What changed in this filing

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Item 1. Financial Statements

2021-10-29 compared with 2021-07-30 · 180 added, 114 removed, 640 unchanged (31% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

33 unchanged sentences

(in millions, except par value)

September 30,

2021 December 31,

1 unchanged sentence

Cash and cash equivalents $ 553.2 $ 665.0

Trade receivables (net of allowance of $ 11.2 and $ 9.5 at June 30, 2021 and December 31, 2020, respectively)

Trade receivables (net of allowance of $ 10.5 and $ 9.5 at September 30, 2021 and December 31, 2020, respectively)

Inventories 747.7 610.4

11 unchanged sentences

Trade accounts payable 548.7 369.9

Accrued compensation and benefits 108.4 85.8

Other current liabilities 277.0 260.0

7 unchanged sentences

Common stock, $ 0.01 par value – authorized 300.0 shares;

issued 83.4 and 82.9 shares at June 30, 2021 and December 31, 2020, respectively

issued 83.4 and 82.9 shares at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 850.8 837.9

1 unchanged sentence

Accumulated other comprehensive income (loss) ( 229.3 ) ( 208.4 )

Less cost of shares of common stock in treasury – 14.2 and 14.3 shares at June 30, 2021 and December 31, 2020, respectively

Less cost of shares of common stock in treasury – 14.2 and 14.3 shares at September 30, 2021 and December 31, 2020, respectively

( 458.3 ) ( 459.2 )

34 unchanged sentences

69.2 $ 0.9 $ 844.0 $ 847.0 $ ( 200.0 ) $ ( 458.0 ) $ 1,033.9

Net income (loss) — — — 48.1 — — 48.1

Other comprehensive income (loss) – net of tax — — — — ( 29.3 ) — ( 29.3 )

Issuance of common stock — — 0.2 — — — 0.2

Compensation under stock-based plans – net — — 6.5 — — — 6.5

Dividends — — 0.1 ( 8.5 ) — — ( 8.4 )

Acquisition of treasury stock — — — — — ( 0.2 ) ( 0.2 )

Other — — — — — ( 0.1 ) ( 0.1 )

Balance at September 30, 2021

69.2 $ 0.9 $ 850.8 $ 886.6 $ ( 229.3 ) $ ( 458.3 ) $ 1,050.7

The accompanying notes are an integral part of these condensed consolidated financial statements .

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(in millions)

Shares Common

26 unchanged sentences

68.6 $ 0.9 $ 826.8 $ 726.9 $ ( 294.8 ) $ ( 459.4 ) $ 800.4

Net income (loss) — — — 5.8 — — 5.8

Other comprehensive income (loss) – net of tax — — — — 40.9 — 40.9

Issuance of common stock — — 0.7 — — — 0.7

Compensation under stock-based plans – net — — 4.7 — — 0.4 5.1

Acquisition of treasury stock — — — — — ( 0.1 ) ( 0.1 )

Other — — — ( 0.1 ) — — ( 0.1 )

Balance at September 30, 2020

$ 68.6 $ 0.9 $ 832.2 $ 732.6 $ ( 253.9 ) $ ( 459.1 ) $ 852.7

The accompanying notes are an integral part of these condensed consolidated financial statements .

2 unchanged sentences

(in millions)

Six Months Ended

Nine Months Ended

September 30,

Operating Activities

2 unchanged sentences

Depreciation and amortization 37.9 36.3

(Gain) loss on disposition of discontinued operations ( 2.6 ) 21.1

Loss on early extinguishment of debt 27.7 —

31 unchanged sentences

Basis of Presentation and Principles of Consolidation.

The accompanying unaudited Condensed Consolidated Financial Statements of Terex Corporation and subsidiaries as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The accompanying unaudited Condensed Consolidated Financial Statements of Terex Corporation and subsidiaries as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and instructions to Form 10-Q and Article 10 of Regulation S-X.

7 unchanged sentences

Certain prior period amounts have been reclassified to conform with the 2021 presentation.

On May 25, 2021, the Company acquired assets to facilitate manufacturing of certain Materials Processing (“MP”) products in China.

Total cash consideration transferred was approximately $ 17 million.

The transaction was recorded as an asset acquisition at cost, with the proceeds allocated to individual assets acquired.

In the opinion of management, adjustments considered necessary for the fair statement of these interim financial statements have been made.

Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of results that may be expected for the year ending December 31, 2021.

On July 6, 2021, the Company acquired 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 will be 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 will be calculated as the excess of the aggregate of the fair value of the consideration transferred over the fair value of the net assets recognized.

MDS’s results of operations will be consolidated within the MP segment in the Condensed Consolidated Financial Statements from the date of acquisition.

Cash and cash equivalents include $ 3.4 million and $ 5.0 million at June 30, 2021 and December 31, 2020, respectively, which were not immediately available for use.

Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of results that may be expected for the year ending December 31, 2021.

Cash and cash equivalents include $ 3.3 million and $ 5.0 million at September 30, 2021 and December 31, 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 .

The following table provides amounts of cash and cash equivalents presented in the Condensed Consolidated Statement of Cash Flows (in millions):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Cash and cash equivalents:

10 unchanged sentences

Accounting Standards to be Implemented

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”, which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The amendments in this ASU were effective upon issuance and may be applied through December 31, 2022.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

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.

Accounts Receivable and Allowance for Doubtful Accounts.

7 unchanged sentences

Other adjustments ( 1.3 )

Balance as of June 30, 2021

Balance as of September 30, 2021

Finance Receivables.

The Company’s net finance receivable balances include both sales-type leases and commercial loans.

The Company had $ 9.9 million and $ 116.0 million of net finance receivables at June 30, 2021 and December 31, 2020, respectively.

The allowance for credit losses on finance receivables was $ 8.3 million and $ 13.8 million at June 30, 2021 and December 31, 2020, respectively.

The Company had $ 12.9 million and $ 129.8 million of gross finance receivables at September 30, 2021 and December 31, 2020, respectively.

The allowance for credit losses on finance receivables was $ 8.0 million and $ 13.8 million at September 30, 2021 and December 31, 2020, respectively.

In February 2021, the Company transferred finance receivables of $ 89.7 million to a U.S.

4 unchanged sentences

Reserves are recorded for expected loss over the contractual period of risk exposure.

See Note K – “Litigation and Contingencies” for additional information about guarantees issued to financial institutions.

See Note L – “Litigation and Contingencies” for additional information regarding guarantees issued to financial institutions.

Accrued Warranties .

15 unchanged sentences

Foreign exchange effect/other ( 1.0 )

Balance as of June 30, 2021

Balance as of September 30, 2021

Fair Value Measurements.

Assets and liabilities measured at fair value on a recurring basis under the provisions of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement and Disclosure” (“ASC 820”) include interest rate caps, commodity swaps, cross currency swaps and foreign exchange contracts, discussed in Note H – “Derivative Financial Instruments” and debt discussed in Note I – “Long-term Obligations”.

Assets and liabilities measured at fair value on a recurring basis under the provisions of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurement and Disclosure” (“ASC 820”) include interest rate caps, commodity swaps, 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 a market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

13 unchanged sentences

The Company identifies its operating segments according to how business activities are managed and evaluated, and has identified three operating segments:

Aerials, Utilities and MP.

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”).

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

9 unchanged sentences

Sales between segments are generally priced to recover costs plus a reasonable markup for profit, which is eliminated in consolidation.

September 30,

2021 December 31,

10 unchanged sentences

Three Months Ended

June 30, 2021 Three Months Ended

June 30, 2020

September 30, 2021 Three Months Ended

September 30, 2020

AWP MP Corporate and Other / Eliminations Total AWP MP Corporate and Other / Eliminations Total

7 unchanged sentences

(1) Includes intercompany sales and eliminations.

(2) Total sales include $ 522.8 million and $ 384.4 million for the three months ended June 30, 2021 and 2020, respectively, attributable to the U.S., the Company’s country of domicile.

Six Months Ended

June 30, 2021 Six Months Ended

June 30, 2020

(2) Total sales include $ 490.3 million and $ 386.2 million for the three months ended September 30, 2021 and 2020, respectively, attributable to the U.S., the Company’s country of domicile.

Nine Months Ended

September 30, 2021 Nine Months Ended

September 30, 2020

AWP MP Corporate and Other / Eliminations Total AWP MP Corporate and Other / Eliminations Total

7 unchanged sentences

(1) Includes intercompany sales and eliminations.

(2) Total sales include $ 938.5 million and $ 815.5 million for the six months ended June 30, 2021 and 2020, respectively, attributable to the U.S., the Company’s country of domicile.

(2) Total sales include $ 1.4 billion and $ 1.2 billion for the nine months ended September 30, 2021 and 2020, respectively, 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.

1 unchanged sentence

Three Months Ended

June 30, 2021 Three Months Ended

June 30, 2020

September 30, 2021 Three Months Ended

September 30, 2020

AWP MP Corporate and Other / Eliminations Total AWP MP Corporate and Other / Eliminations Total

6 unchanged sentences

(1) Includes other product types, intercompany sales and eliminations.

Six Months Ended

June 30, 2021 Six Months Ended

June 30, 2020

Nine Months Ended

September 30, 2021 Nine Months Ended

September 30, 2020

AWP MP Corporate and Other / Eliminations Total AWP MP Corporate and Other / Eliminations Total

7 unchanged sentences

NOTE C – INCOME TAXES

During the three months ended June 30, 2021, the Company recognized income tax expense of $ 14.4 million on income of $ 86.7 million, an effective tax rate of 16.6 %, as compared to income tax benefit of $ 3.0 million on loss of $ 6.2 million, an effective tax rate of 48.4 %, for the three months ended June 30, 2020.

The lower effective tax rate for the three months ended June 30, 2021 when compared with the three months ended June 30, 2020 is primarily due to geographic mix and the 2020 benefit of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), partially offset by U.S.

During the three months ended September 30, 2021, the Company recognized income tax expense of $ 13.9 million on income of $ 61.4 million, an effective tax rate of 22.6 %, as compared to income tax benefit of $ 1.1 million on income of $ 20.9 million, an effective tax rate of ( 5.3 )%, for the three months ended September 30, 2020.

The higher effective tax rate for the three months ended September 30, 2021 when compared with the three months ended September 30, 2020 is primarily due to U.S.

tax on foreign income, the 2020 benefit of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and geographic mix.

During the nine months ended September 30, 2021, the Company recognized income tax expense of $ 36.0 million on income of $ 195.5 million, an effective tax rate of 18.4 %, as compared to income tax benefit of $ 4.9 million on loss of $ 10.8 million, an effective tax rate of 45.4 %, for the nine months ended September 30, 2020.

The lower effective tax rate for the nine months ended September 30, 2021 when compared with the nine months ended September 30, 2020 is primarily due to geographic mix and the 2020 benefit of the CARES Act, partially offset by U.S.

tax on foreign income.

During the six months ended June 30, 2021, the Company recognized income tax expense of $ 22.1 million on income of $ 134.1 million, an effective tax rate of 16.5 %, as compared to income tax benefit of $ 3.8 million on loss of $ 31.7 million, an effective tax rate of 12.0 %, for the six months ended June 30, 2020.

The higher effective tax rate for the six months ended June 30, 2021 when compared with the six months ended June 30, 2020 is primarily due to U.S.

tax on foreign income, partially offset by geographic mix and the 2020 benefit of the CARES Act.

NOTE D – EARNINGS PER SHARE

NOTE D – ACQUISITIONS AND DISCONTINUED OPERATIONS

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 Condensed 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.

Discontinued Operations

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.

As a result, the Company reported these operations, formerly part of the Cranes segment, in discontinued operations in the Condensed Consolidated Statement of Comprehensive Income (Loss) for all periods presented.

During the three and nine months ended September 30, 2020, the Company recorded income (loss) from discontinued operations, net of tax of $( 0.1 ) million and $( 1.3 ) million, respectively.

Gain (Loss) on Disposition of Discontinued Operations - net of tax is presented below (in millions):

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Cranes Material Handling and Port Solutions Total Cranes Cranes Material Handling and Port Solutions Total Cranes

Gain (loss) on disposition of discontinued operations $ 0.8 $ — $ 0.8 $ ( 20.5 ) $ 1.4 $ 1.2 $ 2.6 $ ( 27.7 )

(Provision for) benefit from income taxes ( 0.2 ) — ( 0.2 ) 4.4 ( 0.4 ) 0.4 — 6.6

Gain (loss) on disposition of discontinued operations – net of tax $ 0.6 $ — $ 0.6 $ ( 16.1 ) $ 1.0 $ 1.6 $ 2.6 $ ( 21.1 )

NOTE E – EARNINGS PER SHARE

(in millions, except per share data) Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

17 unchanged sentences

Restricted stock awards

1.1 0.2 1.1 —

Diluted weighted average shares outstanding 70.9 69.5 70.8 69.7

5 unchanged sentences

Net income (loss) $ 0.68 $ 0.08 $ 2.29 $ ( 0.41 )

Non-vested 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 and 2.0 million were outstanding during the three months ended June 30, 2021 and 2020, 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.

Weighted average restricted stock awards of approximately 0.1 million and 2.0 million were outstanding during the six months ended June 30, 2021 and 2020, 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 E – INVENTORIES

Non-vested restricted stock and restricted stock units granted (“restricted stock awards”) 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 and 0.9 million were outstanding during the three months ended September 30, 2021 and 2020, 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.

Weighted average restricted stock awards of approximately 0.1 million and 2.0 million were outstanding during the nine months ended September 30, 2021 and 2020, 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):

September 30,

2021 December 31,

4 unchanged sentences

Inventories $ 747.7 $ 610.4

Reserves for lower of cost or net realizable value and excess and obsolete inventory were $ 60.2 million and $ 61.8 million at June 30, 2021 and December 31, 2020, respectively.

NOTE F – PROPERTY, PLANT AND EQUIPMENT

Reserves for lower of cost or net realizable value and excess and obsolete inventory were $ 57.2 million and $ 61.8 million at September 30, 2021 and December 31, 2020, respectively.

NOTE G – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment – net consist of the following (in millions):

September 30,

2021 December 31,

7 unchanged sentences

Property, plant and equipment – net $ 412.6 $ 406.6

NOTE G – GOODWILL AND INTANGIBLE ASSETS, NET

NOTE H – GOODWILL AND INTANGIBLE ASSETS

An analysis of changes in the Company’s goodwill by business segment is as follows (in millions):

4 unchanged sentences

102.0 173.4 275.4

Acquisitions — 7.3 7.3

Foreign exchange effect and other ( 0.8 ) ( 2.2 ) ( 3.0 )

Balance at June 30, 2021, gross

Balance at September 30, 2021, gross

139.8 201.7 341.5

Accumulated impairment ( 38.6 ) ( 23.2 ) ( 61.8 )

Balance at June 30, 2021, net

Balance at September 30, 2021, net

$ 101.2 $ 178.5 $ 279.7

In connection with the MDS acquisition, the Company recognized goodwill of $ 7.3 million during the period.

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.

Intangible assets, net were comprised of the following (in millions):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Weighted Average Life

8 unchanged sentences

$ 72.7 $ ( 58.6 ) $ 14.1 $ 66.1 $ ( 57.8 ) $ 8.3

In connection with the MDS acquisition, the Company recognized customer relationships and trademarks of $ 6.3 million with an estimated useful life of 7 years and $ 1.3 million with an estimated useful life of 10 years during the period.

See Note D – “Acquisitions and Discontinued Operations” for additional information regarding the MDS acquisition.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2021 2020 2021 2020

Aggregate Amortization Expense $ 0.7 $ 0.4 $ 1.6 $ 1.3

Estimated aggregate intangible asset amortization expense (in millions) for each of the next five years is as follows:

NOTE H – DERIVATIVE FINANCIAL INSTRUMENTS

Estimated aggregate intangible asset amortization expense for each of the next five years is as follows (in millions):

NOTE I – DERIVATIVE FINANCIAL INSTRUMENTS

The Company operates internationally, with manufacturing and sales facilities in various locations around the world.

9 unchanged sentences

Interest Rate Caps and Commodity Swaps

Derivatives designated as cash flow hedging instruments include interest rate caps and commodity swaps with outstanding notional value of $ 300.0 million and $ 25.0 million, respectively, at June 30, 2021.

Commodity swaps outstanding at June 30, 2021 mature on or before August 31, 2022.

Derivatives designated as cash flow hedging instruments include interest rate caps and commodity swaps with outstanding notional value of $ 300.0 million and $ 18.6 million, respectively, at September 30, 2021.

Commodity swaps outstanding at September 30, 2021 mature on or before August 31, 2022.

The outstanding notional value of interest rate caps and commodity swaps was $ 300.0 million and $ 26.0 million, respectively, at December 31, 2020.

5 unchanged sentences

Gains or losses on commodity swaps are reclassified to Cost of goods sold (“COGS”) in the Condensed Consolidated Statement of Comprehensive Income (Loss) when the hedged transaction affects earnings.

In October 2021, the Company terminated all outstanding interest rate caps.

Cross Currency Swaps

Derivatives designated as net investment hedging instruments include cross currency swaps with outstanding notional value of $ 94.9 million and $ 97.7 million at June 30, 2021.

and December 31, 2020, respectively.

Derivatives designated as net investment hedging instruments include cross currency swaps with outstanding notional value of $ 92.6 million and $ 97.7 million at September 30, 2021 and December 31, 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.

6 unchanged sentences

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 June 30, 2021 mature during the third quarter of 2021.

At June 30, 2021 and December 31, 2020, the Company had $ 1.8 million and $ 7.8 million notional value, respectively, of foreign exchange contracts outstanding that were designated as cash flow hedge contracts.

Foreign exchange contracts outstanding at September 30, 2021 mature during the fourth quarter of 2021.

At December 31, 2020, the Company had $ 7.8 million notional value, respectively, of foreign exchange contracts outstanding that were designated as cash flow hedge contracts.

There were no foreign exchange contracts that were designated as cash flow hedge contracts outstanding at September 30, 2021.

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 Condensed Consolidated Statement of Comprehensive Income (Loss).

The Company had $ 70.4 million and $ 54.2 million notional value of foreign exchange contracts outstanding that were not designated as hedging instruments at June 30, 2021 and December 31, 2020, respectively.

The Company had $ 38.0 million and $ 54.2 million notional value of foreign exchange contracts outstanding that were not designated as hedging instruments at September 30, 2021 and December 31, 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.

1 unchanged sentence

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 Condensed Consolidated Balance Sheet (in millions):

September 30,

2021 December 31,

7 unchanged sentences

Interest rate caps Other current liabilities ( 1.2 ) — ( 1.2 ) —

Commodity swaps Other current liabilities ( 0.3 ) — — —

Cross currency swaps - net investment hedge Other non-current liabilities ( 4.0 ) — ( 8.2 ) —

5 unchanged sentences

Instrument Three Months Ended

June 30, 2021 Six Months Ended

June 30, 2021 Income Statement Account Three Months Ended

June 30, 2021 Six Months Ended

June 30, 2021

September 30, 2021 Nine Months Ended

September 30, 2021 Income Statement Account Three Months Ended

September 30, 2021 Nine Months Ended

September 30, 2021

Foreign exchange contracts $ — $ — Cost of goods sold $ — $ 0.1

5 unchanged sentences

Instrument Three Months Ended

June 30, 2020 Six Months Ended

June 30, 2020 Income Statement Account Three Months Ended

June 30, 2020 Six Months Ended

June 30, 2020

September 30, 2020 Nine Months Ended

September 30, 2020 Income Statement Account Three Months Ended

September 30, 2020 Nine Months Ended

September 30, 2020

Foreign exchange contracts $ 0.2 $ ( 0.5 ) Cost of goods sold $ 0.3 $ ( 2.1 )

7 unchanged sentences

Three Months Ended

June 30, 2021 Six Months Ended

June 30, 2021 Three Months Ended

June 30, 2021 Six Months Ended

June 30, 2021

September 30, 2021 Nine Months Ended

September 30, 2021 Three Months Ended

September 30, 2021 Nine Months Ended

September 30, 2021

Income Statement Accounts in which effects of cash flow hedges are recorded $ ( 815.3 ) $ ( 2,311.2 ) $ ( 12.3 ) $ ( 40.6 )

9 unchanged sentences

Three Months Ended

June 30, 2020 Six Months Ended

June 30, 2020 Three Months Ended

June 30, 2020 Six Months Ended

June 30, 2020

September 30, 2020 Nine Months Ended

September 30, 2020 Three Months Ended

September 30, 2020 Nine Months Ended

September 30, 2020

Income Statement Accounts in which effects of cash flow hedges are recorded $ ( 619.3 ) $ ( 1,899.6 ) $ ( 15.8 ) $ ( 50.0 )

9 unchanged sentences

Gain (Loss) Recognized in Income (Loss)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

Instrument Income Statement Account 2021 2020 2021 2020

8 unchanged sentences

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 L - “Stockholders’ Equity” for unrealized net gains (losses), net of tax, included in AOCI.

Within unrealized net gains (losses) included in AOCI as of June 30, 2021, it is estimated that $ 16.5 million of gains are expected to be reclassified into earnings in the next twelve months.

NOTE I – LONG-TERM OBLIGATIONS

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 September 30, 2021, it is estimated that $ 12.3 million of gains are expected to be reclassified into earnings in the next twelve months.

NOTE J – LONG-TERM OBLIGATIONS

Credit Agreement

19 unchanged sentences

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 at June 30, 2021 and thereafter and (ii) maximum permitted level of the senior secured leverage ratio of 2.75 to 1.0 at June 30, 2021 and thereafter.

(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 June 30, 2021.

As of June 30, 2021 and December 31, 2020, the Company had $ 299.4 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 June 30, 2021 and December 31, 2020 was 2.75 % and 3.00 %, respectively.

The Company had no revolving credit amounts outstanding as of June 30, 2021 and December 31, 2020.

The Company was in compliance with all covenants contained in the Credit Agreement as of September 30, 2021.

As of September 30, 2021 and December 31, 2020, the Company had $ 298.4 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 September 30, 2021 and December 31, 2020 was 2.75 % and 3.00 %, respectively.

The Company had no revolving credit amounts outstanding as of September 30, 2021 and December 31, 2020.

In October 2021, the Company prepaid an additional $ 150 million of the Original Term Loan prior to its maturity date to reduce the Company’s outstanding debt and lower its leverage.

The Company expects to record a loss on early extinguishment of debt related to prepayment of approximately $ 1 million for accelerated amortization of debt acquisition costs and original issue discount in the fourth quarter of 2021.

The Company issues letters of credit that generally serve as collateral for certain liabilities included in the Condensed Consolidated Balance Sheet and guaranteeing the Company’s performance under contracts.

7 unchanged sentences

Letters of credit outstanding (in millions):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

$400 Million Facility $ — $ —

17 unchanged sentences

Fair Value of Debt

Based on indicative price quotations from financial institutions multiplied by the amount recorded on the Company’s Condensed Consolidated Balance Sheet (“Book Value”), the Company estimates the fair values of its debt set forth below as of June 30, 2021, as follows (in millions, except for quotes):

Based on indicative price quotations from financial institutions multiplied by the amount recorded on the Company’s Condensed Consolidated Balance Sheet (“Book Value”), the Company estimates the fair values of its debt set forth below as of September 30, 2021, as follows (in millions, except for quotes):

Book Value Quote Fair Value

5 unchanged sentences

See Note A – “Basis of Presentation” for an explanation of ASC 820 hierarchy.

NOTE J – RETIREMENT PLANS AND OTHER BENEFITS

NOTE K – RETIREMENT PLANS AND OTHER BENEFITS

The Company maintains defined benefit plans in France, Germany, India, Switzerland and the United Kingdom for some of its subsidiaries, as well as a nonqualified Supplemental Executive Retirement Plan in the U.S.

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

17 unchanged sentences

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.

NOTE K – LITIGATION AND CONTINGENCIES

NOTE L – LITIGATION AND CONTINGENCIES

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.

22 unchanged sentences

The current amount of the maximum potential liability under these credit guarantees 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 June 30, 2021 and December 31, 2020, the maximum exposure determined at inception was $ 201.3 million and $ 143.8 million, respectively.

For credit guarantees outstanding as of September 30, 2021 and December 31, 2020, the maximum exposure determined at inception was $ 163.3 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 $ 12.5 million and $ 8.3 million at June 30, 2021 and December 31, 2020, respectively.

The allowance for credit losses on credit guarantees was $ 10.2 million and $ 8.3 million at September 30, 2021 and December 31, 2020, respectively.

There can be no assurance that historical credit default experience will be indicative of future results.

The Company’s ability to recover losses experienced from its guarantees may be affected by economic conditions in effect at the time of loss.

NOTE L – STOCKHOLDERS’ EQUITY

NOTE M – STOCKHOLDERS’ EQUITY

Changes in Accumulated Other Comprehensive Income (Loss)

The table below presents changes in AOCI by component for the three and six months ended June 30, 2021 and 2020.

The table below presents changes in AOCI by component for the three and nine months ended September 30, 2021 and 2020.

All amounts are net of tax (in millions).

Three Months Ended

June 30, 2021 Three Months Ended

June 30, 2020

September 30, 2021 Three Months Ended

September 30, 2020

CTA Derivative Hedging Adj.

13 unchanged sentences

$ ( 183.7 ) $ 9.8 $ 0.4 $ ( 55.8 ) $ ( 229.3 ) $ ( 198.5 ) $ ( 9.9 ) $ 3.9 $ ( 49.4 ) $ ( 253.9 )

Six Months Ended

June 30, 2021 Six Months Ended

June 30, 2020

Nine Months Ended

September 30, 2021 Nine Months Ended

September 30, 2020

CTA Derivative Hedging Adj.

13 unchanged sentences

Stock-Based Compensation

During the six months ended June 30, 2021, the Company awarded 0.6 million shares of restricted stock to its employees with a weighted average grant date fair value of $ 44.56 per share.

Approximately 57 % of these awards are time-based and vest ratably on each of the first three anniversary dates.

During the nine months ended September 30, 2021, the Company awarded 0.6 million shares of restricted stock awards to its employees with a weighted average grant date fair value of $ 44.56 per share.

Approximately 58 % of these awards are time-based and vest ratably on each of the first three anniversary dates of the grants.

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.

The Company used the Monte Carlo method to determine grant date fair value of $ 54.92 per share for the awards with a market condition granted on March 4, 2021.

The Company used the Monte Carlo method to determine grant date fair value of $ 54.92 per share for restricted stock awards with a market condition granted on March 4, 2021.

The Monte Carlo method is a statistical simulation technique used to provide the grant date fair value of an award.

7 unchanged sentences

In July 2018, Terex’s Board of Directors authorized the Company to repurchase up to $ 300 million of the Company’s outstanding shares of common stock.

During the six months ended June 30, 2021, the Company did no t repurchase shares under these programs.

During the six months ended June 30, 2020, the Company repurchased 2.5 million shares for $ 54.6 million under these programs.

Terex’s Board of Directors declared a dividend of $ 0.12 per share in the first and second quarters of 2021, which was paid to the Company’s shareholders.

In July 2021, Terex’s Board of Directors declared a dividend of $ 0.12 per share, which will be paid to the Company’s shareholders on September 20, 2021.

During the nine months ended September 30, 2021, the Company did no t repurchase shares under these programs.

During the nine months ended September 30, 2020, the Company repurchased 2.5 million shares for $ 54.6 million under these programs.

Terex’s Board of Directors declared a dividend of $ 0.12 per share in the first, second and third quarters of 2021, which was paid to the Company’s shareholders.

In October 2021, Terex’s Board of Directors declared a dividend of $ 0.12 per share, which will be paid to the Company’s shareholders on December 17, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements