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TheStreet Open House

Terex Announces Second Quarter 2012 Results

Interest and Other income (expense): Net interest expense increased by approximately $20 million from the second quarter of 2011 due to the increase in debt mainly related to the acquisition of Demag Cranes AG. Other expense in the second quarter of 2012 was $3.6 million compared to other income in the prior year quarter of $34.6 million. The change was primarily driven by income in the prior year period of approximately $40 million from the sale of shares of Bucyrus International and an accrual in the second quarter of 2012 for the guaranteed payment to the minority shareholders of Demag Cranes AG pursuant to the DPLA, which payment is not tax deductible.

Taxes: The effective tax rate for the second quarter of 2012 was 35.4% as compared to an effective tax rate of 98.8% for the second quarter of 2011. The lower effective tax rate for the second quarter of 2012 was primarily attributable to losses that did not produce tax benefits having less of an impact in the current period than in the prior year period.

Capital Structure: The Company’s liquidity at June 30, 2012 decreased by approximately $205 million compared to March 31, 2012 and totaled $1,283.1 million, which comprised cash balances of $841.5 million and borrowing availability under the Company’s revolving credit facilities of approximately $442 million. The decrease primarily resulted from repayment and termination of Demag Cranes AG’s credit facility following the effectiveness of the DPLA, partially offset by operational cash generation. As a result of the approval of the DPLA, Terex now has access to Demag Cranes AG’s cash flows. Cash provided by operations in the second quarter of 2012 was approximately $97 million and approximately $18 million in the first half of 2012. For the comparable periods in 2011, cash used in operations was approximately $142 million and $219 million.

Return on Invested Capital (ROIC) was 7.9% for the trailing twelve months ended June 30, 2012, reflecting the improved income from operations during the trailing twelve month period partially offset by the increased average invested capital, primarily due to the acquisition of the Demag Cranes AG business. Debt, less cash and cash equivalents, decreased approximately $74 million in the second quarter of 2012, to $1,561.3 million, compared to the first quarter of 2012, due to positive cash flow generated.

Working Capital: Working Capital as a percent of Trailing Three Month Annualized Net Sales was 27.0% at June 30, 2012, as compared to 30.5% at March 31, 2012. This decrease was primarily due to accelerating throughput mainly in the Construction segment and overall increased net sales in the current quarter.

Backlog: Backlog for orders deliverable during the next twelve months was approximately $2,076 million at June 30, 2012, an increase of approximately 18% from June 30, 2011 and a decrease of approximately 10% from March 31, 2012. Adjusting for the translation effect of foreign currency exchange rates, backlog increased approximately 23% compared to June 30, 2011 and decreased approximately 7% from March 31, 2012.

The primary driver of the year-over-year increase in backlog was the addition of the backlog related to the MHPS segment. Increased replacement of aging fleets drove an increase in AWP’s backlog. This was offset by a decrease in Construction’s backlog, primarily due to lower demand for trucks and material handlers globally as well as compact equipment in North America.

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