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Terex Announces Fourth Quarter And Full Year 2012 Results And Provides 2013 Outlook

Terex Material Handling & Port Solutions: Net sales for the MHPS segment for the fourth quarter of 2012 decreased $80.3 million, or 15.4%, to $439.6 million versus the fourth quarter of 2011. Net sales decreased primarily due to weakness in sales of port equipment compared to the same period last year, as well as reduced volumes of standard material handling cranes and light crane systems.

Loss from operations was $21.9 million, or 5.0% of net sales, as compared with a loss from operations of $19.8 million, or 3.8% of net sales, during the fourth quarter of 2011. Operating performance decreased due to lower volumes, an unfavorable product mix and higher material costs, as well as approximately $16 million in charges for restructuring actions and accruals related to Brazilian post-employment benefit programs. For comparison purposes, approximately $22 million of acquisition related inventory revaluation charges in 2011 did not recur in 2012.

Terex Materials Processing: Net sales for the MP segment for the fourth quarter of 2012 decreased $18.7 million, or 10.9%, to $152.1 million versus the fourth quarter of 2011. While there were pockets of weakness globally driven by macroeconomic uncertainty, many end markets have stabilized. Decreased net sales were driven primarily by continued softness in Western European markets for the segment’s screening products. This was partially offset by continued strength in North America and Australia driven by a broad range of end markets.

Income from operations in the fourth quarter of 2012 was $16.2 million, or 10.7% of net sales, compared to income from operations of $13.7 million, or 8.0% of net sales, during the fourth quarter of 2011. Operating performance improved primarily due to favorable manufacturing expense driven by supply chain savings as well as lower production and warranty costs.

Interest and Other income (expense): Net interest expense decreased by approximately $4 million from the fourth quarter of 2011 primarily due to the retirement of debt during the past year. Other expense decreased in the fourth quarter of 2012 by $3.4 million compared to other expense in the prior year quarter. Additionally, the Company recorded an expense of $30.7 million in the fourth quarter of 2012, primarily associated with redemption of the Company’s 8% Senior Subordinated Notes, repricing of the outstanding term loans and the issuance of the Company’s 6% Senior Notes.

Taxes: The effective tax rate for the fourth quarter of 2012 was 20.5% as compared to an effective tax rate of 64.2% for the fourth quarter of 2011. The lower effective tax rate for the fourth quarter of 2012 was primarily attributable to losses for which no tax benefit was recognized.

Capital Structure: The Company’s liquidity at December 31, 2012 increased by approximately $149.6 million compared to September 30, 2012 and totaled $1,132.6 million, which comprised cash of $678.0 million and borrowing availability under the Company’s revolving credit facilities of $454.6 million. The increase was mainly due to operational cash generation. During the quarter, the Company issued $850 million of 6% Senior Notes and used the proceeds to redeem all of the $800 million outstanding on the 8% Senior Subordinated notes. Cash provided by operations in the fourth quarter of 2012 was approximately $154 million as compared to approximately $130 million for the fourth quarter of 2011. Debt, less cash and cash equivalents, decreased approximately $101 million in the fourth quarter of 2012, to $1,420.7 million, compared to the third quarter of 2012, due to the positive cash flow generation.

Phil Widman, Senior Vice President and Chief Financial Officer commented, “I am pleased with our free cash flow generation in 2012. This allowed us to substantially reshape our capital structure, lower our interest expense and extend out maturities by an additional four years. We expect to make further progress in improving our balance sheet in 2013, by further reducing our debt.”

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