Execute, Innovate, Grow
Annual Report 2021
The Terex Way
The values and beliefs that guide
our actions and behaviors
INTEGRITY
• We will not sacrifice integrity
for profit.
• We are transparent in all of our
business dealings.
• We are accountable to our
team members, customers
and shareholders for achieving
our goals while protecting our
reputation and assets.
RESPECT
• We provide a safe and healthy
work environment for our team
members.
• We treat all people with dignity
and respect.
• We value the differences in
people’s thinking, backgrounds
and cultures.
• We are committed to team
member development.
IMPROVEMENT
• We continuously search for new
and better ways of doing things,
eliminating waste and always
improving.
• We challenge the status quo
and require stretch goals.
• We work in teams across
boundaries.
SERVANT LEADERSHIP
• We work to serve the needs
of our customers, investors,
and team members.
• We nurture a “chain of support”
versus a “chain of command.”
• We ask what we can do to help.
COURAGE
• We have the personal and
professional courage to do the
right thing and take risks that
may cause us to win as well as
to fail periodically.
• We make decisions and
take action.
• We don’t admonish failure,
only the failure to learn.
CITIZENSHIP
• We’re good global, local,
and national citizens.
• We are good stewards of the
environment and the communities
in which we serve.
• We participate in making the
world we live in a better place.
FROM THE CHAIRMAN & CEO
Leading Forward
With Strong Financial Results
in a Challenging Environment
John L. Garrison, Jr., Chairman and CEO (center), Darryl
Niven, Vice President and General Manager, Terex Utilities
(right), Alex Wickers, Finance Director, Terex Utilities (left).
First, I want to thank our team members
throughout the world whose efforts made
2021 such a successful year. In 2021,
the Terex Team delivered strong financial
results while facing major supply-chain
issues and navigating the challenges
of the global COVID-19 pandemic. We
continued to keep our team members safe
as we ramped up production in response
to significantly higher customer demand
for our products across all businesses
and regions. We practiced purposeful
innovation by introducing new models and
services featuring the latest technology and
advanced features. We continued to invest
in our businesses to support growth and
increase productivity.
For the full year 2021, we dramatically
outperformed 2020. Our 2021 earnings per
share increased significantly, from $0.13
to $3.07, a $2.94 improvement. Sales of
$3.9 billion were up 26% year-over-year
as end-markets recovered. We continued
to aggressively manage our SG&A and
reported SG&A % of sales of 11.0%, lower
than our 12.5% target. Operating margin
of 8.4% expanded 620 basis points and
we delivered incremental margins of 32%,
exceeding our target of 25%. We ended
the year with record backlog of $3 billion
reflecting strong end market demand.
We increased the return on shareholders
invested capital to 19.0%. The strong year
reflected outstanding efforts and results by
our global teams to perform at a high level.
We reported free cash flow of $125
million for the year. Our strong balance
sheet enabled us to repay a half billion
dollars of debt, invest $60 million in capital
expenditures across our businesses and
complete two acquisitions. In addition, we
reinstated our quarterly dividend in 2021
and have announced an 8.3% dividend
increase for 2022. The entire Terex team
demonstrated exceptional adaptability and
resiliency to deliver these financial results
for our shareholders.
DRIVING OUR STRATEGIC
PRIORITIES
Our Execute, Innovate, and Grow business
strategy continues to drive our operations
and serves us well.
Execute
We are driving improvement in execution—
Safety, People, and Operations. Our
operations and logistics teams continue
to adjust manufacturing schedules,
direct labor, and shipping schedules
as appropriate. The business has seen
significant increases in material input costs.
The team is working diligently every day to
reduce and recover the additional material
and freight costs that we are experiencing.
I recently had the pleasure of spending
time with our newest team members at our
new Monterrey, Mexico facility and they are
building a strong foundation for the future
based on the Terex Way values and Zero
Harm safety culture. This temporary facility
is producing telehandlers and will continue
to increase production in 2022 as our new
facility is constructed. The new facility along
with the local supply chain will enable Genie
to lower its cost structure and shorten
customer lead times.
Innovate
We are purposeful with our innovation such
that our customers achieve a low total
cost of ownership and great return on their
invested capital.
Our Materials Processing business is
demonstrating purposeful innovation by
expanding the development of its high-
speed shredding product lines to be at
the forefront of the recycling market.
Manufacturing of its high-speed shredder
products will take place at Terex Campsie,
a new, dedicated facility in Northern
Ireland to support the ongoing growth and
development of our Terex Ecotec brand.
We will continue to invest in our businesses
to support long-term growth markets such
as recycling.
In order to support demand for
electric products, Terex currently offers
electric options for approximately 60%
of our Material Processing equipment,
66% of Genie scissors and 30% of our
Execute, Innovate, Grow · Terex Annual Report 2021
1
affinity group sponsored events around the
world to celebrate women’s achievement,
raise awareness against bias, and take
action for equality as part of International
Women’s Day (IWD). To show support and
mark the beginning of our IWD events,
our Board of Directors and Executive
Leadership Team collectively took part by
taking the #BreakTheBias pose.
We are firm believers in our actions
matching our words, whether it is
producing sustainable products, promoting
diversity, equity, and inclusion, or being
good global citizens. Terex team members
in 2021 volunteered to help communities
where they live and work in every country
where we operate, including food
deliveries, COVID-19 vaccination clinics,
and raising funds to fight breast cancer
and other diseases. The corporation makes
selected donations as well—most recently,
in early 2022, to support refugees fleeing
the war in Ukraine.
LOOKING AHEAD
Terex’s performance will benefit by
delivering for customers, investing in our
team members, product development,
plant modernizations and expansions,
digitizing our business processes and
rigorous attention on all costs. At the same
time, supply chain pressures are expected
to remain a challenge and geopolitical
conditions will create a very dynamic
operating environment.
We will continue to focus on the things that
we can control, and we will advance our
strategic priorities to position the Company
for future growth.
Finally, I want to again thank our team
members throughout the world whose
efforts made 2021 such a successful
year. Thank you for everything you do
every day for Terex, our Customers, and
Shareholders.
Stay safe and healthy,
John L. Garrison, Jr.
Chairman and Chief Executive Officer
Top: Terex Corporation Board of Directors and Executive Leadership Team celebrating International Women’s Day
(IWD) by collectively striking the IWD 2022#BreakTheBias pose.
Bottom: John L. Garrison, Jr., Chairman and CEO with Genie team members at our new Monterrey, Mexico facility.
Genie booms. Our Utilities business
products support increased demand for
the electric grid.
In addition, we continue to invest in digital
platforms that provide real time data and
analytics to our customers and Terex
team members.
Grow
Thanks to the hard work of our team
members to deliver on our commitments,
we are growing, both organically and
inorganically.
In 2021, we made two small acquisitions
to expand our Materials Processing
business with the acquisition of a facility
in China to support local production of
mobile crushing equipment and the MDS
International acquisition to expand our
product offerings to customers. Also, we
continued expansion of service facilities,
such as our new Houston, Texas location
for Utilities customers.
In 2022, Terex continues to invest in
electrification, which supports customer
reduction of carbon emissions. We
invested in Viatec, a leading manufacturer
of plug-and-play electronic power take-
off (PTO) systems for utility fleets. PTO
systems eliminate engine idling, resulting
in reduced carbon emissions and quieter
equipment operation. Our Utilities business
has excellent growth prospects with the
rollout of 5G and electrification and we
have invested to meet the strong demand
for our leading products and services.
Looking ahead, we have plans for organic
growth, which strong execution is going to
help drive, as well as inorganic growth. As
always, and as in everything we do, we will
continue to be disciplined in the decisions
we make about capital allocation.
ENVIRONMENTAL, SOCIAL
AND GOVERNANCE (ESG)
LEADERSHIP
Through our Terex Way values, we are
focused on strong Environment, Social
and Governance (ESG) commitments.
Terex is deeply committed to Diversity,
Equity & Inclusion throughout the
organization, and supporting the
communities where we live and work,
including being responsible environmental
stewards. Diversity, Equity and Inclusion
(DEI) is being embraced and driven
throughout the organization. Around the
world, team members have joined DEI
Affinity Groups for non-majority, early
talent, LGBTQ Pride, military veterans, and
other resource groups to help make Terex
a better place to work. Our Women@Terex
2
Execute, Innovate, Grow · Terex Annual Report 2021
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10702
TEREX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
45 Glover Ave, 4th Floor Norwalk Connecticut
(Address of principal executive offices)
34-1531521
(IRS Employer Identification No.)
06850
(Zip Code)
Registrant’s telephone number, including area code: (203) 222-7170
_______________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock ($0.01 par value)
TEX
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Act.
Yes ☐ No ☒
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 (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Smaller reporting company ☐
Accelerated filer ☐
Emerging growth company ☐
Non-accelerated filer ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity stock held by non-affiliates of the registrant was approximately $3,235
million based on the last sale price on June 30, 2021.
Number of outstanding shares of common stock: 69.7 million as of February 8, 2022.
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 Annual Report on Form 10-K with respect to the 2022 Annual Meeting of Stockholders are incorporated by reference into Part III hereof.
As used in this Annual Report on Form 10-K, unless otherwise indicated, Terex Corporation, together with its consolidated
subsidiaries, is referred to as “Terex,” the “Registrant,” “us,” “we,” “our” or the “Company.” Unless specifically noted otherwise, this
Annual Report generally speaks as of December 31, 2021.
Forward-Looking Information
Certain information in this Annual Report includes forward-looking statements (within the meaning of Section 27A of the Securities
Act of 1933, Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) and the Private Securities Litigation Reform
Act of 1995) regarding future events or our future financial performance that involve certain contingencies and uncertainties, including
those discussed below in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of
Operations – Contingencies and Uncertainties.” In addition, when included in this Annual Report or in documents incorporated herein
by reference, the words “may,” “expects,” “should,” “intends,” “anticipates,” “believes,” “plans,” “projects,” “estimates,” “will” and
the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements. However, the absence
of these words does not mean that the statement is not forward-looking. We have based these forward-looking statements on current
expectations and projections about future events. These statements are not guarantees of future performance. Such statements are
inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those reflected in such
forward-looking statements. Such risks and uncertainties, many of which are beyond our control, include, among others:
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our business has been, and could be further, adversely impacted by global health pandemics such as the outbreak of a new
strain of coronavirus (“COVID-19”);
our business is highly competitive and is affected by our cost structure, pricing, product initiatives and other actions taken by
competitors;
we are dependent upon third-party suppliers, making us vulnerable to supply shortages and price increases;
consolidation within our customer base and suppliers;
our operations are subject to a number of potential risks that arise from operating a multinational business, including
compliance with changing regulatory environments and political instability;
a material disruption to one of our significant facilities;
our business is sensitive to government spending;
our ability to integrate acquired businesses;
our business is affected by the cyclical nature of markets we serve;
our need to comply with restrictive covenants contained in our debt agreements;
our ability to generate sufficient cash flow to service our debt obligations and operate our business;
our ability to access the capital markets to raise funds and provide liquidity;
the financial condition of suppliers and customers, and their continued access to capital;
exposure from providing credit support for some of our customers;
we may experience losses in excess of recorded reserves;
our business is global and subject to changes in exchange rates between currencies, commodity price changes, regional
economic conditions and trade relations;
our retention of key management personnel and skilled labor;
possible work stoppages and other labor matters;
changes in import/export regulatory regimes, imposition of tariffs, escalation of global trade conflicts and unfairly traded
imports, particularly from China, could continue to negatively impact our business;
compliance with changing laws and regulations, particularly environmental and tax laws and regulations;
litigation, product liability claims and other liabilities;
our compliance with the United States (“U.S.”) Foreign Corrupt Practices Act and similar worldwide anti-corruption laws;
increased regulatory focus on privacy and data security issues and expanding laws;
our ability to comply with an injunction and related obligations imposed by the U.S. Securities and Exchange Commission
(“SEC”);
our ability to successfully implement our strategy;
disruption or breach in our information technology systems and storage of sensitive data; and
other factors.
Actual events or our actual future results may differ materially from any forward-looking statement due to these and other risks,
uncertainties and material factors. The forward-looking statements contained herein speak only as of the date of this Annual Report
and the forward-looking statements contained in documents incorporated herein by reference speak only as of the date of the
respective documents. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any
forward-looking statement contained or incorporated by reference in this Annual Report to reflect any change in our expectations with
regard thereto or any change in events, conditions or circumstances on which any such statement is based.
2
TEREX CORPORATION AND SUBSIDIARIES
Index to Annual Report on Form 10-K
For the Year Ended December 31, 2021
PAGE
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Item 16.
Form 10-K Summary
SIGNATURES
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PART I
ITEM 1.
BUSINESS
GENERAL
Our Company was incorporated in Delaware in October 1986 as Terex U.S.A., Inc. Since that time, we have changed
significantly, and much of this change has been historically accomplished through acquisitions and managing our portfolio of
companies by divestiture of non-core businesses and products. Today, Terex is a global manufacturer of aerial work platforms
and materials processing machinery. We design, build and support products used in construction, maintenance, manufacturing,
energy, minerals and materials management applications. Terex products and solutions enable customers to reduce their
environmental impact including electric and hybrid offerings that deliver quiet and emission-free performance, products that
support renewable energy, and products that aid in the recovery of useful materials from various types of waste. Our products
are manufactured in North America, Europe, Australia and Asia and sold worldwide. We engage with customers through all
stages of the product life cycle, from initial specification and financing to parts and service support. We continue to focus on
becoming an industry leading operating company.
We report our business in the following segments: (i) Aerial Work Platforms (“AWP”) and (ii) Materials Processing (“MP”).
Further information about our industry and reportable segments appears in Part II, Item 7. – “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and Note B – “Business Segment Information” in the Notes to
Consolidated Financial Statements.
AERIAL WORK PLATFORMS
Our AWP segment designs, manufactures, services and markets aerial work platform equipment, utility equipment and
telehandlers. Products include portable material lifts, portable aerial work platforms, trailer-mounted articulating booms, self-
propelled articulating and telescopic booms, scissor lifts, utility equipment (including digger derricks and insulated aerial
devices) and telehandlers, as well as their related components and replacement parts. Customers use these products to construct
and maintain industrial, commercial, institutional and residential buildings and facilities, for construction and maintenance of
utility and telecommunication lines, tree trimming, certain construction and foundation drilling applications, and for other
commercial operations, as well as in a wide range of infrastructure projects. We market aerial work platform products
principally under the Terex® and Genie® brand names.
AWP has the following significant manufacturing operations:
•
•
•
Aerial work platform equipment is manufactured in Redmond and Moses Lake, Washington, Umbertide, Italy and
Changzhou, China;
Utility products are manufactured in Watertown and Huron, South Dakota and Changzhou, China; and
Telehandlers are manufactured in Oklahoma City, Oklahoma, Umbertide, Italy and Monterrey, Mexico.
We have a parts and logistics center located in North Bend, Washington for our aerial and utility products. Additionally, a
portion of our aerial and utility products parts business is conducted at a shared Terex facility in Southaven, Mississippi. Our
European, Asian Pacific and Latin American parts and logistics operations are conducted through a combination of outsourced
facilities and Terex managed operations.
We also provide service and support for aerial and utility products in the U.S. through a network of service branches and field
service operations.
4
MATERIALS PROCESSING
Our MP segment designs, manufactures, services and markets materials processing and specialty equipment, including crushers,
washing systems, screens, trommels, apron feeders, material handlers, pick and carry cranes, rough terrain cranes, tower cranes,
wood processing, biomass and recycling equipment, concrete mixer trucks and concrete pavers, conveyors, and their related
components and replacement parts. Customers use these products in construction, infrastructure and recycling projects, in
various quarrying and mining applications, as well as in landscaping and biomass production industries, material handling
applications, maintenance applications to lift equipment or material, moving materials and equipment on rugged or uneven
terrain, lifting construction material and placing material at point of use. We market our MP products principally under the
Terex®, Powerscreen®, Fuchs®, EvoQuip®, Canica®, Cedarapids®, CBI®, Simplicity®, Franna®, Terex Ecotec®, Finlay®, Terex
Washing Systems, Terex MPS, Terex Jaques®, Terex Advance®, ProStacktm, Terex Bid-Well®, MDStm and Terex Recycling
Systems brand names and business lines.
MP has the following significant manufacturing operations:
• Mobile crushers are manufactured in Omagh, Northern Ireland;
• Mobile screens and washing systems are manufactured in Dungannon, Northern Ireland;
• Mobile crushers, mobile screens, base crushers, base screens, modular and wheeled crushing and screening plants,
track conveyors, washing systems and pick and carry cranes are manufactured in Hosur, India;
• Modular, mobile and static crushing and screening equipment and base crushers are manufactured in Oklahoma City,
Oklahoma;
Static crushers and screens are manufactured in Subang Jaya, Malaysia;
•
Crushing and screening equipment is manufactured in Durand, Michigan;
•
• Mobile crushers and crushing chambers are manufactured in Coalville, England;
• Wood processing, biomass and recycling equipment systems, mobile screens and tracked conveyors are manufactured
in Campsie, Northern Ireland;
Fabrications, sub-assemblies and steel kits are manufactured in Ballymoney, Northern Ireland;
•
• Wood processing, biomass and recycling equipment systems are manufactured in Newton, New Hampshire;
• Material handlers are manufactured in Bad Schönborn, Germany;
Concrete pavers are manufactured in Canton, South Dakota;
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Front discharge concrete mixer trucks are manufactured in Fort Wayne, Indiana;
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Pick and carry cranes are manufactured in Brisbane, Australia;
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Rough terrain cranes are manufactured in Crespellano, Italy;
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Tower cranes are manufactured in Fontanafredda, Italy;
• Mobile crushers and mobile screens are manufactured in Jiading, China; and
• Mobile and static trommel screens are manufactured in Monaghan, Ireland.
We have North American distribution centers in Louisville, Kentucky and Southaven, Mississippi and service centers in
Australia, Thailand, Turkey and Malaysia.
OTHER
We may assist customers in their rental, leasing and acquisition of our products through Terex Financial Services (“TFS”). TFS
uses its equipment financing experience to facilitate financial products and services to assist customers in the acquisition of our
equipment. On a global basis, TFS facilitates financing transactions directly between (i) end-user customers, distributors and
rental companies and (ii) third-party financial institutions, providing recourse in certain circumstances. Most of the transactions
are fixed and floating rate loans; however, TFS also facilitates sales-type leases, operating leases and rentals. In addition,
wholesale financing may be arranged between dealers and distributors who sell our equipment and financial institutions with
which TFS has established relationships.
TFS continually monitors used equipment values of Terex equipment in the secondary market sales channels for all of our
equipment categories. This provides a basis to project future values of equipment for the underwriting of leases or loans.
These secondary market sales channels may also be used for re-marketing any equipment which is returned at end of lease, or is
repossessed in case of a customer default. If equipment is received, TFS uses the resale channel which maximizes proceeds
and/or mitigates risk for Terex and our funding partners.
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DISCONTINUED OPERATIONS
Mobile Cranes
On July 31, 2019, we completed the disposition of our Demag® mobile cranes business (“Demag”) to Tadano Ltd. and certain
of its subsidiaries (“Tadano”). Products divested were our Demag® all terrain cranes and large lattice boom crawler cranes.
During 2019, we also exited North American mobile crane product lines manufactured in our Oklahoma City facility. Our
actions to sell Demag and cease the manufacturing of mobile crane product lines in our Oklahoma City facility represented a
significant strategic shift in our business away from mobile cranes as these businesses constituted a significant part of our
operations and financial results. We believe these actions were necessary to execute our strategy.
See Note D – “Acquisitions and Discontinued Operations” in the Notes to Consolidated Financial Statements for further
information regarding dispositions and our discontinued operations.
BUSINESS STRATEGY
Terex is a manufacturer of specialized capital equipment and related services. Our goal is to design, manufacture and market
equipment and services that provide superior life-cycle return on invested capital to our customers (“Customer ROIC”).
Customer ROIC is a key focus of our organization and is central to our ability to generate returns for investors.
We operate our Company based on our value system, “The Terex Way.” The Terex Way values shape the culture of our
Company and reflect our collective commitment to and understanding of what it means to be a part of Terex. The Terex Way is
based on six key values:
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Integrity: Integrity reflects honesty, ethics, transparency and accountability. We are committed to maintaining high
ethical standards in all of our business dealings and we never sacrifice our integrity for profit.
Respect: Respect incorporates concern for safety, health, teamwork, diversity, equity, inclusion and performance. We
treat all our team members, customers and suppliers with respect and dignity.
Improvement: Improvement encompasses quality, problem-solving systems, a continuous improvement culture and
collaboration. We continuously search for new and better ways of doing things, focusing on continuous improvement
and the elimination of waste.
Servant Leadership: Servant leadership requires service to others, humility, authenticity and leading by example. We
work to serve the needs of our customers, investors and team members.
Courage: Courage entails willingness to take risks, responsibility, action and empowerment. We have the courage to
make a difference even when it is difficult.
Citizenship: Citizenship means social responsibility and environmental stewardship. We comply with all laws, respect
all people’s values and cultures, and are good global, national and local citizens.
Each business in our Company is unique, but all businesses are managed to a common set of expectations in three broad
thematic areas, as defined by our “Execute, Innovate, Grow” operating framework.
The “Execute” theme involves expectations related to core operating processes and accountabilities. We expect our businesses
to deploy processes that meet local needs while delivering a level of performance and predictability that is consistent with
effective operations. These expectations are fulfilled differently by the various Terex businesses, but the core principles are the
same. For example, our Genie business is managed to a defined set of processes that we call the Genie Business System. Our
Materials Processing segment is managed to a similar set of processes that we call the MP Operating System. Both are key to
delivering excellence across all functions within our operations. We feel that managing this way is key to appropriately
balancing consistency and autonomy in our Company. Process discipline is important to efficient operation, but local control is
important to the effectiveness with which business processes are implemented.
The “Innovate” theme focuses on purposeful development of step-change improvements in Terex offerings and in the efficiency
with which these offerings are executed and supported. Innovation at Terex means doing things significantly better tomorrow
than they have been done in the past by harnessing new thinking and applying technology in new and creative ways.
Digitalization plays an important role in many of the innovations we pursue, but there are other aspects of this strategy that
involve non-digital changes to the design of our products and improved ways of doing things.
6
The “Grow” theme is the outcome of doing “Execute” and “Innovate” well. We will successfully and profitably grow when we
operate efficiently, apply new thinking in creating value for customers and take on new challenges through business
investments (i.e. new category and geographic development). We also see a role for increased inorganic investment by adding
scope or depth to our Company via acquisitions. We are actively building our inorganic investment pipeline, with an eye
towards adding new dimensions to the Company portfolio and applying our skills as a manager of specialized machinery
businesses in new and complementary domains.
Our Disciplined Capital Allocation approach remains an important part of our overall strategy, including maintenance of an
optimal capital structure (~2.5 average net debt to EBITDA over the cycle), growth investments, restructuring investments and
efficient return of capital to shareholders via dividends and share repurchases.
Successful pursuit of the “Execute, Innovate, Grow” strategy will shape the direction of our Company over the coming years.
Terex is a diverse company that works collaboratively to deliver business performance efficiently and effectively. We balance
the independence of our businesses with the benefits of total Company scale, which is central to how we manage our Company.
PRODUCTS
AERIAL WORK PLATFORMS
AERIAL WORK PLATFORMS. Aerial work platform equipment positions workers and materials easily and quickly to
elevated work areas, enhancing safety and productivity at height. These products have been developed as alternatives to
scaffolding and ladders. We offer a variety of aerial lifts that are categorized into six product families: portable material lifts;
portable aerial work platforms; trailer-mounted articulating booms; self-propelled articulating and self-propelled telescopic
booms; and scissor lifts.
•
•
•
•
•
•
Portable material lifts are used primarily indoors in the construction, industrial and theatrical markets.
Portable aerial work platforms are used primarily indoors in a variety of markets to perform overhead maintenance.
Trailer-mounted articulating booms are used both indoors and outdoors. They provide versatile reach, and they have
the ability to be towed between job sites.
Self-propelled articulating booms are primarily used in construction and industrial applications, both indoors and
outdoors. They feature lifting versatility with up, out and over position capabilities to access difficult to reach
overhead areas.
Self-propelled telescopic booms are used outdoors in commercial, industrial and institutional construction, as well as
highway and bridge maintenance projects.
Scissor lifts are used in indoor and outdoor applications in a variety of construction, industrial, institutional and
commercial settings.
UTILITY EQUIPMENT. Our utility products include digger derricks and insulated aerial devices. These products are used by
electric utilities, tree care companies, telecommunications and cable companies, and the related construction industries, as well
as by government organizations.
•
•
Digger derricks are insulated products used to dig holes, hoist and set utility poles, as well as lift transformers and
other materials at job sites near energized power lines.
Insulated aerial devices are used to elevate workers and material to work areas at the top of utility poles near energized
transmission and distribution lines and for trimming trees near energized electrical lines, as well as for miscellaneous
purposes such as sign maintenance.
TELEHANDLERS. Telehandlers are used to move and place materials on residential and commercial construction sites and in
the energy and infrastructure industries.
SERVICES. We offer a range of services for aerial and utility products consisting of inspections, preventative maintenance,
general repairs, reconditioning, refurbishment, modernization and spare parts, as well as consultancy and training services. Our
services are provided on our own products and on third-party products and related equipment.
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MATERIALS PROCESSING
MATERIALS PROCESSING EQUIPMENT. Materials processing equipment is used in processing aggregate materials for
building applications and is also used in the quarrying, mining, construction, demolition, recycling, landscaping and biomass
production industries. Our materials processing equipment includes crushers, screens, trommels and feeders, washing systems
and conveyors as well as wood and biomass chippers and grinders, concrete mixers and pavers.
We manufacture a range of jaw, impactor (both horizontal and vertical shaft) and cone crushers, as well as base crushers for
integration within mobile, modular and static plants.
•
•
Jaw crushers are used for crushing larger rock, primarily at the quarry face or on recycling duties. Applications
include hard rock, sand and gravel and recycled materials. Cone crushers are used in secondary and tertiary
applications to reduce a number of materials, including quarry rock and riverbed gravel.
Horizontal shaft impactors are primary and secondary crushers. They are typically applied to reduce soft to medium
hard materials, as well as recycled materials. Vertical shaft impactors are secondary and tertiary crushers that reduce
material utilizing various rotor configurations and are highly adaptable to any application.
Our screening and feeder equipment includes:
•
•
Heavy duty inclined and horizontal screens and feeders, which are used in low to high tonnage applications and are
available as either stationary or heavy-duty mobile equipment. Screens are used in all phases of plant design from
handling quarried material to fine screening. Dry screening is used to process materials such as sand, gravel, quarry
rock, coal, ore, construction and demolition waste, soil, compost and wood chips.
Feeders are used to unload materials from hoppers and bulk material storage at controlled rates. They are available for
applications ranging from primary feed hoppers to fine material bin unloading. Our range includes apron feeders,
grizzly feeders and pan feeders.
Washing system products include mobile and static wash plants incorporating separation, washing, scrubbing, dewatering and
stockpiling. We manufacture mobile and stationary rinsing screens, scrubbing systems, sand screw dewaterers, bucket-wheel
dewaterers, water management systems, hydrocyclone plants for efficient silt extraction and a range of stockpiling conveyors.
Washing systems operate in the aggregates, recycling, mining and industrial sands segments.
Wood processing, biomass and recycling equipment includes shredders, grinders, trommels, chippers and specialty systems.
This equipment is used in, among other things, recycling, wood energy, green waste/construction, demolition recycling
industries and pulp and paper.
We manufacture a range of conveyors which include tracked and wheeled mobile conveyors. Conveyors are mechanical
machines used to transport and stockpile materials such as aggregates and minerals after processing.
SPECIALTY EQUIPMENT. We manufacture material handlers, cranes, concrete mixer trucks and concrete pavers.
• Material handlers are designed for handling logs, scrap, recycling and other bulky materials with clamshell, magnet or
grapple attachments.
Pick and carry cranes are designed for a wide variety of applications, including use at mine sites, large fabrication
yards, building and construction sites and in machinery maintenance and installation. They combine high road speed
with all-terrain capability.
Rough terrain cranes move materials and equipment on rugged or uneven terrain and are often located on a single
construction or work site for long periods. Rough terrain cranes cannot be driven on highways (other than in Italy) and
accordingly must be transported by truck to the work site.
Tower cranes are often used in urban areas where space is constrained and in long-term or high-rise building sites.
Tower cranes lift construction material and place the material at the point of use. We produce self-erecting,
hammerhead, flat top and luffing jib tower cranes.
Concrete mixer trucks are machines with a large revolving drum in which cement is mixed with other materials to
make concrete. We offer models with custom chassis with configurations from three to seven axles.
Our concrete pavers are used to finish bridges, canals, concrete streets, highways and airport surfaces.
•
•
•
•
•
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BACKLOG
Our backlog as of December 31, 2021 and 2020 was as follows (in millions):
AWP
MP
Total
December 31,
2021
2020
$ 1,955.8 $
825.6
1,034.0
523.4
$ 2,989.8 $ 1,349.0
We define backlog as firm orders that 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. Our backlog orders represent primarily new equipment orders. Parts orders are
generally filled on an as ordered basis.
Our management views backlog as one of many indicators of the performance of our business. Because many variables can
cause changes in backlog and these changes may or may not be of any significance, we consequently view backlog as an
important, but not necessarily determinative, indicator of future results.
Our overall backlog amounts at December 31, 2021 increased $1,640.8 million from our backlog amounts at December 31,
2020, due to higher orders across all business segments as our customers have increased capital spending in response to an
improving global economic outlook.
AWP segment backlog at December 31, 2021 increased approximately 137% from our backlog amounts at December 31, 2020.
This increase from the prior year was driven by robust demand in all global markets as bookings continue to outpace billings.
MP segment backlog at December 31, 2021 increased approximately 98% from our backlog amounts at December 31, 2020.
This increase from the prior year was driven primarily by higher demand across all MP businesses primarily in North America,
Western Europe and Asia Pacific.
DISTRIBUTION
We distribute our products through a global network of independent distributors, rental companies and direct sales to
customers.
AERIAL WORK PLATFORMS
Our aerial work platform and telehandler products are distributed principally through a global network of rental companies and
independent distributors. We employ sales representatives who service these channel partners from offices located throughout
the world.
Our utility products are distributed to the utility and municipal markets and contractors in North America principally through a
network of rental companies, independent distributors and a direct sales model. Outside of North America, independent
distributors sell our utility equipment directly to customers.
MATERIALS PROCESSING
We distribute our products through a global network of independent distributors, rental companies and direct sales to
customers.
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RESEARCH, DEVELOPMENT AND ENGINEERING
We maintain engineering staff primarily at our manufacturing locations to conduct research, development and engineering for
site-specific products. We have also established competency centers that support entire segments from single locations in
certain fields such as control systems. Our businesses assess global trends to understand future needs of our customers and help
us decide which technologies to implement in future development projects. In addition, our engineering center in India
supports our engineering teams worldwide through new product design, existing product design improvement and development
of products for local markets. Continually monitoring our materials, manufacturing and engineering costs is essential to
identifying possible savings, which then enables us to leverage those savings to improve our competitiveness and our
customers’ return on investment. Our research, development and engineering expenses are primarily incurred to develop (i)
additional applications and extensions of our existing product lines to meet customer needs, such as the telematics application to
remotely monitor and manage our products, and take advantage of growth opportunities, and (ii) customer responsive
enhancements and continuous cost improvements of existing products.
Our engineering focus mirrors the business priorities of delivering customer responsive solutions, growing in developing
markets, complying with evolving regulatory standards in our global markets and applying our lean manufacturing principles
by standardizing products, rationalizing components and strategically aligning with select global suppliers. Our engineering
teams in China and India represent our commitment to engineering products for developing markets. They take equipment
technology from the developed markets and translate it to appropriate technology for developing markets using the experience
and cultural understanding of engineering teams native to those markets.
With the increased global awareness and customer demand for products that are not powered by carbon-based fuels, we
continue to develop and incorporate alternative power solutions within our different product lines. Across our product range
depending on product and application, various solutions are being deployed including battery-electric, fuel-electric hybrid and
plug-in hybrids. In parallel to this we continue to research and evaluate alternative fuel options that may become viable
solutions for our products in the future.
Product innovation has become a core element of our growth strategy. We have re-invigorated and increased our emphasis on
creating new models and meeting the demands of our customers. Robust product development pipelines are in place, which we
expect will continue to bring new, differentiated products to the market in the years ahead. We have also focused on producing
more cost-effective product solutions across product families, as well as increasing commonalities of components to ease
manufacturing processes.
We will continue our commitment to appropriate levels of research, development and engineering spending in order to meet our
customer needs, uphold competitive functionality of our products and maintain regulatory compliance in all the markets we
serve.
MATERIALS
Information regarding principal materials, components and commodities and any risks associated with these items are included
in Part II, Item 7A. – “Quantitative and Qualitative Disclosures about Market Risk – Commodities Risk.”
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COMPETITION
We face a competitive global manufacturing market for all of our products. We compete with other manufacturers based on
many factors, particularly price, performance and product reliability. We generally operate under a best value strategy, where
we attempt to offer our customers products designed to improve Customer ROIC. However, in some instances, customers may
prefer the pricing, performance or reliability aspects of a competitor’s product despite our product pricing or performance. We
do not have a single competitor across our business segments. The following table shows the primary competitors, in
alphabetical order, for our products in the following categories:
BUSINESS SEGMENT
PRODUCTS
PRIMARY COMPETITORS
Aerial Work Platforms
Portable Material Lifts and Portable
Aerial Work Platforms
Oshkosh (JLG), Sumner, Vestil and Wesco
Boom Lifts
Scissor Lifts
Utility Equipment
Telehandlers
Materials Processing
Crushing & Screening Equipment
Washing Systems
Aichi, Dingli, Haulotte, JCB, Linamar (Skyjack),
Oshkosh (JLG) and Xtreme/Tanfield (Snorkel)
Dingli, Haulotte, JCB, Linamar (Skyjack), LGMG,
Manitou, Oshkosh
and Xtreme/Tanfield
(JLG)
(Snorkel)
Altec, Dur-A-Lift, Posi+ and Time Manufacturing
CNH, JCB, Manitou (Gehl), Merlo and Oshkosh (JLG,
Skytrak, Caterpillar and Lull brands)
Astec Industries, Deere (Kleeman), Keestrack, Metso,
Portafill, Sandvik and Rubble Master
Azfab, CDE Global, Matec, McLanahan, Metso,
Phoenix Process Equipment, Superior and Weir/Trio
Wood Processing, Biomass, Recycling
Equipment and Trommels
Astec Industries, Bandit, Doppstadt, Eggersmann, Jenz,
Komptech, Morbark and Vermeer
Conveyors
Material Handlers
Concrete Pavers
Concrete Mixer Trucks
Astec/Telestack, Deere (Kleeman), Edge, Metso/
McCloskey, Puzzulona Thor, Superior and Weir/Trio
Atlas, Caterpillar, Liebherr and Sennebogen
Allen Engineering, Gomaco, Guntert & Zimmerman
and Power Curbers
Kimble and Continental Manufacturing, McNeilus and
Oshkosh
Pick and Carry Cranes
Ace, Escorts, Humma and TIDD
Rough Terrain Cranes
Tower Cranes
Kato, Liebherr, Link-Belt, Manitowoc (Grove), Sany,
Tadano-Faun, XCMG and Zoomlion
Comansa,
Wolffkran, XCMG and Zoomlion
Jaso, Liebherr, Manitowoc
(Potain),
MAJOR CUSTOMERS
None of our customers individually accounted for more than 10% of our consolidated net sales in 2021. In 2021, our largest
customer accounted for less than 5% of our consolidated net sales and our top ten customers in the aggregate accounted for less
than 24% of our consolidated net sales. A material portion of AWP net sales are to national rental companies.
PATENTS, LICENSES AND TRADEMARKS
We use proprietary materials such as patents, trademarks, trade secrets and trade names in our operations and take actions to
protect these rights.
We use several significant trademarks and trade names, most notably the Terex®, Genie®, Powerscreen® and Fuchs® trademarks.
The other trademarks and trade names that we use include registered trademarks of Terex Corporation or its subsidiaries.
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We have many patents that we use in connection with our operations and most of our products contain some proprietary
technology. Many of these patents and related proprietary technology are important to the production of particular products;
however, overall, our patents, taken together, are not material to our business or our overall financial results.
Currently, we are engaged in various legal proceedings with respect to intellectual property rights. While the outcome of these
matters cannot be predicted with certainty, we believe the outcome of such matters will not have a material adverse effect,
individually or in aggregate, on our business or operating performance. For more detail, see Item 3 – “Legal Proceedings.”
SAFETY AND ENVIRONMENTAL CONSIDERATIONS
As part of The Terex Way, and our Zero Harm Safety and Environmental culture, we are committed to providing a safe and
healthy environment for our team members, and strive to provide quality products that are safe to use and operate in an
environmentally conscious and respectful manner. Safety is a top priority, not only for our team members, but also our
customers. Terex has a longstanding commitment to designing, manufacturing, and selling safe and efficient products. Our
safety standards and practices are rigorous. We collaborate with customers to design features that help keep operators safe,
improve working environments, and help maintain equipment uptime and utilization.
During the COVID-19 pandemic, we are taking appropriate precautions and implementing safeguards to protect our team
members while they continue to meet our customers' needs around the world. We have implemented measures consistent with
recommendations of the Centers for Disease Control and the World Health Organization. Practices include increased frequency
of cleaning and disinfecting of facilities, following social distancing practices, mask usage when distancing practices are not
possible and managing safe return to work for those impacted by COVID-19.
We generate hazardous and non-hazardous wastes in the normal course of our manufacturing operations. As a result, we are
subject to a wide range of environmental laws and regulations. All of our employees are required to obey all applicable health,
safety and environmental laws and regulations and must observe the proper safety rules and environmental practices in work
situations. These laws and regulations govern actions that may have adverse environmental effects, such as discharges to air
and water, and require compliance with certain practices when handling and disposing of hazardous and non-hazardous wastes.
These laws and regulations would also impose liability for the costs of, and damages resulting from, cleaning up sites, past
spills, disposals and other releases of hazardous substances, should any such events occur. We are committed to complying
with these standards and monitoring our workplaces to determine if equipment, machinery and facilities meet specified safety
standards. Each of our manufacturing facilities is subject to an environmental audit at least once every five years to monitor
compliance. Also, no incidents have occurred which required us to pay material amounts to comply with such laws and
regulations. We are dedicated to ensuring that safety and health hazards are adequately addressed through appropriate work
practices, training and procedures. We are committed to reducing injuries and working towards a world-class level of safety
practices in our industry.
We are dedicated to product safety when designing and manufacturing our equipment. Our equipment is designed to meet all
applicable laws, regulations and industry standards for use in their markets. We continually incorporate safety improvements in
our products. We maintain an internal product safety team that is dedicated to improving safety and investigating and resolving
any product safety issues that may arise.
Use and operation of our equipment in an environmentally conscious manner is an important priority for us. We are aware of
global discussions regarding climate change and the impact of greenhouse gas emissions on global warming. We are increasing
our production of products that have lower greenhouse gas emissions in response to both regulatory initiatives and market
demand. We are active in the development of incorporating alternative power solutions within our different product lines.
Globally, job site regulations have become increasingly stringent, requiring quieter equipment with lower or zero emissions. At
the same time, for our Genie® equipment, more job sites are requiring machines capable of working both outdoors and indoors.
Our customers want products that operate on battery electric and fuel-electric hybrid options. Many Genie® lift models offer
all-electric or fuel-electric hybrid options that deliver quiet, emission-free performance, which is necessary for indoor working
environments, as well as city centers with noise and emission restrictions. We offer crushers and screens that can operate from
electrical power supply lines to help reduce the use of fuel. Hybrid solutions are also available on select utility aerial devices,
cranes, and mixer trucks that use battery power to perform certain equipment functions without the engine running. Overall, we
believe these developments are the leading edge of much greater change to the way equipment in the future will be powered.
We have taken a lead on many of these developments within the industries we serve, and we will continue to evolve our
approach to alternative, environmentally friendly equipment power as technical capabilities advance, solution economics
improve, and customer demand for these solutions continues to increase.
12
Increasing laws and regulations dealing with the environmental aspects of the products we manufacture can result in significant
expenditures in designing and manufacturing new forms of equipment that satisfy such new laws and regulations. Compliance
with laws and regulations regarding safety and the environment has required, and will continue to require, us to make
expenditures. We currently do not expect that these expenditures will have a material adverse effect on our business or results
of operations.
SEASONAL FACTORS
Terex is a globally diverse company, supporting multiple end uses. Seasonality is a factor in some businesses, where annual
purchasing patterns are impacted by the seasonality of downstream project spending. Specifically, our businesses can
experience stronger demand during the second quarter, as customers in the northern hemisphere make investments in time for
the annual construction season (April to October). Non-seasonal macro factors are also important and can surpass seasonal
influences in importance in some years. Entering 2022, for example, we expect supply chain challenges to have greater
influence on our sales than historical seasonal trends. As a result, in 2022, we expect sales to be highest in the second and third
quarters, and expect our earnings generated in the second half of the year to be higher than the first half of the year.
WORKING CAPITAL
Our businesses are working capital intensive and require funding to purchase production and replacement parts inventories and
expenditures to repair, replace and upgrade existing facilities. We have debt service requirements, including periodic interest
payments on our outstanding debt. We believe cash generated from operations, including cash generated from the sale of
receivables, loans from our bank credit facilities and funds raised in capital markets, will provide us with adequate liquidity to
comply with our financial covenants under our bank credit facility, continue to support internal operating initiatives and meet
our operating and debt service requirements for at least the next 12 months from the date of issuance of this annual report. See
Item 1A. – “Risk Factors” for a detailed description of the risks resulting from our debt and our ability to generate sufficient
cash flow to operate our business. We will continue to pursue cash generation opportunities, including reducing costs and
working capital, reviewing alternatives for under-utilized assets, and selectively investing in our businesses to promote growth
opportunities.
HUMAN CAPITAL MANAGEMENT
SAFETY
The safety of our team is our number one priority. At Terex, safety is an absolute way of life. We are committed to Zero
Harm, and we expect all team members to be committed to safety and continuous improvement in this area. In 2016, Terex set
the goals of reaching a 0.20 lost time injury rate and 1.00 total recordable injury rate by 2024. We have made good progress
since 2016 when our lost time injury rate was 0.80 and our total recordable injury rate was 3.82. At the end of 2021, our lost
time injury rate was 0.52 and our total recordable injury rate was 1.77. Our aspirational goal will always be zero injuries, but
these goals represent milestones along our journey to Zero Harm.
TEAM MEMBER TALENT AND SUPPORT
Terex strives to attract, develop and retain the best people to be part of our team. We have a diverse and highly engaged global
workforce. Capable, highly skilled and diverse team members are key to our ability to implement our “Execute, Innovate,
Grow” strategy.
As of December 31, 2021, we had approximately 8,600 team members, including approximately 3,700 team members in the
U.S. Approximately one percent of our team members in the U.S. are represented by labor unions. Outside of the U.S., we
enter into employment contracts and collective agreements in those countries in which such relationships are mandatory or
customary. The provisions of these agreements correspond in each case with the required or customary terms in the subject
jurisdiction. We generally consider our relations with our team members to be good and we provide mechanisms such as
surveys and helplines for our team members to provide their perspectives. In 2021, 81% of team members participated in our
company-wide global engagement survey. Safety remained the highest rated survey category and we received positive net
promoter scores.
13
We have a robust talent review process in which we assess talent strengths and opportunity areas, matching our team members’
career aspirations with the needs of the business. We offer a wide range of training programs to support team members in their
current roles and in achieving advancement opportunities. Our core curriculum of Terex Success Programs are designed for all
of our team members from individual contributors to front line supervisors to managers and executives. These programs are
grounded in The Terex Way values and help participants build key skills. Additional training programs are offered around
specific topics such as Safety; Diversity, Equity and Inclusion (“DEI”); Technical Skills; and Financial Fundamentals.
We have a strong performance management process that includes annually setting clear business and professional objectives,
mid-year calibration, annual performance reviews and succession planning. Both team members and managers play active roles
in the performance management process, furthering a culture of accountability that supports team member development.
We design our benefits and programs to support the way our team members live and work. We care about our team members.
For example, our Global Employee Assistance Program is in place to support team members who are facing challenges in their
personal lives. Where we can, we offer a flexible work environment, enabling team members to manage the demands of their
personal and professional lives.
DIVERSITY, EQUITY AND INCLUSION
We are committed to increasing and retaining demographic diversity at all levels of our global workforce. We extend a warm
welcome to team members of every race, gender, age, religion, identity or experience. We encourage, value and support non-
majority team members in all of our facilities worldwide. We actively seek their engagement and partnership, as we understand
that diversity of background, thought and experience leads to improved problem-solving and greater innovation.
Diversity in and of itself is not sufficient. We strive to be fair and impartial in our decisions, ensuring Equity within our
workplace. By doing so, we create a sense of Inclusion and belonging for all our team members. We are committed to DEI so
we can make Terex the kind of place where every team member feels valued, listened to and appreciated.
Our Company has a vibrant, global initiative to increase representation of women in our workplace because we recognize that
women are often under-represented in manufacturing organizations such as ours. We are making excellent progress, requiring
diverse candidate slates, supporting women through mentoring, training, and colleague-to-colleague education, and using our
talent development process to identify qualified women for their next role(s) within our organization. In 2014, we established
five-year goals to increase representation in three areas: women in leadership, women in line roles (like operations, engineering
and sales) and women overall. Having made progress against these goals, we have extended them for another five years.
In 2020, we committed to expand our primary DEI focus areas to include race and ethnicity, to ensure that members of under-
represented groups have a sense of belonging and can thrive within our organization. We intentionally defined our DEI
aspirations, initially focusing on our U.S. workforce. We have set aspirations to increase the representation of non-majority
team members in leadership, management, indirect manufacturing and indirect selling, general & administrative (“SG&A”)
roles.
In 2021, we implemented actions to help achieve our aspirations, by creating a DEI governance structure that includes a DEI
Governance Council; regional DEI Councils in the Americas, Europe, the Middle East, Africa and Russia (EMEAR) and Asia
Pacific; our longstanding Women@Terex Steering Committee; and eight global Affinity Groups. The DEI Governance
Council is sponsored by our Chief Executive Officer (“CEO”) and Chief Human Resources Officer; our regional councils have
Executive Leadership Team (“ELT”) level sponsorship from our segment Presidents. Our DEI efforts are centered around
recruitment, engagement, development and retention. We have completed training for our ELT, senior leadership, managers
and the HR community. This training will be cascaded to our more junior managers and supervisors as well. We continue to
develop tools and resources for use at the individual and site level to foster inclusion. For 2022, we are introducing a
component to our annual incentive plan that will be focused on the achievement of specific DEI metrics.
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AVAILABLE INFORMATION
We maintain a website at www.terex.com. We make available on our website under “Investor Relations” – “Financial
Reporting”, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to those reports as soon as reasonably practicable after we electronically file or furnish such material with the
SEC. References to our website in this report are provided as a convenience, and the information on our website is not, and
shall not be deemed to be a part of this report or incorporated into any other filings we make with the SEC. The SEC maintains
an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers
that file electronically with the SEC. In addition, we make available on our website under “Investor Relations” –
“Governance”, free of charge, our Audit Committee Charter, Compensation Committee Charter, Governance and Nominating
Committee Charter, Corporate Governance Guidelines and Code of Ethics and Conduct. In addition, the foregoing information
is available in print, without charge, to any stockholder who requests these materials from us.
ITEM 1A.
RISK FACTORS
You should carefully consider the following material risks, together with the cautionary statement under the caption “Forward-
Looking Information” above and the other information included in this report. Although the risks are organized by headings,
and each risk is discussed separately, many are interrelated. The risks described below are not the only ones we face.
Additional risks that are currently unknown to us or that we currently consider immaterial may also impair our business or
adversely affect our financial condition or results of operations. If any of the following risks actually occurs, our business,
financial condition or results of operation could be adversely affected.
Manufacturing and Operational Risks
Global public health pandemics, such as the COVID-19 pandemic, have adversely impacted and may continue to adversely
impact our business, results of operations and financial condition and the ultimate impact will depend on future
developments, which remain uncertain.
Countries around the world have experienced, and may experience in the future, outbreaks of contagious diseases that affect
public health. In March 2020, the World Health Organization declared COVID-19 a global pandemic and governmental
authorities around the world implemented shelter-in-place orders, quarantines, social distancing requirements, travel bans and
other similar governmental restrictions to reduce the spread of COVID-19. Although certain restrictions related to the
COVID-19 pandemic have eased, uncertainty continues to exist regarding such measures and potential future measures. Efforts
to combat the virus have been complicated by viral variants.
The COVID-19 pandemic has disrupted our operations and is expected to continue to negatively impact our operations in
numerous ways. It has also negatively impacted the global economy, created significant volatility and disruption of financial
markets and caused disruptions in our supply chains and logistics. The rapid increase in demand as the COVID-19 pandemic
wanes has caused and is expected to continue to cause significant stress on global supply chains, resulting in parts and
components shortages and/or inefficiencies in production. Current material and component shortages have limited and could
continue to limit our ability to meet customer demand. Additionally, the COVID-19 pandemic adversely affected our
workforce, with temporary factory closures, slowdowns, inefficiencies and restrictions on travel and transports, among other
effects, thereby negatively impacting our operations. A significant percentage of global team members continue to work
remotely, which can introduce operational and cybersecurity risks. Because working remotely has become more prevalent and
accepted as a result of the COVID-19 pandemic, companies could determine that it will be acceptable for employees to work
from their homes on a long-term basis, which could over time reduce demand for our products. We developed and
implemented new health and safety protocols, business continuity plans and different scenario plans in an effort to try to
mitigate the negative impact of the COVID-19 pandemic. Our management continues to remain focused on mitigating the
impact of the COVID-19 pandemic, which has required a large investment of time and resources, which may delay other value-
add initiatives.
15
It is not possible to accurately predict with any degree of certainty the impact of the COVID-19 pandemic on our operations
going forward as the situation continues to remain fluid. Despite our efforts and numerous measures taken to manage the
impacts of the COVID-19 pandemic, the full degree and extent to which it will ultimately affect our operational and financial
performance will depend on uncertain future developments and factors beyond our control, including, but not limited to, the
pace of the continued spread of the pandemic, the severity and ultimate duration of the pandemic, including any resurgences,
mutations or variants, any governmental regulations or restrictions imposed in response to such, and the ultimate efficacy and
distribution speed of approved vaccines and treatments. We expect that any further or prolonged disruptions to our global
supply chain would adversely impact our operations, business results and financial condition. Such factors could also continue
to adversely affect our customers’ financial condition, resulting in further reduced spending for our products and services. The
longer the pandemic continues, the more likely that more of the foregoing risks may be realized.
The impact of the COVID-19 pandemic continues to evolve and its ultimate duration, severity and disruption to our business,
customers and supply chain, and the related financial impact to us, cannot be accurately forecasted at this time. The impact of
the COVID-19 pandemic may also continue to exacerbate other risks discussed below in this section Item 1A. Risk Factors, any
of which could have a material effect on us. This situation continues to evolve and additional impacts may arise that we are not
aware of currently.
We operate in a highly competitive industry.
Our industry is highly competitive. Our competitors include a variety of both domestic and foreign companies in all major
markets. To compete successfully, our products must excel in terms of quality, reliability, productivity, price, features, ease of
use, safety and comfort, and we must provide excellent customer service. The greater financial resources of certain of our
competitors may put us at a competitive disadvantage. Low-cost competition from China and other developing markets could
also result in decreased demand for our products. If competition in our industry intensifies or if our current competitors lower
their prices for competing products, we may lose sales or be required to lower the prices we charge for our products. If we are
unable to provide continued technological improvements in our equipment that meet our customers’ expectations, or the
industry’s expectations, the demand for our equipment could be substantially adversely affected. Our ability to match new
product offerings to diverse global customers’ anticipated preferences for different types and sizes of equipment and various
equipment features and functionality, at affordable prices, is critical to our success. This requires a thorough understanding of
our existing and potential customers on a global basis, particularly in developing markets, including China, India, Latin
America, the Middle East and Africa. Failure to compete effectively could result in lower revenues from our products and
services, lower gross margins or cause us to lose market share.
We are dependent upon third-party suppliers, making us vulnerable to supply shortages and price increases.
We obtain materials and manufactured components from third-party suppliers. In the absence of labor strikes or other unusual
circumstances, substantially all materials and components are normally available from multiple suppliers. However, certain of
our businesses receive materials and components from a single source supplier, although alternative suppliers of such materials
may be generally available. Delays in our suppliers’ abilities, especially any sole suppliers for a particular business, to provide
us with necessary materials and components may delay production at a number of our manufacturing locations, or may require
us to seek alternative supply sources. Delays in obtaining supplies may result from a number of factors affecting our suppliers,
including capacity constraints, regulatory changes, freight and container availability, labor disputes, suppliers’ impaired
financial condition, suppliers’ allocations to other purchasers, weather emergencies, pandemics or acts of war or terrorism. Any
delay in receiving supplies could impair our ability to deliver products to our customers and, accordingly, could have a material
adverse effect on our business, results of operations and financial condition.
We have experienced, and in the future are likely to experience, significant disruption of the supply of some of our parts,
materials, components and final assemblies that we obtain from suppliers or subcontractors. For example, the rapid increase in
demand as the COVID-19 pandemic wanes has caused, and is expected to continue to cause, significant stress on global supply
chains. As economies around the world have reopened in 2021, sharp increases in demand have created significant disruptions
to the global supply chain, which have affected our ability to receive goods on a timely basis and at anticipated costs. Principal
materials and components used in our various manufacturing processes include steel, castings, engines, tires, hydraulics,
cylinders, drive trains, electric controls and motors, semiconductors, and a variety of other commodities and fabricated or
manufactured items. Increases in input costs and freight due to price inflation and global supply chain disruptions may
adversely affect our financial performance. Additionally, tariffs on certain Chinese origin goods may put pressure on input
costs.
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Global logistics network challenges include shortages of shipping containers, ocean freight capacity constraints, international
port delays, trucking and chassis shortages, railway and air freight capacity, and labor availability constraints, which have
resulted in delays, shortages of key manufacturing components, increased order backlogs, and increased transportation costs.
We actively monitor and mitigate supply chain risk, but there can be no assurance that our mitigation plans will be effective to
prevent disruptions that may arise from shortages of materials that we use in the production of our products. Uncertainties
related to the magnitude and duration of global supply chain disruptions have adversely affected, and may continue to adversely
affect, our business and outlook. If we are unable to recover a substantial portion of increased costs from our customers and
suppliers, or through duty draw-back, our business or results of operations could be adversely affected.
In addition, we purchase material and services from our suppliers on terms extended based on our overall credit rating.
Deterioration in our credit rating may impact suppliers’ willingness to extend terms and in turn accelerate cash requirements of
our business.
Consolidation within our customer base and suppliers may negatively impact our pricing and product margins.
Over the last few years, some of our larger customers have been actively growing through acquisitions. This consolidation has
increased the concentration of our largest customers, resulting in increased pricing pressure from our customers. Should our
larger customers continue to grow through acquisitions, their buying influence may grow and negatively impact our negotiating
leverage. Some of our suppliers have undergone a similar process of consolidation. The consolidation of our largest suppliers
has resulted in limited sources of supply for certain parts and components and increased cost pressures from our suppliers. Any
future consolidation of our customer base or our suppliers could negatively impact our business, financial condition, results of
operations and cash flows. If this trend in customer and supplier consolidation continues, it could have an unfavorable impact
on our pricing and product margins.
We are exposed to political, economic and other risks that arise from operating a multinational business.
Our operations are subject to a number of potential risks. Such risks principally include:
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trade protection measures and currency exchange controls;
labor unrest;
global and regional economic conditions;
the United Kingdom’s (“U.K.”) departure from the European Union (“E.U.”);
political instability;
terrorist activities and the U.S. and international response thereto;
restrictions on the transfer of funds into or out of a country;
export duties and quotas;
domestic and foreign customs and tariffs;
current and changing regulatory environments;
difficulties protecting our intellectual property;
transportation delays and interruptions;
costs and difficulties in integrating, staffing and managing international operations, especially in developing markets such
as China, India, Latin America, the Middle East and Africa;
difficulty in obtaining distribution support;
natural disasters; and
current and changing tax laws.
In addition, many of the nations in which we operate have developing legal and economic systems adding greater uncertainty to
our operations in those countries than would be expected in North America, Western Europe and certain Asia Pacific markets.
These factors may have an adverse effect on our international operations in the future.
We continue to focus on operational improvement in developing markets such as China, India, Latin America, the Middle East
and Africa. These efforts will require us to hire, train and retain qualified personnel in countries where language, cultural or
regulatory barriers may exist. Any significant difficulties in continuing to improve or expand our operations in developing
markets may divert management’s attention from our existing operations and require a greater level of resources than we plan to
commit.
Expansion into developing markets may require modification of products to meet local requirements or preferences.
Modification to the design of our products to meet local requirements and preferences may take longer or be more costly than
we anticipate and could have a material adverse effect on our ability to achieve international sales growth.
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A material disruption to one of our significant manufacturing plants could adversely affect our ability to generate revenue.
We produce most of our machines for each product type at one manufacturing facility. If operations at a significant facility
were disrupted as a result of equipment failures, natural disasters, health epidemics, work stoppages, power outages or other
reasons, our business, financial conditions and results of operations could be adversely affected. Interruptions in production
could increase costs and delay delivery of units in production. Production capacity limits could cause us to reduce or delay
sales efforts until production capacity is available.
Our business is sensitive to government spending.
Many of our customers depend substantially on government funding of highway construction, maintenance and other
infrastructure projects. In addition, we sell products to governments and government agencies in the U.S. and other nations.
Policies of governments attempting to address local deficit or structural economic issues could have a material impact on our
customers and markets. Any decrease or delay in government funding of highway construction and maintenance, other
infrastructure projects and overall government spending could cause our revenues and profits to decrease.
We may face limitations on our ability to integrate acquired businesses.
From time to time, we may engage in strategic transactions involving risks, including the possible failure to successfully
integrate and realize the expected benefits of such transactions. We have consummated acquisitions in the past and anticipate
making additional acquisitions in the future. Our ability to realize the anticipated benefits of any purchase, including the
expected combination benefits, will depend, to a large extent, on our ability to integrate any acquired businesses. The risks
associated with integrating acquired businesses include:
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the business culture of the acquired business may not match well with our culture;
technological and product synergies, economies of scale and cost reductions may not occur as expected;
we may acquire or assume unexpected liabilities;
faulty assumptions may be made regarding the acquisition and integration process;
unforeseen difficulties may arise in integrating operations and systems;
we may fail to retain, motivate and integrate key management and other employees of the acquired business; and
we may experience problems in retaining customers.
The successful integration of any newly acquired business also requires us to implement effective internal control processes in
these acquired businesses. We cannot ensure that any newly acquired companies will operate profitably, that the intended
beneficial effect from these acquisitions will be realized and that we will not encounter difficulties in implementing effective
internal control processes in these acquired businesses, particularly when the acquired business operates in foreign jurisdictions
and/or was privately owned. Any of the foregoing could adversely affect our business and results of operations. If we fail to
successfully integrate any acquired business, this could have an adverse effect on our business, financial condition and results
of operations.
Financial and General Economy Risks
Our business is affected by the cyclical nature of markets we serve.
Demand for our products tends to be cyclical and is affected by the general strength of the economies in which we sell our
products, prevailing interest rates, residential and non-residential construction spending, capital expenditure allocations of our
customers, the timing of regulatory standard changes, oil and gas related activity and other factors. As discussed under the risk
factor titled, “Global public health pandemics, such as the COVID-19 pandemic, have adversely impacted and may continue to
adversely impact our business, results of operations and financial condition and the ultimate impact will depend on future
developments, which remain uncertain,” the COVID-19 pandemic negatively impacted the global economy and significantly
increased economic and demand uncertainty. While we are expecting to experience sales growth in 2022, we cannot provide
any assurance the global economic weakness of the recent past will not recur. As discussed under the risk factor titled, “We are
dependent upon third-party suppliers, making us vulnerable to supply shortages and price increases,” the supply chain is
currently constrained, and if we are not able to receive parts and components on a timely basis and at anticipated costs, we may
not achieve the growth we expect in sales or profitability. If our customers are not successful in generating sufficient revenue
or are precluded from securing financing, they may not be able to pay, or may delay payment of, receivables that are owed to
us. Any inability of current and/or potential customers to pay us for our products will adversely affect our earnings and cash
flow.
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Our sales depend in part upon our customers’ replacement or repair cycles, which are impacted in part by historical purchase
levels. We are coming through a period during which global economic conditions and key commodity prices rapidly and
significantly declined, and if economic conditions in the U.S. and other key markets do not show continued improvement, we
may experience negative impacts to our net sales, financial condition, profitability and cash flows, which could result in the
need for us to record impairments. We have taken a number of steps, and will continually review our operations, to reduce our
costs. There can be no assurance, however, that these steps will mitigate the negative impact of a possible deterioration in
economic conditions.
We have a significant amount of debt outstanding and must comply with restrictive covenants in our debt agreements.
Our credit agreement and other debt agreements contain financial and restrictive covenants that may limit our ability to, among
other things, borrow additional funds or take advantage of business opportunities. As of December 31, 2021, we are in
compliance with the financial covenants. However, increases in our debt, increases in our interest expense or decreases in our
earnings could cause us to fail to comply with these financial covenants. Failing to comply with such covenants could result in
an event of default that, if not cured or waived, could result in the acceleration of all our indebtedness or otherwise have a
material adverse effect on our financial position, results of operations and debt service capability.
Our level of debt and the financial and restrictive covenants contained in our credit agreement could have important
consequences on our financial position and results of operations, including increasing our vulnerability to increases in interest
rates because debt under our credit agreement bears interest at variable rates. In addition, our credit agreement indebtedness
may use LIBOR as a benchmark for establishing our interest rate. While we expect LIBOR to be available in substantially its
current form until at least the end of June 30, 2023, it is possible that LIBOR will become unavailable prior to that point which
may impact our interest expense. Our credit agreement provides for any changes away from LIBOR to a successor rate to be
based on prevailing or equivalent standards, however, the replacement of LIBOR may result in fluctuating interest rates that
may have a negative impact on our interest expense and our profitability. Consequences of these developments cannot be
entirely predicted, but could include an increase in the cost of our credit agreement indebtedness.
We may be unable to generate sufficient cash flow to service our debt obligations and operate our business.
Servicing our debt requires a significant amount of cash. Our ability to generate sufficient cash depends on numerous factors
beyond our control and our business may not generate sufficient cash flow from operating activities. Our ability to make
payments on, and refinance, our debt and fund planned capital expenditures will depend on our ability to generate cash in the
future. To some extent, this is subject to general economic, financial, competitive, legislative, regulatory and other factors that
are beyond our control. Lower sales, or uncollectible receivables, generally will reduce our cash flow.
We cannot assure our business will generate sufficient cash flow from operations, or future borrowings will be available to us
under our credit facility or otherwise, in an amount sufficient to fund our liquidity needs.
If our cash flows and capital resources are insufficient to service our indebtedness, we may be forced to reduce or delay capital
expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may
not be successful and may not permit us to meet our scheduled debt service obligations. Our ability to restructure or refinance
our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our
debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict
our business operations.
Our access to capital markets and borrowing capacity could be limited in certain circumstances.
Our access to capital markets to raise funds through the sale of equity or debt securities is subject to various factors, including
general economic and/or financial market conditions. Significant changes in market liquidity conditions could impact access to
funding and associated funding costs, which could reduce our earnings and cash flows. If our consolidated cash flow coverage
ratio is less than 2.0 to 1.0, we are subject to significant restrictions on the amount of indebtedness we can incur. Although our
cash flow coverage ratio was greater than 2.0 to 1.0 at the end of 2021, there can be no assurance this will continue to occur.
Our access to debt financing at competitive risk-based interest rates is partly a function of our credit ratings. A downgrade to
our credit ratings could increase our interest rates, could limit our access to public debt markets, could limit the institutions
willing to provide us credit facilities, and could make any future credit facilities or credit facility amendments more costly and/
or difficult to obtain.
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Although we believe the banks participating in our credit facility have adequate capital and resources, we can provide no
assurance that all of these banks will continue to operate as a going concern in the future. If any of the banks in our lending
group were to fail or be unwilling to renew our credit facility at or prior to its expiration, it is possible that the borrowing
capacity under our current or any future credit facility would be reduced. If the availability under our credit facility was
reduced significantly, we could be required to obtain capital from alternate sources to finance our capital needs. Our options for
addressing such capital constraints would include, but not be limited to (i) obtaining commitments from the remaining banks in
the lending group or from new banks to fund increased amounts under the terms of our credit facility, or (ii) accessing the
public capital markets. If it becomes necessary to access additional capital, it is possible that any such alternatives in the
current market could be on terms less favorable than under our existing credit facility terms, which could have a negative
impact on our consolidated financial position, results of operations or cash flows.
Some of our customers rely on financing with third parties to purchase our products.
We rely on sales of our products to generate cash from operations. Significant portions of our sales are financed by third-party
finance companies on behalf of our customers. The availability of financing by third parties is affected by general economic
conditions, credit worthiness of our customers and estimated residual value of our equipment. Deterioration in credit quality of
our customers or estimated residual value of our equipment could negatively impact the ability of our customers to obtain
resources they need to purchase our equipment. There can be no assurance third-party finance companies will continue to
extend credit to our customers.
Some of our customers have been unable to obtain the credit they need to buy our equipment. As a result, some of our
customers may need to cancel existing orders and some may be compelled to sell their equipment at less than fair value to raise
cash, which could have a negative impact on residual values of our equipment. These economic conditions could have a
material adverse effect on demand for our products and on our financial condition and operating results.
We are exposed to losses from providing credit support to some of our customers.
We may assist customers in their rental, leasing and acquisition of our products by facilitating financing transactions directly
between (i) end-user customers, distributors and rental companies and (ii) third-party financial institutions, providing recourse
in certain circumstances. The expectation of losses or non-performance is assessed based on consideration of historical
customer assessments, current financial conditions, reasonable and supportable forecasts, equipment collateral value and other
factors. Many of these factors, including the assessment of a customer’s ability to pay, are influenced by economic and market
factors that cannot be predicted with certainty. Our maximum liability is generally limited to our customer’s remaining
payments due to the third-party financial institutions at the time of default. In the event of a customer default, we are generally
able to recover and dispose of the equipment at a minimum loss, if any, to us.
During periods of economic weakness, collateral underlying our guarantees of indebtedness of customers can decline sharply,
thereby increasing our exposure to losses. In the future, we may incur losses in excess of our recorded reserves if the financial
condition of our customers were to deteriorate further or the full amount of any anticipated proceeds from the sale of the
collateral supporting our customers’ financial obligations is not realized. Historically, losses related to guarantees have been
immaterial; however, there can be no assurance that our historical experience with respect to guarantees will be indicative of
future results.
We may experience losses in excess of our recorded reserves for receivables.
We evaluate the collectability of our receivables based on consideration of a customer’s payment history, leverage, availability
of third-party financing, political and foreign exchange risks, and other factors. Recorded reserves represent our estimate of
current expected credit losses on existing receivables and are determined based on historical customer assessments, current
financial conditions, and reasonable and supportable forecasts. An unexpected change in customer financial condition or future
economic uncertainty could result in additional requirements for specific reserves, which could have a negative impact on our
consolidated financial position.
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We are subject to currency fluctuations.
Our products are sold in over 100 countries around the world. The reporting currency for our consolidated financial statements
is the U.S. dollar. Certain of our assets, liabilities, expenses, revenues and earnings are denominated in other countries’
currencies, including the Euro, British Pound, Chinese Yuan, Australian Dollar and Mexican Peso. Those assets, liabilities,
expenses, revenues and earnings are translated into U.S. dollars at the applicable foreign exchange rates to prepare our
consolidated financial statements. Therefore, increases or decreases in foreign exchange rates between the U.S. dollar and those
other currencies affect the value of those items as reflected in our consolidated financial statements, even if their value remains
unchanged in their original currency. Due to continued volatility of foreign exchange rates to the U.S. dollar, fluctuations in
foreign exchange rates may have an impact on the accuracy of our financial guidance. Such fluctuations in foreign exchange
rates relative to the U.S. dollar may cause our actual results to differ materially from those anticipated in our guidance and have
a material adverse effect on our business or results of operations. We assess foreign currency risk based on transactional cash
flows, identify naturally offsetting positions and purchase hedging instruments to partially offset anticipated exposures. Despite
our efforts to partially hedge our anticipated exposures, currency fluctuations may impact our financial performance in the
future.
Human Capital Risks
We rely on key management and skilled labor, and we may be unable to attract and retain qualified team members.
We rely on the management and leadership skills of our senior management team, particularly those of the Chief Executive
Officer. The loss of the services of key employees or senior officers, or the inability to identify, hire and retain other highly
qualified personnel in the future, could adversely affect the quality and profitability of our business operations.
Our ability to expand or maintain our business depends on our ability to hire, train and retain team members with the skills
necessary to understand and adapt to the continuously developing needs of our customers. Efforts to attract talent to fill open
roles in light of recent constrained labor availability may take more time than in the past and may cost us significantly more
than in recent years. Moreover, the constrained labor conditions may mean that retention of existing talent may require
significant additional pay and incentives. If we fail to attract, motivate, train and retain qualified personnel, or if we experience
excessive turnover, we may experience declining sales, manufacturing delays or other inefficiencies, increased recruiting,
training and relocation costs and other difficulties, and our business, financial condition, results of operations and cash flows
could be materially and adversely affected. Competition for qualified personnel is intense and we may not be successful in
attracting or retaining qualified personnel, which could negatively impact our business.
We may be adversely impacted by work stoppages and other labor matters.
As of December 31, 2021, we employed approximately 8,600 people worldwide. While we have no reason to believe that we
will be impacted by work stoppages or other labor matters, we cannot assure that future issues with our team members or labor
unions will be resolved favorably or that we will not encounter future strikes, further unionization efforts or other types of
conflicts with labor unions or our team members. Any of these factors may have an adverse effect on us or may limit our
flexibility in dealing with our workforce.
Legal, Regulatory & Compliance Risks
Changes in import/export regulatory regimes, imposition of tariffs, escalation of global trade conflicts and unfairly traded
imports, particularly from China, could continue to negatively impact our business.
The U.S. government has imposed tariffs on certain foreign goods from a variety of countries and regions that it perceives as
engaging in unfair trade practices, and previously raised the possibility of imposing additional tariff increases or expanding the
tariffs to capture other types of goods. In response, many of these foreign governments have imposed retaliatory tariffs on
goods that their countries import from the U.S. Changes in U.S. trade policy have and may continue to result in one or more
foreign governments adopting responsive trade policies that make it more difficult or costly for us to do business in or import
our products from those countries. For example, tariffs on certain Chinese origin goods impact the cost of material and
machines we import directly from our manufacturing operations in China, as well as the cost of material and components
imported on our behalf by suppliers. The indirect impact of inflationary pressure on costs throughout the supply chain and the
direct impact, for example, on costs for machines we import from our manufacturing operations in China, is leading to higher
input costs and lower margins on certain products we sell. In addition, tariffs imposed by the Chinese government on U.S.
imports have made the cost of some of our products more expensive for our Chinese customers.
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We cannot predict the extent to which the U.S. or other countries will impose new or additional quotas, duties, tariffs, taxes or
other similar restrictions upon the import or export of our products in the future, nor can we predict future trade policy or the
terms of any renegotiated trade agreements and their impact on our business. Tariffs and the possibility of an escalation or
further developments of current trade conflicts, particularly between the U.S. and China, could continue to negatively impact
global trade and economic conditions in many of the regions where we do business. This could result in continued significant
increases in our material and component costs and the cost of machinery imported directly from our manufacturing operations
in China. In addition, it may adversely impact demand for our products in China and elsewhere.
While we have been able to mitigate a portion of the effects of tariffs through the U.S. government’s duty draw-back
mechanism and from tariff exclusions, all tariff exclusions have expired. There is potential that some tariff exclusions may be
reinstated, although this is uncertain. If we are unable to recover a substantial portion of increased costs from our customers
and suppliers or through duty draw-back, our business or results of operations could be adversely affected.
The Coalition of American Manufacturers of Mobile Access Equipment, an alliance of mobile access equipment producers in
the U.S. of which we are a member, is pursuing anti-dumping and countervailing cases against unfairly traded Chinese imports
of mobile access equipment. While the U.S. Department of Commerce has issued in 2021 a countervailing and preliminary
anti-dumping duty rate on mobile access equipment from China, these duties may not be enough to offset the subsidies
provided by the Chinese government to Chinese mobile access equipment manufacturers. If additional duties are not imposed
on imports of Chinese mobile access equipment and/or the duties are not finalized through affirmative final determinations, we
may continue to operate at a disadvantage to Chinese manufacturers. This could result in reduced demand for our products in
the U.S. and have an adverse effect on our business or results of operations.
Compliance with environmental regulations could be costly and require us to make significant expenditures.
We generate hazardous and nonhazardous wastes in the normal course of our manufacturing operations. As a result, we are
subject to a wide range of environmental laws and regulations. These laws and regulations govern actions that may have
adverse environmental effects and require compliance with certain practices when handling and disposing of hazardous and
nonhazardous wastes. Some environmental laws impose strict, retroactive and joint and several liability for the remediation of
the release of hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault.
Failure to comply with environmental laws could expose us to substantial fines or penalties and to civil and criminal liability.
These liabilities, sanctions, damages and remediation efforts related to any non-compliance with such laws and regulations
could have a material adverse effect on our business or results of operations. No such incidents have occurred which required
us to pay material amounts to comply with such laws and regulations.
In addition, increasing laws and regulations dealing with environmental aspects of the products we manufacture can result in
significant expenditures in designing and manufacturing new forms of equipment that satisfy such new laws and regulations. In
particular, climate change is receiving increasing attention worldwide. Many scientists, legislators and others attribute climate
change to increased levels of greenhouse gases, including carbon dioxide, which has led to significant legislative and regulatory
efforts to limit greenhouse gas emissions. While additional regulation of emissions in the future appears likely, it is too early to
predict how new regulations would ultimately affect our business, operations or financial results, although government policies
limiting greenhouse gas emissions of our products will likely require increased compliance expenditures on our part.
There is also increased focus, including by governmental and non-governmental organizations, investors and other
stakeholders, on these and other sustainability matters. Maintaining a strong reputation with customers, investors, stakeholders
and trade partners is critical to the success of our business. We devote significant time and resources to programs that are
consistent with our corporate values and are designed to protect and preserve our reputation as a good corporate citizen. Any
perception (whether or not valid) of our failure to act responsibly with respect to the environment or to effectively respond to
new, or changes in, legal or regulatory requirements concerning climate change or other sustainability concerns could adversely
affect our business and reputation.
We face litigation and product liability claims and other liabilities.
In our lines of business, numerous suits have been filed alleging damages for accidents that have occurred during use or
operation of our products. We are self-insured, up to certain limits, for these product liability exposures, as well as for certain
exposures related to general, workers’ compensation and automobile liability. We obtain insurance coverage for catastrophic
losses as well as those risks where insurance is required by law or contract. We do not believe that the outcome of such matters
will have a material adverse effect on our consolidated financial position; however, any significant liabilities not covered by
insurance could have an adverse effect on our financial condition.
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We operate in many different jurisdictions and we could be adversely affected by violations of the U.S. Foreign Corrupt
Practices Act and similar worldwide anti-corruption laws.
We must comply with all applicable laws, including the Foreign Corrupt Practices Act and other laws that prohibit engaging in
corruption for the purpose of obtaining or retaining business. These anti-corruption laws prohibit companies and their
intermediaries from making improper payments or providing anything of value to improperly influence government officials or
private individuals for the purpose of obtaining or retaining a business advantage regardless of whether those practices are legal
or culturally expected in a particular jurisdiction. Our global activities and distribution model are subject to risk of corruption
by our employees and in addition, our sales agents, distributors, dealers and other third parties that transact Terex business
particularly because these parties are generally not subject to our control. We have an internal policy that expressly prohibits
engaging in any commercial bribery and public corruption, including facilitation payments. We conduct corruption risk
assessments, have implemented training programs for our employees with respect to the Company’s prohibition against public
corruption and commercial bribery, and perform reputational due diligence on certain third parties that transact Terex business.
In addition, we conduct transaction testing to assess compliance with our internal anti-corruption policy and procedures.
However, we cannot assure you that our policies, procedures and programs always will protect us from reckless or criminal acts
committed by our employees or third parties that transact Terex business. We have a zero tolerance policy for violations of
anti-corruption laws and our anti-corruption policy. In the event we believe or have reason to believe our employees, agents,
representatives, dealers or distributors or other third parties that transact Terex business have or may have violated our anti-
corruption policy or applicable anti-corruption laws, we investigate or have outside counsel investigate relevant facts and
circumstances. Although we have a compliance program in place designed to reduce the likelihood of potential violations of
such laws, violations of anti-corruption laws could result in significant fines, criminal sanctions against us or our employees,
prohibitions on the conduct of our business including our business with the U.S. government, an adverse effect on our
reputation, business and results of operations and financial condition and a violation of our injunction or cease and desist order
with the SEC. See Risk Factor entitled, “We must comply with an injunction and related obligations imposed by the SEC.”
Increasing regulatory focus on privacy and data security issues and expanding laws could expose us to increased liability.
The legislative and regulatory framework for privacy and data protection issues worldwide is also rapidly evolving and is likely
to remain uncertain for the foreseeable future. We collect and transfer personal data as part of our business processes and
activities. This data is subject to a variety of U.S., E.U. and other international laws and regulations, including oversight by
various regulatory or other governmental bodies. Any inability, or perceived inability, to adequately address privacy and data
protection concerns, even if unfounded, or to comply with applicable laws, regulations, policies, industry standards, contractual
obligations, or other legal obligations (including at newly acquired companies) could result in additional cost and liability to us
or company officials, damage our reputation, inhibit sales, and otherwise adversely affect our business.
We must comply with an injunction and related obligations imposed by the SEC.
We and our directors, officers and employees are required to comply at all times with the terms of a 2009 settlement with the
SEC that includes an injunction barring us from committing or aiding and abetting any future violations of the anti-fraud, books
and records, reporting and internal control provisions of the federal securities laws and related SEC rules. In addition,
regarding a separate and unrelated SEC matter, we consented to the entry of an administrative cease and desist order prohibiting
future violations of certain provisions of the federal securities laws. As a result, if we commit or aid or abet any future
violations of the anti-fraud, books and records, reporting and internal control provisions of the federal securities laws and
related SEC rules, we are likely to suffer severe penalties, financial and otherwise, that could have a material negative impact
on our business and results of operations.
Strategic Performance Risks
The timing and amount of benefits from our strategic initiatives may not be as expected and our financial results could be
adversely impacted.
Each business in our Company is unique, but all businesses are managed to the “Execute, Innovate, Grow” operating
framework. This is part of our continuing strategy to deliver long-term growth and earnings to our shareholders. We have
made, and continue to make, significant investments in these strategic initiatives. However, we cannot provide any assurance
that we will be able to realize the full anticipated benefits of these initiatives. Although “Execute, Innovate, Grow” is expected
to improve future operating margins and revenue growth, if we are unable to achieve expected benefits from these initiatives or
are unable to complete them without material disruption to our businesses, the timing and amount of benefits may not be as
expected and could adversely impact the Company’s competitive position, financial condition, profitability and/or cash flows.
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Information Technology Risks
We may be adversely affected by disruption in, or breach in security of, our information technology systems.
We rely on information technology systems, some of which are managed by third parties, to process, transmit and store
electronic information (including sensitive data such as confidential business information and personally identifiable data
relating to employees, customers and other business partners), and to manage or support a variety of critical business processes
and activities. As technology continues to evolve, we anticipate that we will collect and store even more data in the future and
that our systems will increasingly use remote communication. We continuously seek to maintain a robust program of
information security and controls, but these systems may be damaged, disrupted or shut down due to attacks by computer
hackers, computer viruses, employee error or malfeasance, power outages, hardware failures, telecommunication or utility
failures, catastrophes or other unforeseen events, and in any such circumstances our system redundancy and other disaster
recovery planning may be ineffective or inadequate. A failure of or breach in information technology security, particularly
through malicious cyber-attacks which are increasing in both frequency and sophistication by both state and non-state actors,
could expose us and our customers, distributors and suppliers to risks of misuse of information or systems, the compromise of
confidential information, manipulation and destruction of data, defective products, production downtimes and operations
disruptions. In addition, such breaches in security could result in misstated financial information, regulatory action, fines and
litigation, and other potential liabilities, as well as the costs and operational consequences of implementing further data
protection measures, each of which could have a material adverse effect on our business or results of operations.
The current cyber threat environment indicates increased risk for all companies. In addition, we could be impacted by cyber
threats, disruptions or vulnerabilities of our customers and suppliers. Like other global companies, we have experienced cyber
threats and incidents in our systems and those of our third-party providers, and we have experienced viruses and attacks
targeting our information technology systems and networks, although none have had a material adverse effect on our business
or financial condition. Our information security efforts include programs designed to address security governance,
identification and protection of critical assets, insider risk, third-party risk and cyber defense operations. While these measures
are designed to reduce the risk of a breach or failure of our information technology systems, no security measures or
countermeasures can guarantee that the Company will not experience a significant information security incident in the future.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
Not applicable.
24
ITEM 2.
PROPERTIES
As of December 31, 2021, our principal manufacturing, warehouse, service and office facilities comprised a total of
approximately 7 million square feet of space worldwide. The following table outlines the principal manufacturing, warehouse,
service and office facilities owned or leased (as indicated below) by the Company and its subsidiaries in relation to our
continuing businesses:
BUSINESS SEGMENT
FACILITY LOCATION
BUSINESS SEGMENT
FACILITY LOCATION
Corporate/Other
Multiple Business
Segments
AWP
Norwalk, Connecticut (1)
Schaffhausen, Switzerland (1)
MP
Louisville, Kentucky
Durand, Michigan
Southaven, Mississippi (1)
Oklahoma City, Oklahoma
Moses Lake, Washington (1)
North Bend, Washington (1)
Redmond, Washington (1)
Bothell, Washington (1)
Changzhou, China
Umbertide, Italy
Darra, Australia (1)
Watertown, South Dakota
Huron, South Dakota
Monterrey, Mexico
Coalville, England
Hosur, India
Subang Jaya, Malaysia (1)
Ballymoney, Northern Ireland
Campsie, Northern Ireland
Dungannon, Northern Ireland (1)
Omagh, Northern Ireland (1)
Newton, New Hampshire
Canton, South Dakota
Fort Wayne, Indiana
Bad Schönborn, Germany
Brisbane, Australia (1)
Crespellano, Italy
Fontanafredda, Italy
Monaghan, Republic of Ireland
Jiading, China
(1) These facilities are either partially or fully leased or subleased.
We also have numerous owned or leased locations for new machine and parts sales, distribution and service located worldwide.
We believe the properties listed above are suitable and adequate for our use. From time to time, we may determine that certain
of our properties exceed our requirements. Such properties may be sold, leased or utilized in another manner.
ITEM 3.
LEGAL PROCEEDINGS
We are involved in various legal proceedings, including product liability, general liability, workers’ compensation liability,
employment, commercial and intellectual property litigation, which have arisen in the normal course of operations. We are
insured for product liability, general liability, workers’ compensation, employer’s liability, property damage and other insurable
risks required by law or contract with retained liability to us or deductibles. We believe the outcome of such matters,
individually and in aggregate, will not have a material adverse effect on our consolidated financial statements. However,
outcomes of lawsuits cannot be predicted and, if determined adversely, could ultimately result in us incurring significant
liabilities which could have a material adverse effect on our results of operations.
For information regarding litigation and other contingencies and uncertainties, including our proceedings involving a claim in
Brazil regarding payment of ICMS tax (Brazilian state value-added tax), see Note N – “Litigation and Contingencies,” in the
Notes to Consolidated Financial Statements.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
25
PART II
ITEM 5.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our Common Stock is listed on the New York Stock Exchange under the symbol TEX. Certain of our debt agreements contain
restrictions as to the payment of cash dividends to stockholders. In addition, Delaware law limits payment of dividends. In
February 2022, Terex’s Board of Directors declared a dividend of $0.13 per share, which will be paid to our shareholders on
March 21, 2022. Any additional payments of dividends will depend upon our financial condition, capital requirements and
earnings, as well as other factors that the Board of Directors may deem relevant.
As of February 8, 2022, there were 538 stockholders of record of our Common Stock.
Performance Graph
The following stock performance graph is intended to show our stock performance compared with that of comparable
companies. The stock performance graph shows the change in market value of $100 invested in our Common Stock, the
Standard & Poor’s 500 Stock Index and the Peer Group (as defined below) for the period commencing December 31, 2016
through December 31, 2021. The cumulative total stockholder return assumes dividends are reinvested. The stockholder return
shown on the graph below is not indicative of future performance. The companies in the Peer Group are weighted by market
capitalization.
The Peer Group consists of the following companies that are in our same industry, of comparable revenue size to us and/or
other manufacturing companies: AGCO Corporation, Carlisle Companies Inc., Crane Company, Dana Incorporated, Dover
Corporation, Flowserve Corporation, Hubbell Inc., Lennox International Inc., The Manitowoc Company, Inc., Meritor Inc.,
Oshkosh Corporation, Pentair Ltd., Rockwell Automation, Inc., Roper Technologies Inc., Timken Company, Trinity Industries
Inc. and Westinghouse Air Brake Technologies Corporation.
26
Terex Corporation
S&P 500
Peer Group
12/16
100.00
100.00
100.00
12/17
154.28
121.83
131.59
12/18
89.15
116.49
112.18
12/19
97.78
153.17
153.68
12/20
115.25
181.35
173.42
12/21
146.60
233.41
220.65
Copyright© 2022 Standard & Poor's, a division of S&P Global. All rights reserved.
Purchases of Equity Securities
The following table provides information about our purchases during the quarter ended December 31, 2021 of our Common
Stock that is registered by us pursuant to the Exchange Act.
Issuer Purchases of Equity Securities
Period
October 1, 2021 – October 31, 2021
November 1, 2021 – November 30, 2021
December 1, 2021 – December 31, 2021
Total
Total Number of
Shares Purchased (1)
1,466
976
31,423
33,865
Average Price Paid
per Share
$43.64
$45.98
$41.44
$41.67
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (2)
—
—
28,688
28,688
Approximate
Dollar Value of
Shares that May
Yet be Purchased
Under the Plans or
Programs (in
thousands) (2)
$140,517
$140,517
$139,334
$139,334
(1) Amount includes shares of Common Stock purchased to satisfy requirements under the Company’s deferred compensation obligations to employees.
(2) In July 2018, our Board of Directors authorized and the Company publicly announced the repurchase of up to an additional $300 million of the Company’s
outstanding common shares.
ITEM 6.
RESERVED
27
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
BUSINESS DESCRIPTION
Terex is a global manufacturer of aerial work platforms and materials processing machinery. We design, build and support
products used in construction, maintenance, manufacturing, energy, minerals and materials management applications. Terex
products and solutions enable customers to reduce their environmental impact including electric and hybrid offerings that
deliver quiet and emission-free performance, products that support renewable energy, and products that aid in the recovery of
useful materials from various types of waste. Our products are manufactured in North America, Europe, Australia and Asia and
sold worldwide. We engage with customers through all stages of the product life cycle, from initial specification and financing
to parts and service support. We report our business in the following segments: (i) AWP and (ii) MP.
Further information about our reportable segments appears below and in Note B – “Business Segment Information” in the
Notes to Consolidated Financial Statements.
Non-GAAP Measures
In this document, we refer to various GAAP (U.S. generally accepted accounting principles) and non-GAAP financial
measures. These non-GAAP measures may not be comparable to similarly titled measures disclosed by other companies. We
present non-GAAP financial measures in reporting our financial results to provide investors with additional analytical tools
which we believe are useful in evaluating our operating results and the ongoing performance of our underlying businesses. We
do not, nor do we suggest that investors consider such non-GAAP financial measures in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP.
Non-GAAP measures we may use include translation effect of foreign currency exchange rate changes on net sales, gross
profit, SG&A costs and operating profit, as well as the net sales, gross profit, SG&A costs and operating profit excluding the
impact of acquisitions and divestitures.
As changes in foreign currency exchange rates have a non-operating impact on our financial results, we believe excluding
effects of these changes assists in assessment of our business results between periods. We calculate the translation effect of
foreign currency exchange rate changes by translating current period results using rates that the comparable prior periods were
translated at to isolate the foreign exchange component of fluctuation from the operational component. Similarly, impact of
changes in our results from acquisitions and divestitures not included in comparable prior periods may be subtracted from the
absolute change in results to allow for better comparability of results between periods.
We calculate a non-GAAP measure of free cash flow. We define free cash flow as Net cash provided by (used in) operating
activities, plus (minus) increases (decreases) in TFS finance receivables consisting of sales-type leases and commercial loans
(“TFS Assets”), less Capital expenditures, net of proceeds from sale of capital assets. We believe this measure of free cash
flow provides management and investors further useful information on cash generation or use in our primary operations.
We discuss forward-looking information related to expected earnings per share (“EPS”) excluding the impact of potential future
acquisitions, divestitures, restructuring and other unusual items. Our 2022 outlook for earnings per share is a non-GAAP
financial measure because it excludes unusual items. The Company is not able to reconcile these forward-looking non-GAAP
financial measures to their most directly comparable forward-looking GAAP financial measures without unreasonable efforts
because the Company is unable to predict with a reasonable degree of certainty the exact timing and impact of such items. The
unavailable information could have a significant impact on the Company’s full year 2022 GAAP financial results. This
forward-looking information provides guidance to investors about our EPS expectations excluding these unusual items that we
do not believe are reflective of our ongoing operations.
Working capital is calculated using the Consolidated Balance Sheet amounts for Trade receivables (net of allowance) plus
Inventories, less Trade accounts payable and Customer advances. We view excessive working capital as an inefficient use of
resources, and seek to minimize the level of investment without adversely impacting ongoing operations of the business.
Trailing three months annualized net sales is calculated using net sales for the most recent quarter end multiplied by four. The
ratio calculated by dividing working capital by trailing three months annualized net sales is a non-GAAP measure we believe
measures our resource use efficiency.
28
Non-GAAP measures we also use include Net Operating Profit After Tax (“NOPAT”) as adjusted, Income (loss) from
operations as adjusted, cash and cash equivalents as adjusted and Stockholders’ equity as adjusted, which are used in the
calculation of our after tax return on invested capital (“ROIC”) (collectively the “Non-GAAP Measures”), which are discussed
in detail below.
Overview
Safety remains our top priority; driven by Think Safe – Work Safe – Home Safe. All Terex team members contributed to our
effort of continuing to provide products and services for our customers, while maintaining a safe working environment.
Our strategic operational priorities of execution, innovation, and growth continue to make excellent progress and strengthened
our business operations in 2021. We proactively managed supply chain disruptions and aggressively managed SG&A costs.
We also improved Genie’s future cost competitiveness as our temporary Mexico facility is now producing telehandlers and
continues to ramp-up.
We also continue to innovate so our products and services offer the features and benefits that provide value to our customers.
We introduced new products including environmental and recycling solutions in MP, new electric offerings in Genie, and
electric grid maintenance products in Utilities. We also continued to invest in connected assets and digital capabilities, such as
customer dealer integration and telematics across the enterprise to better serve customers.
Organic and inorganic growth continues to be a focus. In 2021, we expanded production capabilities of mobile crushing and
screening equipment in China and Northern Ireland, completed a bolt-on acquisition, purchasing a heavy duty trommels
business that broadens our product offerings, and continued expansion of service facilities for our Utilities customers.
Our performance in 2021 reflected strong improvement in the business and good execution by our team members in a dynamic
and challenging environment. Net sales of $3.9 billion were up 26% year-over-year as end-markets recovered. SG&A
spending was $42 million lower year-over-year at 11% of net sales, beating our 12.5% target. Operating margin of 8.4%
expanded 620 basis points due to higher sales and strict expense discipline. This led to earnings per share (“EPS”) increasing
significantly from $0.13 in 2020 to $3.07 in 2021.
Overall, 2021 demonstrated the resilience of our businesses and team members to deliver improving results throughout the year
against a challenging backdrop. Like most other industrial companies, we faced shortages and cost pressures from materials,
logistics, freight and labor. These headwinds became more pronounced as the year developed, particularly in the fourth quarter,
and have constrained our growth in the short-term. We took pricing actions, but they were not sufficient to offset significant
material and logistics inflation in the back half of 2021.
Our AWP segment’s 2021 net sales were up 22% from the prior year driven by continued strong demand in all our global
markets. For our Genie business globally, rental rates are improving, used equipment pricing is strong and fleet utilization
remains robust which are all positive signs of a strengthening aerials rental industry. We are also continuing to see positive
indicators for non-residential investment. The utilities market also improved significantly with demand strong across its end-
markets of tree care, rental and investor-owned utilities. We are also experiencing strong growth in our Utilities parts and
services business. AWP delivered significantly improved operating margins in the year, driven by increased production and
aggressively managing all costs. This improvement was despite the current global supply chain dynamics which impacted our
operations in AWP in the second half of the year through reduced efficiency in our manufacturing facilities as well as higher
material, logistics and labor costs. We expect end market demand to remain strong into 2022 as demonstrated by AWP’s
backlog, which is up 137% compared to the prior year. As a result, we anticipate net sales between $2.3 billion and $2.4 billion
and an operating margin between 7.8% and 8.5% in 2022. We expect significantly higher input costs peaking in the first
quarter with pricing realization improving through the year.
Our MP segment’s 2021 net sales were up 35% from the prior year driven by strong customer sentiment across all end-markets
and geographies. MP has been aggressively managing all elements of cost as end-markets improve resulting in a 14% operating
margin for the year. We expect global demand for crushing and screening equipment to continue to grow. Broad-based
economic growth, construction activity and aggregates consumption are the primary market drivers. We are also seeing strong
markets for the concrete mixer truck, material handling and environmental businesses. Customer sentiment continues to
improve and we are encouraged by MP’s backlog, which is up 98% compared to the prior year period. As a result, we
anticipate net sales between $1.8 billion and $1.9 billion and an operating margin between 14.0% and 14.5% in 2022, although
we expect the first quarter will be challenged by supply constraints.
29
In 2021, our largest market remained North America, which represented approximately 55% of our global sales. As compared
to the prior year period, our sales were up double digits in every major geography.
Throughout 2021, our team members remained vigilant and aggressively managed all costs generating $125 million of free cash
flow in the year. As of December 31, 2021, we had $867 million in available liquidity, with no near-term debt maturities. Our
strong liquidity position and cash generation allowed us to repay $503 million of debt in 2021. We also continued to invest in
the business in 2021 with $60 million of capital expenditures across our businesses. We believe we have ample liquidity to
meet our business plans. See “Liquidity and Capital Resources” for a detailed description of liquidity and working capital
levels, including the primary factors affecting such levels, as well as a reconciliation of net cash provided by (used in) operating
activities to free cash flow.
Customer demand remains strong for our products and services. However, we are operating in a very challenging supply chain
and logistics environment along with the continued impacts of a pandemic, so our results could change negatively or positively.
See Part I, Item 1A. – “Risk Factors” for a detailed description of the risks associated with supply chain disruptions and
COVID-19. As a result, we currently expect 2022 EPS to be between $3.55 and $4.05, on net sales between $4.1 billion and
$4.3 billion. Our outlook assumes pricing actions along with manufacturing efficiencies will offset cost pressures and that
supply chain headwinds will abate in the second half of the year.
30
ROIC
ROIC and other Non-GAAP Measures (as calculated below) assist in showing how effectively we utilize capital invested in our
operations. ROIC is determined by dividing the sum of NOPAT for each of the previous four quarters by the average of Debt
less Cash and cash equivalents plus Stockholders’ equity for the previous five quarters. NOPAT for each quarter is calculated
by multiplying Income (loss) from operations by one minus the full year 2021 effective tax rate (“Effective Tax Rate”).
In the calculation of ROIC, we adjust Income (loss) from operations and Stockholders’ equity to remove the effects of the
impact of certain transactions in order to create a measure that is useful to understanding our operating results and the ongoing
performance of our underlying business without the impact of unusual items as shown in the tables below. Cash and cash
equivalents is adjusted to include amounts recorded as held for sale.
Furthermore, we believe return on capital deployed in TFS do not represent our primary operations and, therefore, TFS Assets
and results from operations have been excluded from the Non-GAAP Measures. Debt is calculated using amounts for Current
portion of long-term debt plus Long-term debt, less current portion. We calculate ROIC using the last four quarters’ adjusted
NOPAT as this represents the most recent 12-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, we include 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 Board of Directors use ROIC as one measure to assess operational performance, including in
connection with certain compensation programs. We use ROIC as a metric because we believe it measures how effectively we
invest our capital and provides a better measure to compare ourselves to peer companies to assist in assessing how we drive
operational improvement. We believe ROIC measures return on the amount of capital invested in our primary businesses,
excluding TFS, as opposed to another metric such as return on stockholders’ equity that only incorporates book equity, and is
thus a more accurate and descriptive measure of our performance. We also believe adding Debt less Cash and cash equivalents
to Stockholders’ equity provides a better comparison across similar businesses regarding total capitalization, and ROIC
highlights the level of value creation as a percentage of capital invested. As the tables below show, our ROIC at December 31,
2021 was 19.0%.
Amounts described below are reported in millions of U.S. dollars, except for the Effective Tax Rate. Amounts are as of and for
the three months ended for the periods referenced in the tables below.
Dec '21
Sep '21
Jun '21
Mar '21
Dec '20
Effective Tax Rate
17.6 %
17.6 %
17.6 %
17.6 %
Income (loss) from operations as adjusted
$
70.0
$
74.9
$ 117.3
$
55.4
Multiplied by: 1 minus Effective Tax Rate
82.4 %
82.4 %
82.4 %
82.4 %
Adjusted net operating income (loss) after tax
$
57.7
$
61.7
$
96.7
$
45.6
Debt
$ 674.1
$ 893.4
$ 894.2
$ 979.2
$
1,173.8
Less: Cash and cash equivalents as adjusted
(266.9)
(558.2)
(547.5)
(577.8)
(670.1)
407.2
1,097.0
335.2
1,037.5
346.7
1,015.5
401.4
918.9
503.7
806.8
$ 1,504.2
$ 1,372.7
$ 1,362.2
$ 1,320.3
$
1,310.5
19.0 %
261.7
1,374.0
$
$
Debt less Cash and cash equivalents as adjusted
Stockholders’ equity as adjusted
Debt less Cash and cash equivalents plus
Stockholders’ equity as adjusted
December 31, 2021 ROIC
NOPAT as adjusted (last 4 quarters)
Average Debt less Cash and cash equivalents plus Stockholders’
equity, as adjusted (5 quarters)
31
Reconciliation of income (loss) from operations:
Income (loss) from operations as reported
Adjustments:
(Income) loss from TFS
Income (loss) from operations as adjusted
Reconciliation of Cash and cash equivalents:
Cash and cash equivalents - continuing operations
Cash and cash equivalents - assets held for sale
Cash and cash equivalents as adjusted
Reconciliation of Stockholders’ equity:
Stockholders’ equity as reported
TFS Assets
Effects of adjustments, net of tax:
(Income) loss from TFS
Stockholders’ equity as adjusted
Three
months
ended
12/31/21
Three
months
ended
9/30/21
Three
months
ended
6/30/21
Three
months
ended
3/31/21
$
69.8 $
74.2 $
122.5 $
61.5
0.2
70.0 $
0.7
74.9 $
(5.2)
117.3 $
(6.1)
55.4
As of
12/31/21
As of
9/30/21
As of
6/30/21
As of
3/31/21
As of
12/31/20
266.9 $
553.2 $
542.2 $
572.9 $
—
266.9 $
5.0
558.2 $
5.3
547.5 $
4.9
577.8 $
665.0
5.1
670.1
$
$
$
$
1,109.6 $
1,050.7 $
1,033.9 $
946.1 $
921.5
(3.3)
(3.7)
(8.3)
(21.4)
(113.9)
(9.3)
(9.5)
(10.1)
(5.8)
(0.8)
$
1,097.0 $
1,037.5 $
1,015.5 $
918.9 $
806.8
32
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes
included in Exhibit 15 (a) (1) and (2) Financial Statements and Financial Statement Schedules of this Annual Report on Form
10-K. This section of our Annual Report on Form 10-K generally discusses 2021 and 2020 and provides a year-over-year
comparison of 2021 and 2020. Discussions of 2019 and year-over-year comparison of 2020 and 2019 are not included in this
document and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in
Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020.
Consolidated
2021
2020
2019
% of
Sales
% of
Sales
% Change in
Reported Amounts
2021 vs 2020
% of
Sales
—
Net sales
Gross profit
SG&A
Income (loss) from operations
$ 3,886.8
757.4
429.4
328.0
—
($ amounts in millions)
$ 3,076.4
539.3
470.9
68.4
17.5 %
15.3 %
2.2 %
19.5 %
11.0 %
8.4 %
$ 4,353.1
887.8
552.8
335.0
—
20.4 %
12.7 %
7.7 %
26.3 %
40.4 %
(8.8) %
379.5 %
Net sales for the year ended December 31, 2021 increased $810.4 million when compared to 2020. The increase in net sales
was primarily due to higher demand for aerial work platforms, materials processing equipment, material handlers, concrete
mixer trucks, cranes and utility equipment. Changes in foreign exchange rates positively impacted consolidated net sales by
approximately $95 million. Customer sentiment in both segments continues to improve as equipment is being utilized and
ordered as end-market demand strengthens.
Gross profit for the year ended December 31, 2021 increased $218.1 million when compared to 2020. The increase was
primarily due to higher sales volume, improved manufacturing efficiency, price realization and the positive impact of changes
in foreign exchange rates, partially offset by material, labor and freight cost inflation due to disruptions in the supply chain and
labor availability constraints.
SG&A costs for the year ended December 31, 2021 decreased $41.5 million when compared to 2020. The decrease was
primarily due to cost management actions taken across all areas of our business, including right-sizing our workforce and
reduced discretionary spending, partially offset by the negative impact of changes in foreign exchange rates.
Income from operations increased by $259.6 million for the year ended December 31, 2021 when compared to 2020. The
increase was primarily due to higher sales volume, SG&A cost management, improved manufacturing efficiency, price
realization and the positive impact of changes in foreign exchange rates, partially offset by increases in material, labor and
freight costs.
33
Aerial Work Platforms
2021
2020
2019
% of
Sales
—
% of
Sales
% of
Sales
% Change in
Reported Amounts
2021 vs 2020
($ amounts in millions)
$ 1,782.9
0.5
—
— %
7.0 %
$ 2,726.6
196.2
—
7.2 %
22.2 %
*
Net sales
Income from operations
$ 2,178.8
152.1
* Not a meaningful percentage
Net sales for the AWP segment for the year ended December 31, 2021 increased $395.9 million when compared to 2020
primarily due to higher demand driven by fleet replacement and end-market growth for aerial work platforms in North America,
Western Europe and China. Net sales were positively impacted by the effects of foreign exchange rate changes of
approximately $42 million.
Income from operations for the year ended December 31, 2021 increased $151.6 million when compared to 2020 primarily due
to higher sales volume, improved manufacturing efficiency, price realization, SG&A cost management and the positive effects
of foreign exchange rate changes, partially offset by material, labor and freight cost inflation due to disruptions in the supply
chain and labor availability constraints.
Materials Processing
2021
2020
2019
% of
Sales
% of
Sales
% Change in
Reported Amounts
2021 vs 2020
% of
Sales
—
Net sales
Income from operations
$ 1,691.8
240.9
14.2 %
$ 1,602.6
227.9
—
14.2 %
34.6 %
68.0 %
($ amounts in millions)
$ 1,256.8
143.4
—
11.4 %
Net sales for the MP segment increased by $435.0 million for the year ended December 31, 2021 when compared to 2020
primarily due to robust end-market demand for aggregates and cranes in all major geographies, material handlers in North
America and Western Europe, and concrete mixer trucks and environmental equipment in North America. Net sales were
positively impacted by the effects of foreign exchange rate changes of approximately $53 million.
Income from operations for the year ended December 31, 2021 increased $97.5 million when compared to 2020 primarily due
to higher sales volume, price realization and the positive effects of foreign exchange rate changes, partially offset by material,
labor and freight cost inflation due to disruptions in the supply chain and labor availability constraints.
Corporate and Other / Eliminations
2021
2020
2019
% of
Sales
% of
Sales
($ amounts in millions)
% of
Sales
% Change in
Reported Amounts
2021 vs 2020
Net sales
Loss from operations
$
16.2
(65.0)
$
—
*
36.7
(75.5)
— $
*
23.9
(89.1)
—
*
(55.9) %
13.9 %
* Not a meaningful percentage
Net sales include on-book financing activities of TFS, governmental sales and elimination of intercompany sales activity among
segments. The net sales decrease is primarily attributable to lower TFS revenue, partially offset by lower intercompany sales
eliminations.
Loss from operations for the year ended December 31, 2021 decreased $10.5 million when compared to 2020. The decrease in
operating loss is primarily due to SG&A cost management, gains on the sale of assets and a reserve release in the current period
for a specific finance receivable reserve recorded in 2020, partially offset by lower revenue.
34
Other
2021
2020
2019
Interest (expense), net of interest income
Loss on early extinguishment of debt
Other income (expense) – net
(Provision for) benefit from income taxes
Income (loss) from discontinued operations – net of tax
Gain (loss) on disposition of discontinued operations – net of tax
* Not a meaningful percentage
Interest Expense, Net of Interest Income
($ amounts in millions)
$ (47.8) $ (62.3) $ (81.4)
—
(6.1)
(29.4)
13.0
—
4.9
(46.3)
(2.0)
(37.8)
—
3.4
(0.4)
(155.4)
(19.2)
0.1
% Change in
Reported Amounts
2021 vs 2020
(23.3) %
*
(165.3) %
*
*
117.7 %
During the year ended December 31, 2021, our interest expense, net of interest income, was $47.8 million, or $14.5 million
lower than in 2020 due to a decrease in average borrowings and lower rates.
Loss on Early Extinguishment of Debt
During the year ended December 31, 2021, we recorded a loss on early extinguishment of debt of $29.4 million related to
refinancing of a significant portion of our capital structure and prepayment of term loans.
Other Income (Expense) – Net
Other income (expense) – net for the year ended December 31, 2021 was income of $13.0 million, compared to $4.9 million in
2020, an increase of $8.1 million. The increase in income was primarily due to a gain related to the early termination of a lease,
partially offset by a positive post-closing adjustment in 2020 related to the settlement of our U.S. defined benefit pension plan
in 2018 and lower foreign exchange rate translation gains and mark-to-market gains on investments in the current year
compared to the prior year.
Income Taxes
During the year ended December 31, 2021, we recognized income tax expense of $46.3 million on income of $263.8 million, an
effective tax rate of 17.6%, as compared to income tax expense of $2.0 million on income of $11.0 million, an effective tax rate
of 18.2%, for the year ended December 31, 2020. The lower effective tax rate for the year ended December 31, 2021 when
compared to the year ended December 31, 2020 is primarily due to U.S. tax on foreign income and certain discrete items,
partially offset by geographic mix and the 2020 benefit of the Coronavirus Aid, Relief, and Economic Security Act.
Gain (Loss) on Disposition of Discontinued Operations – Net of Tax
During the years ended December 31, 2021 and 2020, we recognized a gain (loss) on disposition of discontinued operations -
net of tax of $3.4 million and $(19.2) million, respectively. The gain in the current year period primarily related to our prior
dispositions of our mobile cranes and MHPS businesses. The loss in the prior year primarily related to a settlement on cash,
debt, working capital and certain other items related to the prior disposition of our mobile cranes business.
35
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.
Changes in estimates and assumptions used by management could have significant impacts on our financial results. Actual
results could differ from those estimates.
We believe the following are among our most significant accounting policies which are important in determining the reporting
of transactions and events and which utilize estimates about the effect of matters that are inherently uncertain and therefore are
based on management judgment. Please refer to Note A – “Basis of Presentation” in the accompanying Consolidated Financial
Statements for a listing of our accounting policies.
Inventories – In valuing inventory, we are required to make assumptions regarding the level of reserves required to value
potentially obsolete or over-valued items at the lower of cost or net realizable value (“NRV”). These assumptions require us to
analyze the aging of and forecasted demand for our inventory, forecast future product sales prices, pricing trends and margins,
and to make judgments and estimates regarding obsolete or excess inventory. Future product sales prices, pricing trends and
margins are based on historical experience and actual orders received. Our judgments and estimates for excess or obsolete
inventory are based on analysis of actual and forecasted usage. Valuation of used equipment taken in trade from customers
requires us to use the best information available to determine the value of the equipment to potential customers. This value is
subject to change based on numerous conditions. Inventory reserves are established taking into account age, frequency of use,
or sale, and in the case of repair parts, installed base of machines. While calculations are made involving these factors,
significant management judgment regarding expectations for future events is involved. Future events that could significantly
influence our judgment and related estimates include general economic conditions in markets where our products are sold, new
equipment price fluctuations, actions of our competitors, including introduction of new products and technological advances, as
well as new products and design changes we introduce. We make adjustments to our inventory reserves based on identification
of specific situations and increase our inventory reserves accordingly. As further changes in future economic or industry
conditions occur, we may revise estimates that were used to calculate our inventory reserves.
If actual conditions are less favorable than those we have projected, we will increase our reserves for lower of cost or NRV,
excess and obsolete inventory accordingly. Any increase in our reserves will adversely impact our results of operations.
Establishment of a reserve for lower of cost or NRV, excess and obsolete inventory establishes a new cost basis in the
inventory. Such reserves are not reduced until the product is sold.
Guarantees – We may assist customers in their rental, leasing and acquisition of our products by facilitating financing
transactions directly between (i) end-user customers, distributors and rental companies and (ii) third-party financial institutions,
providing recourse in certain circumstances. The expectation of losses or non-performance is assessed based on consideration
of historical customer assessments, current financial conditions, reasonable and supportable forecasts, equipment collateral
value and other factors. Many of these factors, including the assessment of a customer’s ability to pay, are influenced by
economic and market factors that cannot be predicted with certainty. Our maximum liability is generally limited to our
customer’s remaining payments due to the third-party financial institutions at the time of default. In the event of a customer
default, we are generally able to recover and dispose of the equipment at a minimum loss, if any, to us. Reserves are recorded
for expected loss over the contractual period of risk exposure.
There can be no assurance that our historical experience in used equipment markets will be indicative of future results. Our
ability to recover losses experienced from our guarantees may be affected by economic conditions in used equipment markets at
the time of loss. See Note N – “Litigation and Contingencies” in the Notes to Consolidated Financial Statements for further
information regarding our guarantees.
Revenue Recognition – We recognize revenue when goods or services are transferred to customers in an amount that reflects
the consideration which we expect to receive in exchange for those goods or services. In determining when and how revenue is
recognized from contracts with customers, we perform the following five-step analysis: (i) identification of contract with
customer; (ii) determination of performance obligations; (iii) measurement of the transaction price; (iv) allocation of the
transaction price to the performance obligations and (v) recognition of revenue when (or as) the Company satisfies each
performance obligation. The majority of our revenue is recognized at the time of shipment, at the net sales price (transaction
price). Estimates of variable consideration, such as volume discounts and rebates, reduce transaction price when it is probable
that a customer will attain these types of sales incentives. These estimates are primarily derived from contractual terms and
historical experience.
36
Accounts Receivable and Allowance for Doubtful Accounts – Trade accounts receivable are recorded at invoiced amount and
do not bear interest. Allowance for doubtful accounts is our estimate of current expected credit losses on existing accounts
receivable and determined based on historical customer assessments, current financial conditions and reasonable and
supportable forecasts. Account balances are charged off against the allowance when the Company determines it is expected the
receivable will not be recovered. There can be no assurance that our estimate of accounts receivable collection will be
indicative of future results.
Goodwill – We test goodwill at the reporting unit level for impairment on an annual basis and between annual tests if events
and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. Our
annual impairment test date is the first day of our fiscal fourth quarter.
In performing the goodwill impairment test, we may first perform a qualitative assessment or bypass the qualitative assessment
and proceed directly to performing the quantitative impairment test. A qualitative assessment requires that we consider events
or circumstances including macroeconomic conditions, industry and market considerations, cost factors, overall financial
performance, changes in management or key personnel, changes in strategy, changes in customers, changes in the composition
or carrying amount of a reporting segment’s net assets and changes in our stock price. If, after assessing the totality of events
or circumstances, we determine that it is more likely than not that the fair values of our reporting units are greater than the
carrying amounts, then a quantitative impairment test does not need to be performed.
If the qualitative assessment indicates a quantitative analysis should be performed or a quantitative analysis is directly elected,
we evaluate goodwill for impairment by comparing the fair value of each of our reporting units to its carrying value, including
the associated goodwill. To determine the fair values, we use an income approach, along with other relevant market
information, derived from a discounted cash flow model to estimate fair value of our reporting units. An impairment charge for
the amount by which the carrying amount exceeds the reporting unit’s fair value, if any, would be recognized. The loss
recognized would not exceed total amount of goodwill allocated to that reporting unit.
Long-Lived Assets – We assess the realizability of our long-lived assets, including definite-lived intangible assets, and to
evaluate such assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets
(or group of assets) may not be recoverable. Impairment is determined to exist if estimated future undiscounted cash flows are
less than carrying value. If an impairment is indicated, assets are written down to their fair value, which is typically determined
by a discounted cash flow analysis. Future cash flow projections include assumptions regarding future sales levels and the level
of working capital needed to support the assets. We use data developed by business segment management as well as
macroeconomic data in making these calculations. There are no assurances that future cash flow assumptions will be achieved.
The amount of any impairment then recognized would be calculated as the difference between estimated fair value and carrying
value of the asset.
Accrued Warranties – We record accruals for potential warranty claims based on our claim experience. A liability for
estimated warranty claims is accrued at the time of sale. The liability is established using historical warranty claims experience
for each product sold. Historical claims experience may be adjusted for known design improvements or for the impact of
unusual product quality issues. Assumptions are updated for known events that may affect the potential warranty liability.
However, actual claims could be higher or lower than amounts estimated, as the amount and value of warranty claims are
subject to variation as a result of many factors that cannot be predicted with certainty, including production quality issues,
performance of new products, models and technology, changes in weather conditions for product operation, different uses for
products and other similar factors.
Defined Benefit Plans – Pension benefits represent financial obligations that will be ultimately settled in the future with
employees who meet eligibility requirements. We maintain defined benefit plans in France, Germany, India, Switzerland and
the U.K. for some of our subsidiaries, as well as a nonqualified Supplemental Executive Retirement Plan in the U.S. (“U.S.
SERP”). In Italy and Mexico, there are mandatory termination indemnity plans providing a benefit that is payable upon
termination of employment in substantially all cases of termination. We have several non-pension post-retirement benefit
programs, including health and life insurance benefits to certain former salaried and hourly employees.
Plan assets consist primarily of fixed income and equity securities. For non-U.S. funded plans, approximately 70% of the assets
are in fixed income securities, 27% are in equity securities and 3% are in real estate securities. These allocations are reviewed
periodically and updated to meet the long-term goals of the plans.
37
Determination of defined benefit pension and post-retirement plan obligations and their associated expenses requires use of
actuarial valuations to estimate the benefits employees earn while working, as well as the present value of those benefits. We
use the services of independent actuaries to assist with these calculations. Inherent in these valuations are economic
assumptions, including expected returns on plan assets and discount rates at which liabilities may be settled. The actuarial
assumptions used may differ materially from actual results due to changing market and economic conditions, higher or lower
turnover rates, or longer or shorter life spans of participants. Actual results that differ from the actuarial assumptions used are
recorded as unrecognized gains and losses. Unrecognized gains and losses that exceed 10% of the greater of the plan’s
projected benefit obligations or the market-related value of assets are amortized to earnings over the shorter of the estimated
future service period of the plan participants or the period until any anticipated final plan settlements. The assumptions used in
the actuarial models are evaluated periodically and are updated to reflect experience. We believe the assumptions used in the
actuarial calculations are reasonable and are within accepted practices in each of the respective geographic locations in which
we operate.
Expected long-term rates of return on pension plan assets were 4.00% for the U.K. plan and 1.25% for the Swiss plan at
December 31, 2021. Our strategy with regard to the investments in the pension plans is to earn a rate of return sufficient to
match or exceed the long-term growth of pension liabilities. The expected rate of return of plan assets represents an estimate of
long-term returns on the investment portfolio. These rates are determined annually by management based on a weighted
average of current and historical market trends, historical portfolio performance and the portfolio mix of investments. The
expected long-term rate of return on plan assets at the December 31 measurement date is used to measure the earnings effects
for the subsequent year. The difference between the expected return and the actual return on plan assets affects the calculated
value of plan assets and, ultimately, future pension expense (income).
The discount rates were 2.80% for the U.S. SERP and 0.20% to 6.85% with a weighted average of 1.93% for non-U.S. plans at
December 31, 2021. The discount rate enables us to estimate the present value of expected future cash flows on the
measurement date. The rate used reflects a rate of return on high-quality fixed income investments that match the duration of
expected benefit payments at the December 31 measurement date. The discount rates are used to measure the year-end benefit
obligations and the earnings effects on the subsequent year. Typically, a higher discount rate decreases the present value of
benefit obligations.
The U.S. SERP has no expected rate of compensation increase as all participants have retired or have a terminated vested
benefit payable in the future. Our U.K. pension plan is frozen so there is no expected rate of compensation increase; however,
other non-U.S. plans’ expected rates of compensation increases were 1.25% to 8.00%. The weighted average of the rates for all
non-U.S. plans is 0.18% at December 31, 2021. These estimated annual compensation increases are determined by
management every year and are based on historical trends and market indices.
We have recorded the net underfunded status of our defined benefit pension plans as a liability partially offset by an asset and
the unrecognized prior service costs and actuarial gains (losses) as an adjustment to Stockholders’ equity on the Consolidated
Balance Sheet. The net decrease in the net liability and increased funded status of $24.1 million was due primarily to changes
in assumptions from the previous year, primarily increases in discount rates and returns on our plan assets.
Actual results in any given year will often differ from actuarial assumptions because of demographic, economic and other
factors. Market value of plan assets can change significantly in a relatively short period of time. Additionally, the
measurement of plan benefit obligations is sensitive to changes in interest rates. As a result, if the equity market declines and/or
interest rates decrease, the plans’ estimated benefit obligations could increase, causing an increase in liabilities and a reduction
in Stockholders’ Equity.
We expect any future obligations under our plans that are not currently funded to be funded by future cash flows from
operations. If our contributions are insufficient to adequately fund the plans to cover our future obligations, or if the
performance of assets in our plans does not meet expectations, or if our assumptions are modified, contributions could be higher
than expected, which would reduce cash available for our business. Changes in U.S. or foreign laws governing these plans
could require additional contributions.
38
Assumptions used in computing our net pension expense and projected benefit obligation have a significant effect on the
amounts reported. A 25 basis point change in each assumption below would have the following effects upon net pension
expense and projected benefit obligation, respectively, as of and for the year ended December 31, 2021 (in millions):
U. S. Plan:
Net pension expense
Projected benefit obligation
Non-U.S. Plans:
Net pension expense (benefit)
Projected benefit obligation
Increase
Decrease
Discount Rate
Expected long-
term rate of return
Discount Rate
Expected long-
term rate of return
$
$
$
$
—
(1.4)
0.2
(5.6)
$
$
$
$
—
—
(0.4)
—
$
$
$
$
$
$
—
1.4
(0.2)
5.9
—
—
0.4
—
Income Taxes – We estimate income taxes based on enacted tax laws in the various jurisdictions where we conduct business.
We recognize deferred income tax assets and liabilities, which represent future tax benefits or obligations of our legal entities.
These deferred income tax balances arise from temporary differences due to divergent treatment of certain items for accounting
and income tax purposes.
We evaluate our deferred tax assets each period to ensure that estimated future taxable income will be sufficient in character,
amount and timing to result in the use of our deferred tax assets. “Character” refers to the type (ordinary income versus capital
gain) as well as the source (foreign vs. domestic) of the income we generate. “Timing” refers to the period in which future
income is expected to be generated. Timing is important because, in certain jurisdictions, net operating losses (“NOLs”) and
other tax attributes expire if not used within an established statutory time frame. Based on these evaluations, we have
determined that it is more likely than not that expected future earnings will be sufficient to use most of our deferred tax assets.
We do not provide for income taxes or tax benefits on differences between financial reporting basis and tax basis of our non-
U.S. subsidiaries where such differences are reinvested and, in our opinion, will continue to be indefinitely reinvested. If
earnings of foreign subsidiaries are not considered indefinitely reinvested, deferred U.S. income taxes, foreign income taxes,
and foreign withholding taxes may have to be provided. We do not record deferred income taxes on the temporary difference
between the book and tax basis in domestic subsidiaries where permissible. At this time, determination of the unrecognized
deferred tax liabilities for temporary differences related to our investment in non-U.S. subsidiaries is not practicable.
Judgments and estimates are required to determine tax expense and deferred tax valuation allowances and in assessing uncertain
tax positions. Tax returns are subject to audit and local taxing authorities could challenge tax-filing positions we take. Our
practice is to file income tax returns that conform to requirements of each jurisdiction and to record provisions for tax liabilities,
including interest and penalties, in accordance with Accounting Standards Codification (“ASC”) 740, “Income Taxes.” Given
the continued changes and complexity in worldwide tax laws, coupled with our geographic scope and size there may be greater
exposure to uncertain tax positions. Given the subjective nature of applicable tax laws, results of an audit of some of our tax
returns could have a significant impact on our consolidated financial statements.
39
RECENT ACCOUNTING STANDARDS
Please refer to Note A – “Basis of Presentation” in the accompanying Consolidated Financial Statements for a summary of
recently issued accounting standards.
LIQUIDITY AND CAPITAL RESOURCES
We are focused on generating cash and maintaining liquidity (cash and availability under our revolving line of credit) for the
efficient operation of our business. At December 31, 2021, we had cash and cash equivalents of $266.9 million and undrawn
availability under our revolving line of credit of $600 million, giving us total liquidity of approximately $867 million. During
the year ended December 31, 2021, our liquidity decreased by approximately $250 million from December 31, 2020 primarily
due to reducing outstanding debt by approximately $503 million and investing in our strategic priorities, partially offset by cash
generated from operations, the expiration of a $150 million minimum liquidity requirement and proceeds of approximately $99
million from the sale of finance receivables.
Our main sources of funding are cash generated from operations, including cash generated from the sale of receivables, loans
from our bank credit facilities and funds raised in capital markets. We have no significant debt maturities until 2024 and we
have increased our focus on internal cash flow generation. Our actions to maintain liquidity include disciplined management of
costs and working capital. We believe these measures will provide us with adequate liquidity to comply with our financial
covenants under our bank credit facility, continue to support internal operating initiatives and meet our operating and debt
service requirements for at least the next 12 months from the date of issuance of this annual report. See Part I, Item 1A. – “Risk
Factors” for a detailed description of the risks resulting from our debt and our ability to generate sufficient cash flow to operate
our business.
Our ability to generate cash from operations is subject to numerous factors, including the following:
The duration and depth of the global economic uncertainty resulting from COVID-19.
As our sales change, the amount of working capital needed to support our business may change.
•
•
• Many of our customers fund their purchases through third-party finance companies that extend credit based on the
credit-worthiness of customers and expected residual value of our equipment. Changes either in customers’ credit
profile or used equipment values may affect the ability of customers to purchase equipment. There can be no
assurance that third-party finance companies will continue to extend credit to our customers as they have in the past.
Our suppliers extend payment terms to us primarily based on our overall credit rating. Deterioration in our credit
rating may influence suppliers’ willingness to extend terms and in turn accelerate cash requirements of our business.
Sales of our products are subject to general economic conditions, weather, competition, translation effect of foreign
currency exchange rate changes, and other factors that in many cases are outside our direct control. For example,
during periods of economic uncertainty, our customers have delayed purchasing decisions, which reduces cash
generated from operations.
Availability and utilization of other sources of liquidity such as trade receivables sales programs.
•
•
•
Typically, we have invested our cash in a combination of highly rated, liquid money market funds and in short-term bank
deposits with large, highly rated banks. Our investment objective is to preserve capital and liquidity while earning a market rate
of interest.
We seek to use cash held by our foreign subsidiaries to support our operations and continued growth plans outside and inside
the U.S. through funding of capital expenditures, operating expenses or other similar cash needs of these operations. Most of
this cash could be used in the U.S., if necessary, without additional tax expense. Incremental cash repatriated to the U.S. would
not be expected to result in material foreign, Federal or state tax cost. We will continue to seek opportunities to tax-efficiently
mobilize and redeploy funds.
40
We had free cash flow of $125.0 million for the year ended December 31, 2021.
The following table reconciles net cash provided by (used in) operating activities to free cash flow (in millions):
Net cash provided by (used in) operating activities
$
Increase (decrease) in TFS assets
Capital expenditures, net of proceeds from sale of capital assets
Free cash flow $
Year Ended
12/31/2021
293.4
(110.6)
(57.8)
125.0
Pursuant to terms of our trade accounts receivable factoring arrangements, during the year ended December 31, 2021, we sold,
without material recourse, approximately $527 million of trade accounts receivable to enhance liquidity. During the year ended
December 31, 2021, we also sold approximately $96 million of sales-type leases and commercial loans.
Working capital as a percent of trailing three month annualized net sales was 19.1% at December 31, 2021.
The following tables show the calculation of our working capital and trailing three months annualized sales as of December 31,
2021 (in millions):
Net Sales
Trailing Three Month Annualized Net Sales
Inventories
Trade Receivables
Trade Accounts Payable
Customer Advances
Working Capital
Three
months
ended
12/31/2021
$
x
990.1
4
$ 3,960.4
As of
12/31/21
$
$
813.5
507.7
(537.7)
(25.4)
758.1
On January 31, 2017, we entered into a credit agreement which was subsequently amended to include (i) a $600 million
revolving line of credit (the “Revolver”) and (ii) senior secured term loans totaling $600 million with a maturity date of January
31, 2024 (the “Term Loans”). On April 1, 2021, we entered into an amendment and restatement of the credit agreement (as
amended and restated, the “Credit Agreement”) which included the following principal changes to the original credit
agreement: (i) extension of the term of the Revolver to expire on April 1, 2026, which maturity will spring forward to
November 1, 2023 if the principal outstanding under the Term Loans is not repaid or the maturity date is not extended, (ii)
reinstatement of financial covenants that were waived in 2020, (iii) decrease in the interest rate on the drawn Revolver by 25
basis points and (iv) certain other technical changes, including additional language regarding the potential cessation of the
London Interbank Offered Rate (“LIBOR”) as a benchmark rate. See Note J – “Long-Term Obligations” in our Consolidated
Financial Statements for additional information regarding the Credit Agreement.
Borrowings under the Credit Agreement as of December 31, 2021 were $77.8 million, net of discount, on our Term Loans.
During the year ended December 31, 2021, we prepaid approximately $500 million of our Term Loans prior to their maturity
date to reduce our outstanding debt and lower our leverage. At December 31, 2021, the weighted average interest rate was
2.75% on our Term Loans. There were no amounts outstanding on the Revolver as of December 31, 2021.
In April 2021, we sold and issued $600.0 million aggregate principal amount of Senior Notes Due 2029 (“5% Notes”) at par in
a private offering. The proceeds from the 5% Notes, together with cash on hand, were used to fund redemption and discharge
of the $600.0 million aggregate principal amount of Senior Notes Due 2025 (“5-5/8% Notes”) in full for $622.9 million,
including redemption premiums of $16.9 million and accrued but unpaid interest of $6.0 million. See Note J – “Long-Term
Obligations” in our Consolidated Financial Statements for additional information regarding the 5% Notes and 5-5/8% Notes.
41
We remain focused on expanding customer financing solutions in key markets like the U.S., Europe and China. We also
anticipate our continued use of TFS to drive incremental sales by increasing customer financing facilitated through TFS in
certain instances. In February 2021, we transferred finance receivables of $89.7 million to a U.S. regional bank, which
qualified for sales treatment under ASC 860. We received $99.4 million of cash proceeds from the sale and recognized a net
gain of $5.6 million.
On May 25, 2021, we acquired assets to facilitate manufacturing of certain MP products in China for total cash consideration of
approximately $17 million.
On July 6, 2021, we acquired a manufacturer of heavy duty aggregate and recycling trommels, apron feeders and conveyor
systems based in the Republic of Ireland for total cash consideration of approximately $19 million. This acquisition supports
our strategy to expand our material processing offerings in the crushing, screening and environmental industries, with products
that complement our existing products.
In July 2018, our Board of Directors authorized the repurchase up to $300 million of our outstanding shares of common stock.
During the year ended December 31, 2021, we repurchased 28,688 shares for $1.2 million under this authorization leaving
approximately $139 million available for repurchase under this program.
In February 2021, our Board of Directors reinstated our quarterly dividend for 2021 and declared a dividend of $0.12 per share
in each quarter of 2021, which was paid to our shareholders. In February 2022, our Board of Directors declared a dividend of
$0.13 per share, which will be paid to the Company’s shareholders on March 21, 2022.
Our ability to access capital markets to raise funds, through sale of equity or debt securities, is subject to various factors, some
specific to us and others related to general economic and/or financial market conditions. These include results of operations,
projected operating results for future periods and debt to equity leverage. Our ability to access capital markets is also subject to
our timely filing of periodic reports with the SEC. In addition, terms of our bank credit facilities, senior notes and senior
subordinated notes contain restrictions on our ability to make further borrowings and to sell substantial portions of our assets.
The Company’s material cash requirements include the following contractual and other obligations:
Debt
As of December 31, 2021, the Company had outstanding debt of $670.6 million, with $4.0 million payable within 12
months. Future interest payments associated with the outstanding debt are approximately $221 million with $30.5
million payable within 12 months. For detailed debt information see Note J – “Long Term Obligations”.
Leases
The Company has leases for real property, vehicles and office and industrial equipment. As of December 31, 2021, the
Company had contractual fixed costs primarily related to lease commitments of approximately $112 million, with
$27.4 million payable within 12 months. For detailed lease information see Note K – “Leases”.
Purchase Obligations
The Company had purchase obligations of $744.3 million, with substantially all purchase obligations payable within
12 months. Purchase obligations include non-cancellable and cancellable commitments. In many cases, cancellable
commitments contain penalty provisions for cancellation.
We reported a liability of $2.6 million related to unrecognized tax benefits as of December 31, 2021 and do not expect this
liability to change materially in 2022. As such, any related payments in 2022 would not be significant.
Additionally, at December 31, 2021, we had outstanding letters of credit that totaled $107.8 million and maximum exposure of
$143.5 million for credit guarantees outstanding related to recourse provided to third-party financial institutions when
customers finance the purchase of equipment.
42
We maintain defined benefit pension plans for some of our U.S. and non-U.S. operations. It is our policy to fund the retirement
plans at the minimum level required by applicable regulations. In 2021, we made cash contributions and payments to the
retirement plans of $9.7 million, and we estimate that our retirement plan contributions will be approximately $9 million in
2022. Changes in market conditions, changes in our funding levels or actions by governmental agencies may result in
accelerated funding requirements in future periods.
In 2022, we expect approximately $90 million in net capital expenditures, with our largest expenditure related to our
manufacturing facility in Mexico.
Cash Flows
Cash provided by operations was $293.4 million and $225.4 million for the years ended December 31, 2021 and 2020,
respectively. The increase in cash provided by operations was primarily driven by increased operating profitability and
proceeds from the sale of customer finance receivables, partially offset by higher working capital as a result of robust end-
market demand.
Cash used in investing activities was $102.2 million and $38.5 million for the years ended December 31, 2021 and 2020,
respectively. The increase in cash used in investing activities relates primarily to cash used in acquisition and investment
activity, partially offset by lower capital expenditures in the current year and proceeds from the disposition of discontinued
operations in the prior year.
Cash used in financing activities was $580.1 million and $82.8 million for the years ended December 31, 2021 and 2020,
respectively. The increase in cash used in financing activities was primarily due to higher debt repayments, dividend payments
and debt extinguishment costs in the current year, partially offset by higher share repurchases in the prior year.
OFF-BALANCE SHEET ARRANGEMENTS
Guarantees
We may assist customers in their rental, leasing and acquisition of our products by facilitating financing transactions directly
between (i) end-user customers, distributors and rental companies and (ii) third-party financial institutions, providing recourse
in certain circumstances. The expectation of losses or non-performance is assessed based on consideration of historical
customer assessments, current financial conditions, reasonable and supportable forecasts, equipment collateral value and other
factors. Many of these factors, including the assessment of a customer’s ability to pay, are influenced by economic and market
factors that cannot be predicted with certainty. Our maximum liability is generally limited to our customer’s remaining
payments due to the third-party financial institutions at the time of default. In the event of a customer default, we are generally
able to recover and dispose of the equipment at a minimum loss, if any, to us. Reserves are recorded for expected loss over the
contractual period of risk exposure.
There can be no assurance that our historical experience in used equipment markets will be indicative of future results. Our
ability to recover losses experienced from our guarantees may be affected by economic conditions in used equipment markets at
the time of loss.
See Note N – “Litigation and Contingencies” in the Notes to Consolidated Financial Statements for further information
regarding our guarantees.
CONTINGENCIES AND UNCERTAINTIES
Foreign Exchange and Interest Rate Risk
Our products are sold in over 100 countries around the world and, accordingly, our revenues are generated in foreign
currencies, while costs associated with those revenues are only partly incurred in the same currencies. Primary currencies to
which we are exposed are the Euro, British Pound, Chinese Yuan, Australian Dollar and Mexican Peso. We purchase hedging
instruments to manage variability of future cash flows associated with recognized assets or liabilities due to changing currency
exchange rates. See Risk Factor entitled, “We are subject to currency fluctuations.” in Part I, Item 1A. for further information
on our foreign exchange risk.
43
We manage our exposure to interest rate risk by establishing a mix of indebtedness bearing interest at both floating and fixed
rates at inception and maintain a ratio of floating and fixed rates on this mix of indebtedness using interest rate derivatives when
necessary.
See Note I – “Derivative Financial Instruments” in the Notes to Consolidated Financial Statements for further information
regarding our derivatives and Item 7A. – “Quantitative and Qualitative Disclosures About Market Risk” for a discussion of the
impact changes in foreign currency exchange rates and interest rates may have on our financial performance.
Other
We are subject to a number of contingencies and uncertainties including, without limitation, product liability claims, workers’
compensation liability, intellectual property litigation, self-insurance obligations, tax examinations, guarantees, class action
lawsuits and other matters. See Note N – “Litigation and Contingencies” in the Notes to Consolidated Financial Statements for
more information regarding contingencies and uncertainties, including our proceedings involving a claim in Brazil regarding
payment of ICMS tax, penalties and related interest. We are insured for product liability, general liability, workers’
compensation, employer’s liability, property damage, intellectual property and other insurable risks required by law or contract
with retained liability to us or deductibles. Many of the exposures are unasserted or proceedings are at a preliminary stage, and
it is not presently possible to estimate the amount or timing of any liability. However, we do not believe these contingencies
and uncertainties will, individually or in aggregate, have a material adverse effect on our operations. For contingencies and
uncertainties other than income taxes, when it is probable a loss will be incurred and possible to make reasonable estimates of
our liability with respect to such matters, a provision is recorded for the amount of such estimate or for the minimum amount of
a range of estimates when it is not possible to estimate the amount within the range that is most likely to occur.
We generate hazardous and non-hazardous wastes in the normal course of our manufacturing operations. As a result, we are
subject to a wide range of environmental laws and regulations. All of our employees are required to obey all applicable health,
safety and environmental laws and regulations and must observe the proper safety rules and environmental practices in work
situations. These laws and regulations govern actions that may have adverse environmental effects, such as discharges to air
and water, and require compliance with certain practices when handling and disposing of hazardous and non-hazardous wastes.
These laws and regulations would also impose liability for the costs of, and damages resulting from, cleaning up sites, past
spills, disposals and other releases of hazardous substances, should any such events occur. We are committed to complying
with these standards and monitoring our workplaces to determine if equipment, machinery and facilities meet specified safety
standards. Each of our manufacturing facilities is subject to an environmental audit at least once every five years to monitor
compliance. Also, no incidents have occurred which required us to pay material amounts to comply with such laws and
regulations. We are dedicated to ensuring that safety and health hazards are adequately addressed through appropriate work
practices, training and procedures. We are committed to reducing injuries and working towards a world-class level of safety
practices in our industry. See Part I, Item 1. – “Business – Safety and Environmental Considerations” for additional discussion
of safety and environmental items.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks that exist as part of our ongoing business operations and we use derivative financial
instruments, where appropriate, to manage these risks. As a matter of policy, we do not engage in trading or speculative
transactions. For further information on accounting related to derivative financial instruments, refer to Note I – “Derivative
Financial Instruments” in our Consolidated Financial Statements.
Foreign Exchange Risk
Our products are sold in over 100 countries around the world. The reporting currency for our consolidated financial statements
is the U.S. dollar. Certain of our assets, liabilities, expenses, revenues and earnings are denominated in other countries’
currencies, including the Euro, British Pound, Chinese Yuan, Australian Dollar and Mexican Peso. Those assets, liabilities,
expenses, revenues and earnings are translated into U.S. dollars at the applicable foreign exchange rates to prepare our
consolidated financial statements. Therefore, increases or decreases in foreign exchange rates between the U.S. dollar and those
other currencies affect the value of those items as reflected in our consolidated financial statements, even if their value remains
unchanged in their original currency. Due to continued volatility of foreign exchange rates to the U.S. dollar, fluctuations in
foreign exchange rates may have an impact on the accuracy of our financial guidance. Such fluctuations in foreign exchange
rates relative to the U.S. dollar may cause our actual results to differ materially from those anticipated in our guidance and have
a material adverse effect on our business or results of operations. We assess foreign currency risk based on transactional cash
flows, identify naturally offsetting positions and purchase hedging instruments to partially offset anticipated exposures.
44
At December 31, 2021, we performed a sensitivity analysis on the impact that aggregate changes in the translation effect of
foreign exchange rate changes would have on our operating income. Based on this sensitivity analysis, we have determined
that a change in the value of the U.S. dollar relative to other currencies by 10% to amounts already incorporated in the
consolidated financial statements for the year ended December 31, 2021 would have had approximately a $32 million impact on
the translation effect of foreign exchange rate changes already included in our reported operating income for the period.
Interest Rate Risk
We are exposed to interest rate volatility with regard to future issuances of fixed rate debt and existing issuances of variable rate
debt. Primary exposure includes movements in benchmark rates. We manage our exposure to interest rate risk by establishing
a mix of indebtedness bearing interest at both floating and fixed rates at inception and maintain a ratio of floating and fixed
rates on this mix of indebtedness using interest rate derivatives when necessary. At December 31, 2021, approximately 12% of
our debt was floating rate debt and the weighted average interest rate of our debt was 4.68%.
At December 31, 2021, we performed a sensitivity analysis for our financial instruments that have interest rate risk. We
calculated the pretax earnings effect on our interest sensitive instruments. Based on this sensitivity analysis, we have
determined that an increase of 10% in our average floating interest rates at December 31, 2021 would not have materially
increased interest expense for the year ended December 31, 2021.
Commodities Risk
In the absence of labor strikes or other unusual circumstances, substantially all materials and components are normally available
from multiple suppliers. However, certain of our businesses receive materials and components from a single source supplier,
although alternative suppliers of such materials may be generally available. Delays in our suppliers’ abilities, especially any
sole suppliers for a particular business, to provide us with necessary materials and components may delay production at a
number of our manufacturing locations, or may require us to seek alternative supply sources. Delays in obtaining supplies may
result from a number of factors affecting our suppliers, including capacity constraints, regulatory changes, freight and container
availability, labor disputes, suppliers’ impaired financial condition, suppliers’ allocations to other purchasers, weather
emergencies, pandemics or acts of war or terrorism. Any delay in receiving supplies could impair our ability to deliver
products to our customers and, accordingly, could have a material adverse effect on our business, results of operations and
financial condition. Current and potential suppliers are evaluated regularly on their ability to meet our requirements and
standards. We actively manage our material supply sourcing, and employ various methods to limit risk associated with
commodity cost fluctuations and availability. During 2021, our manufacturing operations were adversely affected by material
shortages and production delays as the continuity of supply was impacted by capacity constraints, global logistics disruptions,
raw material shortages and COVID-19 related production downtime at certain component suppliers. We have designed and
implemented plans to mitigate the impact of these risks by using alternate suppliers, expanding our supply base globally,
leveraging our overall purchasing volumes to obtain favorable pricing and quantities, developing a closer working relationship
with key suppliers and purchasing hedging instruments to partially offset anticipated exposures. However, we anticipate that
we will continue to be adversely affected by material shortages and production delays into 2022.
Principal materials and components used in our various manufacturing processes include steel, castings, engines, tires,
hydraulics, cylinders, drive trains, electric controls and motors, semiconductors, and a variety of other commodities and
fabricated or manufactured items. We have seen a rise in input costs across most materials and components which has
adversely affected our financial performance. Additionally, tariffs on certain Chinese origin goods continue to put pressure on
input costs, which we have been able to partially mitigate through the U.S. Government’s duty draw back mechanism. If we
are unable to recover a substantial portion of increased costs from our customers and suppliers or through duty draw-back, our
business or results of operations could be adversely affected. We will continue to monitor international trade policy and will
make adjustments to our supply base where possible to mitigate the impact on our costs. For more information on commodities
risk, see Part I, Item 1A. – Risk Factors.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The report of our independent registered public accounting firms and our consolidated financial statements and financial
statement schedule are filed pursuant to this Item 8 and are included later in this report. See Index to Consolidated Financial
Statements and Financial Statement Schedule on page F-1.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
45
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure information required to be disclosed in reports we
file under the Exchange Act is recorded, processed, summarized and reported within time periods specified in the SEC’s rules
and forms, and such information is accumulated and communicated to our management, including our CEO and Chief Financial
Officer (“CFO”), as appropriate, to allow timely decisions regarding required financial disclosure. In connection with the
preparation of this Annual Report on Form 10-K, our management carried out an evaluation, under supervision and with
participation of our management, including the CEO and CFO, as of December 31, 2021, of the effectiveness of the design and
operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) under the Exchange Act.
Based upon this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of
December 31, 2021.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company,
as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external reporting purposes in accordance with generally accepted accounting principles. Internal
control over financial reporting includes those policies and procedures that: pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our
management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has conducted an assessment, including testing, of the effectiveness of our internal control over financial reporting
as of December 31, 2021. In making its assessment of internal control over financial reporting, management used the criteria in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this assessment, the Company’s management has concluded that, as of December 31, 2021, the
Company’s internal control over financial reporting was effective.
The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by KPMG LLP, an
independent registered public accounting firm, as stated in their report which appears in this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31,
2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Effectiveness of any system of controls and procedures is subject to certain limitations, and, as a result, there can be no
assurance our controls and procedures will detect all errors or fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that objectives of the control system will be attained.
ITEM 9B.
OTHER INFORMATION
None.
46
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 is incorporated by reference from the definitive Terex Corporation Proxy Statement to be
filed with the SEC within 120 days after the year covered by this Annual Report on Form 10-K.
ITEM 11.
EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated by reference from the definitive Terex Corporation Proxy Statement to be
filed with the SEC within 120 days after the year covered by this Annual Report on Form 10-K.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Equity Compensation Plan Information
The following table summarizes information about the Company’s equity compensation plans as of December 31, 2021:
Plan Category
Equity compensation plans approved by stockholders
Equity compensation plans not approved by stockholders
Total
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
__ (1)
—
—
Weighted average exercise
price of outstanding
options, warrants and
rights
Number of securities
remaining available for
future issuance under
equity compensation plans
$—
—
3,320,301
—
3,320,301
(1) This does not include 1,887,706 shares of restricted stock awards and 635,971 shares held in a rabbi trust for a deferred compensation plan.
The other information required by Item 12 is incorporated by reference from the definitive Terex Corporation Proxy Statement
to be filed with the SEC within 120 days after the year covered by this Annual Report on Form 10-K.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by Item 13 is incorporated by reference from the definitive Terex Corporation Proxy Statement to be
filed with the SEC within 120 days after the year covered by this Annual Report on Form 10-K.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our independent registered public accounting firm is KPMG LLP, New York, NY, Auditor ID: 185. Our predecessor
independent registered public accounting firm was PricewaterhouseCoopers LLP, Stamford, CT, Auditor ID: 238.
The information required by Item 14 is incorporated by reference from the definitive Terex Corporation Proxy Statement to be
filed with the SEC within 120 days after the year covered by this Annual Report on Form 10-K.
47
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) (1) and (2) Financial Statements and Financial Statement Schedules.
See “Index to Consolidated Financial Statements and Financial Statement Schedule” on Page F-1.
(3) Exhibits
The exhibits set forth below are filed as part of this Annual Report on Form 10-K.
Exhibit
No.
3.1
Exhibit
Restated Certificate of Incorporation of Terex Corporation (incorporated by reference to Exhibit 3.1 of the Form
S-1 Registration Statement of Terex Corporation, Registration No. 33-52297).
3.2
3.3
3.4
3.5
4.1
4.2
4.3
4.4
10.1
10.2
10.3
10.4
Certificate of Elimination with respect to the Series B Preferred Stock (incorporated by reference to Exhibit 4.3 of
the Form 10-K for the year ended December 31, 1997 of Terex Corporation, Commission File No. 1-10702).
Certificate of Amendment to Certificate of Incorporation of Terex Corporation dated September 5, 1998
(incorporated by reference to Exhibit 3.3 of the Form 10-K for the year ended December 31, 1998 of Terex
Corporation, Commission File No. 1-10702).
Certificate of Amendment of the Certificate of Incorporation of Terex Corporation dated July 17, 2007
(incorporated by reference to Exhibit 3.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated
July 17, 2007 and filed with the Commission on July 17, 2007).
Amended and Restated Bylaws of Terex Corporation (incorporated by reference to Exhibit 3.1 of the Form 8-K
Current Report, Commission File No. 1-10702, dated October 15, 2015 and filed with the Commission on October
19, 2015).
Indenture, dated July 20, 2007, between Terex Corporation and HSBC Bank USA, National Association, as
Trustee, relating to senior debt securities (incorporated by reference to Exhibit 4.1 of the Form S-3 Registration
Statement of Terex Corporation, Registration No. 333-144796).
Indenture, dated July 20, 2007, between Terex Corporation and HSBC Bank USA, National Association, as
Trustee, relating to subordinated debt securities (incorporated by reference to Exhibit 4.2 of the Form S-3
Registration Statement of Terex Corporation, Registration No. 333-144796).
Indenture, dated April 1, 2021, among Terex Corporation, the guarantors named therein and HSBC Bank USA,
National Association, as Trustee, relating to 5% Senior Notes due 2029 (incorporated by reference to Exhibit 4.1 of
the Form 8-K Current Report, Commission File No. 1-10702, dated April 1, 2021 and filed with the Commission
on April 6, 2021).
Description of Capital Stock. *
Terex Corporation Amended and Restated Employee Stock Purchase Plan (incorporated by reference to Exhibit
10.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated May 11, 2017 and filed with the
Commission on May 15, 2017). ***
Terex Corporation Amended and Restated Supplemental Executive Retirement Plan (incorporated by reference to
Exhibit 10.10 of the Form 10-K for the year ended December 31, 2008 of Terex Corporation, Commission File No.
1-10702). ***
Terex Corporation Amended and Restated Deferred Compensation Plan (incorporated by reference to Exhibit
10.11 of the Form 10-Q for the quarter ended June 30, 2004 of Terex Corporation, Commission File No. 1-10702).
***
Amendment to the Terex Corporation Amended and Restated Deferred Compensation Plan (incorporated by
reference to Exhibit 10.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated October 14, 2008
and filed with the Commission on October 17, 2008). ***
48
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
Terex Corporation Deferred Compensation Plan (incorporated by reference to Exhibit 10.2 of the Form 8-K
Current Report, Commission File No. 1-10702, dated May 9, 2013 and filed with the Commission on May, 14,
2013). ***
Employment Letter from Terex Corporation signed by John Garrison on October 15, 2015 (incorporated by
reference to Exhibit 10.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated October 15, 2015
and filed with the Commission on October 19, 2015). ***
Employment Letter from Terex Corporation signed by John Sheehan on February 5, 2017 (Incorporated by
reference to Exhibit 10.21 of the Form 10-K for the year ended December 31, 2017). ***
Form of Restricted Stock Agreement (time based granted 2019) under the Terex Corporation 2018 Omnibus
Incentive Plan between Terex Corporation and participants of the 2018 Omnibus Incentive Plan (incorporated by
reference to Exhibit 10.2 of the Form 10-Q for the quarter ended March 31, 2019 of Terex Corporation,
Commission File No. 1-10702).***
Form of Restricted Stock Agreement (performance based granted 2019) under the Terex Corporation 2018
Omnibus Incentive Plan between Terex Corporation and participants of the 2018 Omnibus Incentive Plan
(incorporated by reference to Exhibit 10.3 of the Form 10-Q for the quarter ended March 31, 2019 of Terex
Corporation, Commission File No. 1-10702).***
Form of Change in Control and Severance Agreement between Terex Corporation and certain executive officers
(incorporated by reference to Exhibit 10.4 of the Form 10-Q for the quarter ended March 31, 2019 of Terex
Corporation, Commission File No. 1-10702).***
Form of Change in Control and Severance Agreement between Terex Corporation and certain executive officers
(incorporated by reference to Exhibit 10.5 of the Form 10-Q for the quarter ended March 31, 2019 of Terex
Corporation, Commission File No. 1-10702).***
Amendment and Restatement Agreement dated as of April 1, 2021, relating to the Credit Agreement dated as of
January 31, 2017, among Terex Corporation and certain of its subsidiaries, the Lenders and Issuing Banks named
therein and Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Collateral Agent
(incorporated by reference to Exhibit 10.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated
April 1, 2021 and filed with the Commission April 6, 2021).
Amended and Restated Credit Agreement dated as of April 1, 2021, among Terex Corporation and certain of its
subsidiaries, the Lenders and Issuing Banks named therein and Credit Suisse AG, Cayman Islands Branch, as
Administrative Agent and Collateral Agent (incorporated by reference to Exhibit 10.2 of the Form 8-K Current
Report, Commission File No. 1-10702, dated April 1, 2021 and filed with the Commission April 6, 2021).
Guarantee and Collateral Agreement dated as of January 31, 2017, among Terex Corporation, certain of its
subsidiaries, and Credit Suisse AG, Cayman Islands Branch, as Collateral Agent (incorporated by reference to
Exhibit 10.2 of the Form 8-K Current Report, Commission File No. 1-10702, dated January 31, 2017 and filed
with the Commission February 2, 2017).
Terex Corporation Amended and Restated 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1
of the Form 8-K Current Report, Commission File No. 1-10702, dated May 6, 2021 and filed with the Commission
May 11, 2021). ***
10.16
Employment Letter from Terex Corporation signed by Julie A. Beck on February 9, 2022 . *, ***
21.1
23.1
23.2
24.1
31.1
31.2
Subsidiaries of Terex Corporation.*
Consent of Independent Registered Public Accounting Firm KPMG LLP, New York, NY.*
Consent of Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP, Stamford,
Connecticut.*
Power of Attorney.*
Chief Executive Officer Certification pursuant to Rule 13a-14(a)/15d-14(a). *
Chief Financial Officer Certification pursuant to Rule 13a-14(a)/15d-14(a). *
49
32
Chief Executive Officer and Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes – Oxley Act of 2002. **
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL
tags are embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document. *
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. *
101.DEF XBRL Taxonomy Extension Definition Linkbase Document. *
101.LAB XBRL Taxonomy Extension Label Linkbase Document. *
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. *
104
*
**
***
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
Exhibit filed with this document.
Exhibit furnished with this document.
Denotes a management contract or compensatory plan or arrangement.
ITEM 16.
FORM 10-K SUMMARY
Not applicable.
50
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
SIGNATURES
TEREX CORPORATION
By:
/s/ John L. Garrison, Jr.
John L. Garrison, Jr.
Chairman and Chief Executive
Officer
February 11, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
NAME
TITLE
DATE
/s/ John L. Garrison, Jr
John L. Garrison, Jr.
/s/ Julie A. Beck
Julie A. Beck
Chairman and Chief Executive
Officer
(Principal Executive Officer)
Senior Vice President and Chief Financial
Officer
(Principal Financial Officer)
/s/ Stephen A. Johnston
Stephen A. Johnston
Chief Accounting Officer
(Principal Accounting Officer)
February 11, 2022
February 11, 2022
February 11, 2022
*/s/ Paula H. J. Cholmondeley
Paula H. J. Cholmondeley
*/s/ Don DeFosset
Don DeFosset
*/s/ Thomas J. Hansen
Thomas J. Hansen
*/s/ Sandie O’Connor
Sandie O’Connor
*/s/ Christopher Rossi
Christopher Rossi
*/s/ Andra M. Rush
Andra M. Rush
*/s/ David A. Sachs
David A. Sachs
Director
Director
Director
Director
Director
Director
Lead Director
*By /s/ Julie A. Beck
Julie A. Beck, as Attorney-in-Fact
February 11, 2022
51
THIS PAGE IS INTENTIONALLY BLANK
NEXT PAGE IS NUMBERED “F-1”
52
TEREX CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
TEREX CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2021 AND 2020
AND FOR EACH OF THE THREE YEARS
IN THE PERIOD ENDED DECEMBER 31, 2021
Reports of Independent Registered Public Accounting Firms
Consolidated Statement of Income (Loss)
Consolidated Statement of Comprehensive Income (Loss)
Consolidated Balance Sheet
Consolidated Statement of Changes in Stockholders’ Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
FINANCIAL STATEMENT SCHEDULE
Schedule II – Valuation and Qualifying Accounts and Reserves
Page
F-2
F-5
F-6
F-7
F-8
F-9
F-10
F-44
All other schedules for which provision is made in the applicable regulations of the Securities and Exchange Commission
(“SEC”) are not required under the related instructions, or are not applicable, and therefore have been omitted.
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and
Board of Directors of Terex Corporation:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheet of Terex Corporation and subsidiaries (the Company) as of
December 31, 2021, the related consolidated statement of income (loss), comprehensive income (loss), changes in stockholders’
equity, and cash flows for the year then ended, and the related notes and financial statement Schedule II – Valuation and
Qualifying Accounts and Reserves (collectively, the consolidated financial statements). We also have audited the Company’s
internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2021 and the results of its operations and its cash flows for the year then ended, in
conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2021 based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to
express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over
financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
F-2
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Identification of uncertain tax positions and the recoverability of deferred tax assets
As described in Note C – “Income Taxes” to the consolidated financial statements, the Company reported a liability of $2.6
million related to unrecognized tax benefits and net deferred tax assets of $133.0 million as of December 31, 2021. The
Company uses judgments and estimates to determine the uncertain tax positions and deferred tax asset valuation
allowances, particularly as a result of the Company’s worldwide operations. Where the Company has determined that its
tax return filing position does not satisfy the more likely than not recognition threshold, it has recorded no tax benefits.
The Company assesses the net realizable value of its deferred tax assets based on available evidence, including historical
information that is supplemented by currently available information about future tax years.
We identified the identification of uncertain tax positions and the recoverability of deferred tax assets as a critical audit
matter. A high degree of auditor judgment, including the involvement of tax and valuation professionals with specialized
skills and knowledge, was required in evaluating (i) the identification of uncertain tax positions, particularly given the
complexities in worldwide tax laws and (ii) future taxable income and statutory limitations used in determining deferred
tax asset valuation allowances.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and
tested the operating effectiveness of certain internal controls related to income taxes, including controls related to the
identification of uncertain tax positions and the recoverability of deferred tax assets. For the identification of uncertain tax
positions, tax and valuation professionals with specialized skills and knowledge assisted in evaluating management’s
identification of uncertain tax positions, including interpretation of relevant tax law and consideration of ongoing and
completed examinations by tax authorities, and assessing certain international intercompany arrangements for consistency
with relevant regulations and generally accepted practices. For the assessment of the recoverability of deferred tax assets,
we evaluated the Company’s estimated future taxable income primarily by comparing estimated amounts to historical
amounts and trends and by considering the length of the period over which the net deferred tax assets are expected to be
used. Tax professionals with specialized skills and knowledge assisted in evaluating the recoverability of deferred tax
assets, including statutory limitations on the use of those assets and assessing potential adjustments to future taxable
income based on known events and relevant enacted tax regulations.
We have served as the Company’s auditor since 2021.
/s/KPMG LLP
New York, New York
February 11, 2022
F-3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
and Stockholders of Terex Corporation
Opinion on the Financial Statements
We have audited the consolidated balance sheet of Terex Corporation and its subsidiaries (the “Company”) as of December 31,
2020, and the related consolidated statements of income (loss), of comprehensive income (loss), of changes in stockholders’
equity and of cash flows for each of the two years in the period ended December 31, 2020, including the related notes and
financial statement schedule listed in the accompanying index for each of the two years in the period ended December 31, 2020
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its
operations and its cash flows for each of the two years in the period ended December 31, 2020 in conformity with accounting
principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on
a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Stamford, Connecticut
February 12, 2021
We served as the Company’s auditor from 1992 to 2020.
F-4
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (LOSS)
(in millions, except per share data)
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Income (loss) from operations
Other income (expense)
Interest income
Interest expense
Loss on early extinguishment of debt
Other income (expense) – net
Income (loss) from continuing operations before income taxes
(Provision for) benefit from income taxes
Income (loss) from continuing operations
Income (loss) from discontinued operations – net of tax
Gain (loss) on disposition of discontinued operations – net of tax
Net income (loss)
Basic earnings (loss) per share:
Income (loss) from continuing operations
Income (loss) from discontinued operations – net of tax
Gain (loss) on disposition of discontinued operations – net of tax
Net income (loss)
Diluted earnings (loss) per share:
Income (loss) from continuing operations
Income (loss) from discontinued operations – net of tax
Gain (loss) on disposition of discontinued operations – net of tax
Net income (loss)
Weighted average number of shares outstanding in per share calculation
Basic
Diluted
Year Ended
December 31,
$
2021
3,886.8
(3,129.4)
$
2020
3,076.4
(2,537.1)
$
2019
4,353.1
(3,465.3)
757.4
(429.4)
328.0
3.7
(51.5)
(29.4)
13.0
263.8
(46.3)
217.5
—
3.4
539.3
(470.9)
68.4
3.6
(65.9)
—
4.9
11.0
(2.0)
9.0
(0.4)
(19.2)
$
220.9
$
(10.6) $
$
$
$
$
3.12
$
0.13
$
—
0.05
3.17
(0.01)
(0.27)
$
(0.15) $
3.07
$
0.13
$
—
0.05
3.12
69.7
70.9
(0.01)
(0.27)
$
(0.15) $
69.6
70.1
887.8
(552.8)
335.0
6.5
(87.9)
—
(6.1)
247.5
(37.8)
209.7
(155.4)
0.1
54.4
2.95
(2.18)
—
0.77
2.92
(2.16)
—
0.76
71.1
71.8
The accompanying notes are an integral part of these consolidated financial statements.
F-5
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(in millions)
Net income (loss)
Other comprehensive income (loss), net of tax:
Cumulative translation adjustment, net of (provision for) benefit from taxes of $5.4,
$(3.0) and $(3.9) for the years ended December 31, 2021, 2020 and 2019,
respectively
Derivative hedging adjustment, net of (provision for) benefit from taxes of $(2.7),
$1.6 and $(1.6) for the years ended December 31, 2021, 2020 and 2019,
respectively
Debt and equity securities adjustment, net of (provision for) benefit from taxes of
$0.0, $0.0 and $0.0 for the years ended December 31, 2021, 2020 and 2019,
respectively
Pension liability adjustment:
Net gain (loss), net of (provision for) benefit from taxes of $(1.6), $1.7 and $1.9
for the years ended December 31, 2021, 2020 and 2019, respectively
Amortization of actuarial (gain) loss, net of provision for (benefit from) taxes of
$(0.3), $(0.4) and $(0.6) for the years ended December 31, 2021, 2020 and
2019, respectively
Divestiture of business, net of provision for (benefit from) taxes of $0.0, $0.0 and
$(5.3) for the years ended December 31, 2021, 2020 and 2019, respectively
Foreign exchange and other effects, net of (provision for) benefit from taxes of
$0.1, $(0.6) and $(0.7) for the years ended December 31, 2021, 2020 and
2019, respectively
Total pension liability adjustment
Other comprehensive income (loss)
Comprehensive income (loss)
Year Ended December 31,
2021
2020
2019
$
220.9
$
(10.6) $
54.4
(42.8)
63.0
17.4
10.0
(5.2)
(1.2)
(1.4)
3.6
1.8
10.6
(6.3)
(7.8)
2.0
—
1.3
13.9
(20.1)
1.3
—
(2.3)
(7.3)
49.1
$
200.8
$
38.5
$
1.9
12.6
(2.2)
4.5
27.3
81.7
The accompanying notes are an integral part of these consolidated financial statements.
F-6
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions, except par value)
Assets
Current assets
Cash and cash equivalents
Trade receivables (net of allowance of $9.7 and $9.5 at December 31, 2021 and 2020, respectively)
Inventories
Prepaid and other current assets
Total current assets
Non-current assets
Property, plant and equipment – net
Goodwill
Intangible assets – net
Other assets
Total assets
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of long-term debt
Trade accounts payable
Accrued compensation and benefits
Accrued warranties and product liability
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term debt, less current portion
Other non-current liabilities
Total liabilities
Commitments and contingencies
Stockholders’ equity
Common stock, $.01 par value – authorized 300.0 shares; issued 83.4 and 82.9 shares at
December 31, 2021 and 2020, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Less cost of shares of common stock in treasury – 14.2 and 14.3 shares at December 31, 2021 and
2020, respectively
Total stockholders’ equity
Total liabilities and stockholders’ equity
December 31,
2021
2020
$
266.9 $
665.0
$
$
507.7
813.5
179.7
1,767.8
429.6
280.1
13.4
372.6
2,863.5 $
5.6 $
537.7
108.5
39.2
218.9
909.9
668.5
175.5
1,753.9
381.2
610.4
222.0
1,878.6
406.6
275.4
8.3
462.9
3,031.8
7.6
369.9
85.8
48.3
211.7
723.3
1,166.2
220.8
2,110.3
0.9
860.0
936.9
(228.5)
0.9
837.9
750.3
(208.4)
(459.7)
1,109.6
2,863.5 $
(459.2)
921.5
3,031.8
$
The accompanying notes are an integral part of these consolidated financial statements.
F-7
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(in millions)
Outstanding
Shares
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Common
Stock in
Treasury
Non-
controlling
Interest
Total
Balance at December 31, 2018
69.6
$
0.8
$
797.3 $
749.0 $
(284.8) $
(401.8) $
0.5 $
861.0
Net income (loss)
Other comprehensive income (loss) – net of tax
Issuance of common stock
Compensation under stock-based plans – net
Dividends
Acquisition of treasury stock
Divestiture
Balance at December 31, 2019
Net income (loss)
Other comprehensive income (loss) – net of tax
Issuance of common stock
Compensation under stock-based plans – net
Dividends
Acquisition of treasury stock
Other
Balance at December 31, 2020
Net income (loss)
Other comprehensive income (loss) – net of tax
Issuance of common stock
Compensation under stock-based plans – net
Dividends
Acquisition of treasury stock
Other
—
—
0.9
0.1
—
(0.2)
—
70.4
—
—
0.7
0.1
—
(2.6)
—
68.6
—
—
0.6
0.1
—
(0.1)
—
—
—
—
—
—
—
—
0.8
—
—
0.1
—
—
—
—
0.9
—
—
—
—
—
—
—
—
—
27.8
(1.3)
0.6
—
—
824.4
—
—
29.0
(15.7)
0.2
—
—
837.9
—
—
12.2
9.3
0.6
—
—
54.4
—
—
—
(32.0)
—
—
771.4
(10.6)
—
—
—
(8.6)
—
(1.9)
750.3
220.9
—
—
—
(34.1)
—
(0.2)
—
27.3
—
—
—
—
—
—
—
—
2.7
—
(7.7)
—
(257.5)
(406.8)
—
49.1
—
—
—
—
—
—
—
—
3.7
—
(56.1)
—
(208.4)
(459.2)
—
(20.1)
—
—
—
—
—
—
—
—
2.9
—
(3.3)
(0.1)
—
—
—
—
—
—
(0.5)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
54.4
27.3
27.8
1.4
(31.4)
(7.7)
(0.5)
932.3
(10.6)
49.1
29.1
(12.0)
(8.4)
(56.1)
(1.9)
921.5
220.9
(20.1)
12.2
12.2
(33.5)
(3.3)
(0.3)
Balance at December 31, 2021
69.2
$
0.9
$
860.0 $
936.9 $
(228.5) $
(459.7) $
— $ 1,109.6
The accompanying notes are an integral part of these consolidated financial statements.
F-8
TEREX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Operating Activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
Year Ended December 31,
2021
2020
2019
$
220.9 $
(10.6) $
54.4
activities:
Depreciation and amortization
(Gain) loss on disposition of discontinued operations
Deferred taxes
Impairments
(Gain) loss on sale of assets
Loss on early extinguishment of debt
Stock-based compensation expense
Inventory and other non-cash charges
Changes in operating assets and liabilities (net of effects of acquisitions and divestitures):
Trade receivables
Inventories
Trade accounts payable
Other assets and liabilities
Foreign exchange and other operating activities, net
Net cash provided by (used in) operating activities
Investing Activities
Capital expenditures
Proceeds from sale of capital assets
Acquisitions, net of cash acquired, and investments
Proceeds (payments) from disposition of investments
Proceeds from disposition of discontinued operations
Net cash provided by (used in) investing activities
Financing Activities
Repayments of debt
Proceeds from issuance of debt
Payment of debt extinguishment costs
Share repurchases
Dividends paid
Other financing activities, net
Net cash provided by (used in) financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year (1)
50.2
(3.4)
1.2
6.3
(7.4)
29.4
33.1
14.7
(139.0)
(229.5)
173.0
140.7
3.2
293.4
(59.7)
1.9
(42.7)
(1.7)
—
(102.2)
(1,103.5)
600.1
(16.9)
(3.0)
(33.5)
(23.3)
(580.1)
(14.3)
(403.2)
670.1
49.7
19.2
5.6
5.5
(0.4)
—
23.8
20.6
16.1
261.6
(156.9)
8.8
(17.6)
225.4
(64.5)
2.7
—
7.5
15.8
(38.5)
(176.0)
170.0
—
(56.0)
(8.4)
(12.4)
(82.8)
25.9
130.0
540.1
$
266.9 $
670.1 $
49.6
(0.1)
(17.6)
83.6
(9.8)
—
43.1
47.6
176.1
20.3
(220.1)
(57.0)
3.3
173.4
(108.9)
4.3
—
30.7
177.7
103.8
(1,660.5)
1,616.6
—
(7.4)
(31.4)
(21.0)
(103.7)
(5.5)
168.0
372.1
540.1
(1) Cash and Cash Equivalents includes Cash and Cash Equivalents-Held for Sale of $5.1 and $5.0 at December 31, 2020 and 2019, respectively.
The accompanying notes are an integral part of these consolidated financial statements.
F-9
TEREX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A – BASIS OF PRESENTATION
Basis of Presentation and Principles of Consolidation. The consolidated financial statements include the accounts of Terex
Corporation, its majority-owned subsidiaries and other controlled subsidiaries (“Terex” or the “Company”). The Company
consolidates all majority-owned and controlled subsidiaries, applies equity method of accounting for investments in which the
Company is able to exercise significant influence and applies the cost method for investments which do not have readily
determinable fair values. All intercompany balances, transactions and profits have been eliminated. Certain prior period
amounts have been reclassified to conform with the 2021 presentation.
As further described in Note D – “Acquisitions and Discontinued Operations”, on July 31, 2019, the Company completed the
disposition of its Demag® mobile cranes business (“Demag”) to Tadano Ltd. and certain of its subsidiaries (“Tadano”). During
2019, the Company also exited North American mobile crane product lines manufactured in its Oklahoma City facility. As a
result, the Company reported these operations, formerly part of the Cranes segment, in discontinued operations in the
Consolidated Statement of Income (Loss) for all periods presented. Residual assets and liabilities were recorded within Prepaid
and other current assets, Other assets, Other current liabilities and Other non-current liabilities in the Consolidated Balance
Sheet at December 31, 2020. See Note D – “Acquisitions and Discontinued Operations” for further information.
Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles (“U.S.
GAAP”) requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual amounts could differ from those estimates.
Cash and Cash Equivalents. Cash equivalents consist of highly liquid investments with original maturities of three months or
less. Carrying amount of cash and cash equivalents approximates its fair value. Cash and cash equivalents include $3.7 million
and $5.0 million at December 31, 2021 and 2020, respectively, which were not immediately available for use. These consist
primarily of cash balances held in escrow to secure various obligations of the Company.
Inventories. Inventories are stated at the lower of cost or net realizable value (“NRV”). Cost is determined by the first-in, first-
out (“FIFO”) and average cost methods (approximately 93% and 7%, respectively). In valuing inventory, the Company is
required to make assumptions regarding the level of reserves required to value potentially obsolete or over-valued items at
lower of cost or NRV. These assumptions require the Company to analyze the aging of and forecasted demand for its
inventory, forecast future product sales prices, pricing trends and margins, and to make judgments and estimates regarding
obsolete or excess inventory. Future product sales prices, pricing trends and margins are based on historical experience and
actual orders received. The Company’s judgments and estimates for excess or obsolete inventory are based on analysis of
actual and forecasted usage. Valuation of used equipment taken in trade from customers requires the Company to use the best
information available to determine the value of the equipment to potential customers. This value is subject to change based on
numerous conditions. Inventory reserves are established taking into account age, frequency of use, or sale, and in the case of
repair parts, installed base of machines. While calculations are made involving these factors, significant management judgment
regarding expectations for future events is involved. Future events that could significantly influence the Company’s judgment
and related estimates include general economic conditions in markets where the Company’s products are sold, new equipment
price fluctuations, actions of the Company’s competitors, including introduction of new products and technological advances,
as well as new products and design changes the Company introduces. The Company makes adjustments to its inventory
reserves based on identification of specific situations and increases its inventory reserves accordingly. As further changes in
future economic or industry conditions occur, the Company may revise estimates that were used to calculate its inventory
reserves. At December 31, 2021 and 2020, reserves for lower of cost or NRV, excess and obsolete inventory totaled $57.8
million and $61.8 million, respectively.
If actual conditions are less favorable than those the Company has projected, the Company will increase its reserves for lower
of cost or NRV, excess and obsolete inventory accordingly. Any increase in the Company’s reserves will adversely impact its
results of operations. Establishment of a reserve for lower of cost or NRV, excess and obsolete inventory establishes a new cost
basis in the inventory. Such reserves are not reduced until the product is sold.
Shipping and handling costs for product shipments to customers are recorded in Cost of goods sold (“COGS”).
F-10
Debt Issuance Costs. Debt issuance costs incurred in securing the Company’s financing arrangements are capitalized and
amortized over the term of the associated debt. Debt issuance costs related to senior notes and term loans are presented in the
balance sheet as a direct deduction from the carrying amount of the borrowing, consistent with debt discounts. Debt issuance
costs related to securing the Company’s revolving line of credit are presented in Other assets. Debt issuance costs related to
debt that is extinguished early are charged to expense at the time of retirement. Debt issuance costs were $12.0 million and
$15.4 million (net of accumulated amortization of $8.0 million and $17.3 million) at December 31, 2021 and 2020,
respectively.
Intangible Assets. Intangible assets include purchased patents, trademarks, customer relationships and other specifically
identifiable assets and are amortized on a straight-line basis over the respective estimated useful lives, which range from one to
ninety-nine years. Intangible assets are reviewed for impairment when events or changes in circumstances indicate that their
carrying amount may not be recoverable.
Goodwill. Goodwill represents the excess of purchase price over the fair value of assets acquired and liabilities assumed as part
of a business combination. Goodwill is assigned to one or more reporting segments on the date of acquisition. The Company
reviews its goodwill for impairment annually during the fourth quarter of each fiscal year or more frequently if an event occurs
or circumstances change that would more likely than not reduce the fair value of any one of its reporting units below its
respective carrying amount.
In performing the goodwill impairment test, the Company may first perform a qualitative assessment or bypass the qualitative
assessment and proceed directly to performing the quantitative impairment test. A qualitative assessment requires the Company
to consider events or circumstances including macroeconomic conditions, industry and market considerations, cost factors,
overall financial performance, changes in management or key personnel, changes in strategy, changes in customers, changes in
the composition or carrying amount of a reporting segment’s net assets and changes in its stock price. If, after assessing the
totality of events or circumstances, the Company determines that it is more likely than not that the fair values of its reporting
units are greater than the carrying amounts, then a quantitative impairment test does not need to be performed.
If the qualitative assessment indicates a quantitative analysis should be performed or a quantitative analysis is directly elected,
the Company evaluates goodwill for impairment by comparing the fair value of each of its reporting units to its carrying value,
including the associated goodwill. To determine the fair values, the Company uses an income approach, along with other
relevant market information, derived from a discounted cash flow model to estimate fair value of its reporting units. An
impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any, would be
recognized. The loss recognized would not exceed total amount of goodwill allocated to that reporting unit.
In connection with the annual impairment test conducted as of October 1, 2021, the Company bypassed the qualitative
assessment and proceeded directly to the quantitative impairment test. The quantitative assessment indicated that each
reporting unit had an estimated fair value which substantially exceeded its respective carrying amount.
Property, Plant and Equipment. Property, plant and equipment are stated at cost. Expenditures for major renewals and
improvements are capitalized while expenditures for maintenance and repairs not expected to extend the life of an asset beyond
its normal useful life are charged to expense when incurred. Plant and equipment are depreciated over the estimated useful
lives (1-40 years and 2-20 years, respectively) of the assets under the straight-line method of depreciation for financial reporting
purposes and both straight-line and other methods for tax purposes.
Long-Lived Assets. The Company assesses the realizability of its long-lived assets, including definite-lived intangible assets,
and evaluates such assets for impairment whenever events or changes in circumstances indicate the carrying amount of such
assets (or group of assets) may not be recoverable. Impairment is determined to exist if estimated future undiscounted cash
flows are less than carrying value. If an impairment is indicated, assets are written down to their fair value, which is typically
determined by a discounted cash flow analysis. Future cash flow projections include assumptions regarding future sales levels
and the level of working capital needed to support the assets. The Company uses data developed by business segment
management as well as macroeconomic data in making these calculations. There are no assurances that future cash flow
assumptions will be achieved. The amount of any impairment then recognized would be calculated as the difference between
estimated fair value and carrying value of the asset. Included in Selling, general & administrative expenses (“SG&A”) in the
Consolidated Statement of Income (Loss) are $6.3 million, $5.5 million and $1.5 million of asset impairments for the years
ended December 31, 2021, 2020 and 2019, respectively.
F-11
Accounts Receivable and Allowance for Doubtful Accounts. Trade accounts receivable are recorded at invoiced amount and
do not bear interest. Allowance for doubtful accounts is the Company’s estimate of current expected credit losses on its
existing accounts receivable and determined based on historical customer assessments, current financial conditions, and
reasonable and supportable forecasts. Account balances are charged off against the allowance when the Company determines
the receivable will not be recovered. There can be no assurance that the Company’s estimate of accounts receivable collection
will be indicative of future results.
The following table summarizes changes in the consolidated allowance for doubtful accounts (in millions):
Balance as of December 31, 2019
Provision for credit losses
Other adjustments
Balance as of December 31, 2020
Provision for credit losses
Other adjustments
Balance as of December 31, 2021
$
$
$
9.9
1.8
(2.2)
9.5
2.5
(2.3)
9.7
Pursuant to terms of the Company’s trade accounts receivable factoring arrangements, certain of the Company’s subsidiaries
may sell their trade accounts receivable. These trade receivables qualify for sales treatment under Accounting Standards
Codification (“ASC”) 860, “Transfers and Servicing” (“ASC 860”) and accordingly, the proceeds are included in net cash
provided by operating activities. The gross amount of trade receivables sold for years ended December 31, 2021, 2020 and
2019 totaled $527.0 million, $405.8 million and $1,108.0 million, respectively. The factoring discount paid upon sale is
recorded as interest expense in the Consolidated Statement of Income (Loss). As of December 31, 2021 and 2020, $60.7
million and $2.0 million, respectively, of receivables qualifying for sale treatment were outstanding and continued to be
serviced by the Company.
Finance Receivables. The Company’s net finance receivable balances include both sales-type leases and commercial loans.
The Company had $12.2 million and $129.8 million of gross finance receivables at December 31, 2021 and 2020, respectively.
The allowance for credit losses on finance receivables was $7.9 million and $13.8 million at December 31, 2021 and 2020,
respectively. In February 2021, the Company transferred finance receivables of $89.7 million to a U.S. regional bank, which
qualified for sales treatment under ASC 860. The Company received $99.4 million of cash proceeds from the sale and
recognized a net gain of $5.6 million.
Revenue Recognition. The Company recognizes revenue when goods or services are transferred to customers in an amount
that reflects the consideration which it expects to receive in exchange for those goods or services. In determining when and
how revenue is recognized from contracts with customers, the Company performs the following five-step analysis: (i)
identification of contract with customer; (ii) determination of performance obligations; (iii) measurement of the transaction
price; (iv) allocation of the transaction price to the performance obligations and (v) recognition of revenue when (or as) the
Company satisfies each performance obligation.
In the United States, the Company has the ability to enter into a security agreement and receive a security interest in the product
by filing an appropriate Uniform Commercial Code (“UCC”) financing statement. However, a significant portion of the
Company’s revenue is generated outside of the United States. In many countries outside of the United States, as a matter of
statutory law, a seller retains title to a product until payment is made. The laws do not provide for a seller’s retention of a
security interest in goods in the same manner as established in the UCC. In these countries, the Company retains title to goods
delivered to a customer until the customer makes payment so that it can recover the goods in the event of customer default on
payment. The Company considers the following events in order to determine when it is appropriate to recognize revenue: (i)
the customer has physical possession of the product; (ii) the customer has legal title to the product; (iii) the customer has
assumed the risks and rewards of ownership, (iv) the customer has communicated acceptance of the product and (v) the
Company has a right to payment. These events serve as indicators, along with the details contained within the contract, that it is
appropriate to recognize revenue.
F-12
The Company generates revenue through the sale of machines, parts and service, and extended warranties. Revenue from
product sales is recorded when the performance obligation is fulfilled, usually at the time of shipment, at the net sales price
(transaction price). Estimates of variable consideration, such as volume discounts and rebates, reduce transaction price when it
is probable that a customer will attain these types of sales incentives. These estimates are primarily derived from contractual
terms and historical experience. The Company elected to present revenue net of sales tax and other similar taxes and account
for shipping and handling as activities to fulfill the promise to transfer goods rather than separate performance obligations.
Payments are typically due either 30 or 60 days, depending on geography, following delivery of products or completion of
services.
Revenue from extended warranties is recognized over time on a straight line basis because the customer benefits evenly from
the extended warranty throughout the period; beginning upon expiration of the standard warranty and through end of the term.
Revenue from services is recognized based on cost input method as the time and materials used in the repair portrays the most
accurate depiction of completion of the performance obligation. During the full year ended December 31, 2021, revenues
generated from the sale of extended warranties and services were an immaterial portion of revenue.
The Company sells equipment subject to leases and related lease payments. Income from operating leases is recognized ratably
over the lease term. Revenue from sales-type leases is recognized at the inception of the lease.
For detailed sales information see Note B – “Business Segment Information”.
Leases. Terex leases approximately 100 real properties, approximately 400 vehicles and approximately 400 pieces of office
and industrial equipment. As the lessee, Terex will classify a lease which it has substantially all the risks and rewards of
ownership as a finance lease.
The Company determines if an arrangement contains a lease at contract inception. With the exception of short-term leases
(leases with terms less than 12 months), all leases with contractual fixed costs are recorded on the balance sheet on the lease
commencement date as a right-of-use (“ROU”) asset and a lease liability. Lease liabilities are initially measured at the present
value of the minimum lease payments and subsequently increased to reflect the interest accrued and reduced by the lease
payments affected. ROU assets are initially measured at the present value of the minimum lease payments adjusted for any
prior lease payments, lease incentives and initial direct costs. The Company does not separate lease and non-lease components
of a contract for any class of leases. Certain leases contain escalation, renewal and/or termination options that are factored into
the ROU asset as appropriate. Operating leases result in a straight-line rent expense over the life of the lease. For finance
leases, ROU assets are amortized on a straight-line basis over the life of the lease and interest accretes to the lease liability
which results in a higher interest expense at lease inception that declines over the life of the lease. Generally, variable lease
costs are expensed as incurred and are not included in the determination of ROU assets or lease liabilities.
Short-term leases for real property, vehicles and industrial and office equipment are recognized in the income statement on a
straight-line basis over the lease term.
The Company uses its estimated incremental borrowing rate, which is derived from information available at the lease
commencement date, in determining the present value of lease payments, if the rate is not implicit in the lease. Consideration is
given to the Company’s recent debt issuances as well as publicly available data for instruments with similar characteristics
when calculating incremental borrowing rates.
The Company adopted Accounting Standard Update (“ASU”) 2016-02, “Leases (Topic 842),” on January 1, 2019 under the
alternative transition method permitted by ASU 2018-11, “Leases (Topic 842): Targeted Improvements”. For detailed lease
information see Note K – “Leases”.
Guarantees. The Company issues guarantees to financial institutions related to financing of equipment purchases by
customers. The expectation of losses or non-performance is assessed based on consideration of historical customer
assessments, current financial conditions, reasonable and supportable forecasts, equipment collateral value and other factors.
Reserves are recorded for expected loss over the contractual period of risk exposure. See Note N – “Litigation and
Contingencies” for additional information regarding guarantees issued to financial institutions.
Accrued Warranties. The Company records accruals for potential warranty claims based on its claim experience. The
Company’s products are typically sold with a standard warranty covering defects that arise during a fixed period. Each
business provides a warranty specific to products it offers. The specific warranty offered by a business is a function of
customer expectations and competitive forces. Warranty length is generally a fixed period of time, a fixed number of operating
hours or both.
F-13
A liability for estimated warranty claims is accrued at the time of sale. The current portion of the product warranty liability is
included in Accrued warranties and product liability and the non-current portion is included in Other non-current liabilities in
the Company’s Consolidated Balance Sheet. The liability is established using historical warranty claims experience for each
product sold. Historical claims experience may be adjusted for known design improvements or for the impact of unusual
product quality issues. Assumptions are updated for known events that may affect the potential warranty liability.
The following table summarizes changes in the consolidated product warranty liability (in millions):
Balance as of December 31, 2019
Accruals for warranties issued during the period
Changes in estimates
Settlements during the period
Foreign exchange effect/other
Balance as of December 31, 2020
Accruals for warranties issued during the period
Changes in estimates
Settlements during the period
Foreign exchange effect/other
Balance as of December 31, 2021
$
$
$
47.5
38.9
14.3
(48.4)
0.6
52.9
42.5
(4.7)
(45.7)
(0.9)
44.1
Accrued Product Liability. The Company records accruals for product liability claims when deemed probable and estimable
based on facts and circumstances, and prior claims experience. Accruals for product liability claims are valued based upon the
Company’s prior claims experience, including consideration of jurisdiction, circumstances of the accident, type of loss or
injury, identity of plaintiff, other potential responsible parties, analysis of outside legal counsel, analysis of internal product
liability counsel and experience of the Company’s product safety employees. Actual product liability costs could be different
due to a number of variables such as the decisions of juries or judges.
Defined Benefit Pension and Other Post-retirement Benefits. The Company provides post-retirement benefits to certain
former salaried and hourly employees and certain hourly employees covered by bargaining unit contracts that provide such
benefits. The Company accounts for these benefits under ASC 715, “Compensation-Retirement Benefits” (“ASC 715”). ASC
715 requires balance sheet recognition of the overfunded or underfunded status of pension and post-retirement benefit plans.
Under ASC 715, actuarial gains and losses and prior service costs or credits must be recognized in Accumulated other
comprehensive income, net of tax effects, until they are amortized as a component of net periodic benefit cost. See Note L –
“Retirement Plans and Other Benefits.”
Deferred Compensation. The Company maintains a deferred compensation plan. The Company’s common stock held in a
rabbi trust pursuant to the Company’s deferred compensation plan, is treated in a manner similar to treasury stock and is
recorded at cost within Stockholders’ equity as of December 31, 2021 and 2020. The plan obligations for participant deferrals
in common stock are classified as Additional paid-in capital and deferrals in the bond fund investment are classified as Accrued
compensation and benefits and Other non-current liabilities in the Consolidated Balance Sheet. The total of common stock
required to settle this deferred compensation obligation is included in the denominator in both basic and diluted earnings per
share calculations.
Stock-Based Compensation. At December 31, 2021, the Company had stock-based employee compensation plans, which are
described more fully in Note M – “Stockholders’ Equity.” The Company accounts for those plans under the recognition and
measurement principles of ASC 718, “Compensation–Stock Compensation” (“ASC 718”). ASC 718 requires that expense
resulting from all share-based payment transactions be recognized in the consolidated financial statements at fair value over the
service period. The Company recognizes forfeitures as they occur.
Foreign Currency Translation. Assets and liabilities of the Company’s non-U.S. operations are translated at year-end
exchange rates. Income and expenses are translated at average exchange rates during the year. For operations whose functional
currency is the local currency, translation adjustments are recorded in the Accumulated other comprehensive income
component of Stockholders’ equity. Gains or losses resulting from foreign currency transactions are recorded in the accounts
based on the underlying transaction.
F-14
Derivatives. Derivative financial instruments are recorded in the Consolidated Balance Sheet at their fair value as either assets
or liabilities. Changes in the fair value of derivatives are recorded each period in earnings or Accumulated other comprehensive
income, depending on whether a derivative is designated and effective as part of a hedge transaction and, if it is, the type of
hedge transaction. Gains and losses on derivative instruments reported in Accumulated other comprehensive income are
included in earnings in the periods in which earnings are affected by the hedged item. See Note I – “Derivative Financial
Instruments.”
Research, Development and Engineering Costs. Research, development and engineering costs are expensed as incurred. Such
costs incurred in the development of new products or significant improvements to existing products are included in SG&A.
Research, development and engineering costs were $52.2 million, $58.9 million and $72.4 million during 2021, 2020 and 2019,
respectively.
Income Taxes. The Company accounts for income taxes using the asset and liability method. This method requires the
recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between
financial statement carrying amounts and the tax bases of assets and liabilities. See Note C – “Income Taxes.”
Earnings Per Share. Basic earnings (loss) per share is computed by dividing Net income (loss) for the period by the weighted
average number of shares of common stock outstanding. Diluted earnings (loss) per share is computed by dividing Net income
(loss) for the period by the weighted average number of shares of common stock outstanding and potential dilutive common
shares. See Note E – “Earnings Per Share.”
Fair Value Measurements. Assets and liabilities measured at fair value on a recurring basis under the provisions of ASC 820,
“Fair Value Measurement and Disclosure” (“ASC 820”) include commodity swaps, interest rate caps, cross currency swaps and
foreign exchange contracts, discussed in Note I – “Derivative Financial Instruments” and debt discussed in Note J – “Long-term
Obligations”. These instruments are valued using observable market data for similar assets and liabilities or the present value
of future cash payments and receipts. ASC 820 establishes a fair value hierarchy for those instruments measured at fair value
that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions
(unobservable inputs). The hierarchy consists of three levels:
Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical,
unrestricted assets or liabilities;
Level 2 – Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for
substantially the full term of the asset or liability; and
Level 3 – Prices or valuation techniques that require inputs that are both significant to the fair value measurement and
unobservable (i.e. supported by little or no market activity).
Determining which category an asset or liability falls within this hierarchy requires judgment. The Company evaluates its
hierarchy disclosures each quarter.
Recently Issued Accounting Standards
Accounting Standards Implemented in 2021
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”)
2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to
simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general
principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application of Topic 740. The
Company adopted ASU 2019-12 on January 1, 2021. Adoption did not have a material effect on the Company’s consolidated
financial statements.
F-15
Accounting Standards to be Implemented
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference
Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contracts,
hedging relationships and other transactions affected by reference rate reform if certain criteria are met to ease an entity’s
financial reporting burden as the market transitions from LIBOR and other interbank offered rates to alternative reference rates.
The FASB further issued ASU 2021-01 in January 2021 to clarify the scope of Topic 848. The guidance was effective upon
issuance and may be applied through December 31, 2022. Adoption is not expected to have a material effect on the Company’s
consolidated financial statements.
NOTE B – BUSINESS SEGMENT INFORMATION
Terex is a global manufacturer of aerial work platforms and materials processing machinery. The Company designs, builds and
supports products used in construction, maintenance, manufacturing, energy, minerals and materials management applications.
Terex products and solutions enable customers to reduce their environmental impact including electric and hybrid offerings that
deliver quiet and emission-free performance, products that support renewable energy, and products that aid in the recovery of
useful materials from various types of waste. The Company’s products are manufactured in North America, Europe, Australia
and Asia and sold worldwide. Terex engages with customers through all stages of the product life cycle, from initial
specification and financing to parts and service support.
The Company identifies its operating segments according to how business activities are managed and evaluated, and has
identified three operating segments: Aerials, Utilities and Materials Processing (“MP”). As Aerials and Utilities operating
segments share similar economic characteristics, these operating segments are aggregated into one operating segment, Aerial
Work Platforms (“AWP”). The Company operates in two reportable segments: (i) AWP and (ii) MP.
AWP designs, manufactures, services and markets aerial work platform equipment, utility equipment and telehandlers as well
as their related components and replacement parts. Customers use these products to construct and maintain industrial,
commercial, institutional and residential buildings and facilities, for construction and maintenance of utility and
telecommunication lines, tree trimming, certain construction and foundation drilling applications, and for other commercial
operations, as well as in a wide range of infrastructure projects.
MP designs, manufactures, services and markets materials processing and specialty equipment, including crushers, washing
systems, screens, trommels, apron feeders, material handlers, pick and carry cranes, rough terrain cranes, tower cranes, wood
processing, biomass and recycling equipment, concrete mixer trucks and concrete pavers, conveyors, and their related
components and replacement parts. Customers use these products in construction, infrastructure and recycling projects, in
various quarrying and mining applications, as well as in landscaping and biomass production industries, material handling
applications, maintenance applications to lift equipment or material, moving materials and equipment on rugged or uneven
terrain, lifting construction material and placing material at point of use.
The Company assists customers in their rental, leasing and acquisition of its products through Terex Financial Services
(“TFS”). TFS uses its equipment financing experience to facilitate financial products and services to assist customers in the
acquisition of the Company’s equipment. TFS is included in Corporate and Other.
Corporate and Other also includes eliminations among the two reportable segments, as well as general and corporate items.
None of the Company’s customers individually accounted for more than 10% of consolidated net sales in 2021, 2020 or 2019.
F-16
Business segment information is presented below (in millions):
Net sales
AWP
MP
Corporate and Other / Eliminations
Total
Income (loss) from operations
AWP
MP
Corporate and Other / Eliminations
Total
Depreciation and amortization
AWP
MP
Corporate
Total
Capital expenditures
AWP
MP
Corporate
Total
Year Ended December 31,
2021
2020
2019
$
2,178.8 $
1,782.9 $
2,726.6
1,691.8
16.2
3,886.8 $
1,256.8
36.7
3,076.4 $
1,602.6
23.9
4,353.1
152.1 $
240.9
(65.0)
0.5 $
143.4
(75.5)
328.0 $
68.4 $
196.2
227.9
(89.1)
335.0
25.9 $
13.3
11.0
50.2 $
23.2 $
11.4
15.1
49.7 $
41.2 $
47.4 $
15.8
2.7
11.6
5.5
23.0
9.1
14.3
46.4
82.1
12.9
10.5
59.7 $
64.5 $
105.5
$
$
$
$
$
$
$
Sales between segments are generally priced to recover costs plus a reasonable markup for profit, which is eliminated in
consolidation.
(in millions)
Identifiable assets
AWP(1)
MP
Corporate and Other / Eliminations (2)
Assets held for sale
Total
December 31,
2021
2020
$
1,870.8 $
1,541.0
1,648.0
1,596.3
(655.3)
(111.8)
—
6.3
$
2,863.5 $
3,031.8
(1) Increase primarily due to higher trade receivable and inventory balances.
(2) Change primarily due to lower cash and finance receivable balances and higher intercompany eliminations.
Long-lived assets consist of net fixed assets, which can be attributed to the specific geographic regions (in millions):
Long-lived Assets
United States
United Kingdom
China
Other European countries
All other
Total
F-17
December 31,
2021
2020
$
218.0 $
76.4
55.8
38.9
40.5
$
429.6 $
237.4
74.5
39.5
36.2
19.0
406.6
Geographic net sales information is presented below (in millions):
Net sales by region
North America
Western Europe
Asia-Pacific
Rest of World (1)
Total (2)
Year Ended December 31, 2021
AWP
MP
Corporate and
Other /
Eliminations
Total
$
$
1,415.8 $
346.7
310.3
106.0
2,178.8 $
667.4 $
515.6
349.3
159.5
1,691.8 $
26.3 $
0.5
3.1
(13.7)
16.2 $
2,109.5
862.8
662.7
251.8
3,886.8
(1) Includes intercompany sales and eliminations.
(2) Total sales include $1.9 billion attributable to the U.S., the Company’s country of domicile.
Net sales by region
North America
Western Europe
Asia-Pacific
Rest of World (1)
Total (2)
Year Ended December 31, 2020
AWP
MP
Corporate and
Other /
Eliminations
Total
$
$
1,185.2 $
230.7
271.6
95.4
1,782.9 $
497.7 $
379.0
256.0
124.1
1,256.8 $
62.5 $
0.3
2.6
(28.7)
36.7 $
1,745.4
610.0
530.2
190.8
3,076.4
(1) Includes intercompany sales and eliminations.
(2) Total sales include $1.6 billion attributable to the U.S., the Company’s country of domicile.
Net sales by region
North America
Western Europe
Asia-Pacific
Rest of World (1)
Total (2)
Year Ended December 31, 2019
AWP
MP
Corporate and
Other /
Eliminations
Total
$
$
1,801.8 $
431.1
325.1
168.6
2,726.6 $
605.6 $
514.2
301.4
181.4
1,602.6 $
76.5 $
0.6
2.1
(55.3)
23.9 $
2,483.9
945.9
628.6
294.7
4,353.1
(1) Includes intercompany sales and eliminations.
(2) Total sales include $2.3 billion attributable to the U.S., the Company’s country of domicile.
The Company attributes sales to unaffiliated customers in different geographical areas based on the location of the customer.
Product type net sales information is presented below (in millions):
Net sales by product type
Aerial Work Platforms
Materials Processing Equipment
Specialty Equipment
Utility Equipment
Other (1)
Total
Year Ended December 31, 2021
AWP
MP
Corporate and
Other /
Eliminations
Total
$
$
1,611.8 $
—
—
380.6
186.4
2,178.8 $
— $
995.9
693.5
—
2.4
1,691.8 $
1.6 $
1.3
2.2
0.6
10.5
16.2 $
1,613.4
997.2
695.7
381.2
199.3
3,886.8
(1) Includes other product types, intercompany sales and eliminations.
F-18
Year Ended December 31, 2020
AWP
MP
Corporate and
Other /
Eliminations
Total
1,234.8 $
—
—
352.4
195.7
1,782.9 $
— $
760.5
493.6
—
2.7
1,256.8 $
0.9 $
—
1.4
—
34.4
36.7 $
1,235.7
760.5
495.0
352.4
232.8
3,076.4
Year Ended December 31, 2019
AWP
MP
Corporate and
Other /
Eliminations
Total
1,912.1 $
—
—
419.2
395.3
2,726.6 $
— $
895.4
699.9
—
7.3
1,602.6 $
2.8 $
—
5.3
—
15.8
23.9 $
1,914.9
895.4
705.2
419.2
418.4
4,353.1
$
$
$
$
Net sales by product type
Aerial Work Platforms
Materials Processing Equipment
Specialty Equipment
Utility Equipment
Other (1)
Total
(1) Includes other product types, intercompany sales and eliminations.
Net sales by product type
Aerial Work Platforms
Materials Processing Equipment
Specialty Equipment
Utility Equipment
Other (1)
Total
(1) Includes other product types, intercompany sales and eliminations.
NOTE C – INCOME TAXES
The components of income (loss) from continuing operations before income taxes are as follows (in millions):
United States
Foreign
Income (loss) from continuing operations before income taxes
Year Ended December 31,
2020
2019
2021
$
$
(16.7) $
280.5
263.8 $
(148.8) $
159.8
11.0 $
(32.4)
279.9
247.5
The Company recorded Income (loss) from discontinued operations and Gain (loss) on disposition of discontinued operations
before income taxes of $2.6 million, $(28.9) million and $(175.8) million for the years ended December 31, 2021, 2020 and
2019, respectively.
F-19
The major components of the Company’s provision for (benefit from) income taxes on continuing operations before income
taxes are summarized below (in millions):
Current:
Federal
State
Foreign
Current income tax provision (benefit)
Deferred:
Federal
State
Foreign
Deferred income tax (benefit) provision
Provision for (benefit from) income taxes
Year Ended December 31,
2020
2019
2021
$
$
6.6 $
1.8
36.7
45.1
(3.8)
1.5
3.5
1.2
46.3 $
(27.1) $
2.3
21.3
(3.5)
1.2
4.3
—
5.5
2.0 $
14.7
1.2
38.1
54.0
(14.9)
(3.3)
2.0
(16.2)
37.8
The elimination of tax from intercompany transactions is included in current tax expense. The Company recorded Provision for
(benefit from) income taxes of $(0.8) million, $(9.3) million and $(20.5) million from discontinued operations and on
disposition of discontinued operations for the years ended December 31, 2021, 2020 and 2019, respectively.
In January 2018, the FASB released guidance on the accounting for tax on Global Intangible Low-taxed Income (“GILTI”).
The guidance indicates that either accounting for deferred taxes related to GILTI or treating any taxes on GILTI as period costs
are both acceptable accounting policy elections. Terex elected to treat taxes on GILTI inclusions as period costs.
Deferred tax assets and liabilities result from differences in the bases of assets and liabilities for tax and financial reporting
purposes. The tax effects of the basis differences and loss carry forwards as of December 31, 2021 and 2020 for continuing
operations are summarized below for major balance sheet captions (in millions):
Property, plant and equipment
Intangibles
Inventories
Accrued warranties and product liability
Loss carry forwards
Retirement plans
Accrued compensation and benefits
Operating lease ROU asset
Operating lease liability
Other
Deferred tax assets valuation allowance
Net deferred tax assets (liabilities)
2021
2020
(16.1) $
(6.8)
6.7
10.8
184.4
11.3
15.8
(23.5)
23.8
24.1
(100.0)
130.5 $
(18.1)
(6.1)
6.1
12.5
204.4
14.0
16.8
(26.1)
27.0
18.5
(112.1)
136.9
$
$
Deferred tax assets were $233.0 million before valuation allowances of $100.0 million, resulting in $133.0 million of net
deferred tax assets which are partially offset by deferred tax liabilities of $2.5 million at December 31, 2021. Deferred tax
assets for continuing operations were $251.6 million ($0.1 million for discontinued operations) before valuation allowances of
$112.1 million, resulting in $139.5 million of net deferred tax assets which are partially offset by deferred tax liabilities for
continuing operations of $2.6 million at December 31, 2020. There were no deferred tax liabilities for discontinued operations
at December 31, 2021 and 2020.
F-20
The Company evaluates the net realizable value of its deferred tax assets each reporting period. The Company must consider
all objective evidence, both positive and negative, in evaluating the future realization of its deferred tax assets, including tax
loss carry forwards. Available evidence, including historical information is supplemented by currently obtainable information
about future tax years. Realization of deferred tax assets requires sufficient taxable income of the appropriate character. To the
extent estimates of future taxable income decrease or do not materialize, additional valuation allowances may be required. The
Company records a valuation allowance for each deferred tax asset for which realization is not assessed as more likely than not.
The valuation allowance for deferred tax assets as of December 31, 2021 and 2020 was $100.0 million and $112.1 million,
respectively. The net change in the total valuation allowance for the years ended December 31, 2021 and 2020 was a decrease
of $12.1 million and an increase of $5.1 million, respectively.
The Company’s Provision for (benefit from) income taxes is different from the amount that would be provided by applying the
statutory federal income tax rate to the Company’s Income (loss) from continuing operations before income taxes. The reasons
for the difference are summarized as follows (in millions):
Tax at statutory federal income tax rate
State taxes
Change in valuation allowance
Foreign tax differential on income/losses of foreign subsidiaries
U.S. tax on multi-national operations
Change in foreign tax rates
U.S. tax legislation
Research and development
Provision to return adjustments
Compensation
Other
Provision for (benefit from) income taxes
Year Ended December 31,
2021
2020
2019
$
$
55.4
2.7
(9.0)
(12.0)
8.1
(0.6)
—
(0.8)
0.5
1.8
0.2
46.3
$
$
2.3
5.2
—
(13.0)
17.6
0.7
(10.9)
(1.2)
(1.7)
3.1
(0.1)
2.0
$
$
51.9
(1.7)
(4.9)
(14.5)
7.2
3.7
—
(2.0)
(2.4)
1.1
(0.6)
37.8
The Company does not provide for foreign income and withholding, U.S. Federal, or state income taxes or tax benefits on the
financial reporting basis over the tax basis of its investments in foreign subsidiaries to the extent such amounts are indefinitely
reinvested to support operations and continued growth plans outside the U.S. The Company reviews its plan to indefinitely
reinvest on a quarterly basis. In making its decision to indefinitely reinvest, the Company evaluates its plans of reinvestment,
its ability to control repatriation and to mobilize funds without triggering basis differences, and the profitability of U.S.
operations and their cash requirements and the need, if any, to repatriate funds. If the assessment of the Company with respect
to earnings of non-U.S. subsidiaries changes, deferred taxes for foreign income taxes and withholding, U.S. Federal or state
income taxes or tax benefits may have to be accrued.
The Company considers foreign earnings that have been taxed in the U.S. or have qualified for the high-tax exception to
taxation to not be indefinitely reinvested. The Company has recorded foreign, federal and state tax expense with respect to
earnings which have been subject to federal income tax and which are no longer indefinitely reinvested. The Company plans to
indefinitely reinvest all undistributed foreign earnings in excess of those previously taxed in the U.S. For the year ended
December 31, 2021, the Company’s estimate of its remaining unremitted earnings of its foreign subsidiary ownership chains
that have positive retained earnings and have not been subject to tax in the U.S. was approximately $103 million. At this time,
determination of the unrecognized deferred tax liabilities for temporary differences related to the Company’s investment in non-
U.S. subsidiaries is not practicable.
At December 31, 2021, the Company has various state net operating loss carry forwards available to reduce future state taxable
income and income taxes, the majority of which will expire at various dates through 2041. The Company also has
approximately $599 million of foreign loss carry forwards, consisting of $278 million in Germany, $168 million in Italy, $54
million in China, $31 million in India, and $68 million in other countries, which are available to offset future taxable income.
The majority of these tax loss carry forwards are available without expiration. In addition, the gross amount of the Australian
capital loss carryforward is $23 million, and it has an unlimited carryforward period.
The Company made total net income tax payments including discontinued operations of $28.4 million, $26.3 million and $46.8
million in 2021, 2020 and 2019, respectively. At December 31, 2021 and 2020, Other current assets included net income tax
receivable amounts of $52.4 million and $56.2 million, respectively.
F-21
The Company and its subsidiaries conduct business globally and file income tax returns in U.S. Federal, state and foreign
jurisdictions, as required. From a tax perspective, major jurisdictions where the Company is often subject to examination by tax
authorities include Germany, Italy, the United Kingdom (“U.K.”), China, India and the U.S. Currently, various entities of the
Company are under audit in Italy, India and elsewhere. With limited exceptions, the statute of limitations for the Company and
most of its subsidiaries has expired for tax years prior to 2016. The Company assesses uncertain tax positions for recognition,
measurement and effective settlement. Where the Company has determined that its tax return filing position does not satisfy
the more likely than not recognition threshold of ASC 740, “Income Taxes,” it has recorded no tax benefits. Where the
Company has determined that its tax return filing positions are more likely than not to be sustained, the Company has measured
and recorded the largest amount of tax benefit greater than 50% likely to be realized. The Company recognizes accrued interest
and penalties, if any, related to income taxes as (Provision for) benefit from income taxes in its Consolidated Statement of
Income (Loss).
The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions).
Balance as of January 1, 2019
Additions for current year tax positions
Additions for prior year tax positions
Reductions for prior year tax positions
Reductions for current year tax positions
Reductions for expiration of statute of limitations
Settlements
Balance as of December 31, 2019
Additions for current year tax positions
Additions for prior year tax positions
Reductions for prior year tax positions
Reductions for current year tax positions
Reductions for expiration of statute of limitations
Settlements
Balance as of December 31, 2020
Additions for current year tax positions
Additions for prior year tax positions
Reductions for prior year tax positions
Reductions for current year tax positions
Reductions for expiration of statute of limitations
Settlements
Balance as of December 31, 2021
$
$
13.5
—
2.0
(0.4)
—
(0.8)
—
14.3
—
9.2
(3.7)
—
—
(1.3)
18.5
—
0.6
(0.1)
—
(0.9)
(15.5)
2.6
The Company evaluates each reporting period whether it is reasonably possible material changes to its uncertain tax position
liability could occur in the next 12 months. Changes may occur as a result of uncertain tax positions being considered
effectively settled, re-measured, paid, acquired or divested, as a result of a change in tax law or judicial decision, or due to
expiration of the relevant statute of limitations. It is not possible to predict which uncertain tax positions, if any, may be
challenged by tax authorities. Timing and impact of income tax audits and their resolution is uncertain. New facts, laws,
pronouncements and judicial decisions can change assessments concerning technical merit and measurement. The amounts of
or periods in which changes to reserves for uncertain tax positions will occur is difficult to predict. The Company does not
expect the amount of unrecognized tax benefits disclosed as of December 31, 2021 will change materially in 2022.
As of December 31, 2021 and 2020, the Company had $2.6 million and $18.5 million, respectively, of unrecognized tax
benefits. Of the $2.6 million at December 31, 2021, $2.0 million, if recognized, would affect the effective tax rate. Potential
interest and penalties were a receivable of $0.2 million and a liability of $1.4 million as of December 31, 2021 and 2020,
respectively. During the years ended December 31, 2021 and 2020, the Company recognized total tax (benefit) expense of
$(1.5) million and $0.2 million for interest and penalties, respectively.
F-22
NOTE D – ACQUISITIONS AND DISCONTINUED OPERATIONS
Acquisitions
On July 6, 2021, the Company acquired all of the outstanding shares of Murray Design & Engineering, Ltd (“MDS”), a
manufacturer of heavy duty aggregate and recycling trommels, apron feeders and conveyor systems, based in the Republic of
Ireland. Total cash consideration transferred was approximately $19 million. The transaction was recorded as a business
combination using the acquisition method which requires measurement of identifiable assets acquired and liabilities assumed at
their estimated fair values as of the acquisition date. Goodwill was calculated as the excess of the aggregate of the fair value of
the consideration transferred over the fair value of the net assets recognized. See Note H – “Goodwill and Intangible Assets,
Net” for additional information regarding goodwill recognized as a result of the acquisition. MDS’s results of operations are
consolidated within the MP segment in the consolidated financial statements from the date of acquisition.
On May 25, 2021, the Company acquired assets to facilitate manufacturing of certain MP products in China. Total cash
consideration transferred was approximately $17 million. The transaction was recorded as an asset acquisition at cost, with the
consideration allocated to individual assets acquired.
Dispositions
On November 30, 2021, the Company sold its utility hot lines tools business located in South America, which had been
recorded as assets and liabilities held for sale prior to its disposition. The Company received consideration of $5.8 million from
the sale at fair value and recognized a gain of $6.4 million included in SG&A in the Consolidated Statement of Income (Loss).
Prior to disposition, the results of operations for the hot lines tools business, including any impairment reserves taken, were
consolidated within the AWP segment in the consolidated financial statements.
On July 31, 2019, the Company completed the disposition of Demag® mobile cranes business to Tadano Ltd. and certain of its
subsidiaries. During 2019, the Company also exited North American mobile crane product lines manufactured in its Oklahoma
City facility. The Company’s actions to sell Demag and cease manufacturing of mobile crane product lines in its Oklahoma
City facility represented a significant strategic shift in its business away from mobile cranes as these businesses constituted a
significant part of its operations and financial results. The Company believes these actions were necessary to execute its
strategy. As a result, the Company reported these operations, formerly part of the Cranes segment, in discontinued operations
in the Consolidated Statement of Income (Loss) for all periods presented.
F-23
Income (Loss) from Discontinued Operations
The Company reported certain operations, formerly part of the Cranes segment, in discontinued operations in the Consolidated
Statement of Income (Loss) for all periods presented. The following information was derived from historical financial
information and has been segregated from continuing operations (in millions):
Net sales
Cost of sales
Selling, general and administrative expenses
Impairment of mobile cranes disposal group
Asset impairments
Other income (expense)
Income (loss) from discontinued operations before income taxes
(Provision for) benefit from income taxes
Income (loss) from discontinued operations – net of tax
Year ended December 31,
2020
2019
6.0 $
(5.8)
(0.9)
—
(0.1)
—
(0.8)
0.4
(0.4) $
327.2
(335.2)
(75.6)
(82.1)
—
(4.5)
(170.2)
14.8
(155.4)
$
$
The following table provides supplemental cash flow information related to discontinued operations (in millions):
Non-cash operating items:
Depreciation and amortization
Deferred taxes
Impairments
Investing activities:
Capital expenditures
Year Ended December 31,
2020
2019
$
$
$
$
— $
0.1 $
0.1 $
— $
3.3
(1.4)
82.1
(3.4)
Gain (Loss) on Disposition of Discontinued Operations - net of tax (in millions)
Gain (loss) on disposition of
discontinued operations
(Provision for) benefit from
income taxes
Gain (loss) on disposition of
discontinued operations – net of
tax
2021
2020
2019
Year Ended December 31,
Cranes MHPS
Total
Cranes MHPS
Total
Cranes MHPS Other
Total
$ 1.4 $ 1.2 $ 2.6 $ (27.7) $ (0.4) $ (28.1) $ (1.0) $ (4.6) $ — $ (5.6)
0.1
0.7
0.8
8.8
0.1
8.9
2.2
3.4
0.1
5.7
$ 1.5 $ 1.9 $ 3.4 $ (18.9) $ (0.3) $ (19.2) $ 1.2 $ (1.2) $ 0.1 $ 0.1
F-24
NOTE E – EARNINGS PER SHARE
For the year ended December 31,
(in millions, except per share data)
2021
2020
2019
Income (loss) from continuing operations
$
217.5
$
Income (loss) from discontinued operations – net of tax
Gain (loss) on disposition of discontinued operations – net of tax
Net income (loss)
Basic shares:
Weighted average shares outstanding
Earnings (loss) per share – basic:
Income (loss) from continuing operations
Income (loss) from discontinued operations – net of tax
Gain (loss) on disposition of discontinued operations – net of tax
Net income (loss)
Diluted shares:
Weighted average shares outstanding – basic
Effect of dilutive securities:
Restricted stock awards
Diluted weighted average shares outstanding
Earnings (loss) per share – diluted:
Income (loss) from continuing operations
Income (loss) from discontinued operations – net of tax
Gain (loss) on disposition of discontinued operations – net of tax
Net income (loss)
$
$
$
$
$
—
3.4
220.9
$
9.0
$
(0.4)
(19.2)
(10.6) $
209.7
(155.4)
0.1
54.4
69.6
71.1
69.7
3.12
—
0.05
3.17
69.7
1.2
70.9
$
0.13
$
(0.01)
(0.27)
$
(0.15) $
69.6
0.5
70.1
3.07
$
0.13
$
—
0.05
3.12
(0.01)
(0.27)
$
(0.15) $
2.95
(2.18)
—
0.77
71.1
0.7
71.8
2.92
(2.16)
—
0.76
Non-vested restricted stock awards and restricted stock units (“restricted stock awards”) granted by the Company are treated as
potential common shares outstanding in computing diluted earnings per share using the treasury stock method. Weighted
average restricted stock awards of approximately 0.1 million, 0.8 million and 0.6 million were outstanding during the years
ended December 31, 2021, 2020 and 2019, respectively, but were not included in the computation of diluted shares as the effect
would be anti-dilutive or performance targets were not expected to be achieved for awards contingent upon performance.
NOTE F – INVENTORIES
Inventories consist of the following (in millions):
Finished equipment
Replacement parts
Work-in-process
Raw materials and supplies
Inventories
December 31,
2021
2020
$
$
283.0 $
157.3
105.5
267.7
813.5 $
195.8
157.0
57.2
200.4
610.4
Reserves for lower of cost or NRV and excess and obsolete inventory were $57.8 million and $61.8 million at December 31,
2021 and 2020, respectively.
F-25
NOTE G – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment – net consist of the following (in millions):
Property
Plant
Equipment
Leasehold improvements
Construction in progress
Property, plant and equipment – gross
Less: Accumulated depreciation
Property, plant and equipment – net
December 31,
2021
2020
$
53.1 $
284.4
402.4
50.0
26.9
816.8
(387.2)
$
429.6 $
43.6
250.1
390.2
49.9
31.1
764.9
(358.3)
406.6
Depreciation expense was $44.3 million, $42.3 million and $39.6 million for the years ended December 31, 2021, 2020 and
2019, respectively.
NOTE H – GOODWILL AND INTANGIBLE ASSETS
An analysis of changes in the Company’s goodwill by business segment is as follows (in millions):
Balance at December 31, 2019, gross
Accumulated impairment
Balance at December 31, 2019, net
Foreign exchange effect and other
Balance at December 31, 2020, gross
Accumulated impairment
Balance at December 31, 2020, net
Acquisitions
Foreign exchange effect and other
Balance at December 31, 2021, gross
Accumulated impairment
Balance at December 31, 2021, net
$
AWP
MP
Total
139.3 $
(38.6)
100.7
1.3
192.4 $
(23.2)
169.2
4.2
140.6
196.6
(38.6)
(23.2)
102.0
—
173.4
7.3
(0.9)
(1.7)
139.7
202.2
(38.6)
(23.2)
331.7
(61.8)
269.9
5.5
337.2
(61.8)
275.4
7.3
(2.6)
341.9
(61.8)
$
101.1 $
179.0 $
280.1
In connection with the MDS acquisition, the Company recognized goodwill of $7.3 million during the year. The goodwill was
assigned to the MP reporting unit and attributable primarily to the assembled workforce and expected synergies from the
business combination. The goodwill is not expected to be deductible for income tax purposes. See Note D – “Acquisitions and
Discontinued Operations” for additional information regarding the MDS acquisition.
F-26
Intangible assets, net were comprised of the following (in millions):
December 31, 2021
December 31, 2020
Weighted
Average
Life
(in years)
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Definite-lived intangible assets:
Technology
Customer Relationships
Land Use Rights
Other
7
19
80
8
$
9.8 $
31.9
(9.7) $
(25.4)
0.1 $ 10.1 $
6.5
26.1
(9.6) $
(24.1)
4.4
26.3
(0.8)
(23.1)
3.6
3.2
4.4
25.5
(0.7)
(23.4)
Total definite-lived intangible assets
$ 72.4 $
(59.0) $ 13.4 $ 66.1 $
(57.8) $
0.5
2.0
3.7
2.1
8.3
In connection with the MDS acquisition, the Company recognized customer relationships of $6.3 million with an estimated
useful life of 7 years and trademarks of $1.3 million with an estimated useful life of 10 years during the year. See Note D –
“Acquisitions and Discontinued Operations” for additional information regarding the MDS acquisition.
(in millions)
Aggregate Amortization Expense
For the Year Ended December 31,
2021
2020
2019
$
2.2
$
1.8
$
1.8
Estimated aggregate intangible asset amortization expense for each of the next five years is as follows (in millions):
2022
2023
2024
2025
2026
$
2.3
1.7
1.5
1.4
1.3
NOTE I – DERIVATIVE FINANCIAL INSTRUMENTS
The Company operates internationally, with manufacturing and sales facilities in various locations around the world. In the
normal course of business, the Company uses cash flow derivatives to manage exposures. For a derivative to qualify for hedge
accounting treatment at inception and throughout the hedge period, the Company formally documents the nature and
relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategies for
undertaking various hedge transactions, and methods of assessing hedge effectiveness. Additionally, for hedges of forecasted
transactions, significant characteristics and expected terms of a forecasted transaction must be specifically identified, and it
must be probable that each forecasted transaction will occur. If it is deemed probable the forecasted transaction will not occur,
then the gain or loss would be recognized in current earnings. Financial instruments qualifying for hedge accounting must
maintain a specified level of effectiveness between the hedging instrument and the item being hedged. The Company does not
engage in trading or other speculative use of financial instruments. The Company records all derivative contracts at fair value
on a recurring basis. The Company’s derivative financial instruments are categorized under the ASC 820 hierarchy; see Note A
– “Basis of Presentation” for an explanation of the hierarchy.
F-27
Commodity Swaps and Interest Rate Caps
Derivatives designated as cash flow hedging instruments include commodity swaps and interest rate caps. The outstanding
notional value of commodity swaps was $22.5 million as of December 31, 2021. There were no interest rate caps outstanding
at December 31, 2021. Commodity swaps outstanding at December 31, 2021 mature on or before August 31, 2022. The
outstanding notional amount of commodity swaps and interest rate caps was $26.0 million and $300.0 million, respectively, at
December 31, 2020. The Company uses commodity swaps to mitigate price risk for hot rolled coil steel and interest rate caps
to mitigate its exposure to changes in interest rates related to variable rate debt. Fair values of commodity swaps are based on
observable market data for similar assets and liabilities. Fair values of interest rate caps are based on the present value of future
cash payments and receipts. Changes in the fair value of commodity swaps and interest rate caps are deferred in Accumulated
other comprehensive income (loss) (“AOCI”). Gains or losses on commodity swaps are reclassified to COGS in the
Consolidated Statement of Income (Loss) when the hedged transaction affects earnings. Gains or losses on interest rate caps
are reclassified to Interest expense in the Consolidated Statement of Income (Loss) when the underlying hedged transactions
occur.
Cross Currency Swaps
Derivatives designated as net investment hedging instruments include cross currency swaps with outstanding notional value of
$68.2 million and $97.7 million at December 31, 2021 and 2020, respectively. The Company uses these cross currency swaps
to mitigate its exposure to changes in foreign currency exchange rates related to a net investment in a Euro-denominated
functional currency subsidiary. Fair values of cross currency swaps are based on the present value of future cash payments and
receipts. Changes in the fair value of cross currency swaps are deferred in AOCI. Gains or losses on cross currency swaps are
reclassified to Selling, general and administrative expenses in the Consolidated Statement of Income (Loss) when the net
investment is liquidated.
Foreign Exchange Contracts
The Company enters into foreign exchange contracts to manage variability of future cash flows associated with changing
currency exchange rates. Foreign currency exchange contracts, whether designated or not designated as cash flow hedges, are
used to mitigate exposure to changes in foreign currency exchange rates on recognized assets and liabilities. Fair values of
these contracts are derived using quoted forward foreign exchange prices to interpolate values of outstanding trades at the
reporting date based on their maturities. Foreign exchange contracts outstanding at December 31, 2021 mature during the first
half of 2022.
At December 31, 2021 and 2020, the Company had $19.4 million and $7.8 million notional value, respectively, of foreign
exchange contracts outstanding that were designated as cash flow hedge contracts. For effective hedging instruments, changes
in the fair value of foreign exchange contracts are deferred in AOCI until the underlying hedged transactions settle. Gains or
losses on foreign exchange contracts are reclassified to COGS in the Company’s Consolidated Statement of Income (Loss).
The Company had $139.7 million and $54.2 million notional value of foreign exchange contracts outstanding that were not
designated as hedging instruments at December 31, 2021 and 2020, respectively. The majority of gains and losses recognized
from foreign exchange contracts not designated as hedging instruments are offset by changes in the underlying hedged items,
resulting in no material net impact on earnings. Changes in the fair value of these derivative financial instruments are
recognized as gains or losses in COGS and Other income (expense) – net in the Consolidated Statement of Income (Loss).
F-28
The following table provides the location and fair value amounts of derivative instruments designated and not designated as
hedging instruments that are reported in the Consolidated Balance Sheet (in millions):
Instrument (1)
Balance Sheet Account
Foreign exchange contracts Other current assets
Other current assets
Commodity swaps
$
Commodity swaps
Cross currency swaps - net
investment hedge
Interest rate caps
Commodity swaps
Cross currency swaps - net
investment hedge
Interest rate caps
Other non-current assets
Other current liabilities
Other current liabilities
Other current liabilities
Other non-current liabilities
Net derivative asset (liability)
Other non-current liabilities
$
December 31,
2021
December 31,
2020
Derivatives
designated as
hedges
Derivatives not
designated as
hedges
Derivatives
designated as
hedges
Derivatives not
designated as
hedges
(0.1) $
4.3
—
(0.5)
—
(1.1)
(2.4)
—
0.2 $
0.7 $
—
—
—
—
—
—
—
0.7 $
— $
7.2
0.3
(2.0)
(1.2)
—
(8.2)
(2.6)
(6.5) $
—
—
—
—
—
—
—
—
—
(1) Categorized as Level 2 under the ASC 820 Fair Value Hierarchy.
The following tables provide the effect of derivative instruments that are designated as hedges in AOCI (in millions):
Gain (Loss) Recognized on Derivatives
in OCI, net of tax
Year Ended December 31,
Gain (Loss) Reclassified from AOCI
into Income
Year Ended December 31,
Instrument
2021
2020
2019
Income Statement Account
2021
2020
2019
Foreign exchange contracts $
(0.1) $
(0.6) $
2.7 Cost of goods sold
$
0.1 $
(2.1) $
Commodity swaps
Cross currency swaps -
cash flow hedge
Cross currency swaps - net
investment hedges
Interest rate caps
2.4
7.0 $
0.3 Cost of goods sold
15.6
(2.4)
—
—
0.6
Other income (expense) - net
—
—
1.1
4.8
2.9
(8.8)
(2.8)
Selling, general and
administrative expenses
—
— Interest expense
—
(1.2)
—
(0.4)
—
—
(5.5)
(2.8)
Total
$
10.0 $
(5.2) $
3.6
Total
$
14.5 $
(4.9) $
(7.2)
F-29
The following tables provide the effect of derivative instruments that are designated as hedges in the Consolidated Statement of
Income (Loss) (in millions):
Classification and amount of Gain or Loss
Recognized in Income
Cost of goods sold
Interest Expense
Other income (expense) - net
Year Ended December 31,
2021
2020
2019
2021
2020
2019
2021
2020
2019
Income Statement
Accounts in which effects
of cash flow hedges are
recorded
$ (3,129.4) $ (2,537.1) $ (3,465.3) $ (51.5) $ (65.9) $ (87.9) $ 13.0 $
4.9 $
(6.1)
Gain (Loss) Reclassified from AOCI into Income (Loss):
Foreign exchange
contracts
(2.1)
0.1
Commodity swaps
Cross currency swaps -
cash flow hedge
15.6
(2.4)
(5.5)
(2.8)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Interest rate caps
—
Amount excluded from effectiveness testing recognized in Income (Loss) based on amortization approach:
Cross currency swaps - net
investment hedge
(1.2)
(0.4)
0.6
0.5
—
—
—
—
—
—
—
—
—
Total
$
15.7 $
(4.5) $
(8.3) $
(0.6) $
0.1 $ — $ — $ — $
—
—
—
—
—
—
—
1.1
—
—
1.1
Derivatives not designated as hedges are used to offset foreign exchange gains or losses resulting from the underlying
exposures of foreign currency denominated assets and liabilities. The following table provides the effect of non-designated
derivatives outstanding at the end of the period in the Consolidated Statement of Income (Loss) (in millions):
Instrument
Foreign exchange contracts
Foreign exchange contracts
Debt conversion feature (1)
Total
Income Statement Account
2021
2020
2019
Year Ended December 31,
Cost of goods sold
Other income (expense) – net
Other income (expense) – net
$
(0.5) $
0.6 $
0.5
—
—
—
$
— $
0.6 $
—
(0.2)
(0.5)
(0.7)
(1) Debt conversion feature on a convertible promissory note held by the Company.
In the Consolidated Statement of Income (Loss), the Company records hedging activity related to commodity swaps, interest
rate caps, cross currency swaps, foreign exchange contracts and the debt conversion feature in the accounts for which the
hedged items are recorded. On the Consolidated Statement of Cash Flows, the Company presents cash flows from hedging
activities in the same manner as it records the underlying item being hedged.
Counterparties to the Company’s derivative financial instruments are major financial institutions and commodity trading
companies with credit ratings of investment grade or better and no collateral is required. There are no significant risk
concentrations. Management continues to monitor counterparty risk and believes the risk of incurring losses on derivative
contracts related to credit risk is unlikely and any losses would be immaterial.
See Note M – “Stockholders’ Equity” for unrealized net gains (losses), net of tax, included in AOCI. Within unrealized net
gains (losses) included in AOCI as of December 31, 2021, it is estimated that $2.0 million of gains are expected to be
reclassified into earnings in the next twelve months.
F-30
NOTE J – LONG-TERM OBLIGATIONS
Long-term debt is summarized as follows (in millions):
5% Senior Notes due May 15, 2029, net of unamortized debt issuance costs of $6.9 at
December 31, 2021
5-5/8% Senior Notes due February 1, 2025, net of unamortized debt issuance costs of $6.0 at
December 31, 2020
$
593.1 $
—
—
594.0
December 31,
2021
2020
Credit Agreement – term debt due January 31, 2024 (“Original Term Loan”, as defined below),
net of unamortized debt issuance costs of $0.4 and $3.0 at December 31, 2021 and 2020,
respectively
Credit Agreement – term debt due January 31, 2024 (“2019 Term Loan”, as defined below),
net of unamortized debt issuance costs of $1.6 at December 31, 2020
Finance lease obligations
Other
Total debt
Less: Current portion of long-term debt
Long-term debt, less current portion
Credit Agreement
77.4
381.0
—
3.5
0.1
674.1
194.3
4.4
0.1
1,173.8
(5.6)
(7.6)
$
668.5 $
1,166.2
On January 31, 2017, the Company entered into a credit agreement with the lenders and issuing banks party thereto and Credit
Suisse AG, Cayman Islands Branch (“CSAG”), as administrative agent and collateral agent, which was subsequently amended
to include (i) a $600 million revolving line of credit (the “Revolver”) and (ii) senior secured term loans totaling $600 million
with a maturity date of January 31, 2024 (the “Term Loans”). On April 1, 2021, the Company entered into an amendment and
restatement of the credit agreement (as amended and restated, the “Credit Agreement”) which included the following principal
changes to the original credit agreement: (i) extension of the term of the Revolver to expire on April 1, 2026, which maturity
will spring forward to November 1, 2023 if the principal outstanding under the $400 million senior secured term loan (the
“Original Term Loan”) is not repaid or its maturity date is not extended, (ii) reinstatement of financial covenants that were
waived in 2020, (iii) decrease in the interest rate on the drawn Revolver by 25 basis points and (iv) certain other technical
changes, including additional language regarding the potential cessation of LIBOR as a benchmark rate. The Company
recorded a loss on early extinguishment of debt related to the amendment and restatement of the Credit Agreement of $2.4
million in the second quarter of 2021.
On March 7, 2019, the Company entered into an Incremental Assumption Agreement and Amendment No. 3 (“Amendment No.
3”) to its credit agreement. Amendment No. 3 provided the Company with an additional term loan (the “2019 Term Loan”) in
the amount of $200 million. During the first quarter of 2021, the Company prepaid the 2019 Term Loan prior to its maturity
date to reduce the Company’s outstanding debt and lower its leverage. The Company recorded a loss on early extinguishment
of debt related to prepayment of $2.1 million for accelerated amortization of debt acquisition costs and original issue discount.
The 2019 Term Loan bore interest at a rate of LIBOR plus 2.75% with a 0.75% LIBOR floor.
The Original Term Loan under the Credit Agreement bears interest at a rate of LIBOR plus 2.00% with a 0.75% LIBOR floor.
During the year ended December 31, 2021, the Company prepaid $303 million of the amount outstanding on the Original Term
Loan prior to its maturity date to reduce the Company’s outstanding debt and lower its leverage. The Company recorded a loss
on early extinguishment of debt related to prepayment of $2.4 million for accelerated amortization of debt acquisition costs and
original issue discount.
Unlimited incremental commitments may be extended at the option of the existing or new lenders and can be in the form of
revolving credit commitments, term loan commitments, or a combination of both, with incremental amounts in excess of $300
million as long as the Company satisfies the maximum permitted level of senior secured leverage as defined in the Credit
Agreement.
F-31
The Credit Agreement requires the Company to comply with a number of covenants which limit, in certain circumstances, the
Company’s ability to take a variety of actions, including but not limited to: incur indebtedness; create or maintain liens on its
property or assets; make investments, loans and advances; repurchase shares of its common stock; engage in acquisitions,
mergers, consolidations and asset sales; redeem debt; and pay dividends and distributions. If the Company’s borrowings under
the Revolver are greater than 30% of the total revolving credit commitments, the Credit Agreement requires the Company to
comply with the following financial tests: (i) minimum required level of the interest coverage ratio of 2.5 to 1.0 and (ii)
maximum permitted level of the senior secured leverage ratio of 2.75 to 1.0. The Credit Agreement also contains customary
default provisions. The Company was in compliance with all covenants contained in the Credit Agreement as of December 31,
2021.
As of December 31, 2021 and 2020, the Company had $77.8 million and $579.9 million, net of discount, respectively, in Term
Loans outstanding under the Credit Agreement. The weighted average interest rate on the Term Loans at December 31, 2021
and 2020 was 2.75% and 3.00%, respectively. The Company had no revolving credit amounts outstanding as of December 31,
2021 and 2020.
The Company obtains letters of credit that generally serve as collateral for certain liabilities included in the Consolidated
Balance Sheet and guaranteeing the Company’s performance under contracts. Letters of credit can be issued under two
facilities provided in the Credit Agreement and via bilateral arrangements outside the Credit Agreement.
The Credit Agreement incorporates secured facilities for issuance of letters of credit up to $400 million (the “$400 Million
Facility”). Letters of credit issued under the $400 Million Facility decrease availability under the Revolver. The Credit
Agreement also permits the Company to have additional secured facilities for the issuance of letters of credit up to $300 million
(the “$300 Million Facility”). Letters of credit issued under the $300 Million Facility do not decrease availability under the
Revolver.
The Company also has bilateral arrangements to issue letters of credit with various other financial institutions (the “Bilateral
Arrangements”). The Bilateral Arrangements are not secured under the Credit Agreement and do not decrease availability
under the Revolver.
Letters of credit outstanding (in millions):
$400 Million Facility
$300 Million Facility
Bilateral Arrangements
Total
December 31, 2021
December 31, 2020
$
$
— $
62.8
45.0
107.8 $
—
35.3
47.2
82.5
Furthermore, the Company and certain of its subsidiaries agreed to take certain actions to secure borrowings under the Credit
Agreement. As a result, Terex and certain of its subsidiaries entered into a Guarantee and Collateral Agreement with CSAG, as
collateral agent for the lenders, granting security and guarantees to the lenders for amounts borrowed under the Credit
Agreement. Pursuant to the Guarantee and Collateral Agreement, Terex is required to (a) pledge as collateral the capital stock
of the Company’s material domestic subsidiaries and 65% of the capital stock of certain of the Company’s material foreign
subsidiaries and (b) provide a first priority security interest in substantially all of the Company’s domestic assets.
5-5/8% Senior Notes
On January 31, 2017, the Company sold and issued $600.0 million aggregate principal amount of Senior Notes Due 2025
(“5-5/8% Notes”) at par in a private offering. The 5-5/8% Notes were jointly and severally guaranteed by certain of the
Company’s domestic subsidiaries.
On March 15, 2021, the Company delivered a notice for the conditional redemption of all of its outstanding 5-5/8% Notes. On
April 5, 2021, the Company redeemed the 5-5/8% Notes in full for $622.9 million, including redemption premiums of
$16.9 million and accrued but unpaid interest of $6.0 million. The Company recorded a loss on early extinguishment of debt
related to the redemption of the 5-5/8% Notes of $22.5 million in the second quarter of 2021.
F-32
5% Senior Notes
In April 2021, the Company sold and issued $600.0 million aggregate principal amount of Senior Notes Due 2029 (“5%
Notes”) at par in a private offering. The proceeds from the 5% Notes, together with cash on hand, was used: (i) to fund
redemption and discharge of the 5-5/8% Notes and (ii) to pay related premiums, fees, discounts and expenses. The 5% Notes
are jointly and severally guaranteed by certain of the Company’s domestic subsidiaries.
Schedule of Debt Maturities
Scheduled annual maturities of the principal portion of long-term debt outstanding at December 31, 2021 in the successive five-
year period and thereafter are summarized below. Amounts shown are exclusive of minimum lease payments for capital lease
obligations (in millions):
2022
2023
2024
2025
2026
Thereafter
Total Debt
Less: Unamortized debt issuance costs
Net debt
Fair Value of Debt
$
$
4.0
4.0
69.9
—
—
600.0
677.9
(7.3)
670.6
The Company estimates the fair values of its debt set forth below as of December 31, 2021 and 2020, as follows (in millions,
except for quotes):
2021
2020
5% Notes
Original Term Loan (net of discount)
5-5/8% Notes
Original Term Loan (net of discount)
2019 Term Loan (net of discount)
Book Value
$
600.0
77.8
Book Value
$
600.0
384.0
195.9
Quote
1.03000 $
0.99875
Quote
1.02750 $
0.98750
0.99000
Fair Value
618.0
77.7
Fair Value
616.5
379.2
193.9
The fair value of debt reported in the table above is based on adjusted price quotations on the debt instruments in an active
market. The Company believes that the carrying value of its other borrowings, including amounts outstanding, if any, for the
revolving credit line under the Credit Agreement, approximate fair market value based on maturities for debt of similar terms.
Fair value of debt reported in the table above are categorized under Level 2 of the ASC 820 hierarchy. See Note A – “Basis of
Presentation” for an explanation of ASC 820 hierarchy.
The Company paid $51.3 million, $58.1 million and $70.9 million of interest in 2021, 2020 and 2019, respectively.
NOTE K – LEASES
Terex has operating leases for real property, vehicles and office and industrial equipment, generally expiring over terms from 1
to 15 years. Many of the leases held by Terex include options to extend or terminate the lease.
Real property leases are used for office, administrative and industrial purposes. The base terms of these leases typically expire
between 2 and 15 years, with options to renew between 1 and 15 years. Most of our renewal options are linked to market
conditions and Terex cannot estimate how existing renewal options will affect the monthly payments.
The vehicle leases mainly include cars and trucks. Term length for these leases typically varies between 1 and 7 years.
Office and industrial equipment leases primarily include machinery used for conducting business at office locations and
manufacturing sites worldwide. Term length for these leases typically varies between 1 and 6 years.
F-33
Operating Leases
Operating lease cost consists of the following (in millions):
Operating lease cost
Variable lease cost
Short-term lease cost
Total operating lease costs
Year Ended December 31,
2021
2020
2019
$
$
31.3 $
4.1
4.3
39.7 $
32.0 $
4.9
4.8
41.7 $
33.8
6.7
5.0
45.5
Variable lease costs are expensed as incurred and are not included in the determination of ROU assets or lease liabilities.
Operating lease obligations consist primarily of commitments to rent real properties.
Supplemental balance sheet information related to leases (in millions, except lease term and discount rate):
December 31,
Operating lease right-of-use assets included within Other assets
Current maturities of operating leases included within Other current liabilities
Non-current operating leases included within Other liabilities
Total operating lease liabilities
Weighted average discount rate for operating leases
Weighted average remaining operating lease term in years
Maturities of operating lease liabilities (in millions):
2022
2023
2024
2025
2026
Thereafter
Total undiscounted operating lease payments
Less: Imputed interest
Total operating lease liabilities
Less: Current maturities of operating lease liabilities
Non-current operating lease liabilities
$
$
$
2021
99.2
20.2
73.1
93.3
4.77 %
5
2020
102.9
24.8
82.9
107.7
5.33 %
5
24.1
25.8
18.5
11.6
7.7
18.9
106.6
(13.3)
93.3
(20.2)
73.1
$
$
$
$
$
Supplemental cash flow and other information related to operating leases (in millions):
Cash paid for amounts included in the measurement of operating lease liabilities
Operating right-of-use assets obtained in exchange for operating lease liabilities
$
$
37.1 $
31.1 $
32.1
21.4
December 31,
2021
2020
F-34
NOTE L – RETIREMENT PLANS AND OTHER BENEFITS
U.S. Pension Plan
The Company maintains a nonqualified Supplemental Executive Retirement Plan (“U.S. SERP”). The U.S. SERP provides
retirement benefits to certain former U.S. employees of the Company. Generally, the U.S. SERP provides a benefit based on
average total compensation earned over a participant’s final five years of employment and years of service reduced by benefits
earned under any Company retirement program, excluding salary deferrals and matching contributions. In addition, benefits are
reduced by Social Security Primary Insurance Amounts attributable to Company contributions. The U.S. SERP is unfunded
and participation in the U.S. SERP has been frozen. There is also a defined contribution plan for certain senior executives of
the Company.
Non-U.S. Plans
The Company maintains defined benefit plans in France, Germany, India, Switzerland and the U.K. for some of its subsidiaries.
Participation in the U.K. plan has been frozen. The U.K. plan is a funded plan and the Company funds this plan in accordance
with funding regulations in the U.K. and a negotiated agreement between the Company and the plan’s trustee. The Switzerland
plan is a funded plan and the Company funds this plan in accordance with funding regulations. Participation in the German
plans is frozen; however, eligible participants are credited with post-freeze service for purposes of determining vesting and the
amount of benefits. The plans in France, Germany, and India are unfunded plans. In Italy and Mexico, there are mandatory
termination indemnity plans providing a benefit that is payable upon termination of employment in substantially all cases of
termination. The Company records this obligation based on mandated requirements. The measure of current obligation is not
dependent on the employees’ future service and therefore is measured at current value.
Other Post-employment Benefits
The Company has several non-pension post-retirement benefit programs. The Company provides post-employment health and
life insurance benefits to certain former salaried and hourly employees. The health care programs are contributory, with
participants’ contributions adjusted annually, and the life insurance plan is noncontributory.
Savings Plans
The Company sponsors various tax deferred savings plans into which eligible employees may elect to contribute a portion of
their compensation. The Company may, but is not obligated to, contribute to certain of these plans. Charges recognized for
these savings plans were $17.3 million, $17.9 million and $20.8 million for the years ended December 31, 2021, 2020 and
2019, respectively. For the years ended December 31, 2021, 2020 and 2019, Company matching contributions to tax deferred
savings plans were invested at the direction of plan participants.
F-35
Information regarding the Company’s plans, including U.S. SERP, was as follows (in millions, except percent values):
Accumulated benefit obligation at end of year
Change in benefit obligation:
U.S. Pension Benefits
Non-U.S. Pension Benefits
Other Benefits
2021
2020
2021
2020
2021
2020
$
43.6 $
46.1 $ 149.5 $ 165.2
Benefit obligation at beginning of year
Service cost
$
46.1 $
—
43.1 $ 167.3 $ 153.0 $
Interest cost
Settlements
Curtailments
Plan amendments
Actuarial loss (gain)(1)
Benefits paid
Foreign exchange effect
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Settlements
Employer contribution
Employee contribution
Benefits paid
Foreign exchange effect
Fair value of plan assets at end of year
Funded status
Amounts recognized in the statement of financial
position are included in:
Other assets
Other current liabilities
Other non-current liabilities
Total liabilities
Amounts recognized in accumulated other
comprehensive loss consist of:
Actuarial net loss
Prior service cost
Total amounts recognized in accumulated other
comprehensive loss
1.1
—
—
—
(1.2)
(2.4)
—
43.6
—
—
—
2.4
—
—
1.4
—
—
—
4.0
(2.4)
—
46.1
—
—
—
2.4
—
1.5
2.8
(1.3)
(1.0)
0.4
12.5
(6.5)
5.9
167.3
122.1
13.8
(1.3)
7.1
0.4
1.1
2.3
—
—
(0.2)
(10.0)
(6.8)
(2.4)
151.3
139.9
6.1
—
7.1
0.2
(6.8)
(1.3)
145.2
2.4 $
—
0.1
—
—
—
(0.1)
(0.3)
—
2.1
—
—
—
0.3
—
2.8
—
0.1
—
—
—
(0.2)
(0.3)
—
2.4
—
—
—
0.3
—
(2.4)
(2.4)
—
—
—
—
(6.5)
(0.3)
(0.3)
4.3
139.9
—
—
—
—
$
(43.6) $
(46.1) $
(6.1) $
(27.4) $
(2.1) $
(2.4)
$
$
— $
2.3 $
— $
2.3 $
7.5 $
0.5 $
— $
0.6 $
41.3
43.8
13.1
26.8
— $
0.3 $
1.8
$
43.6 $
46.1 $
13.6 $
27.4 $
2.1 $
$
5.6 $
—
7.1 $
—
38.4 $
2.6
52.1 $
3.0
— $
—
—
0.3
2.1
2.4
0.2
—
$
5.6 $
7.1 $
41.0 $
55.1 $
— $
0.2
(1) Actuarial gains related to U.S. and non-U.S. pension benefits for the year ended December 31, 2021 were due primarily to higher discount rates when
compared to the rate used in the prior year. Actuarial losses related to U.S. and non-U.S. pension benefits for the year ended December 31, 2020 were due
primarily to lower discount rates when compared to the rate used in the prior year.
F-36
U.S. Pension Benefits
2020
2019
2021
Non-U.S. Pension Benefits
2019
2020
2021
Other Benefits
2020
2019
2021
Weighted-average assumptions as of
December 31:
Discount rate(1)
Expected return on plan assets
Rate of compensation increase(1)
2.80 % 2.50 % 3.31 % 1.93 % 1.42 % 1.87 % 2.58 % 2.12 % 3.10 %
N/A
N/A 3.93 % 3.93 % 4.40 %
N/A
N/A
N/A
N/A
N/A
N/A
N/A 0.18 % 0.17 % 0.17 %
N/A
N/A
N/A
(1) The weighted average assumptions as of December 31 are used to calculate the funded status at the end of the current year and the net periodic cost for the
subsequent year.
U.S. Pension Benefits
2020
2019
2021
Non-U.S. Pension Benefits
2019
2020
2021
Other Benefits
2020
2019
2021
Components of net periodic cost:
Service cost
Interest cost
Expected return on plan assets
$ — $ — $ 0.2 $ 1.1 $ 1.5 $ 1.9 $ — $ — $ —
1.1
—
1.4
—
1.6
—
2.8
2.3
0.1
(5.3) (5.4) (4.7) —
3.6
0.1
—
0.1
—
Recognition of prior service cost
—
—
—
0.1
0.1
0.1
—
—
—
Amortization of actuarial loss
0.3
—
(0.5) 2.1
1.7
1.5
—
—
—
Settlements
Other
Net periodic cost
—
—
—
—
—
0.6
—
—
—
—
—
(0.2) (0.2) (0.9) (0.7) —
—
—
$ 1.4 $ 1.4 $ 1.1 $ 0.1 $ (0.2) $ 2.3 $ 0.1 $ 0.1 $ 0.1
Components of Net periodic cost other than the Service cost component are included in Other income (expense) - Net in the
Consolidated Statement of Income (Loss). The Service cost component is included in the same line item or items as other
compensation costs arising from services rendered by pertinent employees during the period.
Pension Settlements
Participants in the Company’s U.K. pension plan may elect to receive a lump-sum settlement of remaining pension benefits
under the terms of the plan. As a result of participants electing the lump-sum option during the year ended December 31, 2019,
the Company settled $2.4 million of non-U.S. pension obligations. The settlements were paid from plan assets and did not
require a cash contribution from the Company. As a result, the Company recorded settlement losses of $0.6 million reflecting
the accelerated recognition of unamortized losses in the plan proportionate to the obligation that was settled in 2019.
U.S. Pension Benefits
Non-U.S. Pension
Benefits
Other Benefits
2021
2020
2021
2020
2021
2020
Other Changes in Plan Assets and Benefit Obligations
Recognized in Other Comprehensive Income (Loss):
Net (gain) loss
Amortization of actuarial gain (loss)
Amortization of prior service cost
Foreign exchange effect
$
(1.3) $
(0.2) —
—
—
4.0 $ (10.7) $
(2.1)
(0.1)
(1.2)
—
—
(0.2) $
4.2 $
(1.7) —
(0.2) —
—
1.9
(0.2)
—
—
—
Total recognized in other comprehensive income (loss)
$
(1.5) $
4.0 $ (14.1) $
4.2 $
(0.2) $
(0.2)
F-37
For the Company’s plans, including the U.S. SERP, that have accumulated benefit obligations in excess of plan assets, the
projected benefit obligation, accumulated benefit obligation and fair value of plan assets were (in millions):
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
U.S. Pension
Benefits
Non-U.S. Pension
Benefits
2021
2020
2021
2020
$ 43.6 $ 46.1 $ 52.2 $ 167.3
$ 43.6 $ 46.1 $ 50.4 $ 165.2
$ — $ — $ 38.6 $ 139.9
Determination of plan obligations and associated expenses requires the use of actuarial valuations based on certain economic
assumptions, which includes discount rates and expected rates of return on plan assets The discount rate enables the Company
to estimate the present value of expected future cash flows on the measurement date. The rate used reflects a rate of return on
high-quality fixed income investments that matches the duration of expected benefit payments at the December 31
measurement date.
The methodology used to determine the rate of return on non-U.S. pension plan assets was based on average rate of earnings on
funds invested and to be invested. Based on historical returns and future expectations, the Company believes the investment
return assumptions are reasonable. The expected rate of return of plan assets represents an estimate of long-term returns on the
investment portfolio. This assumption is reviewed by the trustees and varies with each of the plans.
The overall investment strategy for non-U.S. defined benefit plans is to achieve a mix of investments to support long-term
growth and minimize volatility while maximizing rates of return by diversification of asset types, fund strategies and fund
managers. Fixed income investments include investments in European government securities and European corporate bonds
and constitute approximately 70% and 74% of the portfolio at December 31, 2021 and 2020, respectively. Equity investments,
multi-asset investment funds and real estate investments that invest in a diversified range of property principally in the retail,
office and industrial/warehouse sectors constitute approximately 30% and 26% of the portfolio at December 31, 2021 and 2020,
respectively. Investments of the plans primarily include investments in companies from diversified industries with 85%
invested internationally and 15% invested in North America. The target investment allocations to support the Company’s
investment strategy for 2022 are approximately 76% to 77% fixed income securities and approximately 23% to 24% equity
securities, multi-asset investment funds and real estate investments.
Fair value of cash in the table below is based on price quotations in an active market and therefore categorized under Level 1 of
the ASC 820 hierarchy. Fair value of investment funds is priced on the market value of underlying investments in the portfolio
and therefore categorized as Level 2 of the ASC 820 hierarchy. Fair value of group annuity insurance contracts is based on
techniques that require inputs that are both significant to the fair value measurement and unobservable and therefore categorized
as Level 3 of the ASC 820 hierarchy. Specifically, group annuity insurance contracts are valued at original buy in price
adjusted for changes in discount rates and other actuarial assumptions. See Note A – “Basis of Presentation,” for an
explanation of the ASC 820 hierarchy.
The fair value of the Company’s plan assets at December 31, 2021 are as follows (in millions):
Non-U.S. Pension Plans
Total
Level 1
Level 2
Level 3
Cash, including money market funds
U.S. equities
Non-U.S. equities
Non-U.S. corporate bond funds
Non-U.S. governmental fixed income funds
Group annuity insurance contracts
Real estate
Other securities
Total investments measured at fair value
F-38
$
2.3 $
—
—
—
—
—
—
—
2.3 $ — $ —
—
22.5
—
16.5
—
2.3
—
29.1
34.1
—
3.9
—
—
34.5
2.3 $ 108.8 $ 34.1
22.5
16.5
2.3
29.1
34.1
3.9
34.5
145.2 $
The fair value of the Company’s plan assets at December 31, 2020 are as follows (in millions):
Non-U.S. Pension Plans
Total
Level 1
Level 2
Level 3
Cash, including money market funds
U.S. equities
Non-U.S. equities
Non-U.S. corporate bond funds
Non-U.S. governmental fixed income funds
Group annuity insurance contracts
Real estate
Other securities
Total investments measured at fair value
$
4.4 $
18.4
14.4
2.9
36.8
35.3
3.8
23.9
$ 139.9 $
—
—
—
—
—
—
—
4.4 $ — $ —
—
18.4
—
14.4
—
2.9
—
36.8
35.3
—
—
3.8
—
23.9
4.4 $ 100.2 $ 35.3
Changes in fair value measurements of Level 3 investments during the years ended December 31, 2021 and 2020 are as follows
(in millions):
Balance at beginning of year
Actuarial gain (loss)
Interest Income
Transfers into (out of) Level 3
Foreign exchange effect
Balance at end of year
December 31,
2021
December 31,
2020
$
$
35.3 $
1.4
0.3
(2.4)
(0.5)
34.1 $
35.5
0.8
0.3
(2.4)
1.1
35.3
The Company plans to contribute approximately $2 million to its U.S. defined benefit pension plan and post-retirement plans
and approximately $7 million to its non-U.S. defined benefit pension plans in 2022. During the year ended December 31, 2021,
the Company contributed $2.6 million to its U.S. defined benefit pension plan and post-retirement plans and $7.1 million to its
non-U.S. defined benefit pension plans. The Company’s estimated future benefit payments under its plans are as follows (in
millions):
Year Ending December 31,
2022
2023
2024
2025
2026
2027-2031
U.S. Pension
Benefits
$
$
$
$
$
$
2.4
2.5
2.5
2.5
2.5
12.2
Non-U.S.
Pension Benefits
$
$
$
$
$
$
5.6 $
6.2 $
6.4 $
6.6 $
6.7 $
34.0 $
Other Benefits
0.3
0.2
0.2
0.2
0.1
0.5
For the other benefits, for measurement purposes, an 8.50% rate of increase in the per capita cost of covered health care benefits
was assumed for 2021, dropping to 7% in 2022 and then decreasing one-half percentage point per year until it reaches 4.00%
for 2028 and thereafter. A one-percentage-point change in assumed health care cost trend rates would not have a material effect
on total service and interest cost components or post-retirement benefit obligation.
F-39
NOTE M – STOCKHOLDERS’ EQUITY
On December 31, 2021, there were 83.4 million shares of common stock issued and 69.2 million shares of common stock
outstanding. Of the 216.6 million unissued shares of common stock at that date, 1.9 million shares of common stock were
reserved for issuance for the vesting of restricted stock.
Common Stock in Treasury
The Company values treasury stock on an average cost basis. As of December 31, 2021, the Company held 14.2 million shares
of common stock in treasury totaling $459.7 million, which include 0.6 million shares held in a trust for the benefit of the
Company’s deferred compensation plan totaling $16.9 million.
Preferred Stock
The Company’s certificate of incorporation was amended in June 1998 to authorize 50.0 million shares of preferred stock,
$0.01 par value per share. As of December 31, 2021 and 2020, there were no shares of preferred stock outstanding.
Long-Term Incentive Plans
In May 2021, the stockholders approved the Terex Corporation Amended and Restated 2018 Omnibus Incentive Plan (the
“2018 Plan”) which increased the number of shares of common stock (“Shares”) authorized for issuance by 2.0 million. The
purpose of the 2018 Plan is to assist the Company in attracting and retaining selected individuals to serve as employees,
directors, officers, consultants and advisors of the Company and its subsidiaries and affiliates who will contribute to the
Company’s success and to achieve long-term objectives which will inure to the benefit of all stockholders of the Company
through the additional incentive inherent in the ownership of the common stock. The 2018 Plan authorizes the granting of (i)
options to purchase shares of Common Stock, (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted stock
units, (v) other stock awards, (vi) cash awards and (vii) performance awards. Under the 2018 Plan, Shares covering restricted
stock awards, restricted stock units and other stock awards shall only be counted as used to the extent that they are actually
issued. As of December 31, 2021, 3.3 million Shares were available for grant under the 2018 Plan.
Under the 2018 Plan, approximately 58% of outstanding awards are time-based and vest ratably on each of the first three
anniversary dates. Approximately 28% cliff vest at the end of a three-year period and are subject to performance targets that
may or may not be met and for which the performance period has not yet been completed. Approximately 14% cliff vest and
are based on performance targets containing a market condition determined over a three-year period.
Fair value of restricted stock awards is based on the market price at the date of grant approval except for 0.4 million shares
based on a market condition. The Company uses the Monte Carlo method to provide grant date fair value for awards with a
market condition. The Monte Carlo method is a statistical simulation technique used to provide the grant date fair value of an
award.
The following table presents the weighted-average assumptions used in the valuations:
Dividend yields
Expected historical volatility
Risk free interest rate
Expected life (in years)
Grant date fair value per share
Grant date
Grant date
Grant date
March 4, 2021
1.12%
53.03%
0.29%
3
$54.92
February 26, 2020
2.12%
36.36%
1.14%
3
$21.09
March 12, 2019
1.31%
36.64%
2.40%
3
$38.77
F-40
The following table is a summary of restricted stock awards under all of the Company’s plans:
Nonvested at December 31, 2020
Granted
Vested
Canceled, expired or other
Nonvested at December 31, 2021
Restricted Stock
Awards
2,391,325 $
638,520 $
(706,935) $
(435,204) $
1,887,706 $
Weighted
Average Grant
Date Fair Value
27.64
44.26
32.53
20.11
34.44
As of December 31, 2021, unrecognized compensation costs related to restricted stock totaled approximately $36 million,
which will be expensed over a weighted average period of 1.6 years. The grant date weighted average fair value for restricted
stock awards during the years ended December 31, 2021, 2020 and 2019 was $44.26, $22.42 and $33.84, respectively. The
total fair value of shares vested for restricted stock awards was $23.0 million, $37.2 million and $44.1 million for the years
ended December 31, 2021, 2020 and 2019, respectively.
Tax benefits associated with stock-based compensation were $5.1 million, $3.5 million and $7.3 million for the years ended
December 31, 2021, 2020 and 2019, respectively. The excess tax benefit for all stock-based compensation is included in the
Consolidated Statement of Cash Flows as an operating cash activity.
Comprehensive Income (Loss)
The following table reflects the accumulated balances of other comprehensive income (loss) (in millions):
Balance at January 1, 2019
Current year change
Balance at December 31, 2019
Current year change
Balance at December 31, 2020
Current year change
Balance at December 31, 2021
Cumulative
Translation
Adjustment
$
(225.6) $
17.4
(208.2)
63.0
(145.2)
(42.8)
(188.0) $
$
Derivative
Hedging
Adjustment
Debt & Equity
Securities
Adjustment
Pension
Liability
Adjustment
Accumulated
Other
Comprehensive
Income (Loss)
(4.4) $
3.6
(0.8)
(5.2)
(6.0)
10.0
4.0 $
0.8 $
1.8
2.6
(1.4)
1.2
(1.2)
— $
(55.6) $
4.5
(51.1)
(7.3)
(58.4)
13.9
(44.5) $
(284.8)
27.3
(257.5)
49.1
(208.4)
(20.1)
(228.5)
As of December 31, 2021, accumulated other comprehensive income (loss) for the cumulative translation adjustment, derivative
hedging adjustment, debt and equity securities adjustment and pension liability adjustment are net of a tax benefit/(provision) of
$9.9 million, $(1.4) million, $(0.1) million and $2.1 million, respectively.
F-41
Changes in Accumulated Other Comprehensive Income (Loss)
The table below presents changes in AOCI by component for the year ended December 31, 2021 and 2020. All amounts are net
of tax (in millions).
Year ended December 31, 2021
Year ended December 31, 2020
Derivative
Hedging
Adj. (1)
Debt &
Equity
Securities
Adj.
Pension
Liability
Adj.
CTA
Total
CTA
Derivative
Hedging
Adj.
Debt &
Equity
Securities
Adj.
Pension
Liability
Adj.
Total
Beginning balance
$ (145.2) $
(6.0) $
1.2 $ (58.4) $ (208.4) $ (208.2) $
(0.8) $
2.6 $ (51.1) $ (257.5)
Other comprehensive
income (loss) before
reclassifications
Amounts reclassified from
AOCI
Net other comprehensive
income (loss)
(42.7)
21.3
(1.2)
11.9
(10.7)
63.0
(9.2)
(1.4)
(8.6)
43.8
(0.1)
(11.3)
—
2.0
(9.4) —
4.0
—
1.3
5.3
(42.8)
10.0
(1.2)
13.9
(20.1)
63.0
(5.2)
(1.4)
(7.3)
49.1
1.2 $ (58.4) $ (208.4)
Ending balance
(1) Reclassifications primarily relate to $12.1 million of income (net of $3.5 million of tax expense) reclassified from AOCI to Cost of Goods Sold related to
4.0 $ — $ (44.5) $ (228.5) $ (145.2) $
$ (188.0) $
(6.0) $
commodity swaps.
Share Repurchases
In July 2018, Terex’s Board of Directors authorized the repurchase up to $300 million of the Company’s outstanding shares of
common stock. The table below presents shares repurchased by the Company during the years ended December 31, 2021, 2020
and 2019 under this program:
Year Ended
December 31
2021
2020
2019
Total Number of
Shares Repurchased
28,688
2,501,900
175,275
Amount of Shares
Repurchased
(in millions)
$1.2
$54.6
$4.9
Dividends
The table below presents dividends declared by Terex’s Board of Directors and paid to the Company’s shareholders in each
quarter of 2021, 2020 and 2019:
Year
2021
2020
2019
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$
$
$
0.12 $
0.12 $
0.11 $
0.12 $
— $
0.11 $
0.12 $
— $
0.11 $
0.12
—
0.11
In February 2022, Terex’s Board of Directors declared a dividend of $0.13 per share which will be paid to the Company’s
shareholders on March 21, 2022.
F-42
NOTE N – LITIGATION AND CONTINGENCIES
General
The Company is involved in various legal proceedings, including product liability, general liability, workers’ compensation
liability, employment, commercial and intellectual property litigation, which have arisen in the normal course of operations.
The Company is insured for product liability, general liability, workers’ compensation, employer’s liability, property damage
and other insurable risks required by law or contract, with retained liability or deductibles. The Company records and
maintains an estimated liability in the amount of management’s estimate of the Company’s aggregate exposure for such
retained liabilities and deductibles. For such retained liabilities and deductibles, the Company determines its exposure based on
probable loss estimations, which requires such losses to be both probable and the amount or range of probable loss to be
estimable. The Company believes it has made appropriate and adequate reserves and accruals for its current contingencies and
the likelihood of a material loss beyond amounts accrued is remote. The Company believes the outcome of such matters,
individually and in aggregate, will not have a material adverse effect on its consolidated financial statements. However,
outcomes of lawsuits cannot be predicted and, if determined adversely, could ultimately result in the Company incurring
significant liabilities which could have a material adverse effect on its results of operations.
Terex Latin América Equipamentos Ltda ICMS Proceedings
Terex Latin America Equipamentos Ltda (“TLA”) imports Terex products into Brazil through the state of Espirito Santo to its
facility in Sao Paulo. For the 2004 through March 2009 period, TLA used a third-party trading company, SAB, as an agent to
process the importation of Terex products. TLA properly paid the Espirito Santo ICMS tax (Brazilian state value-added tax) to
SAB for payment to Espirito Santo, which would produce an ICMS credit to be used against imposition of Sao Paolo ICMS tax.
SAB went into bankruptcy and may not have actually remitted to Espirito Santo the ICMS tax amounts paid to it by TLA. The
Brazilian state of Sao Paulo challenged the credit against Sao Paolo ICMS that TLA claimed and assessed unpaid ICMS tax,
penalties and related interest in the amount of approximately BRL 104 million ($19 million). TLA challenged the claim of Sao
Paulo and learned in October 2019 that the Sao Paulo claim has survived the administrative tribunal process. TLA anticipates
that it will receive notice for an amount due from Sao Paulo and expects to protest the Sao Paulo claim in litigation. While the
Company believes the position of the state of Sao Paulo is without merit and continues to vigorously oppose it, no assurance
can be given as to the final resolution of the ICMS litigation or that TLA will not ultimately be required to pay ICMS and
interest to the state of Sao Paulo.
Other
The Company is involved in various other legal proceedings which have arisen in the normal course of its operations. The
Company has recorded provisions for estimated losses in circumstances where a loss is probable and the amount or range of
possible amounts of the loss is estimable.
Credit Guarantees
The Company may assist customers in their rental, leasing and acquisition of its products by facilitating financing transactions
directly between (i) end-user customers, distributors and rental companies and (ii) third-party financial institutions, providing
recourse in certain circumstances. The current amount of the maximum liability is generally limited to our customer’s
remaining payments due to the third-party financial institutions at the time of default; however, it cannot be reasonably
estimated due to limited availability of the unique facts and circumstances of each arrangement, such as whether changes have
been made to the structure of the contractual obligation between the funder and customer.
For credit guarantees outstanding as of December 31, 2021 and 2020, the maximum exposure determined was $143.5 million
and $143.8 million, respectively. Terms of these guarantees coincide with the financing arranged by the customer and generally
do not exceed five years. The allowance for credit losses on credit guarantees was $6.3 million and $8.3 million at
December 31, 2021 and 2020, respectively.
There can be no assurance that historical experience in used equipment markets will be indicative of future results. The
Company’s ability to recover losses experienced from its guarantees may be affected by economic conditions in used
equipment markets at the time of loss.
F-43
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(in millions)
Balance
Beginning
of Year
Charges to
Earnings
Other (1)
Deductions (2)
Balance End
of Year
Year ended December 31, 2021
Deducted from asset accounts:
Allowance for doubtful accounts - Current
Allowance for doubtful accounts - Non-current
Reserve for inventory
Valuation allowances for deferred tax assets
Totals
Year ended December 31, 2020
Deducted from asset accounts:
Allowance for doubtful accounts - Current
Allowance for doubtful accounts - Non-current
Reserve for inventory
Valuation allowances for deferred tax assets
Totals
Year ended December 31, 2019
Deducted from asset accounts:
Allowance for doubtful accounts - Current
Allowance for doubtful accounts - Non-current
Reserve for inventory
Valuation allowances for deferred tax assets
Totals
$
$
$
$
$
$
9.5 $
11.5
61.8
112.1
194.9 $
2.5 $
—
15.0
(12.0)
5.5 $
(0.8) $
(0.8)
(2.9)
(0.1)
(4.6) $
9.9 $
21.3
53.2
107.0
191.4 $
1.8 $
0.1
8.1
(1.7)
8.3 $
2.6 $
0.9
3.1
6.8
13.4 $
9.1 $
21.6
49.8
114.3
194.8 $
6.4 $
—
4.1
(4.1)
6.4 $
(0.6) $
(0.3)
3.1
(3.2)
(1.0) $
(1.5) $
—
(16.1)
—
(17.6) $
(4.8) $
(10.8)
(2.6)
—
(18.2) $
(5.0) $
—
(3.8)
—
(8.8) $
9.7
10.7
57.8
100.0
178.2
9.5
11.5
61.8
112.1
194.9
9.9
21.3
53.2
107.0
191.4
(1) Primarily represents the impact of foreign currency exchange, business divestitures and other amounts recorded to accumulated other comprehensive income
(loss).
(2) Primarily represents the utilization of established reserves, net of recoveries.
F-44
Exhibit 31.1
CERTIFICATION
I, John L. Garrison, Jr., certify that:
1.
I have reviewed this annual report on Form 10-K of Terex Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: February 11, 2022
/s/ John L. Garrison, Jr.
John L. Garrison, Jr.
Chairman and Chief Executive Officer
Exhibit 31.2
CERTIFICATION
I, Julie A. Beck, certify that:
1.
I have reviewed this annual report on Form 10-K of Terex Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is
made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: February 11, 2022
/s/ Julie A. Beck
Julie A. Beck
Senior Vice President and
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32
In connection with the annual report of Terex Corporation (the “Company”) on Form 10-K for the period ended
December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, John L.
Garrison Jr., Chairman and Chief Executive Officer of the Company, and Julie A. Beck, Senior Vice President and Chief
Financial Officer of the Company, certify, to the best of our knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §
906 of the Sarbanes-Oxley Act of 2002, that:
(1)
(2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934, and
The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ John L. Garrison, Jr.
John L. Garrison, Jr.
Chairman and Chief Executive Officer
February 11, 2022
/s/ Julie A. Beck
Julie A. Beck
Senior Vice President and
Chief Financial Officer
February 11, 2022
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or
otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by
Section 906, has been provided to Terex Corporation and will be retained by Terex Corporation and furnished to the Securities
and Exchange Commission or its staff upon request.
Shareholder Information
BOARD OF DIRECTORS
CORPORATE LEADERSHIP
TRANSFER AGENT AND REGISTRAR
John L. Garrison, Jr.
Chairman and Chief Executive Officer
John L. Garrison, Jr.
Chairman and Chief Executive Officer
David A. Sachs
Partner, Ares Management Corp
Lead Director, Terex Corporation
Julie A. Beck
Senior Vice President,
Chief Financial Officer
American Stock Transfer
& Trust Company
6201 15th Avenue
Brooklyn, NY 11219
Telephone: 800-937-5449
or 718-921-8124
Paula H. J. Cholmondeley
Private Consultant, Strategic Planning
Donald Defosset
Chairman, President and
Chief Executive Officer (retired)
Walter Industries, Inc.
Thomas J. Hansen
Vice Chairman (retired)
Illinois Tool Works, Inc.
Sandie O’Connor
Chief Regulatory Affairs Officer (retired)
JP Morgan Chase & Company
Christopher Rossi
President and Chief Executive Officer
Kennametal, Inc.
Andra Rush
Chair and Chief Executive Officer
Rush Group
Stacey Babson Kaplan
Vice President,
Chief Ethics and Compliance Officer
Andrew Campbell
Vice President, Chief Information Officer
Amy J. George
Senior Vice President,
Chief Human Resources Officer
Kieran Hegarty
President, Terex Materials Processing
Simon Meester
President, Genie
Scott J. Posner
Senior Vice President,
General Counsel and Secretary
Randy S. Williamson
Vice President, Corporate Development
and Chief Strategy Officer
CORPORATE HEADQUARTERS
Terex Corporation
45 Glover Ave, 4th Floor
Norwalk, CT 06850, USA
Telephone: 203-222-7170
Website: www.terex.com
This Annual Report generally speaks as of December 31, 2021 and excludes discontinued operations. This annual report
contains forward-looking information based on current expectations of Terex. Because forward-looking statements involve risks
and uncertainties, actual results could differ materially. For a more detailed description of such risks and uncertainties, see the
Terex Annual Report on Form 10-K, included with this Annual Report, under the headings “Risk Factors” and “Forward-Looking
Information.” The forward-looking statements contained herein speak only as of the date of this Annual Report. Terex expressly
disclaims any obligation or undertaking to update or revise any forward-looking statement contained in this Annual Report to reflect
any change in its expectations. This Annual Report refers to various non-GAAP (U.S. generally accepted accounting principles)
financial measures. The non-GAAP measures may not be comparable to similarly titled measures being disclosed by other
companies. Terex believes that this information is useful to understanding its operating results and the ongoing performance of its
underlying businesses. The photographs, products, and service names included in this Annual Report may be trademarks, service
marks, or trade names of Terex Corporation and/or its subsidiaries in the USA and other countries and all rights are reserved.
Terex is a Registered Trademark of Terex Corporation in the USA and many other countries. Copyright 2022 Terex Corporation.
Shareholders seeking information
concerning stock transfers, changes
of address and lost certificates
should contact the company’s stock
transfer agent directly. American Stock
Transfer & Trust Company may also
be contacted at help@astfinancial.com.
STOCK INFORMATION
Stock Symbol: TEX
Stock Exchange: New York Stock Exchange
The high and low quarterly sales prices
for the past two years of Terex Corporation
are as follows ($):
2021
High
Low
Q1
Q2
Q3
Q4
50.09
55.60
53.82
51.45
33.96
40.79
41.77
38.95
2020
Q1
Q2
Q3
Q4
High
Low
30.17
21.99
22.55
36.92
12.11 11.54
17.19 19.68
ANNUAL REPORT/FORM 10-K
Copies of the Annual Report/Form10-K
are available by downloading from
https://investors.terex.com.
ANNUAL MEETING
A virtual Annual Meeting of Shareholders
will be held at 10 a.m. (Eastern Time) on
May 19, 2022.
Execute, Innovate, Grow · Terex Annual Report 2021
Design: Taylor Design
45 Glover Ave, 4th Floor
Norwalk, CT 06850
203-222-7170
www.terex.com