WESTPORT, Conn., Feb 19, 2003 (BUSINESS WIRE) --
-- Cash generated from operations for 2002 was $70 million
-- Net debt decreased in the fourth quarter by $88 million
Terex Corporation (NYSE: TEX) today announced a net loss for the full year 2002
of $132.5 million, or $3.07 per share, compared to net income of $12.8 million,
or $0.44 per share, for the full year 2001.
Excluding the impact of special items, net income for the full year 2002 was
$46.8 million, or $1.06 per share, compared to $40.1 million, or $1.39 per
share, for the full year 2001. Special items for the full year 2002 include net
charges of $179.3 million (approximately $18 million of which is cash) and
primarily relates to the impact of adopting SFAS No. 141 "Business Combinations"
and SFAS No. 142 "Goodwill and Other Intangible Assets", an extraordinary loss
on the retirement of debt related to the Company's bank refinancings, and
restructuring initiatives at certain business units. Special items for the full
year 2001 include net charges of $27.3 million (approximately $10 million of
which was cash) and primarily relates to a restructuring charge for the
consolidation of eleven facilities and an extraordinary loss on the retirement
of debt.
The Company had a net loss in the fourth quarter of 2002 of $40.3 million, or
$0.85 per share, compared to net income of $1.6 million, or $0.05 per share, for
the fourth quarter of 2001. Excluding the impact of special items, net income
for the fourth quarter of 2002 was $5.4 million, or $0.11 per share, compared to
$4.5 million, or $0.14 per share, for the fourth quarter of 2001. Special items
for the fourth quarter of 2002 include net charges of $45.7 million
(approximately $20 million of which is cash) and primarily relates to previously
announced restructuring charges associated with facility and product line
rationalizations as a result of the recent acquisitions of Demag and Genie,
facility rationalizations within the compact equipment businesses and the
decision to exit certain other businesses. Special items for the fourth quarter
of 2001 include net charges of $2.9 million (approximately $1 million of which
was cash) and primarily relates to an extraordinary loss on the early
extinguishment of debt and restructuring initiatives at certain business units.
"2002 was a year of building a stronger company, setting the foundation that
will allow us to compete and leverage the Terex franchise globally, and
positioning the Company for stronger growth when the economy recovers,"
commented Ronald M. DeFeo, Terex's Chairman and Chief Executive Officer. "2003
will be a year focused on Company fundamentals, integration of acquisitions,
execution on cost saving initiatives, generation of free cash flow and debt
reduction."
Mr. DeFeo added, "Our fourth quarter performance was reflective of this internal
focus. In the quarter, we generated approximately $62 million in cash flow from
operations and reduced net debt by approximately $88 million. On the acquisition
front, our integration of Genie and Demag continues on schedule to deliver the
originally targeted $45 million in annualized cost savings. Genie had
substantially met their target by the time the deal was closed and Demag
continues to aggressively implement its plan. CMI and Atlas, which reported
operating losses for the third quarter of 2002, continue to make improvements as
we aggressively focus on cost controls. CMI returned to profitability in the
fourth quarter and Atlas was essentially break-even. Our base businesses
continued to perform relatively well on the top line, as net sales increased 6%
over last year's fourth quarter. Operating margin, however, was negatively
impacted during the quarter by the performance of our Mining group, under
absorption related to the extended manufacturing shut downs in our off-highway
truck business and provisions required for the valuation of certain accounts
receivable due to the impact of general economic conditions on some of our
customers. We expect operating margin in 2003 to improve as we execute on our
cost saving initiatives and put the one-time costs incurred in 2002 behind us."
A financial summary is shown below:
Three months ended December 31,
-------------------------------------------------
-------------------------------------------------
2002
-------------------------------------------------
(in millions, except per share amounts)
Excluding
Special Excluding Acquisitions
Reported Items Special & Special
(1)(2) Items Items
-------------------------------------------------
-------------------------------------------------
Sales $ 851.1 $ (4.0) $ 847.1 $ 424.2
============= ========================= =========
============= ========================= =========
Gross profit $ 64.8 $ 50.8 $ 115.6 $ 49.9
SG&A 100.3 (14.5) 85.8 41.8
------------- ------------------------- ---------
------------- ------------------------- ---------
Operating profit (35.5) 65.3 29.8 $ 8.1
=========
=========
Interest and other (23.8) 1.9 (21.9)
Income taxes 19.0 (21.5) (2.5)
Extraordinary
loss on debt --- --- ---
------------- -------------------------
------------- -------------------------
Net income $ (40.3) $ 45.7 $ 5.4
============= =========================
============= =========================
Earnings per
share $ (0.85) $ 0.11
EBITDA $ (21.2) $ 65.3 $ 44.1
Backlog $ 399.9 $ 399.9
Average Fully
Diluted Shares
Outstanding 47.4 1.3 48.7
2001
-------------------------------------------------
(in millions, except per share amounts)
Excluding
Special Excluding Acquisitions
Reported Items Special & Special
(1)(3) Items Items
-------------------------------------------------
-------------------------------------------------
Sales $ 442.1 $ (2.7) $439.4 398.3
============ ========================== =========
============ ========================== =========
Gross profit $ 72.3 $ 1.3 $ 73.6 $63.1
SG&A 49.0 (0.7) 48.3 40.3
------------ -------------------------- ---------
------------ -------------------------- ---------
Operating profit 23.3 2.0 25.3 $22.8
=========
=========
Interest and
other (18.6) --- (18.6)
Income taxes (1.5) (0.7) (2.2)
Extraordinary
loss on debt (1.6) 1.6 ---
------------ --------------------------
------------ --------------------------
Net income $ 1.6 $ 2.9 $ 4.5
============ ==========================
============ ==========================
Earnings per
share $ 0.05 $ 0.14
EBITDA $ 33.3 $ 2.0 $ 35.3
Backlog $ 235.2 $235.2
Average Fully
Diluted Shares
Outstanding 32.5 --- 32.5
Twelve months ended December 31,
---------------------------------------------------
---------------------------------------------------
2002
---------------------------------------------------
(in millions, except per share amounts)
Excluding
Special Excluding Acquisitions
Reported Items Special & Special
(1)(4) Items Items
----------------------------------------------------
----------------------------------------------------
Sales $ 2,797.4 $ (12.7) $ 2,784.7 $ 1,749.8
============= ========================= ============
============= ========================= ============
Gross profit $ 356.7 $ 71.7 $ 428.4 $ 267.5
SG&A 288.1 (16.3) 271.8 154.8
------------- ------------------------- ------------
------------- ------------------------- ------------
Operating
profit 68.6 88.0 156.6 $ 112.7
============
============
Interest and
other (94.4) 6.4 (88.0)
Income taxes 8.3 (30.1) (21.8)
Extraordinary
loss on debt (1.6) 1.6 ---
Cumulative
effect of
accounting
change (113.4) 113.4 ---
------------- -------------------------
------------- -------------------------
Net income
(loss) $ (132.5) $ 179.3 $ 46.8
============= =========================
============= =========================
Earnings (loss)
per share $ (3.07) $ 1.06
EBITDA $ 108.8 $ 88.0 $ 196.8
Backlog $ 399.9 $ 399.9
Average Fully
Diluted Shares
Outstanding 43.2 0.9 44.1
2001
---------------------------------------------------
(in millions, except per share amounts)
Excluding
Special Excluding Acquisitions
Reported Items Special & Special
(1)(5) Items Items
----------------------------------------------------
----------------------------------------------------
Sales $ 1,812.5 $ (9.1) 1,821.6 1,729.0
============ ========================== ============
============ ========================== ============
Gross profit $ 276.6 $ 29.1 $305.7 293.3
SG&A 172.4 (5.3) 167.1 156.0
------------ ---------------------------------------
------------ ---------------------------------------
Operating
profit 104.2 34.4 138.6 137.3
============
============
Interest and
other (79.6) --- (79.6)
Income taxes (7.9) (11.0) (18.9)
Extraordinary
loss on debt (3.9) 3.9 ---
Cumulative
effect of
accounting
change --- --- ---
------------ --------------------------
------------ --------------------------
Net income
(loss) $ 12.8 $ 27.3 $ 40.1
============ ==========================
============ ==========================
Earnings (loss)
per share $ 0.44 $ 1.39
EBITDA $ 140.7 $ 34.4 $175.1
Backlog $ 235.2 $235.2
Average Fully
Diluted Shares
Outstanding 28.9 --- 28.9
(1) Management has shown operating results excluding special items as they
believe they are non-recurring in nature and do not reflect the ongoing
performance of the underlying businesses. (2) Special items, net of tax, relate
to previously announced restructuring initiatives ($37.3 million), Genie and
Demag inventory fair value accounting treatment ($2.7 million), SDC valuation
adjustment due to decrease in stock price ($2.3 million), one-time financial
advisory fee ($2.4 million) and businesses to be exited or phased down ($2.0
million), offset partially by a favorable ruling on a legal claim ($1.0
million). (3) Special items, net of tax, relate to restructuring charges ($0.8
million), extraordinary loss on the early extinguishment of debt ($1.6 million),
and businesses held for sale ($0.5 million). (4) Special items, net of tax,
include the items described in (2) above, as well as the charges associated with
the adoption of SFAS No. 142 "Goodwill and Other Intangible Assets" ($124.1
million), income associated with the adoption of SFAS No. 141 "Business
Combinations" ($10.7 million), restructuring initiatives implemented in prior
quarters ($6.6 million), extraordinary loss on the early retirement of debt
($1.6 million), equity loss on minority interest in Tatra ($1.2 million), Genie
and Demag inventory fair value accounting treatment ($2.5 million), businesses
held for sale or phase down ($0.9 million), and the write down of certain assets
within the Light Construction Group, European Crane Group, and Earthking
subsidiary ($15.6 million), offset partially by a foreign exchange rate gain
related to the Demag acquisition ($2.8 million) and a favorable ruling on a
legal claim ($5.4 million). (5) Special items, net of tax, relate primarily to
the restructuring charge for the consolidation of eleven facilities and other
cost reduction initiatives ($20.4 million), extraordinary loss on the early
extinguishment of debt ($3.9 million), a one-time charge for the cost associated
with the return of five trucks by a mining customer ($2.2 million), as well as
businesses held for sale ($0.8 million).
Segment Performance
Terex Construction
Three months ended December 31,
--------------------------------------------
(dollars in millions)
2002 2001
---------------------- ---------------------
% of % of
sales sales
---------- ----------
Net sales $ 278.1 $ 168.3
============ ============
============ ============
Gross profit (1) $ 41.9 15.1% $ 22.4 13.3%
SG&A 27.9 10.0% 13.7 8.1%
------------ ------------
------------ ------------
Operating profit (1) $ 14.0 5.0% $ 8.7 5.2%
============ ============
============ ============
Backlog 76.8 $ 78.1
Twelve months ended December 31,
-------------------------------------------
(dollars in millions)
2002 2001
--------------------- ---------------------
% of % of
sales sales
--------- ---------
Net sales $1,195.5 $ 732.7
=========== ===========
=========== ===========
Gross profit (1) 179.6 15.0% 111.3 15.2%
SG&A 104.9 8.8% 53.6 7.3%
----------- -----------
----------- -----------
Operating profit (1) 74.7 6.2% $57.7 7.9%
=========== ===========
=========== ===========
Backlog 76.8 $78.1
- Operating performance excludes special items. (1) The fourth quarter and
twelve months of 2001 include $1.0 million and $4.5 million of goodwill
amortization, respectively.
Net sales in the Terex Construction group for the fourth quarter of 2002
increased $109.8 million to $278.1 million, from $168.3 million in the fourth
quarter of 2001, driven primarily by the impact of the acquisitions of Atlas and
Schaeff and a 7% increase in the base businesses. The growth in the base
businesses was led by strong performance within the Powerscreen and Benford
businesses, as well as the continued growth and market penetration of the Terex
loader backhoe. SG&A expenses for the fourth quarter of 2002 were $27.9 million,
or 10.0% of sales, compared to $13.7 million, or 8.1% of sales, for the fourth
quarter of 2001. Operating profit for the fourth quarter of 2002 was $14.0
million, or 5.0% of sales, compared to $8.7 million, or 5.2% of sales, for the
fourth quarter of 2001. The slight decrease in operating margins was driven
primarily by under absorption at the off-highway truck business (where extended
shutdowns were used in the fourth quarter of 2002 to work through finished goods
inventory), and the write down of certain accounts receivable to reflect current
market conditions, offset partially by the performance of acquired companies.
Net sales in the Terex Construction group for 2002 increased $462.8 million to
$1,195.5 million, from $732.7 million in 2001. The increase in net sales was
driven by acquired companies and an 8% growth in the base businesses. The growth
in the base businesses is consistent with the trends noted above with respect to
the fourth quarter. SG&A expenses for the year were $104.9 million, or 8.8% of
sales, compared to $53.6 million, or 7.3% of sales, for 2001, reflecting the
impact of acquired companies. Excluding acquisitions, SG&A expenses were 7.8% of
sales in 2002, a slight increase from 2001. Operating profit in 2002 increased
$17.0 million to $74.7 million, or 6.2% of sales, from $57.7 million, or 7.9% of
sales, in 2001, reflecting the impact of acquired companies. Excluding
acquisitions, operating margins were 7.6% of sales for 2002.
"The Terex Construction group had a solid quarter and year," commented Colin
Robertson, President - Terex Construction. "Our base businesses performed well,
especially given the current market conditions and the extended shut downs in
our off-highway truck businesses during the fourth quarter. Our marketing
strategy for Terex Compact Equipment seems to be paying off. We have had some
success, particularly in Europe, in marketing Terex's expanded range of compact
equipment, including wheel loaders, mini-excavators, mini dumpers, rollers and
loader backhoes. The loader backhoe also increased its penetration into the U.S.
market during 2002, and we are looking for similar results from Terex's other
compact equipment in the future. The Powerscreen group continued to post
impressive results, capitalizing on the trend in the market toward mobile
tracked crushing and screening equipment and away from stationary plants to
increase the customers' flexibility and productivity." Mr. Robertson added, "We
continue to make progress on our acquisition integration. Schaeff is performing
within expectations and Atlas was essentially break-even for the quarter. We
have several cost reduction initiatives underway at Atlas and look for this
business to be profitable in 2003."
Terex Cranes
Three months ended December 31,
--------------------------------------------
(dollars in millions)
2002 2001
--------------------- ----------------------
% of % of
sales sales
--------- ----------
Net sales $ 267.4 $ 88.7
============ ============
============ ============
Gross profit (1) $ 27.8 10.4% $ 14.5 16.3%
SG&A 20.5 7.7% 11.1 12.5%
------------ ------------
------------ ------------
Operating profit (1) $ 7.3 2.7% $ 3.4 3.8%
============ ============
============ ============
Backlog 146.2 $ 46.9
Twelve months ended December 31,
-------------------------------------------
(dollars in millions)
2002 2001
--------------------- ---------------------
% of % of
sales sales
--------- ---------
Net sales $ 700.8 $ 473.9
=========== ===========
=========== ===========
Gross profit (1) 89.5 12.8% $74.2 15.7%
SG&A 50.5 7.2% 39.5 8.3%
----------- -----------
----------- -----------
Operating profit (1) 39.0 5.6% $34.7 7.3%
=========== ===========
=========== ===========
Backlog 146.2 $46.9
- Operating performance excludes special items. (1) The fourth quarter and
twelve months of 2001 include $0.2 million and $1.2 million of goodwill
amortization, respectively.
Net sales in the Terex Cranes group for the fourth quarter of 2002 increased
$178.7 million to $267.4 million from $88.7 million in the fourth quarter of
2001. Excluding the impact of the Demag acquisition, net sales for the quarter
increased 30% compared to the fourth quarter of last year. The increase in the
base business was driven by growth in the boom truck business and the hydraulic
crane business in Italy. Also impacting the year-over-year comparison was the
extended shutdowns in the U.S. hydraulic crane business in the fourth quarter of
2001. SG&A expenses increased to $20.5 million, or 7.7% of sales, from $11.1
million, or 12.5% of sales, in the fourth quarter of 2001. Excluding the impact
of acquisitions, SG&A expenses decreased in dollars and in percentage to 6.8% of
sales. Operating profit increased to $7.3 million, or 2.7% of sales, in the
fourth quarter of 2002 from $3.4 million, or 3.8% of sales, in the fourth
quarter of 2001, due primarily to the impact of acquisitions. Operating margins
during the fourth quarter of 2002 were impacted by acquisitions, the current
operating environment, and the write down of certain accounts receivable in the
base businesses reflecting current market conditions.
Net sales for 2002 increased $226.9 million to $700.8 million from $473.9
million in 2001, reflecting the impact of acquired companies and a 7% increase
in net sales in the base businesses. The increase in the base business was
driven by growth in the boom truck business, the U.S. Marine Corps telehandler
contract and the hydraulic crane business in Italy. This increase was partially
offset by continued weakness in the U.S. hydraulic crane market, which reported
double-digit revenue declines in 2002. SG&A expenses in 2002 increased to $50.5
million from $39.5 million in 2001, however, as a percentage of sales, SG&A
expenses decreased to 7.2% in 2002 from 8.3% in 2001, reflecting continued
emphasis on cost controls. Excluding the impact of acquisitions, SG&A expenses
decreased to 6.7% of sales in 2002. Operating profit as a percentage of sales
decreased to 5.6% in 2002, from 7.3% in 2001, reflecting the impact of
acquisitions, the current competitive environment and the write down of certain
accounts receivable reflecting current market conditions.
"The full year 2002 performance for the Terex Cranes group benefited from the
geographic and product diversification of our group," commented Fil Filipov,
President - Terex Cranes. "Our hydraulic crane business in the U.S. continued to
experience double-digit revenue declines in line with industry trends, which
impacted margins in this business, while our hydraulic crane business in Italy
had a very strong year. Our lattice boom crane business was essentially flat and
our boom truck business continued to show double-digit growth while taking
advantage of ownership changes amongst our competitors. Demag has been a
positive contributor to the group right from the beginning and has generated
over $60 million in cash since the date of acquisition." Mr. Filipov continued,
"We are well on our way to integrating Demag and remain comfortable with the $20
million in annualized cost savings announced at the date of the acquisition. The
restructuring we launched in the fourth quarter for our European crane business
is a further step to streamline manufacturing operations and leverage the Demag
acquisition across the whole Terex Cranes group."
Terex Roadbuilding and Utility Products
Three months ended Twelve months ended
December 31, December 31,
--------------------------- ---------------------------
(dollars in millions)
2002 2001 2002 2001
------------- ------------- ------------- -------------
% of % of % of % of
sales sales sales sales
----- ----- ----- -----
Net sales $136.8 $106.1 $562.4 $365.5
======= ======= ======= =======
Gross
profit (1) $ 23.1 16.9% $ 22.3 21.0% $107.1 19.0% $ 68.4 18.7%
SG&A 16.5 12.1% 14.4 13.6% 71.7 12.7% 40.3 11.0%
------- ------- ------- -------
Operating
profit (1) $ 6.6 4.8% $ 7.9 7.4% $ 35.4 6.3% $ 28.1 7.7%
======= ======= ======= =======
Backlog $120.0 $ 50.5 $120.0 $ 50.5
- Operating performance excludes special items. (1) The fourth quarter and
twelve months of 2001 include $0.8 million and $3.3 million of goodwill
amortization, respectively.
Net sales for the Terex Roadbuilding and Utility Products group for the fourth
quarter of 2002 increased $30.7 million to $136.8 million, from $106.1 million
for the fourth quarter of 2001, driven primarily by the acquisitions of Advance
Mixer, Pacific Utility, and Telelect Southeast. Excluding the impact of
acquisitions, sales decreased approximately 9%, as net sales declined in the
Cedarapids and light construction businesses. SG&A expenses for the fourth
quarter 2002 increased to $16.5 million, or 12.1% of sales, compared to $14.4
million, or 13.6% of sales, for the fourth quarter of 2001, reflecting the
impact of acquisitions. Excluding the impact of acquisitions, operating expenses
remained flat at $7.1 million. Operating profit for the fourth quarter of 2002
decreased to $6.6 million, or 4.8% of sales, from $7.9 million, or 7.4% of
sales, for the fourth quarter of 2001. Excluding the impact of acquisitions,
operating profit for the fourth quarter of 2002 was $4.2 million, or 6.7% of
sales, compared to $4.3 million, or 6.2% of sales, for the fourth quarter of
2001.
Net sales for the Terex Roadbuilding and Utility Products group for the full
year 2002 increased $196.9 million to $562.4 million, from $365.5 million for
2001, reflecting the impact of acquired companies. Excluding acquisitions, sales
decreased approximately 15% during 2002, due largely to declines in the
Cedarapids, light construction and utility businesses. SG&A expenses for 2002
increased to $71.7 million, or 12.7% of sales, from $40.3 million, or 11.0% of
sales, for 2001. Excluding acquisitions, SG&A expenses as a percentage of sales
were 11.0% for 2002. Operating profit for the full year 2002 increased $7.3
million to $35.4 million, or 6.3% of sales, from $28.1 million, or 7.7% of
sales, for 2001. Excluding the impact of acquisitions, operating margin was 7.8%
for 2002.
"The Terex Roadbuilding and Utility Products group continued to face challenging
markets during the fourth quarter of 2002," commented Mr. DeFeo. "Our relentless
focus on cost control returned the CMI business to profitability during the
quarter. However, the CMI and Cedarapids businesses continue to be negatively
impacted by budget issues at the federal, state, and local levels. We see no
relief for these businesses in the short term and will continue to focus on
reducing costs and the further integration of these businesses." Mr. DeFeo
continued, "The restructuring and facility consolidation initiated in the third
quarter in our light construction business is paying dividends, as this group
reported double digit operating margins on flat sales in the fourth quarter.
This is a business that was operating basically at break even in the third
quarter of 2002."
Mr. DeFeo further stated, "We are very excited about the investments we made in
the distribution network for our utility business. These investments will not
only help grow the business, but also provide another distribution channel for
other Terex products. We have had some early successes with our loader backhoes
and boom trucks through this distribution channel, and although we have not
planned much in the way of cross selling benefits in 2003, we see this as a
tremendous opportunity."
Terex Aerial Work Platforms
Three months ended Twelve months ended
December 31, December 31,
------------------------ -------------------------
(dollars in millions)
2002 2001 2002 2001
------------ ----------- ------------- -----------
% of % of % of % of
sales sales sales sales
----- ----- ----- -----
Net sales $96.2 $--- $116.7 $---
====== ===== ======= =====
Gross profit $19.2 20.0% $--- $ 22.9 19.6% $---
SG&A 12.4 12.9% --- 14.0 12.0% ---
------ ----- ------- -----
Operating profit $ 6.8 7.1% $--- $ 8.9 7.6% $---
====== ===== ======= =====
Backlog $ 9.1 $--- $ 9.1 $---
- Operating performance excludes special items.
The Terex Aerial Work Platforms group is a new business segment for Terex and
represents the results of Genie Holdings, Inc. and its subsidiaries since their
acquisition by Terex on September 18, 2002.
Commenting on the fourth quarter performance of the Terex Aerial Work Platforms
group, Bob Wilkerson, President-Terex Aerial Work Platforms, said, "We are
pleased with our performance in the fourth quarter. Historically, this is our
weakest quarter of the year, but the aggressive implementation of our
integration plan and relentless focus on cost control is beginning to show up in
the results. Our sales for the quarter of $96.2 million represents a slight
increase over the fourth quarter of 2001; however, our margins improved
significantly over the prior year." Mr. Wilkerson continued, "We remain very
excited about the opportunities of being part of the Terex group and taking
advantage of the best the two companies have to offer. As we progress with our
integration plan we have identified further cost reduction initiatives. We also
see significant opportunities to cross sell other Terex products through the
Genie sales force and share best practices within the companies with respect to
working capital management and manufacturing processes."
Terex Mining
Three months ended Twelve months ended
December 31, December 31,
-------------------------- ---------------------------
(dollars in millions)
2002 2001 2002 2001
------------- ------------ ------------- -------------
% of % of % of % of
sales sales sales sales
------ ----- ----- -----
Net sales $74.7 $82.7 $282.9 $266.1
====== ====== ======= =======
Gross
profit (1) $ 3.8 5.1% $10.8 13.1% $ 29.6 10.5% $ 48.2 18.1%
SG&A 7.2 9.6% 6.7 8.1% 27.3 9.7% 29.8 11.2%
------ ------ ------- -------
Operating
profit (1) $(3.4) (4.6)% $ 4.1 5.0% $ 2.4 0.8% $ 18.4 6.9%
====== ====== ======= =======
Backlog $47.8 $17.1 $ 47.8 $ 17.1
- Operating performance excludes special items. (1) The fourth quarter and
twelve months of 2001 include $0.8 million and $2.9 million of goodwill
amortization, respectively.
Net sales for the Terex Mining group for the fourth quarter of 2002 decreased
$8.0 million to $74.7 million, from $82.7 million in the fourth quarter of 2001.
The decrease in sales is primarily attributable to the surface mining truck
business, as the hydraulic shovel business continued to perform as expected. The
decrease in operating profit from $4.1 million in the fourth quarter of 2001 to
a loss of $3.4 million in the fourth quarter of 2002 was primarily related to
service contract issues that were resolved during the quarter and inventory
write downs.
Net sales for the full year 2002 increased $16.8 million to $282.9 million, from
$266.1 million in 2001. The increase in sales was driven by a strong performance
in the hydraulic shovel business offset partially by continued weakness in the
surface mining truck business. Operating profit for the year declined to $2.4
million for 2002, compared to $18.4 million for 2001. In addition to the items
mentioned above, the Terex Mining results for the year were impacted by reduced
volume and under absorption in the mining truck business.
"2002 was a difficult year for Terex Mining," commented Thys de Beer, President
- Terex Mining. "Depressed commodity prices and above average inventory levels
for certain commodities continued to put pressure on the industry. We made some
difficult decisions in the Mining business during 2002, including the closure of
our Tulsa manufacturing facility. We believe that these initiatives better
position us to improve performance heading into 2003." Mr. De Beer continued,
"We have seen some recent improvements in orders, driven primarily by the coal
mining industry, and backlog was up over $25 million at the end of the fourth
quarter of 2002 from the third quarter of 2002. Through our recent actions, we
have streamlined our operations and cost structure for today's business
environment. As we head into 2003, we are looking for substantial improvements
in the profitability of the Mining business as we leverage the cost savings from
outsourcing final assembly of our surface mining trucks, as well as margin
improvements from the resolution of certain service contract issues which will
not repeat themselves in 2003."
Restructuring Update
"We have had significant restructuring activities during 2002, with pre-tax
charges totaling approximately $64 million, as we have moved to consolidate
manufacturing capacity, reduce overhead, and size our businesses for the current
economic environment," stated Phil Widman, Senior Vice President - Chief
Financial Officer. "With respect to the recently announced fourth quarter
restructuring initiatives of $54 million, we are aggressively implementing our
action plans and remain confident that we will achieve the $12 million in
targeted pre-tax cost savings for 2003." Mr. Widman continued, "For those
restructuring plans implemented earlier in 2002, we are well on our way and are
beginning to see the positive impact from our decisions. The closure of our
Tulsa manufacturing facility and transfer of production to a third party
contract manufacturer has gone according to plan. We are on track to achieve $3
to $5 million in cost savings in 2003 from this action and have shipped our
first mining trucks from this outsourced arrangement at the end of the third
quarter of 2002. In the light construction business, we consolidated
manufacturing capacity into our Rock Hill, South Carolina facility. These
actions have now been completed and we are seeing the benefits starting to show
up in the results for the light construction business in the fourth quarter of
2002. We believe that the success of our 2003 plan is dependent on remaining
focused on the execution of our cost savings initiatives."
Capital Structure
"Cash flow from operations for 2002 was $70.3 million and free cash flow (cash
from operations less capital expenditures) was $41.1 million," commented Mr.
Widman. "While we achieved some improvement in this area during the fourth
quarter, we expect to build on this momentum in 2003. As a percent of annualized
sales, net working capital is approximately 34%, adjusting for the 2002
acquisitions. We remain committed to reducing working capital in 2003 an
additional $150 million from the year end 2002 level."
Net debt at the end of the fourth quarter of 2002 decreased $88.1 million to
$1,209.0 million, from $1,297.1 million at the end of the third quarter of 2002,
primarily reflecting working capital reductions and asset sales. Net debt to
book capitalization at the end of the fourth quarter of 2002 was 61.1%, compared
to 57.5% at the end of 2001 and 62.7% at the end of the third quarter of 2002.
Mr. Widman added, "With respect to our bank covenants, we remain well within our
limits for compliance and our consolidated leverage ratio, calculated in
accordance with our bank credit facility agreement, was below 4.0 times at
December 31, 2002."
Outlook
"We recently provided detailed forecasts by operating segment with respect to
2003," commented Mr. DeFeo. "Our main focus in 2003 will be on Company
fundamentals. We do not expect any help from the end markets, but rather see our
improvement coming from acquisition integration, execution on cost saving
initiatives, penetration into new markets for certain product categories, and
debt and working capital reductions." Mr. DeFeo continued, "With respect to the
first quarter of 2003, I expect earnings to be up 20% to 25% compared to the
first quarter of 2002 and I anticipate the first half of 2003 to represent
approximately 55% of full year 2003 earnings. For the full year, I remain
confident of our ability to achieve the targets described in our recent detailed
guidance provided by segment, despite the current challenging environment."
Safe Harbor Statement
The above contains forward-looking information based on Terex's current
expectations. Because forward-looking statements involve risks and
uncertainties, actual results could differ materially. Such risks and
uncertainties, many of which are beyond Terex's control, include among others:
Terex's business is highly cyclical and weak general economic conditions may
affect the sales of its products and its financial results; the sensitivity of
construction and mining activity to interest rates and government spending; the
ability to successfully integrate acquired businesses; the retention of key
management personnel; Terex's businesses are very competitive and may be
affected by pricing, product initiatives and other actions taken by competitors;
the effects of changes in laws and regulations; Terex's business is
international in nature and is subject to changes in exchange rates between
currencies, as well as international politics; the ability of suppliers to
timely supply Terex parts and components at competitive prices; the financial
condition of suppliers and customers, and their continued access to capital;
Terex's ability to timely manufacture and deliver products to customers; Terex's
substantial amount of debt and its need to comply with restrictive covenants
contained in Terex's debt agreements; compliance with applicable environmental
laws and regulations; and other factors, risks, uncertainties more specifically
set forth in Terex's public filings with the SEC. Actual events or the actual
future results of Terex may differ materially from any forward looking statement
due to those and other risks, uncertainties and significant factors. The
forward-looking statements herein speak only as of the date of this release.
Terex expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statement included in this release
to reflect any changes in Terex's expectations with regard thereto or any
changes in events, conditions, or circumstances on which any such statement is
based.
Terex Corporation is a diversified global manufacturer based in Westport,
Connecticut, with annual revenues of $2.8 billion. Terex is involved in a broad
range of construction, infrastructure, recycling and mining-related capital
equipment under the brand names of Advance, American, Amida, Atlas, Bartell,
Bendini, Benford, Bid-Well, B.L. Pegson, Canica, Cedarapids, Cifali, CMI,
Coleman Engineering, Comedil, CPV, Demag, Fermec, Finlay, Franna, Fuchs, Genie,
Grayhound, Hi-Ranger, Italmacchine, Jaques, Johnson-Ross, Koehring, Lectra Haul,
Load King, Lorain, Marklift, Matbro, Morrison, Muller, O&K, Payhauler, Peiner,
Powerscreen, PPM, Re-Tech, RO, Royer, Schaeff, Simplicity, Square Shooter,
Telelect, Terex, and Unit Rig. Terex offers a complete line of financial
products and services to assist in the acquisition of Terex equipment through
Terex Financial Services. More information on Terex can be found at
www.terex.com.
TEREX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three Months Twelve Months
Ended Dec. 31, Ended Dec.31,
---------------- ------------------
2002 2001 2002 2001
-------- ------- -------- ---------
Net sales $ 851.1 $442.1 $2,797.4 $1,812.5
Cost of goods sold 786.3 369.8 2,440.7 1,535.9
-------- ------- --------- ---------
Gross profit 64.8 72.3 356.7 276.6
Selling, general and
administrative expenses 100.3 49.0 288.1 172.4
-------- ------- --------- ---------
Income (loss) from operations (35.5) 23.3 68.6 104.2
Other income (expense):
Interest income 2.8 1.1 7.5 7.7
Interest expense (26.0) (20.6) (92.9) (86.7)
Other income (expense) - net (0.6) 0.9 (9.0) (0.6)
-------- ------- --------- ---------
Income (loss) from continuing
operations before income taxes &
extraordinary items (59.3) 4.7 (25.8) 24.6
Provision for income taxes 19.0 (1.5) 8.3 (7.9)
-------- ------- --------- ---------
Income (loss) before extraordinary
items (40.3) 3.2 (17.5) 16.7
Extraordinary loss on retirement
of debt --- (1.6) (1.6) (3.9)
Cumulative effect of change in
accounting principle --- --- (113.4) ---
-------- ------- --------- ---------
Net income (loss) $ (40.3) $ 1.6 $ (132.5) $ 12.8
======== ======= ========= =========
EARNINGS PER SHARE: -
Basic:
Income (loss) from operations $ (0.85) $ 0.10 $ (0.41) $ 0.60
Extraordinary loss on
retirement of debt --- (0.05) (0.04) (0.14)
Cumulative effect of change in
accounting
principle --- --- (2.62) ---
-------- ------- --------- ---------
Net income (loss) $ (0.85) $ 0.05 $ (3.07) $ 0.46
======== ======= ========= =========
Diluted:
Income (loss) from operations $ (0.85) $ 0.10 $ (0.41) $ 0.58
Extraordinary loss on
retirement of debt --- (0.05) (0.04) (0.14)
Cumulative effect of change in
accounting
principle --- --- (2.62) ---
-------- ------- --------- ---------
Net income (loss) $ (0.85) $ 0.05 $ (3.07) $ 0.44
======== ======= ========= =========
Weighted average number of common
and common equivalent shares
outstanding in per share
calculation
Basic 47.4 31.9 43.2 28.1
Diluted 47.4 32.5 43.2 28.9
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions, except par value)
(unaudited)
December December
31, 31,
2002 2001
---------- ----------
CURRENT ASSETS
Cash and cash equivalents $ 352.2 $ 250.4
Trade receivables 578.6 351.1
Inventories 1,106.3 704.8
Deferred taxes 45.1 23.7
Other current assets 137.1 53.0
---------- ----------
Total Current Assets 2,219.3 1,383.0
LONG-TERM ASSETS
Property, plant and equipment 309.4 173.9
Goodwill 622.9 620.1
Deferred taxes 135.9 75.4
Other assets 318.8 134.6
---------- ----------
TOTAL ASSETS $ 3,606.3 $ 2,387.0
========== ==========
CURRENT LIABILITIES
Notes payable and current portion of long-term
debt $ 74.1 $ 34.7
Trade accounts payable 542.9 291.0
Accrued compensation and benefits 74.0 37.4
Accrued warranties and product liability 86.0 62.7
Other current liabilities 323.4 201.3
---------- ----------
Total Current Liabilities 1,100.4 627.1
NON CURRENT LIABILITIES
Long-term debt, less current portion 1,487.1 1,020.7
Other 249.6 143.8
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Equity rights --- 0.5
Common Stock, $0.01 par value --
Authorized 150.0 shares; issued 48.6 and 37.5
shares at December 31, 2002 and 2001,
respectively 0.5 0.4
Additional paid-in capital 772.7 532.4
Retained earnings 67.4 199.9
Accumulated other comprehensive income (53.6) (120.3)
Less cost of shares of common stock in treasury
(1.2 and 1.1 shares at December 31, 2002 and
2001, respectively) (17.8) (17.5)
---------- ----------
Total Stockholders' Equity 769.2 595.4
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,606.3 $ 2,387.0
========== ==========
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
Twelve Months Ended
December 31,
---------------------
2002 2001
---------- ----------
OPERATING ACTIVITIES
Net income (loss) $ (132.5) $ 12.8
Adjustments to reconcile net income (loss) to
cash provided by (used in) operating
activities:
Depreciation 35.9 22.5
Amortization 9.1 17.8
Extraordinary loss on retirement of debt 1.6 3.9
Gain on sale of fixed assets (0.7) (1.5)
Gain on foreign currency futures (3.8) ---
Restructuring charges 50.9 19.5
Impairment charges and asset write downs 140.8 ---
Changes in operating assets and liabilities
(net of effects of acquisitions):
Trade receivables 11.6 28.1
Inventories (52.7) (19.6)
Trade accounts payable 86.5 (40.5)
Other, net (76.4) (48.5)
---------- ----------
Net cash provided by (used in) operating
activities 70.3 (5.5)
---------- ----------
INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired (445.9) (130.8)
Capital expenditures (29.2) (13.5)
Proceeds from sale of assets 34.5 8.0
---------- ----------
Net cash used in investing activities (440.6) (136.3)
---------- ----------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt, net
of issuance costs 572.0 481.4
Issuance of common stock 113.3 96.3
Principal repayments of long-term debt (219.6) (388.5)
Net borrowings under revolving line of credit
agreements (0.8) 23.6
Other (4.9) (1.3)
---------- ----------
Net cash provided by financing activities 460.0 211.5
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS 12.1 (0.7)
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 101.8 69.0
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 250.4 181.4
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 352.2 $ 250.4
========== ==========
CONTACT: Terex Corporation
Kevin O'Reilly, Vice President, 203/222-5943
Copyright (C) 2003 Business Wire. All rights reserved.