14.01.2005

Terex to restate prior results

The Terex Corporation, owner of Demag cranes and Genie platforms, has filed form 8-K with the Securities and Exchange Commission (SEC) in the USA disclosing that it has found errors in the accounts for years 2001, 2002 and 2003 and that they will need to be restated.

The errors at this time appear to relate to imbalances in intercompany transactions, the company has retained “independent counsel to advise it with respect to this matter and authorized them to conduct an independent investigation into the circumstances giving rise to the imbalances”.

While not detailing the type of error in the intercompany accounting, a release form the company does state that tat this time it does not look as though the corrections to the accounts will have any impact on shareholders equity after 2003.

At this stage the company says that it appears that most of the errors identified relate to the 2002 accounts and earlier, but at this stage cannot rule out other errors being discovered during the investigation.

This investigation is not, the company says, expected to delay the normal reporting deadline for its year end and fourth quarter 2004 accounts, But that if it did the company is confident that it will be able to avoid any default on its loan covenants.

Terex conducted a thorough review of its reporting procedures and controls towards the end of 2003 and as a result instituted changes, the company has stated that additional resources and simplification or reporting will be added as necessary.

The company statement says:

“Internal controls have been modified to require, among other things, monthly activity balancing and the requirement that any reconciling item that is not resolved within a specified period of time be escalated for prompt resolution. Terex has also changed its reporting relationship for operating financial personnel so that they now report directly to the corporate financial group, and Terex will provide enhanced training for all financial personnel. Terex also intends, among other things, to add additional personnel to the financial organization as necessary, simplify its reporting structure and migrate to a more common information technology platform. These measures are consistent with the principles of Terex's previously announced Terex Improvement Process and are intended to prevent this type of situation from occurring in the future”.