What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-11 compared with 2021-02-12 · 320 added, 509 removed, 1288 unchanged (39% of the section changed)

1 unchanged sentence

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 Securities Exchange Act of 1934, as amended (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 Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required financial disclosure.

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.

12 unchanged sentences

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, 2020 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in this Annual Report on Form 10-K.

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

4 unchanged sentences

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 is incorporated by reference to the definitive Terex Corporation Proxy Statement to be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

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.

EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated by reference to the definitive Terex Corporation Proxy Statement to be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

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.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

6 unchanged sentences

(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 to the definitive Terex Corporation Proxy Statement to be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

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.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 is incorporated by reference to the definitive Terex Corporation Proxy Statement to be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

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.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 is incorporated by reference to the definitive Terex Corporation Proxy Statement to be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

Our independent registered public accounting firm is KPMG LLP , New York, NY , Auditor ID:

Our predecessor independent registered public accounting firm was PricewaterhouseCoopers LLP , Stamford, CT , Auditor ID:

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.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1 unchanged sentence

See “Index to Consolidated Financial Statements and Financial Statement Schedule” on Page F-1.

The exhibits set forth below are filed as part of this Form 10-K .

2.1 Asset and Stock Purchase Agreement, dated as of February 22, 2019 by and between Terex Corporation and Tadano Ltd.

(incorporated by reference to Exhibit 2.1 of the Form 8-K Current Report, Commission File No.

1-10702, dated February 22, 2019 and filed with the Commission February 27, 2019).

The exhibits set forth below are filed as part of this Annual Report on Form 10-K .

3.1 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.

7 unchanged sentences

4.2 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.

4.3 Indenture, dated as of January 31, 2017, among Terex Corporation, the Guarantors and HSBC Bank USA, National Association as Trustee relating to 5.625% Senior Notes due 2025 (incorporated by reference to Exhibit 4.1 of the Form 8-K Current Report, Commission File No.

1-10702, dated January 31, 2017 and filed with the Commission on February 2, 2017).

4.3 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).

4.4 Description of Capital Stock.

7 unchanged sentences

1-10702, dated May 9, 2013 and filed with the Commission on May, 14, 2013).

10.6 Terex Corporation Amended and Restated 2009 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 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).

10.7 Form of Restricted Stock Agreement (time based granted prior to 2017) under the Terex Corporation Amended and Restated 2009 Omnibus Incentive Plan between Terex Corporation and participants of the 2009 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.17 of the Form 10-K for the year ended December 31, 2011).

10.8 Form of Restricted Stock Agreement (performance based granted prior to 2017) under the Terex Corporation Amended and Restated 2009 Omnibus Incentive Plan between Terex Corporation and participants of the 2009 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.18 of the Form 10-K for the year ended December 31, 2011).***

10.9 Form of Restricted Stock Agreement (time based granted 2017) under the Terex Corporation Amended and Restated 2009 Omnibus Incentive Plan between Terex Corporation and participants of the 2009 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.9 of the Form 10-Q for the quarter ended March 31, 2017 of Terex Corporation, Commission File No.

10.10 Form of Restricted Stock Agreement (performance based granted 2017) under the Terex Corporation Amended and Restated 2009 Omnibus Incentive Plan between Terex Corporation and participants of the 2009 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.10 of the Form 10-Q for the quarter ended March 31, 2017 of Terex Corporation, Commission File No.

10.11 Credit Agreement dated as of January 31, 2017, among Terex Corporation, 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 January 31, 2017 and filed with the Commission February 2, 2017).

10.12 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).

10.13 Supplement No.

1 dated as of April 6, 2017 to the 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 10.13 of the Form 10-Q for the quarter ended March 31, 2017 of Terex Corporation, Commission File No.

10.14 Incremental Assumption Agreement and Amendment No.

1 dated as of August 17, 2017, to the Credit Agreement dated as of January 31, 2017, among Terex Corporation, the Lenders named therein and Credit Suisse AG, 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 August 17, 2017 and filed with the Commission on August 17, 2017).

10.6 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 unchanged sentence

10.7 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).

10.17 Incremental Assumption Agreement and Amendment No.

2 dated as of February 28, 2018, to the Credit Agreement dated as of January 31, 2017, among Terex Corporation, the Lenders named therein and Credit Suisse AG, 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 February 28, 2018 and filed with the Commission on February, 28, 2018).

10.18 Incremental Revolving Credit Assumption Agreement dated as of April 10, 2018, to the Credit Agreement dated as of January 31, 2017, among Terex Corporation, the Lenders named therein and Credit Suisse AG, 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 10, 2018 and filed with the Commission on April, 10, 2018).

10.19 Terex Corporation 2018 Omnibus Incentive Plan (incorporated by reference to Appendix A of the DEFA 14A of Terex Corporation filed with the Commission on April 9, 2018).***

10.20 Incremental Assumption Agreement and Amendment No.

3 dated as of March 7, 2019, to the Credit Agreement dated as of January 31, 2017, among Terex Corporation, the Lenders named therein and Credit Suisse AG, 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 March 7, 2019 and filed with the Commission March 7, 2019).

10.8 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.

2 unchanged sentences

10.11 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.

10.25 Loan Modification Agreement and Amendment No.

4 dated as of April 23, 2020, to the Credit Agreement dated as of January 31, 2017, among Terex Corporation, the Lenders named therein and Credit Suisse AG, 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 23, 2020 and filed with the Commission on April 24, 2020).

10.12 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).

10.13 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).

10.14 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).

10.15 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 Subsidiaries of Terex Corporation.*

23.1 Consent of Independent Registered Public Accounting Firm KPMG LLP, New York, NY .*

23.2 Consent of Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP, Stamford, Connecticut.*

27 unchanged sentences

(Principal Executive Officer)

Sheehan Senior Vice President and Chief Financial February 12, 2021

Sheehan Officer

Beck Senior Vice President and Chief Financial February 11, 2022

(Principal Financial Officer)

15 unchanged sentences

Sachs Lead Director

*By /s/ John D.

*By /s/ Julie A.

February 11, 2022

Sheehan, as Attorney-in-Fact

Beck, as Attorney-in-Fact

THIS PAGE IS INTENTIONALLY BLANK

6 unchanged sentences

IN THE PERIOD ENDED DECEMBER 31, 2021

Report of Independent Registered Public Accounting Firm

Report s of Independent Registered Public Accounting Firm s

Consolidated Statement of Income (Loss)

8 unchanged sentences

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

and Stockholders of Terex Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Terex Corporation and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, 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 three 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 three years in the period ended December 31, 2020 (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note A to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

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 Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

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.

2 unchanged sentences

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 audits 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.

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 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.

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 audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

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 (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) 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 (iii) 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.

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.

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 Matters

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 (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters 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.

As described in Note C to the consolidated financial statements, the Company estimates income taxes based on enacted tax laws in the various jurisdictions where it conducts business.

The Company recorded a provision for income taxes on continuing operations of $2.0 million for the year ended December 31, 2020.

Additionally, the Company reported deferred tax assets, net of deferred tax liabilities, for continuing operations of $249.0 million, before valuation allowances of $112.1 million, and a liability of $18.5 million related to uncertain tax positions as of December 31, 2020.

As disclosed by management, judgments and estimates are required by management to determine income tax expense, including evaluating (i) estimates of future taxable income used in evaluating the net realizable value of its deferred tax assets, and (ii) complexities in worldwide tax laws to determine exposure to uncertain tax positions.

The principal considerations for our determination that performing procedures relating to income taxes is a critical audit matter are the significant judgment by management when determining the income tax expense;

this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating audit evidence relating to income taxes, specifically (i) management’s significant assumptions related to estimates of future taxable income, which is used in the evaluation of deferred tax assets, and (ii) management’s assessment of uncertain tax positions, which includes evaluation of complexities in worldwide tax laws.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to income taxes, including controls over the valuation of deferred tax assets and the completeness of uncertain tax positions.

These procedures also included, among others (i) testing the income tax provision, including evaluating the effective tax rate reconciliation and the completeness and accuracy of permanent and temporary tax differences, (ii) evaluating the completeness of management’s assessment of the identification of reserves for uncertain tax positions, including consideration of court decisions, legislative actions and guidance and tax audits, and (iii) evaluating management’s assessment of the realizability of deferred tax assets on a jurisdictional basis, including evaluating the assumptions related to future taxable income and the related expected utilization of deferred tax assets.

Professionals with specialized skill and knowledge were used to assist in evaluating the audit evidence obtained as it relates to management’s assessment of the identification of reserves for uncertain tax positions.

Critical Audit Matter

(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.

New York, New York

February 11, 2022

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.

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.

We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

1 unchanged sentence

February 12, 2021

We have served as the Company’s auditor since 1992.

We served as the Company’s auditor from 1992 to 2020.

TEREX CORPORATION AND SUBSIDIARIES

39 unchanged sentences

Other comprehensive income (loss), net of tax:

Cumulative translation adjustment, net of (provision for) benefit from taxes of $( 3.0 ), $( 3.9 ) and $ 0.0 , respectively

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

( 42.8 ) 63.0 17.4

Derivative hedging adjustment, net of (provision for) benefit from taxes of $ 1.6 , $( 1.6 ) and $ 1.7 , 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

10.0 ( 5.2 ) 3.6

Debt and equity securities adjustment, net of (provision for) benefit from taxes of $ 0.0 , $ 0.0 and $ 0.0 , 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

( 1.2 ) ( 1.4 ) 1.8

Pension liability adjustment:

Net gain (loss), net of (provision for) benefit from taxes of $ 1.7 , $ 1.9 and $ 1.0 , respectively

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

10.6 ( 6.3 ) ( 7.8 )

Amortization of actuarial (gain) loss, net of provision for (benefit from) taxes of $( 0.4 ), $( 0.6 ) and $( 1.7 ), respectively

Settlement of U.S.

defined benefit pension obligations, net of provision for (benefit from) taxes of $ 0.0 , $ 0.0 and $( 24.4 ), respectively

Divestiture of business, net of provision for (benefit from) taxes of $ 0.0 , $( 5.3 ) and $ 0.0 , respectively

Foreign exchange and other effects, net of (provision for) benefit from taxes of $( 0.6 ), $( 0.7 ) and $ 0.2 , 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

1.3 ( 2.3 ) ( 2.2 )

60 unchanged sentences

Dividends — — 0.6 ( 32.0 ) — — — ( 31.4 )

Retirement of treasury stock — ( 0.5 ) ( 549.2 ) ( 1,332.3 ) — 1,882.0 — —

Acquisition of treasury stock ( 0.2 ) — — — — ( 7.7 ) — ( 7.7 )

Other — — — 2.6 ( 2.6 ) — — —

Divestiture — — — — — — ( 0.5 ) ( 0.5 )

Balance at December 31, 2019 70.4 0.8 824.4 771.4 ( 257.5 ) ( 406.8 ) — 932.3

7 unchanged sentences

Acquisition of treasury stock ( 2.6 ) — — — — ( 56.1 ) — ( 56.1 )

Divestiture — — — — — — ( 0.5 ) ( 0.5 )

Other — — — ( 1.9 ) — — — ( 1.9 )

Balance at December 31, 2020 68.6 0.9 837.9 750.3 ( 208.4 ) ( 459.2 ) — 921.5

9 unchanged sentences

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 financial statements.

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

TEREX CORPORATION AND SUBSIDIARIES

14 unchanged sentences

Stock-based compensation expense 33.1 23.8 43.1

Pension plan settlements — — 67.8

Inventory and other non-cash charges 14.7 20.6 47.6

10 unchanged sentences

Proceeds from sale of capital assets 1.9 2.7 4.3

Proceeds from disposition of investments 7.5 30.7 19.3

Proceeds (payments) from disposition of discontinued operations 15.8 177.7 2.5

Other investing activities, net — — ( 6.7 )

Acquisitions, net of cash acquired, and investments ( 42.7 ) — —

Proceeds (payments) from disposition of investments ( 1.7 ) 7.5 30.7

Proceeds from disposition of discontinued operations — 15.8 177.7

Net cash provided by (used in) investing activities ( 102.2 ) ( 38.5 ) 103.8

9 unchanged sentences

Net Increase (Decrease) in Cash and Cash Equivalents ( 403.2 ) 130.0 168.0

Cash and Cash Equivalents at Beginning of Period 540.1 372.1 630.1

Cash and Cash Equivalents at End of Period $ 670.1 $ 540.1 $ 372.1

Cash and Cash Equivalents at Beginning of Year 670.1 540.1 372.1

Cash and Cash Equivalents at End of Year (1)

$ 266.9 $ 670.1 $ 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.

4 unchanged sentences

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 all other investments.

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 - “Discontinued Operations and Assets and Liabilities Held for Sale”, on July 31, 2019, the Company completed the disposition of its Demag ® mobile cranes business (“Demag”) to Tadano Ltd.

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”).

1 unchanged sentence

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 are 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 and December 31, 2019.

Other operations formerly part of the Cranes segment were reorganized to align with the Company’s new management and reporting structure.

The utilities business has been consolidated within Aerial Work Platforms (“AWP”) and the pick and carry, rough terrain and tower cranes businesses have been consolidated within Materials Processing (“MP”).

The Company reports its business in the following segments:

(i) AWP and (ii) MP.

See Note B - “Business Segment Information” and Note D - “Discontinued Operations and Assets and Liabilities Held for Sale” for further information.

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.

8 unchanged sentences

Inventories are stated at the lower of cost or net realizable value (“NRV”).

Cost is determined by the average cost and first-in, first-out (“FIFO”) methods (approximately 10 % and 90 %, respectively).

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 the best available information at that time including actual orders received, negotiations with the Company’s customers for future orders, including their plans for expenditures, and market trends for similar products.

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.

21 unchanged sentences

Intangible assets are reviewed for impairment when events or changes in circumstances indicate that their carrying amount may not be recoverable.

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 and between annual tests 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.

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.

11 unchanged sentences

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.

Impairment of Long-Lived Assets.

The Company assesses the realizability of its 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.

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.

4 unchanged sentences

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”) are $ 5.5 million, $ 1.5 million and $ 2.5 million of asset impairments for the year ended December 31, 2020, 2019 and 2018, respectively.

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.

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 reviews, 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.

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 Company has off-balance sheet credit exposure related to guarantees provided to financial institutions as disclosed in Note O – “Litigation and Contingencies”.

The following table summarizes changes in the consolidated allowance for doubtful accounts (in millions):

7 unchanged sentences

Pursuant to terms of the Company’s trade accounts receivable factoring arrangements, certain of the Company’s subsidiaries may sell their trade accounts receivable.

In certain cases, the Company continues to service such accounts.

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.

2 unchanged sentences

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.

5 unchanged sentences

(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, we have 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.

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.

1 unchanged sentence

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, we retain title to goods delivered to a customer until the customer makes payment so that we can recover the goods in the event of customer default on payment.

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:

1 unchanged sentence

(ii) the customer has legal title to the product;

(iii) the customer has assumed the risks and rewards of ownership and (iv) the customer has communicated acceptance of 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.

23 unchanged sentences

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.

Variable lease costs are expensed as incurred and are not included in the determination of ROU assets or lease liabilities.

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.

3 unchanged sentences

Targeted Improvements”.

For detailed lease information see Note L - “Leases”.

For detailed lease information see Note K – “Leases”.

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 reviews, current financial conditions, reasonable and supportable forecasts, equipment collateral value and other factors.

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 .

29 unchanged sentences

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, prior service costs or credits, and any remaining transition assets or obligations that have not been recognized under previous accounting standards 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 M – “Retirement Plans and Other Benefits.”

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, which is described more fully in Note M – “Retirement Plans and Other Benefits.” 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, 2020 and 2019.

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.

1 unchanged sentence

Stock-Based Compensation .

At December 31, 2020, the Company had stock-based employee compensation plans, which are described more fully in Note N – “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 financial statements at fair value.

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.

8 unchanged sentences

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 J – “Derivative Financial Instruments.”

See Note I – “Derivative Financial Instruments.”

Research, Development and Engineering Costs.

11 unchanged sentences

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 interest rate caps, commodity swaps, cross currency swaps and foreign exchange contracts discussed in Note J – “Derivative Financial Instruments” and debt discussed in Note K – “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.

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).

8 unchanged sentences

Accounting Standards Implemented in 2021

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments,” (“ASU 2016-13”).

ASU 2016-13 sets forth a “current expected credit loss” model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts.

Guidance in this standard replaced the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures.

Subsequently, the FASB issued the following standards related to ASU 2016-13:

ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” ASU 2019-05, “Financial Instruments - Credit Losses (Topic 326) Targeted Transition Relief,” ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” and ASU 2020-03, “Codification Improvement to Financial Instruments,” which provided additional guidance and clarity to ASU 2016-13 (collectively, the “Credit Loss Standard”).

The Company adopted the Credit Loss Standard on January 1, 2020 using a modified retrospective approach.

Adoption did not have a material effect on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” (“ASU 2018-15”).

ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

The Company adopted ASU 2018-15 on January 1, 2020.

Adoption did not have a material effect on the Company’s consolidated financial statements.

In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” (“ASU 2019-04”).

ASU 2019-04 provided narrow scope amendments for Topics 326, 815 and 825.

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.

In August 2018, the FASB issued ASU 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20):

Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans,” (“ASU 2018-14”).

ASU 2018-14 adds, removes and clarifies disclosure requirements related to defined benefit pension plans and other postretirement plans.

The Company adopted ASU 2018-14 for our fiscal year ending December 31, 2020.

Adoption did not have a material effect on the Company’s consolidated financial statements.

Accounting Standards to be Implemented

In December 2019, the FASB issued 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 effective date will be first quarter of fiscal year 2021 and early adoption is permitted.

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.

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 the London Interbank Offered Rate ("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.

NOTE B – BUSINESS SEGMENT INFORMATION

1 unchanged sentence

The Company designs, builds and supports products used in construction, maintenance, manufacturing, energy, minerals and materials management applications.

Terex’s products are manufactured in North and South America, Europe, Australia and Asia and sold worldwide.

The Company engages with customers through all stages of the product life cycle, from initial specification and financing to parts and service support.

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 MP.

As Aerials and Utilities operating segments share similar economic characteristics, these operating segments are aggregated into one operating segment, AWP.

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:

2 unchanged sentences

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, 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.

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’s rough terrain and tower cranes operations were consolidated within MP for financial reporting periods beginning on or after January 1, 2020, to align with its new management and reporting structure.

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 in the acquisition of the Company’s equipment.

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.

24 unchanged sentences

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

(in millions) 2021 2020

Identifiable assets

$ 1,870.8 $ 1,541.0

1,596.3 1,750.9

MP 1,648.0 1,596.3

Corporate and Other / Eliminations (2)

2 unchanged sentences

Total $ 2,863.5 $ 3,031.8

(1) Decrease primarily due to lower inventory balances and elimination of intercompany investment.

(2) Decrease primarily due to settlement of certain intercompany balances.

(3) Change primarily due to lower intercompany eliminations.

Long-lived assets consist of net fixed assets, which can be attributed to the specific geographic regions.

(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

1 unchanged sentence

United Kingdom 76.4 74.5

Germany 12.7 11.0

China 55.8 39.5

Other European countries 38.9 36.2

43 unchanged sentences

Specialty Equipment — 693.5 2.2 695.7

Utility Equipment 380.6 — 0.6 381.2

186.4 2.4 10.5 199.3

7 unchanged sentences

Specialty Equipment — 493.6 1.4 495.0

Utility Equipment 352.4 — — 352.4

195.7 2.7 34.4 232.8

7 unchanged sentences

Specialty Equipment — 699.9 5.3 705.2

Utility Equipment 419.2 — — 419.2

395.3 7.3 15.8 418.4

40 unchanged sentences

Net deferred tax assets (liabilities) $ 130.5 $ 136.9

Deferred tax assets for continuing operations were $ 251.6 million ($ 0.1 million for discontinued operations) before valuation allowances of $ 112.1 million, partially offset by deferred tax liabilities for continuing operations of $ 2.6 million at December 31, 2020.

Deferred tax assets for continuing operations were $ 243.6 million ($ 0.3 million for discontinued operations) before valuation allowances of $ 107.0 million, partially offset by deferred tax liabilities for continuing operations of $ 2.3 million at December 31, 2019.

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.

1 unchanged sentence

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.

Historical information is supplemented by currently available information about future tax years.

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.

2 unchanged sentences

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, 2020 and 2019 was an increase of $ 5.1 million and a decrease of $ 7.3 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.

12 unchanged sentences

Compensation 1.8 3.1 1.1

Pension plan settlement — — ( 7.1 )

Other 0.2 ( 0.1 ) ( 0.6 )

6 unchanged sentences

If the assessment of the Company with respect to earnings of non-U.S.

subsidiaries changes, deferred U.S.

income taxes, foreign income taxes, and foreign withholding taxes may have to be accrued.

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.

7 unchanged sentences

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 $ 601 million of foreign loss carry forwards, consisting of $ 287 million in Germany, $ 183 million in Italy, $ 52 million in China, $ 31 million in Spain, and $ 48 million in other countries, which are available to offset future taxable income.

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.

4 unchanged sentences

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, China, India and the U.S.

Currently, various entities of the Company are under audit in Germany, Italy, India, the U.S.

and elsewhere.

With few exceptions, the statute of limitations for the Company and most of its subsidiaries has expired for tax years prior to 2011.

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.

26 unchanged sentences

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 accounting rules, tax law or judicial decision, or due to expiration of the relevant statute of limitations.

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.

2 unchanged sentences

The amounts of or periods in which changes to reserves for uncertain tax positions will occur is difficult to predict.

The Company believes it is reasonably possible the amount of unrecognized tax benefits disclosed as of December 31, 2020 may decrease approximately $ 4 million in the year ending December 31, 2021.

Such possible decrease relates to anticipated tax audit settlements.

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.

As of December 31, 2020 and 2019, the liability for potential interest and penalties was $ 1.4 million and $ 1.2 million, respectively.

During the years ended December 31, 2020 and 2019, the Company recognized total tax expense of $ 0.2 million for interest and penalties.

NOTE D – DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

Mobile Cranes Disposal Group

On July 31, 2019, the Company completed the disposition of Demag to Tadano.

The Company received approximately $ 215 million of consideration, as adjusted for estimated amounts of cash, debt, working capital and certain other items.

Products divested were Demag ® all terrain cranes and large lattice boom crawler cranes.

During the year ended December 31, 2020, the Company recognized a loss, net of tax, of $ 19.2 million primarily related to a settlement with Tadano on cash, debt, working capital and certain other items related to the disposition of Demag.

During the year ended December 31, 2019 the Company recognized a charge of approximately $ 82 million, net of tax, to write-down Demag to its fair value, less costs to sell.

During the year ended December 31, 2019, the Company recorded a loss on disposition of discontinued operations, net of tax, of $ 11.6 million.

During 2019, the Company also exited North American mobile crane product lines manufactured in its Oklahoma City facility and recognized a gain, net of tax, of $ 12.8 million related to the sale during the year ended December 31, 2019.

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.

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 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.

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.

In connection with the disposition of Demag, the Company entered into certain ancillary agreements with Tadano including a Transition Services Agreement (“TSA”), dated as of July 31, 2019, under which the parties provided one another certain transition services to facilitate the separation of Demag from the Company.

At December 31, 2020, all significant agreements covered under the TSA have terminated.

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.

Income (Loss) from Discontinued Operations

The following amounts related to discontinued operations were derived from historical financial information and have been segregated from continuing operations and reported as discontinued operations in the Consolidated Statement of Income (Loss) (in millions):

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):

Year ended December 31,

2020 2019 2018

Cranes Cranes Cranes

Net sales $ 6.0 $ 327.2

6 unchanged sentences

Other income (expense)

— ( 4.5 ) ( 19.1 )

Income (loss) from discontinued operations before income taxes

2 unchanged sentences

Income (loss) from discontinued operations – net of tax $ ( 0.4 ) $ ( 155.4 )

The Company is actively seeking a buyer for its utility hot lines tools business located in South America and, accordingly, assets and liabilities have been reported as held for sale.

Non-cash impairment charges of $ 1.8 million were recorded to adjust net asset value to estimated fair value in 2018.

The operating results for the hot lines tools business are reported in continuing operations, within the AWP segment in the Company’s segment disclosures.

Assets and Liabilities Held for Sale

Assets and liabilities held for sale consist of the Company’s utility hot lines tools business located in South America, mobile cranes product lines manufactured in Oklahoma City and Demag, all previously contained in its former Cranes segment.

Such assets and liabilities were classified as held for sale upon meeting the requirements of ASC 360 - “Property, Plant and Equipment”, and are recorded at lower of carrying amounts or fair value less costs to sell.

Assets are no longer depreciated once classified as held for sale.

The following table provides the amounts of assets and liabilities held for sale in the Consolidated Balance Sheet (in millions):

December 31, 2020 December 31, 2019

Cash and cash equivalents $ 5.1 $ 5.0

Trade receivables – net 2.3 3.5

Inventories 1.8 5.3

Prepaid and other current assets 0.2 0.2

Impairment reserve ( 3.7 ) ( 4.8 )

Included in Prepaid and other current assets $ 5.7 $ 9.2

Property, plant and equipment – net $ 0.7 $ 0.6

Intangible assets – net 1.8 2.4

Impairment reserve ( 2.2 ) ( 2.8 )

Other assets 0.3 0.4

Included in Other assets $ 0.6 $ 0.6

Trade accounts payable 0.7 4.6

Accruals and other current liabilities 1.3 3.8

Included in Other current liabilities $ 2.0 $ 8.4

Other non-current liabilities 0.7 1.2

Included in Other non-current liabilities $ 0.7 $ 1.2

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

December 31, 2020 December 31, 2019 December 31, 2018

Cash and cash equivalents:

Cash and cash equivalents - continuing operations $ 665.0 $ 535.1 $ 339.5

Cash and cash equivalents - held for sale 5.1 5.0 32.6

Total cash and cash equivalents $ 670.1 $ 540.1 $ 372.1

The following table provides supplemental cash flow information related to discontinued operations (in millions):

Year Ended December 31,

2020 2019 2018

Non-cash operating items:

8 unchanged sentences

2021 2020 2019

Cranes MHPS Total Cranes MHPS Other Total MHPS Atlas Other Total

Cranes MHPS Total Cranes MHPS Total Cranes MHPS Other Total

Gain (loss) on disposition of discontinued operations $ 1.4 $ 1.2 $ 2.6 $ ( 27.7 ) $ ( 0.4 ) $ ( 28.1 ) $ ( 1.0 ) $ ( 4.6 ) $ — $ ( 5.6 )

27 unchanged sentences

Net income (loss) $ 3.12 $ ( 0.15 ) $ 0.76

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.

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 – FINANCE RECEIVABLES

The Company, primarily through TFS, leases equipment and provides financing to customers for the purchase and use of Terex equipment.

In the normal course of business, TFS assesses credit risk, establishes structure and pricing of financing transactions, documents the finance receivable, and records and funds the transactions.

The Company bills and collects cash from the end customer.

The Company primarily conducts on-book business in the U.S., with limited business in other jurisdictions.

The Company does business with various types of customers consisting of rental houses, end user customers and Terex equipment dealers.

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

Finance receivables that management intends to hold until maturity are stated at their outstanding unpaid principal balances, net of an allowance for loan losses as well as any deferred fees and costs.

Finance receivables originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value, on an individual asset basis.

During the years ended December 31, 2020, 2019 and 2018, the Company transferred finance receivables of $ 79.7 million, $ 226.2 million and $ 290.5 million, respectively, to third-party financial institutions, which qualified for sales treatment under ASC 860.

During the years ended December 31, 2020, 2019 and 2018, the Company recorded gains on transferred finance receivables of $ 1.8 million, $ 5.4 million, and $ 3.3 million, respectively, which were recorded as sales by TFS and were reported in the Corporate and Other category.

At December 31, 2020 and 2019, the Company had $ 8.4 million and $ 17.6 million, respectively, of held for sale finance receivables recorded in Prepaid and other current assets in the Consolidated Balance Sheet.

Revenue attributable to finance receivables management intends to hold until maturity is recognized on the accrual basis using the effective interest method.

The Company bills customers and accrues interest income monthly on the unpaid principal balance.

The accrual of interest is generally discontinued when the contractual payment of principal or interest has become 90 days past due or management has significant doubts about further collectability of contractual payments, even though the loan may be currently performing.

A receivable may remain on accrual status if it is in the process of collection and is either guaranteed or secured.

Interest received on non-accrual finance receivables is typically applied against principal.

Finance receivables are generally restored to accrual status when the obligation is brought current and the borrower has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

The Company has a history of enforcing the terms of these separate financing agreements.

During 2020, the Company offered principal payment relief options to customers impacted by the COVID-19 pandemic.

These loan modifications are accounted for in accordance with Section 4013 of the CARES Act and therefore are not treated as troubled debt restructurings for accounting or disclosure purposes.

Finance receivables, net consisted of the following (in millions):

2020 December 31,

Commercial loans $ 118.2 $ 145.7

Sales-type leases 11.6 20.5

Total finance receivables, gross 129.8 166.2

Allowance for credit losses ( 13.8 ) ( 11.0 )

Total finance receivables, net $ 116.0 $ 155.2

Approximately $ 39 million and $ 52 million of finance receivables are recorded in Prepaid and other current assets at December 31, 2020 and 2019, respectively.

Approximately $ 77 million and $ 103 million are recorded in Other assets in the Consolidated Balance Sheet at December 31, 2020 and 2019, respectively.

In February 2021, the Company transferred finance receivables of $89.9 million to TCF National Bank, which qualified for sales treatment under ASC 860.

The Company received $99.4 million cash proceeds from the sale and recognized a net gain of $7.4 million.

Credit losses are charged against the allowance for credit losses when management ceases active collection efforts.

Subsequent recoveries, if any, are credited to earnings.

The allowance for credit losses is maintained at a level set by management which represents evaluation of known and inherent risks in the portfolio at the consolidated balance sheet date.

Management’s periodic evaluation of the adequacy of the allowance is based on the Company’s past loan loss experience, market-based loss experience, specific customer situations, reasonable and supportable forecasts of customer default, estimated value of any underlying collateral, current economic conditions, and other relevant factors.

This evaluation is inherently subjective, since it requires estimates that may be susceptible to significant change.

Although specific and general loss allowances are established in accordance with management’s best estimate, actual losses are dependent upon future events and, as such, further additions to or decreases from the level of loss allowances may be necessary.

The following table presents an analysis of the allowance for credit losses (in millions):

Year Ended December 31, 2020 Year Ended December 31, 2019 Year Ended December 31, 2018

Commercial Loans Sales-Type Leases Total Commercial Loans Sales-Type Leases Total Commercial Loans Sales-Type Leases Total

Balance, beginning of period $ 10.5 $ 0.5 $ 11.0 $ 4.0 $ 1.5 $ 5.5 $ 5.7 $ 0.9 $ 6.6

Provision for credit losses

2.9 ( 0.5 ) 2.4 6.9 ( 1.0 ) 5.9 ( 0.5 ) 0.6 0.1

Charge offs ( 0.2 ) — ( 0.2 ) ( 0.4 ) — ( 0.4 ) ( 1.1 ) — ( 1.1 )

Recoveries 0.6 — 0.6 — — — ( 0.1 ) — ( 0.1 )

Balance, end of period $ 13.8 $ — $ 13.8 $ 10.5 $ 0.5 $ 11.0 $ 4.0 $ 1.5 $ 5.5

The Company utilizes a two-tier approach to set allowances:

(1) identification of impaired finance receivables and establishment of specific loss allowances on such receivables;

and (2) establishment of general loss allowances on the remainder of its portfolio.

Specific loss allowances are established based on circumstances and factors of specific receivables.

The Company regularly reviews the portfolio which allows for early identification of potentially impaired receivables.

The process takes into consideration, among other things, delinquency status, type of collateral and other factors specific to the borrower.

General loss allowance levels are determined based upon a combination of factors including, but not limited to, TFS experience, general market loss experience, performance of the portfolio, current economic conditions, reasonable and supportable forecasts of customer defaults and collateral values, and management's judgment.

The two primary risk characteristics inherent in the portfolio are (1) the customer's ability to meet contractual payment terms, and (2) the liquidation values of the underlying primary and secondary collaterals.

The Company records a general or unallocated loss allowance that is calculated by applying a reserve rate to its portfolio, net of individually impaired finance receivables.

Accounts are considered delinquent when the billed periodic payments of the finance receivables exceed 30 days past the due date.

All delinquent accounts are reviewed for potential impairment.

A receivable is deemed to be impaired when based on current information and events, it is expected that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.

Amount of impairment is measured as the difference between the balance outstanding and underlying collateral value of equipment being financed, as well as any other collateral.

All finance receivables identified as impaired are evaluated individually.

Generally, the Company does not change terms and conditions of existing finance receivables.

The following table presents individually impaired finance receivables (in millions):

December 31, 2020 December 31, 2019 December 31, 2018

Commercial Loans Sales-Type Leases Total Commercial Loans Sales-Type Leases Total Commercial Loans Sales-Type Leases Total

Recorded investment $ 22.0 $ — $ 22.0 $ 7.8 $ — $ 7.8 $ 1.5 $ — $ 1.5

Related allowance 10.9 — 10.9 7.8 — 7.8 0.6 — 0.6

Average recorded investment 19.2 0.2 19.4 7.5 — 7.5 2.4 — 2.4

The allowance for credit losses and finance receivables by portfolio, segregated by those amounts that are individually evaluated for impairment and those that are collectively evaluated for impairment, was as follows (in millions):

December 31, 2020 December 31, 2019

Allowance for credit losses, ending balance:

Commercial Loans Sales-Type Leases Total Commercial Loans Sales-Type Leases Total

Individually evaluated for impairment $ 10.9 $ — $ 10.9 $ 7.8 $ — $ 7.8

Collectively evaluated for impairment 2.9 — 2.9 2.7 0.5 3.2

Total allowance for credit losses $ 13.8 $ — $ 13.8 $ 10.5 $ 0.5 $ 11.0

Finance receivables, ending balance:

Individually evaluated for impairment $ 22.0 $ — $ 22.0 $ 7.8 $ — $ 7.8

Collectively evaluated for impairment 96.2 11.6 107.8 137.9 20.5 158.4

Total finance receivables $ 118.2 $ 11.6 $ 129.8 $ 145.7 $ 20.5 $ 166.2

The following tables present analysis of aging of recorded investment in finance receivables (in millions):

December 31, 2020

Current 31-60 days past due 61-90 days past due Greater than 90 days past due Total past due Total Finance Receivables

Commercial loans $ 104.5 $ 1.3 $ 2.4 $ 10.0 $ 13.7 $ 118.2

Sales-type leases 10.3 1.2 — 0.1 1.3 11.6

Total finance receivables $ 114.8 $ 2.5 $ 2.4 $ 10.1 $ 15.0 $ 129.8

December 31, 2019

Current 31-60 days past due 61-90 days past due Greater than 90 days past due Total past due Total Finance Receivables

Commercial loans $ 135.1 $ 2.4 $ 0.1 $ 8.1 $ 10.6 $ 145.7

Sales-type leases 20.2 — 0.3 — 0.3 20.5

Total finance receivables $ 155.3 $ 2.4 $ 0.4 $ 8.1 $ 10.9 $ 166.2

Commercial loans in the amount of $ 31.4 million and $ 27.1 million were on non-accrual status as of December 31, 2020 and 2019, respectively.

Sales-type leases in the amount of $ 0.1 million and $ 0.3 million were on non-accrual status as of December 31, 2020 and 2019, respectively.

Credit Quality Information

Credit quality is reviewed periodically based on customers’ payment status.

In addition to delinquency status, any information received regarding a customer (such as bankruptcy filings, etc.) will also be considered to determine the credit quality of the customer.

Collateral asset values are also monitored regularly to determine the potential loss exposures on any given transaction.

The Company uses the following internal credit quality indicators, based on an internal risk rating system, using certain external credit data, listed from the lowest level of risk to highest level of risk.

The internal rating system considers factors affecting specific borrowers’ ability to repay.

The following table presents finance receivables by risk rating and year of origination as of December 31, 2020 (in millions):

Rating 2020 2019 2018 2017 2016 Prior Total

Superior $ — $ — $ — $ — $ — $ — $ —

Above Average 5.1 2.1 2.6 — — 1.0 10.8

15.1 27.0 23.6 2.7 — — 68.4

Below Average 1.6 16.2 18.7 1.6 3.9 — 42.0

Sub Standard — 8.4 0.2 — — — 8.6

Total $ 21.8 $ 53.7 $ 45.1 $ 4.3 $ 3.9 $ 1.0 $ 129.8

The following table present finance receivables by risk rating and year of origination as of December 31, 2019 (in millions):

Rating 2019 2018 2017 2016 2015 Prior Total

Superior $ 1.7 $ — $ — $ — $ — $ — $ 1.7

Above Average 12.6 3.0 — — 1.7 — 17.3

20.8 17.1 3.4 0.7 0.1 — 42.1

Below Average 44.6 43.1 4.6 3.9 — — 96.2

Sub Standard 7.7 1.1 — — 0.1 — 8.9

Total $ 87.4 $ 64.3 $ 8.0 $ 4.6 $ 1.9 $ — $ 166.2

The Company believes the finance receivables retained, net of allowance for credit losses, are collectible.

NOTE G – INVENTORIES

NOTE F – INVENTORIES

Inventories consist of the following (in millions):

5 unchanged sentences

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.

NOTE H – PROPERTY, PLANT AND EQUIPMENT

NOTE G – PROPERTY, PLANT AND EQUIPMENT

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

7 unchanged sentences

Property, plant and equipment – net $ 429.6 $ 406.6

Depreciation expense for the years ended December 31, 2020, 2019 and 2018 was $ 42.3 million, $ 39.6 million and $ 39.0 million, respectively.

During 2020, the Company completed construction of a manufacturing facility in Watertown, South Dakota.

Related assets were placed in service and transferred from construction in progress to plant and equipment.

NOTE I – GOODWILL AND INTANGIBLE ASSETS, NET

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):

10 unchanged sentences

102.0 173.4 275.4

Acquisitions — 7.3 7.3

Foreign exchange effect and other ( 0.9 ) ( 1.7 ) ( 2.6 )

3 unchanged sentences

Balance at December 31, 2021, net $ 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.

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

10 unchanged sentences

$ 72.4 $ ( 59.0 ) $ 13.4 $ 66.1 $ ( 57.8 ) $ 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.

For the Year Ended December 31,

1 unchanged sentence

Aggregate Amortization Expense $ 2.2 $ 1.8 $ 1.8

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

NOTE J – 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.

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 method 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.

5 unchanged sentences

see Note A – “Basis of Presentation” for an explanation of the hierarchy.

Interest Rate Caps and Commodity Swaps

Derivatives designated as cash flow hedging instruments include interest rate caps and commodity swaps with outstanding notional amounts of $ 300.0 million and $ 26.0 million, respectively, as of December 31, 2020.

Commodity swaps outstanding at December 31, 2020 mature on or before August 31, 2022.

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.

The outstanding notional amount of commodity swaps was $ 7.0 million at December 31, 2019.

The Company uses interest rate caps to mitigate its exposure to changes in interest rates related to variable rate debt and commodity swaps to mitigate price risk for hot rolled coil steel.

Fair values of interest rate caps are based on the present value of future cash payments and receipts.

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.

Changes in the fair value of interest rate caps and commodity swaps are deferred in Accumulated other comprehensive income (loss) (“AOCI”).

Gains or losses on interest rate caps are reclassified to Interest expense in the Consolidated Statement of Comprehensive Income (Loss) when the underlying hedged transactions occur.

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 amounts of $ 97.7 million at December 31, 2020.

There were no cross currency swaps designated as net investment hedging instruments outstanding at December 31, 2019.

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.

2 unchanged sentences

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.

Derivatives designated as cash flow hedging instruments include cross currency swaps.

There were no cross currency swaps designated as cash flow hedging instruments outstanding at December 31, 2020 and 2019.

The Company used cross currency swaps to mitigate its exposure to changes in foreign currency exchange rates.

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 were deferred in AOCI.

Gains or losses on cross currency swaps were reclassified to Other income (expense) - net in the Consolidated Statement of Income (Loss) when the underlying hedged item is re-measured.

Foreign Exchange Contracts

The Company enters into foreign exchange contracts to manage variability of future cash flows associated with changing currency exchange rates.

Primary currencies to which the Company is exposed are the Euro, British Pound and Australian Dollar.

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, 2020 mature on or before January 27, 2021.

At December 31, 2020 and 2019, the Company had $ 7.8 million and $ 233.0 million notional amount, respectively, of foreign exchange contracts outstanding that were designated as cash flow hedge contracts.

For effective hedging instruments, unrealized gains and losses associated with foreign exchange contracts are deferred as a component of AOCI until the underlying hedged transactions settle and are reclassified to COGS in the Company’s Consolidated Statement of Income (Loss).

The Company had $ 54.2 million and $ 121.2 million notional amount of foreign exchange contracts outstanding that were not designated as hedging instruments at December 31, 2020 and 2019, respectively.

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 Other income (expense) – net in the Consolidated Statement of Income (Loss).

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).

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):

5 unchanged sentences

Commodity swaps Other non-current assets — — 0.3 —

Foreign exchange contracts Other current liabilities — — ( 3.9 ) —

Cross currency swaps - net investment hedge Other current liabilities ( 0.5 ) — ( 2.0 ) —

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

Commodity swaps Other current liabilities ( 1.1 ) — — —

Cross currency swaps - net investment hedge Other non-current liabilities ( 2.4 ) — ( 8.2 ) —

37 unchanged sentences

(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 interest rate caps, commodity swaps, cross currency swaps, foreign exchange contracts and the debt conversion feature in the accounts for which the hedged items are recorded.

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.

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

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.

NOTE K – LONG-TERM OBLIGATIONS

NOTE J – LONG-TERM OBLIGATIONS

Long-term debt is summarized as follows (in millions):

5-5/8% Senior Notes due February 1, 2025, net of unamortized debt issuance costs of $ 6.0 and $ 7.5 at December 31, 2020 and 2019, respectively

$ 594.0 $ 592.5

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

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

2017 Credit Agreement – term debt due January 31, 2024 (“2019 Term Loan”, as defined below), net of unamortized debt issuance costs of $ 1.6 and $ 2.1 at December 31, 2020 and 2019, 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 3.5 4.4

4 unchanged sentences

Credit Agreement

On January 31, 2017, the Company entered into a credit agreement (as amended, the “2017 Credit Agreement”) with the lenders and issuing banks party thereto and Credit Suisse AG, Cayman Islands Branch (“CSAG”), as administrative agent and collateral agent.

The 2017 Credit Agreement includes (i) a $ 600 million revolving line of credit (the “Revolver”) and (ii) senior secured term loans totaling $ 600 million that will mature on January 31, 2024 (the “Term Loans”);

both are further described below.

On April 23, 2020, the Company entered into a Loan Modification Agreement and Amendment No.

4 (“Amendment No.

4”) to the 2017 Credit Agreement.

Amendment No.

4 extended the term of the Revolver to expire on January 31, 2023.

The 2017 Credit Agreement contains a $ 400 million senior secured term loan (the “Original Term Loan”).

On August 17, 2017, the Company entered into an Incremental Assumption Agreement and Amendment No.

1 to the 2017 Credit Agreement which lowered the interest rate on the Original Term Loan by 25 basis points.

On February 28, 2018, the Company entered into an Incremental Assumption Agreement and Amendment No.

2 (“Amendment No.

2”) to the 2017 Credit Agreement which lowered the interest rate on the Original Term Loan by an additional 25 basis points.

The Original Term Loan portion of the 2017 Credit Agreement bears interest at a rate of London Interbank Offered Rate (“LIBOR”) plus 2.00 % with a 0.75 % LIBOR floor.

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 the 2017 Credit Agreement.

3”) to its credit agreement.

Amendment No.

3 provided the Company with an additional term loan (the “2019 Term Loan”) under the 2017 Credit Agreement in the amount of $ 200 million.

The 2019 Term Loan portion of the 2017 Credit Agreement bears interest at a rate of LIBOR plus 2.75 % with a 0.75 % LIBOR floor.

The 2017 Credit Agreement allows unlimited incremental commitments, which 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 ($ 150 million through 2021 as a result of Amendment No.

4) as long as the Company satisfies a senior secured leverage ratio contained in the 2017 Credit Agreement.

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.

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:

5 unchanged sentences

and pay dividends and distributions.

If the Company’s borrowings under the Revolver are greater than 30 % of the total revolving credit commitments, the 2017 Credit Agreement requires the Company to comply with certain financial tests, as defined in the 2017 Credit Agreement.

Amendment No.

4 waived compliance with the minimum required levels of the interest coverage ratio (“Interest Coverage Ratio”) and the maximum permitted levels of the senior secured leverage ratio (“Senior Secured Leverage Ratio”) through December 31, 2020, replacing them with a sliding scale minimum liquidity requirement of $ 100 million at June 30 and September 30, 2020 and $ 150 million at December 31, 2020.

Maximum levels of the Senior Secured Leverage Ratio will be 3.75 to 1.0 at March 31, 2021, 3.25 to 1.0 at June 30, 2021 and 2.75 to 1.0 at September 30, 2021 and thereafter.

If applicable, beginning in 2022, the Interest Coverage Ratio would be 2.5 to 1.0.

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.

In addition, Amendment No.

4 prohibited share repurchases and dividends, contained anti-cash hoarding provisions and additional financial reporting provisions until December 31, 2020.

Amendment No.

4 also increased the interest rate on the Revolver by 25 basis points until December 31, 2021.

The Company, at its sole option, has the ability to revert to original financial covenants and Revolver pricing.

The Company was in compliance with all covenants contained in the Credit Agreement as of December 31, 2021.

During the year ended December 31, 2018, the Company recorded a loss on early extinguishment of debt related to Amendment No.

2 to the 2017 Credit Agreement of approximately $ 0.7 million.

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, 2020 and December 31, 2019.

In February 2021, the Company initiated its option to prepay the 2019 Term Loan under the 2017 Credit Agreement 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 $ 2 million for accelerated amortization of debt acquisition costs and original issue discount in the first quarter of 2021.

The Company issues 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.

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.

12 unchanged sentences

Furthermore, the Company and certain of its subsidiaries agreed to take certain actions to secure borrowings under the Credit Agreement.

As a result, on January 31, 2017, 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 2017 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.

1 unchanged sentence

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 proceeds from the 5-5/8% Notes, together with cash on hand, including cash from the sale of the Company’s Material Handling and Port Solutions business, was used:

(i) to complete a tender offer for up to $ 550.0 million of the Company’s Senior Notes due 2021 (“ 6 % Notes”), (ii) to redeem and discharge such portion of the 6 % Notes not purchased in the tender offer, (iii) to fund a $ 300.0 million partial redemption of the 6 % Notes, (iv) to fund repayment of all $ 300.0 million aggregate principal amount outstanding of the Company’s 6-1/2% Senior Notes due 2021 on or before April 3, 2017, (v) to pay related premiums, fees, discounts and expenses, and (vi) for general corporate purposes.

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.

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.

2 unchanged sentences

Amounts shown are exclusive of minimum lease payments for capital lease obligations (in millions):

Thereafter 600.0

Total Debt 677.9

2 unchanged sentences

Fair Value of Debt

Based on indicative price quotations from financial institutions multiplied by the amount recorded on the Company’s Consolidated Balance Sheet (“Book Value”), the Company estimates the fair values of its debt set forth below as of December 31, 2020 and 2019, as follows (in millions, except for quotes):

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 Book Value Quote Fair Value

5% Notes $ 600.0 1.03000 $ 618.0

2017 Credit Agreement - Original Term Loan (net of discount) $ 384.0 $ 0.98750 $ 379.2

2017 Credit Agreement - 2019 Term Loan (net of discount) $ 195.9 $ 0.99000 $ 193.9

Original Term Loan (net of discount) 77.8 0.99875 77.7

2020 Book Value Quote Fair Value

5-5/8% Notes $ 600.0 1.02750 $ 616.5

2017 Credit Agreement - Original Term Loan (net of discount) $ 387.8 $ 1.00656 $ 390.3

2017 Credit Agreement - 2019 Term Loan (net of discount) $ 197.7 $ 1.00938 $ 199.6

The fair value of debt reported in the table above is based on price quotations on the debt instrument in an active market and therefore is categorized under Level 1 of the ASC 820 hierarchy.

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

Original Term Loan (net of discount) 384.0 0.98750 379.2

2019 Term Loan (net of discount) 195.9 0.99000 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 these other borrowings are categorized under Level 2 of the ASC 820 hierarchy.

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 L – LEASES

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.

3 unchanged sentences

Most of our renewal options are linked to market conditions and Terex cannot estimate how existing renewal options will affect the monthly payments.

Residual value guarantees are not material.

The vehicle leases mainly include cars and trucks.

5 unchanged sentences

Year Ended December 31,

2021 2020 2019

Operating lease cost $ 31.3 $ 32.0 $ 33.8

2 unchanged sentences

Total operating lease costs $ 39.7 $ 41.7 $ 45.5

Variable lease costs correspond to future period lease payments which are determined at fair market value at determined points in time.

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.

Rental expense under operating leases was $ 37.5 million in 2018, prior to the adoption of the current leasing standard.

Supplemental balance sheet information related to leases (in millions, except lease term and discount rate):

17 unchanged sentences

Operating right-of-use assets obtained in exchange for operating lease liabilities $ 31.1 $ 21.4

NOTE M – RETIREMENT PLANS AND OTHER BENEFITS

NOTE L – RETIREMENT PLANS AND OTHER BENEFITS

The Company maintains a nonqualified Supplemental Executive Retirement Plan (“U.S.

6 unchanged sentences

SERP has been frozen.

There is a defined contribution plan for certain senior executives of the Company.

The Company maintained one qualified defined benefit pension plan covering certain domestic employees (the “Terex Plan”).

Participation in the Terex Plan for all employees was frozen.

Participants were credited with post-freeze service for purposes of determining vesting and retirement eligibility only.

The benefits covering salaried employees were based primarily on years of service and employees’ qualifying compensation during the final years of employment.

The benefits covering bargaining unit employees were based primarily on years of service and a flat dollar amount per year of service.

The Company’s policy was generally to fund the Terex Plan based on the requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”).

Plan assets consisted primarily of common stocks, bonds and short-term cash equivalent funds.

In November 2018, the Company completed the termination of the Terex Plan as further described below.

There were no minimum contribution requirements for the 2018 plan year.

The Company maintains defined benefit plans in France, Germany, India, Switzerland and the United Kingdom for some of its subsidiaries.

Participation in the United Kingdom plan has been frozen.

The United Kingdom plan is a funded plan and the Company funds this plan in accordance with funding regulations in the United Kingdom and a negotiated agreement between the Company and the plan’s trustee.

There is also a defined contribution plan for certain senior executives of the Company.

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.

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.

2 unchanged sentences

The plans in France, Germany, and India are unfunded plans.

In Italy, there are mandatory termination indemnity plans providing a benefit that is payable upon termination of employment in substantially all cases of termination.

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.

19 unchanged sentences

Interest cost 1.1 1.4 2.3 2.8 0.1 0.1

Transfer from held for sale — — — 0.1 — 2.1

Settlements — — — ( 1.3 ) — —

13 unchanged sentences

Benefits paid ( 2.4 ) ( 2.4 ) ( 6.8 ) ( 6.5 ) ( 0.3 ) ( 0.3 )

Transfer to held for sale — — — — — —

Foreign exchange effect — — ( 1.3 ) 4.3 — —

2 unchanged sentences

Amounts recognized in the statement of financial position are included in:

Other assets $ — $ — $ 7.5 $ — $ — $ —

Other current liabilities $ 2.3 $ 2.3 $ 0.5 $ 0.6 $ 0.3 $ 0.3

6 unchanged sentences

$ 5.6 $ 7.1 $ 41.0 $ 55.1 $ — $ 0.2

(1) Actuarial gains related to 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.

pension benefits for the years ended December 31, 2020 and 2019 were due primarily to the decreased discount rate when compared to the rate used in the prior year.

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.

Pension Benefits Non-U.S.

4 unchanged sentences

2.80 % 2.50 % 3.31 % 1.93 % 1.42 % 1.87 % 2.58 % 2.12 % 3.10 %

Expected return on plan assets — % — % — % 3.93 % 4.40 % 4.40 % N/A N/A N/A

Expected return on plan assets N/A N/A N/A 3.93 % 3.93 % 4.40 % N/A N/A N/A

Rate of compensation increase (1)

— % — % 3.75 % 0.17 % 0.17 % 0.19 % 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.

11 unchanged sentences

Net periodic cost $ 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 Comprehensive Income (Loss).

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

In November 2018, the Company entered into a contract for a group annuity to transfer the obligation to pay the remaining retirement benefits of all plan participants in the Terex Plan to an insurance company (the “Pension Annuitization”).

The transfer of $ 108.5 million ($ 31.0 million related to discontinued operations), in both plan obligations and plan assets was completed on November 5, 2018.

The Company contributed $ 4.7 million to the plan to facilitate the transaction, secure the remaining plan obligations and take advantage of certain tax benefits.

Prior to the transaction, the Terex Plan had approximately 2,600 participants.

As a result of the Pension Annuitization, the Company recorded a pretax non-cash settlement loss of $ 50.5 million (after tax $ 32.1 million) reflecting the accelerated recognition of unamortized losses in the Terex Plan as a result of the obligation that was settled.

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 years ended December 31, 2019 and 2018, the Company settled $ 2.4 million and $ 2.7 million of non-U.S.

pension obligations, respectively.

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 and $ 0.8 million reflecting the accelerated recognition of unamortized losses in the plan proportionate to the obligation that was settled in 2019 and 2018, respectively.

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.

Pension Benefits Non-U.S.

5 unchanged sentences

Amortization of prior service cost — — ( 0.1 ) ( 0.2 ) — —

Disposals — — — ( 17.9 ) — —

Settlements — — — ( 0.6 ) — —

Foreign exchange effect — — ( 1.2 ) 1.9 — —

9 unchanged sentences

Fair value of plan assets $ — $ — $ 38.6 $ 139.9

The Company had no pension benefit plans with fair value of plan assets in excess of projected benefit obligations or accumulated benefit obligations.

The discount rate enables the Company to estimate the present value of expected future cash flows on the measurement date.

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.

43 unchanged sentences

Actuarial gain (loss) 1.4 0.8

Interest Income 0.3 0.3

Transfers into (out of) Level 3 ( 2.4 ) ( 2.4 )

17 unchanged sentences

2027-2031 $ 12.2 $ 34.0 $ 0.5

For the other benefits, for measurement purposes, a 8.50 % rate of increase in the per capita cost of covered health care benefits was assumed for 2021, decreasing one-half percentage point per year until it reaches 4.50 % for 2029 and thereafter.

Assumed health care cost trend rates may have a significant effect on the amounts reported for health care plans.

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.

NOTE N – STOCKHOLDERS’ EQUITY

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.

7 unchanged sentences

Long-Term Incentive Plans

In May 2018, the stockholders approved the Terex Corporation 2018 Omnibus Incentive Plan (the “2018 Plan”).

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 (“Shares”), (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted stock units, (v) other stock awards, (vi) cash awards and (vii) performance awards.

The maximum number of Shares that may be the subject of awards under the 2018 Plan is 1.2 million Shares, plus the number of Shares remaining available for issuance under the Terex Corporation 2009 Omnibus Incentive Plan (the “2009 Plan”) that are not subject to outstanding awards as of the date of stockholder approval, and the number of Shares subject to awards outstanding under the 2009 Plan as of such date but only to the extent that such outstanding awards are forfeited, expire, or otherwise terminate without the issuance of such Shares.

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.

In May 2009, the stockholders approved the 2009 Plan.

The purpose of the 2009 Plan is to provide a means whereby employees, directors and third-party service providers of the Company develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to devote their best efforts to the business of the Company, thereby advancing the interests of the Company and its stockholders.

The 2009 Plan provides for incentive compensation in the form of (i) options to purchase Shares, (ii) stock appreciation rights, (iii) restricted stock awards and restricted stock units, (iv) other stock awards, (v) cash awards, and (vi) performance awards.

The maximum number of Shares available for issuance under the 2009 Plan was 8.0 million Shares plus the number of Shares remaining available for issuance under the Terex Corporation 2000 Incentive Plan and the 1996 Terex Corporation Long-Term Incentive Plan.

Under the 2018 and 2009 Plans, approximately 50 % of outstanding awards are time-based and vest ratably on each of the first three anniversary dates.

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.

5 unchanged sentences

Grant date Grant date Grant date

February 26, 2020 March 12, 2019 March 8, 2018

March 4, 2021 February 26, 2020 March 12, 2019

Dividend yields 1.12 % 2.12 % 1.31 %

39 unchanged sentences

CTA Derivative

Total CTA (1)

Total CTA Derivative

Beginning balance $ ( 145.2 ) $ ( 6.0 ) $ 1.2 $ ( 58.4 ) $ ( 208.4 ) $ ( 208.2 ) $ ( 0.8 ) $ 2.6 $ ( 51.1 ) $ ( 257.5 )

6 unchanged sentences

Ending balance $ ( 188.0 ) $ 4.0 $ — $ ( 44.5 ) $ ( 228.5 ) $ ( 145.2 ) $ ( 6.0 ) $ 1.2 $ ( 58.4 ) $ ( 208.4 )

(1) Reclassifications relate to $ 26.1 million of losses (net of $ 2.8 million of tax benefits) reclassified from AOCI to Gain (loss) on disposition of discontinued operations - net of tax in connection with the disposition of Demag.

(2) Reclassifications primarily relate to $ 12.6 million of losses (net of $ 5.3 million of tax benefits) reclassified from AOCI to Gain (loss) on disposition of discontinued operations - net of tax in connection with the disposition of Demag.

Share Repurchases and Dividends

Since February 2018, Terex’s Board of Directors authorized the Company to repurchase up to an additional $ 625 million of the Company’s outstanding shares of common stock.

The Company repurchased 2.5 million shares for $ 54.6 million, 0.2 million shares for $ 4.9 million and 11.4 million shares for $ 425.0 million under these programs during the years ended December 31, 2020, 2019 and 2018, respectively.

Terex’s Board of Directors declared a dividend of $ 0.12 per share in the first quarter of 2020, which was paid to the Company’s shareholders.

Terex’s Board of Directors declared a dividend of $ 0.11 and $ 0.10 per share in each quarter of 2019 and 2018, respectively, which were paid to the Company’s shareholders.

In April 2020, the Company announced that it had suspended further share repurchases and dividend payments for the remainder of 2020.

In February 2021, Terex’s Board of Directors reinstated a quarterly dividend for 2021 and declared a dividend of $ 0.12 per share which will be paid on March 19, 2021.

NOTE O – LITIGATION AND CONTINGENCIES

(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 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 Total Number of Shares Repurchased Amount of Shares Repurchased

(in millions)

2021 28,688 $ 1.2

2020 2,501,900 $ 54.6

2019 175,275 $ 4.9

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 First Quarter Second Quarter Third Quarter Fourth Quarter

2021 $ 0.12 $ 0.12 $ 0.12 $ 0.12

2020 $ 0.12 $ — $ — $ —

2019 $ 0.11 $ 0.11 $ 0.11 $ 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.

NOTE N – 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.

The Company is insured for product liability, general liability, workers’ compensation, employer’s liability, property damage and other insurable risk required by law or contract, with retained liability or deductibles.

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.

1 unchanged sentence

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 financial statements as a whole.

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.

11 unchanged sentences

Credit Guarantees

Customers of the Company from time to time may fund the acquisition of the Company’s equipment through third-party finance companies.

In certain instances, the Company may provide a credit guarantee to the finance company, by which the Company agrees to make payments to the finance company should the customer default.

These may require the Company to:

(i) pay-off the customer’s obligations, (ii) assume the customer’s payments or (iii) pay a predetermined percentage of the customer’s outstanding obligation.

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 customer delinquency and 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, 2020 and 2019, the maximum exposure determined at inception was $ 143.8 million and $ 78.4 million, respectively.

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 .

Given the Company’s position as original equipment manufacturer and its knowledge of end markets, the Company, when called upon to fulfill a guarantee, generally has been able to liquidate the financed equipment at a minimal loss, if any, to the Company.

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.

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.

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

(Amounts in millions)

(in millions)

of Year Charges to

25 unchanged sentences

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-K

Item 9A. Controls and Procedures