AGCO Annual Report 2008 | Quarterlytics

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FY2008 Annual Report · AGCO

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RE: DEFINING AGRICULTURE

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2/23/09 10:49:55 AM
2/23/09 10:49:55 AM

2008 Annual Report

RE: DEFINING AGRICULTURE

Agriculture around the world is changing.
Those who adapt, will survive.
Those who embrace, will prosper.

AGCO is embracing change. Agriculture is changing faster than ever before. Key drivers fueling
the future development of our industry include population growth, changing diets, scarcity of
land, emerging market expansion, increased mechanization and biofuel production. In these
changing times, AGCO is helping farmers to meet these challenges head on.

As a leading global manufacturer of agricultural equipment, AGCO offers a full-line of tractors,
combines, self-propelled sprayers, forage and tillage equipment, implements and hay tools.
AGCO products are distributed through more than 2,800 independent dealers and distributors
in more than 140 countries worldwide.

Our products are sold through four core brands: Challenger®, Fendt®, Massey Ferguson® and
Valtra®, providing equipment to help farmers respond to today’s high demands. The breadth of
our product line, our extensive global reach and our technological solutions help our customers
not only survive today’s changing landscape, but to also prosper.

Financial highlights
(In millions, except per share amounts)

2008
Net sales ............................................................... $ 8,424.6
Income from operations .......................................
565.0
Net income ..........................................................
400.0
Total assets ...........................................................
4,954.8
Stockholders’ equity ............................................. 1,957.0
Earnings per share(1) ............................................. $
4.09
Adjusted earnings per share(2) .............................. $
4.09

(1) On a diluted basis.
(2) For a reconciliation of adjusted earnings per share, see footnote 1 on page 20.

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

Change
23.4%
43.1%
62.4%
3.5%
(4.2%)
60.4%
62.3%

AGCO is a leading manufacturer
of agricultural equipment.

Our brands offer a full-line
of products.

AGCO provides high-tech solutions.

Our customers farm in over
140 countries.

Our brands are among the most
trusted in our industry.

Our equipment is built to the
highest standards of design
and manufacturing.

Our products are helping farmers
feed the world.

THIS IS AGCO

AGCO is the largest pure play, full-line equipment
manufacturer focused exclusively on agriculture. Just as our
logo implies, we understand agriculture. Our dedication and
synergies across our family of brands result in a unique
responsiveness to the many changes affecting our industry
and our customers, today.

Our Vision
High-tech solutions for professional
farmers feeding the world.

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

Our Values
(cid:129) Exceed customer expectations.
(cid:129) Be the preferred supplier

for our dealers.

(cid:129) Be the preferred employer

in our industry.

(cid:129) Deliver highest quality products

and services.

(cid:129) Maintain high ethics and act
as a good corporate citizen.
(cid:129) Preserve the traditions and

value of our brands.
(cid:129) Provide superior returns

to our stockholders.

RE: Deﬁ nition “Agriculture”

noun

The science, art or occupation concerned with cultivating land; farming.

Agriculture has evolved into a highly mechanized industry that leverages
technology to improve production and proﬁ tability.

Contents
Financial highlights
This is AGCO
Chairman’s statement
Our Regions
Our Brands
Our Support
Our People
Our Customers
Our Strategy
Board of Directors &
Senior Management
Forward-looking
statements
Financial review
Company information

1
2
3-4
5-6
7-8
9-10
11-12
13-14
15-16

17-18

19
20-25
26

CHAIRMAN’S STATEMENT

Fellow Stockholders,

2008 was a successful year for AGCO. We
delivered record sales and earnings, introduced
signiﬁ cant innovations across our product
portfolio and made key investments positioning
AGCO for future growth. The year began with
a strong global economy, accessible credit, high
commodity prices and plenty of optimism. By
year-end, we were experiencing disruption in
the ﬁ nancial markets unlike any we have seen
in decades. The global ﬁ nancial crisis spread to
the world economy and today we face a more
challenging operating environment.

Looking out beyond the current issues,
the opportunities for the global agricultural
equipment industry and AGCO are signiﬁ cant.
The long-term trends that have increased
demand for grains and lowered grain inventories
are still intact. The growing population, the
increasing need for food, improving diets
and rising demand for energy will continue
to support healthy, long-term basics for the
agricultural industry. As farmers seek to meet
growing food demands and to offset higher
production costs, the rate of mechanization
is increasing, offering signiﬁ cant opportunities.
We are working hard to ensure that AGCO
remains well-positioned to take advantage
of these global trends, while continuing to
strengthen our market position in the coming
years. The following pages tell the story of a
company delivering consistent performance
– a company moving forward with a clear
strategic agenda.

2008 performance
For 2008, AGCO’s sales were $8.4 billion, up
over 23 percent compared to 2007. Earnings
per share grew more than 60 percent and
exceeded $4.00 for the ﬁ rst time in AGCO’s
history. The strength of our markets continued
to produce very positive results. In our Europe/
Africa/Middle East segment, sales exceeded
$4.9 billion and operating margins reached
ten percent for the second consecutive year.
Robust sales growth and the positive impact
of cost reduction initiatives helped our
North American business return to operating
proﬁ tability in 2008. In South America,
Brazil produced record industry tractor sales
and generated record AGCO sales of nearly
$1.5 billion. All this was achieved in a year
when we made signiﬁ cant investments in
research and development and other
productivity initiatives.

We have products and the right technology
to compete effectively in today’s dynamic
marketplace. To ensure AGCO continues
to improve its competitive position and its
performance, we have initiatives in place
aimed at growing sales, controlling costs
and better utilizing capital. Our strategy is
focused on three areas:

• increase investments in research and

development to provide new products
and leading-edge technology;

• enhance the efﬁ ciency and productivity
of our manufacturing and purchasing
functions; and

• improve distribution to expand our reach
and upgrade our customer service to grow
our business.

Investing in new products and technology
The quality and performance of our products
are instrumental to AGCO’s vision of providing
high-tech solutions to professional farmers.
We have steadily increased our research and
development spending over the last six years,
and compared to 2002, we have tripled it to
nearly $200 million in 2008. We are focusing
on new technology for our high-horsepower
tractors, introducing new products that ﬁ ll
regional product niches, and building our
harvesting business. Our technology initiatives
are focused on bringing customer-friendly
technologies to help farmers become more
productive, more efﬁ cient, more environmentally
responsible and, ultimately, more proﬁ table.

The new Massey Ferguson 8690 is a great
example of our technology investment. The
most powerful and technologically advanced
tractor ever produced by Massey Ferguson,
the 8690 made its public debut at the Innov-
Agri farm show in France last November. At
370hp, it is not only the world’s most powerful
conventional four-wheel drive tractor, it also
is the ﬁ rst equipped with industry-leading
e3 Selective Catalytic Reduction (SCR) exhaust
treatment, making it the cleanest emission
tractor in its class, delivering unparalleled
fuel economy. The 8690 was named Tractor
of the Year 2009 at the EIMA Show in Bologna,
Italy and also won the Golden Tractor Design
Award. This is an excellent example of AGCO’s
commitment to strengthen its leadership in
technology, performance and environmental
responsibility.

ADJUSTED EARNINGS
PER SHARE

SALES BY
PRODUCT

SALES BY
GEOGRAPHIC REGION

2008 $4.09

Tractors 67%

EAME* 58%

2007 $2.52

2006 $1.12

Parts 12%

Implements and other 7%
Combines 6%
Application equipment 4%
Hay and forage 4%

North America 21%

South America 18%

Asia Pacific 3%

* Europe, Africa, Middle East

AGCO’s robust operational performance and
the steps taken to reduce our debt over the
last few years have positioned AGCO to better
deal with the current turmoil in the ﬁ nancial
markets. AGCO Finance, our joint venture with
Rabobank, continues to be ready to support our
customers’ retail ﬁ nancing needs. As we look to
the future, our strong balance sheet will provide
a solid foundation for proﬁ table growth.

Our success is built on strong partnerships with
customers, employees, investors and suppliers.
In a world of increasing uncertainty, we believe
there is substantial growth still to come. We
look forward to delivering innovative products
and services that create new opportunities
for AGCO, our customers and our dealers.
Your support enables us to pursue these
opportunities, and I want to thank you for
your continued investment in our company.

Martin Richenhagen
Chairman, President and Chief Executive Ofﬁ cer

Improving our efﬁ ciency and productivity
Our production teams are focused on improved
performance across the Company, reinforcing
quality as a core value by utilizing a program
called AGCO Improvement Methods, or AIM.
This new program uses three proven approaches:
Six Sigma; lean manufacturing; and continuous
improvement. Many of our factories individually
implemented these programs; however,
AIM marks the ﬁ rst time AGCO has utilized a
consistent approach across all of our factories.
These initiatives are providing a solid range
of tools to employees, empowering them to
drive out excess waste, eliminate non-value-
added tasks, and streamline production and
administrative processes – all focused on better
serving the customer. The ﬁ nancial beneﬁ ts
of lower inventories and reduced expenses
are expected to be realized through our
implementation of best practices, which are
identiﬁ ed as part of a rigorous performance
evaluation performed at each location.

Improving our product costs through world
class procurement has been another major
focus. Operating with a global perspective
is now allowing us to leverage the scale of
our business with global purchasing initiatives.
Our increased sourcing from Asia and Eastern
Europe is also gaining traction. In 2009, we
expect to triple our purchases from low cost
locations. Our expectation is a signiﬁ cant cost
saving on resourced components and parts.

Emerging markets and opportunities
Agriculture continues to be an important part
of the Brazilian economy and an important
source of income growth. Unlike most of the
developed agricultural markets, Brazil holds
signiﬁ cant opportunity for farming expansion
and will beneﬁ t from the world’s growing
demand for both food and fuel. Brazil is already
one of the leading exporters of soybeans, sugar
and coffee and is a leading producer of sugar
cane-based ethanol. Mandates for bio-diesel
usage increases are expected to drive more
production in the coming years.

The developing markets in the Commonwealth
of Independent States provide a signiﬁ cant
growth opportunity for AGCO. There is
an immense amount of farmland in Russia,
Ukraine and Kazakhstan being farmed with
inefﬁ cient machinery. Over the last several
years, renewed economic development has
sparked increased demand for agricultural
technology. The current ﬁ nancial situation
has severely limited the availability of credit
in this region. When the credit markets recover,
the key to our success in Russia and East
and Central Europe will be the expansion
of our distribution. We are making signiﬁ cant
investments in this region to grow our footprint,
increase our dealer training and upgrade our
parts and service support to improve the service
experience of our customers.

Today, China is one of the world’s largest
markets for small, low technology agricultural
tractors. Economic progress in this region has
driven more automation to farms. The sales
of high-horsepower tractors, which are AGCO’s
strength, are still relatively small. Over time,
farm consolidation in China is expected to
provide an opportunity for larger, more
productive farm machinery. We are continuing
to explore joint-venture opportunities in China
that would give us access to distribution and
production capability for both the local market
and for sourcing to other regions.

We are fortunate to have over 15,000 dedicated
employees committed to delivering products
and services to make our customers more
efﬁ cient and more productive. Our legacy of
service is built on a strong foundation of solid
values and ethical management. By respecting
people and supporting its communities, AGCO
has positioned itself as a trusted neighbor and
valued employer.

OUR REGIONS

AGCO is the largest pure play, full-line agricultural
equipment manufacturer. Our brands are sold in more than
140 countries through one of the largest distribution
networks in the industry.

DRIVERS FOR GROWTH

AGRICULTURAL
COMMODITIES

ALTERNATIVE
FUELS

FARM
INCOME

AGRICULTURAL
EQUIPMENT

Strength in our
global markets

Established
We have a very strong presence in
established markets. Our activities
and brand penetration in these markets
are supported by the extent and efﬁ ciency
of our dealer networks. Our objectives
are to continue to develop our distribution,
to remain responsive to changing customer
needs and product demands, and to
maintain our focus on helping farmers
improve their proﬁ tability and performance.

Emerging
Emerging markets present us with
opportunities for growth. The strength of our
brands, supported by our expanding dealer
network, means that we are well aligned
to take advantage of these opportunities.
Increasing sophistication of farming methods,
rates of mechanization growth and demand
for agricultural products means there is
tremendous potential for our business to
remain at the forefront of this expansion.

Global presence
Our global activities are organized into four
geographic regions – the largest of which
is the Europe, Africa, and Middle East (EAME)
region. North America is our second largest
region, followed by South America and
Asia Paciﬁ c, respectively.

In 2008, we continued to develop our
presence and expand our activities in the
Asia Paciﬁ c region. We have factories and
assembly facilities in North America, South
America and Europe, and announced the
formation of an engine assembly joint venture
with Concern Tractor Plants (CTP), one of
Russia’s leading manufacturers of industrial
machinery. In addition, we continue to source
tractors from India, Japan and Italy and are
exploring the possibility of sourcing materials,
components and ﬁ nished products from China.

Global opportunities
Our progress during 2008 has demonstrated
that there are tremendous opportunities across
our regions. In particular, the drivers for these
opportunities are based on:
• world population growth – estimated

at 70 million per year – and the associated
demand for agricultural products;

• accelerating trends towards renewable

energies and alternative fuels; and

• increasing mechanization of farming methods.

Europe, Africa and Middle East
There are growing long-term opportunities
in Eastern Europe and particularly in Russia.
This region is increasingly implementing
Western-style agriculture practices, using
modern agricultural equipment to carry
out efﬁ cient, large-scale farming techniques
that result in greater returns from the land.
In particular, there is strong demand in these
markets for combines and balers.

As the rate of mechanical development and,
consequently, the number of farmers with
highly mechanized operations increases, there
is growing demand for our technologically
advanced products. This is especially true
in Central and Eastern Europe, where the
need for high-horsepower tractors is rising.
Our focus is on the development of full line
product ranges under each of our four core
brands, marketed through our improving
distribution channels.

North America
We see our principal opportunities in the
development of our products to meet the
needs of the smaller-scale and professional
farmer segments. We are committed to
achieving this by responding to our customers’
requirements and continuing the
implementation of performance improvement
initiatives designed to increase our proﬁ tability.

We also have a clearly deﬁ ned approach
to the various market segments and how
our products address their needs. We remain
focused on providing clearly differentiated
offerings to the speciﬁ c customer segments
under our core brand strategy.

In 2008, these initiatives included the
creation of three new tractor assembly centers
near commercial shipping ports in the United
States, including Baltimore, Houston and
Seattle/Tacoma. The purpose of this initiative
was to reduce freight costs, move tractor
customization closer to the customer and
improve product quality.

South America
We have a varied and exciting set of operations
in South America. Our strong market positions
in Argentina and Brazil are helping us make
the most of the extensive opportunities in the
South American markets.

Asia Paciﬁ c
During 2008, we saw improved market
demand in Australia and New Zealand. We are
focused on our goal of growing market share
while responding to the opportunities in the
Far East and China.

We are working to leverage the strong dealer
networks that we have in place, by enhancing
our product and service offerings and by
participating in alternative fuel initiatives.

Farmers in South America are becoming
increasingly sophisticated and are looking for
higher levels of product technology and service.
Despite increasing competition, we are
maintaining leadership in our category and
investing to ensure we continue to build on our
strong positions in the South American
markets.

Particularly in China, we are working to develop
our distribution and sourcing arrangements
and establish dealer networks and relationships
with third-party distributors. Asia Paciﬁ c has
the strong potential for market growth since
it encompasses the largest populations and
fastest-growing economies.

Growth in the region overall is expected to
be driven by a growing demand for food and
changing diets, which in turn drive the trend
towards greater mechanization.

OUR BRANDS

Our comprehensive family of brands includes
many of the most recognized and trusted names
in agricultural equipment worldwide.

Challenger MT 865

Our brand
strategy

Over a period of several years, we have
pioneered and reﬁ ned a multiple brand
strategy for the farm equipment business.
We offer many options to satisfy global
customers’ needs and reward their brand
loyalty. It remained evident in 2008 that
this unique strategy is continuing to deliver
very positive results for our customers,
dealers and employees.

We are proud of the fact that farmers all
over the world can ﬁ nd a comprehensive
range of ﬂ exible, reliable equipment
solutions which have been developed to
help them grow their businesses – whatever
the nature and scope of their needs.

One of our key business initiatives is to
ensure that knowledge-sharing between our
brands is carried out efﬁ ciently, so that the
migration of different brands’ market-leading
technologies, experience and best practices
are shared to the beneﬁ t of all core brands
and product lines. We are highly focused
on leveraging these positive synergies to
enhance efﬁ ciency, improve productivity
and capitalize on new opportunities for
growth worldwide.

Challenger
Challenger is our brand for the Caterpillar
dealer network’s agricultural equipment
business. We started in 2002 with the well-
respected track tractors and built a full-line of
wheel tractors, combines and hay equipment
for the CAT dealers.

Challenger unites high-speciﬁ cations
with superior reliability, innovative designs,
and groundbreaking technology and stands
for professional-grade farm equipment and
quality in-ﬁ eld service and parts support.

Its tractor product line includes both wheeled
and track-type designs, CAT engines, as well
as innovative suspension systems to meet the
varying needs of professional farmers around
the world. Challenger markets the world’s
largest production agricultural tractors at
570hp, in both tracked and wheeled models.

Its revolutionary track system utilizes tough
rubber tracks and an innovative suspension
system, offering professional farmers the
traction and ﬂ otation of steel tracks combined
with the ride and speed of rubber tires – indeed
the Challenger MT875B track tractor holds
a world record by cultivating 1,590 acres
in 24 hours with a single operator pulling
a 46-foot-wide disc.

Challenger is our fastest-growing equipment
brand in North America and is growing in
Europe and South America – continuing
to win new customers by demonstrating
superior performance, reliability, power
and support.

Fendt
Fendt, based in Germany, is a market leader in
Europe with a strong reputation for superior
technology and engineering. Fendt is a leading
brand for customers seeking innovative,
high-tech solutions. Used worldwide, Fendt’s
equipment is widely considered to be a global
technology leader for agricultural equipment.

For example, Fendt is world-renowned for
successfully implementing its award-winning
CVT (continuously variable transmission)
technology to tractors, including the highest
horsepower ranges. Today, Fendt has more
than 50,000 CVT-equipped tractors operating
worldwide with remarkable reliability and
efﬁ ciency, delivering increased farmer
productivity.

Fendt’s cutting-edge technology is also
demonstrated by its industry-leading innovation
in front-axle suspension for tractors. For
example, the high-horsepower Fendt 900 Vario
with ranges up to 360hp, offers powerful, time-
saving and cost-saving technological solutions
for ﬁ eld and road applications. In addition,
Fendt offers the advanced braking systems, and
operator controls, such as the innovative Vario
joystick and the Fendt Tractor Management
System, that provide more precise and
ﬂ exible control of hydraulics, power take-off
and headland management systems.

Massey Ferguson
Massey Ferguson, with more than 160 years
of innovation and experience, is one of the
world’s leading tractor brands, offering one of
the most complete lines of agricultural tractors
in the industry. Extending from the ruggedly
simple to high-horsepower/high-speciﬁ cation
tractors, Massey Ferguson’s product line also
includes vineyard, fruit, utility and compact
tractors for demanding specialty applications.
Massey Ferguson is also a force in the global
harvesting business.

Massey Ferguson is continually updating
and reﬁ ning its product range. Technology
enhancements are central to this development,
and examples of this include the recent
introduction of specialty tractors with
pressurized cabs and air-ﬁ ltration systems and
the Auto-Guide satellite-based steering system
on high-horsepower tractors. Manufactured
in Europe, and North and South America,
Massey Ferguson’s combines and balers are
speciﬁ cally tailored to meet local harvesting
conditions.

Massey Ferguson is a truly global brand,
recognized around the world not only for
its heritage and experience, but also for its
technological leadership and comprehensive
product range.

Valtra
Based in Finland, and with a growing
reputation in South America, Valtra is
characterized by its customized performance.
Valtra has a dominant market position in the
Nordic region through its innovative machinery
solutions and high levels of customer service.

The cornerstone of Valtra’s success is its modular
system of tractor assembly that enables the
production of tailor-made equipment to meet
speciﬁ c customer needs. Valtra’s operations
are unique to individual requirements, and
Valtra builds machines to a farmer’s order and
individual speciﬁ cations. To meet these needs,
the customer and sales person agree on the
tractor speciﬁ cations, choosing from Valtra’s
broad list of options.

The ability to build against conﬁ rmed customer
orders represents signiﬁ cant opportunities
for the future, since it is highly efﬁ cient and
beneﬁ ts both the customer and manufacturer.
Valtra also offers customers the opportunity
to visit their Suolahti, Finland, factory and
observe their own tractor being built.

Valtra T202

Fendt 820

Massey Ferguson 8680

OUR SUPPORT

AGCO provides a variety of services and components that
support our brands. This support provides peace of mind
to farmers who invest in our agricultural equipment.

AGCO Advanced Technology Solutions
Advanced Technology Solutions (ATS)
is a dedicated team that delivers leading-edge,
user-friendly and value-added technology
product solutions. ATS increases customer
satisfaction and loyalty while delivering on the
AGCO vision of “Providing High-tech Solutions
for Professional Farmers Feeding the World.”

AGCO Finance
AGCO Finance specializes in providing loan and
lease ﬁ nancing to retail customers buying our
farm equipment. In today’s global marketplace,
professional farmers’ consideration of ﬁ nancing
and leasing options can form as much a part of
their buying criteria as mechanical features and
beneﬁ ts when they acquire farm equipment.

AGCO Parts
An important part of every farmer’s decision-
making process when purchasing agricultural
equipment is the availability, cost and quality
of parts. The AGCO Parts network currently has
in excess of 1.4 million part numbers, available
for immediate dispatch from our distribution
centers around the world.

Advanced Technology Solutions is focused on
machine control, machine management and
precision farming in the professional farming
segment. The majority of products within
this segment are compatible with and utilize
ATS products.

Customers of ATS technology tend to be large
operation farmers, ﬂ eet owners and custom
harvesters looking to maximize their efﬁ ciency
and proﬁ tability. They are using our proven
technology to save fuel, improve production,
manage chemicals and fertilizer application,
increase crop yield and ensure compliance
with environmental regulations.

By utilizing partnerships with leading technology
suppliers, AGCO delivers high performing and
industry-leading products that provide global
customers with the opportunity to be more
effective, efﬁ cient, environmentally responsible
and proﬁ table.

Our joint venture partner, Rabobank Group,
is widely regarded as one of the world’s safest
banks and is rated AAA by the major credit
rating agencies. It has been able to provide
the necessary continuing liquidity to fund our
growing retail sales. Geographically diverse,
AGCO Finance operates in 15 countries in
North America, South America, Europe and
Australia/New Zealand. All regions achieved
portfolio growth in 2008.

AGCO Finance offers comprehensive ﬁ nancing
programs based on innovative ﬁ nancial
products to meet individual needs. We are
very aware that every customer’s ﬁ nancial
situation is different, and we therefore offer
ﬂ exible options so that our ﬁ nance programs
will enable customers to obtain agricultural
equipment that has the power, efﬁ ciency
and technology to help them operate their
businesses proﬁ tably.

AGCO Parts supports the parts, maintenance
and accessories needed across all of our
brands. The importance of the efﬁ ciency
and responsiveness of our service is critical
as farmers depend on us to act quickly and
accurately to keep their operations productive.
All parts that we supply are made to exact
standards, are tested extensively and come
with a 12-month warranty.

In 2008, we successfully executed an aggressive
global parts project by implementing new
systems and processes in purchasing, forecasting,
planning and pricing, which resulted in the
creation of a new organization. In addition, we
have launched a web-based parts catalog viewer
in North America that is making it easier to do
business with AGCO. AGCOPartsBooks.com is
available 24 hours a day, 7 days a week, and is
signiﬁ cantly enhancing our state-of-the-art
catalog system.

AGCO SISU POWER
With manufacturing facilities currently in
Finland and Brazil, AGCO SISU POWER is our
engine business specializing in the design and
manufacture of durable, powerful engines with
industry-leading environmental performance.
It designs and builds a comprehensive sub-10
liter, off-highway engine family.

AGCO SISU POWER is a single global business
unit with plans to expand our production
network into the emerging market sector of
Eastern Europe and Asia. In particular, we are
setting up a joint-venture with Concern Tractor
Plants (CTP) for engine assembly in Russia to
supply a full product range of engines.

AGCO SISU POWER launched this year
the only 7-cylinder engine in the worldwide,
off-road market, again demonstrating our
innovation and leadership in emission
technology. Our cutting edge approach
was further underlined by the introduction
of AGCO SISU POWER e3 Selective Catalytic
Reduction (SCR) Technology, an after-treatment
system providing an effective method for
emission control while signiﬁ cantly improving
fuel economy. A key aim was to maintain our
competitive edge while focusing R&D
investment on fuel economy and
alternative fuels.

AGCO Service
Delivering a positive experience to our customer
when a machine requires repair is the key focus
of our dedicated workforce of technical
service support professionals around the globe.
Whether our ﬁ eld service staff is providing
assistance at the farmstead or our technical
support staff is helping from our strategic
technical support ofﬁ ce locations around the
world, the men and women of AGCO Service
work each day to provide quality, timely and
reliable technical service support to our dealers
and customers.

In 2008, AGCO Service expanded its capabilities
and effectiveness by introducing new tools
to our dealers on a regional and global scale.
AGCO SOURCE, our web-based technical
knowledge database, was deployed with the
purpose of providing technical information
to our dealers 24 hours a day, 7 days a week,
365 days a year. This simple to use, multi-brand,
multi-lingual system provides dealership
technicians with critical technical advice aimed
at getting the customer’s machine repaired
quickly and correctly the ﬁ rst time.

AGCO also launched the Electronic Diagnostic
Tool (EDT) program, which provides our dealer
technicians a common platform diagnostic
tool used to service all brands of AGCO.
With its touch-screen, simple-to-use interface
and end-to-end diagnostic solution capability,
EDT advances AGCO Service’s capability
to deliver a positive repair experience to
a customer’s machine.

Our team goal is to provide a value-added
technical support foundation that our dealers
and customers can rely on when they need it.

7-cylinder AGCO SISU POWER engine

e3 SCR Technology

OUR PEOPLE

The experience, expertise and dedication of our people
are key elements in our continuing objective of achieving
proﬁ table growth around the world.

OUR PEOPLE

Success stories...

Investing in our people
With over 15,000 employees around the world,
AGCO develops human resources programs at
all levels designed to attract, recruit and retain
talented people.

As a technical, knowledge-based business,
we aim to maintain a culture of high
performance by providing our employees with
opportunities for personal and professional
development. Our organization supports a
global strategy of matrix management and
teamwork in order to leverage success across
regions and brands.

In order to drive and support our strategy and
to maximize the skills and capabilities of our
people, we have a well-established knowledge
management system. The AGCO knowledge
base is an ever-expanding training and
development model for our employees
and network of independent dealers.

AGCO Academy
Advances in technology and design require
ongoing training. The AGCO Academy
provides coursework and education in sales
and service to our network of technicians
and independent dealers.

AGCO University
In order to develop and promote our global
talent, we have developed AGCO University.
This employee educational program is
designed to strengthen skills in management
and leadership through AGCO University
classroom and e-learning courses.

The purpose of AGCO University is to create
a structural conduit to provide our people with
skills, education and continuing development.

AGCO improvement methods

In order to increase proﬁ t margins and
customer satisfaction, AGCO works
continuously to improve and innovate
products and processes.

AGCO Improvement Methods (AIM) uses a
variety of improvement methods to manage
projects that eliminate waste and reduce costs.
In addition, many projects are focused on
improving product features most valued
by our customers.

“The success of the AIM initiative is the
result of synergy, team work and is a sign
of cultural change. Seeking out a ‘better
way’ is starting to be a part of everybody’s
job. It is important to understand that this
initiative is not only focused on ﬁ nancial
results but also investing in employee
development and process improvement.
We believe this is the foundation of a
real and sustainable business system.”

Anderson de Mendonca
Director of Quality and
Continuous Improvement
South America

Comprehensive training improves
customer productivity

Sharing knowledge across continents brings
growth opportunities in North America

Dedication and hard work, along with several
new product introductions, are the key drivers
behind the East Asia Paciﬁ c region’s strong
growth in 2008. The sales and marketing team
provided a program of training focused on new
models. Attended by a record number of dealers
and customers, this training resulted in strong
appreciation by both audiences.

In 2008, the region was particularly focused
on supporting customers with their harvest
equipment. The Service Support and Parts team
spent many hours in the ﬁ eld training customers.
This was time well-invested as sales for the
next harvest increased.

“In Australia we set a new record for
volume of parts sales and still maintained
a high ﬁ ll rate. As a result, customers
obtained the parts they needed on time.
There are still great opportunities to grow,
and we hope to achieve this by continuing
to offer training, thereby continuing to
improve our customers’ productivity with
AGCO products.

Wilfred Boyle, AGCO’s Director of Engineering
Special Corporate Projects and Murli Krishnan,
Chief Engineer at our Indian licensee, Tractors
and Farm Equipment Ltd. (TAFE), have successfully
combined their teams’ knowledge and experience
to deliver a range of economy tractors for
markets in the U.S. and Canada.

The new tractors were based on TAFE’s successful
range of Massey Ferguson heritage models sold in
India. A range of technical, mechanical and design
features were added to create the MF 2600 Series.

“This fast-tracked project has been extremely
effective, and its success is due not only
to the tremendous heritage of experience
within Massey Ferguson, but also to the
teamwork and determination demonstrated
by everyone involved. This was truly an
inspiring process, and the ongoing potential
for the 2600 Series is clear.”

Wilfred Boyle
Director of Engineering Special Corporate Projects
North America

Warwick McCormick
Vice President and Managing Director
East Asia Paciﬁ c

Murli Krishnan
Chief Engineer
TAFE, India

Import tractor assembly centers

In 2008, AGCO established three new tractor
assembly centers near U.S. commercial shipping
ports: Baltimore, Houston and Seattle/Tacoma.

These centers established more cost-effective
import tractor distribution, improvement in
product quality and the capability to perform
tractor customization at locations closer to the
receiving dealer and retail customers. The team
met or exceeded all scheduling and operational
requirements.

“Working together as a single, cross-
functional unit, the team selected the
three sites, added necessary assembly
infrastructure and began operations less
than six months after project start. It was
clearly a great source of pride for the team,
and will provide many beneﬁ ts to AGCO,
its dealers and North American farmers for
years to come.”

New shift model increases efﬁ ciency
and cuts costs

As part of ongoing efﬁ ciency optimization
strategy, Dorothea Skupin, Production Manager
at Fendt’s component manufacturing center in
Marktoberdorf, Germany, initiated a review
of its shift organization. During early 2008,
the new system began testing, and within six
months, the beneﬁ ts became clear.

Capacity improved by over 12 percent,
and with the introduction of new machine
technology, signiﬁ cant cost savings have
been achieved.

“The engineering and technical teams
worked together on this project, and we
are absolutely delighted with the results.
Not only have we increased production
capacity and reduced costs, but the new
model has proved easier for all the shift
workers – so there are beneﬁ ts all around.”

Doug Rehor
Director of Cost Improvements
North America

Dorothea Skupin
Production Manager
Fendt, Germany

OUR CUSTOMERS

Customers are at the center of everything we
do and at the heart of our values and vision.

OUR CUSTOMERS

Success stories...

Strengthening our services
Providing product and service solutions that
exceed expectations are key measures of
commitment to our customers. During 2008,
we continued to drive a range of initiatives
to strengthen our dealer network around the
world.

Our leading market share positions in key
agricultural markets of the world have been
achieved by our strong focus on customer
service, leading-edge technology and an
independent dealer network of more than
2,800 dealers.

Our commitment to our customers, and the
pride that we have in their satisfaction, can
best be demonstrated by the experience
of individual farmers.

Fendt tractors serve double duty
for Quebec family partnership

Norwegian mechanic keeps Valtra
customers loyal

Taking part in ﬁ eld trials in Denmark
impresses farming brothers

The Bousquet family runs a successful business
in Quebec, which they founded in 1977. The
operations are divided between farming and
commercial snow removal. Of the ten tractors
the family uses for farming and snow removal,
three are Fendt 900 Series models, while the
rest are Massey Ferguson models.

“When you combine the service with the
quality of the Fendt tractors, you can’t ﬁ nd
a better machine, whether it’s used for
planting corn or moving snow.”

Pierre Bousquet
Ferme Grand Rang Inc.
Canada

Valtra’s mechanic, Eivind Sandvik, in Sunnfjord,
Norway, is a great asset. With a customer
portfolio of more than 150 tractor owners in
nine counties, there is a lot for him to do. In the
village of Guddal – or “Valtravillage” as it’s now
known to locals because the majority of the
farmers own Valtra tractors – Eivind is a popular
character. Einar Moen, general manager for the
Valtra dealership is very forthcoming with praise
for him.

“Eivind radiates calm and creates trust,
which is very valuable. A good mechanic
is essential for a good sale.”

Farming in Denmark, brothers Peter and Mogens
Jensen took part in Massey Ferguson’s extensive
pre-production ﬁ eld trials for the award-winning
new 370hp MF 8690. So impressed by the
machine’s performance, they immediately ordered
two – one each – for permanent use on their
1,920 acres enterprise near Randers.

In sowing winter wheat, use of the MF 8690
increased their average speed of operation by
25 percent with no increase in fuel consumption,
thanks to the tractor’s AGCO SISU POWER e3
Selective Catalytic Reduction Emissions
Technology.

Einar Moen
General Manager
Valtra dealership

Terje Moller, the former personnel manager
of Rolls-Royce and now a dairy farmer in the
village, owns a Valtra A95.

“You have to understand that our faith in
Eivind as a mechanic is one reason we in
the village stick to the Valtra brand.”

Terje Moller
Dairy farmer
Norway

“Top features we look for in a tractor are
good suspension and renowned engine
and transmission technology – in fact we
want a machine with the highest possible
technology all around.”

Peter Jensen
Farmer
Denmark

Challenger tractors help UK farmer
to cut costs and improve yields

A shift to using just two Challenger track
tractors for all the crop establishment work
on 4,700 acres has helped UK farmer, Andrew
Gloag, cut costs while improving timeliness
and maintaining yield.

“The main driver for change has always
been timeliness,” stresses Andrew, who
runs a 570hp Challenger MT875B with
Auto-Guide and a 320hp MT765B. “Getting
the job done with the right machinery at
the right time is the most important
deﬁ ning factor in the success of farming
operations today.”

“The latest cost-effective technology
allows us and our farming partners to
beneﬁ t from the economies of large-scale
farming while maintaining yields and
improving efﬁ ciency.”

Andrew Gloag
Farmer
UK

Challengers are twice the speed

Hector Barruca and his family are Argentinean
combine contractors. Their operation center
is in La Carlota, south of Cordoba Province,
Argentina.

Hector began his farming career working with
his father on the small family-run farm and is
now a farmer and harvest contractor of more
than 19,768 acres. The stars of his machinery
ﬂ eet are two 670 Challenger combines. These
machines performed twice as fast as the other
combines he owns.

“The Challenger 670 has an enormous
threshing capacity and it delivers the entire
machine and crop information we need
and our clients demand. If we did not use
this technology, we could not compete in
the contractors market.”

Hector Barruca
Farmer and harvest contractor
Argentina

OUR STRATEGY

We continue to realize our strategic objectives
by implementing initiatives to build proﬁ table growth:
Strength, Performance and Simplicity.

Success
We have made signiﬁ cant progress with our
strategic initiatives and surpassed our ﬁ nancial
targets over the last two years. Despite the
worldwide ﬁ nancial and economic challenges,
we expect the fundamentals of our industry
to remain positive. Demand drivers such as
population growth, limited land for agricultural
production and an accelerating trend towards
renewable energies are supporting commodity
prices and higher levels of farm income. We are
expecting increasing competition across the
entire industry and a movement towards high
technology. Emerging markets and expanding
opportunities are mainly in South America,
Eastern Europe and Asia. Our updated strategy
will position us for continued success in this
dynamic industry.

Strategic
building blocks

Strength targets increasing sales and
market position by extending our global
reach and capitalizing on our established
brands and strong dealers. We are
continuously enhancing and expanding
our product portfolio. In addition, we are
focused on growing our core brands and
entering new markets.

Performance focuses on improving
our processes, controlling our costs,
optimizing our manufacturing capacities
and leveraging sourcing opportunities.
We are also continuously developing
our employees and enhancing the work
environment to make AGCO a globally
preferred employer.

Simplicity is about the streamlining of our
production facilities and the management of
our working capital and assets. We focus on
order-driven production, better management
of inventories and actively managing the
degree of vertical integration.

Strength initiatives
In 2008, we offered our customers the strongest
product line-up in our history. Our increased
focus on research and development introduced
more than 100 new products. We increased our
capabilities in this area by moving to a global
product management process. This process
is being used to develop leading agriculture
equipment, differentiating products across our
family of brands, and leveraging technology
advantages by building synergies.

We continued to improve our capabilities in the
area of harvesting and farming technologies.
During 2007, we acquired the Brazilian planters
company SFIL and made an investment in the
Italian combine producer Laverda. In 2008,
we collaborated with Topcon and Sauer-
Danfoss providing an industry-leading
positioning and steering technology for our
equipment targeted at the professional
farming segment.

We continued to deliver on our emerging
market strategy by forming a joint venture with
one of Russia’s leading industrial equipment
producers, CTP, to assemble engines. In our
established markets, we continued our efforts
to strengthen our dealer network. We set-up
three assembly centers in North America to
reduce costs and streamline logistics for
AGCO and our dealers.

OUR GLOBAL MANUFACTURING

Corporate Headquarters

Light Assembly

Manufacturing

Parts Distribution

Joint Venture

Performance initiatives
To improve our performance, we have
reviewed our manufacturing strategy and
begun to implement initiatives aimed at
improving the efﬁ ciency of our production
footprint. Through our AGCO Production
System, launched in 2008, we constantly
monitor our operations to optimize resources,
simplify processes and eliminate waste.
Our AGCO Improvement Methods initiative,
ﬁ rst launched in Brazil, engages our employees
and provides tools and training required to
implement Six Sigma, Lean Manufacturing
and Continuous Improvement Principles. The
program continues to be leveraged globally,
allowing AGCO to improve every day using
the expertise of our employees.

Through our purchasing initiatives, we continued
to shift sourcing volumes to best cost countries.
We established a team of sourcing professionals
in several Asian countries, including China and
India. The progress made in 2008 gives us
conﬁ dence that we have signiﬁ cant opportunity
to positively impact our cost base.

Simplicity initiatives
To increase simplicity and improve the utilization
of our asset base, we have introduced a new
Enterprise Resource Planning (ERP) system for
our aftermarket parts activities in Europe and
North America. The program’s goal is to increase
the level of service to our dealers by simplifying
our operating processes and reducing our parts
inventory. Other functions and processes are
planned to be added in the next phase of the
ERP system.

We have programs in place to optimize our
asset base, including our working capital
initiatives. During the last year, we have clearly
deﬁ ned our core processes throughout our
manufacturing operations. Our objective is
to become world class at these core processes,
and we are making investment and operational
decisions accordingly.

Our strong ﬁ nancial performance and the
progress made with our strategic initiatives
demonstrates our commitment. Our entire
management team is focused on reaching
the next level.

BOARD OF DIRECTORS
AND SENIOR MANAGEMENT

Board of Directors

1. P. George Benson

4. Francisco R. Gros

President of the College
of Charleston
Audit, Executive and
Governance Committees

Former CEO of OGX Petróleo e
Gás Participacões, S.A.
Audit and Governance
Committees

Curtis E. Moll
Chairman and CEO
MTD Holdings, Inc.
Audit and Compensation
Committees

10. Hendrikus Visser

Chairman of Royal Huisman
Shipyards N.V.
Audit and Governance
Committees

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

3. Wolfgang Deml

Former President and CEO
BayWa Corporation
Governance and Succession
Planning Committees

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

6. George E. Minnich

Former Senior Vice President
and CFO of ITT Corporation
Audit, Compensation and
Executive Committees

8. David E. Momot

Former Vice President
General Electric
Audit and Compensation
Committees

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

11. Martin H. Richenhagen
Chairman, President
and Chief Executive Ofﬁ cer
AGCO
Executive and Succession
Planning Committees

Senior Management

12. Garry L. Ball

Senior Vice President
Engineering

13. Andrew H. Beck

Senior Vice President
Chief Financial Ofﬁ cer

14. Norman L. Boyd

Senior Vice President
Executive Development

15. David L. Caplan

Senior Vice President
Materials Management,
Worldwide

16. Andre M. Carioba

Senior Vice President
General Manager,
South America

17. Robert B. Crain

Senior Vice President
General Manager,
North America

18. Randall G. Hoffman
Senior Vice President
Global Sales, Marketing
and Product Management

19. Gary L. Collar

Senior Vice President
General Manager, Europe/
Africa/Middle East;
Australia, New Zealand

20. Debra E. Kuper
Vice President
General Counsel and
Corporate Secretary

21. Hubertus M. Mühlhäuser

Senior Vice President
Strategy & Integration
General Manager,
Eastern Europe and Asia

22. Lucinda B. Smith

Senior Vice President
Human Resources

23. Hans-Bernd Veltmaat
Senior Vice President
Manufacturing and Quality

FORWARD-LOOKING STATEMENTS

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

Years Ended December 31,
Operating Results

Net sales ...................................................................................
Gross proﬁt ...............................................................................
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 ..........................
Cash ﬂows from operations .......................................................

Balance Sheet Data
Working capital .........................................................................
Total assets ................................................................................
Long-term debt, less current portion .........................................
Total liabilities ...........................................................................
Stockholders’ equity ..................................................................

Other Data

2008

2007

2006

2005

2004

$ 8,424.6
1,499.7
17.8%
565.0
6.7%
400.0
4.09
97.7
291.3

$ 6,828.1
1,191.0
17.4%
394.8
5.8%
246.3
2.55
96.6
504.3

$ 5,435.0
927.8
17.1%
68.9
1.3%
(64.9)
(0.71)
90.8
$ 442.2

$ 5,449.7
933.6
17.1%
274.7
5.0%
31.6
0.35
90.7
246.3

$ 1,026.7
4,954.8
682.0
2,997.8
1,957.0

638.4
4,787.6
294.1
2,744.6
2,043.0

$ 685.4
4,114.5
577.4
2,620.9
1,493.6

$ 825.8
3,861.2
841.8
2,445.2
1,416.0

$ 5,273.3
952.9
18.1%
323.5
6.1%
158.8
1.71
95.6
$ 265.9

$ 1,045.5
4,297.3
1,151.7
2,874.9
1,422.4

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

15,606

13,720

12,804

13,023

14,313

This annual report includes forward-looking
statements, including the statements in the
Chairman’s Statement and other statements
herein regarding growth, market conditions,
strategic initiatives and their effects, components
and parts purchases, and general economic
conditions. These statements are subject to risk
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, including
declines in the general economy, increases in farm
input costs, lower commodity prices and changes
in the availability of credit for our retail customers,
will adversely affect us.

Most of our sales depend on the retail customers’
obtaining ﬁ nancing, and any disruption in their
ability to obtain ﬁ nancing, whether due to the
current economic downturn or otherwise, will
result in the sale of fewer products by us. A large
portion of the retail sales of our products are
ﬁ nanced by our retail ﬁ nance joint venture with
Rabobank, and any difﬁ culty on Rabobank’s part
to fund the venture would adversely impact sales
if our customers would be required to utilize
other retail ﬁ nancing providers.

The collectability of receivables that
are created from our sales, as well as from
ﬁ nancing obtained by our customers through
our retail ﬁ nancing joint ventures, is critical
to our business.

The recent poor performance of the general
economy may result in a decline in demand for
our products. However, we are unable to predict
with accuracy the amount or duration of this decline,
and our forward-looking statements reﬂ ect merely
our best estimates at the current time.

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 products.

Our success depends on the introduction
of new products, which requires substantial
expenditures and may not be well received
in the market place.

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.

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.

We recently have experienced substantial
and sustained volatility with respect to currency
exchange rate changes, which can adversely
affect our reported results of operations and
the competitiveness of our products.

We are subject to extensive environmental laws
and regulations, and our compliance with, or our
failure to comply with, existing or future laws and
regulations could delay production of our products
or otherwise adversely affect our business.

We have signiﬁ cant pension obligations with
respect to our employees and our available cash
ﬂ ow may be adversely affected in the event that
payments became due under any pension plans
that are unfunded or underfunded. Declines in
the market value of the securities used to fund
these obligations result in increased pension
expense in future periods.

We are subject to raw material price
ﬂ uctuations, which can adversely affect
our manufacturing costs.

In connection with our outstanding indebtedness,
we are subject to certain restrictive covenants and
payment obligations that may adversely affect our
ability to operate and expand our business.

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

Net income (loss) per common share – diluted .............................................
Restructuring and other infrequent expenses (income)(2) .................................
Goodwill impairment charge(2) .................................................................
Bond redemption costs(2) ........................................................................
Deferred income tax valuation allowance adjustment ....................................
Weighted average share impact ...............................................................
Net income per common share – adjusted ..................................................

(2) After tax.

Rounding may impact the summation of certain line items.

2008

2007

2006

2005

2004

4.09

2.55

(0.71)

0.35

—

(0.03)

—

4.09

2.52

0.01

1.81

—

0.01

1.12

—

0.15

0.95

—

$ 1.71

0.04

—

1.46

1.75

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

CONSOLIDATED BALANCE SHEETS
(in millions, except share amounts)

Years Ended December 31,
Net sales ....................................................................................................................................
Cost of goods sold .........................................................................................................................
Gross proﬁt ..............................................................................................................................

2008
$ 8,424.6
6,924.9
1,499.7

2007
$ 6,828.1
5,637.1
1,191.0

2006
$ 5,435.0
4,507.2
927.8

Selling, general and administrative expenses ...................................................................................
Engineering expenses ....................................................................................................................
Restructuring and other infrequent expenses (income) ....................................................................
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 afﬁliates ........................................
Income tax provision ......................................................................................................................
Income (loss) before equity in net earnings of afﬁliates ...................................................................
Equity in net earnings of afﬁliates ..................................................................................................
Net income (loss) ..................................................................................................................... $
Net income (loss) per common share:

Basic ........................................................................................................................................ $
Diluted .................................................................................................................................... $

Weighted average number of common and common equivalent shares outstanding:

Basic ........................................................................................................................................
Diluted ....................................................................................................................................

720.9
194.5
0.2
—
19.1
565.0
19.1
20.1
525.8
164.6
361.2
38.8
400.0

4.36
4.09

91.7
97.7

625.7
154.9
(2.3)
—
17.9
394.8
24.1
43.4
327.3
111.4
215.9
30.4
246.3

2.69
2.55

91.5
96.6

541.7
127.9
1.0
171.4
16.9
68.9
55.2
32.9
(19.2)
73.5
(92.7)
27.8
(64.9)

(0.71)
(0.71)

90.8
90.8

$
$

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.

December 31,
Assets
Current Assets:

2008

2007

Cash and cash equivalents ................................................................................................................................
Restricted cash .................................................................................................................................................
Accounts and notes receivable, net ...................................................................................................................
Inventories, net ................................................................................................................................................
Deferred tax assets ...........................................................................................................................................
Other current assets .........................................................................................................................................

$ 512.2
33.8
815.6
1,389.9
56.6
197.1
Total current assets ...................................................................................................................................... 3,005.2
811.1
275.1
29.9
69.6
176.9
587.0
Total assets ................................................................................................................................................. $ 4,954.8

Property, plant and equipment, net ..........................................................................................................................
Investment in afﬁ liates ............................................................................................................................................
Deferred tax assets .................................................................................................................................................
Other assets ...........................................................................................................................................................
Intangible assets, net ..............................................................................................................................................
Goodwill ................................................................................................................................................................

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 postretirement health care beneﬁts ...................................................................................................
Deferred tax liabilities ............................................................................................................................................
Other noncurrent liabilities .....................................................................................................................................

0.1
—
1,027.1
799.8
151.5
1,978.5
682.0
173.6
108.1
55.6
Total liabilities ............................................................................................................................................. 2,997.8

Stockholders’ Equity:

Preferred stock; $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding in 2008 and 2007
Common stock; $0.01 par value, 150,000,000 shares authorized, 91,844,193 and 91,609,895 shares issued
and outstanding in 2008 and 2007, respectively ................................................................................................
0.9
Additional paid-in capital ..................................................................................................................................
973.2
Retained earnings .............................................................................................................................................
1,419.3
Accumulated other comprehensive (loss) income ...............................................................................................
(436.4)
Total stockholders’ equity ............................................................................................................................
1,957.0
Total liabilities and stockholders’ equity ....................................................................................................... $ 4,954.8

—

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
$ 4,787.6

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
$ 4,787.6

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)

Accumulated Other Comprehensive Income (Loss)

Common Stock

Additional
Amount Paid-In Capital
$

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

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 ................................................................

Shares
Balance, December 31, 2005 ..................................................................................... 90,508,221
—
Adjusted balance, January 1, 2006 ..................................................................................... 90,508,221
—
8,832
660,850
—
—
—
—
—
—
—
Balance, December 31, 2006 ....................................................................................... 91,177,903
—
6,346
425,646
—

Net income .................................................................................................................
Issuance of restricted stock ...........................................................................................
Stock options and SSARs exercised ...............................................................................
Stock compensation .....................................................................................................
Deﬁned beneﬁt 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 afﬁliates, net .......................................
Change in cumulative translation adjustment ...............................................................

—
—
—
—
—
—
—
Balance, December 31, 2007 ..................................................................................... 91,609,895
—
136,457
62,387
35,454
—

Net income ..................................................................................................................
Issuance of restricted stock ...........................................................................................
Issuance of performance award stock ..........................................................................
Stock options and SSARs exercised ...............................................................................
Stock compensation .....................................................................................................
Deﬁned beneﬁt pension plans, net of taxes:

Prior service cost arising during year ........................................................................
Net actuarial loss arising during year .......................................................................
Amortization of net actuarial losses included in net periodic pension cost ...............
Effects of changing pension plan measurement date pursuant to SFAS No. 158:
Service cost, interest cost and expected return on plan assets for October 1 –
December 31, 2007 ............................................................................................
Amortization of net actuarial losses for October 1 – December 31, 2007 ..................
Deferred gains and losses on derivatives, net ................................................................
Deferred gains and losses on derivatives held by afﬁliates, net .......................................
Change in cumulative translation adjustment ................................................................

—
—
—
—
—
Balance, December 31, 2008 ...................................................................................... 91,844,193

—
—
—

0.9
—
0.9
—
—
—
—
—
—
—
—
—
—
0.9
—
—
—
—

894.7
—
894.7
—
0.2
10.8
3.3
(0.1)
—
—
—
—
—
908.9
—
0.2
8.0
25.6

—
—
—
—
—
—
—
0.9
—
—
—
—
—

—
—
—

—
—
—
—
—
0.9

—
—
—
—
—
—
—
942.7
—
1.6
(2.6)
(0.3)
31.8

—
—
—

—
—
—
—
—
973.2

Retained
Earnings

825.4
13.6
839.0
(64.9)
—
—
—
—
—
—
—
—
—
774.1
246.3
—
—
—

—
—
—
—
—
—
—
1,020.4
400.0
—
—
—
—

—
—
—

Unearned
Compensation
(0.1)
$
—
(0.1)
—
—
—
—
0.1
—
—
—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—
—
—
—
—
—

—
—
—

—
—
—
—
—
—

Deﬁned Beneﬁt
Pension Plans
$

(150.1)
—
(150.1)
—
—
—
—
—
6.6
—
—
(26.8)
—
(170.3)

—
—
—
—

1.4
71.1
0.1
10.6
—
—
—
(87.1)
—
—
—
—
—

(0.2)
(57.6)
5.6

Cumulative
Translation
Adjustment

(158.7)
—
(158.7)

—
—
—
—
—
—
—
—
—
136.7
(22.0)
—
—
—
—

—
—
—
—
—
—
182.8
160.8
—
—
—
—
—

—
—
—

—
0.9
—
—
—
(138.4)

—
—
—
—
(418.7)
(257.9)

Deferred
Gains (Losses)
on Derivatives
3.9
$
—
3.9
—
—
—
—
—
—
0.1
(2.0)
—
—
2.0
—
—
—
—

—
—
—
—
7.7
(4.4)
—
5.3
—
—
—
—
—

—
—
—

—
—
(44.4)
(1.0)
—

(40.1) $

Accumulated
Other
Comprehensive
Income (Loss)
$

(304.9)

Total
Stockholders’
Equity
$ 1,416.0

Comprehensive
Income (Loss)

—

(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
—
—
—
—
—

(0.2)
(57.6)
5.6

—
0.9
(44.4)
(1.0)
(418.7)
(436.4)

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
400.0
1.6
(2.6)
(0.3)
31.8

(0.2)
(57.6)
5.6

(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
400.0

(0.2)
(57.6)
5.6

(0.2)
—
(44.4)
(1.0)
(418.7)
$ 1,957.0

0.9
(44.4)
(1.0)
(418.7)
(115.4)

(0.2)
(0.9)
—
—
—
$ 1,419.3

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.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)