BUSINESS DESCRIPTION

We are a diversified global manufacturer of capital equipment with a mission to deliver value-added offerings that meet or exceed our customers' current and future needs. We manufacture a broad range of equipment for use in the construction, infrastructure, quarrying, recycling, mining, shipping, transportation, refining, utility and maintenance industries. We operate in four reportable segments: (i) Terex Aerial Work Platforms; (ii) Terex Construction;
(iii) Terex Cranes; and (iv) Terex Materials Processing & Mining.

Our Aerial Work Platforms segment designs, manufactures, markets and refurbishes aerial work platform equipment, telehandlers, power equipment, construction trailers and utility equipment. Construction, building maintenance, government and utility customers use these products to build and/or maintain large physical assets and structures, construct and maintain utility lines, trim trees and for other commercial operations. Additionally, we own much of the North American distribution channel for our utility products group and operate a fleet of rental utility products in the United States and Canada.

Our Construction segment designs, manufactures and markets heavy and compact construction equipment, asphalt and concrete equipment, landfill compactors and bridge inspection equipment. Construction, logging, mining, industrial and government customers use these products in construction and infrastructure projects, in coal, minerals, sand and gravel operations and to build roads. We acquired A.S.V., Inc. ("ASV") on February 26, 2008. The results of ASV are included in the Construction segment from its date of acquisition.

Our Cranes segment designs, manufactures and markets mobile telescopic cranes, tower cranes, lattice boom crawler cranes, truck-mounted cranes (boom trucks and loading cranes), straddle carriers, gantry cranes, mobile harbor cranes, ship to shore cranes and telescopic container stackers. These products are used primarily for construction, repair and maintenance of infrastructure, building and manufacturing facilities and to improve port productivity. The Company acquired the port equipment businesses of Reggiane Cranes and Plants S.p.A. and Noell Crane Holding GmbH (collectively, "Terex Port Equipment" or the "Port Equipment Business") from Fantuzzi Industries S.a.r.l on July 23, 2009. The results of Terex Port Equipment are included in the Cranes segment from its date of acquisition.

Our Materials Processing & Mining segment designs, manufactures and markets crushing and screening equipment, hydraulic mining excavators, highwall mining equipment, high capacity surface mining trucks, drilling equipment and other products. Construction, mining, quarrying and government customers use these products in construction and commodity mining.

We also assist customers in their rental, leasing and acquisition of our products through Terex Financial Services, Inc.

On January 1, 2009, we realigned certain operations in an effort to capture market synergies and streamline our cost structure. The Roadbuilding businesses, formerly part of our Roadbuilding, Utility Products and Other ("RBUO") segment, are now consolidated within the Construction segment. The Utility Products businesses, formerly part of the RBUO segment, are now consolidated within the Aerial Work Platforms segment. Additionally, our truck-mounted articulated hydraulic crane line of business produced in Delmenhorst and Vechta, Germany, formerly part of the Construction segment, is now consolidated within the Cranes segment. Certain other businesses that were included in the RBUO segment are now reported in Corporate and Other, which includes eliminations among our segments, and prior period amounts have been retrospectively adjusted to conform to this presentation.

Overview

We continue to experience many challenges in the current operating environment, as global economic uncertainty continues to affect all of our businesses. Each of our segments experienced significantly weaker results in the third quarter of 2009 than in the comparable period in 2008. Profits in our Cranes and Materials Processing & Mining ("MPM") segments during the third quarter of 2009 were more than offset by losses in our Aerial Work Platforms ("AWP") and Construction segments.

Although this was a disappointing quarter, we feel that we are turning the corner to better performance. We are at an inflection point in this business cycle and we are beginning to see signs of stabilization and even a few signs that point to growth. While optimism is beginning to build for 2010 and 2011, we continue to expect our overall 2009 net sales to decline approximately 50% as compared to 2008, approximately 5% of which is the estimated translation effect of foreign currency exchange rate changes, reflecting weak global end-markets combined with continued constrained credit availability worldwide.

We continually evaluate our cost structure to be appropriately positioned to respond to changing market conditions. We announced the closure of several facilities this quarter as we strive to lower costs and eliminate underutilized capacity. Additionally, we are continuing to reduce costs as our business will be roughly half the size in terms of net sales than it was in 2008. Manufacturing spending in the third quarter of 2009 was down 52% from the peak spending levels during the second quarter of 2008 and 7% sequentially from the second quarter of 2009. With net sales reduced 59% when compared with the peak second quarter 2008 results, the 52% reduction in manufacturing costs is close to keeping pace with these dramatic drops in revenue. When combined with further reductions of selling, general and administrative expenses ("SG&A"), these actions resulted in a $265 million quarterly run-rate spending reduction in the third quarter of 2009 versus spending levels in the second quarter of 2008. We continue to target a $300 million quarterly run-rate reduction by year-end.

The impact of restructuring activities is expected to result in improved financial results for the remainder of 2009 and beyond, although we do not expect to be profitable in the fourth quarter of 2009, excluding charges related to ongoing restructuring activities. See Note K -"Restructuring and Other Charges" in our Condensed Consolidated Financial Statements for a detailed description of our restructuring activities, including the reasons, timing and costs associated with such activities.

The marketplace for each of our businesses is somewhat different, but there is a common approach we are taking throughout our businesses. We continue to manage our business for cash aggressively. Most of our factories are working on reduced schedules, with a build-to-order approach in order to reduce inventory. We have made good progress in reducing our inventory, but it is an ongoing process. While we do not expect any near term material increase in demand, when it occurs, we will be in a good position to capitalize on it. Our short term cash management focus has led to inventory reductions that generated cash of approximately $497 million year to date, substantially delivering on our $500 million goal for the year in the first three quarters.

We have obviously taken a defensive posture during this period of economic uncertainty, but we are beginning to focus on growth while continuing to hold the line on costs. Our defensive posture and focus on cash management has resulted in a cash balance of over $1 billion, which provides a comfort level during this period of uncertainty, but at a short-term cost, as there exists a large difference in the interest rate we pay on our debt versus the interest rate we earn on our cash balance. As we emerge from this period of uncertainty, we will look to put this cash to better use and outperform the cost of that capital.

We are also pleased with the progress in reducing our material costs. Most of our steel costs are back to 2007 levels and other component costs are decreasing as well. We expect to see increasing benefits from lower input costs in the remainder of 2009 as raw material receipts increase as we work through our existing raw material inventory.

Due to the present economic environment, customers are ordering equipment only when needed, rather than planning purchases in advance, resulting in minimal levels of backlog. As a result, year-over-year backlog for all of our segments is down by approximately 58%. Demand for our AWP and Materials Processing products has begun to exhibit signs of stability, although at low levels. Construction segment backlog decreased versus the comparable prior year period, reflecting the continued global weakening in construction activity. Tower crane and rough terrain crane demand is down substantially from levels of one year ago, driving the majority of the decrease in Cranes backlog. Demand for certain high capacity cranes, including the lower end of the crawler and all-terrain crane product line, is softening, but there is continuing demand as global infrastructure and energy related projects utilize these high capacity cranes. Mining truck backlog decreased from June 30, 2009 levels while hydraulic excavator and drill backlog remained relatively unchanged from June 30, 2009 levels.

After tax Return on Invested Capital ("ROIC") continues to be the unifying metric that we use to measure our operating performance. ROIC measures how effectively we utilize the capital invested in our operations. After tax ROIC is determined by dividing the sum of Net Operating Profit After Tax ("NOPAT") (as defined below) for each of the previous four quarters by the average of the sum of Total stockholders' equity plus Debt (as defined below) less Cash and cash equivalents for the previous five quarters. NOPAT, which is a non-GAAP measure, for each quarter is calculated by multiplying Income (loss) from operations by a figure equal to one minus the effective tax rate of the Company. The effective tax rate is equal to the (Provision for) benefit from income taxes divided by Income (loss) before income taxes for the respective quarter. Debt is calculated using the amounts for Notes payable and current portion of long-term debt plus Long-term debt, less current portion. We calculate ROIC using the last four quarters' NOPAT as this represents the most recent twelve-month period at any given point of determination. In order for the denominator of the ROIC ratio to properly match the operational period reflected in the numerator, we include the average of five quarters' ending balance sheet amounts so that the denominator includes the average of the opening through ending balances (on a quarterly basis) over the same time period as the numerator (four quarters of average invested capital).

We use ROIC as a unifying metric because we feel that it measures how effectively we invest our capital and provides a better measure to compare ourselves to peer companies to assist in assessing how we drive operational improvement. We believe that ROIC measures return on the full enterprise-wide amount of capital invested in our business, as opposed to another metric such as return on stockholders' equity that only incorporates book equity, and is thus a more accurate and descriptive measure of our performance. We also believe that adding Debt less Cash and cash equivalents to Total stockholders' equity provides a better comparison across similar businesses regarding total capitalization, and ROIC highlights the level of value creation as a percentage of capital invested. Consistent with this belief, we use ROIC in evaluating executive performance and compensation, as we have disclosed in the Compensation Discussion and Analysis in our proxy statement for the 2009 annual meeting of stockholders. As of October 1, 2008, we performed our annual goodwill impairment test, which resulted in a non-cash impairment charge for goodwill of $459.9 million, which represented all of the goodwill recorded in the Construction segment and former RBUO segment. However, we do not believe that non-cash impairment charges are indicative of returns on our invested capital. Therefore, we have excluded the effect of these impairment charges from the metrics used in our calculation of ROIC. As the tables below show, our ROIC at September 30, 2009 was negative 4.2%, down from positive 23.7% at September 30, 2008, mainly due to the operating losses and cash flow from operations in the recent periods.

The amounts described below are reported in millions of U.S. dollars, except for the effective tax rates. Amounts are as of and for the three months ended for the periods referenced in the tables below.

                                     Sep '09        Jun '09       Mar '09       Dec '08       Sep '08
Benefit from income taxes as
adjusted                         $  (24.5)       $  (30.8)     $  (24.0)     $  (1.0)
Divided by: Income (loss) before
income taxes as adjusted            (126.9)         (108.5)       (98.5)        37.0
Effective tax rate as adjusted      19.3%           28.4%         24.4%         (2.7)%

Income (loss) from operations as
adjusted                         $  (94.5)       $  (85.7)     $  (72.5)     $  68.1
Multiplied by: 1 minus Effective
tax rate as adjusted                80.7%           71.6%         75.6%         102.7%
Adjusted net operating profit
(loss) after tax                 $  (76.3)       $  (61.4)     $  (54.8)     $  69.9

Debt (as defined above)          $  2,002.9      $  1,736.6    $  1,482.8    $  1,435.8    $  1,568.2
Less: Cash and cash equivalents     (1,033.2)       (938.5)       (344.3)       (484.4)       (487.9)
Debt less Cash and cash
equivalents                      $  969.7        $  798.1      $  1,138.5    $  951.4      $  1,080.3

Total Terex Corporation
stockholders' equity as adjusted $  1,819.5      $  1,860.2    $  1,569.8    $  2,181.2    $  2,302.9

Debt less Cash and cash
equivalents plus Total Terex
Corporation stockholders' equity
as adjusted                      $  2,789.2      $  2,658.3    $  2,708.3    $  3,132.6    $  3,383.2

                 September 30, 2009 ROIC                     (4.2)%
Net operating loss after tax as adjusted (last 4 quarters) $ (122.6)
Average Debt less Cash and cash equivalents plus
Total stockholders' equity (5 quarters)                    $ 2,934.3

                                                                                                                                        12/31/08
Loss before income taxes as reported                                                                                                $ (422.9)
Less: Goodwill impairment                                                                                                             (459.9)
Income before income taxes as adjusted                                                                                              $ 37.0

Benefit from income taxes as reported                                                                                               $ 2.7
Less: Benefit from income taxes on impairment                                                                                         1.7
Benefit from income taxes as adjusted                                                                                               $ 1.0

Income before income taxes as adjusted                                                                                              $ 37.0
Plus: Benefit from income taxes as adjusted                                                                                           1.0
Net income as adjusted                                                                                                              $ 38.0

Loss from operations as reported                                                                                                    $ (391.8)
Less: Goodwill impairment                                                                                                             (459.9)
Income from operations as adjusted                                                                                                  $ 68.1

Total Terex Corporation stockholders' equity as reported                                                                            $ 1,721.7
Less: Net loss as reported                                                                                                            (421.5)
Add: Net income as adjusted                                                                                                           38.0
Total Terex Corporation stockholders' equity as adjusted                                                                            $ 2,181.2

Effective tax rate reconciliation excluding impairment

                                                Three months ended 12/31/08
                                             As reported   Impairment As adjusted
(Loss) income before income taxes             $    (422.9) $  (459.9)   $    37.0
Benefit from income taxes                              2.7        1.7         1.0
Net (loss) income                             $    (420.2)              $    38.0

Effective tax rate                                    0.6%       0.4%      (2.7)%

                                  Sep '08       Jun '08       Mar '08        Dec '07        Sep '07
Provision for income taxes     $  44.9       $  116.8      $  83.2       $  62.0
Divided by: Income before
income taxes                      139.4         353.9         247.5         235.5
Effective tax rate                32.2%         33.0%         33.6%         26.3%

Income from operations         $  167.2      $  370.9      $  256.3      $  239.9
Multiplied by: 1 minus
Effective tax rate                67.8%         67.0%         66.4%         73.7%
Net operating profit after tax $  113.4      $  248.5      $  170.2      $  176.8

Debt (as defined above)        $  1,568.2    $  1,355.9    $  1,373.4    $  1,352.0      $  705.6
Less: Cash and cash
equivalents                       (487.9)       (590.0)       (604.2)       (1,272.4)       (516.6)
Debt less Cash and cash
equivalents                    $  1,080.3    $  765.9      $  769.2      $  79.6         $  189.0

Total Terex Corporation
stockholders' equity           $  2,302.9    $  2,664.6    $  2,538.1    $  2,343.2      $  2,254.4

Debt less Cash and cash
equivalents plus Total Terex
Corporation stockholders'
equity                         $  3,383.2    $  3,430.5    $  3,307.3    $  2,422.8      $  2,443.4




            September 30, 2008 ROIC                23.7%
Net operating profit after tax (last 4 quarters) $ 708.9
Average Debt less Cash and cash equivalents plus
Total stockholders' equity (5 quarters)          $ 2,997.4

Three Months Ended September 30, 2009 Compared with Three Months Ended September 30, 2008

Terex Consolidated



                                          Three Months Ended September 30,
                                      2009                       2008
                                          % of                          % of             % Change In
                                         Sales                          Sales          Reported Amounts
                                              ($ amounts in millions)
Net sales                     $ 1,226.1    -     $     2,514.6                -        (51.2)%
Gross profit                  $ 109.6   8.9%     $     446.2              17.7%        (75.4)%
SG&A                          $ 204.1   16.6%    $     279.0              11.1%        (26.8)%
(Loss) income from operations $ (94.5)  (7.7)%   $     167.2              6.6%         (156.5)%

Net sales for the three months ended September 30, 2009 decreased $1,288.5 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes contributed approximately $85 million to the net sales decrease. Excluding the unfavorable translation effect of foreign currency exchange rate changes, net sales in all segments declined by approximately $1,204 million from the prior year period, primarily due to lower net sales volumes as uncertainty about the global economy has caused customers to remain cautious about purchasing equipment.

Gross profit for the three months ended September 30, 2009 decreased $336.6 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes decreased gross profit by approximately $12 million from the prior year period. Excluding the unfavorable translation effect of foreign currency exchange rate changes, the impact of lower net sales volume decreased gross profit by approximately $303 million. Charges, primarily related to production level and headcount reductions, decreased gross profit by approximately $22 million.

SG&A costs for the three months ended September 30, 2009 decreased by $74.9 million when compared to the same period in 2008. Approximately $13 million of the decrease was due to the favorable translation effect of foreign currency exchange rate changes. Excluding the favorable translation effect of foreign currency exchange rate changes, SG&A costs in all of the segments decreased by approximately $62 million due to lower net sales volume and curtailment of spending. These decreases were partially offset by approximately $2 million of charges related to headcount reductions.

Income (loss) from operations decreased by $261.7 million for the three months ended September 30, 2009 when compared to the same period in 2008. The decrease was due to the items noted above, particularly lower net sales volume, and higher costs due to lower production levels and headcount reductions, which were partially offset by lower SG&A costs.

Terex Aerial Work Platforms



                                  Three Months EndedSeptember 30,
                                       2009                2008
                                            % of               % of      % Change In
                                           Sales               Sales   Reported Amounts
                                      ($ amounts in millions)
Net sales                     $ 200.5        -      $  598.2   -       (66.5)%
Gross profit                  $ (4.2)    (2.1)%     $  90.1    15.1%   (104.7)%
SG&A                          $ 45.9     22.9%      $  65.9    11.0%   (30.3)%
(Loss) income from operations $ (50.1)   (25.0)%    $  24.2    4.0%    (307.0)%

Net sales for the Aerial Work Platforms segment for the three months ended September 30, 2009 decreased $397.7 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes accounted for approximately $6 million of the net sales decrease. Lower net sales volume of approximately $389 million in the North American and European markets primarily drove the decrease in net sales. The lower net sales volume was primarily due to rental customers aging their fleets and deferring purchases of new products, particularly for mid-size booms, scissor lifts and telehandlers. The core markets for aerials in North America and Europe remained at very depressed levels.

SG&A costs for the three months ended September 30, 2009 decreased $20.0 million when compared to the same period in 2008. This was primarily due to reduced net sales volume and cost reduction activities.

(Loss) income from operations for the three months ended September 30, 2009 decreased $74.3 million when compared to the same period in 2008. The decrease was due to the items noted above, particularly lower net sales volume, partially offset by lower SG&A costs.

Terex Construction



                                    Three Months Ended September 30,
                                        2009                 2008
                                            % of                 % of       % Change In
                                            Sales                Sales    Reported Amounts
                                        ($ amounts in millions)
Net sales                     $  236.2        -     $  535.0       -      (55.9)%
Gross profit                  $  (12.0)   (5.1)%    $  50.5     9.4%      (123.8)%
SG&A                          $  47.8     20.2%     $  74.2     13.9%     (35.6)%
(Loss) income from operations $  (59.8)   (25.3)%   $  (23.7)   (4.4)%    (152.3)%

Net sales in the Construction segment decreased by $298.8 million for the three months ended September 30, 2009 when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes accounted for approximately $20 million of the net sales decrease. Lower machine sales volumes of approximately $235 million were largely responsible for the decrease in net sales. Demand for both compact and heavy construction products . . .