SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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: 0-25360
AG-CHEM EQUIPMENT CO., INC.
(Exact Name of Registrant as Specified in Its Charter)
Minnesota 41-0872842
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5720 Smetana Drive
Minnetonka, Minnesota 55343-9688
(Address of Principal Executive Offices)
(612)933-9006
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 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 of
the past 90 days.
___X___ Yes _____ No
As of April 30, 1997, there were outstanding, 9,680,268 shares of the
issuers' Common Stock, $.01 par value per share.
TABLE OF CONTENTS
Page
PART I
ITEM 1. FINANCIAL STATEMENTS.......................................... 2
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS............................................... 8
PART II
ITEM 1. LEGAL PROCEEDINGS............................................ 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................. 12
SIGNATURES ............................................................. 13
EXHIBITS ............................................................. 14
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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<CAPTION>
CONSOLIDATED BALANCE SHEETS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars in Thousands)
(UNAUDITED)
- --------------------------------------------------------------------------------------
March 31, September 30,
ASSETS 1997 1996
--------- ------------
<S> <C> <C>
CURRENT ASSETS:
Accounts receivable, less allowance for
doubtful accounts of $449 and $393, respectively $ 36,079 $ 22,901
Notes receivable, current portion, and
accrued interest receivable 2,014 2,442
Inventories (note 2) 88,494 102,311
Deferred income tax benefits 4,667 4,531
Prepaid expenses and other current assets 460 570
-------- --------
Total current assets 131,714 132,755
PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED
DEPRECIATION OF $26,264 AND $23,439, RESPECTIVELY 46,372 42,697
OTHER ASSETS:
Notes receivable, long-term portion 4,067 4,995
Bond funds held by trustees 748 744
Intangible and other assets, net of accumulated
amortization of $2,102 and $3,463, respectively 4,007 4,368
-------- --------
Total other assets 8,822 10,107
-------- --------
Total assets $186,908 $185,559
======== ========
SEE ACCOMPANYING CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars in Thousands)
(UNAUDITED)
- ------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, September 30,
1997 1996
-------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Current installments of long-term debt $ 4,643 $ 5,165
Note payable to banks 20,300 40,000
Accounts payable 18,191 12,645
Checks outstanding in excess of cash balances 1,209 293
Customer prepayments 14,272 6,036
Accrued expenses (note 3) 18,547 18,186
Deferred income 1,500 389
Accrued income taxes 5,008 2,168
-------- --------
Total current liabilities 83,760 84,882
LONG-TERM DEBT, LESS CURRENT INSTALLMENTS 36,316 43,334
-------- --------
Total liabilities 119,986 128,216
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value
Authorized, 40,000,000 shares; issued and
outstanding, 9,690,768 and 9,695,768 shares, respectively 97 97
Additional paid in capital 2,699 2,699
Retained earnings 63,693 54,512
Foreign currency translation adjustment 433 35
-------- --------
Total stockholders' equity 66,922 57,343
-------- --------
Total liabilities and stockholders' equity $186,908 $185,559
======== ========
SEE ACCOMPANYING CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars in Thousands Except Per Share Amounts)
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------
Three Months Ended March 31, Six Months Ended March 31,
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 130,618 $ 101,385 $ 186,908 $ 146,336
Cost of sales 95,846 72,876 134,997 104,201
--------- --------- --------- ---------
Gross profit 34,772 28,509 51,911 42,135
Selling, general and administrative
expenses 20,149 17,323 34,786 29,685
--------- --------- --------- ---------
Operating income 14,623 11,186 17,125 12,450
Other income (expense):
Other income 765 508 1,628 1,038
Interest expense (1,541) (1,339) (3,272) (2,574)
--------- --------- --------- ---------
Earnings before income taxes 13,847 10,355 15,481 10,914
Income tax expense 5,560 4,000 6,200 4,200
--------- --------- --------- ---------
Net earnings $ 8,287 $ 6,355 $ 9,281 $ 6,714
========= ========= ========= =========
Earnings per share $ 0.86 $ 0.66 $ 0.96 $ 0.70
========= ========= ========= =========
Weighted average common shares
outstanding 9,691 9,696 9,694 9,648
========= ========= ========= =========
SEE ACCOMPANYING CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars In Thousands)
(UNAUDITED)
- ---------------------------------------------------------------------------------
Six Months ended March 31,
-------------------------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 9,281 $ 6,714
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Depreciation and amortization 3,557 2,446
Loss (Gain) on sale of assets 140 (13)
Increase in deferred income tax benefits (136) (930)
Changes in operating assets and liabilities:
Accounts receivable (13,178) (6,589)
Operating notes receivable 1,356 3,404
Inventories 13,817 (28,543)
Other current assets 110 37
Accounts payable 5,546 6,222
Customer prepayments and deferred income 9,347 5,624
Accrued expenses 361 (1,101)
Income taxes 2,840 2,184
-------- --------
Cash provided by (used in) operating activities 33,041 (10,545)
CASH FLOWS FROM INVESTING ACTIVITIES:
Retirement of short-term investments
for industrial revenue bond (4) (4)
Purchase of property, plant and equipment (3,323) (8,216)
Increase in rental equipment (3,512) (2,022)
Proceeds from sale of equipment 8 13
Increase in other assets (584) (546)
-------- --------
Cash used in investing activities (7,415) (10,775)
(CONTINUED ON NEXT PAGE)
SEE ACCOMPANYING CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars In Thousands)
(UNAUDITED)
- --------------------------------------------------------------------------------------
Six months ended March 31,
--------------------------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in checks outstanding in excess of
cash balances 916 (680)
Proceeds from notes payable - banks 14,845 --
Repayments of notes payable - banks (34,545) --
Proceeds from long-term borrowings 50,580 33,462
Repayments of long-term borrowings (57,720) (11,435)
Purchase of common stock (100) --
-------- --------
Cash (used in) provided by financing activities (26,024) 21,347
Foreign currency translation adjustment 398 (27)
-------- --------
Change in cash -- --
Cash at beginning of period -- --
-------- --------
Cash at end of period $ -- $ --
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 3,272 $ 1,567
Income taxes $ 3,530 $ 3,826
Supplemental disclosure of non-cash investing and financing activities:
On December 27, 1995, the Company acquired the minority interest in Soil Teq
Inc. for 100,000 shares of the Company's common stock valued at $2,700 and a
$480 promissory note. As a result, the Company owns 100% of Soil Teq Inc.
SEE ACCOMPANYING CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars In Thousands)
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions in Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. For further
information, refer to the consolidated financial statements and footnotes
thereto for the year ended September 30, 1996 included in the Company's annual
report on Form 10-K. Results of the interim periods are not necessarily
indicative of the results for an entire year.
(2) INVENTORIES
Inventories consist of the following:
March 31, September 30,
1997 1996
--------- ------------
Finished goods $ 37,476 $ 57,248
Resale parts 22,385 17,909
Work in process 7,142 11,195
Raw materials 25,314 21,147
--------- ---------
Total 92,317 107,499
Less LIFO reserve (12,207) (11,480)
--------- ---------
Total 80,110 96,019
Used equipment 8,384 6,292
--------- ---------
Total inventories $ 88,494 $ 102,311
========= =========
If the first in, first out (FIFO) method utilizing current costs had been
used for inventories valued using the LIFO method, inventories would have been
higher by $12,207 at March 31, 1997 and $11,480 at September 30, 1996.
(3) ACCRUED EXPENSES
Accrued expenses consist of the following:
March 31, September 30,
1997 1996
-------- ------------
Compensation $10,458 $10,839
Warranty 1,209 1,132
Taxes other than income 2,359 1,898
Health insurance 1,201 1,464
Interest 1,426 1,716
Other 1,894 1,137
------- -------
Total $18,547 $18,186
======= =======
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(DOLLARS IN THOUSANDS)
RESULTS OF OPERATIONS - THREE-MONTH PERIOD ENDED MARCH 31, 1997 COMPARED TO
THREE-MONTH PERIOD ENDED MARCH 31, 1996
Consolidated net sales increased by $29,233 or 28.8 percent in the
three-month period ended March 31, 1997 from the three-month period ended March
31, 1996. The increase was primarily the result of an increase in post-emergence
and pre-emergence fertilization equipment sales due to increased unit shipments,
rather than pricing changes. The increased unit shipments were largely due to
more orders and faster configuration of custom orders. Sales of the Company's
line of post-emergence equipment line grew by 34.5 percent during the
three-month period ended March 31, 1997. During the same period, sales of
pre-emergence equipment grew by 24.7 percent. As a result, sales of
post-emergence equipment increased from 33.4 percent of total revenues during
the three-month period ended March 31, 1996 to 34.8 percent of total revenues
during the three-month period ended March 31, 1997. The Company expects sales of
its post-emergence equipment to continue to increase at a faster rate than sales
of its other product lines primarily because the market for post-emergence
equipment is a new, rapidly growing market and because the Company holds a
smaller market share than held by the Company's products in the pre-emergence
equipment market.
Consolidated gross profit for the three-month period ended March 31,
1997 increased $6,263 or 22.0 percent as compared to the prior-year period.
Consolidated gross profit as a percent of net sales was 26.6 percent and 28.1
percent for the three-month periods ended March 31, 1997 and 1996, respectively.
The primary reason for the lower margin percentage was special discounts given
on the Company's carry-over of 1996 models in an effort to reduce inventory
balances. The Company does not expect the decline in margin as a percentage of
sales to be a continuing trend. Also, fixed costs, as a percentage of total
product costs, increased as a result of plant expansions in Jackson and Benson
Minnesota. These negative factors were partially offset by operating
efficiencies.
Consolidated selling, general and administrative ("S,G&A") expenses
increased $2,826 or 16.3 percent in the three-month period ended March 31, 1997
as compared to the prior-year period. This increase is largely attributed to a
23.2 percent or $2,260 increase in compensation, employee benefits and
employee-related expenses resulting from an increase in the number of employees
to support the Company's sales growth. All other S,G&A expenses increased by 7.4
percent or $566. S,G&A expenses as a percent of net sales were 15.4 percent and
17.1 percent in the three-month periods ended March 31, 1997 and 1996,
respectively. In the prior year, S,G,&A expenses were increased in order to
support anticipated sales growth and new product development. During such
period, sales did not increase as rapidly as anticipated. This resulted in
S,G,&A expenses representing a higher percentage of sales in the prior year
period on an annual basis. The Company expects S,G,&A expenses to remain at
approximately the same percentage of sales as previous periods.
As a result of the above, operating income was $14,623 and $11,186 in
the three-month periods ended March 31, 1997 and 1996, respectively.
Other income increased 50.6 percent to $765 in the current three-month
period as compared to the prior year three-month period. The increase was due to
improved earnings from the Company's commercial rental property.
Interest expense increased 15.1 percent to $1,541 in the current
three-month period ended as compared to the prior year period due to increased
borrowings to support the Company's working capital requirements. Base interest
rates were relatively stable and changes in such rates had a minimal effect on
interest expense. The Company expects interest expense to decrease due to net
repayments of notes payable.
The effective tax rate in the three-month periods ended March 31, 1997
and 1996 was 40.2 percent and 38.6 percent, respectively. The increase in the
effective tax rate was primarily the result of non-deductible losses incurred by
the Company's Dutch subsidiary.
As a result of the above, net earnings were $8,287 and $6,355 in the
three-month periods ended March 31, 1997 and 1996, respectively. Earnings per
share were $.86 and $.66 for the three-month periods ended March 31, 1997 and
1996, respectively.
RESULTS OF OPERATIONS - SIX-MONTH PERIOD ENDED MARCH 31, 1997 COMPARED TO
SIX-MONTH PERIOD ENDED MARCH 31, 1996
Consolidated net sales increased by $40,572 or 27.7 percent in the
six-month period ended March 31, 1997 from the six-month period ended March 31,
1996. The increase was primarily the result of an increase in post-emergence and
pre-emergence fertilization equipment sales due to increased unit shipments,
rather than pricing changes. The increased unit shipments were largely due to
more orders and faster configuration of custom orders. Sales of the Company's
line of post-emergence equipment line grew by 33.5 percent during the six-month
period ended March 31, 1997. During the same period, sales of pre-emergence
equipment grew by 23.5 percent. As a result, sales of post-emergence equipment
increased from 31.4 percent of total revenues during the six-month period ended
March 31, 1996 to 32.9 percent of total revenues during the six-month period
ended March 31, 1997. The Company expects sales of its post-emergence equipment
to continue to increase at a faster rate than sales of its other product lines
primarily because the market for post-emergence equipment is a new, rapidly
growing market and because the Company holds a smaller market share than held by
the Company's products in the pre-emergence equipment market.
Consolidated gross profit for the six-month period ended March 31, 1997
increased $9,776 or 23.2 percent as compared to the prior-year period.
Consolidated gross profit as a percent of net sales was 27.8 percent and 28.8
percent for the six-month periods ended March 31, 1997 and 1996, respectively.
The primary reason for the lower margin percentage was special discounts given
on the Company's carry-over of 1996 models in an effort to reduce inventory
balances. The Company does not expect the decline in margin as a percentage of
sales to be a continuing trend. Also, fixed costs, as a percentage of total
product costs, increased as a result of the plant expansions. These negative
factors were partially offset by operating efficiencies.
Consolidated sales, general and administrative ("S,G&A") expenses
increased $5,101 or 17.2 percent in the six-month period ended March 31, 1997 as
compared to the prior-year period. This increase is largely attributed to a 21.7
percent or $3,643 increase in compensation, employee benefits and
employee-related expenses resulting from an increase in the number of employees
to support the Company's sales growth and new product development. All other
S,G&A expenses increased by 11.3 percent or $1,458. Of the overall increase in
S,G,&A expenses, costs to support the Company's sales growth increased $4,533 or
17.0 percent, and costs to support product development increased $568 or 18.4
percent. S,G&A expenses as a percent of net sales was 18.6 percent and 20.3
percent in the six-month periods ended March 31, 1997 and 1996, respectively. In
the prior year, S,G,&A expenses were increased in order to support anticipated
sales growth and new product development. During such period, sales did not
increase as rapidly as anticipated. This resulted in S,G,&A expenses
representing a higher percentage of sales in the prior year period. The Company
expects S,G,&A expenses to remain at approximately the same percentage of sales
as prior periods.
As a result of the above, operating income was $17,125 and $12,450 in
the six-month periods ended March 31, 1997 and 1996, respectively.
Other income increased 56.8 percent to $1,628 in the current six-month
period as compared to the prior year six-month period. The increase was due to
improved earnings from the Company's commercial rental property.
Interest expense increased 27.1 percent to $3,272 in the current
six-month period ended as compared to the prior year period due to increased
borrowings to support the Company's working capital requirements. Base interest
rates were relatively stable and changes in such rates had a minimal effect on
interest expense. The Company expects interest expense to decrease due to net
repayments of notes payable.
The effective tax rate in the six-month periods ended March 31, 1997
and 1996 was 40.0 percent and 38.5 percent, respectively. The increase in the
effective tax rate was primarily the result of losses incurred by the Company's
Dutch subsidiary which are not tax-effected and additional non-deductible
goodwill amortization related to the Soil Teq acquisition in December 1995.
As a result of the above, net earnings were $9,281 and $6,714 in the
six-month periods ended March 31, 1997 and 1996, respectively. Earnings per
share were $.96 and $.70 for the six-month periods ended March 31, 1997 and
1996, respectively.
LIQUIDITY AND FINANCIAL POSITION - SIX MONTH PERIOD ENDED MARCH 31, 1997
COMPARED TO SIX-MONTH PERIOD ENDED MARCH 31, 1996
Net cash provided by operating activities increased to $33,135 in the
six-month period ended March 31, 1997, compared to net cash used in operating
activities of $10,545 in the six-month period ended March 31, 1996. The major
reason for this change was an increase in cash provided by operating assets and
liabilities to $20,199 in the six-month period ended March 31, 1997 from cash
used in operating assets and liabilities of $18,762 in the prior year period.
Inventories, together with increased accounts payable balances provided cash of
$19,363 compared to cash used of $23,321 during the six months ended March 31,
1997 and 1996, respectively. Inventories decreased to $88,494 at March 31, 1997
as compared to $102,311 at September 30, 1996. This decrease was the result of
increased shipments to fill orders received during the first and secord quarters
of the fiscal year. The Company normally experiences the highest sales levels in
the second quarter of the fiscal year. Customer prepayments increased $9,347 in
the six months ended March 31, 1997 compared to an increase of $5,624 in the six
months ended March 31, 1996. The larger increase in prepayments was primarily
the result of more orders than the prior-year. The increase in cash provided was
partially offset by an increase in accounts receivable of $13,178 during the six
months ended March 31, 1997, compared to an increase of $6,589 during the prior
year period. The Company expects cash will continue to be provided by operating
activities through net earnings, and this cash will be used to satisfy the
current portion of long-term debt.
Account receivable turnover has remained relatively stable in recent
periods, and has not significantly affected liquidity. Inventory turnover
improved in 1997, primarily because of a build-up of inventory balances in the
prior year in anticipation of demand. Actual demand was less than expected,
resulting in higher debt levels to support working capital requirements at March
31, 1996.
Cash used in investing activities in the six-month period ended March
31, 1997 was $7,415 compared to $10,775 in the prior-year period. This decreased
use of cash was primarily due to prior-year investments in property, plant and
equipment to support the Company's growth. In the six-month period ended March
31, 1997 property, plant and equipment increased by $3,323 compared to an
increase of $8,216 in the six-month period ended March 31, 1996.
Cash used in financing activities was $26,024 in the six-month period
ended March 31, 1997, compared to cash provided of $21,347 in the prior period.
The increase in cash used in financing activities was primarily the result of
the net repayments of notes payable of $19,700 during the six month period ended
March 31, 1997. Additionally, net repayments of long term borrowings were $7,140
during the six month period ended March 31, 1997, compared to net borrowings of
$22,027 during the six month period ended March 31, 1996. This increase in net
repayments is primarily due to decreased working capital requirements that
resulted from increased sales, reduced production and completion of the of the
Company's plant expansions in Jackson and Benson, Minnesota.
Working capital at March 31, 1997 was $48.0 million. As of March 31,
1997 the Company had $44.7 million of unused credit line available. The Company
periodically receives prepayments from customers to secure either more favorable
pricing or a desired delivery date. If the Company did not receive customer
prepayments, it believes its line of credit provides sufficient liquidity to
meet working capital requirements.
The terms of the Company's amended credit line agreement include
covenants that the Company must maintain. There are a number of standard
affirmative covenants, as well as restrictive negative covenants as to
additional borrowings and requirements for the Company to maintain certain
financial ratios. These restrictive covenants include a minimum tangible net
worth of $35 million plus 75 percent of each fiscal year's net earnings, a ratio
of total liabilities to tangible net worth, and an interest coverage ratio.
There are additional limitations on mergers, acquisitions, disposal of assets,
and capital expenditures. The Company does not anticipate any difficulty in
meeting these covenants.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1996 on file with the Securities and Exchange
Commission. During the quarter ended March 31, 1997, the Company was not a party
to any newly initiated material legal proceedings and there have been no
material developments during such period to existing legal proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
See the index to exhibits immediately preceding the exhibits filed with
this report.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which
this report was filed.
SIGNATURES
Pursuant to the requirements 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.
AG-CHEM EQUIPMENT CO., INC.
Date: May 9, 1997 By: /s/ Alvin E. McQuinn
-------------------------------
Alvin E. McQuinn
Its: Chief Executive Officer
Date: May 9, 1997 By: /s/ John C. Retherford
-------------------------------
John C. Retherford
Its: Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Title Page
----------- ----- ----
10.1 Third Amendment to $25,000,000 Long Term Amended and
Restated Revolving Credit Agreement among Ag-Chem
Equipment Co., Inc., NBD Bank, as Lender and Agent,
National City Bank of Minneapolis, as Lender, and Harris
Trust and Savings Bank, as Lender, dated January 1, 1997
10.2 First Amendment to $40,000,000 Short Term Revolving
Credit Agreement among Ag-Chem Equipment Co., Inc., NBD
Bank, as Lender and Agent, National City Bank of
Minneapolis, as Lender, and Harris Trust and Savings
Bank, as Lender, dated January 1, 1997
10.3 Guaranty (Short-Term) of Ag-Chem Sales Co., Inc., dated
January 1, 1997
10.4 Guaranty (Long-Term) of Ag-Chem Sales Co., Inc., dated
January 1, 1997
11.1 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule
Exhibit 10.1
THIRD AMENDMENT TO LONG TERM AMENDED
AND RESTATED REVOLVING CREDIT AGREEMENT
This Third Amendment to Long Term Amended and Restated Revolving Credit
Agreement ("Third Amendment") is dated as of January 1, 1997, and is entered
into among Ag-Chem Equipment Co. Inc., a Minnesota corporation (the "Company"),
NBD Bank ("NBD") for itself and as Agent (in such capacity "Agent"), National
City Bank of Minneapolis, and Harris Trust and Savings Bank (together with NBD
being sometimes referred to collectively as the "Lenders" and individually as a
"Lender"). This Third Amendment amends that certain Long Term Amended and
Restated Revolving Credit Agreement dated as of January 12, 1996, as amended by
the First Amendment to Long Term Amended and Restated Revolving Credit
Agreement, dated March 29, 1996, and the Second Amendment to Long Term Amended
and Restated Revolving Credit Agreement, dated June 28, 1996 (as amended, the
"Credit Agreement"), among the Company, Agent and Lenders. Capitalized terms not
otherwise defined in this Third Amendment shall have the meanings given to them
in the Credit Agreement.
WHEREAS, the Company has requested that the Agent and Lenders consent
to the Company transferring certain of its assets to a new, wholly-owned
subsidiary of the Company, Ag-Chem Sales Co., Inc. ("Ag-Chem Sales") and that it
be allowed to generally transfer assets between subsidiaries.
WHEREAS, the Agent and Lenders have agreed to consent to such
transactions on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. Consent. The Agent and Lenders hereby consent to the Company
transferring assets to Ag-Chem Sales effective as of January 1, 1997 (the
"Transfer to Sales"), subject to the following terms and conditions:
(a) Ag-Chem Sales will deliver simultaneously with the
execution of this Consent, guaranties of the Credit Agreement and Short
Term Revolving Credit Agreement dated June 28, 1996, as amended, among
the Company, Agent and Lenders, substantially in the form given by the
existing Guarantors;
(b) Ag-Chem Sales will deliver to Agent an officer's
certificate, certifying copies of its articles of incorporation, bylaws
and resolutions authorizing its guaranties; and
(c) Ag-Chem Sales will be owned 100% by the Company.
2. Acknowledgments. The parties acknowledge that:
(a) Ag-Chem Sales shall be hereafter considered a "Guarantor"
and a "Loan Party" under the Credit Agreement.
(b) The Company has submitted a revised Schedule 4.4 to the
Credit Agreement, a copy of which is attached to this consent for
reference, and this new Schedule 4.4 replaces the representations in
the prior Schedule 4.4; and
(c) The Transfer to Sales will not be included in the basket
amounts provided for in Sections 5.2(g)(iii) and 5.2(i)(v) of the
Credit Agreement.
3. Transfer of Assets Among the Loan Parties. Sections 5.2(g), (i) and
(k) of the Credit Agreement are hereby amended in their entirety to read as
follows:
(g) Disposition of Assets; Etc. Sell, lease, license, transfer, assign
or otherwise dispose of any of its business, assets, rights, revenues
or property, real, personal or mixed, tangible or intangible, whether
in one or a series of transactions, other than (i) inventory sold in
the ordinary course of business upon customary credit terms and sales
of obsolete or damaged material or equipment, (ii) the sale of all or
part of Ag-Chem Equipment Co International Corp, a Virgin Islands
corporation and/or Kurstjens Terra-Gator B.V., a Netherlands private
limited liability company, (iii) transfers from one Loan Party to
another Loan Party, and (iv) other sales of assets not to exceed
$3,000,000 in the aggregate for all Loan Parties during any fiscal year
of the Company; provided that so long as any Default or Event of
Default shall exist and be continuing, no sales under clauses (ii) or
(iii) above may be made beyond those contracted for at the time of such
Default or Event of Default.
(i) Investments. Make, commit to make or permit to exist any loans,
investments, advances or extensions of credit to any person, firm or
corporation, other than: (i) Cash Equivalents, (ii) loans not to exceed
$500,000 at any time outstanding and travel advances extended to
officers and employees of a Loan Party in the ordinary course of
business, (iii) investments existing on the Effective Date in
Subsidiaries that are not Loan Parties, (iv) investments by the Company
in other Loan Parties, (v) loans from one Loan Party to another Loan
Party, or (vi) other investments which in the aggregate do not exceed
$1,000,000 at any time after the Effective Date.
(k) Transactions with Affiliates. Enter into, or permit or suffer to
exist, or be a party to, any transaction or arrangement, including the
purchase, sale, exchange or use of any property or asset, or any
interest therein, whether real, personal or mixed, or tangible or
intangible, or the rendering of any service, with any Affiliate that is
not a Loan Party or any director or officer of any Loan Party, except
in the ordinary course of and pursuant to the reasonable requirements
of the Loan Party's business and upon fair and reasonable terms which
are no less favorable to such Loan Party than could be obtained in a
comparable arms-length transaction with a person not an Affiliate or a
director or officer of the Loan Party. The Company will not permit
Ag-Chem Equipment International to have any operations or assets with a
value in excess of $10,000.
4. Ratification. The parties hereto acknowledge and agree that the
terms and provisions of this Third Amendment amend, add to and constitute part
of the Credit Agreement. Except as expressly modified and amended by the terms
of this Third Amendment, all of the other terms and conditions of the Credit
Agreement and all of the documents executed in connection therewith or referred
to or incorporated therein, remain in full force and effect and are hereby
ratified, confirmed and approved.
5. Conflicts. If there is an express conflict between the terms of this
Third Amendment and the terms of the Credit Agreement, or any of the other
agreements or documents executed in connection therewith or referred to or
incorporated therein, the terms of this Third Amendment shall govern and
control.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to Long Term Amended and Restated Revolving Credit Agreement to be duly executed
as of the date first written above.
Ag-Chem Equipment Co., Inc.
By: /s/ John Retherford
-----------------------------------
John Retherford
Its: Senior Vice President
NBD Bank
By: /s/ Marguerite Mullins
-----------------------------------
Marguerite Mullins
Its: Vice President
National City Bank of Minneapolis
By: /s/ David W. Boyce
-----------------------------------
David W. Boyce
Its: Vice President
Harris Trust and Savings Bank
By: /s/ Catherine C. Ciolek
-----------------------------------
Catherine C. Ciolek
Its: Vice President
GUARANTOR ACKNOWLEDGEMENT
The undersigned hereby acknowledges the terms of this Third Amendment
to Long Term Amended and Restated Revolving Credit Agreement, dated as of
January 1, 1997, and hereby reaffirm each and every term of their respective
Guaranty (Long Term), dated January 12, 1996, given in favor of the Agent and
the Lenders.
Lor*Al Products, Inc.
By: /s/ John Retherford
-----------------------------------
John Retherford
Its: Vice President
Ag-Chem Equipment Co International Corp.
By: /s/ John Retherford
-----------------------------------
John Retherford
Its: Vice President
Ag-Chem Equipment Canada Ltd.
By: /s/ John Retherford
-----------------------------------
John Retherford
Its: Vice President
Soil-Teq, Inc.
By: /s/ John Retherford
-----------------------------------
John Retherford
Its: Vice President
Exhibit 10.2
FIRST AMENDMENT TO SHORT TERM
REVOLVING CREDIT AGREEMENT
This First Amendment to Short Term Revolving Credit Agreement ("First
Amendment") is dated as of January 1, 1997, and is entered into among Ag-Chem
Equipment Co. Inc., a Minnesota corporation (the "Company"), NBD Bank ("NBD")
for itself and as Agent (in such capacity "Agent"), National City Bank of
Minneapolis, and Harris Trust and Savings Bank (together with NBD being
sometimes referred to collectively as the "Lenders" and individually as a
"Lender"). This First Amendment amends that certain Short Term Revolving Credit
Agreement dated as of June 28, 1996 (as amended, the "Credit Agreement"), among
the Company, Agent and Lenders. Capitalized terms not otherwise defined in this
First Amendment shall have the meanings given to them in the Credit Agreement.
WHEREAS, the Company has requested that the Agent and Lenders consent
to the Company transferring certain of its assets to a new, wholly-owned
subsidiary of the Company, Ag-Chem Sales Co., Inc. ("Ag-Chem Sales") and that it
be allowed to generally transfer assets between subsidiaries.
WHEREAS, the Agent and Lenders have agreed to consent to such
transactions on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. Conditional Consent. The Agent and Lenders hereby consent to the
Company transferring assets to Ag-Chem Sales effective as of January 1, 1997
(the "Transfer to Sales"), subject to the following terms and conditions:
(a) Ag-Chem Sales will deliver simultaneously with the
execution of this Consent, guaranties of the Credit Agreement and Long
Term Amended and Restated Revolving Credit Agreement dated as of
January 12, 1996, among the Company, Agent and Lenders, substantially
in the form given by the existing Guarantors;
(b) Ag-Chem Sales will deliver to Agent an officer's
certificate, certifying copies of its articles of incorporation, bylaws
and resolutions authorizing its guaranties; and
(c) Ag-Chem Sales will be owned 100% by the Company.
2. Acknowledgments. The parties acknowledge that:
(a) Ag-Chem Sales shall be hereafter considered a "Guarantor"
and a "Loan Party" under the Credit Agreement.
(b) The Company has submitted a revised Schedule 4.4 to the
Credit Agreement, a copy of which is attached to this consent for
reference, and this new Schedule 4.4 replaces the representations in
the prior Schedule 4.4; and
(c) The Transfer to Sales will not be included in the basket
amounts provided for in Sections 5.2(g)(iii) and 5.2(i)(v) of the
Credit Agreement.
3. Transfer of Assets Among the Loan Parties. Sections 5.2(g), (i) and
(k) of the Credit Agreement are hereby amended in their entirety to read as
follows:
(g) Disposition of Assets; Etc. Sell, lease, license, transfer, assign
or otherwise dispose of any of its business, assets, rights, revenues
or property, real, personal or mixed, tangible or intangible, whether
in one or a series of transactions, other than (i) inventory sold in
the ordinary course of business upon customary credit terms and sales
of obsolete or damaged material or equipment, (ii) the sale of all or
part of Ag-Chem Equipment Co International Corp, a Virgin Islands
corporation and/or Kurstjens Terra-Gator B.V., a Netherlands private
limited liability company, (iii) transfers from one Loan Party to
another Loan Party, and (iv) other sales of assets not to exceed
$3,000,000 in the aggregate for all Loan Parties during any fiscal year
of the Company; provided that so long as any Default or Event of
Default shall exist and be continuing, no sales under clauses (ii) or
(iii) above may be made beyond those contracted for at the time of such
Default or Event of Default.
(i) Investments. Make, commit to make or permit to exist any loans,
investments, advances or extensions of credit to any person, firm or
corporation, other than: (i) Cash Equivalents, (ii) loans not to exceed
$500,000 at any time outstanding and travel advances extended to
officers and employees of a Loan Party in the ordinary course of
business, (iii) investments existing on the Effective Date in
Subsidiaries that are not Loan Parties, (iv) investments by the Company
in other Loan Parties, (v) loans from one Loan Party to another Loan
Party, or (vi) other investments which in the aggregate do not exceed
$1,000,000 at any time after the Effective Date.
(k) Transactions with Affiliates. Enter into, or permit or suffer to
exist, or be a party to, any transaction or arrangement, including the
purchase, sale, exchange or use of any property or asset, or any
interest therein, whether real, personal or mixed, or tangible or
intangible, or the rendering of any service, with any Affiliate that is
not a Loan Party or any director or officer of any Loan Party, except
in the ordinary course of and pursuant to the reasonable requirements
of the Loan Party's business and upon fair and reasonable terms which
are no less favorable to such Loan Party than could be obtained in a
comparable arms-length transaction with a person not an Affiliate or a
director or officer of the Loan Party. The Company will not permit
Ag-Chem Equipment International to have any operations or assets with a
value in excess of $10,000.
4. Ratification. The parties hereto acknowledge and agree that the
terms and provisions of this First Amendment amend, add to and constitute part
of the Credit Agreement. Except as expressly modified and amended by the terms
of this First Amendment, all of the other terms and conditions of the Credit
Agreement and all of the documents executed in connection therewith or referred
to or incorporated therein, remain in full force and effect and are hereby
ratified, confirmed and approved.
5. Conflicts. If there is an express conflict between the terms of this
First Amendment and the terms of the Credit Agreement, or any of the other
agreements or documents executed in connection therewith or referred to or
incorporated therein, the terms of this First Amendment shall govern and
control.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Short Term Revolving Credit Agreement to be duly executed as of the date
first written above.
Ag-Chem Equipment Co., Inc.
By: /s/ John Retherford
-----------------------------------
John Retherford
Its: Senior Vice President
NBD Bank
By: /s/ Marguerite Mullins
-----------------------------------
Marguerite Mullins
Its: Vice President
National City Bank of Minneapolis
By: /s/ David W. Boyce
-----------------------------------
David W. Boyce
Its: Vice President
Harris Trust and Savings Bank
By: /s/ Catherine C. Ciolek
-----------------------------------
Catherine C. Ciolek
Its: Vice President
GUARANTOR ACKNOWLEDGEMENT
The undersigned hereby acknowledges the terms of this First Amendment
to Short Revolving Credit Agreement, dated as of January 1, 1997, and hereby
reaffirm each and every term of their respective Guaranty (Short Term), dated
June 28, 1996, given in favor of the Agent and the Lenders.
Lor*Al Products, Inc.
By: /s/ John Retherford
-----------------------------------
John Retherford
Its: Vice President
Ag-Chem Equipment Co International Corp.
By: /s/ John Retherford
-----------------------------------
John Retherford
Its: Vice President
Ag-Chem Equipment Canada Ltd.
By: /s/ John Retherford
-----------------------------------
John Retherford
Its: Vice President
Soil-Teq, Inc.
By: /s/ John Retherford
-----------------------------------
John Retherford
Its: Vice President
Exhibit 10.3
GUARANTY
(SHORT TERM)
This GUARANTY dated as of January 1, 1997, is given by Ag-Chem Sales
Co., Inc., a Minnesota corporation ("Guarantor"), to NBD Bank, as Agent (in such
capacity, the "Agent"), and NBD Bank for itself, National City Bank of
Minneapolis, and Harris Trust and Savings Bank (each a "Lender") and any other
financial institution that may from time to time become a Lender under the
Credit Agreement described below.
WHEREAS, the Agent and the Lenders have agreed to extend certain
revolving loans to Guarantor's parent, Ag-Chem Equipment Co., Inc., a Minnesota
corporation ("Debtor"), pursuant to the terms of a certain Short Term Revolving
Credit Agreement, dated June 28, 1996, as amended by agreement dated January 1,
1997, and it is a condition to the Agent's and the Lenders' consent to Debtor
transferring assets to Guarantor that the Guarantor provide this Guaranty.
WHEREAS, Guarantor benefits from the assets to be transferred to it by
Debtor and the financing provided to Debtor and Guarantor has determined it is
in Guarantor's best interests to provide this Guaranty.
THEREFORE, IN CONSIDERATION of and in order to induce the Agent and the
Lenders to loan money or extend credit to; to purchase, accept or discount
notes, instruments or other evidences of indebtedness of or from; and generally
to engage in financial accommodations and do business with Debtor, the
undersigned Guarantor hereby covenants and agrees with the Agent and Lenders as
follows:
1. Definitions. Unless the context requires otherwise, capitalized
terms used herein shall have the following meanings:
(a) "Credit Agreement" means the Short Term Revolving Credit
Agreement dated June 28, 1996, as amended by agreement dated January 1,
1997, among Debtor, Agent and the Lenders, and any further amendments,
restatements or replacements thereof.
(b) "Indebtedness" means any and all indebtedness, liabilities
and obligations of every kind, nature and description, owed to the
Agent or any Lender by Debtor under the Credit Agreement, whether
direct or indirect, absolute or contingent, whether now due and owing,
or which may hereafter, from time to time, be or become due and owing,
whether heretofore or hereafter created or arising, including all
indebtedness evidenced by any note(s) or agreements now or hereinafter
executed and delivered by Debtor to any Lender, any and all renewals,
extensions or modification thereof, and including, without limitation,
reasonable attorneys' fees, costs and expenses incurred by the Agent or
any Lender in connection with the enforcement of this Guaranty or any
obligation against Debtor.
(c) Other capitalized terms shall have the meanings given them
in the Credit Agreement.
2. Guaranty of Indebtedness. Guarantor or hereby unconditionally
guarantees to the Agent and to each Lender the full and prompt payment when due
of all Indebtedness of Debtor due and to become due the Agent and/or each
Lender. The Agent and/or each Lender may have immediate recourse against
Guarantor for full and immediate payment of the Indebtedness at any time after
the Indebtedness has not been paid in full at its maturity (whether at fixed
maturity or maturity accelerated after a default under the terms of the Credit
Agreement).
3. Nature of Guaranty. This is a guarantee of payment, and not of
collection, and Guarantor therefore agrees that neither the Agent nor any Lender
shall be obligated prior to seeking recourse against or receiving payment from
Guarantor, to do any of the following acts (although they may do so, in whole or
in part, at their individual sole option), the performance of each of which is
hereby unconditionally waived by Guarantor:
(a) Take any steps whatsoever to collect from Debtor or to
file any claim of any kind against Debtor; or
(b) Take any steps whatsoever to accept, perfect any security
interest in, foreclose or realize on collateral security, if any, for
the payment of the Indebtedness, or any other Guaranty of the
Indebtedness; or
(c) In any other respect exercise any diligence whatever in
collecting or attempting to collect the Indebtedness by any means.
4. Waivers. Guarantor's liability for payment of the Indebtedness shall
be absolute and unconditional, and nothing whatever except actual full payment
to the Agent and the Lenders of the Indebtedness shall operate to discharge
Guarantor's liability hereunder. Accordingly, Guarantor unconditionally and
irrevocably waives each and every defense which, under principles of guarantee
or suretyship law, would otherwise operate to impair or diminish the liability
of Guarantor for the Indebtedness. Without limiting the generality of the
foregoing waiver, Guarantor agrees that none of the following acts, omissions or
occurrences shall diminish or impair the liability of Guarantor in any respect
(all of which acts or omissions may be done without notice to Guarantor of any
kind):
(a) Any extension, modification, indulgence, compromise,
settlement or variation of the terms of any of the Indebtedness;
(b) The discharge or release of any obligations of the Debtor
or any other person now or hereafter liable on the Indebtedness, by
reason of bankruptcy or insolvency laws;
(c) The acceptance or release by the Agent or any Lender of
any collateral security or other Guaranty, seizure or conversion of any
collateral security by any person or by operation of law, or any
settlement, compromise or extension with respect to any collateral
security or other Guaranty;
(d) The application or allocation by the Agent or any Lender
of payments, collections or credits on the Indebtedness or any other
obligations of the Debtor to the Agent or any Lender;
(e) The creation of any new Indebtedness covered by this
Guaranty; or
(f) The making of a demand, or absence of demand, for payment
of the Indebtedness, or giving, or failing to give, any notice of
dishonor or protest or any other notice.
5. Additional Waivers. Guarantor unconditionally waives:
(a) Any subrogation to the rights of the Agent or any Lender
against the Debtor;
(b) Any acceptance of this Guaranty;
(c) Any setoffs or counterclaims against the Agent or any
Lender which would otherwise impair their respective rights against
Guarantor; and
(d) Any notice of the disposition of any collateral security,
and any right to object to the commercial reasonableness of the
disposition of any such collateral security.
6. Assignment. This Guaranty shall inure to the benefit of the Agent,
its successors and assigns, each Lender and its successors and assigns,
including entities that shall become a "Lender" under the Credit Agreement and
each and every holder or owner of any of the Indebtedness guaranteed hereby. In
the event that there shall be more than one such holder or owner, this Guaranty
shall be deemed a separate contract with each such holder and owner.
7. Termination. This Guaranty shall be binding upon Guarantor and its
successors and assigns, and shall continue in effect until Guarantor shall
deliver to the Bank (and each other holder or owner of the Indebtedness) 30
days' advance written notice of termination; provided that this Guaranty shall
continue in effect thereafter with respect to all Indebtedness in existence on
the effective date of such termination (including all extensions and renewals
thereof and all subsequently accruing interest and other charges thereon) until
all such Indebtedness shall be paid in full.
8. Financial Statements. Guarantor warrants and represents to the Agent
and each Lender that any and all consolidated financial statements delivered, or
to be delivered, to them by Debtor are true and correct in all materials
respects as of the date of such statements
9. Interpretation. The singular reference shall also include the plural
of any word, if the context so requires. Sections headings are for convenience
only and do not affect the interpretation of this Guaranty.
10. Governing Law. This Guaranty shall be governed by and construed in
accordance with the internal laws of the State of Michigan.
11. Forum. Guarantor hereby irrevocably submits to the jurisdiction of
any Minnesota or Michigan state court or any federal court located in
Minneapolis, Minnesota or Detroit, Michigan over any action or proceeding
arising out of or relating to this Guaranty or any other Loan Document, and
Guarantor hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such state or court or federal court.
Guarantor hereby irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding. Guarantor agrees that judgment final by appeal, or expiration of
time to appeal without an appeal being taken, in any such action or proceeding
shall be conclusive and may be enforced in any other jurisdictions by suit on
the judgment or in any other manner provided by law. Nothing in this subsection
shall affect the right of the Agent or any Lender to serve legal process in any
other manner permitted by law or affect the right of the Agent or any Lender to
bring any action or proceeding against Guarantor or its property in the courts
of any other jurisdiction. Guarantor agrees that, if it brings any action or
proceeding arising out of or relating to this Agreement, it shall bring such
action or proceeding in Hennepin County, Minnesota or Wayne County, Michigan.
12. THIS GUARANTY IS FREELY AND VOLUNTARILY GIVEN TO THE AGENT AND THE
LENDERS BY GUARANTOR, WITHOUT ANY DURESS OR COERCION, AND AFTER GUARANTOR HAS
EITHER CONSULTED WITH COUNSEL OR BEEN GIVEN AN OPPORTUNITY TO DO SO, AND
GUARANTOR HAS CAREFULLY AND COMPLETELY READ ALL OF THE TERMS AND PROVISIONS OF
THIS GUARANTY.
WITNESS:
/s/ J. Joyce Lander AG-CHEM SALES CO., INC.
- ---------------------------------
By: /s/ John Retherford
- --------------------------------- ----------------------------------
John Retherford
Its: Vice President
Address: 5720 Smetana Drive
Minnetonka, MN 55343-9688
Exhibit 10.4
GUARANTY
(LONG TERM)
This GUARANTY dated as of January 1, 1997, is given by Ag-Chem Sales
Co., Inc., a Minnesota corporation ("Guarantor"), to NBD Bank, as Agent (in such
capacity, the "Agent"), and NBD Bank for itself, National City Bank of
Minneapolis, and Harris Trust and Savings Bank (each a "Lender") and any other
financial institution that may from time to time become a Lender under the
Credit Agreement described below.
WHEREAS, the Agent and the Lenders have agreed to extend certain
revolving loans to Guarantor's parent, Ag-Chem Equipment Co., Inc., a Minnesota
corporation ("Debtor"), pursuant to the terms of a certain Long Term Amended and
Restated Revolving Credit Agreement, dated January 12, 1996, as amended by
agreements dated March 29, 1996, June 28, 1996 and January 1, 1997, and it is a
condition to the Agent's and the Lenders' consent to Debtor transferring assets
to Guarantor that the Guarantor provide this Guaranty.
WHEREAS, Guarantor benefits from the assets to be transferred to it by
Debtor and the financing provided to Debtor and Guarantor has determined it is
in Guarantor's best interests to provide this Guaranty.
THEREFORE, IN CONSIDERATION of and in order to induce the Agent and the
Lenders to loan money or extend credit to; to purchase, accept or discount
notes, instruments or other evidences of indebtedness of or from; and generally
to engage in financial accommodations and do business with Debtor, the
undersigned Guarantor hereby covenants and agrees with the Agent and Lenders as
follows:
1. Definitions. Unless the context requires otherwise, capitalized
terms used herein shall have the following meanings:
(a) "Credit Agreement" means the Long Term Amended and
Restated Revolving Credit Agreement dated January 12, 1996, as amended
by agreements dated March 29, 1996, June 28, 1996 and January 1, 1997,
among Debtor, Agent and the Lenders, and any further amendments,
restatements or replacements thereof.
(b) "Indebtedness" means any and all indebtedness, liabilities
and obligations of every kind, nature and description, owed to the
Agent or any Lender by Debtor under the Credit Agreement, whether
direct or indirect, absolute or contingent, whether now due and owing,
or which may hereafter, from time to time, be or become due and owing,
whether heretofore or hereafter created or arising, including all
indebtedness evidenced by any note(s) or agreements now or hereinafter
executed and delivered by Debtor to any Lender, any and all renewals,
extensions or modification thereof, and including, without limitation,
reasonable attorneys' fees, costs and expenses incurred by the Agent or
any Lender in connection with the enforcement of this Guaranty or any
obligation against Debtor.
(c) Other capitalized terms shall have the meanings given them
in the Credit Agreement.
2. Guaranty of Indebtedness. Guarantor or hereby unconditionally
guarantees to the Agent and to each Lender the full and prompt payment when due
of all Indebtedness of Debtor due and to become due the Agent and/or each
Lender. The Agent and/or each Lender may have immediate recourse against
Guarantor for full and immediate payment of the Indebtedness at any time after
the Indebtedness has not been paid in full at its maturity (whether at fixed
maturity or maturity accelerated after a default under the terms of the Credit
Agreement).
3. Nature of Guaranty. This is a guarantee of payment, and not of
collection, and Guarantor therefore agrees that neither the Agent nor any Lender
shall be obligated prior to seeking recourse against or receiving payment from
Guarantor, to do any of the following acts (although they may do so, in whole or
in part, at their individual sole option), the performance of each of which is
hereby unconditionally waived by Guarantor:
(a) Take any steps whatsoever to collect from Debtor or to
file any claim of any kind against Debtor; or
(b) Take any steps whatsoever to accept, perfect any security
interest in, foreclose or realize on collateral security, if any, for
the payment of the Indebtedness, or any other Guaranty of the
Indebtedness; or
(c) In any other respect exercise any diligence whatever in
collecting or attempting to collect the Indebtedness by any means.
4. Waivers. Guarantor's liability for payment of the Indebtedness shall
be absolute and unconditional, and nothing whatever except actual full payment
to the Agent and the Lenders of the Indebtedness shall operate to discharge
Guarantor's liability hereunder. Accordingly, Guarantor unconditionally and
irrevocably waives each and every defense which, under principles of guarantee
or suretyship law, would otherwise operate to impair or diminish the liability
of Guarantor for the Indebtedness. Without limiting the generality of the
foregoing waiver, Guarantor agrees that none of the following acts, omissions or
occurrences shall diminish or impair the liability of Guarantor in any respect
(all of which acts or omissions may be done without notice to Guarantor of any
kind):
(a) Any extension, modification, indulgence, compromise,
settlement or variation of the terms of any of the Indebtedness;
(b) The discharge or release of any obligations of the Debtor
or any other person now or hereafter liable on the Indebtedness, by
reason of bankruptcy or insolvency laws;
(c) The acceptance or release by the Agent or any Lender of
any collateral security or other Guaranty, seizure or conversion of any
collateral security by any person or by operation of law, or any
settlement, compromise or extension with respect to any collateral
security or other Guaranty;
(d) The application or allocation by the Agent or any Lender
of payments, collections or credits on the Indebtedness or any other
obligations of the Debtor to the Agent or any Lender;
(e) The creation of any new Indebtedness covered by this
Guaranty; or
(f) The making of a demand, or absence of demand, for payment
of the Indebtedness, or giving, or failing to give, any notice of
dishonor or protest or any other notice.
5. Additional Waivers. Guarantor unconditionally waives:
(a) Any subrogation to the rights of the Agent or any Lender
against the Debtor;
(b) Any acceptance of this Guaranty;
(c) Any setoffs or counterclaims against the Agent or any
Lender which would otherwise impair their respective rights against
Guarantor; and
(d) Any notice of the disposition of any collateral security,
and any right to object to the commercial reasonableness of the
disposition of any such collateral security.
6. Assignment. This Guaranty shall inure to the benefit of the Agent,
its successors and assigns, each Lender and its successors and assigns,
including entities that shall become a "Lender" under the Credit Agreement and
each and every holder or owner of any of the Indebtedness guaranteed hereby. In
the event that there shall be more than one such holder or owner, this Guaranty
shall be deemed a separate contract with each such holder and owner.
7. Termination. This Guaranty shall be binding upon Guarantor and its
successors and assigns, and shall continue in effect until Guarantor shall
deliver to the Bank (and each other holder or owner of the Indebtedness) 30
days' advance written notice of termination; provided that this Guaranty shall
continue in effect thereafter with respect to all Indebtedness in existence on
the effective date of such termination (including all extensions and renewals
thereof and all subsequently accruing interest and other charges thereon) until
all such Indebtedness shall be paid in full.
8. Financial Statements. Guarantor warrants and represents to the Agent
and each Lender that any and all consolidated financial statements delivered, or
to be delivered, to them by Debtor are true and correct in all materials
respects as of the date of such statements
9. Interpretation. The singular reference shall also include the plural
of any word, if the context so requires. Sections headings are for convenience
only and do not affect the interpretation of this Guaranty.
10. Governing Law. This Guaranty shall be governed by and construed in
accordance with the internal laws of the State of Michigan.
11. Forum. Guarantor hereby irrevocably submits to the jurisdiction of
any Minnesota or Michigan state court or any federal court located in
Minneapolis, Minnesota or Detroit, Michigan over any action or proceeding
arising out of or relating to this Guaranty or any other Loan Document, and
Guarantor hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such state or court or federal court.
Guarantor hereby irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding. Guarantor agrees that judgment final by appeal, or expiration of
time to appeal without an appeal being taken, in any such action or proceeding
shall be conclusive and may be enforced in any other jurisdictions by suit on
the judgment or in any other manner provided by law. Nothing in this subsection
shall affect the right of the Agent or any Lender to serve legal process in any
other manner permitted by law or affect the right of the Agent or any Lender to
bring any action or proceeding against Guarantor or its property in the courts
of any other jurisdiction. Guarantor agrees that, if it brings any action or
proceeding arising out of or relating to this Agreement, it shall bring such
action or proceeding in Hennepin County, Minnesota or Wayne County, Michigan.
12. THIS GUARANTY IS FREELY AND VOLUNTARILY GIVEN TO THE AGENT AND THE
LENDERS BY GUARANTOR, WITHOUT ANY DURESS OR COERCION, AND AFTER GUARANTOR HAS
EITHER CONSULTED WITH COUNSEL OR BEEN GIVEN AN OPPORTUNITY TO DO SO, AND
GUARANTOR HAS CAREFULLY AND COMPLETELY READ ALL OF THE TERMS AND PROVISIONS OF
THIS GUARANTY.
WITNESS:
/s/ J. Joyce Lander AG-CHEM SALES CO., INC.
- ---------------------------------
By: /s/ John Retherford
- --------------------------------- ----------------------------------
John Retherford
Its: Vice President
Address: 5720 Smetana Drive
Minnetonka, MN 55343-9688
Exhibit 11.1
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
The per share computation are based on the weighted average number of common
shares outstanding during the periods.
<TABLE>
<CAPTION>
Three Months Ended March 31, Six Months Ended March 31,
---------------------------- --------------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Shares outstanding at
beginning of period 9,696 9,696 9,696 9,596
Issuance of common
stock -- -- -- 100
Repurchase and
retirement of common
stock (5) -- (5) --
------- ------- ------- -------
Shares outstanding at
end of period 9,691 9,696 9,691 9,696
======= ======= ======= =======
Weighted average
shares outstanding 9,691 9,696 9,694 9,648
======= ======= ======= =======
Net earnings $ 8,287 $ 6,355 $ 9,281 $ 6,714
======= ======= ======= =======
Earnings per common
share $ 0.86 $ 0.66 $ 0.96 $ 0.70
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 36,079
<ALLOWANCES> (449)
<INVENTORY> 88,494
<CURRENT-ASSETS> 131,714
<PP&E> 46,372
<DEPRECIATION> (26,264)
<TOTAL-ASSETS> 186,908
<CURRENT-LIABILITIES> 83,760
<BONDS> 0
0
0
<COMMON> 9,691
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 186,908
<SALES> 186,908
<TOTAL-REVENUES> 186,908
<CGS> 134,997
<TOTAL-COSTS> 134,997
<OTHER-EXPENSES> 34,786
<LOSS-PROVISION> 56
<INTEREST-EXPENSE> 3,272
<INCOME-PRETAX> 15,481
<INCOME-TAX> 6,200
<INCOME-CONTINUING> 9,281
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,281
<EPS-PRIMARY> 0.96
<EPS-DILUTED> 0.96
</TABLE>
