AGCO
Annual Report 2010

Plain-text annual report

We Know Agriculture A n n uAl R e p oR t 2 0 1 0 2 AGCO // Annual Report 2010 AGCO At A GlAnCe As the world’s largest manufacturer focused purely on agricultural equipment, AGCO is uniquely positioned to increase farm productivity through high-tech solutions for professional farmers feeding the world. Key business figuRes in million $ – except per share amounts Net sales Income from operations Net income attributable to AGCO Corporation and subsidiaries Total assets Stockholders’ equity Earnings per share(1) Adjusted earnings per share(2) (1) On a diluted basis. (2) For a reconciliation of adjusted earnings per share, see footnote 2 on page 37. sAles by pRoduct in % 68% 15% 6% 4% 4% 3% 2010 2009 Change 6,896.6 6,516.4 324.2 220.5 5,436.9 2,659.2 2.29 2.32 218.7 135.7 4,998.9 2,394.4 1.44 1.55 5.8% 48.2% 62.5% 8.8% 11.1% 59.0% 49.7% Tractors Parts Combines Application equipment Implements and other Hay and forage sAles by geogRAphic Region in million $ Adjusted eARnings peR shARe in $ 22% 25% NA(1) SA(2) EAME(3) ROW(4) 4% 2010 2009 2008 49% 2.32 1.55 3.95 (1) North America (3) Europe, Africa, Middle East (2) South America (4) Rest of World: Asia, Australia/New Zealand, Eastern Europe on the coveR In 2010, AGCO made solid progress toward meeting its long-term growth objectives. Among other things, it was a year marked by numerous combine launches and the announcement of a strategic acquisition of a state-of-the-art combine facility, proof of our accelerated commitment towards improving harvesting productivity. 3 tAble Of COntents 04 // chAiRmAn’s messAge 07 // We KnoW AgRicultuRe 08 // investing in hARvesting 10 // cleAneR AiR Without compRomise 12 // vARio innovAtion hits milestone 14 // pAssionAte About customeRs 15 // We suppoRt youR fARm 16 // ouR bRAnds 24 // A full line of pRoducts 26 // leveRAging pRoductivity 27 // We help feed the WoRld 31 // investing in futuRe technologies 32 // sustAinAbility 33 // meeting hARvesting needs AcRoss the globe 37// selected finAnciAl infoRmAtion 4 4 AGCO // Annual Report 2010 AGCO // Annual Report 2010 chAiRmAn’s messAge fellOw s tOCkhOlders The year 2010 was a productive year for AGCO. We posted sales growth and substantial earnings improvement compared to 2009. AGCO was able to generate significant cash flow, which enabled us to further strengthen our balance sheet and at the same time make important investments in our business. We also made meaningful progress on a number of strategic initiatives focused on operational improvement and market development. These initiatives are aimed at positioning AGCO to take full advantage of positive long-term fundamentals forecasted for the agricultural industry and to achieve ambitious performance goals. 2010 Results AGCO generated sales of nearly $6.9 billion in 2010, representing a 6% increase compared to 2009. Adjusted earnings per share was $2.32 in 2010 compared to $1.55 in 2009. Margin improvement contributed significantly to the increase in earnings. AGCO’s record performance in Brazil offset difficult market conditions in Western Europe, our largest market. Our South America team generated strong order volumes, managed production efficiently and delivered record sales and operating income. The year also was highlighted by further improvement in North American profitability, where operating margins increased 180 basis points compared to 2009. Our North American results benefited from profitable new products, a reorganized sales organization, lower logistics costs and improved factory efficiency. We achieved these results while continuing our substantial investment in product development. For 2010, engineering AGCO Corporation // Company //Chairman‘s Message 5 5 Martin Richenhagen, Atacama Desert, Chile expenses increased 14% and were focused on new products and new engine technology. We also announced three acquisitions during 2010: Laverda – a European manufacturer of harvesting equipment (as discussed below); Sparex – a global distributor of accessories and tractor replacement parts; and Amity – a joint venture interest in a North American manufacturer of air-seeding and tillage equiment. opeRAtionAl highlights In 2010, AGCO made substantial changes to our harvesting equipment operations in Europe which should benefit our future position in this sector. In July, we closed our combine assembly facility in Randers, Denmark and moved all of our European combine production to Breganze, Italy. Breganze is the home of Laverda, AGCO’s 50% owned joint venture partner. This move allows AGCO to leverage Laverda’s modern production facility, take advantage of scale opportunities and benefit from Laverda’s experienced engineering team. In November, we took the next step in our European harvesting strategy by agreeing to acquire the remaining 50% of Laverda, which will close in March 2011. In addition, during 2010 we unveiled our new class 8 hybrid combine and the Fendt Katana forage harvester, which significantly bolsters our harvesting product offering. AGCO also initiated several margin improvement projects in 2010 aimed at lowering product cost and improving factory efficiency. Our three large European tractor manufacturing sites in Beauvais, France; Suolahti, Finland; and Marktoberdorf, Germany, all completed the first phases of a new plant layout and assembly flow. In addition, our 6 AGCO // Annual Report 2010 purchasing organization was restructured to better capitalize on opportunities to reduce material costs through executing best-cost country sourcing and establishing common components and suppliers. These projects, along with our future product development plans, demonstrate our commitment to margin improvement throughout the Company. The record results achieved in South America in 2010 were accomplished by leveraging our two leading brands and distribution networks, Valtra and Massey Ferguson, both of which have been in Brazil for decades. During 2010, Valtra celebrated its 50th anniversary in the Brazilian market. We will continue to invest in both of these brands and product lines to build upon our brand heritage, loyal customer base and dominant market position in this important agricultural region. positive industRy fundAmentAls It is a good time to be in the agricultural equipment industry. Farm fundamentals are strong; farmer balance sheets are in good condition and farm income is expected to improve. In addition, the long-term trends that have increased demand for grains and lowered global grain inventories are still intact and are expected to intensify. The growing population, increasing demand for food, changing diets, and rising demand for energy worldwide will continue to support healthy long-term fundamentals for the agricultural industry. Increased grain demand is likely to stimulate efforts to boost farm productivity globally which will center on improved fertilizer and seed technology and more efficient equipment. Professional farm machinery will be one of the key factors in achieving increased crop yields in future years. Agco’s futuRe pRioRities It also is a good time for AGCO to invest for the future. Our strategic plan is built upon initiatives to grow sales as well as increase margins. Our growth initiatives start with our investments in new product development to upgrade and expand our product offerings in all markets. We intend to dedicate more resources to take advantage of future market opportunities in Eastern Europe, Asia and Africa. We also plan to execute our growth plans in our recently acquired businesses. Margin expansion is expected to be achieved through the continued implementation of our global purchasing strategies aimed to reduce material costs and through the rollout of the AGCO Production System designed to drive productivity improvements at the plant level. In addition, we are developing new platform solutions to simplify our product lines and reduce product costs. We also are making further process and system upgrades aimed at improving the way we introduce new products and services to the market. Our sound financial position will allow us to make these significant investments and to execute our ambitious plans. I am excited about the substantial opportunities that exist for AGCO and the work we have ahead of us. I thank all our employees and dealers for their contributions to our 2010 results and for their continued efforts to drive AGCO forward to the benefit our customers and stockholders. I also thank our fellow stockholders for your support. We will work tirelessly to protect and grow the value of your investment in our Company. Martin Richenhagen Chairman, President and Chief Executive Officer 7 7 we knOw AGriCulture Agricultural innovation drives our company. From impressive hybrid combines to advanced telemetry-based tracking, AGCO supplies agribusiness with the tools and technology needed to efficiently meet growing food, fuel and fiber demands worldwide. 8 AGCO // Annual Report 2010 inVestinG in h ArVestinG AdVAnCes in june, Agco launched the world’s first combines to feature selective catalytic Reduction (scR) emissions technology with our Agco sisu poWeR e3™ engine in a spectacular way that generated overwhelmingly positive response. the company floated two combines into v enice down the grand canal for a Western and central european dealer training event. “Momentum” was the theme of the two-week event, experts about the full range of Massey Ferguson and chosen to reflect the significant progress AGCO has Fendt harvesting products and witnessed field made over the past four years in developing superior demonstrations. This area of Italy was selected as the harvesting products and services. AGCO successfully venue because of its proximity to the Breganze combine demonstrated its commitment to excellence in the manufacturing facility, one of 15 AGCO engineering harvesting machinery sector. centers around the world. The aim of the event was to introduce the brand new hybrid combines and showcase some of AGCO’s new product benefits, which are the result of significant investments in research and development, engineering, manufacturing and customer support. The hybrid Fendt® 9470 X Series and the Massey Ferguson® DELTA Series combines take AGCO into the high-output segment of the market, the fastest growing sector of the combine business in Europe. The Venice experience was followed by nine separate events held back-to-back for distributors, dealers, partners and customers. Guests traveled to a farm in the Veneto region, where they learned from technical A Fendt combine enters Venice on the Grand Canal. (photo above). The Massey Ferguson combine was a surprising sight in the heart of Venice. (photo on right). 9 99 The new hybrid combines were demonstrated across Europe. The new Massey Ferguson and Fendt hybrid combines reflect intensive investment in the future of harvesting The hybrid Fendt 9470 X and Massey Ferguson DELTA and new prospects the potential of AGCO’s new combines (shown on the cover) bring together harvesting equipment. AGCO has already invested nearly conventional threshing and twin-rotor separation for $100 million in its focused development of harvesting high output capacity with the gentlest grain and straw equipment and continues to invest in this growth handling. These combines are also the first to feature strategy. AGCO’s harvesting commitment can also be SCR emissions technology, providing fuel economy and seen in its 2010 agreement to acquire the remaining emission reduction benefits. 50% share in Laverda S.p.A; this will give AGCO full ownership of the Laverda brand, a combine production Following the launch event in Italy, 22 hybrid combines facility in Breganze, Italy, and the Fella-Werke GmbH traveled across the continent to show existing customers grass and hay machinery business. 10 AGCO // Annual Report 2010 CleAner Air with Out COMPrOMise Agco sisu poWeR provides technology solutions to help the world’s farmers comply with cleaner-air regulations without compromising their ability to deliver food to the table. in 2010 Agco was the first engine manufacturer to receive u.s. environmental protection Agency approval for selective catalytic reduction (scR) technology applied in off-road applications. We were also the first to introduce tier 4 interim engines. this demonstrates our leadership in delivering exactly what modern agriculture demands: cleaner emissions, improved economics and powerful performance. Introduced two years ago on tractors in Europe and North America, AGCO’s e3™ engine technology provides powerful, efficient performance while meeting diesel emissions regulations. In 2010, AGCO SISU POWER affirmed its clear commitment to using SCR technology to comply with the Tier 4 interim requirements in both the United States and the European Union. The increased magazine about agricultural technology that conducts extensive independent tests and evaluations of farm machinery. In the magazine’s Powermix test (February 2010), the Massey Ferguson 8690 consumed “an impressive 16.6% less fuel per hour,” which translated into saving 538 gallons (2,000 liters) of fuel over 1,000 hours of operation. Also in 2010, the University of Nebraska Tractor requirements, which went into effect for engines over Test Laboratory confirmed the superior fuel efficiency 130 kW (175HP) at the beginning of 2011, will apply to (horsepower hour per gallon) provided by the Challenger® engines below 130 kW (175HP) starting in 2012. MT600C and Massey Ferguson 8600 with e3™ technology. These respected tests provide strong confirmation that Emission regulation provides a challenge for all engine AGCO is following the right strategy to provide sustainable manufacturers around the world. For AGCO SISU benefits for the environment and to improve farmers’ POWER, it provides an opportunity to differentiate from operational costs around the world. the competition while providing significant customer benefits. e3: hoW it Keeps engine exhAust emissions in checK Our engines with e3™ technology deliver all the energy The technology is simple, robust and reliable, consisting the customer expects – in the form of undiminished of very few parts. SCR technology treats the downstream horsepower and torque – along with better fuel exhaust with diesel exhaust/emissions fluid (DEF), which economy, cooler engine temperatures, and lower nitrous breaks down the exhaust into harmless nitrogen and oxide and particulate emissions. water vapor. As one of the first tractors with SCR technology, the With SCR, the emissions cleaning process takes place in the Massey Ferguson 8690 was tested against competitive exhaust line – so as to not diminish engine performance or tractors in practical tests by profi, a leading international increase complexity of the engine design. 11 te chn i cAl bAcKgRo un d Our AGCO SISU POWERTM diesel engines are optimized for high performance, low particulate emissions and low fuel consumption. AGCO SISU POWER 7 cylinder engine // in 2010, Agco sisu poWeR was one of the first manufacturers to achieve epA tier 4 interim approval for off-road engines utilizing scR technology. // since launching its new 7-cylinder model, Agco sisu poWeR has the most complete engine range below 10 liters on the market. // With the only 7-cylinder engine on the worldwide off-road market, Agco sisu poWeR has once again demonstrated superior innovation. // the extra cylinder in this e3 engine offers 20% more displacement and a corresponding increase in power and torque. Rated power 462 hp boost power 492 hp max. torque 1800 nm or 1328 ft lb cleaner emissions, improved economics and reliable performance.„ e3 efficiently delivers exactly what modern agriculture demands – “ 12 AGCO // Annual Report 2010 VAriO innOVAtiOn hits MilestOne With the introduction of the 200 vario series, continuously variable transmissions (cvt) have been implemented through fendt’s entire product line. to date, over 121,000 transmissions around the world have employed this multiple-award-winning technology. brainstorm and in 1995, the 926 Vario with 260 HP was launched at the Agritechnica show. At first, the introduction provoked fierce industry discussion because some initially doubted the technology’s efficiency. Today the Vario concept is still as simple and unique as ever. Because it has no gear steps or interruptions in pulling power, a Fendt Vario is always driving at optimal speed and power. It delivers an average of 10% higher performance and 10% lower fuel consumption – plus a The 200 Vario Series specialty tractor in a vineyard application. work-time savings of 10%, which means cutting two weeks of work per year out of 1,000 operating hours. The Vario success story started back in the 1970s, when Hans Marshall, a Fendt development engineer, came up “2010 marks the first time Fendt has offered 100% with the first conceptual ideas for a stepless transmission Vario continuously variable transmission technology that functions like an automatic transmission in a car. across all power classes,” says Roland Schmidt, Fendt Eventually the decision was made to produce Marshall’s marketing director. The ingenious 900 Vario Series gearbox delivers efficient continuously variable speed adjustment. 13 emp l oyee stoR y Dr. Heribert Reiter is the driving force behind research and development for the Fendt product line Dr. Reiter has dedicated his career to making high- performing machinery work even better. One of the most successful product development leaders in the agricultural machinery industry, he is responsible for accelerating Fendt product development and introducing many groundbreaking products to the international market. In recent years, his technical expertise helped fuel a previously unimagined new model rollout over the entire power range, from 70 to 390 HP. Today Dr. Reiter heads a force of dedicated and innovative employees and leads a successful product strategy that is based on cutting-edge technology and the highest quality. His technical mastery ensures Fendt continues to maintain Dr. Reiter is a renowned technical expert and leader. its reputation as the technology leader. Most recently, he motivated his team to take a completely new approach in sharpness and cutting ability. With active support from all the development of the Fendt Katana 65 forage harvester, departments, the new forage harvester was launched to named after a Japanese samurai sword renowned for its the market in 2010. info dR. heRibeR t ReiteR // vice president and managing director responsible for fendt engineering in marktoberdorf, germany // serves on the board of the vdmA Agricultural machinery Association // grew up on a crop and dairy farm in schönberg, germany // Wrote his doctoral dissertation on “losses and efficiency in tractor transmissions” // joined fendt in 1990 as a mechanical engineer for transmission development and played decisive role in designing the 700 vario series 14 AGCO // Annual Report 2010 emp l oyee st oR y PAssiOnAte AbOut CustOMers “I’ll never forget meeting Kevin Bien for the first time at a dealer field event years ago. A customer asked how the new model worked and pretty soon both he and Kevin were lying on their backs in the dirt under the combine.” – todd stucke, Agco director, marketing – hay & harvesting knows virtually every AGCO dealer in North America, plus a good many retail customers. Dealers and farmers alike respect Bien because he listens, he knows the products and he gets things done. What he’s been getting done lately is bringing a “supersized” Gleaner combine to market. Bien began working with a team of engineers on the project several years ago, culminating in 30 major improvements to the Super Series in 30 months. “We understand that time is money when harvesting,” says Kevin bien. It’s not uncommon to see a line of people waiting to talk Broadcasting live from the Farm Progress Show in to Kevin Bien at farm shows and dealer events. Usually September, Bien talked excitedly about benchmarking the they want to tap into his wealth of industry knowledge Super7 combine against the competition and exceeding but sometimes they simply want to greet an old friend. expectations for high capacity and low grain loss in real-life The articulate and approachable marketing manager harvest challenges. info Kevin bien // Agco product marketing manager – combines, north America // launched gleaner super7 combine in 2010 with cross-country and competitive harvesting tests // host of numerous broadcast and youtube harvesting productions // helped introduce the fendt brand and its v ario technology to north America // 35 years of sales and marketing experience serving dealers and farmers 15 15 we suPPOrt YOur fArM In 2010, AGCO made bold technology and service strides in our steadfast quest to help producers succeed both at everyday tasks and at conquering the most demanding challenges. AGCO delivers equipment through a multi-branded strategy to meet the broad range of individual requirements. 16 16 AGCO // Annual Report 2010 AGCO // Annual Report 2010 Agc o b RAnds ChAllenGer: sMArt MAChines seriOus results Challenger® – a premium choice for large-scale and application equipment. Challenger tractors range agricultural operations that demand best-in-class up to 585 HP, making Challenger the most powerful equipment solutions – continues to win new customers brand of equipment offered by AGCO. by demonstrating competitive performance, power, durability and support. It is our fastest-growing Using revolutionary designs and groundbreaking equipment brand in North America and is quickly technology, Challenger products have earned respect building momentum in other regions. for combining high specifications with superior reliability. These smart machines deliver serious results The Challenger track system utilizes tough rubber and are sold through a selective dealer network that tracks and an ingenious suspension system to give is committed to providing an outstanding customer professional agribusinessmen the traction and flotation experience and building lasting partnerships. of steel tracks, combined with the speed and ride of rubber tires. The Challenger product family also Continuous innovation from the Challenger brand includes wheeled tractors and a full line of harvesting enables independently-minded agribusinessmen 17 17 17 across the globe to grow their profits, expand and nonstop up-time support give professional operations, improve productivity and lead the producers a competitive edge. industry. Powerful technology, monster capacity since 2007, the mt875b tractor has held a record for cultivating 1,590 acres in 24 hours with a single operator pulling a 46-foot-wide disc. challenger machines deliver smart power to help professional producers tackle their biggest challenges and drive growth. 18 18 AGCO // Annual Report 2010 AGCO // Annual Report 2010 Agc o b RAnds fendt: effiCient teChnOlOGY Fendt® provides high-tech solutions featuring the best and outstanding efficiency, is offered throughout in German engineering. A market leader in Europe, it the entire product line. Today, more than 100,000 is also a premium choice for professional farmers and Fendt Vario CVT-equipped tractors have been contractors in other global markets. Fendt customers delivered worldwide. are able to achieve more with less fuel, resources, time and operating materials, giving them a strong Fendt has also led the way in improving front-axle return on their investment. suspension for tractors, developing advanced braking systems, and re-thinking operator controls to provide With its highly-engineered tractors and harvesting exceptional comfort and greater driving pleasure. equipment, and its exceptional dealer organization, Well-regarded innovations, such as the Vario joystick the brand continues to deliver on its commitment to and the Fendt Tractor Management System, provide increase farmer productivity. For example, the Fendt more precise and flexible control of hydraulics, power award-winning Vario CVT (continuously variable take-off and headland management systems. transmission), which offers low fuel consumption Continuous improvement in technology and 19 19 performance keep this established premium brand at specific technology needs. Leveraging industry- the forefront of innovations to enhance customer leading technology enables Fendt to meet its goal productivity and efficiency. The Fendt team’s of providing customers with the lowest total cost consultative approach also helps it meet customers’ of ownership and highest return on investment. “fendt efficient technology” helps customers achieve more with fewer resources. the new 900 vario series, with output ranging from 240 to 390 hp, unites scR technology with other productivity advances and safety features such as the first anti-lock braking system in a standard series production tractor. 20 20 AGCO // Annual Report 2010 AGCO // Annual Report 2010 Agc o b RAnds MAsseY ferGusOn: A w Orld Of eXPerienCe - wOrkinG with YOu Massey Ferguson® delivers ease-of-use and no- vineyard and fruit, as well as providing compact nonsense dependability to countless farms around and utility machinery. Massey Ferguson continues the world. Extending from the ruggedly simple to to reinforce its product line by providing innovative high-horsepower/high-specification models, Massey answers that meet the challenges of modern Ferguson has been one of the world’s leading tractor agriculture. brands for more than four decades. With a heritage of over 160 years, the brand is a symbol of pride and Massey Ferguson is also a solid force in the global accomplishment. harvesting business. Manufactured in Europe, North America and South America, its combines and balers Drawing on its extensive experience working with are specifically tailored to meet local harvesting farmers, Massey Ferguson offers a broad and conditions. The Massey Ferguson MF 9280 DELTA versatile farm machinery range that caters to all combine won 2010 Machine of the Year at producers, from the largest agribusinesses and Agritechnica in Hanover, Germany. Massey Ferguson custom operators to specialist growers including is a truly global brand, recognized around the world 21 21 21 not only for its heritage and committed dealer experience gives the Massey Ferguson team unique organization, but also for its comprehensive range insights into the needs of today’s and tomorrow’s of sector leading products. Its unrivaled global farmers. massey ferguson was first to introduce scR emissions technology on an agricultural tractor – the mf 8690. together with its sister Agco brands, massey ferguson was the first to introduce this same technology on a combine harvester – the mf 9280 deltA hybrid combine. 22 22 AGCO // Annual Report 2010 AGCO // Annual Report 2010 Agc o b RAnds VAltrA: indiViduAllY YOurs Valtra® is the agricultural machinery brand that options and unique features, each machine can be epitomizes customization, especially for the progressive built to a farmer’s order and individual specifications. farmer and contractor. Based in Finland, it has earned a Customers work in close partnership with their sales solid market position in the Nordic region and has built representatives to determine the ideal specifications a leading reputation in South America, thanks to its for powering their operations, choosing from a wide individualized machinery solutions, high levels of array of colors, engines, transmissions, hydraulics, customer service and consultative sales approach. In cabs and other options. 2010 Valtra celebrated its 50th anniversary in Brazil where it has a leading position in the sugarcane sector. Renowned for their versatility and reliability, Valtra tractors are engineered to withstand harsh climates Valtra tractors are individualized for the way and deliver high performance in demanding working customers work and are custom-built to meet specific conditions and on extreme terrains. Valtra’s value of job needs. Thanks to the high modularity of a Valtra reliability can also be seen in the professional tractor’s basic construction plus a wide choice of approach the team brings to every transaction, 23 23 including sales, parts, service and ongoing support. respect for nature. Customization, coupled with True to the Nordic tradition, Valtra operations Scandinavian functionality and reliability, make Valtra and products emphasize functionality (including the choice for ease of use, comfortable operation and pioneering efforts in ergonomics and safety) and a maximum job efficiency. customers can visit the valtra factory in finland to observe their very own tractors being built. in 2010, vladi peresson drove his new valtra tractor from the factory in finland to his farm in italy, raising donations for an orphanage and a day care center along the way. 24 AGCO // Annual Report 2010 A full line Of PrOduCts designed foR A RAnge of teRRAins And t AsKs. As a leading global manufacturer of agricultural brands keep AGCO at the forefront of agricultural equipment, AGCO offers a comprehensive line of technology. These ongoing commitments have also tractors, combines, sprayers, implements and hay contributed to the continued strengthening and tools. Each of our trusted brands delivers its own broadening of our harvesting product line. diversity, from ruggedly simple utility machines for part-time farmers, to ingeniously nimble solutions for We build our equipment to the highest standards of demanding specialized operations, to jaw-dropping design and manufacturing, and our innovative high-horsepower vehicles for today’s professional products continuously receive awards at international farm fleets. exhibitions. Our most coveted recognition, however, is the endorsement of our wide range of products by Increased investment in research and development progressive farmers and successful dealers around the and a dedication to sharing knowledge among our world. New harvester capitalizes on tractor advances the eagerly awaited fendt forage harvester was previewed for 50,000 visitors at the september 2010 Wadenbrunn field day near Würzburg, germany. from electronics to suspension to selective catalytic Reduction technology, the fendt Katana 65 skillfully incorporates aspects from recent tractor breakthroughs. prototypes developed by a team of engineers have already demonstrated great success, delivering outstanding chopping quality and high output while being extremely fuel efficient. production is expected to begin in late 2011. 25 Durable, dependable self-propelled sprayers meet professional applicators’ demands year after year. Tillage machines are built to efficiently penetrate the soil and meet the need for increased productivity. Hay balers deliver time-saving efficiencies, comfort and convenience. Planters provide high performance, low operating cost and solutions designed for maximum yield. 26 AGCO // Annual Report 2010 cus tomeR stoR y leVerAGinG PrOduCtiVitY “The Challenger MT865B track tractor is the best on the market. One Challenger replaces five older Soviet tractors.”– emeliano Andrey vyacheslavovich (director general of grand llp; an Agco customer) The Challenger brand is helping to significantly improve efficiency – from planting to harvesting – for Grand LLP, a successful farming and agricultural processing operation in northern Kazakhstan. When the business first started, it employed a large fleet of equipment from the Soviet Union. “Times change, and we needed to invest in more efficient machinery,” says Emeliano Andrey Vyacheslavovich, Director General of Grand LLP. challenger machines boost productivity. “Our choice was based on quality and price, and Challenger has satisfied those parameters.” been increased using eight Challenger combine Vyacheslavovich was pleased to replace 10 traditional walker machines). With 200 pieces of older-model Soviet wheeled tractors with just two Challenger MT865B equipment still employed in the fleet, prospects look tracked tractors, and streamline his fleet using powerful promising for continued productivity improvements in Challenger combines. Today, harvesting productivity has the future. harvesters (five 660 rotary models and three 643 straw- info gRAnd llp // located in the fedorov district of the Kostanay province // farms more than 123,000 acres // operates a large fleet led by challenger equipment: two mt865b track tractors, five 660b combines and three 643b combines // served by Agco distributor borusan makina, Kazakhstan 27 27 we helP feed the wOrld At AGCO we think and act globally. We bring relevant technology to locations around the world to maximize yield and meet growing food demands. We look out for our workers, stakeholders and communities. And we lead the way with environmental advances. 28 AGCO // Annual Report 2010 PrOduCinG MOre fOOd On less lAnd the big factors driving world demand for farm equipment – rapid population growth, improving diets, shrinking acreage and increased renewable fuel production – have a major impact on Agco, the world’s #1 “pure player” in agricultural equipment. Every minute, 144 people are added to the world In 2010 we invested nearly $170 million in capital population.(1) There are almost 7 billion people on our projects and over $200 million in research and planet and that number will reach 10 billion soon, with development that improved the efficiency of our most of the growth coming in emerging nations. At the factories, upgraded our system capabilities, supported same time, countries such as China and India are starting our production, developed new products and met to eat more meat, which requires six times as much crop emission requirements. production as grain-based diets. In addition, the expanding population is focused mainly in urban areas, Already #1 in Brazil, AGCO is taking steps to secure its where people tend to consume more calories. future in China and other emerging regions such as Unfortunately, the farmland available to meet these the next decade. AGCO is also working to increase massive food demands is limited. About 12.3-14.8 million production capabilities in Russia over the next few years acres are retired from agriculture every year due to to further strengthen its position in these markets. Africa, where the population is predicted to double over infrastructure expansion, climate issues or other factors, while biofuel production is increasingly competing for limited acreage. In the face of these factors, the AGCO global growth strategy is four-pronged: develop new products, provide advanced technology solutions, enhance our productivity and grow in developing markets. AGCO has a strong global presence and follows the philosophy of manufacturing equipment where our customers are located. With factories around the world and 2,600 independent dealers and distributors in 140 countries, we are well positioned to help feed the world by serving the leading and growing markets for farm equipment. 2010 facts // World population growth(1) 75.7 million people/year // undernourished population(2) 915 million people // biofuel consumption(3) 19.5 billion gallons/year // global soil degradation(4) 12.3-14.8 million acres/year food production will need to increase 70% to meet projected 2050 food (1) Source: http://www.census.gov/ipc/www/popclockworld.html demands.(2) global biofuel production is (2) Source: Food and Agriculture Organisation of the UN (FAO) projected to to reach 50.7 billion (3) Source: http://www.afdc.energy.gov/afdc/data/fuels.html (4) Source: http://www.wri.org/publication/content/8426 (5) Source: OECD, FAO Agricultural Outlook 2009-2018 gallons by 2018.(5) 29 32 6 4 3 8 2 1 5 7 9 10 22 23 27 20 19 18 17 21 25 24 26 29 30 31 28 “ 12 11 14 13 15 16 78% of AGCO‘s business is done outside of North America.„ 1. duluth, georgia, us 17. ennery, france 2. baltimore, maryland, us 18. beauvais, france Our global manufacturing corporate headquarters 3. batavia, illinois, us 19. desford, united Kingdom 4. jackson, minnesota, us 20. exeter, united Kingdom light Assembly manufacturing 5. fargo, north dakota, us 21. grubbenvorst, the netherlands parts distribution joint venture licensee 6. tacoma, Washington, us 22. linnavuori, finland 7. beloit, Kansas, us 8. hesston, Kansas, us 9. houston, texas, us 10. Queretaro, mexico 11. jundiai, brazil 12. mogi das cruzes, brazil 13. santa Rosa, brazil 14. ibirubá, brazil 15. canoas, brazil 23. suolahti, finland 24. bäumenheim, germany 25. marktoberdorf, germany 26. breganze, italy 27. vladimir, Russia 28. chennai, india 29. daqing, china 30. changzhou, china 31. shanghai, china 16. haedo, Argentina 32. melbourne, Australia 30 AGCO // Annual Report 2010 COllAbOrAtinG fOr suCCess Agco Advanced technology solutions offers a specialized automatic guidance system for the sugarcane industry, developed in partnership with the santa fé sugarcane mill in são paulo, brazil. Through a unique collaboration with advanced including providing technical support and operator technology supplier Topcon we are delivering a robust training. By late 2010, the mill was doing all of its and reliable product to meet the sugarcane market’s planning (previously done in the office) and planting specific needs. The project began with the acquisition of using the new solution. The system can also be 10 Valtra BH185 units, all equipped with automatic guidance, and focused on developing a system to reduce time, cost and labor associated with the production of sugarcane. The resulting system increases planting capacity by optimizing rows and “It is important to offer a complete solution. Our ability to act as a consultant from planting through to harvesting is what differentiates us.” transferred to other machines, providing automatic guidance for all operations (tillage, planting, spraying and harvesting). “It is important to offer a complete solution. Our ability to act as a consultant from planting through to harvesting is what differentiates us,” explains Torretta. reducing fuel consumption. It also helps increase the longevity of the sugarcane. Partnering with a forward-thinking customer enabled the team to work closely in an actual production environment and make necessary adjustments to ensure the new version of the System 150 automatic guidance was a total success. “We wanted to offer a comprehensive solution for mechanized production of sugarcane and we found a good partner with interest in investing in and adopting new technologies,” says Jak Torretta, AGCO Products Director in South America. “Santa Fé Sugarcane Mill became a strong ally in an important step forward for agribusiness.” AGCO, through its local Valtra dealer Comper Tratores, actively participated in all stages of the introduction, System 150 Automatic Guidance 31 inVestinG in future teChnOlOGies Agco concentrates on devising practical, real-life solutions for improving farmer profitability. three technologies have proven viable through testing on hundreds of acres. Biogas engine Revealed for the first time in Sweden in 2010, the Valtra N101 demonstration tractor uses state-of-the-art technology that could provide environmental benefits and allow renewable natural resources to be efficiently utilized. Without making any changes to the original diesel engine, 70-80% of the power is generated by biogas. The first test model of the 110 HP tractor has capacity for 170 liters of biogas, sufficient for four to five hours of work. Both the diesel and gas injection systems have their own electronically controlled common rails, allowing the ratio between diesel and biogas to be optimized. Biomass harvesting Our one-pass biomass harvesting system unites proven combine technology with AGCO’s durable and reliable large square baler. The result is a timesaving system that requires just one pass through the field for both grain and crop residue harvest. This harvesting system efficiently harvests grain, while also collecting and packaging clean corn cobs, husks and leaves. The result is a transportable, 3-foot-by-4-foot bale, up to eight feet long, of cellulosic material used in the production of biomass energy. In addition, this technology beats other collection options for delivering clean material in a dense, easy-to-transport form. Electric wheel-drive A prototype hybrid electric RoGator® 1386 high-clearance sprayer was unveiled at the AG CONNECT Expo 2010. The first of its kind on this scale (330 kW), the experimental concept sprayer attracted industry attention for achieving greater than 25% fuel savings, superior torque and better all-around performance compared to a conventional model. With its reduced carbon footprint, improved performance and anticipated lower downtime and operating costs, the electric wheel-drive concept is proving AGCO’s commitment to future technologies to improve agriculture efficiency and sustainability. 32 32 AGCO // Annual Report 2010 AGCO // Annual Report 2010 Martin Richenhagen on a recent trip in South America. GrOwinG A better future As corporate citizens of the world, we believe we can best AGCO is driven to innovate and improve the performance sustain the growth of our company through economic, of our business through economic, environmental and environmental and social programs linked to our business social programs. Active 2010 initiatives included values. We are committed to putting our best financial and governance through accountability measures, risk and non-financial resources together to make the most efficient crisis readiness planning, and product innovation and effective contribution to the global community. The strategies including university research partnerships. world population will be a third larger by 2050, so it is part of AGCO’s long-term strategy to provide solutions to We are living our vision of feeding the world while sustainably grow and harvest enough food, fuel and fiber building on our values of ethical standards, accountability, for the expanding population. integrity, respect and transparency. Currently our sustainability efforts are focused in three Our sustainability focus involves everyone connected to primary areas: our operating communities, our employees, AGCO, from our global executives to the individual and the ecological impact of our processes and products. farmers harvesting crops. ouR com mi tment cAn b e se e n in n umeRous 2010 Activi ti es, in clu di ng : Investment in biofuel alternatives for AGCO SISU POWER engines Water conservation and energy efficiency improvements in our facilities Emissions management tools Employee development programs, including workplace health and safety Giving of time, monies and products to our communities and areas in need 33 MeetinG h ArVestinG needs ACrOss the GlObe Agco delivers relevant technologies that fit farming conditions around the world. in china, a multi-- cultural, multi-functional Agco team is exploring adaptive harvesting solutions to address a wide diversity of crops and geographies in this emerging market. agricultural technology, including self-propelled combines. The country produces an extremely wide variety of crops, from flood-irrigated rice in the south to corn and wheat in the north. As it prepares for growth in the Chinese harvesting market, AGCO organized equipment assessment activities for combines and small balers at multiple locations in 2010, including “voice of customer” reviews with owners, operators and dealers at its Changzhou facility. Two Class 4 Massey Ferguson combines were In 2010, AGCO continued its tradition of helping improve shipped to Heilongjiang for field operation tests and global agriculture’s efficiency through the development evaluation. In addition, a team of engineers and quality and implementation of technologies that are relevant for control specialists from Brazil and Italy traveled to China different regions of the world. Since conventional farming to share their expertise with the development team. practices cannot produce enough food to keep pace with the world’s rapid population growth, technology improvements that allow farmers to produce higher yields while minimizing input costs are crucial. For example, many AGCO advancements help farming operations achieve yield improvements using modern, eco-friendly fertilization and chemical application practices. China is one nation with a growing need for new Evaluation of existing global product platforms in strategic markets like China is key to AGCO’s role in the rapid mechanization of developing countries. 34 34 AGCO // Annual Report 2010 AGCO // Annual Report 2010 bOArd Of direCtOrs And seniOr MAnAGeMent from left to right: WolfgAng deml former president and ceo bayWa corporation governance and succession planning committees heRmAn cAin president and ceo t.h.e. new voice inc. compensation and succession planning committees luiz feRnAndo fuRlAn co-chairman of the board of bRf brasil foods, s. A. Audit & governance committees tom W. lAsoRdA former vice chairman, president and member of the board of managers chrysler llc Audit and compensation committees geRAld l. shAheen former group president caterpillar inc. compensation executive and succession planning committees mARtin h. RichenhAgen chairman, president and chief executive officer, Agco executive and succession planning committees p. geoRge benson president, college of charleston Audit, executive and governance committees geoRge e. minnich former senior vice president and cfo, itt corporation Audit, compensation and executive committees hendRiKus visseR chairman, Royal huisman shipyards n.v. Audit and governance committees cuRtis e. moll chairman and ceo mtd holdings, inc. Audit and compensation committees geRAld b. johAnneson former president and ceo haworth, inc. executive, governance and succession planning committees 35 35 from left to right: AndRé m. cARiobA senior vice president general manager, south America AndReW h. becK senior vice president chief financial officer gARy l. collAR senior vice president general manager, europe/Africa/middle east; Australia, new zealand debRA e. KupeR vice president general counsel and corporate secretary RAndAll g. hoffmAn senior vice president global sales, marketing and product management hAns-beRnd veltmAAt senior vice president manufacturing and Quality hubeRtus m. mühlhäuseR senior vice president strategy & integration general manager, eastern europe and Asia dAvid l. cAplAn senior vice president materials management, Worldwide gARRy l. bAll senior vice president engineering RobeRt b. cRAin senior vice president general manager, north America lucindA b. smith senior vice president human Resources 36 AGCO // Annual Report 2010 fOrwArd lOOkinG stAteMents This annual report includes forward-looking statements, The collectability of receivables that are created from our including the statements in the Chairman’s Message and sales, as well as from financing obtained by our customers other statements herein regarding market demand, grain through our retail financing joint ventures, is critical to our inventories, crop yields, farm incomes and productivity, business. margin expansion, financial position, and the effects of operational changes and strategic investments. These We depend on suppliers for raw materials, components statements are subject to risk that could cause actual and parts for our products, and any failure by our suppliers results to differ materially from those suggested by the to provide products as needed, or by us to promptly statements, including: address supplier issues, will adversely impact our ability to timely and efficiently manufacture and sell products. Our financial results depend entirely upon the agricultural industry, and factors that adversely affect the agricultural A majority of our sales and manufacturing take place industry generally, including declines in the general outside of the United States, and, as a result, we are economy, increases in farm input costs, lower commodity exposed to risks related to foreign laws, taxes, economic prices and changes in the availability of credit for our conditions, labor supply and relations, political conditions retail customers, will adversely affect us. and governmental policies. These risks may delay or reduce our realization of value from our international operations. The poor performance of the general economy has adversely impacted our sales and may continue to have an Volatility with respect to currency exchange rates and adverse impact on our sales in the future, the extent of interest rates can adversely affect our reported results of which we are unable to predict, and there can be no operations and the competitiveness of our products. assurance that our results will not continue to be affected by the weakness in global economic conditions. We are subject to extensive environmental laws and regulations, and our compliance with, or our failure to Our success depends on the introduction of new comply with, existing or future laws and regulations could products, which require substantial expenditures and may delay production of our products or otherwise adversely not be well received in the market place. affect our business. We face significant competition and, if we are unable to We have significant pension obligations with respect to our compete successfully against other agricultural equipment employees, and our available cash flow may be adversely manufacturers, we would lose customers and our affected in the event that payments became due under any revenues and profitability would decline. pension plans that are unfunded or underfunded. Declines Most of our sales depend on the retail customers’ obligations result in increased pension expense in future in the market value of the securities used to fund these obtaining financing, and any disruption in their ability to periods. obtain financing, whether due to the current economic downturn or otherwise, will result in the sale of fewer We are subject to raw material price fluctuations, which products by us. A large portion of the retail sales of our can adversely affect our manufacturing costs. products are financed by our retail finance joint ventures with Rabobank, and any difficulty on Rabobank’s part to In connection with our outstanding indebtedness, we are fund the venture would adversely impact sales if our subject to certain restrictive covenants and payment customers would be required to utilize other retail obligations that may adversely affect our ability to operate financing providers. and expand our business. 37 se le ct ed finAn ciAl infoRmA tio n (in millions, except percentages, per share amounts and employees) Years Ended December 31, 2010 2009(1) 2008(1) 2007(1) 2006(1) opeRAting Results Net sales Gross profit Percent of net sales Income from operations Percent of net sales $ 6,896.6 $ 6,516.4 $ 8,273.1 $ 6,715.9 $ 5,335.4 1,258.7 18.3% 324.2 4.7% 1,071.9 16.4% 218.7 3.4% 1,498.4 18.1% 563.7 6.8% 1,189.7 17.7% 393.7 5.9% 927.2 17.4% 68.2 1.3% Net income (loss) attributable to AGCO Corporation and subsidiaries 220.5 135.7 385.9 232.9 (71.4) Net income (loss) per common share – diluted(2) $ 2.29 $ 1.44 $ 3.95 $ 2.41 $ (0.79) Weighted average shares outstanding – diluted 96.4 94.1 97.7 96.6 90.8 bAlAnce sheet dA tA Working capital Total assets Long-term debt, less current portion Total liabilities Stockholders’ equity otheR dA tA $ 1,208.1 $ 1,079.6 $ 1,037.4 $ 724.8 $ 735.3 5,436.9 4,998.9 4,846.6 4,698.0 4,046.5 443.0 2,777.7 2,659.2 454.0 2,596.2 2,394.4 625.0 2,832.3 2,014.3 294.1 2,583.9 2,114.1 523.1 2,489.1 1,557.4 Number of employees 14,311 14,456 15,606 13,720 12,804 (1) Operating results and balance sheet data presented above have been retroactively restated for the years ended December 31, 2009, 2008, 2007 and 2006 to reflect the deconsolidation of our GIMA joint venture. Refer to our audited Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements, which are included in our Annual Report on Form 10-K. (2) The Company makes reference to adjusted earnings per share, as reconciled below: 2010 2009(1) 2008(1) 2007(1) 2006(1) Net income (loss) per common share – diluted $ 2.29 $ 1.44 $ 3.95 $ 2.41 $ (0.79) Restructuring and other infrequent expenses (income)(3) Goodwill impairment charge(3) Weighted average share impact 0.03 — — 0.11 — — — — — (0.03) — — Net income per common share – adjusted $ 2.32 $ 1.55 $ 3.95 $ 2.38 $ 0.01 1.81 0.01 1.04 (3) After tax. 38 AGCO // Annual Report 2010 con s oli dA te d st Ate ments of opeRA tions (in millions, except per share amounts) Years Ended December 31, 2010 2009 2008 Net sales Cost of goods sold Gross profit Selling, general and administrative expenses Engineering expenses Restructuring and other infrequent expenses Amortization of intangibles Income from operations Interest expense, net Other expense, net Income before income taxes and equity in net earnings of affiliates Income tax provision Income before equity in net earnings of affiliates Equity in net earnings of affiliates Net income Net loss attributable to noncontrolling interest Net income attributable to AGCO Corporation and subsidiaries Net income per common share attributable to AGCO Corporation and subsidiaries: Basic Diluted Weighted average number of common and common equivalent shares outstanding: Basic Diluted $ 6,896.6 $ 6,516.4 $ 8,273.1 5,637.9 1,258.7 5,444.5 1,071.9 6,774.7 1,498.4 692.1 219.6 4.4 18.4 324.2 33.3 16.0 274.9 104.4 170.5 49.7 220.2 0.3 630.1 191.9 13.2 18.0 218.7 42.1 22.2 154.4 57.7 96.7 38.7 135.4 0.3 720.9 194.5 0.2 19.1 563.7 32.1 20.1 511.5 164.4 347.1 38.8 385.9 — $ $ $ 220.5 $ 135.7 $ 385.9 2.38 2.29 $ $ 1.47 1.44 $ $ 92.8 96.4 92.2 94.1 4.21 3.95 91.7 97.7 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. co nso li dA ted b AlAnce sheets (in millions, except share amounts) December 31, Assets Current Assets: Cash and cash equivalents Accounts and notes receivable, net Inventories, net Deferred tax assets Other current assets Total current assets Property, plant and equipment, net Investment in affiliates Deferred tax assets Other assets Intangible assets, net Goodwill Total assets liAbilities And stocKholdeRs’ eQuity Current Liabilities: Current portion of long-term debt Convertible senior subordinated notes Securitization facilities 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 Total liabilities tempoRARy eQuity 39 2010 2009 $ 719.9 $ 908.5 1,233.5 52.6 206.5 651.4 725.2 1,156.7 63.6 151.6 3,121.0 2,748.5 924.8 398.0 58.0 130.8 171.6 632.7 910.0 353.9 70.0 115.7 166.8 634.0 $ 5,436.9 $ 4,998.9 $ 0.1 $ 161.0 113.9 682.6 883.1 72.2 0.1 193.0 — 621.6 808.7 45.5 1,912.9 1,668.9 443.0 226.5 103.9 91.4 454.0 276.6 118.7 78.0 2,777.7 2,596.2 Equity component of redeemable convertible senior subordinated notes — 8.3 stocKholdeRs’ eQuity AGCO Corporation stockholders’ equity: Preferred stock; $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding in 2010 and 2009 Common stock; $0.01 par value, 150,000,000 shares authorized, 93,143,542 and 92,453,665 shares issued and outstanding at December 31, 2010 and 2009, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total AGCO Corporation stockholders’ equity Noncontrolling interest Total stockholders’ equity — 0.9 1,051.3 1,738.3 (132.1) 2,658.4 0.8 2,659.2 — 0.9 1,061.9 1,517.8 (187.4) 2,393.2 1.2 2,394.4 Total liabilities, temporary equity and stockholders’ equity $ 5,436.9 $ 4,998.9 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. 40 AGCO // Annual Report 2010 con s oli dA te d st Ate ments of stocKholdeRs’ eQuity (in millions, except share amounts) common stocK AccumulAted otheR compRehensive income (loss) Balance, December 31, 2007 Adjustment for GIMA deconsolidation Adjusted balance, January 1, 2008 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: 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 Net income (loss) Issuance of restricted stock Issuance of performance award stock Stock options and SSARs exercised Stock compensation Investments by noncontrolling interest Defined benefit pension plans, net of taxes: Net actuarial loss arising during year 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 Reclassification to temporary equity – Equity component of convertible senior subordinated notes Change in cumulative translation adjustment Balance, December 31, 2009 Net income (loss) Issuance of restricted stock Issuance of performance award stock Stock options and SSARs exercised Stock compensation Conversion of 1¾% convertible senior subordinated notes Repurchase of 1¾% convertible senior subordinated notes 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 Reclassification to temporary equity – Equity component of convertible senior subordinated notes Change in cumulative translation adjustment Balance, December 31, 2010 shARes Amount 91,609,895 $ — 91,609,895 — 136,457 62,387 35,454 — — — — — — — — — 0.9 — 0.9 — — — — — — — — — — — — — AdditionAl pAid-in cApitAl $ 1,036.9 — 1,036.9 — 1.6 (2.6) (0.3) 31.8 — — — — — — — — 91,844,193 0.9 1,067.4 — 26,388 581,393 1,691 — — — — — — — — 92,453,665 — 17,303 555,262 56,326 — 60,986 — — — — — — — — — 93,143,542 $ — — — — — — — — — — — — 0.9 — — — — — — — — — — — — — — — 0.9 — 0.6 (5.2) — 7.4 — — — — — (8.3) — 1,061.9 — 0.7 (11.2) — 12.7 — (21.1) — — — — — — 8.3 — $ 1,051.3 $ 1,738.3 $ (179.1) $ $ (1.4) $ (132.1) $ 0.8 $ 2,659.2 $ 275.8 $ 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. RetAined eARnings defined benefit pension plAns cumulAtive tRAnslAtion Adjustment defeRRed gAins (losses) on deRivAtives compRehensive noncontRolling stocKholdeRs‘ coRpoRA tion noncontRolling income (loss) inteRests eQuity And subsidiARies inteRest AccumulAted otheR compRehensive (loss) income AttRibutAble compRehensive loss totAl to Agco AttRibutAble to $ 997.3 $ (86.8) $ 160.5 $ $ 79.0 $ 6.0 $ 2,120.1 — 997.3 385.9 (86.8) 160.5 (6.0) (6.0) 2,114.1 385.9 $ 385.9 $ — (0.2) (0.9) 1,382.1 135.7 (138.1) (418.4) (257.9) (208.3) 282.9 25.0 1,517.8 220.5 (0.2) (57.6) 5.6 — — — — — — — 0.9 — — — — — — — — — — — — — — — — — — (75.6) 5.4 — — (2.8) 23.5 1.8 6.7 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 23.4 48.4 (44.4) (1.0) (40.1) 35.4 0.6 (4.1) 5.3 — 5.3 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 2.5 0.2 — — — 79.0 — — — — — (0.2) (57.6) 5.6 — 0.9 (44.4) (1.0) (418.4) (436.1) (75.6) 5.4 35.4 0.6 282.9 (187.4) — — — — — — — — — — — — — — (2.8) 23.5 1.8 6.7 2.5 0.2 — 23.4 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — (0.3) 1.3 — 0.2 1.2 (0.3) (0.1) 1.6 (2.6) (0.3) 31.8 (0.2) (57.6) 5.6 (0.2) — (44.4) (1.0) 0.6 (5.2) — 7.4 1.3 (75.6) 5.4 35.4 0.6 (418.4) 2,014.3 135.4 (8.3) 283.1 2,394.4 220.2 0.7 (11.2) — 12.7 — (21.1) (2.8) 23.5 1.8 6.7 2.5 0.2 8.3 23.3 (0.2) (57.6) 5.6 0.9 (44.4) (1.0) (418.4) (129.2) 135.7 (75.6) 5.4 35.4 0.6 282.9 384.4 220.5 (2.8) 23.5 1.8 6.7 2.5 0.2 23.4 — — (0.3) 0.2 (0.1) (0.3) (0.1) (0.4) common stocK AccumulAted otheR compRehensive income (loss) RetAined eARnings defined benefit pension plAns cumulAtive tRAnslAtion Adjustment defeRRed gAins (losses) on deRivAtives $ 997.3 $ (86.8) $ 160.5 $ AccumulAted otheR compRehensive income (loss) noncontRolling inteRests totAl stocKholdeRs‘ eQuity $ 79.0 $ 6.0 $ 2,120.1 — (86.8) — 160.5 (6.0) 2,114.1 385.9 $ 385.9 $ — 41 compRehensive (loss) income AttRibutAble to Agco coRpoRA tion And subsidiARies compRehensive loss AttRibutAble to noncontRolling inteRest Amortization of net actuarial losses included in net periodic pension cost Effects of changing pension plan measurement date: 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 91,844,193 0.9 1,067.4 Balance, December 31, 2007 Adjustment for GIMA deconsolidation Adjusted balance, January 1, 2008 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 Balance, December 31, 2008 Net income (loss) Issuance of restricted stock Issuance of performance award stock Stock options and SSARs exercised Stock compensation Investments by noncontrolling interest Defined benefit pension plans, net of taxes: Net actuarial loss arising during year 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 Reclassification to temporary equity – Equity component of convertible senior subordinated notes Change in cumulative translation adjustment Balance, December 31, 2009 Net income (loss) Issuance of restricted stock Issuance of performance award stock Stock options and SSARs exercised Stock compensation Conversion of 1¾% convertible senior subordinated notes Repurchase of 1¾% convertible senior subordinated notes 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 Reclassification to temporary equity – Equity component of convertible senior subordinated notes Change in cumulative translation adjustment Balance, December 31, 2010 shARes Amount pAid-in cApitAl 91,609,895 $ $ 1,036.9 AdditionAl 91,609,895 136,457 62,387 35,454 26,388 581,393 1,691 92,453,665 17,303 555,262 56,326 60,986 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 0.9 — 0.9 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 0.9 — — 0.9 1,036.9 — — 1.6 (2.6) (0.3) 31.8 — — — — — — — — — 0.6 (5.2) — 7.4 — — — — — (8.3) — 1,061.9 — 0.7 (11.2) — 12.7 — (21.1) — — — — — — 8.3 — — 997.3 385.9 — — — — — — — (0.2) (0.9) — — — 1,382.1 135.7 — — — — — — — — — — — 1,517.8 220.5 — — — — — — — — — — — — — — — — — — — (0.2) (57.6) 5.6 — 0.9 — — — (138.1) — — — — — — (75.6) 5.4 — — — — (208.3) — — — — — — — (2.8) 23.5 1.8 6.7 — — — — — — — — — — — — — — — — (418.4) (257.9) — — — — — — — — — — — 282.9 25.0 — — — — — — — — — — — — — — 23.4 48.4 5.3 — 5.3 — — — — — — — — — — (44.4) (1.0) — (40.1) — — — — — — — — 35.4 0.6 — — (4.1) — — — — — — — — — — — 2.5 0.2 — — — 79.0 — — — — — (0.2) (57.6) 5.6 — 0.9 (44.4) (1.0) (418.4) (436.1) — — — — — — (75.6) 5.4 35.4 0.6 — 282.9 (187.4) — — — — — — — (2.8) 23.5 1.8 6.7 2.5 0.2 — 23.4 (6.0) — — — — — — — — — — — — — — — (0.3) — — — — 1.3 — — — — — 0.2 1.2 (0.3) — — — — — — — — — — — — — (0.1) 1.6 (2.6) (0.3) 31.8 (0.2) (57.6) 5.6 (0.2) — (44.4) (1.0) (418.4) 2,014.3 135.4 0.6 (5.2) — 7.4 1.3 (75.6) 5.4 35.4 0.6 (8.3) 283.1 2,394.4 220.2 0.7 (11.2) — 12.7 — (21.1) (2.8) 23.5 1.8 6.7 2.5 0.2 8.3 23.3 (0.2) (57.6) 5.6 0.9 (44.4) (1.0) (418.4) (129.2) 135.7 (75.6) 5.4 35.4 0.6 282.9 384.4 220.5 (2.8) 23.5 1.8 6.7 2.5 0.2 23.4 — — (0.3) 0.2 (0.1) (0.3) (0.1) (0.4) 93,143,542 $ $ 1,051.3 $ 1,738.3 $ (179.1) $ $ (1.4) $ (132.1) $ 0.8 $ 2,659.2 $ 275.8 $ 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. 42 AGCO // Annual Report 2010 con s oli dA te d st Ate ments of cAsh floWs (in millions) Years Ended December 31, Cash flows from operating activities: Net income 2010 2009 2008 $ 220.2 $ 135.4 $ 385.9 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Deferred debt issuance cost amortization Amortization of intangibles Amortization of debt discount Stock compensation Equity in net earnings of affiliates, net of cash received Deferred income tax provision (benefit) Loss (gain) on sale of property, plant and equipment Changes in operating assets and liabilities, net of effects from purchase of businesses: Accounts and notes receivable, net Inventories, net Other current and noncurrent assets Accounts payable Accrued expenses Other current and noncurrent liabilities Total adjustments Net cash provided by operating activities Cash flows from investing activities: 135.9 2.9 18.4 15.3 13.4 (14.8) 2.9 0.1 (21.2) (60.6) (92.8) 70.6 114.9 33.5 218.5 438.7 118.8 2.8 18.0 15.0 8.0 (21.0) (21.9) 1.4 241.2 277.1 40.8 (380.3) (68.1) (19.3) 212.5 347.9 116.1 3.2 19.1 14.1 33.3 (11.0) 7.3 (0.1) (194.5) (366.4) (81.6) 266.5 113.3 (26.9) (107.6) 278.3 Purchases of property, plant and equipment (167.1) (206.6) (236.8) Proceeds from sale of property, plant and equipment (Purchase) sale of businesses, net of cash acquired Investments in unconsolidated affiliates, net Restricted cash and other Net cash used in investing activities Cash flows from financing activities: Repurchase or conversion of convertible senior subordinated notes Proceeds from debt obligations Repayments of debt obligations Proceeds from issuance of common stock Payment of minimum tax withholdings on stock compensation Payment of debt issuance costs Investments by noncontrolling interest Net cash (used in) provided by financing activities Effects of exchange rate changes on cash and cash equivalents Increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year 0.9 (81.5) (25.4) — (273.1) (60.8) 71.4 (109.2) 0.5 (11.3) — — (109.4) 12.3 68.5 651.4 2.1 0.5 (17.6) 37.1 (184.5) — 282.3 (343.2) — (5.2) (0.1) 1.3 (64.9) 46.8 145.3 506.1 $ 719.9 $ 651.4 $ 4.5 — (0.6) (32.5) (265.4) — 75.8 (37.2) 0.3 (3.2) (1.4) — 34.3 (115.9) (68.7) 574.8 506.1 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. 43 corporate headquarters form 10-K 4205 River Green Parkway Duluth, Georgia 30096 US 770-813-9200 The Form 10-K annual report to the Securities and Exchange Commission is available on our corporate web site (www.AGCOcorp.com), under “Investors,” or upon request from the Investor Relations Department at corporate headquarters. transfer Agent & Registrar Computershare Trust Company, N.A. 250 Royall Street Canton, MA 02021 US stock exchange AGCO Corporation common stock (trading symbol is “AGCO”) is traded on the New York Stock Exchange. independent Registered Printed on FSC certified paper utilizing soy base inks. Annual meeting The annual meeting of the Company’s stockholders will be held at 9:00 a.m. ET, on April 21, 2011 at the offices of AGCO Corporation, 4205 River Green Parkway, Duluth, Georgia 30096 US. public Accounting firm credits KPMG LLP Atlanta, Georgia US Upper photo on page 14 “Kevin Bien” by Willie Vogt, Farm Progress © 2011 AGCO Corporation All Rights Reserved. Incorporated in Delaware. An Equal Opportunity Employer. AGCO®, Fendt®, Massey Ferguson®, Valtra® and their respective logos as well as corporate and product identity used herein are trademarks of AGCO 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. compARison of cumulAtive totAl RetuRn US$ 450 400 350 300 250 200 150 100 50 AGCO Corporation Custom Peer Group S&P MidCap Index 2005 2006 2007 2008 2009 2010 The graph shown (above) 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. Assumes $100 invested on January 1, 2006. Assumes dividend reinvested. Fiscal year ending December 31, 2010. (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-Hannifin Corporation and Terex Corporation. 44 AGCO // Annual Report 2010 Corporate Headquarters 4205 River Green Parkway Duluth, Georgia 30096 US 

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