AGCO Reports Improved First Quarter Results

Apr 26, 2001, 01:00 ET from AGCO Corporation

    DULUTH, Ga., April 26 /PRNewswire/ -- AGCO Corporation (NYSE:   AG) a
 worldwide designer, manufacturer and distributor of agricultural equipment,
 today reported an improvement in its first quarter operating results.  AGCO
 reported a first quarter net loss, excluding restructuring expenses, of
 $0.07 per share versus a loss of $0.16 per share in 1999.  First quarter
 operating income, excluding restructuring expenses, improved to $10.0 million
 from $3.9 million in 2000.
     For the first quarter of 2001, the Company reported net sales of
 $532.1 million and a net loss, excluding restructuring expenses, of $4.3
 million, or $0.07 per share.  In addition, the Company recorded restructuring
 and other infrequent expenses of $2.3 million, or $0.02 per share, in the
 first quarter primarily related to the Company's North American facility
 rationalizations.  Including the restructuring expenses, the Company reported
 a net loss of $5.8 million, or $0.10 per share.  For the first quarter of
 2000, AGCO reported net sales of $534.8 million and a net loss, excluding
 restructuring expenses, of  $9.5 million, or $0.16 per share.  Including
 restructuring expenses of $1.9 million in 2000, the Company reported a first
 quarter net loss of $10.7 million, or $0.18 per share.
     AGCO's earnings improvement in the first quarter was the result of higher
 gross margins resulting from higher production and improved margins on new
 products.  The first quarter results for 2001 also included approximately $2.6
 million of expenses to obtain waivers from noteholders on the Company's 8.5%
 senior subordinated notes regarding the payment of dividends on the Company's
 common stock under a restricted payment covenant.  In addition, the Company
 incurred approximately $3.7 million of higher costs at AGCO's Hesston, Kansas
 manufacturing facility associated with the initial production of products
 relocated from closed facilities.  In 2000, the first quarter loss included an
 $8.0 million loss associated with the U.S. accounts receivable securitization
 facility completed in January 2000.
     "Our first quarter results continue to demonstrate our focus on cost
 reduction and margin improvement," stated John M. Shumejda, AGCO's President
 and Chief Executive Officer.  "Excluding the unusual items in both periods,
 our operations improved in all regions of the world despite difficult industry
 conditions in many regions.  We continue to focus on our goals of cost
 reduction and margin expansion through manufacturing facility rationalization,
 product resourcing, material cost reductions and other initiatives."
 
     Regional Market Results
     North America -- Industry retail unit sales of tractors in the first
 quarter increased approximately 8% over the prior year period with increases
 in all segments.  Industry retail unit sales of combines were 47% higher than
 the prior year in the seasonally low first quarter.  AGCO's retail sales of
 tractors in the first quarter were significantly higher than the prior year in
 all tractor segments.  AGCO's retail sales of combines were lower due to a
 delayed schedule of deliveries to contract harvesters compared to the prior
 year period.
      "Our strong tractor sales reflect favorable customer acceptance of our
 new and upgraded tractor lines," stated Mr. Shumejda.  "Although the market
 remains extremely competitive, we believe we are building momentum for a
 successful year while still improving margins."
 
     Western Europe -- Industry retail unit sales of tractors in Western Europe
 for the first quarter declined approximately 9% compared to 2000 with declines
 in most of the significant Western European markets.  AGCO's retail unit sales
 for the quarter also declined when compared to the prior year period.
     The Western European market is weaker than expected due to concerns over
 BSE and foot-and-mouth disease.  The near-term impact of these diseases is
 still uncertain and will be determined by the ultimate extent and severity of
 the outbreak in addition to the level of government compensation to be paid to
 farmers for the loss of livestock.  "We are monitoring the situation in Europe
 closely," stated Mr. Shumejda.  "While our sales have held up to date, we have
 chosen to reduce production in the second quarter to ensure our inventories
 remain on plan.  Our revised forecast for Western Europe is 5-10% below the
 prior year as a result of these issues."
 
     South America -- South American industry retail unit sales of tractors
 during the first quarter increased approximately 38% compared to 2000. The
 Brazilian market continued its strong growth and was partially offset by
 declines in Argentina and the other South American markets.  AGCO's South
 American retail sales increased significantly during the first quarter
 compared to the prior year period.
     "The Brazilian market continues to be strong due to full availability of
 the Brazilian government subsidized retail financing program, FINAME," stated
 Mr. Shumejda.  "AGCO has capitalized on these favorable conditions with a
 significant improvement in operating income.  Higher production volume and our
 cost reduction initiatives in South America have greatly improved margins and
 profitability."
 
     Rest of World Markets -- Outside of North America, Western Europe and
 South America, AGCO's net sales for the first quarter increased significantly
 over the prior year's first quarter particularly in the Middle Eastern
 markets.
 
     Ag-Chem Transition Underway
     On April 16, 2001, AGCO completed the acquisition of Ag-Chem Equipment
 Company, a leading manufacturer and distributor of self-propelled fertilizer
 and chemical sprayers for pre-emergent and post-emergent applications.  AGCO
 issued 11.8 million shares of AGCO common stock and paid approximately $147.5
 million in cash as consideration in the transaction.  Last week, the Company
 announced its plan to rationalize facilities in order to begin integrating the
 two businesses.  The Company announced it would consolidate AGCO's Willmar,
 Minnesota sprayer manufacturing plant and Ag-Chem's Benson, Minnesota
 manufacturing plant into the Ag-Chem Jackson, Minnesota manufacturing
 facility.  In addition, AGCO will close Ag-Chem's Minnetonka, Minnesota
 administrative offices and move all engineering and administrative functions
 to either the Jackson plant or AGCO's Duluth, GA headquarters.  "We are
 aggressively developing and implementing transition plans," stated Mr.
 Shumejda.  "The facility rationalizations will generate a portion of the
 targeted $30 million in synergies to be achieved over the next two years."
 
     Outlook
     As a result of uncertainty arising from BSE and foot-and-mouth disease,
 the Company has revised its outlook for Western Europe to decline between 5%
 to 10%.  The Company continues to expect industry retail demand in 2001 to be
 relatively flat in the other major markets of the world.
     Ag-Chem's net sales and income from operations are heavily concentrated in
 February, March and April of each year.  As a result of the mid-April closing
 date, AGCO's results for 2001 will not reflect Ag-Chem's seasonally strongest
 period.  While the Company is targeting to generate sufficient cost synergies
 to neutralize earnings for the balance of 2001, the additional common shares
 issued in the transaction are expected to reduce AGCO's net income per share
 by approximately $0.08 per share in 2001.  "Although the timing of the
 transaction negatively impacts our 2001 results, we are enthusiastic about the
 positive contribution that Ag-Chem will provide in 2002 and beyond," stated
 Mr. Shumejda.  In addition, the Company previously announced the closing of a
 $100 million European securitization facility in April 2001.  In connection
 with the closing, the Company expects to incur a one-time loss of
 approximately $3.5 million in the second quarter related to the initial
 funding of the facility.
     Consequently, the Company now anticipates its full year net income per
 share, excluding restructuring and other infrequent expenses, will be
 approximately 60% higher in 2001 than 2000.  In 2000, AGCO's net income per
 common share, excluding restructuring and other infrequent expenses, was
 $0.28 per share.
 
     Dividends Suspended
     As a result of a restricted payments covenant on its senior subordinated
 notes, the Company has suspended the payment of dividends until such time as
 it is able to meet the interest coverage ratio as prescribed in the notes
 indenture.
 
     Safe Harbor Statement
     Statements which are not historical facts, including cost reduction
 projections, production volume forecasts and industry demand outlook, are
 forward looking and subject to risks which could cause actual results to
 differ materially from those suggested by the statements.  Although the
 Company believes that the statements it has made are based on reasonable
 assumptions, they are based on current information and beliefs and,
 accordingly, the Company can give no assurance that its statements will be
 achieved.  The Company bases its outlook on key operating, economic and
 agricultural data which are subject to change including, but not limited to:
 farm cash income, worldwide demand for agricultural products, commodity
 prices, grain stock levels, weather, crop production, farmer debt levels,
 existing government programs and farm-related legislation.  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, the success of its facility
 rationalization process, production disruptions and changes in environmental,
 international trade and other laws which impact the way in which it conducts
 its business.  Further information concerning factors that could significantly
 affect the Company's results is included in the Company's filings with the
 Securities and Exchange Commission.  The Company disclaims any responsibility
 to update any forward-looking statements.
     AGCO Corporation, headquartered in Duluth, Georgia, is a global designer,
 manufacturer and distributor of agricultural equipment and related replacement
 parts.  AGCO products are distributed in 140 countries.  AGCO offers a full
 product line including tractors, combines, hay tools, sprayers, forage
 equipment and implements through more than 7,750 independent dealers and
 distributors around the world.  AGCO products are distributed under the brand
 names AGCO(R)Allis, AGCOSTAR(R), Farmhand(R), FENDT(TM), Fieldstar(R),
 GLEANER(R), Glencoe(R), Hesston(R), Massey Ferguson(R), New Idea(R), Spra-
 Coupe(R), Tye(R), White Tractors, White Planters and Willmar(R).  AGCO
 provides retail financing through AGCO Finance in North America and through
 Agricredit in the United Kingdom, France, Germany, Ireland, Spain and Brazil.
 In 2000, AGCO had sales of $2.3 billion.
     Please visit our website at www.agcocorp.com .
 
 
                       AGCO CORPORATION AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in millions)
 
                                                     March 31,    December 31,
                                                       2001          2000
                                                    (Unaudited)
     ASSETS
     Current Assets:
       Cash and cash equivalents                         $5.4          $13.3
       Accounts and notes receivable, net               569.1          602.9
       Inventories, net                                 586.7          531.1
       Other current assets                              92.7           93.0
         Total current assets                         1,253.9        1,240.3
     Property, plant and equipment, net                 291.3          316.2
     Investment in affiliates                            87.3           85.3
     Other assets                                       190.2          176.0
     Intangible assets, net                             270.7          286.4
         Total assets                                $2,093.4       $2,104.2
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current Liabilities:
       Accounts payable                                $220.5         $244.4
       Accrued expenses                                 339.2          357.6
       Other current liabilities                         40.1           34.4
         Total current liabilities                      599.8          636.4
     Long-term debt                                     645.8          570.2
     Postretirement health care benefits                 27.6           27.5
     Other noncurrent liabilities                        77.6           80.2
         Total liabilities                            1,350.8        1,314.3
 
     Stockholders' Equity:
       Preferred stock                                    ---            ---
       Common stock                                       0.6            0.6
       Additional paid-in capital                       432.4          427.1
       Retained earnings                                616.6          622.9
       Unearned compensation                             (0.9)          (1.4)
       Accumulated other comprehensive income          (306.1)        (259.3)
         Total stockholders' equity                     742.6          789.9
         Total liabilities and stockholders' equity  $2,093.4       $2,104.2
 
     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)
 
                                                   Three Months Ended March 31,
                                                       2001           2000
 
     Net sales                                         $532.1         $534.8
     Cost of goods sold                                 449.6          457.7
       Gross profit                                      82.5           77.1
 
     Selling, general and administrative expenses        56.7           58.9
     Engineering expenses                                11.9           10.5
     Restructuring and other infrequent expenses          2.3            1.9
     Amortization of intangibles                          3.9            3.8
 
       Income from operations                             7.7            2.0
 
     Interest expense, net                               13.9           11.4
     Other expense, net                                   7.6           12.3
 
     Loss before income taxes and equity in net earnings
       of affiliates                                    (13.8)         (21.7)
 
     Income tax benefit                                  (5.2)          (8.7)
 
     Loss before equity in net earnings of affiliates    (8.6)         (13.0)
 
     Equity in net earnings of affiliates                 2.8            2.3
 
     Net loss                                           $(5.8)        $(10.7)
 
     Net loss per common share:
       Basic                                           $(0.10)        $(0.18)
       Diluted                                         $(0.10)        $(0.18)
 
     Weighted average number of common and common
        equivalent shares outstanding:
       Basic                                             59.3           58.9
       Diluted                                           59.3           58.9
 
     Dividends declared per common share                $0.01          $0.01
 
     See accompanying notes to condensed consolidated financial statements.
 
 
                       AGCO CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (unaudited and in millions)
 
                                                   Three Months Ended March 31,
                                                        2001           2000
     Cash flows from operating activities:
       Net loss                                         $(5.8)        $(10.7)
       Adjustments to reconcile net loss to net
        cash provided by (used in)operating activities:
         Depreciation and amortization                   12.6           13.7
         Amortization of intangibles                      3.9            3.8
         Amortization of unearned compensation            0.5            1.5
         Equity in net earnings of affiliates,
           net of cash received                          (2.1)          (2.3)
         Deferred income tax benefit                    (14.4)         (14.8)
         Changes in operating assets and liabilities,
          net of effects from purchase/sale of businesses:
           Accounts and notes receivable, net             0.8          142.2
           Inventories, net                             (77.9)         (46.5)
           Other current and noncurrent assets           (6.5)          (7.1)
           Accounts payable                              (3.5)          20.4
           Accrued expenses                              (3.9)         (16.0)
           Other current and noncurrent liabilities      (1.0)           8.0
            Total adjustments                           (91.5)         102.9
            Net cash provided by (used in)
             operating activities                       (97.3)          92.2
     Cash flows from investing activities:
         Purchase of property, plant and equipment       (4.5)          (7.5)
         Investment in unconsolidated affiliates         (0.5)          (1.2)
           Net cash used for investing activities        (5.0)          (8.7)
     Cash flows from financing activities:
         Proceeds from (repayments of)
          long-term debt, net                            89.3          (93.4)
         Proceeds from issuance of preferred stock        5.3            ---
         Dividends paid on common stock                  (0.6)          (0.6)
         Net cash provided by (used in)
          financing activities                           94.0          (94.0)
         Effect of exchange rate changes
          on cash and cash equivalents                    0.4            1.3
         Decrease in cash and cash equivalents           (7.9)          (9.2)
         Cash and cash equivalents, beginning of period  13.3           19.6
         Cash and cash equivalents, end of period        $5.4          $10.4
 
     See accompanying notes to condensed consolidated financial statements.
 
 
                       AGCO CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)
 
     1.    BASIS OF PRESENTATION
 
     The condensed consolidated financial statements of AGCO Corporation and
 subsidiaries (the "Company" or "AGCO") included herein have been prepared in
 accordance with generally accepted accounting principles for interim financial
 information and the rules and regulations of the Securities and Exchange
 Commission.  In the opinion of management, the accompanying unaudited
 condensed consolidated financial statements reflect all adjustments, which are
 of a normal recurring nature, necessary to present fairly the Company's
 financial position, results of operations and cash flows at the dates and for
 the periods presented.  These condensed consolidated financial statements
 should be read in conjunction with the Company's audited financial statements
 and notes thereto included in the Company's Annual Report on Form 10-K for the
 year ended December 31, 2000.  Interim results of operations are not
 necessarily indicative of results to be expected for the fiscal year.  Certain
 reclassifications of previously reported financial information were made to
 conform to the current presentation.
 
     2.    RESTRUCTURING AND OTHER INFREQUENT EXPENSES
 
     In 2000, the Company permanently closed its combine manufacturing facility
 in Independence, Missouri and its Lockney, Texas and Noetinger, Argentina
 manufacturing facilities.  In 1999, the Company permanently closed its
 Coldwater, Ohio manufacturing facility.  The majority of production in these
 facilities has been relocated to existing Company facilities or outsourced to
 third parties.
     In connection with these facility closures, the Company recorded
 restructuring and other infrequent expenses of $24.5 million in 1999, $24.9
 million in 2000 and $2.3 million in the first quarter of 2001.  The components
 of the restructuring and other infrequent expenses are summarized in the
 following table (in millions):
 
                                                                Reserve Balance
                       1999         2000         2001    Expenses  at March 31,
                      Expense      Expense      Expense  Incurred      2001
     Employee
      severance       $1.9         $6.9         $---         $7.2        $1.6
     Facility closure
      costs            7.7          5.4          ---         10.7         2.4
     Write-down of
      property plant
      and equipment,
      net of
      recoveries      14.9          1.3         (0.7)        15.5         ---
     Production
      transition costs ---         11.3          3.0         14.3         ---
                     $24.5        $24.9         $2.3        $47.7        $4.0
 
 
     3.    LONG-TERM DEBT
 
     Long-term debt consisted of the following at March 31, 2001 and December
 31, 2000 (in millions):
 
                                        March 31,  December 31,
                                          2001                   2000
 
   Revolving credit facility         $   390.4               $    314.2
   Senior subordinated notes             248.7                    248.6
   Other long-term debt                    6.7                      7.4
                                     $   645.8               $    570.2
 
     4.    INVENTORIES
 
     Inventories are valued at the lower of cost or market using the first-in,
 first-out method.  Market is net realizable value for finished goods and
 repair and replacement parts.  For work in process, production parts and raw
 materials, market is replacement cost.
 
     Inventory balances at March 31, 2001 and December 31, 2000 were as follows
 (in millions):
 
                                       March 31,         December 31,
                                         2001                2000
 
      Finished goods                $    258.0           $   233.0
      Repair and replacement parts       226.8               222.2
      Work in process, production parts
       and raw materials                 166.3               143.6
        Gross inventories                651.1               598.8
      Allowance for surplus and obsolete
       inventories                       (64.4)              (67.7)
        Inventories, net            $    586.7           $   531.1
 
     5.    SEGMENT REPORTING
 
     The Company has four geographic reportable segments: North America; South
 America; Europe/Africa/Middle East; and Asia/Pacific.  Each 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 segment are based on the location of the
 third-party customer.  All intercompany transactions between the segments have
 been eliminated.  The Company's selling, general and administrative expenses
 and engineering expenses are charged to each segment based on the region where
 the expenses are incurred.  As a result, the components of operating income
 for one segment may not be comparable to another segment.  Segment results for
 the three months ended March 31, 2001 and 2000 are as follows (in millions):
 
                      North      South    Europe/Africa     Asia/
                     America    America    Middle East     Pacific Consolidated
 
     2001
     Net sales      $150.6        $61.5       $296.9        $23.1      $532.1
     Income (loss)
      from
      operations     (12.3)         4.2         18.9          3.8        14.6
 
     2000
     Net sales      $140.7        $49.9       $318.5        $25.7      $534.8
     Income (loss)
      from
      operations     (11.4)        (0.5)        17.5          3.7         9.3
 
 
     A reconciliation from the segment information to the consolidated balances
 for income from operations is set forth below (in millions):
 
                                                    Three Months Ended
                                                         March 31,
                                                   2001               2000
     Segment income from operations              $ 14.6             $  9.3
     Restricted stock compensation expense         (0.7)              (1.6)
     Restructuring and other infrequent expenses   (2.3)              (1.9)
     Amortization of intangibles                   (3.9)              (3.8)
     Consolidated income from operations         $  7.7             $  2.0
 
     6.    ACCOUNTS RECEIVABLE SECURITIZATION
 
     During the first quarter ended March 31, 2001, the Company increased its
 funding under its U.S. securitization facility by $35.0 million.  The proceeds
 from this funding were used to reduce outstanding borrowings under the
 Company's existing revolving credit facility.  In conjunction with this
 funding, the Company recorded in the first quarter of 2001 an initial one-time
 $0.4 million loss, representing the difference between the current and future
 value of the receivables sold.
 
     7.    PREFERRED STOCK
 
     On March 23, 2001 the Company sold non-voting preferred shares, which are
 convertible into shares of AGCO common stock (1 preferred share per 1,000
 common shares), par value $0.01 per share, in a private placement with net
 proceeds of approximately $5.3 million.  The amount of the net proceeds
 exceeds the aggregate amount of common stock dividends in 2001, 2000 and 1999
 which were paid in violation of a restricted payments covenant contained in
 the Indenture governing the Company's 81/2% Senior Subordinated Notes due
 2006.
 
     8.    SUBSEQUENT EVENTS
 
     Recent Acquisition - Ag-Chem
 
     On April 16, 2001 the Company completed the acquisition of Ag-Chem
 Equipment Company, Inc. ("Ag-Chem"), a leading manufacturer and distributor of
 specialized off-road heavy equipment for agricultural and industrial
 applications.  Ag-Chem shareholders received total consideration of $247.2
 million consisting of 11,800,000 AGCO common shares and $147.5 million of
 cash.  The funding of the cash component of the purchase price was made
 through borrowings under the Company's existing revolving credit facility.
 
     Refinancings
 
     On April 17, 2001 the Company issued $250.0 million of 9 1/2% Senior Notes
 due 2008 (the "Senior Notes").  The Senior Notes are unsecured obligations of
 the Company and are redeemable at the option of the Company, in whole or in
 part, at any time on or after May 1, 2005 initially at 104.75% of their
 principal amount, plus accrued interest, declining to 100% of their principal
 amount plus accrued interest, on or after May 1, 2007.  The indenture also
 requires the Company to offer to repurchase the Senior Notes at 101% of their
 principal amount, plus accrued interest to the date of the repurchase in the
 event of a change in control.  The indenture governing the Senior Notes
 contains certain covenants that limit, among others, the Company's ability and
 that of its restricted subsidiaries to incur additional indebtedness; make
 "restricted payments" (including dividends); make certain investments;
 guarantee indebtedness; create liens; and sell assets.
     On April 17, 2001 the Company entered into a new revolving credit facility
 with Rabobank consisting of a $350.0 million multi-currency revolving credit
 facility that will mature October 2005.  The new revolving credit facility is
 secured by a majority of the Company's U.S., Canadian and U.K.-based assets
 and a pledge of the stock of the Company's domestic and material foreign
 subsidiaries.  Interest will accrue on borrowings outstanding under the new
 revolving credit facility, at the Company's option, at either (1) LIBOR plus a
 margin based on a ratio of the Company's senior debt to EBITDA, as adjusted,
 or (2) the administrative agent's base lending rate or the federal funds rate
 plus a margin ranging between .625% and 1.5%, whichever is higher.  The new
 revolving credit facility contains certain covenants, including covenants
 restricting the incurrence of indebtedness and the making of certain
 restrictive payments, including dividends.  In addition, the Company must
 maintain certain financial covenants including, among others, a total debt to
 EBITDA ratio, a senior debt to EBITDA ratio and a fixed charge coverage ratio,
 as defined.
     The initial proceeds of the Senior Notes and the new revolving credit
 facility were used to repay all borrowings outstanding under the existing
 revolving credit facility.
 
     New European Securitization Facility
     On April 17, 2001 the Company entered into a new $100.0 million
 securitization facility with Rabobank whereby certain European wholesale
 accounts receivable from the Company's operations in France, Germany and Spain
 will be sold to a third party on a revolving basis through a wholly-owned
 special purpose subsidiary.  The Company used the $100.0 million proceeds from
 the European securitization facility to reduce outstanding borrowings under
 its new revolving credit facility.
 
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SOURCE AGCO Corporation
    DULUTH, Ga., April 26 /PRNewswire/ -- AGCO Corporation (NYSE:   AG) a
 worldwide designer, manufacturer and distributor of agricultural equipment,
 today reported an improvement in its first quarter operating results.  AGCO
 reported a first quarter net loss, excluding restructuring expenses, of
 $0.07 per share versus a loss of $0.16 per share in 1999.  First quarter
 operating income, excluding restructuring expenses, improved to $10.0 million
 from $3.9 million in 2000.
     For the first quarter of 2001, the Company reported net sales of
 $532.1 million and a net loss, excluding restructuring expenses, of $4.3
 million, or $0.07 per share.  In addition, the Company recorded restructuring
 and other infrequent expenses of $2.3 million, or $0.02 per share, in the
 first quarter primarily related to the Company's North American facility
 rationalizations.  Including the restructuring expenses, the Company reported
 a net loss of $5.8 million, or $0.10 per share.  For the first quarter of
 2000, AGCO reported net sales of $534.8 million and a net loss, excluding
 restructuring expenses, of  $9.5 million, or $0.16 per share.  Including
 restructuring expenses of $1.9 million in 2000, the Company reported a first
 quarter net loss of $10.7 million, or $0.18 per share.
     AGCO's earnings improvement in the first quarter was the result of higher
 gross margins resulting from higher production and improved margins on new
 products.  The first quarter results for 2001 also included approximately $2.6
 million of expenses to obtain waivers from noteholders on the Company's 8.5%
 senior subordinated notes regarding the payment of dividends on the Company's
 common stock under a restricted payment covenant.  In addition, the Company
 incurred approximately $3.7 million of higher costs at AGCO's Hesston, Kansas
 manufacturing facility associated with the initial production of products
 relocated from closed facilities.  In 2000, the first quarter loss included an
 $8.0 million loss associated with the U.S. accounts receivable securitization
 facility completed in January 2000.
     "Our first quarter results continue to demonstrate our focus on cost
 reduction and margin improvement," stated John M. Shumejda, AGCO's President
 and Chief Executive Officer.  "Excluding the unusual items in both periods,
 our operations improved in all regions of the world despite difficult industry
 conditions in many regions.  We continue to focus on our goals of cost
 reduction and margin expansion through manufacturing facility rationalization,
 product resourcing, material cost reductions and other initiatives."
 
     Regional Market Results
     North America -- Industry retail unit sales of tractors in the first
 quarter increased approximately 8% over the prior year period with increases
 in all segments.  Industry retail unit sales of combines were 47% higher than
 the prior year in the seasonally low first quarter.  AGCO's retail sales of
 tractors in the first quarter were significantly higher than the prior year in
 all tractor segments.  AGCO's retail sales of combines were lower due to a
 delayed schedule of deliveries to contract harvesters compared to the prior
 year period.
      "Our strong tractor sales reflect favorable customer acceptance of our
 new and upgraded tractor lines," stated Mr. Shumejda.  "Although the market
 remains extremely competitive, we believe we are building momentum for a
 successful year while still improving margins."
 
     Western Europe -- Industry retail unit sales of tractors in Western Europe
 for the first quarter declined approximately 9% compared to 2000 with declines
 in most of the significant Western European markets.  AGCO's retail unit sales
 for the quarter also declined when compared to the prior year period.
     The Western European market is weaker than expected due to concerns over
 BSE and foot-and-mouth disease.  The near-term impact of these diseases is
 still uncertain and will be determined by the ultimate extent and severity of
 the outbreak in addition to the level of government compensation to be paid to
 farmers for the loss of livestock.  "We are monitoring the situation in Europe
 closely," stated Mr. Shumejda.  "While our sales have held up to date, we have
 chosen to reduce production in the second quarter to ensure our inventories
 remain on plan.  Our revised forecast for Western Europe is 5-10% below the
 prior year as a result of these issues."
 
     South America -- South American industry retail unit sales of tractors
 during the first quarter increased approximately 38% compared to 2000. The
 Brazilian market continued its strong growth and was partially offset by
 declines in Argentina and the other South American markets.  AGCO's South
 American retail sales increased significantly during the first quarter
 compared to the prior year period.
     "The Brazilian market continues to be strong due to full availability of
 the Brazilian government subsidized retail financing program, FINAME," stated
 Mr. Shumejda.  "AGCO has capitalized on these favorable conditions with a
 significant improvement in operating income.  Higher production volume and our
 cost reduction initiatives in South America have greatly improved margins and
 profitability."
 
     Rest of World Markets -- Outside of North America, Western Europe and
 South America, AGCO's net sales for the first quarter increased significantly
 over the prior year's first quarter particularly in the Middle Eastern
 markets.
 
     Ag-Chem Transition Underway
     On April 16, 2001, AGCO completed the acquisition of Ag-Chem Equipment
 Company, a leading manufacturer and distributor of self-propelled fertilizer
 and chemical sprayers for pre-emergent and post-emergent applications.  AGCO
 issued 11.8 million shares of AGCO common stock and paid approximately $147.5
 million in cash as consideration in the transaction.  Last week, the Company
 announced its plan to rationalize facilities in order to begin integrating the
 two businesses.  The Company announced it would consolidate AGCO's Willmar,
 Minnesota sprayer manufacturing plant and Ag-Chem's Benson, Minnesota
 manufacturing plant into the Ag-Chem Jackson, Minnesota manufacturing
 facility.  In addition, AGCO will close Ag-Chem's Minnetonka, Minnesota
 administrative offices and move all engineering and administrative functions
 to either the Jackson plant or AGCO's Duluth, GA headquarters.  "We are
 aggressively developing and implementing transition plans," stated Mr.
 Shumejda.  "The facility rationalizations will generate a portion of the
 targeted $30 million in synergies to be achieved over the next two years."
 
     Outlook
     As a result of uncertainty arising from BSE and foot-and-mouth disease,
 the Company has revised its outlook for Western Europe to decline between 5%
 to 10%.  The Company continues to expect industry retail demand in 2001 to be
 relatively flat in the other major markets of the world.
     Ag-Chem's net sales and income from operations are heavily concentrated in
 February, March and April of each year.  As a result of the mid-April closing
 date, AGCO's results for 2001 will not reflect Ag-Chem's seasonally strongest
 period.  While the Company is targeting to generate sufficient cost synergies
 to neutralize earnings for the balance of 2001, the additional common shares
 issued in the transaction are expected to reduce AGCO's net income per share
 by approximately $0.08 per share in 2001.  "Although the timing of the
 transaction negatively impacts our 2001 results, we are enthusiastic about the
 positive contribution that Ag-Chem will provide in 2002 and beyond," stated
 Mr. Shumejda.  In addition, the Company previously announced the closing of a
 $100 million European securitization facility in April 2001.  In connection
 with the closing, the Company expects to incur a one-time loss of
 approximately $3.5 million in the second quarter related to the initial
 funding of the facility.
     Consequently, the Company now anticipates its full year net income per
 share, excluding restructuring and other infrequent expenses, will be
 approximately 60% higher in 2001 than 2000.  In 2000, AGCO's net income per
 common share, excluding restructuring and other infrequent expenses, was
 $0.28 per share.
 
     Dividends Suspended
     As a result of a restricted payments covenant on its senior subordinated
 notes, the Company has suspended the payment of dividends until such time as
 it is able to meet the interest coverage ratio as prescribed in the notes
 indenture.
 
     Safe Harbor Statement
     Statements which are not historical facts, including cost reduction
 projections, production volume forecasts and industry demand outlook, are
 forward looking and subject to risks which could cause actual results to
 differ materially from those suggested by the statements.  Although the
 Company believes that the statements it has made are based on reasonable
 assumptions, they are based on current information and beliefs and,
 accordingly, the Company can give no assurance that its statements will be
 achieved.  The Company bases its outlook on key operating, economic and
 agricultural data which are subject to change including, but not limited to:
 farm cash income, worldwide demand for agricultural products, commodity
 prices, grain stock levels, weather, crop production, farmer debt levels,
 existing government programs and farm-related legislation.  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, the success of its facility
 rationalization process, production disruptions and changes in environmental,
 international trade and other laws which impact the way in which it conducts
 its business.  Further information concerning factors that could significantly
 affect the Company's results is included in the Company's filings with the
 Securities and Exchange Commission.  The Company disclaims any responsibility
 to update any forward-looking statements.
     AGCO Corporation, headquartered in Duluth, Georgia, is a global designer,
 manufacturer and distributor of agricultural equipment and related replacement
 parts.  AGCO products are distributed in 140 countries.  AGCO offers a full
 product line including tractors, combines, hay tools, sprayers, forage
 equipment and implements through more than 7,750 independent dealers and
 distributors around the world.  AGCO products are distributed under the brand
 names AGCO(R)Allis, AGCOSTAR(R), Farmhand(R), FENDT(TM), Fieldstar(R),
 GLEANER(R), Glencoe(R), Hesston(R), Massey Ferguson(R), New Idea(R), Spra-
 Coupe(R), Tye(R), White Tractors, White Planters and Willmar(R).  AGCO
 provides retail financing through AGCO Finance in North America and through
 Agricredit in the United Kingdom, France, Germany, Ireland, Spain and Brazil.
 In 2000, AGCO had sales of $2.3 billion.
     Please visit our website at www.agcocorp.com .
 
 
                       AGCO CORPORATION AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in millions)
 
                                                     March 31,    December 31,
                                                       2001          2000
                                                    (Unaudited)
     ASSETS
     Current Assets:
       Cash and cash equivalents                         $5.4          $13.3
       Accounts and notes receivable, net               569.1          602.9
       Inventories, net                                 586.7          531.1
       Other current assets                              92.7           93.0
         Total current assets                         1,253.9        1,240.3
     Property, plant and equipment, net                 291.3          316.2
     Investment in affiliates                            87.3           85.3
     Other assets                                       190.2          176.0
     Intangible assets, net                             270.7          286.4
         Total assets                                $2,093.4       $2,104.2
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current Liabilities:
       Accounts payable                                $220.5         $244.4
       Accrued expenses                                 339.2          357.6
       Other current liabilities                         40.1           34.4
         Total current liabilities                      599.8          636.4
     Long-term debt                                     645.8          570.2
     Postretirement health care benefits                 27.6           27.5
     Other noncurrent liabilities                        77.6           80.2
         Total liabilities                            1,350.8        1,314.3
 
     Stockholders' Equity:
       Preferred stock                                    ---            ---
       Common stock                                       0.6            0.6
       Additional paid-in capital                       432.4          427.1
       Retained earnings                                616.6          622.9
       Unearned compensation                             (0.9)          (1.4)
       Accumulated other comprehensive income          (306.1)        (259.3)
         Total stockholders' equity                     742.6          789.9
         Total liabilities and stockholders' equity  $2,093.4       $2,104.2
 
     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)
 
                                                   Three Months Ended March 31,
                                                       2001           2000
 
     Net sales                                         $532.1         $534.8
     Cost of goods sold                                 449.6          457.7
       Gross profit                                      82.5           77.1
 
     Selling, general and administrative expenses        56.7           58.9
     Engineering expenses                                11.9           10.5
     Restructuring and other infrequent expenses          2.3            1.9
     Amortization of intangibles                          3.9            3.8
 
       Income from operations                             7.7            2.0
 
     Interest expense, net                               13.9           11.4
     Other expense, net                                   7.6           12.3
 
     Loss before income taxes and equity in net earnings
       of affiliates                                    (13.8)         (21.7)
 
     Income tax benefit                                  (5.2)          (8.7)
 
     Loss before equity in net earnings of affiliates    (8.6)         (13.0)
 
     Equity in net earnings of affiliates                 2.8            2.3
 
     Net loss                                           $(5.8)        $(10.7)
 
     Net loss per common share:
       Basic                                           $(0.10)        $(0.18)
       Diluted                                         $(0.10)        $(0.18)
 
     Weighted average number of common and common
        equivalent shares outstanding:
       Basic                                             59.3           58.9
       Diluted                                           59.3           58.9
 
     Dividends declared per common share                $0.01          $0.01
 
     See accompanying notes to condensed consolidated financial statements.
 
 
                       AGCO CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (unaudited and in millions)
 
                                                   Three Months Ended March 31,
                                                        2001           2000
     Cash flows from operating activities:
       Net loss                                         $(5.8)        $(10.7)
       Adjustments to reconcile net loss to net
        cash provided by (used in)operating activities:
         Depreciation and amortization                   12.6           13.7
         Amortization of intangibles                      3.9            3.8
         Amortization of unearned compensation            0.5            1.5
         Equity in net earnings of affiliates,
           net of cash received                          (2.1)          (2.3)
         Deferred income tax benefit                    (14.4)         (14.8)
         Changes in operating assets and liabilities,
          net of effects from purchase/sale of businesses:
           Accounts and notes receivable, net             0.8          142.2
           Inventories, net                             (77.9)         (46.5)
           Other current and noncurrent assets           (6.5)          (7.1)
           Accounts payable                              (3.5)          20.4
           Accrued expenses                              (3.9)         (16.0)
           Other current and noncurrent liabilities      (1.0)           8.0
            Total adjustments                           (91.5)         102.9
            Net cash provided by (used in)
             operating activities                       (97.3)          92.2
     Cash flows from investing activities:
         Purchase of property, plant and equipment       (4.5)          (7.5)
         Investment in unconsolidated affiliates         (0.5)          (1.2)
           Net cash used for investing activities        (5.0)          (8.7)
     Cash flows from financing activities:
         Proceeds from (repayments of)
          long-term debt, net                            89.3          (93.4)
         Proceeds from issuance of preferred stock        5.3            ---
         Dividends paid on common stock                  (0.6)          (0.6)
         Net cash provided by (used in)
          financing activities                           94.0          (94.0)
         Effect of exchange rate changes
          on cash and cash equivalents                    0.4            1.3
         Decrease in cash and cash equivalents           (7.9)          (9.2)
         Cash and cash equivalents, beginning of period  13.3           19.6
         Cash and cash equivalents, end of period        $5.4          $10.4
 
     See accompanying notes to condensed consolidated financial statements.
 
 
                       AGCO CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)
 
     1.    BASIS OF PRESENTATION
 
     The condensed consolidated financial statements of AGCO Corporation and
 subsidiaries (the "Company" or "AGCO") included herein have been prepared in
 accordance with generally accepted accounting principles for interim financial
 information and the rules and regulations of the Securities and Exchange
 Commission.  In the opinion of management, the accompanying unaudited
 condensed consolidated financial statements reflect all adjustments, which are
 of a normal recurring nature, necessary to present fairly the Company's
 financial position, results of operations and cash flows at the dates and for
 the periods presented.  These condensed consolidated financial statements
 should be read in conjunction with the Company's audited financial statements
 and notes thereto included in the Company's Annual Report on Form 10-K for the
 year ended December 31, 2000.  Interim results of operations are not
 necessarily indicative of results to be expected for the fiscal year.  Certain
 reclassifications of previously reported financial information were made to
 conform to the current presentation.
 
     2.    RESTRUCTURING AND OTHER INFREQUENT EXPENSES
 
     In 2000, the Company permanently closed its combine manufacturing facility
 in Independence, Missouri and its Lockney, Texas and Noetinger, Argentina
 manufacturing facilities.  In 1999, the Company permanently closed its
 Coldwater, Ohio manufacturing facility.  The majority of production in these
 facilities has been relocated to existing Company facilities or outsourced to
 third parties.
     In connection with these facility closures, the Company recorded
 restructuring and other infrequent expenses of $24.5 million in 1999, $24.9
 million in 2000 and $2.3 million in the first quarter of 2001.  The components
 of the restructuring and other infrequent expenses are summarized in the
 following table (in millions):
 
                                                                Reserve Balance
                       1999         2000         2001    Expenses  at March 31,
                      Expense      Expense      Expense  Incurred      2001
     Employee
      severance       $1.9         $6.9         $---         $7.2        $1.6
     Facility closure
      costs            7.7          5.4          ---         10.7         2.4
     Write-down of
      property plant
      and equipment,
      net of
      recoveries      14.9          1.3         (0.7)        15.5         ---
     Production
      transition costs ---         11.3          3.0         14.3         ---
                     $24.5        $24.9         $2.3        $47.7        $4.0
 
 
     3.    LONG-TERM DEBT
 
     Long-term debt consisted of the following at March 31, 2001 and December
 31, 2000 (in millions):
 
                                        March 31,  December 31,
                                          2001                   2000
 
   Revolving credit facility         $   390.4               $    314.2
   Senior subordinated notes             248.7                    248.6
   Other long-term debt                    6.7                      7.4
                                     $   645.8               $    570.2
 
     4.    INVENTORIES
 
     Inventories are valued at the lower of cost or market using the first-in,
 first-out method.  Market is net realizable value for finished goods and
 repair and replacement parts.  For work in process, production parts and raw
 materials, market is replacement cost.
 
     Inventory balances at March 31, 2001 and December 31, 2000 were as follows
 (in millions):
 
                                       March 31,         December 31,
                                         2001                2000
 
      Finished goods                $    258.0           $   233.0
      Repair and replacement parts       226.8               222.2
      Work in process, production parts
       and raw materials                 166.3               143.6
        Gross inventories                651.1               598.8
      Allowance for surplus and obsolete
       inventories                       (64.4)              (67.7)
        Inventories, net            $    586.7           $   531.1
 
     5.    SEGMENT REPORTING
 
     The Company has four geographic reportable segments: North America; South
 America; Europe/Africa/Middle East; and Asia/Pacific.  Each 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 segment are based on the location of the
 third-party customer.  All intercompany transactions between the segments have
 been eliminated.  The Company's selling, general and administrative expenses
 and engineering expenses are charged to each segment based on the region where
 the expenses are incurred.  As a result, the components of operating income
 for one segment may not be comparable to another segment.  Segment results for
 the three months ended March 31, 2001 and 2000 are as follows (in millions):
 
                      North      South    Europe/Africa     Asia/
                     America    America    Middle East     Pacific Consolidated
 
     2001
     Net sales      $150.6        $61.5       $296.9        $23.1      $532.1
     Income (loss)
      from
      operations     (12.3)         4.2         18.9          3.8        14.6
 
     2000
     Net sales      $140.7        $49.9       $318.5        $25.7      $534.8
     Income (loss)
      from
      operations     (11.4)        (0.5)        17.5          3.7         9.3
 
 
     A reconciliation from the segment information to the consolidated balances
 for income from operations is set forth below (in millions):
 
                                                    Three Months Ended
                                                         March 31,
                                                   2001               2000
     Segment income from operations              $ 14.6             $  9.3
     Restricted stock compensation expense         (0.7)              (1.6)
     Restructuring and other infrequent expenses   (2.3)              (1.9)
     Amortization of intangibles                   (3.9)              (3.8)
     Consolidated income from operations         $  7.7             $  2.0
 
     6.    ACCOUNTS RECEIVABLE SECURITIZATION
 
     During the first quarter ended March 31, 2001, the Company increased its
 funding under its U.S. securitization facility by $35.0 million.  The proceeds
 from this funding were used to reduce outstanding borrowings under the
 Company's existing revolving credit facility.  In conjunction with this
 funding, the Company recorded in the first quarter of 2001 an initial one-time
 $0.4 million loss, representing the difference between the current and future
 value of the receivables sold.
 
     7.    PREFERRED STOCK
 
     On March 23, 2001 the Company sold non-voting preferred shares, which are
 convertible into shares of AGCO common stock (1 preferred share per 1,000
 common shares), par value $0.01 per share, in a private placement with net
 proceeds of approximately $5.3 million.  The amount of the net proceeds
 exceeds the aggregate amount of common stock dividends in 2001, 2000 and 1999
 which were paid in violation of a restricted payments covenant contained in
 the Indenture governing the Company's 81/2% Senior Subordinated Notes due
 2006.
 
     8.    SUBSEQUENT EVENTS
 
     Recent Acquisition - Ag-Chem
 
     On April 16, 2001 the Company completed the acquisition of Ag-Chem
 Equipment Company, Inc. ("Ag-Chem"), a leading manufacturer and distributor of
 specialized off-road heavy equipment for agricultural and industrial
 applications.  Ag-Chem shareholders received total consideration of $247.2
 million consisting of 11,800,000 AGCO common shares and $147.5 million of
 cash.  The funding of the cash component of the purchase price was made
 through borrowings under the Company's existing revolving credit facility.
 
     Refinancings
 
     On April 17, 2001 the Company issued $250.0 million of 9 1/2% Senior Notes
 due 2008 (the "Senior Notes").  The Senior Notes are unsecured obligations of
 the Company and are redeemable at the option of the Company, in whole or in
 part, at any time on or after May 1, 2005 initially at 104.75% of their
 principal amount, plus accrued interest, declining to 100% of their principal
 amount plus accrued interest, on or after May 1, 2007.  The indenture also
 requires the Company to offer to repurchase the Senior Notes at 101% of their
 principal amount, plus accrued interest to the date of the repurchase in the
 event of a change in control.  The indenture governing the Senior Notes
 contains certain covenants that limit, among others, the Company's ability and
 that of its restricted subsidiaries to incur additional indebtedness; make
 "restricted payments" (including dividends); make certain investments;
 guarantee indebtedness; create liens; and sell assets.
     On April 17, 2001 the Company entered into a new revolving credit facility
 with Rabobank consisting of a $350.0 million multi-currency revolving credit
 facility that will mature October 2005.  The new revolving credit facility is
 secured by a majority of the Company's U.S., Canadian and U.K.-based assets
 and a pledge of the stock of the Company's domestic and material foreign
 subsidiaries.  Interest will accrue on borrowings outstanding under the new
 revolving credit facility, at the Company's option, at either (1) LIBOR plus a
 margin based on a ratio of the Company's senior debt to EBITDA, as adjusted,
 or (2) the administrative agent's base lending rate or the federal funds rate
 plus a margin ranging between .625% and 1.5%, whichever is higher.  The new
 revolving credit facility contains certain covenants, including covenants
 restricting the incurrence of indebtedness and the making of certain
 restrictive payments, including dividends.  In addition, the Company must
 maintain certain financial covenants including, among others, a total debt to
 EBITDA ratio, a senior debt to EBITDA ratio and a fixed charge coverage ratio,
 as defined.
     The initial proceeds of the Senior Notes and the new revolving credit
 facility were used to repay all borrowings outstanding under the existing
 revolving credit facility.
 
     New European Securitization Facility
     On April 17, 2001 the Company entered into a new $100.0 million
 securitization facility with Rabobank whereby certain European wholesale
 accounts receivable from the Company's operations in France, Germany and Spain
 will be sold to a third party on a revolving basis through a wholly-owned
 special purpose subsidiary.  The Company used the $100.0 million proceeds from
 the European securitization facility to reduce outstanding borrowings under
 its new revolving credit facility.
 
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 SOURCE  AGCO Corporation