WESTPORT, Conn.--(BUSINESS WIRE)--Oct. 27, 2005--Terex Corporation
(NYSE: TEX) today announced net income for the third quarter of 2005
of $54.4 million, or $1.06 per share, compared to net income of $46.0
million, or $0.89 per share, for the third quarter of 2004. Excluding
the impact of special items, net income for the third quarter of 2005
was $56.1 million, or $1.10 per share, compared to net income of $47.8
million, or $0.93 per share, for the third quarter of 2004. Special
items for the third quarter of 2005 included charges for investigation
costs associated with the Company's internal review and restatement of
its financial statements for the fiscal years 2000, 2001, 2002, and
2003 and the first and second quarters of 2004, charges relating to
previously announced restructuring programs, an asset impairment
charge for the Company's American Truck Company joint venture, and the
gain on the sale of a facility in the Czech Republic. Special items
for the third quarter of 2004 primarily included costs associated with
announced restructuring activities, costs associated with the
restructuring of the compact equipment parts business, write-down of
certain assets associated with a discontinued parts business,
accelerated amortization arising from the early retirement of debt,
and gain on the sale of facilities. The estimated effective tax rate
for the third quarter of 2005 was 34.8%, as compared with 6.9% for the
third quarter of 2004. Further information regarding the effective tax
rates for the periods provided is included in the "Taxes" section
towards the end of this release.
Net sales increased to $1,528.3 million in the third quarter of
2005, an increase of 22% from $1,251.8 million in the third quarter of
2004. Net debt (consisting of long-term debt, including current
portion of long-term debt, less cash and cash equivalents) at
September 30, 2005 increased by $30 million from June 30, 2005 levels.
For the nine months ended September 30, 2005, net sales totaled
$4,741.3 million, an increase of 31% from $3,632.0 million for the
nine months ended September 30, 2004. Net income for the first nine
months of 2005 was $162.9 million, or $3.19 per share, compared to net
income of $131.1 million, or $2.56 per share, for the first nine
months of 2004. Net income, excluding special items, was $167.0
million, or $3.27 per share, for the first nine months of 2005,
compared to net income, excluding special items, of $125.3 million, or
$2.45 per share, for the first nine months of 2004. Net debt decreased
by $17 million in the nine months ended September 30, 2005.
"Overall, Terex had a strong third quarter," commented Ronald M.
DeFeo, Terex's Chairman and Chief Executive Officer. "We are pleased
with our operational and financial performance, which reflects
continued positive end-market trends for many of our products and
builds on the operational improvements we have undertaken to date. We
are seeing more meaningful signs that the struggling businesses in our
portfolio are in the early stages of recovery, while at the same time
our stronger businesses continue to post even better results than
originally anticipated." Mr. DeFeo continued, "We also saw a
meaningful improvement in operating margins resulting from improved
pricing and growth leverage. For the second consecutive quarter, we
posted a double digit percentage incremental margin (defined as the
year over year change in income from operations divided by the year
over year change in net sales), with a third quarter reported total
Company incremental margin of approximately 12%, a particularly strong
performance in this difficult input cost environment."
"We continue to operate in a challenging environment. We view
these challenges as opportunities to deliver even stronger results in
the future," added Mr. DeFeo. "Supplier issues, most notably, but not
exclusively, steel and tires, resulted in cost pressures and shortages
impacting several of our products. Couple these issues with the
overtime needed to meet customer demand, and we have good but
difficult problems to solve. These reinforce the importance of all the
work we are doing as part of the Terex Business System to bring Terex
together. As I have indicated before, we are still in the early stages
of these initiatives."
"The metric that we will continue to use to measure our business
performance is: Return on Invested Capital ("ROIC"), and this is the
measure for which we would expect our shareholders to hold us
accountable. We define ROIC as the last twelve months operating profit
excluding special items divided by the sum of average book equity and
average net debt over the same twelve month period," said Mr. DeFeo.
"Despite being an industry leader with regard to performance in this
area and a substantially reduced asset base compared to prior years,
we still feel our operating margin is too low and our working capital
(defined as the sum of accounts receivable and inventory less accounts
payable) is too high as measured as a percentage of revenue. Our
percentage of working capital to the trailing three months sales
annualized at the end of the third quarter was approximately 21%, and
we continue to target 18% and 15% for the end of 2005 and 2006,
respectively. This effort to control working capital investment
relative to our pre-tax earnings stream will drive cash flow, and
enable the Company to pay down its high cost debt, most notably the
$300 million of 10 3/8% bonds callable in April 2006."
In this press release Terex refers to various non-GAAP financial
measures. These measures may not be comparable to similarly titled
measures being disclosed by other companies. The tables below and the
tables included elsewhere in this press release provide a
reconciliation of the reported GAAP numbers for the third quarters and
first nine months of 2005 and 2004 and the reported numbers excluding
special items. Terex believes that this information is useful to
understanding its operating results and the ongoing performance of its
underlying businesses without the impact of special items. Terex also
discloses EBITDA and net debt, as they are commonly referred to
financial metrics used in the investing community. 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 on the following page. Please note
that, as previously announced on March 3, 2005, third quarter 2004
results of operations set out below will exceed the preliminary
operating performance results previously released for that period,
reflecting the impact of capitalizing a portion of increasing
commodity cost variances on inventory value. Additionally, due to the
valuation allowance established as of December 31, 2003, Terex's
provision for U.S. taxes in the quarters ended March 31, 2004, June
30, 2004 and September 30, 2004 will be substantially reversed,
thereby increasing net income in those periods. The tables below
reflect the changes in all periods impacted.
Three months ended September 30,
-------------------------------------------------------
2005 2004
-------------------------- ---------------------------
(in millions, except per share amounts)
Special Excluding Special Excluding
Items Special Items Special
Reported (2) Items Reported (3) Items
-------------------------- --------------------------
Net sales $1,528.3 $ --- $ 1,528.3 $1,251.8 $ --- $ 1,251.8
======== ======= ========= ======== ======= =========
Gross profit $ 241.9 $ 2.5 $ 244.4 $ 186.0 $ 0.9 $ 186.9
SG&A 139.7 (1.2) 138.5 114.0 --- 114.0
-------- ------- --------- -------- ------- ---------
Income from
operations 102.2 3.7 105.9 72.0 0.9 72.9
Other income
(expense) (18.8) (1.1) (19.9) (22.6) 1.0 (21.6)
Provision for
income taxes (29.0) (0.9) (29.9) (3.4) (0.1) (3.5)
-------- ------- --------- -------- ------- ---------
Net income $ 54.4 $ 1.7 $ 56.1 $ 46.0 $ 1.8 $ 47.8
======== ======= ========= ======== ======= =========
Earnings per
share & $ 1.06 $ 1.10 $ 0.89 $ 0.93
EBITDA (1) $ 116.4 $ 120.1 $ 85.6 $ 86.5
Backlog $1,284.5 $ 3.7 $ 1,284.5 $ 824.6 $ 0.9 $ 824.6
Average
diluted
shares
Outstanding 51.2 51.2 51.4 51.4
(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 charges for investigation
costs associated with the Company's internal review ($0.8 million),
charges related to previously announced restructuring activities,
namely at the Kilbeggan facility, Atlas UK operation and Terex
Utilities branch locations ($1.4 million), an asset impairment charge
in the American Truck Company joint venture ($0.2 million), and the
gain on the sale of a facility in the Czech Republic ($0.7 million).
(3) Special items, net of tax, relate to previously announced
restructuring initiatives ($0.3 million), the accelerated amortization
arising from the early retirement of debt ($0.9 million), costs
associated with the restructuring of the compact equipment parts
business ($0.4 million) and businesses held for sale or to be closed
($1.8 million), offset by a gain on the sale of a facility ($1.6
million).
Nine months ended September 30,
-------------------------------------------------------
2005 2004
-------------------------- --------------------------
(in millions, except per share amounts)
Special Excluding Special Excluding
Items Special Items Special
Reported (2) Items Reported (3) Items
-------- ------- --------- -------- ------- ---------
Net sales $4,741.3 $ --- $ 4,741.3 $3,632.0 $ --- $ 3,632.0
======== ======= ========= ======== ======= =========
Gross profit $ 731.9 $ 3.7 $ 735.6 $ 541.3 $ 10.8 $ 552.1
SG&A 417.9 (3.3) 414.6 345.2 (1.6) 343.6
-------- ------- --------- -------- ------- ---------
Income from
operations 314.0 7.0 321.0 196.1 12.4 208.5
Other income
(expense) (66.1) (1.1) (67.2) (48.7) (18.9) (67.6)
Benefit from/
(provision
for) income
taxes (85.0) (1.8) (86.8) (16.3) 0.7 (15.6)
-------- ------- --------- -------- ------- ---------
Net income
(loss) $ 162.9 $ 4.1 $ 167.0 $ 131.1 $ (5.8)$ 125.3
======== ======= ========= ======== ======= =========
Earnings per
share $ 3.19 $ 3.27 $ 2.56 $ 2.45
EBITDA (1) $ 359.4 $ 366.4 $ 244.1 $ 256.5
Backlog $1,284.5 $ 7.0 $ 1,284.5 $ 824.6 $ 12.4 $ 824.6
Average
diluted
shares
Outstanding 51.1 51.1 51.2 51.2
(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 charges for investigation
costs associated with the Company's internal review ($1.6 million),
charges related to restructuring activities, namely at the corporate
level, and at the business units of Cedarapids, Terex UK, Terex
Utilities branch locations and the Kilbeggan facility ($2.9 million),
an asset impairment charge in the American Truck Company joint venture
($0.2 million), charges relating to the closure of certain Terex
Utilities branch locations ($0.1 million) and the gain on the sale of
a facility in the Czech Republic ($0.7 million).
(3) Special items, net of tax, relate to the gain on the sale of
facilities ($16.7 million), costs associated with restructuring
activities, mainly in the Terex-Atlas businesses ($7.3 million), the
net gain related to the favorable settlement of litigation proceedings
regarding the O&K acquisition ($3.8 million), the loss on the sale of
discontinued business activities ($4.3 million), the write-down of
investments ($0.9 million), and the accelerated amortization arising
from the early retirement of debt ($2.2 million).
Segment Performance
The comparative segment performance data below reflects Terex's
current business segment organization. Comparative segment performance
data also excludes special items.
Terex Construction
Third Quarter Year-to-Date
--------------------------- -------------------------------
(dollars in millions)
2005 2004 2005 2004
------------- ------------- --------------- ---------------
% of % of % of % of
sales sales sales Sales
----- ----- ----- -----
Net sales $481.2 $418.5 $1,554.2 $1,283.2
======= ======= ========= =========
Gross
profit $ 70.1 14.6% $ 57.0 13.6% $ 219.7 14.1% $ 180.4 14.1%
SG&A 43.5 9.0% 36.2 8.6% 128.0 8.2% 111.9 8.7%
------- ------- --------- ---------
Operating
profit $ 26.6 5.5% $ 20.8 5.0% $ 91.7 5.9% $ 68.5 5.3%
======= ======= ========= =========
Backlog $281.9 $162.8 $ 281.9 $ 162.8
Net sales in the Terex Construction group for the third quarter of
2005 increased $62.7 million to $481.2 million from $418.5 million in
the third quarter of 2004. The 15% increase in net sales was primarily
driven by the heavy construction equipment businesses, including the
scrap handler business, and the mobile crushing and screening
businesses. Gross margin in the third quarter of 2005 was 14.6%, a
1.0% improvement when compared with the third quarter of 2004. SG&A
expenses for the third quarter of 2005 were $43.5 million, or 9.0% of
sales, compared to $36.2 million, or 8.6% of sales, in the third
quarter of 2004, with the increase due mainly to higher sales and
marketing costs related to increased sales volume and higher bad debt
expense in the period. Income from operations for the quarter was
$26.6 million, or 5.5% of sales, an increase of 28% when compared to
$20.8 million, or 5.0% of sales, for the third quarter of 2004.
"Net sales across our various product categories continue to show
impressive growth," commented Colin Robertson, President-Terex
Construction. "It is difficult to limit the positive comments on the
revenue growth to just one or two products, as the scrap handler,
North American off-highway truck, wheeled excavator, European
telehandler and mobile crushing and screening businesses all posted
strong year over year revenue growth. Our compact construction
equipment business grew modestly year over year, as it continues to
battle with an extremely competitive marketplace and significant
pricing pressure, particularly in North America."
"We continue to face the financial headwinds that are making
margin expansion more challenging. Input costs remain elevated, and
the weak dollar, as compared to the British Pound Sterling and Euro,
although improving somewhat, still provides challenges," Mr. Robertson
added. "Our focus remains on cost savings and supplier rationalization
opportunities that we have identified, and we feel that many of these
opportunities will be in place for the 2006 fiscal year." Mr.
Robertson continued, "In the near term, we fully expect that demand
will provide us with the opportunity to realign our prices to ensure
that supply pressures we, and the industry in general, are
experiencing are addressed and our margins reflect the robustness of
the recovery."
Terex Cranes
Third Quarter Year-to-Date
--------------------------- ---------------------------
(dollars in millions)
2005 2004 2005 2004
------------- ------------- ------------- -------------
% of % of % of % of
sales sales Sales sales
----- ----- ----- -----
Net sales $289.7 $269.3 $930.7 $755.4
======= ======= ======= =======
Gross profit $ 36.8 12.7% $ 32.6 12.1% $113.7 12.2% $ 96.6 12.8%
SG&A 24.2 8.4% 24.7 9.2% 79.1 8.5% 70.0 9.3%
------- ------- ------- -------
Operating
profit $ 12.6 4.3% $ 7.9 2.9% $ 34.6 3.7% $ 26.6 3.5%
======= ======= ======= =======
Backlog $385.4 $243.8 $385.4 $243.8
Net sales in the Terex Cranes group for the third quarter of 2005
increased $20.4 million to $289.7 million from $269.3 million in the
third quarter of 2004, reflecting improvement in most businesses,
particularly in the tower crane business. SG&A expenses remained
relatively flat at $24.2 million, or 8.4% of sales, in the third
quarter of 2005 when compared to SG&A expenses in the third quarter of
2004 of $24.7 million, or 9.2% of sales. Income from operations
increased $4.7 million to $12.6 million, or 4.3% of sales, for the
third quarter of 2005 from $7.9 million, or 2.9% of sales, for the
third quarter of 2004.
"As in the first half of this year, our global presence continues
to help balance our performance in the third quarter," commented Steve
Filipov, President - Terex Cranes. "The North American market,
however, has shown signs of demand improvement. The backlog is strong,
and the order book continues to grow. We now need to increase our
production rate. We have a new leadership team in place that is firmly
focused on lean implementation, better purchasing and customer
service. Additionally, the Waverly, Iowa team initiated an additional
price increase of roughly 5% to help offset cost pressures. We
continue to see improvements in our other product ranges, including
the tower crane business, and an improving all-terrain crane global
market."
Mr. Filipov continued, "What has turned out to be a real success
for Terex is our under-300-ton lattice boom crane relationship with
IHI. This month, Terex will be delivering the 300th crawler crane sold
under this relationship. This product, combined with our 300-ton and
up range out of Germany, has made Terex one of the market leaders in
this category. The small range of crawler lattice-boom cranes has
continued to grow in market penetration in North America, and
positions out product well for the recovering crane economy."
Terex Aerial Work Platforms
Third Quarter Year-to-Date
--------------------------- -----------------------------
(dollars in millions)
2005 2004 2005 2004
------------- ------------- --------------- -------------
% of % of % of % of
sales sales Sales sales
----- ----- ----- -----
Net sales $370.4 $235.8 $1,041.8 $677.9
======= ======= ========= =======
Gross profit $ 76.1 20.5% $ 45.9 19.5% $ 197.7 19.0% $138.1 20.4%
SG&A 26.3 7.1% 16.4 7.0% 71.4 6.9% 52.5 7.7%
------- ------- --------- -------
Operating
profit $ 49.8 13.4% $ 29.5 12.5% $ 126.3 12.1% $ 85.6 12.6%
======= ======= ========= =======
Backlog $202.8 $118.5 $ 202.8 $118.5
Net sales for the Terex Aerial Work Platforms group for the third
quarter of 2005 increased $134.6 million to $370.4 million from $235.8
million in the third quarter of 2004. The increase in sales was driven
primarily by continued strong order activity from the rental channel.
Gross margin slightly improved in the quarter versus the prior year
results, as pricing actions and volume leverage has offset the
negative impact of continued cost pressures on components used in
production as well as some cost inefficiencies resulting from ramp-up
in manufacturing resources to respond to this segment's significant
revenue growth. Income from operations increased to $49.8 million, or
13.4% of sales, in the third quarter of 2005 from $29.5 million, or
12.5% of sales, in the third quarter of 2004.
"During the third quarter, we continued to see strong demand for
all our products," said Bob Wilkerson, Terex Executive Vice President
and President - Terex Aerial Work Platforms. "Demand on a worldwide
basis remained strong, with particular strength in Asia and the
Americas. Additionally, we saw an increase in order activity for many
of our products due to Hurricane Katrina, but this increase was mainly
due to the replacement of lost or damaged equipment already in the
region, and does not reflect the reconstruction needs that will
undoubtedly materialize."
Mr. Wilkerson added, "We are full of optimism as we look forward
into 2006, and we expect our favorable performance trend to continue.
We continue to tackle the challenges that emerge from input pricing
and supply concerns, but feel we are doing reasonably well in managing
these items. The management team remains focused and will continue to
work to ensure that input costs and sales prices are closely linked.
Our optimism is strong, and the demand for our products is solid today
and is still improving. It is important to remember that approximately
65% of our business is North American focused, and the largest driver
of this business is commercial construction. With commercial
construction in the U.S. only recently recovering, and a consensus
view of a multi-year projected favorable outlook for commercial
construction in the U.S., we remain optimistic that revenues and
operating profit will continue to improve."
Terex Materials Processing & Mining
Third Quarter Year-to-Date
--------------------------- ---------------------------
(dollars in millions)
2005 2004 2005 2004
------------- ------------- ------------- -------------
% of % of % of % of
sales sales sales sales
----- ----- ----- -----
Net sales $217.2 $160.4 $636.0 $389.7
======= ======= ======= =======
Gross profit $ 39.5 18.2% $ 23.3 14.5% $112.8 17.7% $ 62.0 15.9%
SG&A 20.4 9.4% 14.1 8.8% 61.3 9.6% 40.3 10.3%
------- ------- ------- -------
Operating
profit $ 19.1 8.8% $ 9.2 5.7% $ 51.5 8.1% $ 21.7 5.6%
======= ======= ======= =======
Backlog $237.6 $124.6 $237.6 $124.6
Net sales for the Terex Materials Processing & Mining group for
the third quarter of 2005 increased $56.8 million to $217.2 million
from $160.4 million in the third quarter of 2004. As in the first half
of 2005, the increase in sales was attributable to the overall strong
demand for mining products, mainly the mining hydraulic excavators
manufactured in Dortmund, Germany, as well as to the acquisition of
the Reedrill mining business in the fourth quarter of 2004. Excluding
the acquisition of Reedrill, net sales increased 18% compared to the
comparable year ago period. This increased sales volume had a positive
impact on operating income, as income from operations more than
doubled to $19.1 million, or 8.8% of sales, in the third quarter of
2005 from $9.2 million, or 5.7% of sales, in the third quarter of
2004.
"The Materials Processing & Mining group had a solid third quarter
of 2005, continuing the positive earnings and profit performance that
reflects the improving end-market," commented Rick Nichols, President
- Terex Materials Processing & Mining. "This trend is a direct result
of solid global GDP growth supporting commodity prices at levels where
mining companies are encouraged to promote investment in production
and capacity related projects. This quarter, we saw a strong demand
for Terex's hydraulic shovel and electric drive mining trucks,
increasing the field population of our products and significantly
improving our parts and service sales outlook. Additionally, the
performance of Reedrill and the Materials Processing group,
specifically our Cedarapids operation, continue to meaningfully
contribute to our earnings."
Mr. Nichols continued, "We continue to look forward with a sense
of optimism. The GDP growth that has provided a platform for our
current performance is also the cornerstone to our growth over the
next five years. Emerging market economies, such as China, India and
Russia, are expected to continue their strong growth for the
foreseeable future. Additionally, we have some engineering projects in
our new product development pipeline, such as a larger truck, a more
complete shovel line and new drill products, which should be additive
to the revenue and profit of this segment. With this global economic
backdrop, added with our pricing actions, low-cost sourcing
initiatives and new product development, we remain firm in our belief
that our operating margins will exceed 10% in 2006."
Terex Roadbuilding, Utility Products and Other
Third Quarter Year-to-Date
---------------------------- ---------------------------
(dollars in millions)
2005 2004 2005 2004
-------------- ------------- ------------- -------------
% of % of % of % of
sales sales Sales sales
------ ----- ----- -----
Net sales $198.8 $190.4 $669.7 $579.5
======= ======= ======= =======
Gross profit $ 21.1 10.6% $ 25.7 13.5% $ 89.0 13.3% $ 72.7 12.5%
SG&A 21.4 10.8% 20.6 10.8% 67.5 10.1% 61.5 10.6%
------- ------- ------- -------
Operating
profit
(loss) $ (0.3) (0.2%) $ 5.1 2.7% $ 21.5 3.2% $ 11.2 1.9%
======= ======= ======= =======
Backlog $196.1 $188.4 $196.1 $188.4
Net sales for the Terex Roadbuilding, Utility Products and Other
group for the third quarter of 2005 increased $8.4 million to $198.8
million from $190.4 million for the third quarter of 2004, with
substantially all the sales growth coming from the concrete mixing
truck and utility businesses. SG&A expenses for the third quarter of
2005 were $21.4 million, or 10.8% of sales, compared to $20.6 million,
or 10.8% of sales, in the third quarter of 2004. Income from
operations decreased to a loss of $0.3 million from a profit of $5.1
million, or 2.7% of sales, in the third quarter of 2004.
"The Roadbuilding, Utility Products and Other group continued to
struggle, although signs of improvement are beginning to materialize,"
commented Chris Ragot, President - Terex Roadbuilding and Utilities.
"We have some internal issues that are being addressed, namely
operating inefficiencies at our installation sites for our Utilities
group in the western United States. The Utilities group had a strong
showing at the ICUEE show, North America's largest utilities show,
held every two years. We unveiled our new range of products targeting
the transmission line business, as well as a new product focused on
the home market for DSL installation. All customers, whether investor
owned utilities, telecom or contractors, have indicated a growing need
for equipment. This favorable outlook is bolstered by this group's
growth in both backlog and bookings."
Mr. Ragot continued, "Our expectations for the Roadbuilding
business for the end of 2005 and on into 2006 is positive. Our
concrete focused businesses, including mixing trucks, batch plants and
slip-form pavers, all continue to perform well. This strong
performance is a result of a continued strong North American housing
market and the beginning of a material recovery in non-residential
work. Our main challenge on the Roadbuilding side remains the asphalt
plant business."
Regarding the Company's specialty vehicle businesses, Mr. DeFeo
commented, "We incurred charges in the third quarter related to the
inventory associated with the IMOD contract as well as costs
associated with the continuation of proposal efforts, including
testing, for the previously announced LVSR project. We are evaluating
our participation in the American Truck Company joint-venture, as the
financial results to date have not met our expectations." Mr. DeFeo
continued, "Terex's special programs group also had a challenging
quarter, reflecting costs associated with a reduction in the fleet
size of the re-rental program."
Capital Structure
"Net debt at the end of the third quarter of 2005 increased $30
million to $763 million from $733 million at the end of the second
quarter of 2005," commented Phil Widman, Terex's Senior Vice President
and Chief Financial Officer. "This reflects a decrease of $61 million
from the net debt balance of $824 million as of the end of the third
quarter of 2004." Mr. Widman added, "We have said that our
expectations are for cash flow to closely follow the seasonal pattern
of the business. With a stronger third quarter than originally
anticipated, much of the anticipated cash flow has been reinvested in
working capital to supply current product demand, and as such, it has
deferred much of the cash benefit into the fourth quarter. Working
capital as a percent of trailing three month annualized sales was
approximately 21% at the end of both the third quarter of 2005 and
2004. However, our goal is still to achieve an 18% level at the end of
2005."
Taxes
Commenting on the effective tax rate used in this release, Mr.
Widman stated, "The effective tax rate in the third quarter of 2005 is
estimated to be 34.8%, compared to 6.9% in the third quarter of 2004."
Mr. Widman continued, "The 2004 rate is lower than the statutory rate
due to discrete items in the quarter, including the favorable
resolution of a jurisdictional audit, the release of valuation
allowances in certain businesses as their profitability indicated that
deferred tax assets would more likely than not be realized, and the
impact of a full valuation allowance on the U.S. deferred tax assets
not being reversed until the fourth quarter of 2004."
Outlook
"Looking forward, we remain optimistic about our earnings outlook,
said Mr. DeFeo. For 2005 we are forecasting the full year earnings per
share ("EPS") to be in the range of $4.15 - $4.25, as compared to our
prior guidance of $3.90 to $4.10, both before special items. Our
revenue expectations for 2005 are towards the high end of the $6.0 -
$6.2 billion range. We continue to see solid order activity, best
illustrated by our year to date revenue increase of 31% and our
backlog increase of 56% when compared with the same period last year.
We are currently in the middle of 2006 budget reviews, and as such we
cannot give specific guidance at this time, but we expect that next
year will be substantially better in regard to revenues, margins and
cash flow when compared to 2005. We continue to believe that there are
significantly better days ahead for Terex, and our focus will be on
doing those things necessary to drive results and deliver industry
leading returns on invested capital for our shareholders."
Update on Restatement Process
As previously disclosed in Current Reports on Form 8-K furnished
to the Securities and Exchange Commission ("SEC"), Terex has commenced
a detailed internal examination in an effort to reconcile imbalances
in certain of the Company's accounts, and previously has announced
that the financial statements of Terex for the years ended December
31, 2000, 2001, 2002 and 2003 and for the first and second quarters of
2004 need to be restated to correct certain errors. In addition, Terex
is also reviewing other historical accounting issues, including
historical revenue recognition practices, certain reserve balances and
certain transactions with United Rentals, Inc. Terex has placed an
updated list of questions and answers on its website, www.terex.com,
under the Investors section, to provide information with respect to
the status of Terex's examination and restatement process, as well as
the SEC investigation of the Company.
Safe Harbor Statement
The press release 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, infrastructure and mining activity and products produced
for the military 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; Terex's continued access to capital and ability to obtain
parts and components from suppliers on a timely basis 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 significant amount of debt and
its need to comply with restrictive covenants contained in Terex's
debt agreements; Terex's ability to file its periodic reports with the
SEC on a timely basis; the previously announced SEC investigation of
Terex; Terex's ability to ensure that all intercompany transactions
will be properly recorded; compliance with applicable environmental
laws and regulations; and other factors, risks and uncertainties more
specifically set forth in Terex's public filings with the SEC. In
addition, until the previously announced review by Terex of its
accounts is concluded, no assurance can be given with respect to the
financial statement adjustments, impacts and periods resulting from
such review, nor can there be assurance that additional adjustments to
the financial statements will not be identified. 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 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 with 2004
net sales of approximately $5 billion. Terex operates in five business
segments: Terex Construction, Terex Cranes, Terex Aerial Work
Platforms, Terex Materials Processing & Mining, and Terex
Roadbuilding, Utility Products and Other. Terex manufactures a broad
range of equipment for use in various industries, including the
construction, infrastructure, quarrying, recycling, surface mining,
shipping, transportation, refining, utility and maintenance
industries. 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.
CONTACT: Terex Corporation
Tom Gelston, 203-222-5943
SOURCE: Terex Corporation