DISCONTINUED OPERATIONS AND OTHER DIVESTITURES

2019 Mobile Cranes Divestiture

On February 22, 2019, the Company entered into an Asset and Stock Purchase Agreement (the “ASPA”) with Tadano Ltd. (“Tadano”). Pursuant to the ASPA, the Company is selling its Demag^® mobile cranes business to Tadano for an enterprise value of $215 million (the “Transaction”). The consideration is being paid in cash and the cash received will be net of indebtedness. The purchase price is subject to post-closing adjustments based upon the level of net working capital and cash and debt in the Demag^® mobile cranes business at the closing date. The products to be divested are Demag^® all terrain cranes and large lattice boom crawler cranes. The Transaction, which is subject to governmental regulatory approvals and other customary closing conditions, is targeted to close in mid-2019. In addition to selling its Demag^® mobile cranes business, the Company will exit the North American mobile crane product lines manufactured in its Oklahoma City facility.

As a result of the Transaction, the Company expects to recognize a pre-tax charge in the range of $100 million, which includes a charge of approximately $55 million attributable to the derecognition of amounts previously recognized in accumulated other comprehensive income, in the first quarter of 2019, which will be subject to post-closing adjustments, to write-down the mobile cranes disposal group to fair value, less costs to sell.

The Demag^® mobile cranes business and North American mobile crane product lines constitute a significant part of the Company’s Cranes segment and represent a significant portion of the Company’s revenues, operating income (loss) and assets. Going forward, the Company will manage and report its business in the following segments: (i) AWP and (ii) MP. Prior period reportable segment information will be adjusted in succeeding periods to reflect the realignment of the Company’s operations.

MHPS

On May 16, 2016, Terex agreed to sell its Material Handling and Port Solutions (“MHPS”) business to Konecranes Plc (“Konecranes”) by entering into a Stock and Asset Purchase Agreement, as amended (the “SAPA”), with Konecranes. As a result, the Company and Konecranes terminated the Business Combination Agreement and Plan of Merger (the “BCA”) announced on August 11, 2015, with no penalties incurred by either party. On January 4, 2017, the Company completed the Disposition, pursuant to the SAPA, effective as of January 1, 2017. In connection with the Disposition, the Company received 19.6 million newly issued Class B shares of Konecranes and approximately $835 million in cash after adjustments for estimated cash, debt and net working capital at closing and the divestiture of Konecranes’ Stahl Crane Systems business, which was undertaken by Konecranes in connection with the Disposition. During the year ended December 31, 2017, the Company recognized a gain on the Disposition (net of tax) of $65.7 million.

The Company sold all shares received in connection with the Disposition for net proceeds of approximately $770 million and recorded a $42.0 million net gain on sale of shares which included a gain of $41.6 million attributable to foreign exchange rate changes during the year ended December 31, 2017. The net gain is recorded as a component of Other income (expense) - net in the Consolidated Statement of Income (Loss).

On March 23, 2017, Konecranes declared a dividend of €1.05 per share to holders of record as of March 27, 2017, which was paid on April 4, 2017. During the year ended December 31, 2017, the Company recognized dividend income of $13.5 million as a component of Other income (expense) - net in the Consolidated Statement of Income (Loss).

Loss Contract

Related to the Disposition, the Company and Konecranes entered into an agreement for Konecranes to manufacture certain crane products on behalf of the Company for an original period of 12 months, which was subsequently amended for a total of 36 months on October 11, 2017. The Company recorded an expense of $7.9 million related to losses expected to be incurred over the original agreement’s life during the year ended December 31, 2017.

SAPA and BCA Related Expenses

Terex incurred transaction costs directly related to the SAPA of $14.2 million for the year ended December 31, 2016, which amounts are recorded in Income (loss) from discontinued operations - net of tax in the Consolidated Statement of Income (Loss).

The Company incurred transaction costs directly related to the BCA of $14.0 million for the year ended December 31, 2016 which is recorded in Other income (expense) - net in the Consolidated Statement of Income (Loss).

Income (loss) from discontinued operations

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



	Year ended December 31,
	2016
Net sales	$	1,398.2
Cost of sales	(1,090.3		)
Selling, general and administrative expenses	(266.8		)
Goodwill and intangible asset impairments	(3.1		)
Net interest (expense)	(2.3		)
Other income (expense)	(11.5		)
Income (loss) from discontinued operations before income taxes	24.2
(Provision for) benefit from income taxes	(9.9		)
Income (loss) from discontinued operations – net of tax	14.3
Net loss (income) attributable to noncontrolling interest	(0.9		)
Income (loss) from discontinued operations - net of tax attributable to Terex Corporation	$	13.4

As a result of impairment tests performed in 2016 for indefinite-lived tradenames in the MHPS business, the Company recorded non-cash impairment charges of approximately $3 million during the year ended December 31, 2016.

Other Divestitures

Cranes

As part of the transformation and improvement of its Cranes segment, the Company is actively seeking a buyer for its utility hot lines tools business located in South America and, accordingly, assets and liabilities have been reported as held for sale since management made its decision in December 2016, at which time the Company recorded a non-cash impairment charge of $1.6 million to adjust net asset value to estimated fair value. Additional non-cash impairment charges of $6.7 million and $1.8 million were recorded to adjust net asset value to estimated fair value in 2017 and 2018, respectively.

In August 2017, the Company entered into an agreement to sell its cranes manufacturing facility in Jinan, China. The sale was completed during the third quarter of 2017 and the Company recorded a gain on sale of $5.7 million in its Corporate and Other category as a component of Selling, general and administrative expenses (“SG&A”) in the Consolidated Statement of Income (Loss).

Construction

In December 2016, the Company entered into an agreement to sell its Coventry, U.K.-based compact construction business and recorded a non-cash impairment charge of $3.5 million to adjust the net asset value of these construction product lines to estimated fair value. During the year ended December 31, 2017, the Company completed the sale of Coventry, U.K.-based compact construction business and remaining U.K.-based compact construction product lines and recognized a loss of $1.2 million within SG&A in the Consolidated Statement of Income (Loss) related to the sale.

In March 2017, the Company signed a sale agreement with a buyer to sell its Indian compact construction business. The Company completed the sale during the year ended December 31, 2017 and a loss of $1.6 million was recognized within SG&A related to the sale.

The operating results for these construction product lines are reported in continuing operations, within the Corporate and Other category in the Company’s segment disclosures.

During the year ended December 31, 2016, the Company sold certain portions of its former Construction segment, including the following products: midi/mini excavators, wheeled excavators, compact wheel loaders, and components, primarily in Europe. The Company recognized a loss of $8.1 million ($5.6 million after-tax) related to sale of its components assets, of which $4.0 million was recorded in COGS and $4.1 million was recorded in SG&A in the Consolidated Statement of Income (Loss). The Company received total proceeds of approximately $60 million and recognized a gain of $7.2 million ($3.3 million after-tax) within SG&A related to sale of its midi/mini excavators, wheeled excavators, and compact wheel loader business shares and assets. During the year ended December 31, 2017, the Company recognized a gain of $5.8 million within SG&A resulting from a post-closing adjustment related to the 2016 sale of its midi/mini excavators, wheeled excavators, and compact wheel loader business in Germany.

The operating results for these construction product lines are reported in continuing operations, within the Corporate and Other category in the Company’s segment disclosures.

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



	Year Ended December 31,
	2016
Non-cash operating items:
Depreciation and amortization	$	22.4
Deferred taxes	$	15.8
Asset impairments	$	3.0
Investing activities:
Capital expenditures	$	(14.9	)

Gain (Loss) on Disposition of Discontinued Operations



	Year Ended December 31,
	2018										2017									2016
	MHPS			Atlas			Other		Total		MHPS			Atlas			Total			Atlas
Gain (loss) on disposition of discontinued operations	$	(1.2	)	$	3.2		$	—	$	2.0	$	89.9		$	3.5		$	93.4		$	4.5
(Provision for) benefit from income taxes	(1.9		)	(0.5		)	2.8		0.4		(24.2		)	(0.5		)	(24.7		)	(1.0		)
Gain (loss) on disposition of discontinued operations – net of tax	$	(3.1	)	$	2.7		$	2.8	$	2.4	$	65.7		$	3.0		$	68.7		$	3.5