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Terex files for 2005, deals with probes

Thursday, 1 June 2006 ( #262 ) - WESTPORT, CT, United States
Terex Girolift 3514
Terex Girolift 3514
Equipment manufacturer Terex Corp has filed its 2005 annual report but said it remained the subject of federal investigations. A US Securities & Exchange Commission (SEC) investigation involves Terex accounting practices and was the subject of a written order Terex received on February 1. The US attorney's office has requested information on four 2000 and 2001 Terex transactions involving United Rentals Inc. A May 2005 SEC subpoena involves those transactions (Forkliftaction.com News #250). "Terex has been co-operating with the SEC," a Terex statement said. "Until the SEC's investigation ... is complete, the company is not able to predict the outcome." Terex acknowledged accounting errors and said it "did not maintain effective controls over its financial reporting process, due to an insufficient complement of personnel with a level of accounting knowledge, experience and training in the application of generally accepted accounting principles commensurate with the company's financial reporting requirements." Control deficiency directly contributed to a "material weakness" in income taxes and a resulting audit adjustment at two locations. Primarily, timing and adjustment issues arose because of "the inadequate reconciliation and review of parts and work-in-process inventories". During 2005, Terex replaced 12 senior finance personnel. The company intensified training of finance and business personnel and, during 2005's fourth quarter, held mandatory business practice meetings for senior managers at 10 company locations in the US and Europe. In the annual report, Terex said aerial work platform demand improved worldwide with particular strength in Asia and the Americas. The segment recorded stronger demand from the rental channel in the United States and, to a lesser extent, improved parts sales. Higher steel costs and costs to ramp-up production impacted on the segment's profitability. Terex formed the aerial work platforms segment in September 2002 after acquiring Genie Holdings Inc. It enlarged the segment in January 2006 by including the firm's European telehandlers business, formerly part of the Terex construction segment (Forkliftaction.com News #243).
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