UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
F O R M 10 - Q
(Mark One)
|X| Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2002
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10702
Terex Corporation
(Exact name of registrant as specified in its charter)
Delaware 34-1531521
(State of Incorporation) (IRS Employer Identification No.)
500 Post Road East, Suite 320, Westport, Connecticut 06880
(Address of principal executive offices)
(203) 222-7170
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
------- ------
Number of outstanding shares of common stock: 44.1 million as of May 13, 2002.
The Exhibit Index appears on page 35.
INDEX
TEREX CORPORATION AND SUBSIDIARIES
GENERAL
This Quarterly Report on Form 10-Q filed by Terex Corporation ("Terex" or the
"Company") includes financial information with respect to the following
subsidiaries of the Company (all of which are wholly-owned except PPM Cranes,
Inc.) which are guarantors (the "Guarantors") of the Company's $300 million
principal amount of 10-3/8% Senior Subordinated Notes due 2011 (the "10-3/8%
Notes") and $250 million principal amount of 8-7/8% Senior Subordinated Notes
due 2008 (the "8-7/8% Notes"). The following subsidiaries, with the exception of
PPM Cranes, Inc., are also guarantors of the Company's $200 million principal
amount of 9-1/4% Senior Subordinated Notes due 2011 (the "9-1/4% Notes"). See
Note L to the Company's March 31, 2002 Condensed Consolidated Financial
Statements included in this Quarterly Report.
State or other jurisdiction of I.R.S. employer
Guarantor incorporation or organization identification number
--------- ----------------------------- ---------------------
Terex Cranes, Inc. Delaware 06-1513089
PPM Cranes, Inc. Delaware 39-1611683
Koehring Cranes, Inc. Delaware 06-1423888
Terex-Telelect, Inc. Delaware 41-1603748
Terex-RO Corporation Kansas 44-0565380
Payhauler Corp. Illinois 36-3195008
O & K Orenstein & Koppel, Inc. Delaware 58-2084520
The American Crane Corporation North Carolina 56-1570091
Amida Industries, Inc. South Carolina 57-0531390
Cedarapids, Inc. Iowa 42-0332910
Standard Havens, Inc Delaware 43-0913249
Standard Havens Products, Inc. Delaware 43-1435208
BL-Pegson USA, Inc. Connecticut 31-1629830
Benford America, Inc. Delaware 76-0522879
Coleman Engineering, Inc. Tennessee 62-0949893
EarthKing, Inc. Delaware 06-1572433
Finlay Hydrascreen USA, Inc. New Jersey 22-2776883
Powerscreen Holdings USA Inc. Delaware 61-1265609
Powerscreen International LLC Delaware 61-1340898
Powerscreen North America Inc. Delaware 61-1340891
Powerscreen USA, LLC Kentucky 31-1515625
Royer Industries, Inc. Pennsylvania 24-0708630
Terex Bartell, Inc. Delaware 34-1325948
Terex Mining Equipment, Inc. Delaware 06-1503634
CMI Terex Corporation Oklahoma 73-0519810
Page No.
PART I FINANCIAL INFORMATION
---------------------
Item 1 Condensed Consolidated Financial Statements
TEREX CORPORATION
Condensed Consolidated Statement of Operations --
Three months ended March 31, 2002 and 2001...........................3
Condensed Consolidated Balance Sheet - March 31, 2002
and December 31, 2001................................................4
Condensed Consolidated Statement of Cash Flows --
Three months ended March 31, 2002 and 2001...........................5
Notes to Condensed Consolidated Financial Statements -- March 31, 2002...6
PPM CRANES, INC.
Condensed Consolidated Statement of Operations --
Three months ended March 31, 2002 and 2001..........................20
Condensed Consolidated Balance Sheet - March 31, 2002
and December 31, 2001...............................................21
Condensed Consolidated Statement of Cash Flows --
Three months ended March 31, 2002 and 2001..........................22
Notes to Condensed Consolidated Financial Statements -- March 31, 2002..23
1
Page No.
PART I FINANCIAL INFORMATION (continued)
---------------------------------
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations..................25
Item 3 Quantitative and Qualitative Disclosures About Market Risk.........31
PART II OTHER INFORMATION
Item 1 Legal Proceedings..................................................32
Item 2 Changes in Securities and Use of Proceeds..........................32
Item 3 Defaults Upon Senior Securities....................................32
Item 4 Submission of Matters to a Vote of Security Holders................32
Item 5 Other Information..................................................32
Item 6 Exhibits and Reports on Form 8-K...................................33
SIGNATURES....................................................................34
EXHIBIT INDEX.................................................................35
2
PART 1. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
(in millions, except per share data)
For the Three Months
Ended March 31,
---------------------------
2002 2001
------------- -------------
Net sales...........................................$ 582.0 $ 477.4
Cost of goods sold.................................. 490.7 398.8
------------- -------------
Gross profit................................... 91.3 78.6
Selling, general and administrative expenses........ 59.8 40.6
------------- -------------
Income from operations......................... 31.5 38.0
Other income (expense):
Interest income................................ 0.8 2.0
Interest expense............................... (22.0) (21.0)
Other income (expense) - net................... (1.2) (0.8)
------------- -------------
Income before income taxes and
extraordinary items....................... 9.1 18.2
Provision for income taxes.......................... (2.9) (5.8)
------------- -------------
Income before extraordinary items.............. 6.2 12.4
Extraordinary loss on retirement on debt............ --- (2.3)
Cumulative effect of change in
accounting principle............................... 10.7 ---
------------- -------------
Net income..........................................$ 16.9 $ 10.1
============= =============
Per common share:
Basic:
Income from operations........................$ 0.16 $ 0.46
Extraordinary loss on retirement of debt...... --- (0.09)
Cumulative effect of change in
accounting principle......................... 0.28 ---
------------- -------------
Net income..................................$ 0.44 $ 0.37
============= =============
Diluted:
Income from operations........................$ 0.16 $ 0.45
Extraordinary loss on retirement of debt...... --- (0.08)
Cumulative effect of change in
accounting principle......................... 0.28 ---
------------- -------------
Net income..................................$ 0.44 $ 0.37
============= =============
Weighted average number shares outstanding in
per share calculation:
Basic....................................... 38.0 26.8
Diluted..................................... 38.7 27.4
The accompanying notes are an integral part of these financial statements.
3
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
(in millions, except par value)
March 31, December 31,
2002 2001
---------- ------------
Assets
Current assets
Cash and cash equivalents........................ $ 158.8 $ 250.4
Trade receivables (net of allowance
of $8.7 at March 31, 2002
and $8.6 at December 31, 2001)................. 437.5 351.1
Inventories...................................... 743.3 704.8
Deferred taxes................................... 24.9 23.7
Other current assets............................. 56.6 53.0
----------- -----------
Total current assets......................... 1,421.1 1,383.0
Long-term assets
Property, plant and equipment.................... 167.6 173.9
Goodwill......................................... 712.4 620.1
Deferred taxes................................... 81.2 75.4
Other assets..................................... 151.8 134.6
----------- -----------
Total assets.......................................... $ 2,534.1 $ 2,387.0
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities
Notes payable and current portion
of long-term debt............................... $ 50.3 $ 34.7
Trade accounts payable........................... 346.6 291.0
Accrued compensation and benefits................ 40.6 37.4
Accrued warranties and product liability......... 60.8 62.7
Other current liabilities........................ 202.3 201.3
----------- -----------
Total current liabilities.................... 700.6 627.1
Non-current liabilities
Long-term debt, less current portion............. 1,030.8 1,020.7
Other............................................ 154.0 143.8
Commitments and contingencies
Stockholders' equity
Equity rights.................................... 0.5 0.5
Common stock, $.01 par value - authorized
150.0 shares; issued 39.7 and 37.5
shares at March 31, 2002 and
December 31, 2001, respectively................ 0.4 0.4
Additional paid-in capital....................... 575.1 532.4
Retained earnings................................ 216.8 199.9
Accumulated other comprehensive income........... (126.3) (120.3)
Less cost of shares of common stock in treasury
- 1.2 and 1.1 shares at March 31, 2002
and December 31, 2001, respectively............ (17.8) (17.5)
----------- -----------
Total stockholders' equity................... 648.7 595.4
----------- -----------
Total liabilities and stockholders' equity............ $ 2,534.1 $ 2,387.0
=========== ===========
The accompanying notes are an integral part of these financial statements.
4
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(in millions)
For the Three Months
Ended March 31,
---------------------------
2002 2001
--------------- -----------
Operating Activities
Net income.................................................................... $ 16.9 $ 10.1
Adjustments to reconcile net income to cash provided by (used in) operating
activities:
Depreciation............................................................. 6.9 5.6
Amortization............................................................. 1.4 4.2
Extraordinary loss on retirement of debt................................. --- 2.3
Gain on sale of fixed assets............................................. --- (0.1)
Changes in operating assets and liabilities (net of effects of
acquisitions):
Trade receivables...................................................... (53.3) (15.9)
Inventories............................................................ (12.0) (33.8)
Trade accounts payable................................................. 34.3 18.6
Other, net............................................................. (8.7) (16.6)
-------------- -------------
Net cash provided by (used in) operating activities................. (14.5) (25.6)
-------------- -------------
Investing Activities
Acquisition of businesses, net of cash acquired............................... (72.5) (7.7)
Capital expenditures.......................................................... (5.9) (3.6)
Proceeds from sale of assets.................................................. 0.4 0.8
-------------- -------------
Net cash provided by (used in) investing activities................. (78.0) (10.5)
-------------- -------------
Financing Activities
Proceeds from issuance of long-term debt, net of issuance costs............... --- 287.9
Principal borrowing (repayments) of long-term debt............................ 0.7 (194.2)
Net borrowings (repayments) under revolving line of credit agreements......... 1.6 (0.5)
Other......................................................................... (0.3) (0.6)
-------------- -------------
Net cash provided by financing activities........................... 2.0 92.6
-------------- -------------
Effect of Exchange Rate Changes on Cash and Cash Equivalents..................... (1.1) (1.6)
-------------- -------------
Net Increase (Decrease) in Cash and Cash Equivalents............................. (91.6) 54.9
Cash and Cash Equivalents at Beginning of Period................................. 250.4 181.4
-------------- -------------
Cash and Cash Equivalents at End of Period....................................... $ 158.8 $ 236.3
============== =============
The accompanying notes are an integral part of these financial statements.
5
TEREX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(unaudited)
(dollar amounts in millions, unless otherwise noted, except per share amounts)
NOTE A -- BASIS OF PRESENTATION
Basis of Presentation. The accompanying unaudited condensed consolidated
financial statements of Terex Corporation and subsidiaries as of March 31, 2002
and for the three months ended March 31, 2002 and 2001 have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles to be included in full year
financial statements. The accompanying condensed consolidated balance sheet as
of December 31, 2001 has been derived from the audited consolidated balance
sheet as of that date.
The condensed consolidated financial statements include the accounts of Terex
Corporation and its majority owned subsidiaries ("Terex" or the "Company"). All
material intercompany balances, transactions and profits have been eliminated.
In the opinion of management, all adjustments considered necessary for a fair
statement have been made. Such adjustments consist only of those of a normal
recurring nature. Operating results for the three months ended March 31, 2002
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2002. 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, 2001.
Cash and cash equivalents at March 31, 2002 and December 31, 2001 include $2.6
and $7.6, respectively, which was not immediately available for use.
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets," was issued in October 2001.
SFAS No. 144 became effective for the Company on January 1, 2002 and provides
new guidance on the recognition of impairment losses on long-lived assets to be
held and used or to be disposed of and also broadens the definition of what
constitutes a discontinued operation and how the results of a discontinued
operation are to be measured and presented. The adoption of the standard has not
materially changed the methods used by the Company to determine impairment
losses on long-lived assets, but may result in additional items being reported
as discontinued operations in the future.
SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections as of April 2002," was issued in May
2002. SFAS No. 145 becomes effective for certain leasing transactions occurring
after May 15, 2002 and shall be applied by the Company from January 1, 2003 with
respect to reporting gains and losses from extinguishments of debt. The Company
is currently evaluating the provisions of SFAS No. 145 to determine the impact
on its financial statements.
NOTE B -- ACQUISITIONS
On January 14, 2002, the Company completed the acquisition of the Schaeff Group
of Companies ("Schaeff"). Schaeff is a German manufacturer of compact
construction equipment and a full range of scrap material handlers. Schaeff's
annual revenues for 2001 were approximately $220. Total cash consideration paid
for Schaeff was approximately $62, subject to adjustment. In a separate
transaction, certain former shareholders of Schaeff purchased approximately 1.3
million shares of Common Stock from the Company in January 2002 for
approximately $23.
On January 15, 2002, the Company completed the acquisition of Utility Equipment,
Inc., which does business as Pacific Utility Equipment Co. ("Utility
Equipment"). Utility Equipment, headquartered in Oregon with locations in
various states, distributes, assembles, rents and provides service of products
for the utility, telecommunications and municipal markets. In connection with
the acquisition, the Company issued approximately 455 thousand shares of Common
Stock, subject to adjustment.
On March 26, 2002, the Company acquired EPAC Holdings, Inc., which does business
under the names Telelect East and Eusco ("EPAC"). EPAC, headquartered in
6
Tennessee with locations in various states, distributes, assembles, rents and
provides service of products for the utility, telecommunications and municipal
markets. In connection with the acquisition, the Company issued approximately
300 thousand shares of Common Stock and $1.3 cash, subject to adjustment.
The operating results of the acquired businesses are included in the Company's
consolidated results of operations since their respective dates of acquisition.
NOTE C - ACCOUNTING CHANGE - BUSINESS COMBINATIONS AND GOODWILL
In July 2001, the Financial Accounting Standards Board issued SFAS No. 141
"Business Combinations" and SFAS No. 142 "Goodwill and Other Intangible Assets."
SFAS No. 141, effective July 1, 2001, addresses financial accounting and
reporting for business combinations and requires all business combinations to be
accounted for using the purchase method. One requirement of SFAS No. 141 is that
previously recorded negative goodwill be eliminated. Accordingly, the Company
recorded a cumulative effect of an accounting change of $10.7 related to the
write-off of negative goodwill at January 1, 2002 from the acquisition of Fermec
Manufacturing Limited in December 2000.
SFAS No. 142 addresses financial accounting for acquired goodwill and other
intangible assets and how such assets should be accounted for in financial
statements upon their acquisition and after they have been initially recognized
in the financial statements. In accordance with SFAS No. 142, goodwill related
to acquisitions completed after June 30, 2001, was not amortized in 2001 and,
effective January 1, 2002, goodwill related to acquisitions completed prior to
July 1, 2001 is no longer being amortized. Under this standard, goodwill and
indefinite life intangible assets will be reviewed for impairment and written
down only in the period in which the recorded value of such assets exceed their
fair value. The Company's initial impairment test must be performed on all
reporting units by June 30, 2002. Under the transitional provisions of SFAS No.
142, the Company identified its reporting units and is in the process of
performing impairment tests on the net goodwill and other intangible assets
associated with each of the reporting units, using a valuation date of January
1, 2002. It is anticipated that an impairment loss may be recorded during the
second quarter of 2002; however, the Company is unable at this time to estimate
the effect of this potential loss on earnings or financial position. Any
required adjustment from adoption will be recorded as a cumulative effect of
change in accounting principle adjustment as of January 1, 2002.
The table below illustrates the Company's reported results after applying SFAS
No. 142.
For the Three Months
Ended March 31,
--------------------
2002 2001
---------- -----------
Goodwill amortization............................... $ --- $ 3.2
========== ===========
Reported net income................................. $ 16.9 $ 10.1
Add back: Goodwill amortization, net of
income taxes....................................... --- 2.2
---------- ----------
Adjusted net income................................. $ 16.9 $ 12.3
========== ==========
Per common share:
Basic:
Reported net income............................. $ 0.44 $ 0.37
Add back: Goodwill amortization, net of
income taxes................................... --- 0.08
---------- ----------
Adjusted net income............................. $ 0.44 $ 0.45
========== ==========
Diluted:
Reported net income............................. $ 0.44 $ 0.37
Add back: Goodwill amortization, net of
income taxes................................... --- 0.08
---------- ----------
Adjusted net income............................. $ 0.44 $ 0.45
========== ==========
7
An analysis of changes in the Company's goodwill by business segment is as
follows:
Terex Terex Terex
Americas Europe Mining Total
------------ -------------- ------------- ------------
Balance at December 31, 2001..... $ 238.5 $ 281.9 $ 99.7 $ 620.1
Acquisitions..................... 39.9 44.3 --- 84.2
Other............................ --- 13.5 (5.4) 8.1
------------ -------------- ------------- -------------
Balance at March 31, 2002........ $ 278.4 $ 339.7 $ 94.3 $ 712.4
============ ============== ============= =============
Other includes changes due to foreign exchange rates and disposal of assets.
NOTE D -- DERIVATIVE FINANCIAL INSTRUMENTS
Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," and its related amendment, SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities." These standards require that all derivative financial instruments
be recorded on the consolidated balance sheets at their fair value as either
assets or liabilities. Changes in the fair value of derivatives will be recorded
each period in earnings or accumulated other comprehensive income, depending on
whether a derivative is designated and effective as part of a hedge transaction
and, if it is, the type of hedge transaction. Gains and losses on derivative
instruments reported in accumulated other comprehensive income will be included
in earnings in the periods in which earnings are affected by the hedged item. As
of January 1, 2001, the adoption of these new standards resulted in no
cumulative effect of an accounting change on net earnings. The cumulative effect
of the accounting change increased accumulated other comprehensive income by
$0.9, net of income taxes. Prior years' financial statements were not restated
for this change.
Under SFAS No. 133, there are two types of derivatives that the Company enters
into: hedges of fair value exposures and hedges of cash flow exposures. Fair
value exposures relate to recognized assets or liabilities and firm commitments,
while cash flow exposures relate to the variability of future cash flows
associated with recognized assets or liabilities or forecasted transactions.
The Company operates internationally, with manufacturing and sales facilities in
various locations around the world, and utilizes certain financial instruments
to manage its foreign currency, interest rate and fair value exposures. To
qualify a derivative as a hedge at inception and throughout the hedge period,
the Company formally documents the nature and relationships between the hedging
instruments and hedged items, as well as its risk-management objectives,
strategies for undertaking the various hedge transactions and method of
assessing hedge effectiveness. Additionally, for hedges of forecasted
transactions, the significant characteristics and expected terms of a forecasted
transaction must be specifically identified, and it must be probable that each
forecasted transaction will occur. If it were deemed probable that the
forecasted transaction will not occur, the gain or loss would be recognized in
earnings currently. Financial instruments qualifying for hedge accounting must
maintain a specified level of effectiveness between the hedging instrument and
the item being hedged, both at inception and throughout the hedged period. The
Company does not engage in trading or other speculative use of financial
instruments.
The Company uses forward contracts and options to mitigate its exposure to
changes in foreign currency exchange rates on third-party and inter-company
forecasted transactions. The primary currencies to which the Company is exposed
include the Euro, British Pound and Australian Dollar. When using options as a
hedging instrument, the Company excludes the time value from the assessment of
effectiveness. The effective portion of unrealized gains and losses associated
with forward contracts and the intrinsic value of option contracts are deferred
as a component of accumulated other comprehensive income until the underlying
hedged transactions are reported on the Company's consolidated statement of
operations. The Company uses interest rates swaps to mitigate its exposure to
changes in interest rates related to existing issuances of variable rate debt
and to fair value changes of fixed rate debt. Primary exposure includes
movements in the U.S. prime rate and London Interbank Offer Rate ("LIBOR").
Changes in the fair value of derivatives that are designated as fair value
hedges are recognized in earnings as offsets to the changes in fair value of
exposures being hedged. The change in fair value of derivatives that are
designated as cash flow hedges are deferred in accumulated other comprehensive
income (loss) and are recognized in earnings as the hedged transactions occur.
Any ineffectiveness is recognized in earnings immediately.
8
The Company records hedging activity related to debt instruments in interest
expense and hedging related to foreign currency and lease obligations in
operating profit.
The Company has entered into interest rate swap agreements that effectively
convert variable rate interest payments into fixed rate interest payments. At
March 31, 2002, the Company had $65.0 notional amount of these interest rate
swap agreements outstanding which mature in 2002. The fair market value of these
swaps at March 31, 2002 was a loss of $1.3. These swap agreements have been
designated as, and are effective as, cash flow hedges of outstanding debt
instruments. During the three months ended March 31, 2002 and 2001, the Company
recorded the change in fair value to accumulated other comprehensive income
(loss) and reclassified to earnings a portion of the deferred loss from
accumulated other comprehensive income (loss) as the hedged transactions
occurred and were recognized in earnings.
The Company has entered into a series of interest rate swap agreements that
convert fixed rated interest payments into variable rate interest payments. At
March 31, 2002, the Company had $429.0 notional amount of such interest rate
swap agreements outstanding which mature in 2006 through 2011. The fair market
value of these swaps at March 31, 2002 was a loss of $11.6 which is recorded in
other non-current liabilities and is offset by a $11.6 reduction in the carrying
value of the long-term obligations being hedged.
The Company is also a party to currency exchange forward contracts to manage its
exposure to changing currency exchange rates that mature within one year. At
March 31, 2002, the Company had $88.9 of notional amount of currency exchange
forward contracts outstanding which mature in 2002. The fair market value of
these swaps at March 31, 2002 was a gain of $0.2. These swap agreements have
been designated as, and are effective as, cash flow hedges of specifically
identified assets and liabilities. During the three months ended March 31, 2002
and 2001, the Company recorded the change in fair value to accumulated other
comprehensive income (loss) and reclassified to earnings a portion of the
deferred loss from accumulated other comprehensive income (loss) as the hedged
transactions occurred and were recognized in earnings.
At March 31, 2002, the fair value of all derivative instruments has been
recorded in the Condensed Consolidated Balance Sheet as a net liability of
$12.5.
Counterparties to interest rate derivative contracts and currency exchange
forward contracts are major financial institutions with credit ratings of
investment grade or better and no collateral is required. There are no
significant risk concentrations. Management believes the risk of incurring
losses on derivative contracts related to credit risk is remote and any losses
would be immaterial.
Unrealized net gains (losses) included in Other Comprehensive Income are as
follows:
Three Months Ended
March 31,
----------------------------
2002 2001
------------- --------------
Balance at beginning of period (upon $ (0.8) $ 0.9
adoption of SFAS No. 133 for 2001)....
Additional gains (losses)............... (0.2) (3.0)
Amounts reclassified to earnings........ 0.1 ---
------------- --------------
Balance at end of period................ $ (0.9) $ (2.1)
============= ==============
For further information on accounting policies related to derivative financial
instruments, refer to the Company's Annual Report on Form 10-K for the year
ended December 31, 2001.
NOTE E - RESTRUCTURING AND OTHER CHARGES
During the third quarter of 2001, the Company announced that a number of its
production facilities would reduce staffing, seven facilities would be closed
and their activities consolidated into other Company facilities and that other
additional non-recurring expenses would be incurred. The restructuring program
is designed to maximize factory utilization and to leverage common purchasing,
engineering and marketing operations in the Americas and Europe. The majority of
facility consolidations occurred in 2001 and the plan is expected to be fully
implemented by the end of 2002.
9
The Company recorded costs of $1.2 during the three months ended March 31, 2002
and $29.9 during the year ended December 31, 2001, for severance and
consolidation costs related to these actions as well as other non-recurring
expenses. The severance costs, totaling approximately $6, are for the
elimination of approximately 725 positions in connection with the aforementioned
plant consolidations and staff reductions. Other costs, totaling approximately
$25, including plant consolidation costs and related asset write-offs of which
approximately $21 represents non-cash charges. These costs were included in the
2001 consolidated statement of income. As of March 31, 2002, approximately $4
representing future cash costs have been accrued; cash payments are expected to
be completed by the end of 2002.
NOTE F -- INVENTORIES
Inventories consist of the following:
March 31, December 31,
2002 2001
--------------- --------------
Finished equipment.......................... $ 224.0 $ 236.4
Replacement parts........................... 219.9 195.0
Work-in-process............................. 104.2 90.5
Raw materials and supplies.................. 195.2 182.9
-------------- --------------
Inventories................................. $ 743.3 $ 704.8
============== ==============
NOTE G -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
March 31, December 31,
2002 2001
--------------- ---------------
Property.................................... $ 22.2 $ 20.9
Plant....................................... 100.9 108.9
Equipment................................... 130.7 126.9
-------------- ---------------
253.8 256.7
Less: Accumulated depreciation............. (86.2) (82.8)
-------------- ---------------
Net property, plant and equipment........... $ 167.6 $ 173.9
============== ===============
NOTE H -- EARNINGS PER SHARE
Three Months Ended March 31,
(in millions, except per share data)
-------------------------------------------------------------------------
2002 2001
------------------------------------ -------------------------------------
Per-Share Per-Share
Income Shares Amount Income Shares Amount
------------ ------------ ---------- ----------- ----------- -------------
Basic earnings per share
Income before extraordinary items.... $ 6.2 38.0 $ 0.16 $ 12.4 26.8 $ 0.46
Effect of dilutive securities
Warrants............................. --- --- --- ---
Stock Options........................ --- 0.6 --- 0.5
Equity Rights........................ --- 0.1 --- 0.1
------------ ------------ ---------- -----------
Income before extraordinary items
- diluted............................ $ 6.2 38.7 $ 0.16 $ 12.4 27.4 $ 0.45
============ ============ ========== =========== =========== =============
Options to purchase 693 thousand and 540 thousand shares of common stock were
outstanding during the three months ended March 31, 2002 and 2001, respectively,
but were not included in the computation of diluted earnings per share because
the exercise price of options was greater than the average market price of the
common stock and, therefore, the effect would be anti-dilutive.
10
NOTE I -- STOCKHOLDER'S EQUITY
Total non-shareowner changes in equity (comprehensive income) include all
changes in equity during a period except those resulting from investments by,
and distributions to, shareowners. The specific components include: net income,
deferred gains and losses resulting from foreign currency translation, deferred
gains and losses resulting from derivative hedging transactions and minimum
pension liability adjustments. For the three months ended March 31, 2002 and
2001, total non-shareowner changes in equity were as follows.
For the Three Months
Ended March 31,
--------------------------------
2002 2001
--------------- ----------------
Net income....................................$ 16.9 $ 10.1
Other comprehensive income:
Translation adjustment................... (5.9) (38.2)
Pension liability adjustment............. --- ---
Derivative hedging adjustment............ (0.1) (2.1)
--------------- ----------------
Comprehensive income..........................$ 10.9 $ (30.2)
=============== ================
NOTE J -- LITIGATION AND CONTINGENCIES
In the Company's lines of business numerous suits have been filed alleging
damages for accidents that have arisen in the normal course of operations
involving the Company's products. The Company is self-insured, up to certain
limits, for these product liability exposures, as well as for certain exposures
related to general, workers' compensation and automobile liability. Insurance
coverage is obtained for catastrophic losses as well as those risks required to
be insured by law or contract. The Company has recorded and maintains an
estimated liability in the amount of management's estimate of the Company's
aggregate exposure for such self-insured risks.
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.
The Company's outstanding letters of credit totaled $39.1 at March 31, 2002. The
letters of credit generally serve as collateral for certain liabilities included
in the Condensed Consolidated Balance Sheet. Certain of the letters of credit
serve as collateral guaranteeing the Company's performance under contracts.
The Company is party to an action commenced in the United States District Court
for the District of Delaware by the End of the Road Trust, a creditor
liquidating trust formed to liquidate the assets of Fruehauf Trailer Corporation
("Fruehauf"), a former subsidiary of the Company and currently a reorganized
debtor in bankruptcy, and Pension Transfer Corporation, as sponsor and
administrator for certain Fruehauf pension plans (collectively, the
"Plaintiffs") against the Company and certain former officers and directors of
Fruehauf and Terex (collectively, the "Defendants"). The Plaintiffs allege, in
essence, that the Defendants breached fiduciary duties owed to Fruehauf and made
certain misrepresentations in connection with certain accounting matters arising
from the Company's 1989 acquisition of Fruehauf and the 1991 initial public
offering of Fruehauf stock, and that the Defendants were unjustly enriched
thereby. Plaintiffs also allege that certain pension investments made on behalf
of the Fruehauf pension plans violated ERISA. The Company has reached an
agreement in principal to settle this matter in a manner which will not have a
material adverse effect on the Company's operations.
The Company has agreed to indemnify certain outside parties for losses related
to a former subsidiary's worker compensation obligations. Some of the claims for
which Terex is contingently obligated are also covered by bonds issued by an
insurance company and/or letters of credit. The Company recorded liabilities for
these contingent obligations representing management's estimate of the potential
losses which the Company might incur.
11
NOTE K -- BUSINESS SEGMENT INFORMATION
Terex is a diversified global manufacturer of a broad range of equipment for the
construction, infrastructure and mining industries. During 2001, the Company
began operating in three business segments: (i) Terex Americas; (ii) Terex
Europe; and (iii) Terex Mining. Previously, the Company had reported its
operations as Terex Earthmoving and Terex Lifting. All prior periods have been
restated to reflect results based on the three current business segments.
Terex Americas includes the results of all business units located in North and
South America, Australia and Asia, with the exception of those business units
included within Terex Mining. Terex Europe includes the results of all business
units located in Europe with the exception of those business units included
within Terex Mining. Terex Mining includes the results of the Terex Mining
operations in Tulsa, Oklahoma, the O&K Mining business located in Dortmund,
Germany and Terex Mining sales offices in Australia, South America and Africa.
Included in Eliminations/Corporate are the eliminations among the segments, as
well as general and corporate items for the three months ended March 31, 2002
and 2001. Industry segment information is presented below:
Three Months Ended
March 31,
------------------------------
2002 2001
-------------- ---------------
Sales
Terex Americas............................ $ 290.0 $ 238.3
Terex Europe.............................. 294.1 223.9
Terex Mining.............................. 65.3 61.1
Eliminations/Corporate.................... (67.4) (45.9)
-------------- ---------------
Total................................... $ 582.0 $ 477.4
============== ===============
Income (Loss) from Operations
Terex Americas............................ $ 13.9 $ 19.1
Terex Europe.............................. 18.2 16.0
Terex Mining.............................. 1.6 3.0
Eliminations/Corporate.................... (2.2) (0.1)
-------------- ---------------
Total................................... $ 31.5 $ 38.0
============== ===============
NOTE L -- CONSOLIDATING FINANCIAL STATEMENTS
On March 29, 2001, the Company sold and issued $300 aggregate principal amount
of 10-3/8% Senior Subordinated Notes due 2011 (the "10-3/8% Notes"). On December
17, 2001, the Company sold and issued $200 aggregate principal amount of 9-1/4%
Senior Subordinated Notes due 2011 (the "9-1/4% Notes"). On March 31, 1998 and
March 9, 1999, the Company issued and sold $150 and $100 aggregate principal
amount, respectively, of 8-7/8% Senior Subordinated Notes due 2008 (the "8-7/8%
Notes"). As of March 31, 2002, the 10-3/8% Notes, the 9-1/4% Notes and the
8-7/8% Notes were each jointly and severally guaranteed by the following
wholly-owned subsidiaries of the Company (the "Wholly-owned Guarantors"): Terex
Cranes, Inc., Koehring Cranes, Inc., Terex-Telelect, Inc., Terex-RO Corporation,
Payhauler Corp., O & K Orenstein & Koppel, Inc., The American Crane Corporation,
Amida Industries, Inc., Cedarapids, Inc., Standard Havens, Inc., Standard Havens
Products, Inc., BL-Pegson USA, Inc., Benford America, Inc., Coleman Engineering,
Inc., EarthKing, Inc., Finlay Hydrascreen USA, Inc., Powerscreen Holdings USA
Inc., Powerscreen International LLC, Powerscreen North America Inc., Powerscreen
USA, LLC, Royer Industries, Inc., Terex Bartell, Inc., Terex Mining Equipment,
Inc. and CMI Terex Corporation. At March 31, 2002, the 10-3/8% Notes and the
8-7/8% Notes are also jointly and severally guaranteed by PPM Cranes, Inc.,
which is 92.4% owned by Terex.
No subsidiaries of the Company except the Wholly-owned Guarantors and PPM
Cranes, Inc. have provided a guarantee of the 10-3/8% Notes and the 8-7/8%
Notes. No subsidiaries of the Company except the Wholly-owned Guarantors have
provided a guarantee of the 9-1/4% Notes.
The following summarized condensed consolidating financial information for the
Company segregates the financial information of Terex Corporation, the
Wholly-owned Guarantors, PPM Cranes, Inc. and the Non-guarantor Subsidiaries.
Terex Corporation consists of parent company operations. Subsidiaries of the
parent company are reported on the equity basis.
12
Wholly-owned Guarantors combine the operations of the Wholly-owned Guarantor
subsidiaries. Subsidiaries of Wholly-owned Guarantors that are not themselves
guarantors are reported on the equity basis.
PPM Cranes, Inc. consists of the operations of PPM Cranes, Inc. Its subsidiary
is reported on an equity basis.
Non-guarantor Subsidiaries combine the operations of subsidiaries which have not
provided a guarantee of the obligations of Terex Corporation under the 10-3/8%
Notes, the 9-1/4% Notes and the 8-7/8% Notes.
Debt and goodwill allocated to subsidiaries is presented on an accounting
"push-down" basis.
13
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2002
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ------------- -------------
Net sales............................... $ 69.9 $ 213.7 $ 5.9 $ 361.3 $ (68.8) $ 582.0
Cost of goods sold................... 68.6 183.7 5.5 302.5 (69.6) 490.7
------------- ------------- ------------- ------------- ------------- -------------
Gross profit............................ 1.3 30.0 0.4 58.8 0.8 91.3
Selling, general & administrative
expenses........................... 6.3 18.5 0.4 34.6 --- 59.8
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) from operations........... (5.0) 11.5 --- 24.2 0.8 31.5
Interest income....................... 0.4 (0.1) --- 0.5 --- 0.8
Interest expense...................... (10.5) (2.3) (0.7) (8.5) --- (22.0)
Income (loss) from equity investees... 33.3 --- --- --- (33.3) ---
Other income (expense) - net.......... (0.8) (0.1) --- (0.3) --- (1.2)
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) before income taxes and
extraordinary items................... 17.4 9.0 (0.7) 15.9 (32.5) 9.1
Provision for income taxes............ (0.5) --- --- (2.4) --- (2.9)
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) before extraordinary items 16.9 9.0 (0.7) 13.5 (32.5) 6.2
Extraordinary loss on retirement of debt --- --- --- --- --- ---
Cumulative effect of change in
accounting principle................. --- --- --- 10.7 --- 10.7
------------- ------------- ------------- ------------- ------------- -------------
Net income (loss)....................... $ 16.9 $ 9.0 $ (0.7) $ 24.2 $ (32.5) $ 16.9
============= ============= ============= ============= ============= =============
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ------------- -------------
Net sales............................... $ 48.2 $ 193.2 $ 12.3 $ 223.7 $ --- $ 477.4
Cost of goods sold................... 46.7 164.0 10.9 177.2 --- 398.8
------------- ------------- ------------- ------------- ------------- -------------
Gross profit............................ 1.5 29.2 1.4 46.5 --- 78.6
Selling, general & administrative
expenses........................... 5.2 10.7 2.2 22.5 --- 40.6
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) from operations........... (3.7) 18.5 (0.8) 24.0 --- 38.0
Interest income....................... 1.5 0.1 --- 0.4 --- 2.0
Interest expense...................... (4.2) (2.9) (1.6) (12.3) --- (21.0)
Gain on sale of businesses............ --- --- --- --- --- ---
Income (loss) from equity investees... 21.6 --- --- (0.1) (21.5) ---
Other income (expense) - net.......... 0.5 (0.2) --- (1.1) --- (0.8)
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) from continuing operations
before income taxes and extraordinary
items................................. 15.7 15.5 (2.4) 10.9 (21.5) 18.2
Provision for income taxes............ (4.6) --- --- (1.2) --- (5.8)
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) from continuing operations
before extraordinary items............ 11.1 15.5 (2.4) 9.7 (21.5) 12.4
Extraordinary loss on retirement of debt (1.0) (0.6) --- (0.7) --- (2.3)
Cumulative effect of change in
accounting principle................. --- --- --- --- --- ---
------------- ------------- ------------- ------------- ------------- -------------
Net income (loss)....................... $ 10.1 $ 14.9 $ (2.4) $ 9.0 $ (21.5) $ 10.1
============= ============= ============= ============= ============= =============
14
TEREX CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 2002
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
-------------- ------------- ------------- ------------- ------------- ---------------
Assets
Current assets
Cash and cash equivalents.......... $ 79.7 $ 1.8 $ 0.1 $ 77.2 $ --- $ 158.8
Trade receivables.................. 42.3 114.3 3.3 277.6 --- 437.5
Intercompany receivables........... 14.7 (2.7) 1.6 35.3 (48.9) ---
Inventories........................ 89.9 215.6 10.7 412.8 14.3 743.3
Current deferred tax assets........ 22.4 0.4 --- 2.1 --- 24.9
Other current assets............... 11.5 2.1 0.1 42.9 --- 56.6
------------- ------------- ------------- ------------- ------------- -------------
Total current assets............. 260.5 331.5 15.8 847.9 (34.6) 1,421.1
Long-term assets
Property, plant and equipment...... 8.3 65.9 0.3 93.1 --- 167.6
Investment in and advances to
(from) subsidiaries.............. 735.6 (224.7) (0.1) (363.0) (147.8) ---
Goodwill........................... 2.7 255.2 10.6 443.9 --- 712.4
Deferred taxes..................... 74.7 --- --- 6.5 --- 81.2
Other assets....................... 44.4 54.1 0.7 52.6 --- 151.8
------------- ------------- ------------- ------------- ------------- -------------
Total assets............................ $ 1,126.2 $ 482.0 $ 27.3 $ 1,081.0 $ (182.4) $ 2,534.1
============= ============= ============= ============= ============= =============
Liabilities and stockholders' equity
(deficit)
Current liabilities
Notes payable and current portion
of long-term debt................ $ 0.6 $ 3.0 $ 0.4 $ 46.3 $ --- $ 50.3
Trade accounts payable............. 32.3 69.0 2.9 242.4 --- 346.6
Intercompany payables.............. 27.4 14.1 1.8 5.6 (48.9) ---
Accruals and other current
liabilities...................... 79.2 49.7 5.9 168.9 --- 303.7
------------- ------------- ------------- ------------- ------------- -------------
Total current liabilities........ 139.5 135.8 11.0 463.2 (48.9) 700.6
Non-current liabilities
Long-term debt, less current portion 296.6 189.2 62.4 482.6 --- 1,030.8
Other.............................. 41.4 17.5 0.8 94.3 --- 154.0
Stockholders' equity (deficit)....... 648.7 139.5 (46.9) 40.9 (133.5) 648.7
------------- ------------- ------------- ------------- ------------- -------------
Total liabilities and stockholders'
equity (deficit)..................... $ 1,126.2 $ 482.0 $ 27.3 $ 1,081.0 $ (182.4) $ 2,534.1
============= ============= ============= ============= ============= =============
15
TEREX CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2001
(in millions)
Wholly- Non-
Terex Owned PPM Guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ------------- -------------
Assets
Current assets
Cash and cash equivalents.......... $ 144.2 $ 3.9 $ 0.1 $ 102.2 $ --- $ 250.4
Trade receivables.................. 23.1 94.6 3.9 229.5 --- 351.1
Intercompany receivables........... 14.2 18.7 --- 66.2 (99.1) ---
Net inventories.................... 76.1 254.2 14.5 361.8 (1.8) 704.8
Current deferred tax assets........ 22.5 0.4 --- 0.8 --- 23.7
Other current assets............... 13.2 2.7 0.1 37.0 --- 53.0
------------- ------------- ------------- ------------- ------------- -------------
Total current assets............. 293.3 374.5 18.6 797.5 (100.9) 1,383.0
Property, plant & equipment - net.... 8.4 66.2 0.2 99.1 --- 173.9
Investment in and advances to
(from) subsidiaries................ 647.2 (245.2) (0.2) (295.4) (106.4) ---
Goodwill............................. 2.7 252.1 10.6 354.7 --- 620.1
Deferred taxes....................... 74.7 --- --- 0.7 --- 75.4
Other assets......................... 33.4 44.6 0.7 55.9 --- 134.6
------------- ------------- ------------- ------------- ------------- -------------
Total assets............................ $ 1,059.7 $ 492.2 $ 29.9 $ 1,012.5 $ (207.3) $ 2,387.0
============= ============= ============= ============= ============= =============
Liabilities and stockholders' equity
(deficit)
Current liabilities
Notes payable and current portion
of long-term debt................ $ 0.4 $ 2.6 $ 0.4 $ 31.3 $ --- $ 34.7
Trade accounts payable............. 33.4 54.0 3.3 200.3 --- 291.0
Intercompany payables.............. 23.1 21.1 2.2 52.7 (99.1) ---
Accruals and other current
liabilities...................... 70.3 87.6 7.0 136.5 --- 301.4
------------- ------------- ------------- ------------- ------------- -------------
Total current liabilities........ 127.2 165.3 12.9 420.8 (99.1) 627.1
Non current liabilities
Long-term debt less current portion 298.6 185.8 62.4 473.9 --- 1,020.7
Other............................. 38.5 10.6 0.8 93.9 --- 143.8
Stockholders' equity (deficit)....... 595.4 130.5 (46.2) 23.9 (108.2) 595.4
------------- ------------- ------------- ------------- ------------- -------------
Total liabilities and stockholders'
equity (deficit)..................... $ 1,059.7 $ 492.2 $ 29.9 $ 1,012.5 $ (207.3) $ 2,387.0
============= ============= ============= ============= ============= =============
16
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2002
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ----------------------------
Net cash provided by (used in)
operating activities................. $ (57.2) $ (0.4) $ --- $ 43.1 $ --- $ (14.5)
------------- ------------- ------------- ------------- ------------- -------------
Investing activities
Acquisition of businesses, net of
cash acquired...................... (7.3) --- --- (65.2) --- (72.5)
Capital expenditures................. --- (1.9) --- (4.0) --- (5.9)
Proceeds from sale of assets......... --- 0.2 --- 0.2 --- 0.4
------------- ------------- ------------- ------------- ------------- -------------
Net cash provided by (used in)
investing activities........... (7.3) (1.7) --- (69.0) --- (78.0)
------------- ------------- ------------- ------------- ------------- -------------
Financing activities
Proceeds from issuance of long-term
debt, net of issuance costs....... --- --- --- --- --- ---
Principal borrowings (repayments) of
long-term debt.................... --- --- --- 0.7 --- 0.7
Net borrowings (repayments) under
revolving line of credit agreements --- --- --- 1.6 --- 1.6
Other................................ --- --- --- (0.3) --- (0.3)
------------- ------------- ------------- ------------- ------------- -------------
Net cash provided by (used in)
financing activities............ --- --- --- 2.0 --- 2.0
------------- ------------- ------------- ------------- ------------- -------------
Effect of exchange rates on cash and
cash equivalents..................... --- --- --- (1.1) --- (1.1)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents.......................... (64.5) (2.1) --- (25.0) --- (91.6)
Cash and cash equivalents, beginning of
period............................... 144.2 3.9 0.1 102.2 --- 250.4
------------- ------------- ------------- ------------- ------------- -------------
Cash and cash equivalents,
end of period........................ $ 79.7 $ 1.8 $ 0.1 $ 77.2 $ --- $ 158.8
============= ============= ============= ============= ============= =============
17
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2001
(in millions)
Wholly- Non-
Terex owned PPM guarantor Intercompany
Corporation Guarantors Cranes, Inc. Subsidiaries Eliminations Consolidated
------------- ------------- ------------- ------------- ------------- ---------------
Net cash provided by (used in)
operating activities................. $ (28.3) $ (20.1) $ 0.1 $ 22.7 $ --- $ (25.6)
------------- ------------- ------------- ------------- ------------- -------------
Cash flows from investing activities
Acquisition of businesses, net of
cash acquired...................... (2.6) --- --- (5.1) --- (7.7)
Capital expenditures................. (0.8) (1.2) --- (1.6) --- (3.6)
Proceeds from sale of excess assets.. --- --- --- 0.8 --- 0.8
------------- ------------- ------------- ------------- ------------- -------------
Net cash provided by (used in)
investing activities.............. (3.4) (1.2) --- (5.9) --- (10.5)
------------- ------------- ------------- ------------- ------------- -------------
Cash flows from financing activities
Proceeds from issuance of long-term
debt, net of issuance costs....... 123.8 74.9 --- 89.2 --- 287.9
Principal repayments of long-term debt (38.5) (53.4) --- (102.3) --- (194.2)
Net repayments under revolving line
of credit agreements............... --- --- --- (0.5) --- (0.5)
Other................................ (0.2) --- --- (0.4) --- (0.6)
------------- ------------- ------------- ------------- ------------- -------------
Net cash provided by (used in)
financing activities............. 85.1 21.5 --- (14.0) --- 92.6
------------- ------------- ------------- ------------- ------------- -------------
Effect of exchange rates on cash and
cash equivalents..................... --- --- --- (1.6) --- (1.6)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents.......................... 53.4 0.2 0.1 1.2 --- 54.9
Cash and cash equivalents, beginning of
period............................... 108.7 0.3 0.1 72.3 --- 181.4
------------- ------------- ------------- ------------- ------------- -------------
Cash and cash equivalents,
end of period........................ $ 162.1 $ 0.5 $ 0.2 $ 73.5 $ --- $ 236.3
============= ============= ============= ============= ============= =============
18
NOTE L - SUBSEQUENT EVENT
On April 23, 2002, the Company issued 5.3 million shares of its Common Stock in
a public offering with net proceeds to the Company of $113.3.
19
PPM CRANES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
(in millions)
For the Three Months Ended
March 31,
---------------------------
2002 2001
------------- -------------
Net sales............................................$ 5.9 $ 12.3
Cost of goods sold................................... 5.5 10.9
------------- -------------
Gross profit.................................... 0.4 1.4
Selling, general and administrative expenses......... 0.4 2.2
------------- -------------
Income (loss) from operations................... --- (0.8)
Other income (expense):
Interest expense................................ (0.7) (1.6)
Amortization of debt issuance costs............. --- ---
------------- -------------
Loss before income taxes............................. (0.7) (2.4)
Provision for income taxes........................... --- ---
------------- -------------
Net loss.............................................$ (0.7) $ (2.4)
============= =============
The accompanying notes are an integral part of these financial statements.
20
PPM CRANES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
(in millions, except share amounts)
March 31, December 31,
2002 2001
---------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents........................................... $ 0.1 $ 0.1
Trade accounts receivables (net of allowance of $0.6 at March 31,
2002 and $0.7 at December 31, 2001)............................... 3.3 3.9
Inventories......................................................... 10.7 14.5
Due from affiliates................................................. 1.6 0.7
Due from Terex Corporation.......................................... --- ---
Other current assets ............................................... 0.1 0.1
---------------- -----------------
Total current assets.............................................. 15.8 19.3
Long-term assets:
Property, plant and equipment....................................... 0.3 0.3
Goodwill............................................................ 10.6 10.6
Other assets........................................................ 0.7 0.7
---------------- -----------------
Total assets........................................................... $ 27.4 $ 30.9
================ =================
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Trade accounts payable.............................................. $ 2.9 $ 3.3
Accrued warranties and product liability............................ 4.1 4.8
Accrued expenses.................................................... 1.8 2.4
Due to affiliates................................................... 1.5 2.2
Due to Terex Corporation............................................ 0.4 0.9
Current portion of long-term debt................................... 0.4 0.4
---------------- -----------------
Total current liabilities......................................... 11.1 14.0
Non-current liabilities:
Long-term debt, less current portion................................ 62.4 62.4
Other............................................................... 0.8 0.7
Commitments and contingencies
Shareholders' deficit
Common stock, Class A, $.01 par value -
authorized 8,000 shares; issued and outstanding 5,000 shares...... --- ---
Common stock, Class B, $.01 par value -
authorized 2,000 shares; issued and outstanding 413 shares........ --- ---
Accumulated deficit................................................. (46.9) (46.2)
Accumulated other comprehensive income.............................. --- ---
---------------- -----------------
Total shareholders' deficit...................................... (46.9) (46.2)
---------------- -----------------
Total liabilities and shareholders' deficit............................ $ 27.4 $ 30.9
================ =================
The accompanying notes are an integral part of these financial statements.
21
PPM CRANES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
(in millions)
For the Three Months
Ended March 31,
--------------------------
2002 2001
------------- ------------
OPERATING ACTIVITIES
Net loss..................................................................... $ (0.7) $ (2.4)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization............................................ --- 0.4
Changes in operating assets and liabilities:
Trade accounts receivable.............................................. 0.6 1.4
Inventories............................................................ 3.8 (1.2)
Trade accounts payable................................................. (0.4) (0.4)
Net amounts due to affiliates.......................................... (2.0) 2.7
Other, net............................................................. (1.3) (0.4)
------------- ---------------
Net cash provided by operating activities............................ --- 0.1
INVESTING ACTIVITIES
Net cash used in investing activities...................................... --- ---
FINANCING ACTIVITIES
Net cash used in financing activities...................................... --- ---
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS.................................................... --- ---
------------- ---------------
NET CHANGE IN CASH AND CASH EQUIVALENTS......................................... --- 0.1
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD................................ 0.1 0.1
------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD...................................... $ 0.1 $ 0.2
============= ===============
The accompanying notes are an integral part of these financial statements.
22
PPM CRANES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(unaudited)
(dollar amounts in millions, unless otherwise noted)
NOTE 1 -- DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
PPM Cranes, Inc. (the "Company" or "PPM") is engaged in the design, manufacture,
marketing and worldwide distribution and support of construction equipment,
primarily hydraulic cranes and related spare parts.
On May 9, 1995, Terex Corporation, through its wholly-owned subsidiary Terex
Cranes, Inc., a Delaware corporation, completed the acquisition of all of the
capital stock of Legris Industries, Inc., a Delaware corporation, which then
owned 92.4% of the capital stock of PPM Cranes, Inc.
The condensed consolidated financial statements reflect Terex Corporation's
basis in the assets and liabilities of the Company which was accounted for as a
purchase transaction. As a result, the debt and goodwill associated with the
acquisition have been "pushed down" to the Company's financial statements.
In the opinion of management, all adjustments considered necessary for a fair
statement have been made. Such adjustments consist only of those of a normal
recurring nature. Operating results for the three months ended March 31, 2002
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2002. For further information, refer to the Company's
consolidated financial statements and footnotes thereto for the year ended
December 31, 2001.
The condensed consolidated financial statements include the accounts of the
Company and its wholly owned inactive subsidiary, PPM Far East Pte. Ltd. All
material intercompany transactions and profits have been eliminated.
NOTE 2 - ACCOUNTING CHANGE - BUSINESS COMBINATIONS AND GOODWILL
In July 2001, the Financial Accounting Standards Board issued SFAS No. 141
"Business Combinations" and SFAS No. 142 "Goodwill and Other Intangible Assets."
SFAS No. 141, effective July 1, 2001, addresses financial accounting and
reporting for business combinations and requires all business combinations to be
accounted for using the purchase method.
SFAS No. 142 addresses financial accounting for acquired goodwill and other
intangible assets and how such assets should be accounted for in financial
statements upon their acquisition and after they have been initially recognized
in the financial statements. In accordance with SFAS No. 142, effective January
1, 2002, goodwill is no longer being amortized. Under this standard, goodwill
and indefinite life intangible assets will be reviewed for impairment and
written down only in the period in which the recorded value of such assets
exceed their fair value. The Company's initial impairment test must be performed
by June 30, 2002. Under the transitional provisions of SFAS No. 142, the Company
is in the process of performing impairment tests on the net goodwill and other
intangible assets, using a valuation date of January 1, 2002. It is anticipated
that an impairment loss may be recorded during the second quarter of 2002;
however, the Company is unable at this time to estimate the effect of this
potential loss on earnings or financial position. Any required adjustment from
adoption will be recorded as a cumulative effect of change in accounting
principle adjustment as of January 1, 2002.
During the three months ended March 31, 2001, the Company recorded goodwill
amortization expense of $0.3. The Company's net loss for the three months ended
March 31, 2001 excluding amortization of goodwill was $2.1.
NOTE 3 - RESTRUCTURING AND OTHER CHARGES
During the third quarter of 2001, Terex Corporation announced that a number of
its production facilities would be consolidated, some facilities would be closed
(including PPM's Conway facility) and that other additional non-recurring
expenses would be incurred. These actions are designed to maximize factory
utilization by taking advantage of recently acquired factories and to leverage
common purchasing, engineering and marketing operations. The PPM facility closed
in the first quarter of 2002.
23
PPM recorded costs of $2.7 during 2001 for severance and closing costs related
to these actions as well as other non-recurring expenses. The severance costs,
totaling $0.5, were for the elimination of approximately 42 positions in
connection with the plant closure. Other costs, totaling $2.2, include asset
write-offs and plant closing costs of which approximately $1.4 represents
non-cash charges. As of March 31, 2002, all of these costs have been accrued;
cash payments took place primarily in the fourth quarter of 2001 and were
completed during the first quarter of 2002.
NOTE 4 -- INVENTORIES
Inventories consist of the following:
March 31, December 31,
2002 2001
----------------- ----------------
Finished equipment........................ $ 2.3 $ 4.5
Replacement parts......................... 5.5 5.9
Work in process........................... 0.6 1.2
Raw materials and supplies................ 2.3 2.9
----------------- -----------------
Inventories............................... $ 10.7 $ 14.5
================= =================
NOTE 5 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
March 31, December 31,
2002 2001
----------------- ----------------
Property, plant and equipment............. $ 0.8 $ 0.8
Less: Accumulated depreciation........... (0.5) (0.5)
----------------- ----------------
Net property, plant and equipment......... $ 0.3 $ 0.3
================= ================
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company is involved in product liability and other lawsuits incident to the
operation of its business. Insurance with third parties is maintained for
certain of these items. It is management's opinion that none of these lawsuits
will have a material adverse effect on the Company's financial position.
On March 29, 2001, Terex Corporation sold and issued $300 aggregate principal
amount of 10-3/8% Senior Subordinated Notes due 2011 (the "10-3/8% Notes"). On
March 31, 1998 and March 9, 1999, Terex Corporation issued and sold $150.0 and
$100.0 aggregate principal amount, respectively, of 8-7/8% Senior Subordinated
Notes due 2008 (the "8-7/8% Notes"). The 10-3/8% Notes and the 8-7/8% Notes are
each jointly and severally guaranteed by certain domestic subsidiaries of Terex
Corporation, including PPM.
NOTE 7 - RELATED PARTY TRANSACTIONS
During the three months ended March 31, 2002 and 2001, the Company had
transactions with various unconsolidated affiliates as follows:
Three Months Ended
March 31,
----------------------------------
2002 2001
--------------- -----------------
Product sales and service revenues $ --- $ ---
Management fee expense $ --- $ 0.3
Interest expense $ 0.8 $ 1.4
Included in management fee expenses are expenses paid by Terex Corporation on
behalf of the Company (e.g. legal, treasury and tax services expense).
24
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Terex is a diversified global manufacturer of a broad range of equipment for the
construction, infrastructure and mining industries. During 2001, the Company
began operating primarily in three business segments: (i) Terex Americas; (ii)
Terex Europe; and (iii) Terex Mining. Previously, the Company had reported its
operations as Terex Earthmoving and Terex Lifting. All prior periods have been
restated to reflect results based on the three current business segments.
Terex Americas includes the results of all business units located in North and
South America, Australia and Asia, with the exception of those business units
included within Terex Mining. The 2001 results for Terex Americas include the
operations of Jaques International and its affiliates (collectively the "Jaques
Group") since January 24, 2001, its date of acquisition. The 2001 results do not
include the operations of CMI Corporation (now CMI Terex Corporation) and its
affiliates ("CMI"), since they were acquired on October 1, 2001. The 2002
results for Terex Americas include the operations of Utility Equipment, Inc.,
which does business as Pacific Utility Equipment Co. ("Utility Equipment"),
since January 15, 2002, its date of acquisition. The 2002 results for Terex
Americas include the operations of the Schaeff Group of Companies ("Schaeff")
since January 14, 2002, its date of acquisition, with the exception of those
operations of Schaeff included in the results for Terex Europe.
Terex Europe includes the results of all business units located in Europe with
the exception of those business units included within Terex Mining. The 2002
results for Terex Europe include the operations of Terex Atlas GmbH ("Atlas")
since December 28, 2001, its date of acquisition. The 2002 results for Terex
Europe also include the operations of Schaeff since January 14, 2002, its date
of acquisition, with the exception of those operations of Schaeff included in
the results for Terex Americas.
Terex Mining includes the results of the Terex Mining operations in Tulsa,
Oklahoma, the O&K Mining business located in Germany and Terex Mining sales
offices in Australia, South America and Africa.
Included in Eliminations/Corporate are the eliminations among the segments, as
well as general and corporate items for the three months ended March 31, 2002
and 2001.
25
Three Months Ended March 31, 2002 Compared with the Three Months Ended
March 31, 2001
The table below is a comparison of net sales, gross profit, selling, general and
administrative expenses, and income from operations, by segment, for the three
months ended March 31, 2002 and 2001.
Three Months Ended
March 31,
--------------------------- Increase
2002 2001 (Decrease)
------------- ------------- --------------
NET SALES
Terex Americas....................................$ 290.0 $ 238.3 $ 51.7
Terex Europe...................................... 294.1 223.9 70.2
Terex Mining...................................... 65.3 61.1 4.2
Eliminations/Corporate............................ (67.4) (45.9) (21.5)
------------- ------------- --------------
Total...........................................$ 582.0 $ 477.4 $ 104.6
============= ============= ==============
GROSS PROFIT
Terex Americas....................................$ 39.6 $ 35.4 $ 4.2
Terex Europe...................................... 44.3 31.7 12.6
Terex Mining...................................... 8.1 11.7 (3.6)
Eliminations/Corporate............................ (0.7) (0.2) (0.5)
------------- ------------- --------------
Total...........................................$ 91.3 $ 78.6 $ 12.7
============= ============= ==============
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Terex Americas....................................$ 25.7 $ 16.3 $ 9.4
Terex Europe...................................... 26.1 15.7 10.4
Terex Mining...................................... 6.5 8.7 (2.2)
Eliminations/Corporate............................ 1.5 (0.1) 1.6
------------- ------------- --------------
Total...........................................$ 59.8 $ 40.6 $ 19.2
============= ============= ==============
INCOME FROM OPERATIONS
Terex Americas....................................$ 13.9 $ 19.1 $ (5.2)
Terex Europe...................................... 18.2 16.0 2.2
Terex Mining...................................... 1.6 3.0 (1.4)
Eliminations/Corporate............................ (2.2) (0.1) (2.1)
------------- ------------- --------------
Total...........................................$ 31.5 $ 38.0 $ (6.5)
============= ============= ==============
Net Sales
Sales increased $104.6 million, or approximately 22%, to $582.0 million for the
three months ended March 31, 2002 from $477.4 million for the comparable 2001
period. The primary reason for the increase in sales was the impact of
businesses acquired since the first quarter of 2001. Excluding the impact of the
acquisitions, net sales decreased approximately 4% during the three months ended
March 31, 2002 from the comparable 2001 period.
Terex Americas sales were $290.0 million for the three months ended March 31,
2002, an increase of $51.7 million or approximately 22% from $238.3 million for
the three months ended March 31, 2001. Excluding the impact of acquisitions,
sales decreased approximately $10 million, due primarily to the decline in the
mobile hydraulic crane and the Cedarapids businesses. Backlog was $115.1 million
at March 31, 2002 compared to $102.5 million at March 31, 2001. The increase in
backlog is primarily due to the impact of the businesses acquired since March
31, 2001, offset partially by the decline in the mobile hydraulic crane, the
Cedarapids and the light construction businesses. The sales mix was
approximately 16% parts for the three months ended March 31, 2002 and 2001.
Terex Europe's sales were $294.1 million for the three months ended March 31,
2002, an increase of $70.2 million or approximately 31% from $223.9 million for
the three months ended March 31, 2001. Excluding the impact of the companies
acquired since March 31, 2001, net sales in the first quarter of 2001 were up
approximately 4% from the first quarter of 2001, reflecting the strong
performance at the Benford and Powerscreen group businesses and improvements
26
within the lifting businesses. Terex Europe's backlog was $182.4 million at
March 31, 2002 and $89.9 million at March 31, 2001. The increase in backlog is
due primarily to the businesses acquired as well as the backlog at the
Powerscreen business, which at March 31, 2002 was more than double that of the
prior year. Backlog does not include any significant parts orders, which are
normally filled in the period ordered. The sales mix was approximately 12% parts
for the three months ended March 31, 2002 and 2001.
Terex Mining's sales were $65.3 million for the three months ended March 31,
2002, an increase of $4.2 million or approximately 7% from the same period in
the prior year. Both the surface mining truck and the hydraulic shovel
businesses increased in sales. Terex Mining's backlog was $43.5 million at March
31, 2002 and $19.2 million at March 31, 2001. The increase in backlog was due
primarily to an increase in orders for large hydraulic mining shovels. The sales
mix was approximately 44% parts for the three months ended March 31, 2002 as
compared to 40% for the comparable 2001 period.
Net sales for Eliminations/Corporate in the three months ended March 31, 2002
primarily consists of the elimination of sales among the three segments. The
primary reason for the increase in the first quarter of 2002 from the first
quarter of 2001 is the increase in sales of crushing and screening products and
loader backhoes from Terex Europe to Terex Americas.
Gross Profit
Gross profit for the three months ended March 31, 2002 increased approximately
16%, or $12.7 million, to $91.3 million from $78.6 million in the comparable
2001 period. The increase in gross profit is primarily due to the impact of
businesses acquired since the first quarter of 2001. Gross profit as a
percentage of sales decreased to 15.7% in the three months ended March 31, 2002
as compared to 16.5% in the prior year period.
Terex Americas' gross profit increased approximately 12%, or $4.2 million, to
$39.6 million for the three months ended March 31, 2002, compared to $35.4
million for the three months ended March 31, 2001. The increase in gross profit
is due primarily to the impact of businesses acquired, offset partially by a
decline in sales in the Cedarapids and the mobile hydraulic crane businesses.
The gross margin percentage decreased to 13.7% in the three months ended March
31, 2002 as compared to 14.9% in 2001. Excluding the impact of acquisitions,
gross margin percentage decreased to 12.0% in the three months ended March 31,
2002 from 14.9% for the comparable 2001 period. Impacting gross margins were the
$1.2 million in restructuring costs related to the consolidation of the
Company's hot mix asphalt plant businesses and double digit revenue declines in
the mobile hydraulic crane and Cedarapids businesses.
Terex Europe's gross profit increased $12.6 million, or approximately 40%, to
$44.3 million for the three months ended March 31, 2002, compared to $31.7
million for the three months ended March 31, 2001. The increase in gross profit
was a result primarily of the inclusion of businesses acquired. Gross profit as
a percentage of sales increased to 15.1% in 2002 from 14.2% in 2001. Excluding
the impact of acquisitions, gross profit increased to $32.7 million or 14.5% of
net sales in the three months ended March 31, 2002, reflecting improvements
within the lifting business.
Terex Mining's gross profit decreased $3.6 million, or approximately 31%, to
$8.1 million for the three months ended March 31, 2002, compared to $11.7
million for the three months ended March 31, 2001. The decrease in gross profit
was a result primarily of product mix within the hydraulic shovel business, as
well as the reclassification in 2002 of certain service expenses to cost of
sales from selling, general and administrative expenses. Gross profit as a
percentage of sales decreased to 12.4% from 19.1% in 2001.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to $59.8 million, or
10.3% of sales, for the three months ended March 31, 2002 from $40.6 million, or
8.5% of sales, for the three months ended March 31, 2001, principally due to the
impact of businesses acquired. Excluding the impact of the businesses acquired
since March 31, 2001, selling, general and administrative expenses in the three
months ended March 31, 2002 were 8.5% of sales, the same as in the comparable
2001 period, reflecting management's continued focus on cost control.
Terex Americas' selling, general and administrative expenses increased to $25.7
million, or 8.9% of sales, for the three months ended March 31, 2002, from $16.3
million, or 6.8% of sales, for the comparable period in 2001, principally due to
the impact of businesses acquired. Excluding the impact of the acquisitions,
selling, general and administrative expenses in the three months ended March 31,
2002 decreased to $15.5 million as compared to $16.3 million for the comparable
period in 2001, or 6.7% and 6.8% as a percentage of sales, respectively.
Terex Europe's selling, general and administrative expenses increased to $26.1
million, or 8.9% of sales, for the three months ended March 31, 2002 from $15.7
million, or 7.0% of sales, for the three months ended March 31, 2001. This
27
increase in selling, general and administrative expenses was principally due to
the impact of businesses acquired. Excluding the impact of the businesses
acquired, selling, general and administrative expenses in the three months ended
March 31, 2002 decreased to $15.0 million or 6.7% of sales.
Terex Mining's selling, general and administrative expenses decreased to $6.5
million for the three months ended March 31, 2002 as compared to $8.7 million
for the three months ended March 31, 2001. As a percentage of sales, selling,
general and administrative expenses decreased to 10.0% in the three months ended
March 31, 2002 as compared to 14.2% in the prior year's period. The primary
reason for the decline was the reclassification of certain service expenses to
cost of sales in 2002.
Income from Operations
On a consolidated basis, the Company had income from operations of $31.5
million, or 5.4% of sales, for the three months ended March 31, 2002, compared
to income from operations of $38.0 million, or 8.0% of sales, for the three
months ended March 31, 2001. The primary reason for the decline in income from
operations was the double digit revenue declines in the North American mobile
hydraulic crane and Cedarapids businesses, a shift in product mix and a
competitive pricing environment in some end markets.
Terex Americas' income from operations decreased by $5.2 million to $13.9
million, or 4.8% of sales, for the three months ended March 31, 2002 from $19.1
million, or 8.0% of sales, for the three months ended March 31, 2001. The
decrease in income from operations and operating margins is primarily due to the
decline in sales in the mobile hydraulic crane and Cedarapids businesses, as
well as a $1.2 million restructuring charge related to the consolidation of the
Company's hot mix asphalt plant businesses. Excluding the impact of the
businesses acquired in late 2001 and early 2002 and the restructuring charge,
operating margin was 6.8% for the three months ended March 31, 2002, as compared
to 8.0% in the prior year period.
Terex Europe's income from operations of $18.2 million for the three months
ended March 31, 2002 was an increase of $2.2 million from income of $16.0
million for the three months ended March 31, 2001. The increase was primarily
due to the impact of the businesses acquired since March 31 2001, as well as
improvements in the lifting business. Income from operations as a percentage of
sales decreased to 6.2% for the three months ended March 31, 2002 from 7.1% for
the comparable 2001 period. Excluding the impact of the business acquired since
March 31, 2001, operating margin was 7.8% for the three months ended March 31,
2002, as compared to 7.1% in the prior year period.
Terex Mining's income from operations decreased to $1.6 million for the three
months ended March 31, 2002, as compared to $3.0 million for the three months
ended March 31, 2001. As a percentage of sales, operating income was 2.5% in the
three months ended March 31, 2002 as compared to 4.9% in the comparable 2001
period. The primary reason for the decrease in income from operations and
operating margins was a result of product mix within the hydraulic shovel
business.
Net Interest Expense
During the three months ended March 31, 2002, the Company's net interest expense
increased $2.2 million to $21.2 million from $19.0 million for the comparable
2001 period. This increase was primarily due to higher average debt balances
that more than offset the effects of lower interest rates in the three months
ended March 31, 2002 versus the comparable period in 2001.
Extraordinary Item
During the three months ended March 31, 2001, the Company recorded a charge of
$2.3 million, net of income taxes, to recognize a loss on the write-off of
unamortized debt acquisition costs for the early extinguishment of debt in
connection with the prepayment of principal of certain term loans under the
Company's bank credit facilities.
Cumulative Effect of Change in Accounting Principal
In accordance with the requirements of Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations," the Company recorded a
cumulative effect of change in accounting principle of $10.7 million in the
three months ended March 31, 2002. This gain represents the write-off of
negative goodwill at January 1, 2002 from the acquisition of Fermec
Manufacturing Limited in December 2000.
28
LIQUIDITY AND CAPITAL RESOURCES
Net cash of $14.5 million was used in operating activities during the three
months ended March 31, 2002. Approximately $37 million was used for working
capital. Net cash used in investing activities was $78.0 million during the
three months ended March 31, 2002 and primarily represents the acquisitions of
Schaeff, Utility Equipment and EPAC Holdings, Inc. ("EPAC") and capital
expenditures. Net cash provided by financing activities was $2.0 million during
the three months ended March 31, 2002, which primarily represents net borrowings
under the Company's revolving line of credit. Cash and cash equivalents totaled
$158.8 million at March 31, 2002. In addition, the Company had approximately
$246 million available for borrowing under its revolving credit facilities at
March 31, 2002. Therefore, total liquidity available to the Company at March 31,
2002 was approximately $405 million.
Including the January 2002 acquisitions of Schaeff and Utility Equipment, the
March 2002 acquisition of EPAC and the 2001 acquisitions of the Jaques Group,
CMI and Atlas, since the beginning of 1995 Terex has invested approximately $1.4
billion to strengthen and expand its core businesses through more than 25
strategic acquisitions. Terex expects that acquisitions and new product
development will continue to be important components of its growth strategy and
is continually reviewing acquisition opportunities. The Company will continue to
pursue strategic acquisitions, some of which could individually or in the
aggregate be material, which complement the Company's core operations and offer
cost reduction opportunities, distribution and purchasing synergies and product
diversification.
Debt reduction and an improved capital structure are major focal points for the
Company. The Company regularly reviews its alternatives to improve its capital
structure and to reduce debt service through debt refinancings, issuance of
equity, asset sales, including strategic dispositions of business units, or any
combination thereof. On April 23, 2002, the Company issued approximately 5.3
million shares of its common stock in a public offering with net proceeds to the
Company of $113.3 million. During 2001, the Company successfully executed three
capital market transactions raising $500 million in senior subordinated notes,
expanding its revolving credit facilities to $300 million and raising $96
million from the issuance of common stock. Additionally, in October 2001,
January 2002 and March 2002, the Company issued approximately 3.6 million
shares, 0.5 million shares and 0.3 million shares of its common stock in
connection with the acquisition of CMI, Utility Equipment and EPAC,
respectively, as a means of acquiring businesses. The Company also sold
approximately 1.3 million shares of its common stock to certain former
shareholders of Schaeff in January 2002.
The Company's businesses are working capital intensive and require funding for
purchases of production and replacement parts inventories, capital expenditures
for repair, replacement and upgrading of existing facilities, as well as
financing of receivables from customers and dealers. The Company has significant
debt service requirements, including semi-annual interest payments on its senior
subordinated notes and monthly interest payments on its bank credit facilities.
No principal payments are required under the Company's bank facility or
subordinated notes until March 2003. Other than default under the terms of the
Company's debt instruments, there are no other events that would accelerate the
repayment of the Company's debt.
Management believes that cash generated from operations, together with the
Company's bank credit facilities and cash on hand, provides the Company with
adequate liquidity to meet the Company's operating and debt service
requirements.
The Company's main sources of funding are cash generated from operations and
access to the Company's bank credit facilities, as well as the Company's ability
to access the capital markets. Additionally, the Company sells insured customer
accounts receivable to third party institutions to accelerate the collection of
cash.
Cash generated from operations is directly tied to the Company's sales. A
decrease in sales will have a negative impact on the Company's ability to derive
liquidity from its operations. Sales are subject to decline for a number of
reasons, including economic conditions, weather, competition and foreign
currency fluctuations. A significant portion of sales are financed by third
party finance companies in reliance on the credit worthiness of the Company's
customers and the estimated residual value of its equipment. Deterioration in
the credit quality of the Company's customers or the estimated residual value of
its equipment could negatively impact the ability of such customers to obtain
the resources needed to make purchases from the Company and could have a
material adverse impact on results of operations or financial condition of the
Company.
The Company's ability to borrow under its existing bank credit facilities is
subject to the Company's ability to comply with a number of covenants. The
Company's bank credit facilities include covenants regarding interest coverage,
fixed charge coverage and leverage, among others. These covenants require
quarterly compliance and become more restrictive annually. Maintaining
compliance with these ratios depends on the future performance of the Company
and the achievement of cost savings and earning levels anticipated in
acquisitions.
The Company's ability to access the capital markets to raise funds, through the
sale of equity or debt securities, is subject to various factors, some specific
to the Company and some impacted by general economic and/or financial market
conditions. These include results of operations, projected operating results for
future periods and debt to equity leverage.
29
CONTINGENCIES AND UNCERTAINTIES
Euro
In 1999, 12 of the 15 member countries of the European Union established fixed
conversion rates between their existing currencies ("legacy currencies") and one
common currency, the Euro. Since 1999 the Euro has traded on currency exchanges
and could be used in business transactions. Beginning in January 2002, new
Euro-denominated bills and coins were issued, and legacy currencies began to be
withdrawn from circulation. The Company's operating subsidiaries affected by the
Euro conversion previously assessed the systems and business issues raised by
the Euro currency conversion. These issues included, among others, (1) the need
to adapt computer and other business systems and equipment to accommodate
Euro-denominated transactions and (2) the competitive impact of cross-border
price transparency, which may make it more difficult for businesses to charge
different prices for the same products on a country-by-country basis, since the
Euro currency was issued in 2002. To date, the Euro conversion has not had a
material adverse impact on the Company's financial condition or results of
operations.
Foreign Currencies and Interest Rate Risk
The Company's products are sold in over 100 countries around the world and,
accordingly, revenues of the Company are generated in foreign currencies, while
the costs associated with those revenues are only partly incurred in the same
currencies. The major foreign currencies, among others, in which the Company
does business are the Euro, the British Pound and the Australian Dollar. The
Company may, from time to time, hedge specifically identified committed cash
flows in foreign currencies using forward currency sale or purchase contracts.
Such foreign currency contracts have not historically been material in amount.
The Company manages exposure to fluctuating interest rates with interest
protection arrangements. Certain of the Company's obligations, including
indebtedness under the Company's bank credit facility, bear interest at floating
rates, and as a result an increase in interest rates could adversely affect,
among other things, the results of operations of the Company. The Company has
entered into interest protection arrangements with respect to approximately $65
million of the principal amount of its indebtedness under its bank credit
facility, fixing interest at various rates between 9.23% and 9.32%.
Certain of the Company's obligations, including its senior subordinated notes,
bear interest at fixed interest rates from 8-7/8% to 10-3/8%. The Company has
entered into interest rate agreements to convert these fixed rates to floating
rates with respect to approximately $350 million of the principal amount of its
indebtedness under its 8-7/8% Senior Subordinated Notes and its 10-3/8% Senior
Subordinated Notes. The floating rates are based on a spread of 2.91% to 4.94%
over LIBOR. At March 31, 2002, the floating rates ranged between 4.98% and
7.28%.
Other
The Company is subject to a number of contingencies and uncertainties including,
without limitation, product liability claims, self-insurance obligations, tax
examinations and guarantees. Many of the exposures are unasserted or proceedings
are at a preliminary stage, and it is not presently possible to estimate the
amount or timing of any cost to the Company. However, the Company does not
believe that these contingencies and uncertainties will, in the aggregate, have
a material adverse effect on the Company. When it is probable that a loss has
been incurred and possible to make reasonable estimates of the Company's
liability with respect to such matters, a provision is recorded for the amount
of such estimate or for the minimum amount of a range of estimates when it is
not possible to estimate the amount within the range that is most likely to
occur.
The Company generates hazardous and nonhazardous wastes in the normal course of
its manufacturing operations. As a result, Terex is subject to a wide range of
federal, state, local and foreign environmental laws and regulations. These laws
and regulations govern actions that may have adverse environmental effects and
also require compliance with certain practices when handling and disposing of
hazardous and nonhazardous wastes. These laws and regulations also impose
liability for the costs of, and damages resulting from, cleaning up sites, past
spills, disposals and other releases of hazardous substances. Compliance with
these laws and regulations has, and will continue to require, the Company to
make expenditures. The Company does not expect that these expenditures will have
a material adverse effect on its business or profitability.
The Company is party to an action commenced in the United States District Court
for the District of Delaware by End of Road Trust, a creditor liquidating trust
30
formed to liquidate the assets of Fruehauf Trailer Corporation ("Fruehauf"), a
former subsidiary of the Company and currently a reorganized debtor in
bankruptcy, and Pension Transfer Corporation, as sponsor and administrator for
certain Fruehauf pension plans (collectively, the "Plaintiffs") against the
Company and certain former officers and directors of Fruehauf and Terex
(collectively, the "Defendants"). The Plaintiffs allege, in essence, that the
Defendants breached fiduciary duties owed to Fruehauf and made certain
misrepresentations in connection with certain accounting matters arising from
the Company's 1989 acquisition of Fruehauf and the 1991 initial public offering
of Fruehauf stock, and that the Defendants were unjustly enriched thereby.
Plaintiffs also allege that certain pension investments made on behalf of the
Fruehauf pension plans violated ERISA. The Company has reached an agreement in
principal to settle this matter in a manner which will not have a material
adverse effect on the Company's operations.
RECENT ACCOUNTING PRONOUNCEMENTS
SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections as of April 2002," was issued in May
2002. SFAS No. 145 becomes effective for certain leasing transactions occurring
after May 15, 2002 and shall be applied by the Company from January 1, 2003 with
respect to reporting gains and losses from extinguishments of debt. The Company
is currently evaluating the provisions of SFAS No. 145 to determine the impact
on its financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to certain market risks which exist as part of its
ongoing business operations and the Company uses derivative financial
instruments, where appropriate, to manage these risks. The Company, as a matter
of policy, does not engage in trading or speculative transactions. For further
information on accounting policies related to derivative financial instruments,
refer to the Company's Annual Report on Form 10-K for the year ended December
31, 2001.
Foreign Exchange Risk
The Company is exposed to fluctuations in foreign currency cash flows related to
third party purchases and sales, intercompany product shipments and intercompany
loans. The Company is also exposed to fluctuations in the value of foreign
currency investments in subsidiaries and cash flows related to repatriation of
these investments. Additionally, the Company is exposed to volatility in the
translation of foreign currency earnings to U.S. Dollars. Primary exposures
include the U.S. Dollars versus functional currencies of the Company's major
markets which include the Euro, the British Pound and the Australian Dollar. The
Company assesses foreign currency risk based on transactional cash flows and
identifies naturally offsetting positions and purchases hedging instruments to
protect anticipated exposures. At March 31, 2002, the Company had foreign
currency contracts with a notional value of $88.9 million. The fair market value
of these arrangements, which represents the cost to settle these contracts, was
an asset of approximately $0.2 million at March 31, 2002.
Interest Rate Risk
The Company is exposed to interest rate volatility with regard to future
issuances of fixed rate debt and existing issuances of variable rate debt.
Primary exposure includes movements in the U.S. prime rate and London Interbank
Offer Rate ("LIBOR"). The Company uses interest rate swaps to reduce interest
rate volatility. At March 31, 2002, the Company had approximately $65 million of
interest rate swaps fixing interest rates between 9.23% and 9.32%. The fair
market value of these arrangements, which represents the cost to settle these
contracts, was a liability of approximately $1.3 million at March 31, 2002.
At March 31, 2002, the Company had approximately $429 million of interest rate
swaps that converted fixed rates to floating rates. The floating rates ranged
between 4.98% and 7.28% at March 31, 2002. The fair market value of these
arrangements, which represent the cost to settle these contracts, was a
liability of approximately $12 million.
At March 31, 2002, the Company performed a sensitivity analysis for the
Company's derivatives and other financial instruments that have interest rate
risk. The Company calculated the pretax earnings effect on its interest
sensitive instruments. Based on this sensitivity analysis, the Company has
determined that an increase of 10% in the Company's weighted average interest
rates at March 31, 2002 would have increased interest expense by approximately
$1 million in the three months ended March 31, 2002.
31
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in certain claims and litigation arising in the ordinary
course of business, which are not considered material to the financial
operations or cash flow of the Company. For information concerning litigation
and other contingencies see "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Contingencies and Uncertainties."
Item 2. Changes in Securities and Use of Proceeds
On January 15, 2002, the Company issued 455,166 shares of its common stock that
were not registered under the Securities Act of 1933, as amended (the
"Securities Act"). These shares were issued to the sole stockholder of Utility
Equipment in connection with the acquisition of all of the outstanding capital
stock of such company by a subsidiary of the Company.
On March 26, 2002, the Company issued 292,374 shares of its common stock that
were not registered under the Securities Act. These shares were issued to the
two stockholders of EPAC in connection with the merger of such company into a
subsidiary of the Company.
Each of these issuances was made pursuant to an exemption from registration
provided by Section 4(2) of the Securities Act, as neither such issuance
involved a "public offering" pursuant to the Securities Act, given the limited
number and scope of persons to whom the securities were issued.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
On April 23, 2002, the Company issued 5.3 million shares of its common stock in
a public offering with net proceeds to the Company of $113.3 million.
Forward Looking Information
Certain information in this Quarterly Report includes forward-looking statements
regarding future events or the future financial performance of the Company that
involve certain contingencies and uncertainties, including those discussed above
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," "intends," "anticipates,"
"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. The Company has 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 the Company's control, include,
among others: the Company's business is highly cyclical and weak general
economic conditions may affect the sales of its products and its financial
results; the sensitivity of construction and mining activity to interest rates,
government spending and general economic conditions; the ability to successfully
integrate acquired businesses; the retention of key management personnel;
foreign currency fluctuations; the Company's businesses are very competitive and
may be affected by pricing, product initiatives and other actions taken by
competitors; the effects of changes in laws and regulations; the Company's
business is international in nature and is subject to changes in exchange rates
between currencies, as well as international politics; the ability of suppliers
to timely supply the Company parts and components at competitive prices; the
financial condition of suppliers and customers, and their continued access to
capital; the Company's ability to timely manufacture and deliver products to
customers; the Company's substantial amount of debt and its need to comply with
restrictive covenants contained in the Company's debt agreements; compliance
with applicable environmental laws and regulations; and other factors. Actual
32
events or the actual future results of the Company 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. The Company expressly disclaims 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 the Company's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits set forth on the accompanying Exhibit Index have
been filed as part of this Form 10-Q.
(b) Reports on Form 8-K.
- During the quarter ended March 31, 2002, the Company
filed the following Current Report on Form 8-K:
- A report on Form 8-K dated December 28, 2001 was filed
on January 15, 2002 announcing the completion of the
Company's acquisition of Atlas Weyhausen GmbH and The
Schaeff Group of Companies and the sale of 1,346,582
shares of the Company's common stock to the former
owners of The Schaeff Group of Companies.
33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TEREX CORPORATION
-----------------
(Registrant)
Date: May 14, 2002 /s/ Joseph F. Apuzzo
Joseph F. Apuzzo
Chief Financial Officer
(Principal Financial Officer)
Date: May 14, 2002 /s/ Mark T. Cohen
Mark T. Cohen
Controller
(Principal Accounting Officer)
34
EXHIBIT INDEX
3.1 Restated Certificate of Incorporation of Terex Corporation
(incorporated by reference to Exhibit 3.1 to the Form S-1 Registration
Statement of Terex Corporation, Registration No. 33-52297).
3.2 Certificate of Elimination with respect to the Series B Preferred Stock
(incorporated by reference to Exhibit 4.3 to the Form 10-K for the year
ended December 31, 1998 of Terex Corporation, Commission File No.
1-10702).
3.3 Certificate of Amendment to Certificate of Incorporation of Terex
Corporation dated September 5, 1998 (incorporated by reference to
Exhibit 3.3 to the Form 10-K for the year ended December 31, 1998 of
Terex Corporation, Commission File No. 1-10702).
3.4 Amended and Restated Bylaws of Terex Corporation (incorporated by
reference to Exhibit 3.2 to the Form 10-K for the year ended December
31, 1998 of Terex Corporation, Commission File No. 1-10702).
4.1 Indenture dated as of September 30, 1998 among Terex Corporation, the
Guarantors named therein and United States Trust Company of New York,
as Trustee (incorporated by reference to Exhibit 4.6 of Amendment No. 1
to the Form S-4 Registration Statement of Terex Corporation,
Registration No. 333-53561).
4.2 First Supplemental Indenture, dated as of September 23, 1998, between
Terex Corporation and United States Trust Company of New York, as
Trustee (to Indenture dated as of September 30, 1998) (incorporated by
reference to Exhibit 4.4 to the Form 10-Q for the quarter ended
September 30, 1999 of Terex Corporation, Commission File No. 1-10702).
4.3 Second Supplemental Indenture, dated as of April 1, 1999, between Terex
Corporation and United States Trust Company of New York, as Trustee (to
Indenture dated as of September 30, 1998) (incorporated by reference to
Exhibit 4.5 to the Form 10-Q for the quarter ended September 30, 1999
of Terex Corporation, Commission File No. 1-10702).
4.4 Third Supplemental Indenture, dated as of July 29, 1999, between Terex
Corporation and United States Trust Company of New York, as Trustee (to
Indenture dated as of September 30, 1998) (incorporated by reference to
Exhibit 4.6 to the Form 10-Q for the quarter ended September 30, 1999
of Terex Corporation, Commission File No. 1-10702).
4.5 Fourth Supplemental Indenture, dated as of August 26, 1999, between
Terex Corporation and United States Trust Company of New York, as
Trustee (to Indenture dated as of September 30, 1998) (incorporated by
reference to Exhibit 4.7 to the Form 10-Q for the quarter ended
September 30, 1999 of Terex Corporation, Commission File No. 1-10702).
4.6 Fifth Supplemental Indenture, dated as of March 29, 2001, between Terex
Corporation and United States Trust Company of New York, as Trustee (to
Indenture dated as of September 30, 1998) (incorporated by reference to
Exhibit 4.6 to the Form 10-Q for the quarter ended March 31, 2001 of
Terex Corporation, Commission File No. 1-10702).
4.7 Sixth Supplemental Indenture, dated as of October 1, 2001, between
Terex Corporation and United States Trust Company of New York, as
Trustee (to Indenture dated as of September 30, 1998) (incorporated by
reference to Exhibit 4.7 to the Form 10-Q for the quarter ended October
31, 2001 of Terex Corporation, Commission File No. 1-10702).
4.8 Indenture dated as of March 9, 1999 among Terex Corporation, the
Guarantors named therein and United States Trust Company of New York,
as Trustee (incorporated by reference to Exhibit 4.4 to the Form 10-K
for the year ended December 31, 1998 of Terex Corporation, Commission
File No. 1-10702).
4.9 First Supplemental Indenture, dated as of April 1, 1999, between Terex
Corporation and United States Trust Company of New York, as Trustee (to
Indenture dated as of March 9, 1999) (incorporated by reference to
Exhibit 4.8 to the Form 10-Q for the quarter ended September 30, 1999
of Terex Corporation, Commission File No. 1-10702).
4.10 Second Supplemental Indenture, dated as of July 30, 1999, between Terex
Corporation and United States Trust Company of New York, as Trustee (to
Indenture dated as of March 9, 1999) (incorporated by reference to
Exhibit 4.9 to the Form 10-Q for the quarter ended September 30, 1999
of Terex Corporation, Commission File No. 1-10702).
35
4.11 Third Supplemental Indenture, dated as of August 26, 1999, between
Terex Corporation and United States Trust Company of New York, as
Trustee (to Indenture dated as of March 9, 1999) (incorporated by
reference to Exhibit 4.11 to the Form 10-Q for the quarter ended
September 30, 1999 of Terex Corporation, Commission File No. 1-10702).
4.12 Fourth Supplemental Indenture, dated as of March 29, 2001, between
Terex Corporation and United States Trust Company of New York, as
Trustee (to Indenture dated as of March 9, 1999) (incorporated by
reference to Exhibit 4.11 to the Form 10-Q for the quarter ended March
31, 2001 of Terex Corporation, Commission File No. 1-10702).
4.13 Fifth Supplemental Indenture, dated as of October 1, 2001, between
Terex Corporation and United States Trust Company of New York, as
Trustee (to Indenture dated as of March 9, 1999) (incorporated by
reference to Exhibit 4.13 to the Form 10-Q for the quarter ended
October 31, 2001 of Terex Corporation, Commission File No. 1-10702).
4.14 Indenture, dated as of March 29, 2001, between Terex Corporation and
United States Trust Company of New York, as Trustee (incorporated by
reference to Exhibit 4.12 to the Form 10-Q for the quarter ended March
31, 2001 of Terex Corporation, Commission File No. 1-10702).
4.15 First Supplemental Indenture, dated as of October 1, 2001, between
Terex Corporation and United States Trust Company of New York, as
Trustee (to Indenture dated as of March 29, 2001) (incorporated by
reference to Exhibit 4.15 to the Form 10-Q for the quarter ended
October 31, 2001 of Terex Corporation, Commission File No. 1-10702).
4.16 Indenture, dated as of December 17, 2001, between Terex Corporation,
the Guarantors named therein and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 4.16 to Form S-4 Registration
Statement of Terex Corporation, Registration No. 333-75700).
10.1 Terex Corporation Incentive Stock Option Plan, as amended (incorporated
by reference to Exhibit 4.1 to the Form S-8 Registration Statement of
Terex Corporation, Registration No. 33-21483).
10.2 1994 Terex Corporation Long Term Incentive Plan (incorporated by
reference to Exhibit 10.2 to the Form 10-K for the year ended December
31, 1994 of Terex Corporation, Commission File No. 1-10702).
10.3 Terex Corporation Employee Stock Purchase Plan (incorporated by
reference to Exhibit 10.3 to the Form 10-K for the year ended December
31, 1994 of Terex Corporation, Commission File No. 1-10702).
10.4 1996 Terex Corporation Long Term Incentive Plan (incorporated by
reference to Exhibit 10.1 to Form S-8 Registration Statement of Terex
Corporation, Registration No. 333-03983).
10.5 Amendment No. 1 to 1996 Terex Corporation Long Term Incentive Plan
(incorporated by reference to Exhibit 10.5 to the Form 10-K for the
year ended December 31, 1999 of Terex Corporation, Commission File No.
1-10702).
10.6 Amendment No. 2 to 1996 Terex Corporation Long Term Incentive Plan
(incorporated by reference to Exhibit 10.6 to the Form 10-K for the
year ended December 31, 1999 of Terex Corporation, Commission File No.
1-10702).
10.7 Terex Corporation 1999 Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.7 to the Form 10-Q for the quarter ended
September 30, 2000 of Terex Corporation, Commission File No. 1-10702).
10.8 Terex Corporation 2000 Incentive Plan (incorporated by reference to
Exhibit 10.8 to the Form 10-Q for the quarter ended September 30, 2000
of Terex Corporation, Commission File No. 1-10702).
10.9 Common Stock Appreciation Rights Agreement dated as of May 9, 1995
between the Company and United States Trust Company of New York, as
Rights Agents (incorporated by reference to Exhibit 10.29 of the
Amendment No. 1 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52711).
10.10 SAR Registration Rights Agreement dated as of May 9, 1995 among the
Company and the Purchasers, as defined therein (incorporated by
reference to Exhibit 10.31 of the Amendment No. 1 to the Form S-1
Registration Statement of Terex Corporation, Registration No.
33-52711).
10.11 Amended and Restated Credit Agreement, dated as of March 29, 2001,
among Terex Corporation, certain of its Subsidiaries, the Lenders named
therein, and Credit Suisse First Boston, as Administrative Agent
(incorporated by reference to Exhibit 10.11 to the Form 10-Q for the
quarter ended March 31, 2001 of Terex Corporation, Commission File No.
1-10702).
10.12 Amendment No. 1 to the Amended and Restated Credit Agreement, dated as
of December 13, 2001, among Terex Corporation, certain of its
Subsidiaries, the Lenders named therein and Credit Suisse First Boston,
as Administrative Agent (incorporated by reference to Exhibit 10.12 to
Form S-4 Registration Statement of Terex Corporation, Registration No.
333-75700).
36
10.13 Amended and Restated Tranche C Credit Agreement, dated as of March 29,
2001, among Terex Corporation, the Lenders named therein, and Credit
Suisse First Boston, as Administrative Agent and Collateral Agent
(incorporated by reference to Exhibit 10.12 to the Form 10-Q for the
quarter ended March 31, 2001 of Terex Corporation, Commission File No.
1-10702).
10.14 Amendment No. 1 to the Amended and Restated Tranche C Credit Agreement,
dated as of December 13, 2001, among Terex Corporation, the Lenders
named therein and Credit Suisse First Boston, as Administrative Agent
and Collateral Agent (incorporated by reference to Exhibit 10.14 to
Form S-4 Registration Statement of Terex Corporation, Registration No.
333-75700).
10.15 Guarantee Agreement dated as of March 6, 1998 of Terex Corporation and
Credit Suisse First Boston, as Collateral Agent (incorporated by
reference to Exhibit 10.14 to the Form 10-K for the year ended December
31, 1998 of Terex Corporation, Commission File No. 1-10702).
10.16 Guarantee Agreement dated as of March 6, 1998 of Terex Corporation,
each of the subsidiaries of Terex Corporation listed therein and Credit
Suisse First Boston, as Collateral Agent (incorporated by reference to
Exhibit 10.15 to the Form 10-K for the year ended December 31, 1998 of
Terex Corporation, Commission File No. 1-10702).
10.17 Security Agreement dated as of March 6, 1998 of Terex Corporation, each
of the subsidiaries of Terex Corporation listed therein and Credit
Suisse First Boston, as Collateral Agent (incorporated by reference to
Exhibit 10.16 to the Form 10-K for the year ended December 31, 1998 of
Terex Corporation, Commission File No. 1-10702).
10.18 Pledge Agreement dated as of March 6, 1998 of Terex Corporation, each
of the subsidiaries of Terex Corporation listed therein and Credit
Suisse First Boston, as Collateral Agent (incorporated by reference to
Exhibit 10.17 to the Form 10-K for the year ended December 31, 1998 of
Terex Corporation, Commission File No. 1-10702).
10.19 Form Mortgage, Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Financing entered into by Terex Corporation and
certain of the subsidiaries of Terex Corporation, as Mortgagor, and
Credit Suisse First Boston, as Mortgagee (incorporated by reference to
Exhibit 10.18 to the Form 10-K for the year ended December 31, 1998 of
Terex Corporation, Commission File No. 1-10702).
10.20 Asset Purchase and Sale Agreement between Terex Corporation and Partek
Acquisition Company, Inc., dated as of July 20, 2000 (incorporated by
reference to Exhibit 1 of the Form 8-K Current Report, Commission File
No. 1-10702, dated September 30, 2000 and filed with the Commission on
October 5, 2000).
10.21 Share Purchase and Sale Agreement among Powerscreen International plc,
Partek Cargotec Holding Ltd and, for purposes of Article 9 only,
Moffett Engineering Limited, dated as of July 20, 2000 (incorporated by
reference to Exhibit 2 of the Form 8-K Current Report, Commission File
No. 1-10702, dated September 30, 2000 and filed with the Commission on
October 5, 2000).
10.22 Share Purchase and Sale Agreement among Holland Lift International
B.V., Partek Cargotec Holding Netherlands B.V. and, for purposes of
Article 9 only, Kooi B.V., dated as of July 20, 2000 (incorporated by
reference to Exhibit 3 of the Form 8-K Current Report, Commission File
No. 1-10702, dated September 30, 2000 and filed with the Commission on
October 5, 2000).
10.23 Asset Purchase and Sale Agreement among PPM Deutschland GmbH Terex
Cranes, Hiab GmbH and, for purposes of Section 2.3 only, Holland Lift
International B.V., Partek Cargotec Holding Netherlands B.V. and Kooi
B.V., dated as of September 29, 2000 (incorporated by reference to
Exhibit 4 of the Form 8-K Current Report, Commission File No. 1-10702,
dated September 30, 2000 and filed with the Commission on October 5,
2000).
10.24 Purchase Agreement dated as of March 22, 2001 among the Company and the
Purchasers, as defined therein (incorporated by reference to Exhibit
10.27 to the Form 10-Q for the quarter ended March 31, 2001 of Terex
Corporation, Commission File No. 1-10702).
10.25 Registration Rights Agreement dated as of March 29, 2001 among the
Company and the Initial Purchasers, as defined therein (incorporated by
reference to Exhibit 10.28 to the Form 10-Q for the quarter ended March
31, 2001 of Terex Corporation, Commission File No. 1-10702).
10.26 Agreement and Plan of Merger, dated as of June 27, 2001, by and among
CMI Corporation, Terex Corporation and Claudius Acquisition Corp.
(incorporated by reference to Exhibit 2.1 of the Form 8-K Current
Report, Commission File No. 1-10702, dated June 27, 2001 and filed with
the Commission on June 28, 2001).
37
10.27 Underwriting Agreement, dated as of December 5, 2001, between Terex
Corporation and Salomon Smith Barney Inc. (incorporated by reference to
Exhibit 1 of the Form 8-K Current Report, Commission File No. 1-10702,
dated December 5, 2001 and filed with the Commission on December 6,
2001).
10.28 Purchase Agreement, dated as of December 10, 2001, among Terex
Corporation and the Purchasers, as defined therein (incorporated by
reference to Exhibit 10.32 to Form S-4 Registration Statement of Terex
Corporation, Registration No. 333-75700).
10.29 Registration Rights Agreement, dated as of December 17, 2001, among
Terex Corporation and the Initial Purchasers, as defined therein
(incorporated by reference to Exhibit 10.33 to Form S-4 Registration
Statement of Terex Corporation, Registration No. 333-75700).
10.30 Agreement on the Sale and Purchase of Shares of the Schaeff Group of
Companies, dated as of November 26, 2001, among Terex Corporation, its
wholly-owned subsidiary and the parties named therein (incorporated by
reference to Exhibit 10.1 of the Form 8-K Current Report, Commission
File No. 1-10702, dated December 28, 2001 and filed with the Commission
on January 15, 2002).
10.31 Stock Purchase Agreement Concerning the Acquisition of Terex Common
Stock, dated as of November 26, 2001, among Terex Corporation, its
wholly-owned subsidiary and the parties named therein (incorporated by
reference to Exhibit 10.2 of the Form 8-K Current Report, Commission
File No. 1-10702, dated December 28, 2001 and filed with the Commission
on January 15, 2002).
10.32 Underwriting Agreement, dated as of April 18, 2002 between Terex
Corporation and Credit Suisse First Boston Corporation (incorporated by
reference to Exhibit 1.1 of the Form 8-K Current Report, Commission
File No. 1-10702, dated April 18, 2002 and filed with the Commission on
April 18, 2002).
10.33 Contract of Employment, dated as of September 1, 1999, between Terex
Corporation and Filip Filipov (incorporated by reference to Exhibit
10.29 to the Form 10-Q for the quarter ended September 30, 1999 of
Terex Corporation, Commission File No. 1-10702).
10.34 Supplement to Contract of Employment, dated as of April 1, 2000,
between Terex Corporation and Filip Filipov (incorporated by reference
to Exhibit 10.37 to the Form 10-Q for the quarter ended September 30,
2000 of Terex Corporation, Commission File No. 1-10702).
10.35 Second Amended and Restated Employment and Compensation Agreement,
dated as of January 1, 2002, between Terex Corporation and Ronald M.
DeFeo (incorporated by reference to Exhibit 10.34 to the Form 10-K for
the year ended December 31, 2001 of Terex Corporation, Commission File
No. 1-10702).
10.36 Form of Amended and Restated Change in Control and Severance Agreement
dated as of April 1, 2002 between Terex Corporation and certain
executive officers. *
12 Calculation of Ratio of Earnings to Fixed Charges. *
o Exhibit filed with this document.
38