AGCO Reports Fourth Quarter Results

  AGCO Reports Fourth Quarter Results

     Record Sales Produce Full Year Adjusted Earnings per Share of $5.25

Business Wire

DULUTH, Ga. -- February 5, 2013

AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and
distributor of agricultural equipment, reported net sales of approximately
$2.7 billion for the fourth quarter of 2012, an increase of approximately 7.4%
compared to net sales of $2.5 billion for the fourth quarter of 2011. Reported
and adjusted net income for the fourth quarter of 2012 were $1.04 per share
and $0.99 per share, respectively. Adjusted net income excludes a non-cash
intangible asset impairment charge of approximately $22.4 million related to
the Company’s Chinese harvesting business. Adjusted net income also excludes a
non-cash tax gain of $26.9 million from the recognition of U.S. deferred tax
assets. These results compare to reported and adjusted net income of $2.90 per
share and $1.44 per share, respectively, for the fourth quarter of 2011.
Adjusted net income for the fourth quarter of 2011 excluded a non-cash tax
gain and transaction expenses associated with the acquisition of GSI.
Excluding unfavorable currency translation impacts of approximately 4.0%, net
sales in the fourth quarter of 2012 increased approximately 11.4% compared to
the fourth quarter of 2011.

Net sales for the full year of 2012 were approximately $10.0 billion, an
increase of approximately 13.6% compared to the full year of 2011. Excluding
the unfavorable impact of currency translation of approximately 7.7% and the
favorable impact of acquisitions of approximately 8.8%, net sales for the full
year of 2012 increased approximately 12.5% compared to the full year of 2011.
For the full year of 2012, reported net income per share was $5.30 and
adjusted net income per share, excluding the items discussed above, was $5.25.
These results compare to reported net income of $5.95 per share and adjusted
net income, excluding the items discussed above, of $4.48 per share for the
full year of 2011.

Fourth Quarter Highlights

  *Organic sales growth for Q4 2012 vs Q4 2011 was 7.3%, with the strongest
    growth coming from South America and Asia/Pacific^(1)

       *Regional organic sales results: South America +27.8%; Asia/Pacific
         +27.5%; Europe/Africa/ Middle East (“EAME”) +3.4%; North America
         (1.8%)

  *Fourth quarter operating margin reached approximately 10% in the South
    American region and North American operating margin improved 120 basis
    points in Q4 2012 vs Q4 2011
  *EAME fourth quarter sales and operating income negatively impacted by
    lower production and start-up costs associated with the new Fendt assembly
    facility in Germany
  *Working capital reduction in the fourth quarter resulting in 2012
    full-year free cash flow of approximately $326 million

^(1)Excludes currency translation and acquisition impacts

“AGCO completed 2012 with record sales and adjusted earnings while making
significant upgrades to our product offerings and improving our manufacturing
facilities,” stated Martin Richenhagen, Chairman, President and Chief
Executive Officer. “We also generated $326 million of free cash flow for the
full year of 2012 after increasing our strategic investments in our business.
This progress was achieved while overcoming start-up inefficiencies in our
German manufacturing operations. Our margin improvement initiatives continued
to be successful. Most notably, full year operating margins in South America
expanded over 100 basis points and North American operating margins were
approximately 10%, the best in over a decade. Looking forward, we continue to
have a positive long-term outlook for our industry and for AGCO as
demonstrated by the start of a share repurchase plan last July and the
recently announced initiation of a dividend beginning in March 2013.”

Market Update

Industry Unit Retail Sales
                              Tractors            Combines
                                                
Year ended December 31, 2012   Change from         Change from
                               Prior Year Period   Prior Year Period
                                                   
North America                  10%                 Flat
South America                  3%                  (1)%
Western Europe                 (3)%                5%
                                                   
                                                   

“Global commodity prices remain elevated due to weather-related production
difficulties across many of the developed markets,” stated Mr. Richenhagen.
“Crop production in North America was significantly lower in 2012 due to
ongoing drought conditions. However, higher crop prices and extensive crop
insurance produced near record levels of farm income in the U.S. supporting
farm machinery purchases. We are experiencing softness in demand for grain
storage and protein production equipment as a result of lower crop production
volumes. A mixed weather pattern is partially offsetting attractive crop
prices in Europe. Industry sales remain soft in the weather impacted markets
of Southern Europe, Scandinavia and Finland, while demand remained stable in
the key Western European markets of Germany and France. Industry demand in
South America increased during the second half of 2012. Improved crop yields,
attractive government financing programs in Brazil and favorable grain prices
all supported farm equipment industry sales. Demand for commodities has caught
up with global capacity driven by biofuels use, the growing population and
increasing emerging market protein consumption. Our long-term view remains
optimistic as elevated farm income should continue to support healthy growth
in our industry.”

Regional Results

AGCO Regional Net Sales (in millions)
                                                              % change from
                                            % change    2011 due to
                                   Net sales     from 2011     currency
                                                               translation^(1)
                                                               
Three months ended December
31, 2012
North America                      $ 652.3       9.0   %       0.6       %
South America                        511.9       14.1  %       (15.9     )%
Europe/Africa/Middle East            1,406.5     1.8   %       (2.3      )%
Asia/Pacific                        132.7       49.1  %       (0.3      )%
Total                              $ 2,703.4     7.4   %       (4.0      )%
                                                               
Year ended December 31, 2012
North America                      $ 2,584.4     46.0  %       (0.7      )%
South America                        1,855.7     (0.8  )%      (15.8     )%
Europe/Africa/Middle East            5,073.7     4.7   %       (7.4      )%
Asia/Pacific                        448.4       57.9  %       (2.8      )%
Total                              $ 9,962.2     13.6  %       (7.7      )%
^(1) See Footnotes for additional disclosure



North America

AGCO’s North American sales grew 19.8% in the full year of 2012 compared to
2011, excluding the impact of unfavorable currency translation and the
acquisition benefit from GSI. Elevated levels of farm income continued to
support strong industry demand from the professional farming sector and
produced healthy growth for AGCO. The most significant increases were in high
horsepower tractors, sprayers and hay equipment. The positive contribution of
acquisitions, higher sales and margin improvement initiatives all contributed
to growth in income from operations of $169.0 million for the full year of
2012 compared to 2011.

South America

Excluding the benefit of acquisitions and negative currency translation, South
American sales were 10.3% higher in the full year of 2012 compared to the full
year of 2011. Higher sales in Brazil were partially offset by declines in
Argentina. AGCO’s profitability in South America improved during the full year
of 2012, with operating margins rising to 8.7% compared to 7.7% in the same
period of 2011. Income from operations increased $18.5 million for the full
year of 2012 compared to 2011 due to higher sales and margin expansion.

EAME

Sales in AGCO’s EAME region grew approximately 9.9% in the full year of 2012
compared to the full year of 2011, exclusive of acquisition benefits and the
unfavorable impact of currency translation. AGCO sales growth in France,
Germany and Russia was partially offset by lower sales in southern Europe and
Finland. EAME operating income declined by $12.0 million in the full year of
2012 compared to the same period in 2011. Results were negatively impacted by
a weaker sales mix and start-up costs associated with the slow ramp of
production in the new Fendt tractor assembly facility.

Asia/Pacific

Excluding the benefit of acquisitions and negative currency translation, net
sales in the Asia/Pacific region were 23.2% higher in the full year of 2012
compared to the full year of 2011. Growth in Australia, New Zealand and China
produced most of the increase. Income from operations in the Asia/Pacific
region decreased $13.7 million in the full year of 2012, compared to 2011, due
to increased market development costs in China.

Outlook

Elevated soft commodities prices in 2013 are expected to support healthy farm
income and sustain stable equipment demand. For 2013, AGCO is projecting net
sales in a range from $10.2 billion to $10.4 billion, with forecasted pricing
benefits, market share improvements and relatively neutral currency impacts.
Improved gross and operating margins compared to 2012 levels are expected
while allowing for significant investments in product and market development
costs. Based on these assumptions, AGCO is targeting 2013 earnings per share
in a range from $5.10 to $5.35. The Company’s earnings target reflects an
increase in income tax expense of approximately $0.40 per share compared to
2012 and previous 2013 projections as a result of the recognition of its U.S.
deferred income tax assets.

“As we turn our focus to 2013, we remain optimistic about AGCO’s ability to
take advantage of the positive long-term demand drivers for our industry,”
stated Mr. Richenhagen. “Organic growth and margin improvement will continue
to be our primary focus. AGCO’s cost reduction initiatives are aimed at
lowering material and labor costs through purchasing actions and factory
productivity. Engineering expenditures are expected to increase as we work to
meet tier 4 emissions requirements. We expect to continue to invest in new
products, including upgraded harvesting, high horsepower tractor and sprayer
offerings, and to devote significant resources to enhance our presence in the
CIS region, China and Africa. Our plans in 2013 also include investing in our
manufacturing facilities to enable our growth and improve our productivity.”

AGCO will be hosting a conference call with respect to this earnings
announcement at 10:00 a.m. Eastern Time on Tuesday, February 5, 2013. The
Company will refer to slides on its conference call. Interested persons can
access the conference call and slide presentation via AGCO’s website at
www.agcocorp.com in the “Events” section on the “Company/Investors” page of
our website. A replay of the conference call will be available approximately
two hours after the conclusion of the conference call for twelve months
following the call. A copy of this press release will be available on AGCO’s
website for at least twelve months following the call.

Safe Harbor Statement

Statements that are not historical facts, including the projections of
earnings per share, sales, market conditions, farm incomes, share repurchase
plans, initiation of dividend payments, cost reduction initiatives, commodity
prices, pricing benefits, effects of tax accounting, margin improvements,
currency translation, investments in production facilities and product
development, expanding markets, industry demand, productivity and market share
improvements, general economic conditions and engineering efforts, are
forward-looking and subject to risks that could cause actual results to differ
materially from those suggested by the statements. The following are among the
factors that could cause actual results to differ materially from the results
discussed in or implied by the forward-looking statements.

  *Our financial results depend entirely upon the agricultural industry, and
    factors that adversely affect the agricultural industry generally,
    including declines in the general economy, increases in farm input costs,
    lower commodity prices, lower farm income and changes in the availability
    of credit for our retail customers, will adversely affect us.
  *The recent poor performance of the general economy may result in a decline
    in demand for our products. However, we are unable to predict with
    accuracy the amount or duration of this decline, and our forward-looking
    statements reflect merely our best estimates at the current time.
  *A majority of our sales and manufacturing take place outside the United
    States, and, as a result, we are exposed to risks related to foreign laws,
    taxes, economic conditions, labor supply and relations, political
    conditions and governmental policies. These risks may delay or reduce our
    realization of value from our international operations.
  *Most retail sales of the products that we manufacture are financed, either
    by our joint ventures with Rabobank or by a bank or other private lender.
    During 2012, our joint ventures with Rabobank, which are controlled by
    Rabobank and are dependent upon Rabobank for financing as well, financed
    approximately 50% of the retail sales of our tractors and combines in the
    markets where the joint ventures operate. Any difficulty by Rabobank to
    continue to provide that financing, or any business decision by Rabobank
    as the controlling member not to fund the business or particular aspects
    of it (for example, a particular country or region), would require the
    joint ventures to find other sources of financing (which may be difficult
    to obtain), or us to find another source of retail financing for our
    customers, or our customers would be required to utilize other retail
    financing providers. As a result of the recent economic downturn,
    financing for capital equipment purchases generally has become more
    difficult in certain regions and in some cases, was expensive to obtain.
    To the extent that financing is not available or available only at
    unattractive prices, our sales would be negatively impacted.
  *Both AGCO and our retail finance joint ventures have substantial account
    receivables from dealers and end customers, and we would be adversely
    impacted if the collectability of these receivables was not consistent
    with historical experience; this collectability is dependent upon the
    financial strength of the farm industry, which in turn is dependent upon
    the general economy and commodity prices, as well as several of the other
    factors listed in this section.
  *We have experienced substantial and sustained volatility with respect to
    currency exchange rate and interest rate changes, including uncertainty
    associated with the Euro, which can adversely affect our reported results
    of operations and the competitiveness of our products.
  *All acquisitions, including the acquisition of GSI, involve risks relating
    to retention of key employees and customers and fulfilling projections
    prepared by or at the direction of prior ownership. In addition, we may
    encounter difficulties in integrating recent and future acquisitions into
    our business and may not fully achieve, or achieve within a reasonable
    time frame, expected strategic objectives and other expected benefits of
    the acquisition.
  *Our success depends on the introduction of new products, particularly
    engines that comply with emission requirements, which requires substantial
    expenditures.
  *Our production levels and capacity constraints at our facilities,
    including those resulting from plant expansions, could adversely affect
    our results.
  *Our expansion plans in emerging markets, including establishing a greater
    manufacturing and marketing presence and growing our use of component
    suppliers, could entail significant risks.
  *We depend on suppliers for components, parts and raw materials for our
    products, and any failure by our suppliers to provide products as needed,
    or by us to promptly address supplier issues, will adversely impact our
    ability to timely and efficiently manufacture and sell products. We also
    are subject to raw material price fluctuations, which can adversely affect
    our manufacturing costs.
  *We face significant competition, and if we are unable to compete
    successfully against other agricultural equipment manufacturers, we would
    lose customers and our net sales and profitability would decline.
  *We have a substantial amount of indebtedness, and, as result, we are
    subject to certain restrictive covenants and payment obligations that may
    adversely affect our ability to operate and expand our business.

Further information concerning these and other factors is included in AGCO’s
filings with the Securities and Exchange Commission, including its Form 10-K
for the year ended December31,2011. AGCO disclaims any obligation to update
any forward-looking statements except as required by law.

About AGCO

AGCO, Your Agriculture Company, (NYSE: AGCO), is a global leader focused on
the design, manufacture and distribution of agricultural machinery. AGCO
supports more productive farming through a full line of tractors, combines,
hay tools, sprayers, forage equipment, tillage, implements, grain storage and
protein production systems, as well as related replacement parts. AGCO
products are sold through four core machinery brands, Challenger®, Fendt®,
Massey Ferguson®, Valtra® and GSI®, and are distributed globally through 3,150
independent dealers and distributors in more than 140 countries worldwide.
Retail financing is available through AGCO Finance for qualified purchasers.
Founded in 1990, AGCO is headquartered in Duluth, Georgia, USA. In 2012, AGCO
had net sales of $10.0 billion. http://www.agcocorp.com

                 Please visit our website at www.agcocorp.com

AGCO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in millions)
                                                              
                                               December 31,       December 31,
                                               2012               2011
ASSETS
Current Assets:
Cash and cash equivalents                      $  781.3           $  724.4
Accounts and notes receivable, net                924.6              970.5
Inventories, net                                  1,703.1            1,559.6
Deferred tax assets                               243.5              142.7
Other current assets                             302.2            265.6   
Total current assets                              3,954.7            3,662.8
Property, plant and equipment, net                1,406.1            1,222.6
Investment in affiliates                          390.3              346.3
Deferred tax assets                               40.0               37.6
Other assets                                      131.2              126.9
Intangible assets, net                            607.1              666.5
Goodwill                                         1,192.4          1,194.5 
Total assets                                   $  7,721.8        $  7,257.2 
                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt              $  59.1            $  60.1
Accounts payable                                  888.3              937.0
Accrued expenses                                  1,226.5            1,080.6
Other current liabilities                        98.8             127.8   
Total current liabilities                         2,272.7            2,205.5
Long-term debt, less current portion              1,227.7            1,409.7
Pensions and postretirement health care           331.6              298.6
benefits
Deferred tax liabilities                          242.7              192.3
Other noncurrent liabilities                     149.1            119.9   
Total liabilities                                4,223.8          4,226.0 
                                                                  
Temporary Equity                                  7.3                —
                                                                  
Stockholders’ Equity:
AGCO Corporation stockholders’ equity:
Common stock                                      1.0                1.0
Additional paid-in capital                        1,092.1            1,073.2
Retained earnings                                 2,843.7            2,321.6
Accumulated other comprehensive loss             (479.4  )         (400.6  )
Total AGCO Corporation stockholders’ equity      3,457.4          2,995.2 
Noncontrolling interests                         33.3             36.0    
Total stockholders’ equity                       3,490.7          3,031.2 
Total liabilities, temporary equity and        $  7,721.8        $  7,257.2 
stockholders’ equity
                                                                             
See accompanying notes to condensed consolidated financial statements.



AGCO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in millions, except per share data)
                                               
                                               Three Months Ended December 31,
                                                 2012           2011     
                                                                 
Net sales                                      $  2,703.4        $  2,517.8
Cost of goods sold                               2,175.6          1,993.7  
Gross profit                                      527.8             524.1
                                                                 
Selling, general and administrative expenses      284.5             246.9
Engineering expenses                              89.6              84.0
Impairment charge                                 22.4              —
Amortization of intangibles                      12.4             7.5      
                                                                 
Income from operations                            118.9             185.7
                                                                 
Interest expense, net                             14.1              9.1
Other expense, net                               10.5             1.8      
                                                                 
Income before income taxes and equity in net      94.3              174.8
earnings of affiliates
                                                                 
Income tax provision (benefit)                   6.9              (98.8    )
                                                                 
Income before equity in net earnings of           87.4              273.6
affiliates
                                                                 
Equity in net earnings of affiliates             13.6             11.7     
                                                                 
Net income                                        101.0             285.3
                                                                 
Net loss (income) attributable to                1.5              (0.1     )
noncontrolling interests
                                                                 
Net income attributable to AGCO Corporation    $  102.5          $  285.2    
and subsidiaries
                                                                 
Net income per common share attributable to
AGCO Corporation and subsidiaries:
                                                                 
Basic                                          $  1.06           $  2.94     
Diluted                                        $  1.04           $  2.90     
                                                                 
Weighted average number of common and common
equivalent shares outstanding:
Basic                                            96.9             97.1     
Diluted                                          98.5             98.2     
                                                                             
See accompanying notes to condensed consolidated financial statements.



AGCO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in millions, except per share data)
                                                     
                                                     Years Ended December 31,
                                                      2012       2011    
                                                                   
Net sales                                            $ 9,962.2     $ 8,773.2
Cost of goods sold                                    7,839.0      6,997.1 
Gross profit                                           2,123.2       1,776.1
                                                                   
Selling, general and administrative expenses           1,041.2       869.3
Engineering expenses                                   317.1         275.6
Restructuring and other infrequent income              —             (0.7    )
Impairment charge                                      22.4          —
Amortization of intangibles                           49.3         21.6    
                                                                   
Income from operations                                 693.2         610.3
                                                                   
Interest expense, net                                  57.6          30.2
Other expense, net                                    34.8         19.1    
                                                                   
Income before income taxes and equity in net           600.8         561.0
earnings of affiliates
                                                                   
Income tax provision                                  137.9        24.6    
                                                                   
Income before equity in net earnings of affiliates     462.9         536.4
                                                                   
Equity in net earnings of affiliates                  53.5         48.9    
                                                                   
Net income                                             516.4         585.3
                                                                   
Net loss (income) attributable to noncontrolling      5.7          (2.0    )
interests
                                                                   
Net income attributable to AGCO Corporation and      $ 522.1       $ 583.3   
subsidiaries
                                                                   
Net income per common share attributable to AGCO
Corporation and subsidiaries:
                                                                   
Basic                                                $ 5.38        $ 6.10    
Diluted                                              $ 5.30        $ 5.95    
                                                                   
Weighted average number of common and common
equivalent shares outstanding:
Basic                                                 97.1         95.6    
Diluted                                               98.6         98.1    
                                                                             
See accompanying notes to condensed consolidated financial statements.



AGCO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in millions)
                                                   
                                                   Years Ended December 31,
                                                    2012       2011     
                                                                  
Cash flows from operating activities:
Net income                                         $ 516.4       $ 585.3    
Adjustments to reconcile net income to net cash
provided by operating
activities:
Depreciation                                         180.6          151.9
Deferred debt issuance cost amortization             3.5            2.9
Impairment charge                                    22.4           —
Amortization of intangibles                          49.3           21.6
Amortization of debt discount                        8.7            8.2
Stock compensation                                   36.8           24.4
Equity in net earnings of affiliates, net of cash    (25.7  )       (19.0    )
received
Deferred income tax benefit                          (36.4  )       (127.6   )
Other                                                0.6            (1.3     )
Changes in operating assets and liabilities, net
of effects from purchase of
businesses:
Accounts and notes receivable, net                   40.6           5.4
Inventories, net                                     (160.9 )       (221.0   )
Other current and noncurrent assets                  (71.8  )       (16.5    )
Accounts payable                                     (61.7  )       162.3
Accrued expenses                                     154.5          183.5
Other current and noncurrent liabilities            9.5          (34.2    )
Total adjustments                                   150.0        140.6    
Net cash provided by operating activities           666.4        725.9    
Cash flows from investing activities:
Purchases of property, plant and equipment           (340.5 )       (300.4   )
Proceeds from sale of property, plant and            0.9            1.5
equipment
Purchase of businesses, net of cash acquired         (2.9   )       (1,018.0 )
Investments in consolidated affiliates, net of       (20.1  )       (34.8    )
cash acquired
Investments in unconsolidated affiliates, net        (15.8  )       (8.3     )
Restricted cash and other                           3.7          (3.7     )
Net cash used in investing activities               (374.7 )      (1,363.7 )
Cash flows from financing activities:
Repurchase or conversion of convertible senior       —              (161.0   )
subordinated notes
(Repayment of) proceeds from debt obligations, net   (222.5 )       850.5
Payment of debt issuance costs                       (0.2   )       (14.8    )
Payment of minimum tax withholdings on stock         (0.3   )       (2.5     )
compensation
Purchases and retirement of common stock             (17.6  )       —
(Distribution to) investments by noncontrolling      (1.0   )       (1.5     )
interests
Proceeds from issuance of common stock              —            0.3      
Net cash (used in) provided by financing            (241.6 )      671.0    
activities
Effect of exchange rate changes on cash and cash    6.8          (28.7    )
equivalents
Increase in cash and cash equivalents                56.9           4.5
Cash and cash equivalents, beginning of year        724.4        719.9    
Cash and cash equivalents, end of year             $ 781.3       $ 724.4    
                                                                             
See accompanying notes to condensed consolidated financial statements.



                      AGCO CORPORATION AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
               (unaudited, in millions, except per share data)

1. STOCK COMPENSATION EXPENSE

The Company recorded stock compensation expense as follows:

                              Three Months Ended     Years Ended
                               December 31,              December 31,
                                2012     2011        2012     2011
Cost of goods sold             $ 0.5        $ 0.5        $ 2.4        $ 1.6
Selling, general and            7.5         6.0         34.6        23.0
administrative expenses
Total stock compensation       $ 8.0        $ 6.5        $ 37.0       $ 24.6
expense
                                                                             
                                                                             

2. INDEBTEDNESS

Indebtedness at December 31, 2012 and 2011 consisted of the following:

                                           December 31,    December 31,
                                             2012               2011
1¼% Convertible senior subordinated          $  192.1           $  183.4
notes due 2036
4½% Senior term loan due 2016                   264.2              259.4
5⅞% Senior notes due 2021                       300.0              300.0
Credit Facility                                 465.0              665.0
Other long-term debt                           65.5             62.0    
                                                1,286.8            1,469.8
Less: Current portion of long-term debt        (59.1   )         (60.1   )
Total indebtedness, less current portion     $  1,227.7        $  1,409.7 
                                                                             
                                                                             

As of December 31, 2012 and 2011, the closing sales price of the Company’s
common stock had not exceeded 120% of the conversion price of the 1¼%
convertible senior subordinated notes for at least 20 trading days in the 30
consecutive trading days ending December 31, 2012 and 2011, and, therefore,
the Company classified the notes as long-term debt. Future classification of
the notes between current and long-term debt is dependent on the closing sales
price of the Company’s common stock during future quarters.

3. INVENTORIES

Inventories at December 31, 2012 and 2011 were as follows:

                             December 31,   December 31,
                             2012             2011
Finished goods               $   598.5        $   500.0
Repair and replacement parts     505.6            450.7
Work in process                  137.5            127.6
Raw materials                   461.5           481.3
Inventories, net             $   1,703.1      $   1,559.6
                                                  
                                                  

4. ACCOUNTS RECEIVABLE SALES AGREEMENTS

At December31, 2012 and 2011, the Company had accounts receivable sales
agreements that permit the sale, on an ongoing basis, of a majority of its
wholesale receivables in North America and Europe to its 49% owned U.S.,
Canadian and European retail finance joint ventures. As of December 31, 2012
and 2011, the cash received from receivables sold under the U.S., Canadian and
European accounts receivable sales agreements was approximately $1.1 billion
and $827.5 million, respectively.

Losses on sales of receivables associated with the accounts receivable
financing facilities discussed above, reflected within “Other expense, net” in
the Company’s Condensed Consolidated Statements of Operations, were
approximately $5.4 million and $21.8 million during the three months and year
ended December 31, 2012, respectively. Losses on sales of receivables
associated with the accounts receivable financing facilities reflected within
“Other expense, net” and “Interest expense, net” in the Company’s Condensed
Consolidated Statements of Operations were approximately $6.4 million and
$22.0 million during the three months and year ended December 31, 2011,
respectively.

The Company’s retail finance joint ventures in Brazil and Australia also
provide wholesale financing to the Company’s dealers. As of December31, 2012
and 2011, these retail finance joint ventures had approximately $100.6 million
and $62.0 million, respectively, of outstanding accounts receivable associated
with these arrangements. In addition, the Company sells certain trade
receivables under factoring arrangements to other financial institutions
around the world.

5. NET INCOME PER SHARE

The Company’s convertible senior subordinated notes provide for (i)the
settlement upon conversion in cash up to the principal amount of the converted
notes with any excess conversion value settled in shares of the Company’s
common stock, and (ii)the conversion rate to be increased under certain
circumstances if the notes are converted in connection with certain change of
control transactions. Dilution of weighted shares outstanding will depend on
the Company’s stock price for the excess conversion value using the treasury
stock method. A reconciliation of net income attributable to AGCO Corporation
and subsidiaries and weighted average common shares outstanding for purposes
of calculating basic and diluted net income per share for the three months and
years ended December 31, 2012 and 2011 is as follows:

                                                   
                                               
                 Three Months Ended December        Years Ended December 31,
                 31,
                   2012           2011           2012        2011
                                                                             
Basic net
income per
share:
Net income
attributable
to AGCO
Corporation
and              $  102.5           $  285.2        $  522.1         $ 583.3
subsidiaries
Weighted
average number
of
common shares      96.9              97.1           97.1           95.6
outstanding
                                                                             
Basic net
income per
share
attributable
to
AGCO
Corporation      $  1.06            $  2.94         $  5.38          $ 6.10
and
subsidiaries
                                                                             
Diluted net
income per
share:
Net income
attributable
to AGCO
Corporation
and
subsidiaries
for
purposes of
computing
diluted net
income per       $  102.5           $  285.2        $  522.1         $ 583.3
share
                                                                             
Weighted
average number
of common
shares              96.9               97.1            97.1            95.6
outstanding
Dilutive stock
options,
SSARs,
performance
share awards
and
restricted          1.0                0.9             1.0             0.6
stock awards
Weighted
average
assumed
conversion of
contingently
convertible
senior
subordinated       0.6               0.2            0.5            1.9
notes
Weighted
average number
of common
and common
equivalent
shares
outstanding
for purposes
of
computing
diluted net
income per
share              98.5              98.2           98.6           98.1
                                                                             
Diluted net
income per
share
attributable
to
AGCO
Corporation      $  1.04            $  2.90         $  5.30          $ 5.95
and
subsidiaries
                                                                             
                                                                             

6. SEGMENT REPORTING

Effective January 1, 2012, the Company modified its system of reporting,
resulting from changes to its internal management and organizational
structure, which changed its reportable segments from North America; South
America; Europe/Africa/Middle East; and Rest of World, to North America; South
America; Europe/Africa/Middle East; and Asia/Pacific.The Asia/Pacific
reportable segment includes the regions of Asia, Australia and New Zealand,
and the Europe/Africa/Middle East segment will now include certain markets in
Eastern Europe. Effective January 1, 2012, these reportable segments are
reflective of how the Company’s chief operating decision maker reviews
operating results for the purposes of allocating resources and assessing
performance. Disclosures for the three months and year ended December 31, 2011
have been adjusted to reflect the change in reportable segments.

The Company’s four reportable segments distribute a full range of agricultural
equipment and related replacement parts. The Company evaluates segment
performance primarily based on income from operations. Sales for each segment
are based on the location of the third-party customer. The Company’s selling,
general and administrative expenses and engineering expenses are charged to
each segment based on the region and division where the expenses are incurred.
As a result, the components of income from operations for one segment may not
be comparable to another segment. Segment results for the three months and
years ended December 31, 2012 and 2011 are as follows:

Three
Months         North         South         Europe/Africa/       Asia/
Ended        America    America    Middle East       Pacific    Consolidated
December
31,
                                                                                           
2012
Net sales      $ 652.3       $ 511.9       $    1,406.5         $ 132.7       $   2,703.4
Income
from             54.0          51.0             87.4              0.4             192.8
operations
                                                                                           
2011
Net sales      $ 598.7       $ 448.5       $    1,381.6         $ 89.0        $   2,517.8
Income
from             42.6          36.4             142.5             8.0             229.5
operations
                                                                                           
                                                                                           

Years
Ended        North        South        Europe/Africa/    Asia/      Consolidated
December       America         America         Middle East          Pacific
31,
                                                                                               
2012
Net sales      $ 2,584.4       $ 1,855.7       $    5,073.7         $ 448.4       $   9,962.2
Income
from             259.9           161.6              474.9             10.2            906.6
operations
                                                                                               
2011
Net sales      $ 1,770.6       $ 1,871.5       $    4,847.2         $ 283.9       $   8,773.2
Income
from             90.9            143.1              486.9             23.9            744.8
operations
                                                                                               
                                                                                               

A reconciliation from the segment information to the consolidated balances for
income from operations is set forth below:

                 Three Months Ended           Years Ended
                  December 31,                    December 31,
                   2012       2011          2012        2011  
Segment income    $ 192.8         $ 229.5         $ 906.6          $ 744.8
from operations
Corporate           (31.6 )         (30.3 )         (107.1 )         (90.6 )
expenses
Stock
compensation        (7.5  )         (6.0  )         (34.6  )         (23.0 )
expense
Restructuring
and other           —               —               —                0.7
infrequent
income
Impairment          (22.4 )         —               (22.4  )         —
charge
Amortization of    (12.4 )        (7.5  )        (49.3  )        (21.6 )
intangibles
Consolidated
income from       $ 118.9        $ 185.7        $ 693.2         $ 610.3 
operations
                                                                             
                                                                             

                     RECONCILIATION OF NON-GAAP MEASURES

This earnings release discloses adjusted income from operations, net income
and net income per share, all of which exclude amounts that differ from the
most directly comparable measure calculated in accordance with U.S. generally
accepted accounting principles (“GAAP”). A reconciliation of each of these
financial measures to the most directly comparable GAAP measure is included
below.

The following is a reconciliation of adjusted income from operations, net
income and net income per share to reported income from operations, net income
and net income per share for the three months ended December 31, 2012 and 2011
(in millions, except per share data):

                 Three months ended December 31,
                  2012                                          2011                                      
                                                                                         
                  Income                            Net             Income                            Net
                  From             Net              Income          From             Net              Income
                  Operations       Income^(1)       Per             Operations       Income^(1)       Per
                                                    Share^(1)                                         Share^(1)
                                                                                                                
As adjusted       $   141.3        $  98.0          $ 0.99          $   191.5        $ 141.7          $ 1.44
Tax                   —               (26.9 )         (0.27 )           —              —                —
adjustments^(2)
Impairment            22.4            22.4            0.22              —              —                —
charge^(3)
GSI                  —              —             —               5.8           (143.5 )        (1.46 )
acquisition^(4)
                                                                                                                
As reported       $   118.9        $  102.5        $ 1.04         $   185.7        $ 285.2         $ 2.90  
                                                                                                                
^(1) Net income and net income per share amounts are after tax.
^(2)During the fourth quarter of 2012, the Company recorded a non-cash tax gain associated with the recognition
of certain U.S. deferred tax assets from the reversal of its U.S. deferred tax valuation allowance and the      
recognition of certain U.S. research and development tax credits.                                               
^(3) In accordance with ASC 350, “Intangibles - Goodwill and Other,” the Company conducted an impairment
analysis of its Chinese harvesting business during the fourth quarter of 2012. As a result of its analysis, the 
Company concluded that the goodwill and certain other intangible assets were impaired and recorded an           
impairment charge of $22.4 million.                                                                             
^(4) During the fourth quarter of 2011, the Company recorded a tax gain of $149.3 million and acquisition
expenses of $5.8 million associated with the GSI acquisition.
                                                                                                                
                                                                                                                

The following is a reconciliation of adjusted income from operations, net
income and net income per share to reported income from operations, net income
and net income per share for the years ended December 31, 2012 and 2011 (in
millions, except per share data):

                 Years ended December 31,
                  2012                                          2011                                      
                                                                                         
                  Income                            Net             Income                            Net
                  From             Net              Income          From             Net              Income
                  Operations       Income^(1)       Per             Operations       Income^(1)       Per
                                                    Share^(1)                                         Share^(1)
                                                                                                                
As adjusted       $   715.6        $  517.6         $ 5.25          $  615.4         $ 439.3          $ 4.48
Tax                   —               (26.9 )         (0.27 )          —               —                —
adjustments^(2)
Impairment            22.4            22.4            0.22             —               —                —
charge^(3)
Restructuring
and other             —               —               —                (0.7  )         (0.5   )         —
infrequent
income^(4)
GSI                  —              —             —              5.8           (143.5 )        (1.47 )
acquisition^(5)
                                                                                                                
As reported       $   693.2        $  522.1        $ 5.30         $  610.3        $ 583.3         $ 5.95  
                                                                                                                
^(1) Net income and net income per share amounts are after tax.
^(2) During the fourth quarter of 2012, the Company recorded a non-cash tax gain associated with the
recognition of certain U.S. deferred tax assets from the reversal of its U.S. deferred tax valuation allowance  
and the recognition of certain U.S. research and development tax credits.                                       
^(3) In accordance with ASC 350, “Intangibles - Goodwill and Other,” the Company conducted an impairment
analysis of its Chinese harvesting business during the fourth quarter of 2012. As a result of its analysis, the 
Company concluded that the goodwill and certain other intangible assets were impaired and recorded an           
impairment charge of $22.4 million.                                                                             
^(4) The restructuring and other infrequent income recorded during 2011 related primarily to a reversal of
approximately $0.9 million of previously accrued legally required severance payments associated with the        
rationalization of the Company’s French operations.                                                             
^(5) During the fourth quarter of 2011, the Company recorded a tax gain of $149.3 million and acquisition
expenses of $5.8 million associated with the GSI acquisition.                                                   
                                                                                                                
                                                                                                                

This earnings release discloses the percentage change in regional net sales
due to the impact of currency translation. The following table sets forth, for
the three months and year ended December 31, 2012, the impact to net sales of
currency translation by geographical segment (in millions, except
percentages):

                      Three Months Ended                        Change due to currency
                       December 31,                                  translation
                                                       %
                        2012        2011        change         $          %     
                                                       from
                                                       2011
                                                                                               
North America          $ 652.3         $ 598.7         9.0  %        $ 3.5            0.6   %
South America            511.9           448.5         14.1 %          (71.1  )       (15.9 )%
Europe/Africa/Middle     1,406.5         1,381.6       1.8  %          (32.2  )       (2.3  )%
East
Asia/Pacific            132.7          89.0          49.1 %         (0.3   )       (0.3  )%
                                                                                               
                       $ 2,703.4       $ 2,517.8       7.4  %        $ (100.1 )       (4.0  )%
                                                                                               
                       Years Ended                                   

                       December 31,                                  Change due to currency
                                                                     translation
                                                       %
                        2012           2011          change         $             %     
                                                       from
                                                       2011
                                                                                               
North America          $ 2,584.4       $ 1,770.6       46.0 %        $ (11.6  )       (0.7  )%
South America            1,855.7         1,871.5       (0.8 )%         (295.5 )       (15.8 )%
Europe/Africa/Middle     5,073.7         4,847.2       4.7  %          (357.7 )       (7.4  )%
East
Asia/Pacific            448.4          283.9         57.9 %         (7.9   )       (2.8  )%
                                                                                               
                       $ 9,962.2       $ 8,773.2       13.6 %        $ (672.7 )       (7.7  )%
                                                                                               
                                                                                               

This earnings release discloses the percentage change in regional net sales
due to the impact of acquisitions. The following table sets forth, for the
three months and year ended December 31, 2012, the impact to net sales of
acquisitions by geographical segment (in millions, except percentages):

                      Three Months Ended                        Change due to
                       December 31,                                  acquisitions
                                                       %
                        2012        2011        change         $        %    
                                                       from
                                                       2011
                                                                                          
North America          $ 652.3         $ 598.7         9.0  %        $ 61.1        10.2 %
South America            511.9           448.5         14.1 %          9.8         2.2  %
Europe/Africa/Middle     1,406.5         1,381.6       1.8  %          10.5        0.8  %
East
Asia/Pacific            132.7          89.0          49.1 %         19.5        21.9 %
                                                                                          
                       $ 2,703.4       $ 2,517.8       7.4  %        $ 100.9       4.0  %
                                                                                          
                                                                                          
                       Years Ended                                   Change due to
                       December 31,                                  acquisitions
                                                       %
                        2012           2011          change         $           %    
                                                       from
                                                       2011
                                                                                          
North America          $ 2,584.4       $ 1,770.6       46.0 %        $ 475.7       26.9 %
South America            1,855.7         1,871.5       (0.8 )%         87.5        4.7  %
Europe/Africa/Middle     5,073.7         4,847.2       4.7  %          104.7       2.2  %
East
Asia/Pacific            448.4          283.9         57.9 %         106.4       37.5 %
                                                                                          
                       $ 9,962.2       $ 8,773.2       13.6 %        $ 774.3       8.8  %
                                                                                          
                                                                                          

The following is a reconciliation of free cash flow to net cash provided by
operating activities for the years ended December 31, 2012 and 2011 (in
millions):

                                              2012        2011   
                                                                            
Net cash provided by operating activities       $ 666.4          $ 725.9
Less:
Capital expenditures                             (340.5 )        (300.4 )
Free cash flow                                  $ 325.9         $ 425.5  

Contact:

AGCO
Greg Peterson, 770-232-8229
Director of Investor Relations
greg.peterson@agcocorp.com
 
Press spacebar to pause and continue. Press esc to stop.