DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

Pursuant to the SAPA on May 16, 2016, Terex has agreed to sell its entire MHPS business to Konecranes for total consideration of approximately $1.3 billion. See Note A - “Termination of Business Combination Agreement and Plan of Merger” for further information on this transaction. The sale of the Company’s MHPS business to Konecranes represents a significant strategic shift in the Company’s business away from universal, process, mobile harbor and ship-to-shore cranes that will have a major effect on the Company’s future operating results, primarily because the MHPS business represented the entirety of one of the Company’s five previous reportable operating segments and comprised two of the Company’s six previous reporting units, representing a significant portion of the Company’s revenues and assets, and is therefore accounted for as a discontinued operation. MHPS products include universal cranes, process cranes and components, such as rope hoists, chain hoists, light crane systems, travel units and electric motors, primarily for industrial applications, and mobile harbor cranes, ship-to-shore gantry cranes, rubber tired and rail mounted gantry cranes, straddle carriers, sprinter carriers, reach stackers, container handlers, general cargo lift trucks, automated stacking cranes, automated guided vehicles and software solutions for logistics terminals. Upon completion of the Transaction, Terex will own approximately 25% of the outstanding shares of Konecranes and have the right to nominate two directors to the Konecranes Board. Upon closing of the Transaction, Terex expects to account for the investment in Konecranes using the equity-method of accounting. The Transaction, which is subject to customary regulatory approvals and the approval of the shareholders of Konecranes, is expected to close in early 2017.

As a result of the SAPA, the Company recognized a pre-tax charge of $55.6 million ($55.6 million after-tax) in the second quarter of 2016 to write-down the MHPS disposal group to fair value, less costs to sell. The Company estimated the amount of sale proceeds using the cash proceeds plus an average of closing stock prices in the month of June 2016 for Konecranes common shares as traded on the Nasdaq Helsinki stock exchange (under the symbol “KCR1V”) multiplied by 19.6 million Class B shares expected to be received. If the average Konecranes stock price had been 10% higher during this period, the pre-tax charge would have been approximately $4 million. If the average Konecranes stock price had been 10% lower during this period, the pre-tax charge would have been approximately $107 million. If the U.S. Dollar versus the Euro exchange rate increased 5%, the pre-tax charge would have been approximately $19 million. If the U.S. Dollar versus the Euro exchange rate decreased 5%, the pre-tax charge would have been approximately $92 million.

As a result of the SAPA, the Company has determined that amounts invested in the MHPS business are no longer indefinitely reinvested. Accordingly, the Company recorded previously unrecognized U.S. and foreign deferred taxes associated with its investment in MHPS subsidiaries. The effective tax rate on income from discontinued operations in 2016 differs from the statutory rate, in part, due to the recognition of these deferred taxes.

Income (loss) from discontinued operations

The following amounts related to the discontinued operations were derived from historical financial information and have been segregated from continuing operations and reported as discontinued operations in the Condensed Consolidated Statement of Comprehensive Income (in millions):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Net sales	$	322.1		$	385.6		$	634.7		$	725.4
Cost of sales	(242.1		)	(303.6		)	(512.9		)	(568.1		)
Selling, general and administrative expenses	(63.7		)	(69.8		)	(158.5		)	(139.2		)
Impairment of MHPS disposal group	(55.6		)	—			(55.6		)	—
Net interest (expense)	(0.2		)	(0.4		)	(0.6		)	(0.9		)
Other income (expense)	0.1			1.8			2.2			(0.9		)
Income (loss) from discontinued operations before income taxes	(39.4		)	13.6			(90.7		)	16.3
(Provision for) benefit from income taxes	(5.7		)	(3.2		)	(6.8		)	(5.7		)
Income (loss) from discontinued operations – net of tax	(45.1		)	10.4			(97.5		)	10.6
Net loss (income) attributable to noncontrolling interest	0.5			(1.1		)	0.7			(1.8		)
Income (loss) from discontinued operations – net of tax attributable to Terex Corporation	$	(44.6	)	$	9.3		$	(96.8	)	$	8.8

Construction

During the second quarter of 2016, the Company entered into an agreement to sell certain compact and other construction assets and liabilities of the Company’s former Construction segment, including the following products: midi/mini excavators, wheeled excavators and compact wheel loaders, primarily in Europe. The Company expects to realize proceeds of approximately $60 million from the sale in the second half of 2016. The associated assets and liabilities are reported below and in the Condensed Consolidated Balance Sheet as held for sale. The operating results for this business are reported in continuing operations, within the Corporate and Other category in our segment disclosures. We recognized a pre-tax charge of $5.7 million ($3.9 million after-tax) in the second quarter of 2016 to write-down assets of the disposal group to estimated fair value, less costs to sell, of which $4.0 million is recorded in Cost of goods sold and $1.7 million is recorded in Selling, general and administrative expenses in the Condensed Consolidated Statement of Comprehensive Income (Loss).

Assets and liabilities held for sale

Assets and liabilities held for sale consist of the Company’s MHPS assets and liabilities that are being sold to Konecranes and certain assets and liabilities of the Company’s former Construction segment, primarily in Europe, which are expected to be sold within one year. Such assets and liabilities are classified as held for sale upon meeting the requirements of ASC 360 - “Property, Plant and Equipment”, and are recorded at lower of carrying amounts or fair value less costs to sell. Assets are no longer depreciated once classified as held for sale. The following table provides the amounts of assets and liabilities held for sale in the Condensed Consolidated Balance Sheet (in millions):



	June 30, 2016								December 31, 2015
	MHPS			Construction		Total			MHPS
Assets
Cash and cash equivalents	$	97.3		$	—	$	97.3		$	95.3
Trade receivables – net	223.1			19.5		242.6			236.0
Inventories	424.5			35.0		459.5			382.1
Prepaid and other current assets	27.1			1.2		28.3			36.2
Current assets held for sale	$	772.0		$	55.7	$	827.7		$	749.6

Property, plant and equipment – net	$	304.3		$	14.9	$	319.2		$	303.9
Goodwill	596.4			—		596.4			564.1
Intangible assets	225.2			—		225.2			226.9
Impairment reserve	(55.6		)	—		(55.6		)	—
Other assets	74.6			4.8		79.4			65.6
Non-current assets held for sale	$	1,144.9		$	19.7	$	1,164.6		$	1,160.5

Liabilities
Notes payable and current portion of long-term debt	$	22.6		$	—	$	22.6		$	13.8
Trade accounts payable	154.4			18.3		172.7			177.0
Accruals and other current liabilities	328.0			8.3		336.3			255.2
Current liabilities held for sale	$	505.0		$	26.6	$	531.6		$	446.0

Long-term debt, less current portion	$	0.1		$	—	$	0.1		$	0.1
Retirement plans and other non-current liabilities	307.6			0.5		308.1			298.4
Non-current liabilities held for sale	$	307.7		$	0.5	$	308.2		$	298.5

The following table provides amounts of cash and cash equivalents presented in the Consolidated Statement of Cash Flows (in millions):



	June 30, 2016		December 31, 2015
Cash and cash equivalents:
Cash and cash equivalents - continuing operations	$	200.8	$	371.2
Cash and cash equivalents - discontinued operations	97.3		95.3
Total cash and cash equivalents:	$	298.1	$	466.5

Cash and cash equivalents of discontinued operations at June 30, 2016 and December 31, 2015 include $11.1 million and $9.8 million, respectively, which were not immediately available for use. These consist primarily of cash balances held in escrow to secure various obligations of the Company.

The following table provides supplemental cash flow information related to discontinued operations (in millions):



	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2016		2015			2016		2015
Non-cash operating items:
Depreciation and amortization	$	9.1	$	13.8		$	22.4	$	28.1
Impairment of MHPS disposal group	$	55.6	$	—		$	55.6	$	—
Deferred taxes	$	4.4	$	(0.6	)	$	4.3	$	0.2
Investing activities:
Capital expenditures	$	4.7	$	5.8		$	8.5	$	10.6

Other



	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2016		2015			2016			2015

Gain (loss) on disposition of discontinued operations	$	0.1	$	(0.4	)	$	4.6		$	3.2
(Provision for) benefit from income taxes	—		—			(1.1		)	(0.5		)
Gain (loss) on disposition of discontinued operations – net of tax	$	0.1	$	(0.4	)	$	3.5		$	2.7

During the six months ended June 30, 2016 and 2015 the Company recorded gains of $3.0 million and $2.8 million, respectively, net of tax, related to the sale of its Atlas heavy construction equipment and knuckle-boom cranes businesses based on contractually obligated earnings based payments from the purchaser. During the six months ended June 30, 2016 the Company recorded a gain of $0.5 million, net of tax, related to the sale of its truck business.