AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide
manufacturer and distributor of agricultural equipment, reported
net sales of approximately $2.2 billion for the fourth quarter of
2010, an increase of 18.7% compared to the fourth quarter of 2009.
Reported net income was $0.87 per share, and adjusted net income,
excluding restructuring and other infrequent expenses, was $0.88
per share. These results compare to reported net income of $0.35
per share and adjusted net income, excluding restructuring and
other infrequent expenses, of $0.42 per share for the fourth
quarter of 2009. Excluding unfavorable currency translation impacts
of approximately 4.5%, net sales in the fourth quarter of 2010
increased 23.2% compared to the same period in 2009.
Net sales for the full year of 2010 were approximately $6.9
billion, an increase of approximately 5.8% compared to the full
year of 2009. Excluding the favorable impact of currency
translation of approximately 0.3%, net sales for the full year of
2010 increased approximately 5.6% compared to 2009. For the full
year of 2010, reported net income was $2.29 per share and adjusted
net income, excluding restructuring and other infrequent expenses,
was $2.32 per share. These results compare to reported net income
of $1.44 per share and adjusted net income, excluding restructuring
and other infrequent expenses, of $1.55 per share for the full year
of 2009.
“AGCO finished 2010 with a robust fourth quarter performance
highlighted by strong sales growth and margin expansion,” stated
Martin Richenhagen, Chairman, President and Chief Executive
Officer. “Improving order flow along with increased production
levels in our North American and European factories resulted in
strong revenue and margin improvement in those regions in the
fourth quarter. This improvement drove sales growth of over 20%,
excluding currency translation impacts, with operating margins
doubling to 6.6% in the fourth quarter. In 2009, our focus was on
reducing inventory. As we finished 2010, with company and dealer
inventories at targeted levels, we efficiently increased production
and are well positioned to take advantage of 2011 market
opportunities.”
“Throughout the year, we managed our working capital carefully
and generated over $270 million of free cash flow for the full year
of 2010,” continued Mr. Richenhagen. “AGCO’s strong balance sheet
enables us to make important investments in our business. In 2010,
we increased our research and development efforts by approximately
14% compared to 2009, focusing on new products and new engine
technology. During December 2010, we expanded our high margin
replacement parts business with the purchase of Sparex Holdings,
Ltd. in Europe for approximately $85 million. In early 2011, we
will complete two previously announced acquisitions which will
bolster our European combine business and provide advanced
air-seeding products to our distribution network. AGCO’s solid
financial position and ability to generate cash will allow us to
increase our strategic investments in 2011.”
AGCO’s North American region reported a sales increase in the
fourth quarter of 2010 of approximately 47.3% compared to the
fourth quarter of 2009, excluding favorable currency translation
impacts. Increased sales of combines, tractors and sprayers
contributed to higher sales in the North American region.
Europe/Africa/Middle East (EAME) sales in the fourth quarter of
2010 increased approximately 28.9% compared to the same period in
2009, excluding unfavorable currency translation impacts. The
increase was supported by stabilizing Western European industry
conditions in the fourth quarter of 2010. AGCO’s South American
region reported a sales increase of approximately 0.9% in the
fourth quarter of 2010 compared to the elevated levels in the
fourth quarter of 2009, excluding favorable currency translation
impacts. Industry demand increased in Argentina during the fourth
quarter of 2010 but declined in Brazil compared to the fourth
quarter of 2009.
In the fourth quarter of 2010, income from operations grew to
$142.4 million, an increase of nearly 200% compared to the fourth
quarter of 2009. Gross margins were 18.9% in the fourth quarter of
2010 compared to 14.6% in the fourth quarter of 2009. The margin
improvement was driven by higher production, improved mix and
pricing benefits. Income from operations for the full year of 2010
increased approximately $105.5 million compared to the full year of
2009, primarily due to improved margins partially offset by higher
engineering expenses to support new product development and tier 4
engine emission upgrades.
Market Update
Industry Unit Retail Sales
Year ended December 31, 2010
Tractors
Change from
Prior Year Period
Combines
Change from
Prior Year Period
North America + 5 % + 9 % South America + 31 % + 29 %
Western Europe (10 %) (34 %)
North America
Industry unit retail sales of tractors increased modestly in
North America for the full year of 2010, compared to the full year
of 2009. Strong growth in high horsepower tractors was partially
offset by a small decline in utility tractors. Robust economics for
the professional farming segment contributed to the strength in
retail sales of high horsepower tractors and combines. Softness in
the dairy and livestock sectors contributed to lower industry unit
retail sales of mid-range tractors and hay equipment, which both
declined compared to the full year of 2009.
South America
For the full year of 2010, industry unit retail sales of
tractors in South America grew sharply compared to the same period
in 2009. Strong farm fundamentals and favorable government
financing programs in Brazil contributed to the strong industry
demand, which began to decelerate in the second half of 2010.
Western Europe
Industry unit retail tractor sales were down approximately 10%
in Western Europe during the full year of 2010 compared to the
prior year, but did stabilize during the second half of 2010. The
slow pace of macro-economic recovery, weak farmer sentiment and
soft demand in the dairy and livestock sectors contributed to the
decline in 2010. Industry unit retail tractor sales declines were
most pronounced in France, Spain, Italy and the United Kingdom in
the full year of 2010 compared to 2009.
“Year-end global stocks of food crops are at low levels and
demand for soft commodities is growing,” stated Mr. Richenhagen.
“Elevated crop prices are driving profitable farm economics and
incentivizing farmers to invest to increase their production
capabilities. Western European farm equipment demand is expected to
strengthen in 2011 due to improved farmer profitability for grain
and dairy producers. In North America, higher levels of farm income
are projected to maintain demand for large tractors and combines.
Farm economics remain strong in Brazil, but equipment demand in
2011 is expected to soften due to less generous financing
subsidies. We are optimistic regarding the long-term potential of
our industry resulting from favorable trends in demand for soft
commodities, which should support crop prices and farmer
profitability.”
Regional Results
AGCO Regional Sales (in
millions)
Net sales
% change
from 2009
% change from2009 due
tocurrencytranslation(1)
Three months ended December 31, 2010 North America $
462.9 48.6 % 1.3 % South America 440.1 2.6 % 1.7 %
Europe/Africa/Middle East 1,185.5 19.5 % (9.4 %) Rest of World
79.5 (16.0 %) (0.4 %)
Total $ 2,168.0 18.7 % (4.5 %)
Year ended December 31, 2010
North America $ 1,489.3 3.2 % 1.9 % South America 1,753.3 50.2 %
14.0 % Europe/Africa/Middle East 3,364.4 (6.6 %) (5.0 %) Rest of
World 289.6 (4.7 %) 2.6 %
Total $ 6,896.6 5.8 % 0.3 %
(1)See Footnotes for additional disclosure
North America
AGCO’s sales in North America increased modestly in the full
year of 2010 compared to the same period in 2009. Healthy economics
for row crop farmers generated increased sales of sprayers,
combines and parts which were offset by declines in sales of hay
and forage equipment and utility tractors. Income from operations
of approximately $49.5 million for the full year of 2010 increased
approximately $27.6 million compared to the full year of 2009.
Improved margins from new products, favorable mix and factory
efficiencies were partially offset by higher engineering costs.
Higher sales and improved operating margins in the second half of
2010 offset declines experienced in the first half of the year.
South America
For the full year of 2010, AGCO’s South American sales increased
36.2% compared to the same period in 2009, excluding the impact of
favorable currency translation. Record levels of industry demand in
Brazil and improved crop production in Argentina produced the
robust sales growth. Income from operations increased approximately
$97.1 million for the full year of 2010 compared to 2009. Sales
growth, improved factory productivity and a richer product mix in
Brazil led to the increase in income from operations.
EAME
Weak market conditions, primarily in Western Europe, resulted in
modest sales declines in AGCO’s EAME region for the full year of
2010 compared to the same period in 2009. AGCO experienced the
largest sales declines in France, Germany and Africa partially
offset by sales growth in Poland and Finland. Income from
operations declined by approximately $17.3 million in the full year
of 2010 compared to the same period in 2009. Reduced sales, lower
production and increased engineering expenses contributed to the
decline.
Rest of World
Net sales in AGCO’s Rest of World segment declined by
approximately 7.3% during the full year of 2010 compared to the
same period in 2009, excluding the favorable impact of currency
translation. Lower sales in Australia and New Zealand were
partially offset by higher sales in China and Asia. Income from
operations in the Rest of World region decreased approximately $4.2
million in the full year of 2010 compared to the same period in
2009 due primarily to weaker sales and increased expenses related
to growth initiatives.
Outlook
Worldwide industry demand is expected to be flat or to increase
modestly in 2011 compared to 2010 levels. Higher crop prices for
grain and dairy farmers in Western Europe and improving farmer
sentiment are expected to generate modest growth in the Western
European market. In North America, industry sales are expected to
be flat in 2011 compared to the high level experienced in 2010. The
strong financial position of row crop farmers and the expectation
of farm income above historical averages is expected to support
demand from the professional farming sector. Strong farm
fundamentals are expected to continue in Brazil in 2011. However,
less attractive government financing programs are expected to
result in a softening of demand as compared to the record demand of
2010.
AGCO is targeting adjusted earnings per share, excluding
restructuring and other infrequent expenses, in the range from
$2.50 to $2.75 for the full year of 2011. Net sales are expected to
range from $7.6 billion to $7.9 billion. Gross margin improvements
are expected to be partially offset by higher expenses for new
product and new market development.
AGCO will be hosting a conference call with respect to this
earnings announcement at 10:00 a.m. Eastern Time on Tuesday,
February 8, 2011. The Company will refer to slides on its
conference call. Interested persons can access the conference call
and slide presentation via AGCO’s website at www.agcocorp.com under
the heading “Events” on the “Investors” page. A replay of the
conference call will be available approximately two hours after the
conclusion of the conference call for twelve months following the
call. A copy of this press release will be available on AGCO’s
website for at least twelve months following the call.
Safe Harbor Statement
Statements that are not historical facts, including the
projections of earnings per share, sales, market conditions, margin
improvements, profitability, inventory levels, benefits from
inventory reduction and productivity initiatives, impact of
acquisitions, industry demand, general economic conditions, global
food demand and diet trends, commodity prices, farm economics and
productivity, pension costs and engineering and restructuring
expenses, are forward-looking and subject to risks that could cause
actual results to differ materially from those suggested by the
statements. The following are among the factors that could cause
actual results to differ materially from the results discussed in
or implied by the forward-looking statements. Further information
concerning these and other factors is included in AGCO’s filings
with the Securities and Exchange Commission, including its Form
10-K for the year ended December 31, 2009. AGCO disclaims
any obligation to update any forward-looking statements except as
required by law.
- Our financial results depend entirely
upon the agricultural industry, and factors that adversely affect
the agricultural industry generally, including declines in the
general economy, increases in farm input costs, lower commodity
prices, lower farm income and changes in the availability of credit
for our retail customers, will adversely affect us.
- The recent poor performance of the
general economy may result in a decline in demand for our products.
However, we are unable to predict with accuracy the amount or
duration of this decline, and our forward-looking statements
reflect merely our best estimates at the current time.
- A majority of our sales and
manufacturing take place outside of the United States, and, as a
result, we are exposed to risks related to foreign laws, taxes,
economic conditions, labor supply and relations, political
conditions and governmental policies. These risks may delay or
reduce our realization of value from our international
operations.
- Most retail sales of the products that
we manufacture are financed, either by our retail finance joint
ventures with Rabobank or by a bank or other private lender. During
2010, our joint ventures with Rabobank, which are controlled by
Rabobank and are dependent upon Rabobank for financing as well,
financed approximately 50% of the retail sales of our tractors and
combines in the markets where the joint ventures operate. Any
difficulty by Rabobank to continue to provide that financing, or
any business decision by Rabobank as the controlling member not to
fund the business or particular aspects of it (for example, a
particular country or region), would require the joint ventures to
find other sources of financing (which may be difficult to obtain),
or us to find another source of retail financing for our customers,
or our customers would be required to utilize other retail
financing providers. As a result of the ongoing economic downturn,
financing for capital equipment purchases generally has become more
difficult and expensive to obtain. To the extent that financing is
not available or available only at unattractive prices, our sales
would be negatively impacted.
- Both AGCO and our retail finance joint
ventures have substantial accounts receivables from dealers and end
customers, and we would be adversely impacted if the collectability
of these receivables was not consistent with historical experience;
this collectability is dependent upon the financial strength of the
farm industry, which in turn is dependent upon the general economy
and commodity prices, as well as several of the other factors
listed in this section.
- We recently have experienced
substantial and sustained volatility with respect to currency
exchange rate and interest rate changes, which can adversely affect
our reported results of operations and the competitiveness of our
products.
- We are subject to extensive
environmental laws and regulations, and our compliance with, or our
failure to comply with, existing or future laws and regulations
could delay production of our products or otherwise adversely
affect our business.
- We have significant pension obligations
with respect to our employees, and our available cash flow may be
adversely affected in the event that payments become due under any
pension plans that are unfunded or underfunded. Declines in the
market value of the securities used to fund these obligations
result in increased pension expense in future periods.
- The agricultural equipment industry is
highly seasonal, and seasonal fluctuations significantly impact
results of operations and cash flows.
- Our success depends on the introduction
of new products, particularly engines that comply with emission
requirements, which requires substantial expenditures.
- We depend on suppliers for raw
materials, components and parts for our products, and any failure
by our suppliers to provide products as needed, or by us to
promptly address supplier issues, will adversely impact our ability
to timely and efficiently manufacture and sell products. We also
are subject to raw material price fluctuations, which can adversely
affect our manufacturing costs.
- We face significant competition and, if
we are unable to compete successfully against other agricultural
equipment manufacturers, we would lose customers and our net sales
and profitability would decline.
- We have a substantial amount of
indebtedness, and as result, we are subject to certain restrictive
covenants and payment obligations that may adversely affect our
ability to operate and expand our business.
About AGCO
AGCO, Your Agriculture Company (NYSE: AGCO), was founded in 1990
and offers a full product line of tractors, combines, hay tools,
sprayers, forage, tillage equipment, implements and related
replacement parts. AGCO agricultural products are sold under the
core brands of Challenger®, Fendt®, Massey Ferguson® and Valtra®,
and are distributed globally through more than 2,700 independent
dealers and distributors, in more than 140 countries worldwide.
AGCO provides retail financing through AGCO Finance. AGCO is
headquartered in Duluth, Georgia, USA. In 2010, AGCO had net sales
of $6.9 billion.
Please visit our website at www.agcocorp.com.
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in millions)
December 31,
2010
December 31,
2009
ASSETS Current Assets: Cash and cash equivalents $
719.9 $ 651.4 Accounts and notes receivable, net 908.5 725.2
Inventories, net 1,233.5 1,156.7 Deferred tax assets 52.6 63.6
Other current assets 206.5 151.6 Total
current assets 3,121.0 2,748.5 Property, plant and equipment, net
924.8 910.0 Investment in affiliates 398.0 353.9 Deferred tax
assets 58.0 70.0 Other assets 130.8 115.7 Intangible assets, net
171.6 166.8 Goodwill 632.7 634.0 Total
assets $ 5,436.9 $ 4,998.9
LIABILITIES AND
STOCKHOLDERS’ EQUITY Current Liabilities: Current portion of
long-term debt $ 0.1 $ 0.1 Convertible senior subordinated notes
161.0 193.0 Securitization facilities 113.9 — Accounts payable
682.6 621.6 Accrued expenses 883.1 808.7 Other current liabilities
72.2 45.5 Total current liabilities
1,912.9 1,668.9 Long-term debt, less current portion 443.0 454.0
Pensions and postretirement health care benefits 226.5 276.6
Deferred tax liabilities 103.9 118.7 Other noncurrent liabilities
91.4 78.0 Total liabilities
2,777.7 2,596.2
Temporary Equity:
Equity component of redeemable convertible senior subordinated
notes — 8.3 Stockholders’ Equity: AGCO Corporation
stockholders’ equity: Common stock 0.9 0.9 Additional paid-in
capital 1,051.3 1,061.9 Retained earnings 1,738.3 1,517.8
Accumulated other comprehensive loss (132.1 ) (187.4
) Total AGCO Corporation stockholders’ equity 2,658.4
2,393.2 Noncontrolling interest 0.8
1.2 Total stockholders’ equity 2,659.2
2,394.4 Total liabilities, temporary equity and
stockholders’ equity $ 5,436.9 $ 4,998.9
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)
Three Months Ended December 31,
2010 2009 Net sales $ 2,168.0 $ 1,827.2 Cost of goods
sold 1,758.8 1,561.0 Gross profit 409.2 266.2
Selling, general and administrative expenses 200.0 158.8
Engineering expenses 61.1 45.5 Restructuring and other infrequent
expenses 1.1 9.4 Amortization of intangibles 4.6 4.7
Income from operations 142.4 47.8 Interest expense,
net 9.6 9.0 Other expense, net 6.3 1.8 Income
before income taxes and equity in net earnings of affiliates 126.5
37.0 Income tax provision 54.6 14.5
Income before equity in net earnings of affiliates 71.9 22.5
Equity in net earnings of affiliates 13.3 10.7
Net income 85.2 33.2 Net loss attributable to noncontrolling
interest — 0.3 Net income attributable to AGCO
Corporation and subsidiaries $ 85.2 $ 33.5 Net income per
common share attributable to AGCO Corporation and subsidiaries:
Basic $ 0.92 $ 0.36 Diluted $ 0.87 $ 0.35 Weighted
average number of common and common equivalent shares outstanding:
Basic 93.0 92.3 Diluted 97.5 95.6
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)
Years Ended December 31,
2010 2009 Net sales $ 6,896.6 $ 6,516.4 Cost of goods
sold 5,637.9 5,444.5 Gross profit 1,258.7 1,071.9
Selling, general and administrative expenses 692.1 630.1
Engineering expenses 219.6 191.9 Restructuring and other infrequent
expenses 4.4 13.2 Amortization of intangibles 18.4
18.0 Income from operations 324.2 218.7 Interest
expense, net 33.3 42.1 Other expense, net 16.0 22.2
Income before income taxes and equity in net earnings of
affiliates 274.9 154.4 Income tax provision 104.4
57.7 Income before equity in net earnings of
affiliates 170.5 96.7 Equity in net earnings of affiliates
49.7 38.7 Net income 220.2 135.4 Net
loss attributable to noncontrolling interest 0.3 0.3
Net income attributable to AGCO Corporation and subsidiaries
$ 220.5 $ 135.7 Net income per common share attributable to
AGCO Corporation and subsidiaries: Basic $ 2.38 $ 1.47
Diluted $ 2.29 $ 1.44 Weighted average number of common and
common equivalent shares outstanding: Basic 92.8 92.2
Diluted 96.4 94.1
See accompanying notes to condensed
consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited and in millions)
Years Ended December 31,
2010 2009 Cash flows from
operating activities: Net income $ 220.2 $ 135.4
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 135.9 118.8 Deferred debt issuance cost amortization
2.9 2.8 Amortization of intangibles 18.4 18.0 Amortization of debt
discount 15.3 15.0 Stock compensation 13.4 8.0 Equity in net
earnings of affiliates, net of cash received (14.8 ) (21.0 )
Deferred income tax provision
(benefit)
2.9 (21.9 ) Loss on sale of property, plant and equipment 0.1 1.4
Changes in operating assets and liabilities, net of effects from
purchase
of business:
Accounts and notes receivable, net (21.2 ) 241.2 Inventories, net
(60.6 ) 277.1 Other current and noncurrent assets (92.8 ) 40.8
Accounts payable 70.6 (380.3 ) Accrued expenses 114.9 (68.1 ) Other
current and noncurrent liabilities 33.5 (19.3
) Total adjustments 218.5 212.5 Net
cash provided by operating activities 438.7
347.9 Cash flows from investing activities: Purchases of
property, plant and equipment (167.1 ) (206.6 ) Proceeds from sale
of property, plant and equipment 0.9 2.1 (Purchase) sale of
business, net of cash acquired (81.5 ) 0.5 Investments in
unconsolidated affiliates, net (25.4 ) (17.6 ) Restricted cash and
other — 37.1 Net cash used in investing
activities (273.1 ) (184.5 ) Cash flows from
financing activities: Repurchase or conversion of convertible
senior subordinated notes (60.8 ) — Repayment of debt obligations,
net (37.8 ) (60.9 ) Payment of debt issuance costs — (0.1 ) Payment
of minimum tax withholdings on stock compensation (11.3 ) (5.2 )
Proceeds from issuance of common stock 0.5 — Investments by
noncontrolling interest — 1.3 Net cash
used in financing activities (109.4 ) (64.9 ) Effect
of exchange rate changes on cash and cash equivalents 12.3
46.8 Increase in cash and cash equivalents
68.5 145.3 Cash and cash equivalents, beginning of period
651.4 506.1 Cash and cash equivalents, end of
period $ 719.9 $ 651.4
See accompanying notes to condensed
consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIESNOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(unaudited, in millions,
except per share data)
1. DECONSOLIDATION OF JOINT VENTURE
On January 1, 2010, the Company adopted the provisions of
Accounting Standards Update (“ASU”) 2009-17, “Consolidations (Topic
810): Improvements to Financial Reporting by Enterprises Involved
with Variable Interest Entities” (“ASU 2009-17”), and performed a
qualitative analysis of all its joint ventures, including its GIMA
joint venture, to determine whether it had a controlling financial
interest in such ventures. As a result of this analysis, the
Company determined that its GIMA joint venture should no longer be
consolidated into the Company’s results of operations or financial
position as the Company does not have a controlling financial
interest in GIMA based on the shared powers of both joint venture
partners to direct the activities that most significantly impact
GIMA’s financial performance. GIMA is a joint venture between AGCO
and Claas Tractor SAS to cooperate in the field of purchasing,
design and manufacturing of components for agricultural tractors.
Each party has a 50% ownership interest in the joint venture and
has an investment of approximately €4.2 million in the joint
venture. Both parties purchase all of the production output of the
joint venture. The deconsolidation of GIMA resulted in a
retroactive reduction to “Noncontrolling interests” within equity
and an increase to “Investments in affiliates” in the Company’s
Condensed Consolidated Balance Sheet as of December 31, 2009 of
approximately $6.4 million. The deconsolidation resulted in a
retroactive reduction in the Company’s “Net sales” and “Income from
Operations” within its Condensed Consolidated Statements of
Operations and a reclassification of amounts previously reported as
“Net income attributable to noncontrolling interests” to “Equity in
net earnings of affiliates,” but otherwise had no net impact to the
Company’s consolidated net income for the three months and year
ended December 31, 2009. In addition, the deconsolidation also
resulted in a reduction of the Company’s “Total assets” and “Total
liabilities” within its Condensed Consolidated Balance Sheets, but
had no net impact to the Company’s “Total stockholders’ equity”
other than the reduction previously mentioned. The Company
retroactively restated prior periods and recorded the following
adjustments:
Condensed Consolidated Balance Sheet
as of December 31, 2009
AsPreviouslyReported
Adjustment
As adjusted
Total assets $ 5,062.2 $ (63.3 ) $ 4,998.9 Total liabilities
$ 2,653.1 $ (56.9 ) $ 2,596.2
Condensed Consolidated Statement
ofOperations for the Three Months EndedDecember 31, 2009
Net sales $ 1,852.5 $ (25.3 ) $ 1,827.2 Income from
operations $ 48.9 $ (1.1 ) $ 47.8 Condensed Consolidated
Statement of
Operations for the Year Ended
December 31, 2009
Net sales $ 6,630.4 $ (114.0 ) $ 6,516.4 Income from
operations $ 219.3 $ (0.6 ) $ 218.7
2. STOCK COMPENSATION EXPENSE
The Company recorded stock compensation
expense as follows:
Three Months Ended
December 31,
Years Ended
December 31,
2010 2009 2010
2009 Cost of goods sold $ 0.2 $ (0.5 ) $ 0.7 $ 0.1 Selling, general
and administrative expenses 4.7 (2.8 ) 12.9
8.2 Total stock compensation expense $ 4.9 $ (3.3 ) $ 13.6 $
8.3
3. RESTRUCTURING AND OTHER INFREQUENT EXPENSES
During 2009 and 2010, the Company announced and initiated
several actions to rationalize employee headcount at various
manufacturing facilities located in France, Finland, Germany and
the United States, as well as at various administrative offices
located in the United Kingdom, Spain and the United States. The
Company also announced the closure of its combine assembly
operations in Randers, Denmark in 2009. During 2010, the Company
recorded restructuring and other infrequent expenses of
approximately $4.4 million, primarily related to severance and
other related costs associated with the Company’s rationalization
of its operations in Denmark, Spain, Finland and France. During
2009, the Company recorded restructuring and other infrequent
expenses of approximately $13.2 million, primarily related to
severance and other related costs associated with the Company’s
rationalization of its operations in France, the United Kingdom,
Finland, Germany, the United States and Denmark.
4. INDEBTEDNESS
Indebtedness at December 31, 2010 and 2009
consisted of the following:
December 31,
2010
December 31,
2009
6⅞% Senior subordinated notes due 2014 $ 267.7 $ 286.5 1¾%
Convertible senior subordinated notes due 2033 161.0 193.0 1¼%
Convertible senior subordinated notes due 2036 175.2 167.5
Securitization facilities 113.9 — Other long-term debt 0.2
0.1 718.0 647.1 Less: Current portion of
long-term debt (0.1 ) (0.1 ) 1¾% Convertible senior subordinated
notes due 2033 (161.0 ) (193.0 ) Securitization facilities
(113.9 ) — Total indebtedness, less current portion $
443.0 $ 454.0
Holders of the Company’s 1¾% convertible senior subordinated
notes due 2033 and 1¼% convertible senior subordinated notes due
2036 may convert the notes, if, during any fiscal quarter, the
closing sales price of the Company’s common stock exceeds,
respectively, 120% of the conversion price of $22.36 per share for
the 1¾% convertible senior subordinated notes and $40.73 per share
for the 1¼% convertible senior subordinated notes, 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 December 31,
2010 and 2009, the closing sales price of the Company’s common
stock had exceeded 120% of the conversion price of the 1¾%
convertible senior subordinated notes for at least 20 trading days
in the 30 consecutive trading days ending December 31, 2010 and
2009, respectively, and, therefore, the Company classified the
notes as a current liability. In accordance with ASU 2009-04,
“Accounting for Redeemable Equity Instruments,” the Company also
classified the equity component of the 1¾% convertible senior
subordinated notes as “temporary equity” as of December 31, 2009.
The amount classified as “temporary equity” was measured as the
excess of (a) the amount of cash that would be required to be paid
upon conversion over (b) the current carrying amount of the
liability-classified component. As of December 31, 2010, the amount
of cash required to be repaid upon conversion of the 1 ¾%
convertible senior subordinated notes was equivalent to the
carrying amount of the liability-classified component. Future
classification of both series of notes between current and
long-term debt and classification of the equity component of the
1¼% convertible senior subordinated notes as “temporary equity” is
dependent on the closing sales price of the Company’s common stock
during future quarters.
During 2010, the Company repurchased approximately $37.5 million
of principal amount of its 1¾% convertible senior subordinated
notes plus accrued interest for approximately $58.1 million. The
repurchase included approximately $21.1 million associated with the
excess conversion value of the notes and resulted in a loss on
extinguishment of approximately $0.2 million reflected in “interest
expense, net.” The Company reflected both the repurchase of the
principal and the excess conversion value of the notes totaling
$58.1 million within “Repurchase or conversion of convertible
senior subordinated notes” within the Company’s Condensed
Statements of Cash Flows for the year ended December 31, 2010. In
addition, during 2010, holders of the Company’s 1¾% convertible
senior subordinated notes converted $2.7 million of principal
amount of the notes. The Company issued 60,986 shares associated
with the $2.7 million excess conversion value of the notes. The
loss on extinguishment associated with the conversions of the notes
was less than $0.1 million and was reflected in “Interest expense,
net”. The Company reflected the repayment of the principal of the
notes totaling $2.7 million within “Repurchase or conversion of
convertible senior subordinated notes” within the Company’s
Condensed Consolidated Statements of Cash Flows for the year ended
December 31, 2010.
5. INVENTORIES
Inventories at December 31, 2010 and 2009
were as follows:
December 31,
2010
December 31,
2009
Finished goods $ 422.6 $ 480.0 Repair and replacement parts 432.4
383.1 Work in process 90.2 86.3 Raw materials 288.3
207.3 Inventories, net $ 1,233.5 $ 1,156.7
6. ACCOUNTS RECEIVABLE SALES AGREEMENTS AND
SECURITIZATION FACILITIES
At December 31, 2010, the Company’s accounts receivable
securitization facilities in Europe had outstanding funding of
approximately €85.1 million (or approximately $113.9 million). In
accordance with ASU 2009-16, “Transfers and Servicing (Topic 860):
Accounting for Transfers of Financial Assets” and ASU 2009-17, the
Company recognized approximately $113.9 million of accounts
receivable sold through its European securitization facilities
within the Company’s Condensed Consolidated Balance Sheets as of
December 31, 2010, with a corresponding liability equivalent to the
funded balance of the facility.
At December 31, 2010, the Company had accounts receivable sales
agreements that permit the sale, on an ongoing basis, of
substantially all of its wholesale interest-bearing and
non-interest bearing receivables in North America to AGCO Finance
LLC and AGCO Finance Canada, Ltd., its 49% owned U.S. and Canadian
retail finance joint ventures. As of December 31, 2010, net cash
received from receivables sold under the U.S. and Canadian accounts
receivable sales agreements was approximately $375.9 million.
Losses on sales of receivables associated with the accounts
receivable financing facilities discussed above, reflected within
“Other expense, net” and “Interest expense, net” in the Company’s
Condensed Consolidated Statements of Operations, were approximately
$4.6 million and $16.1 million during the three months and year
ended December 31, 2010, respectively. Losses on sales of
receivables primarily from the Company’s European securitization
facilities and former U.S. and Canadian securitization facilities
were approximately $3.8 million and $15.6 million during the three
months and year ended December 31, 2009, respectively.
The Company’s AGCO Finance retail finance joint ventures in
Europe, Brazil and Australia also provide wholesale financing to
the Company’s dealers. The receivables associated with these
arrangements are without recourse to the Company. As of December
31, 2010 and 2009, these retail finance joint ventures had
approximately $221.8 million and $176.9 million, respectively, of
outstanding accounts receivable associated with these arrangements.
In addition, the Company sells certain trade receivables under
factoring arrangements to other financial institutions around the
world.
7. EARNINGS PER SHARE
The Company’s convertible senior subordinated notes provide for
(i) the settlement upon conversion in cash up to the principal
amount of the converted notes with any excess conversion value
settled in shares of the Company’s common stock, and (ii) the
conversion rate to be increased under certain circumstances if the
notes are converted in connection with certain change of control
transactions. Dilution of weighted shares outstanding will depend
on the Company’s stock price for the excess conversion value using
the treasury stock method. A reconciliation of net income
attributable to AGCO Corporation and subsidiaries and weighted
average common shares outstanding for purposes of calculating basic
and diluted earnings per share for the three months and years ended
December 31, 2010 and 2009 is as follows:
Three Months Ended December 31,
Years Ended December 31,
2010 2009 2010 2009 Basic net income per
share: Net income attributable to AGCO
Corporation and subsidiaries
$ 85.2 $ 33.5 $ 220.5 $ 135.7 Weighted average number of common
shares outstanding
93.0
92.3
92.8
92.2
Basic net income per share attributable to AGCO Corporation
and subsidiaries $ 0.92 $ 0.36 $ 2.38 $ 1.47 Diluted net
income per share: Net income attributable to AGCO
Corporation and subsidiaries for
purposes of computing diluted net income
per share
$ 85.2 $ 33.5 $ 220.5 $ 135.7 Weighted average number of
common shares outstanding
93.0
92.3
92.8
92.2
Dilutive stock options, performance share awards and restricted
stock awards
0.4
1.1
0.4
0.4
Weighted average assumed conversion of
contingently convertible senior subordinated notes
4.1
2.2
3.2
1.5
Weighted average number of common and
common equivalent shares outstanding for purposes of computing
diluted earnings per share
97.5
95.6
96.4
94.1
Diluted net income per share attributable to AGCO
Corporation and subsidiaries $ 0.87 $ 0.35 $ 2.29 $ 1.44
8. SEGMENT REPORTING
Effective January 1, 2010, the Company modified its system of
reporting, resulting from changes to its internal management and
organizational structure over the past year, which changed its
reportable segments from North America; South America;
Europe/Africa/Middle East; and Asia/Pacific to North America; South
America; Europe/Africa/Middle East; and Rest of World. The Rest of
World reportable segment includes the regions of Eastern Europe,
Asia, Australia and New Zealand, and the Europe/Africa/ Middle East
segment no longer includes certain markets in Eastern Europe.
Effective January 1, 2010, these reportable segments are reflective
of how the Company’s chief operating decision maker reviews
operating results for the purposes of allocating resources and
assessing performance. Disclosures for the three months and year
ended December 31, 2009 have been adjusted to reflect the change in
reportable segments.
The Company’s four reportable segments distribute a full range
of agricultural equipment and related replacement parts. The
Company evaluates segment performance primarily based on income
from operations. Sales for each segment are based on the location
of the third-party customer. The Company’s selling, general and
administrative expenses and engineering expenses are charged to
each segment based on the region and division where the expenses
are incurred. As a result, the components of income from operations
for one segment may not be comparable to another segment. Segment
results for the three months and years ended December 31, 2010 and
2009 are as follows:
Three Months Ended
December 31,
NorthAmerica
SouthAmerica
Europe/Africa/
Middle East
Rest ofWorld
Consolidated
2010 Net sales $ 462.9 $ 440.1 $ 1,185.5 $ 79.5 $
2,168.0 Income from operations 34.9 23.0 112.5 4.6 175.0
2009 Net sales $ 311.5 $ 429.1 $ 991.9 $ 94.7 $ 1,827.2
(Loss) income from operations (5.1 ) 35.3 38.6 2.7 71.5
Years Ended
December 31,
NorthAmerica
SouthAmerica
Europe/Africa/Middle East
Rest ofWorld
Consolidated
2010 Net sales $
1,489.3 $ 1,753.3 $ 3,364.4 $ 289.6 $ 6,896.6 Income from
operations 49.5 161.7 207.2 14.2 432.6
2009 Net sales
$ 1,442.7 $ 1,167.1 $ 3,602.8 $ 303.8 $ 6,516.4 Income from
operations 21.9 64.6 224.5 18.4 329.4
A reconciliation from the segment
information to the consolidated balances for income from operations
is set forth below:
Three Months Ended
December 31,
Years Ended
December 31,
2010 2009 2010
2009 Segment income from
operations $ 175.0 $ 71.5 $ 432.6 $ 329.4 Corporate expenses (22.2
) (12.4 ) (72.7 ) (71.3 ) Stock compensation expense (4.7 ) 2.8
(12.9 ) (8.2 ) Restructuring and other infrequent expenses (1.1 )
(9.4 ) (4.4 ) (13.2 ) Amortization of intangibles (4.6 )
(4.7 ) (18.4 ) (18.0 ) Consolidated income
from operations $ 142.4 $ 47.8 $ 324.2 $ 218.7
RECONCILIATION OF NON-GAAP MEASURES
This earnings release discloses adjusted income from operations,
net income and earnings per share, all of which exclude amounts
that differ from the most directly comparable measure calculated in
accordance with U.S. generally accepted accounting principles
(“GAAP”). A reconciliation of each of these financial measures to
the most directly comparable GAAP measure is included below.
The following is a reconciliation of adjusted income from
operations, net income and earnings per share to reported income
from operations, net income and earnings per share for the three
months ended December 31, 2010 and 2009 (in millions, except per
share data):
Three months ended December 31, 2010 2009
Income
From
Operations
Net
Income(1)
Earnings
Per
Share(1)
Income
From
Operations
Net
Income(1)
EarningsPerShare(1)
As adjusted $ 143.5 $ 85.9 $ 0.88 $ 57.2 $ 40.3 $ 0.42
Restructuring and other infrequent expenses (2)
1.1
0.7
0.01
9.4
6.8
0.07
As reported $ 142.4 $ 85.2 $ 0.87 $ 47.8 $ 33.5 $ 0.35
(1) Net income and earnings per share amounts are after tax.
(2) The restructuring and other infrequent expenses recorded during
the fourth quarter of 2010 related primarily to severance costs
associated with the Company’s rationalization of its operations in
France and Denmark. The restructuring and other infrequent expenses
recorded during the fourth quarter of 2009 related primarily to
severance costs associated with the Company’s rationalization of
its operations in the United States, the United Kingdom, France,
Germany and Denmark.
The following is a reconciliation of adjusted income from
operations, net income and earnings per share to reported income
from operations, net income and earnings per share for the years
ended December 31, 2010 and 2009 (in millions, except per share
data):
Years ended December 31, 2010 2009
Income
From
Operations
Net
Income(1)
Earnings
Per
Share(1)
Income
From
Operations
Net
Income(1)
EarningsPerShare(1)
As adjusted $ 328.6 $ 223.6 $ 2.32 $ 231.9 $ 145.5 $ 1.55
Restructuring and other infrequent expenses(2)
4.4
3.1
0.03
13.2
9.8
0.11
As reported $ 324.2 $ 220.5 $ 2.29 $ 218.7 $ 135.7 $ 1.44
(1) Net income and earnings per share amounts are after tax.
(2) The restructuring and other infrequent expenses recorded in
2010 primarily related to severance and other related costs
associated with the Company’s rationalization of its operations in
Denmark, Spain, Finland and France. The restructuring and other
infrequent expenses recorded in 2009 primarily related to severance
and other related costs associated with the Company’s
rationalization of its operations in France, the United Kingdom,
Finland, Germany, the United States and Denmark.
The following is a reconciliation of net
sales for the three months ended December 31, 2010 at actual
exchange rates compared to 2009 adjusted exchange rates (in
millions):
Three months ended December 31,
2010 atActualExchangeRates
2010 atAdjusted
Exchange
Rates (1)
Change due to currency
translation
North America $ 462.9 $ 458.7 1.3 % South America 440.1
433.0 1.7 % Europe/Africa/Middle East 1,185.5 1,278.5 (9.4 )% Rest
of World 79.5 79.9 (0.4 )% $ 2,168.0 $ 2,250.1 (4.5
)%
(1) Adjusted exchange rates are 2009
exchange rates.
The following is a reconciliation of net
sales for the year ended December 31, 2010 at actual exchange rates
compared to 2009 adjusted exchange rates (in millions):
Year ended December 31,
2010 atActualExchangeRates
2010 atAdjustedExchangeRates (1)
Change due tocurrencytranslation
North America $ 1,489.3 $ 1,461.2 1.9 % South America
1,753.3 1,590.3 14.0 % Europe/Africa/Middle East 3,364.4 3,544.7
(5.0 )% Rest of World 289.6 281.6 2.6 % $ 6,896.6 $
6,877.8 0.3 %
(1) Adjusted exchange rates are 2009
exchange rates.
The following is a reconciliation of free
cash flow to net cash provided by operating activities for the
years ended December 31, 2010 and 2009 (in millions):
2010 2009 Net cash
provided by operating activities $ 438.7 $ 347.9 Less: Capital
expenditures (167.1 ) (206.6 ) Free cash flow $ 271.6
$ 141.3
Grafico Azioni AGCO (NYSE:AGCO)
Storico
Da Lug 2024 a Ago 2024
Grafico Azioni AGCO (NYSE:AGCO)
Storico
Da Ago 2023 a Ago 2024