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AGCO Reports Fourth Quarter Results

  AGCO Reports Fourth Quarter Results   Sales and Margin Improvement Produce Record Full Year Earnings per Share of                                     $6.01  Business Wire  DULUTH, Ga. -- February 4, 2014  AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and distributor of agricultural equipment, reported net sales of approximately $2.9 billion during the fourth quarter of 2013, an increase of approximately 5.8% compared to net sales of $2.7 billion for the fourth quarter of 2012. Reported net income for the fourth quarter of 2013 was $1.40 per share. These results compare to reported and adjusted net income of $1.04 and $0.99 per share, respectively, for the fourth quarter of 2012. Adjusted net income for the fourth quarter of 2012 excluded a non-cash intangible asset impairment charge of approximately $22.4 million as well as a non-cash tax gain of approximately $26.9 million from the recognition of U.S. deferred tax assets. Excluding an unfavorable currency translation impact of approximately 0.3%, net sales in the fourth quarter of 2013 increased approximately 6.1% compared to the fourth quarter of 2012.  Net sales for the full year of 2013 were approximately $10.8 billion, an increase of approximately 8.3% compared to the same period in 2012. For the full year of 2013, reported net income was $6.01 per share. This result compares to reported and adjusted net income of $5.30 and $5.25 per share, respectively, for the full year of 2012. Excluding an unfavorable impact of currency translation of approximately 1.2%, net sales for the full year of 2013 increased approximately 9.5% compared to 2012.  Fourth Quarter and Full Year Highlights    *Fourth quarter regional sales results^(1): Europe/Africa/ Middle East     (“EAME”) +10%; Asia/Pacific (“APAC”) +6%; North America +2%; South America     +1%;   *Adjusted operating margins in 2013 improved over 160 basis points in the     fourth quarter and nearly 120 basis points for the full year vs.     comparable 2012 periods   *Full year regional operating margin performance: North America 11.8%,     South America 10.4%, EAME 10.2%, APAC 0.1%   *Announced $500 million share repurchase program in December   *2014 earnings per share guidance remains at approximately $6.00 per share  ^(1)Excludes currency translation impact. See reconciliation of non-GAAP measures in Appendix.  “AGCO closed the year with a solid fourth quarter, making 2013 a record year for both sales and earnings,” stated Martin Richenhagen, Chairman, President and Chief Executive Officer. “We continue to take advantage of healthy market conditions by leveraging our global footprint and our well-positioned brands. Strong sales performance and steady progress with our profitability improvement efforts produced margin expansion in 2013. We generated over $400 million of free cash flow in 2013 while making heavy investments in plant productivity, new products and tier 4 emission requirements. Our strong cash generation will allow us to continue making strategic investments in improved technology and production capabilities while returning cash to our shareholders. AGCO’s record earnings and consistent cash flow generation over the last three years has strengthened our balance sheet and positioned the Company for continued success.”  Market Update  Industry Unit Retail Sales                                 Tractors            Combines Year ended December 31, 2013       Change from           Change from                                    Prior Year Period     Prior Year Period                                                           North America                      9            %        8            % South America                      17           %        35           % Western Europe                     (1      )    %        (10     )    %                                                                         “Crop production improved to more normal levels and farm income remained strong across most of the developed farm markets during 2013,” stated Mr. Richenhagen. “Improved yields in North America and high levels of farm income supported industry sales. In Western Europe, favorable farm economics in France and Germany supported industry demand, while market conditions remained soft in the weather-impacted regions of the United Kingdom and parts of Northern Europe. Attractive soft commodity prices, improved harvests and supportive government financing programs all contributed to market strength in Brazil. In 2014, industry demand is expected to weaken due to lower commodity prices and reduced farm income. Our long-term view remains positive as increasing global demand for commodities driven by biofuel use, the growing world population and increasing emerging market protein consumption are expected to support elevated farm income and healthy conditions in our industry.”  Regional Results  AGCO Regional Net Sales (in millions)                                                                                                                                 % change from                                                        Change       2012 due to                                                       from         currency                            2013                         2012         translation^(1)                                           2012                                                                       Three months ended December 31 North America              $ 658.1        $ 652.3       0.9    %     (0.6     )  % South America                461.7          511.9       (9.8 ) %     (10.3    )  % Europe/Africa/Middle         1,602.9        1,406.5     14.0   %     3.8         % East Asia/Pacific                137.0         132.7       3.2    %     (3.1     )  % Total                      $ 2,859.7      $ 2,703.4     5.8   %     (0.3     )  % Year ended December 31 North America              $ 2,757.8      $ 2,584.4     6.7    %     (0.3     )  % South America                2,039.7        1,855.7     9.9    %     (11.9    )  % Europe/Africa/Middle         5,481.5        5,073.7     8.0    %     2.3         % East Asia/Pacific                507.9         448.4       13.3   %     (2.1     )  % Total                      $ 10,786.9     $ 9,962.2     8.3   %     (1.2     )  % ^(1) See Footnotes for additional disclosure   North America  North American net sales grew 7.0% during the full year of 2013 compared to 2012, excluding the negative impact of currency translation. Sales were strongest in the row crop segment, with the most significant increases in sprayers, high horsepower tractors, grain storage products and implements. Increased sales, a favorable product mix and margin improvement initiatives all contributed to growth in income from operations of $66.0 million for the full year of 2013 compared to the same period in 2012.  South America  AGCO’s South American net sales grew 21.8% in the full year of 2013 compared to the same period in 2012, excluding the negative impact of currency translation. Sales were higher in both Brazil and Argentina, with growth mainly in high horsepower tractors, sprayers and grain storage products. Operating margins improved approximately 170 basis points for the full year of 2013 compared to 2012 due to higher sales, a richer mix of products and the benefit of cost-reduction initiatives. Income from operations increased $51.1 million for the full year of 2013 compared to 2012.  EAME  Net sales in AGCO’s EAME region improved by 5.7% in the full year of 2013 compared to the full year of 2012 on a constant currency basis. Improved production capacity at the Fendt facility in Germany generated most of the increase. Higher sales in France and Germany were partially offset by declines in Central and Eastern Europe. EAME’s income from operations increased $83.3 million for the full year of 2013 compared to 2012. The benefit of higher sales and improved production efficiency contributed to the increase.  Asia/Pacific  Net sales in the Asia/Pacific region were 15.4% higher in the full year of 2013 compared to the same period in 2012, excluding the negative impact of currency translation. Growth in China, East Asia and Australia produced most of the increase. Income from operations in the Asia/Pacific region declined by $9.7 million in the full year of 2013 compared to the same period in 2012. The benefit of higher sales was offset by increased market development costs in China.  Outlook  Lower commodity prices relative to 2013 are expected to result in reduced farm income and softer industry demand across the developed agricultural equipment markets in 2014. AGCO is projecting net sales in a range from $10.8 billion to $11.0 billion, with forecasted pricing benefits and market share improvements offsetting the impact of the expected industry decline. Improved gross margins compared to 2013 levels are expected to be offset by higher engineering and market development costs. Based on these assumptions, AGCO is targeting earnings per share of approximately $6.00 during 2014.  “2014 will be a challenging year for our industry,” stated Mr. Richenhagen. “With modest declines in demand expected across most markets, we will focus on managing working capital while we continue to execute on our strategic initiatives. We expect to continue investing in new products and technology, as well as devoting significant resources to enhance our presence in the CIS region, China and Africa. Our plans in 2014 also include investing in our production facilities to improve efficiency as well as in higher technology products that will make farmers more productive and more profitable.”                                      *****  AGCO will be hosting a conference call with respect to this earnings announcement at 10:00 a.m. Eastern Time on Tuesday, February 4, 2014. 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 and productivity, global grain consumption, commodity prices, population levels, margin improvements, investments in production facilities and product development, industry demand, market development and engineering expenses, inventory levels, cash flow levels and general economic conditions, 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.   *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 2013, 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 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 and systems upgrades at     our manufacturing facilities, 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 December31,2012 and subsequent Form 10-Qs. 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 five core machinery brands, Challenger®, Fendt®, Massey Ferguson®, Valtra® and GSI®, and are distributed globally through 3,100 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 2013, AGCO had net sales of $10.8 billion. For more information, see 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, 2013     December 31, 2012 ASSETS Current Assets: Cash and cash equivalents              $   1,047.2           $   781.3 Accounts and notes receivable,         940.6                 924.6 net Inventories, net                       2,016.1               1,703.1 Deferred tax assets                    241.2                 243.5 Other current assets                   272.0                302.2          Total current assets                   4,517.1               3,954.7 Property, plant and equipment,         1,602.3               1,406.1 net Investment in affiliates               416.1                 390.3 Deferred tax assets                    24.4                  40.0 Other assets                           134.6                 131.2 Intangible assets, net                 565.6                 607.1 Goodwill                               1,178.7              1,192.4        Total assets                           $   8,438.8          $   7,721.8                                                                  LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Current portion of long-term           $   110.5             $   59.1 debt Convertible senior subordinated        201.2                 192.1 notes Accounts payable                       960.3                 888.3 Accrued expenses                       1,389.2               1,226.5 Other current liabilities              150.8                98.8           Total current liabilities              2,812.0               2,464.8 Long-term debt, less current           938.5                 1,035.6 portion Pensions and postretirement            246.4                 331.6 health care benefits Deferred tax liabilities               251.2                 242.7 Other noncurrent liabilities           145.9                149.1          Total liabilities                      4,394.0              4,223.8                                                                      Temporary equity                       —                     16.5 Stockholders’ equity: AGCO Corporation stockholders’ equity: Common stock                           1.0                   1.0 Additional paid-in capital             1,117.9               1,082.9 Retained earnings                      3,402.0               2,843.7 Accumulated other comprehensive        (510.7        )       (479.4        ) loss Total AGCO Corporation                 4,010.2               3,448.2 stockholders’ equity Noncontrolling interests               34.6                 33.3           Total stockholders’ equity             4,044.8              3,481.5        Total liabilities, temporary           $   8,438.8          $   7,721.8    equity and 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,                                                2013               2012                                                                      Net sales                                      $  2,859.7           $  2,703.4 Cost of goods sold                             2,268.7             2,175.6 Gross profit                                   591.0                527.8                                                                      Selling, general and administrative            295.2                284.5 expenses Engineering expenses                           86.7                 89.6 Impairment charge                              —                    22.4 Amortization of intangibles                    11.9                12.4                                                                      Income from operations                         197.2                118.9                                                                      Interest expense, net                          17.8                 14.1 Other expense, net                             14.9                10.5                                                                      Income before income taxes and equity in       164.5                94.3 net earnings of affiliates                                                                      Income tax provision                           38.7                6.9                                                                      Income before equity in net earnings of        125.8                87.4 affiliates                                                                      Equity in net earnings of affiliates           11.1                13.6                                                                      Net income                                     136.9                101.0                                                                      Net loss attributable to noncontrolling        2.4                 1.5 interests                                                                      Net income attributable to AGCO                $  139.3            $  102.5 Corporation and subsidiaries                                                                      Net income per common share attributable to AGCO Corporation and subsidiaries: Basic                                          $  1.43             $  1.06 Diluted                                        $  1.40             $  1.04 Cash dividends declared and paid per           $  0.10             $  — common share                                                                      Weighted average number of common and common equivalent shares outstanding: Basic                                          97.4                96.9 Diluted                                        99.7                98.5                                                                                                                                           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,                                                     2013           2012                                                                       Net sales                                           $ 10,786.9       $ 9,962.2 Cost of goods sold                                  8,396.3         7,839.0 Gross profit                                        2,390.6          2,123.2                                                                       Selling, general and administrative expenses        1,088.7          1,041.2 Engineering expenses                                353.4            317.1 Impairment charge                                   —                22.4 Amortization of intangibles                         47.8            49.3                                                                       Income from operations                              900.7            693.2                                                                       Interest expense, net                               58.0             57.6 Other expense, net                                  40.1            34.8                                                                       Income before income taxes and equity in net        802.6            600.8 earnings of affiliates                                                                       Income tax provision                                258.5           137.9                                                                       Income before equity in net earnings of             544.1            462.9 affiliates                                                                       Equity in net earnings of affiliates                48.2            53.5                                                                       Net income                                          592.3            516.4                                                                       Net loss attributable to noncontrolling             4.9             5.7 interests                                                                       Net income attributable to AGCO Corporation         $ 597.2         $ 522.1 and subsidiaries                                                                       Net income per common share attributable to AGCO Corporation and subsidiaries: Basic                                               $ 6.14          $ 5.38 Diluted                                             $ 6.01          $ 5.30 Cash dividends declared and paid per common         $ 0.40          $ — share                                                                       Weighted average number of common and common equivalent shares outstanding: Basic                                               97.3            97.1 Diluted                                             99.4            98.6                                                                       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,                                                      2013          2012                                                                       Cash flows from operating activities: Net income                                           $ 592.3         $ 516.4 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation                                         211.6           180.6 Deferred debt issuance cost amortization             3.5             3.5 Impairment charge                                    —               22.4 Amortization of intangibles                          47.8            49.3 Amortization of debt discount                        9.2             8.7 Stock compensation                                   34.6            36.8 Equity in net earnings of affiliates, net of         (19.0     )     (25.7   ) cash received Deferred income tax provision (benefit)              21.7            (36.4   ) Other                                                0.3             0.6 Changes in operating assets and liabilities, net of effects from purchase of businesses: Accounts and notes receivable, net                   (36.2     )     40.6 Inventories, net                                     (356.9    )     (160.9  ) Other current and noncurrent assets                  7.0             (71.8   ) Accounts payable                                     54.7            (61.7   ) Accrued expenses                                     123.4           154.5 Other current and noncurrent liabilities             103.0          9.5      Total adjustments                                    204.7          150.0    Net cash provided by operating activities            797.0          666.4    Cash flows from investing activities: Purchases of property, plant and equipment           (391.8    )     (340.5  ) Proceeds from sale of property, plant and            2.6             0.9 equipment Purchase of businesses, net of cash acquired         (9.5      )     (2.9    ) Investments in consolidated affiliates, net of       —               (20.1   ) cash acquired (Sale of) investments in unconsolidated              (10.0     )     (15.8   ) affiliates, net Restricted cash and other                            —              3.7      Net cash used in investing activities                (408.7    )     (374.7  ) Cash flows from financing activities: Payment of debt obligations, net                     (58.1     )     (222.5  ) Payment of debt issuance costs                       (0.1      )     (0.2    ) Payment of minimum tax withholdings on stock         (17.0     )     (0.3    ) compensation Excess tax benefit related to stock                  11.4            — compensation Payment of dividends to stockholders                 (38.9     )     — Purchases and retirement of common stock             (1.0      )     (17.6   ) (Distribution to) investments by                     (3.1      )     (1.0    ) noncontrolling interests, net Net cash used in financing activities                (106.8    )     (241.6  ) Effects of exchange rate changes on cash and         (15.6     )     6.8      cash equivalents Increase in cash and cash equivalents                265.9           56.9 Cash and cash equivalents, beginning of year         781.3          724.4    Cash and cash equivalents, end of year               $ 1,047.2      $ 781.3                                                                                See accompanying notes to condensed consolidated financial statements.                                                                                 AGCO CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in millions, except share amounts and per share data)  1. STOCK COMPENSATION EXPENSE The Company recorded stock compensation expense as follows:                                                                                                                                     Three Months Ended December       Years Ended December                        31,                               31,                        2013           2012             2013         2012 Cost of goods          $  —             $  0.5           $  2.3         $ 2.4 sold Selling, general and                    0.7             7.5             32.6          34.6 administrative expenses Total stock compensation           $  0.7          $  8.0          $  34.9       $ 37.0 expense                                                                              2. INDEBTEDNESS Indebtedness at December 31, 2013 and 2012 consisted of the following:                                                                                                                                                              December 31, 2013     December 31, 2012 1¼% Convertible senior                 $    201.2            $   192.1 subordinated notes due 2036 4½% Senior term loan due 2016          275.0                 264.2 5⅞% Senior notes due 2021              300.0                 300.0 Credit facility, expires 2016          360.0                 465.0 Other long-term debt                   114.0                65.5                                                  1,250.2               1,286.8 Less: Current portion of               (110.5        )       (59.1         ) long-term debt 1¼% Convertible senior                 (201.2        )       (192.1        ) subordinated notes due 2036 Total indebtedness, less current       $    938.5           $   1,035.6    portion                                                                              Holders of the Company’s 1¼% convertible senior subordinated notes had the right to require the Company to repurchase the notes at a repurchase price of 100% of their principal amount, plus any interest, on December 15, 2013. No notes were tendered for repurchase. In addition, holders may convert the notes if, during any fiscal quarter, the closing sales price of the Company’s common stock exceeds 120% of the conversion price of $40.44 per share for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter. As of December31, 2013, the closing sales price of the Company’s common stock had 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 December31, 2013, and, therefore, the holders of the notes may convert the notes during the three months ending March31, 2014. Due to the ability of the holders of the notes to convert the notes during the three months ending March 31, 2014, the Company classified the notes as a current liability as of December 31, 2013. As of December31, 2012, the Company classified the notes as a current liability due to the redemption feature of the notes. The Company classified approximately $9.2 million of the equity component of the 1¼% convertible senior subordinated notes as “Temporary equity” as of December 31, 2012. The amount classified as “Temporary equity” was measured as the excess of (i) the amount of cash that would be required to be paid upon conversion over (ii) the current carrying amount of the liability-classified component. As of December 31, 2013, the amount of principal cash required to be repaid upon conversion of the 1¼% convertible senior subordinated notes was equivalent to the carrying amount of the liability-classified component. Future classification of the notes between current liabilities and long-term debt will be dependent on the closing sales price of the Company’s common stock during future quarters, until the fourth quarter of 2015.  In December 2013, holders of the Company's 1¼% convertible senior subordinated notes converted less than $0.1 million of principal amount of the notes. The Company issued 286 shares associated with the less than $0.1 million excess conversion value of the notes.   3. INVENTORIES Inventories at December 31, 2013 and 2012 were as follows:                                                                                                                                                  December 31, 2013    December 31, 2012 Finished goods                     $   775.7             $     598.5 Repair and replacement parts       550.2                 505.6 Work in process                    109.0                 137.5 Raw materials                      581.2                461.5 Inventories, net                   $   2,016.1          $     1,703.1                                                                  4. ACCOUNTS RECEIVABLE SALES AGREEMENTS  At December31, 2013 and 2012, 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 December31, 2013 and 2012, the cash received from receivables sold under the U.S., Canadian and European accounts receivable sales agreements was approximately $1.3 billion and $1.1 billion, 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 $6.8 million and $25.6 million during the three months and year ended December31, 2013, 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 December31, 2012, respectively.  The Company’s retail finance joint ventures in Brazil and Australia also provide wholesale financing to the Company’s dealers. As of December31, 2013 and 2012, these retail finance joint ventures had approximately $68.2 million and $100.6 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 December31, 2013 and 2012 is as follows:                                                                             Three Months Ended          Years Ended December 31,                           December 31,                           2013        2012          2013           2012                                                                         Basic net income per share: Net income attributable to           $ 139.3      $ 102.5      $  597.2        $ 522.1 AGCO Corporation and subsidiaries Weighted average number of common          97.4         96.9         97.3            97.1 shares outstanding                                                                         Basic net income per share attributable to           $ 1.43       $ 1.06       $  6.14         $ 5.38 AGCO Corporation and subsidiaries                                                                         Diluted net income per share: Net income attributable to           $ 139.3      $ 102.5      $  597.2        $ 522.1 AGCO Corporation and subsidiaries                                                                         Weighted average number of common          97.4          96.9          97.3             97.1 shares outstanding Dilutive stock-settled appreciation rights       0.7           1.0           0.8              1.0 and performance share awards Weighted average assumed conversion of contingently           1.6          0.6          1.3             0.5 convertible senior subordinated notes Weighted average number of common shares and common share equivalents outstanding for           99.7         98.5         99.4            98.6 purposes of computing diluted net income per share                                                                         Diluted net income per share attributable to           $ 1.40       $ 1.04       $  6.01         $ 5.30 AGCO Corporation and subsidiaries                                                                            6. SEGMENT REPORTING  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 December31, 2013 and 2012 are as follows:                                                                      Three Months           North        South        Europe/Africa/ Ended            America      America      Middle East        Asia/Pacific     Consolidated December 31, 2013 Net sales        $ 658.1      $ 461.7      $    1,602.9       $  137.0         $   2,859.7 Income (loss)           54.1         32.8         155.2              (1.6      )      240.5 from operations                                                                                 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                                                                                                                                                          Years Ended            North          South          Europe/Africa/     Asia/Pacific     Consolidated December         America        America        Middle East 31,                                                                                     2013 Net sales        $ 2,757.8      $ 2,039.7      $    5,481.5       $    507.9       $  10,786.9 Income from             325.9          212.7          558.2              0.5              1,097.3 operations                                                                                     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                                                                                      A reconciliation from the segment information to the consolidated balances for income from operations is set forth below:                                                                      Three Months Ended December      Years Ended December 31,                     31,                     2013             2012          2013          2012 Segment income from         $  240.5           $ 192.8       $ 1,097.3       $ 906.6 operations Corporate           (30.7     )        (31.6   )     (116.2    )     (107.1  ) expenses Stock compensation        (0.7      )        (7.5    )     (32.6     )     (34.6   ) expense Impairment          —                  (22.4   )     —               (22.4   ) charge Amortization of                  (11.9     )        (12.4   )     (47.8     )     (49.3   ) intangibles Consolidated income from         $  197.2          $ 118.9      $ 900.7        $ 693.2  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 December31, 2013 and 2012 (in millions, except per share data):                      Three months ended December 31,                       2013                                      2012                       Income                        Net           Income                        Net                       From         Net          Income        From         Net          Income                       Operations     Income^(1)     Per           Operations     Income^(1)     Per                                                     Share^(1)                                   Share^(1)                                                                                                  As adjusted           $  197.2       $  139.3       $  1.40       $  141.3       $  98.0        $  0.99 Tax                   —              —              —             —              (26.9    )     (0.27   ) adjustments^(2) Impairment            —             —             —            22.4          22.4          0.22     charge^(3)                                                                                                  As reported           $  197.2      $  139.3      $  1.40      $  118.9      $  102.5      $  1.04                                                                                                                                                                                                                     ^(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.   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 December31, 2013 and 2012 (in millions, except per share data):                                           Years ended December 31,                       2013                                      2012                       Income                        Net           Income                        Net                       From         Net          Income        From         Net          Income                       Operations     Income^(1)     Per           Operations     Income^(1)     Per                                                     Share^(1)                                   Share^(1)                                                                                                  As adjusted           $  900.7       $  597.2       $  6.01       $  715.6       $  517.6       $  5.25 Tax                   —              —              —             —              (26.9    )     (0.27   ) adjustments^(2) Impairment            —             —             —            22.4          22.4          0.22     charge^(3)                                                                                                  As reported           $  900.7      $  597.2      $  6.01      $  693.2      $  522.1      $  5.30                                                                                                           ^(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.   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 December31, 2013, 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                                                            % change                            2013          2012            from         $          %                                                            2012                                                                                       North America              $ 658.1         $ 652.3         0.9    %     $ (4.0 )     (0.6  ) % South America              461.7           511.9           (9.8 ) %     (52.7  )     (10.3 ) % Europe/Africa/Middle       1,602.9         1,406.5         14.0   %     53.8         3.8     % East Asia/Pacific               137.0          132.7          3.2    %     (4.1   )     (3.1  ) %                            $ 2,859.7      $ 2,703.4      5.8   %     $ (7.0 )     (0.3  ) %                                                                                                                                                                                           Years Ended December 31,                    Change due to currency                                                                        translation                                                             %                            2013           2012            change     $            %                                                             from                                                             2012                                                                                        North America              $ 2,757.8        $ 2,584.4       6.7  %     $ (7.7   )     (0.3  ) % South America              2,039.7          1,855.7         9.9  %     (220.2   )     (11.9 ) % Europe/Africa/Middle       5,481.5          5,073.7         8.0  %     115.9          2.3     % East Asia/Pacific               507.9           448.4          13.3 %     (9.5     )     (2.1  ) %                                                                                                                   $ 10,786.9      $ 9,962.2      8.3  %     $ (121.5 )     (1.2  ) %                                                                                                 The following is a reconciliation of free cash flow to net cash provided by operating activities for the years ended December31, 2013 and 2012 (in millions):                                                                                               Years Ended December 31,                                                 2013         2012                                                                 Net cash provided by operating activities       $  797.0       $ 666.4 Less: Capital expenditures                            (391.8   )     (340.5  ) Free cash flow                                  $  405.2      $ 325.9                                                                           Contact:  AGCO, Your Agriculture Company Greg Peterson, 770-232-8229 Director of Investor Relations greg.peterson@agcocorp.com