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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-12930
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AGCO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 58-1960019
(State of incorporation) (I.R.S. Employer Identification No.)
4205 RIVER GREEN PARKWAY
DULUTH, GEORGIA 30096
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 813-9200
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Common stock par value $.01 per share: 71,952,559 shares outstanding as
of July 31, 2001.
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AGCO CORPORATION AND SUBSIDIARIES
INDEX
Page
Numbers
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PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance
Sheets - June 30, 2001 and
December 31, 2000 3
Condensed Consolidated Statements
of Operations for the Three Months
Ended June 30, 2001 and 2000 4
Condensed Consolidated Statements
of Operations for the Six Months
Ended June 30, 2001 and 2000 5
Condensed Consolidated Statements
of Cash Flows for the Six Months
Ended June 30, 2001 and 2000 6
Notes to Condensed Consolidated
Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 23
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 32
PART II. OTHER INFORMATION:
Item 4. Submission of Matters to a Vote of Security Holders 33
Item 6. Exhibits and Reports on Form 8-K 33
SIGNATURES 34
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Part I. Financial Information
Item I. Financial Statements
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents $ 17.7 $ 13.3
Accounts and notes receivable, net 461.6 602.9
Inventories, net 660.4 531.1
Other current assets 104.9 93.0
-------- --------
Total current assets 1,244.6 1,240.3
Property, plant and equipment, net 320.3 316.2
Investments in affiliates 92.5 85.3
Other assets 228.9 176.0
Intangible assets, net 428.9 286.4
-------- --------
Total assets $2,315.2 $2,104.2
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 225.6 $ 244.4
Accrued expenses 386.1 357.6
Other current liabilities 34.9 34.4
-------- --------
Total current liabilities 646.6 636.4
Long-term debt 735.5 570.2
Postretirement health care benefits 27.7 27.5
Other noncurrent liabilities 74.2 80.2
-------- --------
Total liabilities 1,484.0 1,314.3
-------- --------
Stockholders' Equity:
Common stock: $0.01 par value, 150,000,000 shares authorized,
71,944,305 and 59,589,428 shares issued and outstanding
at June 30, 2001 and December 31, 2000, respectively 0.7 0.6
Additional paid-in capital 531.6 427.1
Retained earnings 621.4 622.9
Unearned compensation (0.5) (1.4)
Accumulated other comprehensive loss (322.0) (259.3)
-------- --------
Total stockholders' equity 831.2 789.9
-------- --------
Total liabilities and stockholders' equity $2,315.2 $2,104.2
======== ========
See accompanying notes to condensed consolidated financial statements.
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AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND IN MILLIONS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED JUNE 30,
----------------------------
2001 2000
------ ------
Net sales $659.3 $640.8
Cost of goods sold 545.6 535.8
------ ------
Gross profit 113.7 105.0
Selling, general and administrative expenses 63.2 55.4
Engineering expenses 13.0 10.8
Restructuring and other infrequent expenses 3.3 13.1
Amortization of intangibles 4.8 3.5
------ ------
Income from operations 29.4 22.2
Interest expense, net 15.5 11.9
Other expense, net 10.1 8.8
------ ------
Income before income taxes, equity in net earnings
of affiliates and extraordinary loss 3.8 1.5
Income tax provision 1.4 0.6
------ ------
Income before equity in net earnings of affiliates and extraordinary loss 2.4 0.9
Equity in net earnings of affiliates 3.2 3.2
------ ------
Income before extraordinary loss 5.6 4.1
Extraordinary loss, net of taxes 0.8 --
------ ------
Net income $ 4.8 $ 4.1
====== ======
Net income per common share:
Basic:
Income before extraordinary loss $ 0.08 $ 0.07
Extraordinary loss (0.01) --
------ ------
Net income $ 0.07 $ 0.07
====== ======
Diluted:
Income before extraordinary loss $ 0.08 $ 0.07
Extraordinary loss (0.01) --
------ ------
Net income $ 0.07 $ 0.07
====== ======
Weighted average number of common and common equivalent shares outstanding:
Basic 69.2 59.1
====== ======
Diluted 69.9 59.7
====== ======
Dividends declared per common share $ -- $ 0.01
====== ======
See accompanying notes to condensed consolidated financial statements.
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AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND IN MILLIONS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED JUNE 30,
-----------------------------
2001 2000
-------- --------
Net sales $1,191.4 $1,175.6
Cost of goods sold 995.2 993.5
-------- --------
Gross profit 196.2 182.1
Selling, general and administrative expenses 119.9 114.3
Engineering expenses 24.9 21.3
Restructuring and other infrequent expenses 5.6 15.0
Amortization of intangibles 8.7 7.3
-------- --------
37.1 24.2
Income from operations
Interest expense, net 29.4 23.3
Other expense, net 17.7 21.1
-------- --------
Loss before income taxes, equity in net earnings
of affiliates and extraordinary loss (10.0) (20.2)
Income tax benefit (3.8) (8.1)
-------- --------
Loss before equity in net earnings of affiliates and extraordinary loss (6.2) (12.1)
Equity in net earnings of affiliates 6.0 5.5
-------- --------
Loss before extraordinary loss (0.2) (6.6)
Extraordinary loss, net of taxes 0.8 --
-------- --------
Net loss $ (1.0) $ (6.6)
======== ========
Net loss per common share:
Basic:
Loss before extraordinary loss $ (0.01) $ (0.11)
Extraordinary loss (0.01) --
-------- --------
Net loss $ (0.02) $ (0.11)
======== ========
Diluted:
Loss before extraordinary loss $ (0.01) $ (0.11)
Extraordinary loss (0.01) --
-------- --------
Net loss $ (0.02) $ (0.11)
======== ========
Weighted average number of common and common equivalent shares outstanding:
Basic 64.3 59.0
======== ========
Diluted 64.3 59.0
======== ========
Dividends declared per common share $ 0.01 $ 0.02
======== ========
See accompanying notes to condensed consolidated financial statements.
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AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED AND IN MILLIONS)
SIX MONTHS ENDED JUNE 30,
-------------------------
2001 2000
------ ------
Cash flows from operating activities:
Net loss $ (1.0) $ (6.6)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Extraordinary loss, net of taxes 0.8 --
Depreciation and amortization 25.7 26.1
Amortization of intangibles 8.7 7.3
Amortization of unearned compensation 0.9 2.5
Equity in net earnings of affiliates, net of cash received (5.3) (5.3)
Deferred income tax benefit (27.0) (26.7)
Loss on write-down of property, plant and equipment -- 2.9
Changes in operating assets and liabilities, net of effects
from purchase of businesses:
Accounts and notes receivable, net 120.8 134.7
Inventories, net (56.2) (58.7)
Other current and noncurrent assets (12.4) (12.0)
Accounts payable (17.7) 17.2
Accrued expenses 12.0 43.1
Other current and noncurrent liabilities (0.5) (17.5)
------ ------
Total adjustments 49.8 113.6
------ ------
Net cash provided by operating activities 48.8 107.0
------ ------
Cash flows from investing activities:
Purchase of property, plant and equipment (12.5) (14.1)
Purchase of businesses, net of cash acquired (147.5) (10.0)
Investments in affiliates (0.5) (1.2)
------ ------
Net cash used for investing activities (160.5) (25.3)
------ ------
Cash flows from financing activities:
Proceeds from (repayments of) debt, net 123.0 (86.2)
Proceeds from issuance of preferred stock 5.3 --
Payment of debt and common stock issuance costs (11.3) --
Dividends paid on common stock (0.6) (1.2)
------ ------
Net cash provided by (used in) financing activities 116.4 (87.4)
------ ------
Effect of exchange rate changes on cash and cash equivalents (0.3) (0.6)
------ ------
Increase (decrease) in cash and cash equivalents 4.4 (6.3)
Cash and cash equivalents, beginning of period 13.3 19.6
------ ------
Cash and cash equivalents, end of period $ 17.7 $ 13.3
====== ======
See accompanying notes to condensed consolidated financial statements.
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AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements of AGCO Corporation and
subsidiaries (the "Company" or "AGCO") included herein have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments, which are of a normal
recurring nature, necessary to present fairly the Company's financial position,
results of operations and cash flows at the dates and for the periods presented.
These condensed consolidated financial statements should be read in conjunction
with the Company's audited financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
Interim results of operations are not necessarily indicative of results to be
expected for the fiscal year. Certain reclassifications of previously reported
financial information were made to conform to the current presentation.
2. AG-CHEM ACQUISITION
On April 16, 2001, the Company completed the acquisition of Ag-Chem
Equipment Co., Inc. ("Ag-Chem"), a manufacturer and distributor of
self-propelled sprayers. The Company paid Ag-Chem shareholders approximately
$247.2 million consisting of approximately 11.8 million AGCO common shares and
$147.5 million of cash. The funding of the cash component of the purchase price
was made through borrowings under the Company's revolving credit facility.
The Ag-Chem acquisition was accounted for as a purchase in accordance
with Accounting Principles Board ("APB") No. 16, and, accordingly, the purchase
price has been allocated to the assets acquired and the liabilities assumed
based on a preliminary estimate of fair values as of the acquisition date. In
connection with the acquisition of Ag-Chem, the Company established liabilities
primarily related to severance, employee relocation and other costs associated
with the planned closure of Ag-Chem's Benson, Minnesota manufacturing facility,
Minnetonka, Minnesota administrative office and fifteen parts and service
facilities. The activity related to these liabilities is summarized in the
following table (in millions):
Reserve
Liabilities Expenses Balance at
Established Incurred June 30, 2001
----------- -------- -------------
Employee severance $2.4 $0.9 $1.5
Employee relocation expense 0.3 -- 0.3
Facility closure costs 0.2 -- 0.2
---- ---- ----
$2.9 $0.9 $2.0
==== ==== ====
The severance relates to the planned termination of approximately 210
Ag-Chem employees, of which 66 had been terminated as of June 30, 2001.
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3. RESTRUCTURING AND OTHER INFREQUENT EXPENSES
In the second quarter of 2001, the Company announced its plans to
rationalize certain facilities as part of the Ag-Chem acquisition integration.
The Company plans to consolidate AGCO's Willmar, Minnesota manufacturing
facility and Ag-Chem's Benson, Minnesota manufacturing facility into Ag-Chem's
Jackson, Minnesota manufacturing plant. In addition, the Company will close
Ag-Chem's Minnetonka, Minnesota administrative offices and relocate the majority
of these functions to the Jackson facility. Lastly, the Company will close
fifteen Ag-Chem parts and service facilities and integrate parts warehousing and
logistics into AGCO's existing North America parts distribution system.
In connection with these closures, the Company recorded restructuring
and other infrequent expenses of $2.6 million during the second quarter of 2001.
The components of the restructuring and other infrequent expenses are summarized
in the following table (in millions):
Reserve Balance
2001 Expenses at June 30,
Expense Incurred 2001
------- -------- ---------------
Employee severance $0.6 $0.1 $0.5
Employee retention payments 0.5 0.1 0.4
Facility closure costs 0.6 -- 0.6
Write-down of property, plant and equipment 0.4 0.4 --
Facility relocation and transition costs 0.5 0.5 --
---- ---- ----
$2.6 $1.1 $1.5
==== ==== ====
The severance relates to the planned termination of approximately 200
AGCO employees of which 5 had been terminated as of June 30, 2001. The employee
retention payments relate to incentives to be paid to Ag-Chem and AGCO employees
who remain employed until certain future termination dates and are accrued over
the term of the retention period. The facility closure costs include employee
costs and other exit costs to be incurred at Willmar after operations cease. The
write-down of property, plant and equipment represents the impairment of
machinery and equipment at Willmar from the facility closures and was based on
the estimated fair value of the assets compared to their carrying value. The
facility relocation and transition costs are being expensed as incurred and
represent costs to relocate employees, inventory and machinery and costs to
integrate operations into the retained facilities. The $1.5 million of costs
accrued at June 30, 2001 are expected to be incurred in 2001.
In 2000, the Company permanently closed its combine manufacturing
facility in Independence, Missouri and its Lockney, Texas and Noetinger,
Argentina implement manufacturing facilities. In 1999, the Company permanently
closed its Coldwater, Ohio manufacturing facility. The majority of production in
these facilities has been relocated to existing Company facilities or outsourced
to third parties. In connection with these facility closures, the Company
recorded additional restructuring and other infrequent expenses of $3.0 million
in the first six months of 2001. A summary of the expenses and related reserves
associated with these closures is included in the following table (in millions):
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Reserve Balance Reserve Balance
at December 31, 2001 Expenses at June 30,
2000 Expense Incurred 2001
--------------- ------- -------- ---------------
Employee severance $1.9 $ -- $1.3 $0.6
Facility closure costs 3.9 (0.7) 1.7 1.5
Write-down of property, plant
and equipment, net of recoveries -- (0.7) (0.7) --
Production transition costs -- 4.4 4.4 --
---- ---- ---- ----
$5.8 $3.0 $6.7 $2.1
==== ==== ==== ====
The expenses incurred in 2001 primarily relate to production transition
costs. In addition, the Company recorded credits totaling $1.4 million relating
to recoveries from the sale of property and the reversal of closing cost
reserves which will not be incurred.
4. LONG-TERM DEBT
Long-term debt consisted of the following at June 30, 2001 and December
31, 2000 (in millions):
June 30, December 31,
2001 2000
-------- ------------
Revolving credit facility $205.7 $314.2
9 1/2% Senior notes due 2008 250.0 --
8 1/2% Senior subordinated notes due 2006 248.8 248.6
Other long-term debt 31.0 7.4
------ ------
$735.5 $570.2
====== ======
On April 17, 2001 the Company issued $250.0 million of 9 1/2% Senior
Notes due 2008 (the "Senior Notes"). The Senior Notes are unsecured obligations
of the Company and are redeemable at the option of the Company, in whole or in
part, commencing May 1, 2005 initially at 104.75% of their principal amount,
plus accrued interest, declining to 100% of their principal amount plus accrued
interest on or after May 1, 2007. The indenture governing the Senior Notes
requires the Company to offer to repurchase the Senior Notes at 101% of their
principal amount, plus accrued interest to the date of the repurchase in the
event of a change in control. The indenture also contains certain covenants
that, among other things, limit the Company's ability (and that of its
restricted subsidiaries) to incur additional indebtedness; make restricted
payments (including dividends and share repurchases); make investments;
guarantee indebtedness; create liens; and sell assets. The proceeds were used to
repay borrowings outstanding under the Company's existing revolving credit
facility.
On April 17, 2001 the Company entered into a $350.0 million
multi-currency revolving credit facility with Rabobank that will mature October
2005. The facility is secured by a majority of the Company's U.S., Canadian and
U.K. based assets and a pledge of the stock of the Company's domestic and
material foreign subsidiaries. Interest will accrue on borrowings outstanding
under the facility, at the Company's option, at either (1) LIBOR plus a margin
based
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on a ratio of the Company's senior debt to EBITDA, as adjusted, or (2) the
administrative agent's base lending rate or the federal funds rate plus a margin
ranging between .625% and 1.5%, whichever is higher. The facility contains
covenants, including covenants restricting the incurrence of indebtedness and
the making of restrictive payments, including dividends. In addition, the
Company must fulfill financial covenants including, among others, a total debt
to EBITDA ratio, a senior debt to EBITDA ratio and a fixed charge coverage
ratio, as defined in the facility. The proceeds were used to repay borrowings
outstanding under the Company's then existing revolving credit facility.
5. INVENTORIES
Inventories are valued at the lower of cost or market using the
first-in, first-out method. Market is net realizable value for finished goods
and repair and replacement parts. For work in process, production parts and raw
materials, market is replacement cost.
Inventory balances at June 30, 2001 and December 31, 2000 were as
follows (in millions):
June 30, December 31,
2001 2000
-------- ------------
Finished goods $282.5 $233.0
Repair and replacement parts 250.8 222.2
Work in process, production parts and raw materials 194.6 143.6
------ ------
Gross inventories 727.9 598.8
Allowance for surplus and obsolete inventories (67.5) (67.7)
------ ------
Inventories, net $660.4 $531.1
====== ======
6. NET INCOME PER COMMON SHARE
The computation, presentation and disclosure requirements for earnings
per share are presented in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share." Basic earnings per common
share is computed by dividing net income by the weighted average number of
common shares outstanding during each period. Diluted earnings per common share
assumes exercise of outstanding stock options and vesting of restricted stock
when the effects of such assumptions are dilutive.
A reconciliation of net income (loss) and the weighted average number
of common shares outstanding used to calculate basic and diluted net income
(loss) per common share for the three and six months ended June 30, 2001 and
2000 is as follows (in millions, except per share data):
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Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
2001 2000 2001 2000
------ ------ ------ ------
BASIC EARNINGS PER SHARE
Weighted average number of common shares outstanding 69.2 59.1 64.3 59.0
====== ====== ====== ======
Net income (loss) $ 4.8 $ 4.1 $ (1.0) $ (6.6)
====== ====== ====== ======
Net income (loss) per common share $ 0.07 $ 0.07 $(0.02) $(0.11)
====== ====== ====== ======
DILUTED EARNINGS PER SHARE
Weighted average number of common shares outstanding 69.2 59.1 64.3 59.0
Assumed vesting of restricted stock 0.5 0.5 -- --
Assumed exercise of outstanding stock options 0.2 0.1 -- --
------ ------ ------ ------
Weighted average number of common and common equivalent
shares outstanding 69.9 59.7 64.3 59.0
====== ====== ====== ======
Net income (loss) $ 4.8 $ 4.1 $ (1.0) $ (6.6)
====== ====== ====== ======
Net income (loss) per common share $ 0.07 $ 0.07 $(0.02) $(0.11)
====== ====== ====== ======
7. COMPREHENSIVE INCOME (LOSS)
Total comprehensive income (loss) for the three and six months ended
June 30, 2001 and 2000 were as follows (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
2001 2000 2001 2000
------ ------ ------ ------
Net income (loss) $ 4.8 $ 4.1 $ (1.0) $ (6.6)
Other comprehensive income (loss)
Foreign currency translation adjustments (16.1) (2.9) (61.5) (20.2)
Unrealized gain (loss) on derivatives 0.2 -- (1.2) --
------ ------ ------ ------
Total comprehensive income (loss) $(11.1) $ 1.2 $(63.7) $(26.8)
====== ====== ====== ======
8. ACCOUNTS RECEIVABLE SECURITIZATION
In the second quarter, the Company entered into account receivable
securitization facilities in Europe and Canada, whereby wholesale accounts
receivable are sold on a revolving basis. The facilities allow for funding up to
approximately $150 million. In connection with the closing of these facilities,
the Company incurred transaction costs and an initial loss of sales of
receivables of $3.6 million. At June 30, 2001, the Company had funded
approximately $372.9 million under the Company's securitization facilities in
the United States, Canada and Europe.
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9. PREFERRED STOCK
On March 23, 2001, the Company sold non-voting preferred shares, which
were convertible into shares of the Company's common stock in a private
placement with net proceeds of approximately $5.3 million. On June 1, 2001,
preferred shares were converted into 550,000 shares of the Company's common
stock.
10. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Effective January 1, 2001, the Company adopted SFAS No. 133 "Accounting
for Derivative Instruments and Hedging Activities," as amended by SFAS No. 138.
The cumulative effect for adopting this standard as of January 1, 2001 resulted
in a fair value asset, net of taxes of approximately $0.5 million, which is
expected to be reclassified to earnings over the next twelve months. All
derivatives are recognized on the balance sheet at fair value. On the date the
derivative contract is entered, the Company designates the derivative as either
(1) a fair value hedge of a recognized liability, (2) a cash flow hedge of a
forecasted transaction, (3) a hedge of a net investment in a foreign operation,
or (4) a non-designated derivative instrument. The Company currently engages in
derivatives that are classified as cash flow hedges and non-designated
derivative instruments. Changes in the fair value of a derivative that is
designated as a cash flow hedge are recorded in other comprehensive income until
reclassified into earnings at the time of settlement of the forecasted
transaction. Changes in the fair value of non-designated derivative contracts
and the ineffective portion of designated derivative instruments are reported in
current earnings.
The Company formally documents all relationships between hedging
instruments and hedged items, as well as the risk management objectives and
strategy for undertaking various hedge transactions. The Company formally
assesses, both at the hedge's inception and on an ongoing basis, whether the
derivatives that are used in hedging transactions are highly effective in
offsetting changes in fair values or cash flow of hedged items. When it is
determined that a derivative is no longer highly effective as a hedge, hedge
accounting is discontinued on a prospective basis.
Foreign Currency Risk
The Company has significant manufacturing operations in the United
States, the United Kingdom, France, Germany, Denmark and Brazil, and it
purchases a portion of its tractors, combines and components from third party
foreign supplies, primarily in various European countries and in Japan. The
Company also sells products in over 140 countries throughout the world. The
Company's most significant transactional foreign currency exposures include: (i)
the British pound in relation to the Euro and the U.S. dollar and (ii) the Euro
and the Canadian dollar in relation to the U.S. dollar.
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The Company attempts to manage its transactional foreign exchange
exposure by hedging identifiable foreign currency cash flow commitments arising
from receivables, payables, and expected purchases and sales. Where naturally
offsetting currency positions do not occur, the Company hedges certain of its
exposures through the use of foreign currency forward contracts.
The Company uses foreign currency forward contracts to hedge
receivables and payables on the Company's balance sheet that are denominated in
foreign currencies other than the functional currency. These forward contracts
are classified as non-designated derivatives instruments. For the six months
ended June 30, 2001, the Company recorded losses of approximately $2.2 million
included in current earnings under the caption of other expense, net. These
losses were substantially offset by gains on the remeasurement of the underlying
asset or liability being hedged.
The Company uses foreign currency forward contracts to hedge forecasted
foreign currency inflows and outflows resulting from purchases and sales. The
Company currently has hedged anticipated foreign currency cash flows up to
twelve months in the future. As of June 30, 2001, the Company had deferred
losses, net of taxes, of $1.4 million included in stockholders' equity as a
component of accumulated other comprehensive loss. The deferred loss is expected
to be reclassified to earnings during the next twelve months. The Company
recorded no gain or loss resulting from a forward contract's ineffectiveness or
discontinuance as a cash flow hedge.
Interest Rate Risk
The Company uses interest rate swap agreements to manage its exposure
to interest rate changes. Currently, the Company has an interest rate swap which
matures in December 2001 that has the effect of converting a portion of the
Company's floating rate debt to a fixed rate. The Company has designated this
swap agreement as a cash flow hedge. As of June 30, 2001, the Company had a
deferred gain, net of tax, of approximately $0.2 million included in
stockholders' equity as a component of accumulated other comprehensive loss.
This deferred loss is expected to be reclassified to current earnings on or
before the maturity date of the swap. The Company had no material gain or loss
resulting from the interest rate swap agreement's ineffectiveness as a cash flow
hedge. In addition, no portion of the swap agreement was discontinued as a cash
flow hedge.
The following table summarizes activity in accumulated other
comprehensive loss related to derivatives held by the Company during the period
from January 1, 2001 through June 30, 2001 (in millions):
Before-Tax Income After-Tax
Amount Tax Amount
---------- ------ ---------
Cumulative effect of adopting SFAS No. 133, net $ 0.8 $(0.3) $ 0.5
Net changes in fair value of derivatives (4.0) 1.6 (2.4)
Net gains reclassified from accumulated other
comprehensive loss into earnings 1.2 (0.5) 0.7
----- ----- -----
Accumulated derivative net losses as of June 30, 2001 $(2.0) $ 0.8 $(1.2)
===== ===== =====
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The Company's senior management establishes the Company's foreign
currency and interest rate risk management policies. This policy is reviewed
periodically by the Audit Committee of the Board of Directors. The policy allows
for the use of derivative instruments to hedge exposures to movements in foreign
currency and interest rates. The Company's policy prohibits the use of
derivative instruments for speculative purposes.
11. SEGMENT REPORTING
The Company has five reportable segments: North America; South America;
Europe/Africa/Middle East; Asia/Pacific; and Sprayer Division. Each regional
segment distributes a full range of agricultural equipment and related
replacement parts. The Sprayer division manufactures and distributes
self-propelled agricultural sprayers and replacement parts. The Company
evaluates segment performance primarily based on income from operations. Sales
for each regional segment are based on the location of the third-party customer.
All intercompany transactions between the segments have been eliminated. 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 operating income for one segment
may not be comparable to another segment. As a result of the Ag-Chem
acquisition, the Company created a new segment, the Sprayer Division, which
includes Ag-Chem and the Company's existing sprayer operations. Prior period
segment results have been restated to conform with the new segments. Segment
results for the three and six months ended June 30, 2001 and 2000 are as follows
(in millions):
Three months ended North South Europe/Africa Sprayer
June 30, America America /Middle East Asia/Pacific Division Consolidated
- ----------------------------- ------- ------- ------------- ------------ -------- ------------
2001
Net sales $172.2 $57.2 $347.2 $20.3 $62.4 $ 659.3
Income from operations -- 3.7 31.4 2.9 0.1 38.1
2000
Net sales $179.0 $57.0 $372.0 $21.9 $10.9 $ 640.8
Income (loss) from operations 1.1 (0.6) 36.3 3.0 0.4 40.2
Six months ended North South Europe/Africa Sprayer
June 30, America America /Middle East Asia/Pacific Division Consolidated
- ----------------------------- ------- ------- ------------- ------------ -------- ------------
2001
Net sales $305.9 $118.7 $644.1 $43.4 $79.3 $1,191.4
Income (loss) from operations (14.5) 7.9 50.3 6.7 2.3 52.7
2000
Net sales $305.4 $106.9 $690.5 $47.6 $25.2 $1,175.6
Income (loss) from operations (11.6) (1.1) 53.8 6.7 1.7 49.5
14
15
A reconciliation from the segment information to the consolidated
balances for income from operations is set forth below (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2001 2000 2001 2000
------ ------ ------ ------
Segment income from operations $ 38.1 $ 40.2 $ 52.7 $ 49.5
Restricted stock compensation expense (0.6) (1.4) (1.3) (3.0)
Restructuring and other infrequent expenses (3.3) (13.1) (5.6) (15.0)
Amortization of intangibles (4.8) (3.5) (8.7) (7.3)
------ ------ ------ ------
Consolidated income from operations $ 29.4 $ 22.2 $ 37.1 $ 24.2
====== ====== ====== ======
12. SUPPLEMENTAL GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION
On April 17, 2001, AGCO issued $250 million of 9 1/2% Senior Notes due
2008. The Senior Notes are fully and unconditionally guaranteed by the following
U.S. subsidiaries of AGCO Corporation: AGCO Ventures LLC, Hesston Ventures
Corporation, Hay and Forage Industries ("HFI"), Ag-Chem Equipment Co., Inc.,
Ag-Chem Manufacturing Co., Inc., Ag-Chem Sales Co., Inc., Ag-Chem Equipment
International, Inc., Lor*Al Products, Inc. and Ag-Chem Equipment Canada, Ltd.
(the "Guarantor Subsidiaries"). The following financial information presents
condensed consolidating balance sheets, statements of operations and cash flow
of (i) the parent company as if it accounted for its subsidiaries on the equity
method, (ii) the Guarantor Subsidiaries on a combined basis, and (iii) the
non-guarantor subsidiaries on a combined basis. AGCO Ventures LLC, Hesston
Ventures Corporation and HFI, represent AGCO's ownership in the manufacturing
operations of HFI. AGCO acquired the remaining 50% interest in HFI in May 2000.
Accordingly, HFI is reflected on the equity method of accounting for periods
prior to May 2000 and is consolidated with the Company's financial statements
subsequent to May 2000. In addition, the remaining Guarantor Subsidiaries, not
associated with HFI, were acquired on April 16, 2001 as part of the acquisition
of Ag-Chem Equipment Company, Inc., and accordingly, are included in the
following financial information subsequent to the acquisition date.
15
16
AGCO CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2001
(IN MILLIONS)
PARENT GUARANTOR NON-GUARANTOR ELIMINATING
COMPANY SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------- ------------ ------------- ----------- ------------
Net sales $174.2 $101.7 $506.3 $(122.9) $659.3
Cost of good sold 152.0 93.9 422.6 (122.9) 545.6
------ ------ ------ ------- ------
Gross profit 22.2 7.8 83.7 -- 113.7
Selling, general and administrative expenses 22.6 9.9 30.7 -- 63.2
Engineering expenses 1.2 4.0 7.8 -- 13.0
Restructuring and other infrequent expenses (0.3) 2.2 1.4 -- 3.3
Amortization of intangibles 1.8 1.0 2.0 -- 4.8
------ ------ ------ ------- ------
Income (loss) from operations (3.1) (9.3) 41.8 -- 29.4
Interest expense, net 12.9 0.2 2.4 -- 15.5
Other (income) expense, net 3.5 (0.5) 7.1 -- 10.1
------ ------ ------ ------- ------
Income (loss) before income taxes, equity in
net earnings of unconsolidated subsidiaries
and affiliates and extraordinary loss (19.5) (9.0) 32.3 -- 3.8
Income tax provision (benefit) (5.3) (4.0) 10.7 -- 1.4
------ ------ ------ ------- ------
Income (loss) before equity in net earnings
of unconsolidated subsidiaries and
affiliates and extraordinary loss (14.2) (5.0) 21.6 -- 2.4
Equity in net earnings of unconsolidated
subsidiaries and affiliates 19.8 0.5 1.4 (18.5) 3.2
------ ------ ------ ------- ------
Income (loss) before extraordinary loss 5.6 (4.5) 23.0 (18.5) 5.6
Extraordinary loss, net of taxes 0.8 -- -- -- 0.8
------ ------ ------ ------- ------
Net income (loss) $ 4.8 $ (4.5) $ 23.0 $ (18.5) $ 4.8
====== ====== ====== ======= ======
16
17
AGCO CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000
(IN MILLIONS)
PARENT GUARANTOR NON-GUARANTOR ELIMINATING
COMPANY SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------- ------------ ------------- ----------- ------------
Net sales $182.5 $ 13.0 $512.3 $ (67.0) $640.8
Cost of goods sold 161.0 12.0 429.8 (67.0) 535.8
------ ------ ------ ------- ------
Gross profit 21.5 1.0 82.5 -- 105.0
Selling, general and administrative expenses 24.5 0.7 30.2 -- 55.4
Engineering expenses 2.4 0.5 7.9 -- 10.8
Restructuring and other infrequent expenses 11.8 -- 1.3 -- 13.1
Amortization of intangibles 1.2 -- 2.3 -- 3.5
------ ------ ------ ------- ------
Income (loss) from operations (18.4) (0.2) 40.8 -- 22.2
Interest expense, net 7.2 -- 4.7 -- 11.9
Other expense, net 3.8 -- 5.0 -- 8.8
------ ------ ------ ------- ------
Income (loss) before income taxes and equity in
net earnings of unconsolidated subsidiaries
and affiliates (29.4) (0.2) 31.1 -- 1.5
Income tax provision (benefit) (12.2) (0.1) 12.9 -- 0.6
------ ------ ------ ------- ------
Income (loss) before equity in net earnings
of unconsolidated subsidiaries and
affiliates 17.2 (0.1) 18.2 -- 0.9
Equity in net earnings of unconsolidated
subsidiaries and affiliates 21.3 -- 1.8 (19.9) 3.2
------ ------ ------ ------- ------
Net income (loss) $ 4.1 $ (0.1) $ 20.0 $ (19.9) $ 4.1
====== ====== ====== ======= ======
17
18
AGCO CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2001
(IN MILLIONS)
PARENT GUARANTOR NON-GUARANTOR ELIMINATING
COMPANY SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------- ------------ ------------- ----------- ------------
Net sales $311.7 $143.1 $953.7 $(217.1) $1,191.4
Cost of goods sold 276.4 138.1 797.8 (217.1) 995.2
------ ------ ------ ------- --------
Gross profit 35.3 5.0 155.9 -- 196.2
Selling, general and administrative expenses 44.9 11.2 63.8 -- 119.9
Engineering expenses 1.8 6.7 16.4 -- 24.9
Restructuring and other infrequent expenses (0.7) 4.9 1.4 -- 5.6
Amortization of intangibles 3.5 1.0 4.2 -- 8.7
------ ------ ------ ------- --------
Income (loss) from operations (14.2) (18.8) 70.1 -- 37.1
Interest expense, net 22.9 0.2 6.3 -- 29.4
Other (income) expense, net 8.9 (0.5) 9.3 -- 17.7
------ ------ ------ ------- --------
Income (loss) before income taxes, equity in
net earnings of unconsolidated subsidiaries
and affiliates and extraordinary loss (46.0) (18.5) 54.5 -- (10.0)
Income tax provision (benefit) (13.9) (7.8) 17.9 -- (3.8)
------ ------ ------ ------- --------
Income (loss) before equity in net earnings
of unconsolidated subsidiaries
and affiliates (32.1) (10.7) 36.6 -- (6.2)
Equity in net earnings of unconsolidated
subsidiaries and affiliates 31.9 0.5 3.0 (29.4) 6.0
------ ------ ------ ------- --------
Income (loss) before extraordinary loss (0.2) (10.2) 39.6 (29.4) (0.2)
Extraordinary loss, net of taxes 0.8 -- -- -- 0.8
------ ------ ------ ------- --------
Net income (loss) $ (1.0) $(10.2) $ 39.6 $ (29.4) $ (1.0)
====== ====== ====== ======= ========
18
19
AGCO CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
(IN MILLIONS)
PARENT GUARANTOR NON-GUARANTOR ELIMINATING
COMPANY SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
-------- ------------ ------------- ----------- ------------
Net sales $ 321.6 $ 13.0 $ 957.7 $ (116.7) $1,175.6
Cost of goods sold 288.0 12.0 810.2 (116.7) 993.5
-------- -------- -------- -------- --------
Gross profit 33.6 1.0 147.5 -- 182.1
Selling, general and administrative expenses 48.0 0.7 65.6 -- 114.3
Engineering expenses 4.8 0.5 16.0 -- 21.3
Restructuring and other infrequent expenses 14.9 -- 0.1 -- 15.0
Amortization of intangibles 2.7 -- 4.6 -- 7.3
-------- -------- -------- -------- --------
Income (loss) from operations (36.8) (0.2) 61.2 -- 24.2
Interest expense, net 14.5 -- 8.8 -- 23.3
Other expense, net 13.5 -- 7.6 -- 21.1
-------- -------- -------- -------- --------
Income (loss) before income taxes and
equity in net earnings of unconsolidated
subsidiaries and affiliates (64.8) (0.2) 44.8 -- (20.2)
Income tax provision (benefit) (26.7) (0.1) 18.7 -- (8.1)
-------- -------- -------- -------- --------
Income (loss) before equity in net
earnings of unconsolidated subsidiaries
and affiliates (38.1) (0.1) 26.1 -- (12.1)
Equity in net earnings of unconsolidated
subsidiaries and affiliates 31.5 -- 2.9 (28.9) 5.5
-------- -------- -------- -------- --------
Net income (loss) $ (6.6) $ (0.1) $ 29.0 $ (28.9) $ (6.6)
======== ======== ======== ======== ========
19
20
AGCO CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
AS OF JUNE 30, 2001
(IN MILLIONS)
PARENT GUARANTOR NON-GUARANTOR ELIMINATING
COMPANY SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
---------- ------------ ------------- ----------- -------------
ASSETS
Current Assets:
Cash and cash equivalents $ 3.7 $ 2.2 $ 11.8 $ -- $ 17.7
Accounts and notes receivables, net 88.0 18.3 341.2 -- 447.5
Receivables from unconsolidated
subsidiaries and affiliates 239.6 0.2 213.7 (439.4) 14.1
Inventories, net 209.9 137.8 325.7 (13.0) 660.4
Other current assets 45.2 8.0 51.7 -- 104.9
---------- ---------- ---------- ---------- ----------
Total current assets 586.4 166.5 944.1 (452.4) 1,244.6
Property, plant and equipment, net 12.3 86.7 221.3 -- 320.3
Investments in unconsolidated subsidiaries
and affiliates 967.0 2.3 89.6 (966.4) 92.5
Other assets 139.1 21.4 68.1 0.3 228.9
Intangible assets, net 34.5 168.5 225.9 -- 428.9
---------- ---------- ---------- ---------- ----------
Total assets $ 1,739.3 $ 445.4 $ 1,549.0 $ (1,418.5) $ 2,315.2
========== ========== ========== ========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 44.2 $ 23.8 $ 148.8 $ -- $ 216.8
Payables to unconsolidated subsidiaries
and affiliates 180.3 120.1 147.8 (439.4) 8.8
Accrued expenses 93.4 31.0 261.7 -- 386.1
Other current liabilities 1.3 3.6 30.0 -- 34.9
---------- ---------- ---------- ---------- ----------
Total current liabilities 319.2 178.5 588.3 (439.4) 646.6
Long-term debt 551.8 16.1 167.6 -- 735.5
Postretirement health care benefits 24.1 3.6 -- -- 27.7
Other noncurrent liabilities 13.0 4.2 57.0 -- 74.2
---------- ---------- ---------- ---------- ----------
Total liabilities 908.1 202.4 812.9 (439.4) 1,484.0
Total stockholders' equity 831.2 243.0 736.1 (979.1) 831.2
---------- ---------- ---------- ---------- ----------
Total liabilities & $ 1,739.3 $ 445.4 $ 1,549.0 $ (1,418.5) $ 2,315.2
stockholder's equity ========== ========== ========== ========== ==========
20
21
AGCO CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2001
(IN MILLIONS)
PARENT GUARANTOR NON-GUARANTOR ELIMINATING
COMPANY SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
---------- ------------ ------------- ----------- ------------
Net cash provided by (used for) operating
activities: $ (50.0) $ 23.6 $ 75.2 $ -- $ 48.8
---------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Purchase of property, plant & equipment (0.2) (5.4) (6.9) -- (12.5)
Purchase of business, net of cash acquired (147.5) -- -- -- (147.5)
Investments in affiliates (0.5) -- -- -- (0.5)
---------- ---------- ---------- ---------- ----------
Net cash used for investing activities (148.2) (5.4) (6.9) -- (160.5)
---------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Proceeds (payments) on long-term debt 238.6 (44.0) (71.6) -- 123.0
Proceeds (payments) from intercompany loans (30.1) 28.0 2.1 -- --
Proceeds from issuance of preferred stock 5.3 -- -- -- 5.3
Payment of debt & common stock issuance costs (11.3) -- -- -- (11.3)
Dividends paid on common stock (0.6) -- -- -- (0.6)
---------- ---------- ---------- ---------- ----------
Net cash provided by (used for) financing
activities: 201.9 (16.0) (69.5) -- 116.4
---------- ---------- ---------- ---------- ----------
Effect of exchange rate changes on cash &
cash equivalents -- (0.1) (0.2) -- (0.3)
Increase (decrease) in cash & cash equivalents 3.7 2.1 (1.4) -- 4.4
Cash and cash equivalents, beginning of period -- 0.1 13.2 -- 13.3
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period $ 3.7 $ 2.2 $ 11.8 $ -- $ 17.7
========== ========== ========== ========== ==========
21
22
AGCO CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000
(IN MILLIONS)
PARENT GUARANTOR NON-GUARANTOR ELIMINATING
COMPANY SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
---------- ------------ ------------- ----------- ------------
Net cash provided by (used for) operating
activities: $ 129.0 $ (5.9) $ (16.1) $ -- $ 107.0
---------- ---------- ---------- ---------- ----------
Cash flows from investing activities:
Purchase of property, plant & equipment (6.2) (1.7) (6.2) -- (14.1)
Purchase of business, net of cash acquired -- (10.0) -- -- (10.0)
Investments in affiliates (2.0) -- (1.2) 2.0 (1.2)
---------- ---------- ---------- ---------- ----------
Net cash provided by (used for)
investing activities: (8.2) (11.7) (7.4) 2.0 (25.3)
---------- ---------- ---------- ---------- ----------
Cash flows from financing activities:
Proceeds (payments) on long-term debt (89.8) -- 3.6 -- (86.2)
Proceeds (payments) from intercompany
loans (26.5) 15.6 10.9 -- --
Issuance of common stock -- 2.0 -- (2.0) --
Dividends paid on common stock (1.2) -- -- -- (1.2)
---------- ---------- ---------- ---------- ----------
Net cash provided by (used for) financing
activities: (117.5) 17.6 14.5 (2.0) (87.4)
---------- ---------- ---------- ---------- ----------
Effect of exchange rate changes on cash &
cash equivalents -- -- (0.6) -- (0.6)
Increase (decrease) in cash & cash
equivalents 3.3 -- (9.6) -- (6.3)
Cash and cash equivalents, beginning of
period -- -- 19.6 -- 19.6
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period $ 3.3 $ -- $ 10.0 $ -- $ 13.3
========== ========== ========== ========== ==========
13. NEW ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141 "Business Combinations" and SFAS No. 142 "Goodwill and Other
Intangible Assets." SFAS No. 141 prospectively prohibits the pooling of interest
method of accounting for business combinations initiated after June 30, 2001.
SFAS No. 142 requires companies to cease amortizing goodwill on December 31,
2001 that was in existence at June 30, 2001. Any goodwill resulting from
acquisitions completed after June 30, 2001 will not be amortized. SFAS No. 142
also establishes a new method of testing goodwill for impairment on an annual
basis or on an interim basis if an event occurs or circumstances change that
would reduce the fair value of a reporting unit below its carrying value. The
adoption of SFAS No. 142 will result in the Company's discontinuation of
amortization of its goodwill; however, the Company will be required to test its
goodwill for impairment under the new standard in 2002, which could have an
adverse effect on the Company's future results of operations if an impairment
occurs.
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23
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company's operations are subject to the cyclical nature of the
agricultural industry. Sales of the Company's equipment have been and are
expected to continue to be affected by changes in net cash farm income, farm
land values, weather conditions, demand for agricultural commodities, commodity
prices and general economic conditions. The Company records sales when the
Company ships equipment and replacement parts to its independent dealers,
distributors or other customers. To the extent possible, the Company attempts to
ship products to its dealers and distributors on a level basis throughout the
year to reduce the effect of seasonal demands on its manufacturing operations
and to minimize its investment in inventory. Retail sales by dealers to farmers
are highly seasonal and are a function of the timing of the planting and
harvesting seasons. As a result, the Company's net sales have historically been
the lowest in the first quarter and have increased in subsequent quarters.
RESULTS OF OPERATIONS
The Company recorded income before extraordinary loss for the quarter
ended June 30, 2001 of $5.6 million compared to $4.1 million for the same period
in 2000. Net income per common share before extraordinary loss on a diluted
basis was $0.08 and $0.07 for the second quarters of 2001 and 2000,
respectively. Net loss before extraordinary loss for the first six months of
2001 was $0.2 million compared to a loss of $6.6 million for the same period in
2000. The Company recorded a loss before extraordinary loss per common share on
a diluted basis of $0.01 for the first six months of 2001 compared to a loss of
$0.11 per common share for the same period in 2000. The results for the second
quarter and first six months of 2001 included restructuring and other infrequent
expenses ("restructuring expenses") of $3.3 million, or $0.03 per share, and
$5.6 million, or $0.05 per share, respectively, primarily related to the
integration of Ag-Chem Equipment Company, Inc. ("Ag-Chem") acquired in April
2001 and the rationalization of certain manufacturing facilities. In addition,
the Company recorded an extraordinary loss, net of taxes, of $0.8 million, or
$0.01 per share, for the write-off of unamortized debt costs associated with the
Company's revolving credit facility, which was refinanced in April 2001. The
results for the second quarter and first six months of 2000 included
restructuring expenses of $13.1 million, or $0.13 per share and $15.0 million,
or $0.15 per share, respectively, associated with the closure of certain
manufacturing facilities announced in 2000 and 1999.
AGCO's earnings for the second quarter and first half of 2001 were
negatively impacted by losses at Ag-Chem for the period since acquisition. The
Ag-Chem acquisition was completed after Ag-Chem's seasonally strongest period,
typically the first calendar quarter of the year. The impact of the Ag-Chem
acquisition, excluding restructuring expenses, was a reduction in net income of
approximately $2.0 million, or $0.05 per share for the second quarter and $0.03
per share for the first six months of 2001 including the additional shares
issued in the transaction. For the second quarter of 2001, the Company also
incurred $3.6 million of one-time losses and transaction costs associated with
European and Canadian accounts receivable securitization facilities established
in the second quarter. In addition, the Company incurred approximately $2.3
million of production inefficiencies at AGCO's Hesston, Kansas manufacturing
facility associated with the initial production of products relocated from
closed facilities. For the first six months ended
23
24
June 30, 2001, AGCO's earnings were negatively impacted by approximately $4.0
million of costs associated with the initial funding of securitization
facilities and approximately $2.6 million of expenses to obtain covenant waivers
from note holders of the Company's 8.5% senior subordinated notes regarding the
payment of dividends on the Company's common stock. In addition, the Company
incurred approximately $6.0 million of production inefficiencies at the Hesston,
Kansas manufacturing facility for the first six months. In 2000, the first six
months included an $8.0 million, or $0.08 per share, loss associated with the
closing of the U.S. accounts receivable securitization facility completed in
January 2000.
RETAIL SALES
In the United States and Canada, industry retail unit sales of tractors
and combines for the first six months of 2001 increased approximately 9.0% and
29.0%, respectively, compared to the same period in 2000. Company retail sales
of tractors in the United States and Canada increased significantly, and Company
unit retail sales of combines declined in the first six months of 2001 compared
to the same period in the prior year. The Company's retail sales of combines
were lower due to the timing of production and deliveries compared to the prior
year period.
In Western Europe, industry unit retail sales of tractors declined
approximately 8.0% for the first six months of 2001 compared to the prior year
with the largest declines in Germany, Spain and Italy. Concerns over BSE (mad
cow disease) and foot-and-mouth disease appeared to contribute to the decline.
Company unit retail sales for the first six months also declined compared to
2000.
Industry unit retail sales of tractors in South America for the first
six months of 2001 increased approximately 19.0% compared to 2000. The major
market of Brazil continued its strong growth due to full availability of a
supplemental Brazilian government subsidized retail financing program. The
growth in the Brazilian market was partially offset by declines in Argentina and
the other South American markets. Company unit retail sales also increased
significantly during the first half of 2001 compared to the prior year period.
In most other international markets, Company net sales for the first
six months increased over the comparable prior year period, particularly in the
Middle Eastern markets.
STATEMENTS OF OPERATIONS
Net sales for the second quarter of 2001 were $659.3 million compared
to $640.8 million for the same period in 2000. Net sales for the first six
months of 2001 were $1,191.4 million compared to $1,175.6 million for the prior
year. Net sales for the second quarter and first six months of 2001 included
approximately $54.0 million generated by Ag-Chem in the period subsequent to
acquisition. Net sales for the second quarter and first six months of 2001 were
approximately $35 million and $65 million lower than the prior year,
respectively, due to the negative impact of foreign currency translation,
primarily due to the strength of the U.S. dollar in relation to the Euro, the
British pound and the Brazilian Real. Excluding the impact of the Ag-Chem
acquisition and foreign currency translation, net sales were level for the
second quarter and were 2.3% higher for the first six months when compared to
the prior year.
24
25
Regionally, net sales in North America decreased $6.8 million, or 3.8%,
for the second quarter of 2001 and increased $0.5 million, or 0.2%, for the
first six months of 2001 compared to the same periods in 2000. In the
Europe/Africa/Middle East region, net sales for the second quarter of 2001
decreased $24.8 million, or 6.7%, compared to 2000 and decreased $46.4 million,
or 6.7%, for the first six months of 2001 compared to 2000, primarily due to the
negative impact of foreign currency translation and the result of industry
declines in Western Europe. Net sales in South America increased approximately
$0.2 million, or 0.4%, for the second quarter of 2001, and $11.8 million, or
11.0%, for the first six months of 2001 compared to 2000 primarily due to the
strength of the Brazilian market partially offset by the impact of currency
translation. In the Asia/Pacific region, net sales decreased approximately $1.6
million, or 7.3%, for the second quarter of 2001, and $4.2 million, or 8.8%, for
the first six months of 2001 compared to 2000 primarily due to the impact of
currency translation. In the Sprayer Division, net sales increased $51.5 million
and $54.1 million, respectively, for the second quarter and first six months of
2001 compared to the same periods in 2000. The acquisition of Ag-Chem
contributed approximately $54.0 million (all in the second quarter) of the
increase over the prior year.
Gross profit was $113.7 million (17.2% of net sales) for the second
quarter of 2001 compared to $105.0 million (16.4% of net sales) for the same
period in the prior year. Gross profit was $196.2 million (16.5% of net sales)
for the first six months of 2001 compared to $182.1 million (15.5% of net sales)
for the same period in the prior year. Gross margins improved for the quarter
and first six months primarily due to the sale of higher margin Ag-Chem
products, cost reduction initiatives and the impact of new higher margin
products. This margin improvement was offset, in part, by cost inefficiencies in
the Hesston plant aggregating approximately $2.3 million and $6.0 million,
respectively, for the second quarter and first six months of 2001. These
inefficiencies were primarily due to the initial production run of combines and
planters in this facility.
Selling, general and administrative ("SG&A") expenses for the second
quarter of 2001 were $63.2 million (9.6% of net sales) compared to $55.4 million
(8.6% of net sales) for the same period in the prior year. For the first six
months of 2001, SG&A expenses were $119.9 million (10.1% of net sales) compared
to $114.3 million (9.7% of net sales) for the same period in the prior year. The
increase as a percentage of sales for both the quarter and first six months was
the result of Ag-Chem, which had a higher SG&A expense ratio to net sales than
the remainder of the Company. Engineering expenses for the second quarter and
first six months of 2001 were $13.0 million (2.0% of net sales) and $24.9
million (2.1% of net sales), respectively, compared to $10.8 million (1.7% of
net sales) and $21.3 million (1.8% of net sales), respectively, for the same
periods in the prior year. The increase is due to the addition of engineering
expenses of Hay & Forage Industries acquired in May 2000 and Ag-Chem subsequent
to acquisition.
The Company recorded restructuring expenses of $3.3 million and $5.6
million for the second quarter and first six months ended June 30, 2001. The
restructuring expenses included $2.6 million of costs related to the integration
Ag-Chem recorded in the second quarter. The remaining expenses for the second
quarter and first six months primarily related to costs associated with certain
manufacturing facility rationalization programs. See "Restructuring and
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Other Infrequent Expenses" for further discussion. For the second quarter and
first six months ended June 30, 2000, the Company recorded $13.1 million and
$15.0 million, respectively, for costs associated with manufacturing facility
closures.
Amortization of intangibles for the second quarter and first six months
of 2001 increased $1.3 million and $1.4 million, respectively, compared to 2000,
primarily due to the amortization of goodwill associated with the Ag-Chem
acquisition.
Income from operations was $29.4 million (4.5% of net sales) and $37.1
million (3.1% of net sales) for the second quarter and first six months of 2001,
respectively, compared to $22.2 million (3.5% of net sales) and $24.2 million
(2.1% of net sales), respectively, for the same period in the prior year.
Excluding restructuring expenses, operating income was $32.7 million (5.0% of
net sales) and $42.7 million (3.6% of net sales) for the second quarter and
first six months of 2001, respectively, compared to $35.3 million (5.5% of net
sales) and $39.2 million (3.3% of net sales) for the comparable periods in 2000,
respectively. The improvement for the first six months is due to higher gross
margins as discussed previously.
Interest expense, net was $15.5 million and $29.4 million for the
second quarter and first six months of 2001, respectively, compared to $11.9
million and $23.3 million, respectively, for the same period in 2000. The
increase in interest expense for the second quarter primarily relates to
increased indebtedness related to the Ag-Chem acquisition of approximately
$200.0 million, including assumed debt. The increase in interest expense, net
for the first six months of 2001 included $2.0 million of the $2.6 million
related to the successful waiver solicitation on the Company's 8 1/2% Senior
Subordinated Notes.
Other expense, net was $10.1 million and $17.7 million for the second
quarter and first six months of 2001, respectively, compared to $8.8 million and
$21.1 million, respectively, for the same periods in 2000. During the second
quarter of 2001, losses on sales of receivables primarily under the Company's
securitization facilities were $8.6 million compared to $4.8 million for the
same period in 2000. During the second quarter of 2001, the Company completed
securitization facilities in Europe and Canada totaling $150.0 million. As a
result, the second quarter of 2001 includes $3.6 million of up-front losses and
transaction costs associated with the initial funding of these facilities. For
the first six months of 2001, discounts on sales of receivables were $13.6
million compared to $14.8 million for the same period in 2000. The first six
months of 2000 included $7.1 million of up-front losses and transaction costs
associated with the initial $200.0 million funding of the U.S. securitization
facility.
The Company recorded an income tax provision of $1.4 million and an
income tax benefit of $3.8 million for the second quarter and first six months
of 2001, respectively, compared to an income tax provision of $0.6 million and
an income tax benefit of $8.1 million for the same periods in 2000. The
Company's estimated effective tax rate for the respective periods decreased from
40.0% for the 2000 periods to 38.0% for the 2001 periods due to a change in the
income mix by tax jurisdiction and a reduction in tax rates in certain
jurisdictions.
Equity in earnings of affiliates was $3.2 million and $6.0 million for
the second quarter and first six months of 2001, respectively, compared to $3.2
million and $5.5 million for the same periods in 2000. The increase in equity in
earnings of affiliates was primarily related to
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certain Ag-Chem joint ventures.
During the second quarter of 2001, the Company recorded a $0.8 million
extraordinary loss, net of taxes, representing the write-off of the unamortized
debt issuance costs associated with the Company's revolving credit facility,
which was refinanced in April 2001.
RESTRUCTURING AND OTHER INFREQUENT EXPENSES
In the second quarter of 2001, the Company announced its plans to
rationalize certain facilities as part of the Ag-Chem acquisition integration.
The Company plans to consolidate AGCO's Willmar, Minnesota manufacturing
facility and Ag-Chem's Benson, Minnesota manufacturing facility into Ag-Chem's
Jackson, Minnesota manufacturing plant. In addition, the Company will close
Ag-Chem's Minnetonka, Minnesota administrative offices and relocate the majority
of these functions to the Jackson facility. Also, the Company will close fifteen
Ag-Chem parts and service facilities and integrate parts warehousing and
logistics into AGCO's existing North America parts distribution system. These
closures are expected to result in the reduction of cost of goods sold and
operating expenses for the combined businesses and generate a portion of the
targeted $30.0 million in synergies to be achieved in the acquisition.
In connection with these closures, the Company recorded restructuring
and other infrequent expenses of $2.6 million during the second quarter of 2001.
The components of the restructuring and other infrequent expenses are summarized
in the following table (in millions):
Reserve Balance
2001 Expenses at June 30,
Expense Incurred 2001
-------------- --------------- -----------------
Employee severance $ 0.6 $ 0.1 $ 0.5
Employee retention payments 0.5 0.1 0.4
Facility closure costs 0.6 -- 0.6
Write-down of property, plant and equipment 0.4 0.4 --
Facility relocation and transition costs 0.5 0.5 --
------------ ------------ ------------
$ 2.6 $ 1.1 $ 1.5
============ ============ ============
The severance relates to the planned termination of approximately 200
AGCO employees of which 5 had been terminated as of June 30, 2001. The employee
retention payments relate to incentives to be paid to Ag-Chem and AGCO employees
who remain employed until certain future termination dates and are accrued over
the term of the retention period. The facility closure costs include employee
costs and other exit costs to be incurred at Willmar after operations cease. The
write-down of property, plant and equipment represents the impairment of
machinery and equipment at Willmar from the facility closures and was based on
the estimated fair value of the assets compared to their carrying value. The
facility relocation and transition costs are being expensed as incurred and
represent costs to relocate employees, inventory and machinery and costs to
integrate operations into the retained facilities. The $1.5 million of costs
accrued at June 30, 2001 are expected to be incurred in 2001. In addition, the
Company expects to incur additional restructuring expenses of approximately
$10.0 million to $12.0 million in 2001 related to these closures.
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In 2000, the Company permanently closed its combine manufacturing
facility in Independence, Missouri and its Lockney, Texas and Noetinger,
Argentina implement manufacturing facilities. In 1999, the Company permanently
closed its Coldwater, Ohio manufacturing facility. The majority of production in
these facilities has been relocated to existing Company facilities or outsourced
to third parties. In connection with these facility closures, the Company
recorded additional restructuring and other infrequent expenses of $3.0 million
in the first six months of 2001. A summary of the expenses and related reserves
associated with these closures is included in the following table (in millions):
Reserve Balance Reserve Balance
at December 31, 2001 Expenses at June 30,
2000 Expense Incurred 2001
---------------- ------------ -------------- --------------
Employee severance $ 1.9 $ -- $ 1.3 $ 0.6
Facility closure costs 3.9 (0.7) 1.7 1.5
Write-down of property, plant
and equipment, net of recoveries -- (0.7) (0.7) --
Production transition costs -- 4.4 4.4 --
------------ ------------- ------------ ------------
$ 5.8 $ 3.0 $ 6.7 $ 2.1
============ ============= ============ ============
The expenses incurred in 2001 primarily relate to production transition
costs. In addition, the Company recorded credits totalling $1.4 million relating
to recoveries from the sale of property and the reversal of closing costs
reserves which will not be incurred.
ACQUISITIONS
On April 16, 2001, the Company completed the acquisition of Ag-Chem, a
manufacturer and distributor of self-propelled sprayers. The Company paid
Ag-Chem shareholders approximately $247.2 million consisting of approximately
11.8 million AGCO common shares and $147.5 million of cash. The funding of the
cash component of the purchase price was made through borrowings under the
Company's revolving credit facility.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financing requirements are subject to variations due to
seasonal changes in inventory and dealer receivable levels. Internally generated
funds are supplemented when necessary from external sources, primarily the
Company's revolving credit facility and accounts receivable securitization
facilities.
During the second quarter of 2001, the Company completed a number of
transactions, which modified the Company's capital structure and replaced the
Company's existing revolving credit facility, which was scheduled to expire in
January 2002.
The Company entered into a $350.0 million multi-currency revolving
credit facility with Rabobank that will mature October 2005. The facility is
secured by a majority of the Company's U.S., Canadian and U.K. based assets and
a pledge of the stock of the Company's domestic and material foreign
subsidiaries. Interest will accrue on borrowings outstanding under the facility,
at the Company's option, at either (1) LIBOR plus a margin based on a ratio of
the Company's
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senior debt to EBITDA, as adjusted, or (2) the administrative agent's base
lending rate or the federal funds rate plus a margin ranging between .625% and
1.5%, whichever is higher. The facility contains covenants, including covenants
restricting the incurrence of indebtedness and the making of restrictive
payments, including dividends. In addition, the Company must fulfill financial
covenants including, among others, a total debt to EBITDA ratio, a senior debt
to EBITDA ratio and a fixed charge coverage ratio, as defined in the facility.
The proceeds were used to repay borrowings outstanding under the Company's
existing revolving credit facility. As of June 30, 2001 the Company had
borrowings of $205.7 million and availability to borrow $137.8 million under its
revolving credit facility.
The Company issued $250.0 million of 9 1/2% Senior Notes due 2008 (the
"Senior Notes"). The Senior Notes are unsecured obligations of the Company and
are redeemable at the option of the Company, in whole or in part, commencing May
1, 2005 initially at 104.75% of their principal amount, plus accrued interest,
declining to 100% of their principal amount plus accrued interest on May 1,
2007. The indenture governing the Senior Notes requires the Company to offer to
repurchase the Senior Notes at 101% of their principal amount, plus accrued
interest to the date of the repurchase in the event of a change in control. The
indenture contains certain covenants that, among other things, limits the
Company's ability (and that of its restricted subsidiaries) to incur additional
indebtedness; make restricted payments (including dividends and share
repurchases); make investments; guarantee indebtedness; create liens; and sell
assets and share repurchases. The proceeds were used to pay borrowings
outstanding under the Company's existing revolving credit facility.
Lastly, the Company completed accounts receivable securitization
facilities totaling approximately $150.0 million whereby certain European and
Canadian wholesale accounts receivable from the Company's operations in Europe
and Canada may be sold to a third party on a revolving basis. The Company used
the proceeds from these securitization facilities to reduce outstanding
borrowings under its new revolving credit facility.
As a result, the Company's primary financing and funding sources are
the $250.0 million 8 1/2% Senior Subordinated Notes due 2006, the Senior Notes,
a $350.0 million revolving credit facility and approximately $400.0 million of
accounts receivable securitization facilities in the U.S., Canada and Europe.
The Company's working capital requirements are seasonal, with
investments in working capital typically building in the first half of the year
and then reducing in the second half of the year. The Company had $598.0 million
of working capital at June 30, 2001, a decrease of $5.9 million from working
capital of $603.9 million at December 31, 2000. The Ag-Chem acquisition
contributed approximately $87.0 million of working capital comprised primarily
of inventory and accounts receivable. This increase was offset by a decrease in
accounts receivable primarily resulting from increased funding of securitization
facilities in 2001 totaling approximately $142.0 million.
Cash flow provided by operating activities was $48.8 million for the
six months ended June 30, 2001 compared to $107.0 million provided by operating
activities for the same period during 2000. Operating cash flow benefited from
an additional $142.0 million in receivables securitization funding in 2001 and
$200.0 million in funding in 2000.
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Capital expenditures for the first six months ended June 30, 2001 were
$12.5 million compared to $14.1 million for the same period in 2000. The Company
anticipates that additional capital expenditures for the remainder of 2001 will
range from approximately $45.0 million to $50.0 million and will primarily be
used to support the development and enhancement of new and existing products as
well as facility, equipment and systems improvements.
The Company's debt to capitalization ratio (total long-term debt
divided by the sum of total long-term debt and stockholders' equity) was 46.9%
at June 30, 2001 compared to 41.9% at December 31, 2000. The increase is
primarily attributable to higher debt incurred in connection with the Ag-Chem
acquisition partially offset by the reduction in debt resulting from increased
funding of accounts receivable securitization facilities.
The Company believes that available borrowings under the Company's
revolving credit facility, funding under the accounts receivable securitization
facilities, available cash and internally generated funds will be sufficient to
support its working capital, capital expenditures and debt service requirements
for the foreseeable future.
The Company from time to time reviews and will continue to review
acquisition and joint venture opportunities as well as changes in the capital
markets. If the Company were to consummate a significant acquisition or elect to
take advantage of favorable opportunities in the capital markets, the Company
may supplement availability or revise the terms under its credit facilities or
complete public or private offerings of equity or debt securities.
OUTLOOK
The Company continues to expect to improve operating margins in 2001
through cost reductions from manufacturing facility rationalizations, product
resourcing, material cost reductions and other initiatives. The Company's
earnings for 2001 will be adversely impacted by the incremental debt and common
shares issued in connection with the Ag-Chem acquisition. As a result of the
mid-April closing date and the timing of identified synergies, AGCO's results
for 2001 will not reflect Ag-Chem's seasonally strongest period and AGCO will
not generate sufficient operating earnings to cover the acquisition carrying
costs. Improved operating income in North and South America are expected to
offset weakness in the Western European markets. As a result, the Company
anticipates it will increase profitability compared to 2000.
ACCOUNTING CHANGES
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 141 "Business
Combinations" and SFAS No. 142 "Goodwill and Other Intangible Assets." SFAS No.
141 prospectively prohibits the pooling of interest method of accounting for
business combinations initiated after June 30, 2001. SFAS No. 142 requires
companies to cease amortizing goodwill on December 31, 2001, that was in
existence at June 30, 2001. Any goodwill resulting from acquisitions completed
after June 30, 2001 will not be amortized. SFAS No. 142 also establishes a new
method of testing goodwill for impairment on an annual basis or on an interim
basis if an event occurs or circumstances change
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that would reduce the fair value of a reporting unit below its carrying value.
The adoption of SFAS No. 142 will result in the Company's discontinuation of
amortization of its goodwill; however, the Company will be required to test its
goodwill for impairment under the new standard in 2002, which could have an
adverse effect on the Company's future results of operations if an impairment
occurs.
FORWARD LOOKING STATEMENTS
Certain statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this report are
forward looking, including certain statements set forth under "Outlook",
"Results of Operations" and "Liquidity and Capital Resources" headings. Forward
looking statements include the Company's expectations with respect to factors
that affect net sales, restructuring and infrequent expenses, future capital
expenditures, fulfillment of working capital needs, and plans with respect to
acquisitions. Although the Company believes that the statements it has made are
based on reasonable assumptions, they are based on current information and
beliefs and, accordingly, the Company can give no assurance that its statements
will be achieved. In addition, these statements are subject to factors that
could cause actual results to differ materially from those suggested by the
forward looking statements. These factors include, but are not limited to,
general economic and capital market conditions, the demand for agricultural
products, world grain stocks, crop production, commodity prices, farm income,
farm land values, government farm programs and legislation, the levels of new
and used field inventories, weather conditions, interest and foreign currency
exchanges rates, the conversion to the Euro, pricing and product actions taken
by competitors, customer access to credit, production disruptions, supply and
capacity constraints, Company cost reduction and control initiatives, Company
research and development efforts, labor relations, dealer and distributor
actions, technological difficulties, changes in environmental, international
trade and other laws, the impact of the SFAS No. 142 requirement that the
Company test for impairment of goodwill, and political and economic uncertainty
in various areas of the world. Further information concerning factors that could
significantly affect the Company's results is included in the Company's filings
with the Securities and Exchange Commission. The Company disclaims any
responsibility to update any forward looking statements.
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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
FOREIGN CURRENCY RISK MANAGEMENT
The Company has significant manufacturing operations in the United
States, the United Kingdom, France, Germany, Denmark and Brazil, and it
purchases a portion of its tractors, combines and components from third party
foreign suppliers, primarily in various European countries and in Japan. The
Company also sells products in over 140 countries throughout the world. The
majority of the Company's revenue outside the United States is denominated in
the currency of the customer location with the exception of sales in the Middle
East, Africa and Asia which is primarily denominated in British pounds, Euros or
U.S. dollars. The Company's most significant transactional foreign currency
exposures are (i) the British pound in relation to the Euro and the U.S. dollar
and (ii) the Euro and the Canadian dollar in relation to the U.S. dollar.
Fluctuations in the value of foreign currencies create exposures, which can
adversely affect the Company's results of operations.
The Company attempts to manage its transactional foreign exchange
exposure by hedging identifiable foreign currency cash flow commitments arising
from receivables, payables, and committed purchases and sales. Where naturally
offsetting currency positions do not occur, the Company hedges certain of its
exposures through the use of foreign currency forward contracts. The Company's
hedging policy prohibits foreign currency forward contracts for speculative
trading purposes. The Company's translation exposure resulting from translating
the financial statements of foreign subsidiaries into U.S. dollars is not
hedged. The Company's most significant translation exposures are the British
pound, the Euro and the Brazilian real in relation to the U.S. dollar. When
practical, this translation impact is reduced by financing local operations with
local borrowings.
For additional information, see the Company's most recent annual report
filed on Form 10-K (Item 7A). There has been no material change in this
information
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of Stockholders was held on April 25,
2001. The following matters were voted upon and the results of the
voting were as follows:
(1) To elect four directors to serve as Class III directors until
the annual meeting in 2004 or until their successors have been
duly elected and qualified. The nominees, Messrs. Booker,
Johanneson, Moll and Ratliff, were elected to the Company's
board of directors. The results follow:
Nominee Affirmative Votes Withheld Votes
-----------------------------------------------------------------------
W. Wayne Booker 45,121,664 6,241,824
Gerald B. Johanneson 45,076,230 6,287,258
Curtis E. Moll 45,131,381 6,232,107
Robert J. Ratliff 45,072,629 6,290,859
(2) To approve the 2001 Stock Option Plan
There were 37,420,822 votes in favor, 13,795,253 votes opposed
and 147,353 votes abstained.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Canadian Receivable Purchase Agreement dated as of June 26,
2001, among the Company, Cooperatieve Centrale
Raiffeisen-Boernleenbank B.A. and the parties named therein.
10.2 European Receivable Purchase Agreements dated as of April 11,
2001, among the Company, Cooperatieve Centrale
Raffeisen-Boerenleenbank B.A. and the parties named therein.
(b) Reports on Form 8-K
The Company filed a Form 8-K dated April 2, 2001 to provide unaudited
pro forma combined financial information of AGCO Corporation in
connection with the Senior Notes offering and management's presentation
materials related to the Senior Notes offering.
The Company filed a Form 8-K dated April 3, 2001 announcing its
intention to raise $250 million through an institutional private
placement of Senior Notes.
The Company filed a Form 8-K dated April 11, 2001 containing slides
from management's presentation materials related to the Senior Notes
offering.
The Company filed a Form 8-K dated April 16, 2001 setting forth certain
unaudited financial information for AGCO Corporation and its
subsidiaries.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AGCO CORPORATION
Registrant
Date: August 14, 2001 /s/ Donald R. Millard
------------------------------------------------
Donald R. Millard
Sr. Vice President and Chief Financial Officer
(Principal Financial Officer)
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