Terex Announces Second Quarter 2012 Results

As changes in foreign currency exchange rates have a non-operating impact on our financial results, we believe excluding the effect of these changes assists in the assessment of our business results between periods. We calculate the translation effect of foreign currency exchange rate changes by translating the current period results at the rates that the comparable prior periods were translated to isolate the foreign exchange component of the fluctuation from the operational component. Similarly, the impact of changes in our results from acquisitions that were not included in comparable prior periods is subtracted from the absolute change in results to allow for better comparability of results between periods.

After-tax gains or expense and per share amounts (Income from continuing operations as adjusted) are calculated using pre-tax amounts, applying a tax rate based on jurisdictional rates to arrive at an after-tax amount. This number is divided by the weighted average diluted shares to provide the impact on earnings per share. The Company assesses the impact of these items because when discussing earnings per share, the Company adjusts for items it believes are not reflective of operating activities in the periods.

Second Quarter 2011					Pre-Tax				Tax Rate					After-Tax					EPS
Gain on sale of BUCY shares				$	40.0				35.7%				$	25.7				$	0.22
Demag Cranes AG charges				$	(2.7)				*				$	(2.5)				$	(0.02)
Restructuring and other charges				$	(36.4)				*				$	(33.2)				$	(0.29)
* Based on a jurisdictional blend

Backlog is defined as firm orders that are expected to be filled within one year. The disclosure of backlog aids in the analysis of the Company’s customers’ demand for product, as well as the ability of the Company to meet that demand. The backlog of the various Terex businesses is not necessarily indicative of sales to be recognized in a specified future period.

					Jun 30, 2012					Jun 30, 2011				% change				% change (excluding FX)					Mar 31, 2012				% change				% change (excluding FX)
Consolidated Backlog				$	2,075.7				$	1,760.5				18%				23%				$	2,301.3				(10%)				(7%)
AWP				$	511.4				$	447.8				14%				16%				$	673.6				(24%)				(23%)
Construction				$	179.5				$	301.1				(40%)				(36%)				$	266.4				(33%)				(30%)
Cranes				$	840.8				$	918.0				(8%)				(1%)				$	764.9				10%				13%
MHPS				$	459.2				$	-				-				-				$	492.0				(7%)				(2%)
MP				$	84.8				$	93.6				(9%)				(7%)				$	104.4				(19%)				(18%)

Days Payable Outstanding is calculated by dividing Trade accounts payable by the product of the trailing three months Cost of goods sold multiplied by four, which ratio is multiplied by 365 days.

Days Payable Outstanding
				Jun 30, 2012					Mar 31, 2012
Trade Accounts Payable				$	829.8				$	818.9
Cost of goods sold for the three months ended					1,582.9					1,488.6
					x 4					x 4
Annualized cost of goods sold				$	6,331.6				$	5,954.4
Quotient					0.1311					0.1375
					X 365 days					X 365 days
Days Payable Outstanding					48 days					50 days

Days Sales Outstanding is calculated by dividing Trade receivables by the trailing three months Net sales multiplied by four, which ratio is multiplied by 365 days.

Days Sales Outstanding
				Jun 30, 2012					Mar 31, 2012
Trade Receivables				$	1,266.7				$	1,210.0
Net sales for the three months ended					2,011.5					1,819.4
					x 4					x 4
Annualized net sales				$	8,046.0				$	7,277.6
Quotient					0.1574					0.1663
					x 365 days					x 365 days
Days Sales Outstanding					57 days					61 days

Debt is calculated using the Condensed Consolidated Balance Sheet amounts for Notes payable and current portion of long-term debt plus Long-term debt, less current portion. It is a measure that aids in the evaluation of the Company’s financial condition.

	Jun 30, 2012
Long term debt, less current portion	$	2,342.3
Notes payable and current portion of long-term debt		60.5
Debt	$	2,402.8

EBITDA is defined as earnings, before interest, taxes, depreciation and amortization. The Company calculates this by adding the amount of depreciation and amortization expenses that have been deducted from income from operations back into income from operations to arrive at EBITDA. Depreciation and amortization amounts reported in the Condensed Consolidated Statement of Cash Flows include amortization of debt issuance costs that are recorded in Other income (expense) - net and, therefore, are not included in EBITDA. Terex believes that disclosure of EBITDA will be helpful to those reviewing its performance, as EBITDA provides information on Terex’s ability to meet debt service, capital expenditure and working capital requirements, and is also an indicator of profitability.

				Three months ended June 30,											Six months ended June 30,
				2012					2011						2012					2011
Income (loss) from operations				$	175.0				$	6.8					$	238.8				$	(2.5)
Depreciation					24.5					20.6						49.9					40.7
Amortization					13.3					6.3						26.7					12.4
Bank fee amortization not included in Income (loss) from   operations					(2.6)					(1.6)						(5.0)					(3.2)
EBITDA				$	210.2				$	32.1					$	310.4				$	47.4

Free cash flow is defined as income from operations plus depreciation and amortization, proceeds from the sale of assets, certain impairments and write-downs, plus or minus changes in working capital, customer advances and rental/demo equipment and less capital expenditures.

				Three months ended Jun 30, 2012
Income from operations				$ 175.0
Depreciation and amortization				37.8
Proceeds from sale of assets				10.8
Changes in working capital				(65.0)
Customer advances				12.1
Rental/demo equipment				(0.1)
Capital expenditures				(15.7)
Free cash flow				$ 154.9

Income (loss) from operations as adjusted: The Company adjusts income (loss) from operations for items it believes are not reflective of operating activities in the periods.

				Three months ended Jun 30,
					2012					2011
Income (loss) from operations as reported				$	175.0				$	6.8
Prior Acquisition Settlements					-					(0.7)
Restructuring and related items					-					36.4
Income (loss) from operations as adjusted				$	175.0				$	42.5

Inventory Turns and Days: Inventory Turns is calculated by dividing annualized cost of sales by the inventory balance. Days inventory is calculated by dividing 365 days by the inventory turns result.

Inventory Turns and Days
				Jun 30, 2012					Mar 31, 2012
Inventory				$	1,734.8				$	1,827.0
Cost of goods sold for the three months ended					1,582.9					1,488.6
					x 4					x 4
Annualized cost of sales				$	6,331.6				$	5,954.4
					365 days/					365 days/
Inventory turns					3.65 x					3.26 x
Days Inventory					100 days					112 days

Operating Margin is defined as the ratio of Income (Loss) from Operations to Net Sales.

Return on Invested Capital (“ROIC”) is determined by dividing the sum of Net Operating Profit After Tax (“NOPAT”) (as defined below) for each of the previous four quarters by the average of the sum of Total Terex Corporation Stockholders’ equity plus Debt (as defined above) less Cash and cash equivalents for the previous five quarters. NOPAT, which is a non-GAAP measure, for each quarter is calculated by multiplying Income (loss) from continuing operations by a figure equal to one minus the effective tax rate of the Company. The Company believes that returns on capital deployed in Terex Financial Services (“TFS”) do not represent management of the Company’s primary operations and, therefore, TFS finance receivable assets and results of operations have been excluded from the calculation below. Additionally, the Company does not believe that the deferred gain on marketable securities and specifically the shares of Bucyrus (“BUCY shares”), held from the sale of our Mining business, is reflective of its ongoing operations and has been excluded from the calculation below. The effective tax rate is equal to the (Provision for) benefit from income taxes divided by Income (loss) before income taxes for the respective quarter. Total Terex Corporation Stockholders’ equity is adjusted to include redeemable noncontrolling interest as this item is deemed to be temporary equity and therefore the Company believes it should be included in the denominator of the ROIC ratio. The Company calculates ROIC using the last four quarters’ NOPAT as this represents the most recent twelve-month period at any given point of determination. In order for the denominator of the ROIC ratio to properly match the operational period reflected in the numerator, the Company includes the average of five quarters’ ending balance sheet amounts so that the denominator includes the average of the opening through ending balances (on a quarterly basis) thereby providing, over the same time period as the numerator, four quarters of average invested capital.

Terex management and the Board of Directors use ROIC as one of the primary measures to assess operational performance and in connection with certain compensation programs. Terex utilizes ROIC as a unifying metric because management believes that it measures how effectively the Company invests its capital and provides a better measure to compare the Company to peer companies to assist in assessing how it drives operational improvement. ROIC measures return on the amount of capital invested in the Company’s primary businesses, excluding TFS, as opposed to another metric such as return on Terex Corporation stockholders’ equity that only incorporates book equity, and is thus a more accurate and descriptive measure of the Company’s performance. Terex also believes that adding Debt less Cash and cash equivalents to Total Terex Corporation stockholders’ equity provides a better comparison across similar businesses regarding total capitalization, and that ROIC highlights the level of value creation as a percentage of capital invested.

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