-- Net sales of over $1 billion in second quarter
-- Cash flow from operations of $70 million in the quarter; $184
million year-to-date
-- Net debt decreased $163 million from December 31, 2002
WESTPORT, Conn.--(BUSINESS WIRE)--July 23, 2003--Terex Corporation (NYSE: TEX) today announced a net loss for the
second quarter of 2003 of $49.1 million, or $1.02 per share, compared
to net income of $5.2 million, or $0.12 per share, for the second
quarter of 2002. Excluding the impact of special items, net income for
the quarter was $24.7 million, or $0.50 per share, compared to $20.5
million, or $0.47 per share, for the second quarter of 2002. Special
items for the second quarter of 2003, which are explained in more
detail later in this release, primarily include an impairment charge
and product rationalization within the Roadbuilding group, facility
consolidation in the tower crane and Powerscreen businesses and a loss
on the early retirement of debt. Special items for the second quarter
of 2002 primarily included costs associated with the closure of a
manufacturing facility in Tulsa, Oklahoma and the write down of
certain assets within the light construction, European lifting and
EarthKing businesses, partially offset by a foreign exchange gain
associated with the acquisition of Demag.
Net sales increased to $1,007.4 million in the second quarter of
2003, an increase of 54% from $653.2 million in the second quarter of
2002. Cash flow from operations was $69.5 million and net debt
decreased by $62.6 million during the second quarter of 2003. Net
sales for the six months ended June 30, 2003 increased to $1,886.7
million, an increase of 57% from $1,199.6 million for the six months
ended June 30, 2002. Net loss for the first six months of 2003 was
$36.6 million or $0.76 per share, compared to a net loss of $102.0
million, or $2.48 per share for the first six months of 2002. Net
income, excluding special items, was $40.5 million, or $0.82 per
share, for the first six months of 2003, compared to net income,
excluding special items, of $27.5 million, or $0.67 per share, for the
first six months of 2002. Cash flow from operations was $184.4 million
and net debt decreased by $162.7 million in the six months ended June
30, 2003.
"As we look back on the first six months of 2003, we have made
progress on many of our goals for the year, but we realize that there
is still much work in front of us," commented Ronald M. DeFeo, Terex's
Chairman and Chief Executive Officer. "At the halfway point of the
year we have generated $184 million in cash from operations, paid down
$106 million in debt and reduced net debt by $163 million. Our sales
and earnings, excluding special items, grew by more than 40% and our
earnings per share, excluding special items, by more than 20%, as we
are realizing benefits from integrating acquisitions and executing on
cost-saving initiatives. We accomplished all of this against the
backdrop of very difficult end markets."
"The first half of the year, however, did have its bumps in the
road," added Mr. DeFeo. "Our end-markets remain challenging in all of
our businesses, but were particularly weak in Roadbuilding and North
American cranes. We have plans to reduce the cost structure further in
these businesses in an effort to streamline operations, reduce our
investment and improve profitability. All of these actions are
necessary given current market demand. With respect to acquisitions, I
am very pleased with the performance of Genie and Demag after the
first nine months. I believe both are outperforming the market,
executing on their integration plan and delivering meaningful earnings
and cash flow to the Company. Our other restructuring and cost-saving
initiatives are moving along as scheduled. Our facility consolidation
in the U.K. involving the Benford and Fermec businesses is essentially
complete. Although the first six months were burdened with the
incremental costs of redundant facilities, the transition into the new
Coventry facility went quite smoothly and we expect to begin realizing
the cost-saving benefits during the second half of 2003."
"Despite our progress, we still have a lot left to do," said Mr.
DeFeo. "Our visibility into the market place is limited and it is
difficult to predict the timing of any recovery. As a management team,
we are constantly looking for ways to create value for customers and
shareholders. We believe our recent agreement with Daewoo to
distribute crawler excavators and wheel loaders under the Terex brand
in North America, as well as the recent win of our joint venture,
American Truck Company, to supply the Ministry of Defense of Israel
(IMOD) with tactical vehicles, are both low cost opportunities to grow
the business and create value. The Daewoo agreement fills a gap in our
product line and will allow our dealers to focus on a full Terex
product line, one of the most complete in the industry. The IMOD win
is our entrance into the military market, which is dominated by a few
players with very little competition. Although these initiatives will
require a focused effort, we see real opportunity to apply the Terex
value proposition. In the near term, we remain committed to executing
our plan, generating cash flow and reducing debt."
In this press release Terex refers to various non-GAAP (generally
accepted accounting principles) financial measures. These measures may
not be comparable to similarly titled measures being disclosed by
other companies. The table below and the tables included elsewhere in
this press release provide a reconciliation of the reported GAAP
numbers for the second quarter and six months year to date of 2003 and
2002, the reported numbers excluding special items, and the reported
numbers excluding acquisitions (specifically Demag, Genie, Pacific
Utility, Telelect Southeast, Advance Mixer, Crane & Machinery,
Commercial Body and Combatel) and special items. Terex believes that
this information is useful to understanding its operating results, the
ongoing performance of its underlying businesses without the impact of
special items, and the impact that acquisitions have had on its
financial performance. Terex also discloses EBITDA and net debt, as
they are commonly referred to financial metrics used in the investing
community, and Terex believes that disclosure of EBITDA and net debt
will be helpful to those reviewing its performance and that of other
comparable companies, as EBITDA and net debt provide information on
Terex's leverage position, ability to meet debt service and capital
expenditure and working capital requirements, and EBITDA is also an
indicator of profitability.
A financial summary is shown below:
Three months ended June 30,
--------------------------------------------
2003
--------------------------------------------
(in millions, except per share amounts)
Excluding
Special Excluding Acquisitions
Items Special & Special
Reported (2) Items Items (4)
--------------------------------------------
Net sales $ 1,007.4 $ --- $ 1,007.4 $ 631.8
========== ======== ========== ========
Gross profit $ 112.1 $ 38.0 $ 150.1 $ 91.8
SG&A 92.8 (2.3) 90.5 61.2
---------- -------- ---------- --------
Income from operations 19.3 40.3 59.6 $ 30.6
========
Other income (expense) (80.5) 54.3 (26.2)
Provision for income taxes 11.5 (20.9) (9.4)
Income (loss) from
discontinued operations 0.6 0.1 0.7
Cumulative effect of change
in accounting principles --- --- ---
---------- -------- ----------
Net income (loss) $ (49.1) $ 73.8 $ 24.7
========== ======== ==========
Earnings per share $ (1.02) $ 0.50
EBITDA (1) $ 35.6 $ 40.3 $ 75.9
Backlog $ 407.4 $ 407.4
Average diluted shares
Outstanding 48.2 1.3 49.5
Three months ended June 30,
--------------------------------------------
2002
--------------------------------------------
(in millions, except per share amounts)
Excluding
Special Excluding Acquisitions
Items Special & Special
Reported (3) Items Items (4)
--------------------------------------------
Net sales $ 653.2 $ --- $ 653.2 $ 618.1
========== ======== ========== ========
Gross profit $ 116.6 $ 8.2 $ 124.8 $ 120.3
SG&A 69.4 (0.6) 68.8 65.8
---------- -------- ---------- --------
Income from operations 47.2 8.8 56.0 $ 54.5
========
Other income (expense) (30.8) 9.5 (21.3)
Provision for income taxes (5.3) (5.9) (11.2)
Income (loss) from
discontinued operations (5.9) 2.9 (3.0)
Cumulative effect of change
in accounting principles --- --- ---
---------- -------- ----------
Net income (loss) $ 5.2 $ 15.3 $ 20.5
========== ======== ==========
Earnings per share $ 0.12 $ 0.47
EBITDA (1) $ 56.2 $ 8.8 $ 65.0
Backlog $ 343.5 $ 343.5
Average diluted shares
Outstanding 43.6 --- 43.6
(1) EBITDA is calculated as income from operations plus depreciation
and amortization included in income from operations.
(2) Special items, net of tax, relate to goodwill impairment for the
Roadbuilding group ($42.5 million), exiting certain businesses and
product rationalization within the Roadbuilding group ($22.0
million), restructuring activities ($7.0 million), loss on
retirement of debt ($1.4 million), write-off of remaining
investment in SDC International ($0.8 million), and Genie
inventory fair value accounting treatment ($0.1 million).
(3) Special items, net of tax, relate to the restructuring charge for
the closure of the Tulsa, Oklahoma facility ($2.8 million),
headcount reductions at Cedarapids ($0.6 million), and write-down
of certain assets within the Light Construction, European lifting
and EarthKing businesses ($15.6 million), offset partially by a
foreign exchange rate gain related to the Demag acquisition ($3.7
million).
(4) Acquisitions excluded are Demag, Genie, Pacific Utility, Telelect
Southeast, Advance Mixer, Crane & Machinery, Commercial Body and
Combatel.
Six months ended June 30,
--------------------------------------------
2003
--------------------------------------------
(in millions, except per share amounts)
Excluding
Special Excluding Acquisitions
Items Special & Special
Reported (2) Items Items (4)
--------------------------------------------
Net sales $ 1,886.7 $ --- $ 1,886.7 $ 1,179.1
========== ======== ========== ==========
Gross profit $ 237.0 $ 43.5 $ 280.5 $ 170.1
SG&A 177.6 (2.6) 175.0 116.7
---------- -------- ---------- ----------
Income from operations 59.4 46.1 105.5 $ 53.4
==========
Other income (expense) (104.1) 52.7 (51.4)
Provision for income taxes 6.8 (21.9) (15.1)
Income (loss) from
discontinued operations 1.3 0.2 1.5
Cumulative effect of change
in accounting principles --- --- ---
---------- -------- ----------
Net income (loss) $ (36.6) $ 77.1 $ 40.5
========== ======== ==========
Earnings per share $ (0.76) $ 0.82
EBITDA (1) $ 89.9 $ 46.5 $ 136.4
Backlog $ 407.4 $ 407.4
Average diluted shares
Outstanding 48.0 1.3 49.3
Six months ended June 30,
--------------------------------------------
2002
--------------------------------------------
(in millions, except per share amounts)
Excluding
Special Excluding Acquisitions
Items Special & Special
Reported (3) Items Items (4)
--------------------------------------------
Net sales $ 1,199.6 $ --- $ 1,199.6 $ 1,151.1
========== ======== ========== ==========
Gross profit $ 206.2 $ 9.4 $ 215.6 $ 208.5
SG&A 126.1 (0.6) 125.5 120.7
---------- -------- ---------- ----------
Income from operations 80.1 10.0 90.1 $ 87.8
==========
Other income (expense) (53.1) 9.5 (43.6)
Provision for income taxes (8.7) (6.3) (15.0)
Income (loss) from
discontinued operations (6.9) 2.9 (4.0)
Cumulative effect of
change in accounting
principles (113.4) 113.4 ---
---------- -------- ----------
Net income (loss) $ (102.0) $ 129.5 $ 27.5
========== ======== ==========
Earnings per share $ (2.48) $ 0.67
EBITDA (1) $ 96.2 $ 10.0 $ 106.2
Backlog $ 343.5 $ 343.5
Average diluted shares
Outstanding 41.2 --- 41.2
(1) EBITDA is calculated as income from operations plus depreciation
and amortization included in income from operations.
(2) Special items, net of tax, relate to goodwill impairment for the
Roadbuilding group ($42.5 million), exiting certain businesses and
product rationalization within the Roadbuilding group ($22.0
million), restructuring activities ($8.3 million), loss on
retirement of debt ($1.4 million), write-off of remaining
investment in SDC International ($0.8 million), write-down of
certain assets within the EarthKing business ($1.7 million) and
Genie and Demag inventory fair value accounting treatment ($2.1
million), offset partially by a favorable ruling on a legal claim
($1.7 million).
(3) Special items, net of tax, relate to the restructuring charge for
the closure of the Tulsa, Oklahoma facility ($2.8 million),
closure of the Standard Havens facility ($0.8 million), headcount
reductions at Cedarapids ($0.6 million), write-down of certain
assets within the Light Construction, European lifting and
EarthKing businesses ($15.6 million), impact of adopting SFAS No.
142 "Goodwill and Other Intangible Assets" and SFAS No. 141
"Business Combination" ($113.4 million), offset partially by a
foreign exchange rate gain related to the Demag acquisition ($3.7
million).
(4) Acquisitions excluded are Demag, Genie, Pacific Utility, Telelect
Southeast, Advance Mixer, Crane & Machinery, Commercial Body and
Combatel.
Segment Performance
The comparative segment performance below excludes special items.
See Table I included later in this press release for the
reconciliation to the reported GAAP numbers.
Terex Construction
Second Quarter Year-to-Date
---------------------------- ---------------------------
(dollars in millions)
2003 2002 2003 2002
------------- ------------- ------------- ------------
% of % of % of % of
sales sales sales sales
----- ----- ----- -----
Net sales $382.7 $337.7 $700.9 $594.2
====== ====== ====== ======
Gross profit $ 55.4 14.5% $ 61.1 18.1% $ 97.1 13.9% $100.3 16.9%
SG&A 34.2 8.9% 32.2 9.5% 61.7 8.8% 56.1 9.4%
------ ------ ------ ------
Operating
profit $ 21.2 5.5% $ 28.9 8.6% $ 35.4 5.1% $ 44.2 7.4%
====== ====== ====== ======
Backlog $ 89.2 $115.0 $ 89.2 $115.0
Net sales in the Terex Construction Group for the second quarter
of 2003 increased $45.0 million to $382.7 million from $337.7 million
in the second quarter of 2002. The increase in sales was driven
primarily by the foreign exchange movements among the Euro, British
Pound and U.S. dollar. Excluding the translation impact of foreign
exchange movements, sales for Terex Construction were flat to slightly
down. SG&A expenses for the second quarter of 2003 were $34.2 million,
or 8.9% of sales, compared to $32.2 million, or 9.5% of sales, for the
second quarter of 2002, reflecting an increase in the allowance for
doubtful accounts. Income from operations for the quarter was $21.2
million, or 5.5% of sales, compared to $28.9 million, or 8.6% of
sales, for the second quarter of 2002.
"Despite difficult end-markets, we believe the Terex Construction
Group had a solid quarter," commented Colin Robertson, President-Terex
Construction. "Our focus on execution and cost reduction are starting
to show up in our results. Although our performance is down year over
year, we have seen sequential improvement in margins from the first
quarter of 2003 as the restructuring and cost saving initiatives we
implemented in late 2002 and early 2003 are starting to take hold.
This is in spite of provisioning for some troubled customers, the
incremental costs from operating redundant facilities in the U.K.
while we moved production to consolidate the Benford and Fermec
businesses, and the negative currency impact from selling our
European-manufactured product into the United States."
"Specifically, the Atlas business continued to make progress
during the quarter as we focused on cost reductions and manufacturing
efficiencies, and the consolidation of our Benford and Fermec
locations into our new manufacturing facility in Coventry is
essentially complete," Mr. Robertson added. "I am very pleased with
the execution of this transition, as there was minimal disruption to
the business while at the same time we continued to penetrate and grow
our markets. We believe we are well positioned and we expect our cost
saving initiatives related to the facility consolidation to positively
impact our second half results. In addition, we are taking incremental
actions in our Powerscreen business and closing our Kilbeggan
facility. This will lower our cost structure even further for this
business and better utilize the manufacturing capacity."
"As we look to the second half of 2003, we will continue to focus
on the things we can control, such as driving additional costs out of
the system and penetrating new and under-represented markets, and we
will continue to have a persistent focus on working capital reduction
and cash generation."
Terex Cranes
Second Quarter Year-to-Date
---------------------------- ---------------------------
(dollars in millions)
2003 2002 2003 2002
------------- -------------- ------------- ------------
% of % of % of % of
sales sales sales sales
----- ----- ----- -----
Net sales $273.0 $136.4 $510.9 $271.5
====== ====== ====== ======
Gross profit $ 28.7 10.5% $ 21.7 15.9% $ 58.3 11.4% $ 38.5 14.2%
SG&A 19.8 7.3% 9.4 6.9% 40.2 7.9% 18.9 7.0%
------ ------ ------ ------
Operating
profit $ 8.9 3.3% $ 12.3 9.0% $ 18.1 3.5% $ 19.6 7.2%
====== ====== ====== ======
Backlog $153.0 $ 59.2 $153.0 $ 59.2
Net sales in the Terex Cranes group for the second quarter of 2003
increased $136.6 million to $273.0 million from $136.4 million in the
second quarter of 2002. Excluding the impact of acquisitions (Demag
and Crane & Machinery), net sales for the quarter were down over 20%,
reflecting the weak North American markets, although offset somewhat
by better performance in the international markets. SG&A expenses
increased to $19.8 million, or 7.3% of sales, in the second quarter of
2003 compared to $9.4 million, or 6.9% of sales, for the second
quarter of 2002, reflecting the impact of acquired companies.
Excluding the impact of acquisitions, SG&A expenses decreased to $8.6
million. Income from operations for the quarter was $8.9 million, or
3.3% of sales, compared to $12.3 million, or 9.0% of sales, in the
second quarter of 2002, as margins continue to be under pressure from
competitive pricing in the market place, sales volume reduction in
North America and used machine sales with very low margins.
"Our integration of Demag continues on track and we are
aggressively growing that business," commented Fil Filipov, President
- Terex Cranes. "What we have in the crane industry are two diverse
markets. The North American market is depressed and down over 30% for
the first half of the year. While the international business still
shows signs of life in certain areas, however, the pricing remains
very competitive. Our tower crane business continues to outperform the
industry, as it reported strong double-digit growth in the quarter and
first six months, and Demag continues to see its markets grow on the
strength of recent product introductions. From an operational
perspective, we continue to squeeze costs out of the system by
reducing our manufacturing capacity in the U.S. and internationally.
With the previous announced relocation of our boom truck business to
Waverly, Iowa and the closure of our Peiner tower crane facility in
Germany, we will lower our fixed overhead and improve manufacturing
efficiencies and profitability. The consolidation of these facilities
will be completed in the second half of 2003."
Mr. Filipov added, "We do not expect a rebound in the end-markets
and in the short term we will continue to focus on cost reductions and
managing the business for cash, such as aggressively converting used
equipment. This has impacted our overall margin, but we believe it is
necessary to compete in today's environment."
Terex Mining, Roadbuilding, Utility Products and Other
Second Quarter Year-to-Date
---------------------------- ---------------------------
(dollars in millions)
2003 2002 2003 2002
------------- ------------- ------------- -------------
% of % of % of % of
sales sales sales sales
----- ----- ----- -----
Net sales $202.9 $193.9 $392.6 $356.2
====== ====== ====== ======
Gross profit $ 30.4 15.0% $ 41.1 21.2% $ 59.6 15.2% $ 75.0 21.1%
SG&A 22.8 11.2% 24.2 12.5% 44.5 11.3% 45.5 12.8%
------ ------ ------ ------
Operating
profit $ 7.6 3.7% $ 16.9 8.7% $ 15.1 3.8% $ 29.5 8.3%
====== ====== ====== ======
Backlog $119.0 $138.6 $119.0 $138.6
On July 1, 2003 the Company announced that it reached an agreement
in principle to sell Terex's worldwide electric drive mining truck
business to Caterpillar, and for Terex to acquire Caterpillar's mining
shovel intellectual property. As a result, the Company has accounted
for the mining truck business and wholly owned product support
businesses as a discontinued operation in accordance with SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets."
This will require the Company to restate prior year results to treat
the mining truck business as a discontinued operation on the
consolidated statement of operations and to show the net assets of the
business as a single amount in the consolidated balance sheet. Due to
the size of the remaining mining business, the Company has ceased
reporting Mining as a separate segment. See Table II included later in
this release for restated prior period segment information.
Net sales for the Terex Mining, Roadbuilding and Utility Products
group for the second quarter of 2003 increased $9.0 million to $202.9
million from $193.9 million for the second quarter of 2002, driven
primarily by the acquisitions in the utility business and Advance
Mixer. Excluding the impact of acquisitions, sales decreased
approximately 5%. SG&A expenses for the second quarter of 2003 were
$22.8 million, or 11.2% of sales, compared to $24.2 million, or 12.5%
of sales, in the second quarter of 2002. Excluding the impact of
acquisitions, SG&A expenses decreased approximately 15%, reflecting
management's intense focus on cost controls in response to weak market
conditions. Income from operations decreased to $7.6 million, or 3.7%
of sales, in the second quarter of 2003, from $16.9 million, or 8.7%
of sales, in the second quarter of 2002.
"The Mining, Roadbuilding and Utility Products group continues to
have its ups and downs," commented Mr. DeFeo. "Our CMI business, which
is significantly impacted by highway spending, saw revenue decline
over 25% in the quarter. Although the business has its near-term
challenges, we still believe that the U.S. will need to invest in its
highways and infrastructure, which will drive long-term growth in this
sector. However, we do not see any catalyst for this business in 2003
and do not anticipate any improvement in the market until the highway
bill is reauthorized and there is some clarity to the state budget
issues, possibly in 2004. We have made many changes in the
Roadbuilding businesses over the past year, from rationalizing our
product offering and closing facilities to management changes, and we
will continue to focus on reducing costs and managing these businesses
for cash as we navigate through these tough end-markets."
Mr. DeFeo continued, "Our utility business continues to post solid
results and our investments in the distribution channel over the past
year provide us with real opportunities to penetrate new markets, such
as the large investor owned utilities and municipalities, and grow
this franchise. Our "Utility Depot" marketing strategy has gained
momentum as we continue to cross-sell other Terex products into this
market."
"Our Mining group as a whole reported improved profitability on
flat sales as the cost saving initiatives implemented in 2002 are
flowing to the bottom line," commented Thys de Beer, President - Terex
Mining. "The shovel business in particular is still performing
strongly and we are capturing the orders for the large mining shovels
as they come along. Initial market reaction to our announced deal with
Caterpillar has been quite positive, but there remains a lot of work
in front of us to get this accomplished."
Terex Aerial Work Platforms
Second Quarter Year-to-Date
------------------------- --------------------------
(dollars in millions)
2003 2002 2003 2002
------------- ----------- ------------- ------------
% of % of % of % of
sales sales sales sales
----- ----- ----- -----
Net sales $167.8 $9.3 $315.0 $17.1
======= ===== ======= ======
Gross profit $ 35.5 21.2% $0.8 8.6% $ 65.7 20.9% $ 1.6 9.4%
SG&A 14.0 8.3% 0.6 6.5% 27.7 8.8% 1.2 7.0%
------- ----- ------- ------
Operating profit $ 21.5 12.8% $0.2 2.2% $ 38.0 12.1% $ 0.4 2.3%
======= ===== ======= ======
Backlog $ 21.3 $0.5 $ 21.3 $ 0.5
The Terex Aerial Work Platforms group represents the results of
Genie Holdings, Inc. and its subsidiaries since their acquisition by
Terex on September 18, 2002. In addition, beginning April 1, 2003, the
Aerial Work Platform group became responsible for the manufacturing,
sales and service of the Terex telehandlers business in North America,
and prior year amounts have been restated for consistency.
Net sales for the Terex Aerial Work Platforms group for the second
quarter of 2003 were $167.8 million. SG&A expenses were $14.0 million,
or 8.3% of sales, for the second quarter of 2003 and income from
operations were $21.5 million, or 12.8% of sales.
"We are very pleased with our second quarter results," said Bob
Wilkerson, President - Terex Aerial Work Platforms group. "Our second
quarter sales were flat to slightly up compared to the run rate of the
second quarter of 2002, but our margins have improved considerably as
we benefited during the quarter from previous restructuring actions as
well as a favorable movement in foreign exchange. As we look forward,
we expect the end markets to remain challenging, but we see the
financial restructuring occurring at some of the large rental
companies as a necessary step to improve the financial position of the
customer base before they start buying again."
Mr. Wilkerson added, "During the quarter we also assumed
responsibility for the Terex telehandler business in North America,
including manufacturing, sales and service. As this product is
primarily sold through the rental channel, it is a natural fit with
Genie and the manner in which we go to market. We are very impressed
with the quality of the Terex telehandler product and see a compelling
value proposition that we can offer to customers. Although there have
been changes in the telehandler industry over the past few years, with
new entrants and more recently with consolidations, there still
remains significant market opportunities in this category. Our goal is
to capitalize on those opportunities by leveraging our customer value
proposition."
Special Items
Given recent performance in the Roadbuilding reporting unit and
the continued uncertainty surrounding highway spending at the federal,
state, and local levels, the Company accelerated its review of the
long-term value of the Roadbuilding business. In addition to taking
into account past management actions, including staff reductions and
changes in management, the Company reviewed additional actions to
streamline operations and improve profitability. The result of this
review led management to rationalize certain product lines within the
Roadbuilding reporting unit. The charge associated with the impairment
of goodwill was $51.3 million and the charge related to exiting and
rationalizing certain product categories is $30.6 million, primarily
related to inventory.
Also included in special items for the second quarter of 2003
were: (1) the closure costs related to the Peiner and Kilbeggan
operations ($9.0 million); (2) the loss on the retirement of debt
related to the $50 million redemption of the 8 - 7/8% senior
subordinated notes ($1.9 million); (3) the write-off of the remaining
investment in SDC International ($1.1 million); and (4) Genie
inventory fair value accounting treatment ($0.1 million). Special
items recognized in the second quarter of 2003 amount to $94.0
million, pre-tax. In addition, $1.3 million in charges related to
facility closures initiated in the second quarter of 2003 will be
recognized in future periods. The cash component of this charge is
approximately $10 million. Also in the quarter, the Company recognized
$0.7 million in charges from previous restructuring projects.
For the second quarter of 2002, special items consisted of the
costs associated with the closure of a manufacturing facility in
Tulsa, Oklahoma ($4.2 million), the write-down of certain assets
within the Light Construction, European Lifting and EarthKing
businesses ($22.9 million), and headcount reductions in the
Roadbuilding group ($0.9 million), offset partially by a foreign
exchange gain related to the Demag acquisition ($5.5 million).
Capital Structure
"Cash flow from operations for the second quarter of 2003 was $70
million, bringing the total for the first six months of 2003 to $184
million," commented Phil Widman, Senior Vice President and Chief
Financial Officer. "In the quarter we generated an additional $38
million in cash from working capital (defined as the sum of accounts
receivable plus inventory less accounts payable) reductions, making
for a total of $128 million for the first six months of 2003. Our
working capital as a percent of trailing three month annualized sales
decreased to 23% at the end of the second quarter of 2003 compared to
34% at the end of 2002." Mr. Widman added, "Given our success in
working capital reductions in the first half of the year compared to
our full year 2003 goal of $150 million of working capital reductions,
we have increased our target for working capital reductions during
2003 to $200 million."
Net debt (defined as total debt less cash) at the end of the
second quarter of 2003 decreased $162.7 million to $1,046.3 million
from $1,209.0 million at the end of 2002. Net debt to book
capitalization at the end of the second quarter of 2003 was 57.3%,
compared to 61.1% at the end of 2002. Mr. Widman added, "We remain
committed to a minimum reduction in total debt of $200 million in
2003, over half of which was achieved during the first six months, but
feel a level of $250 million may be attainable."
Outlook
"We continue to operate in a difficult to forecast environment,"
commented Mr. DeFeo. "We did not expect any help from the end markets
in 2003 and we have not seen any. However, we remain confident in our
ability to achieve the annual guidance we previously provided, but
perhaps at the lower end of the range, and to exceed our original
working capital and debt reduction targets, as we continue to run the
business for cash flow. We have made some significant strides during
the year, but realize that we have to stay focused on our goals and
the execution of our plan. Our ability to seize opportunities and
create value in bad times as well as good times is what will
differentiate us from our competitors. In 2003, despite depressed end
markets, we expect earnings per share, excluding special items, to
increase by over 25%, while delivering significant cash flow for debt
reduction. We will accomplish all of this while continuing to
strengthen the Terex franchise and position Terex as the number three
franchise player in the worldwide construction equipment market."
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 continuing weak
general economic conditions may affect the sales of its products and
its financial results; construction and mining activity are affected
by interest rates and government spending; the ability to successfully
integrate new businesses may affect Terex's future performance;
changes in Terex's 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; the dependence of some of Terex's customers relying on third
party financing to purchase its products; 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 Securities and Exchange Commission. 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 2002 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 Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
---- ---- ---- ----
Net sales $1,007.4 $653.2 $1,886.7 $1,199.6
Cost of goods sold 895.3 536.6 1,649.7 993.4
--------- ------- --------- ---------
Gross profit 112.1 116.6 237.0 206.2
Selling, general and
administrative expenses 92.8 69.4 177.6 126.1
--------- ------- --------- ---------
Income from operations 19.3 47.2 59.4 80.1
Other income (expense):
Interest income 2.0 1.9 3.6 2.7
Interest expense (26.3) (22.1) (51.8) (43.8)
Goodwill impairment (51.3) --- (51.3) ---
Loss on retirement of debt (1.9) --- (1.9) ---
Other income (expense) - net (3.0) (10.6) (2.7) (12.0)
--------- ------- --------- ---------
Income (loss) from continuing
operations before income taxes
and cumulative effect of change
in accounting principle (61.2) 16.4 (44.7) 27.0
Benefit from (provision for)
income taxes 11.5 (5.3) 6.8 (8.7)
--------- ------- --------- ---------
Income (loss) from continuing
operations before cumulative
effect of change in accounting
principle (49.7) 11.1 (37.9) 18.3
Income (loss) from discontinued
operations 0.6 (5.9) 1.3 (6.9)
--------- ------- --------- ---------
Income (loss) before cumulative
effect of change in
accounting principle (49.1) 5.2 (36.6) 11.4
Cumulative effect of change in
accounting principle --- --- --- (113.4)
--------- ------- --------- ---------
Net income (loss) $ (49.1) $ 5.2 $ (36.6) $ (102.0)
========= ======= ========= =========
EARNINGS PER SHARE: -
Basic:
Income (loss) from continuing
operations $ (1.03) $ 0.26 $ (0.79) $ 0.45
Income (loss) from
discontinued operations 0.01 (0.14) 0.03 (0.17)
--------- ------- --------- ---------
Income (loss) before
cumulative effect of
change in accounting
principle (1.02) 0.12 (0.76) 0.28
Cumulative effect of change
in accounting principle --- --- --- (2.80)
--------- ------- --------- ---------
Net income (loss) $ (1.02) $ 0.12 $ (0.76) $ (2.52)
========= ======= ========= =========
Diluted:
Income (loss) from continuing
operations $ (1.03) $ 0.26 $ (0.79) $ 0.44
Income (loss) from
discontinued operations 0.01 (0.14) 0.03 (0.16)
--------- ------- --------- ---------
Income (loss) before
cumulative effect of
change in accounting
principle (1.02) 0.12 (0.76) 0.28
Cumulative effect of change
in accounting principle --- --- --- (2.76)
--------- ------- --------- ---------
Net income (loss) $ (1.02) $ 0.12 $ (0.76) $ (2.48)
========= ======= ========= =========
Weighted average number of common
and common equivalent shares
outstanding in per share
calculation:
Basic 48.2 42.7 48.0 40.4
Diluted 48.2 43.6 48.0 41.2
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions, except par value)
(unaudited)
June December
30, 31,
2003 2002
---- ----
CURRENT ASSETS
Cash and cash equivalents $ 420.4 $ 352.2
Trade receivables 561.1 578.6
Inventories 955.2 1,106.3
Other current assets 237.3 184.0
--------- ---------
Total Current Assets 2,174.0 2,221.1
LONG-TERM ASSETS
Property, plant and equipment 313.9 309.4
Goodwill 601.1 622.9
Other assets 481.7 472.3
--------- ---------
TOTAL ASSETS $3,570.7 $3,625.7
========= =========
CURRENT LIABILITIES
Notes payable and current portion of long-term
debt $ 69.7 $ 74.1
Trade accounts payable 577.6 542.9
Accrued compensation and benefits 84.1 74.0
Accrued warranties and product liability 81.0 86.0
Other current liabilities 281.2 329.2
--------- ---------
Total Current Liabilities 1,093.6 1,106.2
NON CURRENT LIABILITIES
Long-term debt, less current portion 1,397.0 1,487.1
Other 301.1 263.2
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock, $0.01 par value --
Authorized 150.0 shares; issued 49.4 and
48.6 shares at June 30, 2003 and
December 31, 2002, respectively 0.5 0.5
Additional paid-in capital 785.2 772.7
Retained earnings 30.8 67.4
Accumulated other comprehensive income (loss) (19.7) (53.6)
Less cost of shares of common stock in treasury
(1.2 shares at June 30, 2003 and December 31,
2002) (17.8) (17.8)
--------- ---------
Total Stockholders' Equity 779.0 769.2
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,570.7 $3,625.7
========= =========
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
Six Months Ended
June 30,
2003 2002
-------- --------
OPERATING ACTIVITIES
Net income (loss) $ (36.6) $(102.0)
Adjustments to reconcile net income (loss)
to cash provided by (used in) operating
activities:
Depreciation 27.5 15.7
Amortization 5.9 2.8
Impairment charges and asset write downs 72.5 140.8
Loss on retirement of debt 1.4 ---
Gain on sale of fixed assets (2.9) ---
Changes in operating assets and liabilities (net
of effects of acquisitions):
Trade receivables 3.4 (90.0)
Inventories 82.8 (14.2)
Trade accounts payable 42.0 79.9
Other, net (11.6) (24.4)
-------- --------
Net cash provided by operating activities 184.4 8.6
-------- --------
INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired (8.7) (89.5)
Capital expenditures (14.1) (10.1)
Proceeds from sale of assets 3.5 2.6
-------- --------
Net cash used in investing activities (19.3) (97.0)
-------- --------
FINANCING ACTIVITIES
Principal borrowings (repayments) of long-term debt (53.0) 0.7
Net borrowings (repayments) under revolving line of
credit agreements (36.5) 0.2
Issuance of common stock --- 113.3
Payment of premium on early retirement of debt (2.2) ---
Other (16.4) (0.4)
-------- --------
Net cash provided by (used in) financing
activities (108.1) 113.8
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS 11.2 5.1
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 68.2 30.5
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 352.2 250.4
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 420.4 $ 280.9
======== ========
Table I
-------
TEREX CORPORATION AND SUBSIDIARIES
(in millions)
(unaudited)
Three Months Ended June 30,
---------------------------
2003
---------------------------
Excluding
Special Special
GAAP Items Items
--------------------------
Sales
Construction(1) $ 382.7 $ --- $ 382.7
Cranes(2) 273.0 --- 273.0
Mining, Roadbuilding & Utility(3) 202.9 --- 202.9
Aerial Work Platforms(4) 167.8 --- 167.8
Corp / Eliminations (19.0) --- (19.0)
-------- ------- ---------
Total $1,007.4 $ --- $ 1,007.4
======== ======= =========
Gross Profit
Construction(1) $ 53.3 $ 2.1 $ 55.4
Cranes(2) 21.8 6.9 28.7
Mining, Roadbuilding & Utility(3) 1.5 28.9 30.4
Aerial Work Platforms(4) 35.4 0.1 35.5
Corp / Eliminations 0.1 --- 0.1
-------- ------- ---------
Total $ 112.1 $ 38.0 $ 150.1
======== ======= =========
SG&A
Construction(1) $ 34.3 $ (0.1)$ 34.2
Cranes(2) 20.3 (0.5) 19.8
Mining, Roadbuilding & Utility(3) 24.5 (1.7) 22.8
Aerial Work Platforms(4) 14.0 --- 14.0
Corp / Eliminations (0.3) --- (0.3)
-------- ------- ---------
Total $ 92.8 $ (2.3)$ 90.5
======== ======= =========
Operating Income
Construction(1) $ 19.0 $ 2.2 $ 21.2
Cranes(2) 1.5 7.4 8.9
Mining, Roadbuilding & Utility(3) (23.0) 30.6 7.6
Aerial Work Platforms(4) 21.4 0.1 21.5
Corp / Eliminations 0.4 --- 0.4
-------- ------- ---------
Total $ 19.3 $ 40.3 $ 59.6
======== ======= =========
Three Months Ended June 30,
---------------------------
2002
---------------------------
Excluding
Special Special
GAAP Items Items
------------------------
Sales
Construction(1) $337.7 $ --- $ 337.7
Cranes(2) 136.4 --- 136.4
Mining, Roadbuilding & Utility(3) 193.9 --- 193.9
Aerial Work Platforms(4) 9.3 --- 9.3
Corp / Eliminations (24.1) --- (24.1)
------ ------- ---------
Total $653.2 $ --- $ 653.2
====== ======= =========
Gross Profit
Construction(1) $ 61.1 $ --- $ 61.1
Cranes(2) 21.7 --- 21.7
Mining, Roadbuilding & Utility(3) 32.9 8.2 41.1
Aerial Work Platforms(4) 0.8 --- 0.8
Corp / Eliminations 0.1 --- 0.1
------ ------- ---------
Total $116.6 $ 8.2 $ 124.8
====== ======= =========
SG&A
Construction(1) $ 32.2 $ --- $ 32.2
Cranes(2) 9.4 --- 9.4
Mining, Roadbuilding & Utility(3) 24.8 (0.6) 24.2
Aerial Work Platforms(4) 0.6 --- 0.6
Corp / Eliminations 2.4 --- 2.4
------ ------- ---------
Total $ 69.4 $ (0.6)$ 68.8
====== ======= =========
Operating Income
Construction(1) $ 28.9 $ --- $ 28.9
Cranes(2) 12.3 --- 12.3
Mining, Roadbuilding & Utility(3) 8.1 8.8 16.9
Aerial Work Platforms(4) 0.2 --- 0.2
Corp / Eliminations (2.3) --- (2.3)
------ ------- ---------
Total $ 47.2 $ 8.8 $ 56.0
====== ======= =========
(1) Special items relate primarily to the closure of the Kilbeggan
facility within the Powerscreen business.
(2) Special items relate primarily to the closure of the Peiner
facility within the Tower Crane group.
(3) Special items relate primarily to exiting and rationalizing
certain product categories within the Roadbuilding group.
(4) Special items relate to the Genie inventory fair value accounting
treatment
Table I (continued)
-------------------
TEREX CORPORATION AND SUBSIDIARIES
(in millions)
(unaudited)
Six Months Ended June 30,
--------------------------
2003
--------------------------
Excluding
Special Special
GAAP Items Items
-------- ------- ---------
Sales
Construction(1) $ 700.9 $ --- $ 700.9
Cranes(2) 510.9 --- 510.9
Mining, Roadbuilding & Utility(3) 392.6 --- 392.6
Aerial Work Platforms(4) 315.0 --- 315.0
Corp / Eliminations (32.7) --- (32.7)
-------- ------- ---------
Total $1,886.7 $ --- $ 1,886.7
======== ======= =========
Gross Profit
Construction(1) $ 95.0 $ 2.1 $ 97.1
Cranes(2) 49.0 9.3 58.3
Mining, Roadbuilding & Utility(3) 28.3 31.3 59.6
Aerial Work Platforms(4) 64.9 0.8 65.7
Corp / Eliminations (0.2) --- (0.2)
-------- ------- ---------
Total $ 237.0 $ 43.5 $ 280.5
======== ======= =========
SG&A
Construction(1) $ 61.8 $ (0.1)$ 61.7
Cranes(2) 40.7 (0.5) 40.2
Mining, Roadbuilding & Utility(3) 46.5 (2.0) 44.5
Aerial Work Platforms(4) 27.7 --- 27.7
Corp / Eliminations 0.9 --- 0.9
-------- ------- ---------
Total $ 177.6 $ (2.6)$ 175.0
======== ======= =========
Operating Income
Construction(1) $ 33.2 $ 2.2 $ 35.4
Cranes(2) 8.3 9.8 18.1
Mining, Roadbuilding & Utility(3) (18.2) 33.3 15.1
Aerial Work Platforms(4) 37.2 0.8 38.0
Corp / Eliminations (1.1) --- (1.1)
-------- ------- ---------
Total $ 59.4 $ 46.1 $ 105.5
======== ======= =========
Six Months Ended June 30,
---------------------------
2002
--------------------------
Excluding
Special Special
GAAP Items Items
-------- ------- ---------
Sales
Construction(1) $ 594.2 $ --- $ 594.2
Cranes(2) 271.5 --- 271.5
Mining, Roadbuilding & Utility(3) 356.2 --- 356.2
Aerial Work Platforms(4) 17.1 --- 17.1
Corp / Eliminations (39.4) --- (39.4)
-------- ------- ---------
Total $1,199.6 $ --- $ 1,199.6
======== ======= =========
Gross Profit
Construction(1) $ 100.3 $ --- $ 100.3
Cranes(2) 38.5 --- 38.5
Mining, Roadbuilding & Utility(3) 65.6 9.4 75.0
Aerial Work Platforms(4) 1.6 --- 1.6
Corp / Eliminations 0.2 --- 0.2
-------- ------- ---------
Total $ 206.2 $ 9.4 $ 215.6
======== ======= =========
SG&A
Construction(1) $ 56.1 $ --- $ 56.1
Cranes(2) 18.9 --- 18.9
Mining, Roadbuilding & Utility(3) 46.1 (0.6) 45.5
Aerial Work Platforms(4) 1.2 --- 1.2
Corp / Eliminations 3.8 --- 3.8
-------- ------- ---------
Total $ 126.1 $ (0.6)$ 125.5
======== ======= =========
Operating Income
Construction(1) $ 44.2 $ --- $ 44.2
Cranes(2) 19.6 --- 19.6
Mining, Roadbuilding & Utility(3) 19.5 10.0 29.5
Aerial Work Platforms(4) 0.4 --- 0.4
Corp / Eliminations (3.6) --- (3.6)
-------- ------- ---------
Total $ 80.1 $ 10.0 $ 90.1
======== ======= =========
(1) Special items relate primarily to the closure of the Kilbeggan
facility within the Powerscreen business.
(2) Special items relate to the closure of the Peiner facility within
the tower crane group, closure of the RO boom truck facility, and
the Demag inventory fair value accounting treatment.
(3) Special items relate to restructuring actions, exiting and
rationalization certain product categories with the Roadbuilding
group and write-down of certain assets within the EarthKing
business.
(4) Special items relate to the Genie inventory fair value accounting
treatment.
Table II
--------
TEREX MINING, ROADBUILDING, UTILITY PRODUCTS AND OTHER
(in millions)
(unaudited)
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1
01 01 01 01 02 02 02 02 03
----- ----- ----- ----- ----- ----- ----- ----- -----
GAAP
Sales 134.1 112.1 98.6 138.0 162.3 193.9 174.8 165.1 189.7
Gross Profit 26.2 22.8 21.6 28.5 32.7 32.9 29.5 25.9 26.8
SG & A 12.0 12.7 12.5 17.5 21.3 24.8 19.6 20.9 22.0
Income from
operations 14.2 10.1 9.1 11.0 11.4 8.1 9.9 5.0 4.8
EXCLUDING
SPECIAL ITEMS
Sales 134.1 112.1 98.6 138.0 162.3 193.9 174.8 165.1 189.7
Gross Profit 26.2 22.8 23.6 28.9 33.9 41.1 32.8 29.5 29.2
SG & A 12.0 12.7 12.0 17.5 21.3 24.2 19.6 20.2 21.7
Income from
operations 14.2 10.1 11.6 11.4 12.6 16.9 13.2 9.3 7.5
CONTACT: Terex Corporation, Westport
Kevin O'Reilly, Vice President, 203-222-5943
SOURCE: Terex Corporation