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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
[X] OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2000
or
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to__________.
Commission File Number 1-10702
TEREX CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 34-1531521
(State of incorporation) (I.R.S. Employer
Identification No.)
500 Post Road East, Suite 320, Westport, Connecticut 06880
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (203) 222-7170
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $.01 par value
(Title of Class)
New York Stock Exchange
(Name of Exchange on which Registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. YES X NO____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of the voting and non-voting common equity stock held
by non-affiliates of the Registrant was approximately $496.4 million based on
the last sale price on March 13, 2001.
The number of shares of the Registrant's Common Stock outstanding was
26,810,105 as of March 13, 2001.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Terex Corporation Proxy Statement to be filed with the
Securities and Exchange Commission within 120 days after the year covered
by this Form 10-K with respect to the 2001 Annual Meeting of Stockholders
are incorporated by reference into Part III hereof.
TEREX CORPORATION AND SUBSIDIARIES
Index to Annual Report on Form 10-K
For the Year Ended December 31, 2000
Page
PART I
Item 1 Business........................................................... 3
Item 2 Properties......................................................... 17
Item 3 Legal Proceedings.................................................. 19
Item 4 Submission of Matters to a Vote of Security Holders................ 19
PART II
Item 5 Market for Registrant's Common Stock and Related Stockholder
Matters........................................................... 19
Item 6 Selected Financial Data............................................ 20
Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................... 21
Item 7A Quantitative and Qualitative Disclosure about Market Risk.......... 28
Item 8 Financial Statements and Supplementary Data........................ 29
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures......................................... 30
PART III
Item 10 Directors and Executive Officers of the Registrant................. *
Item 11 Executive Compensation............................................. *
Item 12 Security Ownership of Certain Beneficial Owners and Management..... *
Item 13 Certain Relationships and Related Transactions..................... *
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.... 30
* Incorporated by reference from Terex Corporation Proxy Statement to be filed
with the Securities and Exchange Commission with respect to the 2001 Annual
Meeting of Stockholders.
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As used in this Annual Report on Form 10-K, unless otherwise indicated, Terex
Corporation, together with its consolidated subsidiaries, is hereinafter
referred to as "Terex," the "Registrant," or the "Company."
PART I
ITEM 1. BUSINESS
General
Terex is a diversified global manufacturer of a broad range of equipment for the
construction, infrastructure and mining industries. The Company strives to build
a growing franchise under the Terex brand name. The Company remains focused on
its mission of delivering products that are reliable, productive and
cost-effective, and of producing equipment that improves our customers' return
on invested capital. The Company primarily organizes itself into two business
segments, Terex Lifting and Terex Earthmoving. The Company's products are
manufactured at 39 plants in the United States, Europe, Australia and Asia, and
are sold primarily through a worldwide distribution network with over 1,000
locations to the global construction, infrastructure and surface mining markets.
Over the past several years, the Company has implemented a series of
interrelated operational and strategic initiatives designed to create a
competitive advantage in the marketplace. These include (i) increasing the
variable portion of its manufacturing costs to over 80% of total costs; (ii)
reducing operating expenses as a percentage of revenues substantially below the
industry's average and eliminating non value-added functions throughout the
organization; (iii) providing our customers with a cost-effective product line;
and (iv) diversifying the Company's product line in order to maximize financial
performance.
For financial information about the Company's industry and geographic segments,
see Note O --- "Business Segment Information" in the Notes to the Consolidated
Financial Statements and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Terex Lifting
Terex Lifting manufactures and sells telescopic mobile cranes (including rough
terrain, truck and all terrain mobile cranes), tower cranes, lattice boom
cranes, utility aerial devices (including digger derricks and articulated aerial
devices), telescopic material handlers (including container stackers and rough
terrain), truck mounted cranes (boom trucks), aerial work platforms (including
scissor, articulated boom and straight telescoping boom aerial work
platforms)and related components and replacement parts. Construction and
industrial customers, as well as utility companies, are the primary users of
these products. Customers use these products to lift equipment, material or
workers to various heights. Throughout the world market, mobile cranes are
principally sold to rental companies and dealers with rental fleets. Terex
Lifting's mobile crane market share varies by geographical area; however, the
Company believes it is the leading manufacturer of mobile cranes in France,
Italy and Spain and is the second largest manufacturer in the United States (and
the Company believes it is the largest manufacturer of commercial hydraulic
mobile cranes in the United States). The Company also believes that it is the
second largest manufacturer in the United States of utility aerial devices and
the third largest manufacturer of tower cranes worldwide.
Terex Lifting has 15 significant manufacturing operations: (i) PPM S.A.S.
located in Montceau-les-Mines, France, at which mobile cranes and container
stackers under the brand names TEREX and PPM are manufactured; (ii) Terex Italia
S.r.l., located in Crespellano, Italy, at which mobile cranes are manufactured
under the TEREX, BENDINI and PPM brand names; (iii) PPM Cranes, Inc. (also known
as Terex Cranes - Conway Operations), located in Conway, South Carolina, at
which rough terrain hydraulic telescoping mobile cranes and truck cranes are
manufactured under the P&H (a licensed trademark of Harnischfeger Corporation)
and TEREX brand names; (iv) Terex Lifting - Waverly Operations (also known as
Koehring Cranes, Inc.), located in Waverly, Iowa, at which rough terrain
hydraulic telescoping mobile cranes and truck cranes are manufactured under the
brand names TEREX and LORAIN, and aerial lift equipment is manufactured under
the brand names TEREX AERIALS and TEREX; (v) Terex-Telelect, Inc. ("Telelect"),
located in Watertown, South Dakota, at which utility aerial devices and digger
derricks are manufactured under the TELELECT and HI-RANGER brand names; (vi)
Terex Aerials Limited, located in Cork, Ireland, at which aerial platforms are
manufactured under the TEREX brand name; (vii) Terex-RO Corporation ("Terex
RO"), located in Olathe, Kansas, at which truck mounted cranes are manufactured
under the RO-STINGER brand name; (viii) Terex Handlers, located in Baraga,
Michigan, at which rough terrain telescopic boom material handlers are
manufactured under the SQUARE SHOOTER and TEREX brand names; (ix) Holland Lift
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International B.V. ("Holland Lift"), located in Hoorn, The Netherlands, at which
aerial platforms are manufactured under the HOLLAND LIFT brand name; (x) The
American Crane Corporation ("American Crane") located in Wilmington, North
Carolina, at which lattice boom cranes are manufactured under the AMERICAN brand
name; (xi) Terexlift S.r.l. ("Terexlift"), located near Perugia, Italy, at which
rough terrain telescopic material handlers are manufactured under the
ITALMACCHINE and TEREX brand names and cement mixers and concrete pumps are
manufactured under the ITALMACCHINE brand name; (xii) Terex Peiner GmbH
("Peiner"), located in Trier, Germany, at which tower cranes are manufactured
under the PEINER trade name; (xiii) Gru Comedil S.p.A. ("Comedil"), located in
Fontanafredda, Italy, at which tower cranes are manufactured under the COMEDIL
trade name; (xiv) Terex Lifting U.K. Limited ("Terex Lifting U.K."), located in
Tetbury, England, at which material handlers are manufactured under the MATBRO
trade name; and (xv) Terex Lifting Australia Pty. Ltd. ("Terex Lifting
Australia"), located in Brisbane, Australia, at which all terrain mobile cranes
are manufactured under the FRANNA trade name.
The Company has been actively involved in both acquiring and disposing of
operations with the Terex Lifting segment. In July 1999, as part of the
acquisition of Powerscreen International plc, the Company acquired the material
handling operations of Matbro Limited (now Terex Lifting U.K.) and Moffett
Engineering Limited ("Moffett"). Moffett, located in Dundalk, Ireland,
manufactures truck-mounted forklifts. On November 3, 1999, the Company completed
the acquisition of the Material Handling Division of Teledyne, Inc., which
included substantially all of the assets comprising the Princeton business and
all of the capital stock of Teledyne GmbH, the owner of Kooi B.V. (collectively,
"Princeton/Kooi"). Princeton/Kooi manufacture and market truck-mounted forklifts
at facilities in Canal Winchester, Ohio and Vrouwenparochie, The Netherlands. On
December 1, 1999, the Company completed the purchase of Terex Lifting Australia,
formerly known as Franna Cranes Pty. Ltd., a manufacturer of all-terrain "pick
and carry" cranes in Australia. See Note B - "Acquisitions" in the Notes to the
Consolidated Financial Statements for further information.
On September 30, 2000, the Company completed the sale of its truck-mounted
forklift businesses, consisting of Moffett and Princeton/Kooi, to various
subsidiaries of Partek Corporation of Finland for $144 million in cash, subject
to adjustment. See Note C - "Sale of Businesses" in the Notes to the
Consolidated Financial Statements for further information.
Terex Earthmoving
Terex Earthmoving manufactures and sells large hydraulic excavators, loader
backhoes, articulated and rigid off-highway trucks, high capacity surface mining
trucks, scrapers, crushing and screening equipment, asphalt pavers, asphalt
mixing plants, and related components and replacement parts. These products are
used primarily by construction, mining, quarrying and government customers. The
Company believes that it has the leading market share for large hydraulic
excavator models having machine weights in excess of 200 tons, that it is a
significant competitor in the market for large capacity off highway haulers and
scrapers and that it had the leading market share in high capacity surface
mining trucks since 1999.
Terex Earthmoving has 16 significant manufacturing operations: (i) Terex
Equipment Limited ("TEL"), located in Motherwell, Scotland; (ii) Unit Rig ("Unit
Rig") and Payhauler Corp. ("Payhauler"), located in Tulsa, Oklahoma; (iii) O&K
Mining GmbH ("O&K Mining"), located in Dortmund, Germany; (iv) Powerscreen
International Distribution Ltd. ("Powerscreen"), located in Dungannon, Northern
Ireland and Kilbeggan, Ireland; (v) Finlay Hydrascreens (Omagh) Limited
("Finlay"), located in Omagh, Ireland; (vi) BL-Pegson Ltd. ("B.L. Pegson"),
located in Coalville, England; (vii) Simplicity Engineering ("Simplicity"),
located in Durand, Michigan; (viii) Royer Industries, Inc. and Re-Tech
(collectively "Royer/Re-Tech"), located in Lebanon, Pennsylvania; (ix) Benford
Limited ("Benford"), located in Warwick, England; (x) Cedarapids, Inc.
("Cedarapids") located in Cedar Rapids, Iowa; (xi) Standard Havens, Inc.
("Standard Havens"), located in Glasgow, Missouri; (xii) Jaques International
("Jaques"), located in Melbourne, Australia; (xiii) Canica-Jaques, located in
Vancouver, Washington; (xiv) Jaques International Sdn Bhd ("Jaques Malaysia"),
located in Subang Jaya, Malaysia; (xv) Jaques (Thailand) Limited ("Jaques
Thailand"), located in Chomburi, Thailand; and (xvi) Fermec Manufacturing
Limited ("Fermec") located in Manchester, England.
TEL manufactures, sells and markets off-highway rigid haulers and articulated
haulers, having capacities ranging from 25 to 100 tons, and scrapers that load,
move and unload large quantities of soil for site preparations, including
roadbeds. TEL's products are sold under the Company's TEREX brand name. Unit Rig
and Payhauler manufacture, sell and market electric rear hauler trucks with
payload capacities ranging from 50 to 360 tons and bottom dump haulers with
capacities ranging from 180 to 270 tons, principally sold to copper, gold, iron
ore, coal, borates and diamond mining industry customers, as well as all wheel
drive rigid off-highway trucks. O&K Mining manufactures and sells large
hydraulic mining shovels. Cedarapids, Finlay, Powerscreen, B.L. Pegson,
Simplicity, Royer/Re-Tech, Jaques, Jaques Malaysia, Jaques Thailand and
Canica-Jaques manufacture, sell and market crushing and screening equipment.
Cedarapids also manufactures, sells and markets a line of asphalt pavers and
associated equipment. Standard Havens manufactures, sells and markets asphalt
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plants. Benford manufactures, sells and markets dumpers and compactors. Fermec
manufactures, sells and markets loader backhoes. These products are sold under
the Company's TEREX, UNIT RIG, LECTRA HAUL, O&K, PAYHAULER, POWERSCREEN, FINLAY,
SIMPLICITY, CEDARAPIDS, BENFORD, B.L. PEGSON, ROYER, RE-TECH,
CEDARAPIDS/STANDARD HAVENS, JAQUES, CANICA-JAQUES and FERMEC brand names. TEL's
North, Central and South American sales and distribution are managed by Terex
Americas, a division of the Company, located in Tulsa, Oklahoma. In addition,
Terex Earthmoving has an interest in North Hauler Limited Liability Company
("North Hauler Limited"), a corporation incorporated under the laws of China, a
joint venture with Second Inner Mongolia Machinery Company for the production of
haulers in China. North Hauler Limited manufactures and sells heavy trucks,
principally used in mining, at a facility in Baotou, Inner Mongolia, and the
People's Republic of China.
The Company has made a number of significant acquisitions in the Terex
Earthmoving segment in recent years as part of its continuing plan to diversify
its product offerings and the geographic range of its customers. In January
2001, the Company acquired Jaques, Canica-Jaques, Jaques Malaysia and Jaques
Thailand (collectively, the "Jaques Group"), manufacturers of crushing equipment
in Australia, Asia and North America. On December 28, 2000, the Company acquired
Fermec from CNH Global N.V., adding the loader backhoe product line to Terex
Earthmoving's offerings. The Company entered the aggregates industry with its
acquisitions of Powerscreen International plc in July 1999 for a purchase price
of approximately $294 million and Cedarapids on August 26, 1999 for
approximately $170 million, subject to adjustment. The acquisitions of
Powerscreen International plc and Cedarapids provided the Company with a
significant market position in the crushing and screening equipment markets. On
March 31, 1998, the Company acquired O&K Mining from O&K Orenstein & Koppel AG
for net aggregate consideration of approximately $168 million, subject to
adjustment. See Note B "Acquisitions" in the Notes to the Consolidated Financial
Statements for further information.
Other
Terex Light Construction manufactures and sells mobile and portable
floodlighting systems, concrete power trowels, concrete placement systems,
concrete finishing systems, concrete mixers, generators, traffic control
products, and related components and replacement parts. These products are
typically used for rental and construction applications.
Terex Light Construction has three significant manufacturing operations: (i)
Amida Industries, Inc. ("Amida"), located in Rock Hill, South Carolina, which
manufactures and sells portable floodlighting systems, concrete power trowels,
concrete placement systems, concrete finishing systems, concrete mixers and
traffic control products under the AMIDA, BARTELL, MORRISON, BENFORD, MULLER and
TEREX brand names; (ii) Terex Bartell, Ltd. ("Bartell"), located in Brampton,
Ontario, Canada, which manufactures and sells concrete power trowels and
concrete finishing systems under the BARTELL brand name and (iii) Coleman
Engineering, Inc. ("Coleman") located in Holly Springs, Mississippi, which
manufactures and sells portable floodlighting systems and generators under the
COLEMAN ENGINEERING brand name. Terex Light Construction also distributes
products in North America that are manufactured in the Benford facility in
Warwick, England, including dumpers and compaction equipment. These products are
sold under the Company's AMIDA, BENFORD, and TEREX brand names.
Terex Light Construction is structured to capitalize on the rental segment of
the construction equipment industry. The Company's strategy is to expand its
product offerings to the national rental companies, while maintaining its
business with independent rental stores. The Company's consolidation efforts are
intended to create value for customers through the synergies of the Company's
sales force and elimination of costly distribution steps, such as manufacturer's
representatives, thus lowering the cost of the Company's products to its
customers.
The light equipment concept originated in April 1999 with the acquisition of
Amida. The Terex Light Construction product line was broadened by the addition
of the Benford line of compaction equipment as part of the July 1999 acquisition
of Powerscreen, the acquisition of Bartell in September 1999, the acquisition of
the Muller Mixer product line in February 2000 and the acquisition of Coleman in
October 2000. See Note B - "Acquisitions" in the Notes to the Consolidated
Financial Statements for further information.
In January 2001, the Company announced the launching of an Internet site by its
subsidiary EarthKing, Inc. ("Earthking"). In 2001, EarthKing is introducing its
e-commerce capabilities as an independent and unbiased Internet marketplace for
the construction and mining equipment industry. EarthKing's goal is to use the
Internet and technology to provide savings to users of construction and mining
equipment in the selection, acquisition, management and disposition of their
equipment and parts. EarthKing has developed agreements with several strategic
partners to participate within the EarthKing alliance to provide reliable
delivery of cost-effective services to its customers.
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Products
Telescopic Mobile Cranes
Telescopic mobile cranes are used primarily for industrial applications, in
commercial and public works construction and in maintenance applications, to
lift equipment or material to heights in excess of 50 feet. Terex Lifting
manufactures the following types of telescopic mobile cranes:
[Graphic] Rough Terrain Cranes -- are designed to lift materials and
equipment on rough or uneven terrain. Rough terrain cranes are
most often located on a single construction or work site such as
a building site, a highway or a utility project for long periods
of time. Rough terrain cranes cannot be driven on highways and
accordingly must be transported by truck to the work site. Rough
terrain cranes manufactured by Terex Lifting have maximum lifting
capacities of up to 100 tons and maximum tip heights of up to 225
feet. Terex Lifting manufactures its rough terrain cranes at its
facilities located at Waverly, Iowa, Conway, South Carolina and
Crespellano, Italy under the brand names TEREX, LORAIN, P&H, PPM
and BENDINI.
[Graphic] Truck Cranes -- have two cabs and can travel rapidly from job
site to job site at highway speeds. In contrast to rough terrain
cranes, which are often located for extended periods at a single
work site, truck cranes are often used for multiple local jobs,
primarily in urban or suburban areas. Truck cranes manufactured
by Terex Lifting have maximum lifting capacities of up to 75 tons
and maximum tip heights of up to 193 feet. Terex Lifting
manufactures truck cranes at its Waverly, Iowa and Conway, South
Carolina facilities under the brand names TEREX, P&H and LORAIN.
[Graphic] All Terrain Cranes -- were developed in Europe as a cross between
rough terrain and truck cranes in that they are designed to
travel across both rough terrain and highways. All terrain cranes
have two cabs and are versatile and highly maneuverable. All
terrain cranes manufactured by Terex Lifting have lifting
capacities of up to 130 tons and maximum tip heights of up to 246
feet. Terex Lifting manufactures its all terrain cranes at its
Montceau-les-Mines, France and Brisbane, Australia facilities
under the brand names TEREX, PPM and FRANNA.
Tower Cranes
Tower cranes lift construction material to heights and place the material at the
point where it is being used. They include a stationary vertical tower near the
top of which is a horizontal jib with a counterweight. On the jib is a trolley
through which runs a load carrying cable and which moves the load along the jib
length. On larger cranes, the operator is located above the work site where the
tower and jib meet, providing superior visibility. The jib also rotates 360
degrees, creating a large working area equal to twice the jib length. Luffing
jib tower cranes have an angled jib with no trolley, and operate like a
traditional lattice boom crane mounted on a tower. Luffing jib tower cranes are
often used in urban areas where space is constrained. Tower cranes are currently
produced by Terex under the PEINER, COMEDIL and TEREX brand names. Terex
produces the following types of tower cranes:
[Graphic] Self-Erecting Tower Cranes -- are trailer mounted and unfold from
four sections (two for the tower and two for the jib); certain
larger models have a telescopic tower and folding jib. These
cranes can be assembled on site in a few hours. Applications
include residential and small commercial construction. Crane
heights range from 50-75 feet and jib lengths from 60-100 feet.
[Graphic] Hammerhead Tower Cranes -- have a tower and a horizontal jib
assembled from sections. The tower extends above the jib to which
suspension cables supporting the jib are attached. These cranes
are assembled on-site in one to three days depending on height,
and can increase in height with the project; they have a maximum
free-standing height of 200 feet and a maximum jib length of 240
feet.
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[Graphic] Flat Top Tower Cranes -- have a tower and a horizontal jib
assembled from sections. There is no tower extension above the
jib, which reduces cost and facilitates assembly; the jib is
self-supporting and consists of reinforced jib sections. These
cranes are assembled on site in one to two days, and can increase
in height with the project; they have a maximum freestanding
height of 305 feet and a maximum jib length of 280 feet.
[Graphic] Luffing Jib Tower Cranes -- have a tower and an angled jib
assembled from sections. The tower extends above the jib to which
suspension cables supporting the jib are attached. Unlike other
tower cranes, there is no trolley to control lateral movement of
the load, which is accomplished by changing the jib angle. These
cranes are assembled on site in two to three days, and can
increase in height with the project; they have a maximum
freestanding height of 185 feet and a maximum jib length of 200
feet.
Lattice Boom Cranes
Terex Lifting produces crawler and truck mounted lattice boom cranes.
[Graphic] Crawler-mounted lattice boom cranes are designed to lift material
on rough terrain and can maneuver while bearing a load. Truck
mounted lattice boom cranes are used on-roads, typically in urban
areas. Both types consist of a boom made of tubular steel
sections, which are transported to and erected, together with the
base unit, at a construction site. Terex Lifting manufactures
crawler and truck mounted lattice boom cranes at its Wilmington,
North Carolina facilities under the TEREX and AMERICAN brand
names. These lattice boom crawler cranes have lifting capacities
from 125 to 450 tons, and lattice boom truck cranes have lifting
capacities up to 300 tons.
Utility Aerial Devices
Utility aerial devices are used to set utility poles and move workers and
materials to work areas at the top of utility poles and towers. Utility aerial
devices are mounted on commercial truck chassis, which include separately
installed steel cabinets for tool and material storage.
[Graphic] Articulated Aerial Devices -- are used to elevate workers to work
areas at the top of utility poles or in trees and include one or
two man baskets. Articulated aerial devices available from Terex
Lifting include telescopic, non-overcenter and overcenter models
and range in working heights from 32 to 103 feet. Articulated
aerial devices are manufactured by Terex Lifting at its
Watertown, South Dakota facility under the brand names TELELECT
and HI-RANGER.
[Graphic] Digger Derricks -- are used to set telephone poles. The digger
derricks include a telescopic boom with an auger mounted at the
tip, which digs a hole, and a device to grasp, manipulate and set
the pole. Digger derricks available from Terex Lifting have
sheave heights exceeding 95 feet and lifting capacities up to
48,000 pounds. Digger derricks are manufactured by Terex Lifting
at its Watertown, South Dakota facility under the brand name
TELELECT.
Telescopic Material Handlers
Telescopic material handlers are used to lift containers or other material from
one location to another at the same job site.
[Graphic] Telescopic Container Stackers -- are used to pick up and stack
containers at dock and terminal facilities. At the end of a
telescopic container stacker's boom is a spreader which enables
it to attach to containers of varying lengths and weights and to
rotate the container up to 360 degrees. Telescopic container
stackers are particularly effective in storage areas where
containers are continually added and removed, and where the
efficient manipulation of, and access to, specific containers is
required. Telescopic container stackers manufactured by Terex
Lifting have lifting capacities up to 49.5 tons, can stack up to
six full or nine empty containers and are able to maneuver
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through very narrow areas. Terex Lifting manufactures its
telescopic container stackers under the brand names PPM, TEREX
and P&H SUPERSTACKERS at its Montceau-les-Mines, France facility.
[Graphic] Rough Terrain Telescopic Boom Material Handlers -- serve a
similar function as smaller size rough terrain telescopic mobile
cranes and are used to move and place materials on new
residential and commercial job sites. Terex Lifting manufactures
rough terrain telescopic boom material handlers with load
capacities of up to 10,000 pounds and with a maximum extended
reach of up to 40 feet and lift capabilities of up to 56 feet.
Terex Lifting manufactures rough terrain telescopic boom material
handlers at its facilities in Baraga, Michigan and Perugia, Italy
under the brand names SQUARE SHOOTER, TEREX and ITALMACCHINE.
Truck Mounted Cranes (Boom Trucks)
Terex Lifting manufactures telescopic boom cranes for mounting on commercial
truck chassis. Truck mounted cranes are used primarily in the construction
industry to lift equipment or materials to various heights. Boom trucks are
generally lighter and have a lower lifting capacity than truck cranes, and are
used for many of the same applications when lower lifting capabilities are
required. An advantage of a boom truck is that the equipment or material to be
lifted by the crane can be transported by the truck, which can travel at highway
speeds. Applications include the installation of air conditioners and other roof
equipment. The Terex Lifting segment manufactures the following type of crane
for installation on truck chassis:
[Graphic] Telescopic Boom Truck Mounted Cranes -- enable an operator to
reach heights of up to 166 feet and have a maximum lifting
capacity of up to 30 tons. Terex Lifting manufactures its
telescopic boom truck mounted cranes at its Olathe, Kansas
facility under the brand name RO-STINGER.
Aerial Work Platforms
Aerial work platforms are self-propelled devices which position workers and
materials easily and quickly to elevated work areas. These products have
developed over the past 20 years as alternatives to scaffolding and ladders. The
work platform is mounted on either a telescoping and/or articulating boom or on
a vertical lifting scissor mechanism. Terex Lifting manufactures the following
types of aerial work platforms:
[Graphic] Scissor Lifts -- are used in open areas in indoor or outdoor
applications in a variety of construction, industrial and
commercial settings. Scissor lifts manufactured by Terex Lifting
have maximum working heights of up to 110 feet and maximum load
capacities of up to 2,000 pounds. Terex Lifting manufactures
scissor aerial work platforms at its Waverly, Iowa, and Hoorn,
The Netherlands facilities under the brand names TEREX AERIALS
and HOLLAND LIFT.
[Graphic] Straight Telescopic Boom Lifts -- are used primarily outdoors in
residential, commercial and industrial new construction and
maintenance projects. Straight telescopic boom lifts manufactured
by Terex Lifting have maximum working heights of up to 116 feet
and maximum load capacities of up to 650 pounds. Terex Lifting
manufactures its straight telescopic aerial work platforms at its
Waverly, Iowa facility under the brand name TEREX AERIALS.
[Graphic] Articulating Telescopic Boom Lifts -- are generally used in
industrial environments where the articulation allows the user to
access elevated areas over machines or structural obstacles which
prevent access with a scissor lift or straight boom. Articulating
lifts available from Terex Lifting have maximum working heights
of up to 86 feet and maximum load capacities of up to 500 pounds.
Terex Lifting manufactures its articulating telescopic boom lifts
at its Cork, Ireland facility under the brand name TEREX AERIALS.
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Rigid and Articulated Off-Highway Trucks
Terex Earthmoving manufactures two distinct types of off-highway trucks with
hauling capacities from 25 to 100 tons: articulated and rigid frame.
[Graphic] Articulated Off-Highway Trucks -- are three axle, six-wheel drive
machines with a capacity range of 25 to 40 tons. Their
differentiating feature is an oscillating connection between the
cab and body, which allows the cab and body to move
independently. This enables all six tires to maintain ground
contact for improved traction on rough terrain. This also allows
the truck to move effectively through extremely rough or muddy
off-road conditions. Articulated off-highway trucks are typically
used together with an excavator or wheel loader to move dirt in
connection with road, tunnel or other infrastructure construction
and commercial, industrial or major residential construction
projects. Terex's articulated trucks are manufactured in
Motherwell, Scotland, under the brand name TEREX.
[Graphic] Rigid Off-Highway Trucks -- are two axle machines which generally
have larger capacities than articulated trucks, but can operate
only on improved or graded surfaces. The capacities of rigid
off-highway trucks range from 35 to 100 tons, and off-highway
trucks have applications in large construction or infrastructure
projects, aggregates and smaller surface mines. Terex
Earthmoving's rigid trucks are manufactured in Motherwell,
Scotland, under the TEREX brand name and in Tulsa, Oklahoma,
under the PAYHAULER brand name.
High Capacity Surface Mining Trucks
Terex Earthmoving manufactures high capacity surface mining trucks, which are
off road dump trucks with capacities in excess of 120 tons used primarily for
surface mining.
[Graphic] Terex Earthmoving's high capacity surface mining trucks are
powered by a diesel engine driving an electric generator that
provides power to individual electric motors in each of the rear
wheels. Unit Rig's current LECTRA HAUL product line consists of a
series of rear dump trucks with payload capabilities ranging from
120 to 360 tons, and bottom dump trucks with capacities ranging
from 180 to 270 tons. Terex Earthmoving's high capacity surface
mining trucks are manufactured at Unit Rig, located in Tulsa,
Oklahoma, under the UNIT RIG, LECTRA HAUL and TEREX brand names.
Large Hydraulic Excavators
Terex Earthmoving sells hydraulic excavators, which are shovels primarily used
to load coal, copper ore, iron ore, diamonds, other mineral-bearing materials,
or rocks into trucks. These products are primarily utilized for quarrying
construction materials or digging in surface mines. Additional applications
include large construction projects with difficult working conditions where
large amounts of solid material and rock are to be moved.
[Graphic] Terex Earthmoving offers a complete range of large hydraulic
excavators, with operating weights from 58 to 800 tons. O&K
Mining produces the RH 400, available in both electric and diesel
drive, the world's largest hydraulic excavator with an 800 ton
machine weight and 80 ton bucket capacity. The inclusion of the
RH 400 in Terex Earthmoving's product line enables it to compete
with the most popular electric rope shovel size class. Most
hydraulic excavators sold by Terex Earthmoving are manufactured
under the O&K brand name by O&K Mining in Dortmund, Germany.
[Graphic] Loader Backhoes Loader backhoes - incorporate a front-end loader
and rear excavator arm. They are used for loading, excavating and
lifting in many construction and agricultural related
applications. Terex Earthmoving's loader backhoes are
manufactured under the FERMEC brand name in Manchester, England.
-9-
Crushing and Screening Equipment
Terex Earthmoving's crushing and screening equipment is used in the aggregate
processing and recycling industries. Crushing and screening products include
crushers, screens, trommels, feeders and conveyors, which are used when
processing raw aggregate materials. Typical crushing and screening operations
utilize a combination of components in reducing virgin aggregate materials to
required product sizes for final usage in road building and related construction
applications. Crushing and screening plants can be either stationary or
portable. Portable crushing and screening plants are configured with a variety
of components to provide easy site-to-site mobility, application versatility,
flexible on-demand finished product and reduced set-up time.
Crushing Equipment
Terex Earthmoving manufactures crushing equipment under the PEGSON, CEDARAPIDS,
JAQUES AND CANICA-JAQUES brand names in Coalville, England, Cedar Rapids, Iowa,
Melbourne, Australia, Subang Jaya, Malaysia and Vancouver, Washington. Terex
Earthmoving produces the following types of crushing equipment:
[Graphic] Jaw Crushers -- are primary crushers with reduction ratios of 6
to 1 for crushing larger rock. Applications include hard rock,
sand and gravel and recycled materials. Models offered yield a
range of production capacities: up to 265 tons per hour for the
smallest unit, and up to 1,700 tons per hour for the largest.
[Graphic] Horizontal Shaft Impactors -- are secondary crushers which
utilize rotor impact bars and breaker plates to achieve high
production tonnages and improved aggregate particle shape. The
rugged durability and easy maintenance of horizontal shaft
impactors ensure less downtime and reduced wear costs for the
owner. They are typically applied to reduce soft to medium hard
materials.
[Graphic] Vertical Shaft Impactors -- are tertiary crushers which reduce
material utilizing various rotor configurations and are highly
adaptable to any application. Vertical shaft impactors can be
customized to material conditions and desired product size/shape.
A full range of models provides customers with increased
tonnages, better circuit balance and screen efficiency.
[Graphic] Cone Crushers -- are used in secondary and tertiary applications
to reduce a number of materials, including quarry rock and
riverbed gravel. High production, low maintenance and enhanced
final material cubical shape are the principal features of these
compression-type roller bearing crushers.
Screening Equipment
Terex Earthmoving manufactures screening equipment at its facilities in
Dungannon, Northern Ireland, Kilbeggan, Ireland, Omagh, Northern Ireland,
Durand, Michigan, Cedar Rapids, Iowa, Lebanon, Pennsylvania, Melbourne,
Australia, Subang Jaya, Malaysia and Chomburi, Thailand under the brand names
POWERSCREEN, FINLAY, SIMPLICITY, CEDARAPIDS, ROYER, RE-TECH and JAQUES.
[Graphic] Heavy Duty Inclined Screens and Feeders -- are found in high
tonnage applications. These units are typically custom designed
to meet the needs of each customer. Although primarily found in
stationary installations, Terex Earthmoving supplies a variety of
screens and feeders for use on heavy duty portable crushing and
screening spreads.
[Graphic] Inclined Screens -- are used in all phases of plant design from
handling quarried material to fine screening. Capable of handling
much larger capacity than a flat screen, inclined screens are
most commonly found in large stationary installations where
maximum output is required. This requires the ability to custom
design and manufacture units that meet both the engineering and
application requirements of the end user.
-10-
[Graphic] Feeders -- are generally situated at the primary end of the
processing facility, requiring rugged design in order to handle
the impact of the material being fed from front end loaders,
excavators, etc. The feeder moves material to the crushing and
screening equipment in a controlled fashion. Some feeders
manufactured by Terex Earthmoving remove smaller sized materials
through a short scalping area before reaching the crusher,
significantly reducing the wear in the crusher chamber.
[Graphic] Flat Screens -- combine the high efficiency of a horizontal
screen with the capacity, bearing life and low maintenance of an
inclined screen. They are adaptable for heavy scalping, standard
duty and fine screening applications and are engineered for
durability and user friendliness.
[Graphic] Dry Screening -- is used to process materials such as sand,
gravel, quarry rock, coal, construction and demolition waste,
soil, compost and wood chips.
[Graphic] Washing Screens -- are used to separate, wash, scrub, dewater and
stockpile sand and gravel. Products manufactured by Terex
Earthmoving include a completely mobile single chassis washing
plant incorporating separation, washing, dewatering and
stockpiling, mobile and stationary screening rinsers,
bucket-wheel dewaterers, scrubbing devices for aggregate, a
mobile cyclone for maximum retention of sand particles, silt
extraction systems, stockpiling conveyors and a sand screw system
as an alternative option to the bucket-wheel dewaterers.
[Graphic] Trommels -- are used in the recycling of construction and
demolition waste material, as well as soil, compost and wood
chips. Trommels incorporate conveyors and variable speed
fingertip control of the belts and rotating drum to separate the
various materials. Terex Earthmoving manufactures a range of
trommel and soil shredding equipment. Terex Earthmoving also
designs, sources, installs, commissions and provides aftersales
support for turnkey recycling systems. These systems are used to
process construction and demolition waste, as well as decasing,
segmenting and processing empty bottles. The soil shredding units
are mainly used by landscape contractors and provide a high
specification end product. Trommels are produced by Terex
Earthmoving at its facilities in Lebanon, Pennsylvania under the
brand names RE-TECH, ROYER and TEREX.
Asphalt Equipment
Terex Earthmoving manufactures asphalt mixing plants and asphalt pavers at its
facilities in Cedar Rapids, Iowa, and Glasgow, Missouri.
[Graphic] Asphalt Pavers -- Terex Earthmoving sells asphalt pavers with
maximum widths from 18 feet to 30 feet. Pavers are available in
rubber tire and steel or rubber track designs. The smaller units
have a maximum paving width of 18 feet and are used for
commercial work such as parking lots, development streets and
construction overlay projects. Mid-sized pavers are used for
mainline and commercial projects and have maximum paving widths
ranging from 24 to 28 feet. High production pavers are engineered
and built for heavy-duty, mainline paving and are capable of 30
foot maximum paving widths. All of the above feature direct
hydrostatic drive for maximum uptime, patented frame raise for
maneuverability and three-point suspension for smooth, uniform
mats. Terex Earthmoving's asphalt pavers are manufactured under
the CEDARAPIDS and GRAYHOUND brand names in Cedar Rapids, Iowa.
[Graphic] Asphalt Mixing Plants -- are used by road construction companies
to produce hot mix asphalt. The mixing plants are available in
portable, relocatable and stationary configurations. Associated
plant components and control systems are manufactured to offer
customers a wide variety of equipment to meet individual
production requirements. The asphalt mixing plants are
manufactured under the CEDARAPIDS/STANDARD HAVENS brand name in
Glasgow, Missouri.
-11-
Light Construction Equipment
Light construction equipment produced by Terex includes mobile and portable
floodlighting systems, concrete power trowels, concrete placement systems,
concrete finishing systems, generators and traffic control products.
[Graphic] Light Towers -- are used primarily to light work areas for night
construction activity. They are towed to the work-site where the
telescopic tower is extended and outriggers are deployed for
stability. They are diesel powered and provide adequate light for
construction activity for a radius of approximately 300 feet from
the tower. Light towers are manufactured under the AMIDA, COLEMAN
ENGINEERING and TEREX brand names.
[Graphic] Power Trowels -- are used to provide a smooth finish on concrete
surfaces. They are used on soft cement as the concrete hardens.
The power trowels are manufactured as walk-behind and ride-on
models. Trowels are typically used in conjunction with other
products manufactured by Terex Light Construction, including
light towers, power buggies, screed, and material spreaders.
Power trowels are manufactured under the BARTELL brand name in
Brampton, Ontario, Canada.
[Graphic] Power Buggies -- are used primarily to transport concrete from
the mixer to the pouring site. Terex Amida power buggies include
dump capacities from 10 to 21 cubic feet with both walk-behind
and ride-on models. Terex manufactures power buggies under the
AMIDA, MORRISION and TEREX brand names in Rock Hill, South
Carolina.
[Graphic] Generators - are used to provide electric power on construction
sites and other remote locations. Generators are manufactured
under the COLEMAN ENGINEERING brand name in Holly Springs,
Mississippi.
[Graphic] Directional Arrowboards -- are used to direct traffic around road
construction sites. They are primarily solar powered, with solar
panels continuously recharging batteries which provide power
during night hours. Terex Amida arrowboards include 15 and 25
light configurations. Directional arrow boards are manufactured
under the TEREX and AMIDA brand names in Rock Hill, South
Carolina.
Backlog
The Company's backlog as of December 31, 2000 and 1999 was as follows:
December 31,
----------------------------
2000 1999
-------------- -------------
(in millions)
Terex Lifting......................$ 111.7 $ 167.0
Terex Earthmoving.................. 102.3 158.3
Other.............................. 5.8 1.2
-------------- -------------
Total.........................$ 219.8 $ 326.5
============== =============
Substantially all of the Company's backlog orders are expected to be filled
within one year, although there can be no assurance that all such backlog orders
will be filled within that time period. The Company's backlog orders represent
primarily new equipment orders. Parts orders are generally filled on an
as-ordered basis.
Terex Lifting backlog at December 31, 2000 decreased $55.3 million to $111.7
million as compared to $167.0 million at December 31, 1999. The decrease in
backlog was due to the continued slowdown in the mobile crane segment and the
effect of the sale of the Company's truck-mounted forklift businesses in
September 2000. The backlog at Terex Earthmoving decreased to $102.3 million at
December 31, 2000 from $158.3 million at December 31, 1999, principally due to
slowdowns in the mining business and improvements in delivery performance and
lead-times within the Company's crushing and screening business. Included in
Other backlog are backlog orders of Terex Light Construction.
-12-
Distribution
Terex Lifting distributes its products primarily through a global network of
dealers and national accounts in over 1,000 different locations. Terex Lifting's
telescopic mobile cranes are marketed in the great majority of the United States
under the TEREX brand name. Terex Lifting's European telescopic mobile cranes
distribution is carried out primarily under three brand names, TEREX, PPM and
BENDINI, through a distribution network comprised of both distributors and a
direct sales force. Terex Lifting sells its lattice boom cranes through a
distribution network under the TEREX and AMERICAN brand names. Terex Lifting
distributes its mobile cranes in Australia under the FRANNA and TEREX brand
names. Telescopic boom truck mounted cranes are distributed by Terex Lifting
under the RO-STINGER brand name. Terex Lifting sells its utility aerial devices
under the TEREX TELELECT and HI-RANGER brand names principally through a network
of North American distributors. Terex Lifting sells its aerial work platform
products through a distribution network throughout the world, but principally in
North America and Europe. Terex Lifting's aerial work platform products are sold
under the brand names TEREX AERIALS and HOLLAND LIFT. Terex Lifting sells its
tower cranes through a distribution network under the PEINER, COMEDIL and TEREX
brand names. Terex Lifting's material and container handlers products are sold
through a distribution network under the brand names of TEREX, SQUARE SHOOTER,
PPM, P&H and ITALMACCHINE.
With respect to Terex Earthmoving products, TEL markets trucks and replacement
parts primarily through worldwide dealership networks. TEL's truck dealers are
independent businesses, which generally serve the construction, mining, timber
and/or scrap industries. Although these dealers carry products of a variety of
manufacturers, and may or may not carry more than one of Terex's products, each
dealer generally carries only one manufacturer's "brand" of each particular type
of product. Terex employs sales representatives who service these dealers from
offices located throughout the world. Payhauler distributes its products
primarily through a dealership network. Unit Rig distributes its products and
services directly to customers primarily through its own distribution system.
O&K Mining sells its hydraulic excavators and after-market parts and services
primarily through its export sales department in Dortmund, Germany, through O&K
Mining's global network of wholly-owned foreign subsidiaries and through
dealership networks. Fermec sells its loader backhoes through a network of
independent dealers and distributors throughout the world.
Powerscreen distributes all screening products through a global network of
dealers in more than 80 locations. The American dealers are supported by a
distribution center located in Louisville, Kentucky. Most dealers are single
line Powerscreen dealers. B.L. Pegson sells their entire range of crushers,
screens and feeders worldwide through distributors under the PEGSON brand name.
In total there are approximately 50 dealers, half of which are located in the
United States and served by the distribution center in Louisville, Kentucky.
Finlay distributes all products worldwide through a network of independent
dealers. In total there are approximately 35 distributors located across five
continents. Simplicity sells products through dealers, mainly located in the
United States, as well as direct to original equipment manufactures. Most of
Royer/Re-Tech's business is in the United States and their products are sold by
distributors. Benford sells its products primarily through dealers and
distributors.
Cedarapids crushing and screening equipment and asphalt pavers (and aftermarket
support parts for both of these lines) are sold principally through a worldwide
network of distributors under the CEDARAPIDS brand name. There are approximately
40 domestic and 25 international dealers, many of which have multiple branch
offices. Asphalt mixing plants are sold direct to end user customers under the
CEDARAPIDS/STANDARD HAVENS brand name. The Jaques Group distributes its crushing
and screening equipment principally through a worldwide network of independent
distributors and dealers.
Terex Light Construction distributes its products through a global network of
dealers and national accounts. Terex employs sales representatives who service
these dealers throughout the world. Worldwide distribution is conducted under
the AMIDA, BARTELL, MORRISON, BENFORD, MULLER, COLEMAN ENGINEERING and TEREX
brand names.
Research and Development
Terex maintains engineering staffs at several of its locations who design new
products and improvements in existing product lines. Terex's engineering
expenses are primarily incurred in connection with the improvements of existing
products, efforts to reduce costs of existing products and, in certain cases,
the development of products which may have additional applications or represent
extensions of the existing product line. Such costs incurred in the development
of new products or significant improvements to existing products of continuing
operations amounted to $9.1, $9.1 and $8.2 million in 2000, 1999 and 1998,
respectively.
-13-
Materials
Principal materials used by the Company in its various manufacturing processes
include steel, castings, engines, tires, hydraulic cylinders, drive trains,
electric controls and motors, and a variety of other fabricated or manufactured
items. In the absence of labor strikes or other unusual circumstances,
substantially all materials are normally available from multiple suppliers.
Current and potential suppliers are evaluated on a regular basis on their
ability to meet the Company's requirements and standards. Electric wheel motors
and controls used in most of the Unit Rig product line are currently supplied
exclusively by General Electric Company. The Company has endeavored to develop
alternative sources and has entered into a contract with General Atomics, a
former defense contractor, who has developed electric wheel motors for the
largest Unit Rig trucks. If the Company is unable to develop alternative
sources, or if there is disruption or termination of its relationship with
General Electric Company (which is not governed by a written contract), it could
have a material adverse effect on Unit Rig's operations.
Competition
Telescopic Mobile Cranes -- The domestic telescopic mobile crane industry is
comprised primarily of three manufacturers. The Company believes that Terex
Lifting is the second largest domestic manufacturer. The Company believes that
the number one domestic manufacturer is Grove Worldwide, and the number three
domestic manufacturer is Link-Belt, a subsidiary of Sumitomo Corp. The Company's
principal markets in Europe are in France, Italy and Spain, where the Company
believes it has the largest market shares. In Europe, Terex Lifting's primary
competitors are Grove Cranes Ltd, Liebherr and Mannesmann Dematic.
Truck Mounted Cranes (Boom Trucks) -- The United States boom truck industry is
dominated by four manufacturers, of which the Company believes Terex RO is the
second largest behind Grove National.
Tower Cranes -- The tower crane industry includes two principal competitors,
Liebherr and Potain, who combined represent well over half of the worldwide
market. Terex and Wolf are the only other competitors with a multi-national
presence; other manufacturers are small and regional.
Lattice Boom Cranes -- The lattice boom crane industry includes Manitowoc,
Link-Belt, Mannesmann Dematic, Liebherr, and Hitachi. Manitowoc is the world
leader in lifting capacities over 125 tons, and represents over half of the
United States lattice boom crane market.
Utility Aerial Devices -- The utility aerial device industry is comprised
primarily of three manufacturers. The Company believes that it is the second
largest manufacturer in the United States of utility aerial devices behind
Altec.
Telescopic Container Stackers -- The Company believes that four manufacturers
account for a majority of the global market for telescopic container stackers.
The Company believes that it is the second largest manufacturer behind Kalmar.
Other manufacturers include Valmet Belloti and Taylor.
Rough Terrain Telescopic Boom Material Handlers - OmniQuip (Textron),
Caterpillar and Gradall (JLG) are the largest manufacturers of rough terrain
telescopic material handlers. The Company believes that it is the fourth largest
manufacturer of rough terrain telescopic material handlers.
Aerial Work Platforms - The aerial work platform industry in North America is
fragmented, with seven major competitors. Terex believes that it is the fifth
largest manufacturer of aerial work platforms in North America, behind JLG,
Genie, UpRight and OmniQuip (Textron). The Company believes that its market
share in boom lifts is greater than its market share in scissor lifts.
Off-Highway Trucks -- North America and Europe account for a majority of the
global market. Four manufacturers dominate the global market. Terex believes
that it is the third largest of these manufacturers (behind Volvo and
Caterpillar).
High Capacity Surface Mining Trucks -- The high capacity surface mining truck
industry includes three principal manufacturers: Caterpillar, Komatsu-Dresser
and the Company. The Company believes that it had the leading market share since
1999.
Large Hydraulic Excavators -- The large hydraulic excavator industry is
comprised of primarily seven manufacturers, the largest of which are Hitachi,
Komatsu-DeMag, Liebherr and Caterpillar. The Company believes it is the largest
manufacturer of hydraulic excavators having machine weights in excess of 200
tons. The largest hydraulic excavators also compete against electric mining
-14-
shovels (rope excavators) from competitors such as Harnischfeger Corporation and
Bucyrus International, Inc. and, for some applications, against bucket wheel
loaders from competitors such as Caterpillar, Volvo and Komatsu-Dresser.
Loader Backhoes -- The loader backhoe industry is a competitive market
reflecting a large number of competitors. The largest competitors are
Caterpillar, CNH (including both its Case and New Holland brands), JCB,
Fiat-Hitachi and John Deere. The Company believes that it is the fifth largest
of these manufacturers in Europe and in the United States.
Crushing and Screening Equipment -- The crushing industry is a competitive
market reflecting a large number of competitors. The two largest competitors are
Nordberg, a subsidiary of Metso Corporation, and Svedala Industri A.B. The
Company believes it is the third largest manufacturer. The screening industry
includes six principal manufacturers: Extec (U.K.), Nordberg (Metso Corporation)
(Finland), Astec Industries (U.S.), Svedala (Sweden), Ohio Screen (U.S.), and
Parker Plant (U.K.). The Company believes that it is the market leader in the
mobile screening industry.
Asphalt Pavers -- The asphalt paver industry includes four principal
manufacturers: Blaw-Knox (Ingersoll-Rand), Barber Greene (Caterpillar), Roadtec
(Astec Industries) and the Company. The Company believes it is the third largest
manufacturer.
Asphalt Mixing Plants -- The asphalt mixing plant industry includes three
principal manufacturers: Astec Industries, CMI Corporation, and Gencor
Corporation. The Company believes it is the fourth largest manufacturer.
Light Towers -- The United States light tower market is dominated by three
manufacturers. The Company believes that it is the largest manufacturer followed
by Allmand Bros. and Ingersoll-Rand.
Light Concrete Equipment -- The light concrete equipment market is fragmented
with numerous small manufacturers. The Company believes that Allen Engineering,
Multiquip, and Wacker are the primary extended line competitors. The Company
believes that it is the third largest extended line manufacturer in this
category.
Employees
As of December 31, 2000, the Company had approximately 6,150 employees. The
Company considers its relations with its personnel to be good. Approximately 34%
of the Company's employees are represented by labor unions which have entered
into or are in the process of entering into various separate collective
bargaining agreements with the Company. The Company experienced a labor strike
at its Terex Lifting manufacturing facility in Waverly, Iowa during December
1999 and January 2000 which was settled in January 2000. The strike at Waverly
had no appreciable affect on the conduct of business or financial results of the
Terex Lifting segment as a whole.
Patents, Licenses and Trademarks
Several of the trademarks and trade names of the Company, in particular the
TEREX, LORAIN, UNIT RIG, MARKLIFT, P&H, PPM, TELELECT, SQUARE SHOOTER,
PAYHAULER, O&K, HOLLAND LIFT, AMERICAN, ITALMACCHINE, PEINER, COMEDIL, FRANNA,
POWERSCREEN, CEDARAPIDS, FINLAY, SIMPLICITY, B.L. PEGSON, MATBRO, BENFORD,
MULLER, RE-TECH, JAQUES, CANICA-JAQUES, AMIDA, MORRISON, BRIMONT, EARTHKING,
FERMEC, COLEMAN ENGINEERING and BARTELL trademarks, are important to the
business of the Company. The Company owns and maintains trademark registrations
and patents in countries where it conducts business, and monitors the status of
its trademark registrations and patents to maintain them in force and renews
them as required. The Company also protects its trademark, trade name and patent
rights when circumstances warrant such action, including the initiation of legal
proceedings, if necessary. P&H is a registered trademark of Harnischfeger
Corporation which the Company has the right to use for certain products pursuant
to a license agreement until 2011. The Company also has the right to use the O&K
and Orenstein & Koppel names (which are registered trademarks of Orenstein &
Koppel) for most applications in the mining business for an unlimited period of
time. All other trademarks and trade names referred to in this Annual Report are
registered trademarks of Terex Corporation or its subsidiaries.
Environmental Considerations
The Company generates hazardous and non-hazardous wastes in the normal course of
its operations. As a result, the Company is subject to a wide range of federal,
state, local and foreign environmental laws and regulations, including the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
that (i) govern activities or operations that may have adverse environmental
-15-
effects, such as discharges to air and water, as well as handling and disposal
practices for hazardous and non-hazardous wastes, and (ii) impose liability for
the costs of cleaning up, and certain damages resulting from, sites of past
spills, disposals or other releases of hazardous substances. Compliance with
such laws and regulations has, and will, require expenditures by the Company on
a continuing basis. However, the Company has not incurred, and does not expect
to incur in the future, any material capital expenditures for environmental
control facilities.
Seasonal Factors
The Company markets a large portion of its products in North America and Europe,
and its sales of trucks, asphalt mixing plants, mobile crushing and screening
equipment and cranes during the fourth quarter of each year to the construction
industry are usually lower than sales of such equipment during each of the first
three quarters of the year because of the normal winter slowdown of construction
activity. However, sales of trucks and excavators to the mining industry are
generally less affected by such seasonal factors.
-16-
ITEM 2. PROPERTIES
The following table outlines the principal manufacturing, warehouse and office
facilities owned or leased by the Company and its subsidiaries:
Entity Facility Location Type and Size of Facility
Terex (Corporate Offices) and EarthKing.....Westport, Connecticut (1) Office; 19,898 sq. ft.
Terex (Distribution Center).................Southaven, Mississippi (1) Office and warehouse;
505,000 sq. ft. (2)
Amida.......................................Rock Hill, South Carolina Office, manufacturing and warehouse;
121,020 sq. ft.
Bartell.....................................Brampton, Ontario, Canada Office, manufacturing and warehouse;
32,509 sq. ft.
Coleman.....................................Holly Springs, Mississippi Office, manufacturing and warehouse;
100,000 sq. ft.
Coleman.....................................Memphis, Tennessee (1) Warehouse and manufacturing;
50,000 sq. ft.
Terex Lifting
Terex Lifting - Waverly Operations..........Waverly, Iowa Office, manufacturing and warehouse;
311,920 sq. ft.
Terex Lifting - Conway Operations...........Conway, South Carolina (1) Office, manufacturing and warehouse;
153,716 sq. ft.
PPM S.A.S. .................................Montceau-les-Mines, France Office, manufacturing and warehouse;
418,376 sq. ft.
Terex Italia................................Crespellano, Italy Office, manufacturing and warehouse;
68,501 sq. ft.
Terex Lifting Espana .......................Cabanillas Del Campo, Spain (1) Office and warehouse; 26,900 sq. ft.
PPM S.A.S. subsidiary.......................Dortmund, Germany (1) Office and warehouse; 129,180 sq. ft.
PPM S.A.S. subsidiary.......................Rethel, France Office, manufacturing and warehouse;
213,058 sq. ft.
Telelect....................................Watertown, South Dakota (3) Office, manufacturing and warehouse;
237,900 sq. ft.
Telelect (Terex Manufacturing)..............Huron, South Dakota Manufacturing; 88,000 sq. ft.
Terex Aerials Limited.......................Cork, Ireland (1) Office and manufacturing; 35,250 sq. ft.
Terex-RO....................................Olathe, Kansas Office and manufacturing; 80,400 sq. ft.
Terex Handlers..............................Baraga, Michigan Office, manufacturing and warehouse;
53,620 sq. ft.
Comedil.....................................Fontanafredda, Italy Office, manufacturing and warehouse;
100,682 sq. ft.
Holland Lift................................Hoorn, The Netherlands Office, manufacturing and warehouse;
30,000 sq. ft.
Terexlift...................................Perugia, Italy Office, manufacturing and warehouse;
113,834 sq. ft.
Peiner......................................Trier, Germany Office, manufacturing and warehouse;
85,787 sq. ft.
American Crane..............................Wilmington, North Carolina Office, manufacturing and warehouse;
572,200 sq. ft.
Terex Lifting Australia.....................Brisbane, Australia (1) Office, manufacturing and warehouse;
42,495 sq. ft.
Terex Lifting U.K...........................Tetbury, England (1) Office, manufacturing and warehouse;
80,000 sq. ft.
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Terex Earthmoving
O&K Mining..................................Dortmund, Germany (1) Office, manufacturing, warehouse;
775,000 sq. ft.
Unit Rig and Payhauler......................Tulsa, Oklahoma Office, manufacturing and warehouse;
375,587 sq. ft.
TEL.........................................Motherwell, Scotland Office, manufacturing and warehouse;
473,000 sq. ft.
Powerscreen.................................Dungannon, Northern Ireland Office, manufacturing and warehouse;
330,000 sq. ft.
Powerscreen.................................Kilbeggan, Ireland Manufacturing; 70,000 sq. ft.
Finlay......................................Omagh, Northern Ireland Office, manufacturing and warehouse;
152,863 sq. ft.
Benford.....................................Warwick, England Office, manufacturing and warehouse;
210,000 sq. ft.
Simplicity..................................Durand, Michigan Office, manufacturing and warehouse;
167,000 sq. ft.
B. L. Pegson................................Coalville, England Office, manufacturing and warehouse;
204,486 sq. ft.
Cedarapids..................................Cedar Rapids, Iowa Office, manufacturing and warehouse;
608,423 sq. ft.
Standard Havens ............................Glasgow, Missouri Office, manufacturing and warehouse;
140,000 sq. ft.
Royer/Re-Tech...............................Lebanon, Pennsylvania (1) Office, manufacturing and warehouse;
148,800 sq. ft.
Fermec......................................Manchester, England Office, manufacturing and warehouse;
371,683 sq. ft.
Jaques......................................Melbourne, Australia (1) Office, manufacturing and warehouse;
36,000 sq. ft.
Canica-Jaques...............................Vancouver, Washington (1) Office, manufacturing and warehouse;
41,000 sq. ft.
Jaques Malaysian............................Subang Jaya, Malaysia (1) Manufacturing and warehouse;
111,200 sq. ft.
Jaques Thailand.............................Chomburi, Thailand Manufacturing; 79,500 sq. ft.
(1) These facilities are either leased or subleased by the indicated entity.
(2) Includes 239,400 sq. ft. of warehouse space subleased to others.
(3) Includes 18,550 sq. ft. which are leased by the indicated entity.
Unit Rig, O&K Mining and Powerscreen also have numerous owned or leased
locations for parts distribution and rebuilding of components located worldwide.
Management believes that the properties listed above are suitable and adequate
for the Company's use. The Company has determined that certain of its properties
exceed its requirements. Such properties may be sold, leased or utilized in
another manner and have been excluded from the above list.
The majority of the Company's U.S. properties are subject to mortgages arising
from its bank credit facilities.
Financial Information about Industry and Geographic Segments, Export Sales and
Major Customers
Information regarding foreign and domestic operations, export sales, segment
information and major customers is included in Note O -- "Business Segment
Information" in the Notes to the Consolidated Financial Statements.
-18-
ITEM 3. LEGAL PROCEEDINGS
As described in Note M -- "Litigation and Contingencies" in the Notes to the
Consolidated Financial Statements, the Company is involved in various legal
proceedings, including product liability and workers' compensation liability
matters, which have arisen in the normal course of its operations and to which
the Company is self-insured for up to $2.5 million per incident. Management
believes that the final outcome of such matters will not have a material adverse
effect on the Company's consolidated financial position.
In connection with the Company's sale of the Clark material handling business to
Clark Material Handling Company ("CMHC") in November 1996, CMHC assumed
liabilities from Terex arising from product liability claims dealing with Clark
material handling products manufactured prior to the date of the divestiture. In
connection with CMHC's voluntary filing for bankruptcy in 2000, CMHC has
defaulted on its obligations to indemnify and defend the Company from such
product liability claims. As a result of this situation, the Company recorded an
expense of $7.3 million, net of income taxes, in the fourth quarter of 2000
representing the Company's estimated liability for known product liability
claims.
For information concerning other contingencies and uncertainties, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Contingencies and Uncertainties."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
(a) The Company's Common Stock is listed on the New York Stock Exchange (the
"NYSE") under the symbol "TEX." The high and low stock prices for the Company's
Common Stock on the NYSE Composite Tape (for the last two completed years) are
as follows:
2000 1999
------------------------------ --------------------------------
Fourth Third Second First Fourth Third Second First
High.......... $17.19 $19.50 $17.25 $28.88 $31.50 $31.88 $35.50 $28.50
Low........... 11.56 12.00 12.38 11.13 24.81 24.25 23.25 22.13
No dividends were declared or paid in 1999 or in 2000. Certain of the Company's
debt agreements contain restrictions as to the payment of cash dividends. In
addition, payment of dividends is limited by Delaware law. The Company intends
generally to retain earnings, if any, to fund the development and growth of its
business and to pay down debt. The Company does not plan on paying dividends on
the Common Stock in the near term. Any future payments of cash dividends will
depend upon the financial condition, capital requirements and earnings of the
Company, as well as other factors that the Board of Directors may deem relevant.
As of March 13, 2001, there were 717 stockholders of record of the Company's
Common Stock.
(b) Not Applicable.
-19-
ITEM 6. SELECTED FINANCIAL DATA
(in millions except per share amounts and employees)
As of or for the Year Ended December 31,
-------------------------------------------------------------
2000 1999 1998 1997 1996
----------- ----------- ------------- ----------- -----------
Summary of Operations
Net sales....................................................$ 2,068.7 $ 1,856.6 $ 1,233.2 $ 842.3 $ 678.5
Income from operations....................................... 198.3 178.3 122.0 71.1 5.1
Income (loss) from continuing operations before
extraordinary items........................................ 103.9 172.9 72.8 30.3 (54.3)
Income (loss) from discontinued operations................... (7.3) --- --- --- 102.0
Income before extraordinary items............................ 96.6 172.9 72.8 30.3 47.7
Net income................................................... 95.1 172.9 34.5 15.5 47.7
Income applicable to common stock............................ 95.1 172.9 34.5 10.7 24.8
Per Common and Common Equivalent Share:
Basic
Income (loss) from continuing operations.................$ 3.82 $ 7.14 $ 3.52 $ 1.57 $ (6.54)
Income (loss) from discontinued operations............... (0.27) --- --- --- 8.64
Income before extraordinary items........................ 3.55 7.14 3.52 1.57 2.10
Net income............................................... 3.50 7.14 1.67 0.66 2.10
Diluted
Income (loss) from continuing operations.................$ 3.72 $ 6.75 $ 3.25 $ 1.44 $ (5.81)
Income (loss) from discontinued operations............... (0.26) --- --- --- 7.67
Income before extraordinary items........................ 3.46 6.75 3.25 1.44 1.86
Net income............................................... 3.41 6.75 1.54 0.60 1.86
Working Capital
Current assets...............................................$ 1,242.4 $ 1,315.3 $ 771.6 $ 426.5 $ 390.2
Current liabilities.......................................... 575.6 579.5 425.4 236.1 195.0
Working capital.............................................. 666.8 735.8 346.2 190.4 195.2
Property, Plant and Equipment
Net property, plant and equipment............................$ 153.9 $ 172.8 $ 99.5 $ 47.8 $ 31.7
Capital expenditures......................................... 24.2 21.4 13.1 9.9 8.1
Depreciation................................................. 23.0 17.6 10.1 8.2 7.0
Total Assets...................................................$ 1,983.7 $ 2,177.5 $ 1,151.2 $ 588.5 $ 471.2
Capitalization
Long-term debt and notes payable, including current
maturities.................................................$ 902.5 $ 1,156.4 $ 631.3 $ 300.1 $ 281.3
Minority interest, including redeemable preferred stock of a
subsidiary................................................ --- --- 0.6 0.6 10.0
Redeemable convertible preferred stock....................... --- --- --- --- 46.2
Stockholders' equity (deficit)............................... 451.5 432.8 98.1 59.6 (71.7)
Dividends per share of Common Stock..........................$ --- $ --- $ --- $ --- $ ---
Shares of Common Stock outstanding at year end............... 26.8 27.5 20.8 20.5 13.2
Employees...................................................... 6,150 6,650 4,142 2,950 2,270
The Selected Financial Data include the results of operations of Coleman,
Fermec, Amida, Powerscreen, Cedarapids, Bartell, Re-Tech, Princeton/Kooi, Franna
(now known as Terex Lifting Australia), Payhauler, O&K Mining, Holland Lift,
American Crane, Italmacchine (now known as Terexlift S.r.l.), Peiner, Comedil,
the Simon Access Companies, Terex Handlers and PPM from October 23, 2000,
December 28, 2000, April 1, 1999, July 27, 1999, August 27, 1999, September 20,
1999, September 29, 1999, November 3, 1999, December 1, 1999, January 5, 1998,
March 31, 1998, May 4, 1998, July 31, 1998, November 3, 1998, November 13, 1998,
December 18, 1998, April 7, 1997, April 14, 1997 and May 9, 1995, respectively,
the dates of their acquisitions. See Note B -- "Acquisitions" in the Notes to
the Consolidated Financial Statements for further information. The Selected
Financial Data for the year ended December 31, 2000, includes the results of
operations of Princeton/Kooi and Moffett (a division of Powerscreen) through
September 30, 2000, the date these units were sold. See Note C - "Sale of
Businesses" in the Notes to the Consolidated Financial Statements for further
information. The Selected Financial Data for the year ended December 31, 1996
includes the results of operations of Clark Material Handling Company ("CMHC")
as discontinued operations. CMHC was sold by the Company in November 1996.
-20-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
The Company organizes itself primarily in two industry segments: Terex Lifting
and Terex Earthmoving. The 2000 results for Terex Lifting include the operations
of Moffett and Princeton/Kooi through September 30, 2000, their date of sale.
The 1999 results for Terex Lifting include the operations of Moffett, Terex
Lifting U.K., Princeton/Kooi and Terex Lifting Australia from their respective
acquisition dates of July 27, 1999, November 3, 1999 and December 1, 1999. The
1998 results for Terex Lifting include the operations of Holland Lift, American
Crane, Terexlift, Peiner and Comedil from their respective acquisition dates of
May 4, 1998, July 31, 1998, November 3, 1998, November 13, 1998 and December 18,
1998. The 1999 results for Terex Earthmoving include the operations of
Powerscreen (excluding Moffett and Terex Lifting U.K.), Cedarapids and Re-Tech
from their respective acquisition dates of July 27, 1999, August 27, 1999 and
September 29, 1999. Terex Earthmoving results for 1998 includes the results of
Payhauler and O&K Mining from their respective acquisition dates of January 5,
1998 and March 31, 1998. Included in the 2000 Other are the results of the
operations of Coleman from October 23, 2000, its date of acquisition, along with
the results of operations of Amida and Bartell, as well as general and corporate
items. Included in the 1999 Other are the results of the operations of Amida and
Bartell from their respective acquisition dates of April 1, 1999 and September
20, 1999 as well as general and corporate items.
2000 Compared with 1999
The table below is a comparison of net sales, gross profit, selling, general and
administrative expenses and income (loss) from operations, by segment, for 2000
and 1999.
Year Ended
December 31,
-------------------- Increase
2000 1999 (Decrease)
---------- --------- ----------
(in millions of dollars)
NET SALES
Terex Lifting................................. $ 924.0 $ 944.9 $ (20.9)
Terex Earthmoving............................. 1,099.5 878.9 220.6
Other......................................... 45.2 32.8 12.4
---------- ---------- ---------
Total...................................... $ 2,068.7 $ 1,856.6 $ 212.1
========== ========== =========
GROSS PROFIT
Terex Lifting................................. $ 155.2 $ 146.0 $ 9.2
Terex Earthmoving............................. 201.1 164.0 37.1
Other......................................... 7.3 6.7 0.6
---------- ---------- ---------
Total...................................... $ 363.6 $ 316.7 $ 46.9
========== ========== =========
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Terex Lifting................................. $ 60.4 $ 59.6 $ 0.8
Terex Earthmoving............................. 96.5 76.5 20.0
Other......................................... 8.4 2.3 6.1
---------- ---------- ---------
Total...................................... $ 165.3 $ 138.4 $ 26.9
========== ========== =========
INCOME FROM OPERATIONS
Terex Lifting................................. $ 94.8 $ 86.4 $ 8.4
Terex Earthmoving............................. 104.6 87.5 17.1
Other......................................... (1.1) 4.4 (5.5)
---------- ---------- ---------
Total...................................... $ 198.3 $ 178.3 $ 20.0
========== ========== =========
-21-
Net Sales
Sales increased $212.1 million, or approximately 11.4%, to $2,068.7 million in
2000 from $1,856.6 million in 1999. This revenue increase was due to the effect
of a full year of inclusion of companies acquired in 1999, offset partially by
declining revenues at existing businesses.
Terex Lifting's sales were $924.0 million for 2000, a decrease of $20.9 million,
or 2.2%, from $944.9 million in 1999. The decrease can be attributed to the
continued decline in the hydraulic mobile crane market and the aerial work
platform business, which was de-emphasized during the fourth quarter of 1999
with the closing of the Company's Milwaukee facility. These items were offset
partially by the contribution from companies acquired in 1999 and the Company's
performance in its utility aerial device business. Machine sales decreased $33.0
million to $762.0 million while part sales increased $4.3 million to $100.8
million. Terex Lifting's backlog decreased $55.3 million to $111.7 million,
attributable primarily to a decline in the hydraulic mobile crane business and
the sale of the truck-mounted forklift businesses in the third quarter of 2000.
Terex Earthmoving's sales were $1,099.5 million in 2000, an increase of $220.6
million, or 25%, from $878.9 million in 1999. This increase was primarily due to
the impact of companies acquired in 1999, offset partially by declining revenues
in the Company's mining business. Machine sales increased $187.1 million to
$831.2 million while part sales increased $33.0 million to $233.4 million.
Backlog decreased to $102.3 million at December 31, 2000 from $158.3 million at
December 31, 1999 due to slowdowns in the mining business and improvements in
delivery performance and lead-times within the Company's crushing and screening
business.
Net sales for Other represent sales from Amida, Bartell and Coleman from their
date of acquisition and service revenues generated by Terex's parts distribution
center for services provided to a third party. Amida, Bartell and Coleman were
acquired by Terex on April 1, 1999, September 20, 1999 and October 23, 2000,
respectively.
Gross Profit
Gross profit for 2000 increased $46.9 million to $363.6 million as a result of
1999 acquisitions. Gross profit as a percentage of net sales for 2000 increased
to 17.6% as compared to 17.1% for 1999. This increase was related primarily to
margin improvements in the Terex truck and the utility aerial device businesses,
driven by increased volumes and manufacturing efficiencies, and a full year of
inclusion of companies acquired in 1999. In 2000, the Company recorded special
charges of $10.1 million related to the closure of the Company's distribution
facility in the United Kingdom, the impact of an aggregates customer that filed
for bankruptcy and the further integration of the Company's mining division. In
1999, the Company recorded special charges of $9.9 million related to the
closure of the Company's Milwaukee aerial work platform facility and head count
reductions at O&K Mining. Excluding the special charges, gross margin was 18.1%
in 2000 compared to 17.6% in 1999.
Terex Lifting's gross profit increased $9.2 million, or 6.3%, to $155.2 million,
compared to $146.0 million in 1999. Gross profit as a percentage of sales
increased to 16.8% from 15.5% in 1999, due to product mix, the impact of
companies acquired in 1999 and the effect of the 1999 special charges for the
closure of the Company's Milwaukee aerial work platform facility. Excluding the
1999 special charges, the gross profit percentage for 1999 was 16.5%.
Terex Earthmoving's gross profit increased $37.1 million, or 22.6%, to $201.1
million, compared to $164.0 million in 1999. The decrease in gross profit as a
percentage of sales, 18.3% compared to 18.7% in 1999, is primarily related to
the special charges noted above. Excluding special charges, gross profit as a
percentage of sales increased to 19.2% as a result of margin improvements in the
Terex truck business and a full year of inclusion of companies acquired in 1999.
Gross profit for Other increased to $7.3 million in 2000 from $6.7 million in
1999 primarily due to the increased sales from the businesses acquired in 2000
and 1999.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (which include the Company's
research and development expenses) increased to $165.3 million in 2000 from
$138.4 million for 1999, reflecting the effects of a full year of inclusion of
the companies acquired in 1999 and the special charges recorded during the year.
In 2000, the Company recorded special charges of $2.7 million related to the
closure of the Company's distribution facility in the United Kingdom, the
further integration of the Company's mining division and due diligence costs
associated with a large potential acquisition which did not come to fruition,
offset partially by a curtailment gain related to one of the Company's pension
plans. In 1999, the Company recorded special items of ($1.4) million related to
-22-
headcount reductions at the Company's manufacturing facility in Germany, offset
by a favorable legal settlement. As a percentage of sales, selling, general and
administrative expenses increased to 8.0% in 2000 from 7.5% in 1999.
Terex Lifting's selling, general and administrative expenses increased to $60.4
million from $59.6 million in 1999, due to a full year of inclusion of companies
acquired in 1999 and additional investments in sales and marketing support.
Selling, general and administrative expenses as a percentage of sales increased
to 6.5% from 6.3% in 1999. Excluding the impact of acquisitions, selling,
general and administrative expenses as a percentage of sales decreased to 6.0%
from 6.2% in 1999.
Terex Earthmoving's selling, general and administrative expenses increased $20.0
million to $96.5 million for 2000 as compared to $76.5 million in 1999. This
increase is primarily due to the effect of acquired companies and the special
charges noted above. As a percentage of sales, however, selling, general and
administrative expenses increased slightly to 8.8% in 2000 from 8.7% in 1999.
Selling, general and administrative expenses for Other increased to $8.4 million
in 2000 as compared to $2.3 million in 1999. The increase in 2000 is primarily
the result of the inclusion of Coleman in 2000 and of Amida and Bartell for all
of 2000, the special charges noted above and the Company's investment in its new
EarthKing subsidiary, an independent e-commerce company that will provide new
tools for equipment owners and operators to maximize their return on investment.
In 1999, selling, general and administrative expenses were lower due to the
effect of a favorable legal settlement to the Company during the fourth quarter
of 1999. See "Business--Research and Development" for a discussion of the
Company's engineering expenses.
Income from Operations
Income from operations for the Company increased $20.0 million, or 11.2%, to
$198.3 million, compared to $178.3 million in 1999. Income from operations as a
percentage of sales remained at 9.6% in 2000 and 1999. Excluding the special
charges, income from operations as a percentage of sales was 10.2% in
2000 as compared to 10.1% in 1999.
Terex Lifting's income from operations increased $8.4 million, or 9.7%, to $94.8
million, as compared to $86.4 million in 1999. The increase can be attributed to
the contributions from acquired companies in 1999 and the performance of the
Company's utility aerial devices business, offset somewhat by a decline in the
hydraulic mobile crane business. Included in income from operations in 1999 were
special charges related to the closing of the Company's Milwaukee facility.
Income from operations as a percentage of sales, excluding the special charges,
increased to 10.3% in 2000 from 10.2% in 1999.
Terex Earthmoving's income from operations increased $17.1 million, or 19.5%, to
$104.6 million, compared to $87.5 million in 1999. As a percentage of sales,
income from operations decreased to 9.5% from 10.0% in 1999. Excluding special
charges, operating margin improved to 10.4% in 2000 from 10.2% in 1999.
Income from operations for Other decreased $5.5 million in 2000 to an operating
loss of $1.1 million, compared to income of $4.4 million in 1999. This decrease
was a result of the impact in 2000 of due diligence costs associated with a
large potential acquisition which did not come to fruition and the Company's
investment in EarthKing, partially offset by the inclusion of the Amida, Bartell
and Coleman acquisitions for all or a portion of 2000. Further, the 1999 results
benefited from the one-time impact of a favorable legal settlement.
Interest Expense
Net interest expense increased to $94.3 million for 2000 from $77.5 million in
1999 as a result of higher average debt levels due to debt incurred to finance
the 1999 acquisitions as well as higher interest rates.
Income Taxes
During 2000, the Company recognized an income tax expense of $55.7 million as
compared to an income tax benefit of $74.5 million in 1999. During the fourth
quarter of 1999, the Company announced the resolution of an IRS audit, which
started in December 1994, regarding its income tax returns for the years 1987
through 1989. The resolution of this audit did not require payment of tax. The
1999 income tax benefit resulted from the capitalization of certain deferred
taxes. See Note J - "Income Taxes" in the Notes to the Consolidated Financial
Statements.
Loss from Discontinued Operations
In connection with the Company's sale of the Clark material handling business to
CMHC in November 1996, CMHC assumed liabilities from Terex arising from product
liability claims dealing with Clark material handling products manufactured
prior to the date of the divestiture. In connection with CMHC's voluntary filing
for bankruptcy in 2000, CMHC has defaulted on its obligations to indemnify and
defend the Company from such product liability claims. As a result of this
situation, the Company recorded an expense of $7.3 million, net of income taxes,
in the fourth quarter of 2000 representing the Company's estimated liability for
known product liability claims.
-23-
Extraordinary Items
During 2000, the Company recorded a charge of $1.5 million, net of income taxes,
to recognize a loss on the early extinguishment of debt in connection with the
prepayment of principal of the Company's bank credit facilities.
1999 Compared with 1998
The table below is a comparison of net sales, gross profit, selling, general and
administrative expenses and income (loss) from operations, by segment, for 1999
and 1998.
Year Ended
December 31,
--------------------- Increase
1999 1998 (Decrease)
----------- --------- -----------
(in millions of dollars)
NET SALES
Terex Lifting............................... $ 944.9 $ 770.9 $ 174.0
Terex Earthmoving........................... 878.9 456.4 422.5
Other....................................... 32.8 5.9 26.9
---------- ---------- ----------
Total.................................... $ 1,856.6 $ 1,233.2 $ 623.4
========== ========== ==========
GROSS PROFIT
Terex Lifting............................... $ 146.0 $ 128.5 $ 17.5
Terex Earthmoving........................... 164.0 96.5 67.5
Other....................................... 6.7 0.8 5.9
---------- ---------- ----------
Total.................................... $ 316.7 $ 225.8 $ 90.9
========== ========== ==========
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Terex Lifting............................... $ 59.6 $ 46.4 $ 13.2
Terex Earthmoving........................... 76.5 54.8 21.7
Other....................................... 2.3 2.6 (0.3)
---------- ---------- ----------
Total.................................... $ 138.4 $ 103.8 $ 34.6
========== ========== ==========
INCOME FROM OPERATIONS
Terex Lifting............................... $ 86.4 $ 82.1 $ 4.3
Terex Earthmoving........................... 87.5 41.7 45.8
Other....................................... 4.4 (1.8) 6.2
---------- ---------- ----------
Total.................................... $ 178.3 $ 122.0 $ 56.3
========== ========== ==========
Net Sales
Sales increased $623.4 million, or approximately 51%, to $1,856.6 million in
1999 from $1,233.2 million in 1998. Internally generated growth represented
approximately $234.0 million, or 38%, of this revenue increase while acquired
companies contributed approximately $389.0 million, or 62%.
Terex Lifting's sales were $944.9 million for 1999, an increase of $174.0
million, or 23%, from $770.9 million in 1998, which was driven primarily from
contributions of acquired companies. Internal growth of approximately $25
million represents strong performances by the Company's utility aerial devices
and material handling businesses, which reported sales increases of 38% and 51%
respectively, partially offset by declines in the hydraulic mobile crane and
U.S. aerials businesses. Machine sales increased $138.1 million to $795.0
million while part sales increased $14.9 million to $96.5 million. Terex
Lifting's backlog decreased $54.8 million to $167.0 million attributable
primarily to a decline in the hydraulic mobile crane business, offset partially
by the backlog of businesses acquired in 1999.
Terex Earthmoving's sales were $878.9 million in 1999, an increase of $422.5
million, or 93%, from $456.4 million in 1998, which was split evenly between
internal growth and contributions from acquired companies. Internal growth was
driven by strong performances at the Company's surface mining truck business,
which generated over $300 million in sales in 1999, and the Company's Terex
-24-
truck business, which reported an increase in sales of 18% from 1998. Machine
sales increased $354.5 million to $644.1 million while part sales increased
$56.7 million to $200.4 million. Backlog decreased to $158.3 million at December
31, 1999 from $196.4 million at December 31, 1998 primarily from the completion
of the $157 million order for 160 trucks from Coal India, partially offset by
the backlog of business acquired in 1999.
Net sales for Other in 1999 represent sales from Amida, Bartell and service
revenues generated by Terex's parts distribution center for services provided to
a third party. Amida and Bartell were acquired by Terex on April 1, 1999 and
September 20, 1999, respectively. In 1998, net sales consisted of service
revenues generated by Terex's parts distribution center.
Gross Profit
Gross profit for 1999 increased $90.9 million to $316.7 million as a result of
acquisitions, internally generated growth and the execution and completion of
the Coal India order during 1999. Gross profit as a percentage of net sales for
1999 decreased to 17.1% as compared to 18.3% for 1998. This decrease was
primarily due to the product mix, as machine sales as a percent of total sales
increased during the year, and special charges related to the closure of the
Company's Milwaukee aerial work platform facility.
Terex Lifting's gross profit increased $17.5 million, or 14%, to $146.0 million,
compared to $128.5 million in 1998. Gross profit as a percentage of sales
decreased to 15.5% from 16.7% in 1998, due to product mix and the special
charges mentioned above. Excluding the special charge, the gross profit
percentage for 1999 was 16.5%.
Terex Earthmoving's gross profit increased $67.5 million, or 70%, to $164.0
million, compared to $96.5 million in 1998. The decrease in gross profit as a
percentage of sales, 18.7% compared to 21.1% in 1998, is primarily related to
product mix as new machine sales represented 71.6% of total sales in 1999
compared to 60.3% in 1998.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (which include the Company's
research and development expenses) increased to $138.4 million in 1999 from
$103.8 million for 1998, reflecting the effects of the companies acquired in
1999 and 1998. As a percentage of sales, however, selling, general and
administrative expenses decreased to 7.5% in 1999 from 8.4% in 1998.
Terex Lifting's selling, general and administrative expenses increased to $59.6
million from $46.4 million in 1998, reflecting the impact of acquired companies.
Selling, general and administrative expenses as a percentage of sales increased
to 6.3% from 6.0% in 1998. Excluding the impact of acquisitions, selling,
general and administrative expenses as a percentage of sales remained constant
at 6.0%.
Terex Earthmoving's selling, general and administrative expenses increased $21.7
million to $76.5 million for 1999 primarily due to the effect of acquired
companies and the cost of a headcount reduction at the Company's manufacturing
facility in Germany. As a percentage of sales, however, selling, general and
administrative expenses decreased to 8.7% in 1999 from 12.0% in 1998. Excluding
the special charge, selling, general and administrative expense as a percentage
of sales was 8.5% for 1999.
Selling, general and administrative expenses for Other decreased slightly to
$2.3 million in 1999 as compared to $2.6 million in 1998. The decrease is the
result of a favorable legal settlement to the Company during the fourth quarter
of 1999, partially offset by the inclusion of the Amida and Bartell
acquisitions. See "Business--Research and Development" for a discussion of the
Company's engineering expenses.
Income from Operations
Income from operations for the Company increased $56.3 million, or 46%, to
$178.3 million, compared to $122.0 million in 1998. Income from operations as a
percentage of sales decreased to 9.6% compared to 9.9% in 1998. Excluding the
special charges, income from operations as a percentage of sales was 10.1%.
Terex Lifting's income from operations increased $4.3 million, or 5%, to $86.4
million, as compared to $82.1 million in 1998. The increase can be attributed to
the contributions from acquired companies, strong performances by the Company's
utility aerial devices and material handling businesses offset by a decline in
hydraulic mobile crane business and special charges related to closing of the
Company's Milwaukee facility. Income from operations as a percentage of sales
decreased to 9.1% in 1999 from 10.7% in 1998. Excluding the special charges,
income from operations as a percentage of sales was 10.2% in 1999.
-25-
Terex Earthmoving's income from operations increased $45.8 million, or 110%, to
$87.5 million, compared to $41.7 million in 1998. As a percentage of sales,
income from operations increased to 10.0% from 9.1% in 1998. The increase in
both dollars and as a percentage is driven primarily by acquisitions, internally
generated growth and continuing cost control efforts.
Income from operations for Other increased $6.2 million as a result of the
inclusion of the Amida and Bartell acquisitions and the impact of a favorable
legal settlement.
Interest Expense
Net interest expense increased to $77.5 million for 1999 from $44.5 million in
1998 as a result of higher average debt levels due to the 1999 acquisitions and
$7.7 million of interest related to the Company's settlement of its IRS audit.
(See Note J - "Income Taxes" in the Notes to the Consolidated Financial
Statements).
Income Taxes
During 1999, the Company recognized an income tax benefit of $74.5 million as
compared to an income tax expense of $1.7 million in 1998. During the fourth
quarter of 1999, the Company announced the resolution of an IRS audit, which
started in December 1994, regarding its income tax returns for the years 1987
through 1989. The resolution of this audit did not require payment of tax. This
net tax benefit resulted from the capitalization of deferred taxes. (See Note J
- - "Income Taxes" in the Notes to the Consolidated Financial Statements).
Extraordinary Items
During 1998, the Company recorded a charge of $38.3 million to recognize a loss
on the early extinguishment of debt in connection with the redemption of $166.7
million of its 13-1/4% Senior Secured Notes (the "Senior Secured Notes") and the
refinancing of the Company's bank credit facilities.
LIQUIDITY AND CAPITAL RESOURCES
Net cash of $200.6 million was provided by operating activities during the year
ended December 31, 2000, approximately $120 million of which was provided by
reductions in working capital. Net cash provided by investing activities was
$110.9 million during the year ended December 31, 2000, primarily related to the
receipt of $144 million in proceeds from the sale of the Company's truck-mounted
forklift businesses in September 2000. Net cash used in financing activities was
$261.2 million during the year ended December 31, 2000. As described below, cash
was used to repay debt (approximately $241 million) and purchase shares of the
Company's common stock (approximately $20 million). Cash and cash equivalents
totaled $181.4 million at December 31, 2000.
Including the January 2001 acquisition of the Jaques Group and the 2000
acquisitions of Fermec and Coleman (see Note B --"Acquisitions" in the Notes to
the Consolidated Financial Statements), since the beginning of 1995 Terex has
invested approximately $1 billion to strengthen and expand its core businesses
through more than 20 strategic acquisitions. Terex expects that acquisitions and
new product development will continue to be important components of its growth
strategy and is continually reviewing acquisition opportunities. The Company
will continue to pursue strategic acquisitions, some of which could individually
or in the aggregate be material, which complement the Company's core operations
and offer cost reduction opportunities, distribution and purchasing synergies
and product diversification.
Debt reduction and an improved capital structure are major focal points for the
Company. In the first quarter of 2000, the Company announced its intention to
repay $200 million of debt by the end of 2000 from working capital reduction and
free cash flow. During 2000, the Company met these goals by repaying
approximately $241 million of its debt. On March 9, 2000, the Company also
announced that its Board of Directors had authorized the repurchase of up to 2
million shares of the Company's common stock over the next 12 months from cash
on hand. During 2000, the Company purchased 1.3 million shares of its common
stock. In addition, the Company regularly reviews its alternatives to improve
its capital structure and to reduce debt service through debt refinancings,
issuance of equity, asset sales, including strategic dispositions of business
units, or any combination thereof.
The Company's businesses are working capital intensive and require funding for
purchases of production and replacement parts inventories, capital expenditures
for repair, replacement and upgrading of existing facilities, as well as
financing of receivables from customers and dealers. The Company has significant
debt service requirements including semi-annual interest payments on its 8-7/8%
senior subordinated notes and monthly interest payments on the Company's bank
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credit facilities. Management believes that cash generated from operations,
together with the Company's bank credit facilities and cash on hand, provides
the Company with adequate liquidity to meet the Company's operating and debt
service requirements. No principal payments are required under the Company's
bank facility or subordinated notes until June 2003.
The Company continues to explore ways to improve its liquidity and capital
structure. In this regard, the Company announced on March 14, 2001 that it
intends to issue approximately $200 million principal amount of Senior
Subordinated Notes Due 2011 ("New Notes") and increase the availability under
its existing revolving bank credit facility maturing March 2004 from $125
million to $300 million. The Company also announced at that time that it is
negotiating an amendment to its existing bank credit agreements to provide the
Company with greater operating flexibility. The Comp