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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) September 8, 2005
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TEREX CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-10702 34-1531521
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
500 Post Road East, Suite 320, Westport, Connecticut 06880
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (203) 222-7170
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NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 4.02. Non-Reliance on Previously Issued Financial Statements.
(a) Terex Corporation ("Terex" or the "Company") has previously disclosed
in Current Reports on Form 8-K furnished to the Securities and Exchange
Commission ("SEC") that the Company concluded that the financial statements of
Terex for the years ended December 31, 2000, 2001, 2002 and 2003 need to be
restated to correct certain errors. As Terex is in the final stages of the
restatement process and computing the tax implications thereof, Terex has
re-evaluated its U.S. deferred tax asset to determine if the deferred tax asset
would "more likely than not" be realized based on the restated results of
Terex's U.S. operations for the three years ended December 31, 2003. This
assessment is required to be made without current hindsight, which precluded the
Company from considering the subsequent profitability of Terex's U.S. operations
in 2004 and 2005. The results of the assessment indicated that a valuation
allowance was required to reduce Terex's net U.S. deferred tax asset as of
December 31, 2003, which materially affects total stockholders' equity as of
December 31, 2003. However, this valuation allowance is then reversed as of
December 31, 2004 due to the profitability of Terex in that period as well as
future profit expectations, including year to date 2005 results. The 2004
reversal of the valuation allowance offsets the reduction in total
stockholders' equity resulting from the establishment of the valuation allowance
in 2003.
Due to the valuation allowance established as of December 31, 2003, Terex's
provision for U.S. taxes in the quarters ended March 31, 2004 and June 30, 2004
will be substantially reversed, thereby increasing net income in those periods
by approximately $2.4 million and $7.4 million, respectively, which are material
to those quarters. Accordingly, the management of Terex and the Audit Committee
of Terex's Board of Directors concluded on September 8, 2005 that the financial
statements for the quarters ended March 31, 2004 and June 30, 2004 need to be
restated to reflect such increase and, therefore, such financial statements
should no longer be relied upon and have informed PricewaterhouseCoopers LLP,
the Company's independent registered accounting firm of this determination.
As part of its prior disclosures Terex stated that it was management's
opinion that, although adjustments in any one year's financial statements might
be material, the cumulative adjustments required to be made to stockholders'
equity as of December 31, 2003 resulting from all items identified were not
expected to be material to total stockholders' equity. Terex's previously
published stockholders' equity balance as of December 31, 2003 was $877 million.
The December 31, 2003 stockholders' equity balance is now anticipated to be
approximately $690 million. However, virtually all of the change in the
stockholders' equity from the originally filed amount is related to the
establishment of the valuation allowance. With the reversal of the valuation
allowance in 2004, net income and changes in accumulated other comprehensive
income for 2004, stockholders' equity as of December 31, 2004 is expected to be
approximately $1.1 billion.
Additionally, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002,
Terex was required to evaluate the effectiveness of its internal control over
financial reporting as of December 31, 2004. Based on this current evaluation,
it was determined that "material weaknesses" existed, which resulted in
ineffective internal control over financial reporting. As announced on January
13, 2005, Terex had determined that a "material weakness" existed in Terex's
internal control over financial reporting as it relates to the recording of
certain intercompany transactions. On September 8, 2005, the management of Terex
and the Audit Committee of Terex's Board of Directors concluded that material
weaknesses also existed as follows a) the Company did not maintain effective
controls, including monitoring, over the financial reporting process as a result
of an insufficient complement of personnel with requisite U.S. GAAP knowledge,
experience and training, and b) the Company did not maintain sufficient
supporting documentation for certain income tax account balances, including
periodic reconciliations, which contributed to the failure to timely file.
During 2004 and 2005, Terex has taken and will continue to take numerous steps
toward the remediation of these material weaknesses including, among other
things, changes in reporting relationships within its financial organization,
hiring additional accounting staff with the requisite U.S. GAAP background and
implementing certain new accounting practices and controls.
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Terex has also issued a press release concerning this matter, a copy which
is included as Exhibit 99.1 to this Form 8-K.
Safe Harbor Statement. The above contains forward-looking information based
on Terex's current expectations. Because forward-looking statements involve
risks and uncertainties, actual results could differ materially. Such risks and
uncertainties, many of which are beyond Terex's control, include among others:
until the SEC investigation and the previously announced review by Terex of its
accounts is concluded, no assurance can be given with respect to the financial
statement adjustments, impacts and periods resulting from such reviews; and
other factors, risks, uncertainties more specifically set forth in Terex's
public filings with the SEC. Actual events or the actual future results of Terex
may differ materially from any forward looking statement due to those and other
risks, uncertainties and significant factors. The forward-looking statements
speak only as of the date of this release. Terex expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statement included in this release to reflect any changes in
Terex's expectations with regard thereto or any changes in events, conditions,
or circumstances on which any such statement is based.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press release of Terex Corporation issued on September 9, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: September 9, 2005
TEREX CORPORATION
By: /s/ Phillip C. Widman
Phillip C. Widman
Senior Vice President and
Chief Financial Officer
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