AGCO Reports Fourth Quarter Results; Results Impacted by Weaker Markets and Production Cuts Earnings Improvement Targeted in 2006.DULUTH Duluth (dəl  th`), city (1990 pop. 85,493), seat of St. Louis co., NE Minn., at the west end of Lake Superior, at the head of lake navigation and opposite Superior, Wis.; inc. 1870. , Ga. -- AGCO AGCO Alcohol and Gaming Commission of OntarioAGCO Anderson, Greenwood, & Company AGCO After Google Check-Out Corporation (NYSE NYSE See: New York Stock Exchange :AG), a worldwide manufacturer and distributor of agricultural equipment, reported a net loss of $0.71 per share for the fourth quarter of 2005. Adjusted net income, which excludes restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and other infrequent in·fre·quent adj. 1. Not occurring regularly; occasional or rare: an infrequent guest. 2. expenses and a non-cash deferred income tax adjustment, was $0.30 per share for the fourth quarter of 2005. These results compare to reported net income of $0.52 per share and adjusted net income of $0.52 per share for the fourth quarter of 2004. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the fourth quarter of 2005 were $1.4 billion, a decrease of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 10% compared to the same period in 2004. For the full year, reported net income was $0.36 per share in 2005 compared to $1.71 per share in 2004. Adjusted net income, which excludes restructuring and other infrequent expenses, costs associated with a June June: see month. 2005 bond redemption and a non-cash deferred income tax adjustment, was $1.46 per share for the full year of 2005 compared to adjusted net income, excluding restructuring and other infrequent expenses, of $1.75 per share in 2004. Net sales for the full year of 2005 increased approximately 3% to $5.4 billion. In the fourth quarter of 2005, AGCO recorded a non-cash adjustment to increase its valuation allowance against its U.S. deferred income tax assets of $90.8 million, or $1.00 per share. Based on the uncertainty of utilizing the deferred income tax assets, an increase to the valuation allowance was determined to be appropriate in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Statement of Financial Accounting Standards No. 109. This adjustment does not affect the Company's ability to utilize the deferred income tax assets with future profitability in the U.S. "Our focus in the fourth quarter was on generating cash and reducing inventory levels," stated Martin Richenhagen, President and Chief Executive Officer. "Production levels in the fourth quarter of 2005 were approximately 30% lower than the prior year which allowed us to significantly reduce inventories from third quarter levels. Margin pressures from lower production and other factors along with softer market conditions in Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. negatively impacted our fourth quarter operating results. The significant decline in industry demand in South America was the principal cause of our operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. in 2005." "Although market conditions remain challenging, we believe we are gaining momentum in our key markets," stated Mr. Richenhagen. "Our retail sales performance in 2005 was a positive sign that our products and core brands are gaining acceptance worldwide. For 2006, our goals are to improve margins and asset returns through the achievement of our cost reduction and inventory management initiatives. In addition, we have a significant range of new products which will be introduced throughout the year that we believe will further enhance our competitive position in a variety of market segments." Fourth Quarter and Full Year Results For the fourth quarter of 2005, AGCO reported net sales of $1,384.9 million and a net loss of $63.8 million, or $0.71 per share. Adjusted net income, excluding restructuring and other infrequent income and a non-cash deferred income tax adjustment, was $26.9 million, or $0.30 per share. For the fourth quarter of 2004, AGCO reported net sales of $1,534.1 million and net income of $50.7 million, or $0.52 per share. Adjusted net income, excluding restructuring and other infrequent income, in the fourth quarter of 2004 was $50.6 million, or $0.52 per share. The following is a reconciliation of adjusted income from operations, net income and earnings per share to reported income from operations, net (loss) income and (loss) earnings per share for the quarters ended December December: see month. 31, 2005 and 2004:
2005 2004
-------------------------- --------------------------
(in millions, except per share data)
Net Earnings
Income Income (Loss) Income Net Earnings
From (Loss) Per From Income Per
Operations (1) Share(1) Operations (1) Share(1)
-------------------------- --------------------------
As adjusted $53.5 $26.9 $0.30 $88.3 $50.6 $0.52
Restructuring and
other infrequent
income(2) (0.2) (0.1) -- (1.0) (0.1) --
Deferred income
tax valuation
allowance
adjustment(3) -- 90.8 1.00 -- -- --
-------------------------- --------------------------
As reported $53.7 $(63.8) $(0.71) $89.3 $50.7 $0.52
========================== ==========================
(1)Net income (loss) and earnings (loss) per share amounts are after
tax (rounding may impact the summation of certain line items).
(2)The restructuring and other infrequent income recorded in the
fourth quarter of 2005 relates primarily to a reversal of previously
established provisions associated with the Company's rationalization
of its Finnish tractor manufacturing operations and gains on the
sale of property, plant and equipment associated with the Company's
rationalization of its Valtra European sales operations. The
restructuring and other infrequent income recorded in the fourth
quarter of 2004 primarily related to the reversal of a previously
established provision related to the Company's pension scheme in the
U.K., offset by charges incurred associated with the rationalization
of the Company's Randers, Denmark combine manufacturing operations
and its Finnish tractor manufacturing operations. See Note 1 to our
Condensed Consolidated Financial Statements for further explanation.
(3)During the fourth quarter of 2005, the Company recognized a non-
cash income tax charge of $90.8 million related to increasing the
valuation allowance for its U.S. deferred income tax assets.
For the full year of 2005, AGCO reported net sales of $5,449.7 million and net income of $31.6 million, or $0.36 per share. Adjusted net income, excluding restructuring and other infrequent income, bond redemption costs and a non-cash deferred income tax adjustment, was $136.3 million, or $1.46 per share. For the full year of 2004, AGCO reported net sales of $5,273.3 million and net income of $158.8 million, or $1.71 per share. Adjusted net income, excluding restructuring and other infrequent expenses, for the full year of 2004 was $162.4 million, or $1.75 per share. The following is a reconciliation of adjusted income from operations, net income and earnings per share to reported income from operations, net income and earnings per share for the full years ended December 31, 2005 and 2004:
2005 2004
---------------------------- ---------------------------
(in millions, except per share data)
Income Net Earnings Income Net Earnings
From Income Per From Income Per
Operations (1) Share(1) Operations (1) Share(1)
---------------------------- ---------------------------
As adjusted $274.7 $136.3 $1.46 $323.6 $162.4 $1.75
Restructuring
and other
infrequent
(income)
expenses(2) -- (0.2) -- 0.1 3.6 0.04
Bond
redemption
costs(3) -- 14.1 0.15 -- -- --
Deferred
income tax
valuation
allowance
adjustment(4) -- 90.8 0.95 -- -- --
---------------------------- ---------------------------
As reported $274.7 $31.6 $0.36 $323.5 $158.8 $1.71
============================ ===========================
(1)Net income and earnings per share amounts are after tax.
(2)The restructuring and other infrequent expenses recorded during
2005 relate primarily to the gain on sale of machinery and
equipment, offset by severance charges, both associated with the
rationalization of the Company's Randers, Denmark combine
manufacturing operations. The Company also incurred charges
associated with the rationalization of its Finnish tractor
manufacturing, sales and parts operations. The restructuring and
other infrequent expenses recorded during 2004 primarily related to
charges associated with the Randers rationalization, as well as
charges associated with various rationalization initiatives in
Europe and the U.S. These charges were offset by gains on the sale
of property, plant and equipment and restructuring reserve reversals
related to the Company's Coventry, England facility closure (closed
in 2003) and a reversal of a previously established provision
related to the Company's pension scheme in the U.K. See Note 1 to
our Condensed Consolidated Financial Statements for further
explanation.
(3)On June 23, 2005, AGCO redeemed its $250 million 9 1/2% senior
notes due 2008 at a price of approximately $261.9 million, which
included a premium of 4.75% over the face amount of the notes. At
the time of the redemption, AGCO recorded interest expense for the
premium of approximately $11.9 million, or $0.13 per share, and
approximately $2.2 million, or $0.02 per share, for the write-off of
the remaining balance of the deferred debt issuance costs.
(4)During the fourth quarter of 2005, the Company recognized a non-
cash income tax charge of $90.8 million related to increasing the
valuation allowance for its U.S. deferred income tax assets.
AGCO's net sales decreased 9.7% for the fourth quarter and increased 3.3% for the full year of 2005. Excluding the impact of currency translation, AGCO's net sales declined 6.4% during the fourth quarter and increased 1.5% during 2005. Net sales for the fourth quarter were negatively impacted by weaker market conditions in Western Europe and South America. For the full year of 2005, net sales increased primarily in the North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Europe/Africa/Middle East regions, offset by significant sales declines in South America due to weaker market conditions throughout the year. In the Europe/Africa/Middle East region, net sales in Western Europe were relatively flat compared to the full year of 2004 with increases achieved in Central and Eastern Europe The term "Central and Eastern Europe" came into wide spread use, replacing "Eastern bloc", to describe former Communist countries in Europe, after the collapse of the Iron Curtain in 1989/90. , as well as the Middle East. Adjusted income from operations declined $34.8 million for the fourth quarter and $48.9 million for the full year of 2005 compared to 2004. Fourth quarter income from operations was impacted by lower sales, production cuts, and currency impacts particularly related to the strengthening Brazilian Real The real (IPA: [xe'aw] or [ʁe'aɫ], symbol: R$, ISO 4217 code: BRL, plural: reais) is the currency of Brazil. It is also the name of the earliest Brazilian currency (see from the Colonial period to 1942. . For the full year, income from operations declined primarily due to lower income from operations in South America and North America, partially offset by improvements in the Europe/Africa/Middle East region. Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: declined in 2005 primarily as a result of reduced margins in South America due to a significant reduction in industry demand and the impact of the strengthening Brazilian Real. In AGCO's Europe/Africa/Middle East operations, income from operations decreased $5.2 million in the fourth quarter and increased $55.7 million for the full year of 2005. Fourth quarter income from operations declined due to an 11% reduction in net sales resulting from weaker market conditions in Western Europe and currency translation. For the full year, the improved operating results were primarily due to stronger operating margins resulting from productivity gains, new product introductions, expense control and pricing. Income from operations in AGCO's South America operations decreased by $21.6 million for the fourth quarter and $89.2 million for the full year of 2005 compared to 2004. Industry demand in South America was significantly below 2004 throughout 2005, resulting in a decline in AGCO's sales in South America, excluding currency impacts, of approximately 36% for the fourth quarter and 29% for the full year of 2005. In addition to the impact of the sales decline, income from operations in South America was negatively impacted by lower production, unfavorable sales mix sales mix See product mix. and the continued strengthening of the Brazilian Real on sales outside of Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. . In North America, income from operations decreased $9.9 million in the fourth quarter and $15.1 million for the full year of 2005 compared to 2004. Income from operations in the fourth quarter and full year was lower primarily due to higher costs from the impact of the weak dollar on products produced primarily in Brazil, higher warranty costs and increased marketing and engineering expenses related to new initiatives. Income from operations in the Asia/Pacific region improved modestly for the fourth quarter and the full year of 2005 compared to 2004 due to higher sales in Asia. Regional Market Results North America - Industry unit retail sales of tractors for the full year of 2005 were relatively flat compared to the prior year resulting from a decrease in the compact tractor tractor, in agriculture, vehicle used to pull such equipment as plows, cultivators, and mowers; to power stationary devices such as saws and winches; and to push snowplows and earth-moving implements. segment, offset by increases in the utility and high horsepower horsepower, unit of power in the English system of units. It is equal to 33,000 foot-pounds per minute or 550 foot-pounds per second or approximately 746 watts. tractor segments. Industry unit retail sales of combines for the full year of 2005 were approximately 1% higher than the prior year. AGCO's unit retail sales of tractors were higher for the full year of 2005 over 2004, while unit retail sales of combines were lower for 2005 compared to 2004. Western Europe - Industry unit retail sales of tractors for the full year of 2005 were approximately 5% lower than the comparable prior year period. For the fourth quarter, retail tractor demand declined approximately 12% versus the prior year. Retail demand for the full year of 2005 improved in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). and Scandinavia Scandinavia (skăn'dĭnā`vēə), region of N Europe. It consists of the kingdoms of Sweden, Norway, and Denmark; Finland and Iceland are usually considered part of Scandinavia. but declined in Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. , France, the United Kingdom and Finland Finland, Finnish Suomi (swô`mē), officially Republic of Finland, republic (2005 est. pop. 5,223,000), 130,119 sq mi (337,009 sq km), N Europe. . AGCO's unit retail sales for the full year of 2005 were relatively flat compared to the prior year. South America - Industry unit retail sales of tractors and combines for the full year of 2005 decreased approximately 24% and 58%, respectively, compared to the prior year. Retail sales in the major market of Brazil declined approximately 38% for tractors and 73% for combines for the full year of 2005 compared to 2004. AGCO's South American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of unit retail sales of tractors and combines also declined significantly for the full year of 2005 compared to 2004. Rest of World Markets - Outside of North America, Western Europe and South America, AGCO's net sales for the full year of 2005 were approximately 30% higher than 2004 due to higher sales in the Middle East and Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. . Worldwide industry equipment demand declined in 2005 with the largest reductions in Western Europe and South America. In North America, industry demand remained relatively stable supported by solid farm income, although drought conditions "Drought Conditions" is episode 126 of The West Wing. Plot Senator Rafferty, a new presidential candidate garnered much media attention with a ground-breaking speech about health care. in certain areas of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. impacted demand in the latter part of the year. In Western Europe, industry demand softened soft·en v. soft·ened, soft·en·ing, soft·ens v.tr. 1. To make soft or softer. 2. To undermine or reduce the strength, morale, or resistance of. 3. in the second half of 2005 as a result of lower agricultural production mainly due to dry weather conditions in Southern Europe Southern Europe or sometimes Mediterranean Europe is a region of the European continent. There is no clear definition of the term which can vary depending on whether geographic, cultural, linguistic or historical factors are taken into account. , as well as uncertainty related to Common Agricultural Policy Agricultural policy describes a set of laws relating to domestic agriculture and imports of foreign agricultural products. Governments usually implement agricultural policies with the goal of achieving a specific outcome in the domestic agricultural product markets. farm subsidy subsidy, financial assistance granted by a government or philanthropic foundation to a person or association for the purpose of promoting an enterprise considered beneficial to the public welfare. reforms. In South America, industry demand declined significantly in 2005 due to drought conditions in Southern Brazil and reduced farm profits resulting from both lower commodity prices and the continued strengthening of the Brazilian Real. Outlook Worldwide industry equipment demand in 2006 is expected to be modestly below 2005 levels. In North America, record farm income from the previous two years should support demand at relatively high levels in 2006. However, higher fuel and fertilizer fertilizer, organic or inorganic material containing one or more of the nutrients—mainly nitrogen, phosphorus, and potassium, and other essential elements required for plant growth. input costs and lower crop prices are expected to negatively impact equipment demand compared to 2005. In Western Europe, equipment demand is expected to continue to decline in 2006 resulting from lower commodity prices, higher farm input costs and concerns over subsidy reforms. In South America, equipment demand is expected to remain at low levels due to the impact of the strong Brazilian Real on exports of commodities, high farm debt levels and drought drought, abnormally long period of insufficient rainfall. Drought cannot be defined in terms of inches of rainfall or number of days without rain, since it is determined by such variable factors as the distribution in time and area of precipitation during and before in Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. . AGCO's net sales for the full year are expected to be slightly below 2005 resulting from lower industry demand, planned dealer inventory reductions and currency translation, partially offset by improved pricing. Despite the expected decline in sales, AGCO is targeting an improvement in its results in 2006 through increased operating margins and lower interest costs. In addition to its goal to improve earnings, AGCO is also targeting improvements in working capital utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be in 2006. AGCO expects to lower its seasonal increases in dealer and Company inventories throughout 2006 by leveling production and dealer deliveries compared to 2005. These actions are expected to have the effect of lowering sales and profits in the first half of 2006 compared to 2005. "Through growth and productivity initiatives, we have set a target to improve annual earnings by up to 10% in 2006 and by 10% to 15% annually thereafter," stated Mr. Richenhagen. The Company will be hosting a conference call with respect to this earnings announcement at 10:00 a.m. Eastern Time on Thursday Thursday: see week. , February February: see month. 9, 2006. Interested persons can access the conference call via the Company's website at www.agcocorp.com. A replay of the conference call will be available approximately two hours after the conclusion of the conference call for twelve months following the call. A copy of this press release will be available on the Company's website. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Statements which are not historical facts, including projections of future sales, net income, earnings, operating margins, production levels, inventory reductions, working capital utilization, interest costs and market demand and conditions, are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and subject to risks which could cause actual results to differ materially from those suggested by the statements. These forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. involve a number of risks and uncertainties. The following are among the factors that could cause actual results to differ materially from the results discussed in or implied by the forward-looking statements. Further information concerning these and other factors is included in the Company's filings with the Securities and Exchange Commission, including its Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004. The Company disclaims any obligation to update any forward-looking statements. --Our financial results depend entirely upon the agricultural industry, and factors that adversely affect the agricultural industry generally will adversely affect us. --Our success depends on the introduction of new products which require substantial expenditures. --We depend on suppliers for components and parts for our products, and any failure by our suppliers to provide products as needed as needed prn. See prn order. , or by us to promptly prompt adj. prompt·er, prompt·est 1. Being on time; punctual. 2. Carried out or performed without delay: a prompt reply. tr.v. address supplier issues, will adversely impact our ability to timely and efficiently manufacture and sell our products. --A majority of our sales and manufacturing takes place outside of the United States, and, as a result, we are exposed to risks related to foreign laws, taxes, economic conditions, labor supply and relations, political conditions and governmental policies. These risks may delay or reduce our realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of value from our international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. . --Currency exchange rate and interest rate changes can adversely affect the profitability of our products. --We are subject to extensive environmental laws and regulations, and our compliance with, or our failure to comply with, existing or future laws and regulations could delay production of our products or otherwise adversely affect our business. --Our labor force is heavily unionized, and our contractual and legal obligations under collective bargaining agreements The contractual agreement between an employer and a Labor Union that governs wages, hours, and working conditions for employees and which can be enforced against both the employer and the union for failure to comply with its terms. and labor laws labor law, legislation dealing with human beings in their capacity as workers or wage earners. The Industrial Revolution, by introducing the machine and factory production, greatly expanded the class of workers dependent on wages as their source of income. subject us to the risks of work interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. or stoppage stoppage - /sto'p*j/ Extreme lossage that renders something (usually something vital) completely unusable. "The recent system stoppage was caused by a fried transformer." and could cause our costs to be higher. --We have significant pension obligations with respect to our employees. --We are subject to fluctuations in raw material prices and availability, which may cause delays in the production of our products or otherwise adversely affect our manufacturing costs. --The agricultural equipment industry is highly seasonal, and seasonal fluctuations significantly impact our results of operations and cash flows. --We face significant competition and, if we are unable to compete successfully against other agricultural equipment manufacturers, we would lose customers and our revenues and profitability would decline. --We have a substantial amount of indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , and, as a result, we are subject to certain restrictive covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. and payment obligations that may adversely affect our ability to operate and expand our business. AGCO Corporation, headquartered in Duluth, Georgia Duluth is a city in Gwinnett County, Georgia, and a suburb of Atlanta located in the Metro Atlanta area. Unincorporated portions of northeast Fulton County and Forsyth County also have Duluth as a mailing address, though this area is technically outside city limits. , is a global manufacturer and distributor of agricultural equipment and related replacement parts. AGCO products are distributed in more than 140 countries. AGCO offers a full product line including tractors, combines, hay tools, sprayers, forage forage Vegetable food, including corn and hay, of wild or domestic animals. Harvested, processed, and stored forage is called silage. Forage should be harvested in early maturity to avoid a decrease in protein and fibre content as crops mature. , tillage equipment and implements through more than 3,900 independent dealers and distributors around the world. AGCO products are distributed under the various well-known well-known adj. 1. Widely known; familiar or famous: a well-known performer. 2. Fully known: well-known facts. brand names AGCO(R), Challenger(R), Fendt Fendt is a German manufacturer of agricultural tractors and machines. It is part of AGCO Corporation. It was founded in 1937 by Xaver Fendt and purchased by AGCO in 1997. (R), Gleaner(R), Hesston(R), Massey Ferguson Massey Ferguson Limited is a major agricultural equipment manufacturer. Originally started in Canada it became one of the country's largest industrial concerns in the 1960s. (R), New Idea(R), RoGator(R), Spra-Coupe(R), Sunflower sunflower, any plant of the genus Helianthus of the family Asteraceae (aster family), annual or perennial herbs native to the New World and common throughout the United States. (R), Terra-Gator(R), Valtra Valtra is a Finnish based manufacturer of tractors owned by the AGCO Corporation. Valtra traces its origin to Valmet, Bolinder, Munktell and Volvo. Bolinder-Munktell merged with Volvo in 1950 to form BM Volvo. (R), and White(TM) Planters Planters is an American snack food company under Kraft Foods manufacturing, best known for its nuts and the Mr. Peanut icon that symbolizes them. Started by Italian immigrants Amedeo Obici and Mario Peruzzi in Wilkes-Barre, Pennsylvania, in 1906, it was incorporated in 1908 . AGCO provides retail financing through AGCO Finance. In 2005, AGCO had net sales of $5.4 billion. Please visit our website at www.agcocorp.com.
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in millions)
December 31, December 31,
2005 2004
-------------- --------------
ASSETS
Current Assets:
Cash and cash equivalents $220.6 $325.6
Accounts and notes receivable, net 655.7 823.2
Inventories, net 1,062.5 1,069.4
Deferred tax assets 39.7 127.5
Other current assets 107.7 58.8
-------------- --------------
Total current assets 2,086.2 2,404.5
Property, plant and equipment, net 561.4 593.3
Investment in affiliates 164.7 114.5
Deferred tax assets 84.1 146.1
Other assets 56.6 70.1
Intangible assets, net 211.5 238.2
Goodwill 696.7 730.6
-------------- --------------
Total assets $3,861.2 $4,297.3
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $6.3 $6.9
Accounts payable 590.9 601.9
Accrued expenses 561.8 660.3
Other current liabilities 101.4 89.9
-------------- --------------
Total current liabilities 1,260.4 1,359.0
Long-term debt, less current portion 841.8 1,151.7
Pensions and postretirement health care
benefits 241.7 247.3
Other noncurrent liabilities 101.3 116.9
-------------- --------------
Total liabilities 2,445.2 2,874.9
-------------- --------------
Stockholders' Equity:
Common stock 0.9 0.9
Additional paid-in capital 894.7 893.2
Retained earnings 825.4 793.8
Unearned compensation (0.1) (0.2)
Accumulated other comprehensive loss (304.9) (265.3)
-------------- --------------
Total stockholders' equity 1,416.0 1,422.4
-------------- --------------
Total liabilities and stockholders'
equity $3,861.2 $4,297.3
============== ==============
See accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. notes to condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge .
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in millions, except per share data)
Three Months Ended
December 31,
-------------------
2005 2004
--------- ---------
Net sales $1,384.9 $1,534.1
Cost of goods sold 1,161.0 1,269.3
--------- ---------
Gross profit 223.9 264.8
Selling, general and administrative expenses
(includes restricted stock compensation expense of
$0.1 million for each of the three months ended
December 31, 2005 and 2004) 136.6 146.1
Engineering expenses 29.7 26.3
Restructuring and other infrequent income (0.2) (1.0)
Amortization of intangibles 4.1 4.1
--------- ---------
Income from operations 53.7 89.3
Interest expense, net 15.3 15.2
Other expense, net 6.8 6.6
--------- ---------
Income before income taxes and equity in net
earnings of affiliates 31.6 67.5
Income tax provision 100.5 22.6
--------- ---------
(Loss) income before equity in net earnings of
affiliates (68.9) 44.9
Equity in net earnings of affiliates 5.1 5.8
--------- ---------
Net (loss) income $(63.8) $50.7
========= =========
Net (loss) income per common share:
Basic $(0.71) $0.56
========= =========
Diluted $(0.71) $0.52
========= =========
Weighted average number of common and common
equivalent shares outstanding:
Basic 90.5 90.3
========= =========
Diluted 90.5 99.7
========= =========
See accompanying notes to condensed consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in millions, except per share data)
Years Ended
December 31,
-------------------
2005 2004
--------- ---------
Net sales $5,449.7 $5,273.3
Cost of goods sold 4,516.1 4,320.4
--------- ---------
Gross profit 933.6 952.9
Selling, general and administrative expenses
(includes restricted stock compensation expense of
$0.4 million and $0.5 million for the years ended
December 31, 2005 and 2004, respectively) 520.7 509.8
Engineering expenses 121.7 103.7
Restructuring and other infrequent expenses -- 0.1
Amortization of intangibles 16.5 15.8
--------- ---------
Income from operations 274.7 323.5
Interest expense, net 80.0 77.0
Other expense, net 34.6 22.1
--------- ---------
Income before income taxes and equity in net
earnings of affiliates 160.1 224.4
Income tax provision 151.1 86.2
--------- ---------
Income before equity in net earnings of affiliates 9.0 138.2
Equity in net earnings of affiliates 22.6 20.6
--------- ---------
Net income $31.6 $158.8
========= =========
Net income per common share:
Basic $0.35 $1.84
========= =========
Diluted $0.36 $1.71
========= =========
Weighted average number of common and common
equivalent shares outstanding:
Basic 90.4 86.2
========= =========
Diluted 95.1 95.6
========= =========
See accompanying notes to condensed consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
Years Ended
December 31,
---------------
2005 2004
------- -------
Cash flows from operating activities:
Net income $31.6 $158.8
------- -------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 89.4 84.3
Deferred debt issuance cost amortization 7.2 13.2
Amortization of intangibles 16.5 15.8
Restricted stock compensation 0.2 0.3
Equity in net earnings of affiliates, net of cash
received (14.5) (6.1)
Deferred income tax provision 107.9 14.5
(Gain on sale) write-down of property, plant and
equipment (2.7) 0.8
Changes in operating assets and liabilities, net of
effects from purchase of businesses:
Accounts and notes receivable, net 103.6 (39.9)
Inventories, net (42.1) (65.1)
Other current and noncurrent assets (22.3) (10.5)
Accounts payable 39.8 53.2
Accrued expenses (44.6) 38.5
Other current and noncurrent liabilities (23.7) 8.1
------- -------
Total adjustments 214.7 107.1
------- -------
Net cash provided by operating activities 246.3 265.9
------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment (88.4) (78.4)
Proceeds from sales of property, plant and equipment 10.5 46.0
Sale/(purchase) of businesses, net of cash acquired 0.4 (765.7)
(Investments in) proceeds from the sale of
unconsolidated affiliates (23.4) 1.0
------- -------
Net cash used in investing activities (100.9) (797.1)
------- -------
Cash flows from financing activities:
(Payment of) proceeds from debt obligations, net (230.9) 413.6
Payment of debt issuance costs -- (21.1)
Proceeds from issuance of common stock 1.4 303.0
------- -------
Net cash (used in) provided by financing
activities (229.5) 695.5
------- -------
Effect of exchange rate changes on cash and cash
equivalents (20.9) 14.3
------- -------
(Decrease) increase in cash and cash equivalents (105.0) 178.6
Cash and cash equivalents, beginning of year 325.6 147.0
------- -------
Cash and cash equivalents, end of year $220.6 $325.6
======= =======
See accompanying notes to condensed consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in millions, except per share data)
1. RESTRUCTURING AND OTHER INFREQUENT EXPENSES During 2005, the Company recorded restructuring and other infrequent income of approximately $0.0 million. The net charges include a $1.5 million gain on the sale of property, plant and equipment related to the completion of auctions of machinery and equipment associated with the rationalization rationalization, in psychology: see defense mechanism. of the Company's Randers Randers (rä`nərs), city (1992 pop. 55,358), Århus co., N central Denmark, a seaport at the mouth of the Gudenå River in the Randers Fjord (an arm of the Kattegat). It is a commercial and industrial center and a rail junction. , Denmark Denmark (dĕn`märk), Dan. Danmark, officially Kingdom of Denmark, kingdom (2005 est. pop. 5,432,000), 16,629 sq mi (43,069 sq km), N Europe. combine manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. , announced in July July: see month. 2004. The gain was offset by $0.8 million of employee retention payments and facility closure costs incurred associated with the Randers rationalization, as well as $0.7 million of severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs, asset write-downs and other facility closure costs related to the rationalization of the Company's Finnish tractor manufacturing, sales and parts operations. During 2004, the Company recorded restructuring and other infrequent expenses of approximately $0.1 million, primarily related to an $8.2 million write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of property, plant and equipment associated with the Randers rationalization, $3.3 million of severance and other facility closure costs associated with the Randers rationalization, and $1.9 million of charges associated with various rationalization initiatives in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and the U.S. These charges were offset by a $6.9
million net gain on the sale of land, buildings and improvements
associated with the Company's Coventry Coventry, city, EnglandCoventry (kŏv`əntrē, kŭv`–), city (1991 pop. 318,718) and metropolitan district, central England. Coventry is an industrial center noted for its automobile production. , England England, the largest and most populous portion of the United Kingdom of Great Britain and Northern Ireland (1991 pop. 46,382,050), 50,334 sq mi (130,365 sq km). It is bounded by Wales and the Irish Sea on the west and Scotland on the north. tractor manufacturing facility, a $2.3 million gain on the sale of machinery and equipment and reserve reversals related to the Coventry closure, and a reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of $4.1 million of a previously established provision related to the Company's pension scheme in the U.K. The Company did not record a tax provision or benefit associated with the gain or charges relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Randers rationalization during 2005 and 2004. 2. LONG-TERM DEBT Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. Long-term debt consisted of the following at December 31, 2005 and December 31, 2004 (in millions):
December 31, December 31,
2005 2004
-------------- --------------
Credit facility $401.5 $424.7
1 3/4% Convertible senior subordinated
notes due 2033 201.3 201.3
9 1/2% Senior notes due 2008 -- 250.0
6 7/8% Senior subordinated notes due 2014 237.0 271.1
Other long-term debt 8.3 11.5
-------------- --------------
848.1 1,158.6
Less: Current portion of long-term debt (6.3) (6.9)
-------------- --------------
Total long-term debt, less current
portion $841.8 $1,151.7
============== ==============
On June 23, 2005, the Company completed the redemption of its $250 million 9 1/2% senior notes due 2008. The Company redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. the notes at a price of approximately $261.9 million, which included a premium of 4.75% over the face amount of the notes. The premium of approximately $11.9 million and the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of the remaining balance of deferred debt issuance costs of approximately $2.2 million, were recognized in interest expense, net during the second quarter of 2005. The funding source for the redemption was a combination of cash generated from the transfer of North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. wholesale interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed to the Company's U.S. and Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. retail finance joint ventures, AGCO Finance LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control and AGCO Finance Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , Ltd., as well as from revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility borrowings and available cash on hand (Note 4). On June 29, 2005, the Company completed an exchange of its $201.3 million 1 3/4% convertible senior subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes, exchanging its then existing convertible notes for new notes (Note 5). 3. INVENTORIES Inventories are valued at the lower of cost or market lower of cost or market A method for determining an asset's value such that either the original cost or the current replacement cost, whichever is lowest, is used for financial reporting purposes. using the first-in, first-out first-in, first-out n. A method of inventory accounting in which the oldest remaining items are assumed to have been the first sold. In a period of rising prices, this method yields a higher ending inventory, a lower cost of goods sold, a higher gross method. Market is net realizable value Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. for finished goods and repair and replacement parts. For work in process, production parts and raw materials, market is replacement cost. Inventories at December 31, 2005 and December 31, 2004 were as follows (in millions):
December 31, December 31,
2005 2004
------------ ------------
Finished goods $477.3 $432.5
Repair and replacement parts 310.9 313.2
Work in process 63.3 103.6
Raw materials 211.0 220.1
------------ ------------
Inventories, net $1,062.5 $1,069.4
============ ============
4. ACCOUNTS RECEIVABLE accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying SECURITIZATION Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. The Company sells wholesale accounts receivable on a revolving basis to commercial paper conduits either on a direct basis or through a wholly-owned special purpose U.S. subsidiary under its United States, Canadian and European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. securitization facilities. Outstanding funding under these facilities totaled approximately $462.7 million at December 31, 2005 and $458.9 million at December 31, 2004. The funded balance has the effect of reducing accounts receivable and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. liabilities by the same amount. Losses on sales of receivables primarily from securitization facilities included in other expense, net were $5.9 million and $4.3 million for the three months ended December 31, 2005 and 2004, respectively, and $22.4 million and $15.6 million for the years ended December 31, 2005 and 2004, respectively. During the second quarter of 2005, the Company completed an agreement to permit transferring, on an ongoing basis, the majority of its wholesale interest-bearing receivables in North America to AGCO Finance LLC and AGCO Finance Canada, Ltd., its U.S. and Canadian retail finance joint ventures. The Company has a 49% ownership interest in these joint ventures. The transfer of the receivables is without recourse A phrase used by an endorser (a signer other than the original maker) of a negotiable instrument (for example, a check or promissory note) to mean that if payment of the instrument is refused, the endorser will not be responsible. to the Company, and the Company will continue to service the receivables. The initial transfer of the wholesale interest-bearing receivables resulted in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $94 million, which were used to redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. the Company's $250 million senior notes (Note 2). As of December 31, 2005, the balance of interest-bearing receivables transferred to AGCO Finance LLC and AGCO Finance Canada, Ltd. under this agreement was approximately $109.9 million. 5. EARNINGS PER SHARE During the fourth quarter of 2004, the Emerging Issues Task Force ("EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation ") reached a consensus on EITF Issue No. 04-08, "Accounting Issues Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings per Share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of ." EITF Issue No. 04-08 requires that contingently convertible debt should be included in the calculation of diluted earnings per share using the if-converted method regardless of whether a market price trigger has been met. The Company adopted the statement during the fourth quarter of 2004 and included approximately 9.0 million additional shares of common stock that may have been issued upon conversion of the Company's former 1 3/4% convertible senior subordinated notes in its diluted earnings per share calculation for the three months ended December 31, 2004, the year ended December 31, 2004 and for the first six months ended June 30, 2005. In addition, diluted earnings per share are required to be restated for each period that the former convertible notes were outstanding. The convertible notes were issued on December 23, 2003. As the Company is not benefiting losses in the United States for tax purposes, the interest expense associated with the convertible notes included in the diluted earnings per share calculation does not reflect a tax benefit. A reconciliation of net (loss) income and weighted average common shares outstanding for purposes of calculating basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. (loss) earnings per share for the three months and years ended December 31, 2005 and 2004 is as follows (in millions, except per share amounts):
Three Months Ended Years Ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Basic net income per share:
Net (loss) income $(63.8) $50.7 $31.6 $158.8
========= ========= ========= =========
Weighted average number
of common shares
outstanding 90.5 90.3 90.4 86.2
--------- --------- --------- ---------
Basic net (loss) income per
share $(0.71) $0.56 $0.35 $1.84
========= ========= ========= =========
Diluted net (loss) income per
share:
Net (loss) income $(63.8) $50.7 $31.6 $158.8
After-tax interest
expense on contingently
convertible senior
subordinated notes -- 1.1 2.3 4.6
--------- --------- --------- ---------
Net (loss) income for
purposes of computing
diluted net income per
share $ (63.8) $51.8 $33.9 $ 163.4
========= ========= ========= =========
Weighted average number
of common shares
outstanding 90.5 90.3 90.4 86.2
Dilutive stock options
and restricted stock
awards -- 0.4 0.3 0.4
Weighted average assumed
conversion of
contingently
convertible senior
subordinated notes -- 9.0 4.4 9.0
--------- --------- --------- ---------
Weighted average number
of common and common
share equivalents
outstanding for
purposes of computing
diluted earnings per
share 90.5 99.7 95.1 95.6
========= ========= ========= =========
Diluted net (loss) income per
share $(0.71) $0.52 $0.36 $1.71
========= ========= ========= =========
On June 29, 2005, the Company completed an exchange of its $201.3 million aggregate principal amount of 1 3/4% convertible senior subordinated notes. AGCO exchanged substantially all of its existing convertible notes for new notes which provide for (i) the settlement upon conversion in cash up to the principal amount of the converted new notes with any excess conversion value settled in shares of AGCO common stock, and (ii) the conversion rate to be increased under certain circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or if the new notes are converted in connection with certain change of control transactions occurring prior to December 10, 2010, but otherwise are substantially the same as the old notes. The impact of the exchange resulted in an initial reduction in the diluted weighted average shares outstanding of approximately 9.0 million shares. In the future, dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. of weighted shares outstanding will depend on the Company's stock price once the market price trigger or other specified conversion circumstances have been met (Note 2). 6. SEGMENT REPORTING segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four The Company has four reportable segments: North America; South America; Europe/Africa/Middle East; and Asia/Pacific. Each regional segment distributes a full range of agricultural equipment and related replacement parts. The Company evaluates segment performance primarily based on income from operations. Sales for each regional segment are based on the location of the third-party customer. The Company's selling, general and administrative expenses and engineering expenses are charged to each segment based on the region and division where the expenses are incurred. As a result, the components of income from operations for one segment may not be comparable to another segment. Segment results for the three months and years ended December 31, 2005 and 2004 are as follows (in millions):
Europe/
Africa/
Three Months Ended North South Middle Asia/
December 31, America America East Pacific Consolidated
------------------------ ------- ------- -------- ------- ------------
2005
Net sales $399.6 $143.0 $787.8 $54.5 $1,384.9
(Loss) income from
operations (7.0) 1.4 65.5 9.7 69.6
2004
Net sales $398.5 $194.5 $889.4 $51.7 $1,534.1
Income from operations 2.9 23.0 70.7 8.5 105.1
Europe/
Africa/
Years Ended North South Middle Asia/
December 31, America America East Pacific Consolidated
--------------------- --------- ------- --------- ------- ------------
2005
Net sales $1,607.8 $648.5 $2,988.7 $204.7 $5,449.7
Income from
operations 17.1 37.8 242.5 35.0 332.4
2004
Net sales $1,412.5 $796.8 $2,873.0 $191.0 $5,273.3
Income from
operations 32.2 127.0 186.8 32.9 378.9
A reconciliation from the segment information to the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: balances for income from operations is set forth below (in millions):
Three Months Ended Years Ended
December 31, December 31,
------------------ ---------------
2005 2004 2005 2004
--------- -------- ------- -------
Segment income from operations $69.6 $105.1 $332.4 $378.9
Corporate expenses (11.9) (12.6) (40.8) (39.0)
Restricted stock compensation
expense (0.1) (0.1) (0.4) (0.5)
Restructuring and other infrequent
income (expenses) 0.2 1.0 -- (0.1)
Amortization of intangibles (4.1) (4.1) (16.5) (15.8)
--------- -------- ------- -------
Consolidated income from operations $53.7 $89.3 $274.7 $323.5
========= ======== ======= =======
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