1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO ___________.
COMMISSION FILE NUMBER: 1-12930
AGCO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 58-1960019
(State or orther jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
4205 RIVER GREEN PARKWAY, DULUTH, GEORGIA 30096
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 813-9200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------------------- -----------------------------------------
COMMON STOCK, ($0.01 PAR VALUE) NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
-------------------------------------------
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
-----------------------------------------------
The aggregate market value of common stock held by non-affiliates of the
Registrant as of the close of business on March 10, 1998 was $1,787,722,000. As
of such date, there were 62,991,311 shares of the registrant's common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the AGCO Corporation Annual Report to Stockholders for the year
ended December 31, 1997 are incorporated by reference in Part II.
Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on April 29, 1998 are incorporated by reference in Part
III.
================================================================================
2
Item 1. BUSINESS
AGCO Corporation ("AGCO" or the "Company") was incorporated in Delaware
in April 1991. The Company's executive offices are located at 4205 River Green
Parkway, Duluth, Georgia 30096, and its telephone number is 770-813-9200. Unless
otherwise indicated, all references in this Form 10-K to the Company include the
Company's subsidiaries.
THE COMPANY
AGCO is a leading manufacturer and distributor of agricultural
equipment throughout the world. The Company sells a full range of agricultural
equipment and related replacement parts, including tractors, combines, hay
tools and forage equipment and implements. The Company's products are widely
recognized in the agricultural equipment industry and are marketed under the
following brand names: Massey Ferguson(R), Fendt, AGCO(R) Allis, GLEANER(R),
Hesston(R), White, Landini, White-New(R) Idea, Black Machine, AGCOSTAR(R),
Glencoe(R), Tye(R), Farmhand(R), IDEAL, and Deutz (South America). The Company
distributes its products through a combination of over 8,500 independent
dealers, wholly-owned distribution companies, associates and licensees. In
addition, the Company provides retail financing in North America, the United
Kingdom, France and Germany through its finance joint ventures with Cooperative
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland" ("Rabobank").
AGCO was organized in June 1990 by an investment group formed by
management to acquire the successor to the agricultural equipment business of
Allis-Chalmers, a company which began manufacturing and distributing
agricultural equipment in the early 1900s. Since its formation in June 1990,
AGCO has grown substantially through a series of 15 acquisitions for
consideration aggregating approximately $1.3 billion. These acquisitions have
allowed the Company to broaden its product line, expand its dealer network and
establish strong market positions in several new markets throughout North
America, South America, Western Europe and the rest of the world. The Company
has achieved significant cost savings and efficiencies from its acquisitions by
eliminating duplicative administrative, sales and marketing functions,
rationalizing its dealer network, increasing manufacturing capacity utilization
and expanding its ability to source certain products and components from third
party manufacturers. In addition to acquisitions, the Company has increased its
sales in North America by entering into a substantial number of crossover
contracts with its dealers whereby a dealer carrying one of the Company's brands
also contracts to sell additional AGCO brands or products. The Company has also
grown through successful expansion of its product offerings, particularly
related to the sale of complementary non-tractor products through its
international distribution channels, and new product introductions.
TRANSACTION HISTORY
Hesston Acquisition. In March 1991, the Company acquired Hesston
Corporation ("Hesston"), a leading manufacturer and distributor of hay tools,
forage equipment and related replacement parts, together with over 500 dealer
contracts (the "Hesston Acquisition"). The assets acquired also included
Hesston's 50% interest in a joint venture, Hay and Forage Industries ("HFI"),
between Hesston and Case Corporation ("Case") which manufactures hay and forage
equipment for both parties. Hesston's net sales in its full fiscal year
preceding the acquisition were approximately $91.0 million. The Hesston
Acquisition enabled the Company to provide its dealers with a more complete line
of farm equipment and to expand its dealer network into territories in which the
Company had not previously been represented.
White Tractor Acquisition. In May 1991, the Company acquired the White
Tractor Division ("White") of Allied Products Corporation ("Allied"), together
with over 600 dealer contracts (the "White Acquisition"). White's net sales in
its full fiscal year preceding the acquisition were approximately $58.3 million.
As a result of the White Acquisition, the Company added a new line of tractors
to its product offerings and expanded its North America dealer network.
2
3
Massey Ferguson North American Acquisition. In January 1993, the
Company entered into an agreement with Varity Corporation ("Varity") to be the
exclusive distributor in the United States and Canada of the Massey Ferguson
line of farm equipment. Concurrently, the Company acquired the North American
distribution operation of Massey Ferguson Group Limited ("Massey") from Varity,
including approximately 1,100 dealer contracts (the "Massey North American
Acquisition"). Net sales attributable to Massey's North American distribution
operation in the full fiscal year preceding the acquisition were approximately
$215.0 million. The Massey North American Acquisition provided AGCO access to
another leading brand name in the agricultural equipment industry, and it
enabled the Company to expand its dealer network by entering into a substantial
number of crossover contracts.
White-New Idea Acquisition. In December 1993, the Company acquired the
White-New Idea Farm Equipment Division ("White-New Idea") of Allied, together
with approximately 900 dealer contracts (the "White-New Idea Acquisition"). The
White-New Idea Acquisition enabled the Company to offer a more complete line of
planters and spreaders and a broader line of tillage equipment. Of White-New
Idea's net sales of approximately $83.1 million in 1993, approximately 46%
represented sales of products in categories in which the Company previously did
not compete.
Agricredit-North America Acquisition. The Company acquired Agricredit
Acceptance Company ("Agricredit-North America"), a retail finance company, from
Varity in two separate transactions (together, the "Agricredit-North America
Acquisition"). The Company acquired a 50% joint venture interest in
Agricredit-North America in January 1993 and acquired the remaining 50% interest
in February 1994. The Agricredit-North America Acquisition has enabled the
Company to provide more competitive and flexible financing alternatives to end
users.
Massey Acquisition. In June 1994, the Company acquired Massey from
Varity, together with Massey's independent dealers and associate and licensee
companies outside the United States and Canada. Massey, with fiscal 1993 net
sales of approximately $898.4 million (including net sales to AGCO of
approximately $124.6 million) (the "Massey Acquisition"), was one of the largest
manufacturers and distributors of tractors in the world. The Massey Acquisition
significantly expanded AGCO's sales and distribution outside North America.
AgEquipment Acquisition. In March 1995, the Company further expanded
its product offerings through its acquisition of AgEquipment Group, a
manufacturer and distributor of farm implements and tillage equipment (the
"AgEquipment Acquisition"). The AgEquipment Acquisition added three brands of
agricultural implements to the Company"s product line, including no-till and
minimum tillage products, distributed under the Tye, Farmhand and Glencoe brand
names.
Maxion Acquisition. In June 1996, the Company acquired the agricultural
and industrial equipment business of Iochpe-Maxion S.A. (the "Maxion
Agricultural Equipment Business"), together with approximately 360 dealer
contracts (the "Maxion Acquisition"). The Maxion Agricultural Equipment
Business, with 1995 sales of approximately $265.0 million, was AGCO"s Massey
Ferguson licensee in Brazil, manufacturing and distributing agricultural
tractors under the Massey Ferguson brand name, combines under the Massey
Ferguson and IDEAL brand names and industrial loader-backhoes under the Massey
Ferguson and Maxion brand names. The Maxion Acquisition established AGCO with
market leadership in the significant Brazilian agricultural equipment market.
Western Combine Acquisition. In July 1996, the Company acquired certain
assets of Western Combine Corporation and Portage Manufacturing, Inc., the
Company"s suppliers of Massey Ferguson combines and other harvesting equipment
sold in North America (the "Western Combine Acquisition"). The Western Combine
Acquisition provided the Company with access to advanced technology and
increased the Company"s profit margin on certain combines and harvesting
equipment sold in North America.
Agricredit-North America Joint Venture. In November 1996, the Company
sold a 51% interest in Agricredit-North America to a wholly-owned subsidiary of
Rabobank. The Company received total consideration of approximately $44.3
million in the transaction. The Company retained a 49% interest in
Agricredit-North America and now operates Agricredit-North America with Rabobank
as a joint venture (the "Agricredit-North America Joint Venture"). The
Agricredit North-America Joint Venture has continued the business of
Agricredit-North America and seeks to build a broader asset-based finance
business through the addition of other lines of business. The Company has
similar joint venture arrangements with Rabobank with respect to its retail
finance companies located in the United Kingdom, France and Germany.
Deutz Argentina Acquisition. In December 1996, the Company acquired the
operations of Deutz Argentina S.A. ("Deutz Argentina"), together with
approximately 225 dealer contracts (the "Deutz Argentina Acquisition"). Deutz
Argentina, with 1995 sales of approximately $109.0 million, supplies
agricultural equipment, engines and light duty trucks in Argentina and other
3
4
markets in South America. The Deutz Argentina Acquisition established AGCO as a
dominant supplier of agricultural equipment in Argentina.
Fendt Acquisition. In January 1997, the Company acquired the operations
of Xaver Fendt GmbH & Co. KG ("Fendt") (the "Fendt Acquisition"). Fendt, which
had 1996 sales of approximately $650.0 million, manufactures and sells tractors
ranging from 50 to 260 horsepower through a network of independent agricultural
cooperatives and dealers in Germany and a network of dealers and distributors
throughout Europe and Australia. With this acquisition, AGCO has leading market
share in Germany and France, two of Europe"s largest agricultural equipment
markets. In December 1997, the Company sold Fendt's caravan and motor home
business in order to focus on its core agricultural equipment business.
Dronningborg Acquisition. In December 1997, the Company acquired the
remaining 68% of Dronningborg Industries a/s (the "Dronningborg Acquisition"),
the Company's supplier of combine harvesters sold under the Massey Ferguson
brand name in Europe. The Company previously owned 32% of this combine
manufacturer which developed and manufactured combine harvesters exclusively for
AGCO. The Dronningborg Acquisition is expected to enable the Company to achieve
certain synergies within its worldwide combine manufacturing and will give AGCO
the opportunity to generate margin improvement on combines sold primarily in
Europe.
Argentina Engine Joint Venture. In December 1997, the Company sold 50%
of Deutz Argentina's engine production and distribution business to Deutz AG, a
global supplier of diesel engines in Cologne, Germany. The Company retained a
50% interest in the engine business and now operates it with Deutz AG as a joint
venture (the "Argentina Engine Joint Venture"). The Argentina Engine Joint
Venture will allow the Company to share in research and development costs and
gain access to advanced technology.
PRODUCTS
Tractors
Tractors are vehicles used to pull farm implements, hay tools, forage
equipment and other farm equipment. The Company participates in three segments
of the tractor market: the compact segment, which includes tractors in the less
than 40 horsepower range; the mid-range segment, which includes tractors in the
40 to 100 horsepower range; and the high horsepower segment, which includes
tractors in excess of 100 horsepower.
All compact tractors are sold under the Massey Ferguson brand name and
are typically used on small farms and in specialty agricultural industries such
as dairies, orchards and vineyards. The Company offers a full range of tractors
in the 40 to 100 horsepower category, including both two-wheel and all-wheel
drive versions. The Company sells mid-range tractors in this category under the
Massey Ferguson, Fendt, AGCO Allis, White, Landini, and Deutz brand names. The
mid-range tractors are typically used on small and medium-sized farms and in
specialty agricultural industries. The Company also offers a full range of
tractors in the over-100 horsepower segment ranging primarily from 100 to 425
horsepower. High horsepower tractors are typically used on larger farms and on
cattle ranches for hay production. The Company sells high horsepower tractors
under the Massey Ferguson, Fendt, AGCO Allis, White, Landini, AGCOSTAR and Deutz
brand names. Tractors accounted for approximately 62%, 60% and 61% of the
Company's net sales in 1997, 1996 and 1995, respectively.
Combines
Combines are large, self-propelled machines used for the harvesting of
crops, such as corn, wheat, soybeans and barley. The Company sells combines
under the GLEANER, Massey Ferguson and IDEAL brand names. Depending on the
market, Gleaner and Massey Ferguson combines are sold with conventional or
rotary technology while the IDEAL combines sold in South America utilize
conventional technology. All combines are complemented by a variety of
crop-harvesting heads, available in different sizes, which are designed to
maximize harvesting speed and efficiency while minimizing crop loss. Combines
accounted for 10%, 11% and 10% of the Company's net sales in 1997, 1996 and
1995, respectively.
4
5
Hay Tools and Forage Equipment, Implements and Other Products
Hay tools are used to harvest and process hay crops for livestock feed.
Hay tools perform a variety of functions, including mowing and conditioning,
raking, tedding, baling and harvesting. Hay tools include self-propelled
windrowers and tractor-powered mowers, which cut and condition hay crops for
faster drying before forage harvesting or baling; hay tedders and rakes, which
are designed to reduce drying time and place hay crops in windrows; round
balers, which harvest and roll windrowed hay into circular bales; square balers,
which harvest and compress the windrowed hay into solid bales; and forage
harvesters, which are used to cut standing corn crops or windrowed hay crops to
uniform length. The Company sells hay and forage equipment primarily under the
Hesston brand name and, to a lesser extent, the White-New Idea and Massey
Ferguson brand names.
The Company also distributes a wide range of implements, planters and
other equipment for its product lines. Tractor-pulled implements are used in
field preparation and crop management. Implements include disk harrows, which
improve field performance by cutting through crop residue, leveling seed beds
and mixing chemicals with the soil; min-tils, which break up soil and mix crop
residue into topsoil, with or without prior disking; and field cultivators,
which prepare a smooth seed bed and destroy weeds. Tractor-pulled planters apply
fertilizer and place seeds in the field. Other equipment primarily includes
tractor-pulled manure spreaders, which fertilize fields with the controlled
application of sludge or solid manure, and loaders, which are used for a variety
of tasks including lifting and transporting hay crops. The Company sells
implements, planters and other products under the Hesston, White-New Idea, Black
Machine, Massey Ferguson, Tye, Farmhand, Glencoe, Deutz and Fendt brand names.
Hay tools and forage equipment, implements and other products accounted for 12%,
12% and 11% of the Company's net sales in 1997, 1996 and 1995, respectively.
Replacement Parts
In addition to sales of new equipment, the replacement parts business
is an important source of revenue and profitability for both the Company and its
dealers. The Company sells replacement parts for products sold under all of its
brand names, many of which are proprietary. These parts help keep farm equipment
in use, including products no longer in production. Since most of the Company's
products can be economically maintained with parts and service for a period of
10 to 20 years, each product which enters the marketplace provides the Company
with a potential long-term revenue stream. In addition, sales of replacement
parts typically generate higher gross margins and historically have been less
cyclical than new product sales. Replacement parts accounted for approximately
16%, 17% and 18% of the Company's net sales in 1997, 1996 and 1995,
respectively.
MARKETING AND DISTRIBUTION
The Company distributes its products primarily through a network of
independent dealers and distributors. The Company"s dealers are responsible for
retail sales to the equipment"s end user in addition to after-sales service and
support of the equipment. The Company"s distributors may sell the Company
products through a network of dealers supported by the distributor. Through the
Company's acquisitions and dealer development activities, the Company has
broadened its product line, expanded its dealer network and strengthened its
geographic presence in Western Europe, North America, South America and the rest
of the world. The Company's sales are not dependent on any specific dealer,
distributor or group of dealers.
Western Europe
Fully assembled tractors and other equipment are marketed by
wholly-owned distribution companies in most major Western European markets.
These distribution companies support a combined network of approximately 2,500
independent Massey Ferguson and Fendt dealers and agricultural cooperatives in
Western Europe. In addition, the Company sells through independent distributors
and associates in certain markets in Western Europe, which distribute through
approximately 750 Massey Ferguson and Fendt dealers. In most cases, dealers
carry competing or complementary products from other manufacturers. Sales in
Western Europe accounted for 47%, 43% and 45% of the Company"s net sales in
1997, 1996 and 1995, respectively.
North America
The Company markets and distributes its farm machinery, equipment and
replacement parts to farmers in North America through a network of dealers
supporting approximately 6,700 dealer contracts. Each of the Company's
approximately 2,575 independent dealers represents one or more of the Company's
distribution lines or brand names. Dealers may also handle competitive and
dissimilar lines of products. The Company intends to maintain the separate
strengths and identities of its brand
5
6
names and product lines. The Company has been able to increase sales, as well
as dealer focus on its products, by establishing crossover contracts. Sales in
North America accounted for 30%, 36% and 38% of the Company"s net sales in 1997,
1996 and 1995, respectively.
South America
The Company markets and distributes its farm machinery, equipment and
replacement parts to farmers in South America through several different
networks. In Brazil and Argentina, the Company distributes products directly to
approximately 420 independent dealers primarily supporting either the Massey
Ferguson, IDEAL, or Deutz brand names. Outside of Brazil and Argentina, the
Company sells its products in South America through independent distributors. In
Brazil, federal laws are extremely protective of the dealers and prohibit a
manufacturer from selling any of its products in Brazil except through its
dealer network. Additionally, each dealer has the exclusive right to sell its
manufacturer"s product in its designated territory and as a result, no dealer
may represent more than one manufacturer. Sales in South America accounted for
10%, 4% and 1% of the Company"s net sales in 1997, 1996 and 1995, respectively.
Rest of the World
Outside Western Europe, North America and South America, the Company
operates primarily through a network of approximately 2,330 independent Massey
Ferguson and Fendt distributors and dealers, as well as associates and
licensees, marketing the Company"s products and providing customer service
support in approximately 100 countries in Africa, the Middle East, Eastern and
Central Europe, Australia and Asia. With the exception of Australia, where the
Company directly supports its dealer network, the Company utilizes independent
distributors, associates and licensees to sell its products. These arrangements
allow AGCO to benefit from local market expertise to establish strong market
positions with limited investment. In some cases, AGCO also sells agricultural
equipment directly to governmental agencies. The Company will continue to
actively support the local production and distribution of Massey-licensed
products by third party distributors, associates and licensees. Sales outside
Western Europe, North America, and South America accounted for 13%, 17% and 16%
of the Company"s net sales in 1997, 1996 and 1995, respectively.
In Western Europe and the rest of the world, associates and licensees
provide a significant distribution channel for the Company's products and a
source of low cost production for certain Massey Ferguson products. Associates
are entities in which the Company has an ownership interest, most notably in
India. Licensees are entities in which the Company has no direct ownership
interest, most notably in Pakistan, Turkey and Argentina. The associate or
licensee generally has the exclusive right to produce and sell Massey Ferguson
equipment in its home country, but may not sell these products in other
countries. The Company generally licenses to these associate companies certain
technology, as well as the right to use Massey Ferguson's trade names. The
Company sells products to associates and licensees in the form of components
used in local manufacturing operations, tractor sets supplied in completely
knocked down ("CKD") kits for local assembly and distribution and fully
assembled tractors for local distribution only. In certain countries, the
arrangements with licensees and associates have evolved to where the Company is
principally providing technology, technical assistance and quality control. In
these situations, licensee manufacturers sell certain tractor models under the
Massey Ferguson brand name in the licensed territory and may also become a
source of low cost production to the Company.
Parts Distribution
In Western Europe, the parts operation is supported by master
distribution facilities in Desford, England and Ennery, France and regional
parts facilities in Spain and Denmark. The Company supports its sales of
replacement parts in North America through its master parts warehouse in
Batavia, Illinois and regional warehouses throughout North America. In the
Asia/Pacific region, the Company's parts operation is supported by a master
distribution facility in Melbourne, Australia. In South America, replacement
parts are maintained and distributed primarily from its manufacturing
facilities.
Dealer Support and Supervision
The Company believes that one of the most important criteria affecting
a farmer's decision to purchase a particular brand of equipment is the quality
of the dealer who sells and services the equipment. The Company provides
significant support to its dealers in order to improve the quality and size of
its dealer network. The Company monitors each dealer's performance and
profitability as well as establishes programs which focus on the continual
improvement of the dealer. In North America, the
6
7
Company also identifies open markets with the greatest potential for each brand
and selects an existing AGCO dealer, or a new dealer, who would best represent
the brand in that territory. AGCO protects each existing dealer's territory and
will not place the same brand within that protected area. Internationally, the
Company also focuses on the development of its dealers. The Company analyzes, on
an ongoing basis, the regions of each country where market share is not
acceptable. Based on this analysis, an additional dealer may be needed in that
territory, or a nonperforming dealer may need to be replaced or refocused on
performance standards.
The Company believes that its ability to offer its dealers a full
product line of agricultural equipment and related replacement parts as well as
its ongoing dealer training and support programs, which focus on business and
inventory management, sales, marketing, warranty and servicing matters and
products, help ensure the vitality and increase the competitiveness of its
dealer network. In addition, the Company maintains dealer advisory groups to
obtain dealer feedback on its operations. The Company believes all of these
programs contribute to the good relations the Company generally enjoys with its
dealers.
The Company agrees to provide dealers with competitive products, terms
and pricing. Dealers are also given volume sales incentives, demonstration
programs and other advertising to assist sales. The Company's competitive sales
programs, including retail financing incentives, and its policy for maintaining
parts and service availability with extensive product warranties are designed to
enhance its dealers' competitive position. Finally, a limited amount of
financial assistance is provided as part of developing new dealers in key market
locations. In general, dealer contracts are cancelable by either party within
certain notice periods.
WHOLESALE FINANCING
Primarily in the United States and Canada, the Company engages in the
standard industry practice of providing dealers with inventories of farm
equipment and replacement parts for extended periods. The terms of the Company's
finance agreements with its dealers vary by region and product line. In the
United States and Canada, dealers are typically not required to make a down
payment, and the Company effectively provides the dealer with the equipment
interest-free for a period of one to twelve months, depending on the product.
Thereafter, dealers are charged interest at varying spreads over the prime rate
until the product is sold. The Company also provides financing to dealers on
used equipment accepted in trade. The Company retains a security interest in all
new and used equipment it finances.
Typically, the sales terms outside the United States and Canada are of
a shorter duration. The sales terms range from 30 day terms to floorplan
financing similar to the arrangements provided to dealers in the United States
and Canada. In many cases, the Company retains a security interest in the
equipment sold on extended terms. In certain international markets, the
Company's sales are backed by letters of credit or credit insurance.
RETAIL FINANCING
Through its retail financing joint ventures located in North America,
the United Kingdom, France and Germany, the Company provides a competitive and
dedicated financing source for AGCO dealers' sales of the Company's products as
well as equipment produced by other manufacturers. These retail finance
companies are owned 49% by the Company and 51% by a wholly-owned subsidiary of
Rabobank. Finance programs can be tailored to prevailing market conditions and
can enhance the Company's sales efforts.
MANUFACTURING AND SUPPLIERS
Manufacturing and Assembly
The Company has consolidated the manufacture of its products in
locations where capacity, technology, or local costs are optimized. Furthermore,
the Company continues to balance its manufacturing resources with externally
sourced machinery, components, and replacement parts to enable the Company to
better control inventory and supply of components. The Company believes that its
manufacturing facilities are sufficient to meet its needs for the foreseeable
future.
7
8
Western Europe
The Company's manufacturing operations in Western Europe are performed
in tractor manufacturing facilities located in Coventry, England; Beauvais,
France and Marktoberdorf, Germany. The Coventry facility produces tractors
marketed under the Massey Ferguson, AGCO Allis and White brand names ranging
from 38 to 110 horsepower that are sold worldwide in fully-assembled form or as
CKD kits for final assembly by licensees and associates. The Beauvais facility
produces 70 to 215 horsepower tractors sold in fully-assembled form also
marketed under the Massey Ferguson, AGCO Allis and White brand names. The
Marktoberdorf facility produces 50 to 260 horsepower tractors sold in
fully-assembled form and marketed under the Fendt brand name. The Company also
assembles forklifts for sale to third parties and manufactures hydraulics for
its Fendt tractors and for sale to third parties in its Kempten, Germany
facility, and assembles cabs for its Fendt tractors in Baumenheim, Germany.
Additionally, as part of the Dronningborg Acquisition, the Company began
manufacturing conventional combines marketed under the Massey Ferguson brand
name in a facility located in Randers, Denmark. The Company also formed a joint
venture with Renault Agriculture S.A. ("Renault"), for the manufacture of
driveline assemblies for high horsepower AGCO and Renault tractors at the
Company's facility in Beauvais (the "GIMA Joint Venture"). By sharing overhead
and engineering costs, the GIMA Joint Venture has resulted in a decrease in the
cost of these components.
North America
The Company manufactures and assembles GLEANER and Massey Ferguson
rotary and conventional combines and combine heads at its Independence, Missouri
facility. The Company leases a manufacturing facility in Coldwater, Ohio, where
it produces its White-New Idea line of hay tools and forage equipment and
implements; Black Machine planters; AGCO Allis, White, Massey Ferguson and
AGCOSTAR tractors; cultivating and tillage equipment marketed under the Glencoe
brand name and tillage equipment and loaders marketed under the Farmhand brand
name. The Company also leases a manufacturing facility in Lockney, Texas where
it produces drill planters and tillage equipment marketed under the Tye brand
name. As part of the HFI joint venture, the Company produces Hesston, White-New
Idea and Massey Ferguson hay tools and forage equipment in Hesston, Kansas. The
HFI partnership agreement provides for HFI to manufacture hay tools and forage
equipment for sale to the Company and Case at cost. By sharing the facilities
with Case, the Company is able to increase HFI's capacity utilization and reduce
the Company's product cost by sharing overhead and product development costs.
The Company also maintains a facility in Queretaro, Mexico where tractors are
assembled for distribution in the Mexican market.
South America
The Company's manufacturing operations in South America are located in
Brazil and Argentina. In Brazil, the Company manufactures and assembles Massey
Ferguson tractors, ranging from 50 to 173 horsepower, and industrial
loader-backhoes at its facility in Canoas, Rio Grande do Sul. The Company also
manufactures conventional combines marketed under the Massey Ferguson, Deutz and
IDEAL brand names in Santa Rosa, Rio Grande do Sul. In Argentina, the Company
manufactures Deutz branded tractors, ranging from 60 to 190 horsepower, and
engine components, and it also assembles light duty trucks in Haedo, Argentina.
The Noetinger, Argentina facility is used for the assembly of implements. In
December 1997, the Company formed the Argentina Engine Joint Venture for the
manufacture of diesel engines, for its equipment and for sale to third parties,
at the facility in San Luis, Argentina, which is owned 50% by the joint venture.
Third-Party Suppliers
The Company believes that managing the level of its company and dealer
inventory is critical to maintaining favorable pricing for its products. Unlike
many of its competitors, the Company externally sources many of its products,
components and replacement parts. This strategy minimizes the Company's capital
investment requirements and allows greater flexibility to respond to changes in
market conditions. As a result of its limited vertical integration relative to
its competitors, the Company believes it is better able to manage company and
dealer inventory levels.
The Company purchases certain products it distributes from third party
suppliers. The Company purchases its standard and specialty tractors from
Landini S.p.A. ("Landini") and distributes these tractors under the Landini
brand name in the United States and Canada and under the Massey Ferguson brand
name outside of North America. In addition, certain Massey Ferguson tractor
models are purchased from licensees in Poland and Turkey and from Iseki &
Company, Limited, a Japanese manufacturer. The Company also purchases certain
other tractors, implements, and hay and forage equipment from various
third-party suppliers.
8
9
In addition to the purchase of machinery, significant components used
in the Company's manufacturing operations, such as engines, are supplied by
third-party companies. The Company selects third-party suppliers which it
believes have the lowest cost, highest quality and most appropriate technology.
The Company also assists in the development of these products or component parts
based upon its own design requirements. The Company's past experience with
outside suppliers has been favorable. Although the Company is currently
dependent upon outside suppliers for several of its products, the Company
believes that, if necessary, alternative sources of supply could be found.
COMPETITION
The agricultural industry is highly competitive. During the 1980s, the
industry experienced significant consolidation and retrenchment. The Company
competes with several large national and international full-line suppliers, as
well as numerous short-line and specialty manufacturers with differing
manufacturing and marketing methods. The Company's principal competitors on a
worldwide basis are Deere & Company, Case and New Holland N.V. In certain
Western European and South American countries, regional competitors exist which
have significant market share in a single country or a group of countries.
The Company believes several key factors influence a buyer's choice of
farm equipment, including the strength and quality of a company's dealers, the
quality and pricing of products, dealer or brand loyalty, product availability,
the terms of financing and customer service. The Company has improved and
continually seeks to improve in each of these areas but focuses primarily on
increasing the farmers' loyalty to the Company's dealers and overall dealer
organizational quality in order to distinguish itself in the marketplace. See
"Marketing and Distribution."
ENGINEERING AND RESEARCH
The Company makes significant expenditures for engineering and applied
research to improve the quality and performance of its products and to develop
new products. The Company expended approximately $54.1 million (1.7% of net
sales), $27.7 million (1.2% of net sales) and $24.1 million (1.1% of net sales)
in 1997, 1996 and 1995, respectively, on engineering and research.
PATENTS AND TRADEMARKS, TRADE NAMES AND BRAND NAMES
The Company owns and has licenses to the rights under a number of
domestic and foreign patents, trademarks, trade names and brand names relating
to its products and businesses. The Company defends its patent, trademark and
trade and brand name rights primarily by monitoring competitors' machines,
industry publications and conducting other investigative work. The Company
considers its intellectual property rights, including its rights to use the
AGCO, AGCO Allis, Massey Ferguson, Fendt, GLEANER, White, Hesston, New Idea,
Landini, Black Machine, AGCOSTAR, Tye, Farmhand, Glencoe, IDEAL, and Deutz
(South America) trade and brand names, important in the operation of its
businesses; however, the Company does not believe it is dependent on any single
patent, trademark or trade name or group of patents or trademarks, trade names
or brand names. AGCO, GLEANER, Hesston, Massey Ferguson, AGCOSTAR, New Idea,
Tye, Farmhand and Glencoe are registered trademarks of the Company. In addition,
Fendt is a registered trademark in Germany, and the Company has a pending
trademark registration for the Fendt brand name in the U.S. and Canada.
EMPLOYEES
As of December 31, 1997, the Company employed approximately 11,000
employees, including approximately 2,700 employees in the United States and
Canada. A majority of the Company's employees at its manufacturing facilities,
both domestic and international, are represented by collective bargaining
agreements with expiration dates ranging from 1998 to 2002. The Company is
currently in negotiation with labor unions in Coldwater, Ohio and in the United
Kingdom relating to the terms of new agreements for collective bargaining
agreements which expire in March and April, 1998, respectively.
ENVIRONMENTAL MATTERS AND OTHER GOVERNMENT REGULATION
The Company is subject to environmental laws and regulations concerning
emissions to the air, discharges of processed or other types of waste water and
the generation, handling, storage, transportation, treatment and disposal of
waste materials. These laws and regulations are constantly changing, and it is
impossible to predict with accuracy the effect they may have on the Company in
the future. The Company has been made aware of possible solvent contamination at
the HFI facility in Hesston,
9
10
Kansas. The extent of any possible contamination is being investigated in
conjunction with the appropriate state authorities. It is the Company's policy
to comply with all applicable environmental, health and safety laws and
regulations, and the Company believes that any expense or liability it may incur
in connection with any noncompliance with any such law or regulation or the
cleanup of any of its properties will not have a material adverse effect on the
Company. The Company believes it is in compliance, in all material respects,
with all applicable laws and regulations.
The Environmental Protection Agency (the "EPA") has issued regulations
concerning permissible emissions from off-road engines. The Company does not
anticipate that the cost of compliance with the regulations will have a material
impact on the Company.
The Company is subject to various national, federal, state and local
laws affecting its business, as well as a variety of regulations relating to
such matters as working conditions and product safety. A variety of state laws
regulate the Company's contractual relationships with its dealers. These laws
impose substantive standards on the relationship between the Company and its
dealers, including events of default, grounds for termination, non-renewal of
dealer contracts and equipment repurchase requirements. Such state laws could
adversely affect the ability of the Company to rationalize its dealer network.
The Company's international operations are also subject to
environmental laws, as well as various other national and local laws, in the
countries in which it manufactures and sells it products. The Company believes
that it is in compliance with such laws in all material respects, and the cost
of compliance with such laws in the future will not have a material adverse
effect on the Company.
REGULATION AND GOVERNMENT POLICY
Domestic and foreign political developments and government regulations
and policies directly affect the agricultural industry in the United States and
abroad and indirectly affect the agricultural equipment business. The
application or modification of existing laws, regulations or policies or the
adoption of new laws, regulations or policies could have an adverse effect on
the Company's business.
FINANCIAL INFORMATION ON GEOGRAPHICAL AREAS
For financial information on geographic areas, see page 40 of the
Annual Report to Stockholders for the year ended December 31, 1997, which is
incorporated herein by reference.
FORWARD LOOKING STATEMENTS
Certain information included in Management's Discussion and analysis of
Financial Condition and Results of Operations constitute forward looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, including the information set forth under "--Outlook". Although the
company believes that the expectations reflected in such forward looking
statements are based upon reasonable assumptions, it can give no assurance that
its expectations will be achieved. Additionally, the Company's financial results
are sensitive to movement in interest rates and foreign currencies, as well as
general economic conditions, pricing and product actions taken by competitors,
production disruptions and changes in environmental, international trade and
other laws which impact the way in which it conducts its business. Important
factors that could cause actual results to differ materially from the Company's
current expectations are disclosed in conjunction with the Company's filing with
the Securities and Exchange Commission.
10
11
Item 2. PROPERTIES
The principal properties of the Company as of December 31, 1997 are as
follows:
Leased Owned
Location Description of Property (sq. ft.) (sq. ft.)
- -------- ----------------------- --------- ----------
North America:
Duluth, Georgia ........................... Corporate Headquarters 125,000
Duluth, Georgia (A)....................... Corporate Office 47,000
Coldwater, Ohio (B)........................ Manufacturing 1,490,000
Hesston, Kansas (C)........................ Manufacturing 1,115,000
Independence, Missouri..................... Manufacturing 450,000
Lockney, Texas............................. Manufacturing 190,000
Queretaro, Mexico.......................... Manufacturing 13,500
Kansas City, Missouri...................... Warehouse 425,000
Batavia, Illinois.......................... Parts Distribution 310,200
Des Moines, Iowa (D)....................... Retail Finance Office 23,850
International:
Coventry, United Kingdom................... Regional Headquarters/Manufacturing 4,135,150
Beauvais, France........................... Manufacturing 3,740,000
Marktoberdorf, Germany..................... Manufacturing 2,411,000
Baumenheim, Germany........................ Manufacturing 1,890,000
Kempten, Germany........................... Manufacturing 582,000
Randers, Denmark........................... Manufacturing 683,000
Haedo, Argentina........................... Manufacturing 489,450
Noetinger, Argentina....................... Manufacturing 156,170
San Luis, Argentina (E).................... Manufacturing 57,860
Canoas, Rio Grande do Sul, Brazil.......... Regional Headquarters /Manufacturing 452,400
Santa Rosa, Rio Grande do Sul, Brazil...... Manufacturing 297,100
Ennery, France............................. Parts Distribution 269,100
Sunshine, Victoria, Australia.............. Regional Headquarters 37,200
Tottenham, Victoria, Australia............. Parts Distribution 179,960
Stoneleigh, United Kingdom................. Training Facility/Office 44,000
- -------------
(A) The Company is currently marketing this corporate office for sale.
(B) In conjunction with the White-New Idea Acquisition in December 1993,
the Company agreed to purchase the Coldwater, Ohio manufacturing
facility from Allied subject to satisfactory completion of an
environmental audit. During 1995, the Company entered into an agreement
with Allied to lease the Coldwater, Ohio facility for a period of up to
five years. During this time, Allied is responsible for the
environmental clean-up of the facility, including all costs associated
with the clean-up. Upon successful completion of the environmental
clean-up, the Company will acquire the Coldwater, Ohio facility for the
original agreed upon amount of $3.2 million.
(C) Owned by HFI, a joint venture in which the Company has a 50% interest.
(D) Owned by the Agricredit-North America Joint Venture, in which the
Company has a 49% interest.
(E) Owned by the Argentina Engine Joint Venture, in which the Company has a
50% interest.
The Company considers each of its facilities to be in good condition and
adequate for its present use. The Company believes that it has sufficient
capacity to meet its current and anticipated manufacturing requirements.
11
12
Item 3. LEGAL PROCEEDINGS
The Company is a party to various legal claims and actions incidental
to its business. The Company believes that none of these claims or actions,
either individually or in the aggregate, is material to the business or
financial condition of the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The dividend and market price information under the heading "Trading
and Dividend Information" on page 15 of the Annual Report to Stockholders for
the year ended December 31, 1997 is incorporated herein by reference.
Item. 6. SELECTED FINANCIAL DATA
The information under the heading "Selected Financial Data" for the
years ended December 31, 1993 through 1997 on page 15 of the Annual Report to
Stockholders for the year ended December 31, 1997 is incorporated herein by
reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information under the heading "Management's Discussion and Analysis
of Financial Condition and Results of Operations" on pages 16 through 23 of the
Annual Report to Stockholders for the year ended December 31, 1997 is
incorporated herein by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information under the heading "Foreign Currency Risk Management" in
"Management's Discussion and Analysis and Results of Operations" and in Footnote
1 - "Financial Instruments" of the Notes to Consolidated Financial Statements on
pages 23 and 31, respectively, of the Annual Report to Stockholders for the year
ended December 31, 1997 is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Registrant and its
subsidiaries included on pages 24 through 41 of the Annual Report to
Stockholders for the year ended December 31, 1997 are incorporated herein by
reference:
Consolidated Statements of Income for the years ended December 31,
1997, 1996 and 1995.
Consolidated Balance Sheets as of December 31, 1997 and 1996.
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995.
Notes to Consolidated Financial Statements.
Report of Independent Public Accountants.
The information under the heading "Quarterly Results" on pages 20 and
21 of the Annual Report to Stockholders for the year ended December 31, 1997 is
incorporated herein by reference.
12
13
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The information under the heading "Election of Directors" and the
information under the heading "Directors Continuing in Office" on pages 2 and 3,
respectively, of the Proxy Statement for the Annual Meeting of Stockholders to
be held April 29, 1998 is incorporated herein by reference for information on
the directors of the Registrant. The information under the heading "Executive
Officers" on pages 20 through 22 of the Proxy Statement for the Annual Meeting
of Stockholders to be held April 29, 1998 is incorporated herein by reference
for information on the executive officers of the Registrant. The information
under the heading "Section 16(a) Beneficial Ownership Reporting Compliance" on
page 22 of the Proxy Statement for the Annual Meeting of Stockholders to be
held April 29, 1998 is incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
The information under the heading "Board of Directors and Certain
Committees of the Board," the information under the heading "Compensation
Committee Interlocks and Insider Participation" and the information under the
heading "Executive Compensation" on pages 4 and 5, page 5, and pages 12 through
14, respectively, of the Proxy Statement for the Annual Meeting of Stockholders
to be held April 29, 1998 are incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the heading "Principal Holders of Common Stock"
on pages 9 through 11 of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 29, 1998 is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the heading "Certain Relationships and Related
Transactions" on page 22 of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 29, 1998 is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. The following consolidated financial statements of AGCO Corporation
and its subsidiaries, included in the Annual Report of the registrant
to its stockholders for the year ended December 31, 1997, are
incorporated by reference in Part II, Item 8:
Consolidated Statements of Income for the years ended December
31, 1997, 1996 and 1995.
Consolidated Balance Sheets at December 31, 1997 and 1996.
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995.
Notes to Consolidated Financial Statements.
Report of Independent Public Accountants.
13
14
(a)2. The following Report of Independent Public Accountants and the
Consolidated Financial Statement Schedule of AGCO Corporation and its
subsidiaries are included herein on pages F-1 through F-2.
Schedule Description
-------- -----------
Report of Independent Public Accountants on Schedule
Schedule II Valuation and Qualifying Accounts
Schedules other than that listed above have been omitted
because the required information is contained in the Notes to
the Consolidated Financial Statements or because such
schedules are not required or are not applicable.
(a)3. The following exhibits are filed or incorporated by reference as part
of this report.
Exhibit No. Description of Exhibit
----------- ----------------------
3.1 Certificate of Incorporation of the Registrant incorporated by
reference to the Company's Quarterly Report Form 10-Q for the
quarter ended March 31, 1996.
3.2 By-Laws of the Registrant.
4.1 Rights Agreement between and among AGCO Corporation and
Chemical Bank, as rights agent, dated as of April 27, 1994
incorporated by reference to the Company's quarterly report on
Form 10-Q for the quarter ended March 31, 1994.
4.2 Certificate of Designation of the Junior Cumulative Preferred
Stock of the Company incorporated by reference to the
Company's quarterly report on Form 10-Q for the quarter ended
March 31, 1994.
4.3 Indenture between AGCO Corporation and SunTrust Bank, as
Trustee, dated as of March 20, 1996, incorporated by reference
to the Company"s Annual Report on Form 10-K for the year ended
December 31, 1995.
10.1 HFI Partnership Agreement incorporated by reference to the
Company's Registration Statement on Form S-1 (No. 33-43437)
dated April 16, 1992.
10.2 Joint Venture Agreement between Massey Ferguson S.A., Renault
Agriculture S.A. and Massey Ferguson Group Limited dated July
20, 1994 incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
10.3 Massey Ferguson Finance France SNC Agreement among and between
Massey Ferguson S.A. and DeLage Landen Leasing S.A. dated
September 15, 1992 incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994.
10.4 Shareholders Agreement in respect of Massey Ferguson Finance
Limited among and between Massey Ferguson Limited, DeLage
Landen Financial Services Limited and DeLage Landen B.V. dated
June 19, 1990 incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994.
10.5 Shareholders Agreement dated February 15, 1995 between Massey
Ferguson GmbH and DeLage Landen Leasing GmbH incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
10.6 Tractor Distributor Agreement by and between Landini S.p.A.
and AGCO Corporation dated February 1, 1995 incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994.
10.7 Deferred Compensation Plan incorporated by reference to the
Company's Registration Statement on Form S-1 (No. 33-43437)
dated April 16, 1992.
14
15
10.8 1991 Stock Option Plan, as amended.
10.9 Form of Stock Option Agreements (Statutory and Nonstatutory)
incorporated by reference to the Company's Registration Statement
on Form S-1 (No. 33-43437) dated April 16, 1992.
10.10 Amended and Restated Long-Term Incentive Plan.
10.11 Nonemployee Director Stock Incentive Plan, as amended.
10.12 Management Incentive Compensation Plan incorporated by
reference to the Company"s Annual Report on Form 10-K for the
year ended December 31, 1995.
10.13 Purchase and Sale Agreement between and among AGCO Corporation
and Varity Holdings Limited, Varity GmbH, Massey Ferguson
GmbH, Massey Ferguson Industries Limited, Massey Ferguson
(Delaware) Inc. and Varity Corporation dated as of April 26,
1994 incorporated by reference to the Company's quarterly
report on Form 10-Q for the quarter ended March 31, 1994.
10.14 Credit Agreement dated as of January 14, 1997 among AGCO
Corporation, AGCO Canada, Ltd., Massey Ferguson Manufacturing
Limited, Massey Ferguson Limited, AGCO Limited, Massey
Ferguson S.A., AGCO Holding B.V., and Massey Ferguson GmbH,
the lenders listed on the signatures pages thereof;
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch ("Rabobank"), SunTrust
Bank Atlanta, and Deutsche Bank AG, New York Branch, as
Co-Managers; Deutsche Bank Canada, as Canadian administrative
agent, and Rabobank, as administrative agent for the lenders,
as amended by the parties thereto on February 24, 1997
incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.
10.15 Limited Liability Company Agreement of Agricredit Acceptance
LLC dated November 1, 1996 incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
10.16 Agreement dated June 27, 1996 by and between Iochpe-Maxion S.A.
and AGCO Corporation incorporated by reference to the Company"s
current report on Form 8-K dated June 28, 1996.
10.17 Engine Supply Agreement dated June 27, 1996 by and between
Iochpe-Maxion S.A. and AGCO Corporation incorporated by reference
to the Company"s current report on Form 8-K dated June 28, 1996.
10.18 Employment and Severance Agreement by and between AGCO
Corporation and Robert J. Ratliff incorporated by reference to
the Company"s Annual Report on Form 10-K for the year ended
December 31, 1995.
10.19 Employment and Severance Agreement by and between AGCO
Corporation and John M. Shumejda incorporated by reference to
the Company"s Annual Report on Form 10-K for the year ended
December 31, 1995.
10.20 Employment and Severance Agreement by and between AGCO
Corporation and James M. Seaver incorporated by reference to
the Company"s Annual Report on Form 10-K for the year ended
December 31, 1995.
10.21 Employment and Severance Agreement by and between AGCO
Corporation and Daniel H. Hazelton incorporated by reference
to the Company"s Annual Report on Form 10-K for the year ended
December 31, 1995.
10.22 Employment and Severance Agreement by and between AGCO Corporation
and Chris E. Perkins.
10.23 Severance and Release Agreement by and between AGCO Corporation
and Jean-Paul Richard.
12.0 Statement re: Computation of Earnings to Combined Fixed Charges.
13.0 Portions of the AGCO Corporation Annual Report to Stockholders
for the year ended December 31, 1997 expressly incorporated herein
by reference.
16
21.0 Subsidiaries of the Registrant.
23.0 Consent of Arthur Andersen LLP, independent public accountants.
27.1 Financial Data Schedule - December 31, 1997 (filed for SEC reporting
purposes only).
27.2 Restated Financial Data Schedule - December 31, 1996 (filed for
SEC reporting purposes only).
(b) Reports on Form 8-K
None
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By: /s/ Robert J. Ratliff
-------------------------
Robert J. Ratliff
Chairman of the Board and
Chief Executive Officer
Dated: March 31, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the date indicated.
Signature Title Date
----------- ------- --------
/s/ Robert J. Ratliff Chairman of the Board and Chief Executive March 31, 1998
------------------------- Officer
Robert J. Ratliff
/s/ John M. Shumejda President and Chief Operating Officer March 31, 1998
-------------------------
John M. Shumejda
/s/ Chris E. Perkins Vice President and Chief Financial March 31, 1998
------------------------- Officer (Principal Financial Officer and
Chris E. Perkins Principal Accounting Officer)
/s/ Henry J. Claycamp Director March 31, 1998
-------------------------
Henry J. Claycamp
/s/ William H. Fike Director March 31, 1998
-------------------------
William H. Fike
/s/ Gerald B. Johanneson Director March 31, 1998
-------------------------
Gerald B. Johanneson
/s/ Richard P. Johnston Director March 31, 1998
-------------------------
Richard P. Johnston
/s/ Anthony D. Loehnis Director March 31, 1998
-------------------------
Anthony D. Loehnis
/s/ Alan S. McDowell Director March 31, 1998
-------------------------
Alan S. McDowell
/s/ Hamilton Robinson, Jr. Director March 31, 1998
-------------------------
Hamilton Robinson, Jr.
/s/ Wolfgang Sauer Director March 31, 1998
-------------------------
Wolfgang Sauer
/s/ Thomas H. Wyman Director March 31, 1998
-------------------------
Thomas H. Wyman
17
18
ANNUAL REPORT ON FORM 10-K
ITEM 14(A)(2)
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 1997
19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Stockholders of AGCO Corporation:
We have audited in accordance with generally accepted auditing standards, the
consolidated balance sheets of AGCO CORPORATION and SUBSIDIARIES as of December
31, 1997 and 1996 and the related consolidated statements of income,
stockholders" equity, and cash flows for each of the three years in the period
ended December 31, 1997, and have issued our report thereon dated February 5,
1998. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The accompanying Schedule II-Valuation and
Qualifying Accounts is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 5, 1998
F-1
20
Schedule II
AGCO CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in millions)
Additions
--------------------
Charged Charged
Balance at To Costs (Credited) Balance
Beginning Acquired and To Other at End
Description of Period Businesses Expenses Accounts Deductions of Period
------------------------ ---------- ---------- -------- --------- ---------- ---------
YEAR ENDED DECEMBER 31, 1997
Allowances for sales incentive discounts and
doubtful receivables:
Equipment Operations ........................... $ 75.8 $ 4.1 $ 116.1 $ -- $ (98.8) $ 97.2
========== ========== ======== ========= ========== =========
YEAR ENDED DECEMBER 31, 1996
Allowances for sales incentive discounts and
doubtful receivables:
Equipment Operations ........................... $ 62.5 $ 3.3 $ 91.5 $ -- $ (81.5) $ 75.8
========== ========== ======== ========= ========== =========
YEAR ENDED DECEMBER 31, 1995
Allowances for sales incentive discounts and
doubtful receivables:
Equipment Operations ........................... $ 60.1 $ 2.2 $ 83.9 $ -- $ (83.7) $ 62.5
---------- ---------- -------- --------- ---------- ---------
Finance Company ................................ 10.0 -- 4.3 -- (1.5) 12.8
---------- ---------- -------- --------- ---------- ---------
Consolidated receivable allowances ........... $ 70.1 $ 2.2 $ 88.2 $ -- $ (85.2) $ 75.3
========== ========== ======== ========= ========== =========
F-2
21
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
3.1 Certificate of Incorporation of Registrant. *
3.2 By-Laws of the Registrant. -
4.1 Rights Agreement between and among AGCO Corporation and Chemical Bank. *
4.2 Certificate of Designation of the Junior Cumulative Preferred Stock of the Company. *
4.3 Indenture between AGCO Corporation and SunTrust Bank, as Trustee. *
10.1 HFI Partnership Agreement. *
10.2 Joint Venture Agreement between Massey Ferguson S.A., Renault Agriculture S.A. *
and Massey Ferguson Group Limited.
10.3 Massey Ferguson Finance France SNC Agreement among and between Massey Ferguson S.A. *
and DeLage Landen Leasing S.A.
10.4 Shareholders Agreement in respect of Massey Ferguson Finance
Limited among and between Massey * Ferguson Limited, DeLage
Landen Financial Services Limited and DeLage Landen B.V.
10.5 Shareholders Agreement between Massey Ferguson GmbH and DeLage Landen B.V. *
10.6 Tractor Distributor Agreement by and between Landini S.p.A. and AGCO Corporation. *
10.7 Deferred Compensation Plan. *
10.8 1991 Stock Option Plan, as amended. -
10.9 Form of Stock Option Agreements (Statutory and Nonstatutory). *
10.10 Amended and Restated Long-Term Incentive Plan. -
10.11 Nonemployee Director Stock Incentive Plan, as amended. -
10.12 Management Incentive Compensation Plan. *
10.13 Purchase and Sale Agreement between and among AGCO Corporation and Varity Holdings *
Limited, Varity GmbH, Massey Ferguson GmbH, Massey Ferguson Industries Limited, Massey
Ferguson (Delaware) Inc. and Varity Corporation.
10.14 Credit Agreement dated as of January 14, 1997, among AGCO Corporation, AGCO Canada, Ltd., *
Massey Ferguson Manufacturing Limited, Massey Ferguson Limited, AGCO Limited, Massey
Ferguson S.A., AGCO Holding B.V., Massey Ferguson GmbH and the lenders listed on the
signature pages thereof, Cooperatieve Centrale Raiffesen - Boerenleenbank B.A., "RABOBANK
NEDERLAND", New York Branch ("Rabobank"),SunTrust Bank, Atlanta, and Deutsche Bank AG,
New York Branch, as Co-Managers; Deutsche Bank Canada, as Canadian Administrative
Agent and Rabobank, as Administrative Agent for the lenders, as amended by the parties thereto
on February 24, 1997.
10.15 Limited Liability Company Agreement of Agricredit Acceptance LLC *
10.16 Agreement dated June 27, 1996 by and between Iochpe-Maxion S.A. and AGCO Corporation *
10.17 Engine Supply Agreement dated June 27, 1996 by and between Iochpe-Maxion S.A. and AGCO *
Corporation
10.18 Employment and Severance Agreement by and between AGCO Corporation and Robert J. Ratliff. *
10.19 Employment and Severance Agreement by and between AGCO Corporation and John M. Shumejda. *
10.20 Employment and Severance Agreement by and between AGCO Corporation and James M. Seaver. *
10.21 Employment and Severance Agreement by and between AGCO Corporation and Daniel H. Hazelton. *
10.22 Employment and Severance Agreement by and between AGCO Corporation and Chris E. Perkins. -
10.23 Severance and Release Agreement by and between AGCO Corporation and Jean-Paul Richard. -
12.0 Statement re: Computation of Earnings to Combined Fixed Charges. -
13.0 AGCO Corporation Annual Report to Stockholders for the year ended December 31, 1997. -
21.0 Subsidiaries of the Registrant. -
23.0 Consent of Arthur Andersen LLP, independent public accountants. -
27.1 Financial Data Schedule - December 31, 1997 (filed for SEC reporting purposes only) -
27.2 Restated Financial Data Schedule - December 31, 1996 (filed for SEC reporting purposes only) -
- --------------
* Incorporated herein by reference