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AGCO Reports Second Quarter Results

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 June 30,     Six Months Ended June 30,

2013

  2012 2013   2012
Cost of goods sold $ 1.3 $ 0.6 $ 1.9 $ 1.2
Selling, general and administrative expenses 18.5   10.4   26.4   18.2
Total stock compensation expense $ 19.8   $ 11.0   $ 28.3   $ 19.4
 

2. INDEBTEDNESS

Indebtedness at June 30, 2013 and December 31, 2012 consisted of the following:

    June 30, 2013       December 31, 2012
1¼% Convertible senior subordinated notes due 2036 $ 196.7 $ 192.1
4½% Senior term loan due 2016 260.4 264.2
5⅞% Senior notes due 2021 300.0 300.0
Credit facility, expires 2016 512.5 465.0
Other long-term debt 92.7   65.5  
1,362.3 1,286.8
Less: Current portion of long-term debt (88.1 ) (59.1 )
1¼% Convertible senior subordinated notes due 2036 (196.7 ) (192.1 )
Total indebtedness, less current portion $ 1,077.5   $ 1,035.6  
 

Holders of the Company’s 1¼% convertible senior subordinated notes may require the Company to repurchase the notes at a repurchase price of 100% of their principal amount, plus any interest, on December 15, 2013. In addition, holders may convert the notes if, during any fiscal quarter, the closing sales price of the Company’s common stock exceeds 120% of the conversion price of $40.58 per share for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter. As of June 30, 2013, the closing sales price of the Company’s common stock had 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, 2013, and, therefore, the holders of the notes may convert the notes during the three months ending September 30, 2013. As of June 30, 2013, the Company classified the notes as a current liability due to the redemption feature discussed above, as well as the ability of the holders of the notes to convert the notes during the three months ending September 30, 2013. As of December 31, 2012, the Company classified the notes as a current liability due to the redemption feature of the notes. As of June 30, 2013 and December 31, 2012, the Company also classified approximately $4.6 million and $9.2 million, respectively, of the equity component of the 1¼% convertible senior subordinated notes as “Temporary equity.” The amount classified as “Temporary equity” was measured as the excess of (i) the amount of cash that would be required to be paid upon conversion over (ii) the current carrying amount of the liability-classified component. Due to the redemption feature of the notes, unless converted prior to such date, the notes will be required to be classified as a current liability through at least December 15, 2013. Holders of the notes may convert the notes earlier than December 15, 2013 dependent on the closing sales price of the Company’s common stock during future quarters in 2013, as previously discussed. Future classification of the notes between current liabilities and long-term debt beyond December 15, 2013 will be dependent on the closing sales price of the Company’s common stock during future quarters, until the fourth quarter of 2015, unless the Company chooses to redeem the notes beginning December 19, 2013.

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