UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission file number ____________________
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
The Terex Corporation and Affiliates' 401(k) Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
Terex Corporation
500 Post Road East, Suite 320
Westport, Connecticut 06880
TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN
Financial Statements
December 31, 2003
TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN
INDEX
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Page
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM......................1
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits.....................2
Statement of Changes in Net Assets Available for Benefits...........3
Notes to Financial Statements.....................................4-8
SUPPLEMENTAL SCHEDULES*:
H - Line 4i - Schedule of Assets (Held at End of Year)..............9
G - Part III - Schedule of Nonexempt Transactions..................10
* Other schedules required by Section 2520.103-10 of the Department of
Labor Rules and Regulations for reporting and Disclosure under the
Employee Retirement Income Security Act of 1974 are omitted because
they are not applicable.
Report of Independent Registered Public Accounting Firm
To the Participants and Administrative Committee of the
Terex Corporation and Affiliates'
401(k) Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Terex Corporation and Affiliates' 401(k) Retirement Savings Plan (the
"Plan") at December 31, 2003 and 2002, and the changes in net assets available
for benefits for the year ended December 31, 2003, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Schedule of
Assets (Held at End of Year) and Schedule of Nonexempt Transactions are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
PricewaterhouseCoopers LLP
Stamford, Connecticut
June 24, 2004
TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31
--------------------------------------------------------------------------------
2003 2002
----------------- -----------------
ASSETS -
Investments:
Investments at fair value............. $ 124,064,379 $ 55,697,914
Commingled pool of investments at
fair value.......................... 2,164,995 1,764,301
Investments at contract value......... 9,897,084 9,336,872
Participant loans..................... 6,886,297 3,908,234
----------------- -----------------
Total investments............... 143,012,755 70,707,321
----------------- -----------------
Receivables:
Participants' contributions........... 487,424 321,739
Employer's contributions.............. 258,896 99,871
----------------- -----------------
Total receivables................ 746,320 421,610
----------------- -----------------
NET ASSETS AVAILABLE FOR BENEFITS......... $ 143,759,075 $ 71,128,931
================= =================
See accompanying notes to financial statements.
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TEREX CORPORATION AND AFFILIATES'
401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2003
--------------------------------------------------------------------------------
ADDITIONS:
Net appreciation in fair value of investments....... $ 28,197,067
Interest and dividends from investments............. 2,409,941
Interest from participant loans..................... 480,493
Employee contributions.............................. 9,647,704
Employer contributions.............................. 4,040,248
Rollover contributions.............................. 640,397
Transfer-in from other plans........................ 39,953,422
-------------------
Total additions................................ 85,369,272
-------------------
DEDUCTIONS:
Withdrawals......................................... (12,680,675)
Administrative fees................................. (58,453)
-------------------
Total deductions............................... (12,739,128)
-------------------
NET INCREASE................................... 72,630,144
NET ASSETS AVAILABLE FOR BENEFITS AT BEGINNING OF YEAR.. 71,128,931
-------------------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR........ $ 143,759,075
===================
See accompanying notes to financial statements.
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TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN
The following description of the Terex Corporation and Affiliates' 401(k)
Retirement Saving Plan (the "Plan") provides only general information.
Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
General - The Plan is a defined contribution plan that covers certain
salaried and hourly employees of Terex Corporation and its subsidiaries
("Terex" or the "Company") meeting minimum eligibility requirements.
Certain officers of Terex serve as trustees of the Plan (the "Trustees").
The investments of the Plan are held in a trust account by Fidelity
Management Trust Company ("Fidelity") and Massachusetts Mutual Life
Insurance Company ("MassMutual").
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
An Administrative Committee, consisting of at least three members appointed
by the Company's Board of Directors, administers the benefit structure of
the Plan. The Company is considered the Plan Administrator for purposes of
ERISA.
On September 18, 2002, the Company completed the acquisition of Genie
Industries, Inc. and its affiliates ("Genie"). The Genie Industries Inc.
Profit Sharing 401(k) Plan (the "Genie Plan") merged into the Plan
effective February 1, 2003, at which time Genie's employees became eligible
to participate in the Plan. In connection with the merger, assets valued at
$37,857,384 were transferred into the Plan from the Genie Plan on February
1, 2003.
On March 26, 2002, the Company completed the acquisition of Telelect
Southeast Distribution Inc., ("Telelect SE"). The Telelect East 401(k)
Retirement Plan (the "Telelect East Plan") merged into the Plan on April 1,
2003, at which time Telelect SE's employees became eligible to participate
in the Plan. In connection with the merger, assets valued at $2,096,038
were transferred into the Plan from the Telelect East Plan on April 1,
2003.
Participant Eligibility - Permanent non-represented employees may begin
participation on the first day of the month following their hiring.
Eligibility for represented employees is as follows: Koehring Cranes, Inc.
after they complete three months of service; and American Crane and
Cedarapids are eligible to participate in the Plan on the first day of the
month following their hiring.
Participant Contributions - Participants may contribute a maximum of 80%
(20% prior to January 1, 2002) of their compensation to the Plan in any
combination of pre-tax or post-tax earnings. The maximum pre-tax
contribution permitted under Internal Revenue Service ("IRS") regulations
in 2003 and 2002 was $12,000 and $11,000, respectively. Participants age 50
and older can elect to make additional pre-tax contributions ("catch-up
contributions") up to the limits prescribed by IRS regulations. These
additional catch-up contributions are not eligible for matching employer
contributions.
Employer Contributions - With the exception of employees at CMI Corporation
("CMI"), Pacific Utilities Equipment Company ("Pacific Utilities"), Genie
and employees represented by collective bargaining units, the Company
contributes 50% of the first 8% of base compensation that a participant
contributes to the Plan. The Company contributes 15% of the amount that a
CMI employee contributes to the Plan, Pacific Utilities employees receive
company match of 50% of the first 4% contributed to the Plan, and Genie
employees receive company match of 100% of the first 4% contributed to the
Plan, subject to IRS limits.
For represented employees, the employer contributions are as follow:
Koehring Cranes, Inc. employees receive no employer match; American Crane
provides that Terex will match 50% of the first 8% of the employee's
contribution; and Cedarapids provides that Terex will match 100% of the
first 4% of the employee's salary that is contributed to the Plan. The
Company may make, in its sole discretion, supplementary contributions.
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TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
All Company contributions are restricted and are made in Terex Common
Stock. However, each calendar year on the first business day of the second
quarter, all restricted Company matching contributions in Terex Common
Stock will be reclassified to unrestricted, thereby allowing participants
to exchange the value of Terex Common Stock into other investment options.
All Company matching contributions posted thereafter will once again be
restricted and invested in Terex Common Stock until the following first
business day of the second quarter.
Contribution Limits - Contributions are limited in that the sum of: a)
total employer contributions and b) total employee pre-tax contributions
and c) total employee post-tax contributions, cannot exceed the lesser of:
i) $40,000 or ii) 100% of the participant's total compensation for the
year. Participants are able to direct current contributions and
redistribute accumulated contributions and earnings between investment
funds.
Vesting - Participants are immediately fully vested in their voluntary
contributions plus any actual earnings thereon. Participants vest in the
employer contribution after one year of eligible service with the exception
of the employees of Genie who are immediately vested in all Company
matching contributions under a safe harbor provision.
Forfeitures - Nonvested employer contributions of employees that have
separated from the Company become forfeitures and are held in a separate
account and may be used to reduce future employer contributions. Effective
January 1, 2002, forfeitures can also be used to pay the Plan's
administrative expenses. However, employees that return to service within
five years from their separation date will be entitled to continue vesting
on the employer contributions which were previously forfeited. At December
31, 2003 forfeited nonvested accounts totaled $67,585. These accounts will
be used to offset future employer contributions.
Allocation of Earnings - Each participant's account is credited with
contributions and an allocation of earnings from the respective investment
funds. A participant's contributions are used to purchase shares in the
various investment funds. The value of and the earnings credited to a
participant's account are based on the proportionate number of shares owned
by the participant and the fair value of the investment on the valuation
date.
Payment of Benefits - Upon retirement, disability or death, the entire
balance of the participant's account becomes payable to the participant or
designated beneficiary. Upon any other termination of employment, the
participant receives the vested portion of his/her account; however, if the
vested portion of the participant's account is greater than $5,000 ($3,500
prior to January 1, 2002) the participant can elect to keep the investments
in the Plan. Withdrawals are also permitted for financial hardship, as
defined in the Plan document, or upon attainment of age 59-1/2.
Participant Loans - Participants may obtain loans in an amount up to the
lesser of $50,000 or 50% of the vested portion of their account balance,
subject to the discretion of the Plan Administrator and certain other
restrictions. Terms of all loans are established by the Plan Administrator.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The accompanying financial statements have been
prepared on the accrual basis.
Investments - Plan investments are stated at fair value based on published
market prices or other independent sources. Net appreciation (depreciation)
in aggregate fair value of investments is comprised of all realized and
unrealized gains and losses during the year.
Expenses - Fees and expenses related to administering the Plan are
generally paid by Terex.
Withdrawals - Withdrawals are recognized at the time of distribution to the
participant.
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TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investment Valuation and Income Recognition - The Plan's investments are
stated at fair value except for its investment contract which is valued at
contract value with an insurance company (see Note 3). Quoted market prices
are used to value investments. Shares of mutual funds are valued at the net
asset value of shares held by the Plan at year end. Purchases and sales of
securities are recorded on a trade-date basis. Interest income is recorded
on the accrual basis. Dividends are recorded on the ex-dividend date.
Payment of Benefits - Benefits are recorded when paid.
Risks and Uncertainties - The Plan provides for various investment options
in investment securities. Investment securities, in general, are exposed to
various risks, such as interest rate, credit and overall market volatility.
Due to the level of risk associated with certain investment securities, it
is reasonably possible that changes in the values of investment securities
will occur in the near term and that such changes could materially affect
the amounts reported in the statements of net assets available for
benefits.
3. INVESTMENTS
The following presents investments that represent 5 percent of more of the
Plan's net assets.
December 31,
--------------------------------
2003 2002
-------------- -------------
Terex Corporation Common Stock $ 17,185,216 * 5,862,837 *
Fidelity Magellan Fund 7,792,564 5,821,183
Fidelity Equity Income Fund 8,462,932 6,684,077
Fidelity Retirement Money Market Fund 15,918,615 4,826,637
Fidelity Low Price Stock Fund 13,478,750 **
Fidelity Diversified International Fund 7,710,465 **
Fidelity Freedom 2030 7,398,515 **
Participant Loans ** 3,908,234
Investment Contract with Massachusets Mutual Life
Insurance Company, #GICO 35024, matures 12/31/05 9,897,084 9,336,872
* Nonparticipant-directed
** This investment represents less than 5 percent of the Plan's net assets.
During 2003, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value by $28,197,067 as follows:
Mutual Funds $ 18,023,802
Common Stock 10,173,265
-------------
$ 28,197,067
=============
The Plan has an interest in a benefit-responsive investment contract which
is valued at contract value as determined by MassMutual, the holder of the
contract. The contract value at December 31, 2003 and 2002 was $9,897,084
and $9,336,872, respectively. The contract value represents contributions
made under contract, plus earnings, less participant withdrawals and
administrative expenses. At December 31, 2003 and 2002, the fair market
value of the contract was approximately $10,636,000, and $10,171,000,
respectively. There are no reserves against the contract value for credit
risk of the contract issuer or otherwise. Participants may ordinarily
-6-
TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
direct the withdrawal or transfer of all or a portion of the investment at
contract value. The guaranteed annual interest rate is 6 percent.
4. NONPARTICIPANT-DIRECTED INVESTMENTS
The Company's contributions to the Plan are invested solely in Terex
Corporation Common Stock. Fidelity holds all Terex common stock in one
investment account and does not segregate employer and employee purchased
common stock activity. As a result, all Plan investments in Terex common
stock are considered nonparticipant-directed. Information about the net
assets and the significant components of the changes in net assets relating
to the nonparticipant-directed investments is as follows:
December 31,
-------------------------------
2003 2002
------------- ------------
Net Assets:
Terex Corporation Common Stock.................$17,185,216 $ 5,862,837
Year Ended
December 31, 2003
--------------------
Changes in Net Assets:
Contributions.................................. $ 3,946,395
Investment income and gain..................... 10,173,265
Transfer from participant-directed investments. 1,327,923
Withdrawals.................................... (796,366)
Net loan activity.............................. (43,674)
Expenses paid.................................. (1,065)
Transfer to participant-directed investments... (3,264,609)
Forfeitures.................................... (19,490)
--------------------
$ 11,322,379
====================
5. PARTY-IN-INTEREST
Certain Plan investments are shares of mutual funds managed by Fidelity.
Fidelity also serves as a custodian and, therefore, these transactions
qualify as party-in-interest transactions. Fees paid by the Plan to
Fidelity for the investment management services amounts to $58,453 for the
year ended December 31, 2003.
6. INCOME TAX STATUS
The Plan received a determination letter, dated May 5, 2004, that it met
the qualification requirements of Sections 401(c) and 401(k) of the
Internal Revenue Code (the "IRC") and that the Plan is exempt from federal
income taxation. The determination letter included the amendment to the
Plan dated December 12, 2002. Subsequently, the Plan has been amended. The
Plan Administrator believes that the Plan, as amended, continues to be
qualified and exempt from tax under Sections 401(c) and 401(k) of the IRC.
7. TERMINATION OF THE PLAN
The Company believes that the Plan will continue without interruption but
reserves the right to discontinue the Plan. In the event that such
discontinuance results in the complete or partial termination of the Plan,
the balance in each participant's account will be distributed as directed
by the Trustees.
-7-
TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
8. NONEXEMPT TRANSACTIONS
During 2003, the Company did not remit employee contributions timely in the
case of one business unit. The nonexempt transaction has no effect on the
tax status of the Plan.
9. SUBSEQUENT EVENTS
On February 14, 2003, the Company acquired Commercial Body Corporation
("Commercial Body") and Combatel Distribution, Inc. ("Combatel"). The
Commercial Body Corporation Employee Profit Sharing and 401(k) Plan (the
"Commercial Body Plan") and the Combatel Distribution, Inc. 401(k) Profit
Sharing Plan (the "Combatel Plan") merged into the Plan effective April 1,
2004, at which time the employees of Commercial Body and Combatel became
eligible to participate in the Plan. In connection with the merger, assets
valued at $1,584,185 and $1,502,830, respectively, were transferred into
the Plan from the Commercial Body Plan and the Combatel Plan on April 1,
2004.
-8-
TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN
LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR) SCHEDULE H
DECEMBER 31, 2003
--------------------------------------------------------------------------------
(c) Description of Investment
Including Maturity Date,
(b) Identity of Issue, Borrower, Rate of Interest, Collateral,
(a) Lessor or Similar Party Par or Maturity Value (d) Cost (e) Current Value
--- ----------------------- --------------------- -------- -----------------
Mutual Funds:
* Baron Growth Fund Registered Investment Company $ 118,837
* Janus Mid Cap Value Fund Registered Investment Company 156,127
* Fidelity Magellan Fund Registered Investment Company 7,792,564
* Fidelity Contrafund Registered Investment Company 6,177,062
* Fidelity Equity-Income Fund Registered Investment Company 8,462,932
* Fidelity Growth Company Fund Registered Investment Company 4,529,027
* Fidelity Intermediate Bond Fund Registered Investment Company 5,210,485
* Fidelity Capital & Income Fund Registered Investment Company 435,592
* Fidelity Mortgage Securities Fund Registered Investment Company 1,926,251
* Fidelity Independence Fund Registered Investment Company 257,470
* Fidelity OTC Portfolio Registered Investment Company 2,153,532
* Fidelity Balanced Fund Registered Investment Company 5,428,303
* Fidelity Convertible Securities Fund Registered Investment Company 337,881
* Fidelity Utilities Fund Registered Investment Company 234,295
* Fidelity Low Priced Stock Fund Registered Investment Company 13,478,750
* Fidelity Aggressive Growth Fund Registered Investment Company 1,438,961
* Fidelity Diversified International Fund Registered Investment Company 7,710,465
* Fidelity Dividend Growth Fund Registered Investment Company 2,916,133
* Fidelity Freedom Income Fund Registered Investment Company 75,749
* Fidelity Freedom 2000 Fund Registered Investment Company 2,404,770
* Fidelity Freedom 2010 Fund Registered Investment Company 4,634,782
* Fidelity Freedom 2020 Fund Registered Investment Company 4,454,726
* Fidelity Freedom 2030 Fund Registered Investment Company 7,398,515
* Fidelity High Income Fund Registered Investment Company 1,064,752
* Fidelity Retirement Money Market
Portfolio Fund Registered Investment Company 15,918,615
* Spartan U.S. Equity Index Fund Registered Investment Company 2,060,703
* Fidelity Freedom 2040 Fund Registered Investment Company 101,884
------------------
106,879,163
Common Stock:
* Terex Corporation Common Stock $ 10,795,988 17,185,216
Investment Contracts:
MassMutual Guaranteed Investment Contract 9,897,084
Commingled Pool of Investments::
* Fidelity Managed Income Portfolio Commingled Pool of Investments 2,164,995
Loans:
* Participants' Loans Interest rates ranging from
5.25% to 9.5% and with
maturities through 2018 6,886,297
------------------
Total $ 143,012,755
==================
* Denotes a party-in interest to the Plan.
-9-
TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN
SCHEDULE OF NONEXEMPT TRANSACTIONS
AS OF DECEMBER 31, 2003
-------------------------------------------------------------------------------------------------------------------
Identity of Relationship Purchase Selling Lease Current Net Gain
Party Involved to Plan Description Price Price Rental Expenses Cost Value or (Loss)
----------------- ------- ----------- ----- ----- ------ -------- ---- ----- ---------
Terex Corporation Sponsor Sponsor failed to remit
employee contributions timely $ 4,233 $ --- $ --- $ --- $4,233 $4,233 $ ---
-10-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
The Terex Corporation and Affiliates'
401(k) Retirement Savings Plan
/s/ Phillip C. Widman
Date: June 28, 2004 By: Phillip C. Widman
Senior Vice President and Chief Financial Officer
Terex Corporation
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