WESTPORT, Conn.--(BUSINESS WIRE)--Jan. 13, 2005--Terex Corporation
announced today that it has filed a Form 8-K with the Securities and
Exchange Commission disclosing that management of Terex and the Audit
Committee of the Board of Directors of Terex have concluded that the
financial statements of Terex for the years ended December 31, 2001,
2002 and 2003 need to be restated to correct certain errors and,
accordingly, such financial statements should no longer be relied
upon.
As previously disclosed on October 28, 2004, Terex commenced a
detailed internal examination of its intercompany transactions in an
effort to reconcile imbalances in certain of Terex's accounts.
Management of Terex has conducted this examination and kept the Board
of Directors of Terex, the Audit Committee and PricewaterhouseCoopers,
LLC, Terex's independent registered accounting firm, informed of the
progress of this examination on a regular basis. In addition, as
previously reported, the Audit Committee has retained independent
counsel to advise it with respect to this matter and authorized such
counsel to conduct an independent investigation into the circumstances
giving rise to the imbalances.
While Terex's review activities are still ongoing, significant
progress has been made in identifying and correcting the intercompany
transactions giving rise to the imbalances. Although management has
not made a final determination of all of the adjustments necessary or
as to the periods in which all of the correcting entries will be made,
Terex currently believes that: (i) the substantial portion of the
adjustments to Terex's financial statements relate to periods in 2002
and earlier; and (ii) in management's opinion, the cumulative
adjustments required to be made to shareholders' equity at December
31, 2003 resulting from all errors identified to date are expected not
to be material to total shareholders' equity, as analyzed in
accordance with applicable SEC and accounting guidelines.
Until the conclusion of Terex's internal review activities and the
completion of procedures by Terex's independent registered accounting
firm, there can be no assurance that there will not be additional
errors discovered that may affect the periods indicated above, which
may impact management's determination of the effect of the adjustments
necessary to correct any misstatements, or which may require Terex to
determine that financial statements of Terex for other fiscal years
should no longer be relied upon.
Upon completion of its examination of the above-described
imbalance situation, Terex intends to file appropriate amendments to
its filings with the SEC for the applicable periods as may be
necessary, including restated financial statements for such periods to
the extent required. While no assurance can be given, Terex currently
expects that it will complete its review and be in a position to file
its Annual Report on Form 10-K for the year ended December 31, 2004 by
the required filing date, and to file its Quarterly Report on Form
10-Q for the three months ended September 30, 2004, a restated Annual
Report on Form 10-K for the year ended December 31, 2003 and , if
required, any applicable Quarterly Reports on Form 10-Q prior thereto.
All such filings are subject to the prior completion of procedures by
Terex's independent registered accounting firm.
As part of its review, Terex has determined that a "material
weakness" (as defined in Rule 13a-15(f) under the Securities Exchange
Act of 1934, as amended) existed in Terex's internal controls over
financial reporting as they relate to the recording of certain
intercompany transactions. The Public Company Accounting Oversight
Board has defined material weakness as "a significant deficiency or
combination of significant deficiencies that results in more than a
remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected."
In 2003, Terex commenced a comprehensive effort to review and
improve its controls over its financial reporting processes to assure
the accuracy of its financial reports so as to comply fully with the
requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the
"SOX Act"). As part of this review and improvement process, a new
financial reporting system was put in place in the later part of 2003
allowing for a more detailed and thorough review of accounts on a
timely basis through analytical report writing functions, as well as
automated back office functions. Additionally, internal controls have
been modified to require, among other things, monthly activity
balancing and the requirement that any reconciling item that is not
resolved within a specified period of time be escalated for prompt
resolution. Terex has also changed its reporting relationship for
operating financial personnel so that they now report directly to the
corporate financial group, and Terex will provide enhanced training
for all financial personnel. Terex also intends, among other things,
to add additional personnel to the financial organization as
necessary, simplify its reporting structure and migrate to a more
common information technology platform. These measures are consistent
with the principles of Terex's previously announced Terex Improvement
Process and are intended to prevent this type of situation from
occurring in the future.
While management believes that it has taken adequate measures
during 2004 to institute processes and controls as they relate to
recording of intercompany transactions, due to the ongoing evaluation
and testing of Terex's internal controls by management and Terex's
independent auditors, and the adjustments to the historical financial
statements referred to in this filing, there can be no assurance that
"material weaknesses" do not exist that management and the independent
registered accounting firm would be required to report in their
assessment of the effectiveness of Terex's internal control structure
over financial reporting as of December 31, 2004 in Terex's Annual
Report on Form 10-K for the year ended December 31, 2004 as required
by Section 404 of the SOX Act.
Terex is currently in compliance with the terms of its Amended and
Restated Credit Agreement dated as of July 3, 2002, as amended (the
"Credit Agreement"), and the Indentures (collectively, the
"Indentures") pursuant to which Terex's outstanding Senior
Subordinated Notes were issued. In addition, after giving affect to
all of the adjustments identified to date, Terex would have been in
compliance with the terms of its Credit Agreement and the Indentures
during all prior periods.
Under the terms of the Credit Agreement, Terex is required to
provide audited financial statements for its fiscal year ended
December 31, 2004 to its lenders under the Credit Agreement on or
before March 31, 2005. Terex currently anticipates being able to
timely provide such audited financial statements. However, if Terex is
unable to provide these financial statements within this time frame,
and is unable to obtain a waiver of such requirement from its lenders
under the Credit Agreement, the lenders under the Credit Agreement may
notify Terex of such failure and Terex will then have 15 days to
provide audited financial statements. While Terex has kept the agent
for the lenders under the Credit Agreement up to date on the progress
of its review and has no reason to believe that it will be unable to
obtain the necessary waiver should it become necessary, the occurrence
of an event of default under the Credit Agreement could result in the
lenders terminating Terex's revolving credit facility and declaring
all outstanding loans under the Credit Agreement due and payable. In
addition, if the lenders under the Credit Agreement were to declare
all outstanding loans under the Credit Agreement to be due and
payable, such acceleration would constitute an event of default under
the Indentures, which would permit the holders of the notes issued
pursuant to the Indentures to declare such notes due and payable.
The matters discussed in this release are addressed in more detail
in the Form 8-K filed by Terex with the SEC today, and readers are
encouraged to review the Form 8-K for additional information. Terex
will provide further information on the status of its financial review
and its restatement of financial statements for earlier periods as
events warrant.
Safe Harbor Statement
The above contains forward-looking statements based on Terex's
current expectations and projections about future events. 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
significant amount of debt and its need to comply with restrictive
covenants contained in Terex's debt agreements; Terex's continued
access to capital and ability to obtain parts and components from
suppliers on a timely basis at competitive prices; Terex's ability to
file its periodic reports with the SEC on a timely basis; Terex's
ability to ensure that all intercompany transactions will be properly
recorded in the future; that there will not be any "material
weaknesses" that Terex and its independent registered accounting firm
would be required to report in Terex's assessment of the effectiveness
of Terex's internal control structure over financial reporting as of
December 31, 2004 in Terex's Annual Report on Form 10-K for the year
ended December 31, 2004 as required by Section 404 of the SOX Act; and
other factors, risks, uncertainties more specifically set forth in
Terex's public filings with the SEC. In addition, until the review by
Terex of the transactions in question 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 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 with 2003
net sales of $3.9 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