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, 1996
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 1-10702
Terex Corporation
(Exact name of registrant as specified in its charter)
Delaware 34-1531521
(State of (IRS Employer
Incorporation) Identification No.)
500 Post Road East, Suite 320, Westport, Connecticut 06880
(Address of principal executive offices)
(203) 222-7170
(Registrant's telephone number)
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: 10.6 million as of March 31, 1996.
The Exhibit Index appears on page 14.
<PAGE>
INDEX
TEREX CORPORATION AND SUBSIDIARIES
Page No.
PART I FINANCIAL INFORMATION
Item 1 Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Operations --
Three months ended March 31, 1996 and 1995................. 3
Condensed Consolidated Balance Sheets --
March 31, 1996 and December 31, 1995....................... 4
Condensed Consolidated Statements of Cash Flows --
Three months ended March 31, 1996 and 1995................. 5
Notes to Condensed Consolidated Financial Statements --
March 31, 1996............................................. 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 8
PART II OTHER INFORMATION
Item 1 Legal Proceedings............................................... 12
Item 5 Other Information............................................... 12
Item 6 Exhibits and Reports on Form 8-K................................ 12
SIGNATURES................................................................. 13
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
For the Three
Months Ended
March 31,
1996 1995
Net sales ........................................ $ 282.0 $ 214.2
Cost of goods sold ............................... 247.3 191.9
Gross profit ..................................... 34.7 23.1
Engineering, selling and administrative expenses . 23.9 17.1
Income from operations ........................... 10.8 6.0
Other income (expense):
Interest income .................................. 0.1 0.3
Interest expense ................................. (11.5) (7.0)
Gain on sale of Fruehauf stock ................... -- 1.0
Gain on sale of property, plant and equipment .... 2.4 0.1
Amortization of debt issuance costs .............. (0.6) (0.5)
Other income (expense) - net ..................... (0.7) (1.7)
Income (loss) before income taxes ................ 0.5 (1.8)
Provision for income taxes ....................... -- (0.1)
NET INCOME (LOSS) ................................ 0.5 (1.9)
Less preferred stock accretion ................... (1.9) (1.7)
Income (loss) applicable to common stock ......... $ (1.4) $ (3.6)
PER COMMON AND COMMON EQUIVALENT SHARE:
Net income (loss) ................................ $ (0.13) $ (0.35)
Weighted average common and
common equivalent shares outstanding
(See Exhibit 11.1) ............................... 10.6 10.3
The accompanying notes are an integral part of these financial statements.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(in millions)
March 31, December 31,
1996 1995
ASSETS
Current assets
Cash and cash equivalents ............................ $ 12.7 $ 7.8
Cash securing letters of credit ...................... 7.2 7.7
Trade receivables (less allowance of
$9.9 at March 31, 1996 and $9.8 at
December 31, 1995) ................................. 143.9 127.1
Customer deposit ..................................... 11.0 19.1
Net inventories ...................................... 243.3 249.3
Other current assets ................................. 17.1 15.2
Total current assets ................................. 435.2 426.2
Long-term assets
Property, plant and equipment - net .................. 95.3 101.3
Goodwill - net ....................................... 64.5 65.8
Other assets ......................................... 32.6 33.6
Total assets ......................................... $ 627.6 $ 626.9
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Notes payable ........................................ $ 7.5 $ 1.9
Current portion of long-term debt and
capital lease obligation ........................... 7.3 7.2
Trade accounts payable ............................... 162.2 161.0
Accrued compensation and benefits .................... 18.0 16.8
Accrued warranties and product liability ............. 38.2 38.6
Accrued interest ..................................... 13.2 4.7
Accrued income taxes ................................. 0.5 1.4
Customer deposit ..................................... 11.0 19.1
Other current liabilities ............................ 38.8 44.0
Total current liabilities ............................ 296.7 294.7
Long-term liabilities
Long-term debt and capital lease
obligations less current portion ................... 326.5 328.4
Accrued warranties and product liability
- long-term ........................................ 34.2 33.1
Accrued pension ...................................... 18.9 18.9
Other long-term liabilities .......................... 16.3 16.6
Minority interest, including redeemable preferred
stock of a subsidiary (liquidation preference
$25.2, subject to adjustment) ...................... 9.4 9.4
Redeemable convertible preferred stock
(liquidation preference $41.7 at March 31, 1996
and $41.2 at December 31, 1995) .................... 25.8 24.6
Commitments and contingencies
Stockholders' deficit
Warrants to purchase common stock .................... 16.5 17.2
Common stock, $.01 par value -
authorized 30.0 shares;
issued and outstanding 10.6 at
March 31, 1996 and 10.6 at December 31, 1995 ....... 0.1 0.1
Additional paid-in capital ........................... 41.9 40.5
Accumulated deficit .................................. (152.3) (150.9)
Pension liability adjustment ......................... (2.7) (2.7)
Unrealized holding gain on equity securities ......... 0.2 1.0
Cumulative translation adjustment .................... (3.9) (4.0)
Total stockholders' deficit .......................... (100.2) (98.8)
Total liabilities and stockholders' deficit .......... $ 627.6 $ 626.9
The accompanying notes are an integral part of these financial statements.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
For the Three Months
Ended March 31,
1996 1995
OPERATING ACTIVITIES
Net income (loss) .......................................... $ 0.5 $ (1.9)
Adjustments to reconcile net income (loss)
to cash used in operating activities:
Depreciation ............................................... 5.1 3.9
Amortization ............................................... 2.0 0.8
Gain on sale of property, plant and equipment .............. (2.4) (0.1)
Gain on sale of Fruehauf stock ............................. -- (1.0)
Other ...................................................... -- 0.3
Changes in operating assets and liabilities:
Restricted cash ............................................ 0.5 2.5
Trade receivables .......................................... (16.8) 7.5
Net inventories ............................................ 6.0 (16.3)
Trade accounts payable ..................................... 1.2 12.8
Accrued interest ........................................... 8.5 (4.9)
Other, net ................................................. (7.4) (4.1)
Net cash used in operating activities ...................... (2.8) (0.5)
INVESTING ACTIVITIES
Capital expenditures ....................................... (1.7) (1.9)
Proceeds from sale of property, plant and equipment ........ 3.3 0.5
Proceeds from sale of Fruehauf stock ....................... -- 2.7
Other ...................................................... -- (0.1)
Net cash provided by investing activities .................. 1.6 1.2
FINANCING ACTIVITIES
Net incremental borrowings under
revolving line of credit agreements ...................... 5.2 0.5
Other ...................................................... -- (0.6)
Net cash provided by (used in) financing activities ........ 5.2
(0.1)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 0.9 1.4
NET INCREASE IN CASH AND CASH EQUIVALENTS .................. 4.9 2.0
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ........... 7.8 9.7
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................. $ 12.7 $ 11.7
The accompanying notes are an integral part of these
financial statements.
<PAGE>
TEREX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in millions, unless otherwise denoted)
March 31, 1996
NOTE A -- BASIS OF PRESENTATION
Basis of Presentation. The accompanying condensed consolidated financial
statements of Terex Corporation and subsidiaries as of March 31, 1996 and for
the three months ended March 31, 1996 and 1995 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, 1995,
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.
The equity method is used to account for investments in affiliates in which the
Company has an ownership interest between 20% and 50%. Investments in affiliates
in which the Company has an ownership interest of less than 20% are accounted
for on the cost method or at fair value in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities."
In the opinion of management, all adjustments considered necessary for a fair
presentation have been made. Such adjustments consist only of those of a normal
recurring nature. Certain 1995 amounts have been reclassified to conform with
the 1996 presentation. Operating results for the three months ended March 31,
1996 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1996. 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, 1995.
NOTE B -- INVENTORIES
Net inventories consist of the following:
March 31, December 31,
1996 1995
Finished equipment ................................. $ 62.8 $ 53.1
Replacement parts .................................. 82.5 94.5
Work-in-process .................................... 19.5 26.0
Raw materials and supplies ......................... 81.7 78.9
246.5 252.5
Less: Excess of FIFO inventory value of LIFO cost .. (3.2) (3.2)
Net inventories $ .................................. 243.3 $ 249.3
<PAGE>
NOTE C -- PROPERTY, PLANT AND EQUIPMENT
Net property, plant and equipment consists of the following:
March 31, December 31,
1996 1995
Property, plant and equipment ... $ 149.7 $ 153.9
Less: Accumulated depreciation .. (54.4) (52.6)
Net property, plant and equipment $ 95.3 $ 101.3
NOTE D -- LITIGATION AND CONTINGENCIES
The Company is subject to a number of contingencies and uncertainties including
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, management does not believe that
these contingencies and uncertainties will, in the aggregate, have a material
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 operations. As a result, the Company is subject to a wide range of federal,
state, local and foreign environmental laws and regulations, including the
Comprehensive Environmental Response, Compensation and Liability Act, that (i)
govern activities or operations that may have adverse environmental effects,
such as discharges to air and water, as well as handling and disposal practices
for hazardous and nonhazardous wastes, and (ii) impose liability for the costs
of cleaning up, and certain damages resulting from, sites of past spills,
disposals or other releases of hazardous substances. Compliance with such laws
and regulations has, and will, require expenditures by the Company on a
continuing basis.
The Internal Revenue Service is currently examining the Company's federal tax
returns for the years 1987 through 1989. In December 1994, the Company received
an examination report from the IRS proposing a substantial tax deficiency based
on this examination. The examination report raises a variety of issues,
including the Company's substantiation for certain deductions taken during this
period, the Company's utilization of certain net operating loss carryovers
("NOL's") and the availability of such NOL's to offset future taxable income. If
the IRS were to prevail on all the issues raised, the amount of the tax
assessment would be approximately $56 plus interest and penalties. If the
Company were required to pay a significant portion of the assessment, it could
have a material adverse impact on the Company and could exceed the Company's
resources. The Company has filed its administrative appeal to the examination
report. Although management believes that the Company will be able to provide
adequate documentation for a substantial portion of the deductions questioned by
the IRS and that there is substantial support for the Company's past and future
utilization of the NOL's, the ultimate outcome of this matter is subject to the
resolution of significant legal and factual issues. If the Company's positions
prevail on the most significant issues, management believes that the amounts due
would not exceed amounts previously paid or provided; however, even under such
circumstances, it is possible that the Company's NOL's could be reduced to some
extent. No additional accruals have been made for any amounts which might be due
as a result of this matter because the possible loss ranges from zero to $56
plus interest and penalties and the ultimate outcome cannot presently be
determined or estimated. If a change in control for tax purposes were to occur,
such a change in control could possibly result in a significant reduction in the
amount of NOL's available to the Company to offset future taxable income.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
The Company operates in three industry segments: Material Handling, Terex
Trucks, and Terex Cranes. The Terex Cranes segment results for periods prior to
May 1995 consist solely of Koehring's operations. Beginning with the first
quarter of 1996, the former heavy equipment segment, which consists of the Terex
business and Unit Rig division, referred to as Terex Trucks.
Quarter Ended March 31, 1995
The table below is a comparison of net sales, gross profit, engineering, selling
and administrative expenses, and income (loss) from operations, by segment, for
the three months ended March 31, 1996 and 1995.
Three Months Ended Increase
March 31, (Decrease)
1996 1995
(in millions of dollars)
NET SALES
Material Handling $ 108.8 $ 134.0 $ (25.2)
Terex Trucks 70.9 57.5 13.4
Terex Cranes 102.5 23.2 79.3
Eliminations (0.2) (0.5) 0.3
Total $ 282.0 $ 214.2 $ 67.8
GROSS PROFIT
Material Handling $ 11.3 $ 11.1 $ 2.0
Terex Trucks 9.1 8.7 0.4
Terex Cranes 14.9 3.3 11.6
Eliminations (0.6) --- (0.6)
Total $ 34.7 $ 23.1 $ 11.6
ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES
Material Handling $ 8.8 $ 10.4 $ (1.6)
Terex Trucks 6.2 5.4 0.8
Terex Cranes 8.7 1.5 7.2
General/Corporate 0.2 (0.2) 0.4
Total $ 23.9 $ 17.1 $ 6.8
INCOME (LOSS) FROM OPERATIONS
Material Handling $ 2.5 $ 0.7 $ 1.8
Terex Trucks 2.9 3.3 (0.4)
Terex Cranes 6.2 1.8 4.4
General/Corporate (0.8) 0.2 (1.0)
Total $ 10.8 $ 6.0 $ 4.8
<PAGE>
Net Sales
Sales increased $67.8 million, or approximately 32%, to $282.0 million for the
three months ended March 31, 1996 over the comparable 1995 period, reflecting
the acquisition of PPM Cranes in the second quarter of 1995 and a strong sales
quarter for Terex Cranes overall, increased revenue at Terex Trucks, partially
offset by an expected slowdown in machine sales at the Material Handling
Segment.
Material Handling Segment sales were $108.8 million for the three months ended
March 31, 1996, a decrease of $25.2 million from $134.0 million in the year
earlier period. The sales mix was approximately 23% parts in the three months
ended March 31, 1996 compared to 17% in the comparable 1995 period. Machine
sales decreased 26% and parts sales, from which the Company generally realizes
significantly higher margins than machine sales, increased 9%.
Material Handling Segment bookings for the three months ended March 31, 1996
were $114.5 million, a decrease of $25.5 million, or 18%, from the year earlier
period. Bookings for parts sales for the three months ended March 31, 1996
increased 6% from the year earlier period. Machine order bookings for the three
months ended March 31, 1996 decreased 24% from the year earlier period. Material
Handling Segment backlog was $85.1 million at March 31, 1996 compared to $141.9
million at March 31, 1995. The decrease in machine sales and bookings was
anticipated and tracked trends in the material handling industry as set forth in
independent publications which report on the industry. The Company adjusted its
production schedule and material procurement in anticipation of the slowdown in
machine sales. The slowdown is not anticipated to have an adverse effect on the
profitability of the material handling segment for 1996.
Terex Trucks sales increased $13.4 million for the three months ended March 31,
1996 from the three months ended March 31, 1995. Machines sales increased 31%,
and parts sales increased 4%. The sales mix was approximately 32% parts for the
three months ended March 31, 1996 compared to 38% parts for the comparable 1995
period.
Terex Trucks bookings for the three months ended March 31, 1996 were $48.8
million, an increase of $7.9 million, or 19%, from the year earlier period.
Bookings for parts sales, from which the Company generally realizes higher
margins than machine sales, decreased $4.0 million from the three months ended
March 31, 1995. Machine bookings for the three months ended March 31, 1996
increased $11.9 million from the comparable 1995 period reflecting higher
international orders. Backlog was $86.5 million at March 31, 1996 compared to
$88.8 million at December 31, 1995 and $51.4 million at March 31, 1995.
Terex Cranes sales were $102.5 million for the three months ended March 31,
1996, an increase of $79.3 million from $23.2 million in the year earlier period
which did not include the PPM business. Terex Cranes backlog was $59.8 million
at March 31, 1996, reflecting the additional PPM backlog acquired, compared to
$12.8 million at March 31, 1995. The increase in cranes sales was due to the
addition of the PPM business, growth in sales at the PPM business, and continued
strong performance by Koehring.
Gross Profit
Gross profit for the three months ended March 31, 1996 increased $11.6 million
compared to the three months ended March 31, 1995.
The Material Handling Segment's gross profit of $11.3 million for the three
months ended March 31, 1996, an increase of $0.2 million from $11.1 million for
the prior year's period. The gross profit percentage in the Material Handling
Segment was 10% for the three months ended March 31, 1996 and 8.3% for the
comparable 1995 period. The increase in profit was due to higher parts sales and
therefore margins coupled with improved manufacturing efficiencies.
Terex Trucks' gross profit increased $0.4 million to $9.1 million for the three
months ended March 31, 1996 compared to $8.7 million for the comparable 1995
period. The gross profit percentage in the Terex Trucks decreased to 13% for the
three months ended March 31, 1996 from 15% for the three months ended March 31,
1995, primarily due to the negative impact on Unit Rig of the inability of a
major supplier to adhere to its delivery schedule. This resulted in Unit Rig
having to shut down production for a period in March, with an estimated negative
profit impact of $800 thousand, due to lost sales volume and unabsorbed
overhead. The Company understands that the supplier has corrected the problem
and it is not expected to recur.
Terex Cranes' gross profit increased $11.6 million to $14.9 million for the
three months ended March 31, 1996, compared to $3.3 million for the prior year's
period, reflecting the PPM Acquisition, the effect of cost reduction actions put
in place at PPM, and improved performance at Koehring.
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses increased to $23.9 million for
the three months ended March 31, 1996 from $17.1 million for the three months
ended March 31, 1995, reflecting the effects of the PPM acquisition in May 1995.
Material Handling Segment engineering, selling and administrative expenses to
$8.8 million for the three months ended March 31, 1996 from $10.4 million for
the comparable 1995 period. Terex Trucks engineering, selling and administrative
expenses increased to $6.2 million for the three months ended March 31, 1996
from $5.4 million for the comparable 1995 period primarily due to costs
associated with a new parts sales office and a new U.K. dealership. Terex Cranes
engineering, selling and administrative expenses increased to $8.7 million for
the three months ended March 31, 1996 from $1.5 million for the comparable 1995
period, reflecting the PPM acquisition in May 1995.
Income (Loss) from Operations
Material Handling Segment income from operations of $2.5 million for the three
months ended March 31, 1996 represents a $1.8 million improvement over the $0.7
million income in the comparable 1995 period. As discussed above, reduced costs
contributed to the increase in income from operations for the three months ended
March 31, 1996.
Terex Trucks income from operations decreased by $0.4 million to $2.9 million
for the three months ended March 31, 1996 from $3.3 million in the comparable
1995 period, primarily due to the factors mentioned above under "Gross Profit".
Terex Cranes income from operations of $6.2 million for the three months ended
March 31, 1996 increased by $4.4 million over the comparable 1995 period,
primarily due to the effect of cost control initiatives implemented at PPM
during Terex's ownership of that business, and continued strong performance by
Koehring.
On a consolidated basis, the Company had operating income of $10.8 million for
the three months ended March 31, 1996, compared to operating income of $6.0
million for the comparable 1995 period, for the reasons mentioned above.
Other Income (Expense)
Net interest expense increased to $11.4 million for the three months ended March
31, 1996 from $6.7 million in the comparable 1995 period as a result of
incremental borrowings associated with the PPM acquisition in May 1995. The
Company realized a gain in the three months ended March 31, 1996 of $2.4 million
from the sale of excess property in Scotland. In 1995, the Company had a gain of
$1.0 million from the sale of Fruehauf stock.
LIQUIDITY AND CAPITAL RESOURCES
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 senior debt
and monthly interest payments on its credit facility. Debt reduction and an
improved capital structure are major focal points for the Company. In this
regard, the Company regularly reviews its alternatives to improve its capital
structure and to reduce debt through debt financings, issuance of equity, assets
sales, including the sale of business units, or any combination thereof.
Currently, the Company has focused its attention on the sale of assets,
including business units, and has taken steps to explore the opportunities
available to it in this regard. It is the Company's intention that certain such
assets be sold during 1996, provided that favorable terms and conditions can be
attained.
Net cash of $2.8 million was used in operating activities during the three
months ended March 31, 1996. Net cash provided by investing activities was $1.6
million during the three months ended March 31, 1996 principally due to the sale
of excess property. Net cash provided by financing activities during the three
months ended March 31, 1996 was $5.2 million, primarily from use of the lending
facility in the U.K. Cash and cash equivalents totaled $12.7 million at March
31, 1996.
The balance outstanding under the Credit Facility as of March 31, 1996 was $65.7
million, and the additional amount the Company could have borrowed was $21.3
million as of that date. TEL entered into a new bank working capital facility in
1995, and PPM Europe is in negotiations to secure a working capital facility in
1996. Management intends to seek additional working capital financing facilities
for the Company's international operations to provide additional liquidity
worldwide.
CONTINGENCIES AND UNCERTAINTIES
The Internal Revenue Service is currently examining the Company's federal tax
returns for the years 1987 through 1989. In December 1994, the Company received
an examination report from the IRS proposing a substantial tax deficiency based
on this examination. The examination report raises a variety of issues,
including the Company's substantiation for certain deductions taken during this
period, the Company's utilization of certain net operating loss carryovers
("NOL's") and the availability of such NOL's to offset future taxable income. If
the IRS were to prevail on all the issues raised, the amount of the tax
assessment would be approximately $56 million plus interest and penalties. If
the Company were required to pay a significant portion of the assessment, it
could have a material adverse impact on the Company and could exceed the
Company's resources. The Company has filed its administrative appeal to the
examination report. Although management believes that the Company will be able
to provide adequate documentation for a substantial portion of the deductions
questioned by the IRS and that there is substantial support for the Company's
past and future utilization of the NOL's, the ultimate outcome of this matter is
subject to the resolution of significant legal and factual issues. If the
Company's positions prevail on the most significant issues, management believes
that the amounts due would not exceed amounts previously paid or provided;
however, even under such circumstances, it is possible that the Company's NOL's
could be reduced to some extent. No additional accruals have been made for any
amounts which might be due as a result of this matter because the possible loss
ranges from zero to $56 million plus interest and penalties and the ultimate
outcome cannot presently be determined or estimated. A change in control of the
Company for tax purposes could possibly result in a significant reduction in the
amount of NOL's available to the Company to offset future taxable income.
The Securities and Exchange Commission (the "Commission") in March of 1994
initiated a private investigation, which included the Company and certain of its
affiliates, to determine whether violations of certain aspects of the Federal
securities laws have taken place. The Company is cooperating with the Commission
in its investigation and it is not possible at this time to determine the
outcome of the Commission's investigation.
The Company received a letter from the Department of Labor (the "DOL") in May of
1995, alleging that the Company's former Chairman of the Board, at the time a
fiduciary for the Company's retirement plans, violated certain provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") in making
certain investments which may have been imprudent and by possibly engaging in
prohibited transactions under ERISA. The Company and its former Chairman of the
Board are currently in discussions with the DOL concerning the allegations and
it is not possible at this time to determine the outcome of this matter;
however, the Company does not believe that the resolution of the allegations
will have a material adverse effect on the Company.
The Company is subject to a number of contingencies and uncertainties including
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, management does not believe that
these contingencies and uncertainties will, in the aggregate, have a material
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 operations. As a result, the Company is subject to a wide range of federal,
state, local and foreign environmental laws and regulations, including the
Comprehensive Environmental Response, Compensation and Liability Act, that (i)
govern activities or operations that may have adverse environmental effects,
such as discharges to air and water, as well as handling and disposal practices
for hazardous and nonhazardous wastes, and (ii) impose liability for the costs
of cleaning up, and certain damages resulting from, sites of past spills,
disposals or other releases of hazardous substances. Compliance with such laws
and regulations has, and will, require expenditures by the Company on a
continuing basis.
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
For information concerning other contingencies see "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Contingencies and
Uncertainties."
Item 5. Other Information
FORWARD LOOKING INFORMATION.
Forward looking information included in this report involves risks and
uncertainties that could significantly impact expected results. The Company's
expectations are predominantly based on what it considers key economic
assumptions. Construction and mining activity are sensitive to interest rates,
government spending and general economic conditions. Some of the other
significant factors for the Company include foreign currency movements,
political uncertainty in various areas of the world, pricing, product
initiatives and other actions taken by competitors, disruptions in production
capacity, excess inventory levels, the effects of changes in laws and
regulations, employee relations and other factors.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits have been filed as part of this Form
10-Q:
Exhibit No.
11.1 Computation of earnings per share
27 Financial data schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
March 31, 1996.
<PAGE>
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 15, 1996 /s/ Ralph T. Brandifino
------------
Ralph T. Brandifino
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date May 15, 1996 /s/ Joseph F. Apuzzo
------------
Joseph F. Apuzzo
Vice President Finance and Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No.
11.1 Computation of Earnings per Share
27 Financial Data Schedule
<PAGE>
EXHIBIT 11.1
(Page 1 of 2)
TEREX CORPORATION AND SUBSIDIARIES
Computation of Earnings per Common Share
(in millions except per share amounts)
Three Months Ended
March 31,
1996 1995
PRIMARY:
Net income (loss) ..................................... $ 0.5 $ (1.9)
Less: Accretion of Preferred Stock .................... (1.9) (1.7)
Net income (loss) applicable to common stock .......... $ (1.4) $ (3.6)
Weighted average shares outstanding during the period . 10.6 10.3
Assumed exercise of warrants at ratio
determined as of March 31, 1995 ..................... --- (a) --- (a)
Assumed exercise of stock options ..................... --- (a) --- (a)
Primary shares outstanding ............................ 10.6 10.3
Primary income (loss) per common share ................ $ (0.13)$ (0.35)
(a) Excluded from the computation because the effect is anti-dilutive.
<PAGE>
EXHIBIT 11.1
(Page 2 of 2)
TEREX CORPORATION AND SUBSIDIARIES
Computation of Earnings per Common Share
(in millions except per share amounts)
Three Months Ended
March 31,
1996 1995
FULLY DILUTED:
Net income (loss) ................................ $ 0.5 $ (1.9)
Less: Accretion of Preferred Stock ............... (1.9) (1.7)
Net income (loss) applicable to common stock ..... $ (1.4) $ (3.6)
Weighted average shares outstanding during the period 10.6 10.3
Assumed exercise of warrants at ratio
determined as of March 31, 1995 .................. --- (a) --- (a)
Assumed exercise of stock options ................ --- (a) --- (a)
Primary shares outstanding ....................... 10.6 10.3
Fully diluted income (loss) per common share ..... $ (0.13)$ (0.35)
(a) Excluded from the computation because the effect is anti-dilutive.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TEREX
CORPORATION MARCH 31, 1996 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 12,700
<SECURITIES> 0
<RECEIVABLES> 153,800
<ALLOWANCES> 9,900
<INVENTORY> 243,300
<CURRENT-ASSETS> 435,200
<PP&E> 149,700
<DEPRECIATION> 54,400
<TOTAL-ASSETS> 627,600
<CURRENT-LIABILITIES> 296,700
<BONDS> 326,500
25,800
0
<COMMON> 100
<OTHER-SE> (100,300)
<TOTAL-LIABILITY-AND-EQUITY> 627,600
<SALES> 282,000
<TOTAL-REVENUES> 282,000
<CGS> 247,300
<TOTAL-COSTS> 247,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,500
<INCOME-PRETAX> 500
<INCOME-TAX> 0
<INCOME-CONTINUING> 500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 500
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
