2006 Annual Report
ALWAYS
FINANCIAL HIGHLIGHTS
(In millions except per share amounts)
2006 2005 2004
Net sales
$ 5,435.0 $ 5,449.7 $ 5,273.3
Income from operations 68.9 274.7 323.5
(64.9) 31.6 158.8
Net (loss) income
Total assets
4,114.5 3,861.2 4,297.3
Stockholders’ equity
1,493.6 1,416.0 1,422.4
Earnings (loss) per share(1) $ (0.71) $ 0.35 $ 1.71
Adjusted earnings per share(2) $ 1.12 $ 1.46 $ 1.75
(1)On a diluted basis.
(2)For a reconciliation of adjusted earnings per share, see footnote 1 on page 17
CONTENTS
Letter to Stockholders.............................................................4–6
Always....................................................................................7–15
Forward-Looking Statements....................................................16
Financial Review...................................................................17–22
Board of Directors, Stockholder Information ............................23
2
COMPANY PROFILE
AGCO Corporation is a global
manufacturer and distributor
of agricultural equipment and
related replacement parts. We
offer a full line of products under
multiple brands through one
of the largest global distribution
networks in the industry,
including approximately 3,200
independent dealers and
distributors in more than 140
countries. We provide retail
financing through AGCO
ALWAYS
Growing
Finance. Since 1990, the
Company has grown from its
initial revenue of $200 million to
net sales of $5.4 billion in 2006.
With shareholders worldwide,
AGCO is traded on the New
York Stock Exchange under the
symbol “AG.”
OUR MISSION
Profitable growth through
superior customer service,
innovation, quality and
commitment.
www.agcocorp.com
3
Martin Richenhagen
Chairman, President and
Chief Executive Officer
It is an exciting time to be in the agricultural
industry. The global market for food production
is changing, and AGCO is making significant
investments to support our growth in the years
ahead. The world’s population is expanding,
and per capita land available for food production
is declining. There are emerging markets and
expanding opportunities in Brazil, Eastern Europe
and Asia. Farms are consolidating, driving an
increase in mega-farming operations and growth
in the sales of larger, more sophisticated farm
equipment. There is also an accelerating demand
for renewable energies among industrialized
nations that has reduced global grain inventories
and greatly improved commodity prices.
AGCO has ambitious plans to operate in these
conditions and grow our global presence. We
intend to maintain and develop our position as a
technology leader and offer outstanding customer
service as we redefine our place in the agricultural
machinery industry.
TO OUR
Stockholders
2006 was an important year for AGCO – a
year of transition. Important events included
the retirement of our key founder, the shift
in corporate direction from growth through
acquisition to organic growth and the rollout of
a new strategic plan.
In August, Robert J. Ratliff retired as Chairman
of the Board. Under Bob’s direction, AGCO
became one of the largest agricultural equipment
companies in the global marketplace. Over the
course of the past 16 years, AGCO has been
a major force behind industry consolidation
with 21 key acquisitions that built our Company
from $200 million in net sales in 1990 to more
than $5.4 billion in 2006. Bob’s knowledge and
expertise within the agricultural industry provided
a solid foundation for AGCO’s growth and our
future success. As Bob’s successor as Chairman
and CEO, I would like to thank Bob for his vision
and leadership during AGCO’s formative years.
In 2006, we introduced an aggressive, strategic
business plan supported by organic growth
initiatives that will continue our advancement as
one of the leading players in the global agricultural
machinery marketplace. Our strategic initiatives
are grouped in three primary areas of focus:
strength, performance and simplicity. The first area
– strength – refers to growing our sales and global
market position. We are focusing on our four key
global brands, the quality of our dealer networks
and the enhancement of our service support
programs. We intend to solidify our technological
advantage in the high-end professional farming
segment, as well as provide an attractive value to
our customers in the lower-end market segment.
We will augment our product line in a number of areas, most notably
through a globally competitive harvesting offering.
In the second area – performance – we seek to increase our
profitability by harmonizing and improving our processes. We have
initiated a global best practice enterprise project to implement a
common IT system. In addition, we will further leverage synergies
between our business operations as well as optimize our global
manufacturing and sourcing activities. Finally, we will continue to
develop our most important resource, our employees. Through a
number of key initiatives, we are providing them with a stimulating
and motivating work environment in all regions.
In the third area – simplicity – we are aiming at optimizing our asset
base and working capital requirements. The initiatives in this area seek
to improve our production and inventory management processes.
Our “build to order” initiative aims at introducing order-driven
production in all of our operations. Our inventory initiatives seek to
reduce investments in excess inventory, and our sourcing initiatives
are aimed at lowering costs. These strategic initiatives will help us
achieve our goals of improving our earnings and returns on capital.
AGCO’s financial performance in 2006 has the Company well-
positioned to fund our strategic growth initiatives. In 2006, AGCO’s
net sales were $5.4 billion, which were flat compared to 2005.
Our 2006 adjusted earnings per share, excluding restructuring
charges and a non-cash goodwill impairment charge, was $1.12.
In 2006, one of our primary objectives was to reduce working
capital and generate cash flow. AGCO exceeded expectations
and generated record operating cash flow in 2006. This strong
performance enabled us to reduce debt and improve our balance
sheet. Our 2006 results were highlighted by record sales and
operating income in our Europe/ Africa/Middle East segment. In
our other regional segments, we experienced mixed results. South
America’s weaker industry conditions resulted in sales declines, but
our cost-reduction efforts allowed us to achieve improved operating
income. The improvements in our European and South American
segments were offset by lower sales and operating income in our
North American and Asia/Pacific segments, where weaker market
conditions impacted our results. In North America, our results were
also negatively impacted by our initiatives to reduce working capital,
where we successfully reduced dealer inventories. While this had a
positive impact on our cash flow results in 2006, it also put pressure
on our sales and operating income in North America.
AGCO derives strength from the heritage of our brands, and
our passion to develop innovative technologies. We are creating
a solid foundation for future growth by investing in our products.
Our research and development investments in 2006 were up
by more than 20 percent from 2004 levels. Our increased R&D
investment delivered more than 40 new products in 2006. Leading
the way was our Fendt brand with 21 new tractor introductions
last year. Fendt products, which are manufactured in Germany,
have been recognized worldwide as the pioneers in agricultural
engineering for many years. Most recently, the 360 horsepower top
Vario model received the Design Award of the Federal Republic
of Germany in Frankfurt in February 2007. Other 2006 product
introductions include the world’s biggest tractor in the market today
– the articulated, 4-wheel drive Challenger MT975B with 570
horsepower, and the Massey Ferguson, Gleaner and Challenger
branded Class VIII combines with their 425 horsepower engines and
fastest unloading rate in the industry. We also introduced one of the
$1.75 $1.46 $1.12
2004 2005 2006
ADJUSTED EARNINGS
PER SHARE
67% 14% 7% 5% 4% 3%
SALES BY PRODUCT
TRACTORS
PARTS
IMPLEMENTS AND OTHERS
APPLICATION EQUIPMENT
COMBINES
HAY AND FORAGE
4
5
most powerful and versatile 4-cylinder tractors in the market with
the new N Series from Valtra.
During 2006, we began major improvement projects in our
manufacturing facilities at Hesston, Kansas, and Marktoberdorf,
Germany. These projects have three key objectives: 1) increase labor
productivity, 2) further improve our product quality and 3) reduce
our finished goods inventories. These initiatives represent significant
investments in our plants and are expected to reduce our operating
costs and satisfy the additional capacity requirements generated by
our aggressive growth plan.
We also made significant investments in our SisuDiesel engine
facility in Finland, adding capacity and a new robotics line, making
it one of the most advanced agricultural equipment manufacturing
facilities in the world. In January 2007, we opened our new
research and development center in Finland for our Valtra brand,
underscoring our continuing commitment to providing some of the
most innovative products and services in the industry.
In 2006, we entered new markets and are poised to enter into
other emerging markets in the coming years. In May, AGCO formed
a joint venture with the Russian SM Group called AGCO SM, of
which we are the majority partner. This joint venture provides
AGCO with access to one of Russia’s largest distribution networks
in this fast-growing, emerging market. Our licensee in India provides
us with a low-cost tractor for export to other global markets as well
as extensive distribution within the country. We are also improving
our distribution channels in key markets. In North America, we
are engaging partners who share our same commitment for quality,
customer service and success. Worldwide, we have consolidated
our brand offering. By focusing on just four key brands, we can
better implement product line additions, engine upgrades, advanced
technologies and improved quality control. We are currently exploring
sourcing materials, components and products from China in the near
future and improving our distribution in that region. As we move
forward, additional strategic partners and joint ventures will continue
to enhance AGCO’s product portfolio and distribution network.
I want to thank everyone who contributed to our successes in
2006, especially our employees, our directors, our dealers and
our customers. We are unable to succeed without you and your
commitment to AGCO and our future. I also want to express my
appreciation to our stockholders. We are working hard to repay
your trust and to reward you for your investment.
As we look ahead, we are inspired by the opportunities for our
Company, and we remain focused on delivering the products and
service levels that will drive strong financial results and keep AGCO
“Always Growing.”
Martin Richenhagen
Chairman, President and
Chief Executive Officer
SALES BY GEOGRAPHIC
REGION
61%
24%
12%
3%
EUROPE/AFRICA/MIDDLE EAST
NORTH AMERICA
SOUTH AMERICA
EAST ASIA/PACIFIC
6
ALWAYS
Moving
Africa, Asia, Australia, Europe,
North America, South America
– wherever crops are grown,
wherever livestock is raised,
wherever high quality machinery
is needed, AGCO brands are
there. Ours are some of the
most recognized and respected
agricultural machinery brands
in the world. They deliver
unmatched power, speed and
efficiency, making AGCO a
market leader in many parts of
the world. Our brand line-up
contains industry giants like
Massey Ferguson, a perennial
leader in the number of tractors
sold worldwide; Fendt, a
global leader in technology
development; Valtra, a market
leader in the Nordic region of
Europe and Brazil; and Challenger,
OUR BRANDS CONTINUE TO COVER MORE GROUND.
another growing worldwide brand
sold through Caterpillar dealers
in both the North American and
Eastern European markets. Today,
our brands are helping us expand
our global footprint even more,
propelling us into rapidly emerging
markets like Eastern Europe and
East Asia. We’re not stopping
there, however. As we see it,
there’s plenty of ground left for
us to cover.
7
ALWAYS
Building
WE’RE BUILDING OUR FUTURE ON A STRONG FOUNDATION.
The agricultural marketplace is changing and is calling for more
efficient utilization of resources through increased mechanization and
automation. That, in turn, increases the opportunity for our broad,
high-quality, multi-brand product line.
The common thread that unites all AGCO brands is our continuing
focus on quality, innovation and reliability. Together, they form the
foundation for all we do – helping us evolve into an even greater
force in the global agricultural machinery industry. Today, we look
at our business as an enterprise, not as a portfolio of different
manufacturing companies. Through strategic initiatives we are
focused on accelerating growth and improving performance. We
are identifying and implementing programs targeted at optimizing
global manufacturing and sourcing as well as time to market. To drive
quality, we are also sharing leading technologies and best practices
across all of our brands. Most importantly, we are continuing to invest
in our people with the goal of having one of the premier workforces
in the industry.
Regardless of location in the world, our
commitment to quality is unwavering.
Each and every one of our employees is
dedicated to building the finest product
available for our customers.
Our customers demand tractors, combines, engines and implements that not
only meet, but exceed, their expectations. Since we focus solely on agricultural
machinery, we build products that strive to reach the highest levels of dependability
and reliability, allowing our customers to be among the most efficient and
productive in the industry.
8
9
At AGCO, our farm machinery roots go back more than a century
and a half. Along the way, we’ve learned what superior customer
service is all about. Today, AGCO provides dealers and professional
farmers around the world with advanced engineering solutions,
technical leadership and high-quality customer service and support.
AGCO creates expert solutions for customers by carefully listening
to their needs – then exceeding their expectations. Our inventory
management systems link inventory with customer demand, making
customization easier. AGCO remains closely aligned with the
needs of our customers. Our field specialists are equipped with the
necessary training and information to take care of our dealers and
customers day in, day out throughout the year.
On the dealer side of our business, we continue to deliver reliable
products, effective product training, expert field service teams,
high-quality parts, proven marketing expertise and competitive
financing and leasing solutions through AGCO Finance. In short,
we provide everything the dealer needs to help close the sale and
grow its business. This also includes AGCO’s Electronic Parts and
Service Information system, which gives our dealer network online
access to vital product information including operator manuals, service
manuals and service bulletins. As an example of our continued focus
on service, Fendt dealerships have access to Fendias, an advanced
electronic diagnostic system that can help cut diagnostic and repair
times by up to 50 percent. So, now our dealers and customers
get the right information faster and easier to keep their customers’
equipment operating at peak performance.
ALWAYS
Helping
“CUSTOMER SERVICE” IS MORE THAN A PHRASE, IT’S PART OF OUR DNA.
To help keep our customers up and
running worldwide, the AGCO Parts
division utilizes computerized inventory
tracking systems, rapid response
capabilities and a streamlined distribution
organization to ensure our dealers and
customers have the right parts when and
where they need them.
AGCO Finance, our retail finance joint
venture, is both an agricultural industry
specialist and a financing specialist. When
customers are ready to buy or lease
equipment, AGCO Finance has the
expertise, financial strength, systems and
comprehensive financing programs to
help them meet their needs.
Customer service is lip service at many companies. Not at AGCO. We continually
invest in the technology and training to ensure our technicians are among the best
trained and equipped in the industry.
10
AGCO is well-positioned to handle
the demand for alternative fuels – from
engine development to maintenance –
and is dedicated to doing the right
thing for the environment.
11
On-farm service is just one way
Caterpillar dealers continue to strengthen
relationships with their customers.
A constant stream of leading-edge technology and innovative
product introductions helps drive AGCO’s growth. In 2006 alone,
we introduced 43 new products, 110 product upgrades, 100
product extensions and 23 re-powered models. Our product
introduction list includes new high-horsepower models, like the
Fendt 936, which continues to win international acclaim for both
its performance and design, as do many of our other brands.
AGCO Global Technologies is dedicated to developing proven,
integrated solutions to help farmers increase profitability through
delivering fuel savings, managing chemical and fertilizer applications
and controlling tractor functions. Our Global Technologies team
focuses on creating precision farming systems featuring the latest
satellite-based steering technology, data collection, yield mapping
and implement control and monitoring solutions.
AGCO remains a leader in advanced transmission technology.
The Continuously Variable Transmission (CVT) was developed by
Fendt for agricultural application and remains one of the world’s
most efficient transmissions. The CVT has been joined by new
4-speed and 6-speed semi-powershift transmissions offering the
high performance, reliability and flexibility demanded by today’s
customer.
We increased our research and development activities again in
2006. AGCO is committed to producing an array of advanced,
automated solutions that enhance the value and performance of
AGCO equipment, helping farmers become increasingly effective,
efficient and environmentally responsible. Our SisuDiesel engines,
for example, utilize cleaner-burning biodiesel fuel mixtures (made
from diesel oil and vegetable oils) at rates ranging from 5 to 100
percent. Market demand for the SisuDiesel engines is increasing.
Not only is the engine used in many AGCO brands worldwide,
but other equipment manufacturers rely on the SisuDiesel quality
and dependability in a variety of external applications, including
forestry equipment, marine applications, irrigation systems and
back-up or emergency power sources.
ALWAYS
Innovating
WHAT DRIVES FARMERS TO DRIVE AGCO? LEADING-EDGE TECHNOLOGY.
The list of awards our brands won in 2006 is an extensive one. Here are a few highlights:
Valtra Brazil – MasterCana Award named Valtra the Best Tractor Manufacturer for the Brazilian sugar and ethanol production segment
Challenger MT900B – Won 2006 PTC Design Award in the Heavy Equipment category for engineering and design
Massey Ferguson 8400 – Received FinOvation Award from Farm Industry News for product of choice
Fendt and Massey Ferguson – Both received Agritechnica Machine of the Year 2006 awards in different horsepower classes
AGCO Tractors – Won five AE-50 awards from ASABE for product innovation, design and engineering
AGCO is continually incorporating innovative technologies into our equipment,
providing tangible benefits to our customers...from engines that deliver the
necessary levels of fuel efficiency and lowest levels of emissions, to productivity-
enhancing satellite guidance technology.
In the past year, AGCO has received
numerous awards for its products. AGCO
is also proud to have received additional
awards for its social responsibility and
community involvement in many regions
of the world.
12
13
AGCO’s tractors, combines, application equipment, implements and technology products touch
farmers every day and in virtually every time zone around the world. We have a solid foundation on
which to build. Through an exhaustive strategic planning process, we have implemented numerous
initiatives targeted to strengthening our Company, ultimately resulting in increased revenues and profitability.
AGCO has launched numerous initiatives that focus on key brands, develop new products and
services, help facilitate the growth of our dealers and distribution, and enter into emerging markets such
as Eastern Europe and East Asia. We will continue to rationalize our product line and take advantage of
low-cost country sourcing and other strategic opportunities designed to trim costs and increase process
efficiency. In addition, we continue to identify best practices in manufacturing, using many different
world-class companies as benchmarks. We rigorously track six essential elements of our business:
speed, cost, customer service, asset management, environmental health and safety. Moreover, we
track the performance of every AGCO factory on those same six points. And, we are moving toward a
worldwide “build to order” manufacturing process, which is designed to reduce inventories, decrease
working capital costs and ensure that the right product is delivered to our customers when promised.
We have also intensified our focus on the harvesting market segment and expect to add more models
to our line of combines and harvesting machinery.
AGCO is expanding its global presence, planning and investing for the future and is, as never before,
committed to meeting the needs our customers, dealers, distributors and employees worldwide. In
short, we are “Always Growing.”
ALWAYS
Raising the bar
FOCUSING ON THE NEXT LEVEL OF GROWTH.
Left to Right
Norman L. Boyd
Senior Vice President
Human Resources
Andrew H. Beck
Senior Vice President
Chief Financial Officer
Randall G. Hoffman
Senior Vice President
Global Sales and Marketing
Martin H. Richenhagen
Chairman of the Board
President and
Chief Executive Officer
Hubertus M. Muehlhaeuser
Senior Vice President
Strategy & Integration and IT
General Manager, Engines
Andre M. Carioba
Senior Vice President
General Manager, South America
Robert B. Crain
Senior Vice President
General Manager, North America
Gary L. Collar
Senior Vice President
Gen. Manager, Europe/Africa/
Middle East; East Asia/Pacific
David L. Caplan
Senior Vice President
Materials Management,
Worldwide
Frank C. Lukacs
Senior Vice President
Manufacturing and Quality
Stephen D. Lupton
Senior Vice President
Corporate Development &
General Counsel
Garry L. Ball
Senior Vice President
Engineering
14
NEW PARTNERS
NEW MARKETS
NEW PRODUCTS
NEW CUSTOMERS
NEW HEIGHTS
15
FORWARD-
LOOKING
STATEMENTS
This annual report includes forward-looking statements
including the statements in the letter to stockholders and
other statements herein regarding future products, growth
and markets. These statements are subject to risks that
could cause actual results to differ materially from those
suggested by the statements, including:
Our financial results depend significantly upon the
agricultural industry, and factors that adversely affect the
agricultural industry generally will adversely affect us.
The agricultural equipment industry is highly seasonal,
and seasonal fluctuations significantly impact our results of
operations and cash flows.
Our success depends on the introduction of new
products, which require substantial expenditures.
We face significant competition and, if we are
unable to compete successfully against other agricultural
equipment manufacturers, we would lose customers and
our revenues and profitability would decline.
We depend on suppliers for 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
16
and efficiently manufacture and sell our products.
A majority of our sales and manufacturing takes 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.
Currency exchange rate and interest rate changes can
adversely affect the profitability 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.
Our labor force is heavily unionized, and our
contractual and legal obligations under collective
bargaining agreements and labor laws subject us to the
risks of work interruption or stoppage and could cause
our costs to be higher.
We have significant pension obligations with respect to
our employees.
We are subject to fluctuations in raw material prices
and availability, which may cause delays in the production
of our products or otherwise adversely affect our
manufacturing costs.
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 the Company’s filings with the Securities
and Exchange Commission, including its Form 10-K for
the year ended December 31, 2006. The Company
disclaims any obligation to update any forward-looking
statements.
SELECTED FINANCIAL INFORMATION
(in millions, except percentages, per share amounts and employees)
Years Ended December 31,
Operating Results
2006
2005
2004
2003
2002
Net sales ...................................................................................................................................................
$ 5,435.0
$
5,449.7
$
5,273.3
$
3,495.3
$
2,922.7
Gross profit ...............................................................................................................................................
Percent of net sales ...................................................................................................................................
Income from operations ...........................................................................................................................
Percent of net sales ...................................................................................................................................
Net (loss) income .....................................................................................................................................
Net (loss) income per common share – diluted(1) .....................................................................................
$
Weighted average shares outstanding – diluted ........................................................................................
927.8
17.1%
68.9
1.3%
(64.9)
(0.71)
90.8
933.6
17.1%
274.7
5.0%
31.6
0.35
90.7
$
952.9
18.1%
323.5
6.1%
158.8
1.71
95.6
$
Cash flows from operations ......................................................................................................................
$
442.2
$
246.3
$
265.9
616.4
17.6%
184.3
5.3%
74.4
0.98
75.8
88.0
$
$
531.8
18.2%
103.5
3.5%
(84.4)
(1.14)
74.2
73.2
$
$
Balance Sheet Data
Working capital .........................................................................................................................................
$
685.4
$
825.8
$
1,045.5
$
755.4
$
599.4
Total assets ................................................................................................................................................
Long-term debt, less current portion .......................................................................................................
Total liabilities ............................................................................................................................................
Stockholders’ equity ..................................................................................................................................
4,114.5
577.4
2,620.9
1,493.6
3,861.2
841.8
2,445.2
1,416.0
4,297.3
1,151.7
2,874.9
1,422.4
2,839.4
711.1
1,933.3
906.1
2,349.0
636.9
1,631.4
717.6
Other Data
Number of employees ..............................................................................................................................
12,804
13,023
14,313
11,278
11,555
(1) The Company makes reference to adjusted earnings per share, as reconciled below:
Net (loss) income per common share – diluted ......................................................................................................................................
$
(0.71)
$
Restructuring and other infrequent expenses(2) .......................................................................................................................................
Goodwill impairment charge(2) ................................................................................................................................................................
Bond redemption costs(2) .........................................................................................................................................................................
Deferred income tax valuation allowance adjustment ............................................................................................................................
Cumulative effect of a change in accounting principle(2) ..........................................................................................................................
0.01
1.81
–
–
–
Weighted average share impact ...............................................................................................................................................................
0.01
2006
2005
0.35
–
–
0.15
0.95
–
–
$
2004
1.71
0.04
–
–
–
–
–
$
2003
0.98
0.26
–
–
–
$
2002
(1.14)
0.38
–
–
1.21
–
0.33
–
–
Net income per common share – adjusted .............................................................................................................................................
$
1.12
$
1.46
$
1.75
$
1.24
$
0.78
(2)After tax.
Rounding may impact the summation of certain line items.
17
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Years Ended December 31,
2006
2005
Net sales .........................................................................................................................................................................................................................
$
5,435.0
$
5,449.7
$
Cost of goods sold ...............................................................................................................................................................................................................
Gross profit ...................................................................................................................................................................................................................
4,507.2
927.8
4,516.1
933.6
Selling, general and administrative expenses ......................................................................................................................................................................
Engineering expenses ..........................................................................................................................................................................................................
Restructuring and other infrequent expenses .....................................................................................................................................................................
Goodwill impairment charge ...............................................................................................................................................................................................
Amortization of intangibles ..................................................................................................................................................................................................
Income from operations ...............................................................................................................................................................................................
Interest expense, net ...........................................................................................................................................................................................................
Other expense, net .............................................................................................................................................................................................................
(Loss) income before income taxes and equity in net earnings of affiliates ........................................................................................................................
Income tax provision ...........................................................................................................................................................................................................
(Loss) income before equity in net earnings of affiliates ......................................................................................................................................................
Equity in net earnings of affiliates ........................................................................................................................................................................................
541.7
127.9
1.0
171.4
16.9
68.9
55.2
32.9
(19.2)
73.5
(92.7)
27.8
Net (loss) income ........................................................................................................................................................................................................
$
(64.9)
$
Net (loss) income per common share:
Basic ..............................................................................................................................................................................................................................
Diluted ..........................................................................................................................................................................................................................
$
$
(0.71)
(0.71)
$
$
Weighted average number of common and common equivalent shares outstanding:
Basic ..............................................................................................................................................................................................................................
Diluted ..........................................................................................................................................................................................................................
90.8
90.8
520.7
121.7
–
–
16.5
274.7
80.0
34.6
160.1
151.1
9.0
22.6
31.6
0.35
0.35
90.4
90.7
$
$
$
2004
5,273.3
4,320.4
952.9
509.8
103.7
0.1
–
15.8
323.5
77.0
22.1
224.4
86.2
138.2
20.6
158.8
1.84
1.71
86.2
95.6
CONSOLIDATED BALANCE SHEETS
(in millions, except share amounts)
December 31,
Assets
Current Assets:
Cash and cash equivalents ..............................................................................................................................................................................................................................
$
Accounts and notes receivable, net ...............................................................................................................................................................................................................
Inventories, net ..............................................................................................................................................................................................................................................
Deferred tax assets ........................................................................................................................................................................................................................................
Other current assets ......................................................................................................................................................................................................................................
Total current assets ..................................................................................................................................................................................................................................
Property, plant and equipment, net ......................................................................................................................................................................................................................
Investment in affiliates ..........................................................................................................................................................................................................................................
Deferred tax assets ..............................................................................................................................................................................................................................................
Other assets .........................................................................................................................................................................................................................................................
Intangible assets, net .............................................................................................................................................................................................................................................
Goodwill ...............................................................................................................................................................................................................................................................
2006
2005
401.1
677.1
1,064.9
36.8
129.1
2,309.0
643.9
191.6
105.5
64.5
207.9
592.1
$
220.6
655.7
1,062.5
39.7
107.7
2,086.2
561.4
164.7
84.1
56.6
211.5
696.7
Total assets ...............................................................................................................................................................................................................................................
$ 4,114.5
$
3,861.2
Liabilities and Stockholders’ Equity
Current Liabilities:
Current portion of long-term debt ................................................................................................................................................................................................................
$
Convertible senior subordinated notes .........................................................................................................................................................................................................
Accounts payable ...........................................................................................................................................................................................................................................
Accrued expenses ..........................................................................................................................................................................................................................................
Other current liabilities ..................................................................................................................................................................................................................................
Total current liabilities ..............................................................................................................................................................................................................................
Long-term debt, less current portion ...................................................................................................................................................................................................................
Pensions and post-retirement health care benefits ..............................................................................................................................................................................................
Deferred tax liabilities ..........................................................................................................................................................................................................................................
Other noncurrent liabilities ..................................................................................................................................................................................................................................
Total liabilities ..........................................................................................................................................................................................................................................
Stockholders’ Equity:
Preferred stock; $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding in 2006 and 2005 ....................................................................................
Common stock; $0.01 par value, 150,000,000 shares authorized, 91,177,903 and 90,508,221 shares issued and outstanding in 2006 and 2005, respectively .................
Additional paid-in capital ................................................................................................................................................................................................................................
Retained earnings ...........................................................................................................................................................................................................................................
Unearned compensation ................................................................................................................................................................................................................................
Accumulated other comprehensive loss ........................................................................................................................................................................................................
Total stockholders’ equity ........................................................................................................................................................................................................................
6.3
201.3
706.9
629.7
79.4
1,623.6
577.4
268.1
114.9
36.9
2,620.9
–
0.9
908.9
774.1
–
(190.3)
1,493.6
$
6.3
–
590.9
561.8
101.4
1,260.4
841.8
241.7
88.1
13.2
2,445.2
–
0.9
894.7
825.4
(0.1)
(304.9)
1,416.0
Total liabilities and stockholders’ equity ..................................................................................................................................................................................................
$ 4,114.5
$
3,861.2
18
The Consolidated Statements of Operations should be read in conjunction with the Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Company’s
audited Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K.
The Consolidated Balance Sheets should be read in conjunction with the Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Company’s
audited Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K.
19
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions, except share amounts)
Common Stock
Shares
Amount
Additional
Paid-In Capital
Balance, December 31, 2003 ................................................................................
75,409,655
$
Net income ..................................................................................................................
—
Issuance of common stock, net of offering expenses ...................................................
14,720,000
Issuance of restricted stock ..........................................................................................
Stock options exercised ................................................................................................
Amortization of unearned compensation .....................................................................
Additional minimum pension liability, net of taxes ........................................................
Deferred gains and losses on derivatives held by affiliates, net .....................................
Change in cumulative translation adjustment ...............................................................
7,487
257,150
—
—
—
—
Balance, December 31, 2004 ..............................................................................
90,394,292
Net income ..................................................................................................................
Issuance of restricted stock ..........................................................................................
Stock options exercised ................................................................................................
Amortization of unearned compensation .....................................................................
Additional minimum pension liability, net of taxes ........................................................
Deferred gains and losses on derivatives held by affiliates, net .....................................
Change in cumulative translation adjustment ...............................................................
Balance, December 31, 2005 ................................................................................
Cumulative effect of adjustments from the adoption of SAB No. 108, net of taxes ....
—
4,449
109,480
—
—
—
—
90,508,221
—
Adjusted balance, January 1, 2006 ....................................................................................
90,508,221
Net loss ........................................................................................................................
Issuance of restricted stock .........................................................................................
Stock options exercised ...............................................................................................
Stock compensation .....................................................................................................
Reclassification due to the adoption of SFAS No. 123R ................................................
Additional minimum pension liability, net of taxes ........................................................
Deferred gains and losses on derivatives, net ...............................................................
Deferred gains and losses on derivatives held by affiliates, net .....................................
Adjustments related to the adoption of SFAS No. 158, net of taxes ............................
Change in cumulative translation adjustment ...............................................................
—
8,832
660,850
—
—
—
—
—
—
—
0.8
—
0.1
—
—
—
—
—
—
0.9
—
—
—
—
—
—
—
0.9
—
0.9
—
—
—
—
—
—
—
—
—
—
$
590.3
—
299.4
0.2
3.3
—
—
—
—
893.2
—
0.1
1.4
—
—
—
—
894.7
—
894.7
—
0.2
10.8
3.3
(0.1)
—
—
—
—
—
$
Retained
Earnings
635.0
158.8
—
—
—
—
—
—
—
793.8
31.6
—
—
—
—
—
—
825.4
13.6
839.0
(64.9)
—
—
—
—
—
—
—
—
—
Unearned
Compensation
Defined Benefit
Pension Plans
Cumulative Translation
Adjustment
Deferred
Gains (Losses)
on Derivatives
Accumulated
Other Comprehensive
Income (Loss)
Total
Stockholders’
Equity
Accumulated Other Comprehensive Loss
$
(0.5)
$
(128.4)
$
(188.4)
$
(2.7)
$
(319.5)
$
Comprehensive
Income (Loss)
$
158.8
—
—
—
—
0.3
—
—
—
(0.2)
—
—
—
0.1
—
—
—
(0.1)
—
(0.1)
—
—
—
—
0.1
—
—
—
—
—
—
$
—
—
—
—
—
(18.9)
—
—
(147.3)
—
—
—
—
(2.8)
—
—
(150.1)
—
(150.1)
—
—
—
—
—
6.6
—
—
(26.8)
—
(170.3)
—
—
—
—
—
—
—
69.3
(119.1)
—
—
—
—
—
—
(39.6)
(158.7)
—
(158.7)
—
—
—
—
—
—
—
—
—
$
136.7
(22.0)
$
—
—
—
—
—
—
3.8
—
1.1
—
—
—
—
—
2.8
—
3.9
—
3.9
—
—
—
—
—
—
0.1
(2.0)
—
—
2.0
$
—
—
—
—
—
(18.9)
3.8
69.3
(265.3)
—
—
—
—
(2.8)
2.8
(39.6)
(304.9)
—
(304.9)
—
—
—
—
—
6.6
0.1
(2.0)
(26.8)
136.7
(190.3)
906.1
158.8
299.5
0.2
3.3
0.3
(18.9)
3.8
69.3
1,422.4
31.6
0.1
1.4
0.1
(2.8)
2.8
(39.6)
1,416.0
13.6
1,429.6
(64.9)
0.2
10.8
3.3
—
6.6
0.1
(2.0)
(26.8)
136.7
(18.9)
3.8
69.3
213.0
31.6
(2.8)
2.8
(39.6)
(8.0)
8.0
(64.9)
6.6
0.1
(2.0)
136.7
76.5
21
Balance, December 31, 2006 ................................................................................
91,177,903
$
0.9
$
908.9
$
774.1
$
20
The Consolidated Statements of Stockholders’ Equity should be read in conjunction with the Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Company’s
audited Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K.
$
1,493.6
$
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Years Ended December 31,
Cash flows from operating activities:
2006
2005
2004
Net (loss) income ............................................................................................................................................................................................
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
$
(64.9)
$
31.6
$
158.8
Depreciation ............................................................................................................................................................................................
Deferred debt issuance cost amortization ...............................................................................................................................................
Goodwill impairment charge ...................................................................................................................................................................
Amortization of intangibles ......................................................................................................................................................................
Stock compensation .................................................................................................................................................................................
Equity in net earnings of affiliates, net of cash received ...........................................................................................................................
Deferred income tax provision ................................................................................................................................................................
Gain on sale of property, plant and equipment ........................................................................................................................................
Write-down of property, plant and equipment ........................................................................................................................................
Changes in operating assets and liabilities, net of effects from purchase of businesses:
Accounts and notes receivable, net .........................................................................................................................................................
Inventories, net ........................................................................................................................................................................................
Other current and noncurrent assets ......................................................................................................................................................
Accounts payable .....................................................................................................................................................................................
Accrued expenses ....................................................................................................................................................................................
Other current and noncurrent liabilities ..................................................................................................................................................
Total adjustments ...............................................................................................................................................................................
Net cash provided by operating activities .....................................................................................................................
Cash flows from investing activities:
Purchases of property, plant and equipment ...........................................................................................................................................
Proceeds from sales of property, plant and equipment ...........................................................................................................................
Sale/(purchase) of businesses, net of cash acquired .................................................................................................................................
(Investments in)/proceeds from sale of unconsolidated affiliates, net ......................................................................................................
Net cash used in investing activities .................................................................................................................................
Cash flows from financing activities:
Proceeds from debt obligations ...............................................................................................................................................................
Repayments of debt obligations ...............................................................................................................................................................
Proceeds from issuance of common stock ..............................................................................................................................................
Payment of debt issuance costs ................................................................................................................................................................
Net cash (used in) provided by financing activities ...................................................................................................
Effects of exchange rate changes on cash and cash equivalents ............................................................................................................................
Increase (decrease) in cash and cash equivalents ..................................................................................................................................................
Cash and cash equivalents, beginning of year ........................................................................................................................................................
Cash and cash equivalents, end of year .................................................................................................................................................................
$
98.6
6.4
171.4
16.9
3.5
(8.8)
10.6
(0.8)
0.3
32.5
66.2
(26.5)
55.1
44.3
37.4
507.1
442.2
(129.1)
3.9
—
(2.9)
(128.1)
538.2
(708.2)
10.8
(4.9)
(164.1)
30.5
180.5
220.6
401.1
89.4
7.2
–
16.5
0.2
(14.5)
107.9
(3.0)
0.3
103.6
(42.1)
(22.3)
39.8
(44.6)
(23.7)
214.7
246.3
(88.4)
10.5
0.4
(23.4)
(100.9)
670.2
(901.1)
1.4
–
(229.5)
(20.9)
(105.0)
325.6
220.6
$
84.3
13.2
–
15.8
0.3
(6.1)
14.5
(8.7)
9.5
(39.9)
(65.1)
(10.5)
53.2
38.5
8.1
107.1
265.9
(78.4)
46.0
(765.7)
1.0
(797.1)
1,450.5
(1,036.9)
303.0
(21.1)
695.5
14.3
178.6
147.0
325.6
$
22
The Consolidated Statements of Cash Flows should be read in conjunction with the Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Company’s
audited Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements, which are included in the Company’s Annual Report on Form 10-K.
Performance Graph
The graph shown below is a line graph presentation of the Company’s
cumulative stockholder returns on an indexed basis as compared to
the S&P Mid-Cap 400 Index and a self-constructed peer group of the
companies listed in footnote 1 to the performance graph (“Peer Group”).
Returns for the Company in the graph are not necessarily indicative of
future performance.
Compare 5-Year Cumulative Total Return
Among AGCO Corporation, S&P Mid-Cap Index
And Peer Group Index
(cid:19)(cid:22)(cid:17)
(cid:19)(cid:19)(cid:22)
(cid:19)(cid:17)(cid:17)
(cid:18)(cid:24)(cid:22)
(cid:18)(cid:22)(cid:17)
(cid:18)(cid:19)(cid:22)
(cid:18)(cid:17)(cid:17)
(cid:24)(cid:22)
(cid:22)(cid:17)
(cid:19)(cid:22)
(cid:17)
(cid:52)
(cid:51)
(cid:34)
(cid:45)
(cid:45)
(cid:48)
(cid:37)
(cid:19)(cid:17)(cid:17)(cid:18)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:19)(cid:17)(cid:17)(cid:19)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:19)(cid:17)(cid:17)(cid:20)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:19)(cid:17)(cid:17)(cid:21)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:19)(cid:17)(cid:17)(cid:22)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:1)(cid:19)(cid:17)(cid:17)(cid:23)
(cid:177)(cid:1)(cid:52)(cid:7)(cid:49)(cid:1)(cid:46)(cid:74)(cid:69)(cid:14)(cid:36)(cid:66)(cid:81)(cid:1)(cid:42)(cid:79)(cid:69)(cid:70)(cid:89)(cid:202)(cid:202)(cid:202)(cid:202)(cid:179)(cid:1)(cid:34)(cid:40)(cid:36)(cid:48)(cid:1)(cid:36)(cid:80)(cid:83)(cid:81)(cid:80)(cid:83)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79)(cid:202)(cid:202)(cid:202)(cid:202)(cid:174)(cid:1)(cid:49)(cid:70)(cid:70)(cid:83)(cid:1)(cid:40)(cid:83)(cid:80)(cid:86)(cid:81)(cid:1)(cid:42)(cid:79)(cid:69)(cid:70)(cid:89)
(cid:8)(cid:17)(cid:9)
Assumes $100 Invested On January 1, 2002
Assumes Dividends Reinvested
(1) Based on information for a self-constructed per group of companies
which includes the following companies: Caterpillar Inc., CNH Global
NV, Cummins Inc., Deere & Company, Eaton Corporation, Ingersoll-
Rand Company, Navistar International Corporation, PACCAR Inc., Parker
Hannifin Corporation and Terex Corporation.
The most recent certifications by AGCO Corporation’s Chief Executive
Officer and Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 regarding the quality of the Company’s
public disclosures are included as exhibits to the Company’s Annual
Report on Form 10-K for fiscal year 2006 filed with the Securities
and Exchange Commission. In addition, AGCO’s Chief Executive
Officer submitted to the New York Stock Exchange the Annual CEO
Certification for 2006 as required by Section 303A.12(a) of the NYSE
Listed Company Manual.
23
BOARD
Of
DIRECTORS
Wolfgang Deml
President and Chief Executive
Officer, BayWa Corporation
Governance and Succession
Planning Committees
s Standing, left to right
Seated, left to right s
Hendrikus Visser
Former Executive Board Member
of Rabobank Nederland and
Nuon, N.V.
Audit and Governance
Committees
P. George Benson
President
College of Charleston
Audit, Executive and
Governance Committees
Gerald B. Johanneson
Former President & Chief
Executive Officer, Haworth, Inc.
Executive, Governance and
Succession Planning Committees
Curtis E. Moll
Chairman of the Board and
Chief Executive Officer, MTD
Products, Inc.
Audit and Governance
Committees
Francisco R. Gros
President and Chief Executive
Officer, Fosfertil
Audit and Governance
Committees
Martin H. Richenhagen
Chairman, President & CEO
AGCO Corporation
Executive and Succession
Planning Committees
W. Wayne Booker
Former Vice Chairman
Ford Motor Company
Audit, Compensation and
Executive Committees
Gerald L. Shaheen
Group President
Caterpillar Inc.
Compensation, Executive and
Succession Planning Committees
Herman Cain
Chairman of
T.H.E. New Voice, Inc.
Compensation and Succession
Planning Committees
David E. Momot
Former Vice President
General Electric
Audit and Compensation
Committees
Corporate Headquarters
4205 River Green Parkway
Duluth, Georgia, 30096 U.S.A.
770-813-9200
Transfer Agent & Registrar
Computershare Investor Services, LLC
P.O. Box 43078
Providence, RI 02940-3078
Stock Exchange
AGCO Corporation common stock
(trading symbol “AG”) is traded on
the New York Stock Exchange.
Independent Registered
Public Accounting Firm
KPMG LLP
Atlanta, Georgia U.S.A.
Annual Meeting
The annual meeting of the
Company’s stockholders will be held
at 9:00 a.m. ET, on April 26, 2007
at the offices of AGCO Corporation,
4205 River Green Parkway, Duluth,
Georgia 30096 U.S.A.
Form 10-K
The Form 10-K annual report to the
Securities and Exchange Commission
is available on our corporate web
site (www.agcocorp.com),
under “Investors & Media,” or
upon request from the Investor
Relations Department at corporate
headquarters.
4205 River Green Parkway
Duluth, Georgia 30096 U.S.A.
770-813-9200
www.agcocorp.com