TEREX CORP, S-4, 1996-03-05

TEREX CORP
S-4, 1996-03-05
TRUCK TRAILERS

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As filed with the Securities and Exchange Commission
on _____, 1996.
Registration No. 33-

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------

TEREX CORPORATION
(Exact name of Registrant as specified in its charter)

Delaware 3550 34-1531521
(State or other (Primary standard industrial (I.R.S. employer
jurisdiction of classification code number) identification no.)
incorporation or
organization)

500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Address, including zip code, and telephone number,
including area code, of Registrants' principal executive offices)
--------------------------

CLARK MATERIAL HANDLING COMPANY
(Exact name of Co-Registrant as specified in its charter)

Delaware 3550 61-1107574
(State or other (Primary standard industrial (I.R.S. employer
jurisdiction of classification code number) identification no.)
incorporation or
organization)

333 West Vine Street
Lexington, Kentucky 40507
(606) 288-1200
(Address, including zip code, and telephone number,
including area code, of Co-Registrants' principal executive offices)
--------------------------

TEREX CRANES, INC.
(Exact name of Co-Registrant as specified in its charter)

Delaware 3530 06-1423889
(State or other (Primary standard industrial (I.R.S. employer
jurisdiction of classification code number) identification no.)
incorporation or
organization)

c/o Terex Corporation
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Address, including zip code, and telephone
number, including area code, of Co-Registrants'
principal executive offices)

<PAGE>

PPM CRANES, INC.
(Exact name of Co-Registrant as specified in its charter)

Delaware 3550 39-1611683
(State or other (Primary standard industrial (I.R.S. employer
jurisdiction of classification code number) identification no.)
incorporation or
organization)

Atlantic Center for Business and Industry
Highway 501 East
Conway, South Carolina 29526
(803) 349-6900
(Address, including zip code, and telephone
number, including area code, of Co-Registrants'
principal executive offices)
--------------------------

TEREX CRANES, INC.
(Exact name of Co-Registrant as specified in its charter)

Delaware 3550 06-1423888
(State or other (Primary standard industrial (I.R.S. employer
jurisdiction of classification code number) identification no.)
incorporation or
organization)

106 12th Street S.E.
Waverly, Iowa 50677
(319) 352-3920
(Address, including zip code, and telephone number,
including area code, of Co-Registrants' principal executive offices)
--------------------------

CMH ACQUISITION CORP.
(Exact name of Co-Registrant as specified in its charter)

Delaware 3530
(State or other (Primary standard industrial (I.R.S. employer
jurisdiction of classification code number) identification no.)
incorporation or
organization)

CMH ACQUISITION INTERNATIONAL CORP.
(Exact name of Co-Registrant as specified in its charter)

Delaware 3530
(State or other (Primary standard industrial (I.R.S. employer
jurisdiction of classification code number) identification no.)
incorporation or
organization)

Marvin B. Rosenberg, Esq.
Terex Corporation
500 Post Road East
Westport, Connecticut 06880
(203) 222-7170
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------

Copies To:

Robinson Silverman Pearce Aronsohn & Berman
1290 Avenue of the Americas
New York, New York 10104
Attention: Stuart A. Gordon, Esq.
Eric I Cohen, Esq.
(212) 541-2000
--------------------------

Approximate date of commencement of proposed sale to public:
As soon as practicable after the Registration Statement becomes effective.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]

CALCULATION OF REGISTRATION FEE

Proposed Proposed
Title of Each Class of Maximum Maximum Amount of
Securities to be Amount to be Offering Price Aggregate Registration
Registered Registered per Unit(1) Offering Price(1) Fee

<S> <C> <C> <C> <C>
Series B Senior Secured $250,000,000
Notes due 2002......... aggregate 100% $250,000,000 $ 86,206.90
principal amount
Guarantees of the
Series B Senior Secured
Notes due 2002......... -- -- -- None(2)

<FN>

(1) Estimated solely for purposes of calculation of the registration fee pursuant to Rule 457(a).
(2) Pursuant to Rule 457(n) no separate registration fee is payable.
</FN>
</TABLE>
--------------------------

The Registrant and the Co-Registrants hereby amend this Registration
Statement on such date or dates as may be necessary to delay its effective date
until the Registrant and the Co-Registrants shall file a further amendment which
specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until
the Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.

<PAGE>

TEREX CORPORATION
Cross Reference Sheet

Pursuant to Item 501(b) of Regulation S-K Showing
Location in Prospectus of Items of Form S-4

Item Number and Caption Heading or Subheading in Prospectus

A.INFORMATION ABOUT THE TRANSACTION

1. Forepart of Registration
Statement and Outside
Front Cover Page of Prospectus Facing Page of Registration
Statement; Cross Reference Sheet;
Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus Inside Front Cover Page of Prospectus;
Outside Back Cover Page of Prospectus

3. Risk Factors, Ratio of Earnings
to Fixed Charges, and Other
Information Prospectus Summary; Risk Factors;
The Company; Summary Consolidated
Financial Data; Selected Consolidated
Financial Data

4. Terms of the Transaction The Exchange Offer; Description of
the Notes and the Guarantees; Certain
Federal Income Tax Consequences

5. Pro Forma Financial Information Not Applicable

6. Material Contacts with the
Company Being Acquired Not Applicable

7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be
Underwriters Not Applicable

8. Interests of Named Experts and
Counsel Legal Matters; Experts

9. Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities Not Applicable

B.INFORMATION ABOUT THE REGISTRANTS

10 Information with Respect to
S-3 Registrants Not Applicable

11 Incorporation of Certain
Information by Reference Not Applicable

12 Information with Respect to
S-2 or S-3 Registrants Not Applicable

13 Incorporation of Certain
Information by Reference Not Applicable

14 Information with Respect to
Registrants Other Than S-3
or S-2 Registrants Prospectus Summary; Summary
Consolidated Financial Data;
The Company; Selected Consolidated
Financial Data; Management's
Discussion and Analysis of
Financial Condition and Results
of Operations; Business;
Description of the Notes and
the Guarantees; Consolidated
Financial Statements

C.INFORMATION ABOUT THE COMPANY BEING ACQUIRED

15 Information with Respect to
S-3 Companies Not Applicable

16 Information with Respect to
S-2 or S-3 Companies Not Applicable

17 Information with Respect to
Companies Other Than
S-2 or S-3 Companies Not Applicable

D.VOTING AND MANAGEMENT INFORMATION

18 Information if Proxies,
Consents or Authorizations Are
to be Solicited Not Applicable

19 Information if Proxies, Consents
or Authorizations are Not to
be Solicited, or in an
Exchange Offer Management; Certain Transactions

<PAGE>

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

<PAGE>

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED _____, 1996

OFFER TO EXCHANGE
all outstanding
Series A 13 1/4% Senior Secured Notes due 2002
($250,000,000 principal amount outstanding)
for
Series B 13 1/4% Senior Secured Notes due 2002
of
TEREX CORPORATION
Payment of Principal and Interest Unconditionally Guaranteed by
Terex Cranes, Inc.
PPM Cranes, Inc.
Koehring Cranes, Inc.
CMH Acquisition Corp.
CMH Acquisition International Corp.
---------------------------------

THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 p.m., NEW YORK CITY TIME,
ON ________________, 1996, UNLESS EXTENDED.
---------------------------------

Terex Corporation, a Delaware corporation ("Terex" or the "Company"), hereby
offers (the "Exchange Offer"), upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (the "Letter
of Transmittal"), to exchange its outstanding Series A Senior Secured Notes due
2002 (the "Old Notes"), of which an aggregate of $250 million in principal
amount is outstanding as of the date hereof, for an equal principal amount of
its Series B Senior Secured Notes due 2002 (the "New Notes"). The form and terms
of the New Notes will be the same as the form and terms of the Old Notes except
that the New Notes will be registered under the Securities Act of 1933, as
amended (the "Securities Act"), and will not bear legends restricting the
transfer thereof. The New Notes will be entitled to the benefits of the
Indenture (the "Indenture"), dated as of May 9, 1995, among the Company, the
Guarantors and United States Trust Company of New York, as trustee, governing
the Old Notes. The New Notes and the Old Notes are sometimes collectively
referred to herein as the "Notes." The Old Notes are, and the New Notes will
continue to be, unconditionally and irrevocably guaranteed by present and future
Material Subsidiaries (as defined herein) of the Company that are Restricted
Subsidiaries (as defined herein) (other than Terex Equipment Limited, the
Company's wholly owned Scottish subsidiary ("TEL"), Clark Material Handling
Company GmbH, the Company's wholly owned German subsidiary ("CMHC Germany"),
P.P.M. S.A., the Company's French subsidiary, and any other present or future
Restricted Subsidiary organized under the laws of a foreign country), including,
without limitation, Terex Cranes, Inc., a Delaware corporation ("Terex Cranes"),
PPM Cranes, Inc., a Delaware corporation ("PPM Cranes"), Koehring Cranes, Inc.,
a Delaware corporation ("Koehring Cranes"), and Clark Material Handling Company,
a Kentucky corporation ("CMHC"). Such companies are collectively referred to
herein as the "Guarantors." See "The Exchange Offer" and "Description of the
Notes and the Guarantees."
(continued on next page)
---------------------------------

SEE "RISK FACTORS" ON PAGE ___ FOR A DISCUSSION OF CERTAIN
RISKS THAT SHOULD BE CONSIDERED BY ELIGIBLE HOLDERS
IN EVALUATING THE EXCHANGE OFFER
---------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is _______,
1996.

<PAGE>

The Company will accept for exchange any and all Old Notes which are validly
tendered in the Exchange Offer prior to 5:00 p.m, New York City time, on
__________________, 1996 (if, when and as extended, the "Expiration Date").
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date, pursuant to the procedures described herein.
The Exchange Offer is not conditioned upon any minimum principal amount of Old
Notes being tendered for exchange. Old Notes may be tendered only in integral
multiples of $1,000. After consummation of the Exchange Offer, the Company may
offer to purchase any Notes at any price or prices which the Company deems
appropriate, although the Company is not obligated and has no present intention
to do so.

The New Notes will bear interest at 13 1/4% per annum from the date of original
issue. Interest on the New Notes will be payable semi-annually, in arrears, on
May 15 and November 15 of each year, commencing November 15, 1995. Holders of
Old Notes that are accepted for exchange will receive, in cash, accrued interest
thereon to, but not including, the date of issuance of the New Notes. Such
interest will be paid with and at the time of the first interest payment on the
New Notes. Interest on the Old Notes accepted for exchange will cease to accrue
upon issuance of the New Notes being exchanged therefor.

The New Notes will not be redeemable prior to May 15, 2000, except that the
Company may, at its option, redeem up to one-third of the original principal
amount of the New Notes at the redemption prices set forth in the Indenture plus
accrued interest through the date of redemption, with the net proceeds of
certain sales of common stock of the Company or any Restricted Subsidiary (as
defined herein). From and after May 15, 2000, the New Notes will be redeemable
at the option of the Company, in whole or in part, at the redemption prices set
forth in the Indenture plus accrued interest to the date of redemption. Upon a
Change of Control (as defined herein), the Company is required, subject to
certain conditions, to offer to purchase the New Notes at 101% of the principal
amount thereof together with accrued interest to the date of purchase. See
"Description of the Notes and the Guarantees."

Except as otherwise set forth herein, the Old Notes are and the New Notes will
be secured by a first priority security interest in (i) substantially all of the
assets of the Company and the Guarantors, other than cash and cash equivalents
(except that as to accounts receivable and inventory, and proceeds thereof and
certain related rights, such security interest are subordinated to liens
securing obligations under any Revolving Credit Facility (as defined herein) to
which any of them are obligors), (ii) property, plant and equipment of certain
of the Restricted Subsidiaries organized outside of the U.S. and (iii) the
Capital Stock (as defined herein) of, and certain intercompany notes from, all
Subsidiaries (as defined herein) of the Company owned by the Company or any
Material Subsidiary (as defined herein). In addition, the Old Notes are and the
New Notes will initially be secured by a security interest in inventory of
certain foreign Restricted Subsidiaries; provided, however, if any European
subsidiary of the Company enters into a working capital or revolving credit
facility, the Company is permitted to secure such facility with accounts
receivable and/or inventory of such Subsidiary and the security interest
securing the Old Notes and the New Notes will be released to the extent required
by the terms of any such facility. All of the assets of the Company, the
Guarantors and the Restricted Subsidiaries described above are collectively
referred to herein as the "Collateral"). See "Description of the Notes and the
Guarantees."

Prior to this Exchange Offer, there has been no public market for the Old Notes.
The Company does not intend to list the New Notes on any securities exchange or
to seek approval for quotation through any automated quotation system. There can
be no assurance that an active market for the New Notes will develop. To the
extent that a market for the New Notes does develop, the market value of the New
Notes will depend on market conditions (such as yields on alternative
investments), general economic conditions, the Company's financial condition and
other conditions. Such conditions might cause the New Notes, to the extent that
they are actively traded, to trade at a significant discount from face value.
See "Risk Factors -- Lack of Public Market."

Based on a previous interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters to third parties,
the Company believes that the New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a person that is an affiliate of the
Company (within the meaning of Rule 405 under the Securities Act)), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that the holder is acquiring the New Notes in its
ordinary course of business and is not participating, and has no arrangement or
understanding with any person to participate, in the distribution of the New
Notes. Holders of Old Notes wishing to accept the Exchange Offer must represent
to the Company that such conditions have been met.

<PAGE>

Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes if such New Notes were received in exchange
for Old Notes that were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of [___] days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."

Neither the Company nor any Guarantor will receive any proceeds from the
Exchange Offer. The Company has agreed to pay the expenses of the Exchange
Offer. No underwriter is being used in connection with the Exchange Offer.

<PAGE>

TABLE OF CONTENTS
Page

AVAILABLE INFORMATION..............................

PROSPECTUS SUMMARY.................................

RISK FACTORS.......................................

THE COMPANY........................................

THE EXCHANGE OFFER.................................

USE OF PROCEEDS CAPITALIZATION.....................

SELECTED CONSOLIDATED FINANCIAL DATA...............

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS..............

BUSINESS...........................................

MANAGEMENT.........................................

SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS........................

CERTAIN TRANSACTIONS...............................

DESCRIPTION OF THE NOTES AND THE GUARANTEES........

CERTAIN FEDERAL INCOME TAX CONSEQUENCES............

PLAN OF DISTRIBUTION...............................

LEGAL MATTERS......................................

INDEPENDENT ACCOUNTANTS............................

---------------------------------

No person is authorized in connection with the Exchange Offer to give any
information or to make any representation other than as contained in this
Prospectus or the accompanying Letter of Transmittal, and, if given or made,
such information or representation must not be relied upon as having been
authorized by the Company. Neither the delivery of this Prospectus or the
accompanying Letter of Transmittal or both together, nor any exchange made
hereunder, shall under any circumstances imply that the information contained
herein is correct as of any date subsequent to the date hereof.

Neither this Prospectus nor the accompanying Letter of Transmittal or both
together constitute an offer to sell or a solicitation of an offer to buy any
security other than the New Notes offered hereby, nor does it constitute an
offer to sell or a solicitation of an offer to buy any securities offered hereby
to any person in any jurisdiction in which it is unlawful to make such offer or
solicitation to such person.

Until , 1996 (90 days after the date of the Exchange Offer), all dealers
offering transactions in the New Notes, whether or not participating in this
Exchange Offer, may be required to deliver a Prospectus.

<PAGE>

AVAILABLE INFORMATION

Terex Corporation is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith is required to file reports, proxy statements and other information
statements with the Commission. Such reports, proxy statements and other
information statements can be inspected and copied at the public reference
facilities maintained by the Commission at its offices at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at Seven World Trade Center, 13th Floor, New
York, New York 10048 and at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials may also be obtained by mail from
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.

The Company's Common Stock, par value $.01 per share (the "Common Stock"), is
listed on the New York Stock Exchange, and reports, proxy statements and other
information statements concerning the Company may also be inspected at the New
York Stock Exchange.

The Company has filed with the Commission a Registration Statement on Form S-4
under the Securities Act with respect to the New Notes offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto, as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the New
Notes offered hereby, reference is made to the Registration Statement, including
the exhibits thereto and the financial statements, notes and schedules filed as
a part thereof, which may be inspected and copied at the public reference
facilities of the Commission referred to above. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the full text of
such contract or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. The
Company has agreed to make available to any prospective purchaser of the Notes
or beneficial owner of the Notes in connection with any sale thereof the
information required by Rule 144(d)(1) under the Securities Act, until such time
as the Company has either exchanged the Notes for securities identical in all
material respects which have been registered under the Securities Act or until
such time as the holders thereof have disposed of such Notes pursuant to an
effective registration statement filed by the Company.

<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements and
notes thereto appearing elsewhere in this Prospectus.

The Company

Terex Corporation ("Terex" or the "Company") is a global provider of capital
goods and equipment used in the mining, commercial building, infrastructure,
manufacturing and construction industries. The Company's operations began in
1983 with the purchase of Northwest Engineering Company, the Company's original
business and name. Since 1983, management has expanded the Company's business
through a series of acquisitions. In 1988, Northwest Engineering Company merged
into a subsidiary acquired in 1986 named Terex Corporation, with Terex
Corporation as the surviving corporation. The Company's Material Handling
Segment designs, manufactures and markets a complete line of internal combustion
("IC") and electric lift trucks, electric walkies, automated pallet trucks,
industrial tow tractors and related components and replacement parts. The Heavy
Equipment Segment designs, manufactures and markets heavy-duty, off-highway,
earthmoving and construction equipment and related components and replacement
parts. The Mobile Cranes segment designs, manufactures and markets mobile
cranes, aerial platforms, container stackers and scrap holders and related
components and replacement parts. See "The Company" and "Business."

The Mobile Cranes Segment was established as a separate business segment as a
result of a significant acquisition in 1995. On May 9, 1995, the Company,
through Terex Cranes, Inc., a recently formed Delaware corporation which is a
wholly owned subsidiary of the Company ("Terex Cranes"), completed the
acquisition (the "PPM Acquisition") of substantially all of the shares of P.P.M.
S.A., a societe anonyme ("PPM Europe"), from Potain S.A., a societe anonyme, and
all of the capital stock of Legris Industries, Inc., a Delaware corporation
which owns 92.4% of the capital stock of PPM Cranes, Inc., a Delaware
corporation ("PPM North America;" and PPM North America together with PPM Europe
collectively referred to as "PPM") from Legris Industries S.A., a societe
anonyme ("Legris France"). PPM designs, manufactures and markets mobile cranes
and container stackers primarily in North America and Western Europe under the
brand names of PPM, P&H (trademark of Harnischfeger Corporation) and BENDINI.
Concurrently with the completion of the PPM Acquisition, the Company contributed
the assets (subject to liabilities) of its Koehring Cranes and Excavators and
Marklift division to Terex Cranes. The former division now operates as Koehring
Cranes, Inc., a wholly owned subsidiary of Terex Cranes ("Koehring"). Koehring
manufactures mobile cranes under the LORAIN brand name and aerial lift equipment
under the MARKLIFT brand name. PPM and Koehring comprise the Company's new
Mobile Cranes Segment.

Summary of Terms of the Exchange Offer

Registration Rights................................ The Old Notes were sold by
the Company (i) to Qualified Institutional Buyers (as defined in Rule 144A
under the Securities Act) and (ii) to a limited number of other
institutional "Accredited Investors" (as defined in Rule 501(A)(1), (2),
(3) or (7) under the Securities Act) on May 9, 1995. Jefferies & Company,
Inc. and Dillon, Read & Co. Inc. were the initial purchasers of the Old
Notes (the "Initial Purchasers"). In connection with the sale of the Old
Notes, the Company and the Initial Purchasers entered into a Registration
Rights Agreement, dated as of May 9, 1995 (the "Registration Rights
Agreement"), providing for the Exchange Offer.
The Exchange Offer................................. The Company is offering to
exchange $1,000 principal amount of New Notes for each $1,000 principal
amount of Old Notes that are properly tendered and accepted for exchange.
The Company will issue the New Notes on or promptly after the Expiration
Date. As of _____ __, 1995, there were __ registered holders of Old Notes
and $250 million aggregate principal amount of Old Notes outstanding. See
"The Exchange Offer." Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to third parties,
including "Exxon Capital Holdings Corporation" (available May 13, 1988),
"Morgan Stanley & Co. Incorporated" (available June 5, 1991), "Mary Kay
Cosmetics, Inc." (available June 5, 1991) and "Warnaco, Inc." (available
October 11, 1991), the Company believes that, except as described below,
New Notes issued pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale, resold and otherwise transferred by holders
thereof (other than any such holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities
Act, provided that such New Notes are acquired in the ordinary course of
such holder's business and that such holder has no arrangement or
understanding with any person to participate in the distribution of such
New Notes. This Prospectus may be used for an offer to resell or other
retransfer of New Notes only as specifically set forth herein. The Exchange
Offer is not being made to, nor will the Company accept surrenders for
exchange from, holders of Old Notes (i) in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with
the securities or blue sky laws of such jurisdiction or (ii) if any holder
is engaged or intends to engage in a distribution of the New Notes. Each
broker-dealer that receives New Notes for its own account in exchange for
Old Notes, where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale
of such New Notes. See "Plan of Distribution."
Expiration Date.................................... The Exchange Offer will
expire at 5:00 p.m., New York City time, on __________________, 1995,
unless extended, in which case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is extended. The Company
will accept for exchange any and all Old Notes which are validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on the Expiration
Date. The New Notes issued pursuant to the Exchange Offer will be delivered
on or promptly after the Expiration Date.
Interest on the New Notes
and Old Notes...................................... The New Notes will bear
interest at the rate of 13 1/4% per annum and interest will be payable
semi-annually on May 15 and November 15, commencing on November 15, 1995,
to holders of record on the immediately preceding May 1 and November 1.
Holders of New Notes will receive interest on November 15, 1995 from the
date of initial issuance of the New Notes, plus an amount equal to the
accrued interest on the Old Notes exchanged therefor from the most recent
date to which interest has been paid to the date of exchange thereof. Such
interest will be paid with the first interest payment on the New Notes.
Interest on the Old Notes accepted for exchange will cease to accrue upon
issuance of the New Notes.
Procedures for Tendering
Old Notes.......................................... Each holder of Old Notes
wishing to accept the Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in accordance with the
instructions contained herein and therein, and mail or otherwise deliver
such Letter of Transmittal, or such facsimile, together with the Old Notes
and any other required documentation, to United States Trust Company of New
York, as Exchange Agent (the "Exchange Agent"), at the address set forth
herein and in the Letter of Transmittal. By executing the Letter of
Transmittal, each holder will represent to the Company that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such
New Notes, whether or not such person has an arrangement or understanding
with any person to participate in the distribution of such New Notes and
that neither the holder nor any such other person is an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company.
Special Procedures for
Beneficial Owners.................................. Any beneficial owner whose
Old Notes are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to tender such Old Notes in
the Exchange Offer should contact such registered holder promptly and
instruct such registered holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender on its own behalf, such
owner must, prior to completing and executing the Letter of Transmittal and
delivering his Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in its name or obtain a properly completed bond
power from the registered holder. The transfer of registered ownership may
take considerable time and may not be able to be completed prior to the
Expiration Date.
Guaranteed Delivery Procedures..................... Holders of Old Notes who
wish to tender their Old Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes, the Letter of Transmittal
or any other documents required by the Letter of Transmittal to the
Exchange Agent prior to the Expiration Date, must tender their Old Notes
according to the guaranteed delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures."
Withdrawal Rights.................................. Tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date by furnishing a written or facsimile transmission notice of
withdrawal to the Exchange Agent containing the information set forth in
"The Exchange Offer -- Withdrawal of Tenders."
Certain Federal Income Tax
Consequences....................................... For a discussion of certain
federal income tax consequences relating to the exchange of the New Notes
for the Old Notes, see "Certain Federal Income Tax Consequences."
Exchange Agent..................................... United States Trust Company
of New York is the Exchange Agent. The address and telephone number of the
Exchange Agent are set forth in "The Exchange Offer -- Exchange Agent."

Summary of Terms of the New Notes and the Guarantees

The Exchange Offer applies to $250 million aggregate principal amount of the Old
Notes. The form and terms of the New Notes will be the same as the form and
terms of the Old Notes, except that the New Notes will be registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof. The New Notes will evidence the same debt as the Old Notes and will be
entitled to the benefits of the Indenture. See "Description of the Notes and the
Guarantees."

Issuer............................................. Terex Corporation.
Securities Offered................................. $250 million aggregate
principal amount of 13 1/4% Series B Senior Secured Notes due 2002.
Maturity........................................... May 15, 2002.
Interest Rate...................................... The New Notes will bear
interest at 13 1/4% per annum from the date of original issue.
Interest Payment Dates............................. May 15 and November 15 of
each year, commencing November 15, 1995.
Collateral......................................... Except as otherwise set
forth herein, the Old Notes are and the New Notes will be secured by a
first priority security interest in (i) substantially all of the assets of
the Company and the Guarantors, other than cash and cash equivalents
(except that as to accounts receivable and inventory, and proceeds thereof
and certain related rights, such security interest shall be subordinated to
liens securing obligations under any Revolving Credit Facility to which any
of them are obligors), (ii) property, plant and equipment of certain of the
Restricted Subsidiaries organized outside of the U.S. and (iii) the Capital
Stock of, and certain intercompany notes from, all Subsidiaries of the
Company owned by the Company or any Material Subsidiary. In addition, the
Old Notes are and the New Notes will initially be secured by a security
interest in inventory of certain foreign Restricted Subsidiaries; provided,
however, if any European subsidiary of the Company enters into a working
capital or revolving credit facility, the Company is permitted to secure
such facility with accounts receivable and/or inventory of such Subsidiary
and the security interest securing the Old Notes and the New Notes will be
released to the extent required by the terms of any such facility.
Ranking............................................ The Notes will rank pari
passu in right of payment with all existing and future senior Indebtedness
(as defined herein) and senior to all subordinated Indebtedness of the
Company. In addition, upon any distribution of assets of the Company
pursuant to any insolvency, bankruptcy, dissolution, winding up,
liquidation or reorganization, the payment of the principal of, and the
premium, if any, and interest on, the Notes will rank pari passu in right
of payment with all existing and future senior indebtedness. At __________,
1995, the aggregate principal amount of senior indebtedness of the Company
was $_____ million, consisting of the $250 million aggregate principal
amount of the Old Notes and $_____ million aggregate principal amount
outstanding under the Credit Facility (as defined herein). The Indenture
will limit, among other things, the incurrence or existence of liens on the
assets of the Company and its Restricted Subsidiaries subject to certain
exceptions.
Optional Redemption................................ The New Notes are not
redeemable prior to May 15, 2000, except that the Company may, at its
option, redeem up to one-third of the original principal amount of the New
Notes at the redemption prices set forth in the Indenture plus accrued
interest through the date of redemption, with the net proceeds of certain
sales of common stock of the Company or any Restricted Subsidiary. From and
after May 15, 2000, the Notes are redeemable at the option of the Company,
in whole or in part, at the redemption prices set forth in the Indenture
plus accrued interest to the date of redemption.
Guarantors......................................... Present and future Material
Subsidiaries of the Company that are Restricted Subsidiaries (other than
TEL, CMHC Germany, P.P.M., S.A., and any other present or future Restricted
Subsidiary organized under the laws of a foreign country), including,
without limitation, Terex Cranes, PPM Cranes, Koehring Cranes and CMHC.
Change of Control.................................. Upon a Change of Control,
the Company is required, subject to certain conditions, to offer to
purchase the New Notes at 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of purchase.
Covenants.......................................... The Indenture under which
the New Notes will be issued will limit, among other things and subject to
certain exceptions, (i) the incurrence of additional debt or the issuance
of Disqualified Stock (as defined herein) by the Company or its Restricted
Subsidiaries, (ii) the payment of dividends on, and redemption of, Equity
Interests (as defined herein) and certain other restricted payments, (iii)
asset sales, (iv) consolidations, mergers or transfers of all or
substantially all the Company's assets, (v) transactions with affiliates,
and (vi) the occurrence or existence of liens.

Risk Factors

See "Risk Factors" for a discussion of certain factors that should be considered
in connection with the Exchange Offer and an investment in the New Notes.

SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands except per share amounts)

The following summary consolidated financial data is derived from the Selected
Consolidated Financial Data appearing elsewhere in this Prospectus.

As of and for the
Nine Months Ended As of and for the Year Ended December 31,
September 30, 1995 ____________________________________________________________
Actual 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations (1)
Net Sales ....................... $ 766,789 $ 786,781 $ 670,309 $ 523,355 $ 784,194 $ 1,023,283
Income (loss) from operations ... 11,381 3,361 (33,896) (4,125) (70,706) 12,193
Income (loss) before
extraordinary items ........... (26,087) 1,170 (65,080) 2,915 (42,731) (39,243)
Per share:
Income (loss) before
extraordinary items .... (3.02) (0.46) (6.55) 0.29 (4.31) (3.97)
Ratio of earnings to combined
fixed charges and preferred
stock accretion (2) ............ (3) 1.0x (3) 1.2x (3) (3)
Total Assets ......................... $ 645,934 $ 401,616 $ 390,702 $ 477,356 $ 506,713 $ 584,352
Capitalization
Long-term debt and notes payable,
including current maturities $ 355,912 $ 190,871 $ 218,039 $ 217,605 $ 223,051 $ 269,186
Stockholders' Deficit ........... (94,157) (55,738) (62,261) (9,075) (4,141) 44,885
Dividends per share ............. $ -- $ -- $ -- -- $ 0.06 $ 0.05
<FN>
(1) The Summary Consolidated Financial Data include the results of operations of
the Company's Clark Material Handling Subsidiary ("CMH") and the Company's
aerial lift division, Mark Industries ("Mark"), from the dates of their
acquisitions, July 31, 1992 and December 31, 1991, respectively, and reflect the
deconsolidation of a former subsidiary, Fruehauf Trailer Corporation
("Fruehauf"), as of January 1, 1992. See a further discussion of these matters
in Note B -- "Acquisitions" and Note C -- "Investment in Fruehauf Trailer
Corporation" in the Notes to the Consolidated Financial Statements. Income
(loss) before extraordinary items in 1992 includes a $36.5 million gain on
deconsolidation of Fruehauf and in 1991 includes a $56.0 million gain as a
result of an initial public offering of Fruehauf common stock.

(2) For purposes of determining the ratio of earnings to combined fixed charges
and preferred stock accretion, earnings are defined as income from continuing
operations before income taxes, minority interest, extraordinary items and fixed
charges. Fixed charges consist of interest on indebtedness, preferred stock
accretion, amortization of debt issuance costs and rental expense representative
of the interest factor.

(3) The ratio of earnings to combined fixed charges and preferred stock
accretion is less than 1.0 for these periods. The deficiency amounts are $25,954
for the nine months ended September 30, 1995, $64,245 for 1993, $46,021 for 1991
and $47,578 for 1990.
</FN>
</TABLE>

<PAGE>

RISK FACTORS

In addition to other matters described in this Prospectus, the following should
be carefully considered in connection with the Exchange Offer and an investment
in the New Notes:

Significant Leverage

The Company is highly leveraged. At September 30, 1995 the Company had
approximately $355.9 million of indebtedness and negative stockholders' equity
of $94.2 million.

On May 9, 1995, the Company completed the refinancing of substantially all of
its outstanding debt (the "Refinancing"). The Refinancing included the private
placement to institutional investors of $250 million of 13.25% Senior Secured
Notes due May 15, 2002 (the "Senior Secured Notes"), repayment of the Company's
existing senior secured notes and senior subordinated notes, totaling
approximately $152.6 million principal amount, and entry into a new credit
facility to replace the Company's existing lending facility in the U.S.

This substantial leverage has several important consequences, including the
following: (i) a substantial portion of the Company's cash flow from operations
will be dedicated to the payment of principal of, and interest on, its
indebtedness, (ii) the covenants contained in the Company's indebtedness impose
certain restrictions on the Company which, among other things, will limit its
ability to borrow additional funds or to dispose of assets, (iii) the Company's
ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, general corporate purposes or other purposes
may be impaired, and (iv) the Company's ability to withstand competitive
pressures, adverse economic conditions and adverse changes in governmental
regulations, to make acquisitions, and to take advantage of significant business
opportunities that may arise, may be negatively impacted. The Company's ability
to meet its debt service obligations and to reduce its total indebtedness will
be dependent upon future performance, which will be subject to general economic
conditions, its ability to achieve cost savings and other financial, business
and other factors affecting the operations of the Company, many of which are
beyond its control. The Company has historically sustained significant losses
and, prior to the Refinancing, net cash from operating activities was
insufficient to meet the Company's debt service requirements, which the Company
funded primarily from asset sales. If the Company is unable to generate
sufficient cash flow from operations in the future to service its debt, it may
be required to refinance all or a portion of such debt, including the new Senior
Secured Notes, or to obtain additional financing. However, there can be no
assurance that any refinancing would be possible or that any additional
financing could be obtained.

Consequences of Failure to Exchange; Old Notes Subject to Restrictions
on Transfer; Possible Adverse Effect on Trading Market for Old Notes

Holders of Old Notes who do not exchange their Old Notes for New Notes pursuant
to the Exchange Offer will continue to be subject to the restrictions on
transfer of such Old Notes as set forth in the legend thereon as a consequence
of the issuance of the Old Notes pursuant to exemptions from, or in transactions
not subject to, the registration requirements of the Securities Act and
applicable state securities laws. In general, the Old Notes may not be offered
or sold unless registered under the Securities Act and applicable state laws, or
pursuant to an exemption therefrom. The Company does not intend to register the
Old Notes under the Securities Act and, after consummation of the Exchange
Offer, will not be obligated to do so. In addition, any holder of Old Notes who
tenders in the Exchange Offer for the purpose of participating in a distribution
of the New Notes may be deemed to have received restricted securities and, if
so, will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction. To
the extent Old Notes are tendered and accepted for exchange in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Old Notes
could be adversely affected. See "The Exchange Offer" and "Description of the
Notes and the Guarantees -- Registration Rights; Liquidated Damages."

Holders Responsible for Compliance with Exchange Offer
Procedures; No Notice of Defects or Irregularities

Issuance of the New Notes in exchange for Old Notes pursuant to the Exchange
Offer will be made only after a timely receipt by the Company of such Old Notes,
a properly completed and duly executed Letter of Transmittal and all other
required documents. Therefore, holders of Old Notes desiring to tender such Old
Notes in exchange for New Notes should allow sufficient time to ensure timely
delivery. Neither the Exchange Agent nor the Company is under any duty to give
notification of defects or irregularities with respect to the tender of Old
Notes for exchange. Old Notes that are not tendered or are tendered but not
accepted for exchange will, following the consummation of the Exchange Offer,
continue to be subject to the existing restrictions upon transfer thereof and,
upon consummation of the Exchange Offer, the Company's obligation to register
the Old Notes will terminate. See "The Exchange Offer."

Collateral

In the event of a default under the Notes, the proceeds from the sale of the
collateral securing the Notes may not be sufficient to satisfy the Company's
obligations under the Notes in full. The amount to be received upon such a sale
would be dependent upon numerous factors including the condition, age and useful
life of the collateral at the time of such sale, the timing and the manner of
the sale, and whether the assets were being sold as part of an ongoing business.
In addition, the book value of the collateral should not be relied upon as a
measure of realizable value.

Fraudulent Conveyance or Transfer; Possible Invalidation
or Subordination of Company Obligations

The incurrence by the Company of indebtedness could be affected by various laws
for the protection of creditors, including, without limitation, laws governing
fraudulent conveyances and transfers. A court could find that the Company did
not receive fair consideration or reasonably equivalent value for the issuance
of the Old Notes, or upon the exchange thereof for New Notes, and that at the
time of such issuance the Company (i) was insolvent, (ii) was rendered insolvent
by reason thereof, (iii) was engaged in a business or transaction for which the
assets remaining in the hands of the Company constituted unreasonably small
capital, or (iv) intended to incur or believed it would incur debts beyond its
ability to pay such debts as they mature, thereby rendering the Company's
indebtedness, and the Company's obligations in connection with the issuance of
the New Notes, avoidable.

A finding that the issuance of the New Notes constituted a fraudulent conveyance
or transfer would permit the court to invalidate the Company's obligations under
the New Notes or subordinate repayment of the New Notes to all other obligations
of the Company.

The measure of insolvency for purposes of the test for determining whether the
Company was insolvent varies depending upon the law of the jurisdiction that is
being applied. Generally, a debtor will be considered insolvent if the sum of
its debts is greater than all of its property at a fair valuation or if the
present fair salable value of its assets is less than the amount that would be
required to pay its probable liability on its existing debts (including
contingent liabilities) as they become absolute and matured. There can be no
assurance of which test a court would apply to determine whether the Company was
"insolvent" at the time of the issuance of the New Notes or that a court would
not find the Company to have been insolvent under such test.

The obligations of any Guarantor under the Indenture and the grant by any
Restricted Subsidiary of a security interest under the Collateral Agreements (as
defined herein) may be subject to review under applicable fraudulent transfer or
similar laws, in the event of the bankruptcy or other financial difficulty of
any such person. In the United States, under such laws, if a court in a lawsuit
by an unpaid creditor or representative of creditors of any such person, such as
a trustee in bankruptcy or any such person as debtor in possession, were to find
that at the time such person incurred its obligations under its guarantee or
pledged its assets, it (i) received less than fair consideration or reasonably
equivalent value therefor, and (ii) either (a) was insolvent, (b) was rendered
insolvent, (c) was engaged in a business or transaction for which its remaining
unencumbered assets constituted unreasonably small capital, or (d) intended to
incur or believed that it would incur debts beyond its ability to pay as such
debts matured, such court could avoid such obligations under its guarantee
and/or the security interest in its assets and direct the return of any amounts
paid with respect thereto. Moreover, regardless of the factors identified in the
foregoing clauses (i) and (ii), a court could take such action if it found that
the guarantee was entered into or the security interest granted with actual
intent to hinder, delay, or defraud creditors. The measure of insolvency for
purposes of the foregoing will vary depending on the law of the jurisdiction
being applied. Generally, however, an entity would be considered insolvent if
the sum of its debts (including contingent or unliquidated debts) is greater
than all of its property at a fair valuation or if the present fair salable
value of its assets is less than the amount that would be required to pay its
probable liability on its existing debts as they become absolute and matured.

Integration of PPM

The acquisition of PPM by the Company will require the integration of the
administrative, finance, sales and marketing organizations of PPM, as well as
the integration of and coordination of PPM's manufacturing and sales activities.
This will require substantial attention from the Company's management team. The
diversion of management attention and any other difficulties encountered in the
integration process could have an adverse impact on the revenue and operating
results of the Company. There also can be no assurance that unforeseen costs and
expenses or other factors may not adversely affect the integration of PPM and
thereby adversely affect the business of the Company.

<PAGE>

Environmental and Related Matters

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 Company may also have contingent responsibility for
liabilities of certain of its subsidiaries with respect to environmental matters
if such subsidiaries were to fail to discharge their obligations to the extent
that such liabilities arose during the period in which the Company was a
controlling shareholder.

Net Operating Loss Carryovers and Other Tax Issues

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.

In addition, Randolph W. Lenz has retired as Chairman of the Company. Although
his retirement agreement places certain restrictions on his ability to sell his
shares of Common Stock in the Company, in the event that Mr. Lenz is able to
sell a substantial portion of his shares in the Company, such sale, in
combination with the issuance of the Warrants in December 20, 1993 and subject
to the effects of other changes in share ownership of the Company, could result
in a change in control for tax purposes. Such a change in control 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.

SEC Investigation

The Securities and Exchange Commission (the "Commission") in March of 1994
initiated a private investigation, which included the Company and certain of its
then 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.

Industry Cyclicality and Substantial Competition

Sales of products to be manufactured and sold by the Company have historically
been subject to substantial cyclical variation extending over a number of years
based on general economic conditions. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

The markets in which the Company competes are highly competitive. The Company
must remain competitive in the areas of quality, price, product line, ease of
use, safety, comfort and customer service. Many of the Company's competitors
have greater financial resources than the Company. See "Business" for further
discussion.

Foreign Operations

The Company's products are sold in over 50 countries around the world and,
accordingly, a substantial portion of the revenues of the Company are generated
in foreign currencies, while the costs associated with these revenues are only
partially incurred in the same currencies. Consequently, the Company has a net
exposure to fluctuations between the U.S. dollar and such foreign currencies,
which impacts the financial performance of the Company. Although revenues and
costs of the Company may be partially hedged, currency movements will impact the
Company's financial performance in the future. In addition, international
operations are subject to a number of potential risks, including, among others,
currency exchange controls, transfer restrictions and rate fluctuations, trade
barriers, the effects of income and withholding tax, and governmental
expropriation.

Lack of Public Market for the New Notes

The New Notes are being offered to the holders of the Old Notes. The Old Notes
were issued in May 1995 to the Initial Purchasers and resold in transactions not
requiring registration under the Securities Act or applicable state securities
laws, including sales pursuant to Rule 144A. The Old Notes are eligible for
trading in the Private Offerings, Resales and Trading through Automatic Linkages
(PORTAL) market. The New Notes are new securities for which there currently is
no market. The Company does not intend to apply for listing of the New Notes on
any securities exchange or for quotation through the National Association of
Securities Dealer Automated Quotation System. There can be no assurance that any
active market for the New Notes will develop. If a trading market develops for
the New Notes, future trading prices of such securities will depend on many
factors, inducing, among other things, prevailing interest rates, the Company's
results of operations and the market for similar securities.

THE COMPANY

Terex is a global provider of capital goods and equipment used in the mining,
commercial building, infrastructure, manufacturing and construction industries.
The Company's operations began in 1983 with the purchase of Northwest
Engineering Company, the Company's original business and name. Since 1983,
management has expanded the Company's business through a series of acquisitions.
In 1988, Northwest Engineering Company merged into a subsidiary acquired in 1986
named Terex Corporation, with Terex Corporation as the surviving corporation.
The Company's Material Handling Segment designs, manufactures and markets a
complete line of internal combustion and electric lift trucks, electric walkies,
automated pallet trucks, industrial tow tractors and related components and
replacement parts. The Heavy Equipment Segment designs, manufactures and markets
heavy-duty, off-highway, earthmoving and contruction equipment and related
components and replacement parts. The Mobile Cranes segment designs,
manufactures and markets mobile cranes, aerial platforms, container stackers and
scrap holders and related components and replacement parts.

The Mobile Cranes Segment was established as a separate business segment as a
result of a significant acquisition in 1995. On May 9, 1995, the Company,
through Terex Cranes, a recently formed wholly owned subsidiary of the Company,
completed the PPM Acquisition. PPM designs, manufactures and markets mobile
cranes and container stackers primarily in North America and Western Europe
under the brand names of PPM, P&H (trademark of Harnischfeger Corporation) and
BENDINI. Concurrently with the completion of the PPM Acquisition, the Company
contributed the assets (subject to liabilities) of its Koehring and Marklift
division to Terex Cranes. The former division now operates as Koehring, a wholly
owned subsidiary of Terex Cranes. Koehring manufactures mobile cranes under the
LORAIN brand name and aerial lift equipment under the MARKLIFT brand name. PPM
and Koehring comprise the Company's new Mobile Cranes Segment.

The Company has grown through acquisitions and has had considerable experience
in restructuring and operating capital goods manufacturers, particularly in the
off-road truck and construction and industrial equipment industries. Following
an acquisition, in order to improve profitability, the Company traditionally (i)
consolidates manufacturing operations, (ii) adjusts new equipment production
capacity to meet the actual level of demand in the marketplace, (iii) reduces
corporate overhead and (iv) emphasizes that portion of the business that yields
the highest margins, particularly the replacement parts business. More
specifically, this strategy involves elimination of marginally profitable or
unprofitable product lines, closing underutilized and inefficient plants,
liquidating excess inventories and substantially reducing personnel.

The principal executive offices of the Company are located at 500 Post Road
East, Westport, Connecticut 06880 and its telephone number is (203) 222-7170.

<PAGE>

THE EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

The Old Notes were sold by the Company on May 9, 1995 to the Initial Purchasers
with further distribution permitted only to (i) Qualified Institutional Buyers
(as defined in Rule 144A under the Securities Act) and (ii) a limited number of
other institutional "Accredited Investors" (as defined in Rule 501(A)(1), (2),
(3) or (7) under the Securities Act). In connection with the sale of the Old
Notes, the Company and the Initial Purchasers entered into the Registration
Rights Agreement which requires the Company (i) to cause the Old Notes to be
registered under the Securities Act or (ii) to file with the Commission a
registration statement under the Securities Act with respect to the New Notes of
the Company identical in all material respects to the Old Notes, and to use its
best efforts to cause such registration statement described in clause (ii) above
to become effective under the Securities Act. The Company is further obligated,
upon the effectiveness of the registration statement, to offer the holders of
the Old Notes the opportunity to exchange their Old Notes for a like principal
amount of New Notes, which will be issued without a restrictive legend and may
be reoffered and resold by the holder without restrictions or limitations under
the Securities Act. A copy of the Registration Rights Agreement has been filed
as an exhibit to the Registration Statement of which this Prospectus is a part.
The Exchange Offer is being made pursuant to the Registration Rights Agreement
to satisfy the Company's obligations thereunder. The term "Holder" with respect
to the Exchange Offer means any person in whose name Old Notes are registered on
the Company's books or any other person who has obtained a properly completed
bond power from the registered Holder.

In order to participate in the Exchange Offer, a Holder must represent to the
Company, among other things, that (i) the New Notes acquired pursuant to the
Exchange Offer are being acquired in the ordinary course of business of the
person receive such New Notes, whether or not such person is the Holder, (ii)
neither the Holder nor any such other person is engaging in or intends to engage
in a distribution of such New Notes, (iii) neither the Holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes within the meaning of the Securities Act, and
(iv) neither the Holder nor any such other person is an "affiliate," as defined
under Rule 405 promulgated under the Securities Act, of the Company. In the
event that any Holder of Old Notes cannot make the requisite representations to
the Company in order to participate in the Exchange Offer, such Holder may be
entitled to have such Holder's Old Notes registered in a "shelf" registration
statement on an appropriate form pursuant to Rule 415 under the Securities Act.
See "Description of the Notes and the Guarantees -- Registration Rights;
Liquidated Damages."

Resale of New Notes

Based on an interpretation by the staff of the Commission set forth in no-action
letters issued to third parties, including "Exxon Capital Holdings Corporation"
(available May 13, 1988), "Morgan Stanley & Co. Incorporated" (available June 5,
1991), "Mary Kay Cosmetics, Inc." (available June 5, 1991) and "Warnaco, Inc."
(available October 11, 1991), the Company believes that, except as described
below, the New Notes issued pursuant to the Exchange Offer in exchange for Old
Notes may be offered for resale, resold and otherwise transferred by any Holder
of such Notes (other than any such Holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
Holder's business and such Holder has no arrangement or understanding with any
person to participate in the distribution of such New Notes. Any Holder who
tenders in the Exchange Offer for the purpose of participating in a distribution
of the New Notes cannot rely on such interpretation by the staff of the
Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. Unless an exemption from registration is otherwise available, any
such resale transaction should be covered by an effective registration statement
containing the selling security holders information required by Item 507 of
Regulation S-K under the Securities Act. This Prospectus may be used for an
offer to resell, resale or other retransfer of New Notes only as specifically
set forth herein. Each broker-dealer that receives New Notes for its own account
in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. See "Plan of Distribution."

Terms of the Exchange Offer

Upon the terms and subject to the conditions set forth in this Prospectus and in
the Letter of Transmittal, the Company will accept for exchange any and all Old
Notes properly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount of
New Notes in exchange for each $1,000 principal amount of outstanding Old Notes
surrendered pursuant to the Exchange Offer. Old Notes may be tendered only in
integral multiples of $1,000.

The form and terms of the New Notes will be the same as the form and terms of
the Old Notes except the New Notes will be registered under the Securities Act
and hence will not bear legends restricting the transfer thereof. The New Notes
will evidence the same debt as the Old Notes. The New Notes will be issued under
and entitled to the benefits of the Indenture, which also authorized the
issuance of the Old Notes, such that both series will be treated as a single
class of debt securities under the Indenture.

As of the date of this Prospectus, $250 million aggregate principal amount of
the Old Notes are outstanding. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered Holders of Old Notes. There will be
no fixed record date for determining registered Holders of Old Notes entitled to
participate in the Exchange Offer.

The Company intends to conduct the Exchange Offer in accordance with the
provisions of the Registration Rights Agreement and the applicable requirements
of the Exchange Act, and the rules and regulations of the Commission thereunder.
Old Notes which are not tendered for exchange in the Exchange Offer will remain
outstanding and continue to accrue interest and will be entitled to the rights
and benefits such Holders have under the Indenture and the Registration Rights
Agreement.

The Company shall be deemed to have accepted for exchange properly tendered Old
Notes when, as and if the Company shall have given oral or written notice
thereof to the Exchange Agent and complied with the provisions of Section 2.6(h)
of the Indenture. The Exchange Agent will act as agent for the tendering Holders
for the purposes of receiving the New Notes from the Company.

Holders who tender Old Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Old Notes pursuant
to the Exchange Offer. The Company will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the Exchange Offer.
See " -- Fees and Expenses."

Expiration Date; Extensions; Amendments

The term "Expiration Date" shall mean 5:00 p.m., New York City time on
________________, 1996, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date to which the Exchange Offer is extended. The Expiration Date shall not in
any event be extended to a date later than __________, 199_ (___ days after the
initial Expiration Date).

In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the Holders an
announcement thereof, prior to 9:00 a.m., New York City time, on the next
business day after the immediately expired Expiration Date.

The Company reserves the right, in its sole discretion, (i) to delay accepting
any Old Notes, to extend the Exchange Offer or to terminate the Exchange Offer,
if any of the conditions set forth below under " -- Conditions" shall not have
been satisfied, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the Holders. If the Exchange Offer is amended in a manner determined
by the Company to constitute a material change, the Company will promptly
disclose such amendment by means of a prospectus supplement that will be
distributed to the registered Holders, and the Company will extend the Exchange
Offer for a period of five to ten business days, depending upon the significance
of the amendment and the manner of disclosure to the registered Holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.

Without limiting the manner in which the Company may choose to make a public
announcement of any delay, extension, termination or amendment of the Exchange
Offer, the Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones news service.

Interest on the New Notes

The New Notes will bear interest at 13 1/4% per annum from the date of original
issue. Interest on the New Notes will be payable semi-annually, in arrears, on
May 15 and November 15 of each year, commencing on November 15, 1995. Holders of
New Notes will receive interest on November 15, 1995 from the date of initial
issuance of the New Notes, plus an amount equal to the accrued interest on the
Old Notes from the most recent date to which interest has been paid to the date
of exchange thereof for New Notes. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of the New Notes.

Conditions

Notwithstanding any other term of the Exchange Offer, the Company will not be
required to accept for exchange, or exchange any New Notes for, any Old Notes,
and may terminate the Exchange Offer as provided herein before the acceptance of
any Old Notes for exchange, if:

(a) any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the Exchange Offer which, in
the Company's sole judgment, might materially impair the ability of the Company
to proceed with the Exchange Offer, or

(b) any law, statute, rule or regulation is proposed, adopted or enacted,
or any existing law, statute, rule or regulation is interpreted by the staff of
the Commission, which, in the Company's sole judgment, might materially impair
the ability of the Company to proceed with the Exchange Offer, or

(c) any governmental approval has not been obtained, which approval the
Company shall, in its sole discretion, deem necessary for the consummation of
the Exchange Offer as contemplated hereby.

If the Company determines in its sole discretion that any of these conditions
are not satisfied, the Company may (i) refuse to accept any Old Notes and return
all tendered Old Notes to the tendering Holders, (ii) extend the Exchange Offer
and retain all Old Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of Holders who tendered such Old Notes to
withdraw their tendered Old Notes, or (iii) waive such unsatisfied conditions
with respect to the Exchange Offer and accept all properly tendered Old Notes
which have not been withdrawn. If such waiver constitutes a material change to
the Exchange Offer, the Company will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the Holders, and the Company
will extend the Exchange Offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure to
the Holders, if the Exchange Offer would otherwise expire during such five to
ten business day period.

Procedures for Tendering

Only a Holder of Old Notes may tender such Old Notes in the Exchange Offer. To
tender in the Exchange Offer, a Holder must complete, sign and date the Letter
of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed
if required by the Letter of Transmittal, and mail or otherwise deliver such
Letter of Transmittal or such facsimile, together with the Old Notes and any
other required documents, to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date. In addition, either (i) Old Notes must be
received by the Exchange Agent along with the Letter of Transmittal, or (ii) a
timely confirmation of book-entry transfer (a "Book-Entry Confirmation") of such
Old Notes, if such procedure is available, into the Exchange Agent's account at
the Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to
the procedure for book-entry transfer described below must be received by the
Exchange Agent prior to the Expiration Date, or (iii) the Holder must comply
with the guaranteed delivery procedures described below. To be tendered
effectively, the Old Notes, Letter of Transmittal and other required documents
must be received by the Exchange Agent at the address set forth below under " --
Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration Date.

The tender by a Holder which is not withdrawn prior to the Expiration Date will
constitute an agreement between such Holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.

THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR AND ON BEHALF OF SUCH HOLDERS.

Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
such Old Notes should contact the registered Holder promptly and instruct such
Holder to tender on such beneficial owner's behalf. If such beneficial owner
wishes to tender on its own behalf, such owner must, prior to completing and
executing the Letter of Transmittal and delivering of its Old Notes, either make
appropriate arrangements to register ownership of the Old Notes in its name or
obtain a properly completed bond power from the registered Holder. The transfer
of registered ownership may take considerable time and may not be able to be
completed prior to the Expiration Date.

Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may
be, must be guaranteed by any Eligible Institution (as defined below) unless the
Old Notes tendered pursuant thereto are tendered (i) by a Holder who has not
completed the box entitled "Special Payment Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. In the event that signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, such
guarantor must be a member firm of a registered national securities exchange or
of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act which is a member of one of the recognized signature guarantee
programs identified in the Letter of Transmittal (an "Eligible Institution").

If the Letter of Transmittal is signed by a person other than the Holder of any
Old Notes listed therein, such Old Notes must be endorsed or accompanied by a
properly completed bond power, signed by such Holder as such Holder's name
appears on such Old Notes with the signature thereon guaranteed by an Eligible
Institution.

If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.

All questions as to the validity, form, eligibility (including time of receipt),
acceptance of tendered Old Notes and withdrawal of tendered Old Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Old Notes not properly tendered or any Old Notes the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right to waive any defects, irregularities or conditions of
tender as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify Holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering Holders,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.

While the Company has no present plan to acquire any Old Notes that are not
tendered in the Exchange Offer or to file a registration statement to permit
resale of any Old Notes that are not tendered pursuant to the Exchange Offer,
the Company reserves the right in its sole discretion to purchase or make offers
for any Old Notes that remain outstanding subsequent to the Expiration Date or,
as set forth above under " -- Conditions," to terminate the Exchange Offer and,
to the extent permitted by applicable law, purchase Old Notes in the open
market, in privately negotiated transactions or otherwise. The terms of any such
purchases or offers could differ from the terms of the Exchange Offer.

In all cases, issuance of New Notes for Old Notes that are accepted for exchange
pursuant to the Exchange Offer will be made only after timely receipt by the
Exchange Agent of certificates for such Old Notes or a timely Book-Entry
confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for exchange for any reason set forth in the terms and conditions of
the Exchange Offer or if Old Notes are submitted for a greater principal amount
than the Holder desires to exchange, such unaccepted or non-exchanged Old Notes
will be returned without expense to the tendering Holder thereof (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described below, such non-exchanged Old Notes will be credited to an
account maintained with such Book-Entry Transfer Facility) as promptly as
practicable after the expiration or termination of the Exchange Offer.

Book Entry Transfer

The Exchange Agent will make a request to establish an account with respect to
the Old Notes at the Book-Entry Transfer Facility for purposes of the Exchange
Offer within two business days after the date of this Prospectus, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof,
with any required signature guarantees and any other required documents, must,
in any case, be transmitted to and received by the Exchange Agent at the address
set forth below under "-- Exchange Agent" on or prior to the Expiration Date or,
if the guaranteed delivery procedures described below are to be complied with,
within the time period provided under such procedures. Delivery of documents to
the Book-Entry Transfer Facility does not constitute delivery to the Exchange
Agent.

Guaranteed Delivery Procedures

Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may effect a tender if:

(a) The tender is made through an Eligible Institution;

(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) setting forth the
name and address of the Holder, the registered number(s) of such Old Notes and
the principal amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five New York Stock Exchange trading
days after the Expiration Date, the Letter of Transmittal (or facsimile thereof)
together with the Old Notes or a Book-Entry Confirmation, as the case may be,
and any other documents required by the Letter of Transmittal will be deposited
by the Eligible Institution with the Exchange Agent; and

(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Old Notes in proper form for
transfer or a Book-Entry Confirmation, as the case may be, and all other
documents required by the Letter of Transmittal, are received by the Exchange
Agent within five New York Stock Exchange trading days after the Expiration
Date.

Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent
to Holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.

Withdrawal of Tenders

Except as otherwise provided herein, tenders of Old Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date.

To withdraw a tender of Old Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at its
address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the registered number or
numbers and principal amount of such Old Notes or, in the case of Old Notes
transferred by book-entry transfer, the name and number of the account at the
Book-Entry Transfer Facility to be credited), (iii) be signed by the Holder in
the same manner as the original signature on the Letter of Transmittal by which
such Old Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have United States Trust
Company of New York, the trustee with respect to the Old Notes (the "Trustee"),
register the transfer of such Old Notes into the name of the person withdrawing
the tender and (iv) specify the name in which any such Old Notes are to be
registered, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no New Notes will be issued with
respect thereto unless the Old Notes so withdrawn are validly re-tendered. Any
Old Notes which have been tendered but which are not accepted for payment will
be returned to the Holder thereof without cost to such Holder as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described above under "-- Procedures for Tendering" at any time prior
to the Expiration Date.

<PAGE>

Exchange Agent

United States Trust Company of New York has been appointed as Exchange Agent of
the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:

By Registered or Certified Mail: By Overnight Courier:

United States Trust Company of New York United States Trust Company of New York
P.O. Box 844 770 Broadway
Cooper Station, New York 10276 New York, New York 10003
Attention: Corporate Trust Operations

By Hand: By Facsimile:

United States Trust Company of New York (212) 420-6152
65 Beaver Street Attention: Customer Service
New York, New York 10005
Attention: Ground Level Confirm by telephone:
Corporate Trust Operations (800) 548-6565

Fees and Expenses

The expenses of soliciting tenders will be borne by the Company. The principal
solicitation is being made by mail; however, additional solicitation may be made
by telegraph, telephone or in person by officers and regular employees of the
Company and its affiliates.

The Company has not retained any dealer-manager in connection with the Exchange
Offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the Exchange Offer. The Company, however, will pay the Exchange
Agent reasonable and customary fees for its services and will reimburse it for
its reasonable out-of-pocket expenses in connection therewith.

The cash expenses to be incurred in connection with the Exchange Offer will be
paid by the Company and are estimated in the aggregate to be approximately
$_______________. Such expenses include fees and expenses of the Exchange Agent
and Trustee, accounting and legal fees and printing costs, among others.

The Company will pay all transfer taxes, if any, applicable to the exchange of
Old Notes pursuant to the Exchange Offer. If, however, certificates representing
New Notes or Old Notes for principal amounts not tendered or accepted for
exchange are to be delivered to, or are to be issued in the name of, any person
other than the Holder of the Old Notes tendered, or if tendered Old Notes are
registered in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Old Notes pursuant to the Exchange Offer, then the amount of any
such transfer taxes (whether imposed on the Holder or any other persons) will be
payable by the tendering Holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
Holder.

Consequences of Failure to Exchange

The Old Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will remain restricted securities. Accordingly, such Old Notes may be
resold only (i) to the Company (upon redemption thereof or otherwise), (ii)
pursuant to an effective registration statement under the Securities Act, (iii)
so long as the Old Notes are eligible for resale pursuant to Rule 144A, to a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of Rule 144A, or (iv)
pursuant to another available exemption from the registration requirements of
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States.

Accounting Treatment

The New Notes will be recorded at the same carrying value as the Old Notes as
reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Company. The expenses of the Exchange Offer will be amortized over the term of
the New Notes.

USE OF PROCEEDS

This Exchange Offer is intended to satisfy certain of the Company's obligations
to the holders of the Old Notes under the Registration Rights Agreement entered
into in connection with the sale of the Old Notes. The Company will not receive
any cash proceeds from the issuance of the New Notes offered hereby. In
consideration for issuing the New Notes as contemplated in this Prospectus, the
Company will receive in exchange Old Notes in like principal amount, the forms
and terms of which are identical, in all material respects, to the New Notes.
The Old Notes surrendered in exchange for New Notes will be retired and canceled
and cannot be reissued. Accordingly, issuance of the New Notes will not result
in any increase in the indebtedness of the Company. Proceeds from the sale of
the privately placed Old Notes were used to refinance the Company's then
outstanding senior secured notes and senior subordinated notes, to finance the
PPM Acquisition of and to pay transaction expenses incurred in connection with
the PPM Acquisition and the issuance of the Old Notes.

<PAGE>

CAPITALIZATION

The following table sets forth the consolidated capitalization of the Company as
of September 30, 1995. The table should be read in conjunction with the
consolidated financial statements of the Company and the related notes thereto
included elsewhere in this Prospectus. See "The Company" and "Selected
Consolidated Financial Information."

(in thousands)
Notes payable and long-term debt (including current portion):
Senior Secured Notes due May 15, 2002 (1) .............. $ 246,919
Credit Facility maturing May 9, 1998 (2) ............... 72,335
Other debt, including notes payable (3) ................ 36,658
---------
Total notes payable and long term debt ............... 355,912
---------

Minority interest, including redeemable
preferred stock of a subsidiary ........................... 10,028
---------

Redeemable Convertible Preferred Stock
(including the Preferred Stock registered hereby) ...... 22,462
---------

Stockholders' Deficit
Common Stock Purchase Warrants ......................... 17,240
Common Stock ........................................... 104
Additional paid-in capital ............................. 40,451
Accumulated deficit .................................... (147,872)
Pension liability adjustment ........................... (1,778)
Unrealized holding gain on equity securities ........... 938
Foreign currency translation adjustment ................ (3,240)
---------
Total stockholders' deficit .......................... (94,157)
---------

Total capitalization ........................................ $ 294,245
=========
- ---------

(1) Represents $250.0 million principal amount of Senior Secured Notes. See "The
Senior Secured Notes," below.

(2) The Credit Facility currently provides for revolving credit loans and
guarantees of letters of credit of up to $100 million and matures on May 9,
1998. The Credit Facility bears interest at a fluctuating rate based on 1.75%
per annum in excess of the prime rate or 3.75% per annum in excess of the
adjusted eurodollar rate at the Company's option. Borrowings under the credit
facility are secured by a lien on substantially all of the Company's domestic
accounts receivable and inventory. See "The Credit Facility," below.

(3) Includes $16.1 million of notes payable to banks, capital leases and term
debt assumed in the PPM Acquisition. See Note F -- "Long Term Obligations" of
the Notes to Consolidated Financial Statements, included elsewhere in this
Prospectus, for a description of the Company's other debt.

The Senior Secured Notes

On May 9, 1995, the Company issued $250 million of Senior Secured Notes due May
15, 2002. Except in the event of certain asset sales, there are no principal
repayment or sinking fund requirements prior to maturity. Interest on the Notes
is payable semi-annually on May 15 and November 15 of each year, commencing on
November 15, 1995, to holders of record on the immediately preceding May 1 and
November 1, respectively. The Notes bear interest at 13 3/4% per annum. Upon the
earlier of (i) the consummation of an Exchange Offer and (ii) the effectiveness
of a Shelf Registration Statement, the interest rate on the Notes will decrease
to 13 1/4% per annum. Interest is computed on the basis of a 360-day year
comprised of twelve 30-day months.

The Senior Secured Notes are senior obligations of the Company, pari passu in
right of payment with all existing and future senior indebtedness and senior to
all subordinated indebtedness. Repayment of the Senior Secured Notes are
guaranteed by certain domestic wholly-owned subsidiaries of the Company (the
"Guarantors"). The Senior Secured Notes are secured by a first priority security
interest on substantially all of the assets of the Company and the Guarantors,
other than cash and cash equivalents, except that as to accounts receivable and
inventory and proceeds thereof, and certain related rights, such security shall
be subordinated to liens securing obligations outstanding under any working
capital or revolving credit facility secured by such accounts receivable and
inventory, including the Credit Facility. The Senior Secured Notes are also
secured by a lien on certain assets of the Company's foreign subsidiaries. The
Indenture for the Senior Secured Notes places certain limits on the Company's
ability to incur additional indebtedness; permit the existence of liens; issue,
pay dividends on or redeem equity securities; sell assets; consolidate, merge or
transfer assets to another entity; and enter into transactions with affiliates.

In connection with the issuance of the Senior Secured Notes, the Company issued
one million stock appreciation rights ("SARs") entitling the holders to receive
cash or Terex Corporation common stock, at the option of the Company, in an
amount equal to the average closing sale price of the common stock for 60
trading days prior to the date of exercise less $7.288 for each SAR.

The foregoing description is a summary of the terms of the Senior Secured Notes
and Indenture and is qualified in its entirety by reference to such documents,
copies of which are filed as Exhibits to the Registration Statement of which
this Prospectus is a part.

The Credit Facility

The Company currently has a secured revolving credit facility (the "Credit
Facility") with certain institutional lenders (the "Lenders"). Under the terms
of such facility, the Company and Clark Material Handling Company ("CMHC"),
Koehring and PPM North America, each a subsidiary of the Company, (collectively,
the "Borrowers") will have availability, subject to the borrowing base
limitations set forth below, in an aggregate amount of up to $100 million.
Subject to the terms and conditions set forth in the Credit Facility, the
Borrowers may borrow (in the form of revolving loans and up to $15 million in
outstanding letters of credit) an amount at any time outstanding initially
equalling the sum of the following: (i) 75% of the net amount of eligible
receivables (as defined in the Credit Facility) of the Company, Koehring and PPM
North America, plus (ii) 70% of the net amount of eligible receivables of CMHC,
plus (iii) the lesser of (a) 45% of the value of eligible inventory (as defined
in the Credit Facility) of the Borrowers or (b) 80% of the appraised orderly
liquidation value of eligible inventory.

Each Borrower guarantees, on a joint and several basis, all of the obligations
of the other Borrowers under the Credit Facility, which obligations will
generally be secured by a first priority security interest in favor of the
Lenders in all of the receivables and inventory and certain related rights of
the Borrowers.

The outstanding principal amount of prime rate loans initially bears interest at
the rate of 1.75% per annum in excess of the prime rate and the outstanding
principal amount of eurodollar rate loans initially bears interest at the rate
of 3.75% per annum in excess of the adjusted eurodollar rate. The Credit
Facility contains covenants limiting the Borrowers' activities, including,
without limitation, limitations on the incurrence of indebtedness, liens, asset
sales, dividends and other payments, investments, mergers and related party
transactions.

The Credit Facility matures on May 9, 1998. The Lenders, at their option, may
extend the facility for one additional year. In the event that for any reason
the facility is terminated prior to the maturity date, the Borrowers must pay to
the Lenders a termination fee.

The foregoing description is a summary of the terms of the Credit Facility and
does not purport to be complete and is qualified in its entirety by reference to
the Loan and Security Agreement dated as of May 9, 1995 between the Lenders and
the Borrowers, a copy of which is filed as an Exhibit to the Registration
Statement of which this Prospectus is a part.

<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands except per share amounts and employees)

Selected Financial Data

The Selected Financial Data include the results of operations of CMH and of Mark
from the dates of their acquisitions, July 31, 1992 and December 31, 1991,
respectively, and reflect the deconsolidation of Fruehauf as of January 1, 1992.
For a further discussion of these matters, see Note B -- "Acquisitions" and Note
C -- "Investment in Fruehauf Trailer Corporation" in the Notes to the
Consolidated Financial Statements. Income (loss) before extraordinary items and
net income (loss) in 1992 include a $36.5 million gain on deconsolidation of
Fruehauf, and in 1991 include a $56.0 million gain as a result of an initial
public offering of Fruehauf common stock.

The following data should be read in conjunction with the historical financial
statements of the Company and the related notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere herein. Operating results for interim periods are not
necessarily indicative of results for the entire fiscal year.

Nine Months Ended As of and for the Year Ended December 31,
September 30, 1995 ____________________________________________________________
Actual 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations
Net Sales ........................ $ 766,789 $ 786,781 $ 670,309 $ 523,355 $ 784,194 $ 1,023,283
Income (loss) from operations .... 11,381 3,361 (33,896) (4,125) (70,706) 12,193
Income (loss) before
extraordinary items .......... (26,087) 1,170 (65,080) 2,915 (42,731) (39,243)
Net income (loss) ................ (33,539) 461 (66,544) 2,915 (42,731) (42,837)
Net income (loss) applicable
to common stock .............. (38,739) (5,468) (66,696) 2,915 (42,731) (42,837)
Per Common and Common Equivalent Share:
Income (loss) before
extraordinary items .......... (3.02) (0.46) (6.55) 0.29 (4.31) (3.97)
Net income (loss) ................ (3.75) (0.53) (6.70) 0.29 (4.31) (4.33)
Ratio of earnings to fixed charges (1) (2) 1.0x (2) 1.0x (2)
(2)
Total Assets .......................... $ 645,934 $ 401,616 $ 390,702 $ 477,356 $ 506,713 $ 584,352
Capitalization
Long-term debt and notes payable,
including current maturities $ 355,912 $ 190,871 $ 218,039 $ 217,605 $ 223,051 $ 269,186
Minority interest, including
redeemable preferred
stock of a subsidiary ........ $ 10,028 -- -- -- -- --
Redeemable convertible
preferred stock .............. 22,462 17,262 10,480 -- -- --
Stockholders' Deficit ............ (94,157) (55,738) (62,261) (9,075) (4,141) 44,885
Dividends per share of
Common Stock ................. -- -- -- -- $ 0.06 $ 0.05
Shares of Common Stock outstanding
at period end ............... 10,359 10,303 10,303 9,949 9,923 9,893
Employees ............................. 3,670 2,851 2,930 3,056 6,980 8,000
- -----------

<FN>

Notes to Selected Consolidated Financial Data

(1) For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as income from continuing operations before income
taxes, minority interest, extraordinary items and fixed charges. Fixed
charges consist of interest on indebtedness, preferred stock accretion,
amortization of debt issuance costs and rental expense representative of
the interest factor.

(2) The ratio of earnings to fixed charges is less than 1.0 for these periods.
The deficiency amounts are $25,954 for the nine months ended September 30,
1995, $64,245 for 1993, $46,021 for 1991 and $47,578 for 1990.

</FN>
</TABLE>

<PAGE>

Unaudited Quarterly Financial Data

Summarized quarterly financial data for the nine months ended September 30, 1995 and for the years 1994 and 1993 are as
follows (in thousands, except per share amounts):

1995 1994 1993
--------------------------- -------------------------------------- ------------------------------------
Third Second First Fourth Third Second First Fourth Third Second First
-------- ------- ------- -------- -------- -------- -------- -------- -------- ------- -------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales..... $283,304 $269,409 $214,076 $213,431 $207,062 $198,250 $168,038 $150,799 $164,052 $172,261 $183,197

Gross
profit . 30,814 24,234 21,212 25,698 22,782 19,502 15,177 7,499 11,545 13,257 16,192

Income
(loss)
before
extraor-
dinary
items. (7,768) (16,416) (1,885) 531 1,209 10,254 (10,824) (21,988) (15,046) (15,647) (12,399)

Net income
(loss) (7,786) (23,868) (1,885) 219 1,045 10,021 (10,824) (21,449) (15,046) (17,650) (12,399)

Net income
(loss)
applicable
to common
stock. (9,639) (25,657) (3,614) (1,369) (472) 8,577 (12,204) (21,601) (15,046) (17,650) (12,399)

Per share:
Primary

Income
(loss)
before
extraor-
dinary
items $(0.93) $(1.76) $(0.35) $(0.10) $(0.03) $0.64 $(1.18) $(2.22) $(1.51) $(1.57) $(1.25)

Net
income
(loss) (0.93) (2.48) (0.35) (0.13) (0.05) 0.62 (1.18) (2.17) (1.51) (1.77) (1.25)

Fully diluted

Income
(loss)
before
extraor-
dinary
items $(0.93) $(1.76) $(0.35) $(0.10) $(0.03) $0.60 $(1.18) $(2.22) $(1.51) $(1.57) $(1.25)

Net
income
(loss) (0.93) (2.48) (0.35) (0.13) (0.05) 0.59 (1.18) (2.17) (1.51) (1.77) (1.25)
</TABLE>

The accompanying unaudited quarterly financial data of the Company have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with Item 302 of Regulation S-K. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been made and were of a normal recurring nature except for those discussed
below.

In 1995, the Company recognized a gain of $1.0 million in the first quarter as a
result of the sale of 486,622 shares of Fruehauf common stock and recorded
severance and exit costs of $3.5 million in the second quarter.

In 1994, the Company recognized gains of $4.6 million in the first quarter,
$15.5 million in the second quarter, $4.3 million in the third quarter and $1.6
million in the fourth quarter as a result of the sale of a total of 5,900,000
shares of Fruehauf common stock. The Company recognized a gain of $4.7 million
from the sale of its Drexel Industries subsidiary in the second quarter of 1994.
The Company recorded severance charges of $4.5 million in the second quarter of
1994 and $2.8 million in the fourth quarter of 1994, and a related pension
curtailment gain of $0.9 million in the fourth quarter of 1994.

As a result of changing Mark's product offerings and distribution, the Company
recognized a charge to income of $4.7 million in the fourth quarter of 1993 to
write-off the remaining unamortized goodwill from the acquisition of Mark. The
Company recognized a gain of $3.0 million in the fourth quarter of 1993 as a
result of the sale of 1,000,000 shares of Fruehauf common stock.

Net income (loss) has been reduced by Preferred Stock accretion for purposes of
calculating earnings per share amounts. See Note I -- "Preferred Stock" in the
Notes to the Company's Consolidated Financial Statements.

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Prior to the PPM Acquisition on May 9, 1995, the Company operated in two
industry segments during the periods presented herein: material handling and
heavy equipment. The addition of the PPM business to the Company's existing
crane and aerial lift business has created combined mobile crane operations
sufficient in size to constitute a third industry segment referred to herein as
"Mobile Cranes." The comparisons presented below have been reclassified to a
three segment basis for consistency. The Mobile Cranes segment results for
periods prior to May 1995 consist solely of Koehring's operations which were
formerly included in the results of the Heavy Equipment Segment.

Nine Months Ended September 30, 1995

The table below is a comparison of net sales, gross profit, selling, general and
administrative expenses, severance and exit costs, and income (loss) from
operations, by segment, for the nine months ended September 30, 1995 and 1994.

Nine Months Ended
September 30, Increase
1995 1994 (Decrease)
(in millions of dollars)

NET SALES
Material Handling..................... $ 404.4 $ 335.7 $ 68.7
Heavy Equipment....................... 190.5 173.1 17.4
Mobile Cranes......................... 172.7 66.9 105.8
Eliminations.......................... (0.8) (2.3) 1.5

Total.......................... $ 766.8 $ 573.4 $ 193.4

GROSS PROFIT
Material Handling..................... $ 26.7 $ 22.4 $ 4.3
Heavy Equipment....................... 26.4 24.6 1.8
Mobile Cranes......................... 23.2 10.4 12.8

Total.......................... $ 76.3 $ 57.4 $ 18.9

ENGINEERING, SELLING AND ADMINISTRATIVE
EXPENSES
Material Handling..................... $ 24.6 $ 33.2 $ (8.6)
Heavy Equipment....................... 17.1 15.7 1.4
Mobile Cranes......................... 18.7 4.9 13.8
General/Corporate..................... 1.0 2.0 (1.0)

Total.......................... $ 61.4 $ 55.8 $ 5.6

SEVERANCE AND EXIT COSTS
Material Handling..................... $ 3.5 $ 4.3 $ (0.8)
Heavy Equipment....................... --- 0.2 (0.2)

Total.......................... $ 3.5 $ 4.5 $ (1.0)

INCOME (LOSS) FROM OPERATIONS
Material Handling..................... $ (1.4) $ (15.1) $ 13.7
Heavy Equipment....................... 9.3 8.7 0.6
Mobile Cranes......................... 4.5 5.5 (1.0)
General/Corporate..................... (1.0) (2.0) 1.0

Total.......................... $ 11.4 $ (2.9) $ 14.3

Net Sales

Sales increased $193.4 million to $766.8, or approximately 34%, for the nine
months ended September 30, 1995 over the comparable 1994 period.

Material Handling Segment sales were $404.4 million for the nine months ended
September 30, 1995, an increase of $68.7 million from $335.7 million in the year
earlier period. The sales mix was approximately18% parts in the nine months
ended September 30, 1995 compared to 20% in the comparable 1994 period. Machine
sales increased 22%, primarily because of increased output resulting from
actions taken by management during 1994 and shipments of the new Genesis line of
IC trucks, introduced in December 1994. Parts sales increased 7% because of
improved parts inventory availability partially offset by the adverse effects of
a labor strike at the Company's parts distribution center during the second
quarter of 1995. The strike has not had a material continuing effect on parts
sales.

Material Handling Segment bookings for the nine months ended September 30, 1995
were $368.7 million, an increase of $59.8 million, or 19%, from the year earlier
period, on strong customer demand early in the year for the new Genesis line.
Bookings for parts sales for the nine months ended September 30, 1995, from
which the Company generally realized higher margins than machine sales,
increased 6% from the year earlier period. Machine order bookings for the nine
months ended September 30, 1995 increased 17% from the year earlier period,
reflecting the favorable acceptance of the Company's new Genesis line. Material
Handling Segment backlog was $100.1 million at September 30, 1995 compared to
$135.9 million at December 31, 1994 and $119.8 million at September 30, 1994.

Heavy Equipment Segment sales increased $17.4 million for the nine months ended
September 30, 1995 from the nine months ended September 30, 1994. Machines sales
increased 9%, and parts sales increased 10%. The sales mix was approximately 35%
parts for the nine months ended September 30, 1995 compared to 35% parts for the
comparable 1994 period. Heavy Equipment Segment parts sales were also adversely
affected by the strike at the parts distribution center during the second
quarter of 1995, but to a lesser degree than the Material Handling Segment.

Heavy Equipment Segment bookings for the nine months ended September 30, 1995
were $171.3 million, an increase of $12.3 million, or 8%, from the year earlier
period. Bookings for parts sales, from which the Company generally realizes
higher margins than machine sales, increased 12% from the nine months ended
September 30, 1994. Machine bookings for the nine months ended September 30,
1995 increased 5% from the comparable 1994 period. Heavy Equipment Segment
backlog was $55.2 million at September 30, 1995 compared to $67.8 million at
December 31, 1994 and $48.2 million at September 30, 1994.

Mobile Crane segment sales were $172.7 million for the nine months ended
September 30, 1995, an increase of $105.8 million from $66.9 million in the year
earlier period due to the PPM Acquisition in May 1995. Mobile Crane Segment
backlog was $81.6 million at September 30, 1995, reflecting the additional PPM
backlog acquired, compared to $11.7 million at December 31, 1994 and $11.9
million at September 30, 1994.

Gross Profit

Gross profit of $76.3 million for the nine months ended September 30, 1995 was
$18.9 million, or 33%, higher than gross profit of $57.5 million for the nine
months ended September 30, 1994.

The Material Handling Segment's gross profit increased $4.3 million to $26.7
million for the nine months ended September 30, 1995 compared to $22.4 million
for the prior year's period. The gross profit percentage in the Material
Handling Segment was 7% for the nine months ended September 30, 1995 and for the
comparable 1994 period. Favorable efficiencies due to higher production and
sales volumes and the effects of 1994 severance actions were offset by
additional costs associated with the start-up of production of the new Genesis
product line and manufacturing inefficiencies related to vendors' continuing
inability to meet demand.

The Heavy Equipment Segment's gross profit increased $1.8 million to $26.4
million for the nine months ended September 30, 1995 compared to $24.6 million
for the comparable 1994 period. The gross profit percentage in the Heavy
Equipment Segment was 14% for the nine months ended September 30, 1995 and for
the nine months ended September 30, 1994.

Mobile Crane Segment's gross profit increased $12.8 million to $23.2 million for
the nine months ended September 30, 1995, compared to $10.4 million for the
prior year's period reflecting the addition of the May through September 1995
results of the PPM businesses.

Engineering, Selling and Administrative Expenses

Engineering, selling and administrative expenses increased to $61.4 million for
the nine months ended September 30, 1995 from $55.8 million for the nine months
ended September 30, 1994. Material Handling Segment engineering, selling and
administrative expenses decreased to $24.6 million for the nine months ended
September 30, 1995 from $33.2 million for the comparable 1994 period, primarily
as a result of severance actions taken by management during the second half of
1994. Heavy Equipment Segment engineering, selling and administrative expenses
increased to $17.1 million for the nine months ended September 30, 1995 from
$15.7 million for the comparable 1994 period as a result of costs associated
with the start-up of a new parts service business. Mobile Crane Segment
engineering, selling and administrative expenses increased to $18.7 million for
the nine months ended September 30, 1995 from $4.9 million for the comparable
1994 period reflecting the PPM Acquisition in May 1995. Corporate administrative
expenses in 1994 included a charge of $2.2 million in connection with the
termination of a management contract with a related party.

Severance and Exit Costs

The Company announced personnel reductions totaling approximately 134 employees
in the Material Handling Segment's North American operations during the second
quarter of 1995 as a continuation of the Company's programs to increase
manufacturing efficiency, reduce costs and improve liquidity. The Company
recorded a combined charge of $3.5 million in the second quarter of 1995 for
severance costs associated with these actions and additional costs associated
with the closing of certain administrative and warehouse facilities.

During the second quarter of 1994, the Company recorded a charge of $4.5 million
principally related to severance costs in the Material Handling Segment's North
American and European operations. In June 1994, the Company announced personnel
reductions in plant supervision, engineering, marketing and administration
totaling approximately 160 employees. The $4.5 million charge represents
severance costs associated with these actions.

Income (Loss) from Operations

The Material Handling Segment loss from operations of $1.4 million for the nine
months ended September 30, 1995 represents a $13.7 million improvement over the
$15.1 million loss in the comparable 1994 period. As discussed above, increased
sales and reduced costs contributed to the improvement in income from operations
for the nine months ended September 30, 1995.

Heavy Equipment Segment income from operations improved by $0.6 million to $9.3
million for the nine months ended June 30, 1995 from $8.7 million in the
comparable 1994 period, primarily as a result of reduced costs, offset by costs
associated with the start up of a new parts service business.

Mobile Crane Segment income from operations of $4.5 million for the nine months
ended September 30, 1995 decreased by $1.0 over the comparable 1994 period,
primarily due to losses of the PPM businesses acquired in May 1995.

On a consolidated basis, the Company realized operating income of $11.4 million
for the nine months ended September 30, 1995, compared to an operating loss of
$2.9 million for the comparable 1994 period.

Other Income (Expense)

Net interest expense increased to $27.3 million for the nine months ended
September 30, 1995 from $22.9 million in the comparable 1994 period as a result
of incremental borrowings associated with the PPM Acquisition in May 1995. The
Company realized gains of $24.4 million from sales of Fruehauf common stock
during the nine months ended September 30, 1994. The Company owns 250,000 shares
of Fruehauf common stock which it received in settlement of certain obligations
of Fruehauf.

The Company recorded a charge of $3.0 million in the nine months ended September
30, 1995 to recognize the impairment in value of certain properties held for
sale.

The Company also incurred net foreign exchange losses of $1.9 million,
trademark-related expenses of $1.0 million, and $0.5 million of Group Retiree
expenses during the nine months ended September 30, 1995.

The Company recorded a charge of $1.8 million in the nine months ended September
30, 1995 for payments related to the retirement of its former chairman in August
1995, as described more fully in "Management -- Retirement of Randolph W. Lenz."
The balance of the provision for income taxes generally represents taxes
withheld on foreign royalties and dividends, and the fluctuation in the
provision for income tax is due to fluctuations in these items.

1994 Compared with 1993

The table below is a comparison of net sales, gross profit, engineering,
selling, and administrative expenses, severance charges and income (loss) from
operations, by segment, for the years ended December 31, 1994 and 1993. As
described in Note A -- "Significant Accounting Policies -- Restatements and
Reclassifications" of the Notes to the Consolidated Financial Statements, the
1993 amounts have been restated.

Year Ended
December 31 Increase
1994 1993 (Decrease)
(in millions of dollars)
NET SALES
Material Handling............ $ 472.7 $ 395.6 $ 77.1
Heavy Equipment.............. 226.8 203.8 23.0
Mobile Cranes................ 90.4 71.4 19.0
Eliminations................. (3.1) (0.5) (2.6)
--------- --------- ----------
Total................. $ 786.8 $ 670.3 $ 116.5
========= ========= ==========

GROSS PROFIT
Material Handling............ $ 35.2 $ 16.0 $ 19.2
Heavy Equipment.............. 33.8 30.5 3.3
Mobile Cranes................ 14.2 2.0 12.2
--------- --------- ----------
Total................ $ 83.2 $ 48.5 $ 34.7
========= ========= ==========

ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES
Material Handling............ $ 42.4 $ 44.6 $ (2.2)
Heavy Equipment.............. 22.1 24.2 (2.1)
Mobile Cranes................ 6.3 10.1 (3.8)
General/Corporate............ 1.7 3.5 (1.8)
--------- --------- ----------
Total................. $ 72.5 $ 82.4 $ (9.9)
========= ========= ==========

SEVERANCE CHARGES
Material Handling............ $ 6.7 $ --- $ 6.7
Heavy Equipment.............. 0.6 --- 0.6
--------- --------- ----------
Total................. $ 7.3 $ --- $ 7.3
========= ========= ==========

INCOME (LOSS) FROM OPERATIONS
Material Handling............ $ (13.9) $ (28.6) $ 14.7
Heavy Equipment.............. 11.1 6.3 4.8
Mobile Cranes................ 7.9 (8.1) 16.0
General/Corporate............ (1.7) (3.5) 1.8
--------- --------- ----------
Total................. $ 3.4 $ (33.9) $ 37.3
========= ========= ==========

Net Sales

Sales in 1994 increased $116.5 million, or approximately 17%, over 1993.

Material Handling Segment sales were $472.7 million for 1994, an increase of
$77.1 million, or 19%, from $395.6 million for the prior year. Machine sales
increased $81.0 million and parts sales decreased $3.9 million. As a result, the
sales mix was approximately 19% parts in 1994 compared to 24% parts in 1993.
Machine sales improved due to increased industry demand and increased output
resulting from production improvements and the easing of capital constraints.
Cash constraints in the second half of 1993 resulted in production problems
caused by a lack of supplies and materials during the last half of 1993 and the
opening months of 1994. Production improved in 1994 because of reorganization of
work flows and other actions taken by manufacturing management and because a
working capital infusion in December 1993 allowed management to improve
relations and schedule payment terms with its key suppliers. Parts sales were
affected by the cash constraints previously discussed and by difficulties in
assimilating the Material Handling Segment's parts business into the Terex Parts
Distribution Center during the first half of 1994, leading to decreased parts
availability. Parts sales improved during the last half of 1994 as these
difficulties were mitigated.

Material Handling Segment bookings for 1994 were $470.6 million, an increase of
$5.6 million from 1993. Machine order bookings for the year ended December 31,
1994 of $381.2 million increased $17.3 million or 5% compared to $364.0 million
in the year earlier period. Bookings for parts sales for 1994, from which the
Company generally realizes higher margins than machine sales, decreased $11.6
million, or 12%, from the year earlier period, primarily because of decreased
parts availability as discussed above. Material Handling Segment backlog was
$135.9 million at December 31, 1994 compared to $152.7 million at December 31,
1993. This change reflects the improvement in second through fourth quarter
sales resulting from the upward trend in production and improved parts
availability levels. As the Company maintains full production in the Material
Handling Segment United States operations and as parts availability returns to
normal levels, management expects that the backlog of both machines orders and
parts orders will be reduced during 1995.

In December 1994 CMHC introduced the Genesis 2- to 4-ton IC truck. The light IC
market, in which this product competes, represents approximately 60% of the
rider lift truck industry. Management believes this product is superior to
competitors' products in performance, reliability and operator comfort, and is
designed to achieve reduced production costs.

Heavy Equipment Segment sales increased $23.0 million, or 11%, to $226.8 million
in 1994 from $203.8 million in 1993. Machine sales increased $21.6 million and
parts sales increased $1.4 million. The sales mix was approximately 36% parts in
1994 compared to 39% parts in 1993. Machine sales increased at all of the Heavy
Equipment Segment divisions, reflecting increased domestic construction industry
demand and improved sales volume outside the United States.

Heavy Equipment Segment bookings for 1994 were $232.2 million, an increase of
$38.1 million, or 20%, from 1993. Bookings for parts sales of $77.6 million,
from which the Company generally realizes higher margins than machine sales,
were comparable to bookings for 1993. Machine bookings for 1994 increased $42.2
million, or 38%, from 1993, reflecting the factors discussed above. Heavy
Equipment Segment backlog was $67.8 million at December 31, 1994 compared to
$62.3 million at December 31, 1993, reflecting the improved shipments in 1994.
Parts backlog was $6.1 million at December 31, 1994 compared to $8.6 million at
December 31, 1993. This decrease resulted from increased parts availability
during 1994. As a result of the working capital infusion in December 1993, the
inventory availability for parts sales increased during 1994 and management
expects that the backlog of parts orders will continue to be reduced as working
capital continues to be applied to improve parts inventory availability.

Mobile Crane segment sales were $90.4 million for 1994, an increase of $19.0
million from $71.4 million in 1993. Machine sales increased 43% and parts sales
increased 3%. The sales mix was approximately 27% parts in 1994 compared to 33%
parts in 1993.

Mobile Crane Segment bookings were $83.6 million for 1994, an increase of 9%
from 1993. Machine bookings increased 16%, and parts bookings increased by 1%.

Gross Profit

Gross profit for 1994 increased $34.7 million compared to 1993.

The Material Handling Segment's gross profit increased $19.2 million to $35.2
million for 1994 compared to $16.0 million for 1993. The gross profit percentage
in the Material Handling Segment increased to 7.4% for 1994 from 4.0% for 1993,
reflecting cost reduction initiatives and production improvements in the second
through fourth quarters of 1994, somewhat offset by comparatively lower sales
and decreased manufacturing efficiency due to shortages in manufacturing
supplies and materials during the first quarter of the year and the decrease in
sales of replacement parts.

The Heavy Equipment Segment's gross profit increased $3.3 million to $33.8
million for 1994 compared to $30.5 million for 1993. Improved gross profit from
machine sales accounted for substantially all of the increase. The gross profit
percentage in the Heavy Equipment Segment remained at 15.0% for 1994 and 1993,
reflecting the continuing effects of cost reduction initiatives and improved
manufacturing efficiency offset by a decrease in the parts sale mix during 1994.

Mobile Crane Segment's gross profit increased $12.2 million to $14.2 million for
1994, compared to $2.0 million for 1993. The gross profit percentage in the
Mobile Crane segment increased to 15.7% for 1994 from 2.8% in the prior years
period reflecting the continuing effects of cost reductions and improved
manufacturing efficiency.

Engineering, Selling and Administrative Expenses

Engineering, selling and administrative expenses decreased to $72.5 million for
1994 from $82.4 million for 1993 as a result of cost reduction initiatives
throughout the Company. Material Handling Segment engineering, selling and
administrative expenses totaled $42.4 million for 1994 compared to $44.6 million
for the prior year. Heavy Equipment Segment engineering, selling and
administrative expenses decreased to $22.1 million for 1994 from $24.2 million
for the prior year. As a result of changing Mark's product offerings and
distribution, the Heavy Equipment Segment recognized a charge to income of $4.7
million in the fourth quarter of 1993 to write-off the remaining unamortized
goodwill from the acquisition of Mark. Mobile Crane Segment engineering, selling
and administrative expenses decreased to $6.3 million for 1994 compared to $10.1
million for 1993. Corporate administrative expense in 1994 includes a charge of
$2.2 million in connection with the termination, as of January 1, 1994, of the
Company's management contract with KCS Industries, L.P. ("KCS"), a Connecticut
limited partnership principally owned by certain present and former officers of
the Company, offset by allocations to operating segments. Charges under the KCS
contract would have totaled approximately $2.7 million for the year ended
December 31, 1994 if it had not been terminated, and would have continued at
such rate until at least June 30, 1995. See "Certain Transactions" and Note M --
"Related Party Transactions" in the Notes to the Consolidated Financial
Statements for further information.

Severance Charges

During the second quarter of 1994, the Company recorded a charge of $4.5 million
related principally to severance costs in the Material Handling Segment's North
American and European operations. In June 1994, the Company announced personnel
reductions in plant supervision, engineering, marketing and administration
totaling approximately 160 employees. The Company also reorganized certain
marketing activities and closed several of its regional sales offices in the
United States. In December 1994, the Company announced additional personnel
reductions totaling approximately 90 employees in conjunction with the closing
of the Material Handling Segment's Korean plant and certain branch sales offices
in France. An additional $2.8 million charge was recorded for costs, principally
severance costs, associated with these actions.

Income (Loss) from Operations

The Material Handling Segment incurred a loss from operations of $7.2 million
for 1994, excluding the severance charge discussed above ($13.9 million
including the severance charge), compared to a loss of $28.6 million for 1993.
As discussed above, the decreases in sales and gross profit in the opening
months of 1994 reflected the difficulties in restoring full production due to
supplier problems. Income from operations was $3.5 million in the fourth quarter
of 1994, excluding the severance charge ($1.1 million including the severance
charge), compared to a loss of $10.7 million in the fourth quarter of 1993.
Because of the production improvements achieved during 1994 and the reduced
operating expenses resulting from the actions described above, management
expects continued improvement in the Material Handling Segment's income from
operations during 1995.

Heavy Equipment Segment income from operations improved by $4.8 million to $11.1
million for 1994 compared to $6.3 million in the prior year. As a result of
changing Mark's product offerings and distribution, the Heavy Equipment Segment
recognized a charge to income of $4.7 million in the fourth quarter of 1993 to
write-off the remaining unamortized goodwill from the acquisition of Mark. This
improvement resulted from the increase in gross profit offset by the increase in
engineering, selling and administrative expenses described above.

Mobile Crane Segment income from operations of $7.9 million for 1994 improved by
$16.0 million over the comparable 1994 period due to increased sales and cost
reductions outlined above. As a result of cost reductions, improvements in
inventory management and consolidation of model offerings, Koehring was
profitable in 1994 after several years of losses.

On a consolidated basis, the Company achieved operating income of $10.7 million,
excluding the severance charge discussed above, for 1994 ($3.4 million income
including the severance charge) compared to an operating loss of $33.9 million
for the prior year.

Other Income (Expense)

Interest expense on a consolidated basis was $30.5 million for 1994 compared to
$31.2 million for 1993. The decrease in interest expense is primarily the result
of repayments of senior and subordinated debt partially offset by increased
borrowings under the Company's lending facilities.

The Company recognized equity in the net loss of Fruehauf of $0.7 million in
1993. As described in Note C -- "Investment in Fruehauf Trailer Corporation" in
the Notes to the Consolidated Financial Statements, the Company's carrying value
for its investment in Fruehauf was reduced to zero during 1992 and the Company
did not recognize any additional gains or losses with respect to its investment
in Fruehauf except as realized on transactions in Fruehauf common stock. In
December 1993, the Company sold 1,000,000 shares of Fruehauf common stock and
realized a gain of $3.0 million. During 1994 the Company sold a total of
5,900,000 shares of Fruehauf common stock and realized a gain of $26.0 million.

In 1994, the Company recorded a provision for state income taxes of $0.5 million
in connection with the sale of its former subsidiary, Drexel Industries, Inc.
The balance of the provision for income taxes generally represents taxes
withheld on foreign royalties and dividends. As such, any fluctuation in the
provision for income tax is due to fluctuations in these items.

Extraordinary Items

During 1994, the Company repurchased a total of $27.3 million of old senior
secured notes. The Company recognized extraordinary losses totaling $0.7 million
from these transactions to write off unamortized discount and debt issuance
costs.

In connection with terminating its previous bank lending agreement, the Company
recognized a charge of approximately $2.0 million in the second quarter of 1993
to write off unamortized debt issuance costs.

In December 1993, the Company repurchased $5.0 million of old senior secured
notes for approximately $4.5 million, including accrued interest. The Company
recognized an extraordinary gain on this transaction of approximately $0.5
million, net of write-off of unamortized discount and debt issuance costs.

<PAGE>

1993 Compared with 1992

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 years ended December 31, 1993 and 1992. As described in Note A
- -"Significant Accounting Policies -- Restatements and Reclassifications" of the
Notes to Consolidated Financial Statements, the 1993 amounts have been restated.
Amounts shown for the Material Handling Segment for 1992 represent activity for
the five months subsequent to the CMH Acquisition.

Year Ended
December 31 Increase
1993 1992 (Decrease)
(in millions of dollars)
NET SALES
Material Handling.......... $ 395.6 $ 241.0 $ 154.6
Heavy Equipment............ 203.8 194.7 9.1
Mobile Cranes.............. 71.4 87.7 (16.3)
Eliminations............... (0.5) --- (0.5)
--------- --------- -----------
Total............... $ 670.3 $ 523.4 $ 146.9
========= ========= ===========

GROSS PROFIT
Material Handling.......... $ 16.0 $ 22.5 $ (6.5)
Heavy Equipment............ 30.5 26.8 3.7
Mobile Cranes.............. 2.0 2.8 (0.8)
--------- --------- -----------
Total.............. $ 48.5 $ 52.1 $ (3.6)
========= ========= ===========

ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES
Material Handling.......... $ 44.6 $ 20.3 $ 24.3
Heavy Equipment............ 24.2 23.6 0.6
Mobile Cranes.............. 10.1 12.0 (1.9)
General/Corporate.......... 3.5 0.3 3.2
--------- --------- -----------
Total............... $ 82.4 $ 56.2 $ 26.2
========= ========= ===========

INCOME (LOSS) FROM OPERATIONS
Material Handling.......... $ (28.6) $ 2.2 $ (30.8)
Heavy Equipment............ 6.3 3.2 3.1
Mobile Cranes.............. (8.1) (9.2) 1.1
General/Corporate.......... (3.5) (0.3) (3.2)
--------- --------- -----------
Total............... $ (33.9) $ (4.1) $ (29.8)
========= ========= ===========

Net Sales

Sales in 1993 increased $146.9 million, or approximately 28%, over 1992.

Material Handling Segment sales were $395.6 million for 1993 compared to $241.0
million for the last five months of 1992, an increase of $154.6 million. On a
pro forma basis, giving effect to the CMH Acquisition as of January 1, 1992,
sales decreased $133.9 million for 1993 from $529.5 million for 1992. Material
Handling Segment sales in the first quarter of 1993 were significantly lower
than in the fourth quarter of 1992. Management believes that Material Handling
Segment dealers increased orders during the fourth quarter of 1992 to ensure
adequate inventory levels during the first quarter of 1993 while the Company
transferred certain light IC lift truck production from Korea to the U.S. and
Germany. In addition, the Material Handling Segment operations in the U. S.
experienced working capital constraints during 1993 which limited the Company's
ability to obtain materials and maintain production, adversely affecting sales
for 1993. Bookings remained strong because of improved demand in the North
American forklift industry. As a result of these factors, the Material Handling
Segment backlog was $152.7 million at December 31, 1993 compared to $83.2
million at December 31, 1992 and $80.8 million at the July 31, 1992 CMH
Acquisition date.

<PAGE>

Heavy Equipment Segment sales increased $9.1 million in 1993 from 1992. Machines
and contract sales represented $9.9 million of the increase and offset by a
parts sales decrease of $0.8 million. The sales mix changed from approximately
41% parts in 1992 to 39% parts in 1993. Unit Rig, the Heavy Equipment Segment
division that principally serves the mining industry, experienced a decrease in
sales of $4.5 million to $69.6 million in 1993 from $74.1 million in 1992. Unit
Rig equipment sales decreased $7.0 million, partially offset by a $2.5 million
increase in parts sales. The decrease in equipment sales reflects continuing low
activity in the mining industry as well as more aggressive pricing and financing
by competitors. The decreased sales at Unit Rig were offset by an $11.3 million
increase in sales by the Terex Business to $132.7 million for 1993. Terex
Business machine sales increased $16.0 million, partially offset by a $4.7
million decrease in parts sales.

Heavy Equipment Segment bookings in 1993 were $194.1 million, a decrease of
$31.5 million, or 14%, from 1992. Bookings for parts sales, from which the
Company realizes higher margins than machine sales, decreased $1.9 million or
2.4% in 1993. Machine bookings decreased $32.1 million or 22%, reflecting
continuing weakness in the Heavy Equipment Segment's principal markets during
the first half of 1993 as well as more aggressive pricing and financing by the
Company's competitors. The slow recovery in the construction industry has also
made the Terex Business distributor networks more cautious in their acquisition
of new equipment, especially for machines to be used in the rental market. Heavy
Equipment Segment backlog was $62.3 million at December 31, 1993 compared to
$72.0 million at December 31, 1992, reflecting the decrease in bookings. Parts
backlog was $8.6 million at December 31, 1993 compared to $6.3 million at
December 31, 1992. This increase resulted primarily from liquidity constraints
experienced during 1993 which resulted in decreased parts inventory
availability.

Mobile Crane segment sales were $71.4 million for 1993, a decrease of $16.3
million from $87.7 million in the year earlier period. Machine sales decreased
23% and parts sales decreased 12%. The sales mix was approximately 33% parts for
1993 compared to 30% parts in 1992. Koehring sales in 1992 were higher due to
sales of slow moving inventory and product lines at low margins to reduce
inventory and more effectively utilize working capital.

Mobile Crane Segment bookings were $76.5 million for 1993, a decrease of 15%
from the year earlier period. Machine bookings decreased 11%, and parts bookings
decreased by 9%. Bookings declined during 1993 due to the slow recovery in the
construction market which made the Mobile Crane Segment's distributors more
cautious in their acquistion of new equipment, especially those to be used in
the rental market.

Gross Profit

Gross profit for 1993 decreased $3.6 million compared to 1992.

The Material Handling Segment's gross profit decreased $6.5 million to $16.0
million for 1993 compared to $22.5 million for the last five months of 1992 and
compared to $40.1 million on a pro forma basis for 1992. The gross profit
percentage in the Material Handling Segment decreased to 4.0% for 1993 compared
to 9.3% for the last five months of 1992. The decrease in gross profit
percentage reflects comparatively lower 1993 sales (compared to annualized 1992
sales) and decreased manufacturing efficiency due to working capital
constraints, somewhat offset by cost reduction initiatives.

The Heavy Equipment Segment's gross profit increased $3.7 million to $30.5
million for 1993 compared to $26.8 million for 1992. Improved gross profit from
machines and contract sales accounted for substantially all of the increase,
reflecting the positive effects of cost reduction initiatives implemented in
1992 and throughout 1993. The gross profit percentage in the Heavy Equipment
Segment increased to 15.0% for 1993 compared to 13.8% for 1992, reflecting
improved manufacturing efficiency.

Mobile Crane Segment's gross profit decreased $0.8 million to $2.0 million for
1993, compared to $2.8 million for 1992. The gross profit percentage in the
Mobile Crane segment decreased to 2.8% for 1993 from 3.2% in 1992. Gross profit
for the 1993 period included a $2.2 million provision for write-down of certain
inventory at Koehring in connection with management's decision to consolidate
model offerings.

Engineering, Selling and Administrative Expenses

Engineering, selling and administrative expenses increased to $77.7 million for
1993 from $56.2 million for 1992. Material Handling Segment engineering, selling
and administrative expenses totaled $44.6 million for 1993 compared to $20.3
million for the last five months of 1992 and compared to $48.2 million on a pro
forma basis for 1992. Heavy Equipment Segment engineering, selling and
administrative expenses increased to $24.2 million for 1993 from $23.6 million
for 1992. Heavy Equipment Segment results for 1994 include a charge to income of
$4.7 million in the fourth quarter of 1993 to write-off the remaining
unamortized goodwill from the acquisition of Mark the Company recognized as a
result of changing Mark's product offerings and distribution. The write-off was
offset by cost reduction initiatives, including headcount reductions and the
consolidation of certain administrative functions into the Heavy Equipment
Segment's administrative offices in Tulsa, Oklahoma. Mobile Crane Segment
engineering, selling and administrative expenses decreased to $10.1 million for
1993 from $12.0 million for 1992. Corporate expenses increased $3.2 million
primarily as a result of increased legal and accounting expenses which were not
fully allocated to operating segments.

Income (Loss) from Operations

The Material Handling Segment incurred a loss from operations of $28.6 million
for 1993, compared to operating income of $2.2 million for the last five months
of 1992 and compared to an operating loss of $8.2 million on a pro forma basis
for 1992, primarily as a result of decreased sales. As discussed above, sales
and gross profit in 1993 reflect the effects of the Company's working capital
constraints.

Heavy Equipment Segment income from operations improved by $3.1 million to $6.3
million in 1993 from $3.2 million in 1992. This improvement resulted from the
increase in gross profit and the decrease in engineering, selling and
administrative expenses. The improvements were partially offset by a charge to
income of $4.7 million in the fourth quarter of 1993 to write-off the remaining
unamortized goodwill from the acquisition of Mark the Company recognized as a
result of changing Mark's product offerings and distribution.

Mobile Crane Segment loss from operations of $8.1 million for 1993 improved by
$1.1 million over 1992 principally due to continuing cost reductions,
improvements in inventory management and consolidation of model offerings.

On a consolidated basis, the Company experienced an operating loss of $29.2
million for 1993, compared to an operating loss of $4.1 million for 1992.

Other Income (Expense)

Interest expense on a consolidated basis was $31.2 million for 1993 compared to
$23.3 million for 1992. Terex sold $160 million principal amount of its 13%
senior secured notes due August 1, 1996 on July 31, 1992. The proceeds of the
senior secured notes were used for the cash portion of the the acquisition of
CMH ($85 million), the payment of all amounts outstanding under Terex's previous
credit and letter of credit agreement ($58 million), and for working capital and
transaction costs. The increase in Terex interest expense for 1993 over 1992 is
primarily the result of incremental borrowings to finance the acquisition of CMH
(incremental interest expense of approximately $6.7 million) and higher interest
rates on new borrowings used to refinance the previous credit and letter of
credit agreement, as well as additional costs related to establishing and
utilizing a new credit and letter of credit agreement.

The Company recognized equity in the net loss of Fruehauf of $0.7 million in
1993 compared to a gain from deconsolidation of Fruehauf of $36.5 million in
1992. As described in Note C -- "Investment in Fruehauf Trailer Corporation" in
the Notes to the Consolidated Financial Statements, the Company's carrying value
for its investment in Fruehauf was reduced to zero in 1992 and the Company did
not recognize any additional gains or losses with respect to its investment in
Fruehauf except as realized on transactions in Fruehauf common stock. In
December 1993, the Company sold 1,000,000 shares of Fruehauf common stock and
realized a gain of $3.0 million.

The provision for income taxes generally represents taxes withheld on foreign
royalties and dividends. As such, any fluctuation in the provision for income
tax is due to fluctuations in these items. The Company adopted SFAS No. 109,
"Accounting for Income Taxes" on January 1, 1993. The new pronouncement retains
the basic concepts of SFAS No. 96, but generally simplifies its application. The
adoption of this new pronouncement did not have a material impact on the
Company's financial statements.

Extraordinary Items

In December 1993, the Company repurchased $5.0 million of its old senior secured
notes for approximately $4.5 million, including accrued interest. The Company
recognized an extraordinary gain on this transaction of approximately $0.5
million.

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.

Net cash of $27.9 million was used in operating activities during the nine
months ended September 30, 1995. Net cash used by investing activities was $95.8
million during the nine months ended September 30, 1995 principally due to the
PPM Acquisition as described below. Net cash provided by financing activities
during the nine months ended September 30, 1995 was $127.5 million, primarily
from the Refinancing discussed below. Cash and cash equivalents totaled $12.5
million at September 30, 1995.

Factors affecting future liquidity

As discussed below, the Company has refinanced its senior and subordinated debt,
established new credit facilities and borrowed additional funds to complete the
PPM Acquisition which will impact future operating results, sources of liquidity
and debt service requirements.

On May 9, 1995, the Company completed the refinancing and the PPM Acquisition.
The Refinancing included the private placement to institutional investors of
$250 million of the Senior Secured Notes, repayment of the Company's old senior
secured notes and senior subordinated notes, totaling approximately $152.6
million principal amount, and entry into the Credit Facility to replace the
Company's existing lending facility in the U.S. Until such time as the Company
completes an exchange of the Senior Secured Notes for an equivalent issue of
registered notes, or a shelf registration statement for the Senior Secured Notes
is effective, the interest rate on the Senior Secured Notes will be 13.75%. The
Indenture for the Senior Secured Notes places certain limits on the Company's
ability to incur additional indebtedness; permit the existence of liens; issue,
pay dividends on or redeem equity securities; utilize the proceeds of assets
sales; consolidate, merge or transfer assets to another entity; and enter into
transactions with affiliates. In connection with the issuance of the Senior
Secured Notes, the Company issued 1,000,000 stock appreciation rights ("SARs")
entitling the holders to receive cash or Common Stock, at the option of the
Company, in an amount equal to the average closing sale price of the common
stock for 60 trading days prior to the date of exercise less $7.288 for each
SAR.

Approximately $92.6 million of the proceeds of the Senior Secured Notes was used
for the PPM Acquisition, including the repayment of certain indebtedness of PPM
required to be repaid in connection with the acquisition. In addition, the
Company estimates that the acquisition costs incurred will total approximately
$3.0 million. The remainder of the purchase price consisted of the issuance of
redeemable preferred stock of Terex Cranes having an aggregate liquidation
preference of 127 million French francs (approximately $26.1 million), subject
to adjustment. The purchase price is subject to adjustment calculated by
reference to the consolidated net asset value of PPM as determined by an audit
as of the date of closing. The preferred stock does not bear a dividend and,
accordingly, the Company has valued this stock at approximately $8.8 million
(discounted at 15%). The Company has not yet reached agreement with the sellers
about the amount of purchase price adjustment but, based on work performed, the
Company believes that the amount of the preferred stock could ultimately be
reduced.

The Company's Credit Facility provides the Company with the ability to borrow
(in the form of revolving loans and up to $15 million in outstanding letters of
credit) up to $100 million. The Credit Facility is secured by substantially all
of the Company's domestic receivables and inventory (including PPM). The amount
of borrowings is limited to the sum of the following: (i) 75% of the net amount
of eligible receivables, as defined, of the Company's U.S. businesses other than
CMHC, plus (ii) 70% of the net amount of CMHC eligible receivables, plus (iii)
the lesser of 45% of the value of eligible inventory, as defined, or 80% of the
appraised orderly liquidation value of eligible inventory less (iv) any
availability reserves established by the lenders. The Credit Facility expires
May 9, 1998 unless extended by the lenders for one additional year. At the
option of the Company, revolving loans may be in the form of prime rate loans
initially bearing interest at the rate of 1.75% per annum in excess of the prime
rate and eurodollar rate loans initially bearing interest at the rate of 3.75%
per annum in excess of the adjusted eurodollar rate.

The Company made an interest payment of $17.7 million on November 15, 1995 on
the Senior Secured Notes. The Company's debt service obligations for the
remainder of 1995 include approximately $0.6 million monthly on the Credit
Facility. Management believes that, together with cash generated from
operations, the Refinancing provides the Company with adequate liquidity to meet
the Company's operating and debt service requirements. The balance outstanding
under the Credit Facility as of December 31, 1995 was $67.1 million, and the
additional amount the Company could have borrowed was $10.0 million as of that
date. Management intends to seek additional working capital financing facilities
for the Company's international operations to provide additional liquidity
worldwide, but there can be no assurances whether, or under what terms, such
additional facilities can be obtained.

CONTINGENCIES AND UNCERTAINTIES

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.

<PAGE>

BUSINESS

General

Terex is a global provider of capital goods and equipment used in the
manufacturing, distribution, mining, construction and infrastructure industries.

The Company's operations began in 1983 with the purchase of Northwest
Engineering Company, the Company's original business and name. Since 1983,
management has expanded the Company's business through a series of acquisitions.
In 1988, Northwest Engineering Company merged into a subsidiary acquired in 1986
named Terex Corporation, with Terex Corporation as the surviving corporation.
For the year ended December 31, 1994, consolidated revenues of the Company
amounted to approximately $787 million. Prior to May 1995, the Company's
operations were divided into two principal segments: Material Handling and Heavy
Equipment. On May 9, 1995, the Company completed the PPM Acquisition. Together
with Koehring, these businesses form the Company's new Mobile Cranes Segment.

The Material Handling Segment designs, manufactures and markets a complete line
of internal combustion ("IC") and electric lift trucks, electric walkies,
automated pallet trucks, industrial tow tractors and related components and
replacement parts. These products are used in material handling applications in
a broad array of manufacturing, distribution and transportation industries. The
Material Handling Segment consists of CMH, which was acquired by the Company on
July 31, 1992 from Clark Equipment Company.

The Heavy Equipment Segment designs, manufactures and markets heavy-duty,
off-highway earthmoving and construction equipment and related components and
replacement parts. These products are used primarily by construction, mining,
logging, industrial and government customers in building roads, dams and
commercial and residential buildings; supplying coal, minerals, sand and gravel.
The Heavy Equipment Segment consists of two operating businesses: (i) the Terex
Business, which manufactures off-highway rigid and articulated haulers, scrapers
and wheel loaders and (ii) Unit Rig, which manufactures electric rear and bottom
dump haulers, as well as mechanical drive haulers and wheel loaders principally
sold to the mining industry.

The Mobile Cranes Segment designs, manufactures and markets mobile cranes,
aerial platforms, container stackers and scrap handlers and related components
and replacement parts. These products are used primarily for construction,
repair and maintenance of infrastructure, buildings and manufacturing
facilities, for material handling applications in the distribution and
transportation industries as well as in the scrap, refuse and lumber industries.
The Mobile Cranes Segment consists of three operating businesses: (i) Koehring,
which manufactures mobile cranes, aerial lift platforms and scrap handlers, (ii)
PPM North America, which manufactures mobile cranes and container stackers under
the brand name P&H (a trademark of Harnischfeger) primarily in North America and
(iii) PPM Europe, which manufactures mobile cranes and container stackers
primarily in Europe.

For financial information about the Company's industry and geographic segments,
see Note N -- "Business Segment Information" in the Notes to the Consolidated
Financial Statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

The Company's long-term strategy has been, and continues to be, to seek out
acquisitions in the capital goods industry where aggressive management can
achieve substantial improvements in profitability and cash flow.

Material Handling Segment

CMH is a leading North American and European designer, manufacturer and marketer
of a complete line of IC and electric lift trucks, electric walkies, automated
pallet trucks, industrial tow tractors and related replacement parts. CMH's
products are distributed through an established global dealer network which
includes more than 440 locations. Management believes CMH has the largest
installed fleet in North America, with over 250,000 units, and that over 320,000
CMH trucks are presently in operation worldwide. Historically, approximately 80%
of CMH's revenues have been derived from new product sales and approximately 20%
of revenues have been derived from the sale of replacement parts. CMH and its
independent dealers sell to a diversified base of customers in a variety of
industries. CMH's headquarters and U.S. manufacturing facilities are located in
Lexington, Kentucky. CMH's international manufacturing facilities are located in
Mulheim-Ruhr, Germany. CMH also owns a training and research center in
Lexington, Kentucky.

The Company acquired CMH on July 31, 1992. Following the acquisition, CMH began
implementing initiatives intended to reduce its manufacturing and operating
costs. These initiatives have included consolidation of engineering,
manufacturing and parts facilities. In December 1993, CMH transferred its parts
supply operations to the Company's parts distribution center in Southaven,
Mississippi. During 1994, CMH completed the transfer of its light IC lift truck
chassis production from Korea to Lexington, Kentucky, closed its manufacturing
facility in Danville, Kentucky and closed its axle manufacturing facility in
Korea. In April 1994, the Company sold 100% of the stock of Drexel. Drexel,
which is located in Horsham, Pennsylvania, manufactures very narrow-aisle lift
trucks.

CMH currently offers 116 basic truck designs within six major product lines:
light IC trucks (1.0 to 5.0 tons), heavy IC trucks (5.5 to 47.5 tons),
narrow-aisle trucks, electric counterbalanced trucks (1.3 to 6.0 tons), electric
walkies and tow tractors.

Light IC trucks are used for general warehousing needs and are generally powered
by liquid propane and well suited for manufacturing and distribution
applications which require a high degree of maneuverability. Heavy IC trucks are
specialty products designed for use in more demanding situations such as heavy
manufacturing or container handling applications. Narrow-aisle trucks provide
solutions for high density storage needs and operate in six-to-eight foot aisles
and reach heights of more than 30 feet. Electric counterbalanced trucks are
designed for indoor use in warehousing, manufacturing, distribution and other
applications and are powered by a rechargeable electric battery. For
environmental reasons, electric trucks are becoming more popular. Electric
walkies are generally used in transporting and order-selecting. Tow tractors are
units designed to pull one or more trailers, with the largest market for tow
tractors being airport baggage handling.

CMH is a leading manufacturer of lift trucks in North America, although the
brand names of Hyster and Yale combined, both owned by Nacco Industries, Inc.,
account for production of more lift trucks annually. Other major North American
competitors include Toyota, Mitsubishi, Caterpillar and Komatsu in both IC and
electric riders, and Crown and Raymond in electric riders alone. In Europe, CMH
competes with the Linde Group, the European market leader, as well as
Hyster-Yale, Toyota and Jungheinreich. CMH also competes with a number of
specialty firms.

Heavy Equipment Segment

The Company is recognized as a significant competitor in the market for large
capacity haulers and scrapers. However, the Company is not a dominant
manufacturer in the heavy equipment industry, which is dominated in most
segments by large, diversified firms, such as Caterpillar, Dresser Industries
and Komatsu, that have broader product lines and greater financial resources.
The Company also competes in this industry with a number of specialty firms,
whose products generally compete directly with one or more of the Company's
product lines.

Terex Business

The Company acquired the Terex Division in December 1986 and acquired Terex
Equipment Limited ("TEL"), a subsidiary of the Company located in Scotland, in
June 1987. The Terex Division and TEL are jointly hereinafter referred to as the
"Terex Business," which is headquartered in Motherwell, Scotland. Terex
Division's marketing efforts in the United States serve the needs of North,
Central and South America, while TEL serves the remainder of the international
market. TEL manufactures the products of the Terex Business at its facility in
Motherwell, Scotland.

The Terex Business has two principal product lines: off-highway rigid and
articulated haulers and scrapers. A "hauler" is an off-road dump truck with a
capacity in excess of 25 tons. Haulers produced by the Terex Business have
capacities ranging from 25 to 85 tons. A "scraper" is an off-road vehicle,
commonly referred to as an "earth mover," that loads, moves and unloads large
quantities of soil for site preparations, including roadbeds. The Terex Business
product line also includes wheel loaders although these are not presently being
manufactured. A "wheel loader" is a vehicle that loads materials onto trucks,
conveyors and similar equipment. The Terex Business products perform a wide
range of earthmoving functions in quarry and open pit mining and in many types
of heavy construction, including highway, dam and waterway construction;
commercial and industrial site preparation; general land improvement and real
estate development; and structural renovation and replacement. The Terex
Business's main competitors are Caterpillar, VME Group, Komatsu and Dresser.

In 1987, TEL entered into a joint venture agreement with Second Inner Mongolia
Machinery Company for the production of haulers in China. The joint venture
company, North Hauler Limited Liability Company, manufactures heavy trucks,
principally used in mining, at a facility in Baotou, Inner Mongolia, People's
Republic of China.

Unit Rig

In July 1988, the Company purchased certain domestic and foreign assets and
operations of the business that now operates as the Unit Rig Division ("Unit
Rig"). Unit Rig is headquartered in Tulsa, Oklahoma.

Unit Rig's predecessor pioneered the development of the diesel electric drive,
rear dump hauling truck for use in open pit mining operations. The truck is
powered by a diesel engine driving an electric generator that provides power to
individual electric motors in each of the rear wheels. Unit Rig's current LECTRA
HAUL product line consists of a series of rear dump hauler trucks with payload
capacities ranging from 100 to 260 tons, and bottom dump haulers with capacities
ranging from 180 to 270 tons.

Unit Rig also produces the Dart line of wheel loaders and mechanical drive
haulers. This product line consists of the Dart 600C mechanical drive wheel
loader with a bucket capacity up to 23 cubic yards and rear dump trucks ranging
in capacity from 85 to 130 tons. The Dart line also includes a tractor-trailer
bottom dump hauler with capacities from 120 to 160 tons.

The present principal markets for Unit Rig products are copper, gold, coal and
iron mines. Unit Rig's major customers are mining companies in North and South
America, Asia, Africa and Australia. Approximately 70% of Unit Rig's sales are
export sales. Unit Rig's largest competitors are Caterpillar, Komatsu and
Dresser.

Mobile Cranes Segment

Koehring

In January 1987, the Company purchased certain assets and operations of the
business that operated prior to the PPM Acquisition as the Koehring Cranes &
Excavators Division, which assets and operations were contributed to Koehring in
connection with the PPM Acquisition. Koehring, headquartered in Waverly, Iowa,
designs, manufactures and markets a broad line of hydraulic excavators and
hydraulic telescoping cranes sold under the well recognized trade names of
KOEHRING and LORAIN. In 1994 the Company discontinued manufacturing hydraulic
excavators except for large scrap handlers where the Company maintains a
meaningful market share. Hydraulic telescoping cranes are primarily used for
construction and industrial applications. Koehring's largest competitors in the
hydraulic excavator market are Komatsu and Caterpillar. Koehring has four
principal competitors in the mobile crane market: Grove Manufacturing, Liebherr
Werk Ehingen, Link-Belt and PPM Cranes, Inc.

In December 1991, the Company acquired substantially all operating assets of the
business that operated prior to the PPM Acquisition as the Mark Industries
Division. Mark relocated to the Koehring facilities in Waverly, Iowa during 1992
in order to more effectively utilize existing capabilities and manufacturing
facilities at the Waverly location. Mark is engaged in the manufacture and sale
of aerial lift equipment, including scissor lifts, boom lifts and a full line of
replacement parts. Scissor lifts and boom lifts are used for the repair,
maintenance and construction of buildings, manufacturing facilities and
equipment. These lifts are used in a wide variety of industrial applications,
such as installing and repairing electrical and plumbing fixtures; installing
drywall and ceilings; cleaning, repairing and painting production equipment;
maintaining refineries, chemical plants and aircraft; and performing common
construction tasks such as siding, insulation and structural member
installation. In 1993, the Company began to market Mark's products through the
Terex and CMH dealer networks to expand distribution opportunities. Mark's
largest competitor in the aerial lift industry is JLG Industries.

The Company currently manages the Northwest Engineering and BCP Construction
Products ("BCP," acquired in 1985) businesses from Koehring's location in
Waverly, Iowa. The sale of replacement parts for Northwest Engineering and BCP
products, including the Dynahoe backhoe/loader, constitutes the most important
part of these businesses.

<PAGE>

PPM Europe

On May 9, 1995, the Company acquired substantially all of the capital stock of
PPM Europe. PPM Europe was formed in 1966 by Potain, S.A., and is a leading
European designer, manufacturer and marketer of mobile cranes and container
stackers. PPM Europe consists of several subsidiaries throughout Europe,
including: Bendini SpA, an Italian rough terrain crane producer, Brimont Agraire
S.A., a specialized trailer manufacturer in France, PPM Krane GmbH, a sales
organization in Germany, and Baulift Baumaschinen Und Krane Handels GmbH, a
parts distributor in Germany. PPM Europe operates two manufacturing facilities,
its PPM manufacturing facility at Montceau les Mines in central France and its
Bendini manufacturing facility in northern Italy. PPM Europe markets its
products primarily in Europe, Africa and the Middle East under the PPM and
BENDINI brand names. PPM Europe's major competitors in mobile cranes are Krupp
Mobilkran, Grove Cranes Ltd. and Liebherr Werk Ehingen. PPM Europe's major
competitors in the container stacker market are Kalmar, Valmet Belloti and
Taylor.

PPM North America

On May 9, 1995, the Company acquired substantially all of the capital stock of
PPM North America. PPM North America, headquartered in Conway, South Carolina,
designs, manufactures and markets rough terrain cranes, truck cranes and
container stackers under the P&H brand name which is licensed from Harnischfeger
Corporation. PPM also markets mobile cranes and container stackers in the Far
East through its Singapore subsidiary and in Australia through its Australian
subsidiary. PPM North America has four main competitors in the mobile crane
market: Grove Manufacturing, Liebherr Werk Ehingen, Link-Belt and Koehring
Cranes.

Environmental Considerations

Research and Development

The Company maintains engineering staffs at several of its locations which
design new products and improvements in existing product lines. Such costs
incurred in the development of new products or significant improvements to
existing products amounted to $10.5 million, $11.8 million and $6.7 million in
1994, 1993 and 1992, respectively.

Materials

Principal materials used by the Company in its various manufacturing processes
include steel, castings, engines, tires, electric controls and motors, and a
variety of other fabricated or manufactured items. In the absence of labor
strikes or other unusual circumstances, substantially all materials are normally
available from multiple suppliers. Current and potential suppliers are evaluated
on a regular basis on their ability to meet the Company's requirements and
standards. During the first half of 1994, certain of CMH's suppliers experienced
difficulties in meeting CMH's production schedules. Such difficulties, while not
eliminated, were substantially alleviated in the second half of 1994. Electric
wheel motors and controls used in the Unit Rig product line are currently
supplied exclusively by General Electric Company.

Seasonal Factors

The Company markets a large portion of its products in North America and Europe,
and its sales of heavy equipment and cranes during the fourth quarter of each
year (i.e., October through December) to the construction industry are usually
lower than sales of such equipment during each of the first three quarters of
the year because of the normal winter slowdown of construction activity.
However, sales of heavy equipment to the mining industry, as well as sales of
lift trucks, are generally less affected by such seasonal factors.

Distribution

CMH markets original equipment and repair parts through a worldwide dealer
network. CMH currently has 94 independent North American dealers who operate
approximately 233 outlets, with all such dealer outlets providing both sales and
service. CMH's European distribution network consists of approximately 85
independent dealers and three company-owned dealers operating in 29 countries.
CMH dealers generally market the full CMH product line and maintain
comprehensive service capabilities. CMH operates a dealer service organization
designed to coordinate sales and promotional activities, provide ongoing dealer
training and facilitate dealer communications.

CMH products are sold through a system which enables customers to specify a
truck which meets their particular materials handling needs. Customers can add
attachments such as container handlers, side shifters, roll clamps, block
handlers, carton clamps, push-pulls (slip-sheet) and fork positioners. CMH and
its dealers sell to a diversified customer base with no single customer
accounting for more than 4% of CMH's revenues.

The Terex Business markets original equipment and repair parts through worldwide
dealership networks. Unit Rig distributes its products and services directly to
customers primarily through its own distribution system. The Company's heavy
equipment dealers are independent businesses which generally serve the
construction, mining, timber and/or scrap industries. Although these dealers
carry products of a variety of manufacturers, and may or may not carry more than
one of the Company's products, each dealer generally carries only one
manufacturer's "brand" of each particular type of product. The Company employs
sales representatives who service these dealers from offices located throughout
the world.

The Mobile Cranes Segment distributes its products through a global network of
over 300 independent dealers organized by product line. With respect to mobile
cranes, in North America both Koehring and PPM North America maintain extensive
dealer networks. The geographic strength of Koehring Cranes, which markets its
mobile cranes under the LORAIN brand name, centers in the midwest and
mid-Atlantic regions of the U.S. and the geographic strength of PPM North
America, which markets its mobile cranes under the P&H brand, centers in the
southern and western regions. PPM Europe's distribution is carried out under two
brand names, PPM and BENDINI, through a single distriubtion network comprised of
both distributors and a direct sales force.

Backlog

The Company's backlog as of September 30, 1995, December 31, 1994 and 1993 was
as follows:

September 30, December 31,
1995 1994 1993
(in millions of dollars)
Material Handling......... $100.1 $135.9 $152.7
Heavy Equipment........... 55.2 67.8 80.9
Mobile Cranes............. 81.6 11.7 18.6
-------- ------- --------

Total................ $236.9 $215.4 $233.6
======== ======= ========

Substantially all of the Company's backlog orders are expected to be filled
within one year, although there can be no assurance that all such backlog orders
will be filled within that time period. The Company's backlog orders represent
primarily new equipment orders. Parts orders are generally filled on an
as-ordered basis.

Patents, Licenses and Trademarks

Several of the trademarks and trade names of the Company, in particular the
TEREX, CLARK, KOEHRING, LORAIN, UNIT RIG, MARKLIFT, DYNAHOE, POWERWORKER, P&H
(licensed by PPM North America from Harnischfeger Corporation), PPM,
HYPERSTACKER, SUPERSTACKER, BENDINI and GENESIS trademarks, are important to the
business of the Company. The Company owns and maintains trademark and patent
registrations in countries where it conducts business, and monitors the status
of its trademark and patent registrations to maintain them in force and renews
them as required. The Company also takes steps, including legal action, to
protect its trademark, trade name and patent rights when circumstances warrant
such action.

<PAGE>

Employees

As of September 30, 1995, the Company had approximately 3,670 employees. The
Company considers its relations with its personnel to be good. Approximately 33%
of the Company's employees are represented by labor unions which have entered
into various separate collective bargaining agreements with the Company.
Although the Company experienced a labor strike, which has been settled, at its
parts distribution center in Southaven, Mississippi during the second quarter of
1995, and a strike at its Koehring facility in Waverly, Iowa in December 1995,
which has also been settled, the Company does not expect these strikes to have a
material continuing adverse impact on the business.

Financial Information about Industry and
Geographic Segments, Export Sales and Major Customers

Information regarding foreign and domestic operations, export sales, segment
information and major customers is included in Note N -- "Business Segment
Information" in the Notes to the Consolidated Financial Statements.

<PAGE>

PROPERTIES

The following table outlines the principal manufacturing, warehouse and office
facilities owned or leased by the Company and its subsidiaries:

Entity Facility Location Type and Size of Facility

Terex
(Corporate
Offices)... Westport, Connecticut (1) Office 14,898 sq. ft.
Terex
(Distribution
Center) Southaven, Mississippi (1) Warehouse and light manufacturing
505,000 sq. ft. (2)

Material Handling Segment

CMHC ........ Lexington, Kentucky (1) Manufacturing, warehouse and
office 372,600 sq. ft.
CMHC ........ Lexington, Kentucky Training and research and
development 43,000 sq. ft.
CMHC ........ Lexington, Kentucky (1) Office 64,600 sq. ft.
CMHC ........ Lexington, Kentucky (1) Manufacturing, warehouse and
test facility 59,500 sq. ft.
CMHC ........ Chicago, Illinois (1) Office 9,100 sq. ft.
CMH Germany...... Mulheim-Ruhr, Germany Manufacturing, engineering, power
generation, maintenance and office
241,350 sq. ft.
CMH Germany...... Mulheim-Ruhr, Germany (1) Office 61,360 sq. ft.
CMH Germany...... Saarn, Germany (1) Warehouse 150,700 sq. ft.

Heavy Equipment Segment

Unit Rig ........ Tulsa, Oklahoma Manufacturing and office
325,000 sq. ft.
TEL.............. Motherwell, Scotland Manufacturing, warehouse and
office 714,000 sq. ft. (3)

Mobile Cranes Segment

Koehring & Mark.. Waverly, Iowa (4) Office, manufacturing and warehouse
383,000 sq. ft.
PPM
North America Conway, South Carolina (1) Office, manufacturing and warehouse
257,040 sq. ft.
PPM Europe....... Montceau les Mines, France Office, manufacturing and warehouse
419,764 sq. ft.
PPM Europe....... Crespellano, Italy Office, manufacturing and warehouse
92,750 sq. ft.
PPM Europe....... Dortmund, Germany (1) Office and warehouse
129,180 sq. ft.
PPM Europe....... Rethel, France Office, manufacturing and warehouse
215,300 sq. ft.
- ------------------------------
(1) These facilities are either leased or subleased by the indicated entity.
(2) Includes 239,400 sq. ft. of warehouse space currently leased to others.
(3) Includes 148,500 sq. ft. of manufacturing space currently leased to others.
(4) Koehring also owns a 66,000 sq. ft. facility in Waterloo, Iowa which is
currently leased to others.
<PAGE>

CMH also operates seven sales and service branch locations, all of which are
leased. The branch facilities consist of office and service space and generally
range in size from 1,500 to 3,100 square feet per facility. CMH also owns
manufacturing and office facilities in Seoul and Banwael, Korea which were
closed in the fourth quarter of 1994 and are presently held for sale.

Unit Rig also has 10 owned or leased locations for parts distribution and
rebuilding of components, of which two are in the United States, two are in
Canada and six are abroad.

The properties listed above are suitable and adequate for the Company's use. The
Company has determined that certain of its properties exceed its requirements.
Such properties may be sold, leased or utilized in another manner and have been
excluded from the above list.

LEGAL PROCEEDINGS

As described in Note L -- "Litigation and Contingencies" in the Notes to the
Consolidated Financial Statements, the Company is involved in various legal
proceedings, including product liability and workers' compensation liability
matters, which have arisen in the normal course of its operations and to which
the Company is self-insured for up to $5.0 million. Management believes that the
final outcome of such matters will not have a material adverse effect on the
Company's consolidated financial position.

In December 1992, a Class Action complaint was filed against Fruehauf Trailer
Corporation ("Fruehauf," a former subsidiary of the Company), the Company,
certain of Fruehauf's then officers and directors and certain of the
underwriters of the initial public offering of Fruehauf, in the United States
District Court for the Eastern District of Michigan, Southern Division,
alleging, among other things, violations of certain provisions of the federal
securities laws, and seeking unspecified compensatory and punitive damages. The
Company has settled this litigation, with court approval, and recorded a
provision of $0.25 million in the quarter ended March 31, 1995.

For information concerning other contingencies and uncertainties, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Contingencies and Uncertainties."

<PAGE>

MANAGEMENT

Executive Officers and Directors

The following individuals are currently directors of the Company:

Name Age Positions and First Year
Offices with Company Elected Director

Ronald M. DeFeo 43 President, Chief 1993
Executive Officer,
Chief Operating
Officer and Director

Marvin B. Rosenberg 55 Senior Vice President, 1992
General Counsel,
Secretary and Director

G. Chris Andersen 57 Director 1992
William H. Fike 58 Director 1995
Bruce I. Raben 42 Director 1992
David A. Sachs 36 Director 1992
Adam E. Wolf 81 Director 1983

Mr. DeFeo became a director of the Company in 1993 and was appointed President
and Chief Operating Officer of the Company on October 4, 1993 and Chief
Executive Officer of the Company on March 24, 1995. Prior to joining Terex on
May 1, 1992, Mr. DeFeo was a Senior Vice President of J.I. Case Company, the
farm and construction equipment division of Tenneco Inc., and also served as a
Managing Director of Case Construction Equipment throughout Europe. While at
J.I. Case, Mr. DeFeo was also a Vice President of North American Construction
Equipment Sales and General Manager of Retail Operations.

Mr. Rosenberg was appointed a director of the Company in 1992 and was appointed
a Senior Vice President of the Company effective January 1, 1994. He has served
as Secretary and General Counsel of the Company since 1987. Mr. Rosenberg is a
director of Fruehauf and served as Secretary of Fruehauf since it was organized
in March 1989 until August 1993. From 1987 until December 31, 1993, he was
employed as General Counsel of KCS, an entity that, until December 31, 1993,
provided administrative, financial, marketing, technical, real estate and legal
services to the Company and its subsidiaries.

Mr. Andersen was appointed a director of the Company in 1992. Mr. Andersen
has been Vice Chairman of PaineWebber Incorporated ("PaineWebber") since March
1990. Prior to joining PaineWebber, Mr. Andersen was Managing Director for nine
years at Drexel Burnham Lambert Incorporated ("Drexel Burnham"), an investment
banking firm which filed for protection under Chapter 11 of the United States
Bankruptcy Code in 1990. Mr. Andersen is also a director of Sunshine Mining
Company.

William H. Fike was appointed a director of the Company in April 1995. Mr.
Fike is the Vice Chairman and Executive Vice President of Magna International,
Inc., an automotive parts manufacturer based in Ontario, Canada ("Magna"). Prior
to joining Magna in September 1994, Mr. Fike was employed by Ford Motor Company
from 1966 to 1994, where he served in various capacities, most recently as
President of Ford Europe.

Mr. Raben was appointed a director of the Company in 1992. Mr. Raben is an
Executive Vice President of Jefferies & Company, Inc. Mr. Raben was employed by
Drexel Burnham from 1978 to 1990 where he served in various capacities including
Managing Director. Mr. Raben is also a director of Optical Securities Group and
Equity Marketing.

Mr. Sachs was appointed a director of the Company in 1992 and
served as a director of Fruehauf from November 1992 to March 1993. Mr. Sachs is
President of Alpha Onyx Asset Management, LLC, an investment advisory firm, and
is a principal at Onyx Partners, Inc., a merchant banking firm. From 1990 to
1994, Mr. Sachs was employed at TMT-FW, Inc., an affiliate of Taylor & Co., a
private investment firm based in Fort Worth, Texas. TMT-FW, Inc. is one of two
general partners of EBD, L.P., which is the sole general partner of The Airlie
Group L.P. ("Airlie"). At TMT-FW, Inc., Mr. Sachs was engaged in the investment
activities of both Airlie and Taylor & Co.

Mr. Wolf became a director of the Company in 1983. Mr. Wolf has been
principally self-employed as an attorney throughout his career. He has
previously served on several boards of directors, including those of a telephone
company, a bank and a hospital.

The following table sets forth, as of November 1, 1995, the respective names and
ages of the Company's executive officers indicating all positions and offices
held by each such person. Each officer is elected by the Board to hold office
for one year or until his successor is duly elected and qualified.

Name Age Positions and Offices Held

Ronald M. DeFeo 43 President, Chief Executive Officer and
Chief Operating Officer
David J. Langevin 44 Executive Vice President
Marvin B. Rosenberg 55 Senior Vice President, General Counsel
and Secretary
Ralph T. Brandifino 50 Senior Vice President and
Chief Financial Officer

For information regarding Messrs. DeFeo and Rosenberg, refer to the table
listing directors above.

Mr. Langevin became Executive Vice President of the Company effective January 1,
1994 and was Acting Chief Financial Officer of the Company from March to
December, 1993. He was employed as a Vice President of KCS from 1988 until
December 31, 1993.

Mr. Brandifino was appointed to the position of Senior Vice President and Chief
Financial Officer on December 6, 1993. Mr. Brandifino was previously the Chief
Financial Officer at the Long Island Lighting Company from 1987 through 1993.

<PAGE>

Executive Compensation
<TABLE>
<CAPTION>

Summary Compensation Table

The Summary Compensation Table below shows the compensation for the
past three fiscal years of the Company's Chief Executive Officer and its four
highest paid executive officers with 1994 earned qualifying compensation in
excess of $100,000 (the "Named Executive Officers").

Long-Term
Annual Compensation Compensation

Other Restricted Securities All Other
Annual Stock Underlying Compen-
Name and Salary Bonus Compen- Awards(1) Options/ sation
Principal Position Year ($) ($) sation SARS (#) ($)
($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Randolph W. Lenz ............... 1994 486,000 243,000 -- 118,250 43,000(4) --
Chairman of the Board(2)(3) .. 1993 483,508 -- -- -- -- --
1992 504,692 -- -- -- -- --

Ronald M. DeFeo ................ 1994 350,000 325,000 -- 84,700 30,800(4) 3,080(6)
President, Chief Executive ... 1993 237,500 60,000 222,693(7) -- 10,000 3,148(6)
Officer and Chief Operating .. 1992 127,145 66,666 -- -- 20,000 --
Officer (5)

David J. Langevin .............. 1994 303,600 150,000 -- 75,350 27,400(4) --
Executive Vice President(3)(8) 1993 -- -- -- -- -- --
1992 -- -- -- -- -- --

Marvin B. Rosenberg ............ 1994 250,000 75,000 -- 62,150 22,600(4) --
Senior Vice President, ....... 1993 -- -- -- -- -- --
Secretary and General ........ 1992 -- -- -- -- -- --
Counsel(3)(9)

Ralph T. Brandifino ............ 1994 235,000 100,000 -- 58,300 21,200(4) --
Senior Vice President, Chief . 1993 16,913 -- -- -- -- --
Financial Officer and ........ 1992 -- -- -- -- -- --
Treasurer(10)

- -----------------------------
<FN>
(1) Consists of shares of restricted Common Stock ("Restricted Stock")
granted under the 1994 Terex Long-Term Incentive Plan (the "1994
Incentive Plan"). Restricted Stock is valued at the closing stock price
of $5.50 per share on June 23, 1994, the date of grant. Dividends are
paid on Restricted Stock awards at the same rate as paid to all
stockholders. The number and market value, based on the closing stock
price of $7.00 per share, of Restricted Stock holdings as of December 31,
1994 for each of the Named Executive Officers were as follows: Mr. Lenz,
21,500 shares, $150,500; Mr. DeFeo, 15,400 shares, $107,800; Mr.
Langevin, 13,700 shares, $95,900; Mr. Rosenberg 11,300 shares, $79,100;
and Mr. Brandifino, 10,600 shares, $74,200. The shares of Restricted
Stock covered by the Restricted Stock awards of each of the Named
Executive Officers become vested to the extent of one-fourth of the
shares covered thereby on each of the first four anniversaries of June
23, 1994; however, upon the earliest to occur of a change of control of
the Company and the death or disability of such Named Executive Officer,
any unvested portion of such Restricted Stock will immediately vest.
(2) Mr. Lenz was Chief Executive Officer of the Company during 1992, 1993 and
1994 and retired as Chairman of the Board and a Director of Company as of
August 28, 1995 (See "Retirement of Randolph W. Lenz," below).
(3) In conjunction with the termination of the Company's management agreement
with KCS, Mr. Lenz, together with Messrs. Langevin and Rosenberg (who
became employees of the Company on January 1, 1994), received cash and
certain securities of the Company. Such payments are not included as part
of annual compensation. See "Certain Transactions."
(4) Includes shares of Common Stock underlying stock options granted under
the 1994 Incentive Plan.
(5) Mr. DeFeo joined the Company on May 1, 1992 and became Chief Executive
Officer on March 24, 1995.
(6) Company's matching contribution to defined contribution plan account.
(7) Includes relocation payments of $214,604.
(8) Mr. Langevin was acting Chief Financial Officer of the Company from March
9, 1993 through December 5, 1993, but did not receive compensation from
the Company until he became Executive Vice President of the Company
effective January 1, 1994. Prior to 1994, Mr. Langevin was employed as an
executive officer of KCS and received compensation from KCS.
(9) Although Mr. Rosenberg has acted as Secretary and General Counsel of the
Company since 1987, he did not receive compensation from the Company
until he was appointed Senior Vice President of the Company effective
January 1, 1994. Prior to 1994, Mr. Rosenberg was employed as an
executive officer of KCS and received compensation from KCS.
(10) Mr. Brandifino joined the Company on December 6, 1993. Mr. Brandifino
is no longer Treasurer of the Company.
</FN>
</TABLE>

Option Grants in 1994

In May 1986, the stockholders approved an incentive stock option plan covering
key management employees (the "1986 Incentive Plan"). As further amended by
action of the stockholders and the Board, 108,228 shares of Common Stock are
currently available for purchase pursuant to incentive stock options granted or
to be granted under the 1986 Incentive Plan, subject to adjustment in the event
of changes in the outstanding Common Stock by reason of certain corporate events
such as stock splits and mergers. The exercise price of the options equals or
exceeds the fair market value of the Common Stock at the time of the grant.
Options granted under the 1986 Incentive Plan vest ratably over three years from
the date of grant. No options were granted during 1994 to any Named Executive
Officers under the 1986 Incentive Plan.

The Board of Directors adopted the 1994 Incentive Plan on June 23, 1994, subject
to stockholder approval which was obtained on June 23, 1995. The 1994 Incentive
Plan provides for the grant of stock options (both incentive stock options and
nonqualified stock options), shares of stock (including restricted stock) and
performance awards. Subject to adjustment in the event of certain changes in the
outstanding Common Stock, 750,000 shares of Common Stock have been reserved for
issuance under the 1994 Incentive Plan. The exercise price of stock options
generally will be no less than the fair market value of the Common Stock at the
time of grant unless otherwise determined by a committee of two or more outside
directors (the "Plan Committee"). The options will vest as determined by the
Plan Committee (but no less than one year from the date of grant), provided that
the options will vest immediately in the event of a Change in Control (as
defined in the 1994 Incentive Plan).

The table below summarizes options conditionally granted during 1994 to the
Named Executive Officers under the 1994 Incentive Plan, subject to stockholder
approval which was obtained on June 23, 1995.

Option/SAR Grants in Last Fiscal Year
Individual Grants
Number of % of Total Potential
Securities Options/SARs Realizable
Underlying Granted to Exercise Value
Options/SARs Employees or Base Expiration Assumed
Name Granted in Fiscal Price Date at Assumed
(#)(1) Year Annual Rates
($/Sh) of Stock Price
Appreciation
for Option Term(2)
5%($) 10%($)
Randolph W. Lenz .. 43,000 15.6% 5.50 6/23/04 148,734 376,920
Ronald M. DeFeo ... 30,800 11.2 5.50 6/23/04 106,535 269,980

David J. Langevin . 27,400 10.0 5.50 6/23/04 94,774 240,177

Marvin B. Rosenberg 22,600 8.2 5.50 6/23/04 78,172 198,102

Ralph T. Brandifino 21,200 7.7 5.50 6/23/04 73,329 185,830

- -------------------
(1) All the options become vested to the extent of one-fourth of the shares
of Common Stock covered thereby on each of the first four anniversaries
of June 23, 1994, the date of grant.
(2) The potential gains shown are net of the option exercise price and do
not include the effect of any taxes associated with exercise. The
amounts are for the assumed rates of appreciation only, do not
constitute projections of future stock price performance, and may not
necessarily be realized. Actual gains, if any, on stock option
exercises depend on the future performance of the Common Stock,
continued employment of the optionee through the term of the option,
and other factors.

<PAGE>

Aggregated Option Exercises in 1994 and Year-End Option Values

The table below summarizes options exercised during 1994 and year-end option
values of the Named Executive Officers.
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs at
Options/SARs at Fiscal Year-end
Fiscal Year-end (#) ($)(3)
Shares Value Exercisable/ Exercisable/
Name Acquired on Realized Unexercisable Unexercisable
Exercise (#) ($)

Randolph W. Lenz .. - - 0/43,000(1) 0/64,500
Ronald M. DeFeo ... - - 16,668/44,132(2) 0/46,200
David J. Langevin . - - 0/27,400(1) 0/41,100
Marvin B. Rosenberg - - 0/22,600(1) 0/33,900
Ralph T. Brandifino - - 0/21,200(1) 0/31,800
- --------
(1) Consist of shares of Common Stock underlying options granted under the 1994
Incentive Plan.
(2) Of such 44,132 shares of Common Stock, 30,800 consist of shares underlying
options granted under the 1994 Incentive Plan.
(3) Based upon the $7.00 per share market value of the Common Stock at closing
on December 31, 1994.

Pension Plans

The Company maintains four defined benefit pension plans covering certain
domestic employees, including, as described below, certain officers of the
Company. Retirement benefits for the plans covering the salaried employees are
based primarily on years of service and employees' qualifying compensation
during the final years of employment.

Messrs. Lenz and DeFeo participate in the Terex Corporation Salaried Employees'
Retirement Plan (the "Retirement Plan"). Messrs. Brandifino, Langevin and
Rosenberg do not participate because participation in the Retirement Plan was
frozen as of May 7, 1993, prior to their employment with the Company.

Participants of the Retirement Plan with five or more years of eligible service
are fully vested and entitled to annual pension benefits beginning at age 65.
Retirement benefits under the Retirement Plan are equal to the product of (i)
the participant's years of service (as defined in the Retirement Plan) and (ii)
1.02% of final average earnings (as defined in the Retirement Plan) plus 0.71%
of such compensation in excess of amounts shown on the applicable Social
Security Integration Table for participants born prior to 1938. For participants
born during 1938-1954, the formula is modified by replacing the 1.02% and 0.71%
figures with 1.08% and 0.65%, respectively. For participants born after 1954,
the formula is modified by replacing the 1.02% and 0.71% figures with 1.13% and
0.60%, respectively. Service in excess of 25 years is not recognized. There is
no offset for primary Social Security.

Participation in the Retirement Plan was frozen as of May 7, 1993, and no
participants, including Mr. Lenz and Mr. DeFeo, will be credited with service
following such date. However, participants not currently fully vested, including
Mr. DeFeo, will be credited with service for purposes of determining vesting
only. Mr. Lenz is already fully vested. The annual retirement benefits payable
at normal retirement age under the Retirement Plan will be $31,530 for Mr. Lenz
and $4,503 for Mr. DeFeo (assuming full vesting).

Compensation of Directors

Directors who are officers of the Company receive no additional compensation by
virtue of their being directors of the Company. Non-officer directors receive an
annual fee of $24,000. No additional compensation is paid for participation in
special or committee meetings of the Board. All directors of the Company are
reimbursed for travel, lodging and related expenses incurred in attending Board
and committee meetings.

In addition, under the 1994 Incentive Plan, outside directors are awarded (i) an
option to purchase 10,000 shares of Common Stock after having completed two
years of service as a member of the Board of Directors, and (ii) an option to
purchase an additional 10,000 shares after having completed five years of
service as a member of the Board of Directors. Years of service completed
include all years served on the Board of Directors, whether prior to, or
subsequent to, the adoption of the 1994 Incentive Plan. The options will have a
term of five years and the exercise price of the options will be equal to the
fair market value of the Common Stock on the date preceding the day the grant is
authorized. The options will not vest until at least one year following the date
of grant, provided, however, that the options will vest immediately in the event
of a change in control of the Company. On June 23, 1994, pursuant to such
provisions of the 1994 Incentive Plan, (i) each of G. Chris Andersen, Bruce I.
Raben and David A. Sachs was granted an option to purchase 10,000 shares of
Common Stock and (ii) Adam E. Wolf was granted an option to purchase 20,000
shares of Common Stock, in each case at an option price of $5.50.

Retirement of Randolph W. Lenz

On August 28, 1995, the Company announced that its Chairman, Randolph W. Lenz,
had retired from his position with the Company and its Board of Directors. In
connection with his retirement, the Company (acting through a committee
comprised of its independent Directors and represented by independent counsel)
and Mr. Lenz have executed a retirement agreement providing certain benefits to
Mr. Lenz and the Company. The agreement provides, among other things, for a
five-year consulting engagement requiring Mr. Lenz to make himself available to
the Company to provide consulting services for certain portions of his time. Mr
Lenz, or his designee, will receive a fee for consulting services which will
include payments in an amount, and a rate, equal to his 1995 base salary until
December 31, 1996. The agreement also provides for the granting of a five-year
$1.8 million loan bearing interest at 6.56% per annum which is subject to being
forgiven in increments over the five-year term of the agreement upon certain
conditions and equity grants having a maximum potential of 200,000 shares of
Terex common stock conditioned upon the Company achieving certain financial
performance objectives in the future. In contemplation of the execution of this
retirement agreement, the Company advanced to Mr. Lenz the principal amount of
the forgivable loan. Mr. Lenz has also agreed not to compete with the Company,
to vote his Terex shares in the manner recommended by the Company's Board of
Directors, not to acquire any additional shares of the Company's common stock,
and, except under certain circumstances, not to sell his shares of common stock.

The foregoing description is a summary of the terms of the retirement agreement
and does not purport to be complete and is qualified in its entirety by
reference to the Agreement dated as of November 2, 1995 between the Company and
Randolph W. Lenz, a copy of which is filed as an Exhibit to the Registration
Statement of which this Prospectus is a part.

Employment Contracts, Termination of Employment and
Change-in-Control Arrangements

The Company has agreed with Ronald M. DeFeo that in the event of a change in
ownership of the Company which prevents him from continuing in his position as
President and Chief Executive Officer, the Company will provide for a
continuance of his salary for a period of 24 months.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Board during fiscal 1994 consisted of G. Chris
Andersen and Adam E. Wolf. There are no Compensation Committee interlocks or
insider participation with respect to such individuals.

<PAGE>

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information regarding the beneficial
ownership of Common Stock by each person known by the Company to own
beneficially more than 5% of Common Stock, by each director, by each executive
officer of the Company named in "Management -- Executive Compensation," and by
all directors and executive officers as a group, as of December 1, 1995. Each
person named in the following table has sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by such
person, except as otherwise set forth in the notes to the table. Shares of
Common Stock that any person has a right to acquire within 60 days after
December 1, 1995 pursuant to an exercise of options, warrants or other rights or
conversion of preferred stock or otherwise are deemed to be outstanding for the
purpose of computing the percentage ownership of such person, but are not deemed
to be outstanding for computing the percentage ownership of any other person
shown in the table.

Name and Address of Amount Percent
Beneficial Owner Beneficially of Class
Owned

Randolph W. Lenz (1) 4,761,362 (3) 44.47%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
The Airlie Group L.P. (2) 525,900 (4) 4.88%
201 Main Street
Fort Worth, TX 76102
Dort A. Cameron, III (2) 581,900 (4) 5.40%
c/o The Airlie Group, L.P.
201 Main Street
Fort Worth, TX 76102
Thomas A. Taylor (2) 763,200 (4) 7.09%
c/o The Airlie Group, L.P.
201 Main Street
Fort Worth, TX 76102
EBD L.P. (2) 525,900 (4) 4.88%
c/o The Airlie Group, L.P.
201 Main Street
Forth Worth, TX 76102
TMT-FW, Inc. (2) 525,900 (4) 4.88%
c/o The Airlie Group, L.P.
201 Main Street
Forth Worth, TX 76102
The Prudential Insurance Company 610,204 (4) 5.86%
of America (5)
Prudential Plaza
Newark, NJ 07102-3777
G. Chris Andersen 34,900 (6) *
1285 Avenue of the Americas
New York, NY 10019
Ronald M. DeFeo 65,473 (7) *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
William H. Fike 0 *
26200 Lahser Road
Suite 300
Southfield, MI 48034
Bruce I. Raben 63,664 (8) *
11100 Santa Monica Boulevard
Suite 1000
Los Angeles, CA 90025
Marvin B. Rosenberg 111,475 (9) 1.06%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
David A. Sachs 37,300 (4)(10) *
2141 Hidden Creek Road
Fort Worth, TX 76107
Adam E. Wolf 28,100 (11) *
875 East Donges Lane
Milwaukee, WI 53217
David J. Langevin 128,775 (12) 1.23%
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
Ralph T. Brandifino 7,950 (13) *
c/o Terex Corporation
500 Post Road East
Westport, CT 06880
All directors and executive officers
as a group (10 persons) 493,337 4.59%

- ------------------------------
* Amount owned does not exceed one percent (1%) of the class so owned.

(1) Mr. Lenz currently pledges, and intends to pledge in the future,
shares of the Common Stock owned by him as collateral for loans. If
Mr. Lenz does not pay such loans when due, the pledgee may have the
right to sell the shares of the Common Stock pledged to it in
satisfaction of Mr. Lenz's obligations. The sale of a significant
amount of such pledged shares could result in a change of control of
the Company. See "Risk Factors -- Future Sales of Common Stock."

(2) Dort A. Cameron, III and TMT-FW, Inc., a Texas corporation, are general
partners of EBD L.P., a Delaware limited partnership which is the sole
general partner of Airlie. Thomas M. Taylor is the President, sole
director and sole stockholder of TMT-FW, Inc. By reason of such
relationships, Messrs. Cameron and Taylor may each be deemed the
beneficial owner of the shares deemed beneficially owned by Airlie.
Each of the indicated individuals, together with certain other persons,
reported ownership of an aggregate of 637,000 shares of Common Stock,
40,000 shares of the Company's Series A Cumulative Redeemable
Convertible Preferred Stock (the "Series A Preferred Stock") and 40,000
of the Company's Series A Common Stock Purchase Warrants (the "Series A
Warrants"), or approximately 7.61% of all outstanding Common Stock,
assuming the conversion of such shares of Series A Preferred Stock and
the exercise of such Series A Warrants (but not the conversion of any
Series A Preferred Stock or the exercise of any Series A Warrants by
any other holder). Except as otherwise reflected in this table or the
footnotes thereto, each of the indicated individuals disclaims the
beneficial ownership of any shares held by any other party.

(3) Includes (i) 4,106,037 shares of Common Stock, representing
approximately 40.27% of the outstanding Common Stock, directly owned by
Mr. Lenz, (ii) 536,200 shares of Common Stock indirectly owned by Mr.
Lenz through a corporation that he indirectly owns and controls, (iii)
5,375 shares of restricted Common Stock granted under the 1994
Incentive Plan and which are vested, (iv) 10,750 shares of restricted
Common Stock issuable upon the exercise of options exercisable within
60 days held by Mr. Lenz, and (v) 38,800 shares of the Company's Series
B Cumulative Redeemable Convertible Preferred Stock (the "Series B
Preferred Stock") convertible into 87,300 shares of Common Stock and
the Company's Series B Common Stock Purchase Warrants (the "Series B
Warrants") exercisable into 15,700 shares of Common Stock received in
connection with the termination of the Company's management agreement
with KCS (see "Certain Transactions").

(4) For each of Airlie, Dort A. Cameron, III, Thomas M. Taylor, EBD L.P.,
TMT-TW, Inc., The Prudential Insurance Company of America
("Prudential") and David A. Sachs, the amount shown assumes the
conversion of the shares of Series A Preferred Stock owned by such
beneficial owner (but not by any other holder of Series A Preferred
Stock), and assumes the exercise of Series A Warrants owned by such
beneficial owner (but not by any other holder of Series A Warrants).

(5) Prudential filed a Schedule 13G Statement, dated February 9, 1995,
pursuant to Section 13(g) of the Exchange Act, reflecting the ownership
of an aggregate of 557,200 shares of Common Stock and 23,045 Series A
Warrants, or approximately 5.86% of all outstanding Common Stock,
assuming the exercise of such Series A Warrants (but not the exercise
of any Series A Warrants by any other holder). Such securities are held
for the benefit of Prudential's clients by Prudential's registered
investment companies and its subsidiary Prudential Securities
Incorporated, and Prudential disclaims the beneficial ownership of such
shares.

(6) Includes 10,000 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days held by Mr. Andersen (see
"Management -- Compensation of Directors").

(7) Includes 3,850 shares of restricted Common Stock granted under the 1994
Incentive Plan and which are vested and 31,034 shares of Common Stock
issuable upon the exercise of options exercisable within 60 days held
by Mr. DeFeo (see "Management -- Executive Compensation").

(8) Does not include 10,000 shares owned by Mr. Raben's wife as to which
Mr. Raben does not have dispositive or voting power and disclaims
beneficial ownership. Includes 10,000 shares of Common Stock issuable
upon the exercise of options exercisable within 60 days held by Mr.
Raben (see "Management -- Compensation of Directors") and 10,244 Series
A Warrants exercisable for 23,664 shares of Common Stock.

(9) Includes (i) 2,825 shares of restricted Common Stock granted under the
1994 Incentive Plan and which are vested, and (ii) 5,650 shares of
Common Stock issuable upon the exercise of options exercisable within
60 days held by Mr. Rosenberg.

(10) Includes 10,000 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days held by Mr. Sachs (see "Management
-- Compensation of Directors"). Includes 3,300 shares of Common Stock
owned by Mr. Sachs' wife. Mr. Sachs disclaims the beneficial ownership
of such shares.

(11) Includes 20,000 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days held by Mr. Wolf (see "Management
-- Compensation of Directors").

(12) Includes (i) 3,425 shares of restricted Common Stock granted under the
1994 Incentive Plan and which are vested, and (ii) 6,850 shares of
Common Stock issuable upon the exercise of options exercisable within
60 days held by Mr. Langevin.

(13) Includes 2,650 shares of restricted Common Stock granted under the 1994
Incentive Plan and which are vested and 5,300 shares of Common Stock
issuable upon the exercise of options exercisable within 60 days held
by Mr.
Brandifino (see "Management -- Executive Compensation").

<PAGE>

CERTAIN TRANSACTIONS

On August 28, 1995, Randolph W. Lenz retired as Chairman of the Board and a
Director of the Company. Mr. Lenz remains the Company's principal stockholder.
As of December 1, 1995 he beneficially owned, directly and indirectly,
approximately 44% of the outstanding Common Stock of the Company. In connection
with his retirement, the Company entered into an agreement with Mr. Lenz which
provides certain benefits to Mr. Lenz and the Company. See "Management --
Retirement of Randolph W. Lenz."

During 1993, the Company's Board of Directors concluded that it would be in the
Company's best interest to terminate the Company's management contract with KCS,
principally owned by Randolph W. Lenz, then Chairman of the Board of the
Company, and integrate the management services of KCS directly into the Company.
Pursuant to an agreement between the Company and KCS, the contract between the
Company and KCS was suspended as of the close of business on December 31, 1993.
David J. Langevin and Marvin B. Rosenberg, employees of KCS, became salaried
employees of the Company effective January 1, 1994, with the titles of Executive
Vice President and Senior Vice President, respectively. In addition, in
consideration of the termination of the contract, the Company issued 89,800
shares of Series B Preferred Stock and 106,950 Series B Warrants, the terms of
which are substantially similar to the terms of the Company's outstanding Series
A Preferred Stock and Series A Warrants, respectively. Of such amounts, Mr. Lenz
received 38,800 shares of Series B Preferred Stock and Series B Warrants
exercisable for 15,700 shares of Common Stock, and Messrs. Langevin and
Rosenberg each received 25,500 shares of Series B Preferred Stock and Series B
Warrants exercisable for 45,625 shares of Common Stock. In addition, Messrs.
Lenz, Langevin and Rosenberg received cash payments of $515,000, $82,000 and
$82,000, respectively.

The Company, certain directors and executives of the Company, and KCS are named
parties in various legal proceedings. During 1994, the Company incurred $319,000
of legal fees and expenses on behalf of the Company, directors and executives of
the Company, and KCS named in the lawsuits.

Bruce I. Raben, a director of the Company, is an officer of Jefferies & Company
Inc. ("Jefferies"), which acted as placement agent for the sale of the Preferred
Stock, Warrants and the Senior Secured Notes. In May 1995, the Company paid $5.7
million in fees to Jefferies in connection with the placement of the Senior
Secured Notes. Jefferies has previously rendered financial advisory and other
services to the Company. JEFCO, one of the Selling Security Holders, is an
affiliate of Jefferies.

The Company intends that all transactions with affiliates be on terms no less
favorable to the Company than could be obtained in comparable transactions with
an unrelated person. The Board will be advised in advance of any such proposed
transaction or agreement and will utilize such procedures in evaluating their
terms and provisions as are appropriate in light of the Board's fiduciary duties
under Delaware law. In addition, the Company has an Audit Committee consisting
solely of outside directors. One of the responsibilities of the Audit Committee
is to review related party transactions.

<PAGE>

DESCRIPTION OF THE NOTES AND THE GUARANTEES

General

The Old Notes were, and the New Notes will be, issued pursuant to the Indenture.
The form and terms of the New Notes will be the same as the form and terms of
the Old Notes, except that the New Notes will be registered under the Securities
Act and, therefore, will not bear legends restricting the transfer thereof. The
terms of the New Notes will include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), as in effect on the date of the Indenture.
The following summary of certain provisions of the Indenture, the Collateral
Agreements (as defined below) and the Registration Rights Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Indenture, the Collateral Agreements and the Registration Rights Agreement,
including the definitions therein of certain terms used below. Copies of the
forms of Indenture, Collateral Agreements and Registration Rights Agreement have
been filed as exhibits to the Registration Statement of which this Prospectus is
a part). The definitions of certain terms used in the following summary are set
forth below under "-- Certain Definitions."

Principal Maturity and Interest; Ranking of New Notes

The New Notes are limited in aggregate principal amount to $250,000,000 and will
mature on May 15, 2002. Interest on the New Notes will be payable semi-annually
on May 15 and November 15 of each year, commencing on November 15, 1995, to
holders of record on the immediately preceding May 1 and November 1,
respectively. The Notes will bear interest at 13 1/4% per annum from the date of
original issue. Holders of New Notes will receive interest on November 15, 1995,
from the date of the initial issuance of the New Notes, plus an amount equal to
the accrued interest on the Old Notes exchanged therefor from the most recent
date to which interest has been paid to the date of exchange thereof. Interest
on the Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of original issuance.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. The New Notes will be payable both as to principal and interest
at the office or agency of the Company or, at the option of the Company, payment
of interest may be made by check mailed to the holders of the New Notes at their
respective addresses set forth in the register of holders of Notes. Until
otherwise designated by the Company, the Company's office or agency will be the
office of the Trustee maintained for such purpose. If a payment date is a legal
holiday at a place of payment, payment may be made at that place on the next
succeeding day that is not a legal holiday at such place of payment, and no
interest shall accrue for the intervening period.

The New Notes will rank pari passu in right of payment with all existing and
future senior indebtedness (including the Old Notes) and senior to all
subordinated indebtedness of the Company. In addition, upon any distribution of
assets of the Company pursuant to any insolvency, bankruptcy, dissolution,
winding up, liquidation or reorganization, the payment of the principal of, and
the premium, if any, and interest on, the New Notes will rank pari passu in
right of payment with all existing and future senior indebtedness (including the
Old Notes). The Notes will rank pari passu in right of payment with all senior
borrowings. The New Notes will be issued in registered form, without coupons,
and in denominations of $1,000 and integral multiples thereof.

Redemption

The Notes are not redeemable at the Company's option prior to May 15, 2000.
Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the applicable date
of redemption, if redeemed during the 12-month period beginning on May 15 of the
years indicated below:

Year Percentage

2000 103.79%
2001 101.89
2002 100.00

Notwithstanding the foregoing, prior to May 15, 2000, the Company may redeem up
to one-third of the original principal amount of the Notes, at a redemption
price of 113.25% of the principal amount of the Notes if the Notes are redeemed
prior to May 15, 1996, 111.36% of the principal amount of the Notes if the Notes
are redeemed after May 15, 1996 and prior to May 15, 1997, 109.46% of the
principal amount of the Notes if the Notes are redeemed after May 15, 1997 and
prior to May 15, 1998, 107.57% of the principal amount of the Notes if the Notes
are redeemed after May 15, 1998 and prior to May 15, 1999, and 105.68% of the
principal amount the Notes are redeemed after May 15, 1999, in each case plus
accrued interest to the applicable redemption date, with the net proceeds of a
bona fide public offering of common stock of the Company or any Restricted
Subsidiary; provided, however, that such redemption shall occur within 60 days
of the date of the closing of such public offering. The restrictions on optional
redemptions set forth in the Indenture will not limit the Company's right to
make open market purchases of the Notes from time to time, except that neither
the Company nor any Restricted Subsidiary may use the proceeds of a bona fide
public offering made prior to May 15, 2000 to make open market purchases of the
Notes.

If less than all of the Notes are to be redeemed at any time, selection of Notes
for redemption will be made by the Trustee in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed, or, if the Notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee deems to be fair and appropriate, provided, however,
that Notes of $1,000 or less may not be redeemed in part. Notice of redemption
will be mailed by first-class mail at least 30 but not more than 60 days before
the redemption date to each holder of Notes to be redeemed at such holder's
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note will state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note. On and after the date of redemption, interest
will cease to accrue on Notes or portions of them called for redemption.

The Notes will not be entitled to any mandatory redemption or sinking fund.

Guarantors

The repayment of the Notes will be unconditionally and irrevocably guaranteed by
present and future Material Subsidiaries of the Company that are Restricted
Subsidiaries (other than TEL, CMHC Germany, P.P.M., S.A. and any other present
or future Restricted Subsidiary organized under the laws of a foreign country)
including Terex Cranes, PPM Cranes, Koehring Cranes and CMHC. The Indenture will
provide that as long as any Notes remain outstanding, any future domestic
Material Subsidiary of the Company that is a Restricted Subsidiary shall enter
into a similar guarantee and the stock of such Subsidiary will be pledged to
secure the Notes.

The obligations of each Guarantor will be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee, result in the obligations of such Guarantor under
the Guarantee not constituting a fraudulent conveyance or fraudulent transfer
under federal or state law. See "Risk Factors -- Fraudulent Conveyance or
Transfer; Possible Invalidation or Subordination of Company Obligations."

Collateral

Subject to certain exceptions, the Notes and Guarantees will be secured by a
security interest in (i) substantially all of the assets of the Company and the
Guarantors, other than cash and cash equivalents (except that as to accounts
receivable and inventory, and proceeds thereof and certain related rights, such
security interest shall be subordinated to Liens securing obligations under any
Revolving Credit Facility to which any of them are obligors), (ii) property,
plant and equipment of the Company and certain of the Restricted Subsidiaries
organized outside of the U.S. and (iii) all of the Capital Stock of (and certain
intercompany notes from) all Subsidiaries of the Company owned by the Company or
any Restricted Subsidiary. In addition, the Notes will initially be secured by a
security interest in inventory of certain foreign Restricted Subsidiaries;
provided, however, that if any European subsidiary of the Company enters into a
Revolving Credit Facility, the Company is permitted to secure such facility with
accounts receivable and/or inventory of such subsidiary and the security
interest securing the Notes will be released to the extent required by the terms
of any such facility. All of the assets of the Company, the Guarantors and the
Restricted Subsidiaries described above are collectively referred to herein as
the "Collateral."

The Company, the Guarantors and the Restricted Subsidiaries have entered into
security agreements, mortgages, deeds of trust and certain other collateral
assignment agreements (collectively, the "Collateral Agreements") that provide
for the grant of a security interest in or pledge of the Collateral to the
Trustee, as collateral agent (in such capacity, the "Collateral Agent"), for the
benefit of the holders of the Notes. Such pledges and security interests will
secure the payment and performance when due of all of the Obligations of the
Company, the Guarantors and the Restricted Subsidiaries, under the Indenture,
the Notes, the Guarantees and the Collateral Agreements. The Trustee, on behalf
of the Noteholders, has entered into an intercreditor agreement with the Lenders
(as defined herein) under the Credit Facility relating to the parties'
respective rights to collateral and providing for certain other matters.

The Collateral Agreements grant certain blanket-type Liens to the Collateral
Agent against the personal property of the Company, the Guarantors and certain
of the Restricted Subsidiaries that are intended to secure the Obligations of
such persons under the Indenture, the Guarantees and the Notes. The Collateral
Agreements also grant a first priority Lien in all fee real property and certain
leasehold interests (the "Real Property Assets") owned or leased by the Company,
the Guarantors and certain of the Restricted Subsidiaries as of the date of the
Indenture. Such Liens shall be subordinate to (i) Purchase Money Liens permitted
under the covenant entitled "--Liens," (ii) Permitted Liens and (iii) Liens on
accounts receivable and inventory, and the proceeds thereof and certain related
rights securing obligations under the Credit Facility. With respect to leasehold
interests, the Collateral Agent's Liens will be limited to the extent such
leasehold interests may be encumbered pursuant to the terms of their respective
underlying leases, and by the terms of such leases. The Company and its
Restricted Subsidiaries will have the right to grant (and suffer to exist) Liens
to third parties to the extent provided in the covenant entitled "Liens" and
will have the right to acquire any such assets subject to such Liens (and suffer
to exist such Liens.) The Collateral Agent's Liens are intended to be, and shall
be, at all times automatically junior and subordinate in priority to certain of
such Liens. The Collateral Agreements also provide that the Collateral Agent
shall not have a lien on property, plant or equipment acquired by the Company,
any Guarantor or any Restricted Subsidiary with the proceeds of Purchase Money
Obligations permitted under the terms of the Indenture, which property, plant
and equipment is subject to Purchase Money Liens permitted under the terms of
the Indenture, if, and for so long as, the agreements governing the terms of
such Purchase Money Obligations and Purchase Money Liens prohibit junior liens
on the assets so acquired.

So long as no Event of Default (as defined in the Indenture) has occurred and is
continuing, and subject to certain terms and conditions in the Indenture and the
Collateral Agreements, the Company will be entitled to receive all cash
dividends, interest and other payments made upon or with respect to the Capital
Stock of any Subsidiary's collateral pledged by it, and to exercise any voting,
other consensual rights and other rights pertaining to such collateral pledged
by it. Upon the occurrence and during the continuance of an Event of Default
relating to payment of principal or interest on the Notes or if the Notes are
accelerated, all rights of the Company to exercise such voting, other consensual
rights or other rights will cease upon notice from the Collateral Agent, and all
such rights will become vested in the Collateral Agent, which to the extent
permitted by law, will have sole right to exercise such voting, other consensual
rights or other rights. Upon the occurrence and during continuance of any Event
of Default, all rights of the Company to receive all cash dividends, interest
and other payments made upon or with respect to the pledged collateral will,
upon notice from the Collateral Agent, cease and such cash dividends, interest
and other payments will be paid to the Collateral Agent. All funds distributed
under the Collateral Agreements and received by the Collateral Agent for the
benefit of the holders of the Notes will be retained and/or distributed by the
Collateral Agent in accordance with the provisions of the Indenture.

Under the terms of the Collateral Agreements, the Collateral Agent will
determine the circumstances and manner in which the Collateral will be disposed
of, including, but not limited to, the determination of whether to foreclose on
the Collateral following an Event of Default. Holders of the Notes may not
enforce the Collateral Agreements. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding Notes may direct the
Collateral Agent in its exercise of any trust or power under the Collateral
Agreements. Upon the full and final payment and performance of all Obligations
of the Company under the Indenture and the Notes, the Collateral Agreements will
terminate and the pledged Collateral will be released. In addition, in the event
that the pledged Collateral is sold and the Net Proceeds are or will be applied
in accordance with the terms of the covenant described under "--Limitation on
Asset Sales," the Collateral Agent will release simultaneously with such sale
the Liens in favor of the Collateral Agent in the assets sold, provided,
however, that the Collateral Agent has received all documentation required by
the Trust Indenture Act therefor.

In the event of a default under the Notes, the proceeds from the sale of the
Collateral may not be sufficient to satisfy the Company's obligations under the
Notes in full. The amount to be received upon such a sale would be dependent
upon numerous factors including the condition, age and useful life of the
collateral at the time of such sale, the timing and the manner of the sale, and
whether the assets were being sold as part of an ongoing business. In addition,
the book value of the collateral should not be relied upon as a measure of
realizable value.

Repurchase Upon Change of Control

Upon the occurrence of a Change of Control, the Company will be required to
offer to repurchase all the Notes then outstanding as described below (the
"Change of Control Offer") at a purchase price equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Change of Control Payment"). Within 40 days following any
Change of Control, the Company must mail a notice to each holder stating, among
other things: (i) that the Change of Control Offer is being made pursuant to
this provision and that all Notes tendered will be accepted for payment, (ii)
the purchase price and the purchase date, which will be no earlier than 30 days
nor later than 40 days from the date such notice is mailed (the "Change of
Control Payment Date"), (iii) that any Note not tendered will continue to accrue
interest, (iv) that, unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest after the Change of Control Payment
Date, (v) that any holder electing to have Notes purchased pursuant to a Change
of Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the paying agent with respect to the Notes (the "Paying Agent") at the address
specified in the notice prior to the close of business on the third business day
preceding the Change of Control Payment Date, (vi) that the holder will be
entitled to withdraw such election if the Paying Agent receives, not later than
the close of business on the second business day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the holder, the principal amount of Notes delivered for purchase,
and a statement that such holder is withdrawing his election to have such Notes
purchased, and (vii) that a holder whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. The Company will comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes in connection with a
Change of Control.

On the Change of Control Payment Date, the Company will, to the extent lawful,
(i) accept for payment the Notes or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent an amount equal to
the Change of Control Payment in respect of all Notes or portions thereof so
tendered, and (iii) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an officer's certificate stating that the Notes or
portions thereof tendered to the Company are accepted for payment. The Paying
Agent will promptly mail to each holder of Notes so accepted payment in an
amount equal to the purchase price for such Notes, and the Trustee will
authenticate and mail to each holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any, provided, however, that
each such new Note will be in principal amount of $1,000 or an integral multiple
thereof. The Company will announce the result of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.

Except as described above with respect to a Change of Control, the Indenture
does not contain provisions that permit the holders of the Notes to require that
the Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar restructuring.

There can be no assurance that sufficient funds will be available at the time of
any Change of Control Offer to make required repurchases.

"Change of Control" means (i) the sale, assignment, lease, transfer or
conveyance (in one transaction or a series of transactions) of all or
substantially all of the Company's assets to any Person or group (as such term
is used in Section 13(d)(3) of the Exchange Act), (ii) the liquidation or
dissolution of the Company or the adoption of a plan by the stockholders of the
Company relating to the dissolution or liquidation of the Company, (iii) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), except for any Person or group owning in excess of 40% of the
voting power of the Voting Stock of the Company on the date of the Indenture, of
a direct or indirect majority in interest (more than 50%) of the voting power of
the Voting Stock of the Company by way of purchase, merger or consolidation or
otherwise, or (iv) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors of the
Company (which includes any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the Company
was approved by a vote of at least 66 2/3% of the directors then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company.

Certain Covenants

Limitation on Restricted Payments. The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly (i) declare or pay any
dividend or make any distribution on account of the Equity Interests of the
Company and its Subsidiaries (other than dividends or distributions payable in
Equity Interests of the Company or such Restricted Subsidiary (other than
Disqualified Stock) or dividends or distributions payable to the Company or any
Wholly Owned Subsidiary), (ii) purchase, redeem or otherwise acquire or retire
for value any Equity Interest of the Company or any Subsidiary or other
Affiliate of the Company (other than any such Equity Interest owned by the
Company or any Wholly Owned Subsidiary), (iii) voluntarily make any principal
payment on, or purchase, redeem, defease or otherwise acquire or retire for
value any Indebtedness that is expressly subordinated in right of payment to the
Notes prior to any scheduled principal payment, sinking fund payment or other
payment at the stated maturity thereof, or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above
are collectively referred to as "Restricted Payments") unless, at the time of
such Restricted Payment:

(a) no Default or Event of Default has occurred and is continuing
or would occur as a consequence thereof, and

(b) immediately after such Restricted Payment (the value of any
such payment, if other than cash, being determined in good
faith by the Board of Directors and evidenced by a resolution
set forth in an officers' certificate delivered to the
Trustee) and after giving effect thereto on a pro forma basis,
the Company could incur at least $1.00 of additional
Indebtedness under the Interest Coverage Ratio test set forth
in the covenant described under "-- Limitation on Incurrence
of Indebtedness," and

(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of the Indenture (including
Restricted Payments permitted by clauses (i) and (ii) of the next
following paragraph and excluding Restricted Payments permitted
by the other clauses therein), is less than the sum of (x) 40% of
the Consolidated Net Income of the Company for the period (taken
as one accounting period) from the beginning of the first quarter
commencing immediately after the date of the Indenture to the end
of the Company's most recently ended fiscal quarter for which
internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, 100% of such deficit), plus (y) 100% of the
aggregate net cash proceeds received by the Company from the
issuance or sale, other than to a Subsidiary of the Company, of
Equity Interests of the Company (other than Disqualified Stock)
after the date of the Indenture and on or prior to the time of
such Restricted Payment, plus (z) 100% of the aggregate net cash
proceeds received by the Company from the issuance or sale, other
than to a Subsidiary of the Company, of any convertible or
exchangeable debt security of the Company that has been converted
or exchanged into Equity Interests of the Company (other than
Disqualified Stock) pursuant to the terms thereof after the date
of the Indenture and on or prior to the time of such Restricted
Payment.

The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would not have been prohibited by the provisions of the
Indenture, (ii) the redemption, purchase, retirement or other acquisition of any
Equity Interests of the Company in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the Company) of
other Equity Interests of the Company (other than Disqualified Stock), (iii) the
redemption, repurchase or payoff of any Indebtedness with proceeds of any
Refinancing Indebtedness (as defined below) permitted to be incurred pursuant to
the provision described under "--Limitation on Incurrence of Indebtedness," (iv)
the redemption, purchase, retirement or other payoff of the Series A Cumulative
Redeemable Convertible Preferred Stock, (v) Investments by the Company or any
Restricted Subsidiary, in an aggregate amount not to exceed $3 million, in a
Non-Restricted Subsidiary formed primarily for the purpose of financing
purchases and leases of inventory manufactured by the Company or any of its
Subsidiaries, and (vi) other Restricted Payments in an aggregate amount not to
exceed $8 million.

Not later than the date of making any Restricted Payment, the Company will
deliver to the Trustee an officers' certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this covenant were computed, which calculations may be based upon
the Company's latest available financial statements.

Limitation on Incurrence of Indebtedness. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, create,
incur, issue, assume, guaranty or otherwise become directly or indirectly liable
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Company will not issue any Disqualified Stock and will not permit
any of its Restricted Subsidiaries to issue any preferred stock, provided,
however, that the Company may incur Indebtedness or issue shares of Disqualified
Stock if the Interest Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least equal to the ratio
set forth below opposite the period in which such incurrence or issuance occurs,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock has been issued, as the case may be, at the beginning of such
four-quarter period;

Period Ending Ratio

May 15, 1996......................................... 2.25:1
May 15, 1997......................................... 2.50:1
May 15, 1998 and thereafter.......................... 2.75:1

provided, however, that, in the case of Indebtedness, (i) the Weighted Average
Life to Maturity of such Indebtedness is greater than the remaining Weighted
Average Life to Maturity of the Notes by at least one year and (ii) such
Indebtedness has a final scheduled maturity that exceeds the final stated
maturity of the Notes by at least one year.

The foregoing limitations will not prohibit the incurrence of (a) Indebtedness
pursuant to the Revolving Credit Facility and repayment obligations in respect
of letters of credit, provided, however, that the aggregate principal amount of
Indebtedness so incurred on any date, together with all other Indebtedness
incurred pursuant to this clause (a) and outstanding on such date, shall not
exceed the sum of (i) 85% of Eligible Receivables (as defined in the Indenture),
plus (ii) 50% of Eligible Inventory (as defined in the Indenture), (b)
performance bonds, surety bonds, insurance obligations or bonds and other
similar bonds or obligations incurred in the ordinary course of business, (c)
Hedging Obligations incurred to fix the interest rate on any variable rate
Indebtedness otherwise permitted by the Indenture, (d) Indebtedness arising out
of sale and leaseback transactions, capital lease obligations or Purchase Money
Obligations (collectively, "Purchase Money Indebtedness") in an aggregate amount
not to exceed $6 million during any calendar year, (e) Indebtedness owed by the
Company to any Wholly Owned Subsidiary or Guarantor or by any Wholly Owned
Subsidiary or Guarantor to the Company or any other Wholly Owned Subsidiary or
Guarantor, (f) Guarantees incurred in the ordinary course of business of
Indebtedness incurred by any Person to purchase or lease inventory manufactured
or sold by the Company or any Restricted Subsidiary (including, without
limitation, Floor Plan Guarantees), provided, however, that (i) to the extent
commercially practicable, the Indebtedness so guaranteed is secured by a first
priority lien on such inventory in favor of the holder of such Indebtedness and
(ii) if the Company or such Restricted Subsidiary is required to make payment
with respect to such guaranty, the Company or such Restricted Subsidiary will
have the right to receive either (1) title to such inventory, (2) a valid
assignment of a perfected first priority security interest in such inventory or
(3) the net proceeds of any resale of such inventory, (g) Indebtedness
outstanding on the date of the Indenture, up to 80 million French Francs of PPM
Funded Debt (as defined in the Indenture) remaining outstanding following
consummation of the Acquisition and the PPM Subordinated Note (as defined in the
Indenture) and (h) Indebtedness issued in exchange for, or the proceeds of which
are contemporaneously used to extend, refinance, renew, replace, or refund
(collectively, "Refinance") Indebtedness referred to in clauses (d) or (g) above
and outstanding Indebtedness incurred pursuant to the debt incurrence tests set
forth in the immediately preceding paragraph (the "Refinancing Indebtedness"),
provided, however, that (1) the principal amount of such Refinancing
Indebtedness does not exceed the principal amount of Indebtedness so Refinanced
(plus the amount of reasonable out-of-pocket fees and expenses incurred in
connection therewith), (2) the Refinancing Indebtedness has a Weighted Average
Life to Maturity that is either (x) equal to or greater than the Weighted
Average Life to Maturity of the Indebtedness being Refinanced or (y) greater
than the Weighted Average Life to Maturity of the Notes, and (3) the Refinancing
Indebtedness ranks, in right of payment, no less favorable to the Notes as the
Indebtedness being Refinanced.

Limitation on Asset Sales. The Company will not, and will not permit any
Restricted Subsidiary to, make any Asset Sale unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset Sale at
least equal to the fair market value of the assets subject to such Asset Sale as
determined in good faith by the Board of Directors, (ii) at least 80% of the
consideration for such Asset Sale (other than consideration consisting of assets
that will be used in the business of the Company or its Subsidiaries) is in the
form of Permitted Proceeds, and (iii) within 12 months of such Asset Sale, the
Net Proceeds thereof are (a) invested in assets related to the business of the
Company or its Restricted Subsidiaries as conducted on the date of the
Indenture, (b) applied to repay Indebtedness under Purchase Money Obligations
incurred in connection with the asset so sold or (c) to the extent not used as
provided in clauses (a) or (b), applied to make an offer to purchase Notes as
described below (an "Excess Proceeds Offer"), provided, however, that if the
amount of Net Proceeds from any Asset Sale not invested pursuant to clause (a)
above is less than $5 million, the Company will not be required to repay
indebtedness pursuant to clause (b) or to make an offer pursuant to clause (c).

The amount of Net Proceeds not invested or applied as set forth in the preceding
clauses (a) and (b) constitutes "Excess Proceeds." If the Company elects, or
becomes obligated to make an Excess Proceeds Offer, the Company will offer to
purchase Notes having an aggregate principal amount equal to the Excess Proceeds
(the "Purchase Amount"), at a purchase price equal to 100% of the aggregate
principal amount thereof, plus accrued and unpaid interest, if any, to the
purchase date. The Company must commence such Excess Proceeds Offer not later
than 60 days after the expiration of the 12-month period following the Asset
Sale that produced Excess Proceeds. If the aggregate purchase price for the
Notes tendered pursuant to the Excess Proceeds Offer is less than the Excess
Proceeds, the Company and its Subsidiaries may use the portion of the Excess
Proceeds remaining after payment of such purchase price for general corporate
purposes.

The Excess Proceeds Offer will remain open for a period of 20 business days and
no longer, unless a longer period is required by law (the "Excess Proceeds Offer
Period"). Promptly after the termination of the Excess Proceeds Offer Period
(the "Excess Proceeds Payment Date"), the Company will purchase and mail or
deliver payment for the Purchase Amount for the Notes or portions thereof
tendered, pro rata or by such other method as may be required by law, or, if
less than the Purchase Amount has been tendered, all Notes tendered pursuant to
the Excess Proceeds Offer. The principal amount of Notes to be purchased
pursuant to an Excess Proceeds Offer may be reduced by the principal amount of
Notes acquired by the Company through purchase or redemption (other than
pursuant to a Change of Control Offer) subsequent to the date of the Asset Sale
and surrendered to the Trustee for cancellation. Any Excess Proceeds Offer will
be conducted in compliance with applicable regulations under the federal
securities law, including Exchange Act Rule 14e-1.

The Company's ability to purchase Notes in the event it is required to make an
Excess Proceeds Offer may be adversely affected by, among other things,
covenants of the Credit Facility. There can be no assurance that sufficient
funds will be available at the time of any Excess Proceeds Offer to make
required repurchases. The Company's failure to comply with the covenant
described above will be an Event of Default under the Indenture if such failure
continues for a specified period and the required notice is given by the Trustee
or the holders of not less than 25% in principal amount of the then outstanding
Notes.

The Company will not, and will not permit any of its Subsidiaries to, create or
suffer to exist or become effective any restriction that would impair the
ability of the Company to make an Excess Proceeds Offer upon an Asset Sale or,
if such Excess Proceeds Offer is made, to pay for the Notes tendered for
purchase.

Limitation on Liens. The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Lien on any asset now owned or hereafter acquired, or on any income or
profits therefrom or assign or convey any right to receive income therefrom,
except (i) Liens on accounts receivable and inventory and the proceeds thereof
(and certain rights relating thereto) securing Indebtedness permitted to be
incurred pursuant to clause (a) under "--Limitation on Incurrence of
Indebtedness" (including the Revolving Credit Facility), (ii) Purchase Money
Liens securing Purchase Money Indebtedness incurred pursuant to clause (d) under
"--Limitation on Incurrence of Indebtedness," and (iii) Permitted Liens.

Limitation on Restrictions on Restricted Subsidiary Dividends. The Company will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any encumbrance
or restriction on the ability of any Restricted Subsidiary (a) to (i) pay
dividends or make any other distributions to the Company or any of its
Restricted Subsidiaries (A) on such Restricted Subsidiary's Capital Stock or (B)
with respect to any other interest or participation in, or measured by, such
Restricted Subsidiary's profits or (ii) pay any indebtedness owed to the Company
or any of its Restricted Subsidiaries, or (b) make loans or advances to the
Company or any of its Subsidiaries, except for such encumbrances or restrictions
existing under or by reasons of (i) the Revolving Credit Facility that are not
materially more restrictive, taken as a whole, than those contained in the
Revolving Credit Facility existing on the date of the Indenture, (ii) the
Indenture, the Notes and the Collateral Agreements, (iii) applicable law, (iv)
any Acquired Debt, which encumbrance or restriction is not applicable to any
person, or the properties or assets of any person, other than the person, or the
property or assets of the person, so acquired, and (v) permitted Refinancing
Indebtedness, provided, however, that such restrictions contained in any
agreement governing such Refinancing Indebtedness are no more restrictive taken
as a whole than those contained in any agreements governing the Indebtedness
being refinanced.

Merger, Consolidation or Sale of Assets. The Company may not consolidate or
merge with or into (whether or not the Company is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions to, any other person unless (i) the Company is the surviving person
or the person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition has been made is a corporation organized and existing under
the laws of the United States, any state thereof or the District of Columbia,
(ii) the person formed by or surviving any such consolidation or merger (if
other than the Company) or the person to which such sale, assignment, transfer,
lease, conveyance or other disposition has been made assumes all the obligations
of the Company, pursuant to a supplemental indenture and Collateral Agreements
in a form reasonably satisfactory to the Trustee and the Collateral Agent, under
the Notes, the Indenture and the Collateral Agreements, (iii) immediately after
giving effect to such transaction, no Default or Event of Default exists, and
(iv) the Company, or any person formed by or surviving any such consolidation or
merger, or to which such sale, assignment, transfer, lease, conveyance or other
disposition has been made, (A) has Consolidated Net Worth (immediately after the
transaction but prior to any purchase accounting adjustments resulting from the
transaction) equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) is permitted, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, to incur at
least $1.00 of additional Indebtedness pursuant to the Interest Coverage Ratio
test set forth in the covenant described under "--Limitation on Incurrence of
Indebtedness."

Limitation on Transactions with Affiliates. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), except for (i)
Affiliate Transactions of aggregate value of up to $1 million conducted in good
faith that are on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Subsidiary with an unrelated
person, (ii) Affiliate Transactions of aggregate value of up to $10 million that
a majority of the disinterested members on the Board of Directors of the Company
determines to be fair to the Company or the relevant Restricted Subsidiary from
a financial point of view and (iii) Affiliate Transactions for which the Company
delivers to the Trustee an opinion as to the fairness to the Company or such
Restricted Subsidiary from a financial point of view issued by an investment
banking firm of national standing; provided, however, that the following will
not be deemed to be Affiliate Transactions: (i) employment agreements entered
into by the Company or any Restricted Subsidiary in the ordinary course of
business with the approval of the Company's Board of Directors, (ii)
transactions between or among the Company and/or its Wholly Owned Subsidiaries
or Guarantors, (iii) transactions permitted by the provisions of the Indenture
described above under "--Limitation on Restricted Payments", (iv) good faith
bona fide purchases and sales of inventory or services made in the ordinary
course of business consistent with past practice between the Company and any
Restricted Subsidiary or between Restricted Subsidiaries and (v) reasonable
directors' fees for members of the Board of Directors of the Company.

Rule 144A Information Requirement. The Company has agreed to furnish to the
holders or beneficial holders of the Notes and prospective purchasers of Notes
designated by the holders of Transfer Restricted Securities, upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act until such time as the holders thereof have disposed of such
Notes pursuant to an effective registration statement.

Reports. Whether or not required by the rules and regulations of the Commission,
so long as any Notes are outstanding, the Company will furnish to the holders of
Notes all quarterly and annual financial information that would be required to
be contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company were required to file such forms, including a "Management's Discussion
and Analysis of Results of Operations and Financial Condition" and, with respect
to the annual information only, a report thereon by the Company's certified
independent accountants. From and after the time the Company files a
registration statement with the Commission with respect to the Notes, the
Company will file such quarterly and annual information with the Commission.

Events of Default and Remedies

Each of the following constitutes an Event of Default under the Indenture: (i)
default for 30 days in the payment when due of interest on the Notes, (ii)
default in payment of principal (or premium, if any) on the Notes when due at
maturity, redemption, by acceleration or otherwise, (iii) default in the
performance or breach of the provisions of "--Merger, Consolidation or Sale of
Assets," "--Limitation on Restricted Payments," "--Limitation on Asset Sales,"
"--Limitation on Liens" or "--Repurchase Upon Change of Control," and certain
provisions of the Collateral Agreements, (iv) default in the performance or
breach of the provisions of "--Limitation on Incurrence of Indebtedness" which
the Company fails to cure within 30 days after the occurrence thereof, (v)
failure by the Company, any Guarantor or any Restricted Subsidiary for 30 days
after notice to comply with certain other agreements in the Indenture, the Notes
or the Collateral Agreements, (vi) default under (after giving effect to any
applicable grace periods or any extension of any maturity date) any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company, any
Guarantor or any Restricted Subsidiary (or the payment of which is guaranteed by
the Company, any Guarantor or any Restricted Subsidiary), whether such
Indebtedness or guarantee now exists or is created after the date of the
Indenture, if (a) either (1) such default results from the failure to pay
principal of or interest on such Indebtedness and (2) as a result of such
default the maturity of such Indebtedness has been accelerated, and (b) the
principal amount of such Indebtedness, together with the principal amount of any
other such Indebtedness with respect to which such a payment default (after the
expiration of any applicable grace period or any extension of the maturity date)
has occurred, or the maturity of which has been so accelerated, exceeds $4
million in the aggregate, (vii) failure by the Company, any Guarantor or any
Restricted Subsidiary to pay final judgments (other than any judgment as to
which a reputable insurance company has accepted full liability) aggregating in
excess of $1 million which judgments are not stayed within 60 days after their
entry, (viii) breach by the Company, any Guarantor or any Restricted Subsidiary
of any material representation or warranty set forth in the Collateral
Agreements, which breach is not cured by the Company or such Guarantor or
Restricted Subsidiary or waived within 30 days after notice to comply with such
breach of a material representation or warranty, (ix) repudiation by the Company
or any of the Guarantors or Restricted Subsidiaries of their obligations under
the Indenture, the Notes, the Collateral Agreements or the Guarantees or the
Company, any Guarantor or any Restricted Subsidiary takes any action that
causes, or asserts, or fails to take any action that it knows, or has been
notified by the Trustee, is necessary to prevent, the unenforceability of the
Indenture, the Notes, the Collateral Agreements or the Guarantees against the
Company or any of the Guarantors or Restricted Subsidiaries for any reason or is
necessary to maintain the priority and perfection of the Liens of the Collateral
Agreements, and (x) certain events of bankruptcy or insolvency with respect to
the Company or any of its Restricted Subsidiaries.

If any Event of Default occurs and is continuing, the Trustee or the holders of
at least 25% in principal amount of the then outstanding Notes may declare by
written notice all the Notes to be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.

The holders of a majority in aggregate principal amount of the Notes then
outstanding, by written notice to the Trustee, may on behalf of the holders of
all of the Notes (i) waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the Notes, and/or (ii)
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree if all existing Events of Default (except
nonpayment of principal or interest that has become due solely because the
acceleration) have been cured or waived.

No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee, incorporator or stockholder of the Company or
any Guarantor, as such, will have any liability for any obligations of the
Company under the Notes, the Indenture, the Collateral Agreements or the
Registration Rights Agreement or for any claim based on, in respect of, or by
reason of, such obligations of their creation. Each holder of the Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the Commission that such a waiver is against public policy.

Defeasance and Discharge of the Indenture and the Notes

The Indenture provides that the Company will be discharged from any and all
obligations in respect of the Notes, other than the obligation to duly and
punctually pay the principal of, and premium, if any, and interest on, the Notes
in accordance with the terms of the Notes and the Indenture upon irrevocable
deposit with the Trustee, in trust, of money and/or U.S. government obligations
that will provide money in an amount sufficient in the opinion of a nationally
recognized accounting firm to pay the principal of and premium, if any, and each
installment of interest, if any, on the due dates thereof on the Notes. Such
trust may only be established if, among other things, (i) the Company has
delivered to the Trustee an opinion of independent counsel to the effect that
the holders of the Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and defeasance and will be
subject to federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit and defeasance had not
occurred, (ii) no Event of Default or event that with the passing of time or the
giving of notice, or both, shall constitute an Event of Default shall have
occurred or be continuing, and (iii) certain of the customary conditions
precedent are satisfied.

The Company may satisfy and discharge its obligations under the Indenture to
holders of the Notes by delivering to the Trustee for cancellation all
outstanding Notes or by depositing with the Trustee or the Paying Agent, if
applicable, after the Notes have become due and payable, cash sufficient to pay
at the stated maturity all of the Notes and paying all other sums payable under
the Indenture by the Company.

Transfer and Exchange

A holder may transfer or exchange Notes in accordance with the Indenture. The
Registrar and the Trustee may require a holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
holder to pay any taxes and fees required by law or permitted by the Indenture.
The Company is not required to transfer or exchange any Note selected for
redemption. Also, the Company is not required to transfer or exchange any Note
for a period of 15 days before a selection of Notes to be redeemed.

The registered holder of a Note will be treated as the owner of it for all
purposes.

Payments for Consent

Neither the Company nor any of its Subsidiaries shall, directly or indirectly,
pay or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any holder of any Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the Indenture or the
Notes unless such consideration is offered to be paid or agreed to be paid to
all holders of the Notes that consent, waive or agree to amend in the time frame
set forth in the solicitation documents relating to such consent, waiver or
agreement.

Amendment, Supplement and Waiver

Except as provided in the next succeeding paragraph, the Indenture and the Notes
may be amended or supplemented with the consent of the holders of at least a
majority in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for Notes) and any
existing Default or Event of Default or compliance with any provision of the
Indenture, the Notes of the Collateral Agreements may be waived with the consent
of the holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for Notes).

Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting holder of Notes) (i) reduce
the principal amount of Notes whose holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of, or the premium on, or change
the fixed maturity of any Note or alter the provisions with respect to the
redemption of the Notes or alter the price at which repurchases of the Notes may
be made pursuant to an Excess Proceeds Offer or Change of Control Offer, (iii)
reduce the rate of or change the time for payment of interest on any Note, (iv)
waive a Default or Event of Default in the payment of principal of or premium,
if any, or interest on the Notes, (v) make any Note payable in money other than
that stated in the Notes, (vi) make any change in the provisions of the
Indenture relating to waivers of past Defaults or the rights of holders of Notes
to receive payments of principal of or interest on the Notes, (vii) waive a
redemption payment with respect to any Note, (viii) make any change in the
provisions of any of the Guarantees that adversely affects the rights of any
holder of Notes, (ix) adversely affect the contractual ranking of the Notes or
Guarantees, or (x) make any change in the foregoing amendment and waiver
provisions.

Notwithstanding the foregoing, without the consent of the holder of Notes, the
Company and the Trustee may amend or supplement the Indenture or the Notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's obligations to holders of the Notes or the Guarantor's
obligation under the Guarantee in the case of a merger or consolidation, to make
any change that would provide any additional rights or benefits to the holders
of the Notes or that does not adversely affect the legal rights under the
Indenture of any such holder, or to comply with requirements of the Commission
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act.

Concerning the Trustee

The Indenture contains certain limitations on the rights of the Trustee, should
it become a creditor of the Company, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise. The Trustee will be permitted to engage in other
transactions; provided, however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.

The holders of a majority in principal amount of the then outstanding Notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to certain
exceptions. The Indenture provides that in case an Event of Default occurs (and
is not cured), the Trustee will be required, in the exercise of its power, to
use the degree of care of a prudent man in the conduct of his own affairs.
Subject to such provisions, the Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request of any holder of
Notes, unless such holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.

Additional Information

Anyone who receives this Prospectus may obtain a copy of the Indenture without
charge by writing to Terex Corporation, 500 Post Road East, Westport,
Connecticut 06880, Attention: Marvin B. Rosenberg, Senior Vice President and
General Counsel.

Certain Definitions

Set forth below are certain defined terms used in the Indenture. Reference is
made to the Indenture for a full definition of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.

"Acquired Debt" means, with respect to any specified Person, Indebtedness of any
other Person existing at the time such other Person merged with or into or
became a Subsidiary of such specified Person, other than Indebtedness incurred
in connection with, or in contemplation of, such other Person merging with or
into or becoming a Subsidiary of such specified Person.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, will mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise. Notwithstanding the
foregoing to the contrary, neither Jefferies & Company, Inc. nor any of its
Affiliates will be deemed to be Affiliates of the Company.

"Asset Sale" means any sale, assignment, transfer, lease, conveyance, or other
disposition (including, without limitation, by way of merger or consolidation)
(collectively, a "transfer"), directly or indirectly, in one or a series of
related transactions other than in the ordinary course of business, of any
assets of the Company or its Restricted Subsidiaries (other than (i) to the
Company or a Restricted Subsidiary and (ii) sale and leaseback transactions that
are expressly permitted under the Indenture).

"Capital Lease Obligation" means, at the time any determination thereof is to be
made, the amount of the liability in respect of a capital lease that would at
such time be so required to be capitalized on the balance sheet in accordance
with GAAP.

"Capital Stock" means any and all shares, interests, participations, rights or
other equivalents (however designated) of corporate stock, including, without
limitation, partnership interests and other indicia of ownership of a business
entity.

"Cash Equivalent" means (i) securities issued or directly and fully guaranteed
or insured by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of America
is pledged in support thereof), (ii) time deposits and certificates of deposit
and commercial paper issued by the parent corporation of any domestic commercial
bank of recognized standing having capital and surplus in excess of $500,000,000
and commercial paper issued by others rated at least A-2 or the equivalent
thereof by Standard & Poor's Corporation or at least P-2 or the equivalent
thereof by Moody's Investors Service, Inc. and in each case maturing within one
year after the date of acquisition and (iii) investments in money market funds
substantially all of whose assets comprise securities of the types described in
clauses (i) and (ii) above.

"Closing Date" means the date upon which the Notes are first issued.

"Consolidated EBITDA" means, with respect to any Person (the referent Person)
for any period, income (loss) from operations of such Person for such period,
determined in accordance with GAAP, plus (to the extent such amounts are
deducted in calculating such income (loss) from operations of such Person for
such period, and without duplication) amortization, depreciation and other
non-cash charges (including, without limitation, amortization of goodwill,
deferred financing fees and other intangibles but excluding (a) non-cash charges
incurred after the date of the Indenture that require an accrual of or a reserve
for cash charges for any future period, and (b) normally recurring accruals such
as reserves against accounts receivable); provided, however that (i) the income
from operations of any Person that is not a Wholly Owned Subsidiary or that is
accounted for by the equity method of accounting will be included only to the
extent of the amount of dividends or distributions paid during such period to
the referent Person or a Wholly Owned Subsidiary of the referent Person, (ii)
the income from operations of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition will be
excluded, and (iii) the income from operations of any Subsidiary will not be
included to the extent that declarations of dividends or similar distributions
by that Subsidiary are not at the time permitted, directly or indirectly, by
operation of the terms of its organization documents or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its owners.

"Consolidated Interest Expense" means, with respect to any Person for any
period, the consolidated interest expense of such Person for such period,
whether paid or accrued (including amortization of original issue discount,
noncash interest payment, and the interest component of Capital Lease
Obligations), to the extent such expense was deducted in computing Consolidated
Net Income of such Person for such period.

"Consolidated Net Income" means, with respect to any Person (the referent
Person) for any period, the aggregate of the Net Income of such Person and its
consolidated Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP; provided, however that (i) the Net Income of any Person
that is not a Wholly Owned Subsidiary or that is accounted for by the equity
method of accounting will be included only to the extent of the amount of
dividends or distributions paid during such period to the referent Person or a
Wholly Owned Subsidiary of the referent Person, (ii) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition will be excluded, and (iii) the Net Income of any
Subsidiary will not be included to the extent that declarations of dividends or
similar distributions by that Subsidiary are not at the time permitted, directly
or indirectly, by operation of the terms of its organization documents or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its owners.

"Consolidated Net Worth" means, with respect to any Person, the total
stockholders' equity (exclusive of any Disqualified Stock) of such Person (less
Investments in Non-Restricted Subsidiaries) determined on a consolidated basis
in accordance with GAAP.

"Default" means any event that is, or after notice or the passage of time or
both would be, an Event of Default.

"Disqualified Stock" means any Capital Stock that, (i) either by its terms or
the terms of any security into which it is convertible or for which it is
exchangeable or otherwise, is or upon the happening of an event or the passage
of time would be, required to be redeemed or repurchased (in whole or in part)
prior to the final stated maturity of the Notes or is redeemable (in whole or in
part) at the option of the holder thereof at any time prior to such final stated
maturity or (ii) is convertible into or exchangeable at the option of the issuer
thereof or any other Person for debt securities or Disqualified Stock. Accretion
in accordance with the terms of any Disqualified Stock outstanding on the Issue
Date shall not constitute the issuance of additional Disqualified Stock.

"Equity Interests" means Capital Stock or warrants, options or other rights to
acquire Capital Stock (but excluding any debt security that is convertible into,
or exchangeable for, Capital Stock).

"Floor Plan Guaranty" means the Guarantee by the Company or a Subsidiary of
Indebtedness incurred by a franchise dealer, or other purchaser or lessor, for
the purchase or lease of inventory manufactured or sold by the Company or a
Restricted Subsidiary, the proceeds of which Indebtedness is used solely to pay
the purchase price of inventory sold by the Company or a Restricted Subsidiary
to such franchise dealer and any related fees and expenses (including finance
fees); provided, that (i) to the extent commercially practicable, the
Indebtedness so guaranteed is secured by a perfected first priority lien on such
inventory in favor of the holder of such Indebtedness and (ii) if the Company or
such Restricted Subsidiary is required to make payment with respect to such
Guarantee, the Company or such Restricted Subsidiary will have the right to
receive either (a) title to such inventory, (b) a valid assignment of a first
priority perfected lien in such inventory or (c) the net proceeds of any resale
of such inventory.

"GAAP" means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as approved by a significant segment of the accounting profession, and in
the rules and regulations of the Commission, which are in effect on the date of
the Indenture.

"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.

"Hedging Obligations" means, with respect to any Person, the obligations of such
Person under (i) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in interest rates.

"Indebtedness" of any Person means (without duplication) (i) all indebtedness of
such Person for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person to pay the deferred purchase price of property or services (other
than trade payables on customary terms incurred in the ordinary course of
business), (iv) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (v) all obligations of such Person as lessee under capitalized
leases, (vi) all obligations, contingent or otherwise, of such Person under
bankers' acceptance and letter of credit facilities, (vii) all obligations of
such Person to purchase, redeem, retire, defease or otherwise acquire for value
any Disqualified Stock, (viii) all obligations of such Person in respect of
Hedging Obligations, (ix) all Indebtedness of others Guaranteed by such Person,
and (x) all Indebtedness of the type referred to in clauses (i) through (ix)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, provided, however, that the amount of such Indebtedness
shall (to the extent such Person has not assumed or become liable for the
payment of such Indebtedness) be the lesser of (x) the fair market value of such
property at the time of determination and (y) the amount of such Indebtedness.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date, provided, however, that,
in the case of each of clauses (i), (ii) and (iii) above, the amount of such
Indebtedness will be the amount that would appear as a liability on the balance
sheet of such Person prepared in accordance with GAAP.

"Interest Coverage Ratio" means, for any period, the ratio of (i) Consolidated
EBITDA of the Company for such period, over (ii) Consolidated Interest Expense
of the Company for such period. In calculating Interest Coverage Ratio for any
period, pro forma effect shall be given to: (a) the incurrence, assumption,
guarantee, repayment, repurchase, redemption or retirement by the Company or any
of its Subsidiaries of any Indebtedness (other than under the Revolving Credit
Facility) subsequent to the commencement of the period for which the Interest
Coverage Ratio is being calculated, as if the same had occurred at the beginning
of the applicable period; and (b) the occurrence of any Asset Sale during such
period by reducing Consolidated EBITDA for such period by an amount equal to the
Consolidated EBITDA (if positive) directly attributable to the assets sold and
by reducing Consolidated Interest Expense by an amount equal to the Consolidated
Interest Expense directly attributable to any Indebtedness secured by the assets
sold and assumed by third parties or repaid with the proceeds of such Asset
Sale, in each case as if the same had occurred at the beginning of the
applicable period. For purposes of making the computation referred to above,
acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including all mergers and consolidations, subsequent to the
commencement of such period shall be calculated on a pro forma basis, assuming
that all such acquisitions, mergers and consolidations had occurred on the first
day of such period. Without limiting the foregoing, the financial information of
the Company with respect to any portion of such four fiscal quarters that falls
before the [Closing Date] shall be adjusted (1) to give pro forma effect to the
issuance of the Units and the application of the proceeds therefrom (including,
without limitation, consummation of the [Acquisition]) as if they had occurred
at the beginning of such four fiscal quarters and (2) to exclude expenses
incurred in connection with the Acquisition or the issuance of the [Units] to
the extent such expenses are included in computing Consolidated Net Income for
such period.

"Investments" means, with respect to any Person, all investments by such Person
in other Persons (including Affiliates) in the forms of loans, Guarantees,
advances or capital contributions (excluding (i) commission, travel and similar
advances to officers and employees of such Person made in the ordinary course of
business and (ii) bona fide accounts receivable arising from the sale of goods
or services in the ordinary course of business consistent with past practice),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.

"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).

"Material Subsidiary" means any Person (a) that is a "Significant Subsidiary" of
the Company as defined in Rule 1-02 of Regulation S-X promulgated by the
Commission or (b) is otherwise material to the business of the Company.

"Net Assets" means, with respect to any Person, (i) the fair market value of the
assets of such Person and its consolidated Subsidiaries as determined on a
consolidated basis in good faith by the Board of Directors of such Person minus
(ii) the aggregate principal amount of the Indebtedness of such Person and its
Subsidiaries that would appear on the consolidated balance sheet of such Person
as of the date of determination.

"Net Income" means, with respect to any Person for any period, the net income
(loss) of such Person for such period, determined in accordance with GAAP,
excluding any gain (but not loss), together with any related provision for taxes
on such gain (but not loss), realized in connection with any Asset Sales and
dispositions pursuant to sale and leaseback transactions, and excluding any
extraordinary gain (but not loss), together with any related provision for taxes
on such gain (but not loss).

"Net Proceeds" means the aggregate cash proceeds received in respect of any
Asset Sale, net of the direct out-of-pocket costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commission), other than any such costs payable to an Affiliate of the
Company, and any relocation expenses incurred as a result thereof, taxes paid or
payable as a result thereof (after taking into account any available tax credits
or deductions and any tax sharing arrangements), amounts required to be applied
to the repayment of Indebtedness secured by a Lien on the asset or assets the
subject of such Asset Sale, and any reserve for adjustment in respect of the
sale price of such asset or assets.

"Non-Restricted Subsidiary" means any Subsidiary of the Company formed or
acquired by the Company or by any Subsidiary of the Company after the date of
the Indenture that has been designated by the Company (by written notice to the
Trustee on or prior to the date of such formation or acquisition) as a
Non-Restricted Subsidiary and each Subsidiary of a Non-Restricted Subsidiary;
provided, however, that a Subsidiary may not be designated as a "Non-Restricted
Subsidiary" unless (i) such designation would not cause a Default or Event of
Default, (ii) neither such Subsidiary nor any of its Subsidiaries is a Guarantor
and (iii) the creditors of such Subsidiary have no direct or indirect recourse
(including, without limitation, recourse with respect to the payment of
principal or interest on Indebtedness of such Subsidiary) to the assets of the
Company or of a Restricted Subsidiary. For purposes of the foregoing, the
Company shall be deemed to make an Investment in each Subsidiary designated as a
"Non-Restricted Subsidiary" immediately following such designation in an amount
equal to the net Investment in such Subsidiary and its Subsidiaries immediately
prior to such designation.

"Obligations" means any principal, interest, penalties, fees, indemnifications,
reimbursements, damages and other obligations and liabilities of the Company or
any of the Subsidiaries under the Indenture, the Notes or any of the Collateral
Agreements.

"Permitted Investments" means (a) Investments in the Company, (b) Investments in
Cash Equivalents, (c) Investments by the Company or any Restricted Subsidiary in
a Guarantor or any Wholly Owned Subsidiary or in a Person, if as a result of
such Investment (i) such Person becomes a Guarantor or a Wholly Owned Subsidiary
and the Capital Stock of such Person is pledged to secure the Obligations, or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company, a Guarantor or a Wholly Owned Subsidiary, (d) Guarantees by the
Company or any Restricted Subsidiary incurred in the ordinary course of business
of Indebtedness incurred for the purchase or lease of inventory manufactured or
sold by the Company or any Subsidiary, including, without limitation, Floor Plan
Guarantees, provided, however, that (a) to the extent commercially practicable,
the Indebtedness so guaranteed is secured by a perfected first priority lien on
such inventory in favor of the holder of such Indebtedness and (b) if the
Company or such Restricted Subsidiary is required to make payment with respect
to such guarantee, the Company or such Restricted Subsidiary will have the right
to receive either (i) title to such inventory, (ii) a valid assignment of a
perfected first priority security interest in such inventory, or (iii) the net
proceeds from the resale of such inventory, (e) Investments in shares of Capital
Stock of Fruehauf in satisfaction of outstanding indebtedness of Fruehauf to the
Company in the amount of up to $2 million, and (f) other Investments that do not
exceed in the aggregate $5 million at any time outstanding.

"Permitted Liens" means (i) Liens in favor of the Company and/or its Restricted
Subsidiaries other than with respect to intercompany Indebtedness, (ii) Liens on
property of a Person existing at the time such Person is acquired by, merged
into or consolidated with the Company or any Restricted Subsidiary, provided,
however, that such Liens were not created in contemplation of such acquisition
and do not extend to assets other than those subject to such Liens immediately
prior to such acquisition, (iii) Liens on property existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary, provided,
however, that such Liens were not created in contemplation of such acquisition
and do not extend to assets other than those subject to such Liens immediately
prior to such acquisition, (iv) Liens incurred in the ordinary course of
business in respect of Hedging Obligations, (v) Liens to secure Indebtedness for
borrowed money of a Subsidiary in favor of the Company or a Wholly Owned
Subsidiary, (vi) Liens (other than pursuant to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or environmental laws) to secure the
performance of statutory obligations, surety or appeal bonds, performance bonds
or other obligations of a like nature incurred in the ordinary course of
business, (vii) Liens existing on the date of the Indenture, (viii) Liens for
taxes, assessments or governmental charges or claims that are not yet delinquent
or that are being contested or remedied in good faith by appropriate proceedings
promptly instituted and diligently concluded, provided, however, that any
reserve or other appropriate provision as may be required in conformity with
GAAP has been made therefor, (ix) Liens arising by reason of any judgment,
decree or order of any court with respect to which the Company or any of its
Restricted Subsidiaries is then in good faith prosecuting an appeal or other
proceedings for review, the existence of which judgment, order or decree is not
an Event of Default under the Indenture, (x) encumbrances consisting of zoning
restrictions, survey exceptions, utility easements, licenses, rights of way,
easements of ingress or egress over property of the Company or any of its
Restricted Subsidiaries, rights or restrictions of record on the use of real
property, minor defects in title, landlord's and lessor's liens under leases on
property located on the premises rented, mechanics' liens, vendors' liens, and
similar encumbrances, rights or restrictions on personal or real property, in
each case not interfering in any material respect with the ordinary conduct of
the business of the Company or any of its Restricted Subsidiaries, (xi) Liens
and priority claims incidental to the conduct of business or the ownership of
properties incurred in the ordinary course of business and not in connection
with the borrowing of money or the obtaining of advances or credit, including,
without limitation, liens incurred or deposits made in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, bids, and government contracts and leases and
subleases, and (xii) any extension, renewal, or replacement (or successive
extensions, renewals or replacements), in whole or in part, of Liens described
in clauses (i) through (xi) above.

"Permitted Proceeds" means (i) cash and/or (ii) promissory notes in an aggregate
principal amount of up to $5 million in connection with any single Asset Sale;
provided, however, that the obligations under any such promissory note are
secured by a first priority security interest in the assets sold.

"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof, or any other entity.

"Purchase Money Liens" means (i) Liens to secure or securing Purchase Money
Obligations permitted to be incurred under the Indenture and (ii) Liens to
secure Refinancing Indebtedness incurred solely to refinance Purchase Money
Obligations provided that such Refinancing Indebtedness is incurred no later
than 180 days after the satisfaction of such Purchase Money Obligations.

"Purchase Money Obligations" means Indebtedness representing, or incurred to
finance, the cost (i) of acquiring any assets and (ii) of construction or
build-out of manufacturing, distribution or administrative facilities (including
Purchase Money Obligations of any other Person at the time such other Person is
merged with or into or is otherwise acquired by the Company), provided, however,
that (a) the principal amount of such Indebtedness does not exceed 100% of such
cost, including construction charges, (b) any Lien securing such Indebtedness
does not extend to or cover any other asset or property other than the asset or
property being so acquired and (c) such Indebtedness is incurred, and any Liens
with respect thereto are granted, within 180 days of the acquisition of such
property or asset.

"Restricted Investment" means an Investment other than a Permitted Investment.

"Restricted Subsidiary" means all Subsidiaries of the Company other than
Non-Restricted Subsidiaries.

"Revolving Credit Facility" means any working capital facility or facilities of
the Company or any Subsidiary providing for revolving credit borrowings or other
working capital facilities in an aggregate amount not to exceed the Indebtedness
permitted under clause (a) of the second paragraph under the heading
"Limitations on Incurrence of Indebtedness," including, without limitation, the
Credit Facility and any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith.

"Subsidiary" means, with respect to any Person, (i) any corporation, association
or other business entity of which more than 50% of the total voting power of
shares of Voting Stock thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof and (ii) any partnership in which such Person or
any of its Subsidiaries is a general partner.

"Voting Stock" means, with respect to any Person, (i) one or more classes of the
Capital Stock of such Person having general voting power to elect at least a
majority of the board of directors, managers or trustees of such Person
(irrespective of whether or not at the time Capital Stock of any other class or
classes have or might have voting power by reason of the happening of any
contingency) and (ii) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (i) above.

"Weighted Average Life to Maturity" means, when applied to any Indebtedness at
any date, the number of years (rounded to the nearest one-twelfth) obtained by
dividing (i) the then outstanding principal amount of such Indebtedness into
(ii) the total of the product obtained by multiplying (x) the amount of each
then remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect thereof,
by (y) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment.

"Wholly Owned Subsidiary" means (i) a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by the Company
or one or more Wholly Owned Subsidiaries and (ii) Terex Cranes, PPM Cranes and
P.P.M., S.A., in each case so long as the Company or one or more Wholly Owned
Subsidiaries maintains a percentage ownership interest equal to or greater than
such ownership interest (on a fully diluted basis) on the Closing Date.

Book-Entry, Delivery and Form

Old Notes that were initially issued to qualified institutional buyers ("QIBs")
were issued in the form of one or more registered Global Notes (the "Global
Notes"), which were deposited with, or on behalf of, The Depositary Trust
Company (the "Depositary") and registered in its name or in the name of Cede &
Co., its nominee (the "Global Holder"). Old Notes that were (i) originally
issued to or transferred to institutional "accredited investors" (as such term
is defined in Rule 501(A)(1), (2), (3) or (7) under the Securities Act) who are
not QIBs or to any other persons who are not QIBs (the "Non-Global Purchasers")
or (ii) issued as described below under "Certificated Securities," were issued
in registered form (the "Certificated Securities"). Upon the transfer to a QIB
of Certificated Securities initially issued to a Non-Global Purchaser, such
Certificated Securities will, unless the applicable Global Notes have previously
been exchanged for Certificated Securities, be exchanged for an interest in the
Global Notes representing the principal amount of Notes being transferred. The
following are summaries of certain rules and operating procedures of the
Depository which affect the Global Notes.

The Depository is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depository's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depository's
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depository's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depository's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depository only through the Depository's
Participants or the Depository's Indirect Participants.

Pursuant to procedures established by the Depository (i) upon deposit of the
Global Notes, the Depository credited the accounts of Participants designated by
the Initial Purchasers with portions of the Global Notes and (ii) ownership of
the Notes was shown on, and the transfer of ownership thereof will be effected
only through, records maintained by the Depository (with respect to the
interests of the Depository's Participants), the Depository's Participants and
the Depository's Indirect Participants. The laws of some states require that
certain persons take physical deliver in definitive form of securities that they
own. Consequently, the ability to transfer Notes will be limited to such extent.

So long as the Global Holder is the registered owner of any Notes, the Global
Holder will be considered the sole owner of such Notes under the Indenture.
Except as provided below, owners of beneficial interests in Global Notes will
not be entitled to have Notes represented by such Global Notes registered in
their names, will not receive or be entitled to receive physical delivery of
Certificated Securities, and will not be considered the owners or Holders
thereof under the Indenture, for any purpose. As a result, the ability of a
person having a beneficial interest in Notes represented by a Global Note to
pledge such interest to persons or entities that do not participate in the
Depository's system or to otherwise take actions in respect of such interest,
may be affected by the lack of a physical certificate evidencing such interest.
Accordingly, each QIB owning a beneficial interest in a Global Note must rely on
the procedures of the Depository and, if such QIB is not a Participant or an
Indirect Participant, on the procedures of the Participant through which such
QIB owns its interest, to exercise any rights of a holder under such Global Note
or the Indenture.

Neither of the Company nor the Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of Notes
by the Depository, or for maintaining, supervising or reviewing any records of
the Depository relating to such Notes.

Payments in respect of the principal of, premium, if any, and interest on any
Notes registered in the name of a Global Holder on the applicable record date
will be payable by the Trustee to or at the direction of such Global Holder in
its capacity as the registered holder under the Indenture. Under the terms of
the Indenture, the Company and the Trustee may treat the persons in whose names
the Notes, including the Global Notes, are registered as the owners thereof for
the purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, neither the Company nor the Trustee has or will have
any responsibility or liability for the payment of such amounts to beneficial
owners of Notes (including principal, premium, if any, and interest), or to
immediately credit the accounts of the relevant Participants with such payment,
in amounts proportionate to their respective interests in the Global Notes in
principal amount of beneficial interests in the relevant security as shown on
the records of the Depository. Payments by the Depository's Participants and the
Depository's Indirect Participants to the beneficial owners of Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Depository's Participants or the Depository's Indirect
Participants.

Certificated Securities

If (i) the Company notifies the Trustee in writing that the Depository is no
longer willing or able to act as a Depository and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, then, upon surrender by the relevant Global
Holder of its Global Note, Certificated Securities in such form will be issued
to each person that such Global Holder and the Depository identify as the
beneficial owner of the related Notes. In addition, subject to certain
conditions, any person having a beneficial interest in the Global Note may, upon
request to the Trustee, exchange such beneficial interest for Notes in the form
of Certificated Securities. Upon any such issuance, the Trustee is required to
register such Certificated Securities in the name of, and cause the same to be
delivered to, such person or persons (or the nominee of any thereof) in full
registered form.

Neither the Company nor the Trustee will be liable for any delay by the related
Global Holder or the Depository in identifying the beneficial owners of the
related Notes and each such person may conclusively rely on, and will be
protected in relying on, instructions from such Global Holder or of the
Depository for all purposes (including with respect to the registration and
delivery, and the respective principal amounts of the Notes to be issued).

Same-Day Settlement and Payment

Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Notes are
expected to be eligible to trade in the PORTAL Market and to trade in the
Depository's Same-Day Funds Settlement System, and any permitted secondary
market trading activity in the Notes will therefore be required by the
Depository to be settled in immediately available funds. No assurance can be
given as to the effect, if any, of such settlement arrangements on trading
activity in the Notes.

<PAGE>

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of the principal United States Federal income tax
consequences of the exchange of Old Notes for New Notes. The discussion set
forth below is based upon the Internal Revenue Code of 1986, as amended,
regulations and announcements promulgated thereunder and published rulings and
court decisions, all as in effect on the date hereof and without giving effect
to changes to the Federal tax laws, if any, enacted after the date hereof.
Legislative, judicial or administrative changes or interpretations may be
forthcoming that could alter or modify the statements or conclusions set forth
below. This summary does not discuss all the Federal income tax consequences
that may be relevant to a particular holder or to certain holders subject to
special treatment under the Federal income tax laws (including insurance
companies, tax exempt organizations, financial institutions, broker-dealers,
foreign corporations and persons who are not citizens of the United States.

The exchange of Old Notes for New Notes should not be treated as a sale or
exchange of Old Notes for Federal income tax purposes. Consequently, noteholders
who exchange Old Notes for New Notes will not recognize gain or loss upon
receipt of the New Notes. For purposes of computing original issue discount on
the New Notes, the original issue discount, if any, of the Old Notes will carry
over to the New Notes as if the New Notes were issued on the same issue date and
for the same issue price as the Old Notes. A noteholder's tax basis in and
market discount, if any, on the New Notes will be the same as such noteholder's
tax basis in and market discount, if any, on the Old Notes exchanged therefor.
Noteholders will be considered to have held the New Notes from the time of their
original acquisition of the Old Notes.

There will be no Federal income tax consequences of the Exchange Offer to
nonexchanging noteholders.

This summary is based on the Company's understanding of the Federal Income Tax
laws, which in turn is in part based on discussions with the Company's
professional advisers. It is the Company's belief that all material federal
income tax consequences are addressed.

THE FOREGOING IS A SUMMARY OF THE PRINCIPAL INCOME TAX CONSEQUENCES TO A HOLDER
OF AN OLD NOTE. EACH HOLDER OF AN OLD NOTE IS URGED TO CONSULT ITS TAX ADVISOR
TO DETERMINE THE SPECIFIC FEDERAL INCOME TAX CONSEQUENCES OF ACCEPTING THE
EXCHANGE OFFER, AS WELL AS THE EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS.

PLAN OF DISTRIBUTION

Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of [___] days after the
Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until ______________________, 1996 (90 days after the Registration
Statement is declared effective), all dealers effecting transactions in the New
Notes may be required to deliver a prospectus.

The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

The Company has agreed to pay all expenses incident to the Exchange Offer other
than commissions or concessions of any brokers or dealers and will indemnify the
Holders of the New Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.

LEGAL MATTERS

Certain legal matters in connection with the New Notes and the guarantees
thereof will be passed upon for the Company by Robinson Silverman Pearce
Aronsohn & Berman, 1290 Avenue of the Americas, New York, New York 10104.

EXPERTS

The consolidated financial statements of the Company as of December 31, 1994 and
1993 and for each of the years in the three year period ended December 31, 1994
included in this Prospectus have been so included in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

The combined financial statements of Legris Industries, Inc. and PPM S.A. as of
December 31, 1994 and 1993 and for the years ended December 31, 1994, 1993 and
1992 included in this Prospectus have been so included in reliance on the report
of Ernst & Young LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
TEREX CORPORATION

[To be furnished by the Company]

<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table itemizes the expenses incurred by the Company in connection
with the offering of the shares of Preferred Stock and shares of Common Stock
being registered. All the amounts shown are estimates except the SEC
registration fee.

Item Amount
Registration Fee - SEC ...................................$ 9,517.24
Transfer Agent Fees and Expenses.............................. 5,000.00
Printing and Engraving Expenses............................... 5,000.00
Legal Fees and Expenses ................................... 150,000.00
Accounting Fees and Expenses.................................. 75,000.00
Blue Sky Fees and Expenses ................................... 5,000.00
Miscellaneous Expenses ................................... 5,000.00
TOTAL..............................$ 254,517.24
- --------------------
* To be completed by amendment.

Item 14. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law ("DGCL") and Article IX of
the Company's By-laws provide for the indemnification of the Company's directors
and officers in a variety of circumstances, which may include liabilities under
the Securities Act of 1933, as amended (the "Securities Act").

Article IX of the Company's By-laws generally requires the Company to indemnify
its directors and officers against all liabilities (including judgments,
settlements, fines and penalties) and reasonable expenses incurred in connection
with the investigation, defense, settlement or appeal of any type of action,
whether instituted by a third party or a stockholder (either directly or
derivatively) and including specifically, but without limitation, actions
brought under the Securities Act and/or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); provided that no such indemnification will be
allowed if such director or officer was not successful in defending against any
such action and it is determined that the director or officer engaged in
misconduct which constitutes (i) a willful breach of his or her "duty of
loyalty" (as further defined therein) to the Company or its stockholders; (ii)
acts or omissions not in "good faith" (as further defined therein) or which
involve intentional misconduct or a knowing violation of law; (iii) the payment
of an illegal dividend or the authorization of an unlawful stock repurchase in
violation of Delaware law; or (iv) a transaction from which the executive
derived a material improper personal financial profit.

The Company's Certificate of Incorporation, as amended, contains a provision
which eliminates the personal liability of a director to the Company and its
stockholders for certain breaches of his or her fiduciary duty of care as a
director. This provision does not, however, eliminate or limit the personal
liability of a director (i) for any breach of such director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
the Delaware statutory provision making directors personally liable, under a
negligence standard, for unlawful dividends of unlawful stock repurchases or
redemptions, or (iv) for any transaction from which the director derived an
improper personal benefit. This provision offers persons who serve on the Board
of Directors of the Company protection against awards of monetary damages
resulting from negligent (except as indicated above) and "grossly" negligent
actions taken in the performance of their duty of care, including grossly
negligent business decisions made in connection with takeover proposals for the
Company. As a result of this provision, the ability of the Company or a
stockholder thereof to successfully prosecute an action against a director for a
breach of his duty of care has been limited. However, the provision does not
affect the availability of equitable remedies such as an injunction or
rescission based upon a director's breach of his duty of care. The Securities
and Exchange Commission (the "Commission") has taken the position that the
provision will have no effect on claims arising under the Federal securities
laws.

The Company maintains a directors' and officers' insurance policy which insures
the officers and directors of the Company from any claim arising out of an
alleged wrongful act by such persons in their respective capacities as officers
and directors of the Company.

<PAGE>

Item 15. Recent Sales of Unregistered Securities

On December 20, 1993, the Company completed the private placement of (i)
1,300,000 common stock purchase warrants and (ii) the 1,200,000 shares of
Preferred Stock being registered hereby to 22 institutional investors for
aggregate proceeds to the Company of $30.2 million. This private placement was
effected pursuant to Section 4(2) of the Securities Act.

On December 29, 1993, the Company issued and contributed 350,000 shares of its
Common Stock to the Terex Corporation Master Retirement Plan Trust (the "Plan")
in satisfaction of certain outstanding obligations of the Company to the Plan.
This private placement was effected pursuant to Section 4(2) of the Securities
Act.

On December 9, 1994, the Company issued in a private placement (i) 89,800 shares
of Series B Preferred Stock and 106,950 common stock purchase warrants, to three
individuals in consideration for the early termination of a contract between the
Company and KCS Industries, Inc., a related party. The private placement was
effected pursuant to Section 4(2) of the Securities Act.

On May 9, 1995, the Company completed the private placement of $250 million
aggregate principal amount of its 13-1/4% Senior Secured Notes due 2002 and one
million of its common stock appreciation rights to institutional investors. This
private placement was effected pursuant to Section 4(2) of the Securities Act.

<PAGE>

Item 16. Exhibits and Financial Statement Schedules

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 Restated Bylaws of Terex Corporation (incorporated by reference
to Exhibit 3.2 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52297).
3.3 Certificate of Designation of Preferences and Rights of Series B
Cumulative Redeemable Convertible Preferred Stock ("Series B
Preferred Stock") of Terex Corporation (incorporated by reference
to Exhibit 3.3 to the Form 10-K for the year ended December 31,
1994 of Terex Corporation, Commission File No. 1-10702).
4.1 Warrant Agreement dated as of December 20, 1993 between Terex
Corporation and Mellon Securities Trust Company, as Warrant Agent
(incorporated by reference to Exhibit 4.40 to the Form S-1
Registration Statement of Terex Corporation, Registration No.
33-52297).
4.2 Form of Series A Warrant (incorporated by reference to Exhibit
4.41 to the Form S-1 Registration Statement of Terex Corporation,
Registration No. 33-52297).
4.3 Form of Series A Preferred Stock certificate (incorporated by
reference to Exhibit 4.42 to the Form S-1 Registration Statement
of Terex Corporation, Registration No. 33-52711).
4.4 Form of Series B Warrant (incorporated by reference to Exhibit
4.43 to the Form 10-K for the year ended December 31, 1994 of
Terex Corporation, Commission File No. 1-10702).
4.5 Form of Series B Preferred Stock Certificate (incorporated by
reference to Exhibit 4.44 to the Form 10-K for the year ended
December 31, 1994 of Terex Corporation, Commission File No.
1-10702).
4.6 Form of 13-1/4% Senior Secured Notes Due 2002 of Terex
Corporation (incorporated by reference to Exhibit 4.6 of the
Amendment No. 1 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52711).
4.7 Indenture dated as of May 9, 1995 among the Company, the
Guarantors referred to therein and United States Trust Company of
New York, as Trustee (incorporated by reference to Exhibit 4.7 of
the Amendment No. 1 to the Form S-1 Registration Statement of
Terex Corporation, Registration No. 33-52711).
5.1 Opinion of Robinson Silverman Pearce Aronsohn & Berman LLP as to
the legality of the shares being registered.**
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 Common Stock Appreciation Rights Agreement dated as of July 31,
1992 between Terex Corporation and United States Trust Company of
New York, as SAR Agent (incorporated by reference to Exhibit 10.36
to the Form 10-K for the year ended December 31, 1992 of Terex
Corporation, Commission file No. 1-10702).
10.5 SAR Registration Rights Agreement dated as of July 31, 1992
between Terex Corporation and the purchasers who are signatories
thereto (incorporated by reference to Exhibit 10.37 to the Form
10-K for the year ended December 31, 1992 of Terex Corporation,
Commission file No. 1-10702).
10.6 Stock Purchase Agreement dated as of May 27, 1992 between Clark
Equipment Company and Terex Corporation (incorporated by reference
to Exhibit 10.27 to the Form 10-K for the year ended December 31,
1992 of Terex Corporation, Commission File No. 1-10702).
10.7 First Amendment to Stock Purchase Agreement dated as of July 31,
1992 between Terex Corporation and Clark Equipment Company
(incorporated by reference to Exhibit 10.28 to the Form 10-K for
the year ended December 31, 1992 of Terex Corporation, Commission
File No. 1-10702).
10.9 Tax Agreement dated as of July 31, 1992 between Terex Corporation
in favor of Clark Equipment Company (incorporated by reference to
Exhibit 10.30 to the Form 10-K for the year ended December 31,
1992 of Terex Corporation, Commission File No. 1-10702).
10.10 Trademark Assignment Agreement dated as of July 31, 1992 between
Clark Equipment Company and Clark Material Handling Company
(incorporated by reference to Exhibit 10.31 to the Form 10-K for
the year ended December 31, 1992 of Terex Corporation, Commission
File No. 1-10702).
10.11 Trademark Assignment dated as of July 31, 1992 executed by Clark
Equipment Company in favor of Clark Material Handling Company
(incorporated by reference to Exhibit 10.32 to the Form 10-K for
the year ended December 31, 1992 of Terex Corporation, Commission
File No. 1-10702).
10.12 License Agreement dated as of July 31, 1992 between Clark
Equipment Company and Clark Material Handling Company
(incorporated by reference to Exhibit 10.33 to the Form 10-K for
the year ended December 31, 1992 of Terex Corporation, Commission
File No. 1-10702).
10.14 Termination, General Release and Waiver Agreement, dated as of
June 29, 1993, between Clark Material Handling Company and Gary D.
Bello (incorporated by reference to Exhibit 10.21 to the Form S-1
Registration Statement of Terex Corporation, Registration No.
33-52297).
10.15 Form of Purchase Agreement dated as of December 20, 1993 between
Terex Corporation and the purchasers of Series A Warrants and
shares of Series A Preferred Stock of Terex Corporation
(incorporated by reference to Exhibit 10.22 to the Form S-1
Registration Statement of Terex Corporation, Registration No.
33-52297).
10.16 Registration Rights Agreement dated as of December 20, 1993
between Terex Corporation and the purchasers of Series A Warrants
(incorporated by reference to Exhibit 10.23 to the Form S-1
Registration Statement of Terex Corporation, Registration No.
33-52297).
10.17 Registration Rights Agreement dated as of December 20, 1993
between Terex Corporation and the purchasers of shares of Series A
Preferred Stock of Terex Corporation (incorporated by reference to
Exhibit 10.24 to the Form S-1 Registration Statement of Terex
Corporation, Registration No. 33-52297).
10.18 Series B Preferred Stock and Warrants Registration Rights
Agreement (incorporated by reference to Exhibit 10.27 to the Form
10-K for the year ended December 31, 1994 of Terex Corporation,
Commission File No.
1-10702).
10.19 Agreement dated July 1, 1987, between KCS Industries, Inc. and
Northwest Engineering Company (incorporated by reference to
Exhibit 10.2 to the Form S-4 Registration Statement of Terex
Corporation, Registration No. 33-20737).
10.20 Management Agreement Amendment, dated January 1, 1993, between
KCS Industries, Inc. and Terex Corporation (incorporated by
reference to Exhibit 10.26 to the Form S-1 Registration Statement
of Terex Corporation, Registration No. 33-52297).
10.21 Management Agreement Termination Agreement, dated January 1,
1994, between KCS Industries, L.P. and Terex Corporation
(incorporated by reference to Exhibit 10.27 to the Form S-1
Registration Statement of Terex Corporation, Registration No.
33-52297).
10.22 Amendment to Management Agreement Termination Agreement, dated
October 17, 1994, between KCS Industries , L.P. and Terex
Corporation (incorporated by reference to Exhibit 10.31 to the
Form 10-K for the year ended December 31, 1994 of Terex
Corporation, Commission File No. 1-10702).
10.23 Credit Facility, dated December 23, 1993, among Terex Equipment
Limited, Terex Corporation and Standard Chartered Bank
(incorporated by reference to Exhibit 10.28 to the Form S-1
Registration Statement of Terex Corporation, Registration No.
33-52297).
10.24 Amended and Restated Stock Purchase Agreement by and between CMH
Acquisition Corp. and DAC Acquisition Corp. with respect to the
sale of the outstanding stock of Drexel Industries dated as of
April 15, 1994 (incorporated by reference to Exhibit 10.33 to the
Form 10-K for the year ended December 31, 1994 of Terex
Corporation, Commission File No. 1-10702).
10.25 Share Purchase Agreement, as amended, between Terex Cranes, Inc.
and Legris Industries, S.A. and Potain, S.A. (incorporated by
reference to Exhibit 10.1 to the From 8-K for May 9, 1995,
Commission File No. 1-10702).
10.26 Certificate of Designation of Terex Cranes, Inc. with respect to
its Series A Redeemable Exchangeable Preferred Stock
(incorporated by reference to Exhibit 10.2 to the From 8-K for
May 9, 1995, Commission File No. 1-10702).
10.27 Stockholders Agreement dated as of May 9, 1995 by and among
Terex Corporation, Legris Industries S.A., Potain S.A. and Terex
Cranes, Inc. (incorporated by reference to Exhibit 10.3 to the
From 8-K for May 9, 1995, Commission File No. 1-10702).
10.28 Purchase Agreement, dated as of April 27, 1995, among Terex
Corporation (the "Company"), certain of its subsidiaries and
Jefferies & Company, Inc. ("Jefferies") and Dillon, Read & Co.
Inc. (together with Jefferies, the "Purchasers") (incorporated by
reference to Exhibit 10.28 of the Amendment No. 1 to the Form S-1
Registration Statement of Terex Corporation, Registration No.
33-52711).
10.29 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).
10.30 Debt Registration Rights Agreement dated as of May 9, 1995 among
the Company and the Purchasers (incorporated by reference to
Exhibit 10.30 of the Amendment No. 1 to the Form S-1 Registration
Statement of Terex Corporation, Registration No. 33-52711).
10.31 SAR Registration Rights Agreement dated as of May 9, 1995 among
the Company and the Purchasers (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).
10.32 Security and Pledge Agreement dated as of May 9, 1995 between
the Company and United States Trust Company of New York, as
Collateral Agent (incorporated by reference to Exhibit 10.32 of
the Amendment No. 1 to the Form S-1 Registration Statement of
Terex Corporation, Registration No. 33-52711).
10.33 Subsidiary Security and Pledge Agreement dated as of May 9, 1995
between certain subsidiaries of the Company and United States
Trust Company of New York, as Collateral Agent (incorporated by
reference to Exhibit 10.33 of the Amendment No. 1 to the Form S-1
Registration Statement of Terex Corporation, Registration No.
33-52711).
10.34 Loan and Security Agreement dated as of May 9, 1995 among Terex
Corporation, Clark Material Handling Company, Koehring Cranes,
Inc. and PPM Cranes, Inc. and Congress Financial Corporation and
Foothill Capital Corporation, for itself and as agent
(incorporated by reference to Exhibit 10.34 of the Amendment No.
1 to the Form S-1 Registration Statement of Terex Corporation,
Registration No. 33-52711).
10.35 Guarantee dated as of May 9, 1995 from Terex Corporation,
Koehring Cranes, Inc., PPM Cranes, Inc. and CMH Acquisition Corp.
and Legris Industries, Inc. (incorporated by reference to Exhibit
10.35 of the Amendment No. 1 to the Form S-1 Registration
Statement of Terex Corporation, Registration No. 33-52711).
10.36 Guarantee dated as of May 9, 1995 from Terex Corporation, Clark
Material Handling Company, PPM Cranes, Inc. and CMH Acquisition
Corp. and Legris Industries, Inc. (incorporated by reference to
Exhibit 10.36 of the Amendment No. 1 to the Form S-1 Registration
Statement of Terex Corporation, Registration No. 33-52711).
10.37 Guarantee dated as of May 9, 1995 from Terex Corporation, Clark
Material Handling Company, Koehring Cranes, Inc. and CMH
Acquisition Corp. and Legris Industries, Inc. (incorporated by
reference to Exhibit 10.37 of the Amendment No. 1 to the Form S-1
Registration Statement of Terex Corporation, Registration No.
33-52711).
10.38 Guarantee dated as of May 9, 1995 from Clark Material Handling
Company, Koehring Cranes, Inc., PPM Cranes, Inc. and CMH
Acquisition Corp. and Legris Industries, Inc. (incorporated by
reference to Exhibit 10.38 of the Amendment No. 1 to the Form S-1
Registration Statement of Terex Corporation, Registration No.
33-52711).
10.39 Agreement dated as of November 2, 1995 between Terex Corporation,
a Delaware corporation, and Randolph W. Lenz (incorporated by
reference to Exhibit 10 to the Form 10-Q for the quarter ended
September 30, 1995, Commission File No. 1-10702).
11.1 Computation of per share earnings. **
12.1 Computation of ratio of earnings to fixed charges.**
21.1 Subsidiaries of Terex Corporation.**
23.1 Independent Accountants' Consent of Price Waterhouse LLP -
Stamford, Connecticut. **
23.2 Independent Auditors' Consent of Ernst & Young LLP -- Greenville,
South Carolina. **
23.3 Consent of Robinson Silverman Pearce Aronsohn & Berman LLP
(included as part of the Exhibit 5.1). **
24.1 Power of Attorney (included on signature page of this Registration
Statement).

- --------------------
** To be filed by amendment.

<PAGE>

(b) Financial Statement Schedules:

Terex Corporation

Report of Price Waterhouse (included as part of Exhibit 23.1) Report of
Ernst & Young LLP (included as part of Exhibit 23.2) Schedule II --
Valuation and Qualifying Accounts and Reserves S-1

All other schedules are omitted as the required information is inapplicable or
the information is presented in the consolidated financial statements or related
notes.

Item 22. Undertakings

(a) The undersigned registrant hereby undertakes to do the following:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such requests, and to send the incorporated documents by first-class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Westport, Connecticut,
on , 1996.

TEREX CORPORATION

By:
Name: Ronald M. DeFeo
Title: President, Chief Executive Officer
and Chief Operating Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Ronald M. DeFeo and Marvin B. Rosenberg, or
either of them, as his true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting said attorney-in-fact and agent,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date

President, Chief Executive Officer, , 1996
Ronald M. DeFeo Chief Operating Officer
and Director
(Principal Executive Officer)

Senior Vice President, , 1996
Ralph T. Brandifino Chief Financial Officer
and Treasurer
(Principal Financial and
Accounting Officer)

Senior Vice President, , 1996
Marvin B. Rosenberg General Counsel,
Secretary and Director

Director , 1996
G. Chris Andersen

Director , 1996
William H. Fike

Director , 1996
Bruce I. Rabin

Director , 1996
David A. Sachs

Director , 1996
Adam E. Wolf

<PAGE>

SIGNATURES

TEREX CRANES, INC.

By:
Name: Fil Filipov
Title: President

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

Signature Title Date

President , 1996
Fil Filipov (Principal Executive Officer)

Vice President, Treasurer , 1996
David J. Langevin and Director
(Principal Financial
and Accounting Officer)

Vice President, Secretary , 1996
Marvin B. Rosenberg and Director

Director , 1996
Ronald M. Defeo

<PAGE>

SIGNATURES

PPM CRANES, INC.

By:
Name: Fil Filipov
Title: President

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

Signature Title Date

President , 1996
Fil Filipov (Principal Executive Officer)

Vice President, Treasurer , 1996
David J. Langevin and Director
(Principal Financial
and Accounting Officer)

Vice President, Secretary , 1996
Marvin B. Rosenberg and Director

[Director] , 1996
Ronald M. Defeo

[Director] , 1996
K. Thor Lundgren

<PAGE>

SIGNATURES

KOEHRING CRANES, INC.

By:
Name: Fil Filipov
Title: President

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

Signature Title Date

President , 1996
Fil Filipov (Principal Executive Officer)

Vice President, , 1996
David J. Langevin Treasurer and Director
(Principal Financial and
Accounting Officer)

Vice President, Secretary , 1996
Marvin B. Rosenberg and Director

Director , 1996
Ronald M. DeFeo

<PAGE>

SIGNATURES

CLARK MATERIAL HANDLING COMPANY

By:
Name: Martin Dorio
Title: President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Marvin B. Rosenberg, as his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

Signature Title Date

President and , 1996
Martin Dorio Chief Executive Officer
(Principal Executive Officer)

Acting Treasurer , 1996
Lawrence Spitzmiller (Principal Financial Officer)

[ Acting Controller , 1996]
Robert Caccaro (Principal Accounting Officer)

Secretary and Director , 1996
Marvin B. Rosenberg

<PAGE>

TEREX CORPORATION
INDEX TO FINANCIAL STATEMENTS

Page
TEREX CORPORATION (REGISTRANT)
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994
AND 1993 AND FOR EACH OF THE THREE YEARS
IN THE PERIOD ENDED DECEMBER 31, 1994

Reports of independent accountants.........................................F - 2
Consolidated statement of operations ......................................F - 3
Consolidated balance sheet.................................................F - 4
Consolidated statement of changes in stockholders' deficit.................F - 5
Consolidated statement of cash flows.......................................F - 6
Notes to consolidated financial statements.................................F - 7

TEREX CORPORATION (REGISTRANT)
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1995 AND FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1995 AND 1994

Condensed consolidated statement of operations ...........................F - 37
Condensed consolidated balance sheet......................................F - 38
Condensed consolidated statement of cash flows............................F - 39
Notes to condensed consolidated financial statements......................F - 40

PPM S.A. AND LEGRIS INDUSTRIES, INC.
(BUSINESS ACQUIRED FROM LEGRIS INDUSTRIES, S. A.
BY TEREX CORPORATION)
COMBINED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994
AND 1993 AND FOR EACH OF THE THREE YEARS
IN THE PERIOD ENDED DECEMBER 31, 1994

Report of independent auditors............................................F - 44
Combined balance sheets...................................................F - 45
Combined statements of operations.........................................F - 47
Combined statements of shareholders' equity...............................F - 48
Combined statements of cash flows.........................................F - 49
Notes to combined financial statements....................................F - 50

PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION OF TEREX CORPORATION AND SUBSIDIARIES.

Pro forma financial information...........................................F - 61
Unaudited pro forma condensed consolidated statement of operations for the
year ended December 31, 1994..........................................F - 62
Unaudited pro forma condensed consolidated statement of operations for the
nine months ended September 30, 1995..................................F - 63
Notes to unaudited pro forma financial information........................F - 64

PPM CRANES, INC. (GUARANTOR)
UNAUDITED CONSOLIDATING FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994 AND 1993
AND FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1994

Reports of independent accountants........................................F - 65
Consolidated statement of operations .....................................F - 66
Consolidated balance sheet................................................F - 67
Consolidated statement of changes in stockholders' equity.................F - 69
Consolidated statement of cash flows......................................F - 70
Notes to consolidated financial statements................................F - 71

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Stockholders of Terex Corporation

In our opinion, the consolidated financial statements listed in the Index to
Consolidated Financial Statements and Financial Statement Schedule on page F-1
and referred to under Item 14(a)(1) and (2) present fairly, in all material
respects, the financial position of Terex Corporation and its subsidiaries at
December 31, 1994 and 1993, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

As discussed in Note O to the consolidated financial statements, the Company is
required to make significant principal repayments during 1995 and is currently
seeking to refinance its long term debt obligations.

As discussed in Notes A and C to the consolidated financial statements, the 1993
and 1992 financial statements have been restated.

PRICE WATERHOUSE LLP
Stamford, Connecticut
March 28, 1995

<PAGE>

TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands except per share amounts)

Year Ended December 31,
--------------------------------------
1994 1993 1992
---------- ---------- ----------

NET SALES ................................ $ 786,781 $ 670,309 $ 523,355

COST OF GOODS SOLD ....................... 703,622 621,816 471,242
--------- --------- ---------

Gross profit ........................ 83,159 48,493 52,113

ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES
Third parties ....................... 70,200 74,793 53,390
Related parties ..................... 2,245 2,878 2,848
Write-off of Mark goodwill .......... -- 4,718 --
--------- --------- ---------

72,445 82,389 56,238

SEVERANCE CHARGES ........................ 7,353 -- --
--------- --------- ---------

Income (loss) from operations ....... 3,361 (33,896) (4,125)

OTHER INCOME (EXPENSE)
Interest income ..................... 587 1,149 1,666
Interest expense .................... (30,492) (31,246) (23,320)
Amortization of debt issuance costs . (2,300) (3,369) (1,694)
Gain on sale of Fruehauf stock ...... 26,043 3,009 --
Equity in net loss of Fruehauf ...... -- (677) (3,714)
Gain from deconsolidation of Fruehauf -- -- 36,518
Gain on sale of Drexel business ..... 4,742 -- --
Gain on sale of property,
plant and equipment ............... 260 2,601 363
Other income (expense) - net ........ (245) (2,493) (2,712)
--------- --------- ---------

INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS ........ 1,956 (64,922) 2,982

PROVISION FOR INCOME TAXES .............. (786) (158) (67)
--------- --------- ---------

INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS ............... 1,170 (65,080) 2,915

EXTRAORDINARY LOSS ON RETIREMENT OF DEBT . (709) (1,464) --
--------- --------- ---------

NET INCOME (LOSS) ................... 461 (66,544) 2,915

LESS PREFERRED STOCK ACCRETION ........... (5,929) (152) --
--------- --------- ---------

INCOME (LOSS) APPLICABLE
TO COMMON STOCK ................... $ (5,468) $ (66,696) $ 2,915
========= ========= =========

PER COMMON AND COMMON EQUIVALENT SHARE:
Loss before extraordinary items ..... $ (0.46) $ (6.55) $ .29
Extraordinary loss on
retirement of debt ................ (0.07) (0.15) --
--------- --------- ---------

Net income (loss) ................... $ (0.53) $ (6.70) $ .29
========= ========= =========

AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
IN PER SHARE CALCULATION ............ 10,303 9,953 9,945
========= ========= =========

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

<PAGE>

TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands except per share amounts)

ASSETS
December 31,
----------------------

1994 1993
--------- ---------

CURRENT ASSETS
Cash and cash equivalents ..........................$ 9,727 $ 9,183
Cash securing letters of credit .................... 6,688 6,263
Trade receivables (less allowance of
$6,114 in 1994 and $7,478 in 1993) ............... 91,717 74,028
Net inventories .................................... 164,245 163,838
Other current assets ............................... 5,775 4,016
--------- ---------

Total Current Assets .................... 278,152 257,328

LONG-TERM ASSETS
Property, plant and equipment - net ................ 86,160 97,537
Debt issuance costs and
intangible assets - net .......................... 8,604 12,645
Other assets ....................................... 28,700 23,192
--------- ---------

TOTAL ASSETS ............................................$ 401,616 $ 390,702
========= =========

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Notes payable ..................................... $ 2,078 $ 2,909
Current portion of long-term debt ................. 25,806 19,799
Trade accounts payable ............................ 112,213 85,350
Accrued compensation and benefits ................. 10,823 8,162
Accrued warranties and product liability .......... 27,629 27,226
Accrued interest .................................. 8,969 10,698
Accrued income taxes .............................. 1,328 1,415
Other current liabilities ......................... 32,732 32,221
--------- ---------
Total Current Liabilities .............. 221,578 187,780
NON CURRENT LIABILITIES
Long-term debt, less current portion .............. 162,987 195,331
Accrued warranties and product liability .......... 31,846 33,959
Accrued pension ................................... 16,456 20,270
Other ............................................. 7,225 5,143

REDEEMABLE CONVERTIBLE PREFERRED STOCK
Liquidation preference $36,578 in 1994
and $30,108 in 1993 ............................. 17,262 10,480

COMMITMENTS AND CONTINGENCIES (Note L)

STOCKHOLDERS' DEFICIT
Warrants to purchase common stock ................. 17,564 16,851
Common Stock, $0.01 par value--
authorized 30,000 shares;
issued and outstanding 10,303
in 1994 and 1993 ................................ 103 103
Additional paid-in capital ........................ 40,127 40,127
Accumulated deficit ............................... (108,395) (102,927)
Pension liability adjustment ...................... (1,778) (4,173)
Unrealized holding gain on equity securities ...... 1,825 --
Cumulative translation adjustment ................. (5,184) (12,242)
--------- ---------

Total Stockholders' Deficit ............ (55,738) (62,261)
--------- ---------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT ............ $ 401,616 $ 390,702
========= =========

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

<PAGE>

<TABLE>
<CAPTION>
TEREX CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

(in thousands)

Additional Pension Unrealized Cumulative
Common Paid-in Accumulated Liability Holding Translation
Warrants Stock Capital Deficit Adjustment Gain Adjustment Total
--------- ------- --------- ----------- --------- --------- ---------- -------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
DECEMBER 31, 1991 ............. $ -- $ 99 $ 37,496 $ (39,146) $ (8,233) $ -- $ 5,643 $ (4,141)

Exercise of stock options ..... -- -- 274 -- -- -- -- 274
Net income .................... -- -- -- 2,915 -- -- -- 2,915
Pension liability adjustment .. -- -- -- -- 3,781 -- --
3,781
Translation adjustment ........ -- -- -- -- -- -- (11,904) (11,904)
--------- --------- --------- --------- --------- --------- --------- ---------

BALANCE AT
DECEMBER 31, 1992 ............. -- 99 37,770 (36,231) (4,452) -- (6,261) (9,075)

Exercise of stock options ..... -- -- 38 -- -- -- -- 38
Issuance of Warrants (Note I) . 16,851 -- -- -- -- -- --
16,851
Pension Contribution (Note J) . -- 4 2,319 -- -- -- --
2,323
Net loss ...................... -- -- -- (66,544) -- -- -- (66,544)
Accretion of carrying value of
redeemable preferred stock to
redemption value (Note I) ... -- -- -- (152) -- -- --
(152)
Pension liability adjustment .. -- -- -- -- 279 -- --
279
Translation adjustment ........ -- -- -- -- -- -- (5,981) (5,981)
--------- --------- --------- --------- --------- --------- --------- ---------

BALANCE AT
DECEMBER 31, 1993 ............. 16,851 103 40,127 (102,927) (4,173) -- (12,242) (62,261)

Issuance of Warrants (Note I) . 713 -- -- -- -- -- --
713
Net income .................... -- -- -- 461 -- -- -- 461
Accretion of carrying value of
redeemable preferred stock to
redemption value (Note I) ... -- -- -- (5,929) -- -- --
(5,929)
Pension liability adjustment .. -- -- -- -- 2,395 -- --
2,395
Unrealized holding gain on
equity securities (Note C) .. -- -- -- -- -- 1,825 --
1,825
Translation adjustment ........ -- -- -- -- -- -- 7,058 7,058
--------- --------- --------- --------- --------- --------- --------- ---------

BALANCE AT
DECEMBER 31, 1994 ............. $ 17,564 $ 103 $ 40,127 $(108,395) $ (1,778) $ 1,825 $ (5,184) $ (55,738)
========= ========= ========= ========= ========= ========= ========= =========

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

</TABLE>

TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) .......................................... $ 461 $ (66,544) $ 2,915
Adjustments to reconcile net income (loss)
to net cash from (used in)
operating activities:
Depreciation ........................................... 13,709 12,139 7,074
Amortization and write-off of
debt issuance costs, goodwill
and other intangibles .............................. 3,388 10,261 2,746
Extraordinary loss on retirement of debt ............... 709 1,464 --
Gain on sale of Fruehauf stock ......................... (26,043) (3,009) --
Equity in net loss of Fruehauf ......................... -- 677 3,714
Gain from deconsolidation of Fruehauf .................. -- -- (36,518)
Gain on sale of Drexel business ........................ (4,742) -- --
Gain on sale of property, plant and equipment .......... (260) (2,601) (363)
Other noncash charges .................................. (804) 99 1,796
Increase (decrease) in cash due to changes
in operating assets and liabilities net
of the effects of acquisitions of businesses:
Cash securing letters of credit ..................... (425) 5,216 (11,479)
Trade receivables ................................... (17,564) 1,708 18,806
Net inventories ..................................... 77 30,312 49,176
Other current assets ................................ 143 2,061 (512)
Trade accounts payable .............................. 24,379 (5,141) 7,187
Accrued compensation and benefits ................... 3,277 (3,567) (6,821)
Accrued warranties and product liabilities .......... 296 (3,356) 4,590
Accrued interest .................................... (1,729) (1,121) 7,763
Accrued income taxes ................................ (78) (604) 940
Other assets ........................................ (306) (123) (7,928)
Other liabilities ................................... (3,728) (24,075) (21,318)
--------- --------- ---------
Net cash from (used in) operating activities ...... (9,240) (46,204) 21,768

INVESTING ACTIVITIES
Acquisitions of businesses, net of cash acquired ........... -- -- (86,544)
Capital expenditures ....................................... (12,717) (11,549) (5,382)
Advances to Fruehauf ....................................... -- (677) (3,714)
Proceeds from sale of excess assets ........................ 3,295 11,306 1,513
Proceeds from sale of Fruehauf stock ....................... 24,943 2,464 --
Proceeds from sale of Drexel business ...................... 10,289 -- --
Proceeds from sale-leaseback of Saarn property ............. 9,981 -- --
Other - net ................................................ 1,000 1,823 248
--------- --------- ---------
Net cash from (used in) investing activities .. 36,791 3,367 (93,879)

FINANCING ACTIVITIES
Net borrowings (repayments) under
revolving line of credit agreements ...................... 12,947 11,931 (55,753)
Principal repayments of long-term debt ..................... (41,524) (12,450) (9,109)
Proceeds from issuance of preferred stock and warrants ..... -- 27,179 --
Proceeds from issuance of long-term debt ................... -- -- 151,890
Other - net ................................................ 249 44 2,258
--------- --------- ---------
Net cash from (used in) financing activities .. (28,328) 26,704 89,286

Effect of exchange rate changes on cash and cash equivalents 1,321 (355) (2,396)
--------- --------- ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .......... 544 (16,488) 14,779

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ................ 9,183 25,671 10,892
--------- --------- ---------

CASH AND CASH EQUIVALENTS AT END OF YEAR ...................... $ 9,727 $ 9,183 $ 25,671
========= ========= =========
</TABLE>

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

<PAGE>

TEREX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994
(dollar amounts in thousands, unless otherwise noted, except per share amounts)

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation. The 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."

Cash and Cash Equivalents. Cash equivalents consist of highly liquid investments
with original maturities of three months or less. The carrying amount of cash
and cash equivalents approximates their fair value.

Cash Securing Letters of Credit. The Company has certain cash and cash
equivalents that are not fully available for use in its operations. Certain
international operations collateralize letters of credit and performance bonds
with cash deposits. In addition, certain provisions of the Company's previous
lending agreement with a commercial bank required that amounts be deposited in a
cash collateral account to collateralize letters of credit issued by that bank.
Although Terex has entered into a new lending facility which replaced the
previous lending arrangement, Terex will continue to utilize letters of credit
issued under the previous lending arrangement until their expiration. These cash
balances will be made available to the Company as the underlying bonds and
letters of credit expire.

Inventories. Inventories are stated at the lower of cost or market value. Cost
is determined by the last-in, first-out ("LIFO") method for certain domestic
inventories and by the first-in, first-out ("FIFO") method for inventories of
international subsidiaries and certain domestic inventories. Approximately 50%
and 49% of consolidated inventories at December 31, 1994 and 1993, respectively,
are accounted for under the LIFO method.

Debt Issuance Costs. Debt issuance costs associated with securing the Company's
financing arrangements are capitalized and amortized over the life of the
respective debt agreement. Capitalized debt issuance costs related to debt that
is retired early are charged to expense at the time of retirement. Unamortized
debt issuance costs totaled $3,271 and $6,283 at December 31, 1994 and 1993,
respectively. During 1994, 1993 and 1992, the Company amortized $2,300, $3,369
and $1,694, respectively, of capitalized debt issuance costs; in addition, $601
and $2,162 of such costs were charged to extraordinary loss on retirement of
debt in 1994 and 1993, respectively.

Intangible Assets. Intangible assets include the excess of purchase price over
the fair value of identifiable net assets of acquired companies, which is being
amortized on a straight-line basis over 15 years, and costs allocated to
patents, trademarks and other specifically identifiable assets arising from
business combinations, which are amortized on a straight-line basis over the
respective estimated useful lives not exceeding seven years. Unamortized
intangible assets totaled $5,222 and $6,362 at December 31, 1994 and 1993,
respectively, net of accumulated amortization of $2,388 and $1,377 at December
31, 1994 and 1993, respectively. Amortization of intangible assets of $1,140,
$1,612 and $599 in 1994, 1993 and 1992, respectively, is included in
Engineering, Selling and Administrative Expenses. Intangible assets are
periodically assessed for impairment of value and any loss is recognized upon
impairment.

Property, Plant and Equipment. Property, plant and equipment are stated at cost.
Expenditures for major renewals and improvements are capitalized while
expenditures for maintenance and repairs not expected to extend the life of an
asset beyond its normal useful life are charged to expense when incurred. Plant
and equipment are depreciated over the estimated useful lives of the assets
under the straight-line method of depreciation for financial reporting purposes
and both straight-line and other methods for tax purposes.

Revenue Recognition. Revenue and costs are generally recorded when products are
shipped and invoiced to either independently owned and operated dealers or to
customers. Certain new units may be invoiced prior to the time customers take
physical possession. Revenue is recognized in such cases only when the customer
has a fixed commitment to purchase the units, the units have been completed,
tested and made available to the customer for pickup or delivery, and the
customer has requested that the Company hold the units for pickup or delivery at
a time specified by the customer in the sales documents. In such cases, the
units are invoiced under the Company's customary billing terms, title to the
units and risks of ownership pass to the customer upon invoicing, the units are
segregated from the Company's inventory and identified as belonging to the
customer and the Company has no further obligations under the order.

Accrued Warranties and Product Liability. The Company records accruals for
potential warranty and product liability claims based on the Company's claim
experience. Warranty costs are accrued at the time revenue is recognized. The
Company provides self-insurance accruals for estimated product liability
experience on known claims and for claims anticipated to have been incurred
which have not yet been reported. Certain of the Company's product liability
accruals, principally related to the forklift business acquired during 1992 (see
Note B -- "Acquisitions"), are presented on a discounted basis. The related
discount of approximately $8,100 at each of December 31, 1994 and 1993, computed
using an 8.0% discount rate, is recorded as a direct reduction of gross product
liability claims and is amortized using the effective interest rate method.
Interest expense attributable to the amortization of the discount aggregated
approximately $3,200, $4,000 and $1,300 in 1994, 1993 and 1992, respectively.
The remainder of the Company's product liability accruals are presented on a
gross settlement basis. Product liability payments, including expenses, are
estimated to approximate $10,000 per year.

Non Pension Postretirement Benefits. The Company adopted SFAS No. 106 "Employers
Accounting for Postretirement Benefits other than Pensions" on January 1, 1993.
The statement requires accrual of the obligation to provide future benefits to
employees during the years that the employees provide service. The Company
provides postretirement benefits to certain former salaried and hourly employees
and certain hourly employees covered by bargaining unit contracts that provide
such benefits. The Company elected the delayed recognition method of adoption,
and the effect of adoption of the new standard was not material to the Company's
financial statements. (See Note K -- "Retirement Plans.")

Foreign Currency Translation. Assets and liabilities of the Company's
international operations are translated at year-end exchange rates. Income and
expenses are translated at average exchange rates prevailing during the year.
For operations whose functional currency is the local currency, translation
adjustments are accumulated in the Cumulative Translation Adjustment component
of Stockholders' Deficit. Gains or losses resulting from foreign currency
transactions are included in Other income (expense) -- net. Net foreign exchange
losses were $235, $825 and $2,413 in 1994, 1993 and 1992, respectively.

Foreign Exchange Contracts. The Company uses foreign exchange contracts to hedge
recorded balance sheet amounts related to certain international operations and
firm commitments that create currency exposures. The Company does not enter into
speculative contracts. Gains and losses on hedges of assets and liabilities are
recognized in income as offsets to the gains and losses from the underlying
hedged amounts. Gains and losses on hedges of firm commitments are recorded on
the basis of the underlying transaction. At December 31, 1994 and 1993, the
Company had no outstanding foreign exchange contracts.

Environmental Policies. Environmental expenditures that relate to current
operations are either expensed or capitalized depending on the nature of the
expenditure. Expenditures relating to conditions caused by past operations that
do not contribute to current or future revenue generation are expensed.
Liabilities are recorded when environmental assessments and/or remedial actions
are probable, and the costs can be reasonably estimated. Such amounts are not
material at December 31, 1994 and 1993.

Research and Development Costs. Research and development costs are expensed as
incurred. Such costs incurred in the development of new products or significant
improvements to existing products are included in Engineering, Selling and
Administrative Expenses and amounted to $10,462 in 1994, $11,822 in 1993 and
$6,741 in 1992.

Issuance of Stock by a Subsidiary. The Company accounts for increases and
decreases in its proportionate share of a subsidiary's equity arising from the
issuance of stock by the subsidiary and related transactions as gains and losses
in the Consolidated Statement of Operations.

Income Taxes. The Company adopted SFAS No. 109, "Accounting for Income Taxes" on
January 1, 1993. SFAS No. 109 retains the basic concepts of SFAS No. 96, the
Company's former method of accounting for income taxes, which requires the
Company to follow the liability method. The liability method provides that
deferred tax assets and liabilities be recorded based upon the difference
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes. SFAS No. 109 further requires that the Company
record a valuation allowance for deferred tax assets if realization of such
assets is dependent on future taxable income. The effect of adoption of the new
standard was not material to the Company's financial statements. (See Note H --
"Income Taxes.")

Net Income (Loss) Per Share. Net income (loss) per share is based on the
weighted average number of common and common equivalent shares outstanding
during the year. The dilutive effect of common stock equivalents (if applicable)
is calculated using the treasury stock method.

Restatements and Reclassifications. The consolidated financial statements for
the year ended December 31, 1992 have been restated as a result of Fruehauf
Trailer Corporation's ("Fruehauf") restatement of its financial statements as
described in Note C -- "Investment in Fruehauf Trailer Corporation." The
consolidated financial statements for the year ended December 31, 1993 have been
restated to reflect the correction of various vendor accounts, resulting from
the resolution of unreconciled items, at the Material Handling Segment.

The accompanying consolidated financial statements reflect the effects of the
restatements as follows:

As
Previously Restatement As
Reported Effect Restated
--------- --------- ---------
Stockholders' Deficit, December 31, 1991
(cumulative effect of restatements
for 1989 through 1991) ................. $ 59,881 $(64,022) $ (4,141)
Net income (loss),
year ended December 31, 1992 ........... (57,175) 60,090 2,915
Change in translation adjustment,
year ended December 31, 1992 ........... (12,929) 1,025 (11,904)
Stockholders' Deficit, December 31, 1992 . (6,168) (2,907) (9,075)

Net income (loss),
year ended December 31, 1993 ........... (62,661) (3,883) (66,544)
Change in translation adjustment,
year ended December 31, 1993 .......... (8,962) 2,981 (5,981)
Stockholders investment, December 31, 1993 $(58,452) $ (3,809) $(62,261)

Net income (loss) per share:
Year ended December 31, 1992 ........... $ (5.75) $ 6.04 $ 0.29
Year ended December 31, 1993 ........... $ (6.31) $ (0.39) $ (6.70)

Certain amounts shown for 1992 and 1993 have been reclassified to conform to the
1994 presentation.

NOTE B -- ACQUISITIONS

Clark Material Handling Company - On July 31, 1992, the Company acquired Clark
Material Handling Company ("CMHC") and certain affiliate companies (together
with CMHC, "CMH") from Clark Equipment Company (the "CMH Acquisition"). CMH is
engaged in the design, manufacture and marketing of internal combustion ("IC")
and electric forklift and lift trucks and related parts and equipment. The
purchase price of the CMH Acquisition was $91,090, which was funded by $85,000
of cash and a $6,090 note to the seller.

The acquisition was accounted for using the purchase method with the purchase
price of the acquisition allocated to assets acquired and liabilities assumed
based upon their respective estimated fair value at the date of the acquisition.
Purchase price allocations were based on evaluations, estimations, appraisals,
actuarial studies and other studies performed by the Company. The excess of
purchase price over the net assets acquired ($4,009) is included in Debt
Issuance Costs and Intangible Assets and is being amortized on a straight-line
basis over 15 years.

The operating results of CMH have been included in the Company's consolidated
results of operations since August 1, 1992. The following unaudited pro forma
summary presents the consolidated results of operations as though the Company
completed the CMH Acquisition on January 1, 1992, after giving effect to certain
adjustments, including amortization of goodwill and intangible assets, increased
depreciation resulting from the revaluation of property, plant and equipment,
interest expense and amortization of debt issuance costs on the acquisition
debt, and reduced operating costs related to recurring cost savings which are
directly attributable to the CMH Acquisition.

<PAGE>

Unaudited Pro Forma
For the Year Ended
December 31,1992
------------------------

Net sales............................................ $ 811,859
Loss from operations................................. (14,452)
Net loss............................................. (16,423)
Net loss per common share............................ $ (1.65)

The unaudited pro forma consolidated results do not represent actual operating
results. The Company is actively reorganizing the operations of CMH by
consolidating manufacturing and distribution operations. Consequently, the pro
forma results are not necessarily indicative of the Company's future operations.

Mark Industries - In December 1991, the Company purchased substantially all
operating assets of Mark Industries ("Mark"), a manufacturer of aerial lift
equipment, for $5,865. The acquisition of Mark was accounted for using the
purchase method, with the purchase price of the acquisition allocated to assets
acquired and liabilities assumed based upon their respective estimated fair
value at the date of the acquisition. Purchase price allocations were based on
evaluations, estimations and other studies performed by the Company. The Mark
purchase price allocation was completed in 1992. The excess of the purchase
price over the fair value of the net assets acquired totaled $5,550 and was
originally being amortized on a straight-line basis over 12 years. In late 1993
the Company introduced several new aerial lift models under the CMH brand name
and began to market these products through the Terex and CMH dealer networks.
Management made a determination that the goodwill related to the December 1991
acquisition, primarily associated with the Mark name and dealer network, had
been impaired as a result of the above factors and, accordingly, the Company
wrote off the remaining balance of $4,718 in 1993.

NOTE C-- INVESTMENT IN FRUEHAUF TRAILER CORPORATION

Accounting for Investment

Prior to an initial public offering of 4,000,000 shares of Fruehauf common stock
in July of 1991 (the "Fruehauf IPO"), Fruehauf was a wholly-owned subsidiary of
the Company. Following the IPO and as of December 31, 1992, the Company owned
approximately 42% of the outstanding common stock of Fruehauf. Pending the
consummation of certain exchange transactions, Terex's principal shareholder and
certain other individuals placed 956,000 shares of Fruehauf common stock in a
voting trust to enable the Company to retain voting control of more than 50% of
Fruehauf's outstanding common stock. Because the voting trust allowed the
Company to retain a controlling financial interest in Fruehauf, the Company
included Fruehauf in its consolidated financial statements in 1991. The voting
trust terminated during 1992 and, accordingly, the Company accounted for its
ownership interest in Fruehauf using the equity method in 1992 and 1993.

In August 1993, Fruehauf entered into agreements with its existing lenders, a
new lender and a number of investors which resulted in a restructuring of
existing debt and provided for a new $25,000 credit facility and $20,500 of new
equity (the "Fruehauf Restructuring"). As a result of the Fruehauf Restructuring
the Company's ownership of Fruehauf decreased to approximately 26% in August
1993. As part of the Fruehauf Restructuring, Terex confirmed its agreement with
Fruehauf to accept 2,251,167 shares of Fruehauf common stock in payment of
$13,507 of intercompany indebtedness which Fruehauf owed to Terex. These shares
were received by Terex in December 1993.

Because Fruehauf had experienced significant losses since 1990 and continued to
have a stockholders' deficit after the new equity investment described above
under "Fruehauf Restructuring," Terex's carrying value for its investment in
Fruehauf was reduced to zero. Terex also recognized a contingent obligation of
approximately $3,000 with respect to guarantees by Terex of certain obligations
of Fruehauf. This amount was reduced to $2,000 in 1994 as a result of the
expiration of certain of the guarantees.

In December 1993, the Company sold 1,000,000 shares of Fruehauf common stock and
realized a gain and aggregate proceeds of $3,009, reducing its ownership to
approximately 22.6% (6,386,622 shares) at December 31, 1993. In February 1994
the Company sold an additional 1,000,000 shares of Fruehauf common stock for
$4,620, reducing its remaining ownership interest in Fruehauf to 19.1%. Because
the Company's ownership interest was below 20% and because the Company intended
to sell the remaining shares, management concluded that use of the equity method
was no longer appropriate for the Company's investment in Fruehauf and
classified the Company's remaining shares of Fruehauf common stock as shares
available for sale under SFAS No. 115. During the remainder of 1994 the Company
sold an additional 4,900,000 shares of Fruehauf common stock for $21,423 and the
Company's remaining ownership interest in Fruehauf at December 31, 1994 was
486,622 shares of common stock or approximately 1.6% of Fruehauf's outstanding
common stock. As required by SFAS 115 for assets held for sale, the investment
was valued at $1,825 at December 31, 1994, with an equivalent amount presented
as a component of stockholders' deficit. The Company sold the remaining shares
of Fruehauf common stock in January 1995 for $796.

Restatement of Fruehauf Financial Statements

In March 1994, Fruehauf announced that it would revise the allocation of the
purchase price paid by Terex in its 1989 acquisition of Fruehauf. In March 1995,
Fruehauf restated its financial statements for 1989 through 1992 for revisions
in the accounting treatment for Fruehauf's maritime operations, certain
liabilities included in the opening purchase price allocation and the valuation
of certain assets in the opening purchase price allocation. Because Fruehauf was
included as a consolidated subsidiary in the Company's consolidated financial
statements for 1989 through 1991 and was accounted for on the equity method for
1992 and 1993, the restatements by Fruehauf also resulted in the restatement of
Terex's consolidated financial statements for 1989 through 1992. There was no
significant effect on Terex's 1993 financial statements because Terex's
investment in Fruehauf had been reduced to zero during 1992 and use of the
equity method had been suspended. See Note A -- "Significant Accounting Policies
- -- Restatements and Reclassifications."

NOTE D -- INVENTORIES

Inventories consist of the following:
December 31,
-------------------------------

1994 1993
----------- ------------

Finished equipment .................. $ 26,812 $ 27,157
Replacement parts ................... 68,932 62,150
Work-in-process ..................... 13,520 14,351
Raw materials and supplies .......... 57,894 65,165
--------- ---------
167,158 168,823
Less: Excess of FIFO inventory value
over LIFO cost .................... (2,913) (4,985)
--------- ---------
Net inventories ................ $ 164,245 $ 163,838
========= =========

In 1994 and 1993, certain inventory quantities were reduced, resulting in the
liquidation of LIFO inventory quantities carried at lower costs prevailing in
prior years. The effects of such liquidations were to decrease cost of goods
sold by $2,072 in 1994 and $167 in 1993.

NOTE E -- PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

December 31,
-------------------------------

1994 1993
----------- ----------

Property $ 8,335 $ 12,157
Plant 32,249 41,711
Equipment 83,419 73,918
--------- ---------
124,003 127,786
Less: Accumulated depreciation ....... (37,843) (30,249)
--------- ---------
Net property, plant and equipment $ 86,160 $ 97,537
========= =========

<PAGE>

NOTE F -- LONG-TERM OBLIGATIONS

December 31,
----------------------------

1994 1993
--------- ---------

Long-term debt is summarized as follows:
Senior Secured Notes bearing interest at 13%,
due August 1, 1996 ("Senior Secured Notes") $127,219 $154,173
Secured Senior Subordinated Notes bearing
interest at 13.5%, due July 1, 1997
("Subordinated Notes") .................... 24,546 32,702
Lending Facility maturing August 24, 1997 ... 24,064 10,165
Secured promissory note bearing interest
at prime rate, due July 31, 1994 .......... -- 6,090
Secured term note bearing interest at 9.0%
payable in equal semiannual installments
from August 1994 to February 1998 ......... 587 740
Capital lease obligations (Note G) .......... 12,377 11,130
Other ....................................... -- 130
-------- --------

Total long-term debt ................... 188,793 215,130
Current portion of long-term debt ...... 25,806 19,799
-------- --------

Long-term debt, less current portion ... $162,987 $195,331
======== ========

Senior Secured Notes and Subordinated Notes

The Senior Secured Notes, totaling $127,673 principal amount outstanding at
December 31, 1994, were issued during July 1992 for a total of $160,000 in
conjunction with the CMH Acquisition and a refinancing of the Company's bank
debt. Proceeds from the issuance of the Senior Secured Notes were used for the
cash portion of the CMH Acquisition purchase price ($85,000), for the settlement
of all amounts outstanding under its previous credit facility ($58,000), and for
working capital and transaction costs. Interest on the Senior Secured Notes is
due semiannually on February 1 and August 1.

The indenture for the Senior Secured Notes requires that proceeds from the sale
of collateral must be used to make an offer to repurchase, at par, an equivalent
amount of Senior Secured Notes. During 1994, as a result of sales of 5,400,000
shares of Fruehauf common stock during 1994 and 1,000,000 shares in the last
quarter of 1993, the Company repurchased $27,327 principal amount of the Senior
Secured Notes. The Company realized an extraordinary loss of $709 on the
repurchases in conjunction with the accelerated write off of related discount
and debt issuance costs.

In December 1993, the Company repurchased in the open market $5,000 principal
amount of Senior Secured Notes for approximately $4,544, including accrued
interest, and had such notes cancelled as of December 31, 1993. The Company
realized an extraordinary gain from the early extinguishment of debt of $539,
net of unamortized debt discount and debt issuance costs.

The provisions of the Senior Secured Notes registration rights agreement
required that the Company file a registration statement to register the Senior
Secured Notes, or to effect an exchange offer of registered notes for such
notes, with the Securities and Exchange Commission by November 30, 1992, which
registration was to become effective no later than March 1, 1993. The
registration has not become effective and, as a result, Terex is incurring
liquidated damages until such filing becomes effective. Terex incurred such
liquidated damages in the amount of $715 and $768 during 1994 and 1993,
respectively, which are included in interest expense.

The Subordinated Notes, totalling $24,915 principal amount outstanding at
December 31, 1994, were initially issued as unsecured subordinated notes for a
total amount of $50,000. The notes have annual sinking fund requirements of
$8,333 due July 1 which commenced in 1992, and mature in 1997. Interest on the
Subordinated Notes is due semiannually on January 2 and July 1. In 1992, in
conjunction with the issuance of the Senior Secured Notes, the holders of
Subordinated Notes were granted a secondary security interest in certain of the
Company's assets.

The Senior Secured Notes are secured by substantially all of the Company's
inventory and property, plant and equipment, and were secured by the Company's
investment in Fruehauf common stock. The Subordinated Notes are secured by a
secondary secured position in substantially the same assets. Certain
non-financial covenants of the indentures governing the Senior Secured Notes and
Subordinated Notes limit, among other things, Terex's ability to incur
additional indebtedness, consummate mergers and acquisitions, pay dividends,
sell business segments and enter into transactions with affiliates, and also
place limitations on change of control. The Company's principal shareholder has
pledged shares of the Common Stock owned by him as collateral for loans. If such
loans are not paid when due, the pledgee may have the right to sell the shares
of the Common Stock pledged to it in satisfaction of such obligations. The sale
of a significant amount of such pledged shares could result in a change of
control of the Company and may require the Company to make an offer to
repurchase the Senior Secured Notes and the Subordinated Notes.

The financial covenants of the indentures require, among other things, that the
Company comply with the Net Worth Covenants and the Collateral Covenants. In the
event that the Company's net worth is not in excess of the amount required under
the Net Worth Covenants for any two consecutive quarters, the Company must offer
to repurchase, at par plus accrued interest, 20% of the outstanding principal
amount of the Notes. In the event the Company is not in compliance with the
Collateral Covenants at the end of any calendar quarter, the Company must offer
to repurchase, at par plus accrued interest, $16.0 million principal amount of
the Senior Secured Notes or such greater amount as would be necessary to bring
the Company into compliance with the Collateral Covenants. If the Company were
not to be in compliance with such covenants, there could result a material
adverse impact on the Company.

The Company was in compliance with the Net Worth Covenants and the Collateral
Covenants at December 31, 1994 and throughout 1994. As discussed in Note O --
"Liquidity, Financing and Severance Actions," the Company is seeking to
refinance the Senior Secured Notes and the Subordinated Notes during 1995. Even
if the Company is not successful in such refinancing, the Company believes that,
based on management's current estimates, it will be in compliance with its
covenants with respect to the Senior Secured Notes and Subordinated Notes over
the next twelve months.

Lending Facility

In May 1993, Terex entered into an agreement with a new lender which initially
provided short-term financing and currently provides long term financing (the
"Lending Facility"). The Lending Facility is secured by substantially all the
Company's domestic receivables and proceeds thereof. Interest on Lending
Facility borrowings is payable monthly at variable rates generally equal to
2.75% above the prime rate. During 1994, the agreement was amended to extend the
maturity date from August 24, 1995 to August 24, 1997. The agreement currently
provides for up to $30,000 of cash advances and guarantees through April 30,
1995, and $25,000 thereafter through the extended maturity date. The balance
outstanding under the Lending Facility at December 31, 1994 was $24,064.
Accordingly, all outstanding borrowings are classified as Long Term Debt in the
accompanying Balance Sheet.

In conjunction with entering into the Lending Facility, the Company terminated a
former bank lending agreement and recognized, as an extraordinary item, a charge
of $2,003 to write off the unamortized debt issuance costs.

TEL Facility

In 1993, the Company's subsidiary, Terex Equipment Limited ("TEL") located in
Motherwell, Scotland, entered into a bank facility (the "TEL Facility") which
provides up to (pound)28,000 ($42,000) including up to (pound)13,000 ($19,500)
non-recourse discounting of accounts receivable which meet certain credit
criteria, plus additional facilities for tender and performance bonds and
foreign exchange contracts. Interest rates vary between 1.0% - 1.5% above the
financial institution's Published Base Rate or LIBOR. The TEL Facility is
collateralized primarily by the related accounts receivable. The TEL Facility
requires no performance covenants. Proceeds from the TEL Facility are primarily
used for working capital purposes. Amounts discounted under facility were
$11,900 and zero at December 31, 1994 and 1993, respectively.

Secured Promissory Note

A portion of the CMH Acquisition was financed through a note to the seller in
the amount of $6,090 due July 31, 1994. Interest accrued at prime rate and was
payable quarterly. The seller note was secured by certain property, plant and
equipment. The note was paid in May 1994.

<PAGE>

Schedule of Debt Maturities

Scheduled annual maturities of long-term debt outstanding at December 31, 1994
in the successive five-year period are summarized below. Amounts shown are
exclusive of minimum lease payments disclosed in Note G -- "Lease Commitments":

1995 .......................................................$ 23,360
1996 ........................................................ 121,237
1997 ........................................................ 32,571
1998 ........................................................ 71
1999 ........................................................ --
Thereafter .................................................. --
--------

Total .................................................. $177,239
========

Based on quoted market values, the Company believes that the fair value of the
Senior Secured Notes and Subordinated Notes is approximately $121,289 and
$23,171, respectively, as of December 31, 1994. The Company believes that the
carrying value of its other borrowings approximates fair market value, based on
discounting future cash flows using rates currently available for debt of
similar terms and remaining maturities.

The Company paid $32,221, $31,805 and $15,602 of interest in 1994, 1993 and
1992, respectively.

The weighted average interest rate on short term borrowings outstanding was
10.2% at December 31, 1994 and 9.3% at December 31, 1993.

NOTE G -- LEASE COMMITMENTS

The Company leases certain facilities, machinery and equipment, and vehicles
with varying terms. Under most leasing arrangements, the Company pays the
property taxes, insurance, maintenance and expenses related to the leased
property. Certain of the equipment leases are classified as capital leases and
the related assets have been included in Property, Plant and Equipment. Net
assets under capital leases were $5,919 and $5,011 at December 31, 1994 and
1993, respectively, net of accumulated amortization of $2,856 and $3,352 at
December 31, 1994 and 1993, respectively.

The Company's Material Handling Segment also routinely enters into
sale-leaseback arrangements for certain equipment, which is later sold to
third-party customers under sales-type lease agreements. The Company maintains a
net investment in these leases, represented by the present value of payments due
under the leases of $8,014 of which $1,549 is current at December 31, 1994.

In connection with the original sale-leaseback arrangements underlying the
customer leasing program, the Company has an outstanding rental installment
obligation which is recorded based on the present value of minimum payments due
under the leases.

Future minimum capital and noncancelable operating lease payments and the
related present value of capital lease payments at December 31, 1994 are as
follows:
Capital Operating
Leases Leases
--------- ---------

1995 ................................. 3,621 6,775
1996 ................................. 3,059 5,910
1997 ................................. 2,998 4,963
1998 ................................. 2,542 3,333
1999 ................................. 1,778 2,482
Thereafter ................................. 139 1,128
--------- ---------
Total minimum obligations .................... 14,137 24,591
=========
Less amount representing interest............. 1,760
---------
Present value of net minimum obligations...... 12,377
Less current portion.......................... 2,445
---------
Long-term obligations......................... $ 9,932
=========

Noncash investing and financing activities include net capital lease obligations
of $1,144, $4,156 and $2,150 incurred in 1994, 1993 and 1992, respectively, when
the Company entered into leases for new equipment.

Most of the Company's operating leases provide the Company with the option to
renew the leases for varying periods after the initial lease terms. These
renewal options enable the Company to renew the leases based upon the fair
rental values at the date of expiration of the initial lease. Total rental
expense under operating leases was $7,405, $6,294 and $6,601 in 1994, 1993, and
1992, respectively.

In November 1994, the Company entered into a sale-leaseback transaction for
CMH's parts distribution center in Germany. The Company received net proceeds of
16,500 German marks ($11,000) and will lease the facility under the terms of a
five year lease for a total rental of 2,900 German marks ($1,900) per year. The
Company realized a gain of 6,244 German marks ($4,029) which was deferred and
will be amortized as a reduction of rental expense over the lease term ($774 per
year).

NOTE H -- INCOME TAXES

The components of Income (Loss) Before Income Taxes and Extraordinary Items are
as follows:

Year ended December 31,
----------------------------------

1994 1993 1992
--------- --------- ----------

United States ..................... $ 12,355 $(67,455) $ 169
Foreign ........................... (10,399) 2,533 2,813
-------- -------- --------

Income (loss) before income taxes
and extraordinary items ....... $ 1,956 $(64,922) $ 2,982
======== ======== ========

The major components of the Company's provision for income taxes are summarized
below:

Year ended December 31,
-------------------------------------

1994 1993 1992
------ ------ ------

Current:
Federal ............................. $ -- $ -- $ --
State ............................... 498 -- --
Foreign ............................. 2,132 1,336 167
Utilization of foreign net
operating loss ("NOL") carryforward (1,844) (1,178) --
------- ------- -------

Current income tax provision 786 158 167
------- ------- -------
Deferred:
Deferred federal income tax benefit . -- -- (100)
------- ------- -------

Total provision for income taxes .... $ 786 $ 158 $ 67
======= ======= =======

<PAGE>

Deferred tax assets and liabilities result from differences in the basis of
assets and liabilities for tax and financial statement purposes. In accordance
with SFAS No. 109, "Accounting for Income Taxes," a valuation allowance has been
recognized. The tax effects of the basis differences and net operating loss
carryforward as of December 31, 1994 and 1993 are summarized below for major
balance sheet captions:

1994 1993

Net inventories .......................... $ (7,118) $ (4,343)
Fixed assets ............................. (9,564) (9,933)
Other .................................... (485) (202)
--------- ---------
Total deferred tax liabilities ...... (17,167) (14,478)
--------- ---------
Receivables .............................. 1,376 2,136
Warranties and product liability ......... 20,756 20,709
Investments .............................. 957 9,692
All other items .......................... 6,098 4,914
Benefit of net operating loss carryforward 126,573 114,109
--------- ---------
Total deferred tax assets ........... 155,760 151,560
--------- ---------
Deferred tax assets valuation allowance .. (138,593) (137,082)
--------- ---------
Net deferred tax liabilities ........ $ -- --
--------- ---------
--------- ---------

The valuation allowance for deferred tax assets as of January 1, 1993 was
$112,708. The net change in the total valuation allowance for the years ended
December 31, 1993 and 1994 were increases of $24,374 and $1,511, respectively.

The Company's Provision for Income Taxes is different from the amount which
would be provided by applying the statutory federal income tax rate to the
Company's Loss Before Income Taxes and Extraordinary Items. The reasons for the
difference are summarized below:
Year ended December 31,
------------------------------------

1994 1993 1992
--------- --------- ---------

Statutory federal income tax rate ..... $ 685 $(22,723) $ 1,014
Recognition of previously
unrecognized tax assets ............. (4,333) -- --
NOL with no current benefit ........... -- 21,641 --
Foreign tax differential on
income/losses of foreign subsidiaries 3,698 (627) (856)
Goodwill write-off .................... -- 1,793 --
State tax ............................. 498 -- --
Other ................................. 238 74 (91)
-------- -------- --------

Total provision for income taxes ..... $ 786 $ 158 $ 67
======== ======== ========

The Company has not provided for U.S. federal and foreign withholding taxes on
$10,625 of foreign subsidiaries' undistributed earnings as of December 31, 1994,
because such earnings are intended to be reinvested indefinitely. Any income tax
liability that would result had such earnings actually been repatriated would
likely be offset by utilization of NOL's. On repatriation, certain foreign
countries impose withholding taxes. The amount of withholding tax that would be
payable on remittance of the entire amount of undistributed earnings would
approximate $1,900.

At December 31, 1994, the Company had domestic federal net operating loss
carryforwards of $272,501. Approximately $93,765 of the remaining net operating
loss carryforwards are subject to special limitations under the Internal Revenue
Code, and the NOL's may be affected by the current IRS examination discussed
below.

<PAGE>

The tax basis net operating loss carryforwards expire as follows:

Tax Basis Net
Operating Loss
Carryforwards

1995 .... 24,041
1996 .... 45,231
1997 .... 8,004
1998 .... 11,908
1999 .... --
2000 .... 4,581
2006 .... 20,689
2007 .... 35,661
2008 .... 101,896
2009 .... 20,490
--------

Total $272,501
========

The Company also has various state net operating loss and tax credit
carryforwards expiring at various dates through 2009 available to reduce future
state taxable income and income taxes. In addition, the Company's foreign
subsidiaries have approximately $60,586 of loss carryforwards, $33,475 in
Germany, $17,748 in U.K. and $9,363 in other countries, which are available to
offset future foreign taxable income. The loss carryforwards in Germany and U.K.
are available without expiration. The loss carryforwards in other countries of
$7,271 are available without expiration, with the remaining $2,092 expiring in
the years 1995 through 2000.

The Company made income tax payments of $790, $58 and $66 in 1994, 1993 and
1992, respectively.

NOTE I -- PREFERRED STOCK

The Company's certificate of incorporation was amended in October 1993 to
authorize 10,000,000 shares of preferred stock, $.01 par value per share. As of
December 31, 1994, a total of 1,289,800 shares of preferred stock are issued and
outstanding as described below.

Series A Cumulative Redeemable Convertible Preferred Stock

As of December 31, 1994, the Company has 1,200,000 issued and outstanding shares
of Series A Cumulative Redeemable Convertible Preferred Stock (the "Series A
Preferred Stock"). These shares were issued as part of a private placement on
December 20, 1993 which also included the issuance of 1,300,000 Common Stock
Purchase Warrants (the "Series A Warrants," see Note J -- "Stockholders'
Deficit"). The Series A Preferred Stock has a par value of $.01 per share and an
initial liquidation preference of $25.00 per share (the "Liquidation
Preference"). During the period from the issue date and ending at the Accretion
Termination Date (as defined below), the Liquidation Preference will accrete at
the rate of 13% per year until December 20, 1998, and 18% per year thereafter.
The Liquidation Preference totaled $34,321 at December 31, 1994.

After the Accretion Termination Date, the holders of the Series A Preferred
Stock are entitled to cumulative dividends, payable quarterly, as described
below. Each share of Series A Preferred Stock is convertible into 2.25 shares of
the Company's common stock (subject to adjustment in certain circumstances), and
is redeemable at the option of the Company on or after December 31, 1994 at a
price equal to the Liquidation Preference plus unpaid dividends provided that a
concurrent redemption of all outstanding Series A Warrants is made. The Series A
Preferred Stock is subject to a mandatory redemption requirement on or before
December 31, 2000 at a per share redemption price equal to the Liquidation
Preference on the date of redemption plus accrued but unpaid dividends. The
Series A Preferred Stock has no voting rights except when and if dividends are
in arrears as described below.

Commencing three months prior to the date the Company's indentures and loan
agreements allow the Company to declare and pay cash dividends on the Series A
Preferred Stock ("the Accretion Termination Date"), dividends will begin to
accrue at the rate of 13% per year through December 20, 1998, and at the rate of
18% per year thereafter. After the Accretion Termination Date the holders of the
Series A Preferred Stock will be entitled to elect one additional director of
the Company if the Company fails to declare and pay the full amount of dividends
payable on any two dividend payment dates. Such holders will have a right to
elect two additional directors of the Company if the Company misses four
dividend payment dates.

The aggregate net proceeds to the Company for the Series A Preferred Stock and
the Series A Warrants issued on December 20, 1993 were $27,179. The Company has
allocated $10,328 and $16,851 of this amount to the Series A Preferred Stock and
the Series A Warrants, respectively, based on management's estimate of the
relative fair values of these securities at the time of their issuance, using
information provided by the Company's investment bankers. The difference between
the initially recorded amount and the redemption amount will be accreted to the
carrying value of the Series A Preferred Stock using the interest method over
the period from issuance to the mandatory redemption date, December 31, 2000. In
addition, the carrying value of the Series A Preferred Stock will be further
adjusted for increases in the Liquidation Preference prior to the Accretion
Termination Date as described above. The total accretion recorded in 1994 and
1993 was $5,912 and $152, respectively.

Series B Cumulative Redeemable Convertible Preferred Stock

As of December 31, 1994, the Company has 89,800 issued and outstanding shares of
Series B Cumulative Redeemable Convertible Preferred Stock (the "Series B
Preferred Stock"). These shares were issued to certain individuals on December
9, 1994 in consideration for the early termination of a contract between the
Company and KCS Industries, Inc., a Connecticut limited partnership ("KCS"), a
related party (see Note M -- "Related Party Transactions"). The transaction also
included the issuance of 106,950 Common Stock Purchase Warrants (the "Series B
Warrants," see Note J -"Stockholders' Deficit"). The Series B Preferred Stock
has a par value of $.01 per share and an initial liquidation preference of
$25.00 per share (the "Liquidation Preference"). During the period from the
issue date and ending at the Accretion Termination Date (as defined below), the
Liquidation Preference will accrete at the rate of 13% per year until December
20, 1999, and 18% per year thereafter. The Liquidation Preference totaled $2,257
at December 31, 1994.

After the Accretion Termination Date, the holders of the Series B Preferred
Stock are entitled to cumulative dividends, payable quarterly, as described
below. Each share of Series B Preferred Stock is convertible into 2.25 shares of
the Company's common stock (subject to adjustment in certain circumstances), and
is redeemable at the option of the Company on or after December 31, 1995 at a
price equal to the Liquidation Preference plus unpaid dividends provided that a
concurrent redemption of all outstanding Series B Warrants is made. The Series B
Preferred Stock is subject to a mandatory redemption requirement on or before
December 31, 2001 at a per share redemption price equal to the Liquidation
Preference on the date of redemption plus accrued but unpaid dividends. The
Series B Preferred Stock has no voting rights except when and if dividends are
in arrears as described below.

Commencing three months prior to the date the Company's indentures and loan
agreements allow the Company to declare and pay cash dividends on the Series B
Preferred Stock ("the Accretion Termination Date"), dividends will begin to
accrue at the rate of 13% per year through December 20, 1999, and at the rate of
18% per year thereafter.

The Company has allocated $853 and $713 to the Series B Preferred Stock and the
Series B Warrants, respectively, based on management's estimate of the relative
fair values of these securities at the time of their issuance (equivalent to the
allocation used for the Series A Preferred Stock and Series A Warrants). The
difference between the initially recorded amount and the redemption amount will
be accreted to the carrying value of the Series B Preferred Stock using the
interest method over the period from issuance to the mandatory redemption date,
December 31, 2001. In addition, the carrying value of the Series B Preferred
Stock will be further adjusted for increases in the Liquidation Preference prior
to the Accretion Termination Date as described above. The total accretion
recorded in 1994 was $17.

NOTE J -- STOCKHOLDERS' DEFICIT

Common Stock. The Company's certificate of incorporation was amended in October
1993 to increase the number of authorized shares of common stock, par value $.01
(the "Common Stock"), to 30,000,000. As of December 31, 1994, there were
10,303,067 shares issued and outstanding. Of the 19,696,933 unissued shares at
that date, 6,016,228 shares were reserved for issuance as follows:

Conversion of Series A Preferred Stock (Note I)...... 2,700,000
Conversion of Series B Preferred Stock (Note I)...... 202,050
Exercise of Series A and Series B Warrants.......... 3,005,950
Exercise of Stock Options............................ 108,228
-----------

Total reserved for issuance..................... 6,016,228
===========

In December 1993, the Company issued 350,000 shares of Common Stock as a
contribution to two of the Company's pension plans. The Company valued these
shares at $2,323, based on 96.5% of the market price of the Common Stock on the
date of issuance.

Series A Warrants. In connection with the private placement of the Series A
Preferred Stock (see Note I -- "Series A Preferred Stock"), the Company issued
1,300,000 Series A Warrants. Each Series A Warrant may be exercised, in whole or
in part, at the option of the holder at any time before the expiration date on
December 31, 2000 and is redeemable by the Company under certain circumstances.
Upon the exercise or redemption of a Warrant, the holder thereof shall be
entitled to receive 2.23 shares of Common Stock. The exercise price for the
Warrants is $.01 for each share of Common Stock. The number of shares of Common
Stock issuable upon exercise or redemption of the Warrants is subject to
adjustment in certain circumstances.

Series B Warrants. In connection with the private placement of the Series B
Preferred Stock (see Note I -- "Series B Preferred Stock"), the Company issued
106,950 Series B Warrants. Each Series B Warrant may be exercised, in whole or
in part, at the option of the holder at any time before the expiration date on
December 31, 2001 and is redeemable by the Company under certain circumstances.
Upon the exercise or redemption of a Warrant, the holder thereof shall be
entitled to receive one share of Common Stock. The exercise price for the
Warrants is $.01 for each share of Common Stock. The number of shares of Common
Stock issuable upon exercise or redemption of the Warrants is subject to
adjustment in certain circumstances.

Stock Options. The Company maintains a qualified incentive stock option ("ISO")
plan covering certain officers and key employees. The exercise price of the ISO
stock option is the fair market value of the shares at the date of grant. The
ISO allows the holder to purchase shares of common stock, commencing one year
after grant. ISO options expire after ten years. At December 31, 1994, 26,062
stock options were available for grant under the plan.

<PAGE>

The following table is a summary of stock options:
Number Exercise Price
of Options per Option
-------- -----------------

Outstanding at December 31, 1991................ 78,583 $ 6.40 to 14.80
Granted..................................... 20,000 13.25
Exercised................................... (25,917) 6.40 to 14.80
Canceled or expired......................... (13,000) 10.20 to 14.80
--------

Outstanding at December 31, 1992................ 59,666 $ 6.40 to 14.80
Granted..................................... 23,750 7.13 to 10.50
Exercised................................... (3,750) 10.20
Canceled or expired......................... (3,750) 14.80
--------
Outstanding at December 31, 1993................ 75,916 $ 6.40 to 14.80
Granted..................................... 10,000 6.63
Exercised................................... ---
Canceled or expired......................... (3,750) 14.80
--------
Outstanding at December 31, 1994................ 82,166 $ 6.40 to 14.80
========

Exercisable at December 31, 1994................ 54,251 $ 6.40 to 14.80
========

Long-Term Incentive Plan. In June 1994, the Company's board of directors
approved a Long-Term Incentive Plan (the "Plan") covering certain managerial,
administrative and professional employees and outside directors. The Plan
provides for awards to employees, from time to time and as determined by a
committee of outside directors, of cash bonuses, stock options, stock and/or
restricted stock. The total number of shares of the Company's common stock
available to be awarded under the Plan is 750,000, subject to certain
adjustments. In June 1994, options to purchase a total of 308,800 shares of
common stock at $5.50 per share and a total of 129,400 shares of restricted
common stock were granted to employees and outside directors. The Plan, and the
options and restricted stock granted thereunder, are subject to approval by the
Company's shareholders. Accordingly, these shares and options are not considered
to be outstanding and are not included in calculations of earnings per share.

Stock Appreciation Rights. In connection with the sale of the Senior Secured
Notes and obtaining the consent of the holders of the Company's existing
Subordinated Notes to modify the Subordinated Notes, the Company issued 658,409
common stock appreciation rights ("SAR"). As of December 31, 1994, there were
624,794 SAR's outstanding. Of the outstanding SAR's, 552,000 may be exercised at
the option of the holder thereof at any time through July 31, 1996. The
remaining 72,794 SAR's may be exercised through July 1, 1997. The SAR's entitle
the holder to receive the market appreciation in the Company's Common Stock
between $11.00 per share, subject to adjustment, and the average price per share
for the 30 consecutive trading days prior to the date of exercise. At December
31, 1994, there was no reserve requirement necessary because the Company's
Common Stock price was below $11.00 per share.

Dividends. No dividends were declared or paid in 1994, 1993 or 1992. As
discussed in Note F -- "Long-Term Obligations," certain of the Company's debt
agreements contain restrictions as to the payment of cash dividends. Under the
most restrictive of these agreements, no retained earnings were available for
dividends at December 31, 1994. The terms of the Company's outstanding Series A
Preferred Stock and Series B Convertible Preferred Stock also restrict the
Company's ability to pay cash dividends on the Common Stock.

NOTE K -- RETIREMENT PLANS

Pension Plans

US Plans

The Company maintains four defined benefit pension plans covering certain
domestic employees. The benefits for the plans covering the salaried employees
are based primarily on years of service and employees' qualifying compensation
during the final years of employment. Participation in the plan for salaried
employees was frozen as of May 7, 1993, and no participants will be credited
with service following such date except that participants not fully vested will
be credited with service for purposes of determining vesting only. The benefits
for the plans covering the hourly employees are based primarily on years of
service and a flat dollar amount per year of service. It is the Company's policy
generally to fund these plans based on the minimum requirements of the Employee
Retirement Income Security Act of 1974 (ERISA). Plan assets consist primarily of
common stocks, bonds, and short-term cash equivalent funds.

Pension expense includes the following components for 1994, 1993 and 1992:

Year Ended December 31,
-----------------------------------
1994 1993 1992
--------- --------- --------

Service cost for benefits
earned during period ............ $ 183 $ 449 $ 499
Interest cost on projected
benefit obligation .............. 2,176 2,368 2,378
Actual (return) loss on plan assets (355) (2,128) (3,052)
Net amortization and deferral ..... (1,150) 872 1,870
Curtailment (gain) loss ........... -- (284) 58
------- ------- -------
Net pension expense ............. $ 854 $ 1,277 $ 1,753
======= ======= =======

<TABLE>
<CAPTION>
The following table sets forth the US plans' funded status and the amounts
recognized in the Company's financial statements at December 31:

1994 1993 1992
----------- ------------ -----------
Overfunded Underfunded Overfunded Underfunded Underfunded
Plans Plans Plans Plans Plans
--------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Actuarial present value of:
Vested benefits ...................... $ 7,952 $ 19,041 $ 9,252 $ 22,450 $ 27,249
======== ======== ======== ======== ========
Accumulated benefits ................. $ 8,145 $ 19,119 $ 9,509 $ 22,657 $ 27,637
======== ======== ======== ======== ========

Projected benefits ................... $ 8,145 $ 19,119 $ 9,509 $ 22,657 $ 29,602
Fair value of plan assets ................. 9,268 14,723 9,711 14,641 19,929
-------- -------- -------- -------- --------

Projected benefit obligation (in excess of)
less than plan assets ................ 1,123 (4,396) 202 (8,016) (9,673)
Unrecognized net loss from past
experience different than assumed .... 2,488 1,778 3,691 4,173 6,328
Unrecognized prior service cost ........... 470 -- 503 -- 920
Unrecognized transition (asset) ........... -- -- -- -- (324)
Adjustment to recognize minimum liability . -- (1,778) -- (4,173) (4,988)
-------- -------- -------- -------- --------
Pension asset (liability) recognized
in the balance sheet ............... $ 4,081 $ (4,396) $ 4,396 $ (8,016) $ (7,737)
======== ======== ======== ======== ========
</TABLE>

The expected long-term rate of return on plan assets was 9% for the periods
presented. The discount rate assumption was 8.5% for 1994, 7.0% for 1993 and
8.25% for 1992. The assumption for the rate of compensation increase, if
applicable per plan provisions, was 5.5% for 1992 and until May 7, 1993.

In accordance with the provisions of the SFAS No. 87, "Employers' Accounting for
Pensions," the Company has recorded an adjustment of $1,778 and $4,173 to
recognize a minimum pension liability at December 31, 1994 and 1993,
respectively. This liability is offset by a direct reduction of stockholders'
deficit of $1,778 and $4,173 at December 31, 1994 and 1993, respectively.

Assets of Terex's pension plans were combined with assets of Fruehauf's pension
plans into a master trust (the "Master Trust") effective January 1, 1992. In
1993, the Master Trust acquired Terex Common Stock to be held in designated
accounts for the benefit of Fruehauf retirees. The fair value of the Terex
Common Stock held for the benefit of the Fruehauf retirees totaled approximately
$3.3 million at December 31, 1993. The Master Trust disposed of this investment
in Terex Common Stock in March 1994 for approximately $3.9 million.

In December 1993, Terex contributed 350,000 shares of Terex Common Stock, par
value $.01, to the Master Trust for the benefit of two of the Terex plans, which
were valued by Terex at $2,323 based upon 96.5% of the market value of Terex
Common Stock as quoted on the New York Stock Exchange on the day of
contribution. The market value of this investment was $2,450 at December 31,
1994.

In addition, the Master Trust held 6,000 Terex Common Stock Appreciation Rights
("Terex SAR's"), valued at $1.00 per right (total value of $6) at December 31,
1994 and 12,000 Terex SAR's, valued at $1.25 per right ($15 total) at December
31, 1993.

As of December 31, 1993 the Master Trust maintained a participation in
Fruehauf's Credit Facility with a market value of $1,954 (cost of $2,299). The
rights of the Master Trust were equivalent to those of the other lenders and
investors.

Effective September 1, 1994, the Fruehauf Trailer Corporation Master Retirement
Trust was created, and those investments held by the Master Trust allocable to
the Fruehauf pension plans were transferred to the Fruehauf Trailer Corporation
Master Retirement Plan Trust, including the investment in Fruehauf's Bank Credit
Facility. The investments in Terex Common Stock and Terex SAR's remained in the
Master Trust for the benefit of participants in Terex's pension plans.

International Plans

TEL maintains a government-required defined benefit plan (which includes certain
defined contribution elements) covering substantially all of its management
employees. This plan is fully funded. Pension expense relating to this plan was
approximately $260, $228 and $208 for the years ended December 31, 1994, 1993
and 1992, respectively.

Certain of CMH's German employees are covered by noncontributory defined benefit
pension plans. The Company retained responsibility for such plans after the
Acquisition. CMH also maintains separate pension benefit plans for certain
German executive employees and for other staff. The executive pension plans are
based on final pay and service, and, in some cases, are dependent on social
security pensions while the other staff plans are based on fixed amounts applied
to the number of years service rendered. The plans are unfunded.

The components of consolidated pension expense for each of the reporting periods
covered by these financial statements is as follows:

Five months
Year Ended Year Ended ended
December 31, December 31, December 31,
1994 1993 1992

Current service cost ............ $ 174 $ 201 $ 103
Interest cost ................... 877 862 339
Net amortization and deferrals .. (820) 84 37
------ ------ ------
Defined benefit pension expense . $ 231 $1,147 $ 479
====== ====== ======

The following table reconciles the funded status of the Company's defined
benefit pension plans to the amounts recognized on the Company's Consolidated
Balance Sheet:

December 31,
1994 1993
Accumulated benefit obligation,
including nonvested benefits
of $207 and $819 at December 31, 1994
and 1993 ............................ $ 11,095 $ 12,220
======== ========

Projected benefit obligation ......... $ 11,152 $ 13,143
Unrecognized net gain/(loss) ......... 1,902 (893)
Unrecognized transition
asset (liability) ................... (665) (814)
Adjustment required to recognize
minimum liability ................... -- 785
-------- --------
Accrued pension cost ................. $ 12,389 $ 12,221
======== ========

Discount rates of 7.5% in 1994 and 7% in 1993 were used to determine the
projected benefit obligation. During 1994, the Company significantly reduced its
German work force in connection with restructuring of its operations. As a
result, the Company realized a curtailment gain with respect to these plans,
which was recognized as a reduction of the unrecognized transition liability in
accordance with the provisions of SFAS 88, "Employers' Accounting for
Settlements and Curtailments of Defined Benefit Plans and for Termination of
Benefits." The Company changed certain assumptions used in the actuarial
valuation of the plans: the assumed rate of compensation increases is 0% through
1999 and 2% thereafter (4% for all periods in the 1993 valuation); and the
assumed rate of cost of living adjustments of pensions in payment is 0% through
1999 and 2% thereafter (3.5% for all periods in the 1993 valuation). These
changes in assumptions reflect the reductions in personnel and other changes in
the Company's operations, including changes in compensation arrangements,
implemented during 1994. These changes resulted in an actuarial gain of $2,724.
The gain in excess of 10% of the projected benefit obligation is being amortized
over 2 years; $908 was amortized as a reduction of pension cost in 1994 and was
recorded in the fourth quarter of 1994.

Saving Plans

The Company sponsors various tax deferred savings plans into which eligible
employees may elect to contribute a portion of their compensation. The Company
can, but is not obligated to, contribute to certain of these plans.

Other Postretirement Benefits

The Company provides postretirement health and life insurance benefits to
certain former salaried and hourly employees of Koehring. The Company adopted
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than
Pensions," on January 1, 1993. This statement requires accrual of postretirement
benefits (such as health care benefits) during the years an employee provides
service.

Terex adopted the provisions of SFAS No. 106 using the delayed recognition
method, whereby the amount of the unrecognized transition obligation at January
1, 1993 is recognized prospectively as a component of future years' net periodic
postretirement benefit expense. The unrecognized transition obligation at
January 1, 1993 was $4,476. Terex is amortizing this transition obligation over
12 years, the average remaining life expectancy of the participants. The
liability of the Company, as of December 31, was as follows:

1994 1993
Actuarial present value of
accumulated postretirement
benefit obligation:
Retirees ......................... $ 4,604 $ 4,522
Active participants .............. -- --
Total accumulated postretirement
benefit obligation ........... 4,604 4,522
Unamortized transition obligation ... (3,730) (4,103)

Liability recognized in
the balance sheet ............ $ 874 $ 419

Health care trend rates used in the actuarial assumptions range from 12.3% to
13.5%. These rates decrease to 6.75% over a period of 9 to 11 years. The effect
of a one percentage-point change in the health care cost trend rates would
change the accumulated postretirement benefit obligation approximately 5%. The
discount rate used in determining the accumulated postretirement benefit
obligation is 8.25%.

Net periodic postretirement benefit expense includes the following components
for 1994 and 1993:

Year Ended December 31,
1994 1993
--------- -------

Service Cost................................. $ --- $ ---
Interest cost................................ 369 369
Net amortization............................. 373 373
--------- -------
Total................................... 742 742
========= =======

The Company's postretirement benefit obligations are not funded. Net periodic
postretirement benefit expense for the year ended December 31, 1994 and 1993 was
approximately $455 and $419 greater on the accrual basis than it would have been
on the cash basis.

Retiree health payments totaled $235 for the year ended December 31, 1992.

<PAGE>

NOTE L -- LITIGATION AND CONTINGENCIES

In December 1992, a Class Action complaint was filed, purportedly on behalf of
all persons who purchased Fruehauf common stock during the period from June 28,
1991 through December 4, 1992, against Fruehauf, the Company, certain of
Fruehauf's then officers and directors, including Randolph W. Lenz, Marvin B.
Rosenberg and G. Chris Andersen, and certain of the underwriters of the initial
public offering of Fruehauf, namely, PaineWebber Incorporated, Alex. Brown &
Sons, Incorporated and Wertheim Schroder & Co., Incorporated, in the United
States District Court for the Eastern District of Michigan, Southern Division,
seeking unspecified compensatory and punitive damages. The complaint alleges,
among other things, that, in connection with and following the initial public
offering of Fruehauf, the defendants misrepresented Fruehauf's liquidity and the
status of compliance with Fruehauf's credit facilities at the time of the
Fruehauf IPO, and in certain other documents publicly disseminated by Fruehauf
subsequent to the initial public offering. The plaintiffs then amended their
complaint to include claims based on the April 1993 restatement of Fruehauf's
1989 and 1990 financial statements. The defendants filed answers to the
complaint denying material allegations of the complaint, as amended, and
asserting various affirmative defenses. A motion for partial summary judgment
against the defendants on the restatement claims is currently pending. The
Company has not recorded any loss provision for this litigation. The Company has
been participating in settlement discussions and, based on an agreement in
principal reached with the plaintiffs, believes this litigation will be resolved
without any material adverse impact to the Company.

In the Company's lines of business, but primarily in the Material Handling
Segment, numerous suits have been filed alleging damages for injuries or deaths
from accidents involving the Company's products that have arisen in the normal
course of operations. As part of the acquisition of CMH, the Company and CMH
assumed both the outstanding and future product liability exposures related to
such operations. As of December 31, 1994, CMH had approximately 120 lawsuits
outstanding alleging damages for injuries or deaths arising from accidents
involving CMH products. Most of the foregoing suits are in various stages of
pretrial completion, and certain plaintiffs are seeking punitive as well as
compensatory damages. 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, based in part upon actuarial determinations, 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 is contingently liable as a guarantor for certain customers' floor
plan obligations with financial institutions. As a guarantor, the Company is
obligated to purchase equipment which has been repossessed by the financial
institution based upon the unamortized principal balance outstanding. The
Company records the repossessed inventory as used equipment at its estimated net
realizable value. Any resultant losses are charged against related reserves. The
guarantee under such floor plans aggregated $7,031 at December 31, 1994. The
Company has recorded reserves based on management's estimates of potential
losses arising from these guarantees. Historically, the Company has incurred
only immaterial losses relating to these arrangements.

CMH has also given guarantees to financial institutions relating to capital
loans, residual guarantees and other dealer and customer obligations arising out
of the ordinary conduct of its business. Such guarantees approximated $6,400 at
December 31, 1994. Potential losses on such guarantees are accrued as a
component of the Allowance for Doubtful Accounts.

To enhance its marketing effort and ensure continuity of its dealer network, CMH
has also agreed as part of its dealer sales agreements to repurchase certain new
and unused products and parts inventory and certain products used as dealer
rental assets in the event of a dealer termination. Repurchase agreements
included in operating agreements with an independent financial institution have
been patterned after those included in the dealer sales agreements, and provide
for repurchase of inventory in certain circumstances of dealer default on
financing provided by the financial institution to the dealer. Dealer inventory
and rental asset financing of approximately $206,000 at December 31, 1994 were
covered by those operating agreements. Under these agreements, when dealer
terminations do occur, a newly selected dealer generally assumes the assets of
the prior dealer and any related financial obligations. Historically, CMH has
incurred only immaterial losses relating to these arrangements.

Terex's outstanding letters of credit totaled $6,688 which are cash
collateralized. The letters of credit generally serve as collateral for certain
liabilities included in the Consolidated Balance Sheet. Certain of the letters
of credit serve as collateral guaranteeing the Company's performance under
contracts.

As described in Note H -- "Income Taxes," the Internal Revenue Service is
currently examining the Company's federal tax returns for the years 1987 through
1989.

Terex has agreed to indemnify certain outside parties for losses related to
Fruehauf's worker compensation obligations. Some of the claims for which Terex
is contingently obligated are also covered by bonds issued by an insurance
company. As of December 31, 1994 Terex has recognized liabilities for these
contingent obligations in the aggregate amount of $2,000, representing
management's estimate of the maximum potential losses which the Company might
incur.

NOTE M -- RELATED PARTY TRANSACTIONS

Under a contract dated July 1, 1987, as amended, KCS Industries, L.P., a
Connecticut limited partnership ("KCS"), principally owned by Randolph W. Lenz,
Chairman of the Board and a principal stockholder of the Company, provided
administrative, financial, marketing, technical, real estate and legal services
to the Company and its subsidiaries until December 31, 1993. KCS also provided
assistance in the evaluation, negotiation and consummation of potential
acquisitions of other companies, products and processes, as well as the
development of new areas of business for the Company.

For the services of KCS, the Company paid KCS an annual fee plus the
reimbursement for all out-of-pocket expenses incurred by KCS in fulfilling the
contract, including travel and similar expenses and fees for professional and
other services provided by third parties. Each year the contract was in effect,
the annual fee increased by the greater of 10% or the increase in the Consumer
Price Index, subject to limitations imposed by the Company's debt agreements.
During 1993 and 1992, the Company made payments to KCS for fees of $2,878 and
$2,848, respectively.

During 1993, the Board of Directors of the Company concluded that it would be in
the Company's best interest to terminate the Company's contract with KCS and
integrate the management services of KCS directly into the Company. Pursuant to
an agreement between the Company and KCS, the contract between the Company and
KCS was terminated as of the close of business on December 31, 1993. David J.
Langevin and Marvin B. Rosenberg, employees of KCS, became salaried employees of
the Company effective January 1, 1994, with the titles of Executive Vice
President and Senior Vice President, respectively. In consideration of the
termination of the contract, the Company issued 89,800 shares of the Company's
Series B Cumulative Redeemable Convertible Preferred Stock (valued at $853) and
106,950 Series B Warrants (valued at $713), the terms of which are substantially
similar to the terms of the Company's outstanding Series A Preferred Stock and
Series A Warrants, respectively. Of such amounts, Mr. Lenz received 38,800
shares of preferred stock and warrants exercisable for 15,700 shares of Terex
Common Stock and Messrs. Langevin and Rosenberg received 25,500 shares of
preferred stock and warrants exercisable for 45,625 shares of Terex Common
Stock. In addition, Messrs. Lenz, Langevin and Rosenberg received cash payments
of $515, $82 and $82, respectively.

The Company, certain directors and executives of the Company, and KCS are named
parties in various legal proceedings. During 1994, 1993 and 1992, the Company
incurred $319, $351 and $59 of legal fees and expenses on behalf of the Company,
directors and executives of the Company, and KCS named in the lawsuits.

On January 25, 1993, Terex entered into an agreement whereby KCS borrowed $1,683
from Terex (the "KCS/Terex Note"). The KCS/Terex Note bore interest at prime.
The loan represented by the KCS/Terex Note may have constituted a default under
the Senior Secured Notes, the Subordinated Notes and the Bank Lending Agreement.
The entire balance was repaid to Terex on February 1, 1993, six days after the
initial borrowing, thereby curing any default which may have occurred.

In conjunction with the CMH Acquisition, the Company financed the acquisition
and refinanced a major component of its previously outstanding bank debt through
a private placement of Secured Notes and SAR's, and the establishment of the
Bank Lending Agreement. Mr. Raben, a director of the Company, is an employee and
officer of Jefferies & Company, Inc. ("Jefferies"), the investment banking firm
which acted as an exclusive placement agent for the Company in the offering of
the Senior Secured Notes and SAR's. Jefferies was paid fees of $6,500 in 1992
for services performed as placement agent. Jefferies was also the Company's
placement agent for the December 1993 sale of the Series A Preferred Stock and
Series A Warrants for which Jefferies received fees totalling $2,500 in 1993.
Jefferies was also the agent for the Company for certain sales by the Company of
its common stock of Fruehauf in 1993. Jefferies purchased 250,000 Series A
Warrants and 180,000 shares of Series A Preferred Stock from the Company in
connection with the Company's private placement on December 20, 1993.

David A. Sachs, a director of the Company, was affiliated with the Airlie Group
L.P. ("Airlie"), a limited partnership which owns approximately 9% of the
Company's Common Stock (including Common Stock issuable upon conversion of
Series A Preferred Stock) and 40,000 Warrants. Until May 1994, Mr. Sachs was an
employee of the investment firm of TMT-FW, Inc. which is one of two general
partners of the general partner of Airlie. During the time Mr. Sachs was
affiliated with Airlie, Airlie received all director fees to which Mr. Sachs was
entitled by reason of his service as a director of the Company ($6 in 1994 and
$24 in 1993). On December 20, 1993, Airlie purchased 40,000 Warrants and 40,000
shares of Series A Preferred Stock from the Company as part of the Company's
private placement.

In 1992, the Board approved a program to consolidate Fruehauf's parts
warehousing and administration functions with the Company. During the fourth
quarter of 1992, Fruehauf announced its intention to close its parts warehouse
in Westerville, Ohio and transfer its replacement parts inventory to the Terex
distribution center in Southaven Mississippi. In November 1992, in contemplation
of the parts consolidation, Terex had transferred $2.0 million to Fruehauf. As a
result of a debt restructuring of Fruehauf, the proposed arrangement was not
effectuated and, in May 1993, Terex entered into an agreement with an operating
unit of Fruehauf, whereby such operating unit was to provide products and
manufacturing services to Terex. This agreement required Terex to make a $2.0
million payment to such operating unit, which Terex effected on May 11, 1993 by
instructing Fruehauf to transfer the $2.0 million Fruehauf owed to Terex
directly to such operating unit. The operating unit of the Fruehauf unit in
question subsequently ceased operations. The Company is in discussions with
Fruehauf concerning the satisfaction of Fruehauf's obligations under the May
1993 agreement.

The Company requires that all transactions with affiliates be on terms no less
favorable to the Company than could be obtained in comparable transactions with
an unrelated person. The Board is advised in advance of any such proposed
transaction or agreement and utilizes such procedures in evaluating their terms
and provisions as are appropriate in light of the Board's fiduciary duties under
Delaware law. In addition, the Company has an Audit Committee consisting solely
of outside directors. One of the responsibilities of the Audit Committee is to
review related party transactions.

NOTE N-- BUSINESS SEGMENT INFORMATION

The Company operates in two industry segments: Material Handling and Heavy
Equipment.

The Material Handling Segment, which was acquired during 1992 (see Note B --
"Acquisitions"), designs, manufactures and markets a complete line of internal
combustion and electric lift trucks, electric walkies, automated pallet trucks,
industrial tow tractors and related replacement parts. Material Handling Segment
products are used in material handling applications in a broad array of
manufacturing, distribution and transportation industries.

The Heavy Equipment Segment designs, manufactures and markets heavy-duty,
off-highway earthmoving, construction, lifting, material handling and aerial
lift equipment, and related components and replacement parts. Products include
haulers, scrapers, wheel loaders, crawlers, mobile cranes, excavators and aerial
lifts. Such products are used primarily by construction, mining, logging,
industrial and government customers in building roads, dams and commercial and
residential buildings; supplying coal, minerals, sand and gravel; and handling
materials in the scrap, refuse and lumber industries.

<PAGE>

Industry segment information is presented below:

1994 1993 1992
----------- ----------- -----------

Sales
Material Handling ........ $ 472,652 $ 395,625 $ 240,940
Heavy Equipment .......... 317,168 275,164 282,415
Eliminations ............. (3,039) (480) --
--------- --------- ---------

Total .................. $ 786,781 $ 670,309 $ 523,355
========= ========= =========

Income (Loss) From Operation
Material Handling ........ $ (13,983) $ (28,573) $ 2,177
Heavy Equipment .......... 18,952 2,922 (5,929)
General/Corporate ........ (1,608) (3,527) (373)
--------- --------- ---------

Total .................. $ 3,361 $ (29,178) $ (4,125)
========= ========= =========

Depreciation and Amortizatio
Material Handling ........ $ 11,024 $ 9,733 $ 4,068
Heavy Equipment .......... 3,169 8,707 3,564
General/Corporate ........ 2,904 3,960 2,188
--------- --------- ---------

Total .................. $ 17,097 $ 22,400 $ 9,820
========= ========= =========

Capital Expenditures
Material Handling ........ $ 7,860 $ 8,882 $ 3,129
Heavy Equipment .......... 4,565 2,620 2,238
General/Corporate ........ 292 47 15
--------- --------- ---------

Total .................. $ 12,717 $ 11,549 $ 5,382
========= ========= =========

Identifiable Assets
Material Handling ........ $ 194,985 $ 205,581 $ 247,813
Heavy Equipment .......... 187,710 168,236 229,042
General/Corporate ........ 18,921 16,885 501
--------- --------- ---------

Total .................. $ 401,616 $ 390,702 $ 477,356
========= ========= =========

Geographic segment information is presented below:
1994 1993 1992
----------- ----------- -----------

Sales
North America ............. $ 557,114 $ 466,927 $ 369,394
Europe .................... 240,670 211,726 149,970
All other ................. 33,994 19,338 30,780
Eliminations .............. (44,997) (27,682) (26,789)
--------- --------- ---------

Total ................... $ 786,781 $ 670,309 $ 523,355
========= ========= =========

Income (Loss) From Operations
North America ............. $ 6,255 $ (32,004) $ (11,968)
Europe .................... (4,449) (722) 5,453
All other ................. 374 2,320 1,351
Eliminations .............. 1,181 1,228 1,039
--------- --------- ---------

Total ................... $ 3,361 $ (29,178) $ (4,125)
========= ========= =========

Identifiable Assets
North America ............. $ 250,559 $ 241,564 $ 363,252
Europe .................... 167,538 150,006 122,877
All other ................. 8,766 10,785 8,664
Eliminations .............. (25,247) (11,653) (17,437)
--------- --------- ---------

Total ................... $ 401,616 $ 390,702 $ 477,356
========= ========= =========

Sales between segments and geographic areas are generally priced to recover
costs plus a reasonable markup for profit. Operating income equals net sales
less direct and allocated operating expenses, excluding interest and other
nonoperating items. Corporate assets are principally cash, marketable securities
and administration facilities.

The Material Handling Segment operations market their product primarily through
independent dealers and distributors. The Heavy Equipment Segment operations
market their products through independent dealers and distributors and directly
to the end user.

The Company is not dependent upon any single customer. No single customer
accounted for more than 10% of 1994, 1993 or 1992 consolidated net sales.

Export sales from U.S. operations were as follows:

Year Ended December 31,
-----------------------------------
1994 1993 1992
--------- --------- --------

North and South America ...... $34,873 $28,838 $31,845
Europe, Africa and Middle East 15,122 20,689 38,191
Asia and Australia ........... 39,574 32,837 22,311
------- ------- -------
$89,569 $82,364 $92,347
======= ======= =======

NOTE O -- LIQUIDITY, FINANCING AND SEVERANCE ACTIONS

The Company experienced significant operating losses in the first quarter of
1994. Results improved in the second through fourth quarters of 1994 and the
Company generated income from operations of $3,361 for the year and $6,268 for
the quarter ended December 31, 1994. During 1994 the Company has taken
significant actions to reduce its overall cost structure and improved liquidity
by selling non-strategic assets to repay debt and lower interest costs. During
1994, the Company repaid $35,744 of high interest rate debt, which will result
in interest expense savings of approximately $4,700 on an annual basis.

In June 1994, the Company announced personnel reductions in plant supervision,
engineering, marketing and administration totaling approximately 160 employees
in the Material Handling Segment's North American and European operations. The
Company also reorganized certain marketing activities and closed several of its
regional sales offices in the United States. The Company recorded a $4,549
charge in the second quarter of 1994 for severance costs associated with these
actions. In December 1994, the Company announced additional personnel reductions
totaling approximately 90 employees in conjunction with the closing of the
Material Handling Segment's Korean plant and certain branch sales offices in
France. An additional $2,804 charge was recorded for costs, principally
severance costs, associated with these actions.

The indentures governing the Senior Secured Notes and Subordinated Notes
require, among other things, that the Company maintain certain levels of
tangible net worth (the "Net Worth Covenants") and collateral (the "Collateral
Covenants"). In the event that the Company's net worth is not in excess of the
amount required under the Net Worth Covenants for any two consecutive quarters,
the Company must offer to repurchase, at par plus accrued interest, 20% of the
outstanding principal amount of the Notes. In the event the Company is not in
compliance with the Collateral Covenants at the end of any calendar quarter, the
Company must offer to repurchase, at par plus accrued interest, $16,000
principal amount of the Senior Secured Notes or such greater amount as would be
necessary to bring the Company into compliance with the Collateral Covenants. If
any offer to repurchase Notes were required to be made as a result of
noncompliance with the Covenants it is likely that the Company would require
additional funding to complete the offer, and if such funding were unavailable
to it, the Company would be unable to comply with the terms of the Notes and the
maturity of the Notes may be accelerated. Such circumstances could result in a
material adverse impact on the Company.

The Company was in compliance with the Net Worth Covenants and the Collateral
Covenants at December 31, 1994 and throughout 1994. During 1994, the Company has
taken actions to maintain compliance with the Net Worth Covenants and Collateral
Covenants, including the sale of its Drexel subsidiary, shares of Fruehauf
common stock and other assets, and plans to take additional actions, if needed,
to continue in compliance. As discussed below, the Company is seeking to
refinance the Senior Secured Notes and the Subordinated Notes during 1995. In
the event that the Company is not successful in such refinancing, the Company
believes that, based on management's current estimates, it will be in compliance
with its covenants with respect to the Senior Secured Notes and Subordinated
Notes over the next twelve months.

The Company's interest payment requirements for 1995 total approximately $23,200
on the Senior Secured Notes, the Subordinated Notes and the Lending Facility, of
which amount approximately $10,900 has been paid as of March 1, 1995. The
Company's principal repayment requirements for 1995 include approximately $8,247
in June 1995 for a required sinking fund payment on the Subordinated Notes. In
addition, as a result of the sale of certain real estate collateral in November
and December 1994, 500,000 shares of Fruehauf common stock in December 1994 and
the remaining 486,622 shares of Fruehauf common stock in January 1995, pursuant
to the indenture for the Senior Secured Notes, the Company also intends to offer
to repurchase approximately $15,923 of the Senior Secured Notes in the second
quarter of 1995.

The Senior Secured Notes mature on August 1, 1996 and the Subordinated Notes
mature on July 1, 1997. As discussed below, the Company is currently seeking to
refinance the Senior Secured Notes and Subordinated Notes during 1995; however,
there is no assurance that it will be successful in this regard. If the
refinancing is not completed, management intends to pursue alternative
refinancing opportunities, including replacement or additional working capital
based lending facilities; however, management has not identified any specific
sources of such alternative financing.

If the Company does not refinance the Senior Secured Notes and Subordinated
Notes and does not arrange additional financing before the principal repayments
of Senior Secured Notes and Subordinated Notes discussed above are due, the
Company intends to fund such repayments from operations. The need to use funds
from operations for $24,300 of debt repayments in the second quarter of 1995
could adversely affect the Company's operations by affecting its ability to meet
its operating payment obligations, including payments to vendors, on a timely
basis in the second quarter, although management believes that continued
improvement in cash flow from operations would allow the Company to return to
normal payment terms during the second half of 1995.

The Company has announced its plans to acquire, through a newly formed wholly
owned subsidiary of the Company ("Terex Cranes"), (i) substantially all of the
capital stock of P.P.M., S.A. ("PPM Europe") which is engaged in the mobile
crane and container stacker business in Europe primarily under the PPM brand
name, and (ii) all of the capital stock of Legris Industries, Inc. ("PPM North
America"), which is currently engaged in the mobile crane and container stacker
business in the United States, Singapore and Australia primarily under the P&H
brand name ("PPM North America" and, together with PPM Europe, "PPM"), from
Legris Industries, S.A. Simultaneously with the closing of the acquisition, the
Company will contribute to Terex Cranes, substantially all of the assets,
subject to all of the liabilities of its Koehring and Mark divisions.

The aggregate purchase price for PPM (including debt to be repaid immediately
after the acquisition and debt expected to remain outstanding) is approximately
577,000 French Francs (approximately $115,400). A portion of the purchase price
is payable by issuance of a redeemable non-interest bearing promissory note of
Terex Cranes in the amount of 8,000 French Francs (approximately $1,600) and
119,000 French Francs (approximately $23,800) in aggregate liquidation
preference of preferred stock of Terex Cranes, bearing no dividends. The note
matures in seven years and may be paid in cash or, at the option of Terex
Cranes, in common stock of Terex Cranes. The purchase price is subject to
adjustment calculated by reference to the consolidated net asset value of PPM as
determined by an audit to be conducted following the consummation of the
acquisition.

The Company intends to finance the cash portion of the purchase price through
the sale to institutional investors of a new series of secured notes. Proceeds
from the sale of such notes will also provide funds to permit the Company to
redeem all of its existing Senior Secured Notes and Senior Subordinated Notes.
The Company is also endeavoring to obtain expanded working capital lending
facilities. There is no assurance that the Company will be able to conclude any
of such financings.

NOTE P -- CONSOLIDATED FINANCIAL STATEMENTS

On May 9, 1995, the Company completed the refinancing of substantially all of
its outstanding debt (the "Refinancing") and, through Terex Cranes, Inc. ("Terex
Cranes"), a newly formed subsidiary, completed the acquisition of substantially
all of the outstanding stock of PPM. S.A. and Legris Industries, Inc. See Note X
for information related to the acquisition.

The Refinancing included the private placement to institutional investors of
$250,000,000 of 13.25% Senior Secured Notes due May 15, 2002 (the "New Senior
Secured Notes"), repayment of the Company's old senior secured notes and senior
subordinated notes, totaling approximately $152,600,000 principal amount, and
entry into a new Credit Facility to replace the Company's existing lending
facility in the U.S. Until such time as the Company completes an exchange of the
New Senior Secured Notes for an equivalent issue of registered notes, or a shelf
registration statement for the New Senior Secured Notes is effective, the
interest rate on the New Senior Secured Notes will be 13.75%. The Indenture for
New Senior Secured Notes places certain limits on the Company's ability to incur
additional indebtedness; permit the existence of liens; issue, pay dividends on
or redeem equity securities; utilize the proceeds of asset sales; consolidate,
merge or transfer assets to another entity; and enter into transactions with
affiliates.

CMH Acquisition Corp., CMH Acquisition International Corp., Clark Material
Handling Company, Terex Cranes, Inc., Koehring Cranes, Inc., Legris Industries,
Inc. and PPM Cranes, Inc. (collectively, the "Guarantors"), all subsidiaries of
Terex, provide a full, unconditional, joint and several guaranty of the
obligations under the Senior Secured Notes and will provide the same guaranty
for the obligations of any registered notes exchanged for the Senior Secured
Notes.

With the exception of PPM Cranes, Inc., each of the Guarantors is a corporation
organized and existing under the laws of the state of Delaware and is a
wholly-owned subsidiary of the Company. PPM Cranes, Inc. is a corporation
organized and existing under the laws of the state of Delaware and is 92.4%
owned by Terex.

The following summarized condensed consolidating financial information for the
Company segregates the financial information of Terex Corporation, the guarantor
subsidiaries and the non-guarantor subsidiaries.

<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED) (IN THOUSANDS)
SEPTEMBER 30, 1995

GUARANTOR GUARANTOR NONGUARANTOR INTERCOMPANY
PARENT SUBSIDIARIES PPM CRANES SUBSIDIARIES ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ............ $ 5,940 $ 5,863 $ 158 $ 521 $ -- $ 12,482
Cash securing letters of credit ...... 2,061 52 -- 1,582 -- 3,695
Trade receivables - net .............. 30,090 77,246 10,391 72,365 (42,882) 147,210
Inventories - net .................... 43,695 118,290 26,294 60,832 (445) 248,666
Other current assets ................. 872 11,650 204 5,553 -- 18,279
--------- --------- --------- --------- --------- ---------
Total current assets ................. 82,658 213,101 37,047 140,853 (43,327) 430,332
--------- --------- --------- --------- --------- ---------

Property, Plant & equipment - net .... 10,256 46,455 4,088 51,018 -- 111,817

Investment in and advances to
subsidiaries ...................... 210,680 (29,842) (6,206) (51,480) (123,152) --

Debt issuance costs and
intangible assets - net ........... 15,110 57,634 -- 719 11,990 85,453

Other assets ......................... 7,648 2,175 1,793 8,174 (1,458) 18,332
--------- --------- --------- --------- --------- ---------

TOTAL ASSETS ......................... $ 326,352 $ 289,523 $ 36,722 $ 149,284 $(155,947) $ 645,934
========= ========= ========= ========= ========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable and current portion,
long-term debt .................... $ -- $ 9,142 $ 252 $ 3,222 $ 6,257 $ 18,873
Trade accounts payable ............... 22,714 100,999 10,596 54,899 (42,744) 146,464
Accruals and other current liabilities 38,967 58,960 10,980 24,815 4,196 137,918
--------- --------- --------- --------- --------- ---------
Total current liabilities ............ 61,681 169,101 21,828 82,936 (32,291) 303,255

Long term debt less current portion .. 319,253 (4,302) 5,420 3,225 13,443 337,039

Other long term liabilities .......... 15,361 45,976 621 19,148 (13,799) 67,307

Redeemable convertible preferred stock 22,633 10,028 -- -- (171) 32,490

Stockholders' investment ............. (92,576) 68,720 8,853 43,975 (123,129) (94,157)
--------- --------- --------- --------- --------- ---------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ................. $ 326,352 $ 289,523 $ 36,722 $ 149,284 $(155,947) $ 645,934
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1995
GUARANTOR GUARANTOR NONGUARANTOR INTERCOMPANY
PARENT SUBSIDIARIES PPM CRANES SUBSIDIARIES ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C> <C>
NET SALES .................................... $ 105,347 $ 440,889 $ 35,880 $ 229,377 $ (44,704) $ 766,789
Cost of goods sold ........................... 93,635 405,256 29,640 206,819 (44,821) 690,529
--------- --------- --------- --------- --------- ---------

GROSS PROFIT ................................. 11,712 35,633 6,240 22,558 117 76,260
Engineering, selling & administrative expenses 11,387 32,403 4,125 13,486 -- 61,401
Severance charges ............................ -- 3,478 -- -- -- 3,478
--------- --------- --------- --------- --------- ---------

INCOME (LOSS) FROM OPERATIONS ................ 325 (248) 2,115 9,072 117 11,381
Interest expense ............................. (7,603) (11,261) (137) (4,832) (3,510) (27,343)
Income (loss) from equity investees .......... (14,735) (10,098) -- -- 24,833 --
Other income (expense) - net ................. (5,345) (1,099) (79) (4,363) 894 (9,992)
--------- --------- --------- --------- --------- ---------

INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS ................... (27,358) (22,706) 1,899 (123) 22,334 (25,954)

Provision for income taxes ................... 2 (135) -- -- -- (133)
--------- --------- --------- --------- --------- ---------

Income (loss) before extraordinary items ..... (27,356) (22,841) 1,899 (123) 22,334 (26,087)
Extraordinary Loss on Retirement of Debt ..... (7,452) -- -- -- -- (7,452)
--------- --------- --------- --------- --------- ---------

NET INCOME (LOSS) ............................ (34,808) (22,841) 1,899 (123) 22,334 (33,539)
Less Preferred Stock Accretion ............... (5,200) -- -- -- -- (5,200)
--------- --------- --------- --------- --------- ---------

INCOME (LOSS) APPLICABLE TO COMMON STOCK ..... $ (40,008) $ (22,841) $ 1,899 $ (123) $ 22,334 $ (38,739)
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)

NINE MONTHS ENDED SEPTEMBER 30, 1995 PPM
GUARANTOR GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES SUBSIDIARIES CONSOLIDATED

<S> <C> <C> <C> <C> <C>
NET CASH PROVIDED (USED) BY OPERATING ............... $ (23,705) $ 5,464 $ (1,096) $ (8,608) $ (27,945)
--------- --------- --------- --------- ---------
ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired ..... (93,457) -- 1,028 -- (92,429)
Capital expenditures ................................ (884) (2,114) (142) (3,988) (7,128)
Proceeds from sale of property, plant and equipment . 8 447 15 402 872
Proceeds from sale of Freuhauf stock ................ 2,714 -- -- -- 2,714
Other - net ......................................... 100 -- -- 85 185
--------- --------- --------- --------- ---------
Net cash used in investing activities ............... (91,519) (1,667) 901 (3,501) (95,786)
--------- --------- --------- --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under revolving line
of credit agreements ............................. 40,789 1,799 262 (743) 42,107
Principal repayments of long-term debt .............. (152,588) (133) -- (1,226) (153,947)
Issuance of long term debt, net of issuance costs ... 234,208 -- 86 5,506 239,800
Other ............................................... -- 4 (8) (442) (446)
--------- --------- --------- --------- ---------
Net cash provided by financing activities ........... 122,409 1,670 340 3,095 127,514
--------- --------- --------- --------- ---------

Effect of exchange rates on cash and cash equivalents (269) 419 13 (1,191) (1,028)
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents 6,916 5,886 158 (10,205) 2,755
Cash and cash equivalents, beginning of period ...... (976) (23) 0 10,726 9,727
--------- --------- --------- --------- ---------
Cash and cash equivalents, end of period ............ $ 5,940 $ 5,863 $ 158 $ 521 $ 12,482
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED) (IN THOUSANDS)
DECEMBER 31, 1994

GUARANTOR GUARANTOR NONGUARANTOR INTERCOMPANY
PARENT SUBSIDIARIES PPM CRANES SUBSIDIARIES ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ............ $ (976) $ (23) $ -- $ 10,726 $ -- $ 9,727
Cash securing letters of credit ...... 6,688 -- -- -- -- 6,688
Trade receivables - net .............. 29,576 36,615 -- 60,859 (35,333) 91,717
Inventories - net .................... 45,978 73,069 -- 45,559 (361) 164,245
Other current assets ................. 2,381 411 -- 2,983 -- 5,775
--------- --------- --------- --------- --------- ---------
Total current assets ................. 83,647 110,072 0 120,127 (35,694) 278,152
--------- --------- --------- --------- --------- ---------

Property, Plant & equipment - net .... 10,569 29,765 -- 45,826 -- 86,160

Investment in and advances to
subsidiaries ...................... 106,271 (36,062) -- (2,413) (67,796) --

Debt issuance costs and
intangible assets - net ........... 3,382 4,450 -- 772 -- 8,604

Other assets ......................... 10,564 3,089 -- 14,146 901 28,700
--------- --------- --------- --------- --------- ---------

TOTAL ASSETS ......................... $ 214,433 $ 111,314 $ 0 $ 178,458 $(102,589) $ 401,616
========= ========= ========= ========= ========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable and current portion,
long-term debt .................... $ 23,189 $ 114 $ -- $ 4,581 $ -- $ 27,884
Trade accounts payable ............... 28,589 72,857 -- 45,714 (34,947) 112,213
Accruals and other current liabilities 35,518 27,051 -- 18,918 (6) 81,481
--------- --------- --------- --------- --------- ---------
Total current liabilities ............ 87,296 100,022 0 69,213 (34,953) 221,578

Long term debt less current portion .. 152,641 137 -- 10,209 -- 162,987

Other long term liabilities .......... 7,250 32,298 -- 15,979 -- 55,527

Redeemable convertible preferred stock 17,262 -- -- -- -- 17,262

Stockholders' investment ............. (50,016) (21,143) -- 83,057 (67,636) (55,738)
--------- --------- --------- --------- --------- ---------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ................. $ 214,433 $ 111,314 $ 0 $ 178,458 $(102,589) $ 401,616
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1994
GUARANTOR GUARANTOR NONGUARANTOR INTERCOMPANY
PARENT SUBSIDIARIES PPM CRANES SUBSIDIARIES ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C> <C>
NET SALES .................................... $ 135,841 $ 441,000 $ -- $ 285,702 $ (75,762) $ 786,781
Cost of goods sold ........................... 116,804 398,536 -- 261,018 (72,736) 703,622
--------- --------- --------- --------- --------- ---------

GROSS PROFIT ................................. 19,037 42,464 0 24,684 (3,026) 83,159
Engineering, selling & administrative expenses 15,110 38,332 -- 22,367 (3,364) 72,445
Severance charges ............................ -- 4,549 -- 2,804 -- 7,353
--------- --------- --------- --------- --------- ---------

INCOME (LOSS) FROM OPERATIONS ................ 3,927 (417) 0 (487) 338 3,361
Interest expense ............................. (3,569) (12,704) -- (13,632) (587) (30,492)
Income (loss) from equity investees .......... (22,905) (18,026) -- -- 40,931 --
Other income (expense) - net ................. 23,374 10,285 -- (5,159) 587 29,087
--------- --------- --------- --------- --------- ---------

INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS ................... 827 (20,862) 0 (19,278) 41,269 1,956

Provision for income taxes ................... -- (790) -- 4 -- (786)
--------- --------- --------- --------- --------- ---------

Income (loss) before extraordinary items ..... 827 (21,652) 0 (19,274) 41,269 1,170
Extraordinary Loss on Retirement of Debt ..... (709) -- -- -- -- (709)
--------- --------- --------- --------- --------- ---------

NET INCOME (LOSS) ............................ 118 (21,652) 0 (19,274) 41,269 461
Less Preferred Stock Accretion ............... (5,929) -- -- -- -- (5,929)
--------- --------- --------- --------- --------- ---------

INCOME (LOSS) APPLICABLE TO COMMON STOCK ..... $ (5,811) $ (21,652) $ 0 $ (19,274) $ 41,269 $ (5,468)
========= ========= ========= ========= ========= =========

</TABLE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)

YEAR ENDED DECEMBER 31, 1994 PPM
GUARANTOR GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES SUBSIDIARIES CONSOLIDATED

<S> <C> <C> <C> <C> <C>
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES ....................................... $ (10) $ (1,518) $ -- $ (7,712) $ (9,240)
-------- -------- -------- -------- --------

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ................................ (3,917) (5,487) -- (3,313) (12,717)
Proceeds from sale-leaseback of Saarn property ...... -- -- -- 9,981 9,981
Proceeds from sale of Drexel Business ............... -- 10,289 -- -- 10,289
Proceeds from sale of excess assets ................. 22 2,993 -- 280 3,295
Proceeds from sale of Freuhauf stock ................ 24,943 -- -- -- 24,943
Other - net ......................................... 1,000 -- -- -- 1,000
-------- -------- -------- -------- --------
Net cash used in investing activities ............... 22,048 7,795 0 6,948 36,791
-------- -------- -------- -------- --------

CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under revolving line
of credit agreements ............................. 13,899 (633) -- (319) 12,947
Principal repayments of long-term debt .............. (35,177) (6,090) -- (257) (41,524)
Other ............................................... -- 7 -- 242 249
-------- -------- -------- -------- --------
Net cash provided by financing activities ........... (21,278) (6,716) 0 (334) (28,328)
-------- -------- -------- -------- --------

Effect of exchange rates on cash and cash equivalents 594 173 -- 554 1,321
-------- -------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents 1,354 (266) 0 (544) 544
Cash and cash equivalents, beginning of period ...... (2,330) 243 -- 11,270 9,183
-------- -------- -------- -------- --------
Cash and cash equivalents, end of period ............ $ (976) $ (23) $ 0 $ 10,726 $ 9,727
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED) (IN THOUSANDS)
DECEMBER 31, 1993

GUARANTOR GUARANTOR NONGUARANTOR INTERCOMPANY
PARENT SUBSIDIARIES PPM CRANES SUBSIDIARIES ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ............ $ (2,330) $ 243 $ -- $ 11,270 $ -- $ 9,183
Cash securing letters of credit ...... 6,263 -- -- -- -- 6,263
Trade receivables - net .............. 21,348 34,662 -- 37,971 (19,953) 74,028
Inventories - net .................... 39,183 74,409 -- 51,204 (958) 163,838
Other current assets ................. 501 (290) -- 2,970 835 4,016
--------- --------- --------- --------- --------- ---------
Total current assets ................. 64,965 109,024 0 103,415 (20,076) 257,328
--------- --------- --------- --------- --------- ---------

Property, Plant & equipment - net .... 7,709 35,868 -- 53,960 -- 97,537

Investment in and advances to
subsidiaries ...................... 121,646 (91,844) -- 8,030 (37,832) --

Debt issuance costs and
intangible assets - net ........... 6,283 5,076 -- 1,286 -- 12,645

Other assets ......................... 4,256 11,389 -- 7,547 -- 23,192
--------- --------- --------- --------- --------- ---------

TOTAL ASSETS ......................... $ 204,859 $ 69,513 $ 0 $ 174,238 $ (57,908) $ 390,702
========= ========= ========= ========= ========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable and current portion,
long-term debt .................... $ 8,333 $ 6,090 $ -- $ 4,999 $ 3,286 $ 22,708
Trade accounts payable ............... 19,974 42,444 -- 26,166 (3,234) 85,350
Accruals and other current liabilities 31,395 43,089 -- 24,840 (19,602) 79,722
--------- --------- --------- --------- --------- ---------
Total current liabilities ............ 59,702 91,623 0 56,005 (19,550) 187,780

Long term debt less current portion .. 185,697 130 -- 9,780 (276) 195,331

Other long term liabilities .......... 5,237 38,516 -- 12,613 3,006 59,372

Redeemable convertible preferred stock 10,480 -- -- -- -- 10,480

Stockholders' investment ............. (56,257) (60,756) -- 95,840 (41,088) (62,261)
--------- --------- --------- --------- --------- ---------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY ................. $ 204,859 $ 69,513 $ 0 $ 174,238 $ (57,908) $ 390,702
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 1993
GUARANTOR GUARANTOR NONGUARANTOR INTERCOMPANY
PARENT SUBSIDIARIES PPM CRANES SUBSIDIARIES ELIMINATIONS CONSOLIDATED

<S> <C> <C> <C> <C> <C> <C>
NET SALES .................................... $ 119,977 $ 358,612 $ -- $ 236,540 $ (44,820) $ 670,309
Cost of goods sold ........................... 110,028 343,210 -- 214,080 (45,502) 621,816
--------- --------- --------- --------- --------- ---------

GROSS PROFIT ................................. 9,949 15,402 0 22,460 682 48,493
Engineering, selling & administrative expenses 12,619 44,148 -- 20,904 -- 77,671
Severance charges ............................ -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------

INCOME (LOSS) FROM OPERATIONS ................ (2,670) (28,746) 0 1,556 682 (29,178)
Interest expense ............................. (4,381) (25,464) -- (1,209) (192) (31,246)
Income (loss) from equity investees .......... (61,463) (3,441) -- -- 64,904 --
Other income (expense) - net ................. 342 (3,699) -- 394 (1,535) (4,498)
--------- --------- --------- --------- --------- ---------

INCOME (LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS ................... (68,172) (61,350) 0 741 63,859 (64,922)

Provision for income taxes ................... -- (74) -- (84) -- (158)
--------- --------- --------- --------- --------- ---------

Income (loss) before extraordinary items ..... (68,172) (61,424) 0 657 63,859 (65,080)
Extraordinary Loss on Retirement of Debt ..... (1,464) -- -- -- -- (1,464)
--------- --------- --------- --------- --------- ---------

NET INCOME (LOSS) ............................ (69,636) (61,424) 0 657 63,859 (66,544)
Less Preferred Stock Accretion ............... (152) -- -- -- -- (152)
--------- --------- --------- --------- --------- ---------

INCOME (LOSS) APPLICABLE TO COMMON STOCK ..... $ (69,788) $ (61,424) $ 0 $ 657 $ 63,859 $ (66,696)
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
TEREX CORPORATION
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)

YEAR ENDED DECEMBER 31, 1993 PPM
GUARANTOR GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES SUBSIDIARIES CONSOLIDATED

<S> <C> <C> <C> <C> <C>
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES ..... $(30,427) $ 4,313 $ -- $(20,090) $(46,204)
-------- -------- -------- -------- --------

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ................................. (1,357) (6,826) -- (3,366) (11,549)
Advances to Freuhauf ................................. -- -- -- (677) (677)
Proceeds from sale of excess assets .................. 1,314 -- -- 9,992 11,306
Proceeds from sale of Freuhauf stock ................. 2,464 -- -- -- 2,464
Other - net .......................................... -- -- -- 1,823 1,823
-------- -------- -------- -------- --------
Net cash used in investing activities ................ 2,421 (6,826) 0 7,772 3,367
-------- -------- -------- -------- --------

CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under revolving line
of credit agreements .............................. (12,450) -- -- -- (12,450)
Principal repayments of long-term debt ............... 10,165 685 -- 1,081 11,931
Proceeds from issuance of preferred stock and warrants 27,179 -- -- -- 27,179
Other ................................................ 37 7 -- -- 44
-------- -------- -------- -------- --------
Net cash provided by financing activities ............ 24,931 692 0 1,081 26,704
-------- -------- -------- -------- --------

Effect of exchange rates on cash and cash equivalents (136) 20 -- (239) (355)
-------- -------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents . (3,211) (1,801) 0 (11,476) (16,488)
Cash and cash equivalents, beginning of period ....... 881 2,044 -- 22,746 25,671
-------- -------- -------- -------- --------
Cash and cash equivalents, end of period ............. $ (2,330) $ 243 $ 0 $ 11,270 $ 9,183
======== ======== ======== ======== ========
</TABLE>

<PAGE>

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)

For the Nine Months
Ended September 30,

1995 1994

Net sales ......................................... $ 766,789 $ 573,350
Cost of goods sold ................................ 690,529 515,889

Gross profit ................................. 76,260 57,461
Engineering, selling and administrative expenses:
Third parties .................................. 61,401 53,574
Related parties ................................ -- 2,245

Total engineering, selling and
administrative expenses ....................... 61,401 55,819
Severance and exit costs ....................... 3,478 4,549

Income (loss) from operations ................ 11,381 (2,907)
Other income (expense):
Interest income .............................. 1,073 400
Interest expense ............................. (28,416) (23,298)
Gain on sale of Fruehauf stock ............... 1,032 24,361
Gain on sale of Drexel business .............. -- 4,742
Property impairment charge ................... (3,000) --
Amortization of debt issuance costs .......... (1,672) (1,835)
Other income (expense) - other ............... (6,352) (8)

Income (loss) before income taxes and
extraordinary items ................ (25,954) 1,455
Income tax provision .............................. (133) (816)

Income (loss) before extraordinary items ..... (26,087) 639
Extraordinary losses on retirement of debt ... (7,452) (397)

NET INCOME (LOSS) ............................ (33,539) 242

Less preferred stock accretion .................... (5,200) (4,341)

Income (loss) applicable to common stock .......... $ (38,739) $ (4,099)

PER COMMON AND COMMON EQUIVALENT SHARE:
Primary:
Income (loss) before extraordinary items ..... $ (3.02) $ (0.36)
Extraordinary items .......................... (0.73) (0.04)

Net income (loss) ....................... $ (3.75) $ (0.40)

Fully diluted:
Income (loss) before extraordinary items ..... $ (3.02) $ (0.36)
Extraordinary items .......................... (0.73) $ (0.04)

Net income (loss) ....................... $ (3.75) $ (0.40)

Weighted average common shares outstanding
including dilutive securities (See Exhibit 11.1)
Primary (in millions) ....................... 10.3 10.3
Fully diluted (in millions) ................. 10.3 10.3

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

<PAGE>

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

September 30, December 31,
1995 1994

ASSETS

Current assets
Cash and cash equivalents .................. $ 12,482 $ 9,727
Cash securing letters of credit ............ 3,695 6,688
Trade receivables (less allowance of
$9,486 at September 30 and
$6,114 at December 31) ................... 147,210 91,717
Net inventories ............................ 248,666 164,245
Other current assets ....................... 18,279 5,775
--------- ---------
Total current assets .......... 430,332 278,152

Property, plant and equipment - net ............. 111,817 86,160
Goodwill - net .................................. 70,343 5,222
Debt issuance costs - net ....................... 15,110 3,382
Other assets .................................... 18,332 28,700
--------- ---------

Total assets .................................... $ 645,934 $ 401,616
========= =========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
Notes payable .............................. $ 6,575 $ 2,078
Current portion of long-term debt .......... 12,298 25,806
Trade accounts payable ..................... 146,464 112,213
Accrued compensation and benefits .......... 16,226 10,823
Accrued warranties and product liability ... 38,488 27,629
Accrued interest ........................... 16,426 8,969
Accrued income taxes ....................... 3,827 1,328
Other current liabilities .................. 62,951 32,732
--------- ---------
Total current liabilities ..... 303,255 221,578

Long-term debt less current portion ............. 337,039 162,987
Accrued warranties and
product liability - long-term ................. 35,110 31,846
Accrued pension ................................. 18,562 16,456
Other long-term liabilities ..................... 13,635 7,225
--------- ---------

Total liabilities ............. 707,601 440,092

Minority interest, including redeemable
preferred stock of a subsidiary
(liquidation preference $26,051,
subject to adjustment) (Note B) ............... 10,028 --

Redeemable convertible preferred stock
(liquidation preference $39,083 at
September 30 and $36,578 at December 31) ...... 22,462 17,262

Commitments and contingencies (Note E)

Stockholders' Deficit
Warrants to purchase common stock .......... 17,240 17,564
Common stock, $.01 par value
- authorized 30,000,000 shares;
issued and outstanding 10,359 at
September 30 and 10,303 at December 31 ... 104 103
Additional paid-in capital ................. 40,451 40,127
Accumulated deficit ........................ (147,872) (108,395)
Pension liability adjustment ............... (1,778) (1,778)
Unrealized holding gain on equity securities 938 1,825
Cumulative translation adjustment .......... (3,240) (5,184)
--------- ---------

Total stockholders' deficit ... (94,157) (55,738)
--------- ---------

Total liabilities and stockholders' deficit ..... $ 645,934 $ 401,616
========= =========

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

TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

For the Nine Months
Ended September 30,
1995 1994

OPERATING ACTIVITIES
Net loss ........................................ $ (33,539) $ 242
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation .................................. 13,265 10,053
Amortization .................................. 7,873 3,207
(Gain) loss on sale of property,
plant and equipment ......................... (173) (115)
Gain on sale of Fruehauf stock ................ (1,032) (24,361)
Gain on sale of Drexel business ............... -- (4,742)
Property impairment charge .................... 3,000 --
Other ......................................... 337 (647)
Changes in operating assets and liabilities:
Restricted cash ............................. 2,993 (781)
Trade receivables ........................... (15,504) (18,201)
Net inventories ............................. (4,598) (1,043)
Trade accounts payable ...................... (20,553) 15,488
Accrued compensation and benefits ........... 4,866 1,616
Accrued warranties and product liability .... 2,275 3,251
Accrued interest ............................ 7,571 (5,842)
Accrued income taxes ........................ 537 242
Other ....................................... 4,737 3,883

Net cash used in operating activities ..... (27,945) (17,750)

INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired . (92,429) --
Capital expenditures ............................ (7,128) (9,853)
Proceeds from sale of property, plant
and equipment ................................. 872 483
Proceeds from refinancing note receivable ....... -- 1,000
Proceeds from sale of Fruehauf stock ............ 2,714 24,916
Proceeds from sale of Drexel business ........... -- 10,289
Other ........................................... 185 535

Net cash from (used in) investing activities (95,786) 27,370

FINANCING ACTIVITIES
Net borrowings under revolving line
of credit agreements .......................... 42,107 11,916
Principal repayments of long-term debt .......... (153,947) (28,275)
Issuance of long-term debt, net of issuance costs 239,800 --
Other ........................................... (446) (124)

Net cash from (used in) financing activities 127,514 (16,483)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS ................................ (1,028) 435

NET DECREASE IN CASH AND CASH EQUIVALENTS ............ 2,755 (6,428)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ..... 9,727 (9,183)

CASH AND CASH EQUIVALENTS AT END OF PERIOD ........... $ 12,482 $ 2,755

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

<PAGE>

TEREX CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, unless otherwise denoted)
September 30, 1995

NOTE A -- BASIS OF PRESENTATION

Basis of Presentation. The accompanying condensed consolidated financial
statements of Terex Corporation and subsidiaries as of September 30, 1995 and
for the three and nine months ended September 30, 1995 and 1994 have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with 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. The accompanying
condensed consolidated balance sheet as of December 31, 1994, 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."

Goodwill. Goodwill, representing the difference between the total purchase price
and the fair value of assets (tangible and intangible) and liabilities at the
date of acquisition, is being amortized on a straight-line basis over between
fifteen and forty years.

It is the Company's policy to periodically evaluate the carrying value of its
operating assets, including goodwill, and to recognize impairments when the
estimated future net operating cash flows from the use of the assets is less
than their carrying value. The amount of any impairment then recognized would be
calculated as the difference between estimated future discounted cash flows and
the carrying value of the asset.

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. Operating results for the three and nine months ended
September 30, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995. 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, 1994.

NOTE B -- REFINANCING AND ACQUISITION

On May 9, 1995, the Company completed the refinancing of substantially all of
its outstanding debt (the "Refinancing") and, through Terex Cranes, Inc. ("Terex
Cranes"), a newly formed subsidiary, completed the acquisition of substantially
all of the outstanding stock of P.P.M., S.A. and Legris Industries, Inc.
(together, "PPM") (the "PPM Acquisition"). PPM designs, manufactures and markets
mobile cranes and container stackers primarily in North America and Western
Europe.

The Refinancing included the private placement to institutional investors of
$250,000 of 13.25% Senior Secured Notes due May 15, 2002 (the "New Senior
Secured Notes"), repayment of the Company's old senior secured notes and senior
subordinated notes, totaling approximately $152,600 principal amount, and entry
into a new Credit Facility to replace the Company's existing lending facility in
the U. S. Until such time as the Company completes an exchange of the New Senior
Secured Notes for an equivalent issue of registered notes, or a shelf
registration statement for the New Senior Secured Notes is effective, the
interest rate on the New Senior Secured Notes will be 13.75%. The Indenture for
the New Senior Secured Notes places certain limits on the Company's ability to
incur additional indebtedness; permit the existence of liens; issue, pay
dividends on or redeem equity securities; utilize the proceeds of asset sales;
consolidate, merge or transfer assets to another entity; and enter into
transactions with affiliates. In connection with the issuance of the New Senior
Secured Notes, the Company issued 1,000,000 stock appreciation rights ("SAR")
entitling the holders to receive cash or Terex Corporation common stock, at the
option of the Company, in an amount equal to the average closing sale price of
the common stock for 60 trading days prior to the date of exercise less $7.288
for each SAR.

The Company's new Credit Facility provides that the Company will be able to
borrow (in the form of revolving loans and up to $15,000 in outstanding letters
of credit) up to $100,000, subject to borrowing base limitations. The Credit
Facility is secured by substantially all of the Company's domestic receivables
and inventory. The amount of borrowings is limited to the sum of the following:
(i) 75% of the net amount of eligible receivables, as defined, of the Company's
U.S. businesses other than Clark Material Handling Company ("CMHC"), plus (ii)
70% of the net amount of CMHC eligible receivables, plus (iii) the lesser of 45%
of the value of eligible inventory, as defined, or 80% of the appraised orderly
liquidation value of eligible inventory, less (iv) any availability reserves
established by the lenders. The new Credit Facility expires May 9, 1998 unless
extended by the lenders for one additional year. At the option of the Company,
revolving loans may be in the form of prime rate loans bearing interest at the
rate of 1.75% per annum in excess of the prime rate and eurodollar rate loans
bearing interest at the rate of 3.75% per annum in excess of the adjusted
eurodollar rate.

Approximately $92,612 of the proceeds of the New Senior Secured Notes was used
for the PPM Acquisition, including the repayment of certain indebtedness of PPM
required to be repaid in connection with the acquisition. In addition, the
Company estimates that the acquisition costs incurred will total approximately
$3,000. The remainder of the purchase price consisted of the issuance of
redeemable preferred stock of Terex Cranes having an aggregate liquidation
preference of 127 million French francs (approximately $26,051), subject to
adjustment. The purchase price is subject to adjustment calculated by reference
to the consolidated net asset value of PPM as determined by an audit as of the
date of closing. The preferred stock does not bear a dividend and, accordingly,
the Company has valued this stock at approximately $8,840 (discounted at 15%).
The Company has not yet reached agreement with the sellers about the amount of
purchase price adjustment but, based on work performed, the Company believes
that the amount of the preferred stock could ultimately be reduced.

The PPM Acquisition is being accounted for using the purchase method, with the
purchase price allocated to the assets acquired and liabilities assumed based
upon their respective estimated fair values at the date of acquisition. The
excess of purchase price over the net assets acquired (approximately $65,864) is
being amortized on a straight-line basis over 15 years. The estimated fair
values of assets and liabilities acquired in the PPM Acquisition are summarized
as follows:

Cash ......................................... $ 974
Accounts receivable .......................... 33,816
Inventories .................................. 69,107
Other current assets ......................... 11,866
Property, plant and equipment ................ 20,516
Other assets ................................. 268
Goodwill ..................................... 65,864
Accounts payable and other current liabilities (84,458)
Other liabilities ............................ (13,501)
---------

$ 104,452
=========

The Company is in the process of obtaining certain evaluations, estimations,
appraisals and actuarial and other studies for purposes of determining certain
values. The Company has also estimated costs related to plans to integrate the
activities of PPM into the Company, including plans to terminate excess
employees, exit certain activities and consolidate and restructure certain
functions. The Company may revise the estimates as additional information is
obtained.

<PAGE>

The operating results of PPM are included in the Company's consolidated results
of operations since May 9, 1995. The following pro forma summary presents the
consolidated results of operations as though the Company completed the PPM
Acquisition on January 1, 1994, after giving effect to certain adjustments,
including amortization of goodwill, interest expense and amortization of debt
issuance costs on the debt issued in the Refinancing:

Pro Forma for the
Nine Months ended Year ended
September 30, 1995 December 31, 1994

Net sales ...................... $ 831,629 $ 966,476
Loss from operations ........... (5,122) (12,904)
Loss before extraordinary items (51,297) (19,321)
Loss before extraordinary items,
per share ............. $ (5.55) $ (2.45)

The pro forma information is not necessarily indicative of what the actual
results of operations of the Company would have been for the periods indicated,
nor does it purport to represent the results of operations for future periods.

NOTE C -- INVENTORIES

Net inventories consist of the following:

September 30, December 31,
1995 1994

Finished Equipment ................................ $ 55,676 $ 26,812
Replacement parts ................................. 88,381 68,932
Work-in-process ................................... 25,351 13,520
Raw materials and supplies ........................ 82,171 57,894
--------- ---------

251,579 167,158

Less: Excess of FIFO inventory value over LIFO cost (2,913) (2,913)
--------- ---------

Net inventories ................................... $ 248,666 $ 164,245
========= =========

NOTE D -- PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

September 30, December 31,
1995 1994

Property ............................. $ 10,733 $ 8,335
Plant ................................ 44,575 32,249
Equipment ............................ 102,884 83,419
--------- ---------

158,192 124,003
Less: Accumulated depreciation ....... (46,375) (37,843)
--------- ---------

Net property, plant and equipment $ 111,817 $ 86,160
========= =========

NOTE E -- LITIGATION, CONTINGENCIES AND RELATED PARTY TRANSACTIONS

The Company is subject to a number of contingencies and uncertainties including
product liability claims, self-insurance obligations, tax examinations and other
contingencies. 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 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 $56,000 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 $56,000
plus interest and penalties and the ultimate outcome cannot presently be
determined or estimated. As discussed above, Mr. Lenz has retired as Chairman of
the Company. Although his retirement agreement places certain restrictions on
his ability to sell his shares of Common Stock in the Company, in the event that
Mr. Lenz is able to sell a substantial portion of his shares in the Company
before December 20, 1996, such sale, in combination with the issuance of the
Warrants in December 20, 1993 and subject to the effects of other changes in
share ownership of the Company, could result in a change in control for tax
purposes. Such a change in control 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.

<PAGE>

Report of Independent Auditors

The Board of Directors and Shareholders
PPM S.A. and Legris Industries, Inc.

We have audited the accompanying combined balance sheets of PPM S.A. and Legris
Industries, Inc. as of December 31, 1994 and 1993, and the related combined
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, based on our audits, the financial statements referred to above
present fairly, in all material respects, the combined financial position of PPM
S.A. and Legris Industries, Inc. at December 31, 1994 and 1993, and the combined
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994 in conformity with generally accepted
accounting principles.

ERNST & YOUNG LLP

Greenville, South Carolina
August 22, 1995

<PAGE>

PPM S.A. and Legris Industries, Inc.

Combined Balance Sheets

December 31
1994 1993
----------- -----------
(In thousands except
share amounts)

Assets
Current assets:
Cash and cash equivalents ................ $ 3,586 $ 2,152
Trade accounts receivable, less allowances
of $2,861 and $2,181 in 1994 and 1993,
respectively ........................... 35,173 25,868
Due from affiliates ...................... 1,705 1,869
Refundable taxes ......................... 5,946 5,257
Inventories .............................. 70,020 63,498
Prepaid expenses ......................... 5,525 4,758
Other current assets ..................... 32 81
-------- --------

Total current assets .......................... 121,987 103,483

Property, plant, and equipment, net ........... 20,922 23,002

Intangible assets:
Cost in excess of net assets acquired,
less accumulated amortization of
$8,567 and $6,871 in 1994 and 1993,
respectively ........................... 34,951 36,540
Other identified intangible assets,
less accumulated amortization
of $871 an $597 in 1994 and 1993,
respectively ........................... 462 715
-------- --------

35,413 37,255
-------- --------

Total assets .................................. $178,322 $163,740
======== ========

<PAGE>

PPM S.A. and Legris Industries, Inc.

Combined Balance Sheets
(continued)

December 31
1994 1993
---------- ----------
(In thousands except
share amounts)

Liabilities and shareholders' equity Current
liabilities:
Trade accounts payable .................... $ 43,963 $ 35,052
Due to affiliates ......................... 6,200 3,027
Product liability reserve ................. 4,850 4,432
Product warranty reserve .................. 1,526 753
Accrued expenses .......................... 15,215 16,352
Current portion of long-term debt
and other short-term borrowings ......... 72,689 37,044
Current portion of obligations
under capital leases .................... 925 731
--------- ---------

Total current liabilities ...................... 145,368 97,391

Long-term debt, less current portion ........... 5,851 28,331

Obligations under capital leases,
less current portion ......................... 2,896 3,308

Minority interest in subsidiaries .............. 1,944 2,591

Shareholders' equity:
Common stock of Legris Industries, Inc.,
$100 par value -- authorized, issued and
outstanding 200 shares .................. -- --
Common stock of PPM S.A., 100 French Francs
($19) par value -- authorized, issued and
outstanding 1,265,544 shares ............. -- --
Paid-in capital ........................... 90,491 81,209
Accumulated deficit ....................... (65,079) (46,043)
Foreign currency translation adjustments .. (3,149) (3,047)
--------- ---------

Total shareholders' equity ..................... 22,263 32,119
--------- ---------

Total liabilities and shareholders' equity ..... $ 178,322 $ 163,740
========= =========

See accompanying notes.

<PAGE>

PPM S.A. and Legris Industries, Inc.

Combined Statements of Operations

Year Ended December 31
1994 1993 1992
----------- ----------- -----------
(In thousands)

Net Sales ....................... $ 179,695 $ 191,236 $ 236,088

Cost of products sold ........... (155,129) (175,072) (197,243)

Selling, general and
administrative expenses ....... (35,673) (38,861) (49,862)

Amortization of intangible assets (1,970) (1,807) (2,074)
--------- --------- ---------

Loss from operations ............ (13,077) (24,504) (13,091)

Other income (expense):
Interest income ............ 48 11 30
Interest expense ........... (6,668) (8,293) (6,421)
Insurance proceeds ......... -- 6,177 1,122
--------- --------- ---------

(6,620) (2,105) (5,269)
--------- --------- ---------

Loss before income taxes and
minority interest ............. (19,697) (26,609) (18,360)

Income tax (benefit) provision .. (14) 30 917
--------- --------- ---------

Loss before minority interest ... (19,683) (26,639) (19,277)

Minority interest in loss of
consolidated subsidiaries ..... 647 946 424
--------- --------- ---------

Net loss ........................ $ (19,036) $ (25,693) $ (18,853)
========= ========= =========

See accompanying notes.

<PAGE>

PPM S.A. and Legris Industries, Inc.

Combined Statements of Shareholders' Equity

FOREIGN
CURRENCY
COMMON STOCK PAID-IN ACCUMULATED TRANSLATION
SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENTS TOTAL
--------- ---------- -------- -------- -------- --------
(In thousands except share amounts)

<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1991 .... 1,265,744 $ -- $ 71,242 $ (1,497) $ (62) $ 69,683

Capital contribution . -- -- 3,500 -- -- 3,500
Conversion of debt
to paid-in capital -- -- 6,467 -- -- 6,467
Net loss ............. -- -- -- (18,853) -- (18,853)
Translation
adjustment ........ -- -- -- -- (2,443) (2,443)
--------- ---------- -------- -------- -------- --------

Balance at
December 31, 1992 .... 1,265,744 -- 81,209 (20,350) (2,505) 58,354

Net loss ............. -- -- -- (25,693) -- (25,693)
Translation
adjustment ........ -- -- -- -- (542) (542)
--------- ---------- -------- -------- -------- --------

Balance at
December 31,1993 .... 1,265,744 -- 81,209 (46,043) (3,047) 32,119

Conversion of debt
to paid-in capital -- -- 9,282 -- -- 9,282
Net loss ............. -- -- -- (19,036) -- (19,036)
Translation
adjustment ........ -- -- -- -- (102) (102)
--------- ---------- -------- -------- -------- --------

Balance at
December 31, 1994 .... 1,265,744 $ -- $ 90,491 $(65,079) $ (3,149) $ 22,263
========= ========== ======== ======== ======== ========

</TABLE>

See accompanying notes.

<PAGE>

PPM S.A. and Legris Industries, Inc.

Combined Statements of Cash Flows

Year Ended December 31
1994 1993 1992
----------- ----------- -----------
(In thousands)
Operating activities
Net loss ................................. $(19,036) $(25,693) $(18,853)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization ....... 6,088 5,661 6,013
Changes in operating assets
and liabilities:
Accounts receivable ............... (9,305) 11,824 13,992
Inventories ....................... (6,522) 20,562 513
Prepaid expenses and other ........ (1,407) 3,450 3,328
Accounts payable .................. 8,911 (14,911) (20,660)
Net amounts due to affiliates ..... 3,009 (3,275) (6,257)
Product liability reserve ......... 418 493 (3,123)
Accrued expenses and product
warranty reserve ................. (364) (2,654) (208)
-------- -------- --------

Net cash used in operating activities .... (18,208) (4,543) (25,255)

Investing activities
Purchases of property, plant
and equipment .......................... (718) (1,683) (5,398)
(Increase) decrease in other
intangible assets ...................... (128) 86 (247)
-------- -------- --------

Net cash used in investing activities .... (846) (1,597) (5,645)

Financing activities
Proceeds from revolving credit
with banks and from notes payable to
an affiliated company .................. 27,141 51,280 28,573
Principal payments on revolving credit
with banks and on notes payable to an
affiliated company ..................... (5,688) (43,239) (2,967)
Proceeds on other long-term debt ......... 347 76 749
Principal payments on other long-term debt -- (3,351) --
Payments on capital leases ............... (218) (160) --
Capital contribution ..................... -- -- 3,500
-------- -------- --------

Net cash provided by financing activities 21,582 4,606 29,855

Effect of exchange rate changes on cash .. (1,094) 942 (461)
-------- -------- --------

Net increase (decrease) in cash
and cash equivalents ................... 1,434 (592) (1,506)
Cash and cash equivalents at
beginning of period .................... 2,152 2,744 4,250
-------- -------- --------

Cash and cash equivalents
at end of period ....................... $ 3,586 $ 2,152 $ 2,744
======== ======== ========

Supplemental disclosure of
cash flow information
Cash paid for interest ................... $ 6,763 $ 9,811 $ 7,667
======== ======== ========
Cash paid for income taxes ............... $ 74 $ 948 $ 2,015
======== ======== ========

See accompanying notes.

<PAGE>

PPM S.A. and Legris Industries, Inc.

Notes to Combined Financial Statements

December 31, 1994

(In thousands)

1. Basis of Presentation and Description of Business

Basis of Presentation

As more fully described in Note 13, Terex Corporation ("Terex"), through its
wholly owned subsidiary Terex Cranes, Inc. ("Terex Cranes"), completed the
acquisition of substantially all of the common stock of PPM S.A. ("PPM Europe")
and Legris Industries, Inc. ("PPM North America") on May 9, 1995. PPM North
America together with PPM Europe collectively are referred to as "PPM" or "the
Company". Prior to the acquisition, Legris Industries, Inc. was a wholly owned
subsidiary of Groupe Legris Industries S.A., a French corporation, and PPM S.A.
was owned 99.13% by Potain S.A., a majority owned subsidiary of Groupe Legris
Industries S.A. ("Groupe Legris").

The accompanying combined financial statements were prepared on the basis of
generally accepted accounting principles and include the combined financial
position, results of operations and cash flows of the businesses of PPM as
follows below (subsidiaries are 100% owned except as indicated). All significant
intercompany balances have been eliminated.

PPM S.A.
Brimont Agraire S.A.
Bendini SpA
PPM Krane GmbH
Baulift Baumaschiunen and Krane Handels GmbH

Legris Industries, Inc.
Potain Tower Cranes, Inc. (inactive)
PPM Cranes, Inc. (92.4%)
PPM of Australia Pty. Ltd. (92.4%)
PPM Far East Pte. Ltd. (92.4%)

Description of Business

PPM designs, manufactures and markets mobile cranes and container stackers
primarily in North America and Western Europe under the brand names of PPM, P&H
(trademark of Harnischfeger Corporation) and BENDINI.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

For the purpose of reporting cash flows, cash and cash equivalents include cash
on hand and overnight investments. Included in cash and cash equivalents is $512
at December 31, 1994 invested under repurchase agreements collateralized by U.
S. Treasury Notes. Securities pledged as collateral for repurchase agreements
are held by the Company's custodian bank until maturity of the repurchase
agreements. Provisions of the agreements ensure that the market value of this
collateral is sufficient in the event of default; however, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings.

Accounts Receivable

The Company provides credit in the normal course of business and performs
ongoing credit evaluation on certain of its customers' financial condition, but
generally does not require collateral to support such receivable. Accounts
receivable potentially exposes the Company to concentration of credit risk,
because the Company's customers operate primarily in the construction industry.
The Company also establishes an allowance for doubtful accounts based upon
factors surrounding the credit risk of specific customers, historical trends and
other information.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined by the
last-in, first-out (LIFO) method for inventories held in the United States, by
the first-in, first-out (FIFO) method for inventories of PPM of Australia Pty.
Ltd and PPM Far East Pte. Ltd., and by the weighted average method for
inventories of PPM S.A.

Property, Plant and Equipment

Additions and major replacements or improvements to property, plant and
equipment are recorded at cost. Maintenance, repairs and minor replacements are
charged to expense when incurred. Assets of PPM are depreciated using the
straight-line method over their estimated useful lives.

Intangible Assets

The excess of cost over fair value of net assets of businesses acquired
("goodwill") is amortized on the straight-line method over a period of twenty
years for Legris Industries, Inc. and fifteen years for PPM S.A. Other
identified intangibles are primarily patents and organizational costs which are
amortized over five years. The lives established for these assets are a
composite of many factors; accordingly, the Company evaluates the continued
appropriateness of these lives based upon the latest available economic factors
and circumstances.

The carrying value of goodwill is reviewed if the facts and circumstances
suggest that it may be impaired. If this review indicates that goodwill will not
be recoverable, as determined based on the undiscounted cash flows of the entity
acquired over the remaining amortization period, the Company's carrying value of
the goodwill is reduced by the estimated shortfall of cash flows.

Product Warranty

PPM warrants that each finished machine is merchantable and free of defects in
workmanship and material for a period of up to one year or a specified period of
use. Warranty reserves have been established for estimated normal warranty costs
and for specific problems known to exist on products in use.

Product Liability

Reserves for product liability have been established based upon historical loss
experience for the estimated liability on incidents which have occurred but have
not yet been reported and for the estimated liability for reported incidents.

Income Taxes

Income taxes are provided using the liability method in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109"). Under FAS 109, the deferred tax liabilities and assets are
determined based on temporary differences between the bases of certain assets
and liabilities for income tax and financial reporting purposes. A valuation
allowance is recognized if it is more likely than not that some portion or all
of a deferred tax asset will not be ultimately realized.

Revenue Recognition

Sales are recorded upon shipment or designation of specific goods for later
shipment at customers' request with related risk of ownership passing to such
customers.

Research and Development Costs

Company sponsored research and development costs related to both present and
future products are expensed currently. Total expenditures for research and
development for 1994, 1993 and 1992 were $2,669, $3,751 and $3,440,
respectively.

Translation of Foreign Currencies

The local currencies of the Company's foreign operations have been determined to
be the functional currencies in accordance with Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation". Transactions in
foreign currencies are translated into United States dollars at average rates of
exchange prevailing during the period. Assets and liabilities denominated in
foreign currencies are translated at the year end exchange rates and resulting
translation adjustments are included as a separate component of shareholders'
equity. Gains and losses on foreign currency transactions are recognized in
earnings.

Shareholders' Equity

No amounts were paid as consideration for the issuance of common stock of PPM
S.A. and Legris Industries, Inc. Accordingly, no amounts have been assigned to
common stock in the financial statements.

3. Inventories

Inventories at December 31, 1994 and 1993 consist of the following:
1994 1993
--------- ---------

Raw materials and parts ........ $41,018 $37,767
Work in process ................ 15,139 11,275
Finished goods and subassemblies 13,091 14,103
Consigned inventory ............ 772 353
------- -------

$70,020 $63,498
======= =======

At December 31, 1994 and 1993, approximately $26,308 and $24,618 of inventories
were valued using the LIFO method. These amounts are approximately equivalent to
the corresponding FIFO values at December 31, 1994 and 1993.

4. Property, Plant and Equipment

Property, plant and equipment at December 31, 1994 and 1993 consists of the
following:

1994 1993
-------- --------

Land and improvements ....... $ 2,080 $ 2,242
Buildings ................... 21,273 20,181
Machinery and equipment ..... 31,504 29,083
-------- --------

54,857 51,506
Less accumulated depreciation (33,935) (28,504)
-------- --------

$ 20,922 $ 23,002
======== ========

Depreciation expense for 1994, 1993 and 1992 was $4,118, $3,854 and $3,939,
respectively.

5. Debt

Debt at December 31, 1994 and 1993 consists of the following:

1994 1993
---------- ---------
Non-interest bearing promissory note
payable to Harnischfeger Corporation with
annual payments of $1,000 through
April 10, 1996, annual payments of $750
beginning April 10, 1997 through
April 10, 2001 and quarterly payments of
$125 beginning April 10, 2001 through
maturity on April 10, 2011 ........................ $ 6,331 $ 6,776

Letter of credit with Credit Lyonnais
bearing interest at U.S. Prime
(8.5% at December 31, 1994) payable
on demand ......................................... 4,700 7,100

Indebtedness to Groupe Legris bearing
interest at 9% annually maturing May 31,
1996 with no scheduled principal
payments prior to that date ....................... 686 686

Indebtedness to Groupe Legris bearing
interest at the Eurodollar rate plus .5%
(6.875% at December 31, 1994)
payable on demand ................................. 11,500 --

Indebtedness to Groupe Legris bearing
interest at the Eurodollar rate plus .5%
(6.875% at December 31, 1994) maturing
December 31, 1996 with no scheduled
principal payments prior to that date ............. 6,000 6,000

Indebtedness to Groupe Legris bearing
interest at the Eurodollar rate plus .5%
(6.875% at December 31, 1994) maturing
April 10, 1996 with no scheduled
principal payments prior to that date ............. $ 3,000 $ 3,000

Bank debt bearing interest at 10.75% ................ -- 179

Notes payable to Credit National
bearing interest at rates ranging from 8% to
15.5% with maturities ranging from
10 to 15 years .................................... 815 1,154

Note payable to Credit CECA over 5 years at 9.32% ... 2,170 1,968

Notes payable to Solirem bearing
interest at 8.5% and 10.24%,
payable over 6 years .............................. 557 843

Note payable to Ministero del'Industria
over 10 years at 8.37% ............................ 366 373

Note payable to Credito Romagnolo
over 8 years at 10.93% ............................ 295 292

Lines of credit due on demand with various banks,
bearing interest at rates ranging from 5.8% to 7.4% 37,857 33,753

Other ............................................... 4,263 3,251
------- -------

78,540 65,375
Less current portion ................................ 72,689 37,044
------- -------

$ 5,851 $28,331
======= =======

Other than the note payable to Harnischfeger Corporation, all debt obligations
were satisfied in connection with the acquisition by Terex in May of 1995 (see
Note 13). Accordingly, all debt obligations other than the long-term portion of
the note payable to Harnischfeger Corporation have been classified as current.

The maturities of the note payable to the Harnischfeger Corporation for the five
years following December 31, 1994 and thereafter are as follows:

Year Payments
-------- -----------

1995 $ 480
1996 520
1997 312
1998 338
1999 366
Thereafter 4,315
----------

$ 6,331
==========

6. Employee Benefit Plan

Domestically, PPM Cranes, Inc. has a defined contribution plan covering its U.S.
employees. Under this plan, the Company matches a portion of an employee's
contribution to the plan. PPM Europe also maintains government required fully
funded retirement plans for its employees in France and Italy. For purposes of
these financial statements, all domestic and PPM Europe employees are considered
to have participated in a multi-employer pension plan as defined in Statement of
Financial Accounting Standards No. 87 "Employer's Accounting for Pensions". For
multi-employer plans, employers are required to recognize as net pension expense
total contributions for the period. With respect to these plans, PPM recorded a
net pension expense of $289 for 1994, $118 for 1993 and $82 for 1992.

7. Income Taxes

Effective January 1, 1992, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". The adoption had no impact on the financial statements of the Company.

(Loss) income before income taxes and minority interest consisted of the
following:

1994 1993 1992
--------- --------- ---------

Domestic.................... $ (7,346) $ (11,179) $ (4,269)
Foreign..................... (12,351) (15,430) (14,091)
--------- --------- ---------

$ (19,697) $ (26,609) $ (18,360)
========= ========= =========

Significant components of the provision for income taxes are as follows:

1994 1993 1992
--------- --------- ---------

Current
Federal.................$ --- $ (5) $ 147
Foreign................. 5 72 836
--------- --------- ---------

5 67 983

Deferred:
Federal................. --- --- ---
Foreign................. (19) (37) (66)
--------- --------- ---------

$ (14) $ 30 $ 917
========= ========= =========

PPM has not provided U.S. and foreign income taxes on foreign undistributed
earnings which are being retained indefinitely for reinvestment. The
distribution of these earnings would result in additional foreign withholding
taxes and additional U.S. Federal income taxes to the extent they are not offset
by foreign tax credits, but it is not practicable to estimate the total tax
liability that would be incurred upon such a distribution.

The income tax (benefit) provision at the effective tax rate differed from the
benefit at the statutory rate as follows:

1994 1993 1992
--------- --------- ---------

Computed tax (benefit) at expected
statutory rate ............... $(6,697) $(9,047) $(4,074)

State taxes ....................... (315) (480) (183)
Valuation allowance ............... 4,695 8,823 4,431
Nondeductible goodwill ............ 837 837 837
Adjustment of prior years' accruals 1,548 -- --
Foreign tax rate differential ..... (82) (103) (94)
------- ------- -------

Income tax (benefit) provision .... $ (14) $ 30 $ 917
======= ======= =======

At December 31, 1994, PPM North America has net operating loss carryforwards for
Federal income tax purposes of approximately $50,550 available to offset future
taxable income, expiring from 1997 to 2008 if not used. PPM Europe has loss
carryforwards of approximately $21,665 at December 31, 1994, including
approximately $11,023 of carryforwards which have no fixed expiration date. The
remaining carryforwards will expire beginning in 1995.

The differences between the loss carryforwards for financial reporting and
income tax purposes result principally from differences between the income tax
basis and the financial reporting basis allocated to the net assets acquired and
differences in the methods of depreciating property, plant, and equipment. For
financial reporting purposes, a valuation allowance equal to the entire benefit
of the cumulative temporary differences and net operating loss carryforwards has
been recognized to offset the net deferred tax assets. For substantially all of
the valuation allowance for deferred tax assets, subsequently recognized tax
benefits will be allocated to reduce goodwill resulting from the acquisition of
PPM by Terex. Components of the Company's deferred taxes are as follows:

1994 1993
---------- ---------

Total deferred tax liabilities ..................... $ (3,030) $ (1,113)

Total deferred tax assets, principally net operating
loss carryforwards ............................. 43,454 36,179

Total valuation allowance .......................... (40,424) (35,066)
-------- --------

Net deferred taxes ................................. $ -- $ --
======== ========

8. Fair Value of Financial Instruments

The Company has estimated the fair value amounts of financial instruments as
required by Statement of Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments", using available market information
and appropriate valuation methodologies. The carrying amount of cash and cash
equivalents, accounts receivable, other current assets, accounts payable and
long-term debt are reasonable estimates of their fair value at December 31,
1994. However, considerable judgment is required in interpreting market data to
develop the carrying amounts of fair value. Accordingly, the carrying amounts
presented herein are not necessarily indicative of the amounts that the Company
would realize in a current market exchange.

9. Leases

PPM has various lease agreements, primarily related to office space, production
facilities, and office equipment, which are accounted for as operating leases.
Certain leases have renewal options and provisions requiring PPM to pay
maintenance, property taxes and insurance. Rent expense for 1994, 1993 and 1992
was $2,977, $2,433 and $3,401, respectively.

PPM Europe also leases buildings and machinery and equipment under capital
leases with terms of 1 to 10 years. Capitalized lease obligations are calculated
using interest rates appropriate at the inception of the lease. Amortization of
assets under capital leases is included with depreciation expense. Property,
plant and equipment includes the following amounts for leases that have been
capitalized:

1994 1993
---------- ---------

Buildings ........................ $ 1,810 $ 1,642
Machinery and equipment .......... 5,124 3,700
------- -------

6,934 5,342
Less accumulated depreciation .... (3,030) (1,603)
------- -------

Property, plant and equipment, net $ 3,904 $ 3,739
======= =======

Future minimum rental payments, by year and in the aggregate, under capital
leases and noncancellable operating leases as of December 31, 1994 are as
follows:
Capital Operating
Year Leases Leases
- --------- ---------- ---------

1995........................................... $ 1,365 $ 1,796
1996........................................... 1,297 1,242
1997........................................... 1,248 890
1998........................................... 664 788
1999........................................... 380 505
2000 and thereafter............................ 2,847 272
---------- ---------

Total minimum lease payments................... $ 7,801 $ 5,493
=========
Amount representing interest................... (3,980)
----------

Present value of minimum lease payments........ $ 3,821
==========

10. Commitments and Contingencies

PPM is involved in product liability and other lawsuits incident to the
operation of its business. Insurance coverages are maintained for claims and
lawsuits of this nature. At December 31, 1994 and 1993, the Company had a
reserve of $4,850 and $4,432 related to product liability matters, including
$200 at December 31, 1994 related to unasserted claims. Actual costs to be
incurred in the future may vary from the estimates, given the inherent
uncertainties in evaluating the outcome of claims and lawsuits of this nature.
Although it is difficult to estimate the liability of the Company related to
these matters, it is management's opinion that none of these lawsuits will have
a materially adverse effect on the Company's combined financial position.

PPM North America is a defendant in a lawsuit initiated by the bankruptcy
trustee for Century II GmbH, a former subsidiary of the Company, related to an
increase in capital. The amount of the claim is for $6,000. Groupe Legris has
indemnified the Company against all losses related to this claim.

PPM is contingently liable up to $1,027 with respect to financing arrangements
and performance guarantees entered into with banks and between certain banks and
certain dealers or customers of PPM.

11. Segment and Geographic Information

The Company operates in one business segment, designing, manufacturing and
marketing mobile cranes and container stackers primarily in North America and
Western Europe. Geographic data for the Company's operations are presented in
the following table. Intercompany sales and expenses are eliminated in
determining results for each operation.

1994 1993 1992
--------- --------- ---------
Net sales to unaffiliated customers:
North America ................. $ 72,409 $ 71,984 $ 65,459
Europe ........................ 92,175 112,673 155,587
--------- --------- ---------

164,584 184,657 221,046

Sales to affiliates ................ 15,111 6,579 15,042
--------- --------- ---------

$ 179,695 $ 191,236 $ 236,088
========= ========= =========

(Loss) from operations:
North America ................. $ (5,466) $ (9,729) $ (3,130)
Europe ........................ (7,611) (14,775) (9,961)
--------- --------- ---------

$ (13,077) $ (24,504) $ (13,091)
========= ========= =========

Identifiable assets:
North America ................. $ 80,179 $ 74,710 $ 87,900
Europe ........................ 98,143 89,030 122,683
--------- --------- ---------

$ 178,322 $ 163,740 $ 210,583
========= ========= =========

12. Related Party Transactions

PPM had transactions with Groupe Legris and certain of its subsidiaries as
follows:

1994 1993 1992
--------- --------- ---------

Product sales and service revenues $15,111 $ 6,579 $15,042
Purchases of inventory ........... 23,613 17,860 13,515
Interest expense ................. 3,230 2,529 3,038
Other charges .................... 4,493 2,772 4,333

13. Subsequent Events -- Acquisition by Terex and Financing Arrangements
(unaudited)

On May 9, 1995, Terex, through its wholly-owned subsidiary Terex Cranes,
completed the acquisition of 99.18% of the shares of PPM S.A., a societe anonyme
("PPM Europe"), from Potain S.A., a societe anonyme, and 100% of the capital
stock of Legris Industries, Inc., a Delaware corporation which owns 92.4% of the
capital stock of PPM Cranes, Inc., a Delaware corporation ("PPM North America")
from Legris Industries S.A., a societe anonyme ("Legris France"). PPM North
America together with PPM Europe collectively are referred to as "PPM". PPM
designs, manufactures and markets mobile cranes and container stackers primarily
in North America and Western Europe under the brand names of PPM, P&H (trademark
of Harnischfeger Corporation) and BENDINI.

The purchase price, together with amounts needed to repay indebtedness of PPM
required to be repaid in connection with the Acquisition, consisted of (i)
approximately $92.6 million in cash and (ii) shares of Series A Redeemable
Exchangeable Preferred Stock of Terex Cranes having an aggregate liquidation
preference of approximately $25.9 million, subject to adjustment (the "Seller
Preferred Stock"). The Seller Preferred Stock bears no dividend and is
mandatorily redeemable in seven years and three months from the date of
issuance. The Seller Preferred Stock may be redeemed at any time for cash (to
the extent permitted pursuant to the provisions of the Indenture for Terex's 13
1/4% Senior Secured Notes due 2002) or, under certain circumstances for shares
of common stock, par value $.01 per share (the "Cranes Common Stock"), of Terex
Cranes. The purchase price is subject to adjustment calculated by reference to
the consolidated net asset value of PPM as determined by an audit to be
conducted following the consummation of the Acquisition. Terex Cranes has not
yet reached agreement with the sellers about the amount of purchase price
adjustment but, based on work performed, Terex Cranes believes that the amount
of the Seller Preferred Stock could ultimately be reduced. In addition, the
liquidation preference and the redemption price of the Seller Preferred Stock
may be adjusted based upon the unit shipments of the mobile crane industry in
Western Europe during the second and third years following the consummation of
the Acquisition.

The funds for the cash portion of the purchase price and the repayment of debt
of the acquired businesses were obtained from the private placement on May 9,
1995 to institutional investors of units consisting of Terex's 13 1/4% Senior
Secured Notes due 2002 and common stock appreciation rights. The Senior Secured
Notes are secured by substantially all of the assets of Terex and its domestic
subsidiaries, including PPM North America, subject to security interests granted
under the Credit Facility as described below, and by liens on certain assets of
certain of Terex's foreign subsidiaries, including PPM Europe.

Simultaneously with the acquisition, Terex, PPM North America and certain other
domestic subsidiaries of Terex entered into a Credit Facility which provides
that the companies will be able to borrow (in the form of revolving loans and up
to $15 million in outstanding letters of credit) up to $100 million, subject to
borrowing base limitations. The Credit Facility is secured by substantially all
of the companies domestic receivables and inventory (including PPM North
America). The amount of borrowings is limited to the sum of the following: (i)
75% of the net amount of eligible receivables, as defined, of Terex's U.S.
businesses other than Clark Material Handling Company ("CMHC") plus (ii) 70% of
the net amount of CMHC eligible receivables, plus (iii) the lesser of 45% of the
value of eligible inventory, as defined, or 80% of the appraised orderly
liquidation value of eligible inventory, less (iv) any availability reserves
established by the lenders. The Credit Facility expires May 9, 1998 unless
extended by the lenders for one additional year. At the option of Terex,
revolving loans may be in the form of prime rate loans bearing interest at the
rate of l.75% per annum in excess of the prime rate and Eurodollar rate loans
bearing interest at the rate of 3.75% per annum in excess of the adjusted
Eurodollar rate.

<PAGE>

TEREX CORPORATION

PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial information
of the Company gives effect to the PPM Acquisition and the Refinancing as
described elsewhere in this Prospectus. The pro forma information is based on
the historical statements of operations of the Company for the year ended
December 31, 1994 and for the nine months ended September 30, 1995, giving
effect to the PPM Acquisition and related financing transactions and adjustments
as reflected in the accompanying notes.

On May 9, 1995, the Company completed the PPM Acquisition. The purchase price,
together with amounts needed to repay indebtedness of PPM required to be repaid
in connection with the PPM Acquisition, consisted of (i) approximately $92.6
million in cash and (ii) shares of Series A Redeemable Exchangeable Preferred
Stock of Terex Cranes having an aggregate liquidation preference of
approximately $26.1 million, subject to adjustment calculated by reference to
the consolidated net asset value of PPM on the closing date of the PPM
Acquisition. A private placement of $250 million of the Company's 13.25% Senior
Secured Notes due 2002 provided the financing for the cash portion of the
purchase price. Proceeds of the Senior Secured Notes and of a new domestic
Credit Facility also provided funds for the refinancing of certain existing
Company debt (the "Refinancing"), for transaction and acquisition costs and for
working capital purposes.

The acquisition was accounted for using the purchase method, with the purchase
price of the PPM Acquisition allocated to the assets acquired and liabilities
assumed based upon their respective estimated fair values at the date of
acquisition. The pro forma consolidated financial information reflects the
Company's initial estimates of the purchase price allocation.

The unaudited pro forma consolidated financial information is not necessarily
indicative of what the actual results of operations of the Company would have
been for the periods indicated, nor does it purport to represent the results of
operations for future periods.

TEREX CORPORATION
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(in thousands except per share amounts)

Terex
Corporation Pro Forma Pro Forma
and Business Acquisition Refinancing
Subsidiaries Acquired Adjustments Adjustments Pro Forma

<S> <C> <C> <C> <C> <C>
NET SALES .............................. $ 786,781 $ 179,695 $ 0 $ 0 $ 966,476

COST OF GOODS SOLD ..................... 703,622 157,099 2,288(2a) 0 863,009
--------- --------- --------- --------- ---------

Gross Profit ...................... 83,159 22,596 (2,288) 0 103,467

ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES ........... 72,445 35,673 0 0 108,118

SEVERANCE CHARGES ...................... 7,353 0 0 0 7,353
--------- --------- --------- --------- ---------

Income (loss) from operations ..... 3,361 (13,077) (2,288) 0 (12,004)

OTHER INCOME (EXPENSE):
Interest income ................... 587 48 0 0 635
Interest expense .................. (30,492) (6,668) 5,329(2b) (12,388)(2d) (44,219)
Amortization of debt issuance costs (2,300) 0 0 (129)(2d) (2,429)
Gain on sale of Fruehauf .......... 26,043 0 0 0 26,043
Gain on sale of Drexel business ... 4,742 0 0 0 4,742
Other income (expense) - net ...... 15 0 0 0 15
--------- --------- --------- --------- ---------

Income (loss) before extraordinary
items and income taxes ............ 1,956 (19,697) 3,041 (12,517) (27,217)

PROVISION FOR INCOME TAXES ............. (786) 14 0 0 (772)
--------- --------- --------- --------- ---------

Income (loss) before
extraordinary items ........... 1,170 (19,683) 3,041 (12,517) (27,989)

Minority interest in loss of subsidiary 0 647 0 0 647

LESS PREFERRED STOCK
ACCRETION ......................... (5,929) 0 (1,421)(2c) 0 (7,350)
--------- --------- --------- --------- ---------

LOSS BEFORE EXTRAORDINARY
ITEMS APPLICABLE TO
COMMON STOCK ...................... $ (4,759) $ (19,036) $ 1,620 $ (12,517) $ (34,692)
========= ========= ========= ========= =========

PER SHARE .............................. $ (.46) $ (3.37)
========= =========

AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING IN
PER SHARE CALCULATION ............. 10,303 10,303
========= =========
</TABLE>

<PAGE>

TEREX CORPORATION
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(in thousands except per share amounts)

Terex
Corporation Pro Forma Pro Forma
and Business Acquisition Refinancing
Subsidiaries Acquired Adjustments Adjustments Pro Forma

<S> <C> <C> <C> <C> <C>
NET SALES .............................. $ 766,789 $ 64,840 $ 0 $ 0 $ 831,629

COST OF GOODS SOLD ..................... 690,529 66,618 672(2a) 0 757,819
--------- --------- --------- --------- ---------

Gross Profit ...................... 76,260 (1,778) (672) 0 73,810

ENGINEERING, SELLING AND
ADMINISTRATIVE EXPENSES ........... 61,401 14,053 0 0 75,454

SEVERANCE CHARGES ...................... 3,478 0 0 0 3,478
--------- --------- --------- --------- ---------

Income (loss) from operations ..... 11,381 (15,831) (672) 0 (5,122)

OTHER INCOME (EXPENSE):
Interest income ................... 1,073 0 0 0 1,073
Interest expense .................. (28,416) (2,305) 1,858(2b) (5,744)(2d) (34,607)
Amortization of debt issuance costs (1,672) 0 0 (161)(2d) (1,833)
Gain on sale of Fruehauf .......... 1,032 0 0 0 1,032
Other income (expense) - net ...... (9,352) (2,355) 0 0 (11,707)
--------- --------- --------- --------- ---------

Loss before extraordinary items
and income taxes .............. (25,954) (20,491) 1,186 (5,905) (51,164)

PROVISION FOR INCOME TAXES ............. (133) 0 0 0 (133)
--------- --------- --------- --------- ---------
loss before
extraordinary items ........... (26,087) (20,491) 1,186 (5,905) (51,297)

LESS PREFERRED STOCK
ACCRETION ......................... (5,200) 0 (794)(2c) 0 (5,994)
--------- --------- --------- --------- ---------

LOSS BEFORE EXTRAORDINARY
ITEMS APPLICABLE TO
COMMON STOCK ...................... $ (31,287) $ (20,491) $ 392 $ (5,905) $ (57,291)
========= ========= ========= ========= =========

PER SHARE .............................. $ (3.02) $ (5.55)
========= =========

AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING IN
PER SHARE CALCULATION ............. 10,330 10,330
========= =========
</TABLE>

<PAGE>

TEREX CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION

1) The unaudited pro forma condensed consolidated financial information is
presented for the year ended December 31, 1994 and the nine months ended
September 30, 1995. The pro forma statements of operations reflect the
consolidated operations of the Company combined with those of the acquired
business assuming the PPM Acquisition and the Refinancing were consummated on
January 1, 1994.

2) The pro forma statement of operations adjustments are summarized as follows:

a) Pro forma acquisition adjustments to "Cost of goods sold" represent
the elimination of goodwill amortization of the business acquired and
the amortization of goodwill resulting from the PPM Acquisition over 15
years.

b) Pro forma acquisition adjustments to "Interest expense" represent
the elimination of interest expense relating to debt repaid in
connection with the PPM Acquisition or forgiven by the seller.

c) Pro forma acquisition adjustments to "Preferred stock accretion"
represent accretion on Terex Cranes redeemable preferred stock issued
in the PPM Acquisition, assuming issuance as of January 1, 1994.

d) The Refinancing provided the funds to finance the PPM Acquisition,
as well as funds to refinance certain existing Company debt and pay
refinancing and acquisition costs. The new Senior Secured Notes bear
interest at 13.25% and are due May 15, 2002. The Credit Facility loans
bear interest at 1.75% in excess of the prime rate or at 3.75% in
excess of the adjusted eurodollar rate, at the Company's option
(interest rate of 11%, including fees, assumed for pro forma
presentation); the Credit Facility expires May 9, 1998. The pro forma
adjustments to "Interest expense" and "Amortization of debt issuance
costs" represent the incremental effects of the Refinancing:
- The Company's old 13% senior secured notes and 13.5% senior
subordinated notes are assumed to be repaid as of January 1, 1994,
and the interest expense and related amortization of discount and
issuance costs is eliminated. - The 13.25% new Senior Secured
Notes are assumed to be issued and registered as of January 1,
1994 and interest expense and related amortization of discount and
issuance costs is included. - The incremental amount borrowed
under the Credit Facility at the time of the Refinancing is
assumed to be outstanding from January 1, 1994 and interest is
included thereon.

3) A pro forma condensed balance sheet is not presented herein because the PPM
Acquisition is reflected in the Company's Condensed Consolidated Balance Sheet
as of September 30, 1995. The estimated fair values of assets and liabilities
acquired in the PPM Acquisition are summarized as follows (in thousands):

Cash ......................................................... $ 974
Accounts receivable .......................................... 33,816
Inventories .................................................. 69,107
Other current assets ......................................... 11,866
Property, plant and equipment ................................ 20,516
Other assets ................................................. 268
Goodwill ..................................................... 65,864
Accounts payable and other current liabilities ............... (84,458)
Other liabilities ............................................ (13,501)
---------

$ 104,452
=========

Financial Statements

PPM Cranes, Inc.

Three years ended December 31, 1994
with Report of Independent Auditors

PPM Cranes, Inc.

Consolidated Financial Statements

Three years ended December 31, 1994

Contents

Report of Independent Auditors 1

Audited Consolidated Financial Statements

Consolidated Balance Sheets 2
Consolidated Statements of Operations 4
Consolidated Statements of Shareholders' Equity 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7

Report of Independent Auditors

The Board of Directors and Shareholders
PPM Cranes, Inc.

We have audited the accompanying consolidated balance sheets of PPM Cranes, Inc.
as of December 31, 1994 and 1993, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of PPM of Australia Pty. Ltd., a wholly-owned subsidiary,
which statements reflect total assets of 3.5% and 3.0T as of December 31, 1994
and 1993, respectively, and total revenues of 5.3%, 4.2% and 5.5% for each of
the three years in the period ended December 31, 1994. Those statements were
audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to data included for PPM of Australia Pty. Ltd.
is based solely on the report of the other auditors.

In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of PPM Cranes, Inc. at December 31, 1994 and
1993, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles.

Greenville, South Carolina
August 22, 1995

PPM Cranes, Inc.

Consolidated Balance Sheets

December 31
1994 1993
(In thousands of dollars
except share amounts)
Assets
Current Assets:
Cash and cash equivalents ............... $ 2,124 $ 850
Trade accounts receivable, less
allowance of $268 and $429 in
1994 and 1993, respectively ............ 10,293 5,827
Due from affiliates ..................... 185 633
Inventories ............................. 27,523 25,446
Prepaid expenses and other current assets 897 911
------- -------
Total current assets ..................... 41,022 33,667

Property, plant, and equipment, net ...... 4,550 4,606

Intangible assets:
Cost in excess of net assets acquired,
less accumulated amortization of
$8,739 and $6,592 in 1994 and 1993,
respectively ........................... 36,852 38,999
Other identified intangible assets,
less accumulated amortization of $731
and $502 in 1994 and 1993, respectively 413 642
------- -------
37,265 39,641
------- -------
Total assets ............................. $82,837 $77,914
======= =======

December 31
1994 1993
(In thousands of dollars
except share amounts)
Liabilities and shareholders' equity
Current liabilities:
Trade accounts payable ................. $ 5,518 $ 5,655
Due to affiliates ...................... 4,526 2,373
Product liability reserve .............. 4,850 4,432
Product warranty reserve ............... 616 299
Accrued interest ....................... 1,610 1,157
Accrued expenses ....................... 1,884 1,208
Bank overdraft ......................... 350 113
Current portion of long-term debt ...... 32,155 150
-------- --------
Total current liabilities ............... 51,509 15,387

Long-term debt, less current portion .... 5,851 28,927

Shareholders' equity:
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 ..... -- --
Additional paid-in capital ............. 52,782 52,782
Accumulated deficit .................... (27,274) (18,791)
Foreign currency translation adjustments (31) (391)
-------- --------
Total shareholders' equity .............. 25,477 33,600
-------- --------
Total liability and shareholders' equity $ 82,837 $ 77,914
======== ========
See accompanying notes

PPM Cranes, Inc.

Consolidated Statements of Operations

Year Ended December 31
1994 1993 1992
(In thousands of dollars)

Net sales ....................... $ 74,814 $ 74,125 $ 69,797
Cost of products sold ........... 65,470 68,581 58,584
Selling, general, and
administrative expenses ........ 12,990 13,545 12,319
Amortization of intangible assets 2,376 2,397 2,550
-------- -------- --------
Loss from operations ............ (6,022) (10,398) (3,656)
Other (income) expense:
Interest expense ............... 2,509 2,021 1,777
Interest income ................ (48) (12) (28)
-------- -------- --------
Loss before income taxes ........ (8,483) (12,407) (5,405)
Income tax (benefit) provision .. -- (5) 147
-------- -------- --------
Net loss ........................ $ (8,483) $(12,402) $ (5,552)
======== ======== ========
See accompanying notes

PPM Cranes, Inc.

Consolidated Statements of Shareholders' Equity

Foreign
Additional Accumu- Currency
Common Stock Paid-in lated Translation
Shares Amount Capital Deficit Adjustments Total
(In thousands of dollars, except share amounts)
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1991 5,000 $-- $ 49,282 $ (837) $ (62) $ 48,383

Issuance of
common stock
-- Class B .... 413 -- 3,500 -- -- 3,500
Net loss ....... -- -- -- (5,552) -- (5,552)
Translation
adjustment for
period ........ -- -- -- -- (295) (295)
-------- ----- -------- -------- -------- --------
Balance at
December 31, 1992 5,413 -- 52,782 (6,389) (357) 46,036

Net loss ....... -- -- -- (12,402) -- (12,402)
Translation
adjustment .... -- -- -- -- (34) (34)
-------- ----- -------- -------- -------- --------
Balance at
December 31, 1993 5,413 -- 52,782 (18,791) (391) 33,600

Net loss ....... -- -- -- (8,483) -- (8,483)
Translation
adjustment .... -- -- -- -- 360 360
-------- ----- -------- -------- -------- --------
Balance at
December 31, 1994 5,413 $-- $ 52,782 $(27,274) $ (31) $ 25,477
======== ===== ======== ======== ======== ========
</TABLE>

PPM Cranes, Inc.

Consolidated Statements of Cash Flows

Year Ended December 31
1994 1993 1992
(In thousands of dollars)

Operating activities

Net loss ................................... $ (8,483) $(12,402) $ (5,552)
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and amortization ............ 3,144 3,211 3,225
Changes in operating assets and
liabilities:
Accounts receivable ..................... (4,466) 927 4,415
Inventories ............................. (2,077) 7,455 (2,139)
Prepaid expenses and other .............. 14 (135) (567)
Accounts payable ........................ (137) (174) (1,070)
Net amounts due to affiliates ........... 2,601 -- --
Product liability reserve ............... 418 493 (3,123)
Product warranty reserve ................ 317 (117) (433)
Accrued expenses ........................ 1,129 (471) (968)
-------- -------- --------
Net cash used in operating activities ...... (7,540) (1,213) (6,212)

Investing activities

Purchases of property, plant,
and equipment ............................. (712) (1,061) (1,271)
Increase in other intangible assets ........ -- -- --
-------- -------- --------
Net cash used in investing activities ...... (712) (1,061) (1,632)

Financing activities

Proceeds from revolving credit
with banks ................................ 237 35,028 8,999
Principal payments on revolving
credit with banks ......................... (179) (35,409) (8,631)
Proceeds from notes payable to
parent company ............................ 20,408 10,025 3,142
Principal payments on notes payable
to parent company ......................... (11,300) (6,925) --
Proceeds from sale of common stock ......... -- -- 3,500
-------- -------- --------
Net cash provided by financing
activities ................................ 9,166 2,719 7,010
Effect of exchange rate changes on cash .... 360 (34) (57)
-------- -------- --------
Net increase (decrease) in cash
and cash equivalents ...................... 1,274 411 (891)
Cash and cash equivalents at
beginning of period ....................... 850 439 1,330
-------- -------- --------
Cash and cash equivalents at
end of period ............................. $ 2,124 $ 850 $ 439
======== ======== ========

Supplemental disclosure of cash flow
information

Cash paid for interest ..................... $ 2,203 $ 2,024 $ 1,974
======== ======== ========

Cash paid for income taxes ................. $ -- $ 130 $ 100
======== ======== ========

See accompanying notes.

PPM Cranes, Inc.

Notes to Consolidated Financial Statements

December 31, 1994

(In thousands of dollars)

1. Basis of Presentation and Description of Business

Basis of Presentation

As more fully described in Note 13 (unaudited), Terex Corporation ("Terex"),
through its wholly owned subsidiary Terex Cranes, Inc. ("Terex Cranes"),
completed the acquisition of substantially all of the common stock of Legris
Industries, Inc. ("Legris"), a Delaware corporation on May 9,1995. Prior to the
acquisition, PPM Cranes, Inc. ("the Company"), a Delaware corporation, was owned
92.4% by Legris, which in turn was wholly owned by Legris Industries S.A., a
French corporation. The remaining 7.6% of the Company is owned by Harnischfeger
Corporation from whom the business was purchased in 199 1.

The Company has two classes of capital stock issued and outstanding - common
Class A and common Class B. These are equal in all respects except that Class B
(to be issued exclusively toHamischfeger Corporation) is entitled to elect one
director and Class A is entitled to elect the remaining directors.

The accompanying consolidated financial statements were prepared on the basis of
generally accepted accounting principles and include the consolidated financial
position, results of operations and cash flows of the Company and its wholly
owned subsidiaries, PPM of Australia Pty. Ltd. and PPM Far East Pte. Ltd. All
significant intercompany balances have been eliminated.

Description of Business

The Company operates in one business segment - the design, manufacture,
marketing and worldwide distribution and support of construction equipment,
primarily hydraulic and lattice boom cranes and related spare parts.

Cash and Cash Equivalents

2. Summary of Significant Accounting Policies

Accounts Receivable

Inventories

Inventories are stated at the lower of cost or market. Cost is determined by the
last-in, first-out (LIFO) method for domestic inventories and by the first-in,
first-out (FIFO) method for inventories of foreign subsidiaries.

Property, Plant and Equipment

Additions and major replacements or improvements to property, plant and
equipment are recorded at cost. Maintenance, repairs and minor replacements are
charged to expense when incurred. Assets of the Company are depreciated using
the straight-line method over their estimated useful lives.

Intangible Assets

The excess of cost over fair value of net assets of businesses acquired
("goodwill") is amortized on the straight-line method over a period of twenty
years. Other identified intangibles are primarily organizational costs which are
amortized over five years. The lives established for these assets are a
composite of many factors; accordingly, the Company evaluates the continued
appropriateness of these lives based upon the latest available economic factors
and circumstances.

Product Warranty

The Company warrants that each finished machine is merchantable and free of
defects in workmanship and material for a period of up to one year or a
specified period of use. Warranty reserves have been established for estimated
normal warranty costs and for specific problems known to exist on products in
use.

Product Liability

Income Taxes

Income taxes are provided using the liability method in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("FAS 109"). Under FAS 109, the deferred tax assets and liabilities are
determined based on temporary differences between the basis of certain assets
and liabilities for income tax and financial reporting purposes.

The Company is a part of a group that files a consolidated income tax return.
The method used to allocate income taxes to members of the group is one in which
current and deferred income taxes are allocated on a separate return basis as if
the Company had not been included in a consolidated income tax return with its
parent.

Revenue Recognition

Sales are recorded upon shipment or designation of specific goods for later
shipment at customers' request with related risk of ownership passing to such
customers.

Research and Development Costs

Translation of Foreign Currencies

The local currencies of the Company's foreign operations have been determined to
be the functional currencies in accordance with Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation". Transactions in
foreign currencies are translated into United States dollars at average rates of
exchange prevailing during the period. Assets and liabilities denominated in
foreign currencies are translated at the year end exchange rates. Gains and
losses on foreign currency transactions are recognized in earnings. Adjustments
resulting from the translation of financial statements of the foreign
subsidiaries and translation gains or losses related to long-term intercompany
investments are included in the foreign currency translation adjustments account
in shareholders' equity.

Reclassifications

Certain reclassifications were made to the 1993 and 1992 financial statements to
conform to the 1994 presentation.

3. Inventories

Inventories at December 31, 1994 and 1993 consist of the following:

1994 1993

Raw materials and parts ........ $18,647 $17,906
Work in process ................ 5,876 3,994
Finished goods and subassemblies 2,228 3,193
Consigned inventory ............ 772 353
------- -------
$27,523 $25,446
======= =======

4. Property, Plant and Equipment

Property, plant and equipment at December 31, 1994 and 1993 consists of the
following:

1994 1993

Land and improvements ....... $ 98 $ 98
Buildings ................... 2,318 2,191
Machinery and equipment ..... 5,116 4,531
------- -------
7,532 6,820
Less accumulated depreciation (2,982) (2,214)
------- -------
$ 4,550 $ 4,606
======= =======

Depreciation expense for 1994, 1993 and 1992 was $768, $814 and $675,
respectively.

5. Debt

At December 31, 1994 and 1993, PPM Far East Pte. Ltd. has a bank overdraft of
approximately $350 and $113, respectively. This overdraft is collateralized by a
building located in Singapore and a guarantee of PPM and bears interest based on
various bank benchmark rates.

Long-term debt at December 31, 1994 and 1993 consists of the following:

1994 1993

Notes payable to Legris $ 38,006 $ 28,898
Note payable to bank .. -- 179
-------- --------
38,006 29,077
Less current maturities (32,155) (150)
-------- --------
$ 5,851 $ 28,927
======== ========

Approximately $12,686 of the indebtedness to Legris bears interest at an annual
fixed rate of 9%. The remainder of this indebtedness bears interest at annual
rates based on various bank benchmark rates ranging from 6.875% to 8.5% at
December 31, 1994. At December 31, 1993, Legris represented to the Company that
this indebtedness should be classified as long-term. In connection with the
acquisition by Terex on May 9, 1995 (see Note 13), all debt obligations of
Legris and its subsidiaries, other than a note payable to Harnischfeger
Corporation, were satisfied. Accordingly, all debt obligations other than the
long-term portion of the note payable toHamischfeger Corporation have been
classified as current at December 31, 1994.

The maturities of the note payable to the Harnischfeger Corporation for the five
years following December 31, 1994 and thereafter are as follows:

Year Payments

1995 $ 480
1996 520
1997 312
1998 338
1999 366
Thereafter 4,315

$6,331

6. Employee Benefit Plan

The Company has a defined contribution plan covering its U. S. employees. Under
this plan, the Company matches a portion of an employee's contribution to the
plan. 'Me related expense to the Company was $119, $118 and $82 for 1994, 1993
and 1992, respectively.

7. Income Taxes

Effective January 1, 1992, the Company adopted the provisions of Statement of
FAS 109. There was no cumulative effect of this change in accounting for income
taxes on the consolidated financial statements.

(Loss) income before income taxes consisted of the following:

1994 1993 1992

Domestic ................. $ (8,703) $(11,980) $ (5,566)
Foreign .................. 220 (427) 161
-------- -------- --------
$ (8,483) $(12,407) $ (5,405)
======== ======== ========

Federal, foreign, and state income taxes (benefit) consisted of the following:

1994 1993 1992

Federal ...................... $-- $-- $--
Foreign ...................... -- (5) 147
State ........................ -- -- --
----- ----- -----
$-- $ (5) $ 147
===== ===== =====

The Company has not provided U.S. income taxes for undistributed earnings of
foreign subsidiaries which are considered to be retained indefinitely for
reinvestment. The distribution of these earnings would result in additional
foreign withholding taxes and additional U.S. Federal income taxes to the extent
they are not offset by foreign tax credits, but it is not practicable to
estimate the total tax liability that would be incurred upon such a
distribution.

The income tax (benefit) provision at the effective rate differed from the
benefit at the statutory rate as follows:

1994 1993 1992

Computed tax (benefit) at
expected statutory rate ................... $(2,884) $(4,218) $(1,838)

State taxes ................................ (364) (620) (270)
Change in state tax rate ................... 165 -- --
Increase in valuation allowance ............ 426 2,182 2,147
Nondeductible goodwill ..................... 837 852 --
Adjustment of prior years' estimated
deferred tax accruals ..................... 1,548 1,620 --
Foreign taxes .............................. -- (5) 147
Meals and entertainment .................... 20 12 13
Other ...................................... 252 172 (52)
------- ------- -------
Income tax (benefit) provision ............. $ -- $ (5) $ 147
======= ======= =======

At December 31, 1994, the Company has net operating loss carryforwards for
Federal income tax purposes of approximately $50,532 available to offset future
taxable income, which included net operating losses of approximately $2,000 that
existed at the date the business was acquired. The differences between the loss
carryforwards for financial reporting and income tax purposes result principally
from differences between the income tax basis and the financial reporting basis
allocated to the net assets acquired and differences in the methods of
depreciating property, plant, and equipment. For financial reporting purposes, a
valuation allowance equal to the entire benefit of the cumulative temporary
differences and net operating loss carryforwards has been recognized to offset
the net deferred tax assets. Components of the Company's deferred taxes at
December 31, 1994 and 1993 are as follows:

1994 1993

Total deferred tax liabilities ................. $ (2,253) $ (277)

Total deferred tax assets, principally
net operating loss carryforwards .............. 25,663 23,261

Total valuation allowance ...................... (23,410) (22,984)
-------- --------
Net deferred taxes ............................. $ -- $ --
======== ========

The expiration of the Company's net operating loss carryforwards are as follows:

Year Expiring Amount

2003 $493
2004 667
2005 22,421
2006 835
2007 5,837
2008 15,125
2009 5,154
-------
$50,532
=======

8. Commitments and Contingencies

The Company has various lease agreements, primarily related to office space,
production facilities, and office equipment, which are accounted for as
operating leases. Certain leases have renewal options and provisions requiring
the Company to pay maintenance, property taxes and insurance. Rent expense for
1994, 1993 and 1992 was $1,148, $1,079 and $656, respectively.

Future minimum payments under noncancelable operating leases at December 31,
1994 are as follows:

1995 $904
1996 620
1997 537
1998 508
1999 303
Thereafter 75
-------
2,947
=======

The Company is involved in product liability and other lawsuits incident to the
operation of its business. Insurance coverages and accruals are maintained for
claims and lawsuits of this nature. At December 31, 1994 and 1993, the Company
had a reserve of $4,850 and $4,432 related to product liability matters,
including $200 at December 31, 1994 related to unasserted claims. Actual costs
to be incurred in the future may vary from the estimates, given the inherent
uncertainties in evaluating the outcome of claims and lawsuits of this nature.
Although it is difficult to estimate the liability of the Company related to
these matters, it is management's opinion that none of these lawsuits will have
a materially adverse effect on the Company's financial position.

The Company is contingently liable up to $1,027 with respect to financing
arrangements and performance guarantees entered into with banks and between
certain banks and certain dealers or customers of the Company.

9. Foreign Operations

Summarized financial data relating to the foreign subsidiaries included in the
accompanying consolidated financial statements at December 31, 1994, 1993 and
1992 are as follows:

1994 1993 1992

Assets .............................. $ 4,832 $ 4,071 $ 4,879
Liabilities ............................ 1,584 830 1,010
Net income (loss) ...................... 220 (422) 14

10. Related Party Transactions

In addition to borrowings from Legris (see Note 5), the Company had transactions
with various unconsolidated affiliates as follows:

1994 1993 1992

Product sales and service revenues ...... $ 2,405 $ 2,141 $ 4,338
Purchases of inventory .................. 14,876 10,531 3,344
Management fee expense .................. 1,500 1,500 331
Interest expense ........................ 2,470 1,643 1,697

11. Subsequent Events - Acquisition by Terex and Financing Arrangements
(unaudited)

On May 9, 1995, Terex, through its wholly-owned subsidiary Terex Cranes,
completed the acquisition of 99.18% of the shares of PPM S.A., a societe
anonyme, from Potain S.A., a societe anonyme, and 100% of the capital stock of
Legris, which owns 92.4% of the capital stock of PPM Cranes, Inc., from Legris
Industries S.A., a societe anonyme. PPM Cranes, Inc. together with PPM S.A.
collectively are referred to as "PPM". PPM designs, manufactures and markets
mobile cranes and container stackers primarily in North America and Western
Europe under the brand names of PPM, P&H (trademark of Harnischfeger
Corporation) and BENDINI.

The funds for the cash portion of the purchase price and the repayment of debt
of the acquired businesses were obtained from the private placement on May 9,
1995 to institutional investors of units consisting of Terex's 13 1/4% Senior
Secured Notes due 2002 and common stock appreciation rights. The Senior Secured
Notes are secured by substantially all of the assets of Terex and its domestic
subsidiaries, including PPM Cranes, Inc., subject to security interests granted
under the Credit Facility as described below and by liens on certain of Terex's
foreign subsidiaries, including PPM S.A.

Simultaneously with the acquisition, Terex, PPM Cranes, Inc. and certain other
domestic subsidiaries of Terex entered into a Credit Facility which provides
that the companies will be able to borrow (in the form of revolving loans and up
to $15 million in outstanding letters of credit) up to $100 million, subject to
borrowing base limitations and subject to participation commitments to be
obtained from additional lenders. The Credit Facility is secured by
substantially all of the companies domestic receivables and inventory (including
PPM Cranes, Inc.). The amount of borrowings is limited to the sum of the
following: (i) 75% of the net amount of eligible receivables, as defined, of
Terex's U.S. businesses other than Clark Material Handling Company ("CMHC") plus
(ii) 70% of the net amount of CMHC eligible receivables, plus (iii) the lesser
of 45% of the value of eligible inventory, as defined, or 80% of the appraised
orderly liquidation value of eligible inventory, less (iv) any availability
reserves established by the lenders. The Credit Facility expires May 9, 1998
unless extended by the lenders for one additional year. At the option of Terex,
revolving loans may be in the form of prime rate loans bearing interest at the
rate of 1.75% per annum in excess of the prime rate and Eurodollar rate loans
bearing interest at the rate of 3.75% per annum in excess of the adjusted
Eurodollar rate.