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EXHIBIT 99.1
SLIDES FROM MANAGEMENT PRESENTATION BY AGCO CORPORATION
THE FOLLOWING PRESENTATION IS NOT AN OFFER TO SELL OUR SECURITIES OR A
SOLICITATION OF OFFERS TO BUY OUR SECURITIES.
The following presentation contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Reference is made to Exhibit 99.2 to this
Current Report on Form 8-K, which is incorporated by reference herein, for
information about forward-looking statements.
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[AGCO LOGO] ROADSHOW PRESENTATION
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APRIL 2001
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OFFERING OVERVIEW
Issuer AGCO Corporation
Issue ____% Senior Notes (the "Notes")
Gross Proceeds $250,000,000
Distribution 144A with Registration Rights
Maturity 2008 (7 years)
Optional Redemption 4 year non-call
On or after May 1, 2005 at certain specified prices
plus accrued interest declining to 100% of their
principal amount, plus accrued interest, on or after
2007
Change of Control Upon a Change of Control, the Company will
be required to make an offer to purchase the Notes at
a purchase price equal to 101% of their principal
amount, plus accrued interest
Use of Proceeds Refinance existing bank debt
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SENIOR MANAGEMENT REPRESENTATIVES
Robert J. Ratliff
Executive Chairman of the Board
Donald R. Millard
Senior Vice President and Chief Financial Officer
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Introduction to AGCO
- Formed in 1990 by a management buyout of Allis-Chalmers
- 18 highly successful acquisitions have grown company's
revenues from $220 million in 1990 to $2.6 billion PF 2000;
equity market cap of $700 million
- World's third largest player with brands of: AGCO(R), Allis,
Massey Ferguson(R), Hesston(R), White, GLEANER(R), New
Idea(R), AGCOSTAR(R), Tye(R), Farmhand(R),
Blencoe(R), Fendt, Spra-Coupe(R) and Willmar(R)
- Strong Market Positions: #3 North America; #1 Germany; #2
France; #1 South America
- Extensive network of 7,750 independent dealers and
distributors,associates and licensees
- Ag-Chem: world's premier sprayer line and access to new blue
chip customer base
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PRIMARY PRODUCTS AND SERVICES
TRACTORS
[PICTURE 1] [PICTURE 2] [PICTURE 3]
COMBINES
[PICTURE 1] [PICTURE 2]
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PRIMARY PRODUCTS AND SERVICES (CONT'D)
HAY TOOLS AND SPRAYERS
[PICTURE 1] [PICTURE 2] [PICTURE 3] [PICTURE 4]
PARTS AND SERVICES
[PICTURE 1]
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[AGCO LOGO] OVERVIEW OF THE GLOBAL
AGRICULTURAL EQUIPMENT INDUSTRY
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[AGCO LOGO]
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INDUSTRY OVERVIEW
AGRICULTURAL EQUIPMENT INDUSTRY HAS UNDERGONE SIGNIFICANT CONSOLIDATION
[PIE CHART DEPICTING THE FOLLOWING:
Deere 29%
AGCO 11%*
Case - New Holland 28%
Other 32%]
(*)Does not include sales by licensees and associates
ESTIMATED 2000 AGRICULTURAL WORLDWIDE EQUIPMENT SALES: $21 BILLION
Source: J. P. Morgan
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CURRENT STATUS OF THE AGRICULTURAL MARKET
1999-2000 REPRESENTED THE WEAKEST FARM EQUIPMENT ENVIRONMENT IN NORTH AMERICA
IN OVER A DECADE.
- Global commodity prices remain low due to bountiful crops for
the fourth consecutive year
- Farmer financial condition remains healthy due to government
payments/subsidies in North America, Western Europe and South
America
- In the North American market (which is the bellwether for the
industry), US farm debt remains low relative to historical
standards
- China's potential entrance into the WTO establishes a major
export market for commodities and would help lift global
commodity prices
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WESTERN EUROPE MARKET OVERVIEW
INDUSTRY SALES OF TRACTORS AND COMBINES
[BAR GRAPH DEPICTING UNIT SALES OF TRACTORS AND COMBINES FROM 1984-2000]
- - Key Factors Affecting Market
- CAP Reform
- Mad cow and other livestock diseases
Source: USDA
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NORTH AMERICAN MARKET OVERVIEW
INDUSTRY SALES OF TRACTORS (EXCLUDING COMPACTS) AND COMBINES
[BAR GRAPH DEPICTING UNIT SALES OF TRACTORS AND COMBINES FROM 1990-2000]
- - Key Factors Affecting Market
- Low commodity prices
- Freedom to Farm Act
- Low US farm debt levels
- High farm income
Source: USDA
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SOUTH AMERICA MARKET OVERVIEW
INDUSTRY SALES OF TRACTORS AND COMBINES (BRAZIL AND ARGENTINA)
[BAR GRAPH DEPICTING UNIT SALES OF TRACTORS AND COMBINES FROM 1990-2000]
- - Key Factors Affecting Market
- Government Financing (FINAME)
Source: USDA
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MARKET OUTLOOK
- - Western European markets are expected to be down by 5% in 2001 due to
the CAP reform and BSE ("mad cow") and hoof and mouth uncertainties
- - Modest industry recovery expected in North America in 2001
- - Improved pricing expected in the US due to low dealer inventory levels
and reduced discounting
- - South American markets continue to improve with the stability in Brazil
- - YTD February 2001 sales versus YTD February 2000 were up in all markets
except Western Europe
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[AGCO LOGO] INVESTMENT HIGHLIGHTS
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DIVERSIFIED GEOGRAPHIC AND PRODUCT SALES
AGCO'S GEOGRAPHIC DIVERSIFICATION AND MULTIPLE PRODUCTS PROVIDE BUFFER TO
REGIONAL DYNAMICS.
2000 NET SALES -- $2.3 BILLION
Pie Chart depicting the following: Pie Chart depicting the following:
Europe 50% Utility Tractors 31%
North America 29% Row Crop Tractors 30%
South America 10% Combines 6%
Asia/Pacific 4% Hay & Forage 6%
Rest of World 7% Parts 19%
Compact Tractors 2%
Other 6%
INTRODUCTION OF PRODUCTS INTO NEW MARKETS AND STRENGTHENING OUR GLOBAL
DISTRIBUTION NETWORK WILL FURTHER DIVERSIFY OUR GEOGRAPHIC REVENUE STREAM.
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LEADING MARKET POSITIONS
- - Massey Ferguson is the most widely sold tractor in the world
2000 2000 AGCO 2000
MARKET SIZE MARKET SHARE MARKET
(UNITS) (%) POSITION
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Western Europe 173,676 14 2
France 37,965 14 2
Germany 25,000 26 1
Spain 19,500 14 3
UK 11,175 14 3
North America 165,813 6 3
South America 29,065 32 1
Brazil 24,591 33 1
Argentina 2,091 39 1
Africa 7,800 23 2
Licensee Markets
India 244,597 16 2
Turkey 34,500 40 1
Pakistan 28,000 45 1
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HIGHLY VARIABLE COST STRUCTURE
THE COMPANY'S EFFICIENT HORIZONTAL MANUFACTURING STRATEGY AND ONGOING
PRODUCT COST REDUCTION INITIATIVES PROVIDE CONTINUED FLEXIBILITY IN A
CHALLENGING ENVIRONMENT.
- - Flexible and efficient manufacturing capabilities combined with highly
variable cost structure enable the Company to react quickly to changes
in market conditions
- - Outsourcing of major components allows ratcheting down of production
without leaving capital intensive machinery idle
Global Manufacturing Costs
Pie chart depicting the following:
Materials 79%
Overhead 12%
Director Labor 9%
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COST REDUCTION EFFORTS
SINCE LATE 1998 WHEN THE CURRENT AGRICULTURAL DOWNTURN COMMENCED,
MANAGEMENT HAS REACTED SWIFTLY TO REDUCE COSTS, GENERATE CASH AND REPAY
INDEBTEDNESS.
- Multi-phase cost reduction effort to generate $150 million of
cost savings
KEY TACTICS/STRATEGIES
- Facilities rationalization
- Material cost reductions
- Manufacturing efficiency programs
- Working capital reductions
- Resourcing
- Common product platforms
- Strategic alliances
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COST REDUCTION EFFORTS
STATUS
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Phase I $50 million
- $53 million operating expense reduction achieved Complete
in 1999 attributable to headcount and
discretionary spending reductions
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Phase II
Step 1 25 million
- Facilities rationalization -- North America Complete
-- South America
Step 2 25 million
- Material cost reductions from purchasing On-Going
- Product resourcing (ex.: Turkey sourced product On-Going
relocated to Brazil)
- Common product platforms (ex.: cabs) On-Going
- Strategic alliances -- Same Deutz-Fahr Complete
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Phase III $50 million - Cost Reduction Teams ("CRT") On-Going
- Product warranty improvement On-Going
- Product and component redesign On-Going
- Other manufacturing initiatives 2002/2003
- Additional strategic alliances 2002/2003
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$150 million
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PROVEN BUSINESS STRATEGY
- - Introduce products into new markets and strengthen global distribution
network
- - Continue to focus on improving North American presence through
initiatives at the dealer level
- - Capitalize on the significant opportunity that exists for continued
consolidation in the agricultural equipment industry by selectively
pursuing strategic acquisitions
- - Continue cost reduction initiatives, which are expected to total$150
million in savings by 2003
- - Maintain conservative financial policies consisting of applying free
cash flow to debt reduction and making selective acquisitions
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[AGCO LOGO]
AG-CHEM ACQUISITION
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AG-CHEM ACQUISITION
- Total purchase price -$247.2 million ($25.80 per Ag-Chem share)
- Consideration is approximately 55% cash and 45% AGCO shares
- AGCO will refinance or assume approximately $45 million of Ag-Chem
debt
- Expect closing in April 2001
- Equipment division highly profitable -over 26% gross margins historically
- Significant rationalization opportunity
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AG-CHEM OVERVIEW
- Manufactures specialized, off-road heavy equipment for the application of
fertilizer and chemicals to farm fields
- Environmentally friendly and cost effective
- Other equipment includes industrial equipment to distribute bio-solid
waste into the soil, chemical transport vehicles and orchard sprayers
- Sell direct to large blue chip customer base
- Strong brand name, reputation and market share
- Clear leader in the $1 billion market for pre-and post-emergent spraying
equipment, of which roughly 90% is in North America
MARKET FOR PRE-AND POST-EMERGENT SPRAYING EQUIPMENT(1)
Pre-Emergent Post-Emergent
(1/3 of market) (2/3 of market)
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Ag-Chem 60% 25%
AGCO -- 25
Deere -- 25
CNH 10 15
Others 30 10
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(1) CSFB Research
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AG-CHEM HISTORICAL FINANCIAL INFORMATION
($ millions)
1996 1997 1998 1999 2000(a)
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Net Sales 280.2 318.2 322.1 292.7 298.8
Gross Profit 79.8 85.6 87.2 78.0 66.4
EBITDA (Total) 29.8 28.1 24.8 17.4 13.8
EBITDA Margin (Total) 10.6% 8.8% 7.7% 5.9% 4.6%
EBITDA (Excluding Soilteq) 31.4 30.4 28.9 22.5 18.1
EBITDA Margin (Excluding Soilteq) 11.2% 9.6% 9.0% 7.7% 6.1%
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(a) Eliminate one-time charge for axle product recall
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AG-CHEM OPPORTUNITIES TO INCREASE VALUE
REVENUES
- Open new markets outside North America
- Migration of agriculture to larger farms
- Crossover sales of AGCO products
- Finance purchase of retail equipment through AGCO Finance
EXPENSES
- Material cost savings }
} EXPECT $30 MILLION
- Product rationalization } ANNUALLY WITHIN 3
} YEARS; $10 MILLION
- Facility rationalization } NEXT 12 MONTHS
}
- Improve profitability of parts and service }
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AG-CHEM 2000 PROFORMA INCLUDING AGCO
SYNERGIES
($ millions) AG-CHEM
INCLUDING
SYNERGIES SYNERGIES
ACTUAL PRODUCT LESS &COST SALES AND SALES
9/30/00 RECALL(a) SOILTEQ(b) SAVINGS(c) GROWTH(d) GROWTH
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Net Sales $298.8 (2.6) 30.0 $326.2
Cost of Sales 232.4 (5.1) (10.0) 22.2 239.5
Gross Profit 66.4 5.1 (2.6) 10.0 7.8 86.7
S,G&A 66.5 -- (7.1) (20.0) 0.9 40.3
Operating (0.1) 5.1 4.5 30.0 6.9 46.4
Income/ (Loss)
EBITDA $ 8.6 5.1 4.3 30.0 6.9 $ 54.9
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(a) Eliminate one-time charge for axle product recall
(b) Eliminate losses from Soilteq division
(c) Cost savings resulting from plant consolidations, parts/service synergies,
administrative synergies, and purchasing synergies
(d) Sales growth from use of AGCO distribution in South America and Europe
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[AGCO LOGO] HISTORICAL OPERATING AND
FINANCIAL PERFORMANCE
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SOURCES AND USES AS OF 12/31/00
($ millions)
SOURCES USES
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Issuance of AGCO Equity $ 114.8 Fund Ag-Chem Transaction $ 247.2
New Credit Facility 115.4 Refinance Ag-Chem Debt 28.5
Senior Notes 250.0 Refinance Existing Bank Debt 314.2
Funding Under Receivables Securitization 135.0 Other Expenses 25.3
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Total Sources $ 615.2 Total Uses $ 615.2
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PRO FORMA CAPITALIZATION
($ in millions) AGCO AS OF PRO FORMA
EXISTING CAPITALIZATION DATA 12/31/00 12/31/00
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Cash $ 13.3 $ 13.4
Debt:
New Secured Credit Facility -- $ 115.4
Existing Unsecured Credit Facility $ 314.2 --
New Senior Notes -- 250.0
8.5% Senior Sub Notes due 2006 248.6 248.6
Other Debt 7.4 23.9
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Total Debt $ 570.2 $ 637.9
Stockholders' Equity 789.9 902.0
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Total Capitalization $ 1,360.1 $ 1,539.9
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SUMMARY FINANCIAL STATISTICS
($ millions)
Year Ended December 31,
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1997 1998 1999 2000 PF2000
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OPERATING RESULTS
Net Sales $ 3,254 $ 2,971 $ 2,436 $ 2,336 $ 2,633
EBITDA, as adjusted 407 286 158 156 160
Total Debt 727 924 692 570 638
Stockholders' Equity 992 982 829 790 902
OPERATING STATISTICS
Sales Growth 38.9% (8.7)% (18.0)% (4.1)% --
EBITDA Margin 12.5 9.6 6.5 6.7 6.1%
CREDIT STATISTICS
Debt/Total Capitalization 42.3% 48.5% 45.5% 41.9% 41.4%
Debt/EBITDA 1.8x 3.2x 4.4x 3.7x 4.0x
EBITDA/Interest Expense 5.8 3.5 2.2 2.6 2.3
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KEY FACTORS IMPACTING 2000 FINANCIAL RESULTS
- - Continued weakness in the agricultural sector
- - Cost savings benefits due to restructuring (in gross margin) -- increasing
from 14.7% in 1999 to 16.1% in 2000
- - Reduced production schedules to maintain target inventory levels
- - Weakness in Western European sales offset by increases in North
America and South America
- - Accounts receivable facility
- - Margins on exports from the UK have been negatively impacted by the
Sterling/Euro exchange rate
- - Currency translation
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FREE CASH FLOW
THE COMPANY HAS INCREASED FREE CASH FLOW IN RECENT YEARS BY EFFICIENTLY MANAGING
WORKING CAPITAL AND REDUCING CAPITAL EXPENDITURES. THE FLEXIBILITY TO REDUCE
CAPITAL EXPENDITURES IS A BENEFIT OF AGCO'S HORIZONTAL MANUFACTURING STRATEGY.
($ millions)
Year Ended December 31,
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1997 1998 1999 2000
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EBITDA, as adjusted $407 $286 $158 $156
Capital Expenditures (72) (61) (44) (58)
Interest Expense (71) (82) (71) (60)
Taxes (35) (50) (37) (30)
Working Capital (171) (102) 224 143 (1)
Other Assets and Liabilities (13) (1) (26) (6)
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FREE CASH FLOW $ 45 ($10) $204 $145
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(1) Accounts receivable declined by $200 million in January 2000 due to the
Securitization.
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WORKING CAPITAL REDUCTIONS
SIGNIFICANT REDUCTIONS IN WORKING CAPITAL HAVE CONTRIBUTED TO THE COMPANY'S
STRONG CASH FLOW. STEPS TAKEN TO REDUCE WORKING CAPITAL INCLUDE REDUCING DEALER
INVENTORY, REDUCING PRODUCTION LEVELS AND USING DEMAND FLOW TECHNOLOGY FOR
PRODUCTION INVENTORY.
[CHART OF % OF WORKING CAPITAL TO [CHART OF ACCOUNTS RECEIVABLE AND
SALES FOR 1998 Q3 TO 2000 Q4] INVENTORY FOR 1998 Q3 TO 2000 Q4]
(1) Working Capital consists of accounts receivable plus inventory less accounts
payable.
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DEBT REDUCTION
($ in millions)
[BAR GRAPH SHOWING LEVELS OF DEBT, EQUITY AND
DEBT-TO-CAPITAL RATIO FOR Q4 1998,
Q4 1999, Q4 2000 AND Q4 2000 (PROFORMA)]
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ASSET PROTECTION
-- The Company has a significant amount of assets that protect the value of
the bonds
PRO FORMA
2000
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Inventory $ 648.3
Receivables 482.4
Property, Plant and Equipment 368.0
Investments 86.5
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Total $1,585.2
Less:
Revolver 115.4
Debt at Non-Guarantor Subsidiaries 23.1
Working Capital at Non-Guarantor Subsidiaries 471.0
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Excess Assets $ 975.7
Senior Notes 250.0
Senior Note Coverage 3.9x
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CREDIT HIGHLIGHTS
- Strong cash flow generation even in trough of cycle
- Cost cutting on core AGCO business will drive another $75 million in
savings over the next few years
- Additional $30 million in saving from cost reductions at Ag-Chem
- Well positioned for industry up-turn
- Focused on returning to investment grade
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