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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO ___________.
COMMISSION FILE NUMBER: 1-12930
AGCO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 58-1960019
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
4205 RIVER GREEN PARKWAY, DULUTH, GEORGIA 30096
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 813-9200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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COMMON STOCK, ($0.01 PAR VALUE) NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No .
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
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The aggregate market value of common stock held by non-affiliates of
the Registrant as of the close of business on March 10, 1999 was $292,501,366.
As of such date, there were 59,535,921 shares of the registrant's common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the AGCO Corporation Annual Report to Stockholders for the
year ended December 31, 1998 are incorporated by reference in Part II.
Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on April 28, 1999 are incorporated by reference in Part
III.
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Item 1. BUSINESS
AGCO Corporation ("AGCO" or the "Company") was incorporated in Delaware
in April 1991. The Company's executive offices are located at 4205 River Green
Parkway, Duluth, Georgia 30096, and its telephone number is 770-813-9200. Unless
otherwise indicated, all references in this Form 10-K to the Company include the
Company's subsidiaries.
THE COMPANY
AGCO is a leading manufacturer and distributor of agricultural
equipment throughout the world. The Company sells a full range of agricultural
equipment and related replacement parts, including tractors, combines, hay
tools, sprayers, forage equipment and implements. The Company's products are
widely recognized in the agricultural equipment industry and are marketed under
the following brand names: AGCO(R) Allis, Massey Ferguson(R), Hesston(R), White,
GLEANER(R), New Idea(R), AGCOSTAR(R), Black Machine, Landini, Tye(R),
Farmhand(R), Glencoe(R), Deutz (South America), IDEAL, Fendt, Spra-Coupe(R) and
Willmar(R). The Company distributes its products through a combination of over
8,500 independent dealers and distributors, associates and licensees. In
addition, the Company provides retail financing in North America, the United
Kingdom, France, Germany, and Brazil through its finance joint ventures with
Cooperative Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland"
("Rabobank").
AGCO was organized in June 1990 by an investment group formed by
management to acquire the successor to the agricultural equipment business of
Allis-Chalmers, a company which began manufacturing and distributing
agricultural equipment in the early 1900s. Since its formation in June 1990,
AGCO has grown substantially through a series of 17 acquisitions for
consideration aggregating approximately $1.4 billion. These acquisitions have
allowed the Company to broaden its product line, expand its dealer network and
establish strong market positions in several new markets throughout North
America, South America, Western Europe and the rest of the world. The Company
has achieved significant cost savings and efficiencies from its acquisitions by
eliminating duplicate administrative, sales and marketing functions,
rationalizing its dealer network, increasing manufacturing capacity utilization
and expanding its ability to source certain products and components from third
party manufacturers. In addition to acquisitions, the Company has increased its
sales in North America by entering into a substantial number of crossover
contracts with its dealers whereby a dealer carrying one of the Company's brands
also contracts to sell additional AGCO brands or products. The Company has also
grown through expansion of its product offerings into new distribution channels
and through new product introductions.
TRANSACTION HISTORY
Hesston Acquisition. In March 1991, the Company acquired Hesston
Corporation ("Hesston"), a leading manufacturer and distributor of hay tools,
forage equipment and related replacement parts (the "Hesston Acquisition"). The
assets acquired also included Hesston's 50% interest in a joint venture, Hay and
Forage Industries ("HFI"), between Hesston and Case Corporation which
manufactures hay and forage equipment for both parties. Hesston's net sales in
its full fiscal year preceding the acquisition were approximately $91.0 million.
The Hesston Acquisition enabled the Company to provide its dealers with a more
complete line of farm equipment and to expand its dealer network.
White Tractor Acquisition. In May 1991, the Company acquired the White
Tractor Division ("White") of Allied Products Corporation (the "White
Acquisition"). White's net sales in its full fiscal year preceding the
acquisition were approximately $58.3 million. As a result of the White
Acquisition, the Company added a new line of tractors to its product offerings
and expanded its North America dealer network.
Massey Ferguson North American Acquisition. In January 1993, the
Company entered into an agreement with Varity Corporation ("Varity") to be the
exclusive distributor in the United States and Canada of the Massey Ferguson
line of farm equipment. Concurrently, the Company acquired the North American
distribution operation of Massey Ferguson Group Limited ("Massey") from Varity
(the "Massey North American Acquisition"). Net sales attributable to Massey's
North American distribution operation in the full fiscal year preceding the
acquisition were approximately $215.0 million. The Massey North American
Acquisition provided AGCO access to another leading brand name in the
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agricultural equipment industry and enabled the Company to expand its dealer
network by entering into a substantial number of crossover contracts.
White-New Idea Acquisition. In December 1993, the Company acquired the
White-New Idea Farm Equipment Division ("White-New Idea") of Allied Products
Corporation (the "White-New Idea Acquisition"). White-New Idea's net sales in
1993 were approximately $83.1 million. The White-New Idea Acquisition enabled
the Company to offer a more complete line of planters and spreaders and a
broader line of tillage equipment.
Agricredit-North America Acquisition. The Company acquired Agricredit
Acceptance Company ("Agricredit-North America"), a retail finance company, from
Varity in two separate transactions (together, the "Agricredit-North America
Acquisition"). The Company acquired a 50% joint venture interest in
Agricredit-North America in January 1993 and acquired the remaining 50% interest
in February 1994. The Agricredit-North America Acquisition enabled the Company
to provide more competitive and flexible financing alternatives to end users.
Massey Acquisition. In June 1994, the Company acquired Massey from
Varity, including Massey's network of independent dealers and distributors and
associate and licensee companies outside the United States and Canada (the
"Massey Acquisition"). Massey, with fiscal 1993 net sales of approximately
$898.4 million (including net sales to AGCO of approximately $124.6 million),
was one of the largest manufacturers and distributors of tractors in the world.
The Massey Acquisition significantly expanded AGCO's sales and distribution
outside North America.
AgEquipment Acquisition. In March 1995, the Company further expanded
its product offerings through its acquisition of AgEquipment Group, a
manufacturer and distributor of farm implements and tillage equipment (the
"AgEquipment Acquisition"). The AgEquipment Acquisition added three brands of
agricultural implements to the Company's product line, including no-till and
minimum tillage products, distributed under the Tye, Farmhand and Glencoe brand
names.
Maxion Acquisition. In June 1996, the Company acquired the agricultural
and industrial equipment business of Iochpe-Maxion S.A. (the "Maxion
Agricultural Equipment Business") (the "Maxion Acquisition"). The Maxion
Agricultural Equipment Business, with 1995 sales of approximately $265.0
million, was AGCO's Massey Ferguson licensee in Brazil, manufacturing and
distributing agricultural tractors under the Massey Ferguson brand name,
combines under the Massey Ferguson and IDEAL brand names and industrial
loader-backhoes under the Massey Ferguson and Maxion brand names. The Maxion
Acquisition expanded the Company's product offerings and distribution network in
South America, particularly in the significant Brazilian agricultural equipment
market.
Western Combine Acquisition. In July 1996, the Company acquired certain
assets of Western Combine Corporation and Portage Manufacturing, Inc., the
Company's suppliers of Massey Ferguson combines and other harvesting equipment
sold in North America (the "Western Combine Acquisition"). The Western Combine
Acquisition provided the Company with access to advanced technology and
increased the Company's profit margin on certain combines and harvesting
equipment sold in North America.
Agricredit-North America Joint Venture. In November 1996, the Company
sold a 51% interest in Agricredit-North America to a wholly-owned subsidiary of
Rabobank. The Company retained a 49% interest in Agricredit-North America and
now operates Agricredit-North America with Rabobank as a joint venture (the
"Agricredit-North America Joint Venture"). The Agricredit North-America Joint
Venture has continued the business of Agricredit-North America and seeks to
build a broader asset-based finance business through the addition of other lines
of business. The Company has similar joint venture arrangements with Rabobank
with respect to its retail finance companies located in the United Kingdom,
France, Germany and Brazil.
Deutz Argentina Acquisition. In December 1996, the Company acquired the
operations of Deutz Argentina S.A. ("Deutz Argentina") (the "Deutz Argentina
Acquisition"). Deutz Argentina, with 1995 sales of approximately $109.0 million,
was a manufacturer and distributor of agricultural equipment, engines and light
duty trucks in Argentina and other markets in South America. The Deutz Argentina
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Acquisition established AGCO as a leading supplier of agricultural equipment in
Argentina. In February 1999, the Company sold its manufacturing operations in
Haedo, Argentina which will allow the Company to consolidate the assembly of
tractors into an existing facility in Brazil.
Fendt Acquisition. In January 1997, the Company acquired the operations
of Xaver Fendt GmbH & Co. KG ("Fendt") (the "Fendt Acquisition"). Fendt, which
had 1996 sales of approximately $650.0 million, manufactures and distributes
tractors through a network of independent agricultural cooperatives, dealers and
distributors in Germany and throughout Europe and Australia. With this
acquisition, AGCO has a leading market share in Germany and France, two of
Europe's largest agricultural equipment markets. In December 1997, the Company
sold Fendt's caravan and motor home business in order to focus on its core
agricultural equipment business.
Dronningborg Acquisition. In December 1997, the Company acquired the
remaining 68% of Dronningborg Industries a/s (the "Dronningborg Acquisition"),
the Company's supplier of combine harvesters sold under the Massey Ferguson
brand name in Europe. The Company previously owned 32% of this combine
manufacturer which developed and manufactured combine harvesters exclusively for
AGCO. The Dronningborg Acquisition enabled the Company to achieve certain
synergies within its worldwide combine manufacturing and increased the Company's
gross profit margin on combines sold primarily in Europe.
Argentina Engine Joint Venture. In December 1997, the Company sold 50%
of Deutz Argentina's engine production and distribution business to Deutz AG, a
global supplier of diesel engines in Cologne, Germany. The Company retained a
50% interest in the engine business and now operates it with Deutz AG as a joint
venture (the "Argentina Engine Joint Venture"). The Argentina Engine Joint
Venture will allow the Company to share in research and development costs and
gain access to advanced technology.
MF Argentina Acquisition. In May 1998, the Company acquired the
distribution rights for the Massey Ferguson brand in Argentina (the "MF
Argentina Acquisition"). The MF Argentina Acquisition expanded the Company's
distribution network in the second largest market in South America.
Spra-Coupe and Willmar Acquisitions. In July 1998, the Company acquired
the Spra-Coupe product line, a brand of agricultural sprayers sold primarily in
North America (the "Spra-Coupe Acquisition"). In October 1998, the Company
acquired the Willmar product line, a brand of agricultural self-propelled
sprayers, spreaders and loaders sold primarily in North America (the "Willmar
Acquisition"). Spra-Coupe and Willmar had combined net sales of approximately
$81.8 million in their respective full fiscal years preceding these
acquisitions. The Spra-Coupe and Willmar Acquisitions expanded the Company's
product offerings to include a full line of self-propelled sprayers.
PRODUCTS
Tractors
Tractors are vehicles used to pull farm implements, hay tools, forage
equipment and other farm equipment. The Company participates in three segments
of the tractor market: the compact segment, which includes tractors in the less
than 40 horsepower range; the mid-range segment, which includes tractors in the
40 to 100 horsepower range; and the high horsepower segment, which includes
tractors in excess of 100 horsepower.
All compact tractors are sold under the Massey Ferguson brand name and
are typically used on small farms and in specialty agricultural industries such
as dairies, orchards and vineyards. The Company offers a full range of tractors
in the 40 to 100 horsepower category, including both two-wheel and all-wheel
drive versions. The Company sells mid-range tractors in the 40 to 100 horsepower
segment under the Massey Ferguson, Fendt, AGCO Allis, White, Landini, and Deutz
brand names. The mid-range tractors are typically used on small and medium-sized
farms and in specialty agricultural industries. The Company also offers a full
range of tractors in the over-100 horsepower segment ranging primarily from 100
to 425 horsepower. High horsepower tractors are typically used on larger farms
and on cattle ranches for hay production. The
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Company sells high horsepower tractors under the Massey Ferguson, Fendt, AGCO
Allis, White, Landini, AGCOSTAR and Deutz brand names. Tractors accounted for
approximately 62%, 62% and 60% of the Company's net sales in 1998, 1997 and
1996, respectively.
Combines
Combines are large, self-propelled machines used for the harvesting of
crops, such as corn, wheat, soybeans and barley. The Company sells combines
under the GLEANER, Massey Ferguson, Deutz, IDEAL, and beginning in 1999, Fendt
brand names. Depending on the market, Gleaner and Massey Ferguson combines are
sold with conventional or rotary technology while the Deutz, Fendt and IDEAL
combines utilize conventional technology. All combines are complemented by a
variety of crop-harvesting heads, available in different sizes, which are
designed to maximize harvesting speed and efficiency while minimizing crop loss.
Combines accounted for 10%, 10% and 11% of the Company's net sales in 1998, 1997
and 1996, respectively.
Hay Tools and Forage Equipment, Sprayers, Implements and Other Products
Hay tools are used to harvest and process hay crops for livestock feed.
Hay tools perform a variety of functions, including mowing and conditioning,
raking, tedding, baling and harvesting. Hay tools include self-propelled
windrowers and tractor-powered mowers, which cut and condition hay crops for
faster drying before forage harvesting or baling; hay tedders and rakes, which
are designed to reduce drying time and place hay crops in windrows; round
balers, which harvest and roll windrowed hay into circular bales; square balers,
which harvest and compress the windrowed hay into solid bales; and forage
harvesters, which are used to cut standing corn crops or windrowed hay crops to
uniform length. The Company sells hay and forage equipment primarily under the
Hesston brand name and, to a lesser extent, the White-New Idea and Massey
Ferguson brand names.
Sprayers are used to apply materials such as fertilizers and crop
protection chemicals to fields before or after crops have emerged. The Company
offers under 500-gallon self-propelled agricultural sprayers under the
Spra-Coupe brand name and 500 to 1,000 gallon self-propelled agricultural
sprayers under the Willmar brand name.
The Company also distributes a wide range of implements, planters and
other equipment for its product lines. Tractor-pulled implements are used in
field preparation and crop management. Implements include disk harrows, which
improve field performance by cutting through crop residue, leveling seed beds
and mixing chemicals with the soil; min-tils, which break up soil and mix crop
residue into topsoil, with or without prior disking; and field cultivators,
which prepare a smooth seed bed and destroy weeds. Tractor-pulled planters apply
fertilizer and place seeds in the field. Other equipment primarily includes
tractor-pulled manure spreaders, which fertilize fields with the controlled
application of sludge or solid manure, and loaders, which are used for a variety
of tasks including lifting and transporting hay crops. The Company sells
implements, planters and other products under the Hesston, White-New Idea, Black
Machine, Massey Ferguson, Tye, Farmhand, Glencoe, Deutz, Fendt and Willmar brand
names. Hay tools and forage equipment, sprayers, implements and other products
accounted for 11%, 12% and 12% of the Company's net sales in 1998, 1997 and
1996, respectively.
Replacement Parts
In addition to sales of new equipment, the replacement parts business
is an important source of revenue and profitability for both the Company and its
dealers. The Company sells replacement parts for products sold under all of its
brand names, many of which are proprietary. These parts help keep farm equipment
in use, including products no longer in production. Since most of the Company's
products can be economically maintained with parts and service for a period of
10 to 20 years, each product which enters the marketplace provides the Company
with a potential long-term revenue stream. In addition, sales of replacement
parts typically generate higher gross margins and historically have been less
cyclical than new product sales. Replacement parts accounted for approximately
17%, 16% and 17% of the Company's net sales in 1998, 1997 and 1996,
respectively.
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MARKETING AND DISTRIBUTION
The Company distributes its products primarily through a network of
independent dealers and distributors. The Company's dealers are responsible for
retail sales to the equipment's end user in addition to after-sales service and
support of the equipment. The Company's distributors may sell the Company's
products through a network of dealers supported by the distributor. Through the
Company's acquisitions and dealer development activities, the Company has
broadened its product line, expanded its dealer network and strengthened its
geographic presence in Western Europe, North America, South America and the rest
of the world. The Company's sales are not dependent on any specific dealer,
distributor or group of dealers.
Western Europe
Fully assembled tractors and other equipment are marketed in most major
Western European markets directly through a network of approximately 2,400
independent Massey Ferguson and Fendt dealers and agricultural cooperatives in
Western Europe. In addition, the Company sells through independent distributors
and associates in certain markets in Western Europe, which distribute through
approximately 770 Massey Ferguson and Fendt dealers. In most cases, dealers
carry competing or complementary products from other manufacturers. Sales in
Western Europe accounted for 47%, 47% and 43% of the Company's net sales in
1998, 1997 and 1996, respectively.
North America
The Company markets and distributes its farm machinery, equipment and
replacement parts to farmers in North America through a network of dealers
supporting approximately 6,500 dealer contracts. Each of the Company's
approximately 2,800 independent dealers represents one or more of the Company's
distribution lines or brand names. Dealers may also handle competitive and
dissimilar lines of products. The Company intends to maintain the separate
strengths and identities of its brand names and product lines. Sales in North
America accounted for 32%, 30% and 36% of the Company's net sales in 1998, 1997
and 1996, respectively.
South America
The Company markets and distributes its farm machinery, equipment and
replacement parts to farmers in South America through several different
networks. In Brazil and Argentina, the Company distributes products directly to
approximately 475 independent dealers primarily supporting either the Massey
Ferguson, IDEAL, or Deutz brand names. Outside of Brazil and Argentina, the
Company sells its products in South America through independent distributors. In
Brazil, federal laws are extremely protective of dealers and prohibit a
manufacturer from selling any of its products in Brazil except through its
dealer network. Additionally, each dealer has the exclusive right to sell its
manufacturer's product in its designated territory and as a result, no dealer
may represent more than one manufacturer. Sales in South America accounted for
11%, 10% and 4% of the Company's net sales in 1998, 1997 and 1996, respectively.
Rest of the World
Outside Western Europe, North America and South America, the Company
operates primarily through a network of approximately 2,115 independent Massey
Ferguson and Fendt distributors and dealers, as well as associates and
licensees, marketing the Company's products and providing customer service
support in approximately 100 countries in Africa, the Middle East, Eastern and
Central Europe, Australia and Asia. With the exception of Australia, where the
Company directly supports its dealer network, the Company utilizes independent
distributors, associates and licensees to sell its products. These arrangements
allow AGCO to benefit from local market expertise to establish strong market
positions with limited investment. In some cases, AGCO also sells agricultural
equipment directly to governmental agencies. The Company will continue to
actively support the local production and distribution of Massey-licensed
products by third party distributors, associates and licensees. Sales outside
Western Europe, North America, and South America accounted for 10%, 13% and 17%
of the Company's net sales in 1998, 1997 and 1996, respectively.
In Western Europe and the rest of the world, associates and licensees
provide a significant distribution channel for the Company's products and a
source of low cost production for certain Massey Ferguson products. Associates
are entities in which the Company has an ownership interest, most notably in
India. Licensees are entities in which the Company has no direct ownership
interest, most notably in Pakistan and Turkey. The associate or licensee
generally has
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the exclusive right to produce and sell Massey Ferguson equipment in its home
country, but may not sell these products in other countries. The Company
generally licenses to these associate companies certain technology, as well as
the right to use Massey Ferguson's trade names. The Company sells products to
associates and licensees in the form of components used in local manufacturing
operations, tractor sets supplied in completely knocked down ("CKD") kits for
local assembly and distribution and fully assembled tractors for local
distribution only. In certain countries, the arrangements with licensees and
associates have evolved to where the Company is principally providing
technology, technical assistance and quality control. In these situations,
licensee manufacturers sell certain tractor models under the Massey Ferguson
brand name in the licensed territory and may also become a source of low cost
production to the Company.
Parts Distribution
In Western Europe, the parts operation is supported by master
distribution facilities in Desford, England; Ennery, France; and Marktoberdorf,
Germany and regional parts facilities in Spain, Denmark, Germany and Italy. The
Company supports its sales of replacement parts in North America through its
master parts warehouse in Batavia, Illinois and regional warehouses throughout
North America. In the Asia/Pacific region, the Company's parts operation is
supported by a master distribution facility in Melbourne, Australia. In South
America, replacement parts are maintained and distributed primarily from its
facilities in Brazil and Argentina.
Dealer Support and Supervision
The Company believes that one of the most important criteria affecting
a farmer's decision to purchase a particular brand of equipment is the quality
of the dealer who sells and services the equipment. The Company provides
significant support to its dealers in order to improve the quality of
its dealer network. The Company monitors each dealer's performance and
profitability as well as establishes programs which focus on the continual
improvement of the dealer. In North America, the Company also identifies open
markets with the greatest potential for each brand and selects an existing AGCO
dealer, or a new dealer, who would best represent the brand in that territory.
AGCO protects each existing dealer's territory and will not place the same brand
within that protected area. Internationally, the Company also focuses on the
development of its dealers. The Company analyzes, on an ongoing basis, the
regions of each country where market share is not acceptable. Based on this
analysis, a dealer may be added in that territory, or a nonperforming
dealer may be replaced or refocused on performance standards.
The Company believes that its ability to offer its dealers a full
product line of agricultural equipment and related replacement parts as well as
its ongoing dealer training and support programs, which focus on business and
inventory management, sales, marketing, warranty and servicing matters and
products, help ensure the vitality and increase the competitiveness of its
dealer network. In addition, the Company maintains dealer advisory groups to
obtain dealer feedback on its operations. The Company believes all of these
programs contribute to the good relations the Company generally enjoys with its
dealers.
The Company agrees to provide dealers with competitive products, terms
and pricing. Dealers are also given volume sales incentives, demonstration
programs and other advertising to assist sales. The Company's competitive sales
programs, including retail financing incentives, and its policy for maintaining
parts and service availability with extensive product warranties are designed to
enhance its dealers' competitive position. Finally, a limited amount of
financial assistance is provided as part of developing new dealers in key market
locations. In general, dealer contracts are cancelable by either party within
certain notice periods.
WHOLESALE FINANCING
Primarily in the United States and Canada, the Company engages in the
standard industry practice of providing dealers with inventories of farm
equipment and replacement parts for extended periods. The terms of the Company's
finance agreements with its dealers vary by region and product line. In the
United States and Canada, dealers are typically not required to make a down
payment, and the Company effectively provides the dealer with the equipment
interest-free for a period of one to twelve months, depending on the product.
Thereafter, dealers are charged interest at varying spreads over the prime rate
until the product is sold. The Company also provides financing to dealers on
used equipment accepted in trade. The Company retains a security interest in all
new and used equipment it finances.
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Typically, the sales terms outside the United States and Canada are of
a shorter duration. The sales terms range from 30 day terms to floorplan
financing similar to the arrangements provided to dealers in the United States
and Canada. In many cases, the Company retains a security interest in the
equipment sold on extended terms. In certain international markets, the
Company's sales are backed by letters of credit or credit insurance.
RETAIL FINANCING
Through its retail financing joint ventures located in North America,
the United Kingdom, France, Germany and Brazil, the Company provides a
competitive and dedicated financing source to the end users of the Company's
products as well as equipment produced by other manufacturers. These retail
finance companies are owned 49% by the Company and 51% by a wholly-owned
subsidiary of Rabobank. Retail finance programs can be tailored to prevailing
market conditions and can enhance the Company's sales efforts.
MANUFACTURING AND SUPPLIERS
Manufacturing and Assembly
The Company has consolidated the manufacture of its products in
locations where capacity, technology, or local costs are optimized. Furthermore,
the Company continues to balance its manufacturing resources with externally
sourced machinery, components, and replacement parts to enable the Company to
better control inventory and supply of components. The Company believes that its
manufacturing facilities are sufficient to meet its needs for the foreseeable
future.
Western Europe
The Company's manufacturing operations in Western Europe are performed
in tractor manufacturing facilities located in Coventry, England; Beauvais,
France and Marktoberdorf, Germany and a combine manufacturing facility in
Randers, Denmark. The Coventry facility produces tractors marketed under the
Massey Ferguson, AGCO Allis and White brand names ranging from 38 to 110
horsepower that are sold worldwide in fully-assembled form or as CKD kits for
final assembly by licensees and associates. The Beauvais facility produces 70 to
260 horsepower tractors marketed under the Massey Ferguson, AGCO Allis and White
brand names. The Marktoberdorf facility produces 50 to 225 horsepower tractors
marketed under the Fendt brand name. The Randers facility produces conventional
combines under the Massey Ferguson brand name, and beginning in 1999, the Fendt
brand name. The Company also assembles forklifts for sale to third parties and
manufactures hydraulics for its Fendt tractors and for sale to third parties in
its Kempten, Germany facility, and assembles cabs for its Fendt tractors in
Baumenheim, Germany. The Company also has a joint venture with Renault
Agriculture S.A. ("Renault"), for the manufacture of driveline assemblies for
high horsepower AGCO and Renault tractors at the Company's facility in Beauvais
(the "GIMA Joint Venture"). By sharing overhead and engineering costs, the GIMA
Joint Venture has resulted in a decrease in the cost of these components.
North America
The Company manufactures and assembles GLEANER and Massey Ferguson
rotary and conventional combines and combine heads at its Independence, Missouri
facility. The Company produces its White-New Idea line of planters, hay tools
and forage equipment and implements; Black Machine planters; AGCO Allis, White,
Massey Ferguson and AGCOSTAR tractors; cultivating and tillage equipment
marketed under the Glencoe brand name and tillage equipment and loaders marketed
under the Farmhand brand name at its Coldwater, Ohio facility. The Company also
leases a manufacturing facility in Lockney, Texas where it produces drill
planters and tillage equipment marketed under the Tye brand name. In Willmar,
Minnesota, the Company manufactures self-propelled sprayers marketed under the
Spra-Coupe and Willmar brand names and loaders and spreaders under the Willmar
brand name. As part of the HFI
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joint venture, the Company produces Hesston, White-New Idea and Massey Ferguson
hay tools and forage equipment in Hesston, Kansas. The HFI partnership agreement
provides for HFI to manufacture hay tools and forage equipment for sale to the
Company and Case Corporation at cost. By sharing the facilities with Case
Corporation, the Company is able to increase HFI's capacity utilization and
reduce the Company's product cost by sharing overhead and product development
costs. The Company also maintains a facility in Queretaro, Mexico where tractors
are assembled for distribution in the Mexican market.
South America
The Company's manufacturing operations in South America are located in
Brazil and Argentina. In Brazil, the Company manufactures and assembles Massey
Ferguson tractors, ranging from 50 to 173 horsepower, and industrial
loader-backhoes at its facility in Canoas, Rio Grande do Sul. The Company also
manufactures conventional combines marketed under the Massey Ferguson, Deutz and
IDEAL brand names in Santa Rosa, Rio Grande do Sul. In February 1999, the
Company sold its Haedo, Argentina plant which manufactured Deutz branded
tractors, ranging from 60 to 190 horsepower, engine components and light duty
trucks. The Haedo sale will allow the Company to consolidate certain operations,
principally tractor assembly, into its Canoas, Brazil facility in the year 2000.
In addition, the Company will outsource certain components currently
manufactured in Haedo as part of the transaction. The Argentina Engine Joint
Venture manufactures diesel engines, for the Company's equipment and for sale to
third parties, at a facility in San Luis, Argentina, which is owned by the joint
venture.
Third-Party Suppliers
The Company believes that managing the level of its company and dealer
inventory is critical to maintaining favorable pricing for its products. Unlike
many of its competitors, the Company externally sources many of its products,
components and replacement parts. This strategy minimizes the Company's capital
investment requirements and allows greater flexibility to respond to changes in
market conditions.
The Company purchases certain products it distributes from third party
suppliers. The Company purchases its standard and specialty tractors from
Landini S.p.A. ("Landini") and distributes these tractors under the Landini
brand name in the United States and Canada and under the Massey Ferguson brand
name outside of North America. In addition, certain Massey Ferguson tractor
models are purchased from licensees in Poland and Turkey and from Iseki &
Company, Limited, a Japanese manufacturer. The Company also purchases certain
other tractors, implements, and hay and forage equipment from various
third-party suppliers.
In addition to the purchase of machinery, significant components used
in the Company's manufacturing operations, such as engines, are supplied by
third-party companies. The Company selects third-party suppliers which it
believes have the lowest cost, highest quality and most appropriate technology.
The Company also assists in the development of these products or component parts
based upon its own design requirements. The Company's past experience with
outside suppliers has been favorable. Although the Company is currently
dependent upon outside suppliers for several of its products, the Company
believes that, if necessary, alternative sources of supply could be found.
SEASONALITY
Retail sales by dealers to farmers are highly seasonal and are a
function of the timing of the planting and harvesting seasons. To the extent
possible, the Company attempts to ship products to its dealers and distributors
on a level basis throughout the year to reduce the effect of seasonal retail
demands on its manufacturing operations and to minimize its investment in
inventory. The Company's financing requirements are subject to variations due to
seasonal changes in working capital levels, which typically build in the first
half of the year and then reduce in the second half of the year.
COMPETITION
The agricultural industry is highly competitive. During the 1980s, the
industry experienced significant consolidation and retrenchment. The Company
competes with several large national and international full-line suppliers, as
well as numerous short-line and specialty manufacturers with differing
manufacturing and marketing methods. The Company's principal competitors on a
worldwide basis are Case Corporation, Deere & Company and New Holland N.V. In
certain Western European and South American countries, regional competitors
exist which have significant market share in a single country or a group of
countries.
8
10
The Company believes several key factors influence a buyer's choice of
farm equipment, including the strength and quality of a company's dealers, the
quality and pricing of products, dealer or brand loyalty, product availability,
the terms of financing and customer service. The Company has improved and
continually seeks to improve in each of these areas but focuses primarily on
increasing the farmers' loyalty to the Company's dealers and overall dealer
organizational quality in order to distinguish itself in the marketplace. See
"Marketing and Distribution."
ENGINEERING AND RESEARCH
The Company makes significant expenditures for engineering and applied
research to improve the quality and performance of its products and to develop
new products. The Company expended approximately $56.1 million (1.9% of net
sales), $54.1 million (1.7% of net sales) and $27.7 million (1.2% of net sales)
in 1998, 1997 and 1996, respectively, on engineering and research.
PATENTS AND TRADEMARKS, TRADE NAMES AND BRAND NAMES
The Company owns and has licenses to the rights under a number of
domestic and foreign patents, trademarks, trade names and brand names relating
to its products and businesses. The Company defends its patent, trademark and
trade and brand name rights primarily by monitoring competitors' machines,
industry publications and conducting other investigative work. The Company
considers its intellectual property rights, including its rights to use the
AGCO, AGCO Allis, Massey Ferguson, Fendt, GLEANER, White, Hesston, New Idea,
Landini, Black Machine, AGCOSTAR, Tye, Farmhand, Glencoe, Willmar, Spra-Coupe,
IDEAL and Deutz (South America) trade and brand names, important in the
operation of its businesses; however, the Company does not believe it is
dependent on any single patent, trademark or trade name or group of patents or
trademarks, trade names or brand names. AGCO, GLEANER, Hesston, Massey Ferguson,
AGCOSTAR, New Idea, Tye, Farmhand, Glencoe, Spra-Coupe and Willmar are
registered trademarks of the Company. In addition, Fendt is a registered
trademark in Germany, and the Company has a pending trademark registration for
the Fendt brand name in the U.S. and Canada.
EMPLOYEES
As of December 31, 1998, the Company employed approximately 10,500
employees, including approximately 2,300 employees in the United States and
Canada. A majority of the Company's employees at its manufacturing facilities,
both domestic and international, are represented by collective bargaining
agreements with expiration dates ranging from 2000 to 2002. The Company is
currently in negotiations with national labor unions in France relating to the
renewal of their collective bargaining agreements which expired December 31,
1998.
ENVIRONMENTAL MATTERS AND OTHER GOVERNMENT REGULATION
The Company is subject to environmental laws and regulations concerning
emissions to the air, discharges of processed or other types of waste water and
the generation, handling, storage, transportation, treatment and disposal of
waste materials. These laws and regulations are constantly changing, and it is
impossible to predict with accuracy the effect they may have on the Company in
the future. The Company has been made aware of possible solvent contamination at
the HFI facility in Hesston, Kansas. The extent of any possible contamination is
being investigated in conjunction with the appropriate state authorities. It is
the Company's policy to comply with all applicable environmental, health and
safety laws and regulations, and the Company believes that any expense or
liability it may incur in connection with any noncompliance with any such law or
regulation or the cleanup of any of its properties will not have a material
adverse effect on the Company. The Company believes it is in compliance, in all
material respects, with all applicable laws and regulations.
The Environmental Protection Agency (the "EPA") has issued regulations
concerning permissible emissions from off-road engines. The Company does not
anticipate that the cost of compliance with the regulations will have a material
impact on the Company.
The Company is subject to various national, federal, state and local
laws affecting its business, as well as a variety of regulations relating to
such matters as working conditions and product safety. A variety of state laws
regulate the Company's contractual relationships with its dealers. These laws
impose substantive standards on the relationship between the Company and its
dealers, including events of default, grounds for termination, non-renewal of
dealer
9
11
contracts and equipment repurchase requirements. Such state laws could adversely
affect the ability of the Company to rationalize its dealer network.
The Company's international operations are also subject to
environmental laws, as well as various other national and local laws, in the
countries in which it manufactures and sells it products. The Company believes
that it is in compliance with such laws in all material respects, and the cost
of compliance with such laws in the future will not have a material adverse
effect on the Company.
REGULATION AND GOVERNMENT POLICY
Domestic and foreign political developments and government regulations
and policies directly affect the agricultural industry in the United States and
abroad and indirectly affect the agricultural equipment business. The
application or modification of existing laws, regulations or policies or the
adoption of new laws, regulations or policies could have an adverse effect on
the Company's business.
FINANCIAL INFORMATION ON GEOGRAPHICAL AREAS
For financial information on geographic areas, see page 43 of the
Annual Report to Stockholders for the year ended December 31, 1998, which is
incorporated herein by reference.
FORWARD LOOKING STATEMENTS
Certain information included in Management's Discussion and Analysis of
Financial Condition and Results of Operations constitute forward looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, including the information set forth under "--Outlook". Although the
Company believes that the expectations reflected in such forward looking
statements are based upon reasonable assumptions, it can give no assurance that
its expectations will be achieved. Additionally, the Company's financial results
are sensitive to movement in interest rates and foreign currencies, as well as
general economic conditions, pricing and product actions taken by competitors,
production disruptions and changes in environmental, international trade and
other laws which impact the way in which it conducts its business. Important
factors that could cause actual results to differ materially from the Company's
current expectations are disclosed in conjunction with the Company's filings
with the Securities and Exchange Commission.
10
12
Item 2. PROPERTIES
The principal properties of the Company as of December 31, 1998 are as
follows:
Leased Owned
Location Description of Property (sq. ft.) (sq. ft.)
- -------- ----------------------- --------- ---------
North America:
Duluth, Georgia ............................ Corporate Headquarters 125,000
Coldwater, Ohio............................. Manufacturing 1,490,000
Hesston, Kansas (A)......................... Manufacturing 1,115,000
Independence, Missouri...................... Manufacturing 450,000
Lockney, Texas.............................. Manufacturing 190,000
Queretaro, Mexico........................... Manufacturing 13,500
Willmar, Minnesota.......................... Manufacturing 223,400
Eagan, Minnesota............................ Sales office 8,300
Kansas City, Missouri....................... Warehouse 425,000
Batavia, Illinois........................... Parts Distribution 310,200
Des Moines, Iowa (B)........................ Retail Finance Office 23,850
International:
Coventry, United Kingdom.................... Regional Headquarters/Manufacturing 4,135,150
Beauvais, France (C)........................ Manufacturing 3,740,000
Marktoberdorf, Germany...................... Manufacturing 2,411,000
Baumenheim, Germany......................... Manufacturing 1,890,000
Kempten, Germany............................ Manufacturing 582,000
Randers, Denmark............................ Manufacturing 683,000
Haedo, Argentina (D)........................ Manufacturing 489,450
Noetinger, Argentina........................ Manufacturing 156,170
San Luis, Argentina (E).................... Manufacturing 57,860
Canoas, Rio Grande do Sul, Brazil........... Regional Headquarters /Manufacturing 452,400
Santa Rosa, Rio Grande do Sul, Brazil....... Manufacturing 297,100
Ennery, France.............................. Parts Distribution 269,100
Sunshine, Victoria, Australia............... Regional Headquarters 37,200
Tottenham, Victoria, Australia.............. Parts Distribution 179,960
Stoneleigh, United Kingdom.................. Training Facility/Office 44,000
- ------------
(A) Owned by HFI, a joint venture in which the Company has a 50% interest.
(B) Owned by the Agricredit-North America Joint Venture, in which the
Company has a 49% interest.
(C) Includes the GIMA Joint Venture, in which the Company has a 50%
interest.
(D) In February 1999, the Company sold the Haedo, Argentina facility. See
Manufacturing and Suppliers - South America in Item 1.
(E) Owned by the Argentina Engine Joint Venture, in which the Company has a
50% interest.
The Company considers each of its facilities to be in good condition and
adequate for its present use. The Company believes that it has sufficient
capacity to meet its current and anticipated manufacturing requirements.
Item 3. LEGAL PROCEEDINGS
The Company is a party to various legal claims and actions incidental
to its business. The Company believes that none of these claims or actions,
either individually or in the aggregate, is material to the business or
financial condition of the Company.
11
13
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The dividend and market price information under the heading "Trading
and Dividend Information" on page 19 of the Annual Report to Stockholders for
the year ended December 31, 1998 is incorporated herein by reference.
Item. 6. SELECTED FINANCIAL DATA
The information under the heading "Selected Financial Data" for the
years ended December 31, 1994 through 1998 on page 19 of the Annual Report to
Stockholders for the year ended December 31, 1998 is incorporated herein by
reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information under the heading "Management's Discussion and Analysis
of Financial Condition and Results of Operations" on pages 20 through 27 of the
Annual Report to Stockholders for the year ended December 31, 1998 is
incorporated herein by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information under the heading "Foreign Currency Risk Management"
and "Interest Rates" in "Management's Discussion and Analysis and Results of
Operations" on pages 26 and 27 of the Annual Report to Stockholders and in
Footnote 1 - "Financial Instruments" of the Notes to Consolidated Financial
Statements on page 34 of the Annual Report to Stockholders for the year ended
December 31, 1998 is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Registrant and its
subsidiaries included on pages 28 through 45 of the Annual Report to
Stockholders for the year ended December 31, 1998 are incorporated herein by
reference:
Consolidated Statements of Income for the years ended December 31,
1998, 1997 and 1996.
Consolidated Balance Sheets as of December 31, 1998 and 1997.
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1998, 1997 and 1996.
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996.
Notes to Consolidated Financial Statements.
Report of Independent Public Accountants.
The information under the heading "Quarterly Results" on page 24 of the
Annual Report to Stockholders for the year ended December 31, 1998 is
incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
12
14
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The information under the heading "Election of Directors" and the
information under the heading "Directors Continuing in Office" on pages 2, and 3
and 4, respectively, of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 28, 1999 is incorporated herein by reference for
information on the directors of the Registrant. The information under the
heading "Executive Officers" on pages 16 through 18 of the Proxy Statement for
the Annual Meeting of Stockholders to be held April 28, 1999 is incorporated
herein by reference for information on the executive officers of the Registrant.
The information under the heading "Section 16(a) Beneficial Ownership Reporting
Compliance" on page 18 of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 28, 1999 is incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
The information under the heading "Board of Directors and Certain
Committees of the Board," the information under the heading "Compensation
Committee Interlocks and Insider Participation" and the information under the
heading "Executive Compensation" on pages 4 and 5, page 5, and pages 8 through
10, respectively, of the Proxy Statement for the Annual Meeting of Stockholders
to be held April 28, 1999 are incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the heading "Principal Holders of Common Stock"
on pages 6 through 8 of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 28, 1999 is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the heading "Certain Relationships and Related
Transactions" on page 18 of the Proxy Statement for the Annual Meeting of
Stockholders to be held April 28, 1999 is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)1. The following consolidated financial statements of AGCO Corporation and
its subsidiaries, included in the Annual Report of the registrant to
its stockholders for the year ended December 31, 1998, are incorporated
by reference in Part II, Item 8:
Consolidated Statements of Income for the years ended December
31, 1998, 1997 and 1996.
Consolidated Balance Sheets at December 31, 1998 and 1997.
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1998, 1997 and 1996.
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996.
Notes to Consolidated Financial Statements.
Report of Independent Public Accountants.
(a)2. The following Report of Independent Public Accountants and the
Consolidated Financial Statement Schedule of AGCO Corporation and its
subsidiaries are included herein on pages F-1 through F-2.
Schedule Description
Report of Independent Public Accountants on
Financial Statement Schedule
Schedule II Valuation and Qualifying Accounts
13
15
Schedules other than that listed above have been omitted
because the required information is contained in the Notes to
the Consolidated Financial Statements or because such
schedules are not required or are not applicable.
(a) 3. The following exhibits are filed or incorporated by reference as part of
this report.
Exhibit No. Description of Exhibit
----------- ----------------------
3.1 Certificate of Incorporation of the Registrant incorporated by
reference to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996.
3.2 By-Laws of the Registrant incorporated by reference to the
Company's Annual Report on From 10-K for the year ended
December 31, 1997.
4.1 Rights Agreement between and among AGCO Corporation and
Chemical Bank, as rights agent, dated as of April 27, 1994
incorporated by reference to the Company's quarterly report on
Form 10-Q for the quarter ended March 31, 1994.
4.2 Certificate of Designation of the Junior Cumulative Preferred
Stock of the Company incorporated by reference to the
Company's quarterly report on Form 10-Q for the quarter ended
March 31, 1994.
4.3 Indenture between AGCO Corporation and SunTrust Bank, as
Trustee, dated as of March 20, 1996, incorporated by reference
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
10.1 HFI Partnership Agreement incorporated by reference to the
Company's Registration Statement on Form S-1 (No. 33-43437)
dated April 16, 1992.
10.2 Joint Venture Agreement between Massey Ferguson S.A., Renault
Agriculture S.A. and Massey Ferguson Group Limited dated July
20, 1994 incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994.
10.3 Massey Ferguson Finance France SNC Agreement among and between
Massey Ferguson S.A. and DeLage Landen Leasing S.A. dated
September 15, 1992 incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994.
10.4 Shareholders Agreement in respect of Massey Ferguson Finance
Limited among and between Massey Ferguson Limited, DeLage
Landen Financial Services Limited and DeLage Landen B.V. dated
June 19, 1990 incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31,
1994.
10.5 Shareholders Agreement dated February 15, 1995 between Massey
Ferguson GmbH and DeLage Landen Leasing GmbH incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
10.6 Tractor Distributor Agreement by and between Landini S.p.A.
and AGCO Corporation dated February 1, 1995 incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994.
10.7 Deferred Compensation Plan incorporated by reference to the
Company's Registration Statement on Form S-1 (No. 33-43437)
dated April 16, 1992.
10.8 1991 Stock Option Plan, as amended.
10.9 Form of Stock Option Agreements (Statutory and Nonstatutory)
incorporated by reference to the
1
16
Company's Registration Statement on Form S-1 (No. 33-43437)
dated April 16, 1992.
10.10 Amended and Restated Long-Term Incentive Plan incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997.
10.11 Nonemployee Director Stock Incentive Plan, as amended
incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.
10.12 Management Incentive Compensation Plan incorporated by
reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
10.13 Purchase and Sale Agreement between and among AGCO Corporation
and Varity Holdings Limited, Varity GmbH, Massey Ferguson
GmbH, Massey Ferguson Industries Limited, Massey Ferguson
(Delaware) Inc. and Varity Corporation dated as of April 26,
1994 incorporated by reference to the Company's quarterly
report on Form 10-Q for the quarter ended March 31, 1994.
10.14 Second Amended and Restated Credit Agreement dated as of March
12, 1999 among AGCO Corporation, AGCO Canada, Ltd., Massey
Ferguson Manufacturing Limited, Massey Ferguson Limited, AGCO
Limited, Massey Ferguson S.A., AGCO Holding B.V., and Massey
Ferguson GmbH, the lenders listed on the signatures pages
thereof; Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch ("Rabobank"), SunTrust
Bank Atlanta, and Deutsche Bank AG, New York Branch, as
co-managers; Deutsche Bank Canada, as Canadian administrative
agent, and Rabobank, as administrative agent for the lenders.
10.15 Limited Liability Company Agreement of Agricredit Acceptance
LLC dated November 1, 1996 incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
10.16 Employment and Severance Agreement by and between AGCO
Corporation and Robert J. Ratliff incorporated by reference to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
10.17 Employment and Severance Agreement by and between AGCO
Corporation and John M. Shumejda incorporated by reference to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
10.18 Employment and Severance Agreement by and between AGCO
Corporation and James M. Seaver incorporated by reference to
the Company's Annual Report on From 10-K for the year ended
December 31, 1995.
10.19 Employment and Severance Agreement by and between AGCO
Corporation and Edward R. Swingle.
10.20 Employment and Severance Agreement by and between AGCO
Corporation and Chris E. Perkins incorporated by reference to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
12.0 Statement re:Computation of Earnings to Combined Fixed
Charges.
13.0 Portions of the AGCO Corporation Annual Report to Stockholders
for the year ended December 31, 1997 expressly incorporated
herein by reference.
21.0 Subsidiaries of the Registrant.
23.0 Consent of Arthur Andersen LLP, independent public
accountants.
2
17
24.0 Power of Attorney
27.1 Financial Data Schedule - December 31, 1998 (filed for SEC
reporting purposes only).
(b) Reports on Form 8-K
None
3
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AGCO Corporation
By: /s/ John M. Shumejda
-----------------------------
John M. Shumejda
President and Chief Executive
Officer
Dated: March 31, 1999
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
* Chairman of the Board March 31, 1999
---------------------------
Robert J. Ratliff
/s/ John M. Shumejda President and Chief Executive March 31, 1999
--------------------------- Officer, Director
John M. Shumejda
/s/ Patrick S. Shannon Vice President and Chief Financial March 31, 1999
--------------------------- Officer (Principal
Patrick S. Shannon Financial Officer and Principal
Accounting Officer)
* Director March 31, 1999
---------------------------
Henry J. Claycamp
Director
---------------------------
Wolfgang Deml
* Director March 31, 1999
---------------------------
William H. Fike
* Director March 31, 1999
---------------------------
Gerald B. Johanneson
* Director March 31, 1999
---------------------------
Richard P. Johnston
Director
---------------------------
Anthony D. Loehnis
Director
---------------------------
Alan S. McDowell
* Director March 31, 1999
---------------------------
Hamilton Robinson, Jr.
* Director March 31, 1999
---------------------------
Wolfgang Sauer
*By: /s/ Patrick S. Shannon
----------------------
Patrick S. Shannon
Attorney-in-Fact
4
19
ANNUAL REPORT ON FORM 10-K
ITEM 14(A)(2)
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 1998
20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To AGCO Corporation:
We have audited in accordance with generally accepted auditing standards, the
consolidated balance sheets of AGCO CORPORATION AND SUBSIDIARIES as of December
31, 1998 and 1997 and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1998, and have issued our report thereon dated February 3,
1999. Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying Schedule II-Valuation
and Qualifying Accounts is the responsibility of the company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Atlanta, Georgia
February 3, 1999
21
Schedule II
AGCO CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in millions)
Additions
---------------------
Charged Charged
Balance at To Costs (Credited) Balance
Beginning Acquired and To Other at End
Description of Period Businesses Expenses Accounts Deductions of Period
----------- ---------- ---------- --------- --------- ---------- ---------
Year ended December 31, 1998
Allowances for sales incentive discounts and
doubtful receivables ....................... $ 97.2 $ 2.0 $ 118.7 $-- $ (110.1) $ 107.8
======= ===== ======== === ======== ========
Year ended December 31, 1997
Allowances for sales incentive discounts and
doubtful receivables ....................... $ 75.8 $ 4.1 $ 116.1 $-- $ (98.8) $ 97.2
======= ===== ======== === ======== ========
Year ended December 31, 1996
Allowances for sales incentive discounts and
doubtful receivables ....................... $ 62.5 $ 3.3 $ 91.5 $-- $ (81.5) $ 75.8
======= ===== ======== === ======== ========
Additions
---------------------
Charged Charged
Balance at To Costs (Credited) Balance
Beginning Acquired and To Other at End
Description of Period Businesses Expenses Accounts Deductions of Period
----------- ---------- ---------- --------- --------- ---------- ---------
Year ended December 31, 1998
Accruals of severance, relocation and
other integration costs .................... $ 12.4 $ 6.5 $ 32.8(a) $-- $ (16.7) $ 35.0
======= ===== ======== === ======== ========
Year ended December 31, 1997
Accruals of severance, relocation and
other integration costs .................... $ 4.7 $ 6.5 $ 18.2 $-- $ (17.0) $ 12.4
======= ===== ======== === ======== ========
Year ended December 31, 1996
Accruals of severance, relocation and
other integration costs .................... $ 1.3 $ -- $ 16.5(b) $-- $ (13.1) $ 4.7
======= ===== ======== === ======== ========
(a) Excludes nonrecurring expenses related to pension and postretirement
benefit expenses of $7.2 million.
(b) Excludes $5.8 million of nonrecurring expenses for stock compensation
expenses under the Company's Long-Term Incentive Plan related to
executive severance.
22
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
3.1 Certificate of Incorporation of Registrant. *
3.2 By-Laws of the Registrant. *
4.1 Rights Agreement between and among AGCO Corporation and Chemical Bank. *
4.2 Certificate of Designation of the Junior Cumulative Preferred Stock of the Company. *
4.3 Indenture between AGCO Corporation and SunTrust Bank, as Trustee. *
10.1 HFI Partnership Agreement. *
10.2 Joint Venture Agreement between Massey Ferguson S.A., Renault Agriculture S.A. *
and Massey Ferguson Group Limited.
10.3 Massey Ferguson Finance France SNC Agreement among and between Massey Ferguson S.A.
and DeLage Landen Leasing S.A. *
10.4 Shareholders Agreement in respect of Massey Ferguson Finance Limited among and between Massey
Ferguson Limited, DeLage Landen Financial Services Limited and DeLage Landen Leasing Gmbh *
10.5 Shareholders Agreement between Massey Ferguson GmbH and DeLage Landen B.V. *
10.6 Tractor Distributor Agreement by and between Landini S.p.A. and AGCO Corporation. *
10.7 Deferred Compensation Plan. *
10.8 1991 Stock Option Plan, as amended. -
10.9 Form of Stock Option Agreements (Statutory and Nonstatutory). *
10.10 Amended and Restated Long-Term Incentive Plan. *
10.11 Nonemployee Director Stock Incentive Plan, as amended. *
10.12 Management Incentive Compensation Plan. *
10.13 Purchase and Sale Agreement between and among AGCO Corporation and Varity Holdings
Limited, Varity GmbH, Massey Ferguson GmbH, Massey Ferguson Industries Limited, Massey
Ferguson (Delaware) Inc. and Varity Corporation. *
10.14 Second Amended and Restated Credit Agreement dated as of January 14, 1997, among AGCO
Corporation, AGCO Canada, Ltd., Massey Ferguson Manufacturing Limited, Massey
Ferguson Limited, AGCO Limited, Massey Ferguson S.A., AGCO Holding B.V., Massey Ferguson
GmbH and the lenders listed on the signature pages thereof, Cooperatieve Centrale
Raiffesen-Boerenleenbank B.A., "RABOBANK NEDERLAND", New York Branch ("Rabobank"),
SunTrust Bank, Atlanta, and Deutsche Bank AG, New York Branch, as Co-Managers;
Deutsche Bank Canada, as Canadian Administrative Agent and Rabobank, as Administrative
Agent for the lenders, as amended by the parties thereto on February 24, 1997. -
10.15 Limited Liability Company Agreement of Agricredit Acceptance LLC *
10.16 Employment and Severance Agreement by and between AGCO Corporation and Robert J. Ratliff. *
10.17 Employment and Severance Agreement by and between AGCO Corporation and John M. Shumejda. *
10.18 Employment and Severance Agreement by and between AGCO Corporation and James M. Seaver. *
10.19 Employment and Severance Agreement by and between AGCO Corporation and Edward R. Swingle -
10.20 Employment and Severance Agreement by and between AGCO Corporation and Chris E. Perkins. *
12.0 Statement re: Computation of Earnings to Combined Fixed Charges. -
13.0 Portions of the AGCO Corporation Annual Report to Stockholders for the year ended -
December 31, 1998.
21.0 Subsidiaries of the Registrant. -
23.0 Consent of Arthur Andersen LLP, independent public accountants. -
27.1 Financial Data Schedule - December 31, 1998 (filed for SEC reporting purposes only) -
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* Incorporated herein by reference