UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission file number ____________________
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
The Terex Corporation and Affiliates' 401(k) Retirement Savings Plan for
Represented Employees
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
Terex Corporation
500 Post Road East, Suite 320
Westport, Connecticut 06880
TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN
FOR REPRESENTED EMPLOYEES
Financial Statements
December 31, 2002
TEREX CORPORATION AND AFFILIATES' 401(k)
RETIREMENT SAVINGS PLAN FOR REPRESENTED EMPLOYEES
INDEX
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Page
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REPORT OF INDEPENDENT AUDITORS.................................................1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits............................2
Statement of Changes in Net Assets Available for Benefits..................3
Notes to Financial Statements..........................................4 - 7
Report of Independent Auditors
To the Participants and Administrative Committee of the
Terex Corporation and Affiliates'
401(k) Retirement Savings Plan for Represented Employees
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Terex Corporation and Affiliates' 401(k) Retirement Savings Plan for
Represented Employees (the "Plan") at December 31, 2002 and 2001, and the
changes in net assets available for benefits for the year ended December 31,
2002, in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the
Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
As discussed in Note 1, effective December 31, 2002, the Plan merged into the
Terex Corporation and Affiliates' 401 (k) Retirement Savings Plan and ceased to
exist as a separate plan.
PricewaterhouseCoopers LLP
Stamford, Connecticut
June 26, 2003
1
TEREX CORPORATION AND AFFILIATES'
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401(k) RETIREMENT SAVINGS PLAN FOR REPRESENTED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31
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2002 2001
----------- -----------
ASSETS:
Plan's interest in Terex Corporation 401(k)
Retirement Savings Plan Master Trust.............. $ --- $ 6,005,487
Receivables:
Employee contributions....................... --- 41,262
Employer contributions....................... --- 12,973
----------- -----------
Total receivables........................ --- 54,235
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS...................... $ --- $ 6,059,722
=========== ===========
See accompanying notes to financial statements.
2
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2002
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ADDITIONS:
Plan's interest in net earnings of Terex Corporation 401(k)
Retirement Savings Plan Master Trust....................... $ (888,518)
Employee contributions...................................... 577,113
Employer contributions...................................... 219,956
Rollover contributions...................................... 14,986
--------------
Total additions........................................ (76,463)
--------------
DEDUCTIONS:
Withdrawals................................................. (1,582,087)
Administrative fees......................................... (3,246)
Transfer to Terex Plan...................................... (4,397,926)
--------------
Total deductions....................................... (5,983,259)
--------------
NET DECREASE........................................... (6,059,722)
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of period......................................... 6,059,722
--------------
End of period............................................... $ ---
==============
See accompanying notes to financial statements.
3
TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN FOR REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN
The following description of the Terex Corporation and Affiliates' 401(k)
Retirement Savings Plan for Represented Employees (the "Plan") provides
only general information. Participants should refer to the Plan document
for a more complete description of the Plan's provisions.
General - The Plan is a defined contribution plan that covers certain
eligible employees of Terex Corporation and its subsidiaries ("Terex" or
the "Company") meeting minimum eligibility requirements. Certain officers
of Terex serve as trustees of the Plan (the "Trustees"). The investments of
the Plan are held by Fidelity Management Trust Company ("Fidelity") and
Massachusetts Mutual Life Insurance Company ("MassMutual").
Effective December 31, 2002, the Plan merged with the Terex Corporation and
Affiliates 401(k) Retirement Savings Plan ("Terex Plan") and all
participants became participants in the Terex Plan. Assets valued at
$4,397,926 were transferred into the Terex Plan from the Plan on December
31, 2002.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
An Administrative Committee, consisting of at least three members appointed
by the Company's Board of Directors, administers the benefit structure of
the Plan. The Company is considered the Plan Administrator for purposes of
ERISA.
Participants of the Plan are the hourly-rate employees of the Company's PPM
Cranes ("PPM") Unit, Unit Rig division ("Unit Rig"), the Terex Parts
Distribution Center ("Southaven"), The American Crane Corporation
("American Crane"), Cedarapids, Inc. ("Cedarapids"), and the former
Bowerston Division of Simon Access ("Bowerston"), which was closed
subsequent to the acquisition of the business on April 7, 1997. Investments
of the former Bowerston employees remain in the Plan, however, there are no
additional employee or employer contributions being made. Terms for each
subsidiary location are negotiated under separate collective bargaining
agreements and differ with respect to participant eligibility, participant
contributions and employer contributions. The general provisions for each
location are discussed below.
Participant Eligibility- Employees at Unit Rig are eligible to participate
in the Plan after they complete six months of service, and employees at
Southaven and PPM are eligible to participate after three months of
service. Employees at American Crane and Cedarapids are eligible to
participate in the Plan on the first day of the month following their
hiring. Prior to January 1, 2002, employees at American Crane were eligible
to participate in the Plan on the date on which they performed an hour of
service as an employee.
Participant Contributions - Participants may contribute a maximum of 80% of
their compensation to the Plan in any combination of pre-tax or post-tax
earnings. Prior to January 1, 2002, participant contributions were limited
as follows: Unit Rig - up to 20% of their compensation; participants at
Southaven, PPM, American Crane and Cedarapids could contribute up to 16% of
their compensation. The maximum pre-tax contribution permitted under
Internal Revenue Service ("IRS") regulations in 2002 was $11,000.
Participants age 50 and older can elect to make additional pre-tax
contributions ("catch-up contributions") up to the limits prescribed by IRS
regulations. These additional catch-up contributions are not eligible for
matching employer contributions. Participants are able to direct current
contributions and redistribute accumulated contributions and earnings
between investment funds.
Employer Contributions - Unit Rig provides that Terex will match 50% of the
first 6% of the employee's salary that is contributed to the Plan.
Southaven provides that Terex will match 50% of the first 6% (8% effective
January 1, 2001) of the employee's salary that is contributed to the Plan.
PPM provides that Terex will match 50% of the first 5% (6% effective April
1, 2001) of the employee's salary that is contributed to the Plan. American
Crane provides that Terex will match 50% of the first 8% of the employee's
contribution, prior to January 1, 2002, the Company match could
4
TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN FOR REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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not exceed $800 in the plan year. Cedarapids provides that Terex will match
100% of the first 4% of the employee's salary that is contributed to the
Plan. The Company may make, in its sole discretion, supplementary
contributions. All Company contributions are restricted and are invested in
Terex Common Stock. However, each calendar year on the first business day
of the second quarter, all restricted Company matching contributions in
Terex Common Stock will be reclassified to unrestricted, thereby allowing
participants to exchange the value of Terex Common Stock into other
investment options. All Company matching contributions posted thereafter
will once again be restricted and invested in Terex Common Stock until the
following first business day of the second quarter.
Contribution Limits - Contributions are limited in that the sum of: a)
total employer contributions and b) total employee pre-tax contributions
and c) total employee post-tax contributions, cannot exceed the lesser of:
i) $40,000 or ii) 100% (25% for years prior to 2002) of the participant's
total compensation for the year.
Vesting - All participants are immediately fully vested in their voluntary
contributions plus any actual earnings thereon. Participants at Southaven,
PPM, American Crane, Unit Rig and Cedarapids vest in the employer matching
contributions after one year of eligible service. Participants employed at
Bowerston on April 7, 1997, are fully vested in employer contributions.
Bowerston participants hired after April 7, 1997, but prior to the closure
of the facility vested in employer contributions after one year of eligible
service.
Forfeitures - Nonvested employer contributions of employees that have
separated from the Company become forfeitures and are held in a separate
account and shall be used to reduce future employer contributions.
Effective January 1, 2002, forfeitures can also be used to pay the Plan's
administrative expenses. However, employees that return to service within
five years from their separation date will be entitled to continue vesting
on the employer contributions which were previously forfeited.
Allocation of Earnings - Each participant's account is credited with
contributions and an allocation of earnings from the respective investment
funds. A participant's contributions are used to purchase shares in the
various investment funds. The value of and the earnings credited to a
participant's account are based on the proportionate number of shares owned
by the participant and the fair value of the investment on the valuation
date.
Payment of Benefits - Upon retirement, disability, or death, the entire
balance of the participant's account becomes payable to the participant or
designated beneficiary. Upon any other termination of employment, the
participant receives the vested portion of his/her account; however, if the
vested portion of the participant's account is greater than $5,000 he/she
can elect to keep the investments in the Plan. Withdrawals are also
permitted for financial hardship, as defined by the Plan, or upon
attainment of age 59-1/2.
Participant Loans - Participants may obtain loans in an amount up to the
lesser of $50,000 or 50% of the vested portion of their account balance,
subject to the discretion of the Plan Administrator and certain other
restrictions. Terms of all loans are established by the Plan Administrator.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The accompanying financial statements have been
prepared on the accrual basis.
Investments - Plan investments are stated at fair value based on published
market prices or other independent sources. Net appreciation (depreciation)
in aggregate fair value of investments is comprised of all realized and
unrealized gains and losses during the year.
5
TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN FOR REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
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Expenses - Fees and expenses related to administering the Plan are
generally paid by Terex.
Withdrawals - Withdrawals are recognized at the time of distribution to the
participant.
Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. INVESTMENTS
The following presents investments that represent 5 percent or more of the
Plan's net assets.
December 31,
----------------------
2002 2001
---------- ----------
Plan's interest in the Terex Corporation 401(k)
Retirement Savings Plan Master Trust........... $ --- $6,005,487
4. INVESTMENT IN MASTER TRUST
The Plan's assets are held in a trust account at Fidelity and consist of an
interest in the Terex Corporation 401(k) Retirement Savings Plan Master
Trust (the "Master Trust"). The Master Trust was established to permit the
commingling of the trust assets for similar employee benefit plans
sponsored by the Company. At December 31, 2002 and 2001, the Plan's
interest in the net assets of the Master Trust was approximately 0.0% and
10.5%, respectively.
Net earnings of the Master Trust are allocated daily by Fidelity to each
participant account balance. Net earnings include interest income, dividend
income and net appreciation (depreciation) of investments. Contributions,
benefit payments and expenses are made on a specific identification basis.
The following table presents the fair values of investments for the Master
Trust at December 31, 2001:
Mutual funds................................ $ 38,412,094
Terex Corporation Common Stock.............. 6,602,776
Participant loans........................... 3,259,125
Investment contract......................... 8,808,370
---------------------
$ 57,082,365
=====================
Net appreciation, dividends and interest for the Master Trust for the year
ended December 31, 2002 are as follows:
Net appreciation (depreciation) of investments:
Mutual Funds................................ $ (6,439,804)
Terex Corporation Common Stock.............. (2,793,667)
Dividends..................................... 655,607
Interest...................................... 386,023
Investment contract interest.................. 528,502
---------------------
$ (7,663,339)
=====================
6
TEREX CORPORATION AND AFFILIATES'
401(k) RETIREMENT SAVINGS PLAN FOR REPRESENTED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
The Master Trust has an interest in a benefit-responsive investment
contract which is valued at contract value as determined by MassMutual, the
holder of the contract. The contract value at December 31, 2002 and 2001
was $9,336,872 and $8,808,370, respectively. The contract value represents
contributions made under contract, plus earnings, less participant
withdrawals and administrative expenses. Participants may ordinarily direct
the withdrawal or transfer of all or a portion of the investment at
contract value. The guaranteed annual interest rate is 6 percent.
5. NONPARTICIPANT-DIRECTED INVESTMENTS
The Company's contributions to the Plan are invested solely in Terex
Corporation Common Stock. Fidelity holds all Terex common stock in one
investment account and does not segregate employer and employee purchased
common stock activity. As a result, all Plan investments in Terex common
stock are considered nonparticipant-directed. Information about the net
assets and the significant components of the changes in net assets relating
to the nonparticipant-directed investments is as follows:
December 31,
------------------------
2002 2001
------------- ----------
Net Assets
Terex Corporation Common Stock................. $ --- $ 820,986
Year Ended
December 31, 2002
----------------------
Changes in Net Assets:
Contributions................................... $ 252,130
Investment income and gain/loss................. (296,256)
Transfer from participant-directed investments.. 77,971
Withdrawals..................................... (151,307)
Net loan activity............................... (2,177)
Forfeitures..................................... (348)
Transfers to participant-directed investments... (94,380)
Transfers to Terex Plan......................... (606,619)
----------------------
$ (820,986)
======================
6. PARTY-IN-INTEREST
Certain Plan and Master Trust investments are shares of mutual funds
managed by Fidelity. Fidelity also serves as a custodian and, therefore,
these transactions qualify as party-in-interest transactions. Fees paid by
the Plan to Fidelity for the investment management services amounts to
$3,246 for the year ended December 31, 2002.
7. INCOME TAX STATUS
The Plan received a determination letter, dated July 31, 1996, that it met
the qualification requirements of Sections 401(c) and 401(k) of the
Internal Revenue Code (the "IRC") and is, therefore exempt from federal
income taxation. Subsequently, the Plan has been amended. The Plan
Administrator believes that the Plan, as amended, continues to be qualified
and exempt from tax under Sections 401(c) and 401(k) of the IRC.
The Company filed for a new determination letter on February 28, 2002. The
IRS has acknowledged receipt of the filing, but has neither commented on
the request nor issued a determination letter.
7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
The Terex Corporation and Affiliates'
401(k) Retirement Savings Plan for
Represented Employees
/s/ Phillip C. Widman
--------------------------------
Date: June 27, 2003 By: Phillip C. Widman
Senior Vice President and
Chief Financial Officer
Terex Corporation