AGCO Annual Report 2007 | Quarterlytics

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FY2007 Annual Report · AGCO

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2007 Annual Report

Letter to Stockholders ............................................. 4 – 5

We Are AGCO ........................................................ 6 – 15

CONTENTS

Forward-Looking Statements ..................................... 16

Financial Review .................................................. 17 – 22

Board of Directors, Stockholder Information ............. 23

Brands + People + Innovation + Opportunity + Strategy

(In millions, except per share amounts)

Net sales
Income from operations
Net income (loss)
Total assets
Stockholders’ equity
Earnings (loss) per share (1)
Adjusted earnings per share (2)

2007
$ 6,828.1
394.8
246.3
4,787.6
2,043.0
2.55
$
2.52
$

(1)On a diluted basis.
(2)For a reconciliation of adjusted earnings per share, see footnote 1 on page 17

FINANCIAL
HIGHLIGHTS

2006 Change
$ 5,435.0 + 25.6%
+ 473.0%

68.9
(64.9)
4,114.5
1,493.6
(0.71)
$
1.12
$

+ 16.4%
+ 36.8%

+ 125.0%

MISSION
Proﬁ table growth through superior customer
service, innovation, quality and commitment.

VISION
High-tech solutions for professional farmers
feeding the world.

From the Brazilian sugar cane ﬁ elds, to the American corn belt, to the wheat ﬁ elds of Europe and the emerging markets

of Asia, the Middle East and Africa – demand for AGCO’s quality brands has never been greater. The 2007 annual report

focuses on what’s behind our brands, and it looks at the ﬁ ve key factors that contribute to the growth of AGCO Corporation.

With net sales of more than $6.8 billion, AGCO is continuing to broaden into one of the strongest agricultural equipment

companies worldwide.

™

development efforts. Looking at just our 2007 new product
introductions, we launched three new Indian sourced
tractors to the North American market, eight new Valtra
tractors, 15 new combines, 23 new planter and tillage
models, the new high horsepower Fendt 900 series and 16
other new tractor models in Europe. In 2008 and 2009, the
number of AGCO’s new product introductions is expected to
increase by nearly one-third compared to our 2007 activity.

AGCO has ambitious plans to take advantage of the strong
markets and grow its global presence. We intend to
maintain and develop our position as a technology leader
and offer outstanding customer service. Our annual report
is organized around the ﬁ ve key elements that we feel are
necessary to attain our ambitions for proﬁ table growth.
First, strong brands – demand for our brands has never
been greater and we are working to ensure this momentum
continues. Next, we consider our people our most
important resource, and we are making investments to
deliver quality products, services and support to our
customers. Third, innovation is driving a full roster of
award-winning new products designed to deliver
productivity solutions to farmers. Fourth, AGCO is focused
on the many opportunities for growth that exist in our
dynamic industry. Finally, we have a results-driven strategy
to deliver our growth ambitions.

Brands
Over the past 17 years, AGCO has been a major force
behind industry consolidation. Through a series of
acquisitions, our sales have grown from $200 million in 1990
to over $6.8 billion in 2007. AGCO acquired many well-
known and respected equipment brands that our customers
rely on to meet their agricultural equipment needs. With our
multi-brand strategy and product differentiation, AGCO
offers more options to satisfy customers’ needs and reward
their brand loyalty. We differentiate our products by feature,
functionality and price. In addition, our brands are enhanced
by a network of dealers and distributors that provide
superior sales and service support to our customers.

Through our four core brands, Massey Ferguson, Fendt,
Valtra and Challenger, we are providing high-tech solutions
for the growing sector of professional farmers. Massey
Ferguson is one of the most widely sold tractor brands in
the world, with more than 150 years of innovation and
experience, and offers one of the most complete lines of
agricultural equipment in the industry. Fendt is a market
leader in Europe with a reputation for superior technology
and engineering. Valtra has achieved a leading market

position in the Nordic region and a strong presence in
Brazil with innovative solutions and unsurpassed customer
service. Challenger markets its full line of high-end farm
equipment to customers requiring high performing,
powerful and rugged machinery.

People
At AGCO, the foundation for our success is a work force
that consists of top talent from around the world. We
understand that motivated employees are essential for the
achievement of our corporate goals. By continually
enhancing the leadership, business and people
management skills of our current and potential managers,
we expect to have employees who can provide the
necessary vision, leadership and execution to achieve our
ﬁ nancial and operational goals. Recognizing that our
employees are critical to the success of our initiatives, we
will continue to invest in market-leading training, knowledge
management and human resources programs. We are also
making increased investments in dealer training and parts
and service support to improve the service experience of
our customers.

Innovation
Our objective is to deliver the highest quality products and
services that exceed our customers’ expectations at the
right price. We are working to produce innovative products
that provide our customers with high-tech solutions to meet
their need for improved efﬁ ciency, productivity and
proﬁ tability. With that aim in mind, we have tripled our
research and development spending over the last six years
to approximately $155 million in 2007. Our spending is
focused on new technology for our high horsepower tractor
products, new products that ﬁ ll regional product niches and
investments in our re-energized harvesting program.

In 2007, we centralized our technology efforts and formed
AGCO’s Advanced Technology Solutions (ATS) group. This
group is a global organization responsible for providing

technology to the family of AGCO brands for use in all
markets around the world. To more effectively manage the
development and introduction of new technologies, we have
separated ATS into three distinct areas of responsibility:
Machine Control, deﬁ ned as automated guidance or
steering assist; Precision Farming, which facilitates
enhanced planting, fertilizer and chemical application and
harvesting operations; and Machine Management, which
enables farmers to record and manage data to help
increase the efﬁ ciency of their operations.

Opportunity
AGCO’s focus for 2008 and beyond includes satisfying the
needs of a rapidly changing agricultural market. Our
challenge is to take advantage of these growing
opportunities by developing new products and innovations,
improving distribution and expanding business in emerging
markets. We also have the opportunity to develop tractors
and machinery to support the needs of fuel crop growers,
evolve equipment to comply with bio-fuel requirements and
be part of an industry that sets standards for bio-fuel
cleanliness and performance. The developing markets of
Russia and Eastern Europe provide a signiﬁ cant growth
opportunity, and we are making investments to expand our
distribution footprint in those regions. AGCO is committed
to meeting or exceeding increasingly strict emissions
requirements via our substantial product development
efforts. We expect to grow AGCO by increasing the
breadth of products, delivering technology-based solutions
to our customers and expanding our presence in the
emerging markets of the world with investments that drive
market growth and deliver outstanding returns.

Strategy
The vision that guides our strategy is to provide “high-tech
solutions for professional farmers feeding the world” by
increasing the efﬁ ciency and productivity of farmers.
AGCO’s mission is to achieve proﬁ table growth through
superior customer service, innovation, quality and

commitment. Being successful requires consistent
execution of strategic principles that drive performance
every year. To ensure AGCO continues to improve its
competitive position and its performance, we have put
strategic initiatives in place aimed at growing our sales,
reducing costs and better utilizing capital. Our growth
strategies are focused on increasing investments in new
products to provide leading technology to the family of
AGCO brands. We are also working to improve our
distribution network to expand our reach and upgrade our
customer service. In addition, our cost reduction strategies
drive the efﬁ ciency and productivity of our manufacturing
and purchasing functions.

Whether it’s one acre or thousands of hectares, we’re
dedicated to improving our customers’ productivity,
efﬁ ciency and proﬁ tability. We’re conﬁ dent that the quality
of our products, combined with ingenuity of our employees
and dealer network, will ensure that our customers and
AGCO are Always Growing.

While I am proud of what we achieved in 2007, we have
much work to do. I believe our business is well positioned
to grow sustainably and proﬁ tably. AGCO’s achievements
in 2007 establish a solid foundation for continued earnings
growth. I thank our Board of Directors for their continued
counsel and guidance. I am grateful for your conﬁ dence,
and I look forward to the opportunities ahead for AGCO.

Martin Richenhagen
Chairman, President and
Chief Executive Ofﬁ cer

2007

2006

2005

$2.52

$1.12

TRACTORS

PARTS

IMPLEMENTS AND OTHER

COMBINES

APPLICATION EQUIPMENT

$1.46

HAY AND FORAGE

68%

13%

EUROPE/AFRICA/MIDDLE EAST

NORTH AMERICA

SOUTH AMERICA

EAST ASIA/PACIFIC

ADJUSTED EARNINGS PER SHARE

SALES BY PRODUCT

SALES BY GEOGRAPHIC REGION

59%

22%

16%

Fellow Stockholders

Martin Richenhagen
Chairman, President and Chief Executive Ofﬁ cer

I am pleased to tell you that AGCO Corporation achieved
record sales and net income in 2007. Over the last 12
months, AGCO’s 13,700 employees and 3,000 independent
dealers applied their dedication, creativity and passion to
the task of providing innovative products and service to our
customers. The major global markets for agricultural
equipment saw a healthy start in 2007 and most
strengthened as the year progressed. Around the globe,
there are factors supporting grain prices and providing
opportunities for our industry. The increasing demand for
soft commodities from the growing population, improved
diets and increased bio-fuel production has resulted in
grain inventories dropping to record lows and grain prices
rising to historic highs. These positive developments drive
more land into crop production and suggest higher visibility
for future farm cash ﬂ ows and large farm equipment
demand. The market outlook for agricultural equipment
remains positive, and AGCO is well-positioned with strong
brands and quality products to take advantage of the
favorable market conditions.

AGCO’s sales and earnings for 2007 both showed
impressive growth compared to 2006. For 2007, AGCO’s

sales increased approximately 25.6% to $6.8 billion, and
our adjusted diluted earnings per share increased over
125% compared to 2006. The strength of our end markets
continued to produce very positive results. Brazil’s farm
economy improved signiﬁ cantly driving strong growth in
our South American sales. Our Europe/Africa/Middle East
segment delivered another strong performance with our
Fendt, Valtra and Massey Ferguson brands making
important contributions. Fendt’s new high horsepower
tractor models were enthusiastically received by our
customers, and the sales of these high margin products
factored into our improvements in sales and margins in
Europe. We also achieved improved sales in both our North
American and Asia/Paciﬁ c segments. Our proﬁ tability
improved in 2007 with our operating margins rising 1.3
percentage points compared to 2006.

In 2007, one of our primary objectives was to reduce
working capital and generate cash ﬂ ow. AGCO exceeded
expectations by generating over $360 million of free cash
ﬂ ow during 2007, which was also a record for our company.
The strong cash ﬂ ow allowed us to reduce debt, improve
our balance sheet and increase our research and

Brands

The world’s farmers seek greater efﬁ ciency and proﬁ tability.
AGCO delivers.

AGCO brands provide farmers the world over with a strong foundation for growth.
AGCO’s extensive family of brands includes many of the most trusted global names
in agricultural equipment, including Challenger, Fendt, Massey Ferguson and Valtra.
These four corporate brands, alone, accounted for more than 86 percent of AGCO
total machinery net sales in 2007. Challenger, a popular and respected full line of
machinery, delivers high speciﬁ cation, powerful, high technology equipment to
professional farmers around the world. Fendt, based in Germany, remains a market
leader in Europe, positioned on the cutting edge of design, engineering and

technological leadership. Massey Ferguson, one of the most widely sold tractor
brands in the world, offers a complete, rugged and versatile product line to ﬁ t virtually
all types of farming applications. Valtra continues to hold a dominant position in both
the Nordic region and the fast-growing Brazilian market with tractors built to deliver
the highest levels of performance in some of the toughest working conditions.
Because Valtra tractors are built to individual customer speciﬁ cations, Valtra proudly
hosted more than 3,000 customers at Valtra’s Suolahti, Finland factory to watch their
tractors being built. We like it when customers look over our shoulders.

People Our customers expect high quality products, service and support.

AGCO people are driven to exceed expectations.

The people of AGCO share a common mission: to create proﬁ table growth
through superior customer service, innovation, quality and commitment.
In 2007, our mission underscored quality, as we launched AGCO Improvement
Methods (AIM). AIM provides AGCO employees with a wide range of proven
problem-solving and quality tools. AGCO University, created from just one of a
series of Human Resources initiatives, continues to train future managers and
leaders – providing employees around the globe with additional education and
professional development options and the opportunity to improve leadership

skills. In 2007, AGCO University launched “Cultivating Our Leaders,” a global
training program that provides high potential employees with the tools they
need to enhance their leadership skills. AGCO also offers employees the
Growing Resources and Opportunity Worldwide (GROW) program, which helps
manage performance and develop core competencies necessary to support
global growth strategies. Of course, it’s not only our employees that beneﬁ t
from all of this training. Our customers do as well.

Chairman’s Award and 2007 Recipients

AGCO Parts Supports AGCO Brands Worldwide

Challenger’s Revolutionary Track System and Innovative
Suspension System Help Raise Farm Productivity

AGCO Finance Makes Delivery Possible for Farmers

AGCO Participates in Raising Awareness for a Breast Cancer
Charity With a Pink Massey Ferguson Tractor

Excited Families Watch Assembly of Their Valtra Tractor

Innovation AGCO is always growing.

So is our roster of innovative, award-winning machinery.

Fendt is synonymous with cutting-edge technology and forward-looking design.
2007 saw the introduction of the Fendt TRISIX Vario triple-axle concept tractor,
which is one of the most technologically advanced tractors ever developed. A
Challenger MT875B put its technology to the test, setting a new world record for
cultivation in 2007 – 1,590 acres in 24 hours. And Massey Ferguson introduced
new, big-square baler technology that allows bales to be 30 percent more dense,
resulting in lower transportation costs for our customers. AGCO also launched
its Advanced Technology Solutions (ATS) Group. The primary mission of this

key group is to develop and incorporate advanced technologies – from the
latest in satellite-guided machine control to industry-leading precision farming
and machine management solutions. All AGCO machinery brands worldwide
incorporate these advanced technology products. To help our customers become
increasingly more productive and efﬁ cient, AGCO is dedicated to innovation.
In 2007, this commitment was demonstrated in part by AGCO’s worldwide
engineering team ﬁ ling the most patent applications in our history. At AGCO,
Always Growing means “always innovating,” too.

Fendt Introduces the TRISIX Vario, a High-Performance Concept Tractor

Valtra Recognition for South American Tractors

World Record Award Plaque for Challenger

Fendt Recognized for Marketing Innovation

Richard Markwell, AGCO EAME, Receives the 2007 SIMA
Palmares de L’Innovation Award for Massey Ferguson

Advanced Technology Solutions (ATS) Group
Integrates Latest Technology Into All AGCO Brands

Using Virtual Reality, Engineers Develop Products
With Greater Speed and Efﬁ ciency

Opportunity The future of farming will provide many challenges.

AGCO is focused on the future.

As the world’s population grows at an ever-increasing pace, the amount of
arable land per capita continues to decrease. For AGCO, and for farmers across
the globe, one solution to this paradox lies in increasing farm productivity
through the use of more efﬁ cient farm equipment. In short, doing more with less.
At AGCO, we’ve built our vision on that idea – providing high-tech solutions
for professional farmers feeding the world. Emerging markets also present new
opportunities. Brazil, for example, still has abundant land available for farming.
Russia, with its aging tractor ﬂ eet, has a growing need and appetite for Western

technology. And China, with 22 percent of the world’s population and 10 percent
of the world’s arable land, represents an important growth market. Bio-fuel
production is another growth driver. U.S. ethanol production, alone, is expected
to double within the next few years. The worldwide focus on renewable energy
from crops is contributing to the increase in commodity prices. And, in turn, that
is helping fuel the demand for more advanced and efﬁ cient farm equipment.
At AGCO, we’re leaving no stone unturned.

Massey Ferguson and Farmers Feeding the World

Advanced Technology Solutions Improvee Product
Advanced Technology Solutions Improve Productivity and Efﬁ ciency

Fendt Wins Demopark Gold Award for
Fendt Wins Demopark Gold Award for
Fendt Wins Demopark Gold Award for
Innovation for the 900 Vario
Innovation for the 900 Vario

Sugar Cane in High Demand in South America

Outstanding Customer Service Makes Valtra an Easy Choice
Outstanding Customer Service Makes Valtra an Easy Choice

Strategy AGCO is focused on growth.

Ours as well as our customers’.

Always Growing is the philosophical and strategic foundation of all that AGCO
does. No one is more committed to this than AGCO’s senior management team.
Under its leadership, AGCO ramped up new product development and, over the
past six years, has increased R&D spending threefold. We opened a new ofﬁ ce in
Schaffhausen, Switzerland to guide the progress of our growth in the Europe/
Africa/Middle East markets. From this central European location, we are better
able to manage key strategic growth initiatives and facilitate the exchange of
ideas and best practices. The new Massey Ferguson “Technology Centre” also
opened in 2007 in Beauvais, France. Its purpose: to showcase our advanced

equipment design and technology to the farm machinery industry. We are
reenergizing our harvesting business. In 2007, we strengthened our market
position, acquiring a 50 percent stake in Laverda S.p.A., a leading European
manufacturer of harvesting equipment. We are also growing our Sisu Diesel
business. Today, Sisu Diesel engines power much of AGCO’s equipment, and the
distribution of these engines outside of AGCO continues to grow. AGCO’s
leadership team is focused on quality, innovation, growth and the satisfaction of
every AGCO machinery customer.

AGCO Senior Management Team

Martin H. Richenhagen
Chairman of the Board
President and
Chief Executive Officer

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

Garry L. Ball
Senior Vice President
Engineering

David L. Caplan
Senior Vice President
Materials Management,
Worldwide

Hubertus M. Muehlhaeuser
Senior Vice President
Strategy & Integration and IT
General Manager, Engines

Stephen D. Lupton
Senior Vice President
Corporate Development
and General Counsel

Andre M. Carioba
Senior Vice President
General Manager,
South America

Gary L. Collar
Senior Vice President
General Manager, Europe/Africa/
Middle East; East Asia/Pacific

Robert B. Crain
Senior Vice President
General Manager,
North America

SELECTED FINANCIAL INFORMATION
(in millions, except percentages, per share amounts and employees)

Years Ended December 31,

Operating Results

2007

2006

2005

2004

2003

Net sales ....................................................................................................................................

$ 6,828.1

$ 5,435.0

$ 5,449.7

$ 5,273.3

$ 3,495.3

Gross proﬁ t ................................................................................................................................

Percent of net sales ...................................................................................................................

Income from operations ............................................................................................................

Percent of net sales ...................................................................................................................

Net income (loss) .......................................................................................................................

Net income (loss) per common share – diluted(1) .......................................................................

Weighted average shares outstanding – diluted .......................................................................

1,191.0

17.4%

394.8

5.8%

246.3

2.55

96.6

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 ﬂ ows from operations .......................................................................................................

504.3

442.2

246.3

265.9

616.4

17.6%

184.3

5.3%

74.4

0.98

75.8

88.0

Balance Sheet Data

Working capital ..........................................................................................................................

638.4

685.4

825.8

$ 1,045.5

755.4

Total assets ................................................................................................................................

Long-term debt, less current portion ........................................................................................

Total liabilities ............................................................................................................................

Stockholders’ equity ..................................................................................................................

4,787.6

294.1

2,744.6

2,043.0

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

Beauvais, France

Other Data

Number of employees ...............................................................................................................

13,720

12,804

13,023

14,313

11,278

the risks of work interruption or stoppage and could
cause our costs to be higher.
We have signiﬁ cant pension obligations with
respect to our employees.
We are subject to ﬂ uctuations 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 our ﬁ lings with the Securities
and Exchange Commission, including our Form
10-K for the year ended December 31, 2007. The
Company disclaims any obligation to update any
forward-looking statements.

(1) The Company makes reference to adjusted earnings per share, as reconciled below:

Net income (loss) per common share – diluted ...................................................................................................................

Restructuring and other infrequent (income) expenses(2) ....................................................................................................

Goodwill impairment charge(2) .............................................................................................................................................

Bond redemption costs(2) .....................................................................................................................................................

Deferred income tax valuation allowance adjustment ........................................................................................................

Weighted average share impact ..........................................................................................................................................

2007

2.55

(0.03)

–

2006

(0.71)

0.01

1.81

–

0.01

2005

0.35

–

0.15

0.95

–

2004

1.71

0.04

–

2003

0.98

0.26

–

Net income per common share – adjusted .........................................................................................................................

2.52

1.12

1.46

1.75

1.24

(2) After tax.

Forward-Looking Statements
This annual report includes forward-looking statements,
including the statements in the letter to new stockholders
and other statements herein regarding new products,
growth, market conditions, strategic initiatives and
results of operations. These statements are subject to
risks that could cause actual results to differ materially
from those suggested by the statements, including:
Our ﬁ nancial results depend entirely upon the
agricultural industry, and factors that adversely affect
the agricultural industry generally will adversely
affect us.
Our success depends on the introduction of new
products, which requires substantial expenditures.
We face signiﬁ cant competition and, if we are
unable to compete successfully against other
agricultural equipment manufacturers, we would lose
customers and our revenues and proﬁ tability 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 and efﬁ ciently 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 pricing and proﬁ tability 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

Rounding may impact the summation of certain line items.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)

Years Ended December 31,

2007

2006

2005

Net sales ....................................................................................................................................................................................................

6,828.1

5,435.0

Cost of goods sold .......................................................................................................................................................................................

Gross proﬁ t .............................................................................................................................................................................................

5,637.1

1,191.0

4,507.2

927.8

Selling, general and administrative expenses ..............................................................................................................................................

Engineering expenses ..................................................................................................................................................................................

Restructuring and other infrequent (income) expenses ...............................................................................................................................

Goodwill impairment charge ........................................................................................................................................................................

Amortization of intangibles ...........................................................................................................................................................................

Income from operations .........................................................................................................................................................................

Interest expense, net ....................................................................................................................................................................................

Other expense, net .......................................................................................................................................................................................

Income (loss) before income taxes and equity in net earnings of afﬁ liates ..................................................................................................

Income tax provision ....................................................................................................................................................................................

Income (loss) before equity in net earnings of afﬁ liates ...............................................................................................................................

Equity in net earnings of afﬁ liates ................................................................................................................................................................

Net income (loss) .....................................................................................................................................................................................

Net income (loss) per common share: ..........................................................................................................................................................

Basic .......................................................................................................................................................................................................

Diluted ....................................................................................................................................................................................................

Weighted average number of common and common equivalent shares outstanding: ................................................................................

625.7

154.9

(2.3)

—

17.9

394.8

24.1

43.4

327.3

111.4

215.9

30.4

541.7

127.9

1.0

171.4

16.9

68.9

55.2

32.9

(19.2)

73.5

(92.7)

27.8

246.3

(64.9)

2.69

2.55

91.5

96.6

(0.71)

90.8

5,449.7

4,516.1

933.6

520.7

121.7

–

16.5

274.7

80.0

34.6

160.1

151.1

9.0

22.6

31.6

0.35

90.4

90.7

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 afﬁ liates .................................................................................................................................................................................................................

Other assets ................................................................................................................................................................................................................................

Intangible assets, net ..................................................................................................................................................................................................................

Goodwill ......................................................................................................................................................................................................................................

2007

2006

582.4

766.4

1,134.2

52.7

186.0

2,721.7

753.0

284.6

89.1

67.9

205.7

665.6

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

Total assets ......................................................................................................................................................................................................................

$ 4,787.6

$ 4,114.5

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 beneﬁ ts .....................................................................................................................................................................

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 2007 and 2006 ..........................................................

Common stock; $0.01 par value, 150,000,000 shares authorized, 91,609,895 and 91,177,903 shares issued and outstanding in 2007 and 2006, respectively

Additional paid-in capital .......................................................................................................................................................................................................

Retained earnings ..................................................................................................................................................................................................................
Accumulated other comprehensive income (loss) .................................................................................................................................................................

Total stockholders’ equity ................................................................................................................................................................................................

0.2

402.5

827.1

773.2

80.3

2,083.3

294.1

150.3

163.6

53.3

2,744.6

–

0.9

942.7

1,020.4

79.0

2,043.0

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

Total liabilities and stockholders’ equity ..........................................................................................................................................................................

$ 4,787.6

$ 4,114.5

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.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions, except share amounts)

Common Stock

Amount

Additional
Paid-In Capital

Balance, December 31, 2004 .......................................................................

90,394,292

0.9

893.2

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 afﬁ liates, net ......................

Change in cumulative translation adjustment ..................................................

—

4,449

109,480

—

Balance, December 31, 2005 .......................................................................

90,508,221

Cumulative effect of adjustments from the adoption of SAB No. 108, net of taxes

—

Adjusted balance, January 1, 2006 .....................................................................

90,508,221

Net loss ...........................................................................................................

Issuance of restricted stock ............................................................................

Stock options exercised ..................................................................................

Stock compensation .......................................................................................

Reclassiﬁ cation 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 afﬁ liates, net ......................

Adjustments related to the adoption of SFAS No. 158, net of taxes ...............

Change in cumulative translation adjustment ..................................................

—

8,832

660,850

—

Balance, December 31, 2006 .......................................................................

91,177,903

Net income .......................................................................................................

Issuance of restricted stock .............................................................................

Stock options and SSARs exercised ...............................................................

Stock compensation ........................................................................................

Deﬁ ned beneﬁ t pension plans, net of taxes: ....................................................

Prior service cost arising during year ............................................................

Net actuarial gain arising during year ............................................................

Amortization of prior service cost included in net periodic pension cost ......

Amortization of net actuarial losses included in net periodic pension cost ...

Deferred gains and losses on derivatives, net .................................................

Deferred gains and losses on derivatives held by afﬁ liates, net ......................

Change in cumulative translation adjustment ..................................................

—

6,346

425,646

—

0.9

—

0.9

—

0.9

—

0.1

1.4

—

894.7

—

894.7

—

0.2

10.8

3.3

(0.1)

—

908.9

—

0.2

8.0

25.6

—

Retained
Earnings

793.8

31.6

—

825.4

13.6

839.0

(64.9)

—

774.1

246.3

—

Balance, December 31, 2007 .......................................................................

91,609,895

0.9

942.7

1,020.4

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.

Unearned
Compensation

Deﬁ ned Beneﬁ t
Pension Plans

Cumulative Translation
Adjustment

Deferred
Gains (Losses)
on Derivatives

Accumulated
Other Comprehensive
Income (Loss)

Total
Stockholders’
Equity

Comprehensive
Income (Loss)

(0.2)

(147.3)

(119.1)

1.1

(265.3)

1,422.4

Accumulated Other Comprehensive Income (Loss)

31.6

—

0.1

—

(0.1)

—

(0.1)

—

0.1

—

(2.8)

—

(150.1)

—

(150.1)

—

6.6

—

(26.8)

—

(170.3)

—

1.4

71.1

0.1

10.6

—

(87.1)

—

(39.6)

(158.7)

—

(158.7)

—

136.7

(22.0)

—

182.8

160.8

—

2.8

—

3.9

—

3.9

—

0.1

(2.0)

—

2.0

—

7.7

(4.4)

—

5.3

—

(2.8)

2.8

(39.6)

(304.9)

—

(304.9)

—

6.6

0.1

(2.0)

(26.8)

136.7

(190.3)

—

1.4

71.1

0.1

10.6

7.7

(4.4)

182.8

79.0

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

1,493.6

246.3

0.2

8.0

25.6

1.4

71.1

0.1

10.6

7.7

(4.4)

182.8

2,043.0

(2.8)

2.8

(39.6)

(8.0)

(64.9)

6.6

0.1

(2.0)

136.7

76.5

246.3

1.4

71.1

0.1

10.6

7.7

(4.4)

182.8

515.6

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)

Years Ended December 31,

Cash ﬂ ows from operating activities:

2007

2006

2005

Net income (loss) ........................................................................................................................................................................
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

246.3

(64.9)

31.6

Depreciation .........................................................................................................................................................................

115.6

Deferred debt issuance cost amortization ...........................................................................................................................

Goodwill impairment charge ................................................................................................................................................

Amortization of intangibles ...................................................................................................................................................

Stock compensation ............................................................................................................................................................

Equity in net earnings of afﬁ liates, 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 ﬂ ows from investing activities:

Purchases of property, plant and equipment .......................................................................................................................

Proceeds from sales of property, plant and equipment .......................................................................................................
(Purchase)/sale of businesses, net of cash acquired ...........................................................................................................
Investments in unconsolidated afﬁ liates, net .......................................................................................................................

Other ....................................................................................................................................................................................

Net cash used in investing activities ....................................................................................................................

Cash ﬂ ows from ﬁ nancing activities:

Proceeds from debt obligations ...........................................................................................................................................

Repayments of debt obligations ..........................................................................................................................................

Proceeds from issuance of common stock ..........................................................................................................................

Payment of debt issuance costs ..........................................................................................................................................
Net cash used in ﬁ nancing 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 ..........................................................................................................................................

4.7

—

17.9

25.7

(3.5)

2.5

(2.9)

—

(3.0)

10.7

(41.4)

54.1

86.4

(8.8)

258.0

504.3

(141.4)

6.0

(17.8)

(68.0)

(2.7)

(223.9)

208.8
(329.5)

8.2

(0.3)

(112.8)

13.7

181.3

401.1

582.4

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

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.

Board of
Directors

(Left to right, standing)

(Left to right, sitting)
Martin H. Richenhagen
Chairman, President and CEO
AGCO Corporation
Executive and Succession
Planning Committees

Curtis E. Moll
Chairman of the Board and CEO
MTD Products, Inc.
Audit and Compensation
Committees

Herman Cain
President and CEO
T.H.E. New Voice, Inc.
Compensation and Succession
Planning Committees

Gerald L. Shaheen
Former President
Caterpillar Inc.
Compensation, Executive and
Succession Planning Committees

Francisco R. Gros
President and CEO
EBX S.A.
Audit and Governance
Committees

P. George Benson
President of the
College of Charleston
Audit, Executive and
Governance Committees

David E. Momot
Former Vice President
General Electric
Audit and Compensation
Committees

Gerald B. Johanneson
Former President and CEO
Haworth, Inc.
Executive, Governance and
Succession Planning Committees

Hendrikus Visser
Chairman of Bever Holding N.V. and
Royal Huisman Shipyards N.V.
Audit and Governance
Committees

Wolfgang Deml
President and CEO
BayWa Corporation
Governance and Succession
Planning Committees

George E. Minnich* (Not Shown)
Former Senior Vice President
and CFO of ITT Corporation
Audit and Compensation Committees
*Appointed January 2008

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 24, 2008 at the ofﬁ ces of AGCO
Corporation, 4205 River Green Parkway,
Duluth, Georgia 30096 U.S.A.

Form 10-K
The Form 10-K annual report to the Securi-
ties and Exchange Commission is available
on our corporate web site (www.agcocorp.
com), under “Investors & Media,” or upon
request from the Investor Relations Depart-
ment at corporate headquarters.

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 2007 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 2007 as
required by Section 303A.12(a) of the
NYSE Listed Company Manual.

AGCO®, Fendt®, Massey Ferguson®, Valtra®
and their respective logos as well as corporate
and product identity used herein are trademarks
of AGCO Corporation or its subsidiaries and may
not be used without permission. Challenger® is a
registered trademark of Caterpillar, Inc. and may
not be used without permission.

Performance Graph
The graph shown (at right) 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.

In Memoriam
W. Wayne Booker
Mr. Booker served on AGCO Corporation’s Board
of Directors for almost seven years. He was the
former Vice Chairman of Ford Motor Company.
We remember him for his sound guidance and
appreciate his many contributions.

Compare 5-Year Cumulative Total Return Among AGCO
Corporation, S&P Mid-Cap Index and Peer Group Index

400

350

300

250

200

150

100

S
R
A
L
L
O
D

(cid:83) S&P Mid-Cap Index(cid:0)(cid:0)
(cid:85) AGCO Corporation
(1)
(cid:78) Peer Group Index

2002 2003 2004 2005 2006 2007

Assumes $100 Invested on January 1, 2003. Assumes Dividends Reinvested.
(1) Based on information for a self-constructed peer group of companies which
includes the following: Caterpillar, Inc., CNH Global NV, Cummins Inc., Deere
& Company, Eaton Corporation, Ingersoll-Rand Company, Navistar International
Corporation, PACCAR Inc., Parker Hanniﬁ n Corporation and Terex Corporation.

GLOBAL
PRESENCE

Regional Ofﬁ ces

Manufacturing

Parts Distribution

Corporate Headquarters

4205 River Green Parkway
Duluth, Georgia 30096 U.S.A.
770-813-9200
www.agcocorp.com

30%

SW-COC-002624