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TheStreet Open House

AGCO Reports Third Quarter Results

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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)
       

September 30,

2012

December 31,

2011

ASSETS
Current Assets:
Cash and cash equivalents $ 321.9 $ 724.4
Accounts and notes receivable, net 1,088.6 994.2
Inventories, net 2,013.9 1,559.6
Deferred tax assets 150.3 142.7
Other current assets   266.8     241.9  
Total current assets 3,841.5 3,662.8
Property, plant and equipment, net 1,306.5 1,222.6
Investment in affiliates 380.7 346.3
Deferred tax assets 35.7 37.6
Other assets 134.8 126.9
Intangible assets, net 630.0 666.5
Goodwill   1,191.9     1,194.5  
Total assets $ 7,521.1   $ 7,257.2  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt $ 52.8 $ 60.1
Accounts payable 821.0 937.0
Accrued expenses 1,143.6 1,080.6
Other current liabilities   121.7     127.8  
Total current liabilities 2,139.1 2,205.5
Long-term debt, less current portion 1,353.9 1,409.7
Pensions and postretirement health care benefits 289.1 298.6
Deferred tax liabilities 196.4 192.3
Other noncurrent liabilities   152.6     119.9  
Total liabilities   4,131.1     4,226.0  
 
Temporary Equity 8.9
 
Stockholders’ Equity:
AGCO Corporation stockholders’ equity:
Common stock 1.0 1.0
Additional paid-in capital 1,092.4 1,073.2
Retained earnings 2,741.2 2,321.6
Accumulated other comprehensive loss   (487.5 )   (400.6 )
Total AGCO Corporation stockholders’ equity   3,347.1     2,995.2  
Noncontrolling interests   34.0     36.0  
Total stockholders’ equity   3,381.1     3,031.2  
Total liabilities, temporary equity and stockholders’ equity $ 7,521.1   $ 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 September 30,
2012     2011
 
Net sales $ 2,295.0 $ 2,099.1
Cost of goods sold   1,804.0   1,691.3  
Gross profit 491.0 407.8
 
Selling, general and administrative expenses 262.8 221.2
Engineering expenses 76.4 67.5
Amortization of intangibles   12.2   4.8  
 
Income from operations 139.6 114.3
 
Interest expense, net 15.8 3.1
Other expense, net   13.8   7.1  
 
Income before income taxes and equity in net earnings of affiliates 110.0 104.1
 
Income tax provision   30.5   31.6  
 
Income before equity in net earnings of affiliates 79.5 72.5
 
Equity in net earnings of affiliates   12.6   12.0  
 
Net income 92.1 84.5
 
Net loss (income) attributable to noncontrolling interests   2.4   (0.1 )
 
Net income attributable to AGCO Corporation and subsidiaries $ 94.5 $ 84.4  
 
Net income per common share attributable to AGCO Corporation and subsidiaries:
 
Basic $ 0.97 $ 0.88  
Diluted $ 0.96 $ 0.87  
 
Weighted average number of common and common equivalent shares outstanding:
Basic   97.0   96.4  
Diluted   98.4   96.9  

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)
   
Nine Months Ended September 30,
2012     2011
 
Net sales $ 7,258.8 $ 6,255.4
Cost of goods sold   5,663.4   5,003.4  
Gross profit 1,595.4 1,252.0
 
Selling, general and administrative expenses 756.7 622.4
Engineering expenses 227.5 191.6
Restructuring and other infrequent income (0.7 )
Amortization of intangibles   36.9   14.1  
 
Income from operations 574.3 424.6
 
Interest expense, net 43.5 21.1
Other expense, net   24.3   17.3  
 
Income before income taxes and equity in net earnings of affiliates 506.5 386.2
 
Income tax provision   131.0   123.4  
 
Income before equity in net earnings of affiliates 375.5 262.8
 
Equity in net earnings of affiliates   39.9   37.2  
 
Net income 415.4 300.0
 
Net loss (income) attributable to noncontrolling interests   4.2   (1.9 )
 
Net income attributable to AGCO Corporation and subsidiaries $ 419.6 $ 298.1  
 
Net income per common share attributable to AGCO Corporation and subsidiaries:
 
Basic $ 4.32 $ 3.13  
Diluted $ 4.25 $ 3.04  
 
Weighted average number of common and common equivalent shares outstanding:
Basic   97.1   95.1  
Diluted   98.6   97.9  

See accompanying notes to condensed consolidated financial statements.

 
 
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
   
Nine Months Ended September 30,
2012     2011
 
Cash flows from operating activities:
Net income $ 415.4   $ 300.0  
Adjustments to reconcile net income to net cash (used in) provided by operating

activities:

Depreciation 125.4 110.2
Deferred debt issuance cost amortization 2.6 2.3
Amortization of intangibles 36.9 14.1
Amortization of debt discount 6.5 6.1
Stock compensation 28.8 17.9
Equity in net earnings of affiliates, net of cash received (27.4 ) (21.7 )
Deferred income tax benefit (1.4 ) (3.3 )
Other (1.4 )

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

Accounts and notes receivable, net (132.2 ) 49.9
Inventories, net (481.5 ) (333.6 )
Other current and noncurrent assets (38.1 ) (15.5 )
Accounts payable (88.8 ) 56.9
Accrued expenses 95.6 88.8
Other current and noncurrent liabilities   25.0     (0.2 )
Total adjustments   (448.6 )   (29.5 )
Net cash (used in) provided by operating activities   (33.2 )   270.5  
Cash flows from investing activities:
Purchases of property, plant and equipment (235.2 ) (187.2 )
Proceeds from sale of property, plant and equipment 0.6 0.9
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 (11.3 ) (8.3 )
Restricted cash and other   (1.0 )    
Net cash used in investing activities   (269.4 )   (307.9 )
Cash flows from financing activities:
Repurchase or conversion of convertible senior subordinated notes (161.0 )
Repayment of debt obligations, net (89.5 ) (47.3 )
Payment of debt issuance costs (0.1 )
Payment of minimum tax withholdings on stock compensation (0.2 ) (2.5 )
Purchases and retirement of common stock (9.5 )
(Distribution to) investment by noncontrolling interests (0.6 ) (1.0 )
Proceeds from issuance of common stock       0.2  
Net cash used in financing activities   (99.9 )   (211.6 )
Effect of exchange rate changes on cash and cash equivalents       (15.7 )
Decrease in cash and cash equivalents (402.5 ) (264.7 )
Cash and cash equivalents, beginning of period   724.4     719.9  
Cash and cash equivalents, end of period $ 321.9   $ 455.2  

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       Nine Months Ended
September 30, September 30,
2012     2011 2012     2011
Cost of goods sold $ 0.7 $ 0.4 $ 1.9 $ 1.1
Selling, general and administrative expenses   8.9   6.0   27.1   17.0
Total stock compensation expense $ 9.6 $ 6.4 $ 29.0 $ 18.1

2. INDEBTEDNESS

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

    September 30,     December 31,
2012 2011
1¼% Convertible senior subordinated notes due 2036 $ 189.9 $ 183.4
4½% Senior term loan due 2016 257.1 259.4
5⅞% Senior notes due 2021 300.0 300.0
Credit Facility 600.0 665.0
Other long-term debt   59.7     62.0  
1,406.7 1,469.8
Less: Current portion of long-term debt   (52.8 )   (60.1 )
Total indebtedness, less current portion $ 1,353.9   $ 1,409.7  

As of September 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 September 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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