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TheStreet Open House

AGCO Reports Second Quarter Results

Stock quotes in this article: AGCO

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About AGCO

AGCO, Your Agriculture Company, (NYSE: AGCO), is a global leader focused on the design, manufacture and distribution of agricultural machinery. AGCO supports more productive farming through a full line of tractors, combines, hay tools, sprayers, forage equipment, tillage, implements, grain storage and protein production systems, as well as related replacement parts. AGCO products are sold through four core machinery brands, Challenger®, Fendt®, Massey Ferguson® and Valtra®, and are distributed globally through 3,100 independent dealers and distributors in more than 140 countries worldwide. Retail financing is available through AGCO Finance for qualified purchasers. Founded in 1990, AGCO is headquartered in Duluth, Georgia, USA. In 2011, AGCO had net sales of $8.8 billion. http://www.agcocorp.com

Please visit our website at www.agcocorp.com

 
 
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in millions)
       
June 30, December 31,
2012 2011
ASSETS
Current Assets:
Cash and cash equivalents $ 393.4 $ 724.4
Accounts and notes receivable, net 1,196.3 994.2
Inventories, net 2,023.2 1,559.6
Deferred tax assets 138.2 142.7
Other current assets   271.1     241.9  
Total current assets 4,022.2 3,662.8
Property, plant and equipment, net 1,243.1 1,222.6
Investment in affiliates 363.8 346.3
Deferred tax assets 46.0 37.6
Other assets 125.8 126.9
Intangible assets, net 640.2 666.5
Goodwill   1,190.2     1,194.5  
Total assets $ 7,631.3   $ 7,257.2  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt $ 56.2 $ 60.1
Accounts payable 989.0 937.0
Accrued expenses 1,083.0 1,080.6
Other current liabilities   134.4     127.8  
Total current liabilities 2,262.6 2,205.5
Long-term debt, less current portion 1,471.4 1,409.7
Pensions and postretirement health care benefits 289.4 298.6
Deferred tax liabilities 193.5 192.3
Other noncurrent liabilities   146.0     119.9  
Total liabilities   4,362.9     4,226.0  
 
Temporary Equity 12.4
 
Stockholders’ Equity:
AGCO Corporation stockholders’ equity:
Common stock 1.0 1.0
Additional paid-in capital 1,092.2 1,073.2
Retained earnings 2,646.7 2,321.6
Accumulated other comprehensive loss   (520.9 )   (400.6 )
Total AGCO Corporation stockholders’ equity   3,219.0     2,995.2  
Noncontrolling interests   37.0     36.0  
Total stockholders’ equity   3,256.0     3,031.2  
Total liabilities, temporary equity and stockholders’ equity $ 7,631.3   $ 7,257.2  
 

See accompanying notes to condensed consolidated financial statements.

 
 
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in millions, except per share data)
       
Three Months Ended June 30,
2012 2011
 
Net sales $ 2,690.1 $ 2,358.6
Cost of goods sold   2,078.7     1,870.3  
Gross profit 611.4 488.3
 
Selling, general and administrative expenses 255.1 216.5
Engineering expenses 79.0 66.2
Restructuring and other infrequent income (0.1 ) (0.9 )
Amortization of intangibles   12.5     4.9  
 
Income from operations 264.9 201.6
 
Interest expense, net 14.7 12.5
Other expense, net   6.1     7.9  
 
Income before income taxes and equity in net earnings of affiliates 244.1 181.2
 
Income tax provision   57.3     61.1  
 
Income before equity in net earnings of affiliates 186.8 120.1
 
Equity in net earnings of affiliates   15.3     13.8  
 
Net income 202.1 133.9
 
Net loss (income) attributable to noncontrolling interests   2.8     (0.2 )
 
Net income attributable to AGCO Corporation and subsidiaries $ 204.9   $ 133.7  
 
Net income per common share attributable to AGCO Corporation and subsidiaries:
 
Basic $ 2.11   $ 1.41  
Diluted $ 2.08   $ 1.36  
 
Weighted average number of common and common equivalent shares outstanding:
Basic   97.2     94.7  
Diluted   98.4     98.6  
 

See accompanying notes to condensed consolidated financial statements.

 
 
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in millions, except per share data)
       
Six Months Ended June 30,
2012 2011
 
Net sales $ 4,963.8 $ 4,156.3
Cost of goods sold   3,859.4     3,312.1  
Gross profit 1,104.4 844.2
 
Selling, general and administrative expenses 494.0 401.2
Engineering expenses 151.1 124.1
Restructuring and other infrequent income (0.1 ) (0.7 )
Amortization of intangibles   24.7     9.3  
 
Income from operations 434.7 310.3
 
Interest expense, net 27.7 18.0
Other expense, net   10.5     10.2  
 
Income before income taxes and equity in net earnings of affiliates 396.5 282.1
 
Income tax provision   100.5     91.8  
 
Income before equity in net earnings of affiliates 296.0 190.3
 
Equity in net earnings of affiliates   27.3     25.2  
 
Net income 323.3 215.5
 
Net loss (income) attributable to noncontrolling interests   1.8     (1.8 )
 
Net income attributable to AGCO Corporation and subsidiaries $ 325.1   $ 213.7  
 
Net income per common share attributable to AGCO Corporation and subsidiaries:
 
Basic $ 3.35   $ 2.26  
Diluted $ 3.29   $ 2.17  
 
Weighted average number of common and common equivalent shares outstanding:
Basic   97.1     94.4  
Diluted   98.8     98.4  
 

See accompanying notes to condensed consolidated financial statements.

 
 
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
       
Six Months Ended June 30,
2012 2011
 
Cash flows from operating activities:
Net income $ 323.3   $ 215.5  
Adjustments to reconcile net income to net cash (used in) provided by operating
 
activities:
Depreciation 85.7 73.6
Deferred debt issuance cost amortization 1.7 1.9
Amortization of intangibles 24.7 9.3
Amortization of debt discount 4.3 4.1
Stock compensation 19.2 11.4
Equity in net earnings of affiliates, net of cash received (18.5 ) (17.4 )
Deferred income tax provision 2.4 1.0
Other (0.2 ) (1.5 )

Changes in operating assets and liabilities, net of effects from purchase of businesses:

Accounts and notes receivable, net (248.2 ) (42.6 )
Inventories, net (508.1 ) (269.3 )
Other current and noncurrent assets (35.4 ) (26.3 )
Accounts payable 91.7 74.4
Accrued expenses 42.2 69.8
Other current and noncurrent liabilities   27.0     (2.4 )
Total adjustments   (511.5 )   (114.0 )
Net cash (used in) provided by operating activities   (188.2 )   101.5  
Cash flows from investing activities:
Purchases of property, plant and equipment (151.1 ) (112.4 )
Proceeds from sale of property, plant and equipment 0.2 0.8
Purchase of businesses, net of cash acquired (2.4 ) (88.3 )
Investments in consolidated affiliates, net of cash acquired (20.1 ) (25.0 )
Investments in unconsolidated affiliates, net (7.9 ) (6.0 )
Restricted cash and other   (2.0 )    
Net cash used in investing activities   (183.3 )   (230.9 )
Cash flows from financing activities:
Conversion of convertible senior subordinated notes (60.7 )
Proceeds from debt obligations, net 42.8 18.3
Payment of debt issuance costs (0.1 )
Payment of minimum tax withholdings on stock compensation (2.5 )

(Distribution to) investment by noncontrolling interest

(0.3 ) (0.5 )
Proceeds from issuance of commons stock       0.1  
Net cash provided by (used in) financing activities   42.4     (45.3 )
Effect of exchange rate changes on cash and cash equivalents   (1.9 )   27.9  
Decrease in cash and cash equivalents (331.0 ) (146.8 )
Cash and cash equivalents, beginning of period   724.4     719.9  
Cash and cash equivalents, end of period $ 393.4   $ 573.1  
 

See accompanying notes to condensed consolidated financial statements.

 
 
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except per share data)

1. STOCK COMPENSATION EXPENSE

The Company recorded stock compensation expense as follows:

    Three Months Ended       Six Months Ended
June 30, June 30,
2012     2011 2012     2011
Cost of goods sold $ 0.6 $ 0.4 $ 1.2 $ 0.7
Selling, general and administrative expenses   10.4   6.6   18.2   11.0
Total stock compensation expense $ 11.0 $ 7.0 $ 19.4 $ 11.7

2. INDEBTEDNESS

Indebtedness at June 30, 2012 and December 31, 2011 consisted of the following:

    June 30,     December 31,
2012 2011
1¼% Convertible senior subordinated notes due 2036 $ 187.7 $ 183.4
4½% Senior term loan due 2016 253.7 259.4
5⅞% Senior notes due 2021 300.0 300.0
Credit Facility 725.0 665.0
Other long-term debt   61.2     62.0  
1,527.6 1,469.8
Less: Current portion of long-term debt   (56.2 )   (60.1 )
Total indebtedness, less current portion $ 1,471.4   $ 1,409.7  

As of June 30, 2012 and December 31, 2011, the closing sales price of the Company’s common stock had not exceeded 120% of the conversion price of the 1¼% convertible senior subordinated notes for at least 20 trading days in the 30 consecutive trading days ending June 30, 2012 and December 31, 2011, and, therefore, the Company classified the notes as long-term debt. Future classification of the notes between current and long-term debt is dependent on the closing sales price of the Company’s common stock during future quarters.

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