Company Achieves Full Year Adjusted EPS of $3.24 and Reported EPS of
$3.06
DULUTH, Ga.--(BUSINESS WIRE)--Feb. 2, 2016--
AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide manufacturer and
distributor of agricultural equipment, reported net sales of
approximately $2.0 billion for the fourth quarter of 2015, a decrease of
approximately 21.2% compared to net sales of approximately $2.5 billion
for the fourth quarter of 2014. Reported net income was $0.73 per share
and adjusted net income, excluding restructuring and other infrequent
expenses, was $0.80 per share for the fourth quarter of 2015. These
results compare to reported net income of $0.85 per share and adjusted
net income, excluding restructuring and other infrequent expenses, of
$1.18 per share for the fourth quarter of 2014. Excluding unfavorable
currency translation impacts of approximately 11.5%, net sales in the
fourth quarter of 2015 decreased approximately 9.6% compared to the
fourth quarter of 2014.
Net sales for the full year of 2015 were approximately $7.5 billion, a
decrease of approximately 23.2% compared to 2014. Excluding the
unfavorable impact of currency translation of approximately 13.0%, net
sales for the full year of 2015 decreased approximately 10.2% compared
to 2014. For the full year of 2015, reported net income was $3.06 per
share and adjusted net income, excluding restructuring and other
infrequent expenses, was $3.24 per share. These results compare to
reported net income of $4.36 per share and adjusted net income,
excluding restructuring and other infrequent expenses, of $4.70 per
share for the full year of 2014.
Fourth Quarter and Full Year Highlights
-
Fourth quarter regional sales results(1): North America
(18.9)%, Europe/Africa/Middle East (“EAME”) 0.9%, South America
(33.9)%, Asia/Pacific (“APAC”) (4.5)%
-
Fourth quarter regional operating margin performance: EAME 10.9%,
North America 1.6%, South America (2.3)%, APAC (1.8)%
-
Inventory reduction of $134 million compared to year-end 2014 on a
constant currency basis
-
Generated over $300 million in free cash flow in 2015
-
Share repurchase program resulted in reduction of 5.5 million shares
during 2015
-
Quarterly dividend increased 8% to $0.13 per share effective first
quarter 2016
-
Full-year earnings per share forecast for 2016 remains at
approximately $2.30
(1) As compared to fourth quarter 2014,
excludes currency translation impact. See reconciliation of
Non-GAAP measures in appendix.
“In the midst of challenging market conditions, we worked aggressively
in 2015 to better align our costs and working capital with the weaker
demand environment,” stated Martin Richenhagen, AGCO’s Chairman,
President and Chief Executive Officer. “Focused inventory reduction
efforts contributed to the generation of over $300 million in free cash
flow. In addition, our cost reduction actions were implemented while
maintaining key investments in new products. The benefits of our product
development efforts can be seen through the extensive list of awards
that AGCO received during 2015. Most recently, we earned three
machine-of-the-year awards at Agritechnica, the world’s largest indoor
farm show in Hannover, Germany, for the Fendt 1000, the Valtra N series
and the Massey Ferguson 5713 tractors. Looking forward to 2016, market
conditions are expected to remain challenging in key markets. In
addition to diligent cost management, we will be concentrating on
initiatives that will drive long-term benefits and raise the efficiency
of our factories, improve our service levels and strengthen our product
offering.”
Market Update
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Industry Unit Retail Sales
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Tractors
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Combines
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Change from
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Change from
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Year ended December 31, 2015
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Prior Year Period
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Prior Year Period
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North America(1)
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(13)%
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(28)%
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South America
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(28)%
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(39)%
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Western Europe
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(4)%
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(10)%
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(1)Excludes compact tractors.
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“Crop production reached near-record levels for a third consecutive
year, contributing to higher grain inventories in 2015 and putting
additional pressure on global farm economics,” continued Mr.
Richenhagen. “Lower farmer income weakened demand for farm equipment
across the major markets. In North America, industry sales progressively
declined throughout the year. Sales declines were most pronounced in the
row crop sector, with significantly lower industry retail sales of
high-horsepower tractors, combines and sprayers. Industry retail demand
declines from 2014 levels were less significant in Western Europe. While
poor economics for dairy producers pressured demand, sales in the arable
farming sector also remained soft due to lower commodity prices.
Declines were most pronounced in the United Kingdom, Finland and
Germany. Industry demand in South America deteriorated significantly
throughout the year with fourth quarter industry unit retail tractor
sales down 40% from the fourth quarter of 2014. In Brazil, demand was
extremely low due to weakness in the general economy, funding
interruptions in the government financing program and softness in the
sugar sector. We expect difficult global industry conditions to persist
through 2016, with farmers delaying purchases and industry inventory
levels being managed down. Despite the current market difficulties, our
long-term view remains positive as increasing global demand for
commodities driven by the growing world population, rising emerging
market protein consumption and biofuel use, are expected to support
elevated farm income and healthy conditions in our industry.”
Regional Results
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AGCO Regional Net Sales (in millions)
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% change from
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2014 due to
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% change
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currency
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Three Months Ended December 31,
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2015
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2014
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from 2014
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translation(1)
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North America
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$
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434.5
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$
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549.2
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(20.9)%
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(2.0)%
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South America
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188.3
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414.6
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(54.6)%
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(20.7)%
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Europe/Africa/Middle East
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1,211.9
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1,374.7
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(11.8)%
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(12.7)%
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Asia/Pacific
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124.3
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146.7
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(15.3)%
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(10.8)%
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Total
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$
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1,959.0
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$
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2,485.2
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(21.2)%
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(11.5)%
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% change from
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% change
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2014 due to
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from
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currency
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Years Ended December 31,
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2015
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2014
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2014
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translation(1)
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North America
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$
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1,965.0
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$
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2,414.2
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(18.6)%
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(2.3)%
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South America
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949.0
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1,663.4
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(42.9)%
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(21.2)%
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Europe/Africa/Middle East
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4,151.3
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5,158.5
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(19.5)%
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(15.5)%
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Asia/Pacific
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402.0
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487.6
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(17.6)%
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(12.1)%
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Total
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$
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7,467.3
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$
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9,723.7
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(23.2)%
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(13.0)%
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(1) See Footnotes for additional disclosures
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North America
Net sales in the North American region decreased 16.3% in the full year
of 2015 compared to 2014, excluding the negative impact of currency
translation. Weaker industry demand and dealer inventory reduction
efforts contributed to lower sales. Sales declines in sprayers,
implements and combines were partially offset by growth in sales of
protein production products. Lower sales and production volumes and a
weaker sales mix contributed to a reduction in income from operations of
approximately $95.8 million for the full year of 2015 compared to 2014.
South America
Excluding unfavorable currency translation impacts, AGCO’s South
American net sales decreased 21.8% in the full year of 2015 compared to
2014. Reduced sales in Brazil, due to weak industry conditions, were
partially offset by sales growth in Argentina and other South American
markets. Income from operations decreased approximately $99.6 million
for the full year of 2015 compared to 2014 due to lower sales and
production volumes, the negative impact of currency translation, and a
weaker mix of sales.
Europe/Africa/Middle East
EAME net sales declined 4.0% in the full-year of 2015 compared to 2014,
excluding unfavorable currency translation impacts, largely due to
softer end-market demand. Declines in Germany, Africa and Scandinavia
were partially offset by growth in France and Turkey. Income from
operations decreased approximately $83.5 million for the full year of
2015 compared to 2014 due to lower sales and production volumes as well
as unfavorable currency translation impacts. Full-year operating margins
were improved, benefiting from operational efficiencies, cost reduction
initiatives and new product sales.
Asia/Pacific
AGCO’s APAC net sales, excluding the negative impact of currency
translation, declined 5.5% in the full year of 2015 compared to 2014.
Losses from operations increased approximately $16.1 million in the full
year of 2015 compared to 2014 due to lower sales and increased market
development costs in China.
Outlook
Softer industry demand for farm equipment across all regions and the
unfavorable effects of foreign currency translation are expected to
negatively impact AGCO’s sales and earnings for 2016. AGCO’s 2016 net
sales are expected to reach approximately $7.0 billion. Gross and
operating margins are projected to be below 2015 levels due to the
impact of lower sales and production volumes, a weaker sales mix and
increased investment in product development expenses. Benefits from the
Company’s cost reduction initiatives are expected to partially offset
the volume-related impacts. Based on these assumptions, 2016 earnings
per share are targeted at approximately $2.30.
* * * * *
AGCO will be hosting a conference call with respect to this earnings
announcement at 10:00 a.m. Eastern Time on Tuesday, February 2, 2016.
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, industry demand, market conditions, world
population, biofuel use and protein consumption, currency translation,
farm income levels, margin levels, industry inventory levels,
investments in product and technology development, cost reduction
initiatives, production volumes, 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.
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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. Our joint ventures with Rabobank, which are controlled
by Rabobank and are dependent upon Rabobank for financing as well,
finance approximately 40% 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, can be expensive to obtain. To the extent
that financing is not available or available only at unattractive
prices, our sales would be negatively impacted.
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Both AGCO and our 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.
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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.
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Our success depends on the introduction of new products, particularly
engines that comply with emission requirements, which requires
substantial expenditures.
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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.
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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.
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We have a substantial amount of indebtedness, and, as a 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 December 31, 2014 and subsequent Form
10-Qs. AGCO disclaims any obligation to update any forward-looking
statements except as required by law.
* * * * *
About AGCO
AGCO (NYSE: AGCO) is a global leader in the design, manufacture and
distribution of agricultural solutions and supports more productive
farming through its full line of equipment and related services. AGCO
products are sold through five core brands, Challenger®, Fendt®, GSI®,
Massey Ferguson® and Valtra®, supported by Fuse® precision technologies
and farm optimization services, and are distributed globally through a
combination of approximately 3,000 independent dealers and distributors
in more than 140 countries. Founded in 1990, AGCO is headquartered in
Duluth, GA, USA. In 2015, AGCO had net sales of $7.5 billion. For more
information, visit http://www.AGCOcorp.com.
For company news, information and events, please follow us on Twitter:
@AGCOCorp. For financial news on Twitter, please follow the hashtag
#AGCOIR.
AGCO: 25 years of identity, centuries of history
Please visit our website at www.agcocorp.com
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AGCO CORPORATION AND SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(unaudited and in millions)
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December 31, 2015
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December 31, 2014
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ASSETS
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Current Assets:
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Cash and cash equivalents
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$
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426.7
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$
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363.7
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Accounts and notes receivable, net
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836.8
|
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|
963.8
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Inventories, net
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1,423.4
|
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|
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1,750.7
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Other current assets
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211.4
|
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232.5
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Total current assets
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2,898.3
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3,310.7
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Property, plant and equipment, net
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1,347.1
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1,530.4
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Investment in affiliates
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392.9
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424.1
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Deferred tax assets
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|
100.7
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215.9
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Other assets
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140.1
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141.1
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Intangible assets, net
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507.7
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553.8
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Goodwill
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1,114.5
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|
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1,192.8
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Total assets
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$
|
6,501.3
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$
|
7,368.8
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current Liabilities:
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Current portion of long-term debt
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$
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89.0
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$
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94.3
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Senior term loan
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217.2
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—
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Accounts payable
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625.6
|
|
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670.2
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Accrued expenses
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1,106.9
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|
|
1,244.1
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Other current liabilities
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146.7
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|
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|
208.3
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Total current liabilities
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2,185.4
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2,216.9
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Long-term debt, less current portion
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928.8
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|
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|
997.6
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Pensions and postretirement health care benefits
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233.9
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269.0
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Deferred tax liabilities
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86.4
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211.7
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Other noncurrent liabilities
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183.5
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176.7
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Total liabilities
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3,618.0
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3,871.9
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Stockholders’ Equity:
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AGCO Corporation stockholders’ equity:
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Common stock
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0.8
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0.9
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Additional paid-in capital
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301.7
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582.5
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Retained earnings
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|
3,996.0
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|
|
|
3,771.6
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Accumulated other comprehensive loss
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(1,460.2
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)
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(906.5
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)
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Total AGCO Corporation stockholders’ equity
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2,838.3
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3,448.5
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Noncontrolling interests
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45.0
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|
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|
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48.4
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Total stockholders’ equity
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2,883.3
|
|
|
|
|
3,496.9
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Total liabilities and stockholders’ equity
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$
|
6,501.3
|
|
|
|
|
$
|
7,368.8
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|
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|
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See accompanying notes to condensed consolidated financial
statements.
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AGCO CORPORATION AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(unaudited and in millions, except per share data)
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
2015
|
|
|
|
2014
|
Net sales
|
|
|
$
|
1,959.0
|
|
|
|
|
$
|
2,485.2
|
Cost of goods sold
|
|
|
1,561.6
|
|
|
|
|
1,987.2
|
Gross profit
|
|
|
397.4
|
|
|
|
|
498.0
|
Selling, general and administrative expenses
|
|
|
222.2
|
|
|
|
|
244.4
|
Engineering expenses
|
|
|
71.7
|
|
|
|
|
84.1
|
Restructuring and other infrequent expenses
|
|
|
7.7
|
|
|
|
|
43.5
|
Amortization of intangibles
|
|
|
10.5
|
|
|
|
|
10.6
|
Income from operations
|
|
|
85.3
|
|
|
|
|
115.4
|
Interest expense, net
|
|
|
13.3
|
|
|
|
|
14.9
|
Other expense, net
|
|
|
19.1
|
|
|
|
|
14.9
|
Income before income taxes and equity in net earnings of affiliates
|
|
|
52.9
|
|
|
|
|
85.6
|
Income tax provision
|
|
|
6.4
|
|
|
|
|
23.9
|
Income before equity in net earnings of affiliates
|
|
|
46.5
|
|
|
|
|
61.7
|
Equity in net earnings of affiliates
|
|
|
14.8
|
|
|
|
|
14.8
|
Net income
|
|
|
61.3
|
|
|
|
|
76.5
|
Net loss attributable to noncontrolling interests
|
|
|
0.8
|
|
|
|
|
1.1
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
62.1
|
|
|
|
|
$
|
77.6
|
Net income per common share attributable to AGCO Corporation and
subsidiaries:
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.73
|
|
|
|
|
$
|
0.85
|
Diluted
|
|
|
$
|
0.73
|
|
|
|
|
$
|
0.85
|
Cash dividends declared and paid per common share
|
|
|
$
|
0.12
|
|
|
|
|
$
|
0.11
|
Weighted average number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
84.8
|
|
|
|
90.8
|
Diluted
|
|
|
84.9
|
|
|
|
91.2
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
2015
|
|
|
|
2014
|
Net sales
|
|
|
|
$
|
7,467.3
|
|
|
|
|
$
|
9,723.7
|
Cost of goods sold
|
|
|
|
5,906.7
|
|
|
|
|
7,657.4
|
Gross profit
|
|
|
|
1,560.6
|
|
|
|
|
2,066.3
|
Selling, general and administrative expenses
|
|
|
|
852.3
|
|
|
|
|
995.4
|
Engineering expenses
|
|
|
|
282.2
|
|
|
|
|
337.0
|
Restructuring and other infrequent expenses
|
|
|
|
22.3
|
|
|
|
|
46.4
|
Amortization of intangibles
|
|
|
|
42.7
|
|
|
|
|
41.0
|
Income from operations
|
|
|
|
361.1
|
|
|
|
|
646.5
|
Interest expense, net
|
|
|
|
45.4
|
|
|
|
|
58.4
|
Other expense, net
|
|
|
|
36.3
|
|
|
|
|
49.1
|
Income before income taxes and equity in net earnings of affiliates
|
|
|
|
279.4
|
|
|
|
|
539.0
|
Income tax provision
|
|
|
|
72.5
|
|
|
|
|
187.7
|
Income before equity in net earnings of affiliates
|
|
|
|
206.9
|
|
|
|
|
351.3
|
Equity in net earnings of affiliates
|
|
|
|
57.1
|
|
|
|
|
52.9
|
Net income
|
|
|
|
264.0
|
|
|
|
|
404.2
|
Net loss attributable to noncontrolling interests
|
|
|
|
2.4
|
|
|
|
|
6.2
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
|
$
|
266.4
|
|
|
|
|
$
|
410.4
|
Net income per common share attributable to AGCO Corporation and
subsidiaries:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
3.06
|
|
|
|
|
$
|
4.39
|
Diluted
|
|
|
|
$
|
3.06
|
|
|
|
|
$
|
4.36
|
Cash dividends declared and paid per common share
|
|
|
|
$
|
0.48
|
|
|
|
|
$
|
0.44
|
Weighted average number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
87.0
|
|
|
|
|
93.4
|
Diluted
|
|
|
|
87.1
|
|
|
|
|
94.2
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
|
$
|
264.0
|
|
|
|
|
$
|
404.2
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation
|
|
|
217.4
|
|
|
|
|
239.4
|
|
Deferred debt issuance cost amortization
|
|
|
2.0
|
|
|
|
|
2.7
|
|
Amortization of intangibles
|
|
|
42.7
|
|
|
|
|
41.0
|
|
Stock compensation expense (credit)
|
|
|
12.2
|
|
|
|
|
(10.8
|
)
|
Equity in net earnings of affiliates, net of cash received
|
|
|
(24.1
|
)
|
|
|
|
(25.4
|
)
|
Deferred income tax (benefit) provision
|
|
|
(26.8
|
)
|
|
|
|
3.6
|
|
Other
|
|
|
(0.1
|
)
|
|
|
|
2.5
|
|
Changes in operating assets and liabilities, net of effects from
purchase of
businesses:
|
|
|
|
|
|
Accounts and notes receivable, net
|
|
|
3.8
|
|
|
|
|
(103.9
|
)
|
Inventories, net
|
|
|
117.6
|
|
|
|
|
111.4
|
|
Other current and noncurrent assets
|
|
|
(49.3
|
)
|
|
|
|
29.1
|
|
Accounts payable
|
|
|
36.3
|
|
|
|
|
(219.4
|
)
|
Accrued expenses
|
|
|
(34.8
|
)
|
|
|
|
(71.2
|
)
|
Other current and noncurrent liabilities
|
|
|
(36.7
|
)
|
|
|
|
35.2
|
|
Total adjustments
|
|
|
260.2
|
|
|
|
|
34.2
|
|
Net cash provided by operating activities
|
|
|
524.2
|
|
|
|
|
438.4
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(211.4
|
)
|
|
|
|
(301.5
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
1.5
|
|
|
|
|
2.8
|
|
Purchase of businesses, net of cash acquired
|
|
|
(25.4
|
)
|
|
|
|
(130.3
|
)
|
Investments in unconsolidated affiliates
|
|
|
(3.8
|
)
|
|
|
|
(3.9
|
)
|
Restricted cash and other
|
|
|
(1.7
|
)
|
|
|
|
—
|
|
Net cash used in investing activities
|
|
|
(240.8
|
)
|
|
|
|
(432.9
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from debt obligations, net
|
|
|
182.4
|
|
|
|
|
100.6
|
|
Purchases and retirement of common stock
|
|
|
(287.5
|
)
|
|
|
|
(499.7
|
)
|
Repurchase or conversion of convertible senior subordinated notes
|
|
|
—
|
|
|
|
|
(201.2
|
)
|
Payment of dividends to stockholders
|
|
|
(42.0
|
)
|
|
|
|
(40.8
|
)
|
Payment of minimum tax withholdings on stock compensation
|
|
|
(6.3
|
)
|
|
|
|
(13.2
|
)
|
Payment of debt issuance costs
|
|
|
(0.7
|
)
|
|
|
|
(1.4
|
)
|
Excess tax benefit related to stock compensation
|
|
|
0.7
|
|
|
|
|
—
|
|
Purchase of or distribution to noncontrolling interests
|
|
|
—
|
|
|
|
|
(6.1
|
)
|
Other
|
|
|
—
|
|
|
|
|
(0.2
|
)
|
Net cash used in financing activities
|
|
|
(153.4
|
)
|
|
|
|
(662.0
|
)
|
Effects of exchange rate changes on cash and cash equivalents
|
|
|
(67.0
|
)
|
|
|
|
(27.0
|
)
|
Increase (decrease) in cash and cash equivalents
|
|
|
63.0
|
|
|
|
|
(683.5
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
363.7
|
|
|
|
|
1,047.2
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
426.7
|
|
|
|
|
$
|
363.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
AGCO CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (unaudited, in millions, except share amounts,
per share data and employees)
1. STOCK COMPENSATION EXPENSE (CREDIT)
The Company recorded stock compensation expense (credit) as follows:
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Years Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
|
|
2014
|
Cost of goods sold
|
|
|
$
|
0.1
|
|
|
|
$
|
0.1
|
|
|
|
$
|
0.9
|
|
|
|
|
|
$
|
(0.9
|
)
|
Selling, general and administrative expenses
|
|
|
1.5
|
|
|
|
0.1
|
|
|
|
11.6
|
|
|
|
|
|
(9.7
|
)
|
Total stock compensation expense (credit)
|
|
|
$
|
1.6
|
|
|
|
$
|
0.2
|
|
|
|
$
|
12.5
|
|
|
|
|
|
$
|
(10.6
|
)
|
During the year ended December 31, 2014, the Company recorded a credit
of approximately $16.9 million for the reversal of previously recorded
long-term stock compensation expense.
2. RESTRUCTURING AND OTHER INFREQUENT EXPENSES
During the years ended December 31, 2015 and 2014, the Company announced
and initiated several actions to rationalize employee headcount at
various manufacturing facilities located in Europe, China, Brazil,
Argentina and the United States, as well as various administrative
offices located in Europe, Brazil, China and the United States. The
aggregate headcount reduction of approximately 2,100 employees in 2014
and 2015 was initiated in order to reduce costs in response to softening
global market demand and reduced production volumes. The Company
recorded restructuring and other infrequent expenses of approximately
$46.4 million and $22.3 million, respectively, during 2014 and 2015
associated with these rationalizations, primarily related to severance
and other related costs. Approximately $19.0 million of severance and
other related costs were paid during 2014. In addition, during 2015, the
Company paid approximately $29.5 million of severance and other related
costs. The remaining $16.9 million balance of severance and other
related costs accrued as of December 31, 2015, inclusive of
approximately $1.3 million of negative foreign currency translation
impacts, will be paid primarily during 2016.
3. INDEBTEDNESS
Indebtedness at December 31, 2015 and 2014 consisted of the following:
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
4½% Senior term loan due 2016
|
|
|
$
|
217.2
|
|
|
|
$
|
242.0
|
|
Credit facility, expires 2020
|
|
|
338.9
|
|
|
|
404.4
|
|
1.056% Senior term loan due 2020
|
|
|
217.2
|
|
|
|
—
|
|
5⅞% Senior notes due 2021
|
|
|
297.4
|
|
|
|
300.0
|
|
Other long-term debt
|
|
|
164.3
|
|
|
|
145.5
|
|
|
|
|
1,235.0
|
|
|
|
1,091.9
|
|
Less: 4½% Senior term loan due 2016
|
|
|
(217.2
|
)
|
|
|
—
|
|
Current portion of other long-term debt
|
|
|
(89.0
|
)
|
|
|
(94.3
|
)
|
Total indebtedness, less current portion
|
|
|
$
|
928.8
|
|
|
|
$
|
997.6
|
|
|
|
|
|
|
|
|
|
|
|
|
4. INVENTORIES
Inventories at December 31, 2015 and 2014 were as follows:
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
Finished goods
|
|
|
$
|
523.1
|
|
|
|
$
|
616.6
|
Repair and replacement parts
|
|
|
515.4
|
|
|
|
536.4
|
Work in process
|
|
|
97.5
|
|
|
|
130.5
|
Raw materials
|
|
|
287.4
|
|
|
|
467.2
|
Inventories, net
|
|
|
$
|
1,423.4
|
|
|
|
$
|
1,750.7
|
|
|
|
|
|
|
|
|
|
|
5. ACCOUNTS RECEIVABLE SALES AGREEMENTS
At December 31, 2015 and 2014, 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 finance joint ventures. During 2015, the
Company entered into an accounts receivable sales agreement that permits
the sale, on an ongoing basis, of its wholesale receivables in Brazil to
its Brazilian finance joint venture. As of December 31, 2015 and 2014,
the cash received from receivables sold under the U.S., Canadian,
European and Brazilian accounts receivable sales agreements was
approximately $1.1 billion and $1.2 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 $5.4 million and $18.8 million during the three
months and year ended December 31, 2015, 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 $5.8 million and $24.8 million during the three months and
year ended December 31, 2014, respectively.
The Company’s finance joint ventures in Brazil and Australia also
provide wholesale financing to the Company’s dealers. As of December 31,
2015 and 2014, these finance joint ventures had approximately $17.7
million and $43.3 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.
6. NET INCOME PER SHARE
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, 2015 and 2014 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Years Ended December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
Basic net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
62.1
|
|
|
|
$
|
77.6
|
|
|
|
$
|
266.4
|
|
|
|
$
|
410.4
|
Weighted average number of common shares outstanding
|
|
|
84.8
|
|
|
|
90.8
|
|
|
|
87.0
|
|
|
|
93.4
|
Basic net income per share attributable to AGCO Corporation and
subsidiaries
|
|
|
$
|
0.73
|
|
|
|
$
|
0.85
|
|
|
|
$
|
3.06
|
|
|
|
$
|
4.39
|
Diluted net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries
|
|
|
$
|
62.1
|
|
|
|
$
|
77.6
|
|
|
|
$
|
266.4
|
|
|
|
$
|
410.4
|
Weighted average number of common shares outstanding
|
|
|
84.8
|
|
|
|
90.8
|
|
|
|
87.0
|
|
|
|
93.4
|
Dilutive stock-settled appreciation rights, performance share awards
and restricted stock units
|
|
|
0.1
|
|
|
|
0.4
|
|
|
|
0.1
|
|
|
|
0.3
|
Weighted average assumed conversion of contingently convertible
senior subordinated notes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.5
|
Weighted average number of common shares and common share
equivalents outstanding for purposes of computing diluted net income
per share
|
|
|
84.9
|
|
|
|
91.2
|
|
|
|
87.1
|
|
|
|
94.2
|
Diluted net income per share attributable to AGCO Corporation and
subsidiaries
|
|
|
$
|
0.73
|
|
|
|
$
|
0.85
|
|
|
|
$
|
3.06
|
|
|
|
$
|
4.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share Repurchase Program
During the year ended December 31, 2015, the Company entered into
accelerated share repurchase agreements (“ASRs”) with a financial
institution to repurchase an aggregate of $287.5 million of shares of
the Company’s common stock. The Company received approximately 5,541,930
shares during the year ended December 31, 2015 related to the ASRs. All
shares received under the ASRs were retired upon receipt, and the excess
of the purchase price over par value per share was recorded to
“Additional paid-in capital” within the Company’s Condensed Consolidated
Balance Sheets.
Of the $1,050.0 million in approved share repurchase programs, the
remaining amount authorized to be repurchased is approximately $244.2
million.
7. 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 (loss) 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 (loss) from operations for one segment may not
be comparable to another segment. Segment results for the three months
and years ended December 31, 2015 and 2014 are as follows:
|
|
|
|
|
North
|
|
|
South
|
|
|
Europe/Africa/
|
|
|
Asia/
|
|
|
|
Three Months Ended December 31,
|
|
|
|
America
|
|
|
America
|
|
|
Middle East
|
|
|
Pacific
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
$
|
434.5
|
|
|
|
$
|
188.3
|
|
|
|
$
|
1,211.9
|
|
|
|
$
|
124.3
|
|
|
|
$
|
1,959.0
|
Income (loss) from operations
|
|
|
|
7.0
|
|
|
|
(4.4
|
)
|
|
|
132.7
|
|
|
|
(2.2
|
)
|
|
|
133.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
$
|
549.2
|
|
|
|
$
|
414.6
|
|
|
|
$
|
1,374.7
|
|
|
|
$
|
146.7
|
|
|
|
$
|
2,485.2
|
Income (loss) from operations
|
|
|
|
30.9
|
|
|
|
39.8
|
|
|
|
134.2
|
|
|
|
(5.9
|
)
|
|
|
199.0
|
|
|
|
|
|
North
|
|
|
South
|
|
Europe/Africa/
|
|
|
Asia/
|
|
|
|
Years Ended December 31,
|
|
|
|
America
|
|
|
America
|
|
Middle East
|
|
|
Pacific
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
$
|
1,965.0
|
|
|
|
$
|
949.0
|
|
|
|
$
|
4,151.3
|
|
|
|
$
|
402.0
|
|
|
|
$
|
7,467.3
|
Income (loss) from operations
|
|
|
|
123.4
|
|
|
|
34.4
|
|
|
|
416.7
|
|
|
|
(27.6
|
)
|
|
|
546.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
$
|
2,414.2
|
|
|
|
$
|
1,663.4
|
|
|
|
$
|
5,158.5
|
|
|
|
$
|
487.6
|
|
|
|
$
|
9,723.7
|
Income (loss) from operations
|
|
|
|
219.2
|
|
|
|
134.0
|
|
|
|
500.2
|
|
|
|
(11.5
|
)
|
|
|
841.9
|
|
A reconciliation from the segment information to the consolidated
balances for income from operations is set forth below:
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Years Ended December 31,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Segment income from operations
|
|
|
$
|
133.1
|
|
|
$
|
199.0
|
|
|
$
|
546.9
|
|
|
$
|
841.9
|
|
Corporate expenses
|
|
|
(28.1
|
)
|
|
(29.4
|
)
|
|
(109.2
|
)
|
|
(117.7
|
)
|
Stock compensation (expense) credit
|
|
|
(1.5
|
)
|
|
(0.1
|
)
|
|
(11.6
|
)
|
|
9.7
|
|
Restructuring and other infrequent expenses
|
|
|
(7.7
|
)
|
|
(43.5
|
)
|
|
(22.3
|
)
|
|
(46.4
|
)
|
Amortization of intangibles
|
|
|
(10.5
|
)
|
|
(10.6
|
)
|
|
(42.7
|
)
|
|
(41.0
|
)
|
Consolidated income from operations
|
|
|
$
|
85.3
|
|
|
$
|
115.4
|
|
|
$
|
361.1
|
|
|
$
|
646.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP MEASURES
This earnings release discloses adjusted income from operations, net
income and earnings 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 those measures to the most directly comparable GAAP measure
is included below.
The following is a reconciliation of adjusted income from operations,
net income and earnings per share to reported income from operations,
net income and earnings per share for the three months ended
December 31, 2015 and 2014 (in millions, except per share data):
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
2015
|
|
2014
|
|
|
|
Income
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
From
|
|
Net
|
|
Earnings Per
|
|
From
|
|
Net
|
|
Earnings Per
|
|
|
|
Operations
|
|
Income (1)
|
|
Share (1)
|
|
Operations
|
|
Income (1)
|
|
Share (1)
|
As adjusted
|
|
|
$
|
93.0
|
|
|
$
|
67.5
|
|
|
$
|
0.80
|
|
|
$
|
158.9
|
|
|
$
|
107.9
|
|
|
$
|
1.18
|
Restructuring and other infrequent expenses (2)
|
|
|
7.7
|
|
|
5.4
|
|
|
0.07
|
|
|
43.5
|
|
|
30.3
|
|
|
0.33
|
As reported
|
|
|
$
|
85.3
|
|
|
$
|
62.1
|
|
|
$
|
0.73
|
|
|
$
|
115.4
|
|
|
$
|
77.6
|
|
|
$
|
0.85
|
(1)
|
|
Net income and earnings per share amounts are after tax.
|
(2)
|
|
The restructuring and other infrequent expenses recorded during
the three months ended December 31, 2015 related primarily to
severance costs associated with the Company’s rationalization of
certain U.S., European and Brazilian manufacturing operations as
well as various administrative offices located in Europe, Brazil
and the United States. The restructuring and other infrequent
expenses recorded during the three months ended December 31, 2014
related primarily to severance costs associated with the Company’s
rationalization of its manufacturing facilities and administrative
offices located in Europe, Brazil, Argentina, China and the United
States.
|
The following is a reconciliation of adjusted income from operations,
net income and earnings per share to reported income from operations,
net income and earnings per share for the years ended December 31, 2015
and 2014 (in millions, except per share data):
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2015
|
|
2014
|
|
|
|
Income
|
|
|
|
|
|
Income
|
|
|
|
|
|
|
|
From
|
|
Net
|
|
Earnings Per
|
|
From
|
|
Net
|
|
Earnings Per
|
|
|
|
Operations
|
|
Income (1)
|
|
Share (1)
|
|
Operations
|
|
Income (1)
|
|
Share (1)
|
As adjusted
|
|
|
$
|
383.4
|
|
|
$
|
282.5
|
|
|
$
|
3.24
|
|
|
$
|
692.9
|
|
|
$
|
442.6
|
|
|
$
|
4.70
|
Restructuring and other infrequent expenses (2)
|
|
|
22.3
|
|
|
16.1
|
|
|
0.18
|
|
|
46.4
|
|
|
32.2
|
|
|
0.34
|
As reported
|
|
|
$
|
361.1
|
|
|
$
|
266.4
|
|
|
$
|
3.06
|
|
|
$
|
646.5
|
|
|
$
|
410.4
|
|
|
$
|
4.36
|
(1)
|
|
Net income and earnings per share amounts are after tax.
|
(2)
|
|
The restructuring and other infrequent expenses recorded during
the year ended December 31, 2015 related primarily to severance
costs associated with the Company’s rationalization of certain
U.S., European and Brazilian manufacturing operations as well as
various administrative offices located in Europe, Brazil and the
United States. The restructuring and other infrequent expenses
recorded during the year ended December 31, 2014 related primarily
to severance costs associated with the Company’s rationalization
of its manufacturing facilities and administrative offices located
in Europe, Brazil, Argentina, China and the United States.
|
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, 2015, the
impact to net sales of currency translation by geographical segment (in
millions, except percentages):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
|
Change due to currency translation
|
|
|
|
2015
|
|
2014
|
|
% change from 2014
|
|
$
|
|
%
|
North America
|
|
|
$
|
434.5
|
|
|
$
|
549.2
|
|
|
(20.9
|
)%
|
|
$
|
(10.8
|
)
|
|
(2.0
|
)%
|
South America
|
|
|
188.3
|
|
|
414.6
|
|
|
(54.6
|
)%
|
|
(85.8
|
)
|
|
(20.7
|
)%
|
Europe/Africa/Middle East
|
|
|
1,211.9
|
|
|
1,374.7
|
|
|
(11.8
|
)%
|
|
(174.5
|
)
|
|
(12.7
|
)%
|
Asia/Pacific
|
|
|
124.3
|
|
|
146.7
|
|
|
(15.3
|
)%
|
|
(15.8
|
)
|
|
(10.8
|
)%
|
|
|
|
$
|
1,959.0
|
|
|
$
|
2,485.2
|
|
|
(21.2
|
)%
|
|
$
|
(286.9
|
)
|
|
(11.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
Change due to currency translation
|
|
|
|
2015
|
|
2014
|
|
% change from 2014
|
|
$
|
|
%
|
North America
|
|
|
$
|
1,965.0
|
|
|
$
|
2,414.2
|
|
|
(18.6
|
)%
|
|
$
|
(54.5
|
)
|
|
(2.3
|
)%
|
South America
|
|
|
949.0
|
|
|
1,663.4
|
|
|
(42.9
|
)%
|
|
(352.3
|
)
|
|
(21.2
|
)%
|
Europe/Africa/Middle East
|
|
|
4,151.3
|
|
|
5,158.5
|
|
|
(19.5
|
)%
|
|
(799.3
|
)
|
|
(15.5
|
)%
|
Asia/Pacific
|
|
|
402.0
|
|
|
487.6
|
|
|
(17.6
|
)%
|
|
(58.9
|
)
|
|
(12.1
|
)%
|
|
|
|
$
|
7,467.3
|
|
|
$
|
9,723.7
|
|
|
(23.2
|
)%
|
|
$
|
(1,265.0
|
)
|
|
(13.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This earnings release discloses the reduction in inventory on a constant
currency basis, excluding the impact of currency translation, between
December 31, 2015 and 2014. The following is a reconciliation of the
impact of currency translation on the change in inventory balances (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change due to
|
|
|
|
Change excluding
|
|
|
|
|
|
|
|
Change from
|
|
currency
|
|
|
|
currency
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
|
2014
|
|
translation
|
|
|
|
translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories, net
|
|
|
$
|
1,423.4
|
|
|
$
|
1,750.7
|
|
|
$
|
(327.3
|
)
|
|
$
|
(193.3
|
)
|
|
|
|
$
|
(134.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of free cash flow to net cash provided
by operating activities for the years ended December 31, 2015 and 2014
(in millions):
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
2014
|
Net cash provided by operating activities
|
|
|
$
|
524.2
|
|
|
|
|
$
|
438.4
|
|
Less:
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(211.4
|
)
|
|
|
|
(301.5
|
)
|
Free cash flow
|
|
|
$
|
312.8
|
|
|
|
|
$
|
136.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160202005387/en/
Source: AGCO
AGCO Greg Peterson, 770-232-8229 Director of Investor Relations greg.peterson@agcocorp.com
|