e8vk
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Dated October 26, 2010
of
AGCO CORPORATION
A Delaware Corporation
IRS Employer Identification No. 58-1960019
SEC File Number 1-12930
4205 River Green Parkway
Duluth, Georgia 30096
(770) 813-9200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On October 26, 2010, AGCO Corporation issued a press release reporting its financial results for
the third quarter ended September 30, 2010. A copy of the press release is attached hereto as
Exhibit 99.1.
In the press release, AGCO uses non-GAAP financial measures. For purposes of SEC Regulation G, a
non-GAAP financial measure is a numerical measure of a registrants historical or future
performance, financial position or cash flows that excludes amounts, or is subject to adjustments
that have the effect of excluding amounts, that are included in the most directly comparable
measure calculated and presented in accordance with GAAP in the statement of income, balance sheet
or statement of cash flows of the issuer; or includes amounts, or is subject to adjustments that
have the effect of including amounts, that are excluded from the most directly comparable measure
so calculated and presented. Non-GAAP financial measures should not be considered as alternatives
to operating income, net income and earnings per share as computed under GAAP for the applicable
period. AGCO considers operating income, net income and earnings per share to be the most
comparable GAAP financial measures to the non-GAAP financial measures
that AGCO provides, and AGCO has included, as a part of the press release, a
reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial
measure.
AGCO uses income from operations, net income and earnings per share amounts that have been adjusted
to exclude restructuring and other infrequent expenses. Restructuring and other infrequent
expenses occur regularly in AGCOs business, but vary in size and frequency. AGCO believes that
the adjusted amounts provide management and investors useful information because the expenses that are excluded
relate to events that resulted in a significant impact during the quarter, but will recur only in
varied amounts and with unpredictable frequency.
AGCO also provides net sales amounts that have been adjusted to exclude the impact of currency
translation. AGCO believes that the adjusted amounts provide useful
information to management and investors to
better analyze the causes of changes in sales between periods.
The information in this Form 8-K and the Exhibit shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated
by reference in any filing of AGCO under the Securities Act of 1933, as amended, except as shall be
expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibit
99.1 Press Release of AGCO Corporation, issued October 26, 2010.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
|
|
|
AGCO Corporation
|
|
|
By: |
/s/ Andrew H. Beck
|
|
|
|
Andrew H. Beck |
|
|
|
Senior Vice President and Chief Financial Officer |
|
|
Dated: October 26, 2010
Exhibit Index
|
|
|
Exhibit No. |
|
Description |
|
|
|
99.1
|
|
Press Release of AGCO Corporation, issued October 26, 2010 |
exv99w1
Exhibit 99.1
|
|
|
For Immediate Release
|
|
CONTACT: |
Tuesday, October 26, 2010
|
|
Greg Peterson |
|
|
Director of Investor Relations |
|
|
770-232-8229 |
|
|
greg.peterson@agcocorp.com |
AGCO REPORTS THIRD QUARTER RESULTS
Third Quarter Net Income per Share of $0.65 on Sales of $1.7 Billion
DULUTH, GA October 26 AGCO, Your Agriculture Company (NYSE:AGCO), a worldwide
manufacturer and distributor of agricultural equipment, reported net sales of approximately $1.7
billion for the third quarter of 2010, an increase of 19.3% compared to the third quarter of 2009.
Reported net income was $0.65 per share and adjusted net income, excluding restructuring and other
infrequent expenses, was $0.66 per share. These results compare to reported net income of $0.12
per share and adjusted net income, excluding restructuring and other infrequent expenses, of $0.13
per share for the third quarter of 2009. Excluding unfavorable currency translation impacts of
approximately 2.7%, net sales in the third quarter of 2010 increased 21.9% compared to the same
period in 2009.
Net sales for the first nine months of 2010 were approximately $4.7 billion, an increase of
approximately 0.8% compared to the same period in 2009. Excluding the favorable impact of currency
translation of approximately 2.2%, net sales for the first nine months of 2010 decreased
approximately 1.3% compared to the same period in 2009. For the first nine months of 2010,
reported net income was $1.41 per share and adjusted net income, excluding restructuring and other
infrequent expenses, was $1.43 per share. These results compare to reported net income of $1.09
per share and adjusted net income, excluding restructuring and other infrequent expenses, of $1.12
per share for the first nine months of 2009.
AGCOs third quarter performance was marked by sales growth in all four of our geographic
regions, stated Martin Richenhagen, Chairman, President and Chief Executive Officer. Industry
demand remained robust in South America, where AGCO outperformed the market and delivered record
third quarter sales and operating income. Our focus on cost control and increased global
production led to higher margins in the third quarter of 2010 compared to the third quarter of
2009. In particular, these developments supported improved third quarter operating income in
AGCOs North America segment compared to the third quarter of 2009.
At current planned volumes, we also expect to generate improved margins in the fourth quarter
of 2010 compared to the fourth quarter of 2009, stated Mr. Richenhagen. In addition, we will
continue our investments in new product development and factory productivity initiatives aimed at
expanding our margins and increasing asset returns in the coming years.
CHALLENGER FENDT MASSEY FERGUSON VALTRA
Industry conditions remained strong in Brazil and Argentina during the third quarter of 2010,
resulting in AGCOs South American region reporting a sales increase of approximately 39.1%
compared to the third quarter of 2009, excluding favorable currency translation impacts. AGCOs
Europe/Africa/Middle East (EAME) region reported an increase in net sales of approximately 12.1%
during the third quarter of 2010 compared to the same period in 2009, excluding unfavorable
currency translation impacts. The increase was supported by stabilizing Western European industry
conditions in the third quarter of 2010. In the North American region, sales in the third quarter
of 2010 increased approximately 26.5% compared to the third quarter of 2009, excluding favorable
currency translation impacts. Increased sales of combines, tractors and sprayers contributed to
higher sales in the North American region.
Income from operations for the third quarter of 2010 grew to $75.9 million, an increase
of approximately 112.6% compared to the third quarter of 2009. Gross margins were 18.3% in the
third quarter of 2010 compared to 17.5% in the third quarter of 2009. The margin improvement was
driven by material cost control and higher production. Income from operations for the first nine
months of 2010 increased approximately $10.9 million compared to the same period in 2009 primarily
due to improved margins partially offset by higher engineering expenses to support new product
development and tier 4 engine emission upgrades.
Market Update
Industry Unit Retail Sales
|
|
|
|
|
|
|
|
|
|
|
Tractors |
|
Combines |
|
|
Change from |
|
Change from |
Nine months ended September 30, 2010 |
|
Prior Year Period |
|
Prior Year Period |
|
North America |
|
|
+2 |
% |
|
|
+ 4 |
% |
South America |
|
|
+46 |
% |
|
|
+36 |
% |
Western Europe |
|
|
-15 |
% |
|
|
-34 |
% |
North America
In the first nine months of 2010, industry unit retail sales of tractors increased modestly in
North America compared to the same period in 2009. Growth in high horsepower tractors and compact
tractors was partially offset by a decline in utility tractors. Strong and improving economics for
the professional producer sector contributed to the strength in retail sales of high horsepower
tractors and combines. Ongoing softness in the dairy and livestock sectors contributed to lower
industry unit retail sales of mid-range tractors and hay equipment, which both declined compared to
the first nine months of 2009.
South America
Industry unit retail sales of tractors in South America grew sharply in the first nine months
of 2010, compared to the same period in 2009. Strong farm fundamentals and favorable government
financing programs in Brazil contributed to the strong industry demand which began to accelerate in
the second half of 2009.
Western Europe
Industry unit retail tractor sales were down approximately 15% in Western Europe during the
first nine months of 2010 compared to the prior year period, but did stabilize during the third
quarter of 2010. The slow pace of macro-economic recovery, weak farmer sentiment and soft demand
in the dairy and livestock sectors contributed to the decline in 2010. Industry unit retail
tractor sales declines were most pronounced in France, Italy and the United Kingdom in the first
nine months of 2010 compared to same period in 2009.
Dry weather conditions have impacted crop production across Europe and resulted in increased
global commodity prices over the last two months, stated Mr. Richenhagen. Overall farm economics
remain strong in Brazil which, along with generous financing programs, are supporting projected
record farm equipment demand for 2010. Western European farm equipment demand is expected to
remain relatively weak for the remainder of 2010 due to poor crop conditions and a weak dairy
sector. Demand in the Russian and Eastern European markets remains at very low levels due to
ongoing credit constraints and drought-impacted crop production. In North America, the expectation
of higher levels of farm income is maintaining demand for large tractors and combines. We continue
to be optimistic regarding the long-term potential of our industry. Favorable trends in global
food consumption should support crop prices leading to increased farmer profitability and
reinvestment in agricultural production.
Regional Results
AGCO Regional Sales (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% change from |
|
|
|
|
|
|
|
|
|
|
|
2009 due to |
|
|
|
|
|
|
|
% change |
|
|
currency |
|
|
|
Net sales |
|
|
from 2009 |
|
|
translation(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
373.4 |
|
|
|
27.8 |
% |
|
|
1.4 |
% |
South America |
|
|
487.7 |
|
|
|
47.1 |
% |
|
|
8.0 |
% |
Europe/Africa/Middle East |
|
|
708.7 |
|
|
|
2.6 |
% |
|
|
(9.5 |
%) |
Rest of World |
|
|
87.6 |
|
|
|
16.2 |
% |
|
|
(2.7 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,657.4 |
|
|
|
19.3 |
% |
|
|
(2.7 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
1,026.4 |
|
|
|
-9.3 |
% |
|
|
2.1 |
% |
South America |
|
|
1,313.2 |
|
|
|
78.0 |
% |
|
|
21.1 |
% |
Europe/Africa/Middle East |
|
|
2,178.9 |
|
|
|
(16.6 |
%) |
|
|
(3.3 |
%) |
Rest of World |
|
|
210.1 |
|
|
|
0.5 |
% |
|
|
4.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
4,728.6 |
|
|
|
0.8 |
% |
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
See Footnotes for additional disclosure |
North America
AGCOs sales of hay and forage equipment and mid-range tractors in North America declined
sharply in the first nine months of 2010 compared to the same period in 2009. Strong economics
for row crop farmers generated increased sales of sprayers, combines and parts. Lower sales levels
and increased expenditures on engineering efforts resulted in a decline in income from operations
of approximately $12.4 million for the first nine months of 2010
compared to the same period in 2009. Increases in sales and income from operations achieved
in the third quarter of 2010 offset a portion of the declines experienced in the first half of the
year.
South America
Record levels of industry demand in Brazil and improved crop production in Argentina resulted
in a 56.8% increase in AGCOs South American sales in the first nine months of 2010, compared to
the same period in 2009, excluding the impact of favorable currency translation. Income from
operations increased approximately $109.4 million in the first nine months of 2010 compared to the
same period in 2009. Sales growth, improved factory productivity and a richer product mix in
Brazil led to the increase in income from operations.
EAME
Weak market conditions in Western Europe and dealer inventory de-stocking resulted in
significant sales declines in AGCOs EAME region in the first nine months of 2010 compared to the
same period in 2009. AGCO experienced the largest declines in France and Germany partially offset
by sales growth in Poland, Finland and the Baltics. Income from operations declined by
approximately $91.2 million in the first nine months of 2010 compared to the same period in 2009.
Reduced sales, lower production and increased engineering expenses contributed to the decline.
Rest of World
Net sales in AGCOs Rest of World segment declined by approximately 3.6% during the first nine
months of 2010 compared to the prior year period, excluding the favorable impact of currency
translation. Lower sales in Australia, New Zealand and Russia accounted for most of the decline.
Income from operations in the Rest of World region was down in the first nine months of 2010
compared to the same period in 2009 due primarily to a weaker sales mix and increased expenses
related to growth initiatives.
Outlook
AGCO is targeting adjusted earnings per share, excluding restructuring expenses, in a
range from $2.10 to $2.20 for the full year of 2010. Net sales are expected to range from $6.7
billion to $6.8 billion. Gross margin improvements are expected to be partially offset by higher
engineering expenses for new product development and Tier 4 emission requirements.
Earnings per share projections exclude restructuring expenses that are expected to be incurred in
AGCOs European operations and which are estimated to be approximately $0.04 per share for the full
year of 2010.
* * * * *
AGCO will be hosting a conference call with respect to this earnings announcement at 10:00
a.m. Eastern Time on Tuesday, October 26, 2010. The Company will refer to slides on its conference
call. Interested persons can access the conference call and slide presentation via AGCOs website
at www.agcocorp.com under the heading Events on the Investors page. 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 AGCOs 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, margin improvements, profitability, inventory levels, benefits from inventory
reduction and productivity initiatives, industry demand, general economic conditions, global food
demand and diet trends, commodity prices, farm economics and productivity, pension costs and
engineering and restructuring expenses, are forward-looking and subject to risks which could cause
actual results to differ materially from those suggested by the statements. These forward-looking
statements involve a number of risks and uncertainties. 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. Further information concerning these and other factors is included in
AGCOs filings with the Securities and Exchange Commission, including its Form 10-K for the year
ended December 31, 2009. AGCO disclaims any obligation to update any forward-looking statements
except as required by law.
|
|
|
Our financial results depend entirely upon the agricultural industry, and factors
that adversely affect the agricultural industry generally, including declines in the
general economy, increases in farm input costs, lower commodity prices, lower farm
income and changes in the availability of credit for our retail customers, will
adversely affect us. |
|
|
|
|
The recent poor performance of the general economy may result in a decline in demand
for our products. However, we are unable to predict with accuracy the amount or
duration of this decline, and our forward-looking statements reflect merely our best
estimates at the current time. |
|
|
|
|
A majority of our sales and manufacturing take place outside of 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
retail finance joint ventures with Rabobank or by a bank or other private lender.
During the first nine months of 2010, 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 ongoing economic downturn, financing for capital
equipment purchases generally has become more difficult and 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 accounts
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 recently have experienced substantial and sustained volatility with respect to
currency exchange rate and interest rate changes, which can adversely affect our
reported results of operations and the competitiveness of our products. |
|
|
|
|
We are subject to extensive environmental laws and regulations, and our compliance
with, or our failure to comply with, existing or future laws and regulations could
delay production of our products or otherwise adversely affect our business. |
|
|
|
|
We have significant pension obligations with respect to our employees, and our
available cash flow may be adversely affected in the event that payments become due
under any pension plans that are unfunded or underfunded. Declines in the market value
of the securities used to fund these obligations result in increased pension expense in
future periods. |
|
|
|
|
The agricultural equipment industry is highly seasonal, and seasonal fluctuations
significantly impact results of operations and cash flows. |
|
|
|
|
Our success depends on the introduction of new products, particularly engines that
comply with emission requirements, which requires substantial expenditures. |
|
|
|
|
We depend on suppliers for raw materials, components and parts 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. |
* * * * *
About AGCO
AGCO, Your Agriculture Company (NYSE: AGCO), was founded in 1990 and offers a full product line of
tractors, combines, hay tools, sprayers, forage, tillage equipment, implements and related
replacement parts. AGCO agricultural products are sold under the core brands of Challenger®,
Fendt®, Massey Ferguson® and Valtra®, and are distributed globally through more than 2,700
independent dealers and distributors, in more than 140 countries worldwide. AGCO provides retail
financing through AGCO Finance. AGCO is headquartered in Duluth, Georgia, USA. In 2009, AGCO had
net sales of $6.6 billion.
# # # # #
Please visit our website at www.agcocorp.com.
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in millions)
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
459.2 |
|
|
$ |
651.4 |
|
Accounts and notes receivable, net |
|
|
863.4 |
|
|
|
725.2 |
|
Inventories, net |
|
|
1,432.3 |
|
|
|
1,156.7 |
|
Deferred tax assets |
|
|
85.7 |
|
|
|
63.6 |
|
Other current assets |
|
|
167.9 |
|
|
|
151.6 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
3,008.5 |
|
|
|
2,748.5 |
|
Property, plant and equipment, net |
|
|
874.0 |
|
|
|
910.0 |
|
Investment in affiliates |
|
|
378.4 |
|
|
|
353.9 |
|
Deferred tax assets |
|
|
67.5 |
|
|
|
70.0 |
|
Other assets |
|
|
131.4 |
|
|
|
115.7 |
|
Intangible assets, net |
|
|
150.0 |
|
|
|
166.8 |
|
Goodwill |
|
|
611.9 |
|
|
|
634.0 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
5,221.7 |
|
|
$ |
4,998.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
|
|
|
$ |
0.1 |
|
Convertible senior subordinated notes |
|
|
162.1 |
|
|
|
193.0 |
|
Securitization facilities |
|
|
75.4 |
|
|
|
|
|
Accounts payable |
|
|
666.1 |
|
|
|
621.6 |
|
Accrued expenses |
|
|
799.8 |
|
|
|
808.7 |
|
Other current liabilities |
|
|
76.1 |
|
|
|
45.5 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
1,779.5 |
|
|
|
1,668.9 |
|
Long-term debt, less current portion |
|
|
446.1 |
|
|
|
454.0 |
|
Pensions and postretirement health care benefits |
|
|
266.7 |
|
|
|
276.6 |
|
Deferred tax liabilities |
|
|
117.7 |
|
|
|
118.7 |
|
Other noncurrent liabilities |
|
|
80.5 |
|
|
|
78.0 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
2,690.5 |
|
|
|
2,596.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporary Equity: |
|
|
|
|
|
|
|
|
Equity component of redeemable convertible senior subordinated notes |
|
|
1.7 |
|
|
|
8.3 |
|
|
|
|
|
|
|
|
|
|
Stockholders Equity: |
|
|
|
|
|
|
|
|
AGCO Corporation stockholders equity: |
|
|
|
|
|
|
|
|
Common stock |
|
|
0.9 |
|
|
|
0.9 |
|
Additional paid-in capital |
|
|
1,044.7 |
|
|
|
1,061.9 |
|
Retained earnings |
|
|
1,653.1 |
|
|
|
1,517.8 |
|
Accumulated other comprehensive loss |
|
|
(170.1 |
) |
|
|
(187.4 |
) |
|
|
|
|
|
|
|
Total AGCO Corporation stockholders equity |
|
|
2,528.6 |
|
|
|
2,393.2 |
|
|
|
|
|
|
|
|
Noncontrolling interest |
|
|
0.9 |
|
|
|
1.2 |
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
2,529.5 |
|
|
|
2,394.4 |
|
|
|
|
|
|
|
|
Total liabilities, temporary equity and stockholders equity |
|
$ |
5,221.7 |
|
|
$ |
4,998.9 |
|
|
|
|
|
|
|
|
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 September 30, |
|
|
|
2010 |
|
|
2009 |
|
Net sales |
|
$ |
1,657.4 |
|
|
$ |
1,389.5 |
|
Cost of goods sold |
|
|
1,353.6 |
|
|
|
1,146.4 |
|
|
|
|
|
|
|
|
Gross profit |
|
|
303.8 |
|
|
|
243.1 |
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
170.3 |
|
|
|
155.5 |
|
Engineering expenses |
|
|
51.4 |
|
|
|
46.3 |
|
Restructuring and other infrequent expenses |
|
|
1.2 |
|
|
|
1.0 |
|
Amortization of intangibles |
|
|
5.0 |
|
|
|
4.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
75.9 |
|
|
|
35.7 |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
5.8 |
|
|
|
10.1 |
|
Other expense, net |
|
|
4.9 |
|
|
|
5.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes and equity in net earnings of affiliates |
|
|
65.2 |
|
|
|
20.0 |
|
|
|
|
|
|
|
|
|
|
Income tax provision |
|
|
14.1 |
|
|
|
14.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before equity in net earnings of affiliates |
|
|
51.1 |
|
|
|
5.2 |
|
|
|
|
|
|
|
|
|
|
Equity in net earnings of affiliates |
|
|
11.1 |
|
|
|
5.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
62.2 |
|
|
|
11.1 |
|
|
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interest |
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries |
|
$ |
62.3 |
|
|
$ |
11.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share attributable to AGCO Corporation and
subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.67 |
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
Diluted |
|
$ |
0.65 |
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common and common equivalent shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
92.9 |
|
|
|
92.3 |
|
|
|
|
|
|
|
|
Diluted |
|
|
95.8 |
|
|
|
94.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2010 |
|
|
2009 |
|
Net sales |
|
$ |
4,728.6 |
|
|
$ |
4,689.2 |
|
Cost of goods sold |
|
|
3,879.1 |
|
|
|
3,883.5 |
|
|
|
|
|
|
|
|
Gross profit |
|
|
849.5 |
|
|
|
805.7 |
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
492.1 |
|
|
|
471.3 |
|
Engineering expenses |
|
|
158.5 |
|
|
|
146.4 |
|
Restructuring and other infrequent expenses |
|
|
3.3 |
|
|
|
3.8 |
|
Amortization of intangibles |
|
|
13.8 |
|
|
|
13.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
181.8 |
|
|
|
170.9 |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
23.7 |
|
|
|
33.1 |
|
Other expense, net |
|
|
9.7 |
|
|
|
20.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes and equity in net earnings of affiliates |
|
|
148.4 |
|
|
|
117.4 |
|
|
|
|
|
|
|
|
|
|
Income tax provision |
|
|
49.8 |
|
|
|
43.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before equity in net earnings of affiliates |
|
|
98.6 |
|
|
|
74.2 |
|
|
|
|
|
|
|
|
|
|
Equity in net earnings of affiliates |
|
|
36.4 |
|
|
|
28.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
135.0 |
|
|
|
102.2 |
|
|
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interest |
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AGCO Corporation and subsidiaries |
|
$ |
135.3 |
|
|
$ |
102.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share attributable to AGCO Corporation and
subsidiaries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.46 |
|
|
$ |
1.11 |
|
|
|
|
|
|
|
|
Diluted |
|
$ |
1.41 |
|
|
$ |
1.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common and common equivalent shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
92.7 |
|
|
|
92.2 |
|
|
|
|
|
|
|
|
Diluted |
|
|
96.0 |
|
|
|
93.5 |
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2010 |
|
|
2009 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
135.0 |
|
|
$ |
102.2 |
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating
activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
97.7 |
|
|
|
83.6 |
|
Deferred debt issuance cost amortization |
|
|
2.1 |
|
|
|
2.1 |
|
Amortization of intangibles |
|
|
13.8 |
|
|
|
13.3 |
|
Amortization of debt discount |
|
|
11.7 |
|
|
|
11.3 |
|
Stock compensation |
|
|
8.5 |
|
|
|
11.3 |
|
Equity in net earnings of affiliates, net of cash received |
|
|
(25.3 |
) |
|
|
(13.6 |
) |
Deferred income tax provision |
|
|
(14.0 |
) |
|
|
(7.9 |
) |
Gain on sale of property, plant and equipment |
|
|
(0.1 |
) |
|
|
(0.3 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts and notes receivable, net |
|
|
22.0 |
|
|
|
35.1 |
|
Inventories, net |
|
|
(277.2 |
) |
|
|
45.7 |
|
Other current and noncurrent assets |
|
|
(62.0 |
) |
|
|
19.0 |
|
Accounts payable |
|
|
46.3 |
|
|
|
(379.2 |
) |
Accrued expenses |
|
|
28.7 |
|
|
|
(65.0 |
) |
Other current and noncurrent liabilities |
|
|
16.9 |
|
|
|
(16.2 |
) |
|
|
|
|
|
|
|
Total adjustments |
|
|
(130.9 |
) |
|
|
(260.8 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
|
4.1 |
|
|
|
(158.6 |
) |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(82.8 |
) |
|
|
(142.9 |
) |
Proceeds from sale of property, plant and equipment |
|
|
0.5 |
|
|
|
1.8 |
|
Investments in unconsolidated affiliates, net |
|
|
|
|
|
|
(1.1 |
) |
Restricted cash and other |
|
|
|
|
|
|
32.2 |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(82.3 |
) |
|
|
(110.0 |
) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Repayment of debt obligations, net |
|
|
(134.1 |
) |
|
|
(59.9 |
) |
Payment of minimum tax withholdings on stock compensation |
|
|
(11.1 |
) |
|
|
(5.2 |
) |
Proceeds from issuance of common stock |
|
|
0.2 |
|
|
|
|
|
Investments by noncontrolling interest |
|
|
|
|
|
|
1.3 |
|
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(145.0 |
) |
|
|
(63.8 |
) |
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
31.0 |
|
|
|
44.7 |
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents |
|
|
(192.2 |
) |
|
|
(287.7 |
) |
Cash and cash equivalents, beginning of period |
|
|
651.4 |
|
|
|
506.1 |
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
459.2 |
|
|
$ |
218.4 |
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except per share data)
1. DECONSOLIDATION OF JOINT VENTURE
On January 1, 2010, the Company adopted the provisions of Accounting Standards Update (ASU)
2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved
with Variable Interest Entities (ASU 2009-17), and performed a qualitative analysis of all its
joint ventures, including its GIMA joint venture, to determine whether it had a controlling
financial interest in such ventures. As a result of this analysis, the Company determined that its
GIMA joint venture should no longer be consolidated into the Companys results of operations or
financial position as the Company does not have a controlling financial interest in GIMA based on
the shared powers of both joint venture partners to direct the activities that most significantly
impact GIMAs financial performance. GIMA is a joint venture between AGCO and Claas Tractor SAS to
cooperate in the field of purchasing, design and manufacturing of components for agricultural
tractors. Each party has a 50% ownership interest in the joint venture and has an investment of
approximately 4.2 million in the joint venture. Both parties purchase all of the production
output of the joint venture. The deconsolidation of GIMA resulted in a retroactive reduction to
Noncontrolling interests within equity and an increase to Investments in affiliates in the
Companys Condensed Consolidated Balance Sheet as of December 31, 2009 of approximately $6.4
million. The deconsolidation resulted in a retroactive reduction in the Companys Net sales and
Income from Operations within its Condensed Consolidated Statements of Operations and a
reclassification of amounts previously reported as Net income attributable to noncontrolling
interests to Equity in net earnings of affiliates, but otherwise had no net impact to the
Companys consolidated net income for the three and nine months ended September 30, 2009. In
addition, the deconsolidation also resulted in a reduction of the Companys Total assets and
Total liabilities within its Condensed Consolidated Balance Sheets, but had no net impact to the
Companys Total stockholders equity other than the reduction previously mentioned. The Company
retroactively restated prior periods and recorded the following adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As |
|
|
|
|
|
|
|
|
Previously |
|
|
|
|
|
|
|
|
Reported |
|
Adjustment |
|
As adjusted |
|
Condensed Consolidated Balance Sheet
as of December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
$ |
5,062.2 |
|
|
$ |
(63.3 |
) |
|
$ |
4,998.9 |
|
Total liabilities |
|
|
|
$ |
2,653.1 |
|
|
$ |
(56.9 |
) |
|
$ |
2,596.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of
Operations for the Three Months Ended
September 30, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
|
$ |
1,403.7 |
|
|
$ |
(14.2 |
) |
|
$ |
1,389.5 |
|
Income from operations |
|
|
|
$ |
34.0 |
|
|
$ |
1.7 |
|
|
$ |
35.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of
Operations for the Nine Months Ended
September 30, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
|
$ |
4,777.9 |
|
|
$ |
(88.7 |
) |
|
$ |
4,689.2 |
|
Income from operations |
|
|
|
$ |
170.4 |
|
|
$ |
0.5 |
|
|
$ |
170.9 |
|
2. STOCK COMPENSATION EXPENSE
The Company recorded stock compensation expense as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Cost of goods sold |
|
$ |
0.2 |
|
|
$ |
0.1 |
|
|
$ |
0.5 |
|
|
$ |
0.6 |
|
Selling, general and administrative expenses |
|
|
3.0 |
|
|
|
2.8 |
|
|
|
8.2 |
|
|
|
11.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock compensation expense |
|
$ |
3.2 |
|
|
$ |
2.9 |
|
|
$ |
8.7 |
|
|
$ |
11.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. RESTRUCTURING AND OTHER INFREQUENT EXPENSES
During 2009 and 2010, the Company announced and initiated several actions to rationalize
employee headcount at various manufacturing facilities located in France, Finland, Germany and the
United States, as well as at various administrative offices located in the United Kingdom, Spain
and the United States. The Company also announced the closure of its combine assembly operations
in Randers, Denmark in 2009. During the nine months ended September 30, 2010, the Company recorded
restructuring and other infrequent expenses of approximately $3.3 million, primarily related to
severance and other related costs associated with the Companys rationalization of its operations
in Denmark, Spain, Finland and France. During the nine months ended September 30, 2009, the Company
recorded restructuring and other infrequent expenses of approximately $3.8 million, primarily
related to severance and other related costs associated with the Companys rationalization of its
operations in the United States, the United Kingdom and Finland.
4. INDEBTEDNESS
Indebtedness at September 30, 2010 and December 31, 2009 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
67/8% Senior subordinated notes due 2014 |
|
$ |
272.8 |
|
|
$ |
286.5 |
|
13/4% Convertible senior subordinated notes due 2033 |
|
|
162.1 |
|
|
|
193.0 |
|
11/4% Convertible senior subordinated notes due 2036 |
|
|
173.3 |
|
|
|
167.5 |
|
Securitization facilities |
|
|
75.4 |
|
|
|
|
|
Other long-term debt |
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
683.6 |
|
|
|
647.1 |
|
Less: Current portion of long-term debt |
|
|
|
|
|
|
(0.1 |
) |
13/4% Convertible senior subordinated notes due 2033 |
|
|
(162.1 |
) |
|
|
(193.0 |
) |
Securitization facilities |
|
|
(75.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total indebtedness, less current portion |
|
$ |
446.1 |
|
|
$ |
454.0 |
|
|
|
|
|
|
|
|
Holders of the Companys 13/4% convertible senior subordinated notes due 2033
and 11/4% convertible senior subordinated notes due 2036 may convert the notes, if, during any fiscal
quarter, the closing sales price of the Companys common stock exceeds, respectively, 120% of the
conversion price of $22.36 per share for the 13/4% convertible senior subordinated notes and $40.73
per share for the 11/4% convertible senior subordinated notes, 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
September 30, 2010 and December 31, 2009, the closing sales price of the Companys common stock had
exceeded 120% of the conversion price of the 13/4% convertible senior subordinated notes for at least
20 trading days in the 30 consecutive trading days
ending September 30, 2010 and December 31, 2009, respectively, and, therefore, the Company
classified the notes as a current liability. In accordance with ASU 2009-04, Accounting for
Redeemable Equity
Instruments, the Company also classified the equity component of the 13/4%
convertible senior subordinated notes as temporary equity. The amount classified as temporary
equity was measured as the excess of (a) the amount of cash that would be required to be paid upon
conversion over (b) the current carrying amount of the liability-classified component. Future
classification of both series of notes between current and long-term debt and classification of the
equity component of both notes as temporary equity is dependent on the closing sales price of the
Companys common stock during future quarters.
During the third quarter of 2010, the Company repurchased approximately $37.5 million of
principal amount of its 13/4% convertible senior subordinated notes plus accrued interest for
approximately
$58.1 million. The repurchase included approximately $21.1 million associated with the excess
conversion value of the notes and resulted in a loss on extinguishment of approximately $0.2
million reflected in interest expense, net.
5. INVENTORIES
Inventories at September 30, 2010 and December 31, 2009 were as follows:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
Finished goods |
|
$ |
595.5 |
|
|
$ |
480.0 |
|
Repair and replacement parts |
|
|
416.1 |
|
|
|
383.1 |
|
Work in process |
|
|
122.5 |
|
|
|
86.3 |
|
Raw materials |
|
|
298.2 |
|
|
|
207.3 |
|
|
|
|
|
|
|
|
Inventories, net |
|
$ |
1,432.3 |
|
|
$ |
1,156.7 |
|
|
|
|
|
|
|
|
6. ACCOUNTS RECEIVABLE SALES AGREEMENTS AND SECURITIZATION FACILITIES
At September 30, 2010, the Companys accounts receivable securitization
facilities in Europe had outstanding funding of approximately 55.3 million (or approximately $75.4
million). In accordance with ASU 2009-16, Transfers and Servicing (Topic 860): Accounting for
Transfers of Financial Assets and ASU 2009-17, the Company recognized approximately $75.4 million
of accounts receivable sold through its European securitization facilities within the Companys
Condensed Consolidated Balance Sheets as of September 30, 2010, with a corresponding liability
equivalent to the funded balance of the facility.
At September 30, 2010, the Company had accounts receivable sales agreements that permit the
sale, on an ongoing basis, of substantially all of its wholesale interest-bearing and non-interest
bearing receivables in North America to AGCO Finance LLC and AGCO Finance Canada, Ltd., its 49%
owned U.S. and Canadian retail finance joint ventures. As of September 30, 2010, net cash received
from receivables sold under the U.S. and Canadian accounts receivable sales agreements was
approximately $443.5 million.
Losses on sales of receivables associated with the accounts receivable financing facilities
discussed above, reflected within Other expense, net and Interest expense, net in the Companys
Condensed Consolidated Statements of Operations, were approximately $3.9 million and $11.5 million
during the three and nine months ended September 30, 2010, respectively. Losses on sales of
receivables primarily
from the Companys European securitization facilities and former U.S. and Canadian securitization
facilities were approximately $1.5 million and $11.7 million during the three and nine months ended
September 30, 2009, respectively.
The Companys AGCO Finance retail finance joint ventures in Europe, Brazil and Australia also
provide wholesale financing to the Companys dealers. The receivables associated with these
arrangements are without recourse to the Company. As of September 30, 2010 and December 31, 2009,
these retail finance joint ventures had approximately $178.9 million and $176.9 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.
7. EARNINGS PER SHARE
The Companys 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 Companys 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 Companys 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 earnings per share for the three and nine months
ended September 30, 2010 and 2009 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AGCO
Corporation and subsidiaries |
|
$ |
62.3 |
|
|
$ |
11.1 |
|
|
$ |
135.3 |
|
|
$ |
102.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding |
|
|
92.9 |
|
|
|
92.3 |
|
|
|
92.7 |
|
|
|
92.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per share attributable to
AGCO Corporation and subsidiaries |
|
$ |
0.67 |
|
|
$ |
0.12 |
|
|
$ |
1.46 |
|
|
$ |
1.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to AGCO
Corporation and subsidiaries for
purposes of computing diluted
net income per share |
|
$ |
62.3 |
|
|
$ |
11.1 |
|
|
$ |
135.3 |
|
|
$ |
102.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding |
|
|
92.9 |
|
|
|
92.3 |
|
|
|
92.7 |
|
|
|
92.2 |
|
Dilutive stock options, performance
share awards and restricted stock
awards |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.5 |
|
|
|
0.1 |
|
Weighted average assumed conversion of
contingently convertible senior
subordinated notes |
|
|
2.6 |
|
|
|
2.3 |
|
|
|
2.8 |
|
|
|
1.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common and
common equivalent shares outstanding
for purposes of computing diluted
earnings per share |
|
|
95.8 |
|
|
|
94.8 |
|
|
|
96.0 |
|
|
|
93.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share attributable to
AGCO Corporation and subsidiaries |
|
$ |
0.65 |
|
|
$ |
0.12 |
|
|
$ |
1.41 |
|
|
$ |
1.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8. SEGMENT REPORTING
Effective January 1, 2010, the Company modified its system of reporting, resulting from
changes to its internal management and organizational structure over the past year, which changed
its reportable segments from North America; South America; Europe/Africa/Middle East; and
Asia/Pacific to North America; South America; Europe/Africa/Middle East; and Rest of World. The
Rest of World reportable segment includes the regions of Eastern Europe, Asia, Australia and New
Zealand, and the Europe/Africa/ Middle East segment no longer includes certain markets in Eastern
Europe. Effective January 1, 2010, these reportable segments are reflective of how the Companys
chief operating decision maker reviews operating results for the purposes of allocating resources
and assessing performance. Disclosures for the three and nine months ended September 30, 2009 have
been adjusted to reflect the change in reportable segments.
The Companys 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 Companys 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 and nine months ended September
30, 2010 and 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
North |
|
South |
|
Europe/Africa/ |
|
|
|
|
September 30, |
|
America |
|
America |
|
Middle East |
|
Rest of World |
|
Consolidated |
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
373.4 |
|
|
$ |
487.7 |
|
|
$ |
708.7 |
|
|
$ |
87.6 |
|
|
$ |
1,657.4 |
|
Income from operations |
|
|
11.9 |
|
|
|
54.1 |
|
|
|
33.3 |
|
|
|
3.0 |
|
|
|
102.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
292.1 |
|
|
$ |
331.6 |
|
|
$ |
690.5 |
|
|
$ |
75.3 |
|
|
$ |
1,389.5 |
|
(Loss) income from operations |
|
|
(2.8 |
) |
|
|
22.9 |
|
|
|
29.8 |
|
|
|
7.9 |
|
|
|
57.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
North |
|
South |
|
Europe/Africa/ |
|
|
|
|
September 30, |
|
America |
|
America |
|
Middle East |
|
Rest of World |
|
Consolidated |
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
1,026.4 |
|
|
$ |
1,313.2 |
|
|
$ |
2,178.9 |
|
|
$ |
210.1 |
|
|
$ |
4,728.6 |
|
Income from operations |
|
|
14.6 |
|
|
|
138.7 |
|
|
|
94.7 |
|
|
|
9.6 |
|
|
|
257.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
1,131.2 |
|
|
$ |
738.0 |
|
|
$ |
2,610.9 |
|
|
$ |
209.1 |
|
|
$ |
4,689.2 |
|
Income from operations |
|
|
27.0 |
|
|
|
29.3 |
|
|
|
185.9 |
|
|
|
15.7 |
|
|
|
257.9 |
|
A reconciliation from the segment information to the consolidated balances for income
from operations is set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Segment income from operations |
|
$ |
102.3 |
|
|
$ |
57.8 |
|
|
$ |
257.6 |
|
|
$ |
257.9 |
|
Corporate expenses |
|
|
(17.2 |
) |
|
|
(13.7 |
) |
|
|
(50.5 |
) |
|
|
(58.9 |
) |
Stock compensation expense |
|
|
(3.0 |
) |
|
|
(2.8 |
) |
|
|
(8.2 |
) |
|
|
(11.0 |
) |
Restructuring and other infrequent expenses |
|
|
(1.2 |
) |
|
|
(1.0 |
) |
|
|
(3.3 |
) |
|
|
(3.8 |
) |
Amortization of intangibles |
|
|
(5.0 |
) |
|
|
(4.6 |
) |
|
|
(13.8 |
) |
|
|
(13.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated income from operations |
|
$ |
75.9 |
|
|
$ |
35.7 |
|
|
$ |
181.8 |
|
|
$ |
170.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 these financial measures to the most directly comparable GAAP measure is
included below (in millions, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
|
Income |
|
|
|
|
|
|
Earnings |
|
|
Income |
|
|
|
|
|
|
Earnings |
|
|
|
From |
|
|
Net |
|
|
Per |
|
|
From |
|
|
Net |
|
|
Per |
|
|
|
Operations |
|
|
Income(1) |
|
|
Share(1) |
|
|
Operations |
|
|
Income(1) |
|
|
Share(1) |
|
As adjusted |
|
$ |
77.1 |
|
|
$ |
63.1 |
|
|
$ |
0.66 |
|
|
$ |
36.7 |
|
|
$ |
12.0 |
|
|
$ |
0.13 |
|
Restructuring and other
infrequent
expenses(2) |
|
|
1.2 |
|
|
|
0.8 |
|
|
|
0.01 |
|
|
|
1.0 |
|
|
|
0.9 |
|
|
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
|
$ |
75.9 |
|
|
$ |
62.3 |
|
|
$ |
0.65 |
|
|
$ |
35.7 |
|
|
$ |
11.1 |
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Net income and earnings per share amounts are after tax. |
|
(2) |
|
The restructuring and other infrequent expenses recorded during the third quarter of
2010 related primarily to severance costs associated with the Companys rationalization of its
operations in Denmark and France. The restructuring and other infrequent expenses recorded during
the third quarter of 2009 related primarily to severance costs associated with the Companys
rationalization of its operations in the United States, the United Kingdom and Finland. |
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
nine months ended September 30, 2010 and 2009 (in millions, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
|
Income |
|
|
|
|
|
|
Earnings |
|
|
Income |
|
|
|
|
|
|
Earnings |
|
|
|
From |
|
|
Net |
|
|
Per |
|
|
From |
|
|
Net |
|
|
Per |
|
|
|
Operations |
|
|
Income(1) |
|
|
Share(1) |
|
|
Operations |
|
|
Income(1) |
|
|
Share(1) |
|
As adjusted |
|
$ |
185.1 |
|
|
$ |
137.7 |
|
|
$ |
1.43 |
|
|
$ |
174.7 |
|
|
$ |
105.3 |
|
|
$ |
1.12 |
|
Restructuring and other
infrequent
expenses(2) |
|
|
3.3 |
|
|
|
2.4 |
|
|
|
0.02 |
|
|
|
3.8 |
|
|
|
3.1 |
|
|
|
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
|
$ |
181.8 |
|
|
$ |
135.3 |
|
|
$ |
1.41 |
|
|
$ |
170.9 |
|
|
$ |
102.2 |
|
|
$ |
1.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Net income and earnings per share amounts are after tax. |
|
(2) |
|
The restructuring and other infrequent expenses recorded during the first nine
months of 2010 related primarily to severance and other related costs associated with the Companys
rationalization of its operations in Denmark, Spain, Finland and France. The restructuring and
other infrequent expenses recorded during the first nine months of 2009 related primarily to
severance costs associated with the Companys rationalization of its operations in the United
States, the United Kingdom and Finland. |
The following is a reconciliation of net sales for the three months ended September 30,
2010 at actual exchange rates compared to 2009 adjusted exchange rates (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
|
|
|
|
|
2010 at |
|
|
2010 at |
|
|
|
|
|
|
Actual |
|
|
Adjusted |
|
|
Change due to |
|
|
|
Exchange |
|
|
Exchange |
|
|
currency |
|
|
|
Rates |
|
|
Rates (1) |
|
|
translation |
|
North America |
|
$ |
373.4 |
|
|
$ |
369.5 |
|
|
|
1.4 |
% |
South America |
|
|
487.7 |
|
|
|
461.3 |
|
|
|
8.0 |
% |
Europe/Africa/Middle East |
|
|
708.7 |
|
|
|
774.2 |
|
|
|
(9.5 |
)% |
Rest of World |
|
|
87.6 |
|
|
|
89.6 |
|
|
|
(2.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,657.4 |
|
|
$ |
1,694.6 |
|
|
|
(2.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Adjusted exchange rates are 2009 exchange rates. |
The following is a reconciliation of net sales for the nine months ended September 30,
2010 at actual exchange rates compared to 2009 adjusted exchange rates (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
|
|
|
|
|
2010 at |
|
|
2010 at |
|
|
|
|
|
|
Actual |
|
|
Adjusted |
|
|
Change due to |
|
|
|
Exchange |
|
|
Exchange |
|
|
currency |
|
|
|
Rates |
|
|
Rates (1) |
|
|
translation |
|
North America |
|
$ |
1,026.4 |
|
|
$ |
1,002.5 |
|
|
|
2.1 |
% |
South America |
|
|
1,313.2 |
|
|
|
1,157.3 |
|
|
|
21.1 |
% |
Europe/Africa/Middle East |
|
|
2,178.9 |
|
|
|
2,266.2 |
|
|
|
(3.3 |
)% |
Rest of World |
|
|
210.1 |
|
|
|
201.7 |
|
|
|
4.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,728.6 |
|
|
$ |
4,627.7 |
|
|
|
2.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Adjusted exchange rates are 2009 exchange rates. |