AGCO Reports Second Quarter Results; Balance Sheet Focus Significantly Improves Cash Flow.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 net income of $0.45 per share for the second quarter of 2006. 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, was also $0.45 per share for the second quarter of 2006. These results compare to reported net income of $0.47 per share and adjusted net income, which excludes restructuring and other infrequent expenses and costs associated with a June June: see month. 2005 bond redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. , of $0.61 per share for the second quarter of 2005. 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 second quarter of 2006 were $1.5 billion, a decrease of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 8% compared to the same period in 2005. For the first six months of 2006, net income was $0.64 per share compared to $0.70 per share in 2005. Adjusted net income was $0.64 per share for the first six months of 2006 compared to $0.84 per share in 2005. Net sales for the first six months of 2006 decreased approximately 7.5% to $2.6 billion. "In the second quarter, we accomplished our goal to reduce seasonal working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. by smoothing our production schedule in 2006," said Martin Richenhagen, President and Chief Executive Officer. "Unit production was down 20 percent from the second quarter of 2005 which contributed to achieving a reduction in 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 and inventories as of June 30, 2006 of approximately $191 million compared to June 2005 levels. Our focus on working capital for the first half of 2006 drove an improvement of approximately $113 million in free cash flow when compared to the first half of 2005. Second quarter sales and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: were pressured by our actions to strengthen our balance sheet, particularly in 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. , where our efforts to reduce dealer inventories resulted in lower sales. In addition, our results were impacted by weaker market conditions in the 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. and Asia/Pacific regions. Our Europe/Africa/Middle East segment continued its strong performance, where we achieved an increase in both sales and 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. ." "In addition to our focus on cash flow, we also are making substantial progress in many of our initiatives to improve our products, distribution, and operating efficiencies," stated Mr. Richenhagen. "Our development of larger, more efficient equipment for the professional farmer continues with our launch of new 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. tractors, larger combines, and sprayer models planned for the second half of the year. In May 2006, we announced the formation of a joint venture company to distribute 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. and 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. branded equipment throughout the fast growing markets of Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). and Kazakhstan Kazakhstan or Kazakstan (kä'zäkstän`), officially Republic of Kazakhstan, republic (2005 est. pop. 15,186,000), c.1,050,000 sq mi (2,719,500 sq km), central Asia. . We are also identifying projects in some of our factories to improve efficiencies and customer responsiveness. We are confident these initiatives will produce growth and improved results in future years." Second Quarter and Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Results For the second quarter of 2006, AGCO reported net sales of $1,450.5 million and net income of $40.9 million, or $0.45 per share. Adjusted net income, excluding restructuring and other infrequent expenses, was also $40.9 million, or $0.45 per share, for the second quarter of 2006. For the second quarter of 2005, AGCO reported net sales of $1,574.3 million and net income of $46.1 million, or $0.47 per share. Adjusted net income, excluding restructuring and other infrequent income and bond redemption costs, was $59.2 million, or $0.61 per share, for the second quarter of 2005. For the first six months of 2006, AGCO reported net sales of $2,620.3 million and net income of $58.2 million, or $0.64 per share. Adjusted net income, excluding restructuring and other infrequent expenses, was $58.3 million, or $0.64 per share for the first six months of 2006. For the first six months of 2005, AGCO reported net sales of $2,831.2 million and net income of $67.6 million, or $0.70 per share. Adjusted net income, excluding restructuring and other infrequent income and bond redemption costs, in the first six months of 2005 was $81.6 million, or $0.84 per share. 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 three and six months ended June 30, 2006 and 2005 is provided in Note 8 to our 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's net sales decreased 7.9% for the second quarter and 7.5% for the first six months of 2006 compared to the same periods in 2005. Excluding the impact of currency translation, AGCO's net sales decreased 9.0% during the second quarter and 6.7% for the first six months of 2006 compared to the same periods in 2005. Net sales declined in the North America, South America and Asia/Pacific regions, partially offset by sales increases in the Europe/Africa/Middle East region, particularly 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). . In North America, net sales were
significantly lower for the first half of 2006 compared to 2005
primarily due to lower dealer deliveries implemented to achieve a
reduction in dealer floorplan inventories compared to the prior year. In
South America and Asia/Pacific, weaker market conditions contributed to
the sales decline.Adjusted income from operations decreased $25.8 million for the second quarter of 2006 and $35.8 million for the first six months of 2006 compared to 2005 resulting from the decrease in net sales. Gross margins in 2006 were slightly above 2005, despite lower production levels, due to productivity gains and a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. sales mix sales mix See product mix. . In AGCO's Europe/Africa/Middle East region, income from operations increased $3.0 million in the second quarter and $8.9 million for the first six months of 2006 compared to 2005. Income from operations in the second quarter and the first six months of 2006 increased due to a 4% and 7% increase in net sales, respectively, excluding currency impact, resulting from stronger market conditions in key regions of Europe Europe is often divided into regions due to geographical, cultural or historical criteria. Some common divisions are as follows. Directional divisions Groupings by compass directions are the hardest to define in Europe, since (among other issues) the pure geographical criteria . The improved operating results were also due to stronger operating margins resulting from productivity gains and a favorable sales mix. Income from operations in AGCO's South America region decreased $1.9 million for the second quarter and $3.2 million for the first six months of 2006 compared to 2005. Industry demand in South America was below 2005 levels, resulting in a decline in AGCO's net sales in South America, excluding currency impact, of approximately 20% for both the second quarter and first six months of 2006. In North America, income from operations decreased $17.6 million in the second quarter and $25.6 million for the first six months of 2006 compared to 2005. Income from operations in the second quarter and the first six months of 2006 was lower primarily due to a 27% and 24% reduction in net sales, respectively, excluding currency impact, compared to 2005. The reduction in net sales was primarily the result of AGCO's actions to decrease working capital by lowering dealer inventories in the first half of 2006. Income from operations in the Asia/Pacific region decreased $4.1 million in the second quarter and $7.9 million for the first six months of 2006 compared to 2005 primarily due to lower sales in Asia and negative currency impacts. Regional Market Results North America - Industry unit retail sales of tractors for the first six months of 2006 were relatively flat over the comparable prior year period resulting from increases in the utility and 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. segments, largely offset by an approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. 10% decline in the high horsepower tractor segment. Industry unit retail sales of combines for the first six months of 2006 were approximately 4% higher than the prior year period. AGCO's unit retail sales of tractors and combines were lower in the first six months of 2006 compared to 2005. Europe - Industry unit retail sales of tractors for the first six months of 2006 decreased approximately 1% compared to the prior year period. Retail demand declined in France, Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. , 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. and 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. , but 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). , the United Kingdom, 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. and 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. . AGCO's unit retail sales for the first six months of 2006 were higher when compared to the prior year period. South America - Industry unit retail sales of tractors and combines for the first six months of 2006 decreased approximately 11% and 39%, respectively, compared to the prior year period. Retail sales in the major market 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. for tractors were relatively flat compared to 2005 and declined approximately 48% for combines during the first six months of 2006 compared to 2005. 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 declined in the first six months of 2006 compared to 2005. Rest of World Markets - Outside of North America, Europe and South America, AGCO's net sales for the first six months of 2006 were approximately 26% lower than 2005 due to lower sales in Asia and the Middle East. "Market conditions during the second quarter were down in all major regions," stated Mr. Richenhagen. "In particular, we expect the softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. demand for high horsepower tractors to continue in North America due to lower farm income anticipated in 2006. In South America, we expect demand to continue to weaken due to the impact of the strong 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. and high farm debt levels." New Productivity Initiatives AGCO has identified several new productivity initiatives throughout its operations designed to reduce product costs, overheads and inventories in the future. AGCO's assembly operations in both Marktoberdorf Marktoberdorf is the capital of the Bavarian district of Ostallgäu in the Regierungsbezirk of Swabia. Marktoberdorf is near Kempten, Füssen, known for the castle Neuschwanstein, Bad Wörishofen, and Schongau. , Germany and Hesston, Kansas Hesston is a city in Harvey County, Kansas, United States. The population was 3,509 at the 2000 census. History Established in 1886 as a village in Emma Township, Hesston began to grow as the Missouri Pacific railroad was expanding westward through the state. will be updated to improve manufacturing cycle time, material flow, and labor productivity. In addition, AGCO has identified opportunities to streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. certain sales, marketing and administrative functions in North America and Europe, which includes the consolidation of administrative and brand functions, in order to generate efficiencies. AGCO expects to complete these projects during the next three years with expected cost improvement and inventory reduction impacts beginning in 2008. AGCO expects total annual savings resulting from these actions to exceed $14 million with working capital reductions expected to be in excess of $40 million. Beginning in the second half of 2006, AGCO expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. project costs related to these initiatives recorded in normal operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before and restructuring expenses of approximately $10 million and $5 million, respectively, through 2008. Outlook Industry demand for farm equipment in 2006 in all major markets is expected to be below 2005 levels. In North America, demand is expected to decline in the second half of 2006 due to concerns resulting from a projected decline in farm income in 2006. In Europe, 2006 equipment demand is expected to be slightly below 2005 levels due to the continuing impact of last year's 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 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. and changes in 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. programs. In South America, equipment demand is expected to decline due to the impact of the strong Brazilian Real on exports of commodities and high farm debt levels. AGCO's net sales for the full year of 2006 are expected to be slightly below 2005 levels based on lower industry demand, planned dealer inventory reductions and currency translation. Gross margins are expected to improve despite lower production in 2006 compared to 2005. AGCO is targeting an improvement in full year earnings per share ranging up to 10% in 2006. In addition, improved 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 is expected to result in strong free cash flow in 2006. AGCO will be hosting a conference call with respect to this earnings announcement at 10:00 a.m. Eastern Time on Monday Monday: see week. , July July: see month. 31, 2006. The company will refer to slides on its conference call. Interested persons can access the conference call and slide presentation via AGCO's website at www.agcocorp.com on the Investors/Media page. A replay of the conference call will be available approximately two hours after the conclusion of the conference call for 12 months following the call. A copy of this press release will be available on AGCO's website for at least 12 months following the call. 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, product lines, results of productivity initiatives, working capital utilization, currency impacts 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by the forward-looking statements. Further information concerning these and other factors is included in AGCO'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 December: see month. 31, 2005. AGCO 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 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. , 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. About AGCO Founded in 1990, AGCO Corporation (NYSE: AG) (www.agcocorp.com) is a global manufacturer of agricultural equipment and related replacement parts. 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, which are distributed through more than 3,600 independent dealers and distributors in more than 140 countries worldwide. AGCO products include the following well-known well-known adj. 1. Widely known; familiar or famous: a well-known performer. 2. Fully known: well-known facts. brands: AGCO(R), Challenger(R), Fendt(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(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. The company is 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. and, in 2005, 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)
June 30, Dec. 31,
2006 2005
--------- ---------
ASSETS
Current Assets:
Cash and cash equivalents $166.6 $220.6
Accounts and notes receivable, net 670.1 655.7
Inventories, net 1,265.4 1,062.5
Deferred tax assets 42.8 39.7
Other current assets 118.0 107.7
--------- ---------
Total current assets 2,262.9 2,086.2
Property, plant and equipment, net 599.1 561.4
Investment in affiliates 184.4 164.7
Deferred tax assets 71.5 84.1
Other assets 64.4 56.6
Intangible assets, net 213.2 211.5
Goodwill 759.5 696.7
--------- ---------
Total assets $4,155.0 $3,861.2
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $6.3 $6.3
Accounts payable 629.8 590.9
Accrued expenses 589.5 561.8
Other current liabilities 83.3 101.4
--------- ---------
Total current liabilities 1,308.9 1,260.4
Long-term debt, less current portion 878.2 841.8
Pensions and postretirement health care benefits 257.9 241.7
Other noncurrent liabilities 142.7 101.3
--------- ---------
Total liabilities 2,587.7 2,445.2
--------- ---------
Stockholders' Equity:
Common stock 0.9 0.9
Additional paid-in capital 905.5 894.7
Retained earnings 883.6 825.4
Unearned compensation -- (0.1)
Accumulated other comprehensive loss (222.7) (304.9)
--------- ---------
Total stockholders' equity 1,567.3 1,416.0
--------- ---------
Total liabilities and stockholders' equity $4,155.0 $3,861.2
========= =========
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 consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in millions, except per share data)
Three Months Ended
June 30,
-------------------
2006 2005
--------- ---------
Net sales $1,450.5 $1,574.3
Cost of goods sold 1,199.2 1,303.1
--------- ---------
Gross profit 251.3 271.2
Selling, general and administrative expenses 132.5 127.3
Engineering expenses 32.0 31.4
Restructuring and other infrequent expenses
(income) -- (0.8)
Amortization of intangibles 4.2 4.1
--------- ---------
Income from operations 82.6 109.2
Interest expense, net 14.3 31.9
Other expense, net 10.3 12.2
--------- ---------
Income before income taxes and equity in net
earnings of affiliates 58.0 65.1
Income tax provision 22.1 25.6
--------- ---------
Income before equity in net earnings of affiliates 35.9 39.5
Equity in net earnings of affiliates 5.0 6.6
--------- ---------
Net income $40.9 $46.1
========= =========
Net income per common share:
Basic $0.45 $0.51
========= =========
Diluted $0.45 $0.47
========= =========
Weighted average number of common and common
equivalent shares outstanding:
Basic 90.8 90.4
========= =========
Diluted 91.6 99.6
========= =========
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)
Six Months Ended
June 30,
-------------------
2006 2005
--------- ---------
Net sales $2,620.3 $2,831.2
Cost of goods sold 2,162.7 2,340.5
--------- ---------
Gross profit 457.6 490.7
Selling, general and administrative expenses 259.1 257.9
Engineering expenses 63.6 62.1
Restructuring and other infrequent expenses 0.1 0.2
Amortization of intangibles 8.3 8.3
--------- ---------
Income from operations 126.5 162.2
Interest expense, net 27.9 48.9
Other expense, net 16.8 19.0
--------- ---------
Income before income taxes and equity in net
earnings of affiliates 81.8 94.3
Income tax provision 34.7 37.9
--------- ---------
Income before equity in net earnings of affiliates 47.1 56.4
Equity in net earnings of affiliates 11.1 11.2
--------- ---------
Net income $58.2 $67.6
========= =========
Net income per common share:
Basic $0.64 $0.75
========= =========
Diluted $0.64 $0.70
========= =========
Weighted average number of common and common
equivalent shares outstanding:
Basic 90.6 90.4
========= =========
Diluted 91.1 99.7
========= =========
See accompanying notes to condensed consolidated financial statements.
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
Six Months
Ended June 30,
---------------
2006 2005
------- -------
Cash flows from operating activities:
Net income $58.2 $67.6
------- -------
Adjustments to reconcile net income to net cash used
in operating activities:
Depreciation 47.3 45.2
Deferred debt issuance cost amortization 2.2 5.1
Amortization of intangibles 8.3 8.3
Restricted stock compensation 3.2 0.1
Equity in net earnings of affiliates, net of cash
received (4.9) (11.2)
Deferred income tax provision (benefit) 8.2 (3.0)
Gain on sale of property, plant and equipment -- (1.6)
Changes in operating assets and liabilities:
Accounts and notes receivable, net 23.0 (49.7)
Inventories, net (154.4) (262.6)
Other current and noncurrent assets (10.3) (23.2)
Accounts payable 0.7 122.9
Accrued expenses 6.2 (15.2)
Other current and noncurrent liabilities 1.6 (28.6)
------- -------
Total adjustments (68.9) (213.5)
------- -------
Net cash used in operating activities (10.7) (145.9)
------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment (47.8) (25.8)
Proceeds from sales of property, plant and equipment 1.2 8.8
Investments in unconsolidated affiliates (2.8) (22.5)
------- -------
Net cash used in investing activities (49.4) (39.5)
------- -------
Cash flows from financing activities:
Payment of debt obligations, net (15.1) (86.6)
Proceeds from issuance of common stock 7.7 0.8
------- -------
Net cash used in financing activities (7.4) (85.8)
------- -------
Effect of exchange rate changes on cash and cash
equivalents 13.5 (7.5)
------- -------
Decrease in cash and cash equivalents (54.0) (278.7)
Cash and cash equivalents, beginning of period 220.6 325.6
------- -------
Cash and cash equivalents, end of period $166.6 $46.9
======= =======
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. STOCK COMPENSATION EXPENSE
A[micro] During the second quarter and first six months of 2006, the
Company recorded approximately $1.9 million and $3.2 million,
respectively, of stock compensation expense in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 123R (Revised
2004), "Share-Based Payment" ("SFAS No. 123R"). The stock compensation
expense was recorded as follows:
Three Months Six Months
Ended Ended
June 30, June 30,
-------------- -----------
2006 2005 2006 2005
------- ------ ----- -----
Cost of goods sold $-- $-- $-- $--
Selling, general and administrative expenses 1.9 -- 3.2 0.1
------- ------ ----- -----
Total stock compensation expense $1.9 $-- $3.2 $0.1
------- ------ ===== =====
2. RESTRUCTURING AND OTHER INFREQUENT EXPENSES During the first six months of 2006, the Company recorded restructuring and other infrequent expenses of approximately $0.1 million. These charges primarily related to 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 associated with the Company's rationalization rationalization, in psychology: see defense mechanism. of certain Valtra European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. sales offices located in 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. , Norway Norway, Nor. Norge, officially Kingdom of Norway, constitutional monarchy (2005 est. pop. 4,593,000), 125,181 sq mi (324,219 sq km), N Europe, occupying the western part of the Scandinavian peninsula. and the United Kingdom. During the first six months of 2005, the Company recorded restructuring and other infrequent expenses of approximately $0.2 million. The net charges included a $1.5 million gain on the sale of property, which was recorded during the second quarter of 2005, related to the completion of auctions of machinery and equipment associated with the rationalization of the 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 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. . The gain was offset by $0.6 million and $0.3 million of costs recorded in the first quarter and second quarter of 2005, respectively, associated with the Randers rationalization. These charges consisted primarily of employee retention payments and other facility closure costs. In addition, during the first quarter of 2005, the Company incurred and recorded approximately $0.3 million of contract termination Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). costs associated with the rationalization of its Valtra European parts distribution operations and $0.1 million of severance costs associated with the rationalization of certain administrative functions of its Finnish tractor manufacturing operations. The Company also recorded approximately $0.4 million of costs during the second quarter of 2005 associated with the announced closure of several of its Valtra European sales offices. 3. 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 June 30, 2006 and December 31, 2005:
June December
30, 31,
2006 2005
------- --------
Credit facility $419.4 $401.5
1 3/4% Convertible senior subordinated notes due 2033 201.3 201.3
6 7/8% Senior subordinated notes due 2014 255.8 237.0
Other long-term debt 8.0 8.3
------- --------
884.5 848.1
Less: Current portion of long-term debt (6.3) (6.3)
------- --------
Total long-term debt, less current portion $878.2 $841.8
======= ========
4. 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 June 30, 2006 and December 31, 2005 were as follows:
June 30, Dec. 31,
2006 2005
--------- ---------
Finished goods $631.5 $477.3
Repair and replacement parts 338.6 307.5
Work in process 75.9 63.3
Raw materials 219.4 214.4
--------- ---------
Inventories, net $1,265.4 $1,062.5
========= =========
5. ACCOUNTS RECEIVABLE 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 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. and European securitization facilities. Outstanding funding under these facilities totaled approximately $440.2 million at June 30, 2006 and $462.7 million at December 31, 2005. 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 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 primarily from securitization facilities included in other expense, net were $7.3 million and $5.6 million for the three months ended June 30, 2006 and 2005, respectively, and $13.8 million and $10.6 million for the six months ended June 30, 2006 and 2005, 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 Adj. 1. interest-bearing - of financial obligations on which interest is paid receivables in North America to 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., its United States 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. As of June 30, 2006, the balance of interest-bearing receivables transferred to AGCO Finance LLC and AGCO Finance Canada, Ltd. under this agreement was approximately $129.7 million compared to approximately $109.9 million as of December 31, 2005. 6. 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 con·tin·gent adj. 1. Liable to occur but not with certainty; possible: "All salaries are reckoned on contingent as well as on actual services" Ralph Waldo Emerson. 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 (1) A mechanism that initiates an action when an event occurs such as reaching a certain time or date or upon receiving some type of input. A trigger generally causes a program routine to be executed. 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 Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes in its diluted earnings per share calculation for the three and 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. 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. The Company exchanged its existing convertible notes for new notes that 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 the Company's 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 a reduction in the 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. weighted average shares outstanding of approximately 9.0 million shares on a prospective basis. 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 are met. A reconciliation of net income and weighted average common shares outstanding for purposes of calculating basic and diluted earnings per share for the three and six months ended June 30, 2006 and 2005 is as follows:
Three Months Six Months
Ending June 30, Ending June 30,
--------------- ---------------
2006 2005 2006 2005
------- ------- ------- -------
Basic net income per share:
Net income $40.9 $46.1 $58.2 $67.6
======= ======= ======= =======
Weighted average number of
common shares outstanding 90.8 90.4 90.6 90.4
------- ------- ------- -------
Basic net income per share $0.45 $0.51 $0.64 $0.75
======= ======= ======= =======
Diluted net income per share:
Net income $40.9 $46.1 $58.2 $67.6
After-tax interest expense on
contingently convertible senior
subordinated notes -- 1.1 -- 2.3
------- ------- ------- -------
Net income for purposes of
computing diluted net income
per share $40.9 $47.2 $58.2 $69.9
======= ======= ======= =======
Weighted average number of
common shares outstanding 90.8 90.4 90.6 90.4
Dilutive stock options and
restricted stock awards 0.3 0.2 0.2 0.3
Weighted average assumed
conversion of contingently
convertible senior subordinated
notes 0.5 9.0 0.3 9.0
------- ------- ------- -------
Weighted average number of
common and common equivalent
shares outstanding for purposes
of computing diluted earnings
per share 91.6 99.6 91.1 99.7
======= ======= ======= =======
Diluted net income per share $0.45 $0.47 $0.64 $0.70
======= ======= ======= =======
7. 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 six months ended June 30, 2006 and 2005 are as follows:
Three Months Ended North South Europe/Africa/ Asia/
June 30, America America Middle East Pacific Consolidated
------------------ ------- ------- -------------- ------- ------------
2006
Net sales $343.2 $160.6 $911.0 $35.7 $1,450.5
Income from
operations 2.3 8.9 86.3 3.6 101.1
2005
Net sales $465.2 $185.3 $876.1 $47.7 $1,574.3
Income from
operations 19.9 10.8 83.3 7.7 121.7
Six Months Ended North South Europe/Africa/ Asia/
June 30, America America Middle East Pacific Consolidated
------------------ ------- ------- -------------- ------- ------------
2006
Net sales $664.0 $301.8 $1,586.2 $68.3 $2,620.3
Income (loss) from
operations (3.1) 20.1 137.6 7.3 161.9
2005
Net sales $858.0 $337.6 $1,542.4 $93.2 $2,831.2
Income from
operations 22.5 23.3 128.7 15.2 189.7
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:
Three Months Six Months
Ended Ended
June 30, June 30,
--------------- ---------------
2006 2005 2006 2005
------- ------- ------- -------
Segment income from operations $101.1 $121.7 $161.9 $189.7
Corporate expenses (12.4) (9.2) (23.8) (18.9)
Stock compensation expense (1.9) -- (3.2) (0.1)
Restructuring and other infrequent
income (expenses) -- 0.8 (0.1) (0.2)
Amortization of intangibles (4.2) (4.1) (8.3) (8.3)
------- ------- ------- -------
Consolidated income from operations $82.6 $109.2 $126.5 $162.2
======= ======= ======= =======
8. RECONCILIATION OF NON-GAAP MEASURES This earnings release discloses adjusted income from operations, net income and earnings per share, as well as free cash flow, all of which exclude amounts that differ from the most directly comparable measure calculated 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 U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). A reconciliation of each of these financial measures to the most directly comparable GAAP measure is included below. 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 quarters ended June 30, 2006 and 2005:
Three months ended June 30,
-----------------------------
2006
-----------------------------
Income Earnings
From Net Per
Operations Income(1) Share(1)
---------- --------- --------
As adjusted $82.6 $40.9 $0.45
Restructuring and other infrequent
expenses (income)(2) -- -- --
Bond redemption costs(3) -- -- --
---------- --------- --------
As reported $82.6 $40.9 $0.45
========== ========= ========
Three months ended June 30,
--------------------------------
2005
-------------------------------
Income Earnings
From Net Per
Operations Income(1) Share(1)
---------- --------- ----------
As adjusted $108.4 $59.2 $0.61
Restructuring and other infrequent
expenses (income)(2) (0.8) (1.0) (0.01)
Bond redemption costs(3) -- 14.1 0.14
---------- --------- ----------
As reported $109.2 $46.1 $0.47
========== ========= ==========
(1) Net income and earnings 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
second quarter of 2005 relates primarily to the gain on sale of
machinery and equipment associated with the rationalization of the
Company's Randers, Denmark combine manufacturing operations. This
gain was offset by charges incurred associated with the Randers
rationalization, as well as the Company's rationalization of its
Valtra European sales operations. The Company did not record a tax
provision or benefit associated with the gain or charges relating
to the Randers rationalization. See Note 2 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 $0.12 per share, and
approximately $2.2 million, or $0.02 per share, for the write-off
of the remaining balance of deferred debt issuance costs.
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 six months ended June 30, 2006 and 2005:
Six months ended June 30,
-----------------------------
2006
-----------------------------
Income Earnings
From Net Per
Operations Income(1) Share(1)
---------- --------- --------
As adjusted $126.6 $58.3 $0.64
Restructuring and other infrequent
expenses (income)(2) 0.1 0.1 --
Bond redemption costs(3) -- -- --
---------- --------- --------
As reported $126.5 $58.2 $0.64
========== ========= ========
Six months ended June 30,
--------------------------------
2005
-------------------------------
Income Earnings
From Net Per
Operations Income(1) Share(1)
---------- --------- ----------
As adjusted $162.4 $81.6 $0.84
Restructuring and other infrequent
expenses (income)(2) 0.2 (0.1) --
Bond redemption costs(3) -- 14.1 0.14
---------- --------- ----------
As reported $162.2 $67.6 $0.70
========== ========= ==========
(1) Net income and earnings per share amounts are after tax.
(2) The restructuring and other infrequent expenses recorded in the
first six months of 2006 relate primarily to severance costs
associated with the Company's rationalization of certain Valtra
European sales offices located in Denmark, Norway and the United
Kingdom. The restructuring and other infrequent income recorded in
the first six months of 2005 relates primarily to the gain on sale
of machinery and equipment associated with the rationalization of
the Company's Randers, Denmark combine manufacturing operations.
This gain was offset by charges incurred associated with the
Randers rationalization, as well as the Company's rationalization
of its Valtra European sales operations. The Company did not
record a tax provision or benefit associated with the gain or
charges relating to the Randers rationalization. See Note 2 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 $0.12 per share, and
approximately $2.2 million, or $0.02 per share, for the write-off
of the remaining balance of deferred debt issuance costs.
The following is a reconciliation of free cash flow to net cash used in operating activities for the six months ended June 30, 2006 and 2005:
2006 2005
------- --------
Net cash used in operating activities $(10.7) $(145.9)
Less:
Capital expenditures (47.8) (25.8)
------- --------
Free cash flow $(58.5) $(171.7)
======= ========
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