1 ) $ 2.0
$ 3.7
$ (108.2 ) $ (261.6 )

Nine Months Ended
September 30, 2018 Nine Months Ended
September 30, 2017
CTA Derivative Hedging Adj. Debt & Equity Securities Adj. Pension Liability Adj. Total CTA (1) Derivative Hedging Adj. Debt & Equity Securities Adj. Pension Liability Adj. (2) Total
Beginning balance $ (144.7 ) $ 2.1
$ 4.3
$ (101.2 ) $ (239.5 ) $ (615.3 ) $ (2.4 ) $ 0.6
$ (162.3 ) $ (779.4 )
Other comprehensive income (loss) before reclassifications (61.2 ) (5.7 ) (3.2 ) 3.0
(67.1 ) 100.4
3.7
3.0
(5.5 ) 101.6
Amounts reclassified from AOCI (0.7 ) (1.5 ) —
4.5
2.3
355.8
0.7
0.1
59.6
416.2
Net Other Comprehensive Income (Loss) (61.9 ) (7.2 ) (3.2 ) 7.5
(64.8 ) 456.2
4.4
3.1
54.1
517.8
Ending balance $ (206.6 ) $ (5.1 ) $ 1.1
$ (93.7 ) $ (304.3 ) $ (159.1 ) $ 2.0
$ 3.7
$ (108.2 ) $ (261.6 )

(1) ~~Reclassification of $352.1~~Reclassifications relate to 26.1 million of losses (net of $1.5 million of tax benefits) from AOCI to Gain (loss) on disposition of discontinued operations - net of tax in connection with the sale of the MHPS business during the nine months ended September 30, 2017.

~~(2) Reclassification of AOCI during the nine months ended September 30, 2017 primarily relates to $55.4 million of losses (net of $23.9~~2.8 million of tax benefits) reclassified from AOCI to Gain (loss) on disposition of discontinued operations - net of tax in connection with the sale of Demag.



	Nine Months Ended September 30, 2019														Nine Months Ended September 30, 2018
	CTA (1)			Derivative Hedging Adj.			Debt & Equity Securities Adj.		Pension Liability Adj.			Total			CTA			Derivative Hedging Adj.			Debt & Equity Securities Adj.			Pension Liability Adj.			Total
Beginning balance	$	(225.6	)	$	(4.4	)	$	0.8	$	(55.6	)	$	(284.8	)	$	(144.7	)	$	2.1		$	4.3		$	(101.2	)	$	(239.5	)
Other comprehensive income (loss) before reclassifications	(58.0		)	(5.7		)	1.7		14.6			(47.4		)	(61.2		)	(5.7		)	(0.6		)	3.0			(64.5		)
Amounts reclassified from AOCI	26.1			5.1			—		0.7			31.9			(0.7		)	(1.5		)	—			4.5			2.3
Net Other Comprehensive Income (Loss)	(31.9		)	(0.6		)	1.7		15.3			(15.5		)	(61.9		)	(7.2		)	(0.6		)	7.5			(62.2		)
Other (2)	—			—			—		—			—			—			—			(2.6		)	—			(2.6		)
Ending balance	$	(257.5	)	$	(5.0	)	$	2.5	$	(40.3	)	$	(300.3	)	$	(206.6	)	$	(5.1	)	$	1.1		$	(93.7	)	$	(304.3	)

(1) Reclassifications relate to 26.1 million of losses (net of 2.8 million of tax benefits) reclassified from AOCI to Gain (loss) on disposition of discontinued operations - net of tax in connection with the ~~MHPS business.~~sale of Demag.

(2) Other relates to amounts reclassified from AOCI to Retained Earnings in connection with the adoption of ASU 2016-01 and 2016-16.

Stock-Based Compensation

During the nine months ended September 30, ~~2018,~~2019, the Company awarded ~~1.0~~1.1 million shares of restricted stock to its employees with a weighted average grant date fair value of ~~$40.25~~$34.22 per share. Approximately ~~62%~~57% of these awards are time-based and vest ratably on each of the first three anniversary dates. Approximately ~~25%~~28% cliff vest at the end of a ~~three year~~three-year period and are subject to performance targets that may or may not be met and for which the performance period has not yet been completed. Approximately ~~13%~~15% cliff vest and are based on performance targets containing a market condition determined over a ~~three year~~three-year period.

The Company used the Monte Carlo method to determine grant date fair value of $~~41.57~~38.77 per share for the awards with a market condition granted on March ~~8, 2018.~~12, 2019. The Monte Carlo method is a statistical simulation technique used to provide the grant date fair value of an award.

The following table presents the weighted-average assumptions used in the valuation:



	Grant date
	March ~~8, 2018~~12, 2019
Dividend yields	~~1.00~~1.31	%
Expected volatility	~~40.41~~36.64	%
Risk free interest rate	~~2.38~~2.40	%
Expected life (in years)	3



ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BUSINESS DESCRIPTION

Terex is a global manufacturer of aerial work platforms, ~~cranes and~~ materials processing ~~machinery.~~machinery and cranes. We design, build and support products used in construction, maintenance, manufacturing, energy, minerals and materials management applications. Our products are manufactured in North and South America, Europe, Australia and Asia and sold worldwide. We engage with customers through all stages of the product life cycle, from initial specification and financing to parts and service support.

We manage and report our business in the following segments: (i) Aerial Work Platforms (“AWP”); and (ii) ~~Cranes; and (iii)~~ Materials Processing (“MP”).

On July 31, 2019, we completed the previously announced disposition of our Demag^® mobile cranes business (“Demag”) to Tadano Ltd. and certain of its subsidiaries. During 2019, we also exited the North American mobile crane product lines manufactured in our Oklahoma City facility. As a result, we realigned certain operations that were formerly part of our Cranes segment. For financial reporting periods beginning on or after January 1, 2019, our utilities business has been consolidated within our AWP segment, our pick and carry cranes business has been consolidated within our MP segment and our rough terrain and tower cranes businesses have been consolidated within Corporate and Other. Prior period reportable segment information was adjusted to reflect the realignment of our operations.

Further information about our industry and reportable segments ~~including geographic information,~~ appears below and in Note B – “Business Segment Information” in the Notes to the Condensed Consolidated Financial Statements.

Non-GAAP Measures

In this document, we refer to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial measures. These non-GAAP measures may not be comparable to similarly titled measures disclosed by other companies. We present non-GAAP financial measures in reporting our financial results to provide investors with additional analytical tools which we believe are useful in evaluating our operating results and the ongoing performance of our underlying businesses. We do not, nor do we suggest that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

Non-GAAP measures we may use include translation effect of foreign currency exchange rate changes on net sales, gross profit, selling, general & administrative (“SG&A”) costs and operating profit, as well as the net sales, gross profit, SG&A costs and operating profit excluding the impact of acquisitions and divestitures.

As changes in foreign currency exchange rates have a non-operating impact on our financial results, we believe excluding effects of these changes assists in assessment of our business results between periods. We calculate the translation effect of foreign currency exchange rate changes by translating current period results at rates that the comparable prior periods were translated at to isolate the foreign exchange component of the fluctuation from the operational component. Similarly, impact of changes in our results from acquisitions and divestitures that were not included in comparable prior periods may be subtracted from the absolute change in results to allow for better comparability of results between periods.

We calculate a non-GAAP measure of free cash flow. We define free cash flow as Net cash provided by (used in) operating activities, plus (minus) increases (decreases) in Terex Financial Services finance receivables consisting of sales-type leases and commercial loans (“TFS Assets”), less Capital expenditures, ~~(excluding acquisition~~plus the estimated level of ~~our Northern Ireland properties).~~net working capital in divested businesses at the closing date. We believe this measure of free cash flow provides management and investors further useful information on cash generation or use in our primary operations.

We discuss forward looking information related to expected earnings per share (“EPS”) excluding restructuring charges and other items. Our ~~2018~~2019 outlook for earnings per share is a non-GAAP financial measure because it excludes items such as restructuring and other related charges, transformation costs, ~~impact of the release of tax valuation allowances,~~ gains and losses on divestitures and other unusual items such as the impact of H.R. 1 “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” (the “2017 Federal Tax Act”).items. The Company is not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts because the Company is unable to predict with a reasonable degree of certainty the exact timing and impact of such items. The unavailable information could have a significant impact on the Company’s full-year ~~2018~~2019 GAAP financial results. Adjusted EPS provides guidance to investors about our EPS expectations excluding restructuring and other charges that we do not believe are reflective of our ongoing operations.

Working capital is calculated using the Condensed Consolidated Balance Sheet amounts for Trade receivables (net of allowance) plus Inventories (net of allowance), less Trade accounts payable and Customer advances. We view excessive working capital as an inefficient use of resources, and seek to minimize the level of investment without adversely impacting the ongoing operations of the business. Trailing three months annualized net sales is calculated using ~~the~~ net sales for the most recent quarter end multiplied by four. The ratio calculated by dividing working capital by trailing three months annualized net sales is a non-GAAP measure that we believe measures our resource use efficiency.

Non-GAAP measures we also use include Net Operating Profit After Tax (“NOPAT”) as adjusted, income (loss) from operations as adjusted, annualized effective tax rate as adjusted, cash and cash equivalents as adjusted, Debt as ~~defined below~~adjusted and Terex Corporation stockholders’ equity as adjusted, which are used in the calculation of our after tax return on invested capital (“ROIC”) (collectively the “Non-GAAP Measures”), which are discussed in detail below.

Overview

Focus, Simplify and Execute to Win ~~are~~continue as the three pillars of our business strategy. Through the first nine months of the year we continued to implement these elements of our strategy to improve our operations. We ~~remain committed~~completed the sale of Demag in the third quarter of 2019 and earlier in the year exited the mobile crane product lines manufactured at our Oklahoma City facility. These actions have positively impacted Terex by Focusing the portfolio on our high performing businesses best positioned to ~~Simplifying~~out-earn their cost of capital over the ~~Company and deploying our Execute to Win business system.~~cycle. We ~~are taking action~~also continue to simplify ~~both~~and optimize our manufacturing footprint. We had the ~~manufacturing~~official opening of MP’s new Northern Ireland facility in September and ~~administrative sides of the business. The~~our new Utilities manufacturing ~~center we are building~~facility in ~~Watertown,~~ South Dakota remains on schedule and ~~the implementation of~~within budget. MP’s capacity expansion in India also remains on track. These investments enable simplification and improved manufacturing productivity critical to future success and growth. In addition, we have transitioned to a ~~new performance management system by our finance team are excellent examples of the actions we are taking.~~simpler two segment operating structure that is reducing corporate operating expenses. We continue to invest in our Execute to Win business system, which remains focused on enhancing our capabilities by investing in people, processes and tools in our three priority areas: Commercial Excellence, Parts and Lifecycle Solutions and Strategic Sourcing. ~~We are seeing benefits from Commercial Excellence in our performance. We are executing plans in~~In particular, with regard to Strategic Sourcing, ~~and Parts and Lifecycle Solutions designed to significantly improve future performance. Although~~as a result of lower production levels we ~~need to transition a greater than expected amount~~now expect savings of ~~our materials to new suppliers to generate savings, the anticipated savings for Strategic Sourcing is in line with our objectives.~~approximately $25 million this year.

~~Global demand for our products continues to grow. We increased sales, operating margin and backlog in AWP and MP. However, Cranes’~~

Operationally, MP continued its excellent performance ~~continued to be negatively impacted by operational challenges. AWP~~as it increased sales and ~~improved its~~expanded operating margin again in the third ~~quarter as compared to the prior year. MP continued to execute well improving both sales and income from operations~~quarter. However, softening in the third quarter as compared to the prior year. In Cranes we resolved many of our supply chain challenges as the quarter progressed, however shortages did impact production and deliveries, leading to lower revenue and marginsCompany’s aerials business more than ~~we expected. Overall, we see positive momentum in our backlog (firm orders expected to be filled within one year) for our segments, which was up 41% year-over-year, excluding Corporate and Other.~~offset MP’s strong operating performance.

Our AWP segment’s third quarter ~~2018 results included continued strong~~2019 net sales ~~driven by growth in North America. Operating margins improved primarily due to production efficiencies which more than offset material cost headwinds. Global customer~~were down 14% from the prior year period. Softening demand remains strong. AWP bookings grew by 50% in the quarter and our backlog is up 48% on a year-over-year basis, reflecting continued strong global demand for our AWP products. We expect margins improvement for the full year 2018 versus 2017 on the incremental sales volume although higher material costs and to a lesser extent foreign exchange rates are anticipated to be headwinds.

Even though our Cranes segment made progress addressing its supply chain challenges in the quarter, it was not as much as we expected. As a result of production and delivery issues, we were not able to recognize approximately $30 million of revenue that was planned for the third quarter. This, along with material cost headwinds and factory under-absorption, led to approximately $8 million of lost margin. Global crane markets were fairly stable with pockets of growth as expected. Oil prices are stimulating modest demand increases in North America and ~~the Middle East. The global market~~Europe for ~~large crawler cranes remains soft, although the new Demag all terrain cranes continue~~aerials equipment led to ~~generate demand. Our Utilities business is a consistent performer~~sales declines in a relatively stable market environment and our tower crane business continues to grow and execute well. Based on our growing backlog and operational improvements, we expect to be breakeven or generate a small operating profitboth markets in the ~~fourth~~ quarter. Sales in China improved due to market growth and increased product adoption. To align with customer demand and manage inventory levels, we reduced aerial production in the quarter by over 30% compared to last year. AWP’s lower operating margin in the quarter was impacted by several factors: lower sales volume, customer mix (higher percentage of national account sales), the strong U.S. Dollar relative to the Euro, lower than expected material cost savings and lower manufacturing absorption due to reducing production volumes.

Our MP segment had another ~~excellent~~strong quarter with ~~its~~increased sales and expanding operating ~~profit improving on increased net sales. Growth was~~margin versus the prior year period. These results were driven primarily by ~~our mobile~~continued demand for crushing and screening products, concrete trucks, material handlers and ~~scrap material handling product lines. Broad-based economic growth, construction activity~~pick and ~~aggregate consumption continue~~carry cranes, as well as effective price and cost management. The strong U.S. Dollar to ~~be primary drivers of demand~~the British Pound provided a modest tailwind for our crushing and screening ~~equipment. We~~business.

Our rough terrain and tower crane businesses, which are ~~encouraged by~~now reported in Corporate and Other, generally performed in line with our expectations in the third quarter of 2019.

As we move forward, we are seeing the impacts of the global trade disputes, tariffs and global political uncertainty on our end markets. The overall markets for AWP and MP declined at the end of the third quarter and into the fourth quarter. Some North American and European AWP rental customers have delayed their orders as they are seeing pressure on rental rates. This led to lower bookings and backlog ~~for the segment, which is up 72%~~as compared to the prior ~~year. We expect margins~~year period. MP is also experiencing a softening market across substantially all of its businesses leading to ~~improve for~~lower bookings and backlog.

In the ~~full year 2018 versus 2017 on incremental sales volume, although higher input costs are a potential headwind.~~

~~Geographically,~~third quarter, our largest market isremained North America, which ~~represents~~represented approximately ~~55%~~59% of our global sales in continuing operations. ~~Our~~As compared to the prior year-to-date period, our sales ~~grew globally, with sales~~were down in North America and Western Europe, essentially flat in Asia Pacific and up by double ~~digit percentages in both North America and Asia Pacific. Sales were also up in Western Europe and declined~~digits off a low base in Latin America.

Through the first nine months of the year we have continued to execute our disciplined capital allocation ~~strategy~~strategy. In addition to strategic investments in our businesses to drive more efficient manufacturing, such as the construction of our new Utilities manufacturing center in South Dakota and expansion of MP locations in the U.K. and India, we have also reduced inventories of finished goods since the end of the last quarter by adjusting production rates down at AWP. Furthermore, we completed the sales of Demag and our ASV Holdings, Inc. (“ASV”) shares in the third quarter of ~~2018.~~2019, realizing approximately $150 million of additional cash for Terex. We ~~are making strategic investments~~generated approximately $104 million of free cash flow in the quarter, more than 50% greater than the amount generated in the same period last year. However, as a result of our ~~businesses.~~ updated outlook for the remainder of the year, we now expect to generate free cash flow of approximately $110 million for 2019.

We believe ~~investing in growth opportunities designed~~our liquidity continues to ~~return significantly more than~~be sufficient to meet our ~~cost~~business plans. See “Liquidity and Capital Resources” for a detailed description of liquidity and working capital ~~is an excellent use of cash. We also continued to invest in our Transformation priority areas that underpin our long-term improvement plans. In July 2018, our Board of Directors authorized~~levels, including the repurchase of up to an additional $300 million of Terex stock. The timing of share repurchases will be based on available liquidity, cash flows, general market conditions and compliance with covenants in our debt agreements.primary factors affecting such levels.

An important development earlier in 2018 was the announcement of the Section 232 tariffs on steel imports into the United States. Steel prices had been trending up and market prices and futures prices for steel have risen dramatically since the beginning of 2018. We addressed the significant increase in steel prices by implementing surcharges on product lines that were impacted by these increases. We are working closely with our customers, being open and transparent, to share increases equitably with them. Another significant change in market dynamics is the implementation of tariffs on certain Chinese imports beginning in early July 2018. These developments contributed to increased material costs in the third quarter of 2018. See Item 3 - “Quantitative and Qualitative Disclosure About Market Risk - Commodities Risk” for more informationBased on our ~~commodities risks~~year-to-date performance, a softening environment for industrial equipment, reduced production volume and the impact of tariffs on us. While our global markets remain strong, we are updating our full year guidance to reflect our third quarter results, our updated production plan in Cranes, higher input costs, including tariffs, and anticipatedadverse foreign exchange ~~headwinds. We now~~rates, we expect ~~2018~~full year earnings per share ~~(“EPS”)~~ to be between ~~$2.60 and $2.70,~~$3.00 to $3.20, excluding restructuring, transformation investments, and other unusual items, ~~and any additional share repurchases,~~ on net sales of approximately ~~$5.1~~$4.4 billion. Looking ahead to 2020, we are operationally planning for revenue to be approximately 10% lower than 2019 due to the softening macro environment for industrial equipment.

ROIC

ROIC and other Non-GAAP Measures (as calculated below) assist in showing how effectively we utilize capital invested in our operations. ROIC is determined by dividing the sum of NOPAT for each of the previous four quarters by the average of Debt less Cash and cash equivalents plus Terex Corporation stockholders’ equity for the previous five quarters. NOPAT for each quarter is calculated by multiplying Income (loss) from operations by one minus the annualized effective tax rate.

In the calculation of ROIC, we adjust income (loss) from operations, annualized effective tax rate, ~~cash and cash equivalents~~ and Terex Corporation stockholders’ equity to remove the effects of the impact of certain transactions in order to create a measure that is useful to understanding our operating results and the ongoing performance of our underlying business without the impact of unusual items as shown in the tables below. Cash and cash equivalents and Debt are adjusted to include amounts recorded as held for sale. Furthermore, we believe returns on capital deployed in TFS do not represent our primary operations and, therefore, TFS Assets and results from operations have been excluded from the Non-GAAP Measures. Debt is calculated using amounts for Notes payable and current portion of long-term debt plus Long-term debt, less current portion. We calculate ROIC using the last four quarters’ adjusted NOPAT as this represents the most recent 12-month period at any given point of determination. In order for the denominator of the ROIC ratio to properly match the operational period reflected in the numerator, we include the average of five quarters’ ending balance sheet amounts so that the denominator includes the average of the opening through ending balances (on a quarterly basis) thereby providing, over the same time period as the numerator, four quarters of average invested capital.

Terex management and Board of Directors use ROIC as one measure to assess operational performance, including in connection with certain compensation programs. We use ROIC as a metric because we believe it measures how effectively we invest our capital and provides a better measure to compare ourselves to peer companies to assist in assessing how we drive operational improvement. We believe ROIC measures return on the amount of capital invested in our primary businesses, excluding TFS, as opposed to another metric such as return on stockholders’ equity that only incorporates book equity, and is thus a more accurate and descriptive measure of our performance. We also believe adding Debt less Cash and cash equivalents to Terex Corporation stockholders’ equity provides a better comparison across similar businesses regarding total capitalization, and ROIC highlights the level of value creation as a percentage of capital invested. As the tables below show, our ROIC at September 30, ~~2018~~2019 was ~~15.7%~~19.1%.

Amounts described below are reported in millions of U.S. dollars, except for the annualized effective tax rates. Amounts are as of and for the three months ended for the periods referenced in the tables below.


	Sep '18			Jun '18			Mar '18			Dec '17			Sep '17			Sep'19			Jun'19			Mar '19			Dec '18			Sep '18
Annualized effective tax rate, as adjusted	23.0		%	23.0		%	23.0		%	26.9		%				20.0		%	20.0		%	20.0		%	16.0		%
Income (loss) from operations as adjusted	$	83.6		$	116.1		$	71.2		$	45.6					$	86.2		$	127.9		$	104.8		$	85.4
Multiplied by: 1 minus Effective tax rate	77.0		%	77.0		%	77.0		%	73.1		%
Multiplied by: 1 minus annualized effective tax rate																80.0		%	80.0		%	80.0		%	84.0		%
Adjusted net operating income (loss) after tax	$	64.4		$	89.4		$	54.8		$	33.3					$	69.0		$	102.3		$	83.8		$	71.7
Debt as defined above	$	1,133.4		$	1,094.2		$	1,083.0		$	984.8		$	984.9
Debt as adjusted																$	1,175.6		$	1,351.9		$	1,477.8		$	1,219.4		$	1,133.4
Less: Cash and cash equivalents as adjusted	(329.5		)	(377.1		)	(451.4		)	(630.1		)	(595.7		)	(475.5		)	(394.6		)	(330.2		)	(372.1		)	(329.5		)
Debt less Cash and cash equivalents as adjusted	803.9			717.1			631.6			354.7			389.2			700.1			957.3			1,147.6			847.3			803.9
Total Terex Corporation stockholders’ equity as adjusted	848.5			805.4			930.1			1,046.8			1,162.2			889.2			860.1			751.7			765.2			837.8
Debt less Cash and cash equivalents plus Total Terex Corporation stockholders’ equity as adjusted	$	1,652.4		$	1,522.5		$	1,561.7		$	1,401.5		$	1,551.4		$	1,589.3		$	1,817.4		$	1,899.3		$	1,612.5		$	1,641.7


September 30, 2018 ROIC	15.7		%
September 30, 2019 ROIC				19.1		%
NOPAT as adjusted (last 4 quarters)	$	241.9		$	326.8
Average Debt less Cash and cash equivalents plus Total Terex Corporation stockholders’ equity as adjusted (5 quarters)	$	1,537.9		$	1,712.0



Delaware		34-1531521
(State of Incorporation)		(IRS Employer Identification No.)



~~Delaware~~ ~~(State~~Title of ~~Incorporation)~~ each class	Trading Symbol(s)	~~34-1531521~~ ~~(IRS Employer Identification No.)~~ Name of each exchange on which registered
Common Stock ($0.01 par value)	TEX	New York Stock Exchange



Large accelerated filerx	☒	Accelerated filero	☐	Non-accelerated filero	☐
Smaller reporting companyo	☐	Emerging growth companyo	☐



	~~TABLE OF CONTENTS~~
		~~Page No.~~PAGE
PART I	FINANCIAL INFORMATION	4

Item 1	Financial Statements	4
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3536
Item 3	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4	Controls and Procedures	53

PART II	OTHER INFORMATION	54

~~PART II~~Item 1	~~OTHER INFORMATION~~	54

~~Item 1~~	Legal Proceedings	54
Item 1A	Risk Factors	5554
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3	Defaults Upon Senior Securities	5655
Item 4	Mine Safety Disclosures	5655
Item 5	Other Information	5655
Item 6	Exhibits	56

SIGNATURES		57



	September 30, 2019			December 31, 2018
Commercial loans	$	143.2		$	154.0
Sales-type leases	29.1			45.5
Total finance receivables, gross	172.3			199.5
Allowance for credit losses	(11.1		)	(5.5		)
Total finance receivables, net	$	161.2		$	194.0



x☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



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



	September 30, 2018		December 31, 2017
Cash and cash equivalents:
Cash and cash equivalents - continuing operations	$	326.0	$	626.5
Cash and cash equivalents - held for sale	3.5		3.6
Total cash and cash equivalents	$	329.5	$	630.1



	Nine Months Ended
	September 30, 2018
Balance at beginning of period	$	52.6
Accruals for warranties issued during the period	46.6
Changes in estimates	0.6
Settlements during the period	(42.3		)
Foreign exchange effect/other	(2.4		)
Balance at end of period	$	55.1



	Three Months Ended September 30, 2017
	AWP		Cranes		MP		Corporate and Other / Eliminations			Total
Net Sales by Product Type
Aerial Work Platforms	$	458.2	$	—	$	—	$	0.8		$	459.0
Mobile Cranes	—		173.7		—		0.7			174.4
Materials Processing Equipment	—		—		174.5		(0.4		)	174.1
Other (1)	98.5		128.2		85.4		(8.4		)	303.7
Total	$	556.7	$	301.9	$	259.9	$	(7.3	)	$	1,111.2



	Nine Months Ended September 30, 2017
	AWP		Cranes		MP		Corporate and Other / Eliminations			Total
Net Sales by Product Type
Aerial Work Platforms	$	1,356.4	$	—	$	—	$	1.9		$	1,358.3
Mobile Cranes	—		491.8		—		1.5			493.3
Materials Processing Equipment	0.6		—		527.9		0.1			528.6
Other (1)	265.1		377.8		261.6		(18.1		)	886.4
Compact Construction Equipment (2)	—		—		—		33.2			33.2
Total	$	1,622.1	$	869.6	$	789.5	$	18.6		$	3,299.8



	September 30, 2019						December 31, 2018
Allowance for credit losses, ending balance:	Commercial Loans		Sales-Type Leases		Total		Commercial Loans		Sales-Type Leases		Total
Individually evaluated for impairment	$	7.6	$	—	$	7.6	$	0.6	$	—	$	0.6
Collectively evaluated for impairment	2.8		0.7		3.5		3.4		1.5		4.9
Total allowance for credit losses	$	10.4	$	0.7	$	11.1	$	4.0	$	1.5	$	5.5

Finance receivables, ending balance:
Individually evaluated for impairment	$	7.6	$	—	$	7.6	$	1.5	$	—	$	1.5
Collectively evaluated for impairment	135.6		29.1		164.7		152.5		45.5		198.0
Total finance receivables	$	143.2	$	29.1	$	172.3	$	154.0	$	45.5	$	199.5


	September 30, 2018												September 30, 2019
	Current		31-60 days past due		61-90 days past due		Greater than 90 days past due		Total past due		Total Finance Receivables		Current		31-60 days past due		61-90 days past due		Greater than 90 days past due		Total past due		Total Finance Receivables
Commercial loans	$	115.1	$	2.6	$	0.1	$	2.1	$	4.8	$	119.9	$	133.3	$	1.9	$	—	$	8.0	$	9.9	$	143.2
Sales-type leases	42.8		—		—		—		—		42.8		28.9		0.2		—		—		0.2		29.1
Total finance receivables	$	157.9	$	2.6	$	0.1	$	2.1	$	4.8	$	162.7	$	162.2	$	2.1	$	—	$	8.0	$	10.1	$	172.3


Rating	September 30, 2018		December 31, 2017		September 30, 2019		December 31, 2018
Superior	$	5.8	$	3.3	$	1.0	$	7.5
Above Average	24.3		31.8		17.2		30.7
Average	31.9		73.1		51.7		56.9
Below Average	90.4		79.6		93.8		94.5
Sub Standard	10.3		18.9		8.6		9.9
Total	$	162.7	$	206.7	$	172.3	$	199.5



	September 30, 2019		December 31, 2018
Finished equipment	$	408.1	$	478.4
Replacement parts	154.9		143.3
Work-in-process	87.7		86.5
Raw materials and supplies	207.3		210.7
Inventories	$	858.0	$	918.9



~~YES~~	x	NO	o



~~YES~~	x	NO	o



~~YES~~	o	NO	x



	September 30, 2019			December 31, 2018
Property	$	38.7		$	39.6
Plant	159.5			161.3
Equipment	344.5			337.3
Leasehold improvements	54.0			49.1
Construction in progress	90.1			42.2
Property, plant and equipment – gross	686.8			629.5
Less: Accumulated depreciation	(327.4		)	(312.2		)
Property, plant and equipment – net	$	359.4		$	317.3



	AWP			MP			Total
Balance at December 31, 2018, gross	$	139.2		$	187.8		$	327.0
Accumulated impairment	(38.6		)	(23.2		)	(61.8		)
Balance at December 31, 2018, net	100.6			164.6			265.2
Foreign exchange effect and other	(0.9		)	(4.6		)	(5.5		)
Balance at September 30, 2019, gross	138.3			183.2			321.5
Accumulated impairment	(38.6		)	(23.2		)	(61.8		)
Balance at September 30, 2019, net	$	99.7		$	160.0		$	259.7



	AWP			Cranes			MP			Total
Balance at December 31, 2017, gross	$	140.2		$	179.3		$	195.2		$	514.7
Accumulated impairment	(38.6		)	(179.3		)	(23.2		)	(241.1		)
Balance at December 31, 2017, net	101.6			—			172.0			273.6
Foreign exchange effect and other	(0.7		)	—			(4.8		)	(5.5		)
Balance at September 30, 2018, gross	139.5			179.3			190.4			509.2
Accumulated impairment	(38.6		)	(179.3		)	(23.2		)	(241.1		)
Balance at September 30, 2018, net	$	100.9		$	—		$	167.2		$	268.1



		September 30, 2019							December 31, 2018
	Weighted Average Life (in years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Definite-lived intangible assets:
Technology	7	$	9.1	$	(8.6	)	$	0.5	$	9.7	$	(9.1	)	$	0.6
Customer Relationships	22	25.4		(22.4		)	3.0		25.6		(21.7		)	3.9
Land Use Rights	82	4.3		(0.6		)	3.7		4.4		(0.6		)	3.8
Other	8	25.0		(22.2		)	2.8		24.9		(21.8		)	3.1
Total definite-lived intangible assets		$	63.8	$	(53.8	)	$	10.0	$	64.6	$	(53.2	)	$	11.4



		September 30, 2019						December 31, 2018
Instrument (1)	Balance Sheet Account	Derivatives designated as hedges			Derivatives not designated as hedges			Derivatives designated as hedges			Derivatives not designated as hedges
Foreign exchange contracts	Other current assets	$	3.4		$	—		$	2.9		$	0.2
Cross currency swaps	Other current assets	0.9			—			0.8			—
Debt conversion feature	Other assets	—			0.2			—			0.5
Cross currency swaps	Other assets	0.3			—			—			—
Foreign exchange contracts	Other current liabilities	(8.6		)	(0.5		)	(5.0		)	—
Commodity swaps	Other current liabilities	(1.2		)	—			(1.1		)	—
Cross currency swaps	Other non-current liabilities	—			—			(3.0		)	—
Net derivative asset (liability)		$	(5.2	)	$	(0.3	)	$	(5.4	)	$	0.7


	Gain (Loss) Recognized on Derivatives in OCI, net of tax							Gain (Loss) Reclassified from AOCI into Income					Gain (Loss) Recognized on Derivatives in OCI, net of tax							Gain (Loss) Reclassified from AOCI into Income
Instrument	Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018			Income Statement Account	Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018		Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019			Income Statement Account	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Foreign exchange contracts	$	0.3		$	(6.5	)	Cost of goods sold	$	(1.6	)	$	0.6	$	(1.9	)	(1.4		)	Cost of goods sold	$	(2.8	)	$	(5.2	)
Commodity swaps													0.2			(0.1		)	Cost of goods sold	(1.5		)	(2.5		)
Cross currency swaps	(0.2		)	(0.7		)	Other income (expense) - net	0.3			1.6		0.2			0.9			Other income (expense) - net	1.9			2.3
Total	$	0.1		$	(7.2	)	Total	$	(1.3	)	$	2.2	$	(1.5	)	$	(0.6	)	Total	$	(2.4	)	$	(5.4	)


	Classification and amount of Gain or Loss Recognized in Income												Classification and amount of Gain or Loss Recognized in Income
	Cost of goods sold						Other income (expense) - net						Cost of goods sold						Other income (expense) - net
	Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018			Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018			Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019			Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Income Statement Accounts in which effects of cash flow hedges are recorded	$	(995.7	)	$	(3,148.9	)	$	(4.4	)	$	(5.8	)	$	(815.0	)	$	(2,748.9	)	$	1.6	$	(2.9	)
Gain (Loss) Reclassified from AOCI into Income:	Gain (Loss) Reclassified from AOCI into Income:												Gain (Loss) Reclassified from AOCI into Income:
Foreign exchange contracts	(1.6		)	0.6			—			—			(2.8		)	(5.2		)	—		—
Commodity swaps													(1.5		)	(2.5		)	—		—
Cross currency swaps	—			—			0.3			1.6			—			—			1.9		2.3
Total	$	(1.6	)	$	0.6		$	0.3		$	1.6		$	(4.3	)	$	(7.7	)	$	1.9	$	2.3



Gain (Loss) Recognized on Derivatives (Ineffective) in Income :
Income Statement Account	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
Cost of goods sold	$	0.8	$	1.6
Other income (expense) – net	0.3		0.2
Total	$	1.1	$	1.8



		Gain (Loss) Recognized in Income
Instrument	Income Statement Account	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019			Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018
Foreign exchange contracts	Other income (expense) – net	$	(0.4	)	$	(0.7	)	$	(0.6	)	$	(0.9	)
Debt conversion feature	Other income (expense) – net	(0.1		)	(0.4		)	(1.1		)	(0.3		)
	Total	$	(0.5	)	$	(1.1	)	$	(1.7	)	$	(1.2	)



	Amount incurred during the nine months ended September 30, 2018			Cumulative amount incurred through September 30, 2018		Total amount expected to be incurred
AWP	$	—		$	0.2	$	0.2
Cranes	(3.7		)	57.4		57.4
MP	—			0.1		0.1
Corp & Other	0.9			3.0		3.0
Total	$	(2.8	)	$	60.7	$	60.7



	Employee Termination Costs			Facility Exit Costs		Asset Disposal and Other Costs		Total
Amount incurred during the nine months ended September 30, 2018	$	(4.7	)	$	1.9	$	—	$	(2.8	)
Cumulative amount incurred through September 30, 2018	$	40.9		$	7.0	$	12.8	$	60.7
Total amount expected to be incurred	$	40.9		$	7.0	$	12.8	$	60.7



	Employee Termination Costs
Restructuring reserve at December 31, 2017	$	29.7
Restructuring reserve increase (decrease)	(4.7		)
Cash expenditures	(9.5		)
Foreign exchange	(0.4		)
Restructuring reserve at September 30, 2018	$	15.1


	Three months ended 9/30/18			Three months ended 6/30/18			Three months ended 3/31/18			Three months ended 12/31/17						Three months ended 9/30/19			Three months ended 6/30/19			Three months ended 3/31/19			Three months ended 12/31/18
Reconciliation of income (loss) from operations:
Income (loss) from operations, as reported	$	71.9		$	103.4		$	71.3		$	41.0					$	86.4		$	126.0		$	99.7		$	81.6
Adjustments:
Deal related	—			—			—			7.1						(0.9		)	(7.0		)	0.2			—
Restructuring and related	2.6			6.9			(2.2		)	(7.8		)				2.2			8.7			1.7			—
Transformation	10.0			7.8			7.3			9.8						2.2			4.0			4.1			4.7
Other	—			—			(2.8		)	—						—			—			—			(0.7		)
(Income) loss from TFS	(0.9		)	(2.0		)	(2.4		)	(4.5		)				(3.7		)	(3.8		)	(0.9		)	(0.2		)
Income (loss) from operations as adjusted	$	83.6		$	116.1		$	71.2		$	45.6					$	86.2		$	127.9		$	104.8		$	85.4

	As of 9/30/18			As of 6/30/18			As of 3/31/18			As of 12/31/17			As of 9/30/17			As of 9/30/19			As of 6/30/19			As of 3/31/19			As of 12/31/18			As of 9/30/18
Reconciliation of Cash and cash equivalents:
Cash and cash equivalents - continuing operations	$	326.0		$	373.6		$	447.9		$	626.5		$	592.7		$	470.6		$	367.5		$	304.6		$	339.5		$	297.0
Cash and cash equivalents - assets held for sale	3.5			3.5			3.5			3.6			3.0			4.9			27.1			25.6			32.6			32.5
Cash and cash equivalents, as adjusted	$	329.5		$	377.1		$	451.4		$	630.1		$	595.7		$	475.5		$	394.6		$	330.2		$	372.1		$	329.5

Debt as defined above	$	1,133.4		$	1,094.2		$	1,083.0		$	984.8		$	984.9
Reconciliation of Debt:
Debt - continuing operations																$	1,175.6		$	1,347.7		$	1,473.4		$	1,214.7		$	1,128.5
Debt - liabilities held for sale																—			4.2			4.4			4.7			4.9
Debt, as adjusted																$	1,175.6		$	1,351.9		$	1,477.8		$	1,219.4		$	1,133.4

Reconciliation of Terex Corporation stockholders’ equity:
Terex Corporation stockholders’ equity as reported	$	974.1		$	947.6		$	1,078.4		$	1,222.0		$	1,379.7		$	866.3		$	860.1		$	781.8		$	860.5		$	974.1
TFS Assets	(149.0		)	(154.0		)	(152.0		)	(181.7		)	(220.5		)	(159.0		)	(180.2		)	(204.6		)	(185.1		)	(149.0		)
Effects of adjustments, net of tax:
Deal related	3.0			3.0			3.0			3.0			(2.3		)	71.4			71.8			78.8			—			—
Restructuring and related	(1.2		)	(3.2		)	(8.0		)	(6.3		)	(0.6		)	24.2			20.8			11.6			9.0			2.2
Transformation	33.2			25.5			19.5			13.9			6.7			28.4			26.3			22.1			17.5			8.4
Extinguishment of debt	1.0			1.0			1.0			0.5			0.5
Pension annuitization																56.3			56.3			56.3			56.3			—
Other	(4.0		)	(6.6		)	(5.4		)	—			—			9.3			9.7			7.4			8.0			2.9
(Income) loss from TFS	(8.6		)	(7.9		)	(6.4		)	(4.6		)	(1.3		)	(7.7		)	(4.7		)	(1.7		)	(1.0		)	(0.8		)
Terex Corporation stockholders’ equity as adjusted	$	848.5		$	805.4		$	930.1		$	1,046.8		$	1,162.2		$	889.2		$	860.1		$	751.7		$	765.2		$	837.8



Year Ended December 31, 2017	Income (loss) from continuing operations before income taxes			(Provision for) benefit from income taxes			Income tax rate
Year Ended December 31, 2018									Income (loss) from continuing operations before income taxes		(Provision for) benefit from income taxes			Income tax rate
Reconciliation of annualized effective tax rate:
As reported	$	112.0		$	(52.0	)	46.4	%	$	287.1	$	(45.4	)	15.8	%
Effect of adjustments:
Deal related	(20.9		)	(11.3		)
Restructuring and related	(12.2		)	(0.5		)			4.5		(1.1		)
Transformation	45.2			(10.1		)			26.4		(4.8		)
Extinguishment of debt	53.1			(19.0		)			0.7		(0.1		)
Asset impairment	(1.6		)	0.6
Pension Annuitization									50.5		(18.3		)
Other									1.0		0.7
Tax related	—			(5.3		)			—		9.8
2017 Federal Tax Act	—			50.4
As adjusted	$	175.6		$	(47.2	)	26.9	%	$	370.2	$	(59.2	)	16.0	%


	Three Months Ended September 30,										Three Months Ended September 30,
	2018				2017						2019				2018
			% of Sales				% of Sales		% Change In Reported Amounts				% of Sales				% of Sales		% Change In Reported Amounts
	($ amounts in millions)										($ amounts in millions)
Net sales	$	1,228.5	—		$	1,111.2	—		10.6	%	$	1,024.6	—		$	1,098.8	—		(6.8	)%
Gross profit	$	232.8	18.9	%	$	219.0	19.7	%	6.3	%	$	209.6	20.5	%	$	240.1	21.9	%	(12.7	)%
SG&A	$	160.9	13.1	%	$	153.1	13.8	%	5.1	%	$	123.2	12.0	%	$	135.9	12.4	%	(9.3	)%
Income (loss) from operations	$	71.9	5.9	%	$	65.9	5.9	%	9.1	%	$	86.4	8.4	%	$	104.2	9.5	%	(17.1	)%


	Nine Months Ended September 30,										Nine Months Ended September 30,
	2018				2017						2019				2018
			% of Sales				% of Sales		% Change In Reported Amounts				% of Sales				% of Sales		% Change In Reported Amounts
	($ amounts in millions)										($ amounts in millions)
Net sales	$	3,891.9	—		$	3,299.8	—		17.9	%	$	3,468.1	—		$	3,468.4	—		—	%
Gross profit	$	743.0	19.1	%	$	612.0	18.5	%	21.4	%	$	719.2	20.7	%	$	747.3	21.5	%	(3.8	)%
SG&A	$	496.4	12.8	%	$	473.1	14.3	%	4.9	%	$	407.1	11.7	%	$	416.4	12.0	%	(2.2	)%
Income (loss) from operations	$	246.6	6.3	%	$	138.9	4.2	%	77.5	%	$	312.1	9.0	%	$	330.9	9.5	%	(5.7	)%


	Three Months Ended 9/30/2018			Nine Months Ended 9/30/2018			Three Months Ended 9/30/2019			Nine Months Ended 9/30/2019
Net cash provided by (used in) operating activities	$	(55.2	)	$	(19.6	)	$	126.7		$	78.4
Increase (decrease) in TFS assets	(5.0		)	(32.7		)	(21.2		)	(26.1		)
Capital expenditures	(12.5		)	(63.2		)	(40.3		)	(75.4		)
Acquisition of MP Northern Ireland properties	—			21.0
Deal related net working capital adjustment							38.5			38.5
Free cash flow	$	(72.7	)	$	(94.5	)	$	103.7		$	15.4


	Three Months Ended 9/30/2018		Three Months Ended 9/30/2017		Three Months Ended 9/30/2019
Net Sales	$	1,228.5	$	1,111.2	$	1,024.6
x	4		4		4
Trailing Three Month Annualized Net Sales	$	4,914.0	$	4,444.8	$	4,098.4



ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



	Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased (1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2)
July 1, 2018 - July 31, 2018	100,837	$41.58	99,409	$300,000
August 1, 2018 - August 31, 2018	1,498	$40.47	—	$300,000
September 1, 2018 - September 30, 2018	4,226	$39.63	—	$300,000
Total	106,561	$41.49	99,409	$300,000