DULUTH, Ga. -- AGCO Corp. reported a net loss of $1.41 per share for the fourth quarter of 2006. The fourth quarter 2006 results reflect a non-cash goodwill impairment charge of approximately $171.4 million associated with the company's sprayer business.



Adjusted net income, which excludes restructuring and other infrequent expenses and the non-cash goodwill impairment charge, was $0.41 per share for the fourth quarter of 2006. For the fourth quarter of 2005, AGCO reported a net loss of $0.71 per share and adjusted net income of $0.30 per share.



Net sales for the fourth quarter of 2006 were $1.6 billion, an increase of approximately 18% compared to the same period in 2005.



For the full year, the Company reported a net loss of $0.71 per share. Adjusted net income, which excludes restructuring and other infrequent expenses and the non-cash goodwill impairment charge, was $1.12 per share for the full year of 2006. Net income for the full year of 2005 was $0.35 per share. Adjusted net income, which excludes restructuring and other infrequent income, costs associated with a June 2005 bond redemption, and a non-cash deferred income tax adjustment, was $1.46 per share for the full year of 2005. Net sales for the full year of 2006 were $5.4 billion, which were slightly below the prior year.



"AGCO delivered record free cash flow in 2006," stated Martin Richenhagen, chairman, president and CEO. "Our working capital focus throughout the year resulted in free cash flow of over $300 million and enabled us to further strengthen our balance sheet. During 2006, we reduced our net debt to capital ratio from 30% to 20% and lowered our net debt by approximately $244 million. Working capital management will continue to be a major focus in 2007."



"Our respected brands, high performance products, and strong dealer networks contributed towards delivering record sales and operating income in the fourth quarter and the full year in our Europe/Africa/Middle East region," continued Mr. Richenhagen. "AGCO succeeded in growing its business in Europe by delivering technology-based solutions to our customers. Sales during 2006 for this segment exceeded $3 billion for the first time, growing approximately 10%, excluding the benefits of currency translation."



Outlook



Worldwide industry retail sales of farm equipment in 2007 is expected to be flat compared to 2006 levels. In North America, 2007 farm income is projected to be modestly higher, but continued uncertainty surrounding the renewal of the farm bill is expected to keep industry retail sales flat compared to 2006. In South America, the income of soybean farmers is expected to improve; however high farmer debt levels are expected to continue to pressure investment in farm equipment. Consequently, industry sales in South America are forecasted to be flat compared to 2006. In Europe, continued expansion in Eastern Europe is expected to offset a slight reduction in sales in Western Europe.



AGCO's net sales for the full year of 2007 are expected to increase between 3% and 5% compared to 2006 due to pricing, market share improvement, growth in Eastern Europe and the impact of currency translation. AGCO is targeting full year earnings per share of approximately $1.30 per share. In 2007, strategic investments in the form of increased engineering expense, plant restructurings, a European information system initiative, new market development and distribution improvements are expected to limit operating margin improvement.



For the first quarter of 2007, net income is expected to be breakeven to a slight loss. A weaker sales mix caused by the timing of new product releases and supplier constraints, as well as increased engineering spending and the other strategic projects highlighted above, are expected to reduce operating margins and operating income below 2006 levels.



Founded in 1990, AGCO Corporation is a global manufacturer of agricultural equipment and related replacement parts. AGCO offers a full product line including tractors, combines, hay tools, sprayers, forage, tillage equipment and implements, which are distributed through more than 3,600 independent dealers and distributors in more than 140 countries worldwide. The company is headquartered in Duluth, Ga., and in 2006 had net sales of $5.4 billion.



SOURCE: AGCO Corp. via Business Wire.