10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

F O R M 10 – Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-10702

Terex Corporation

(Exact name of registrant as specified in its charter)

Delaware 34-1531521

(State of Incorporation) (IRS Employer Identification No.)

200 Nyala Farm Road, Westport, Connecticut 06880

(Address of principal executive offices)

(203) 222-7170

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

YESx NOo

Indicate by check mark whether the registrant has submitted electronically filed and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YESo NOo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b -2 of the Exchange Act.

Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o NO x

Number of outstanding shares of common stock: 108.0 million as of July 28, 2009.

The Exhibit Index begins on page 59.

INDEX

TEREX CORPORATION AND SUBSIDIARIES

GENERAL

This Quarterly Report on Form 10-Q filed by Terex Corporation generally speaks as of June 30, 2009 unless specifically noted otherwise, and includes financial information with respect to the subsidiaries of the Company listed below (all of which are wholly-owned) which were guarantors on June 30, 2009 (the “Guarantors”) of the Company’s 7-3/8% Senior Subordinated Notes due 2014. See Note Q – “Consolidating Financial Statements” to the Company’s June 30, 2009 Condensed Consolidated Financial Statements included in this Quarterly Report. Unless otherwise indicated, Terex Corporation, together with its consolidated subsidiaries, is hereinafter referred to as “Terex,” the “Registrant,” “us,” “we,” “our” or the “Company.”

Guarantor Information

Guarantor	State or other jurisdiction of incorporation or organization	I.R.S. employer identification number
Amida Industries, Inc.	South Carolina	57-0531390
A.S.V., Inc.	Minnesota	41-1459569
CMI Terex Corporation	Oklahoma	73-0519810
Duvalpilot Equipment Outfitters, LLC	Florida	22-3886719
Genie Financial Services, Inc.	Washington	91-1712115
Genie Holdings, Inc.	Washington	91-1666966
Genie Industries, Inc.	Washington	91-0815489
Genie International, Inc.	Washington	91-1975116
Genie Manufacturing, Inc.	Washington	91-1499412
GFS National, Inc.	Washington	91-1959375
Halco America Inc.	Georgia	58-1851191
Hydra Platforms Mfg. Inc.	North Carolina	56-1714789
Koehring Cranes, Inc.	Delaware	06-1423888
Loegering Mfg. Inc.	North Dakota	45-0310755
Powerscreen Holdings USA Inc.	Delaware	61-1265609
Powerscreen International LLC	Delaware	61-1340898
Powerscreen North America Inc.	Delaware	61-1340891
Powerscreen USA, LLC	Kentucky	31-1515625
Powerscreen USC Inc.	Delaware	23-2846987
PPM Cranes, Inc.	Delaware	39-1611683
Schaeff Incorporated	Iowa	42-1097891
Schaeff of North America, Inc.	Delaware	75-2852436
Spinnaker Insurance Company	Vermont	03-0372517
Superior Highwall Holding, Inc.	Delaware	20-4694546
Superior Highwall Miners, Inc.	Delaware	20-4694797
Terex Advance Mixer, Inc.	Delaware	06-1444818
Terex Aerials, Inc.	Wisconsin	39-1028686
Terex Cranes, Inc.	Delaware	06-1513089
Terex Cranes Wilmington, Inc.	North Carolina	56-1570091
Terex Financial Services, Inc.	Delaware	45-0497096
Terex Mexico, LLC	Delaware	81-0586645
Terex Mining Equipment, Inc.	Delaware	06-1503634
Terex USA, LLC	Delaware	75-3262430
Terex Utilities, Inc.	Oregon	93-0557703
Terex-RO Corporation	Kansas	44-0565380
Terex-Telelect, Inc.	Delaware	41-1603748

Forward-Looking Information

Certain information in this Quarterly Report includes forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) regarding future events or our future financial performance that involve certain contingencies and uncertainties, including those discussed below in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contingencies and Uncertainties.” In addition, when included in this Quarterly Report or in documents incorporated herein by reference, the words “may,” “expects,” “intends,” “anticipates,” “plans,” “projects,” “estimates” and the negatives thereof and analogous or similar expressions are intended to identify forward-looking statements. However, the absence of these words does not mean that the statement is not forward-looking. We have based these forward-looking statements on current expectations and projections about future events. These statements are not guarantees of future performance. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. Such risks and uncertainties, many of which are beyond our control, include, among others:

• Our business is cyclical and weak general economic conditions, particularly in the key industries we serve, may affect the sales of our products and financial results;

• uncertainties regarding the duration or severity of the current global economic downturn and disruptions in the financial markets;

• our ability to access the capital markets to raise funds and provide liquidity;

• our business is sensitive to fluctuations in government spending;

• our business is very competitive and may be affected by our cost structure, as well as pricing, product initiatives and other actions taken by competitors;

• a material disruption to one of our significant facilities;

• our retention of key management personnel;

• the financial condition of suppliers and customers, and their continued access to capital;

• our ability to obtain parts and components from suppliers on a timely basis at competitive prices;

• our ability to timely manufacture and deliver products to customers;

• the need to generate sufficient cash flow to service our debt obligations and to comply with restrictive covenants contained in our debt agreements;

• our business is global and subject to changes in exchange rates between currencies, as well as international politics, particularly in developing markets;

• the effects of changes in laws and regulations;

• possible work stoppages and other labor matters;

• compliance with applicable environmental laws and regulations;

• litigation and product liability claims and other liabilities;

• investigations by the United States Securities and Exchange Commission (“SEC”) and the Department of Justice (“DOJ”);

• our implementation of a global enterprise system and its performance; and

• other factors.

Actual events or our actual future results may differ materially from any forward-looking statement due to these and other risks, uncertainties and significant factors. The forward-looking statements contained herein speak only as of the date of this Quarterly Report and the forward-looking statements contained in documents incorporated herein by reference speak only as of the date of the respective documents. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained or incorporated by reference in this Quarterly Report to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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		Page No.
PART I	FINANCIAL INFORMATION
Item 1	Condensed Consolidated Financial Statements
	TEREX CORPORATION AND SUBSIDIARIES
	Condensed Consolidated Statement of Income - Three and six months ended June 30, 2009 and 2008	4
	Condensed Consolidated Balance Sheet - June 30, 2009 and December 31, 2008	5
	Condensed Consolidated Statement of Changes in Stockholders’ Equity- June 30, 2009 and December 31, 2008	6
	Condensed Consolidated Statement of Cash Flows - Six months ended June 30, 2009 and 2008	7
	Notes to Condensed Consolidated Financial Statements - June 30, 2009	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4	Controls and Procedures	54
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	54
Item 1A	Risk Factors	54
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3	Defaults Upon Senior Securities	56
Item 4	Submission of Matters to a Vote of Security Holders	57
Item 5	Other Information	57
Item 6	Exhibits	57
SIGNATURES		58
EXHIBIT INDEX		59

3

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(unaudited)

(in millions, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
		2009		2008		2009		2008
Net sales	$	1,320.2	$	2,935.9	$	2,622.8	$	5,298.6
Cost of goods sold		(1,192.3)		(2,284.7)		(2,350.4)		(4,133.4)
Gross profit		127.9		651.2		272.4		1,165.2
Selling, general and administrative expenses		(213.6)		(280.3)		(430.6)		(538.0)
(Loss) income from operations		(85.7)		370.9		(158.2)		627.2
Other income (expense)
Interest income		0.9		5.0		2.1		14.1
Interest expense		(25.3)		(24.3)		(48.8)		(49.8)
Loss on early extinguishment of debt		(3.3)		-		(3.3)		-
Other income (expense) – net		4.9		2.3		1.2		9.8
(Loss) income before income taxes		(108.5)		353.9		(207.0)		601.3
Benefit from (provision for) income taxes		30.8		(116.8)		54.8		(200.0)
Net (loss) income		(77.7)		237.1		(152.2)		401.3
Less: Net loss (income) attributable to noncontrolling interest		0.1		(0.8)		(0.3)		(1.7)
Net (loss) income attributable to Terex Corporation	$	(77.6)	$	236.3	$	(152.5)	$	399.6
(Loss) Earnings Per Share Attributable to Terex Corporation Common Stockholders:
Basic	$	(0.78)	$	2.35	$	(1.57)	$	3.96
Diluted	$	(0.78)	$	2.32	$	(1.57)	$	3.89
Weighted average number of shares outstanding in per share calculation
Basic		99.1		100.5		97.0		100.8
Diluted		99.1		102.0		97.0		102.6

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

4

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(unaudited)

(in millions, except par value)

	June 30, 2009				December 31, 2008
Assets
Current assets
Cash and cash equivalents		$	938.5	$		484.4
Trade receivables (net of allowance of $62.4 and $62.8 at June 30, 2009 and December 31, 2008, respectively)			639.8			967.5
Inventories			2,002.1			2,234.8
Deferred taxes			172.9			139.0
Other current assets			188.7			215.2
Total current assets			3,942.0			4,040.9
Non-current assets
Property, plant and equipment - net			495.5			481.5
Goodwill			476.3			457.0
Deferred taxes			97.8			84.5
Other assets			365.6			381.5
Total assets		$	5,377.2	$		5,445.4
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable and current portion of long-term debt		$	51.4	$		39.4
Trade accounts payable			518.9			983.9
Accrued compensation and benefits			154.2			169.3
Accrued warranties and product liability			143.4			149.3
Customer advances			94.7			119.3
Other current liabilities			349.4			363.4
Total current liabilities			1,312.0			1,824.6
Non-current liabilities
Long-term debt, less current portion			1,685.2			1,396.4
Retirement plans and other			501.3			480.5
Total liabilities			3,498.5			3,701.5
Commitments and contingencies
Stockholders’ equity
Common stock, $.01 par value – authorized 300.0 shares; issued 120.2 and 107.1 shares at June 30, 2009 and December 31, 2008, respectively			1.2			1.1
Additional paid-in capital			1,242.5			1,046.2
Retained earnings			1,204.1			1,356.6
Accumulated other comprehensive income (loss)			11.1			(82.3)
Less cost of shares of common stock in treasury – 13.1 shares at June 30, 2009 and December 31, 2008			(598.7)			(599.9)
Total Terex Corporation stockholders’ equity			1,860.2			1,721.7
Noncontrolling interest			18.5			22.2
Total equity			1,878.7			1,743.9
Total liabilities and stockholders’ equity		$	5,377.2	$		5,445.4

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

5

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

(in millions)

	Outstanding Shares	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehen- sive Income (Loss)	Common Stock in Treasury	Noncontrolling Interest	Total
Balance at January 1, 2008	100.3	$     1.1	$1,004.1	$1,284.7	$   256.6	$  (203.3)	$     19.8	$2,363.0
Net Income	—	—	—	71.9	—	—	3.7	75.6
Other Comprehensive Income (Loss) – net of tax:
Translation adjustment	—	—	—	—	(332.2)	—	0.3	(331.9)
Pension liability adjustment	—	—	—	—	(10.7)	—	—	(10.7)
Derivative hedging adjustment	—	—	—	—	4.0	—	—	4.0
Comprehensive Loss								(263.0)
Issuance of  Common Stock	0.9	—	44.0	—	—	—	—	44.0
Compensation under Stock-based Plans - net	0.2	—	(2.3)	—	—	3.6	—	1.3
Capital contributed	—	—	—	—	—	—	1.0	1.0
Return of capital	—	—	—	—	—	—	(2.6)	(2.6)
Acquisition of Treasury Stock	(7.4)	—	0.4	—	—	(400.2)	—	(399.8)
Balance at December 31, 2008	94.0	1.1	1,046.2	1,356.6	(82.3)	(599.9)	22.2	1,743.9
Net (Loss) Income	—	—	—	(152.5)	—	—	0.3	(152.2)
Other Comprehensive Income (Loss) – net of tax:
Translation adjustment	—	—	—	—	97.4	—	0.2	97.6
Pension liability adjustment	—	—	—	—	(0.4)	—	—	(0.4)
Derivative hedging adjustment	—	—	—	—	(3.6)	—	—	(3.6)
Comprehensive Loss								(58.6)
Issuance of Common Stock	13.1	0.1	174.9	—	—	—	—	175.0
Compensation under Stock-based Plans - net		—	(14.7)	—	—	1.4	—	(13.3)
Acquisition of noncontrolling interest	—	—	1.2	—	—	—	(2.9)	(1.7)
Return of capital	—	—	—	—	—	—	(1.3)	(1.3)
Issuance of convertible debt – net of tax	—	—	34.9	—	—	—	—	34.9
Acquisition of Treasury Stock	—	—	—	—	—	(0.2)	—	(0.2)
Balance at June 30, 2009	107.1	$      1.2	$1,242.5	$1,204.1	$     11.1	$  (598.7)	$     18.5	$1,878.7

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

6

TEREX CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

(in millions)

	Six Months Ended June 30,
		2009		2008
Operating Activities
Net (loss) income		$	(152.2)	$	401.3
Adjustments to reconcile net (loss) income to cash used in operating activities:
Depreciation			37.5		36.4
Amortization			10.8		10.5
Deferred taxes			(58.5)		19.3
Loss on early extinguishment of debt			3.3		-
Gain on sale of assets			(0.4)		(1.2)
Stock-based compensation			19.1		31.9
Excess tax benefit from stock-based compensation			-		(6.5)
Changes in operating assets and liabilities (net of effects of acquisitions and divestitures):
Trade receivables			365.5		(232.7)
Inventories			304.4		(446.4)
Trade accounts payable			(490.9)		176.6
Accrued compensation and benefits			(24.1)		(22.7)
Income taxes payable			(36.8)		74.0
Accrued warranties and product liability			(10.9)		8.3
Customer advances			(31.1)		(78.1)
Other, net			28.0		(26.8)
Net cash used in operating activities			(36.3)		(56.1)
Investing Activities
Acquisition of businesses, net of cash acquired			-		(478.1)
Capital expenditures			(34.9)		(63.8)
Proceeds from sale of assets			1.2		2.8
Net cash used in investing activities			(33.7)		(539.1)
Financing Activities
Proceeds from issuance of long-term debt			465.4		-
Principal repayments of long-term debt			(58.4)		-
Proceeds from issuance of common stock - net			156.3		-
Excess tax benefit from stock-based compensation			-		6.5
Proceeds from stock options exercised			0.1		2.0
Net (repayments) borrowings under revolving line of credit agreements			(30.7)		1.0
Payment of debt issuance costs			(16.6)		-
Share repurchases			-		(135.6)
Acquisition of noncontrolling interest			(1.7)		-
Other, net			(0.8)		(1.2)
Net cash provided by (used in) financing activities			513.6		(127.3)
Effect of Exchange Rate Changes on Cash and Cash Equivalents			10.5		40.1
Net Increase (Decrease) in Cash and Cash Equivalents			454.1		(682.4)
Cash and Cash Equivalents at Beginning of Period			484.4		1,272.4
Cash and Cash Equivalents at End of Period		$	938.5	$	590.0

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

7

TEREX CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(unaudited)

(currency amounts in millions, unless otherwise noted, except per share amounts)

NOTE A - BASIS OF PRESENTATION

Basis of Presentation. The accompanying unaudited Condensed Consolidated Financial Statements of Terex Corporation and subsidiaries as of June 30, 2009 and for the three and six months ended June 30, 2009 and 2008 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America to be included in full-year financial statements. The accompanying Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Changes in Stockholders’ Equity as of December 31, 2008 have been derived from the audited Consolidated Balance Sheet and Consolidated Statement of Changes in Stockholders’ Equity as of that date. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

The Condensed 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 the 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. Intercompany balances, transactions and profits have been eliminated.

In the opinion of management, all adjustments considered necessary for fair statement of these interim financial statements have been made. Except as otherwise disclosed, all such adjustments consist only of those of a normal recurring nature. Operating results for the three and six months ended June 30, 2009 are not necessarily indicative of results that may be reported for the year ending December 31, 2009.

Cash and cash equivalents at June 30, 2009 and December 31, 2008 include $7.9 and $6.7, respectively, which was not immediately available for use. These consist primarily of cash balances held in escrow to secure various obligations of the Company.

Certain prior period amounts in the Condensed Consolidated Financial Statements have been reclassified to conform to current period presentation, including the segment realignment discussion in Note B – “Business Segment Information.” In connection with the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS No. 160”), amounts reported in prior year periods have been retroactively adjusted to conform with the presentation requirements of SFAS No. 160 discussed below in “Recent Accounting Pronouncements.”

Recent Accounting Pronouncements. In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which was effective for fiscal years beginning after November 15, 2007 and for interim periods within those years.  This statement defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements.  This statement applies under other accounting pronouncements that require or permit fair value measurements.  The statement indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. SFAS No. 157 defines fair value based upon an exit price model.  In February 2008, the FASB issued FASB Staff Positions (“FSP”) No. FAS 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” and FSP No. FAS 157-2, “Effective Date of FASB Statement No. 157.” FSP No. FAS 157-1 amends SFAS No. 157 to exclude SFAS No. 13, “Accounting for Leases” and its related interpretive accounting pronouncements that address leasing transactions, while FSP No. FAS 157-2 delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) until the beginning of the first quarter of 2009.  Effective January 1, 2009, the provisions of SFAS No. 157 were applied to nonfinancial assets and nonfinancial liabilities. The adoption of SFAS No. 157 did not have a significant impact on the determination or reporting of the Company’s financial results.

8

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141R”), which replaces SFAS No. 141, “Business Combinations” (“SFAS No. 141”). SFAS No. 141R retains the underlying concepts of SFAS No. 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting, but SFAS No. 141R changes the application of the acquisition method in a number of significant aspects. Acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. In April 2009, the FASB issued FSP No. FAS 141R-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” (“FSP No. FAS 141R-1”), which clarifies the initial and subsequent recognition, subsequent accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. FSP No. FAS 141R-1 carries forward the requirements in SFAS No. 141 for acquired contingencies, thereby requiring that such contingencies be recognized at fair value on the acquisition date if fair value can be reasonably estimated during the allocation period. If the acquisition date fair value of an asset or liability cannot be reasonably estimated, the asset or liability would be measured at the amount that would be recognized in accordance with SFAS No. 5, “Accounting for Contingencies.” SFAS No. 141R and FSP No. FAS 141R-1 were effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008, which, for the Company, was January 1, 2009. Adoption of SFAS No. 141R and FSP No. FAS 141R-1 did not have a significant impact on the determination or reporting of the Company’s financial results. However, the future effects of SFAS No. 141R and FSP No. FAS 141R-1 will depend on any future acquisitions completed by the Company.

In December 2007, the FASB issued SFAS No. 160. This statement was effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, which, for the Company, was January 1, 2009. This statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the noncontrolling interest is included in consolidated net income on the face of the income statement. It also amends certain Accounting Research Bulletin No. 51,

“Consolidated Financial Statements” consolidation procedures for consistency with the requirements of SFAS No. 141R. This statement also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. Adoption of SFAS No. 160 did not have a significant impact on the determination or reporting of the Company’s financial results.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133” (“SFAS No. 161”). This statement was effective for fiscal years, and interim periods within those fiscal years, beginning after November 15, 2008, which, for the Company, was January 1, 2009. SFAS No. 161 is intended to improve financial reporting by requiring transparency about the nature, purpose, location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities;” and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. Adoption of SFAS No. 161 did not have a significant impact on the determination or reporting of the Company’s financial results. See Note I – “Derivative Financial Instruments.”

In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP No. FAS 142-3”).  FSP No. FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets.”  FSP No. FAS 142-3 was effective on a prospective basis to all intangible assets acquired and for disclosures on all intangible assets recognized on or after the beginning of the first annual period subsequent to December 15, 2008, which, for the Company, was January 1, 2009.   The Company has evaluated the new statement and has determined that it did not have a significant impact on the determination or reporting of its financial results.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles for nongovernmental entities (the “Hierarchy”). The Hierarchy within SFAS No. 162 is similar to the definition in the American Institute of Certified Public Accountants Statement on Auditing Standards No. 69, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles” (“SAS No. 69”). The adoption of SFAS No. 162 did not have a significant effect on the Company’s financial statements because the Company has utilized the guidance within SAS

No. 69.

9

In May 2008, the FASB issued FSP No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion” (“FSP No. APB 14-1”). FSP No. APB 14-1 requires separate accounting for the liability and equity components of convertible debt securities that allow for either mandatory or optional cash settlement (including partial cash settlement) in a manner that reflects the company’s nonconvertible debt borrowing rate at time of issuance when interest cost is recognized in subsequent periods. This bifurcation results in a component of the convertible debt to be classified in equity and accretion of the resulting discount on the debt as part of interest expense reflected in the income statement. FSP No. APB 14-1 is effective for fiscal years beginning after December 15, 2008, which, for the Company, was January 1, 2009. As disclosed in Note L – “Long-Term Obligations,” the adoption of FSP No. APB 14-1 affected the reporting of the 4% Convertible Senior Subordinated Notes Due 2015 (“4% Convertible Notes”) issued in June 2009.

In November 2008, the FASB ratified Emerging Issues Task Force Issue No. 08-6, “Equity Method Investment Accounting Considerations” (“EITF No. 08-6”).  EITF No. 08-6 applies to all investments accounted for under the equity method.  It states that an entity shall measure its equity investment initially at cost.  Contingent consideration should only be included in the initial measurement of the equity method investment if it is required to be recognized by specific authoritative guidance other than SFAS No. 141R.  However, if any equity method investment agreement involves a contingent consideration arrangement in which the fair value of the investor’s share of the investee’s net assets exceeds the investor’s initial cost, a liability should be recognized.  An equity method investor is required to recognize other-than-temporary impairments of an equity method investment and shall account for a share issuance by an investee as if the investor had sold a proportionate share of its investment.  Any gain or loss to the investor resulting from an investee’s share issuance shall be recognized in earnings. EITF No. 08-6 shall be effective for fiscal years beginning on or after December 15, 2008, which, for the Company, was January 1, 2009, and interim periods within those fiscal years, and shall be applied prospectively.  Adoption of EITF No. 08-6 did not have a significant impact on the determination or reporting of the Company’s financial results.

In December 2008, the FASB issued FSP No. FAS 132R-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets”(“FSP No. FAS 132R-1”). FSP No. FAS 132R-1 amends SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. FSP No. FAS 132R-1 requires additional disclosure on a benefit plan’s investment allocation decision-making process, the fair value of each major category of plan assets, the valuation techniques used to measure fair value of the plan assets, and any significant concentrations of risk within plan assets. This FSP is effective for fiscal years ending after December 15, 2009, with early application permitted. The Company does not expect that FSP No. FAS 132R-1 will have a significant impact on the determination or reporting of its financial results.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP No. FAS 107-1 and APB 28-1”). FSP No. FAS 107-1 and APB 28-1 enhances consistency in financial reporting by increasing the frequency of fair value disclosures. FSP No. FAS 107-1 and APB 28-1 relates to fair value disclosures for any financial instruments that are not currently reflected on a company’s balance sheet at fair value. Prior to the effective date, fair values for these assets and liabilities have only been disclosed once a year. FSP No. FAS 107-1 and APB 28-1 will now require these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value. This FSP is effective for interim and annual periods ending after June 15, 2009, with early application permitted for periods ending after March 15, 2009. The adoption of FSP No. FAS 107-1 and APB 28-1 did not have a significant impact on the determination or reporting of the Company’s financial results.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS No. 165”).  This statement was effective for interim or annual financial periods ending after June 15, 2009.  SFAS No. 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.   SFAS No. 165 also requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date—that is, whether that date represents the date the financial statements were issued or were available to be issued.  This disclosure should alert all readers of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented.  Adoption of SFAS No. 165 did not have a significant impact on the determination or reporting of the Company’s financial results.

10

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140” (“SFAS No. 166”).  SFAS No. 166 will require entities to provide more information about transfers of financial assets and a transferor’s continuing involvement, if any, with transferred financial assets.  It also requires additional disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets.  SFAS No. 166 eliminates the concept of a qualifying special-purpose entity and changes the requirements for de-recognition of financial assets.  SFAS No. 166 is effective for the Company in its interim and annual reporting periods beginning on and after January 1, 2010. Earlier application is prohibited.  The Company is evaluating the adoption of SFAS No. 166 but does not expect that it will have a significant impact on the determination or reporting of its financial results.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS No. 167”), which amends the consolidation guidance applicable to variable interest entities.  It replaces the quantitative-based risks and rewards calculation for determining whether an enterprise is the primary beneficiary in a variable interest entity with an approach that is primarily qualitative and requires ongoing assessments of whether an enterprise is the primary beneficiary of a variable interest entity.  SFAS No. 167 also requires additional disclosures about an enterprise’s involvement in variable interest entities.  SFAS No. 167 is effective for the Company in its interim and annual reporting periods beginning on and after January 1, 2010. Earlier application is prohibited.  The Company is currently evaluating the impact that the adoption of SFAS No. 167 will have on the determination or reporting of its financial results.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162” (“SFAS No. 168”).  The FASB Accounting Standards Codification™ (“Codification”) will be the single source of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States.  Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative generally accepted accounting principles for SEC registrants.  All existing accounting standards are superseded as described in SFAS No. 168.  All other accounting literature not included in the Codification is nonauthoritative.  This statement is effective for interim and annual periods ending after September 15, 2009.  The Company does not expect that the adoption of SFAS No. 168 will have a significant impact on the determination or reporting of its financial results.

Accounts Receivable and Allowance for Doubtful Accounts. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company determines the allowance based on historical customer review. The Company reviews its allowance for doubtful accounts at least quarterly. Past due balances over 90 days and over a specified amount are reviewed individually for collectibility. All other balances are reviewed on a pooled basis by type of receivable. Account balances are charged off against the allowance when the Company determines that the receivable will not be recovered. Given current economic conditions, there can be no assurance that the Company’s historical accounts receivable collection experience 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 N - “Litigation and Contingencies.” Substantially all receivables were trade receivables at June 30, 2009 and December 31, 2008.

Accrued Warranties. The Company records accruals for potential warranty claims based on its claim experience. The Company’s products are typically sold with a standard warranty covering defects that arise during a fixed period of time, a fixed number of operating hours, or both. Each business provides a warranty specific to the products it offers. The specific warranty offered by a business is a function of customer expectations and competitive forces.

A liability for estimated warranty claims is accrued at the time of sale. The non-current portion of the warranty accrual is included in Retirement plans and other non-current liabilities. The liability is established using historical warranty claim experience for each product sold. Historical claim experience may be adjusted for known design improvements or for the impact of unusual product quality issues. Warranty reserves are reviewed quarterly to ensure critical assumptions are updated for known events that may affect the estimated warranty liability.

11

The following table summarizes the changes in the consolidated product warranty liability:

	Six Months Ended June 30, 2009
Balance at beginning of period	$	168.4
Accruals for warranties issued during the period		69.4
Changes in estimates		0.5
Settlements during the period		(81.0)
Foreign exchange effect/other		2.3
Balance at end of period	$	159.6

NOTE B - BUSINESS SEGMENT INFORMATION

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

The 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, the Company owns much of the North American distribution channel for its utility products group and operates a fleet of rental utility products in the United States and Canada.

The 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. The Company 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.

The Cranes segment designs, manufactures and markets mobile telescopic cranes, tower cranes, lattice boom crawler cranes, truck-mounted cranes (boom trucks and loading cranes) and telescopic container stackers. These products are used primarily for construction, repair and maintenance of infrastructure, building and manufacturing facilities.

The 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.

The Company also assists customers in their rental, leasing and acquisition of its products through Terex Financial Services, Inc.

On January 1, 2009, the Company realigned certain operations in an effort to capture market synergies and streamline its cost structure. The Roadbuilding businesses, formerly part of the Company’s Roadbuilding, Utility Products and Other segment, are now consolidated within the Construction segment. The Utility Products businesses, formerly part of the Roadbuilding, Utility Products and Other segment, are now consolidated within the Aerial Work Platforms segment. Additionally, the Company’s 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 Roadbuilding, Utility Products and Other segment are now reported in Corporate and Other, which includes eliminations among the Company’s segments, as well as general and corporate items that have not been allocated to business segments for the three and six months ended June 30, 2009 and 2008. Business segment information is presented below, and prior period amounts have been retrospectively adjusted to conform to this presentation:

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	Three Months Ended June 30,				Six Months Ended June 30,
		2009		2008		2009		2008
Net Sales
Aerial Work Platforms	$	209.9	$	755.4	$	438.4	$	1,420.1
Construction		219.9		691.0		481.6		1,191.6
Cranes		491.0		833.8		952.4		1,482.7
Materials Processing & Mining		416.6		681.5		789.7		1,245.8
Eliminations/Corporate		(17.2)		(25.8)		(39.3)		(41.6)
Total	$	1,320.2	$	2,935.9	$	2,622.8	$	5,298.6
(Loss) Income from Operations
Aerial Work Platforms	$	(32.8)	$	131.4	$	(73.8)	$	240.1
Construction		(79.7)		23.0		(163.3)		27.5
Cranes		20.0		126.3		45.4		209.9
Materials Processing & Mining		22.8		110.6		58.5		179.3
Eliminations/Corporate		(16.0)		(20.4)		(25.0)		(29.6)
Total	$	(85.7)	$	370.9	$	(158.2)	$	627.2

		June 30, 2009		December 31, 2008
Identifiable Assets
Aerial Work Platforms	$	749.5	$	889.5
Construction		1,339.8		1,480.7
Cranes		1,583.2		1,769.2
Materials Processing & Mining		2,187.7		2,204.6
Eliminations/Corporate		(483.0)		(898.6)
Total	$	5,377.2	$	5,445.4

NOTE C - INCOME TAXES

The effective tax rate for the three months ended June 30, 2009 was 28.4%, as compared to an effective rate of 33.0% for the three months ended June 30, 2008. The effective tax rate for the six months ended June 30, 2009 was 26.5%, as compared to an effective rate of 33.3% for the six months ended June 30, 2008. The lower tax rate for the three and six months ended June 30, 2009 was primarily due to the relative impact of accruals and releases for uncertain tax positions, the non-deductible tax treatment of the charges related to the proposed SEC settlement (which remains subject to SEC and court approval) and changes in the jurisdictional mix of income.

The Company conducts business globally and, as a result, the Company and its subsidiaries file income tax returns in U.S. federal, state and foreign jurisdictions, as required. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as Australia, Germany, Italy, the United Kingdom and the U.S. Various Terex entities are currently under audit in Germany, the United Kingdom, the U.S. and elsewhere. It is reasonably possible that changes to our unrecognized tax benefits could be significant in the next twelve months due to potential tax audit settlements in these jurisdictions. As a result of uncertainties regarding the timing of the completion of the tax audits and their possible outcomes, an estimate of the range of increase or decrease that could occur in the next twelve months cannot be made.

With few exceptions, including net operating loss carryforwards in the U.S. and Australia, the Company and its subsidiaries are generally no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 1999.

Under SFAS No. 109, “Accounting for Income Taxes,” the Company must consider all available evidence, both positive and negative, in evaluating the future realizability of its deferred tax assets, including tax loss carryforwards. If the future realization of all or a portion of the Company’s deferred tax assets is not more likely than not, the Company must record a valuation allowance against these deferred tax assets. Realizability of these deferred tax assets depends primarily on the Company’s expectation of future taxable income. The Company evaluates the realizability of its deferred tax assets each reporting period. During the three and six months ended June 30, 2009, there was no significant change in the Company’s assessment of the realizability of its deferred tax assets.

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NOTE D - EARNINGS PER SHARE

	Three Months Ended June 30, (in millions, except per share data)				Six Months Ended June 30, (in millions, except per share data)
	2009		2008		2009		2008
Net (loss) income attributable to Terex Corporation common stockholders	$	(77.6)	$	236.3	$	(152.5)	$	399.6
Basic Shares:
Weighted average shares outstanding		99.1		100.5		97.0		100.8
(Loss) earnings per share - basic:	$	(0.78)	$	2.35	$	(1.57)	$	3.96
Diluted shares:
Weighted average shares outstanding		99.1		100.5		97.0		100.8
Effect of dilutive securities:
Stock options and restricted stock awards		-		1.5		-		1.8
Diluted weighted average shares outstanding		99.1		102.0		97.0		102.6
(Loss) earnings per share - diluted:	$	(0.78)	$	2.32	$	(1.57)	$	3.89

Weighted average restricted stock awards of 819 thousand and 52 thousand were outstanding during the three months ended June 30, 2009 and 2008, respectively, but were not included in the computation of diluted shares because the effect would have been anti-dilutive. Weighted average restricted stock awards of 773 thousand and 113 thousand were outstanding during the six months ended June 30, 2009 and 2008, respectively, but were not included in the computation of diluted shares because the effect would have been anti-dilutive. Weighted average options to purchase 773 thousand shares of the Company’s common stock , par value $.01 per share (“Common Stock”) were outstanding during the three months ended June 30, 2009 but were not included in the computation of diluted shares because the effect would have been anti-dilutive. There were no weighted options of shares of Common Stock outstanding that were anti-dilutive during the three months ended June 30, 2008. Weighted average options to purchase 755 thousand and 17 thousand shares of Common Stock were outstanding during the six months ended June 30, 2009 and 2008, respectively, but were not included in the computation of diluted shares because the effect would have been anti-dilutive. SFAS No. 128, “Earnings per Share,” requires that employee stock options and non-vested restricted shares granted by the Company be treated as potential common shares outstanding in computing diluted earnings per share. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future services that the Company has not yet recognized and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares. The Company includes the impact of pro forma deferred tax assets in determining the amount of tax benefits for potential windfalls and shortfalls (the differences between tax deductions and book expense) in this calculation.

The 4% Convertible Notes described in Note L – “Long-Term Obligations,” would be dilutive to the extent that the volume-weighted average price of the Common Stock from the date of issuance of the 4% Convertible Notes during the three and six months ended June 30, 2009 was greater than $16.25 per share. The volume-weighted average price of the Common Stock from the date of issuance of the 4% Convertible Notes during the three and six months ended June 30, 2009 was less than $16.25 per share and, as a result, the 4% Convertible Notes were not dilutive for these periods.

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NOTE E - INVENTORIES

Inventories consist of the following:

	June 30, 2009		December 31, 2008
Finished equipment	$	606.3	$	673.8
Replacement parts		398.7		395.3
Work-in-process		395.7		435.2
Raw materials and supplies		601.4		730.5
Inventories	$	2,002.1	$	2,234.8

Reserves for lower of cost or market value, excess and obsolete inventory were $147.7 and $121.0 at June 30, 2009 and December 31, 2008, respectively.

NOTE F - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment – net consists of the following:

	June 30, 2009		December 31, 2008
Property	$	55.5	$	54.3
Plant		221.7		211.8
Equipment		561.3		522.6
		838.5		788.7
Less: Accumulated depreciation		(343.0)		(307.2)
Property, plant and equipment - net	$	495.5	$	481.5

NOTE G - ACQUISITIONS

2008 Acquisitions

On February 26, 2008, the Company acquired approximately 98% of the outstanding common stock of ASV through a tender offer. This was followed by a merger that was completed on March 3, 2008, pursuant to which the Company acquired all of the remaining outstanding common stock of ASV. The results of ASV are included in the Construction segment from the date of acquisition. Headquartered in Grand Rapids, Minnesota, ASV is a manufacturer of compact rubber track loaders and related accessories, undercarriages and traction products. The acquisition enhances the Company’s product line for smaller construction equipment and provides opportunities for expanding the customer base of ASV and the Company. The Company intends to expand ASV product sales outside the U.S.

The aggregate purchase price for ASV was approximately $457, net of cash acquired. The Company issued 24 thousand restricted shares of the Company’s Common Stock valued at $1.7, of which $0.8 was allocated to the purchase price and the remaining $0.9 will be recorded as an expense of the Company over the remaining service period. On the date of acquisition, ASV had approximately $47 in cash.

Although the acquisition of ASV was not material to the Company, given the relative significance of the goodwill originally recorded, the following table provides information summarizing the fair values of the assets acquired and liabilities assumed at February 26, 2008, the date of acquisition:

At February 26, 2008:
Current assets	$	164
Property, plant and equipment – net		31
Intangible assets		106
Goodwill		254
Other assets		8
Total assets acquired		563
Current liabilities		21
Non-current liabilities		38
Total liabilities assumed		59
Net assets acquired	$	504

15

Of the approximately $106 of acquired intangible assets, approximately $74 was assigned to customer relationships with useful lives of 10-15 years, approximately $30 to patents with useful lives of 10-19 years and approximately $2 was assigned to trademarks and trade names with useful lives of 5 years.

Goodwill of $295 was initially recognized on the date of acquisition and purchase accounting adjustments of $41 were recorded through September 30, 2008, primarily related to adjustments to customer relationships, patents and deferred taxes. Goodwill of approximately $254 represented the excess of the purchase price over the fair values of net assets acquired, as determined at that time. None of the goodwill assigned to ASV was expected to be deductible for tax purposes. As a result of the annual impairment test for goodwill performed as of October 1, 2008, all of the goodwill recorded for ASV was deemed impaired.

The Company also completed smaller acquisitions during 2008 in the Aerial Work Platforms and Construction segments that, taken together, had an aggregate purchase price of less than $30. These acquisitions did not have a material impact on the Company’s financial results either individually or in the aggregate.

NOTE H - GOODWILL

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

		Aerial Work Platforms		Construction		Cranes		Materials Processing & Mining		Total
Balance at December 31, 2008	$	107.6	$	-	$	114.7	$	234.7	$	457.0
Foreign exchange effect and other		0.3		-		1.4		17.6		19.3
Balance at June 30, 2009	$	107.9	$	-	$	116.1	$	252.3	$	476.3

Due to a number of factors, including the Company’s realignment of certain operations within reporting units, continued weakness in the macroeconomic environment and a decline in forecasted business performance used in the annual goodwill impairment test as of October 1, 2008, the Company performed an interim goodwill impairment test as of June 30, 2009. As part of the Company’s impairment analysis for its reporting units, management determined the fair value of each of its reporting units based on estimates of their respective future cash flows.  These estimates that are used to derive expected cash flows include assumptions regarding future sales levels, the impact of cost reduction programs, and the level of working capital needed to support a given business. The Company relies on data developed by business segment management as well as macroeconomic data in making these calculations. The discounted cash flow model also includes a determination of the Company’s weighted average cost of capital. The cost of capital is based on assumptions about interest rates as well as a risk-adjusted rate of return required by the Company’s equity investors.

The fair value of certain reporting units reflected reductions in the estimated future cash flows of the reporting units based on lower expectations for growth and profitability resulting primarily from the downturn in the economy.   While the Company believes it has made reasonable estimates and assumptions to calculate the fair value of its reporting units, it is possible that a material change could occur.  If the actual results are not consistent with the estimates and assumptions used to calculate the fair value of this reporting unit, then a material impairment of goodwill could result.

Although the interim impairment testing performed in the second quarter of 2009 resulted in the fair value of the reporting units exceeding their carrying value thereby indicating no impairment, the Company’s market capitalization has been significantly impacted by the extreme volatility in the U.S. equity and credit markets and has traded below the book value of its stockholders’ equity.  In a volatile market, the observed market prices of individual trades of a company’s shares (and consequently the market capitalization calculated) may not be representative of the fair value of the company as a whole.  Management believes the recent decline in the Company’s market capitalization may not be representative of the fair value of the Company as a whole due to the current economic downturn.

Due to the ongoing uncertainty in market conditions, which may negatively impact the performance of the Company’s reporting units, the Company will continue to monitor the estimated fair value of its reporting units for purposes of determining whether there is evidence of an impairment.

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NOTE I - DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into two types of derivatives: hedges of fair value exposures and hedges of cash flow exposures. Fair value exposures relate to recognized assets or liabilities and firm commitments, while cash flow exposures relate to the variability of future cash flows associated with recognized assets or liabilities or forecasted transactions.

The Company operates internationally, with manufacturing and sales facilities in various locations around the world, and uses certain financial instruments to manage its foreign currency, interest rate and fair value exposures. To qualify a derivative as a hedge 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, strategies for undertaking various hedge transactions and method of assessing hedge effectiveness. Additionally, for hedges of forecasted transactions, the significant characteristics and expected terms of a forecasted transaction must be specifically identified, and it must be probable that each forecasted transaction will occur. If it is deemed probable the forecasted transaction will not occur, then the gain or loss would be recognized in current earnings. Financial instruments qualifying for hedge accounting must maintain a specified level of effectiveness between the hedging instrument and the item being hedged, both at inception and throughout the hedged period. The Company does not engage in trading or other speculative use of financial instruments.

The Company has used and may use forward contracts and options to mitigate its exposure to changes in foreign currency exchange rates on third party and intercompany forecasted transactions. The primary currencies to which the Company is exposed are the Euro and British Pound. The effective portion of unrealized gains and losses associated with forward contracts and the intrinsic value of option contracts are deferred as a component of Accumulated other comprehensive income (loss) until the underlying hedged transactions are reported in the Company’s Condensed Consolidated Statement of Income. The Company uses interest rate swaps to mitigate its exposure to changes in interest rates related to existing issuances of variable rate debt and to fair value changes of fixed rate debt. Primary exposure includes movements in the London Interbank Offer Rate (“LIBOR”).

Changes in the fair value of derivatives designated as fair value hedges are recognized in earnings as offsets to changes in fair value of exposures being hedged. The change in the fair value of derivatives designated as cash flow hedges are deferred in Accumulated other comprehensive income (loss) and are recognized in earnings as hedged transactions occur. Transactions deemed ineffective are recognized in earnings immediately.

In the Condensed Consolidated Statement of Income, the Company records hedging activity related to debt instruments in interest expense and hedging activity related to foreign currency in the accounts for which the hedged items are recorded. On the Condensed Consolidated Statement of Cash Flows, the Company records cash flows from hedging activities in the same manner as it records the underlying item being hedged.

In November 2007, the Company entered into an interest rate swap agreement that converted a fixed rate interest payment into a variable rate interest payment. At June 30, 2009, the Company had $400.0 notional amount of this interest rate swap agreement outstanding, which matures in 2017. The fair market value of this swap at June 30, 2009 resulted in a gain of $34.8, which was recorded in Other assets and as an adjustment to the carrying value of the hedged debt.

The Company had entered into a prior interest rate swap agreement that converted a fixed rate interest payment into a variable rate interest payment. At December 31, 2006, the Company had $200.0 notional amount of this interest rate swap agreement outstanding, which matured in 2014. To maintain an appropriate balance between floating and fixed rate obligations on its mix of indebtedness, the Company exited this interest rate swap agreement on January 15, 2007 and paid $5.4. This loss was recorded as an adjustment to the carrying value of the hedged debt and will be amortized through the original debt maturity date of 2014. As of June 30, 2009, the net adjustment to the carrying value of the hedged debt for the two interest swap agreements was a gain of $31.3.

The Company is also a party to currency exchange forward contracts that generally mature within one year to manage its exposure to changing currency exchange rates. At June 30, 2009, the Company had $779.1 notional amount of currency exchange forward contracts outstanding, most of which mature on or before June 30, 2010. The fair market value of these contracts at June 30, 2009 was a net loss of $9.6. At June 30, 2009, $450.8 notional amount ($6.9 of fair value losses) of these contracts have been designated as, and are effective as, cash flow hedges of specifically identified transactions. During 2009 and 2008, the Company recorded the change in fair value for these cash flow hedges to Accumulated other comprehensive income (loss), and reclassified to earnings a portion of the deferred gain or loss from Accumulated other comprehensive income (loss) as the hedged transactions occurred and were recognized in earnings.

17

The following table provides the location and fair value amounts of derivative instruments designated as hedging instruments under SFAS No. 133 that are reported in the Condensed Consolidated Balance Sheet as of June 30, 2009:

Asset Derivatives	Balance Sheet Location	Fair Value
Foreign exchange contracts	Other current assets	$	19.3
Interest rate contract	Other assets		34.8
Total asset derivatives		$	54.1
Liability Derivatives
Foreign exchange contracts	Other current liabilities	$	28.9
Interest rate contract	Long-term debt, less current portion		31.3
Total liability derivatives		$	60.2
Total Derivatives		$	(6.1)

Counterparties to currency exchange forward contracts are major financial institutions with credit ratings of investment grade or better and no collateral is required. There are no significant risk concentrations. 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.

The following tables provide the effect of derivative instruments on the Condensed Consolidated Statement of Income and Other Comprehensive Income (Loss) (“OCI”) for the three and six months ended June 30, 2009:

Gain or (Loss) Recognized on Derivatives in Income
Fair Value Derivatives	Location		Three months ended June 30, 2009		Six months ended June 30, 2009
Interest rate contract	Interest expense	$	4.1	$	7.6

Gain or (Loss) Recognized on Derivatives in OCI
Cash flow Derivatives		Three months ended June 30, 2009		Six months ended June 30, 2009
Foreign exchange contracts	$	(1.8)	$	4.6

Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective)
Location		Three months ended June 30, 2009		Six months ended June 30, 2009
Cost of goods sold	$	6.3	$	11.0
Other income (expense)		0.2		(1.5)
Total	$	6.5	$	9.5

Gain or (Loss) Recognized on Derivatives (Ineffective) in Income
Location		Three months ended June 30, 2009		Six months ended June 30, 2009
Other income (expense)	$	1.0	$	2.5

Unrealized net gains (losses), net of tax, included in Accumulated other comprehensive income (loss) are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
		2009		2008		2009		2008
Balance at beginning of period	$	(6.4)	$	(5.3)	$	(1.0)	$	(5.0)
Additional gains (losses)		1.6		10.3		(2.1)		11.4
Amounts reclassified to earnings		0.2		(5.8)		(1.5)		(7.2)
Balance at end of period	$	(4.6)	$	(0.8)	$	(4.6)	$	(0.8)

The estimated amount of existing pre-tax net losses for derivative contracts recorded in Accumulated other comprehensive income (loss) as of June 30, 2009 expected to be reclassified into earnings in the next twelve months is $4.6.

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NOTE J - FAIR VALUE MEASUREMENTS

Assets and liabilities measured at fair value on a recurring basis under the provisions of SFAS No. 157 include interest rate swap and foreign currency forward contracts discussed in Note I - “Derivative Financial Instruments.” These contracts are valued using a market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. These approaches often use market multiples derived from a set of comparables. SFAS No. 157 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 own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 - Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (e.g., supported by little or no market activity).

Determining which category an asset or liability falls within this hierarchy requires judgment. The Company evaluates its hierarchy disclosures each quarter. As discussed in Note I - “Derivative Financial Instruments,” the Company has two types of derivative instruments that it records at fair value on a recurring basis, the interest rate swap and foreign exchange contracts. The interest rate swap is categorized under Level 2 of the hierarchy above and is recorded at June 30, 2009 as an asset of $34.8. The foreign exchange contracts are categorized under Level 1 of the hierarchy above and are recorded at June 30, 2009 as a net liability of $6.9. The fair value of the interest rate swap agreement is based on LIBOR yield curves at the reporting date. The fair values of the foreign exchange forward contracts are based on quoted forward foreign exchange prices at the reporting date.

NOTE K - RESTRUCTURING AND OTHER CHARGES

The Company continually evaluates its cost structure to be appropriately positioned to respond to changing market conditions. Given recent economic trends, in 2008 and continuing in the first half of 2009, the Company initiated certain restructuring programs across all segments to better utilize its workforce to match the decreased demand for its products. These restructuring activities reduced the number of team members at all levels and caused the Company to incur costs for employee termination benefits related to the team member reductions. For the six months ended June 30, 2009, the costs incurred equaled the expected costs for these programs. The existing reserve balance as of June 30, 2009 is expected to be paid primarily in the second half of 2009. The following table provides a roll forward of the restructuring reserve by segment and the line items in the Condensed Consolidated Statement of Income, Cost of good sold (“COGS”) or Selling, general and administrative expense (“SG&A”) in which these activities were recorded:

	Number of headcount reductions (1)			Restructuring reserve at December 31, 2008		Restructuring charges					Cash expenditures			Restructuring reserve at June 30, 2009
						COGS			SG&A
Aerial Work Platforms		843	$	4.0	$	5.2	$	1.5		$		(6.2)	$	4.5
Construction		592		4.7		27.8		14.8				(9.8)		37.5
Cranes		267		0.1		1.0		0.6				(0.5)		1.2
Materials Processing & Mining		330		—		2.1		1.8				(3.1)		0.8
Corporate and Other		42		—		—		1.0				0.7		1.7
Total		2,074	$	8.8	$	36.1	$	19.7		$		(18.9)	$	45.7

(1) Headcount data not in millions

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NOTE L - LONG-TERM OBLIGATIONS

2006 Credit Agreement

On July 14, 2006, the Company and certain of its subsidiaries entered into a Credit Agreement (the “2006 Credit Agreement”) with the lenders party thereto (the “Lenders”) and Credit Suisse, as administrative and collateral agent. The 2006 Credit Agreement provides the Company with a revolving line of credit of up to $550 available through July 14, 2012 and term debt of $136.2 that will mature on July 14, 2013. The revolving line of credit consists of $350 of domestic revolving loans and $200 of multicurrency revolving loans. The 2006 Credit Agreement also provides for incremental loan commitments of up to $300, which may be extended at the option of the Lenders or other lenders, subject to the approval of the administrative agent, in the form of revolving credit loans, term loans or a combination of both. The 2006 Credit Agreement was amended on January 1, 2008, February 24, 2009 and June 3, 2009.

Pursuant to the June 2009 amendment, the Company reduced its domestic revolving credit commitments under the 2006 Credit Agreement by $150, prepaid $58.4 principal amount of its term loans thereunder, and increased the interest rates charged thereunder. The amendment also eliminated certain existing financial covenants dealing with the Company’s consolidated leverage ratio and consolidated fixed charge coverage ratio, and instead will require the Company to maintain liquidity of not less than $250 on the last day of each fiscal quarter through June 30, 2011, and thereafter maintain a specified senior secured debt leverage ratio. Pursuant to the amendment, the Company added flexibility in various restrictive covenants and also agreed to provide certain collateral to secure the Company’s obligations under the 2006 Credit Agreement. The amendment also included certain other technical changes.

The Company recorded a charge of $3.3 to recognize a loss on the write-off of unamortized debt acquisition costs for the June 2009 amendment and for debt acquisition costs incurred in connection with the prepayment of existing term loans.

As of June 30, 2009 and December 31, 2008, the Company had $136.2 and $195.0, respectively, of term loans outstanding under the 2006 Credit Agreement. Term loans under the 2006 Credit Agreement bear interest at a rate of LIBOR plus 3.75% and LIBOR plus 1.75% at June 30, 2009 and December 31, 2008, respectively. The weighted average interest rate on the term loans under the 2006 Credit Agreement at June 30, 2009 and December 31, 2008 was 4.35% and 3.21%, respectively.

At December 31, 2008, the Company had a balance of $35.0 outstanding under the revolving credit component of the 2006 Credit Agreement. The Company did not have any revolving credit amount outstanding as of June 30, 2009. The weighted average interest rate on the outstanding portion of the 2006 Credit Agreement revolving credit component at December 31, 2008 was 3.25%.

The 2006 Credit Agreement incorporates facilities for issuance of letters of credit up to $250. Letters of credit issued under the 2006 Credit Agreement letter of credit facility decrease availability under the $550 revolving line of credit. As of June 30, 2009 and December 31, 2008, the Company had letters of credit issued under the 2006 Credit Agreement that totaled $64.1 and $82.2, respectively. The 2006 Credit Agreement also permits the Company to have additional letter of credit facilities up to $100, and letters of credit issued under such additional facilities do not decrease availability under the revolving line of credit. As of June 30, 2009 and December 31, 2008, the Company had letters of credit issued under the additional letter of credit facilities of the 2006 Credit Agreement that totaled $11.0 and $13.9, respectively. The Company also has bilateral arrangements to issue letters of credit with various other financial institutions. These additional letters of credit do not reduce the Company’s availability under the 2006 Credit Agreement. The Company had letters of credit issued under these additional arrangements of $48.2 and $59.2 as of June 30, 2009 and December 31, 2008, respectively. In total, as of June 30, 2009 and December 31, 2008, the Company had letters of credit outstanding of $123.3 and $155.3, respectively.

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The 2006 Credit Agreement requires the Company to comply with a number of covenants. These covenants require the Company to meet certain financial tests, namely (a) to maintain liquidity (as defined in the amendment) of not less than $250 on the last day of each fiscal quarter through June 30, 2011, and (b) thereafter, to maintain a senior secured debt leverage ratio (as defined in the amendment) not in excess of 3.50 to 1.00 at the end of each fiscal quarter, with the ratio declining to 3.00 to 1.00 effective October 1, 2012 and 2.50 to 1.00 effective October 1, 2013. The covenants also limit, in certain circumstances, Terex’s ability to take a variety of actions, including: incur indebtedness; create or maintain liens on its property or assets; make investments, loans and advances; engage in acquisitions, mergers, consolidations and asset sales; and pay dividends and distributions, including share repurchases. At any time on or prior to June 30, 2011, if the Company’s consolidated leverage ratio is greater than 2.50 to 1.00, the Company will be prohibited from repurchasing shares of its Common Stock, paying dividends or redeeming debt (other than regularly scheduled payments of debt and debt under the 2006 Credit Agreement). The 2006 Credit Agreement also contains customary events of default. The Company’s future compliance with its financial covenants under the 2006 Credit Agreement will depend on its ability to generate earnings and manage its assets effectively. The 2006 Credit Agreement also has various non-financial covenants, both requiring the Company to refrain from taking certain future actions (as described above) and requiring the Company to take certain actions, such as keeping in good standing its corporate existence, maintaining insurance, and providing its bank lending group with financial information on a timely basis.

The Company and certain of its subsidiaries agreed to take certain actions to secure borrowings under the 2006 Credit Agreement. As a result, the Company and certain of its subsidiaries entered into an Amended and Restated Guarantee and Collateral Agreement with Credit Suisse, as collateral agent for the Lenders, granting security to the Lenders for amounts borrowed under the 2006 Credit Agreement. The Company 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, and mortgages on, substantially all of the Company’s domestic assets.

10-7/8% Senior Notes

On June 3, 2009, the Company sold and issued $300 aggregate principal amount of 10-7/8% Senior Notes Due 2016 sold at 97.633% (“10-7/8% Notes”). The Company used a portion of the approximately $293 proceeds from the offering of the 10-7/8% Notes, together with a portion of the proceeds from the 4% Convertible Notes discussed below, to prepay a portion of its term loans under the 2006 Credit Agreement and to pay off the outstanding balance under the revolving credit component of the 2006 Credit Agreement. The 10-7/8% Notes are not currently guaranteed by any of the Company’s subsidiaries, but under specified limited circumstances, along with the 4% Convertible Notes and the 8% Senior Subordinated Notes Due 2017 (“8% Notes”), could be guaranteed by certain domestic subsidiaries of the Company in the future. The 10-7/8% Notes are redeemable by the Company beginning in June 2013 at an initial redemption price of 105.438% of principal amount.

4% Convertible Senior Subordinated Notes

On June 3, 2009, the Company sold and issued $172.5 aggregate principal amount of 4% Convertible Notes. In certain circumstances and during certain periods, the 4% Convertible Notes will be convertible at an initial conversion rate of 61.5385 shares of Common Stock per $1,000 principal amount of convertible notes, equivalent to an initial conversion price of approximately $16.25 per share of common stock, subject to adjustment in some events. Upon conversion, Terex will deliver cash up to the aggregate principal amount of the 4% Convertible Notes to be converted and shares of Common Stock with respect to the remainder, if any, of Terex’s convertible obligation in excess of the aggregate principal amount of the 4% Convertible Notes being converted. The 4% Convertible Notes are not currently guaranteed by any of the Company’s subsidiaries, but under specified limited circumstances, along with the 10-7/8% Notes and 8% Senior Subordinated Notes, could be guaranteed by certain domestic subsidiaries of the Company in the future.

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The provisions of FSP No. APB 14-1 are applicable to the 4% Convertible Notes. FSP No. APB 14-1 requires the Company, as issuer of the 4% Convertible Notes, to separately account for the liability and equity components of the 4% Convertible Notes in a manner that reflects the Company’s nonconvertible debt borrowing rate at the date of issuance when interest cost is recognized in subsequent periods. The Company allocated $54.3 of the $172.5 principal amount of the 4% Convertible Notes to the equity component, which represents a discount to the debt and will be amortized into interest expense using the effective interest method through June 2015. The Company recorded a related deferred tax liability of $19.4 on the equity component. The balance of the 4% Convertible Notes was $118.7 at June 30, 2009. Accordingly, the Company’s effective interest rate on the 4% Convertible Notes will be 11.375%, so the Company will recognize interest expense during the twelve months ended June 2010 on the 4% Convertible Notes in an amount that approximates 11.375% of $118.2, the liability component of the 4% Convertible Notes at the date of issuance. The Company recognized interest expense of $1.0 on the 4% Convertible Notes for the three and six months ended June 30, 2009. The interest expense recognized for the 4% Convertible Notes in the twelve months ended June 2011 and subsequent periods will increase as the discount is amortized using the effective interest method, which accretes the debt balance over its term to $172.5 at maturity. Interest expense on the 4% Convertible Notes throughout its term includes 4% annually of cash interest on the maturity balance of $172.5 plus non-cash interest expense accreted to the debt balance as described. The 4% Convertible Notes are classified as long-term debt in the Company’s Condensed Consolidated Balance Sheet at June 30, 2009 based on their June 2015 maturity date.

8% Senior Subordinated Notes

On November 13, 2007, the Company sold and issued $800 aggregate principal amount of 8% Notes. The 8% Notes are not currently guaranteed by any of the Company’s subsidiaries, but under specified limited circumstances, along with the 10-7/8% Notes and the 4% Convertible Notes, could be guaranteed by certain domestic subsidiaries of the Company in the future. The 8% Notes are redeemable by the Company beginning in November 2012 at an initial redemption price of 104.000% of principal amount.

7-3/8% Senior Subordinated Notes

As of June 30, 2009, the Company had $298.8 aggregate principal amount of 7-3/8% Senior Subordinated Notes Due 2014 (“7-3/8% Notes”) outstanding. The 7-3/8% Notes are jointly and severally guaranteed by certain domestic subsidiaries of the Company (see Note Q - “Consolidating Financial Statements”). The 7-3/8% Notes were redeemable by the Company beginning in January 2009 at an initial redemption price of 103.688% of principal amount. The Company does not currently plan to redeem these notes.

Based on quoted market values and indicative price quotations from financial institutions, the Company estimates that the fair values of the 7-3/8% Notes, 8% Notes, 4% Convertible Notes (net of discount), 10-7/8% Notes and the term debt under the 2006 Credit Agreement were approximately $276, $610, $118, $293 and $127, respectively as of June 30, 2009. The Company believes that the carrying value of its other borrowings approximates fair market value based on discounted future cash flows using rates currently available for debt of similar terms and remaining maturities.

NOTE M - RETIREMENT PLANS AND OTHER BENEFITS

Pension Plans

U.S. Plans - As of June 30, 2009, the Company maintained one qualified defined benefit pension plan covering certain domestic employees (the “Terex Plan”). Prior to December 31, 2008, the Company maintained four qualified plans, which were merged into one plan during 2008. Participation in the plan for all employees has been frozen. Participants are credited with post-freeze service for purposes of determining vesting and retirement eligibility only. The benefits covering salaried employees are based primarily on years of service and employees’ qualifying compensation during the final years of employment. The benefits covering bargaining unit employees are based primarily on years of service and a flat dollar amount per year of service. It is the Company’s policy generally to fund the Terex Plan based on the minimum requirements of the Employee Retirement Income Security Act of 1974. Plan assets consist primarily of common stocks, bonds and short-term cash equivalent funds.

The Company adopted a nonqualified Supplemental Executive Retirement Plan (“SERP”) effective October 1, 2002. The SERP provides retirement benefits to certain senior executives of the Company. Generally, the SERP provides a benefit based on average total compensation earned over a participant’s final five years of employment and years of service reduced by benefits earned under any Company retirement program, excluding salary deferrals and matching contributions. In addition, benefits are reduced by Social Security Primary Insurance Amounts attributable to Company contributions. The SERP is unfunded. Effective December 31, 2008, participation in the SERP was frozen and a defined contribution plan was established for certain senior executives of the Company.

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Other Postemployment Benefits

The Company has several non-pension post-retirement benefit programs. The health care programs are contributory, with participants’ contributions adjusted annually, and the life insurance plan is noncontributory. The Company provides postemployment health and life insurance benefits to certain former salaried and hourly employees of Terex Cranes - Waverly Operations and Terex Corporation. The Company provides post-employment health benefits for certain former employees at its Cedarapids and Simplicity Engineering operations.

	Pension Benefits
	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
Components of net periodic cost:
Service cost	$	0.5	$	0.5	$	1.1	$	1.1
Interest cost		2.1		2.0		4.2		4.1
Expected return on plan assets		(1.6)		(2.2)		(3.2)		(4.5)
Amortization of prior service cost		-		-		-		0.1
Recognized actuarial loss		1.3		0.6		2.5		1.1
Net periodic cost	$	2.3	$	0.9	$	4.6	$	1.9

	Other Benefits
	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
Components of net periodic cost:
Service cost	$	-	$	-	$	0.1	$	0.1
Interest cost		0.2		0.2		0.4		0.4
Recognized actuarial loss		0.1		0.1		0.2		0.2
Net periodic cost	$	0.3	$	0.3	$	0.7	$	0.7

The Company plans to contribute approximately $5 to its U.S. defined benefit pension and post-retirement plans for the year ending December 31, 2009. During the six months ended June 30, 2009, the Company contributed $1.3 to its U.S. defined benefit pension plans.

International Plans – The Company maintains defined benefit plans in Germany, France, China, India and the United Kingdom for some of its subsidiaries. The plans in Germany, China, India and France are unfunded plans. For the Company’s operations in Italy, Indonesia and the United Arab Emirates, 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 the mandated requirements. The measure of the current obligation is not dependent on the employees’ future service and therefore is measured at current value.

	Pension Benefits
	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
Components of net periodic cost:
Service cost	$	1.7	$	2.1	$	3.0	$	4.1
Interest cost		4.2		4.6		8.0		9.1
Expected return on plan assets		(1.3)		(2.0)		(2.5)		(4.0)
Amortization of prior service cost		0.2		0.3		0.4		0.6
Recognized actuarial loss		0.3		0.3		0.5		0.6
Net periodic cost	$	5.1	$	5.3	$	9.4	$	10.4

The Company plans to contribute approximately $14 to its international defined benefit pension plans for the year ending December 31, 2009. During the six months ended June 30, 2009, the Company contributed $9.0 to its international defined benefit pension plans.

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NOTE N - LITIGATION AND CONTINGENCIES

In the Company’s lines of business, a number of suits have been filed alleging damages for accidents that have occurred during the use or operation of the Company’s products. The Company is insured for product liability, general liability, workers’ compensation, employer’s liability, property damage and other insurable risk as required by law or contract with retained liability to the Company or deductibles. The Company has recorded and maintains an estimated liability in the amount of management’s estimate of the Company’s aggregate exposure for such retained liabilities and deductibles. For such retained liabilities and deductibles, the Company determines its exposure based on probable loss estimations, which requires such losses to be both probable and the amount or range of possible loss to be estimable. Management does not believe that the final outcome of such matters will have a material adverse effect on the Company’s consolidated financial statements.

The Company has previously disclosed that the SEC has been conducting a private investigation. This investigation is presently focused on (1) the circumstances of the restatement of certain of the Company’s financial statements for the years 2000-2004 and (2) the accounting for certain transactions between the Company and United Rentals, Inc. that took place in 2000 and 2001, and one transaction between United Rentals, Inc. and one of the Company’s subsidiaries that took place in 2001, before that subsidiary was acquired by the Company.  The Company is cooperating with the SEC with respect to these matters and has furnished the SEC with the information it has requested. 

The independent members of the Company’s Board of Directors (the “Board”) have formed a Special Committee of the Board (the “Special Committee”) to review and advise the Board regarding these matters, and after receiving advice from the Special Committee and outside advisors, the Board has authorized an agreement in principle with the SEC’s Staff to present a proposed resolution of these matters to the SEC Commissioners, subject to final documentation and the language of any complaint. Under the terms of the proposed settlement, the Company would consent, without admitting or denying the allegations of the SEC’s complaint, to an injunction against committing or aiding and abetting any future violations of the anti-fraud, books and records, reporting and internal control provisions of the federal securities laws and related SEC rules. The Company would also agree to pay a civil penalty and has taken a reserve in the amount of $8. 

The proposed settlement with the SEC Staff remains subject to the final approval of the SEC Commissioners (and, thereafter, of the court in which an SEC complaint would be filed).   There is no assurance that the SEC Commissioners or such court will approve this proposed settlement. In the event the proposed settlement is not accepted by either the SEC or such court, the Company would either be required to defend any charges the SEC might bring, or try to reach a different resolution acceptable to the SEC and its Staff, as well as the court.

The proposed settlement, if approved, resolves all matters relating to the potential liability of the Company with respect to the SEC investigations described above. Current or former employees of the Company, including our Chief Executive Officer, Ronald M. DeFeo (who also served for some relevant periods of time as a member of United Rental’s Board and Audit Committee), are not addressed by this proposed settlement. The Company does not know whether the SEC will commence additional proceedings in the future against any individuals on any of the matters under review by the SEC Staff.

The Company is involved in various other legal proceedings, including workers’ compensation liability and intellectual property litigation, which have arisen in the normal course of its operations. The Company has recorded provisions for estimated losses in circumstances where a loss is probable and the amount or range of possible amounts of the loss is estimable.

The Company’s outstanding letters of credit totaled $123.3 at June 30, 2009. The letters of credit generally serve as collateral for certain liabilities included in the Condensed Consolidated Balance Sheet. Certain of the letters of credit serve as collateral guaranteeing the Company’s performance under contracts.

The Company has a letter of credit outstanding covering losses related to two former subsidiaries’ worker compensation obligations. The Company has recorded liabilities for these contingent obligations in circumstances where a loss is probable and the amount or range of possible amounts of the loss is estimable.

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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. The maximum liability of the Company generally is limited to the finance company’s net exposure to the customer at the time of default. In the event of customer default, the Company is generally able to recover and dispose of the equipment at a minimum loss, if any, to the Company.

As of June 30, 2009 and December 31, 2008, the Company’s maximum exposure to such credit guarantees was $253.8 and $238.3, respectively, including total guarantees issued by Terex Demag GmbH, part of the Cranes segment, of $121.6 and $156.1, respectively, and Genie Holdings, Inc. and its affiliates, part of the Aerial Work Platforms segment, of $48.1 and $46.1, respectively. The 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 the 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.

Given current financial and economic conditions, 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.

Residual Value and Buyback Guarantees

The Company issues residual value guarantees under sales-type leases. A residual value guarantee involves a guarantee that a piece of equipment will have a minimum fair market value at a future date. The maximum exposure for residual value guarantees issued by the Company totaled $30.8 and $35.1 as of June 30, 2009 and December 31, 2008, respectively. The Company is able to mitigate some of the risk associated with these guarantees because the maturity of the guarantees is staggered, limiting the amount of used equipment entering the marketplace at any one time.

The Company from time to time guarantees that it will buy equipment from its customers in the future at a stated price if certain conditions are met by the customer. Such guarantees are referred to as buyback guarantees. These conditions generally pertain to the functionality and state of repair of the machine. As of June 30, 2009 and December 31, 2008, the Company’s maximum exposure pursuant to buyback guarantees was $156.4 and $145.7, respectively, including total guarantees issued by Genie of $145.0 and $140.4, respectively. The Company is able to mitigate some of the risk of these guarantees by staggering the timing of the buybacks and through leveraging its access to the used equipment markets provided by the Company’s original equipment manufacturer status.

Given current economic conditions, there can be no assurance that our historical experience in used equipment markets will be indicative of future results. Our ability to recover losses experienced from our guarantees may be affected by economic conditions in the used equipment markets at the time of loss.

As of June 30, 2009 and December 31, 2008, the Company has recorded an aggregate liability within Other current liabilities and Retirement plans and other in the Consolidated Balance Sheet of approximately $23 and $19, respectively, for the estimated fair value of all guarantees provided.

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NOTE O - STOCKHOLDERS’ EQUITY

Total non-stockholder changes in equity (comprehensive income) include all changes in equity during a period except those resulting from investments by, and distributions to, stockholders. The specific components include: net income, deferred gains and losses resulting from foreign currency translation, pension liability adjustments and deferred gains and losses resulting from derivative hedging transactions. Total non-stockholder changes in equity were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008			2009		2008
Net (loss) income	$	(77.7)	$	237.1		$	(152.2)	$	401.3
Other comprehensive income (loss):
Pension liability adjustment		(1.5)		(0.1)			(0.4)		-
Translation adjustment		167.5		13.7			97.6		95.3
Derivative hedging adjustment		1.8		4.5			(3.6)		4.2
Comprehensive income (loss)		90.1		255.2			(58.6)		500.8
Comprehensive loss (income) attributable to noncontrolling interest		0.1		(1.4)			(0.5)		(2.9)
Comprehensive income (loss) attributable to Terex Corporation	$	90.2	$	253.8		$	(59.1)	$	497.9

During the six months ended June 30, 2009, the Company purchased the remaining 20% of a noncontrolling interest in two of its subsidiaries in the Aerial Work Platforms segment.  The result of the transaction was a decrease in Noncontrolling interest of $2.9 and an increase in Additional paid-in capital of $1.2 in the Condensed Consolidated Balance Sheet as of June 30, 2009.

During the six months ended June 30, 2009, the Company granted 1,570 thousand shares of restricted stock to its employees with a weighted average grant date fair value of $7.87 per share.  Approximately 65% of these restricted stock awards vest ratably over a three-year period and 35% cliff vest at the end of a three-year period.  139 thousand of these shares are based on performance targets, with 105 thousand of these performance grants containing a market condition. The Company used the Monte Carlo method to determine a grant date fair value of $5.74 per share for the awards with a market condition. The Monte Carlo method is a statistical simulation technique used to provide the grant date fair value of an award. The following table presents the weighted-average assumptions used in the valuation:

Dividend yield	0.00%
Expected volatility	71.93%
Risk-free interest rate	1.38%
Expected life (in years)	3

In December 2006, the Board of Directors of the Company authorized the repurchase of up to $200 of the Company’s outstanding common shares through June 30, 2008. In December 2007, the Board of Directors of the Company increased the share repurchase program by $500, bringing the total amount that may be repurchased under the program to $700, and extended the expiration date for the program through June 30, 2009. In July 2008, the Board of Directors of the Company increased the share repurchase program by an additional $500, bringing the total amount that may be repurchased under the program to $1,200. The program expired on June 30, 2009. During the six months ended June 30, 2009, the Company did not acquire any shares pursuant to the share repurchase program.  In total, the Company purchased approximately 9.7 million shares under this program for approximately $562 through June 30, 2009.

In June 2009, the Company completed a public offering of Common Stock resulting in the issuance of 12.65 million shares at a price of $13.00 per share. The Company received approximately $156 of net proceeds (net of $8.2 of expenses) from the sale of the shares. This transaction increased the recorded amounts of Common Stock by $0.1  and increased additional paid-in capital by approximately $156.

In June 2009, the Company sold and issued 4% Convertible Notes. See Note L – “Long-Term Obligations” for a description of these notes.

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NOTE P - SUBSEQUENT EVENTS

On July 23, 2009, the Company acquired the port equipment businesses of Fantuzzi Industries S.a.r.l and Noell Crane (collectively, “Fantuzzi”) for net consideration of approximately €155. Financial arrangements were made with existing financial creditors of Fantuzzi to provide the Company with long-term financing on favorable terms for substantially all of the acquisition price.

In connection with the acquisition of Fantuzzi, on July 22, 2009, the Company entered into an Incremental Term Loan Assumption Agreement (the “JPM Incremental Agreement”) with J.P. Morgan Chase International Financing Limited (“JPM”) and on July 23, 2009, the Company entered into an Incremental Term Loan Assumption Agreement (the “Italian Banks Incremental Agreement”) with certain of the Fantuzzi lenders, both under the Company’s existing credit facility. Pursuant to the JPM Incremental Agreement, the Company borrowed from JPM approximately $66, which will bear interest at a rate of LIBOR plus 3.75% and mature on July 14, 2013. The Italian Banks Incremental Agreement will be funded upon certain bonds issued by Fantuzzi Finance S.A., having been discharged in full, which is expected to occur in the second half of 2009. Pursuant to the Italian Banks Incremental Agreement, the Company will borrow from certain of the Fantuzzi lenders the U.S. dollar equivalent of approximately €48, which will bear interest at a rate of LIBOR plus 3.75% and mature on July 14, 2013. The net proceeds of both incremental term loans are being used primarily to refinance a portion of the existing indebtedness of Fantuzzi. These loans utilize a portion of the $300 available to the Company for incremental loan commitments under the 2006 Credit Agreement.

The Company assessed events occurring subsequent to June 30, 2009 through July 30, 2009 for potential recognition and disclosure in the condensed consolidated financial statements. The condensed consolidated financial statements were filed on July 30, 2009.

NOTE Q - CONSOLIDATING FINANCIAL STATEMENTS

On November 25, 2003, the Company sold and issued $300 aggregate principal amount of the 7-3/8% Notes. As of June 30, 2009, the 7-3/8% Notes were jointly and severally guaranteed by the following wholly-owned subsidiaries of the Company (the “Wholly-owned Guarantors”): Amida Industries, Inc., A.S.V., Inc., CMI Terex Corporation, Duvalpilot Equipment Outfitters, LLC, Genie Financial Services, Inc., Genie Holdings, Inc., Genie Industries, Inc., Genie International, Inc., Genie Manufacturing, Inc., GFS National, Inc., Halco America Inc., Hydra Platforms Mfg. Inc., Koehring Cranes, Inc., Loegering Mfg. Inc., Powerscreen Holdings USA Inc., Powerscreen International LLC, Powerscreen North America Inc., Powerscreen USA, LLC, Powerscreen USC Inc., PPM Cranes, Inc., Schaeff Incorporated, Schaeff of North America, Inc., Spinnaker Insurance Company, Superior Highwall Holding, Inc., Superior Highwall Miners, Inc., Terex Advance Mixer, Inc., Terex Aerials, Inc., Terex Cranes, Inc., Terex Cranes Wilmington, Inc., Terex Financial Services, Inc., Terex Mexico, LLC, Terex Mining Equipment, Inc., Terex USA, LLC, Terex Utilities, Inc., Terex-RO Corporation and Terex-Telelect, Inc. All of the guarantees are full and unconditional. No subsidiaries of the Company, except the Wholly-owned Guarantors, have provided a guarantee of the 7-3/8% Notes.

The following summarized condensed consolidating financial information for the Company segregates the financial information of Terex Corporation, the Wholly-owned Guarantors and the non-guarantor subsidiaries. The results and financial position of businesses acquired are included from the dates of their respective acquisitions.

Terex Corporation consists of parent company operations and non-guarantor subsidiaries directly owned by the parent company. Subsidiaries of the parent company are reported on the equity basis. Wholly-owned Guarantors combine the operations of the Wholly-owned Guarantor subsidiaries. Subsidiaries of Wholly-owned Guarantors that are not themselves guarantors are reported on the equity basis. Non-guarantor subsidiaries combine the operations of subsidiaries which have not provided a guarantee of the obligations of Terex Corporation under the 7-3/8% Notes. Debt and goodwill allocated to subsidiaries are presented on a “push-down” accounting basis. On June 25, 2008, Terex and certain of its domestic subsidiaries entered into a First Supplemental Indenture for the 7-3/8% Notes, joining other domestic subsidiaries of Terex as Wholly-owned Guarantors pursuant to the terms of the Indenture for the 7-3/8% Notes. These additional subsidiaries are included in the current period financial statements as Wholly-owned Guarantors. Prior period financial statements have been recast to include the additional subsidiaries as Wholly-owned Guarantors for all periods presented.

27

TEREX CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF INCOME

THREE MONTHS ENDED JUNE 30, 2009

(in millions)

	Terex Corporation		Wholly-owned Guarantors		Non- guarantor Subsidiaries		Intercompany Eliminations		Consolidated
Net sales	$	135.0	$	329.5	$	993.6	$	(137.9)	$	1,320.2
Cost of goods sold		(116.6)		(314.7)		(898.9)		137.9		(1,192.3)
Gross profit		18.4		14.8		94.7		-		127.9
Selling, general and administrative expenses		(28.4)		(58.6)		(126.6)		-		(213.6)
Income (loss) from operations		(10.0)		(43.8)		(31.9)		-		(85.7)
Interest income		0.2		0.1		0.6		-		0.9
Interest expense		(17.3)		(2.4)		(5.6)		-		(25.3)
Loss on early extinguishment of debt		(3.3)		-		-		-		(3.3)
Loss from subsidiaries		(59.2)		-		-		59.2		-
Other income (expense) - net		8.1		(0.1)		(3.1)		-		4.9
Loss before income taxes		(81.5)		(46.2)		(40.0)		59.2		(108.5)
Benefit from income taxes		3.9		14.1		12.8		-		30.8
Net loss		(77.6)		(32.1)		(27.2)		59.2		(77.7)
Less: Net loss attributable to noncontrolling interest		-		-		0.1		-		0.1
Net loss attributable to Terex Corporation	$	(77.6)	$	(32.1)	$	(27.1)	$	59.2	$	(77.6)

TEREX CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF INCOME

THREE MONTHS ENDED JUNE 30, 2008

(in millions)

	Terex Corporation		Wholly-owned Guarantors		Non- guarantor Subsidiaries		Intercompany Eliminations		Consolidated
Net sales	$	199.6	$	1,034.8	$	2,097.5	$	(396.0)	$	2,935.9
Cost of goods sold		(179.0)		(803.1)		(1,698.6)		396.0		(2,284.7)
Gross profit		20.6		231.7		398.9		-		651.2
Selling, general and administrative expenses		(34.4)		(76.0)		(169.9)		-		(280.3)
Income (loss) from operations		(13.8)		155.7		229.0		-		370.9
Interest income		0.3		0.1		4.6		-		5.0
Interest expense		(15.7)		(2.4)		(6.2)		-		(24.3)
Income from subsidiaries		258.9		-		-		(258.9)		-
Other income (expense) - net		(7.2)		21.6		(12.1)		-		2.3
Income before income taxes		222.5		175.0		215.3		(258.9)		353.9
Provision for income taxes		13.8		(63.2)		(67.4)		-		(116.8)
Net income		236.3		111.8		147.9		(258.9)		237.1
Less: Net (income) loss attributable to noncontrolling interest		-		0.2		(1.0)		-		(0.8)
Net income attributable to Terex Corporation	$	236.3	$	112.0	$	146.9	$	(258.9)	$	236.3

28

TEREX CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF INCOME

SIX MONTHS ENDED JUNE 30, 2009

(in millions)

	Terex Corporation		Wholly-owned Guarantors		Non- guarantor Subsidiaries		Intercompany Eliminations		Consolidated
Net sales	$	273.4	$	724.3	$	1,951.2	$	(326.1)	$	2,622.8
Cost of goods sold		(239.7)		(691.9)		(1,744.9)		326.1		(2,350.4)
Gross profit		33.7		32.4		206.3		-		272.4
Selling, general and administrative expenses		(46.3)		(120.5)		(263.8)		-		(430.6)
Income (loss) from operations		(12.6)		(88.1)		(57.5)		-		(158.2)
Interest income		0.3		0.2		1.6		-		2.1
Interest expense		(31.6)		(4.9)		(12.3)		-		(48.8)
Loss on early extinguishment of debt		(3.3)		-		-		-		(3.3)
Loss from subsidiaries		(129.8)		-		-		129.8		-
Other income (expense) - net		13.3		(0.2)		(11.9)		-		1.2
Loss before income taxes		(163.7)		(93.0)		(80.1)		129.8		(207.0)
Benefit from income taxes		11.2		25.8		17.8		-		54.8
Net loss		(152.5)		(67.2)		(62.3)		129.8		(152.2)
Less: Net income attributable to noncontrolling interest		-		-		(0.3)		-		(0.3)
Net loss attributable to Terex Corporation	$	(152.5)	$	(67.2)	$	(62.6)	$	129.8	$	(152.5)

TEREX CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF INCOME

SIX MONTHS ENDED JUNE 30, 2008

(in millions)

	Terex Corporation		Wholly-owned Guarantors		Non- guarantor Subsidiaries		Intercompany Eliminations		Consolidated
Net sales	$	368.2	$	1,865.3	$	3,755.6	$	(690.5)	$	5,298.6
Cost of goods sold		(329.6)		(1,436.6)		(3,057.7)		690.5		(4,133.4)
Gross profit		38.6		428.7		697.9		-		1,165.2
Selling, general and administrative expenses		(56.6)		(158.2)		(323.2)		-		(538.0)
Income (loss) from operations		(18.0)		270.5		374.7		-		627.2
Interest income		3.9		0.3		9.9		-		14.1
Interest expense		(32.3)		(5.1)		(12.4)		-		(49.8)
Income from subsidiaries		427.9		-		-		(427.9)		-
Other income (expense) - net		4.3		22.0		(16.5)		-		9.8
Income before income taxes		385.8		287.7		355.7		(427.9)		601.3
Benefit from (provision for) income taxes		13.8		(101.5)		(112.3)		-		(200.0)
Net income		399.6		186.2		243.4		(427.9)		401.3
Less: Net loss (income) attributable to noncontrolling interest		-		0.1		(1.8)		-		(1.7)
Net income attributable to Terex Corporation	$	399.6	$	186.3	$	241.6	$	(427.9)	$	399.6

29

TEREX CORPORATION

CONDENSED CONSOLIDATING BALANCE SHEET

JUNE 30, 2009

(in millions)

	Terex Corporation		Wholly- Owned Guarantors		Non- Guarantor Subsidiaries		Intercompany Eliminations		Consolidated
Assets
Current assets
Cash and cash equivalents	$	503.6	$	1.5	$	433.4	$	-	$	938.5
Trade receivables - net		44.7		126.8		468.3		-		639.8
Intercompany receivables		24.4		56.2		158.7		(239.3)		-
Inventories		245.3		411.7		1,345.1		-		2,002.1
Other current assets		156.2		15.2		190.2		-		361.6
Total current assets		974.2		611.4		2,595.7		(239.3)		3,942.0
Property, plant & equipment - net		61.9		145.9		287.7		-		495.5
Investment in and advances to (from) subsidiaries		2,375.2		(120.7)		(426.5)		(1,828.0)		-
Goodwill		4.5		214.6		257.2		-		476.3
Other assets		55.6		194.0		213.8		-		463.4
Total assets	$	3,471.4	$	1,045.2	$	2,927.9	$	(2,067.3)	$	5,377.2
Liabilities and stockholders’ equity
Current liabilities
Notes payable and current portion of long-term debt	$	0.3	$	8.3	$	42.8	$	-	$	51.4
Trade accounts payable		47.3		84.4		387.2		-		518.9
Intercompany payables		47.2		(15.6)		207.7		(239.3)		-
Accruals and other current liabilities		110.6		106.6		524.5		-		741.7
Total current liabilities		205.4		183.7		1,162.2		(239.3)		1,312.0
Long-term debt, less current portion		1,293.9		120.0		271.3		-		1,685.2
Retirement plans and other		111.9		72.5		316.9		-		501.3
Stockholders’ equity		1,860.2		669.0		1,177.5		(1,828.0)		1,878.7
Total liabilities and stockholders’ equity	$	3,471.4	$	1,045.2	$	2,927.9	$	(2,067.3)	$	5,377.2

30

TEREX CORPORATION

CONDENSED CONSOLIDATING BALANCE SHEET

DECEMBER 31, 2008

(in millions)

	Terex Corporation		Wholly- Owned Guarantors		Non- Guarantor Subsidiaries		Intercompany Eliminations		Consolidated
Assets
Current assets
Cash and cash equivalents	$	1.5	$	5.8	$	477.1	$	-	$	484.4
Trade receivables - net		53.5		274.4		639.6		-		967.5
Intercompany receivables		15.6		89.1		194.9		(299.6)		-
Inventories		265.7		495.2		1,473.9		-		2,234.8
Other current assets		150.1		19.6		184.5		-		354.2
Total current assets		486.4		884.1		2,970.0		(299.6)		4,040.9
Property, plant & equipment - net		59.9		147.7		273.9		-		481.5
Investment in and advances to (from) subsidiaries		2,412.6		(131.2)		(226.3)		(2,055.1)		-
Goodwill		4.5		214.6		237.9		-		457.0
Other assets		98.3		204.4		163.3		-		466.0
Total assets	$	3,061.7	$	1,319.6	$	3,418.8	$	(2,354.7)	$	5,445.4
Liabilities and stockholders’ equity
Current liabilities
Notes payable and current portion of long-term debt	$	2.3	$	9.5	$	27.6	$	-	$	39.4
Trade accounts payable		91.1		207.6		685.2		-		983.9
Intercompany payables		45.5		14.1		240.0		(299.6)		-
Accruals and other current liabilities		150.4		126.0		524.9		-		801.3
Total current liabilities		289.3		357.2		1,477.7		(299.6)		1,824.6
Long-term debt, less current portion		938.3		150.6		307.5		-		1,396.4
Retirement plans and other		112.4		72.7		295.4		-		480.5
Stockholders’ equity		1,721.7		739.1		1,338.2		(2,055.1)		1,743.9
Total liabilities and stockholders’ equity	$	3,061.7	$	1,319.6	$	3,418.8	$	(2,354.7)	$	5,445.4

31

TEREX CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2009

(in millions)

	Terex Corporation		Wholly- owned Guarantors		Non- guarantor Subsidiaries		Intercompany Eliminations		Consolidated
Net cash (used in) provided by operating activities	$	(3.9)	$	5.4	$	(37.8)	$	-	$	(36.3)
Cash flows from investing activities
Capital expenditures		(5.8)		(6.8)		(22.3)		-		(34.9)
Proceeds from sale of assets		-		0.1		1.1		-		1.2
Net cash used in investing activities		(5.8)		(6.7)		(21.2)		-		(33.7)
Cash flows from financing activities
Proceeds from issuance of long-term debt		465.4		-		-		-		465.4
Principal repayments of long-term debt		(58.4)		-		-		-		(58.4)
Proceeds from issuance of common stock		156.3		-		-		-		156.3
Proceeds from stock options exercised		0.1		-		-		-		0.1
Net borrowings (repayments) under revolving line of credit agreements		(35.0)		(1.2)		5.5		-		(30.7)
Payment of debt issuance costs		(16.6)		-		-		-		(16.6)
Acquisition of noncontrolling interest		-		(1.7)		-		-		(1.7)
Other – net		-		(0.1)		(0.7)		-		(0.8)
Net cash provided by (used in) financing activities		511.8		(3.0)		4.8		-		513.6
Effect of exchange rate changes on cash and cash equivalents		-		-		10.5		-		10.5
Net increase (decrease) in cash and cash equivalents		502.1		(4.3)		(43.7)		-		454.1
Cash and cash equivalents, beginning of period		1.5		5.8		477.1		-		484.4
Cash and cash equivalents, end of period	$	503.6	$	1.5	$	433.4	$	-	$	938.5

TEREX CORPORATION

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2008

(in millions)

	Terex Corporation		Wholly- owned Guarantors		Non- guarantor Subsidiaries		Intercompany Eliminations		Consolidated
Net cash (used in) provided by operating activities	$	59.6	$	42.8	$	(158.5)	$	-	$	(56.1)
Cash flows from investing activities
Acquisition of businesses, net of cash acquired		(456.6)		(21.5)		-		-		(478.1)
Capital expenditures		(12.3)		(16.0)		(35.5)		-		(63.8)
Proceeds from sale of assets		-		0.7		2.1		-		2.8
Net cash used in investing activities		(468.9)		(36.8)		(33.4)		-		(539.1)
Cash flows from financing activities
Excess tax benefit from stock-based compensation		6.5		-		-		-		6.5
Proceeds from stock options exercised		2.0		-		-		-		2.0
Net borrowings (repayments) under revolving line of credit agreements		(1.0)		(2.3)		4.3		-		1.0
Share repurchases		(135.6)		-		-		-		(135.6)
Other – net		-		(0.2)		(1.0)		-		(1.2)
Net cash provided by (used in) financing activities		(128.1)		(2.5)		3.3		-		(127.3)
Effect of exchange rate changes on cash and cash equivalents		-		-		40.1		-		40.1
Net (decrease) increase in cash and cash equivalents		(537.4)		3.5		(148.5)		-		(682.4)
Cash and cash equivalents, beginning of period		573.2		12.3		686.9		-		1,272.4
Cash and cash equivalents, end of period	$	35.8	$	15.8	$	538.4	$	-	$	590.0

32

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
	CONDITION AND RESULTS OF OPERATIONS

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) and telescopic container stackers. These products are used primarily for construction, repair and maintenance of infrastructure, building and manufacturing facilities.

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 the turmoil from the ongoing global recession continues to deeply impact our business. Each of our segments experienced significantly weaker results in the second quarter of 2009 than in the comparable period in 2008. Profits in our Cranes and Materials Processing & Mining (“MPM”) segments during the second quarter of 2009 were more than offset by losses in our Aerial Work Platforms (“AWP”) and Construction segments. The turmoil from the global credit crisis and economic slowdown has quickly and deeply impacted sales for both the Company and the industry as a whole, with net sales in certain of our businesses down almost 85% from year ago levels. We continue to realign our businesses for the current demand environment by reducing headcount, lowering production levels and production capacity, and consolidating facilities. We remain focused on the challenges ahead and believe we will be a leaner, more competitive company in the future.

33

The global economy remains under stress and our expectations for the remainder for 2009 have been lowered as we expect the second half of 2009 to continue to be challenging. We are planning for continued softness in demand in most of our end markets as a result of weak global economies, combined with continued constrained credit availability worldwide. We now expect our overall 2009 net sales to decline approximately 50% as compared to 2008, approximately 7% of which is the estimated translation effect of foreign currency exchange rate changes.

While we remain confident that our strategy of product and geographic diversity is the right one to deliver positive shareholder returns for the long term, the current environment presents unique challenges. The depth and duration of the global economic decline is not known, although some stability is beginning to develop in a number of our businesses, giving us an opportunity to lay the foundation for better operating performance in 2010. We expect little market help throughout the remainder of 2009 and 2010. However, we will continue to focus on the items we can control such as expense management, cash generation and returning our factories to steady, planned production levels.

The Company continually evaluates its cost structure to be appropriately positioned to respond to changing market conditions.  In response to the present economic environment, we have taken and will continue to take aggressive actions to reduce costs and preserve cash in all of our businesses. These actions have already resulted in a $246 million quarterly manufacturing and selling, general and administrative (less restructuring) run-rate spending reduction, as compared to spending levels in the second quarter of 2008, with a target to achieve a per quarter spending reduction of $300 million by year-end 2009. Our manufacturing spending itself was down 49% from the second quarter of 2008.

Given the ongoing recession, in 2008 and continuing in the first half of 2009, the Company initiated certain restructuring programs across all segments to better utilize its workforce to match the decreased demand for its products.  The impact of restructuring activities is expected to result in improved financial results for the second half of 2009, although we do not expect to be profitable for the second half 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 the Company. In the remainder of 2009, we will continue to aggressively manage our business for cash. We are operating with a build-to-order approach and we are making solid progress toward our goal of further reducing inventory levels. All of our businesses are working closely with our suppliers to minimize raw material deliveries and with our customers and dealers to confirm existing orders in an effort to minimize the level of inventory in the distribution channel. We continue to operate at reduced production levels, in many instances at levels well below current demand, with the primary objective to reduce inventory. We believe that this strategy, along with significant reductions in production scheduling, should generate significant cash flow from operations during the remainder of 2009. During the second quarter of 2009, inventory reductions generated cash of approximately $278 million and we continue to expect to generate more than $500 million of cash from inventory reductions by the end of 2009.

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 second half of 2009 as raw material receipts increase as we work through our existing raw material inventory.

Due to the ongoing economic uncertainty, customers are ordering equipment when needed, rather than planning purchases in advance as they did in prior periods, resulting in minimal levels of backlog. As a result, year-over-year backlog for all of our segments is down significantly, with AWP, Construction and MPM backlogs down over 65%. Demand for our AWP products has exhibited signs of stability during the last six months, although at low levels. Materials Processing backlog was basically unchanged from March 31, 2009 levels as some stability has been reached in end markets, although at a low level. Mining truck backlog remained relatively unchanged from March 31, 2009 levels due to orders received in June. Mining shovel and drill backlog was down sequentially as demand for the smaller end of the product line slowed. Demand for high capacity cranes, including crawler and all-terrain cranes, is softening, but there is continued demand as these cranes are utilized in infrastructure and energy related projects. Demand for tower cranes and smaller mid-size capacity cranes remains weak.

Our Construction businesses are experiencing a number of significant challenges in this very difficult environment and we are making changes to improve these businesses to meet these challenges. While we currently are implementing the necessary changes to overcome these obstacles, we continue to evaluate strategic options for these businesses and the Construction segment as a whole.

34

During the second quarter of 2009, we raised approximately $608 million of total net proceeds from three capital markets issuances: 1) $300 million principal amount of 10.875% Senior Notes due 2016 at an issue price of 97.633%; 2) 12.65 million shares of common stock, priced at $13.00 per share; and 3) $172.5 million principal amount of 4.00% Convertible Senior Subordinated Notes due 2015. Our capital markets activity this quarter, plus cash generated from operations, resulted in an improved liquidity position with cash and borrowing availability of approximately $939 million and $486 million, respectively, at June 30, 2009.

Upon completion of the financing, our credit facility was amended to eliminate financial covenants based on our consolidated leverage ratio and consolidated fixed charge coverage ratio, and instead added requirements that we maintain liquidity of not less than $250 million on the last day of each fiscal quarter through June 30, 2011, and thereafter maintain a specified senior secured debt leverage ratio.

As a result of these actions, we have strengthened our balance sheet and our liquidity position while removing the uncertainty associated with the earnings-based financial covenants under our credit agreement. With the actions we are taking to reduce costs and increase cash generated from operations, along with our strengthened balance sheet, we expect to have sufficient liquidity to execute our key business plans.

After tax Return on Invested Capital (“ROIC”) continues to be the unifying metric 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 June 30, 2009 was 2.2%, down from 27.1% at June 30, 2008, mainly due to the operating losses and cash flow from operations in the recent periods.

35

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.

		Jun ‘09		Mar ‘09		Dec ‘08		Sep ‘08		Jun ‘08
(Benefit from) provision for income taxes as adjusted	$	(30.8)	$	(24.0)	$	(1.0)	$	44.9
Divided by: Income (loss) before income taxes as adjusted		(108.5)		(98.5)		37.0		139.4
Effective tax rate as adjusted		28.4%		24.4%		(2.7)%		32.2%
Income (loss) from operations as adjusted	$	(85.7)	$	(72.5)	$	68.1	$	167.2
Multiplied by: 1 minus Effective tax rate as adjusted		71.6%		75.6%		102.7%		67.8%
Adjusted net operating profit (loss) after tax	$	(61.4)	$	(54.8)	$	69.9	$	113.4
Debt (as defined above)	$	1,736.6	$	1,482.8	$	1,435.8	$	1,568.2	$	1,355.9
Less: Cash and cash equivalents		(938.5)		(344.3)		(484.4)		(487.9)		(590.0)
Debt less Cash and cash equivalents	$	798.1	$	1,138.5	$	951.4	$	1,080.3	$	765.9
Total Terex Corporation stockholders’ equity as adjusted	$	1,860.2	$	1,569.8	$	2,181.2	$	2,302.9	$	2,664.6
Debt less Cash and cash equivalents plus Total Terex Corporation stockholders’ equity as adjusted	$	2,658.3	$	2,708.3	$	3,132.6	$	3,383.2	$	3,430.5

June 30, 2009 ROIC		2.2%
Net operating profit after tax as adjusted (last 4 quarters)	$	67.1
Average Debt less Cash and cash equivalents plus Total stockholders’ equity (5 quarters)	$	3,062.6

Reconciliation of the December 2008 column (above) of ROIC adjusted for goodwill impairment as of and for the three months ended December 31, 2008.
	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)%

36

		Jun ‘08		Mar ‘08		Dec ‘07		Sep ‘07		Jun ‘07
Provision for income taxes	$	116.8	$	83.2	$	62.0	$	78.5
Divided by: Income before income taxes		353.9		247.5		235.5		231.6
Effective tax rate		33.0%		33.6%		26.3%		33.9%
Income from operations	$	370.9	$	256.3	$	239.9	$	236.3
Multiplied by: 1 minus Effective tax rate		67.0%		66.4%		73.7%		66.1%
Net operating profit after tax	$	248.5	$	170.2	$	176.8	$	156.2
Debt (as defined above)	$	1,355.9	$	1,373.4	$	1,352.0	$	705.6	$	651.7
Less: Cash and cash equivalents		(590.0)		(604.2)		(1,272.4)		(516.6)		(453.4)
Debt less Cash and cash equivalents	$	765.9	$	769.2	$	79.6	$	189.0	$	198.3
Total Terex Corporation stockholders’ equity	$	2,664.6	$	2,538.1	$	2,343.2	$	2,254.4	$	2,073.4
Debt less Cash and cash equivalents plus Total Terex Corporation stockholders’ equity	$	3,430.5	$	3,307.3	$	2,422.8	$	2,443.4	$	2,271.7

June 30, 2008 ROIC		27.1%
Net operating profit after tax (last 4 quarters)	$	751.7
Average Debt less Cash and cash equivalents plus Total stockholders’ equity (5 quarters)	$	2,775.1

RESULTS OF OPERATIONS

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

Terex Consolidated

		Three Months Ended June 30,
		2009			2008
			% of Sales			% of Sales	% Change In Reported Amounts
		($ amounts in millions)
Net sales	$	1,320.2	-	$	2,935.9	-	(55.0)%
Gross profit	$	127.9	9.7%	$	651.2	22.2%	(80.4)%
SG&A	$	213.6	16.2%	$	280.3	9.5%	(23.8)%
(Loss) income from operations	$	(85.7)	(6.5)%	$	370.9	12.6%	(123.1)%

Net sales for the three months ended June 30, 2009 decreased $1,615.7 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes contributed approximately $175 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 $1,441 million from the prior year period, primarily due to lower net sales volumes as the global economy continued to deteriorate.

Gross profit for the three months ended June 30, 2009 decreased $523.3 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes decreased gross profit by approximately $23 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 $424 million. Charges, primarily related to production level and headcount reductions, decreased gross profit by approximately $34 million. Additionally, due to lower production levels, net manufacturing unabsorbed overhead increased, resulting in a reduction to gross profit of approximately $42 million.

Selling, general and administrative (“SG&A”) costs decreased for the three months ended June 30, 2009 by $66.7 million when compared to the same period in 2008. Approximately $23 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 $53 million due to lower net sales volume and curtailment of spending. These decreases were partially offset by approximately $10 million of charges related to headcount reductions.

Income (loss) from operations decreased by $456.6 million for the three months ended June 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.

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Terex Aerial Work Platforms

		Three Months Ended June 30,
		2009			2008
			% of Sales			% of Sales	% Change In Reported Amounts
		($ amounts in millions)
Net sales	$	209.9	-	$	755.4	-	(72.2)%
Gross profit	$	10.2	4.9%	$	196.5	26.0%	(94.8)%
SG&A	$	43.0	20.5%	$	65.1	8.6%	(33.9)%
(Loss) income from operations	$	(32.8)	(15.6)%	$	131.4	17.4%	(125.0)%

Net sales for the Aerial Work Platforms segment for the three months ended June 30, 2009 decreased $545.5 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes accounted for approximately $13 million of the net sales decrease. Lower net sales volume of approximately $528 million across all products and regions 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.

Gross profit for the three months ended June 30, 2009 decreased $186.3 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes decreased gross profit by approximately $7 million from the prior year period. The impact of lower net sales volume decreased gross profit by approximately $145 million. Charges, primarily associated with reductions in production levels and restructuring, reduced gross profit by approximately $13 million. Additionally, due to lower production levels, net manufacturing unabsorbed overhead increased, resulting in a reduction to gross profit of approximately $22 million.

SG&A costs for the three months ended June 30, 2009 decreased $22.1 million when compared to the same period in 2008. Approximately $2 million of the decrease was due to the favorable translation effect of foreign currency exchange rate changes. Selling, marketing and administrative costs were lower by approximately $18 million due to decreased volume and curtailment of spending. Additionally, the allocation of corporate costs decreased by approximately $5 million over the prior year period. These decreases were partially offset by approximately $3 million of increased bad debt charges.

Income (loss) from operations for the three months ended June 30, 2009 decreased $164.2 million 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, partially offset by lower SG&A costs.

Terex Construction

		Three Months Ended June 30,
		2009			2008
			% of Sales			% of Sales	% Change In Reported Amounts
		($ amounts in millions)
Net sales	$	219.9	-	$	691.0	-	(68.2)%
Gross profit	$	(24.4)	(11.1)%	$	96.6	14.0%	(125.3)%
SG&A	$	55.3	25.1%	$	73.6	10.7%	(24.9)%
(Loss) income from operations	$	(79.7)	(36.2)%	$	23.0	3.3%	(446.5)%

Net sales in the Construction segment decreased by $471.1 million for the three months ended June 30, 2009 when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes accounted for approximately $31 million of the net sales decrease. Lower machine sales volumes of approximately $374 million were largely responsible for the decrease in net sales. This was primarily a result of weak customer demand, across all businesses and all geographies, driven by continued constrained credit availability and deferral of capital investments. The environment remained challenging as customers were reluctant to plan purchases in advance and the tightness of commercially available credit continued to impact the ability to finance projects and equipment. Additionally, lower parts, used equipment and other sales volumes decreased net sales by approximately $66 million.

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Gross profit decreased $121.0 million for the three months ended June 30, 2009 when compared to the same period in 2008. The impact of lower net sales volume decreased gross profit by approximately $99 million. Additionally, due to lower production levels, net manufacturing unabsorbed overhead increased, resulting in a reduction to gross profit of approximately $9 million. Charges, primarily related to headcount reductions, decreased gross profit by approximately $13 million.

SG&A costs for the three months ended June 30, 2009 decreased $18.3 million when compared to the same period in 2008. The favorable translation effect of foreign currency exchange rate changes decreased SG&A costs by approximately $8 million over the prior year period. Discretionary spending and cost savings associated with prior headcount reductions lowered SG&A costs by approximately $14 million. Additionally, the allocation of corporate costs decreased by approximately $2 million over the prior year period. These decreases were partially offset by increased costs of approximately $7 million due to headcount reductions.

Income (loss) from operations for the three months ended June 30, 2009 decreased $102.7 million when compared to the same period in 2008, resulting primarily from lower net sales volume and higher costs due to lower production levels and headcount reductions, partially offset by lower SG&A costs.

Terex Cranes

		Three Months Ended June 30,
		2009				2008
				% of Sales			% of Sales	% Change In Reported Amounts
		($ amounts in millions)
Net sales	$	491.0	-		$	833.8	-	(41.1)%
Gross profit	$	70.0	14.3%		$	187.5	22.5%	(62.7)%
SG&A	$	50.0	10.2%		$	61.2	7.3%	(18.3)%
Income from operations	$	20.0	4.1%		$	126.3	15.1%	(84.2)%

Net sales for the Cranes segment for the three months ended June 30, 2009 decreased by $342.8 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes on sales decreased net sales by approximately $72 million. Lower net sales volume, particularly for tower cranes, rough-terrain cranes and boom trucks, decreased net sales by approximately $297 million, as commercial construction projects were postponed or halted and oil related energy demand for rough-terrain cranes slowed. These decreases were partially offset by improved product sales mix of approximately $30 million.

Gross profit for the three months ended June 30, 2009 decreased by $117.5 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. Lower net sales volume decreased gross profit by approximately $98 million. Additionally, due to lower production levels, net manufacturing unabsorbed overhead increased, resulting in a reduction to gross profit of approximately $5 million.

SG&A costs for the three months ended June 30, 2009 decreased $11.2 million over the same period in 2008. The favorable translation effect of foreign currency exchange rate changes decreased SG&A costs by approximately $6 million over the prior year period. Selling costs decreased approximately $5 million due to lower sales volume.

Income from operations for the three months ended June 30, 2009 decreased $106.3 million versus the same period in 2008, resulting primarily from lower net sales volume, partially offset by lower SG&A costs.

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Terex Materials Processing & Mining

		Three Months Ended June 30,
		2009			2008
			% of Sales			% of Sales	% Change In Reported Amounts
		($ amounts in millions)
Net sales	$	416.6	-	$	681.5	-	(38.9)%
Gross profit	$	71.4	17.1%	$	170.0	24.9%	(58.0)%
SG&A	$	48.6	11.7%	$	59.4	8.7%	(18.2)%
Income from operations	$	22.8	5.5%	$	110.6	16.2%	(79.4)%

Net sales in the Materials Processing & Mining segment decreased by $264.9 million for the three months ended June 30, 2009 when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes decreased net sales by approximately $59 million. Lower net sales volume of approximately $205 million, particularly in the Materials Processing businesses, was the primary driver of the decrease in net sales. Additionally, parts sales were lower by approximately $23 million due to lower customer utilization and particularly high sales in the prior year period, although the Mining business began to see a reversal of the spare parts decline experienced over the past half year, with spare parts activity noticeably improving in June. These decreases were partially offset by increased mining equipment sales of approximately $22 million due to a favorable product sales mix oriented towards larger trucks, as well as price realization.

Gross profit decreased by $98.6 million in the three months ended June 30, 2009 when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes decreased gross profit by approximately $7 million from the prior year period. Lower net sales volume, partially offset by price realization, decreased gross profit by approximately $82 million. Additionally, due to lower production levels, net manufacturing unabsorbed overhead increased, resulting in a reduction to gross profit of approximately $6 million.

SG&A costs decreased by $10.8 million in the three months ended June 30, 2009 when compared to the same period in 2008. Approximately $7 million of the decrease was due to the favorable translation effect of foreign currency exchange rate changes. Additionally, lower general and administrative costs, primarily due to reduced legal expenses, decreased SG&A cost by approximately $6 million. These reductions were partially offset by increased costs of approximately $2 million due to headcount reductions.

Income from operations for the three months ended June 30, 2009 decreased $87.8 million from the comparable period in 2008, primarily due to lower net sales volume.

Terex Corporate / Eliminations

		Three Months Ended June 30,
		2009			2008
			% of Sales			% of Sales	% Change In Reported Amounts
		($ amounts in millions)
Net sales	$	(17.2)	-	$	(25.8)	-	33.3%
Loss from operations	$	(16.0)	93.0%	$	(20.4)	79.1%	21.6%

The net sales amounts include the elimination of intercompany sales activity among segments. The decrease reflects the favorable impact of cost reduction activities, including salary and benefit cuts and reduced professional fees, partially offset by the reduction in the allocation of corporate costs to the business segments of approximately $11 million and the $8.0 million charge taken during the three months ended June 30, 2009 in anticipation of the previously mentioned proposed SEC settlement (which remains subject to SEC and court approval).

Interest Expense, Net of Interest Income

During the three months ended June 30, 2009, our interest expense net of interest income was $24.4 million, or $5.1 million higher than the same period in the prior year. This increase was primarily related to approximately $4 million of lower interest income in the current year period due to lower interest rates.

40

Loss on Early Extinguishment of Debt

We recorded a pre-tax charge on an early extinguishment of debt of $3.3 million in the three months ended June 30, 2009.

Other Income (Expense) – Net

Other income (expense) – net for the three months ended June 30, 2009 was income of $4.9 million, an increase of $2.6 million when compared to the same period in the prior year. This was primarily due to higher foreign exchange gains in the current year period compared with the prior year period.

Income Taxes

During the three months ended June 30, 2009, we recognized an income tax benefit of $30.8 million on a loss of $108.5 million, an effective tax rate of 28.4%, as compared to an income tax expense of $116.8 million on income of $353.9 million, an effective tax rate of 33.0%, for the three months ended June 30, 2008. The lower tax rate for the three months ended June 30, 2009 was primarily due to the relative impact of accruals and releases for uncertain tax positions, the non-deductible tax treatment of the charges related to the proposed SEC settlement (which remains subject to SEC and court approval) and changes in the jurisdictional mix of income. As earnings decrease in profitable periods, the items that affect income tax expense have a more significant impact on the effective tax rate.  When the results are losses instead of profits, the effect of items on the tax rate have an opposite impact.  For the remainder of 2009, the magnitude of earnings relative to the items that affect income tax expense may cause volatility in the effective tax rate.

Six Months Ended June 30, 2009 Compared with Six Months Ended June 30, 2008

Terex Consolidated

		Six Months Ended June 30,
		2009			2008
			% of Sales			% of Sales	% Change In Reported Amounts
		($ amounts in millions)
Net sales	$	2,622.8	-	$	5,298.6	-	(50.5)%
Gross profit	$	272.4	10.4%	$	1,165.2	22.0%	(76.6)%
SG&A	$	430.6	16.4%	$	538.0	10.2%	(20.0)%
(Loss) income from operations	$	(158.2)	(6.0)%	$	627.2	11.8%	(125.2)%

Net sales for the six months ended June 30, 2009 decreased $2,675.8 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes contributed approximately $369 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 $2,307 million from the prior year period, primarily due to lower net sales volumes as the global economy continued to deteriorate. These decreases were partially offset by approximately $123 million of improvements in product mix and price realization for crane and mining equipment.

Gross profit for the six months ended June 30, 2009 decreased $892.8 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes decreased gross profit by approximately $52 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 $676 million. Charges, primarily related to production level and headcount reductions, decreased gross profit by approximately $65 million. Additionally, due to lower production levels, net manufacturing unabsorbed overhead increased, resulting in a reduction to gross profit of approximately $100 million.

Selling, general and administrative (“SG&A”) costs decreased for the six months ended June 30, 2009 by $107.4 million when compared to the same period in 2008. Approximately $49 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 $78 million due to lower net sales volume and curtailment of spending. These decreases were partially offset by approximately $20 million of charges related to headcount reductions.

41

Income (loss) from operations decreased by $785.4 million for the six months ended June 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

		Six Months Ended June 30,
		2009				2008
			% of Sales				% of Sales	% Change In Reported Amounts
		($ amounts in millions)
Net sales	$	438.4		-	$	1,420.1	-	(69.1)%
Gross profit	$	15.3		3.5%	$	372.9	26.3%	(95.9)%
SG&A	$	89.1		20.3%	$	132.8	9.4%	(32.9)%
(Loss) income from operations	$	(73.8)		(16.8)%	$	240.1	16.9%	(130.7)%

Net sales for the Aerial Work Platforms segment for the six months ended June 30, 2009 decreased $981.7 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes accounted for approximately $25 million of the net sales decrease. Lower net sales volume of approximately $947 million across all products and regions 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.

Gross profit for the six months ended June 30, 2009 decreased $357.6 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes decreased gross profit by approximately $16 million from the prior year period. The impact of lower net sales volume decreased gross profit by approximately $276 million. Charges, primarily associated with reductions in production levels and restructuring, reduced gross profit by approximately $20 million. Additionally, due to lower production levels, net manufacturing unabsorbed overhead increased, resulting in a reduction to gross profit of approximately $46 million.

SG&A costs for the six months ended June 30, 2009 decreased $43.7 million when compared to the same period in 2008. Approximately $5 million of the decrease was due to the favorable translation effect of foreign currency exchange rate changes. Selling, marketing and administrative costs were lower by approximately $30 million due to decreased volume and curtailment of spending. Additionally, the allocation of corporate costs decreased by approximately $10 million over the prior year period.

Income (loss) from operations for the six months ended June 30, 2009 decreased $313.9 million 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, partially offset by lower SG&A costs.

Terex Construction

		Six Months Ended June 30,
		2009			2008
			% of Sales			% of Sales	% Change In Reported Amounts
		($ amounts in millions)
Net sales	$	481.6	-	$	1,191.6	-	(59.6)%
Gross profit	$	(48.1)	(10.0)%	$	164.3	13.8%	(129.3)%
SG&A	$	115.2	23.9%	$	136.8	11.5%	(15.8)%
(Loss) income from operations	$	(163.3)	(33.9)%	$	27.5	2.3%	(693.8)%

Net sales in the Construction segment decreased by $710.0 million for the six months ended June 30, 2009 when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes accounted for approximately $78 million of the net sales decrease. Lower machine sales volumes of approximately $576 million were largely responsible for the decrease in net sales. This was primarily a result of weak customer demand across all businesses and geographies, driven by continued constrained credit availability and deferral of capital investments. Additionally, lower parts, used equipment and other sales volumes decreased net sales by approximately $62 million.

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Gross profit decreased $212.4 million for the six months ended June 30, 2009 when compared to the same period in 2008. The impact of lower net sales volume decreased gross profit by approximately $152 million. Charges, primarily related to lower production levels and headcount reductions, decreased gross profit by approximately $35 million. Additionally, net manufacturing unabsorbed overhead increased, resulting in a reduction to gross profit of approximately $31 million.

SG&A costs for the six months ended June 30, 2009 decreased $21.6 million when compared to the same period in 2008. The favorable translation effect of foreign currency exchange rate changes decreased SG&A costs by approximately $17 million over the prior year period. Selling, marketing and administrative costs were lower by approximately $15 million due to decreased volume and curtailment of spending. Additionally, the corporate cost allocation decreased by approximately $5 million over the prior year period. These decreases were partially offset by increased costs of approximately $15 million due to headcount reductions.

Income (loss) from operations for the six months ended June 30, 2009 decreased $190.8 million when compared to the same period in 2008, resulting primarily from lower net sales volume and higher costs due to lower production levels and headcount reductions, partially offset by lower SG&A costs.

Terex Cranes

		Six Months Ended June 30,
		2009			2008
			% of Sales			% of Sales	% Change In Reported Amounts
		($ amounts in millions)
Net sales	$	952.4	-	$	1,482.7	-	(35.8)%
Gross profit	$	148.5	15.6%	$	328.2	22.1%	(54.8)%
SG&A	$	103.1	10.8%	$	118.3	8.0%	(12.8)%
Income from operations	$	45.4	4.8%	$	209.9	14.2%	(78.4)%

Net sales for the Cranes segment for the six months ended June 30, 2009 decreased by $530.3 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes on sales decreased net sales by approximately $137 million. Lower net sales volume, particularly for tower, rough-terrain, truck and all-terrain cranes, decreased net sales by approximately $466 million, as commercial construction projects were postponed or halted and oil related energy demand for rough-terrain cranes slowed. These decreases were partially offset by an improved mix of product sales and price realization of approximately $82 million.

Gross profit for the six months ended June 30, 2009 decreased by $179.7 million when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes decreased gross profit by approximately $24 million from the prior year period. Lower net sales volume decreased gross profit by approximately $139 million. Net manufacturing unabsorbed overhead increased, resulting in a reduction to gross profit of approximately $14 million.

SG&A costs for the six months ended June 30, 2009 decreased $15.2 million over the same period in 2008. The favorable translation effect of foreign currency exchange rate changes decreased SG&A costs by approximately $12 million over the prior year period. Additionally, SG&A costs were lower by approximately $4 million primarily due to lower sales volume.

Income from operations for the six months ended June 30, 2009 decreased $164.5 million versus the same period in 2008, primarily due to lower net sales volume and the negative translation effect of foreign currency exchange rate changes, partially offset by the positive impact of an improved product sales mix and price realization.

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Terex Materials Processing & Mining

		Six Months Ended June 30,
		2009				2008
				% of Sales			% of Sales	% Change In Reported Amounts
		($ amounts in millions)
Net sales	$	789.7	-		$	1,245.8	-	(36.6)%
Gross profit	$	156.0	19.8%		$	297.6	23.9%	(47.6)%
SG&A	$	97.5	12.3%		$	118.3	9.5%	(17.6)%
Income from operations	$	58.5	7.4%		$	179.3	14.4%	(67.4)%

Net sales in the Materials Processing & Mining segment decreased by $456.1 million for the six months ended June 30, 2009 when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes decreased net sales by approximately $130 million. Lower net sales volume of approximately $360 million, particularly in the Materials Processing businesses, was the primary driver of the decrease in net sales. These decreases were partially offset by an improvement in mining equipment sales of approximately $41 million due to a favorable product sales mix oriented towards larger trucks, as well as price increases for hydraulic shovels and mining trucks.

Gross profit decreased by $141.6 million in the six months ended June 30, 2009 when compared to the same period in 2008. The unfavorable translation effect of foreign currency exchange rate changes decreased gross profit by approximately $17 million from the prior year period. Lower net sales volume, partially offset by price increases, decreased gross profit by approximately $109 million. Costs associated with reductions in production levels and restructuring reduced gross profit by approximately $6 million. Additionally, due to lower production levels, net manufacturing unabsorbed overhead increased, resulting in a reduction to gross profit of approximately $8 million.

SG&A costs decreased by $20.8 million in the six months ended June 30, 2009 when compared to the same period in 2008. Approximately $15 million of the decrease was due to the favorable translation effect of foreign currency exchange rate changes. Additionally, lower general and administrative costs, primarily due to reduced legal expenses, decreased SG&A cost by approximately $5 million.

Income from operations for the six months ended June 30, 2009 decreased $120.8 million from the comparable period in 2008, primarily due to lower net sales volume.

Terex Corporate / Eliminations

		Six Months Ended June 30,
		2009				2008
				% of Sales			% of Sales	% Change In Reported Amounts
		($ amounts in millions)
Net sales	$	(39.3)	-		$	(41.6)	-	5.5%
Loss from operations	$	(25.0)	63.6%		$	(29.6)	71.2%	15.5%

The net sales amounts include the elimination of intercompany sales activity among segments. Corporate costs before allocations to the business segments decreased as we implemented numerous cost reduction activities. The decrease reflects the favorable impact of cost reduction activities, including salary and benefit cuts and reduced professional fees, partially offset by the reduction in the allocation of corporate costs to the business segments of approximately $19 million and the $8.0 million charge taken during the six months ended June 30, 2009 in anticipation of the previously mentioned proposed SEC settlement (which remains subject to SEC and court approval).

Interest Expense, Net of Interest Income

During the six months ended June 30, 2009, our interest expense net of interest income was $46.7 million, or $11.0 million higher than the same period in the prior year. This increase was primarily related to approximately $12 million of lower interest income in the current year period due to lower interest rates, partially offset by approximately $1 million of lower interest expense due to lower average interest rates for the current year period.

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Loss on Early Extinguishment of Debt

We recorded a pre-tax charge on an early extinguishment of debt of $3.3 million in the six months ended June 30, 2009.

Other Income (Expense) – Net

Other income (expense) – net for the six months ended June 30, 2009 was income of $1.2 million, a decrease of $8.6 million when compared to the same period in the prior year. This was primarily due to lower foreign exchange gains in the current year period compared with the prior year period.

Income Taxes

During the six months ended June 30, 2009, we recognized an income tax benefit of $54.8 million on a loss of $207.0 million, an effective tax rate of 26.5%, as compared to an income tax expense of $200.0 million on income of $601.3 million, an effective tax rate of 33.3%, for the six months ended June 30, 2008. The lower tax rate for the six months ended June 30, 2009 was primarily due to the relative impact of accruals and releases for uncertain tax positions, the non-deductible tax treatment of the charges related to the proposed SEC settlement (which remains subject to SEC and court approval) and changes in the jurisdictional mix of income. As earnings decrease in profitable periods, the items that affect income tax expense have a more significant impact on the effective tax rate.  When the results are losses instead of profits, the effect of items on the tax rate have an opposite impact.  For the remainder of 2009, the magnitude of earnings relative to the items that affect income tax expense may cause volatility in the effective tax rate.

LIQUIDITY AND CAPITAL RESOURCES

Our main sources of funding are cash generated from operations, loans from our bank credit facilities and funds raised in capital markets. During the second quarter of 2009, we raised approximately $608 million of total net proceeds from three capital markets issuances: 1) $300 million principal amount of 10.875% Senior Notes due 2016 (“10-7/8% Notes”) at an issue price of 97.633%; 2) 12.65 million shares of common stock, priced at $13.00 per share; and 3) $172.5 million principal amount of 4.00% Convertible Senior Subordinated Notes due 2015 (“4% Convertible Notes”). Our capital markets activity this quarter, plus cash generated from operations, resulted in an improved liquidity position. We had cash and cash equivalents of $938.5 million at June 30, 2009. In addition, we had $485.9 million available for borrowing under our revolving credit facilities at June 30, 2009. We believe that cash generated from operations, together with access to our bank credit facilities and cash on hand, provide adequate liquidity to meet our operating and debt service requirements. We have no significant debt maturities until 2012; however, we will continue our focus on internal cash flow generation. With the actions we are taking to reduce costs, delay certain capital spending projects and increase cash generated from operations, along with our strengthened balance sheet, we expect to have sufficient liquidity to execute our key business plans.

For the remainder of 2009, we will continue managing our business aggressively for cash. Generating cash from operations depends primarily on our ability to reduce our investment in working capital and our operating losses. Working capital improvement is the key to our cash flow generation expectations in 2009. We continue to focus on collecting receivables in a timely manner and maintaining cautious credit practices, which resulted in our days sales outstanding decreasing slightly in the second quarter of 2009 from the end of the first quarter of 2009. Our past due receivables were down in the second quarter of 2009, both in dollars and aging percentage, as we continue to closely monitor the financial condition of our customers. Consistent with past practice, each quarter we sell receivables to various third party financial institutions through several pre-arranged facilities. During the second quarter of 2009 and 2008, we sold, without recourse, accounts receivable approximating 9% and 7%, respectively, of our second quarter net sales, to provide additional liquidity. The discontinuance of these facilities could reduce our liquidity.

In the second quarter of 2009, despite the current low level of business, we experienced relatively stable order patterns. We are intensely focused in each of our businesses on managing our sales, inventory and operations planning process to quickly adjust our production rate and material ordering in line with current and anticipated market conditions. We are operating with a build-to-order approach as we tightly manage inventory levels. All of our businesses are working closely with our suppliers to minimize raw material deliveries and with our customers and dealers to confirm existing orders in an effort to minimize the level of inventory in the distribution channel.

We continue to adjust production and incoming material levels as appropriate to reflect slowing end-market demand for our products. Actions have been taken to slow, and in some cases stop, production in response to declining demand. We believe adjusting production levels and curtailing incoming material in our Aerial Work Platforms, Construction and Materials Processing businesses will reduce inventory levels further, and we will continue to carefully manage incoming material in the Cranes and Mining businesses as well to match the demand expectations of these businesses. We continue to operate at reduced production levels, in many instances at levels well below our current demand, with the primary objective of inventory reduction.

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We remain focused on increasing inventory turns by sharing, throughout our Company, many of the best practices and lean manufacturing processes that several of our business units have implemented successfully. We expect the above initiatives to reduce the level of inventory needed to support our business and allow us to reduce our manufacturing lead times, thereby reducing our working capital requirements. Despite high current levels of inventory, substantial effort has gone into reviewing and improving our materials planning and forecasting methods. Our continued focus on reducing inventory during the second quarter of 2009 resulted in cash generation of approximately $278 million. Inventory turns in the second quarter of 2009 increased slightly as compared to the first quarter of 2009, but were still significantly lower than in the second quarter of 2008, as volume levels have dropped significantly from the year ago time period. We continue to expect to generate more than $500 million in cash from inventory reductions by the end of 2009.

Our ability to generate cash from operations is subject to numerous factors, including the following:

• Many of our customers fund their purchases through third party finance companies that extend credit based on the credit worthiness of the customers and the expected residual value of our equipment. Changes either in the customers’ credit profile or in used equipment values may impact the ability of customers to purchase equipment. Given current economic conditions and the lack of liquidity in the global credit markets, there can be no assurance that third party finance companies will continue to extend credit to our customers as they have in the past.

• As our sales levels change, the absolute amount of working capital needed to support our business may change.

• We insure and sell a portion of our accounts receivable to third party finance companies that are not obligated to purchase accounts receivable from us and may choose to limit or discontinue further purchases from us at any time. Changes in customers’ credit worthiness, the market for credit insurance or the willingness of third party finance companies to purchase accounts receivable from us may impact our cash flow from operations.

• Our suppliers extend payment terms to us based on our overall credit rating. Declines in our credit rating may impact suppliers’ willingness to extend terms and in turn increase the cash requirements of our business.

• Sales of our products are subject to general economic conditions, weather, competition and the translation effect of foreign currency exchange rate changes, and other factors that in many cases are outside our direct control. For example, during periods of economic uncertainty, our customers may delay purchasing decisions, which could have a negative impact on cash generated from operations. As a result of the ongoing recession, many of our customers have delayed or cancelled orders and we anticipate that they will continue to delay capital spending over the near term.

We negotiate, when possible, advance payments from our customers for products with long lead times to help fund the substantial working capital investment in these products.

In 2008, we used cash from operations in the first quarter and generated cash from operations for the rest of the year. We expect our cash flow performance for 2009 to be heavily influenced by our ability to reduce working capital, driven by efficiency improvements, operating at reduced production levels and reducing our incoming materials and finished goods inventory.

To help fund our cash expenditures, we have maintained cash balances and a revolving line of credit in addition to term borrowings from our bank group. Our bank credit facilities provide us with a revolving line of credit of up to $550 million that is available through July 14, 2012 and term debt of $136.2 million that will mature on July 14, 2013. The revolving line of credit consists of $350 million of available domestic revolving loans and $200 million of available multicurrency revolving loans. The credit facilities also provide for incremental loan commitments of up to $300 million, which may be extended at the option of the lenders, in the form of revolving credit loans, term loans or a combination of both. See Note P – “Subsequent Events” in our Condensed Consolidated Financial Statements for information on two incremental term loan assumption agreements entered into in July 2009.

Although we believe that the banks participating in our credit facility have adequate capital and resources, we can provide no assurance that each of these banks will continue to operate as a going concern in the future. If any of the banks in our lending group were to fail, it is possible that the borrowing capacity under our credit facility would be reduced. In the event that the availability under our credit facility was reduced significantly, we could be required to obtain capital from alternate sources in order to finance our capital needs.

The interest rates charged under our bank credit facility are subject to adjustment based on our consolidated leverage ratio. We had no outstanding borrowings under our revolver at June 30, 2009. The weighted average interest rate on the term loans under the bank credit facility was 4.35% and 3.21% at June 30, 2009 and December 31, 2008, respectively.

We manage our interest rate risk by maintaining a balance between fixed and floating rate debt, including the use of interest rate derivatives when appropriate. Over the long term, we believe this mix will produce lower interest cost than a purely fixed rate mix while reducing interest rate risk.

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Credit ratings on our debt by Moody’s and Standard and Poor’s declined during the quarter with our Moody’s corporate family rating falling to B2 with a stable outlook and our Standard and Poor’s corporate credit rating falling to BB- with a negative outlook.  Lower credit ratings could result in higher interest costs to us in the future.

We anticipate that acquisitions will be a part of our long-term growth strategy, but recent volatility in the financial markets, the downturn in global economic conditions and limited access to capital may slow acquisition activity in the near term. We intend to use a portion of our liquidity to judiciously fund internal expansion activities, including targeted capital expenditures.

On July 23, 2009, we acquired the port equipment businesses of Fantuzzi Industries S.a.r.l and Noell Crane (collectively, “Fantuzzi”) for net consideration of approximately €155 million. Financial arrangements were made with existing financial creditors of Fantuzzi to provide us with long-term financing on favorable terms for substantially all of the acquisition price. As such, we do not expect there to be a significant impact on our available liquidity because of the transaction.

In December 2006, our Board of Directors authorized the repurchase of up to $200 million of our outstanding common shares through June 30, 2008. In December 2007, our Board of Directors increased the share repurchase program by $500 million, bringing the total amount that may be repurchased to $700 million, and extended the expiration date for the program through June 30, 2009. In July 2008, our Board of Directors increased the program by $500 million, bringing the total amount that may be repurchased through June 30, 2009, to $1.2 billion. In total, we have repurchased 9.7 million shares for approximately $562 million through June 30, 2009, under this program. We have not purchased shares under this program since September 2008 due to volatility in the credit markets and our desire to maintain liquidity. The program expired on June 30, 2009.

Declines in the value of defined benefit pension plan assets during 2008 resulted in increased total pension costs for 2009 as compared to total pension costs incurred during 2008. Continued deterioration in the securities markets has reduced the value of certain assets included in our defined benefit pension plans, the effect of which has not been reflected in the accompanying Condensed Consolidated Financial Statements.  There is the potential that the assumptions we have used will differ materially from actual results.  Further declines in the value of plan assets may result in the need for additional cash contributions during 2009 in accordance with funding requirements.

Our ability to access the capital markets to raise funds, through the sale of equity or debt securities, is subject to various factors, some specific to us, and others related to general economic and/or financial market conditions. These include results of operations, projected operating results for future periods and debt to equity leverage. In July 2007, we filed a shelf registration statement with the SEC to allow for easier access to the capital markets. Our ability to access the capital markets is also subject to our timely filing of periodic reports with the SEC. In addition, the terms of our bank credit facility and senior subordinated notes restrict our ability to make further borrowings and to sell substantial portions of our assets.

Our contractual obligations increased as a result of the issuance of the 4% Convertible Notes and 10-7/8% Notes. These notes require principal repayments of $172.5 million and $300 million in 2015 and 2016, respectively. Additionally, interest expense related to these notes will increase in each of the periods prior to maturity.

Cash Flows

Cash used in operations for the six months ended June 30, 2009 totaled $36.3 million, compared to cash used in operations of $56.1 million for the six months ended June 30, 2008. The change in cash used in operations was primarily driven by approximately $179 million cash provided from working capital in the current year compared to approximately $503 million of cash used in working capital in the prior year, partially offset by the impact of an approximate $554 million decrease in net income.

Cash used in investing activities for the six months ended June 30, 2009 was $33.7 million, or $505.4 million less than cash used in investing activities for the six months ended June 30, 2008, primarily due to the acquisition of ASV in 2008 and lower capital expenditures in the current year.

Cash provided by financing activities was $513.6 million for the six months ended June 30, 2009 compared to cash used in financing activities for the six months ended June 30, 2008 of $127.3 million, primarily due to proceeds from the capital market issuances of debt and common stock in June 2009 and cash used for share repurchases in 2008.

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OFF-BALANCE SHEET ARRANGEMENTS

Guarantees

Our customers, from time to time, fund the acquisition of our equipment through third-party finance companies. In certain instances, we may provide a credit guarantee to the finance company by which we agree to make payments to the finance company should the customer default. Our maximum liability is generally limited to the remaining payments due to the finance company at the time of default. In the event of customer default, we are generally able to recover and dispose of the equipment at a minimum loss, if any, to us.

As of June 30, 2009, our maximum exposure to such credit guarantees was $253.8 million, including total credit guarantees issued by Terex Demag GmbH, part of our Cranes segment, and Genie Holdings, Inc. and its affiliates, part of our Aerial Work Platforms segment, of $121.6 million and $48.1 million, respectively. The terms of these guarantees coincide with the financing arranged by the customer and generally do not exceed five years. Given our position as the original equipment manufacturer and our knowledge of end markets, when called upon to fulfill a guarantee, we have generally been able to liquidate the financed equipment at a minimal loss, if any.

Given current financial and economic conditions, there can be no assurance that historical credit default experience will be indicative of future results. Our ability to recover losses experienced from our guarantees may be affected by economic conditions in effect at the time of loss.

We issue, from time to time, residual value guarantees under sales-type leases. A residual value guarantee involves a guarantee that a piece of equipment will have a minimum fair market value at a future date. As described in Note N – “Litigations and Contingencies” in the Notes to the Condensed Consolidated Financial Statements, our maximum exposure related to residual value guarantees under sales-type leases was $30.8 million at June 30, 2009. We are able to mitigate the risk associated with these guarantees because the maturity of the guarantees is staggered, which limits the amount of used equipment entering the marketplace at any one time.

We guarantee, from time to time, that we will buy equipment from our customers in the future at a stated price if certain conditions are met by the customer. Such guarantees are referred to as buyback guarantees. These conditions generally pertain to the functionality and state of repair of the machine. As of June 30, 2009, our maximum exposure pursuant to buyback guarantees was $156.4 million. We are able to mitigate the risk of these guarantees by staggering the timing of the buybacks and through leveraging our access to the used equipment markets provided by our original equipment manufacturer status.

We have recorded an aggregate liability within Other current liabilities and Retirement plans and other in the Condensed Consolidated Balance Sheet of approximately $23 million for the estimated fair value of all guarantees provided as of June 30, 2009.

Given current economic conditions, there can be no assurance that our historical experience in used equipment markets will be indicative of future results. Our ability to recover losses experienced from our guarantees may be affected by economic conditions in the used equipment markets at the time of loss.

Sale-Leaseback Transactions

Our rental business generally rents equipment to customers on a month-to-month basis with an average rental period of four to five months. To better match cash outflows in the rental business to cash inflows from customers, we finance the equipment through a series of sale-leasebacks classified as operating leases. The leaseback period is typically 60 months in duration. At June 30, 2009, the historical cost of equipment being leased back from the financing companies was approximately $34 million and the minimum lease payments for the remainder of 2009 will be approximately $3 million.

CONTINGENCIES AND UNCERTAINTIES

Foreign Currencies and Interest Rate Risk

Our products are sold in over 100 countries around the world and, accordingly, our revenues are generated in foreign currencies, while the costs associated with those revenues are only partly incurred in the same currencies. The major foreign currencies, among others, in which we do business are the Euro and British Pound. We may, from time to time, hedge specifically identified committed and forecasted cash flows in foreign currencies using forward currency sale or purchase contracts. At June 30, 2009, we had foreign exchange contracts with a notional value of $779.1 million.

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We manage exposure to interest rates by incurring a mix of indebtedness bearing interest at both floating and fixed rates at inception and maintaining an ongoing balance between floating and fixed rates on this mix of indebtedness using interest rate swaps when necessary.

See “Quantitative and Qualitative Disclosures About Market Risk” below for a discussion of the impact that changes in foreign currency exchange rates and interest rates may have on our financial performance.

Certain of our obligations, including our senior subordinated notes, bear interest at a fixed interest rate. In November 2007, we entered into an interest rate swap agreement to convert $400 million of the principal amount of our 8% Senior Subordinated Notes due 2017 to floating rates. The floating rate is based on a spread of 2.81% over London Interbank Offer Rate (“LIBOR”). At June 30, 2009, the floating rate was 3.70%. In a prior year, we entered into an interest rate swap agreement to convert a fixed rate to a floating rate with respect to $200 million of the principal amount of our 7-3/8% Senior Subordinated Notes. To maintain an appropriate balance between floating and fixed rate obligations on our mix of debt, we exited this interest rate swap agreement on January 15, 2007 and paid $5.4 million. We recorded this loss as an adjustment to the carrying value of the hedged debt and are amortizing it through the debt maturity date.

Other

We are subject to a number of contingencies and uncertainties including, without limitation, product liability claims, workers’ compensation liability, intellectual property litigation, self-insurance obligations, tax examinations and guarantees. Many of the exposures are unasserted or the proceedings are at a preliminary stage, and it is not presently possible to estimate the amount or timing of any of our costs. However, we do not believe that these contingencies and uncertainties will, in the aggregate, have a material adverse effect on us. When it is probable that a loss has been incurred and possible to make reasonable estimates of our liability with respect to such matters, a provision is recorded for the amount of such estimate or for the minimum amount of a range of estimates when it is not possible to estimate the amount within the range that is most likely to occur.

We generate hazardous and non-hazardous wastes in the normal course of our manufacturing operations. As a result, we are subject to a wide range of federal, state, local and foreign environmental laws and regulations. These laws and regulations govern actions that may have adverse environmental effects, such as discharges to air and water, and also require compliance with certain practices when handling and disposing of hazardous and non-hazardous wastes. These laws and regulations also impose liability for the costs of, and damages resulting from, cleaning up sites, past spills, disposals and other releases of hazardous substances, should any of such events occur. No such incidents have occurred which required us to pay material amounts to comply with such laws and regulations. Compliance with such laws and regulations has required, and will continue to require, us to make expenditures. We do not expect that these expenditures will have a material adverse effect on our business.

We have previously disclosed that the SEC has been conducting a private investigation. This investigation is presently focused on (1) the circumstances of the restatement of certain of our financial statements for the years 2000-2004 and (2) the accounting for certain transactions between us and United Rentals, Inc. that took place in 2000 and 2001, and one transaction between United Rentals, Inc. and one of our subsidiaries that took place in 2001, before that subsidiary was acquired by us.  We are cooperating with the SEC with respect to this matter and have furnished the SEC with the information it has requested of us. 

The independent members of our Board of Directors (the “Board”) have formed a Special Committee of the Board (the “Special Committee”) to review and advise the Board regarding this matter, and after receiving advice from the Special Committee and outside advisors, the Board has authorized an agreement in principle with the SEC’s Staff to present a proposed resolution of this matter to the SEC Commissioners, subject to final documentation and the language of any complaint. Under the terms of the proposed settlement, we would consent, without admitting or denying the allegations of the SEC’s complaint, to an injunction against committing or aiding and abetting any future violations of the anti-fraud, books and records, reporting and internal control provisions of the federal securities laws and related SEC rules. We would also agree to pay a civil penalty, and have taken a reserve in the amount of $8 million.  The proposed settlement with the SEC Staff remains subject to the final approval of the SEC Commissioners (and, thereafter, of the court in which an SEC complaint would be filed).  

As disclosed in our prior filings, commencing on November 2, 2006, we have received subpoenas from the DOJ with respect to its investigation into pricing practices in the rock crushing and screening equipment industry.  In connection with this investigation, the DOJ has convened a grand jury. We have been cooperating with the DOJ in this investigation. Until the DOJ investigation is complete, we are not able to predict its outcome.

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RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS No. 157”), which was effective for fiscal years beginning after November 15, 2007 and for interim periods within those years.  This statement defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements.  This statement applies under other accounting pronouncements that require or permit fair value measurements.  The statement indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. SFAS No. 157 defines fair value based upon an exit price model.  In February 2008, the FASB issued FASB Staff Positions (“FSP”) No. FAS 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” and FSP FAS No. 157-2, “Effective Date of FASB Statement No. 157.” FSP No. FAS 157-1 amends SFAS No. 157 to exclude SFAS No. 13, “Accounting for Leases” and its related interpretive accounting pronouncements that address leasing transactions, while FSP No. FAS 157-2 delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) until the beginning of the first quarter of 2009.  Effective January 1, 2009, the provisions of SFAS No. 157 were applied to nonfinancial assets and nonfinancial liabilities. The adoption of SFAS No. 157 did not have a significant impact on the determination or reporting of our financial results.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141R”), which replaces SFAS No. 141, “Business Combinations” (“SFAS No. 141”). SFAS No. 141R retains the underlying concepts of SFAS No. 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting, but SFAS No. 141R changes the application of the acquisition method in a number of significant aspects. Acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. In April 2009, the FASB issued FSP No. FAS 141R-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” (“FSP No. FAS 141R-1”), which clarifies the initial and subsequent recognition, subsequent accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. FSP No. FAS 141R-1 carries forward the requirements in SFAS No. 141 for acquired contingencies, thereby requiring that such contingencies be recognized at fair value on the acquisition date if fair value can be reasonably estimated during the allocation period. If the acquisition date fair value of an asset or liability cannot be reasonably estimated, the asset or liability would be measured at the amount that would be recognized in accordance with FASB Statement No. 5, “Accounting for Contingencies.” SFAS No. 141R and FSP No. FAS 141R-1 were effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008, which, for the Company, was January 1, 2009. Adoption of SFAS No. 141R and FSP No. FAS 141R-1 did not have a significant impact on the determination or reporting of our financial results. However, the effects of SFAS No. 141R and FSP No. FAS 141R-1 will depend on any future acquisitions we may complete.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS No. 160”). This statement was effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, which, for the Company, was January 1, 2009. This statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the noncontrolling interest is included in consolidated net income on the face of the income statement. It also amends certain Accounting Research Bulletin No. 51, “Consolidated Financial Statements” consolidation procedures for consistency with the requirements of SFAS No. 141R. This statement also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. Adoption of SFAS No. 160 did not have a significant impact on the determination or reporting of our financial results.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133” (“SFAS No. 161”). This statement was effective for fiscal years, and interim periods within those fiscal years, beginning after November 15, 2008, which, for the Company, was January 1, 2009. SFAS No. 161 is intended to improve financial reporting by requiring transparency about the nature, purpose, location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities;” and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. Adoption of SFAS No. 161 did not have a significant impact on the determination or reporting of our financial results. See Note I – “Derivative Financial Instruments” in our Condensed Consolidated Financial Statements.

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In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP No. FAS 142-3”).  FSP No. FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets.”  FSP No. FAS 142-3 was effective on a prospective basis to all intangible assets acquired and for disclosures on all intangible assets recognized on or after the beginning of the first annual period subsequent to December 15, 2008, which, for the Company, was January 1, 2009.   We have evaluated the new statement and have determined that it did not have a significant impact on the determination or reporting of our financial results.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles for nongovernmental entities (the “Hierarchy”). The Hierarchy within SFAS No. 162 is similar to the definition in the American Institute of Certified Public Accountants Statement on Auditing Standards No. 69, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles” (“SAS No. 69”). The adoption of SFAS No. 162 did not have a significant effect on our financial statements because we have utilized the guidance within SAS No. 69.

In May 2008, the FASB issued FSP No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion” (“FSP No. APB 14-1”). FSP No. APB 14-1 requires separate accounting for the liability and equity components of convertible debt securities that allow for either mandatory or optional cash settlement (including partial cash settlement) in a manner that reflects our nonconvertible debt borrowing rate at time of issuance when interest cost is recognized in subsequent periods. This bifurcation results in a component of the convertible debt to be classified in equity and accretion of the resulting discount on the debt as part of interest expense reflected in the income statement. FSP No. APB 14-1 is effective for fiscal years beginning after December 15, 2008, which, for the Company, was January 1, 2009. As disclosed in Note L – “Long-Term Obligations,” the adoption of FSP No. APB 14-1 affected the reporting of the 4% Convertible Senior Subordinated Notes Due 2015 (“4% Convertible Notes”) issued in June 2009.

In November 2008, the FASB ratified EITF Issue No. 08-6, “Equity Method Investment Accounting Considerations” (“EITF No. 08-6”).  EITF No. 08-6 applies to all investments accounted for under the equity method.  It states that an entity shall measure its equity investment initially at cost.  Contingent consideration should only be included in the initial measurement of the equity method investment if it is required to be recognized by specific authoritative guidance other than SFAS No. 141R.  However, if any equity method investment agreement involves a contingent consideration arrangement in which the fair value of the investor’s share of the investee’s net assets exceeds the investor’s initial cost, a liability should be recognized.  An equity method investor is required to recognize other-than-temporary impairments of an equity method investment and shall account for a share issuance by an investee as if the investor had sold a proportionate share of its investment.  Any gain or loss to the investor resulting from an investee’s share issuance shall be recognized in earnings. EITF No. 08-6 shall be effective for fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years, and shall be applied prospectively.  Adoption of EITF No. 08-6 did not have a significant impact on the determination or reporting of our financial results.

In December 2008, the FASB issued FSP No. FAS 132R-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets”(“FSP No. FAS  132R-1”). FSP No. FAS  132R-1 amends SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. FSP No. FAS 132R-1 requires additional disclosure on benefit plan’s investment allocation decision-making process, the fair value of each major category of plan assets, the valuation techniques used to measure fair value of the plan assets, and any significant concentrations of risk within plan assets. This FSP is effective for fiscal years ending after December 15, 2009, with early application permitted. We do not expect that FSP No. FAS 132R-1 will have a significant impact on the determination or reporting of our financial results.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP No. FAS 107-1 and APB 28-1”). FSP No. FAS 107-1 and APB 28-1 enhances consistency in financial reporting by increasing the frequency of fair value disclosures. FSP No. FAS 107-1 and APB 28-1 relates to fair value disclosures for any financial instruments that are not currently reflected on a company’s balance sheet at fair value. Prior to the effective date, fair values for these assets and liabilities have only been disclosed once a year. FSP No. FAS 107-1 and APB 28-1 will now require these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value. This FSP is effective for interim and annual periods ending after June 15, 2009, with early application permitted for periods ending after March 15, 2009. Adoption of FSP No. FAS 107-1 and APB 28-1 did not have a significant impact on the determination or reporting of our financial results.

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In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS No. 165”).  This statement was effective for interim or annual financial periods ending after June 15, 2009.  SFAS No. 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.   It introduces the concept of financial statements being available to be issued.  Financial statements are considered available to be issued when they are complete in a form and format that complies with generally accepted accounting principles and all approvals necessary for issuance have been obtained.  SFAS No. 165 also requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date—that is, whether that date represents the date the financial statements were issued or were available to be issued.  This disclosure should alert all readers of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented.  Adoption of SFAS No. 165 did not have a significant impact on the determination or reporting of our financial results.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140” (“SFAS No. 166”).  SFAS No. 166 will require entities to provide more information about transfers of financial assets and a transferor’s continuing involvement, if any, with transferred financial assets.  It also requires additional disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets.  SFAS No. 166 eliminates the concept of a qualifying special-purpose entity and changes the requirements for de-recognition of financial assets.  SFAS No. 166 is effective for us in our interim and annual reporting periods beginning on and after January 1, 2010. Earlier application is prohibited.  We are evaluating the adoption of SFAS No. 166 but do not expect that it will have a significant impact on the determination or reporting of our financial results.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS No. 167”), which amends the consolidation guidance applicable to variable interest entities.  It replaces the quantitative-based risks and rewards calculation for determining whether an enterprise is the primary beneficiary in a variable interest entity with an approach that is primarily qualitative and requires ongoing assessments of whether an enterprise is the primary beneficiary of a variable interest entity.  SFAS No. 167 also requires additional disclosures about an enterprise’s involvement in variable interest entities.  SFAS No. 167 is effective for us in our interim and annual reporting periods beginning on and after January 1, 2010. Earlier application is prohibited.  We are currently evaluating the impact adoption of SFAS No. 167 will have on the determination or reporting of our financial results.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162” (“SFAS No. 168”).  The FASB Accounting Standards Codification™ (“Codification”) will be the single source of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States.  Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.  All existing accounting standards are superseded as described in SFAS No. 168.  All other accounting literature not included in the Codification is nonauthoritative.  This statement is effective for interim and annual periods ending after September 15, 2009.  We do not expect that the adoption of SFAS No. 168 will have a significant impact on the determination or reporting of our financial results.

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain market risks that exist as part of our ongoing business operations and we use derivative financial instruments, where appropriate, to manage these risks. As a matter of policy, we do not engage in trading or speculative transactions. For further information on accounting policies related to derivative financial instruments, refer to Note I – “Derivative Financial Instruments” in our Condensed Consolidated Financial Statements.

Foreign Exchange Risk

We are exposed to fluctuations in foreign currency cash flows related to third party purchases and sales, intercompany product shipments and intercompany loans. We are also exposed to fluctuations in the value of foreign currency investments in subsidiaries and cash flows related to repatriation of these investments. Additionally, we are exposed to volatility in the translation of foreign currency earnings to U.S. Dollars. Primary exposures include the U.S. Dollar versus functional currencies of our major markets, which include the Euro and British Pound.

At June 30, 2009, we performed a sensitivity analysis on the effect that aggregate changes in the translation effect of foreign currency exchange rate changes would have on our operating (loss) income. Based on this sensitivity analysis, we have determined that a change in the value of the U.S. dollar relative to currencies outside the U.S. by an additional 10% to amounts already incorporated in the financial statements for the three months ended June 30, 2009 would have decreased the translation effect of foreign currency exchange rate changes already included in our reported operating (loss) income by approximately $5.4 million for the period.

We assess foreign currency risk based on transactional cash flows and identify naturally offsetting positions and purchase hedging instruments to partially offset anticipated exposures. At June 30, 2009, we had foreign exchange contracts with a notional value of $779.1 million. The fair market value of these arrangements, which represents the cost to settle these contracts, was a liability of $9.6 million at June 30, 2009. On a mid to long-term basis, we are considering changes in our manufacturing locations to target closer alignment with our customers, which would also help mitigate our exposure to currency fluctuations.

Interest Rate Risk

We are exposed to interest rate volatility with regard to future issuances of fixed rate debt and existing issuances of variable rate debt. Primary exposure includes movements in the U.S. prime rate and LIBOR. We manage interest rate risk by incurring a mix of indebtedness bearing interest at both floating and fixed rates at inception and maintain an ongoing balance between floating and fixed rates on this mix of indebtedness using interest rate swaps when necessary. At June 30, 2009, approximately 34% of our debt was floating rate debt and the weighted average interest rate for all debt was approximately 7.25%.

At June 30, 2009, we performed a sensitivity analysis for our derivatives and other financial instruments that have interest rate risk. We calculated the pretax earnings effect on our interest sensitive instruments. Based on this sensitivity analysis, we have determined that an increase of 10% in our average floating interest rates at June 30, 2009 would have increased interest expense by approximately $1 million for the six months ended June 30, 2009.

Commodities Risk

Principal materials and components that we use in our various manufacturing processes include steel, castings, engines, tires, hydraulics, cylinders, drive trains, electric controls and motors, and a variety of other commodities and fabricated or manufactured items. Extreme movements in the cost and availability of these materials and components may affect our performance. Worldwide steel prices rose for most of 2008 in response to higher demand caused by continued higher consumption in developing market countries such as China. Due to the continued high demand for steel in 2008, many suppliers of steel, castings and other products increased prices or added surcharges to the price of their products. 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 second half of 2009 as raw material receipts increase as our existing raw material inventory is utilized.

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In the absence of labor strikes or other unusual circumstances, substantially all materials and components are normally available from multiple suppliers. However, certain of our businesses receive materials and components from a sole supplier, although alternative suppliers of such materials are generally available. Current and potential suppliers are evaluated on a regular basis on their ability to meet our requirements and standards. We actively manage our material supply sourcing, and may employ various methods to limit risk associated with commodity cost fluctuations and availability. The inability of suppliers, especially any sole suppliers for a particular business, to deliver materials and components promptly could result in production delays and increased costs to manufacture our products. As a result of the macro-economic challenges currently affecting the economy of the U.S. and other parts of the world, our suppliers may experience serious cash flow problems and, as a result, could seek to significantly and quickly increase their prices or reduce their output. We have designed and implemented plans to mitigate the impact of these risks by using alternate suppliers, leveraging our overall purchasing volumes to obtain favorable pricing, and developing a closer working relationship with key suppliers. We continue to search for acceptable alternative supply sources and less expensive supply options on a regular basis, including by improving the globalization of our supply base and using suppliers in China and India. One key Terex Business System initiative has been developing and implementing world-class capability in supply chain management, logistics and global purchasing. We are focusing on gaining efficiencies with suppliers based on our global purchasing power and resources.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that 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. In connection with the preparation of this Quarterly Report on Form 10-Q, our management carried out an evaluation, under the supervision and with the participation of our management, including the CEO and CFO, as of June 30, 2009, 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. Based upon this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2009.

(b) Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our quarter ended June 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The effectiveness of any system of controls and procedures is subject to certain limitations, and, as a result, there can be no assurance that our controls and procedures will detect all errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be attained.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in certain claims and litigation arising in the ordinary course of business, which are not considered material to our financial operations or cash flow. For information concerning litigation and other contingencies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contingencies and Uncertainties.”

Item 1A. Risk Factors

The risk factors presented below entitled “We have debt outstanding and must comply with restrictive covenants in our debt agreements”, “We face litigation and product liability claims and other liabilities” and “We are currently the subject of government investigations” updates and replaces the similarly named risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2008. In addition, we have added an additional risk factor below entitled “We may be unable to generate sufficient cash flow to service our debt obligations,” which should be considered in addition to the risk factors disclosed in our Annual Report. There have been no other material changes to our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2008.

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We have debt outstanding and must comply with restrictive covenants in our debt agreements.

Our existing debt agreements contain a number of significant covenants, which limit our ability to, among other things, borrow additional money, make capital expenditures, pay dividends, dispose of assets and acquire new businesses. These covenants also require us to maintain liquidity of not less than $250 million on the last day of each fiscal quarter through June 30, 2011 and, thereafter, maintain a specified senior secured debt leverage ratio. If the Company is unable to comply with these covenants, there would be a default under these debt agreements. Changes in economic or business conditions, results of operations or other factors could cause the Company to default under its debt agreements. A default, if not waived by Terex’s lenders, could result in acceleration of the Company’s debt and possibly bankruptcy.

We may be unable to generate sufficient cash flow to service our debt obligations.

Servicing our debt will require a significant amount of cash. Our ability to generate sufficient cash depends on numerous factors beyond our control, and our business may not generate sufficient cash flow from operating activities. Our ability to make payments on and to refinance our debt and to fund planned capital expenditures will depend on our ability to generate cash in the future. To some extent, this is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Lower revenues, or uncollectible receivables, generally will reduce our cash flow.

We cannot assure you that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under our credit facility or otherwise, in an amount sufficient to fund our liquidity needs.  

If our cash flows and capital resources are insufficient to service our indebtedness, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.

We face litigation and product liability claims and other liabilities.

In our lines of business, numerous suits have been filed alleging damages for accidents that have occurred during the use or operation of our products. We are self-insured, up to certain limits, for these product liability exposures, as well as for certain exposures related to general, workers’ compensation and automobile liability. Insurance coverage is obtained for catastrophic losses as well as those risks required to be insured by law or contract. We do not believe that the outcome of such matters will have a material adverse effect on our consolidated financial position; however, any significant liabilities not covered by insurance could have an adverse effect on our financial condition.

We are currently the subject of government investigations.

We have previously disclosed that the SEC has been conducting a private investigation. This investigation is presently focused on (1) the circumstances of the restatement of certain of our financial statements for the years 2000-2004 and (2) the accounting for certain transactions between us and United Rentals, Inc. that took place in 2000 and 2001, and one transaction between United Rentals, Inc. and one of our subsidiaries that took place in 2001, before that subsidiary was acquired by us.  We are cooperating with the SEC with respect to these matters and have furnished the SEC with the information it has requested of us. 

The independent members of our Board have formed a Special Committee to review and advise the Board regarding these matters, and after receiving advice from the Special Committee and outside advisors, the Board has authorized an agreement in principle with the SEC’s Staff to present a proposed resolution of these matters to the SEC Commissioners, subject to final documentation and the language of any complaint. Under the terms of the proposed settlement, we would consent, without admitting or denying the allegations of the SEC’s complaint, to an injunction against committing or aiding and abetting any future violations of the anti-fraud, books and records, reporting and internal control provisions of the federal securities laws and related SEC rules. We would also agree to pay a civil penalty, and have taken a reserve in the amount of $8 million. 

The proposed settlement with the SEC Staff remains subject to the final approval of the SEC Commissioners (and, thereafter, of the court in which an SEC complaint would be filed).   There is no assurance that the SEC Commissioners or such court will approve this proposed settlement. In the event the proposed settlement is not accepted by either the SEC or such court, we would either be required to defend any charges the SEC might bring, or try to reach a different resolution acceptable to the SEC and its Staff, as well as the court.

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The proposed settlement, if approved, resolves all matters relating to the potential liability of us with respect to the SEC investigations described above. Current or former employees of us, including our Chief Executive Officer, Ronald M. DeFeo (who also served for some relevant periods of time as a member of United Rental’s Board and Audit Committee), are not addressed by this proposed settlement. We do not know whether the SEC will commence additional proceedings in the future against any individuals on any of the matters under review by the SEC Staff.

We have also received subpoenas and requests for information from the DOJ with respect to an investigation by the DOJ into pricing practices in the rock crushing and screening equipment industry.  In connection with this investigation, the DOJ has convened a grand jury. We have been cooperating with the DOJ to furnish information needed to complete its investigation. Until the DOJ investigation is complete, we are not able to predict its outcome.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable

(b) Not applicable

(c) The following table provides information about our purchases during the quarter ended June 30, 2009 of our common stock that is registered by us pursuant to the Exchange Act.

	Issuer Purchases of Equity Securities
Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share	(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (1)
April 1, 2009 - April 30, 2009	—	—	—	$637,974
May 1, 2009 - May 31, 2009	—	—	—	$637,974
June 1, 2009 - June 30, 2009	—	—	—	$637,974
Total	—	—	—	—

(1) In December 2006, our Board of Directors authorized the repurchase of up to $200 million of the Company’s outstanding common shares through June 30, 2008. In December 2007, our Board of Directors increased the authorization for repurchase of the Company’s outstanding common shares by $500 million for a total at that time of $700 million. The program was also extended to allow for repurchases through June 30, 2009. In July 2008, our Board of Directors increased the share repurchase program by $500 million, bringing the total amount that may be repurchased under the program to $1,200 million. The program expired on June 30, 2009.

Item 3. Defaults Upon Senior Securities

Not applicable.

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Item 4. Submission of Matters to a Vote of Security Holders

At the annual meeting of stockholders held May 14, 2009, Terex stockholders holding a majority of the shares of Common Stock outstanding as of the close of business on March 17, 2009 voted on the three proposals included in the Company’s proxy statement as follows:

	For	Withheld
Proposal 1:  To elect eleven directors to hold office for one year or until their successors are duly elected and qualified:
Ronald M. DeFeo	76,353,460	1,840,302
G. Chris Andersen	76,766,825	1,426,937
Paula H. J. Cholmondeley	74,180,682	4,013,080
Don DeFosset	71,688,858	6,504,904
William H. Fike	71,345,484	6,848,278
Thomas J. Hansen	77,223,455	970,307
Dr. Donald P. Jacobs	76,700,996	1,492,766
David A. Sachs	71,431,086	6,762,676
Oren G. Shaffer	71,680,352	6,513,410
David C. Wang	71,783,933	6,409,829
Helge H. Wehmeier	77,035,467	1,158,295
	For	Against	Abstain
Proposal 2:  To ratify the selection of PricewaterhouseCoopers LLP as independent registered public accounting firm for the Company for 2009	77,207,647	790,076	196,038
	For	Against	Abstain	Broker Non-Votes
Proposal 3:  To approve the Terex Corporation 2009 Omnibus Incentive Plan	50,690,228	5,040,008	209,766	22,253,760

Item 5. Other Information

On July 23, 2009, we acquired the port equipment businesses of Fantuzzi Industries S.a.r.l and Noell Crane (collectively, “Fantuzzi”) for net consideration of approximately €155 million. Financial arrangements were made with existing financial creditors of Fantuzzi to provide us with long-term financing on favorable terms for substantially all of the acquisition price.

In connection with the acquisition of Fantuzzi, on July 22, 2009, we entered into an Incremental Term Loan Assumption Agreement (the “JPM Incremental Agreement”) with J.P. Morgan Chase International Financing Limited (“JPM”) and on July 23, 2009, we entered into an Incremental Term Loan Assumption Agreement (the “Italian Banks Incremental Agreement”) with certain of the Fantuzzi lenders, both under our existing credit facility. Pursuant to the JPM Incremental Agreement, we borrowed from JPM approximately $66 million, which will bear interest at a rate of LIBOR plus 3.75% and mature on July 14, 2013. The Italian Banks Incremental Agreement will be funded upon certain bonds issued by Fantuzzi Finance S.A., having been discharged in full, which is expected to occur in the second half of 2009. Pursuant to the Italian Banks Incremental Agreement, we will borrow from certain of the Fantuzzi lenders the U.S. dollar equivalent of approximately €48 million, which will bear interest at a rate of LIBOR plus 3.75% and mature on July 14, 2013. The net proceeds of both incremental term loans are being used primarily to refinance the existing indebtedness of Fantuzzi. These loans utilize a portion of the $300 million available to us for incremental loan commitments under our existing credit facility.

Item 6. Exhibits

The exhibits set forth on the accompanying Exhibit Index have been filed as part of this Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TEREX CORPORATION

(Registrant)

Date: July 30, 2009 /s/ Phillip C. Widman

Phillip C. Widman

Senior Vice President and

Chief Financial Officer

(Principal Financial Officer)

Date: July 30, 2009 /s/ Mark I. Clair

Mark I. Clair

Vice President, Controller and

Chief Accounting Officer

(Principal Accounting Officer)

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EXHIBIT INDEX

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. 33-52297).

3.2 Certificate of Elimination with respect to the Series B Preferred Stock (incorporated by reference to Exhibit 4.3 of the Form 10-K for the year ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).

3.3 Certificate of Amendment to Certificate of Incorporation of Terex Corporation dated September 5, 1998 (incorporated by reference to Exhibit 3.3 of the Form 10-K for the year ended December 31, 1998 of Terex Corporation, Commission File No. 1-10702).

3.4 Certificate of Amendment of the Certificate of Incorporation of Terex Corporation dated July 17, 2007 (incorporated by reference to Exhibit 3.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated July 17, 2007 and filed with the Commission on July 17, 2007).

3.5 Amended and Restated Bylaws of Terex Corporation (incorporated by reference to Exhibit 3.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated March 4, 2008 and filed with the Commission on March 10, 2008).

4.1 Indenture, dated as of November 25, 2003, between Terex Corporation, the Guarantors named therein and HSBC Bank USA, as Trustee (incorporated by reference to Exhibit 4.10 of the Form S-4 Registration Statement of Terex Corporation, Registration No. 333-112097).

4.2 Indenture, dated July 20, 2007, between Terex Corporation and HSBC Bank USA, National Association, as Trustee, relating to senior debt securities (incorporated by reference to Exhibit 4.1 of the Form S-3 Registration Statement of Terex Corporation, Registration No. 333-144796).

4.3 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. 333-144796).

4.4 Supplemental Indenture, dated November 13, 2007, between Terex Corporation and HSBC Bank USA, National Association relating to 8% Senior Subordinated Notes due 2017 (incorporated by reference to Exhibit 4.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated November 13, 2007 and filed with the Commission on December 14, 2007).

4.5 Supplemental Indenture, dated June 25, 2008, between Terex Corporation and HSBC Bank USA, National Association relating to 7-3/8% Senior Subordinated Notes due 2014 (incorporated by reference to Exhibit 4.5 of the Form 10-Q for the quarter ended June 30, 2008 of Terex Corporation, Commission File No. 1-10702).

4.6 Supplemental Indenture, dated June 3, 2009, between Terex Corporation and HSBC Bank USA, National Association relating to 10-7/8% Senior Notes Due 2016 (incorporated by reference to Exhibit 4.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated June 3, 2009 and filed with the Commission on June 8, 2009).

4.7 Second Supplemental Indenture, dated June 3, 2009, between Terex Corporation and HSBC Bank USA, National Association relating to 4% Convertible Senior Subordinated Notes Due 2015 (incorporated by reference to Exhibit 4.2 of the Form 8-K Current Report, Commission File No. 1-10702, dated June 3, 2009 and filed with the Commission on June 8, 2009).

10.1 1994 Terex Corporation Long Term Incentive Plan (incorporated by reference to Exhibit 10.2 of the Form 10-K for the year ended December 31, 1994 of Terex Corporation, Commission File No. 1-10702).

10.2 Terex Corporation Amended and Restated Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 of the Form 10-Q for the quarter ended June 30, 2007 of Terex Corporation, Commission File No. 1-10702).

10.3 1996 Terex Corporation Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 of the Form S-8 Registration Statement of Terex Corporation, Registration No. 333-03983).

10.4 Amendment No. 1 to 1996 Terex Corporation Long Term Incentive Plan (incorporated by reference to Exhibit 10.5 of the Form 10-K for the year ended December 31, 1999 of Terex Corporation, Commission File No. 1-10702).

10.5 Amendment No. 2 to 1996 Terex Corporation Long Term Incentive Plan (incorporated by reference to Exhibit 10.6 of the Form 10-K for the year ended December 31, 1999 of Terex Corporation, Commission File No. 1-10702).

10.6 Terex Corporation 1999 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.7 of the Form 10-Q for the quarter ended March 31, 2000 of Terex Corporation, Commission File No. 1-10702).

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10.7 Terex Corporation Amended and Restated 2000 Incentive Plan (incorporated by reference to Exhibit 10.3 of the Form 8-K Current Report, Commission File No. 1-10702, dated October 14, 2008 and filed with the Commission on October 17, 2008).

10.8 Form of Restricted Stock Agreement under the Terex Corporation 2000 Incentive Plan between Terex Corporation and participants of the 2000 Incentive Plan (incorporated by reference to Exhibit 10.4 of the Form 8-K Current Report, Commission File No. 1-10702, dated January 1, 2005 and filed with the Commission on January 5, 2005).

10.9 Form of Option Agreement under the Terex Corporation 2000 Incentive Plan between Terex Corporation and participants of the 2000 Incentive Plan (incorporated by reference to Exhibit 10.5 of the Form 8-K Current Report, Commission File No. 1-10702, dated January 1, 2005 and filed with the Commission on January 5, 2005).

10.10 Terex Corporation Amended and Restated Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.10 of the Form 10-K for the year ended December 31, 2008 of Terex Corporation, Commission File No. 1-10702).

10.11 Terex Corporation Amended and Restated 2004 Annual Incentive Compensation Plan (incorporated by reference to Exhibit 10.4 of the Form 8-K Current Report, Commission File No. 1-10702, dated October 14, 2008 and filed with the Commission on October 17, 2008).

10.12 Summary of material terms of non-CEO 2008 performance targets under the Terex Corporation 2004 Annual Incentive Compensation Plan (incorporated by reference to the Form 8-K Current Report, Commission File No. 1-10702, dated December 13, 2007 and filed with the Commission on December 19, 2007).

10.13 Summary of material terms of CEO 2008 performance targets under the Terex Corporation 2004 Annual Incentive Compensation Plan (incorporated by reference to the Form 8-K Current Report, Commission File No. 1-10702, dated March 4, 2008 and filed with the Commission on March 10, 2008).

10.14 Summary of material terms of CEO and non-CEO 2009 performance targets (incorporated by reference to the Form 8-K Current Report, Commission File No. 1-10702, dated February 26, 2009 and filed with the Commission on March 3, 2009).

10.15 Terex Corporation Amended and Restated Deferred Compensation Plan (incorporated by reference to Exhibit 10.11 of the Form 10-Q for the quarter ended June 30, 2004 of Terex Corporation, Commission File No. 1-10702).

10.16 Amendment to the Terex Corporation Amended and Restated Deferred Compensation Plan (incorporated by reference to Exhibit 10.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated October 14, 2008 and filed with the Commission on October 17, 2008).

10.17 Terex Corporation 2005 Deferred Compensation Plan (incorporated by reference to Exhibit 10.2 of the Form 8-K Current Report, Commission File No. 1-10702, dated October 14, 2008 and filed with the Commission on October 17, 2008).

10.18 Amendment to the Terex Corporation 2005 Deferred Compensation Plan (incorporated by reference to Exhibit 10.2 of the Form 8-K Current Report, Commission File No. 1-10702, dated December 12, 2008 and filed with the Commission on December 16, 2008).

10.19 Summary of material terms of Terex Corporation Outside Directors’ Compensation Program (incorporated by reference to Exhibit 10.2 of the Form 8-K Current Report, Commission File No. 1-10702, dated December 13, 2006 and filed with the Commission on December 19, 2006).

10.20 Credit Agreement dated as of July 14, 2006, among Terex Corporation, certain of its subsidiaries, the Lenders named therein and Credit Suisse, 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 July 14, 2006 and filed with the Commission on July 17, 2006).

10.21 Amendment No. 1, dated January 11, 2008, to the Credit Agreement dated as of July 14, 2006, among Terex Corporation, certain of its subsidiaries, the Lenders named therein and Credit Suisse, 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 11, 2008 and filed with the Commission on January 11, 2008).

10.22

Amendment No. 2, dated February 24, 2009, to the Credit Agreement dated as of July 14, 2006, among Terex Corporation, certain of its subsidiaries, the Lenders named therein and Credit Suisse, 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 24, 2009 and filed with the Commission on February 25, 2009).

10.23

Amendment No. 3, dated May 27, 2009, to the Credit Agreement dated as of July 14, 2006, among Terex Corporation, certain of its subsidiaries, the Lenders named therein and Credit Suisse, 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 May 29, 2009 and filed with the Commission on June 3, 2009).

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10.24 Amended and Restated Guarantee and Collateral Agreement dated as of July 14, 2009 among Terex Corporation, certain of its subsidiaries and Credit Suisse, as Collateral Agent. *

10.25 Underwriting Agreement, dated November 7, 2007, among Terex Corporation and Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc. and UBS Securities LLC, as representatives for the several underwriters named therein, relating to 8% Senior Subordinated Notes Due 2017 (incorporated by reference to Exhibit 1.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated November 7, 2007 and filed with the Commission on November 8, 2007).

10.26 Underwriting Agreement, dated May 29, 2009, among Terex Corporation and Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc. and UBS Securities LLC, as representatives for the several underwriters named therein, relating to 10-7/8% Senior Notes Due 2016 (incorporated by reference to Exhibit 1.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated May 29, 2009 and filed with the Commission on June 3, 2009).

10.27 Underwriting Agreement, dated May 29, 2009, among Terex Corporation and Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc. and UBS Securities LLC, as representatives for the several underwriters named therein, relating to the offering of 11,000,000 shares of Common Stock (incorporated by reference to Exhibit 1.2 of the Form 8-K Current Report, Commission File No. 1-10702, dated May 29, 2009 and filed with the Commission on June 3, 2009).

10.28 Underwriting Agreement, dated May 29, 2009, among Terex Corporation and Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc. and UBS Securities LLC, as representatives for the several underwriters named therein, relating to 4% Convertible Senior Subordinated Notes Due 2015 (incorporated by reference to Exhibit 1.3 of the Form 8-K Current Report, Commission File No. 1-10702, dated May 29, 2009 and filed with the Commission on June 3, 2009).

10.29 Amended and Restated Employment and Compensation Agreement, dated October 14, 2008, between Terex Corporation and Ronald M. DeFeo (incorporated by reference to Exhibit 10.5 of the Form 8-K Current Report, Commission File No. 1-10702, dated October 14, 2008 and filed with the Commission on October 17, 2008).

10.30 Life Insurance Agreement, dated as of October 13, 2006, between Terex Corporation and Ronald M. DeFeo (incorporated by reference to Exhibit 10.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated October 13, 2006 and filed with the Commission on October 16, 2006).

10.31 Form of Change in Control and Severance Agreement between Terex Corporation and certain executive officers (incorporated by reference to Exhibit 10.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated March 4, 2008 and filed with the Commission on March 10, 2008).

10.32 Form of Change in Control and Severance Agreement between Terex Corporation and certain executive officers (incorporated by reference to Exhibit 10.2 of the Form 8-K Current Report, Commission File No. 1-10702, dated March 4, 2008 and filed with the Commission on March 10, 2008).

10.33 Employment Letter dated as of November 8, 2006 between Terex Corporation and Thomas J. Riordan (incorporated by reference to Exhibit 10.1 of the Form 8-K Current Report, Commission File No. 1-10702, dated November 13, 2006 and filed with the Commission on November 13, 2006).

12 Calculation of Ratio of Earnings to Fixed Charges. *

31.1 Chief Executive Officer Certification pursuant to Rule 13a-14(a)/15d-14(a). *

31.2 Chief Financial Officer Certification pursuant to Rule 13a-14(a)/15d-14(a). *

32 Chief Executive Officer and Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes –Oxley Act of 2002. *

* Exhibit filed with this document.

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EX-10

EXECUTION COPY

AMENDED AND RESTATED

GUARANTEE AND COLLATERAL AGREEMENT

dated as of

July 14, 2009,

among

TEREX CORPORATION,

Certain Subsidiaries of TEREX CORPORATION

from time to time party hereto

and

CREDIT SUISSE,

as Collateral Agent

[CS&M Ref No. 5865-285]

TABLE OF CONTENTS

Page

ARTICLE I

Definitions

SECTION 1.01.	Credit Agreement	2
SECTION 1.02.	Other Defined Terms	2

ARTICLE II

Guarantee

SECTION 2.01.	Guarantee	6
SECTION 2.02.	Guarantee of Payment	7
SECTION 2.03.	No Limitations, Etc	7
SECTION 2.04.	Reinstatement	8
SECTION 2.05.	Agreement To Pay; Subrogation	8
SECTION 2.06.	Information	8

ARTICLE III

Pledge of Securities

SECTION 3.01.	Pledge	8
SECTION 3.02.	Delivery of the Pledged Collateral	9
SECTION 3.03.	Representations, Warranties and Covenants	10
SECTION 3.04.	Interests in Limited Liability Companies and Limited Partnerships	12
SECTION 3.05.	Registration in Nominee Name; Denominations	12
SECTION 3.06.	Voting Rights; Dividends and Interest, Etc	12

ARTICLE IV

Security Interests in Personal Property

SECTION 4.01.	Security Interest	15
SECTION 4.02.	Representations and Warranties	16
SECTION 4.03.	Covenants	18
SECTION 4.04.	Other Actions	22
SECTION 4.05.	Covenants Regarding Patent, Trademark and Copyright Collateral	23

ii

ARTICLE V

Remedies

SECTION 5.01.	Remedies upon Default	25
SECTION 5.02.	Application of Proceeds	27
SECTION 5.03.	Grant of License to Use Intellectual Property	27
SECTION 5.04.	Securities Act, Etc	28

ARTICLE VI

Indemnity, Subrogation and Subordination

SECTION 6.01.	Indemnity and Subrogation	29
SECTION 6.02.	Contribution and Subrogation	29
SECTION 6.03.	Subordination	29

ARTICLE VII

Miscellaneous

SECTION 7.01.	Notices	30
SECTION 7.02.	Security Interest Absolute	30
SECTION 7.03.	Survival of Agreement	30
SECTION 7.04.	Binding Effect; Several Agreement	30
SECTION 7.05.	Successors and Assigns	31
SECTION 7.06.	Collateral Agent’s Fees and Expenses; Indemnification	31
SECTION 7.07.	Collateral Agent Appointed Attorney-in-Fact	32
SECTION 7.08.	Applicable Law	32
SECTION 7.09.	Waivers; Amendment	33
SECTION 7.10.	WAIVER OF JURY TRIAL	33
SECTION 7.11.	Severability	33
SECTION 7.12.	Counterparts	34
SECTION 7.13.	Headings	34
SECTION 7.14.	Jurisdiction; Consent to Service of Process	34
SECTION 7.15.	Termination or Release	34
SECTION 7.16.	Additional Subsidiaries	35
SECTION 7.17.	Right of Setoff	35
SECTION 7.18.	Effect of Restatement; Reaffirmation of Guarantee and Security Interest	36

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Schedules

Schedule I Subsidiary Guarantors

Schedule II Equity Interests; Pledged Debt Securities

Schedule III Perfection Intellectual Property

Schedule IV Deposit Accounts

Exhibits

Exhibit A Form of Supplement

Exhibit B Perfection Certificate

AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT dated as of July 14, 2009 (this “Agreement”), among TEREX CORPORATION, a Delaware corporation (“Terex”), the Subsidiaries of Terex from time to time party hereto and CREDIT SUISSE (“Credit Suisse”), as collateral agent (in such capacity, the “Collateral Agent”).

PRELIMINARY STATEMENT

Reference is made to (a) the Credit Agreement dated as of July 14, 2006 (as amended by Amendment No. 1 dated as of January 11, 2008, Amendment No. 2 dated as of February 24, 2009, and Amendment No. 3 dated as of May 27, 2009 (“Amendment No. 3”), and as the same may be further amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Terex, New Terex Holdings UK Limited, a limited company organized under the laws of England, Terex International Financial Services Company, a company organized under the laws of the Republic of Ireland, Terex Mining Australia Pty Ltd, a company organized under the laws of Australia and registered in New South Wales, Australia, Terex Italia S.R.L., a company organized under the laws of the Republic of Italy, the lenders from time to time party thereto (the “Lenders”) and Credit Suisse, as administrative agent (in such capacity, the “Administrative Agent”) and Collateral Agent and (b) the Guarantee and Collateral Agreement dated as of July 14, 2006 (as amended, supplemented or otherwise modified prior to the date hereof, the “Existing Guarantee and Collateral Agreement”), among Terex, the Subsidiaries of Terex from time to time party thereto and Credit Suisse, as Collateral Agent.

The Lenders and the Issuing Banks (such term and each other capitalized term used but not defined in this preliminary statement having the meaning given or ascribed to it in Article I) have extended, and have agreed to extend, credit to the Borrowers pursuant to, and upon the terms and conditions specified in, the Credit Agreement. Pursuant to the Reaffirmation and Security Agreement executed in connection with Amendment No. 3 (the “Reaffirmation and Security Agreement”), the Existing Guarantee and Collateral Agreement is required to be amended and restated in the form of this Agreement. Each Subsidiary Guarantor is an affiliate of the Borrowers, has derived substantial benefits from the extension of credit to the Borrowers pursuant to the Credit Agreement, will derive substantial benefits from the extension of credit to the Borrowers pursuant to the Credit Agreement and is willing to execute and deliver this Agreement in order to induce the Lenders and the Issuing Banks to extend such credit and in consideration for previous credit extended. Accordingly, the parties hereto agree as follows:

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ARTICLE I

Definitions

SECTION 1.01. Credit Agreement. (a) Capitalized terms used in this Agreement and not otherwise defined herein have the meanings set forth in the Credit Agreement. All capitalized terms defined in the New York UCC (as such term is defined herein) and not defined in this Agreement have the meanings specified therein. All references to the Uniform Commercial Code shall mean the New York UCC.

(b) The rules of construction specified in Section 1.02 of the Credit Agreement also apply to this Agreement.

SECTION 1.02. Other Defined Terms. As used in this Agreement, the following terms have the meanings specified below:

“Accounts Receivable” shall mean all Accounts and all right, title and interest in any returned goods, together with all rights, titles, securities and guarantees with respect thereto, including any rights to stoppage in transit, replevin, reclamation and resales, and all related security interests, liens and pledges, whether voluntary or involuntary, in each case whether now existing or owned or hereafter arising or acquired.

“Article9 Collateral” shall have the meaning assigned to such term in Section 4.01.

“Collateral” shall mean the Article 9 Collateral and the Pledged Collateral.

“Copyright License” shall mean any written agreement, now or hereafter in effect, granting any right to any third person under any copyright now or hereafter owned by any Grantor or that such Grantor otherwise has the right to license, or granting any right to any Grantor under any copyright now or hereafter owned by any third person, and all rights of such Grantor under any such agreement.

“Copyrights” shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States or any other country, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office (or any successor office or any similar office in any other country), including those listed on Schedule III.

“Credit Agreement” shall have the meaning assigned to such term in the preliminary statement.

“General Intangibles” shall mean all choses in action and causes of action and all other intangible personal property of any Grantor of every kind and nature (other

3

than Accounts) now owned or hereafter acquired by any Grantor, including Indebtedness of any Grantor whether evidenced by a promissory note or not, all rights and interests in partnerships, limited partnerships, limited liability companies and other unincorporated entities, corporate or other business records, indemnification claims, contract rights (including rights under leases, whether entered into as lessor or lessee, Hedging Agreements and other agreements), Intellectual Property, goodwill, registrations, franchises, tax refund claims and any letter of credit, guarantee, claim, security interest or other security held by or granted to any Grantor to secure payment by an Account Debtor of any of the Accounts.

“Grantors” shall mean Terex and the Subsidiary Guarantors.

“Guarantors” shall mean the Subsidiary Guarantors and, to the extent that Terex is not otherwise liable with respect to any Obligations, Terex.

“Intellectual Property” shall mean all intellectual and similar property of any Grantor of every kind and nature now owned or hereafter acquired by any Grantor, including inventions, designs, Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or proprietary technical and business information, know-how, show-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.

“License” shall mean any Patent License, Trademark License, Copyright License or other license or sublicense agreement to which any Grantor is a party, including those listed on Schedule III.

“Loan Document Obligations” shall mean (a) the due and punctual payment of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower under the Credit Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral, and (iii) all other monetary obligations of any Borrower to any of the Secured Parties under the Credit Agreement and each of the other Loan Documents, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of each Borrower under or pursuant to the Credit Agreement and each of the other Loan Documents, and (c) the due and punctual payment and performance of all the obligations of each other Loan Party under or pursuant to this Agreement and each of the other Loan Documents.

4

“Material Debt Security” shall mean any security evidencing Indebtedness held by any Grantor on the date hereof or issued to any Grantor in the future that has an aggregate principal amount in excess of $50,000,000 (other than any such security evidencing Indebtedness of any other Grantor); provided that, for purposes of determining whether such $50,000,000 threshold is exceeded, (i) all securities evidencing Indebtedness between any two specified persons shall be deemed to be one security and (ii) any trade debt between any two specified persons shall be excluded from such determination. Notwithstanding anything in any Loan Document to the contrary, no Grantor shall be required to have any such Indebtedness evidenced by any security or instrument.

“New York UCC” shall mean the Uniform Commercial Code as from time to time in effect in the State of New York.

“Obligations” shall mean (a) the Loan Document Obligations and (b) the due and punctual payment and performance of all obligations of each Loan Party under each Hedging Agreement that (i) is in effect on the Closing Date with a counterparty that is the Administrative Agent or a Lender or an Affiliate of the Administrative Agent or a Lender as of the Closing Date or (ii) is entered into after the Closing Date with any counterparty that is the Administrative Agent or a Lender or an Affiliate of the Administrative Agent or a Lender at the time such Hedging Agreement is entered into.

“Patent License” shall mean any written agreement, now or hereafter in effect, granting to any third person any right to make, use or sell any invention on which a patent, now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, is in existence, or granting to any Grantor any right to make, use or sell any invention on which a patent, now or hereafter owned by any third person, is in existence, and all rights of any Grantor under any such agreement.

“Patents” shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all letters patent of the United States or the equivalent thereof in any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or the equivalent thereof in any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office (or any successor or any similar offices in any other country), including those listed on Schedule III, and (b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.

“Perfection Certificate” shall mean the certificate attached as Exhibit B hereto.

“Perfection Intellectual Property” shall mean the Patents and Trademarks listed on Schedule III hereto.

5

“Pledged Collateral” shall have the meaning assigned to such term in Section 3.01.

“Pledged Debt Securities” shall have the meaning assigned to such term in Section 3.01.

“Pledged Securities” shall mean any promissory notes, stock certificates or other securities now or hereafter included in the Pledged Collateral, including all certificates, instruments or other documents representing or evidencing any Pledged Collateral.

“Pledged Stock” shall have the meaning assigned to such term in Section 3.01.

“Restatement Date”shall mean the date of this Agreement.

“Secured Parties” shall mean (a) the Lenders, (b) the Administrative Agent, (c) the Collateral Agent, (d) each Issuing Bank, (e) each counterparty to any Hedging Agreement with a Loan Party that either (i) is in effect on the Closing Date if such counterparty is the Administrative Agent or a Lender or an Affiliate of the Administrative Agent or a Lender as of the Closing Date or (ii) is entered into after the Closing Date if such counterparty is the Administrative Agent or a Lender or an Affiliate of the Administrative Agent or a Lender at the time such Hedging Agreement is entered into, (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (g) the successors and assigns of each of the foregoing.

“Security ” shall have the meaning assigned to such term in Article 8 of the New York UCC.

“Security Interest” shall have the meaning assigned to such term in Section 4.01.

“Subsidiary Guarantors” shall mean (a) the Subsidiaries identified on Schedule I hereto as Subsidiary Guarantors and (b) each other Subsidiary that becomes a party to this Agreement as a Subsidiary Guarantor after the Restatement Date.

“Trademark License” shall mean any written agreement, now or hereafter in effect, granting to any third person any right to use any trademark now or hereafter owned by any Grantor or that any Grantor otherwise has the right to license, or granting to any Grantor any right to use any trademark now or hereafter owned by any third person, and all rights of any Grantor under any such agreement.

“Trademarks” shall mean all of the following now owned or hereafter acquired by any Grantor: (a) all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings

6

thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office (or any successor office) or any similar offices in any State of the United States or any other country or any political subdivision thereof, and all extensions or renewals thereof, including those listed on Schedule III, (b) all goodwill associated therewith or symbolized thereby and (c) all other assets, rights and interests that uniquely reflect or embody such goodwill.

“Uncertificated Foreign Security” shall mean an Equity Interest constituting a Security at any time owned by any Grantor in any Material First Tier Foreign Subsidiary, which Equity Interest is not represented by a certificate.

“Uncertificated Limited Liability Company Interest” shall mean a limited liability company membership interest at any time owned by any Grantor in any Material Domestic Restricted Subsidiary or Material First Tier Foreign Subsidiary which is a limited liability company and which limited liability company membership interest is not a Security and not represented by a certificate.

“Uncertificated Partnership Interest” shall mean a general partnership interest or limited partnership interest at any time owned by any Grantor in any Material Domestic Restricted Subsidiary or Material First Tier Foreign Subsidiary which is a limited partnership and which general partnership interest or limited partnership interest is not a Security and not represented by a certificate.

“Unfunded Advances/Participations” shall mean (a) with respect to the Administrative Agent, the aggregate amount, if any (i) made available to any Borrower on the assumption that each relevant Lender has made its portion of the applicable Borrowing available to the Administrative Agent as contemplated by Section 2.02(d) of the Credit Agreement and (ii) with respect to which a corresponding amount shall not in fact have been returned to the Administrative Agent by such Borrower or made available to the Administrative Agent by any such Lender, (b) with respect to the Swingline Lender or an A/C Fronting Lender, the aggregate amount, if any, of participations in respect of any outstanding Swingline Loan and A/C Fronted Loans, respectively, that shall not have been funded by the Revolving Credit Lenders in accordance with Section 2.22(e) and 2.24(e), respectively, of the Credit Agreement and (c) with respect to any Issuing Bank (other than any Additional L/C Issuing Bank, with respect to any Additional Letter of Credit), the aggregate amount, if any, of participations in respect of any outstanding L/C Disbursement that shall not have been funded by the Revolving Credit Lenders in accordance with Sections 2.23(d)and 2.02(f) of the Credit Agreement.

ARTICLE II

Guarantee

SECTION 2.01. Guarantee. Each Guarantor unconditionally guarantees, jointly with the other Guarantors and severally, as a primary obligor and not merely as a

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surety, the due and punctual payment and performance of the Obligations. Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee notwithstanding any extension or renewal of any Obligation. Each Guarantor waives presentment to, demand of payment from and protest to any Borrower or any other Loan Party of any Obligation, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment.

SECTION 2.02. Guarantee of Payment. Each Guarantor further agrees that its guarantee hereunder constitutes a guarantee of payment when due and not of collection, and waives any right to require that any resort be had by the Collateral Agent or any other Secured Party to any security held for the payment of the Obligations or to any balance of any Deposit Account or credit on the books of the Collateral Agent or any other Secured Party in favor of any Borrower or any other person.

SECTION 2.03. No Limitations, Etc. (a) Except for termination of a Guarantor’s obligations hereunder as expressly provided in Section 7.15, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by (i) the failure of the Collateral Agent or any other Secured Party to assert any claim or demand or to enforce any right or remedy under the provisions of any Loan Document or otherwise, (ii) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, any Loan Document or any other agreement, including with respect to any other Guarantor under this Agreement, (iii) the release of, or any impairment of or failure to perfect any Lien on or security interest in, any security held by the Collateral Agent or any other Secured Party for the Obligations or any of them, (iv) any default, failure or delay, wilful or otherwise, in the performance of the Obligations, or (v) any other act or omission that may or might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of all the Obligations). Each Guarantor expressly authorizes the Collateral Agent to take and hold security for the payment and performance of the Obligations, to exchange, waive or release any or all such security (with or without consideration), to enforce or apply such security and direct the order and manner of any sale thereof in its sole discretion or to release or substitute any one or more other guarantors or obligors upon or in respect of the Obligations, all without affecting the obligations of any Guarantor hereunder.

(b) To the fullest extent permitted by applicable law, each Guarantor waives any defense based on or arising out of any defense of any Borrower or any other Loan Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any Borrower or any other Loan Party, other than the indefeasible payment in full in cash of all the Obligations. The Collateral

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Agent and the other Secured Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with any Borrower or any other Loan Party or exercise any other right or remedy available to them against any Borrower or any other Loan Party, without affecting or impairing in any way the liability of any Guarantor hereunder except to the extent the Obligations have been fully and indefeasibly paid in full in cash. To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Guarantor against any Borrower or any other Loan Party, as the case may be, or any security.

SECTION 2.04. Reinstatement. Each Guarantor agrees that its guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by the Collateral Agent or any other Secured Party upon the bankruptcy or reorganization of any Borrower, any other Loan Party or otherwise.

SECTION 2.05. Agreement To Pay; Subrogation. In furtherance of the foregoing and not in limitation of any other right that the Collateral Agent or any other Secured Party has at law or in equity against any Guarantor by virtue hereof, upon the failure of any Borrower or any other Loan Party to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Collateral Agent for distribution to the applicable Secured Parties in cash the amount of such unpaid Obligation. Upon payment by any Guarantor of any sums to the Collateral Agent as provided above, all rights of such Guarantor against any Borrower or any other Guarantor arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subject to Article VI.

SECTION 2.06. Information. Each Guarantor assumes all responsibility for being and keeping itself informed of each Borrower’s and each Guarantor’s financial condition and assets and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that neither the Collateral Agent nor any other Secured Party will have any duty to advise such Guarantor of information known to it or any of them regarding such circumstances or risks.

ARTICLE III

Pledge of Securities

SECTION 3.01. Pledge. As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby assigns and pledges to

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the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, a security interest in, all of such Grantor’s right, title and interest in, to and under (a) the Equity Interests of (i) each Material Domestic Restricted Subsidiary and Material First Tier Foreign Subsidiary in existence on the date hereof and (x) in the case of certificated Equity Interests constituting Securities, listed in Part A of Schedule II hereto or (y) in the case of Uncertificated Foreign Securities, Uncertificated Limited Liability Company Interests and Uncertificated Partnership Interests, listed in Part B of Schedule II hereto, and (ii) each Material Domestic Restricted Subsidiary and each Material First Tier Foreign Subsidiary obtained in the future by such Grantor (including the Equity Interests of each Subsidiary that becomes a Material Domestic Restricted Subsidiary or Material First Tier Foreign Subsidiary in the future) and the certificates representing all such Equity Interests (collectively referred to herein as the “Pledged Stock”); provided, however, that the Pledged Stock shall not include (i) more than 65% of the issued and outstanding voting Equity Interests of any Foreign Subsidiary, (ii) to the extent that applicable law requires that a Subsidiary issue directors’ qualifying shares, such qualifying shares, or (iii) any Equity Interests in any Foreign Subsidiary, to the extent that the granting of a security interest therein would result in a stamp tax or any other duty, (b)(i) the Material Debt Securities held by such Grantor on the date hereof (including all such Material Debt Securities listed opposite the name of such Grantor in Part C of Schedule II), (ii) any Material Debt Securities in the future issued to such Grantor and (iii) the promissory notes and any other instruments evidencing such Material Debt Securities (collectively referred to herein as the “Pledged Debt Securities”), (c) all other property that may be delivered to and held by the Collateral Agent pursuant to the terms of this Section 3.01, (d) subject to Section 3.06, all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the securities referred to in clauses (a) and (b) above, (e) subject to Section 3.06, all rights and privileges of such Grantor with respect to the securities and other property referred to in clauses (a), (b), (c) and (d) above, and (f) all Proceeds of any of the foregoing (the items referred to in clauses (a) through (f) above being collectively referred to as the “Pledged Collateral”).

TO HAVE AND TO HOLD the Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, forever; subject, however, to the terms, covenants and conditions hereinafter set forth.

SECTION 3.02. Delivery of the Pledged Collateral. (a) Each Grantor agrees promptly to deliver or cause to be delivered to the Collateral Agent any and all certificates, instruments or other documents representing or evidencing Pledged Securities (other than Uncertificated Foreign Securities, Uncertificated Limited Liability Company Interests and Uncertificated Partnership Interests).

(b) Upon delivery to the Collateral Agent, (i) any certificate, instrument or document representing or evidencing Pledged Securities (other than Uncertificated

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Foreign Securities, Uncertificated Limited Liability Company Interests and Uncertificated Partnership Interests) shall be accompanied by undated stock powers duly executed in blank or other undated instruments of transfer satisfactory to the Collateral Agent and duly executed in blank and by such other instruments and documents as the Collateral Agent may reasonably request and (ii) all other property comprising part of the Pledged Collateral (other than Uncertificated Foreign Securities, Uncertificated Limited Liability Company Interests and Uncertificated Partnership Interests) shall be accompanied by proper instruments of assignment duly executed by the applicable Grantor and such other instruments or documents as the Collateral Agent may reasonably request. Each delivery of Pledged Securities (other than Uncertificated Foreign Securities, Uncertificated Limited Liability Company Interests and Uncertificated Partnership Interests) shall be accompanied by a schedule describing the securities, which schedule shall be attached hereto as Part A, B or C, as applicable, of Schedule II and made a part hereof; provided that failure to attach any such schedule hereto shall not affect the validity of the pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.

(c) Each Grantor pledging Uncertificated Limited Liability Company Interests or Uncertificated Partnership Interests shall deliver to the Collateral Agent an agreement among the issuer thereof, the Collateral Agent and such Grantor, in form and substance satisfactory to the Collateral Agent, pursuant to which such issuer agrees to comply with any and all instructions originated by the Collateral Agent without further consent by such Grantor and not to comply with instructions regarding such Uncertificated Limited Liability Company Interests or Uncertificated Partnership Interests, as applicable, originated by any other person other than a court of competent jurisdiction. The Collateral Agent agrees with each Grantor that the Collateral Agent shall not give any such instructions or directions to any such issuer unless an Event of Default has occurred and is continuing.

SECTION 3.03. Representations, Warranties and Covenants. The Grantors jointly and severally represent, warrant and covenant to and with the Collateral Agent, for the benefit of the Secured Parties, that:

(a) Schedule II correctly sets forth the percentage of the issued and outstanding shares of each class of the Equity Interests of the issuer thereof represented by the Pledged Stock and includes all Equity Interests, debt securities and promissory notes required to be pledged hereunder;

(b) the Pledged Stock and Pledged Debt Securities have been duly and validly authorized and issued by the issuers thereof and (i) in the case of Pledged Stock, are fully paid and nonassessable and (ii) in the case of Pledged Debt Securities, are legal, valid and binding obligations of the issuers thereof;

(c) except for the security interests granted hereunder (or otherwise permitted under the Credit Agreement), each Grantor (i) is and, subject to any transfers made in compliance with the Credit Agreement, will continue to be the direct owner, beneficially and of record, of the Pledged Securities indicated on

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Schedule II as owned by such Grantor, (ii) holds the same free and clear of all Liens, (iii) will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than transfers made in compliance with the Credit Agreement, and (iv) subject to Section 3.06, will cause any and all Pledged Collateral (other than Uncertificated Foreign Securities, Uncertificated Limited Liability Company Interests and Uncertificated Partnership Interests), whether for value paid by such Grantor or otherwise, to be forthwith deposited with the Collateral Agent and pledged or assigned hereunder;

(d) except for restrictions and limitations imposed by the Loan Documents or securities laws generally, the Pledged Collateral is and will continue to be freely transferable and assignable, and none of the Pledged Collateral is or will be subject to any option, right of first refusal, shareholders agreement, charter or by-law provisions or contractual restriction of any nature that might prohibit, impair, delay or otherwise affect the pledge of such Pledged Collateral hereunder, the sale or disposition thereof pursuant hereto or the exercise by the Collateral Agent of rights and remedies hereunder;

(e) each Grantor (i) has the power and authority to pledge the Pledged Collateral pledged by it hereunder in the manner hereby done or contemplated and (ii) will defend its title or interest thereto or therein against any and all Liens (other than the Lien created or permitted by the Loan Documents), however arising, of all persons whomsoever;

(f) no consent or approval of any Governmental Authority, any securities exchange or any other person was or is necessary to the validity of the pledge effected hereby (other than such as have been obtained and are in full force and effect);

(g) by virtue of the execution and delivery by each Grantor of this Agreement, when (i) any Pledged Securities (other than Uncertificated Foreign Securities, Uncertificated Limited Liability Company Interests and Uncertificated Partnership Interests) are delivered to the Collateral Agent in accordance with this Agreement, and (ii) the issuer of any Uncertificated Foreign Securities, Uncertificated Limited Liability Company Interests or Uncertificated Partnership Interests, as applicable, the relevant Grantor and the Collateral Agent have executed an agreement described in Section 3.02(c), the Collateral Agent will obtain a legal, valid and perfected first-priority lien upon and security interest in such Pledged Securities, to the extent that the laws of the United States or any state thereof govern the creation and perfection of any such security interest, as security for the payment and performance of the Obligations; and

(h) the pledge effected hereby is effective to vest in the Collateral Agent, for the ratable benefit of the Secured Parties, the rights of the Collateral Agent in the Pledged Collateral as set forth herein and all action by any Grantor

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necessary or desirable to protect and perfect the Lien on the Pledged Collateral has been duly taken.

SECTION 3.04. Interests in Limited Liability Companies and Limited Partnerships. (a) Each Grantor acknowledges and agrees that (i) each interest in any limited liability company or limited partnership which is a Subsidiary, pledged hereunder and represented by a certificate shall be a Security and shall be governed by Article 8 of the New York UCC and (ii) each such interest shall at all times hereafter be represented by a certificate.

(b) Each Grantor further acknowledges and agrees that (i) each interest in any limited liability company or limited partnership which is a Subsidiary, pledged hereunder and not represented by a certificate shall not be a Security and shall not be governed by Article 8 of the New York UCC, and (ii) such Grantor shall at no time elect to treat any such interest as a Security or issue any certificate representing such interest, unless such Grantor provides prior written notification to the Collateral Agent of such election and immediately delivers any such certificate to the Collateral Agent pursuant to the terms hereof.

SECTION 3.05. Registration in Nominee Name; Denominations. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent, on behalf of the Secured Parties, shall have the right (in its sole and absolute discretion) to hold the Pledged Securities in its own name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank or in favor of the Collateral Agent. Each Grantor will promptly give to the Collateral Agent copies of any notices or other communications received by it with respect to Pledged Securities in its capacity as the registered owner thereof. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have the right to exchange the certificates representing Pledged Securities for certificates of smaller or larger denominations for any purpose consistent with this Agreement.

SECTION 3.06. Voting Rights; Dividends and Interest, Etc. (a) Unless and until an Event of Default shall have occurred and be continuing and the Collateral Agent shall have given the Grantors notice of its intent to exercise its rights under this Agreement (which notice shall be deemed to have been given immediately upon the occurrence of an Event of Default under paragraph (g) or (h) of Article VII of the Credit Agreement):

(i)        Each Grantor shall be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Securities or any part thereof for any purpose consistent with the terms of this Agreement, the Credit Agreement and the other Loan Documents; provided, however, that such rights and powers shall not be exercised in any manner that could materially and adversely affect the rights inuring to a holder of any Pledged Securities or the rights and remedies of any of the Collateral Agent or the other Secured Parties under this Agreement or the

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Credit Agreement or any other Loan Document or the ability of the Secured Parties to exercise the same.

(ii)       The Collateral Agent shall execute and deliver to each Grantor, or cause to be executed and delivered to each Grantor, all such proxies, powers of attorney and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and/or consensual rights and powers it is entitled to exercise pursuant to paragraph (i) above and to receive the cash dividends it is entitled to receive pursuant to paragraph (iii) below.

(iii)      Each Grantor shall be entitled to receive and retain any and all cash dividends, interest, principal and other distributions paid on or distributed in respect of the Pledged Securities to the extent and only to the extent that such dividends, interest, principal and other distributions are permitted by, and otherwise paid or distributed in accordance with, the terms and conditions of the Credit Agreement, the other Loan Documents and applicable law. All noncash dividends, interest and principal, and all dividends, interest and principal paid or payable in cash or otherwise in connection with a partial or total liquidation or dissolution, return of capital, capital surplus or paid-in surplus, and all other distributions (other than distributions referred to in the preceding sentence), whether resulting from a subdivision, combination or reclassification of the outstanding Equity Interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, except in the case of a transaction permitted under the Credit Agreement, if received by any Grantor, shall not be commingled by such Grantor with any of its other funds or property but shall be held separate and apart therefrom, shall be held in trust for the ratable benefit of the Collateral Agent and shall be forthwith delivered to the Collateral Agent in the same form as so received (with any necessary endorsement or instrument of assignment). This paragraph (iii) shall not apply to dividends between or among the Borrowers, the Guarantors and any Subsidiaries only of property subject to a perfected security interest under this Agreement; provided that the applicable Borrower notifies the Collateral Agent in writing, specifically referring to this Section 3.06 at the time of such dividend and takes any actions the Collateral Agent specifies to ensure the continuance of its perfected security interest in such property under this Agreement.

(b) Upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have notified (or shall be deemed to have notified pursuant to Section 3.06(a)) the Grantors of the suspension of their rights under paragraph (a)(iii) of this Section 3.06, then all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant to

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paragraph (a)(iii) of this Section 3.06 shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions. All dividends, interest, principal or other distributions received by any Grantor contrary to the provisions of this Section 3.06 shall be held in trust for the benefit of the Collateral Agent, shall be segregated from other property or funds of such Grantor and shall be forthwith delivered to the Collateral Agent upon demand in the same form as so received (with any necessary endorsement or instrument of assignment). Any and all money and other property paid over to or received by the Collateral Agent pursuant to the provisions of this paragraph (b) shall be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property and shall be applied in accordance with the provisions of Section 5.02. After all Events of Default have been cured or waived and each applicable Grantor has delivered to the Administrative Agent certificates to that effect, the Collateral Agent shall, promptly after all such Events of Default have been cured or waived, repay to each applicable Grantor (without interest) all dividends, interest, principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section 3.06 and that remain in such account.

(c) Upon the occurrence and during the continuance of an Event of Default, after the Collateral Agent shall have notified (or shall be deemed to have notified pursuant to Section 3.06(a)) the Grantors of the suspension of their rights under paragraph (a)(i) of this Section 3.06, then all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section 3.06, and the obligations of the Collateral Agent under paragraph (a)(ii) of this Section 3.06, shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and powers; provided that, unless otherwise directed by the Required Lenders, the Collateral Agent shall have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights. After all Events of Default have been cured or waived, the applicable Grantor shall have the right to exercise the voting and consensual rights and powers that it would otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i) of this Section 3.06.

(d) Any notice given by the Collateral Agent to the Grantors exercising its rights under paragraph (a) of this Section 3.06 (i) may be given by telephone if promptly confirmed in writing, (ii) may be given to one or more of the Grantors at the same or different times and (iii) may suspend the rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) in part without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event of Default has occurred and is continuing.

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ARTICLE IV

Security Interests in Personal Property

SECTION 4.01. Security Interest. (a) As security for the payment or performance, as the case may be, in full of the Obligations, each Grantor hereby assigns and pledges to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, and hereby grants to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, a security interest (the “Security Interest”), in all right, title or interest in or to any and all of the following assets and properties now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “Article9 Collateral”):

(i) all Accounts;

(ii) all Chattel Paper;

(iii) all cash and Deposit Accounts;

(iv) all Documents;

(v) all Equipment;

(vi) all General Intangibles;

(vii) all Instruments;

(viii) all Inventory;

(ix) all Investment Property;

(x) all Letter-of-Credit Rights;

(xi) all Commercial Tort Claims;

(xii)     all books and records pertaining to the Article 9 Collateral; and

(xiii)    to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any person with respect to any of the foregoing.

Notwithstanding anything contained in this Section 4.01 to the contrary, in no event shall the Article 9 Collateral include, and no Grantor shall be deemed to have granted a Security Interest in, (i) any right under any contract or agreement constituting a General Intangible, but only to the extent that the granting of a security interest therein or an assignment thereof would violate any applicable law or any enforceable provision of such contract or agreement; provided that, to the extent such security interest at any time

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hereafter shall no longer be prohibited by law, or immediately upon such provision no longer being enforceable, as the case may be, the Article 9 Collateral shall automatically and without any further action include, and the Grantors shall be deemed to have granted automatically and without any further action a Security Interest in, such right as if such law had never existed or such provision had never been enforceable, as the case may be, (ii) more than 65% of the issued and outstanding voting Equity Interests of any Foreign Subsidiary, (iii) to the extent that applicable law requires that a Subsidiary issue directors’ qualifying shares, such qualifying shares, or (iv) any Equity Interests in any Foreign Subsidiary to the extent that the granting of a security interest therein would result in a stamp tax or any other duty.

(b) Each Grantor hereby irrevocably authorizes the Collateral Agent at any time and from time to time to file in any relevant jurisdiction any initial financing statements (including fixture filings) with respect to the Article 9 Collateral or any part thereof and amendments thereto that (i) indicate the Article 9 Collateral as all assets of such Grantor or words of similar effect, and (ii) contain the information required by Article 9 of the Uniform Commercial Code of each applicable jurisdiction for the filing of any financing statement or amendment, including (A) whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor and (B) in the case of a financing statement filed as a fixture filing, a sufficient description of the real property to which such Article 9 Collateral relates. Each Grantor agrees to provide such information to the Collateral Agent promptly upon request.

Each Grantor also ratifies its authorization for the Collateral Agent to file in any relevant jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof.

The Collateral Agent is further authorized to file with the United States Patent and Trademark Office or United States Copyright Office (or any successor office or any similar office in any other country) such documents as may be necessary or advisable for the purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest granted by each Grantor, without the signature of any Grantor, and naming any Grantor or the Grantors as debtors and the Collateral Agent as secured party; provided, however, that the Collateral Agent shall not file any such documents with respect to any Intellectual Property other than the Perfection Intellectual Property.

(c) The Security Interest is granted as security only and shall not subject the Collateral Agent or any other Secured Party to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of the Article 9 Collateral.

SECTION 4.02. Representations and Warranties. The Grantors jointly and severally represent and warrant to the Collateral Agent and the Secured Parties that:

(a) Each Grantor has good and valid rights in and title to the Article 9 Collateral with respect to which it has purported to grant a Security Interest

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hereunder (except for Liens expressly permitted pursuant to the Loan Documents) and has full power and authority to grant to the Collateral Agent, for the ratable benefit of the Secured Parties, the Security Interest in such Article 9 Collateral pursuant hereto and to execute, deliver and perform its obligations in accordance with the terms of this Agreement, without the consent or approval of any other person other than (i) any consent or approval that has been obtained and (ii) any consent or approval the failure of which could not impair or adversely affect the Security Interests intended to be granted hereunder.

(b) The Perfection Certificate has been duly prepared, completed and executed and the information set forth therein (including (x) the exact legal name of each Grantor and (y) the jurisdiction of organization of each Grantor) is correct and complete as of the Restatement Date. Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations containing a description of the Article 9 Collateral have been prepared by the Collateral Agent based upon the information provided to the Administrative Agent and the Secured Parties in the Perfection Certificate for filing in each governmental, municipal or other office specified in Schedule 6 to the Perfection Certificate (or specified by notice from Terex to the Administrative Agent after the Restatement Date in the case of filings, recordings or registrations required by Sections 5.11 of the Credit Agreement), which are all the filings, recordings and registrations (other than filings required to be made in the United States Patent and Trademark Office and the United States Copyright Office in order to perfect the Security Interest in the Perfection Intellectual Property) that are necessary to publish notice of and protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the ratable benefit of the Secured Parties) in respect of all Article 9 Collateral (other than Intellectual Property that is not Perfection Intellectual Property) in which the Security Interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary in any such jurisdiction, except as provided under applicable law with respect to the filing of Uniform Commercial Code continuation statements. Each Grantor represents and warrants that a fully executed agreement in the form hereof (or a fully executed short form agreement in form and substance satisfactory to the Collateral Agent) and, subject to Section 4.01(b), containing a description of all Perfection Intellectual Property have been delivered to the Collateral Agent for recording by the United States Patent and Trademark Office and the United States Copyright Office pursuant to 35 U.S.C. §261, 15 U.S.C. §1060 or 17 U.S.C. §205 and the regulations thereunder, as applicable, and otherwise as may be required pursuant to the laws of any other necessary jurisdiction (including the filing of Uniform Commercial Code financing statements), to protect the validity of and to establish a legal, valid and perfected security interest in favor of the Collateral Agent (for the ratable benefit of the Secured Parties) in respect of all Perfection Intellectual Property in which a security interest may be perfected by filing, recording or registration in the United States (or any political subdivision thereof) and its territories and

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possessions, and no further or subsequent filing, refiling, recording, rerecording, registration or reregistration is necessary (other than as provided under applicable law with respect to the filing of Uniform Commercial Code continuation statements).

(c) The Security Interest constitutes (i) a legal and valid security interest in all Article 9 Collateral securing the payment and performance of the Obligations, (ii) subject to the filings described in Section 4.02(b), a perfected security interest in all Article 9 Collateral (other than Intellectual Property that is not Perfection Intellectual Property) in which a security interest may be perfected by filing, recording or registering a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code or other applicable law in such jurisdictions and (iii) a security interest that shall be perfected in all Article 9 Collateral (other than Intellectual Property that is not Perfection Intellectual Property) in which a security interest may be perfected upon the receipt and recording of this Agreement with the United States Patent and Trademark Office and the United States Copyright Office, as applicable, within the three month period (commencing as of the date hereof) pursuant to 35 U.S.C. § 261 or 15 U.S.C. § 1060 or the one month period (commencing as of the date hereof) pursuant to 17 U.S.C. § 205. The Security Interest is and shall be prior to any other Lien on any of the Article 9 Collateral, other than Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement that have priority as a matter of law.

(d) The Article 9 Collateral is owned by the Grantors free and clear of any Lien, except for Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement. No Grantor has filed or consented to the filing of (i) any financing statement or analogous document under the Uniform Commercial Code or any other applicable laws covering any Article 9 Collateral (except for financing statements or analogous documents filed for precautionary reasons relating to operating leases, consignments and other similar items, in each case (x) in the ordinary course of business, and (y) as permitted under the Credit Agreement), (ii) any assignment in which any Grantor assigns any Collateral or any security agreement or similar instrument covering any Article 9 Collateral with the United States Patent and Trademark Office or the United States Copyright Office, (iii) any notice under the Assignment of Claims Act, or (iv) any assignment in which any Grantor assigns any Article 9 Collateral or any security agreement or similar instrument covering any Article 9 Collateral with any foreign governmental, municipal or other office, which financing statement or analogous document, assignment, security agreement or similar instrument is still in effect, except, in each case, for Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement. No Grantor holds any Commercial Tort Claims except as indicated on the Perfection Certificate.

SECTION 4.03. Covenants. (a) Each Grantor agrees promptly to notify the Collateral Agent in writing of any change in (i) its legal name, (ii) its identity or type

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of organization or corporate structure, (iii) its Federal Taxpayer Identification Number or organizational identification number or (iv) its jurisdiction of organization. Each Grantor agrees promptly to provide the Collateral Agent with certified organizational documents reflecting any of the changes described in the first sentence of this paragraph. Each Grantor agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected first priority security interest in all the Article 9 Collateral (other than Intellectual Property that is not Perfection Intellectual Property) in which a security interest may be perfected by filing, recording or registering (A) a financing statement or analogous document in the United States (or any political subdivision thereof) and its territories and possessions pursuant to the Uniform Commercial Code or other applicable law in such jurisdictions or (B) a security interest in the Perfection Intellectual Property in the United States Patent and Trademark Office or the United States Copyright Office, in each case, other than with respect to Liens expressly permitted by Section 6.02 of the Credit Agreement that have priority as a matter of law. Each Grantor agrees promptly to notify the Collateral Agent if any material portion of the Article 9 Collateral owned or held by such Grantor is damaged or destroyed.

(b) Each Grantor agrees to maintain, at its own cost and expense, such complete and accurate records with respect to the Article 9 Collateral owned by it as is consistent with its current practices and in accordance with such prudent and standard practices used in industries that are the same as or similar to those in which such Grantor is engaged, but in any event to include complete accounting records indicating all payments and proceeds received with respect to any part of the Article 9 Collateral, and, at such time or times as the Collateral Agent may reasonably request, promptly to prepare and deliver to the Collateral Agent a duly certified schedule or schedules in form and detail satisfactory to the Collateral Agent showing the identity, amount and location of any and all Article 9 Collateral.

(c) Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to Section 5.04(a) of the Credit Agreement, Terex shall deliver to the Collateral Agent a certificate executed by its chief legal officer or a Responsible Officer of Terex certifying that all Uniform Commercial Code financing statements (including fixture filings, as applicable) or other appropriate filings recordings or registrations, including all refilings, recordings and registrations, containing a description of the Article 9 Collateral (other than in respect of Intellectual Property that is not Perfection Intellectual Property) have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (a) of this Section 4.03 to the extent necessary to protect and perfect the Security Interest for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period).

(d) Each Grantor shall, at its own expense, take any and all commercially reasonable actions necessary to defend title to the Article 9 Collateral against all persons and to defend the Security Interest of the Collateral Agent in the Article 9 Collateral and

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the priority thereof against any Lien not expressly permitted pursuant to Section 6.02 of the Credit Agreement.

(e) Each Grantor agrees, at its own expense, promptly to execute, acknowledge, deliver and cause to be duly filed all such further instruments and documents and take all such actions as the Collateral Agent may from time to time reasonably request to better assure, obtain, preserve, protect and perfect the Security Interest and the rights and remedies created hereby, including the payment of any fees and Taxes required in connection with the execution and delivery of this Agreement, the granting of the Security Interest and the filing of any financing or continuation statements (including fixture filings) or other documents in connection herewith or therewith. If any amount payable to any Grantor under or in connection with any of the Article 9 Collateral shall be or become evidenced by any promissory note or other instrument, such note or instrument shall be promptly pledged and delivered to the Collateral Agent, duly endorsed in a manner satisfactory to the Collateral Agent.

(f) The Collateral Agent and such persons as the Collateral Agent may reasonably designate shall have the right, at the applicable Grantor’s own cost and expense, to inspect, during normal business hours and on reasonable notice, the Article 9 Collateral, all records related thereto (and to make extracts and copies from such records) and the premises upon which any of the Article 9 Collateral is located (no more than two such inspections being permitted annually under this Section 4.03(f) unless an Event of Default shall have occurred and be continuing), to discuss the applicable Grantor’s affairs with the officers of such Grantor and its independent accountants and to verify under reasonable procedures the existence, validity, amount, quality, quantity, value, condition and status of, or any other matter relating to, the Article 9 Collateral, including, in the case of Accounts or other Article 9 Collateral in the possession of any third person, by contacting Account Debtors or the third person possessing such Article 9 Collateral for the purpose of making such a verification. The Collateral Agent shall have the absolute right to share any information it gains from such inspection or verification with any Secured Party (it being understood that any such information shall be deemed to be “Information” subject to the provisions of Section 9.17 of the Credit Agreement).

(g) At its option at any time after ten Business Days’ notice to the applicable Grantor (or, to the extent the Collateral Agent deems it necessary to act prior the end of such ten day notice period in order to preserve the Article 9 Collateral, the applicable Grantor’s rights to and use of the Article 9 Collateral or the Security Interest granted herein, any shorter notice period), the Collateral Agent may discharge past due Taxes, assessments, charges, fees, Liens, security interests or other encumbrances at any time levied or placed on the Article 9 Collateral and not expressly permitted pursuant to Section 5.03 or Section 6.02 of the Credit Agreement, and may pay for the maintenance and preservation of the Article 9 Collateral to the extent any Grantor fails to do so as required by the Credit Agreement or this Agreement, and each Grantor jointly and severally agrees to reimburse the Collateral Agent on demand for any payment made or any expense incurred by the Collateral Agent pursuant to the foregoing authorization; provided, however, that nothing in this paragraph shall be interpreted as excusing any Grantor from the performance of, or imposing any obligation on the Collateral Agent or

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any Secured Party to cure or perform, any covenants or other promises of any Grantor with respect to Taxes, assessments, charges, fees, Liens, security interests or other encumbrances and maintenance as set forth herein or in the other Loan Documents.

(h) Each Grantor shall remain liable to observe and perform all the conditions and obligations to be observed and performed by it under each contract, agreement or instrument relating to the Article 9 Collateral, all in accordance with the terms and conditions thereof, and each Grantor jointly and severally agrees to indemnify and hold harmless the Collateral Agent and the Secured Parties from and against any and all liability for such performance.

(i) No Grantor shall make or permit to be made an assignment, pledge or hypothecation of the Article 9 Collateral or shall grant any other Lien in respect of the Article 9 Collateral or permit any notice to be filed under the Assignment of Claims Act, except, in each case, as expressly permitted by Section 6.02 of the Credit Agreement. No Grantor shall make or permit to be made any transfer of the Article 9 Collateral and each Grantor shall remain at all times in possession or otherwise in control of the Article 9 Collateral owned by it, except that (i) Inventory and Accounts Receivable may be sold in the ordinary course of business, (ii) Accounts Receivable may be sold in connection with the Receivables Program and (iii) unless and until the Collateral Agent shall notify the Grantors that an Event of Default shall have occurred and be continuing and that during the continuance thereof the Grantors shall not sell, convey, lease, assign, transfer or otherwise dispose of any Collateral (which notice may be given by telephone if promptly confirmed in writing), the Grantors may use and dispose of the Collateral in any lawful manner not inconsistent with the provisions of this Agreement, the Credit Agreement or any other Loan Document; provided that, notwithstanding anything contained in this Section 4.03(i) to the contrary, each Grantor shall be permitted to deliver Article 9 Collateral to, and store Article 9 Collateral with, a bailee or warehouseman without obtaining an executed lien waiver in favor of the Collateral Agent.

(j) No Grantor will, without the Collateral Agent’s prior written consent, which consent shall not be unreasonably withheld, grant any extension of the time of payment of any Accounts included in the Article 9 Collateral, compromise, compound or settle the same for less than the full amount thereof, release, wholly or partly, any person liable for the payment thereof or allow any credit or discount whatsoever thereon, other than extensions, credits, discounts, compromises, compoundings or settlements granted or made in the ordinary course of business and consistent with its current and past practices and in accordance with such commercially prudent and standard practice used in industries that are the same as or similar to those in which such Grantor is engaged.

(k) Each Grantor, at its own expense, shall maintain or cause to be maintained insurance covering physical loss or damage to the Inventory and Equipment in accordance with the requirements set forth in Section 5.02 of the Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the Collateral Agent (and all officers, employees or agents designated by the Collateral Agent) as such Grantor’s true and lawful agent (and attorney-in-fact) for the purpose, upon the occurrence and during the continuance of an Event of Default, of making, settling and adjusting claims in

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respect of Article 9 Collateral under policies of insurance, endorsing the name of such Grantor on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect thereto. In the event that any Grantor at any time or times shall fail to obtain or maintain any of the policies of insurance required hereby or under the Credit Agreement or to pay any premium in whole or part relating thereto, the Collateral Agent may, without waiving or releasing any obligation or liability of any Grantor hereunder or any Default or Event of Default, in its sole discretion, obtain and maintain such policies of insurance and pay such premium and take any other actions with respect thereto as the Collateral Agent deems advisable. All sums disbursed by the Collateral Agent in connection with this paragraph, including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable, upon demand, by the Grantors to the Collateral Agent and shall be additional Obligations secured hereby.

(l) Each Grantor shall maintain, in form and manner reasonably satisfactory to the Collateral Agent, records of its Chattel Paper and its books, records and documents evidencing or pertaining thereto.

SECTION 4.04. Other Actions. In order to further insure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the Security Interest in the Article 9 Collateral, each Grantor agrees, in each case at such Grantor’s own expense, to take the following actions with respect to the following Article 9 Collateral:

(a) Instruments. If any Grantor shall at any time hold or acquire any Instruments (other than securities evidencing Indebtedness that are not Material Debt Securities), such Grantor shall forthwith endorse, assign and deliver the same to the Collateral Agent, accompanied by such undated instruments of endorsement, transfer or assignment duly executed in blank as the Collateral Agent may from time to time specify.

(b) Deposit Accounts. Each Grantor hereby agrees that on or prior to August 3, 2009 (or such later date as the Collateral Agent may agree in its sole discretion), it shall execute and deliver to the Collateral Agent, and shall use commercially reasonable efforts to cause Bank of America, N.A. to execute and deliver to the Collateral Agent, one or more control agreements, in form and substance reasonably satisfactory to the Collateral Agent, among such Grantor, the Collateral Agent and Bank of America, N.A., with respect to the deposit accounts and lockboxes enumerated in Schedule IV hereto and each similar deposit account or lockbox that any Grantor at any time hereafter opens or maintains.

(c) Electronic Chattel Paper and Transferable Records. If any Grantor at any time holds or acquires an interest in any Electronic Chattel Paper or any “transferable record”, as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction,

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such Grantor shall promptly notify the Collateral Agent thereof and, at the request of the Collateral Agent, shall take such action as the Collateral Agent may request to vest in the Collateral Agent control under New York UCC Section 9-105 of such Electronic Chattel Paper or control under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. The Collateral Agent agrees with such Grantor that the Collateral Agent will arrange, pursuant to procedures satisfactory to the Collateral Agent and so long as such procedures will not result in the Collateral Agent’s loss of control, for the Grantor to make alterations to the Electronic Chattel Paper or transferable record permitted under UCC Section 9-105 or, as the case may be, Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such Electronic Chattel Paper or transferable record.

(d) Letter-of-Credit Rights. If any Grantor is at any time a beneficiary under a letter of credit (other than a letter of credit issued in the ordinary course of business), with a face amount in excess of $10,000,000, now or hereafter issued in favor of such Grantor, such Grantor shall promptly notify the Collateral Agent thereof and, at the request and option of the Collateral Agent, such Grantor shall, pursuant to an agreement in form and substance satisfactory to the Collateral Agent, either (i) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to the Collateral Agent of the proceeds of any drawing under the letter of credit or (ii) arrange for the Collateral Agent to become the transferee beneficiary of the letter of credit, with the Collateral Agent agreeing, in each case, that the proceeds of any drawing under the letter of credit are to be paid to the applicable Grantor unless an Event of Default has occurred and is continuing.

(e) Commercial Tort Claims. If any Grantor shall at any time hold or acquire a Commercial Tort Claim in an amount reasonably estimated to exceed $10,000,000, the Grantor shall promptly notify the Collateral Agent thereof in a writing signed by such Grantor including a summary description of such claim and grant to the Collateral Agent, for the ratable benefit of the Secured Parties, in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Collateral Agent.

SECTION 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral. (a) Each Grantor agrees that it will not, and will not permit any of its licensees to, do any act, or omit to do any act, whereby any Patent that is material to the conduct of such Grantor’s business may become invalidated or dedicated to the public, and agrees that it shall continue to mark any products covered by a Patent with the

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relevant patent number as necessary and sufficient to establish and preserve its maximum rights under applicable patent laws.

(b) Each Grantor (either itself or through its licensees or its sublicensees) will, for each Trademark material to the conduct of such Grantor’s business, (i) maintain such Trademark in full force free from any claim of abandonment or invalidity for non-use, (ii) maintain the quality of products and services offered under such Trademark, (iii) display such Trademark with notice of Federal or foreign registration to the extent necessary and sufficient to establish and preserve its maximum rights under applicable law and (iv) not knowingly use or knowingly permit the use of such Trademark in violation of any third party rights.

(c) Each Grantor (either itself or through its licensees or sublicensees) will, for each work covered by a material Copyright, continue to publish, reproduce, display, adopt and distribute the work with appropriate copyright notice as necessary and sufficient to establish and preserve its maximum rights under applicable copyright laws.

(d) Each Grantor shall notify the Collateral Agent promptly if it knows or has reason to know that any Patent, Trademark or Copyright material to the conduct of its business may become abandoned, lost or dedicated to the public, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, United States Copyright Office or any court or similar office of any country) regarding such Grantor’s ownership of any Patent, Trademark or Copyright, its right to register the same, or its right to keep and maintain the same.

(e) Each Grantor will take all commercially reasonable steps that are consistent with the practice in any proceeding before the United States Patent and Trademark Office, United States Copyright Office or any office or agency in any political subdivision of the United States or in any other country or any political subdivision thereof, to maintain and pursue each material application relating to the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or registration) and to maintain each issued Patent and each registration of the Trademarks and Copyrights that is material to the conduct of any Grantor’s business, including timely filings of applications for renewal, affidavits of use, affidavits of incontestability and payment of maintenance fees, and, if consistent with good business judgment, to initiate opposition, interference and cancelation proceedings against third parties.

(f) In the event that any Grantor knows or has reason to believe that any Article 9 Collateral consisting of a Patent, Trademark or Copyright material to the conduct of any Grantor’s business has been or is about to be infringed, misappropriated or diluted by a third person, such Grantor promptly shall notify the Collateral Agent and shall, if consistent with good business judgment, promptly sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and take such other actions as are appropriate under the circumstances to protect such Article 9 Collateral.

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(g) Upon the occurrence and during the continuance of an Event of Default, each Grantor shall use all commercially reasonable efforts to obtain all requisite consents or approvals by the licensor of each Copyright License, Patent License or Trademark License to effect the assignment of all such Grantor’s right, title and interest thereunder to the Collateral Agent, for the ratable benefit of the Secured Parties, or its designee.

ARTICLE V

Remedies

SECTION 5.01. Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default, each Grantor agrees to deliver each item of Collateral to the Collateral Agent on demand, and it is agreed that the Collateral Agent shall have the right to take any of or all the following actions at the same or different times: (a) with respect to any Article 9 Collateral consisting of Intellectual Property, on demand, to cause the Security Interest to become an assignment, transfer and conveyance of any of or all such Article 9 Collateral by the applicable Grantor to the Collateral Agent, or to license or sublicense, whether general, special or otherwise, and whether on an exclusive or nonexclusive basis, any such Article 9 Collateral throughout the world on such terms and conditions and in such manner as the Collateral Agent shall determine (other than in violation of any then-existing licensing arrangements to the extent that waivers cannot be obtained), and (b) with or without legal process and with or without prior notice or demand for performance, to take possession of the Article 9 Collateral and without liability for trespass to enter any premises where the Article 9 Collateral may be located for the purpose of taking possession of or removing the Article 9 Collateral and, generally, to exercise any and all rights afforded to a secured party under the Uniform Commercial Code or other applicable law. Without limiting the generality of the foregoing, each Grantor agrees that the Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default and subject to the mandatory requirements of applicable law, to sell or otherwise dispose of all or any part of the Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery as the Collateral Agent shall deem appropriate. The Collateral Agent shall be authorized at any such sale (if it deems it advisable to do so) to restrict the prospective bidders or purchasers to persons who will represent and agree that they are purchasing the Collateral for their own account for investment and not with a view to the distribution or sale thereof, and upon consummation of any such sale the Collateral Agent shall have the right to assign, transfer and deliver to the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such sale shall hold the property sold absolutely, free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which such Grantor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted.

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The Collateral Agent shall give each applicable Grantor ten Business Days’ written notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611 of the New York UCC or its equivalent in other jurisdictions) of the Collateral Agent’s intention to make any sale of Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale and, in the case of a sale at a broker’s board or on a securities exchange, shall state the board or exchange at which such sale is to be made and the day on which the Collateral, or portion thereof, will first be offered for sale at such board or exchange. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Collateral Agent may fix and state in the notice (if any) of such sale. At any such sale, the Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as the Collateral Agent may (in its sole and absolute discretion) determine. The Collateral Agent shall not be obligated to make any sale of any Collateral if it shall determine not to do so, regardless of the fact that notice of sale of such Collateral shall have been given. The Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In case any sale of all or any part of the Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Collateral Agent until the sale price is paid by the purchaser or purchasers thereof, but the Collateral Agent shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may be sold again upon like notice. At any public (or, to the extent permitted by law, private) sale made pursuant to this Agreement, any Secured Party may bid for or purchase, free (to the extent permitted by applicable law) from any right of redemption, stay, valuation or appraisal on the part of any Grantor (all said rights being also hereby waived and released to the extent permitted by applicable law), the Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to such Secured Party from any Grantor as a credit against the purchase price, and such Secured Party may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to any Grantor therefor. For purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall be treated as a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant to such agreement and no Grantor shall be entitled to the return of the Collateral or any portion thereof subject thereto, notwithstanding the fact that after the Collateral Agent shall have entered into such an agreement all Events of Default shall have been remedied and the Obligations paid in full. As an alternative to exercising the power of sale herein conferred upon it, the Collateral Agent may proceed by a suit or suits at law or in equity to foreclose this Agreement and to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale pursuant to the provisions of this Section 5.01 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-610(b) of the New York UCC or its equivalent in other jurisdictions.

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SECTION 5.02. Application of Proceeds. The Collateral Agent shall apply the proceeds of any collection, sale, foreclosure or other realization upon any Collateral, including any Collateral consisting of cash, as follows:

FIRST, to the payment of all reasonable costs and expenses incurred by the Administrative Agent or the Collateral Agent (in their respective capacities as such hereunder or under any other Loan Document) in connection with such collection, sale, foreclosure or realization or otherwise in connection with this Agreement, any other Loan Document or any of the Obligations, including all court costs and the reasonable fees and expenses of its agents and legal counsel, the repayment of all advances made by the Administrative Agent and/or the Collateral Agent hereunder or under any other Loan Document on behalf of any Grantor and any other reasonable out of pocket costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document;

SECOND, to the payment in full of Unfunded Advances/Participations (the amounts so applied to be distributed between or among the Administrative Agent, Swingline Lender and any Issuing Bank pro rata in accordance with the amounts of Unfunded Advances/Participations owed to them on the date of any such distribution);

THIRD, to the payment in full of all other Obligations (the amounts so applied to be distributed among the Secured Parties pro rata in accordance with the amounts of the Obligations owed to them on the date of any such distribution); and

FOURTH, to the Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds, moneys or balances in accordance with this Agreement. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof.

SECTION 5.03. Grant of License to Use Intellectual Property. For the purpose of enabling the Collateral Agent to exercise rights and remedies under this Agreement at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, to the extent permitted to do so (and each Grantor shall make all commercially reasonable efforts to obtain the consent to license all Intellectual Property referred to below to the Collateral Agent pursuant to this Section 5.03), each Grantor hereby grants to the Collateral Agent an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantors), to use, license or

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sublicense any of the Article 9 Collateral consisting of Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof. The use of such license by the Collateral Agent may be exercised, at the option of the Collateral Agent, only upon the occurrence and during the continuation of an Event of Default; provided, however, that any license, sublicense or other transaction entered into by the Collateral Agent in accordance herewith shall be binding upon each Grantor notwithstanding any subsequent cure of an Event of Default.

SECTION 5.04. Securities Act, Etc. In view of the position of the Grantors in relation to the Pledged Collateral, or because of other current or future circumstances, a question may arise under the U.S. Securities Act of 1933, as now or hereafter in effect, or any similar statute hereafter enacted analogous in purpose or effect (such Act and any such similar statute as from time to time in effect being called the “Federal Securities Laws”) with respect to any disposition of the Pledged Collateral permitted hereunder. Each Grantor understands that compliance with the Federal Securities Laws might very strictly limit the course of conduct of the Collateral Agent if the Collateral Agent were to attempt to dispose of all or any part of the Pledged Collateral, and might also limit the extent to which or the manner in which any subsequent transferee of any Pledged Collateral could dispose of the same. Similarly, there may be other legal restrictions or limitations affecting the Collateral Agent in any attempt to dispose of all or part of the Pledged Collateral under applicable “blue sky” or other state securities laws or similar laws analogous in purpose or effect. Each Grantor recognizes that in light of such restrictions and limitations the Collateral Agent may, with respect to any sale of the Pledged Collateral, limit the purchasers to those who will agree, among other things, to acquire such Pledged Collateral for their own account, for investment, and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that in light of such restrictions and limitations, the Collateral Agent, in its sole and absolute discretion (a) may proceed to make such a sale whether or not a registration statement for the purpose of registering such Pledged Collateral or part thereof shall have been filed under the Federal Securities Laws and (b) may approach and negotiate with a limited number of potential purchasers (including a single potential purchaser) to effect such sale. Each Grantor acknowledges and agrees that any such sale might result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. In the event of any such sale, the Collateral Agent shall incur no responsibility or liability for selling all or any part of the Pledged Collateral at a price that the Collateral Agent, in its sole and absolute discretion, may in good faith deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might have been realized if the sale were deferred until after registration as aforesaid or if more than a limited number of purchasers (or a single purchaser) were approached. The provisions of this Section 5.04 will apply notwithstanding the existence of a public or private market upon which the quotations or sales prices may exceed substantially the price at which the Collateral Agent sells.

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ARTICLE VI

Indemnity, Subrogation and Subordination

SECTION 6.01. Indemnity and Subrogation. In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section 6.03), each Borrower agrees that (a) in the event a payment shall be made by any Guarantor under this Agreement on behalf of such Borrower, such Borrower shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of any Guarantor shall be sold pursuant to this Agreement or any other Security Document to satisfy in whole or in part a claim of any Secured Party on behalf of such Borrower, such Borrower shall indemnify such Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.

SECTION 6.02. Contribution and Subrogation. Each Guarantor (a “Contributing Guarantor”) agrees (subject to Section 6.03) that, in the event a payment shall be made by any other Guarantor hereunder in respect of any Obligation, or assets of any other Guarantor shall be sold pursuant to any Security Document to satisfy any Obligation owed to any Secured Party, and such other Guarantor (the “Claiming Guarantor”) shall not have been fully indemnified by the applicable Borrower as provided in Section 6.01, the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal to (i) the amount of such payment or (ii) the greater of the book value or the fair market value of such assets, as the case may be, in each case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Guarantor on the date hereof and the denominator shall be the aggregate net worth of all the Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 7.16, the date of the supplement hereto executed and delivered by such Guarantor). Any Contributing Guarantor making any payment to a Claiming Guarantor pursuant to this Section 6.02 shall be subrogated to the rights of such Claiming Guarantor under Section 6.01 to the extent of such payment.

SECTION 6.03. Subordination. (a) Notwithstanding any provision of this Agreement to the contrary, all rights of the Guarantors under Sections 6.01 and 6.02 and all other rights of indemnity, contribution or subrogation under applicable law or otherwise shall be subordinated and junior to the indefeasible payment in full in cash of the Obligations. No failure on the part of any Borrower or any Guarantor to make the payments required by Sections 6.01 and 6.02 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of its obligations hereunder.

(b) Each Borrower and each Guarantor hereby agree that all Indebtedness and other monetary obligations owned by it to any Borrower, any other Guarantor or any Subsidiary shall be subordinated and junior to the indefeasible payment in full in cash of the Obligations.

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ARTICLE VII

Miscellaneous

SECTION 7.01. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted herein) be in writing and given as provided in Section 9.01 of the Credit Agreement. All communications and notices hereunder to any Subsidiary Guarantor shall be given to it in care of Terex as provided in Section 9.01 of the Credit Agreement.

SECTION 7.02. Security Interest Absolute. All rights of the Collateral Agent hereunder, the Security Interest, the grant of a security interest in the Pledged Collateral and all obligations of each Grantor hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of the Credit Agreement, any other Loan Document, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from the Agreement, any other Loan Document or any other agreement or instrument relating to the foregoing, (c) except as otherwise expressly permitted under the Loan Documents or effected pursuant thereto, any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Grantor in respect of the Obligations or this Agreement.

SECTION 7.03. Survival of Agreement. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and the Issuing Bank and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any Lender or Issuing Bank or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under any Loan Document is outstanding and unpaid or the aggregate L/C Exposure (other than with respect to Letters of Credit that have been fully cash collateralized on terms satisfactory to the Collateral Agent and the applicable Issuing Bank) does not equal zero and so long as the Commitments have not expired or terminated.

SECTION 7.04. Binding Effect; Several Agreement. This Agreement shall become effective as to any Loan Party when a counterpart hereof executed on behalf of such Loan Party shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Loan Party and the Collateral Agent and their respective permitted successors and assigns, and shall inure to the benefit of such Loan Party, the Collateral Agent and the other Secured Parties and their respective successors and assigns, except

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that no Loan Party shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated or permitted by this Agreement or the Credit Agreement. This Agreement shall be construed as a separate agreement with respect to each Loan Party and may be amended, modified, supplemented, waived or released with respect to any Loan Party without the approval of any other Loan Party and without affecting the obligations of any other Loan Party hereunder.

SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of any Grantor or the Collateral Agent that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns.

SECTION 7.06. Collateral Agent’s Fees and Expenses; Indemnification. (a) The parties hereto agree that the Collateral Agent shall be entitled to reimbursement of its expenses incurred hereunder as provided in Section 9.05 of the Credit Agreement.

(b) Without limitation of its indemnification obligations under the other Loan Documents, each Grantor jointly and severally agrees to indemnify the Collateral Agent and the other Indemnitees against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities, and related out of pocket expenses, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of, the execution, delivery or performance of this Agreement or any agreement or instrument contemplated hereby or any claim, litigation, investigation or proceeding relating to any of the foregoing or to the Collateral, regardless of whether any Indemnitee is a party thereto or whether initiated by a third party or by a Loan Party or any Affiliate thereof; provided, however, that such indemnity shall not, as to any Indemnitee, be available for such losses, claims, damages, liabilities or related expenses (x) to the extent determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee, (y) arising from such Indemnitee’s material breach of this Agreement or any other Loan Document or (z) arising out of any claim, litigation, investigation or proceeding that does not involve an act or omission of any Borrower or any of its Affiliates and that is brought by an Indemnitee against any other Indemnitee (other than the Administrative Agent, the Collateral Agent or any bookrunner or lead arranger for the Credit Facilities, in each case, in its capacity as such). To the extent permitted by applicable law, no Grantor shall assert, and each Grantor hereby waives any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of proceeds thereof.

(c) Any such amounts payable as provided hereunder shall be additional Obligations secured hereby and by the other Security Documents. The provisions of this

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Section 7.06 shall remain operative and in full force and effect regardless of the termination of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby, the repayment of any of the Obligations, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Collateral Agent or any other Secured Party. All amounts due under this Section 7.06 shall be payable within ten Business Days of written demand therefor and shall bear interest, on and from the date of demand, at the rate specified in Section 2.06(a) of the Credit Agreement.

SECTION 7.07. Collateral Agent Appointed Attorney-in-Fact. In connection with the Existing Guarantee and Collateral Agreement, each Grantor appointed the Collateral Agent as the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest and continues to be in full force and effect. Without limiting the generality of the foregoing, the Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent’s name or in the name of such Grantor (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof, (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral, (c) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral, (d) to send verifications of Accounts Receivable to any Account Debtor, (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral, (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral, (g) to notify, or to require any Grantor to notify, Account Debtors to make payment directly to the Collateral Agent, and (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement in accordance with its terms, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes; provided, however, that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent and the other Secured Parties shall be accountable only for amounts actually received as a result of the exercise of the powers granted to them herein, and neither they nor their officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence, wilful misconduct or bad faith.

SECTION 7.08. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

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SECTION 7.09. Waivers; Amendment. (a) No failure or delay by the Collateral Agent, the Administrative Agent, any Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver hereof or thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent, the Administrative Agent, the Issuing Banks and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 7.09, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent and the Loan Party or Loan Parties with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 9.08 of the Credit Agreement.

SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.10.

SECTION 7.11. Severability. In the event any one or more of the provisions contained in this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

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SECTION 7.12. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 7.04. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

SECTION 7.13. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

SECTION 7.14. Jurisdiction; Consent to Service of Process. (a) Each of the Grantors hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America, sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document, or for recognition or enforcement of any judgment, and each of the Loan Parties hereby irrevocably and unconditionally agrees that, to the extent permitted by law, all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the Loan Parties agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Collateral Agent, the Administrative Agent, Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Grantor or its properties in the courts of any jurisdiction.

(b) Each of the Loan Parties hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (a) of this Section 7.14. Each of the Loan Parties hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Each of the Loan Parties hereby irrevocably consents to service of process in the manner provided for notices in Section 7.01. Nothing in this Agreement or any other Loan Document will affect the right of the Collateral Agent to serve process in any other manner permitted by law.

SECTION 7.15. Termination or Release. (a) This Agreement, the Guarantees, the Security Interest, the pledge of the Pledged Collateral and all other security interests granted hereby shall terminate when all the Loan Document Obligations have been indefeasibly paid in full and the Lenders have no further commitment to lend under the Credit Agreement, the aggregate L/C Exposure (other than with respect to

35

Letters of Credit that have been fully cash collateralized on terms satisfactory to the Collateral Agent and the applicable Issuing Bank) has been reduced to zero and the Issuing Banks have no further obligations to issue Letters of Credit under the Credit Agreement.

(b) A Subsidiary Guarantor shall automatically be released from its obligations hereunder and the Security Interests created hereunder in the Collateral of such Subsidiary Guarantor shall be automatically released upon the consummation of any transaction permitted by the Credit Agreement as a result of which such Subsidiary Guarantor ceases to be a Subsidiary. Upon request of such Subsidiary Guarantor, the Collateral Agent shall confirm such release in writing.

(c) Upon any sale or other transfer by any Grantor of any Collateral that is permitted under the Credit Agreement to any person that is not Terex or a Subsidiary Guarantor, or, upon the effectiveness of any written consent to the release of the Security Interest granted hereby in any Collateral pursuant to Section 9.08 of the Credit Agreement, the Security Interest in such Collateral shall be automatically released. Upon request of such Grantor, the Collateral Agent shall confirm such release in writing.

(d) In connection with any termination or release pursuant to paragraph (a), (b) or (c) above, the Collateral Agent shall promptly execute and deliver to any Grantor, at such Grantor’s expense, all Uniform Commercial Code termination statements and similar documents that such Grantor shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this Section 7.15 shall be without recourse to or representation or warranty by the Collateral Agent or any Secured Party. Without limiting the provisions of Section 7.06, the Borrowers shall reimburse the Collateral Agent upon demand for all reasonable costs and out of pocket expenses, including the fees, charges and expenses of counsel, incurred by it in connection with any action contemplated by this Section 7.15.

SECTION 7.16. Additional Subsidiaries. Pursuant to Section 5.11 of the Credit Agreement, each Material Domestic Restricted Subsidiary that was not (i) in existence on the Restatement Date or (ii) a Material Domestic Restricted Subsidiary on the Restatement Date is required to enter into this Agreement as a Guarantor and a Grantor upon becoming a Material Domestic Restricted Subsidiary. Upon execution and delivery by the Collateral Agent and such Subsidiary of a supplement in the form of Exhibit A hereto, such Subsidiary shall become a Subsidiary Guarantor and a Grantor hereunder with the same force and effect as if originally named as a Subsidiary Guarantor and a Grantor herein. The execution and delivery of any such instrument shall not require the consent of any other Loan Party hereunder. The rights and obligations of each Loan Party hereunder shall remain in full force and effect notwithstanding the addition of any new Loan Party as a party to this Agreement.

SECTION 7.17. Right of Setoff. If an Event of Default shall have occurred and is continuing, each Secured Party is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all Collateral (including any deposits (general or special, time or demand, provisional or

36

final)) at any time held and other obligations at any time owing by such Secured Party to or for the credit or the account of any Grantor against any and all of the obligations of such Grantor now or hereafter existing under this Agreement and the other Loan Documents held by such Secured Party, irrespective of whether or not such Secured Party shall have made any demand under this Agreement or any other Loan Document and although such obligations may be unmatured. The rights of each Secured Party under this Section 7.17 are in addition to other rights and remedies (including other rights of setoff) which such Secured Party may have.

SECTION 7.18. Effect of Restatement; Reaffirmation of Guarantee and Security Interest. This Agreement shall supersede the Existing Guarantee and Collateral Agreement from and after the Restatement Date. The parties hereto acknowledge and agree, however, that (i) none of the execution and delivery of Amendment No. 3, the Reaffirmation and Security Agreement or this Agreement or the consummation of the transactions to occur on the Restatement Date constitutes a novation, payment and reborrowing or termination of the Obligations under the Existing Credit Agreement and the other Loan Documents as in effect prior to the Restatement Date, (ii) such Obligations are in all respects continuing with only the terms being modified as provided in the Credit Agreement and the other Loan Documents, (iii) the liens and security interests in favor of the Collateral Agent for the benefit of the Secured Parties securing payment of such Obligations are in all respects in full force and effect with respect to all Obligations and (iv) all references in the other Loan Documents to the Existing Guarantee and Collateral Agreement shall be deemed to refer without further amendment to this Agreement.

Each Subsidiary Loan Party, by its signature below, hereby affirms and confirms its guarantee of the Obligations under the Existing Credit Agreement and the pledge of and/or grant of a security interest in its assets as collateral to secure such Obligations, all as provided in the Existing Guarantee and Collateral Agreement, the Reaffirmation and Security Agreement and the other Security Documents as originally executed and with effect from the time originally executed, and acknowledges and agrees that such guarantee, pledge and/or grant is in full force and effect in respect of, and to secure, the Obligations under the Credit Agreement and the other Loan Documents.

[Remainder of this page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year
first above written.

TEREX CORPORATION,
by
	Name:
	Title:

EACH SUBSIDIARY OF TEREX CORPORATION LISTED ON SCHEDULEI HERETO,
by
	Name:
	Title:

38

CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Collateral Agent
by
	Name:
	Title:

by
	Name:
	Title:

EX-12

Exhibit 12

TEREX CORPORATION

CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES

(amounts in millions)

	Three Months Ended June 30,					Six Months Ended June 30,
	2009			2008		2009			2008
Earnings:
(Loss) income before income taxes	$	(108.5)		$	353.9	$	(207.0)		$	601.3
Adjustments:
Undistributed (income) loss of less than 50% owned investments		(0.5)			0.3		0.1			(0.6)
Fixed charges		35.5			30.3		65.4			62.0
Earnings	$	(73.5)		$	384.5	$	(141.5)		$	662.7
Fixed charges:
Interest expense, including debt discount amortization	$	25.3		$	24.3	$	48.8		$	49.8
Amortization/writeoff of debt issuance costs		4.5			0.8		5.4			1.6
Portion of rental expense representative of interest factor (assumed to be 33%)		5.7			5.2		11.2			10.6
Fixed charges	$	35.5		$	30.3	$	65.4		$	62.0
Ratio of earnings to fixed charges		-	(1)		12.7x		-	(1)		10.7x
Amount of earnings deficiency for coverage of fixed charges	$	109.0		$	-	$	206.9		$	-
(1) Less than 1.0x

EX-31

Exhibit 31.1

CERTIFICATION

I, Ronald M. DeFeo, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Terex Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2009

/s/ Ronald M. DeFeo

Ronald M. DeFeo

Chairman and

Chief Executive Officer

EX-31

Exhibit 31.2

CERTIFICATION

I, Phillip C. Widman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Terex Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2009

/s/ Phillip C. Widman

Phillip C. Widman

Senior Vice President and

Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Terex Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Ronald M. DeFeo, Chairman and Chief Executive Officer of the Company, and Phillip C. Widman, Senior Vice President and Chief Financial Officer of the Company, certify, to the best of our knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Ronald M. DeFeo

Ronald M. DeFeo

Chairman and

Chief Executive Officer

July 30, 2009

/s/ Phillip C. Widman

Phillip C. Widman

Senior Vice President and

Chief Financial Officer

July 30, 2009

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Terex Corporation and will be retained by Terex Corporation and furnished to the Securities and Exchange Commission or its staff upon request.