We are a leading manufacturer and distributor of agricultural equipment and related replacement parts throughout the world. We sell a full range of agricultural equipment, including tractors, combines, self-propelled sprayers, hay tools, forage equipment, tillage, implements and grain storage and protein production systems. Our products are widely recognized in the agricultural equipment industry and are marketed under a number of well-known brand names, including: Challenger®, Fendt®, Massey Ferguson®, Valtra® and GSI®. We distribute most of our products through a combination of approximately 3,150 dealers, distributors, associates and licensees. In addition, we provide retail financing through our retail finance joint ventures with Rabobank.

Results of Operations

We sell our equipment and replacement parts to our independent dealers, distributors and other customers. A large majority of our sales are to independent dealers and distributors that sell our products to the end user. To the extent practicable, we attempt to sell products to our dealers and distributors on a level basis throughout the year to reduce the effect of seasonal demands on our manufacturing operations and to minimize our investment in inventories. However, retail sales by dealers to farmers are highly seasonal and are linked to the planting and harvesting seasons. In certain markets, particularly in North America, there is often a time lag, which varies based on the timing and level of retail demand, between our sale of the equipment to the dealer and the dealer's sale to a retail customer.

The following table sets forth, for the periods indicated, the percentage relationship to net sales of certain items included in our Consolidated Statements of Operations:

                                                             Years Ended December 31,
                                                           2012       2011 (1)      2010
Net sales                                                 100.0 %      100.0  %    100.0 %
Cost of goods sold                                         78.7         79.8        81.8
Gross profit                                               21.3         20.2        18.2
Selling, general and administrative expenses               10.5          9.9        10.0
Engineering expenses                                        3.2          3.1         3.2
Restructuring and other infrequent (income) expenses          -            -         0.1
Impairment charge                                           0.2            -           -
Amortization of intangibles                                 0.5          0.2         0.2
Income from operations                                      6.9          7.0         4.7
Interest expense, net                                       0.6          0.4         0.5
Other expense, net                                          0.3          0.2         0.2
Income before income taxes and equity in net earnings of
affiliates                                                  6.0          6.4         4.0
Income tax provision                                        1.4          0.3         1.5
Income before equity in net earnings of affiliates          4.6          6.1         2.5
Equity in net earnings of affiliates                        0.5          0.6         0.7
Net income                                                  5.1          6.7         3.2
Net loss (income) attributable to noncontrolling
interests                                                   0.1            -           -
Net income attributable to AGCO Corporation and
subsidiaries                                                5.2 %        6.6  %      3.2 %


____________________________________
(1) Rounding may impact summation of amounts.

2012 Compared to 2011

Net income attributable to AGCO Corporation and subsidiaries for 2012 was $522.1 million, or $5.30 per diluted share, compared to net income for 2011 of $583.3 million, or $5.95 per diluted share.

Net sales for 2012 were approximately $9,962.2 million, or 13.6% higher than 2011 primarily due to sales increases in all of our geographical segments as well as the favorable impact of acquisitions, partially offset by the unfavorable impact of currency translation. Income from operations was $693.2 million in 2012 compared to $610.3 million in 2011. The increase in

income from operations during 2012 was a result of the benefits of acquisitions, an increase in net sales and improved gross margins resulting from price increases, higher production levels, a better sales mix and material cost control initiatives, partially offset by higher engineering and selling, general and administrative expenses ("SG&A expenses") and a non-cash goodwill and other intangible asset impairment charge related to our Chinese harvesting business.

In our Europe/Africa/Middle East ("EAME") region, income from operations decreased approximately $12.0 million in 2012 compared to 2011, primarily due to a weaker mix of products, the negative impact of currency translation and the impact of lower production and start-up costs associated with our new Fendt assembly facility in Germany in the second half of the year. Income from operations in our South American region increased approximately $18.5 million in 2012 compared to 2011, primarily due to higher sales and improved margins from cost control efforts. In our North America region, income from operations increased approximately $169.0 million in 2012 compared to 2011, primarily due to the positive impact of acquisitions, higher net sales and margin improvement initiatives. Income from operations in the Asia/Pacific region decreased approximately $13.7 million in 2012 compared to 2011, primarily due to increased market development costs in China, partially offset by acquisition benefits and improved gross margins.

Retail Sales

Worldwide industry equipment demand for farm equipment was relatively stable during 2012 in most major markets compared to 2011. Global commodity prices remained at higher levels due to weather-related production difficulties across many of the developed markets. Industry conditions in the key Western European markets of Germany and France remained stable while adverse weather negatively impacted market conditions in Southern Europe, Scandinavia and Finland. In South America, industry demand improved in the second half of 2012 from lower levels in the first half of the year as a result of better weather conditions. Improved crop yields, attractive government financing subsidies in Brazil and favorable commodity prices also helped to strengthen industry demand. In North America, industry demand was strong in 2012 compared to 2011. Despite an extensive drought in the United States, higher crop prices and extensive crop insurance resulted in near record farm income levels in the region.

In the United States and Canada, industry unit retail sales of tractors increased approximately 10% in 2012 compared to 2011. Industry unit retail sales of combines was relatively flat in 2012 compared to 2011. Continued favorable farm economics resulted in the strength of retail sales particularly for larger, high horsepower equipment. In Western Europe, industry unit retail sales of tractors decreased approximately 3% while industry unit retail sales of combines increased approximately 5% in 2012 compared to 2011. Growth in the key markets of France and Germany was offset by declines in Southern Europe due to dry weather and weak economic conditions, as well as declines in Scandinavia and Finland due to wet weather conditions and a late harvest. In South America, industry unit retail sales of tractors in 2012 increased approximately 3% compared to 2011. Industry unit retail sales of tractors in the major market of Brazil increased approximately 7% and was relatively flat in Argentina during 2012 compared to 2011. Industry unit retail sales in Brazil remained at high levels due to attractive farm economics and supportive government subsidized financing programs. Industry unit retail sales of combines in South America during 2012 were relatively flat compared to 2011. Our net sales in our Asia/Pacific segment for 2012 were approximately 58% higher than 2011, primarily due to increases in Australia, New Zealand and China.

Results of Operations

Net sales for 2012 were $9,962.2 million compared to $8,773.2 million for 2011, primarily due to the positive impacts of market growth and acquisitions, partially offset by the unfavorable impact of foreign currency translation. Acquisitions positively impacted net sales by approximately $774.3 million, or 8.8%, during 2012 compared to 2011. Foreign currency translation negatively impacted net sales during 2012 as compared to 2011 by approximately $672.7 million, or 7.7%, primarily due to the weakening of the Euro and the Brazilian real. The following table sets forth, for the year ended December 31, 2012, the impact to net sales of currency translation and acquisitions by geographical segment (in millions, except percentages):

                                                                                   Change due to         Change due to Currency
                                                              Change               Acquisitions                Translation
                             2012          2011            $           %            $           %             $              %
North America             $ 2,584.4     $ 1,770.6     $   813.8      46.0  %   $   475.7      26.9 %   $      (11.6 )      (0.7 )%
South America               1,855.7       1,871.5         (15.8 )    (0.8 )%        87.5       4.7 %         (295.5 )     (15.8 )%
Europe/Africa/Middle East   5,073.7       4,847.2         226.5       4.7  %       104.7       2.2 %         (357.7 )      (7.4 )%
Asia/Pacific                  448.4         283.9         164.5      57.9  %       106.4      37.5 %           (7.9 )      (2.8 )%
                          $ 9,962.2     $ 8,773.2     $ 1,189.0      13.6  %   $   774.3       8.8 %   $     (672.7 )      (7.7 )%

Regionally, net sales in North America increased during 2012 compared to 2011, primarily as a result of our acquisition of GSI Holding Corp. ("GSI") and improved industry demand. The most significant increases in sales, excluding acquisitions, were in high horsepower tractors, hay equipment and sprayers. In the EAME region, net sales increased in 2012 compared to 2011, with the largest net sales increases in France, Germany and Russia, partially offset by lower net sales in Southern Europe and Finland. Excluding the negative impact of foreign currency translation, net sales were higher in Brazil and were partially offset by declines in Argentina. In Asia/Pacific, net sales increased in 2012 compared to 2011, primarily due to net sales increases in Australia, New Zealand and China. We estimate that worldwide average price increases were approximately 3% in both 2012 and 2011. Consolidated net sales of tractors and combines, which consisted of approximately 65% of our net sales in 2012, increased approximately 2% in 2012 compared to 2011. Unit sales of tractors and combines also increased approximately 2% during 2012 compared to 2011. The unit sales increase and the increase in net sales can differ due to foreign currency translation, pricing and sales mix changes.

The following table sets forth, for the years ended December 31, 2012 and 2011, the percentage relationship to net sales of certain items included in our Consolidated Statements of Operations (in millions, except percentages):

                                                               2012                       2011
                                                                      % of                       % of
                                                          $        Net Sales         $        Net Sales
Gross profit                                         $ 2,123.2         21.3 %   $ 1,776.1       20.2  %
Selling, general and administrative expenses           1,041.2         10.5 %       869.3        9.9  %
Engineering expenses                                     317.1          3.2 %       275.6        3.1  %
Restructuring and other infrequent income                    -            - %        (0.7 )        -  %
Impairment charge                                         22.4          0.2 %           -          -  %
Amortization of intangibles                               49.3          0.5 %        21.6        0.2  %
Income from operations                               $   693.2          6.9 %   $   610.3        7.0  %

Gross profit as a percentage of net sales increased during 2012 as compared to 2011. Favorable pricing, higher production volumes throughout most of 2012 and cost control initiatives helped to produce higher margins. Our gross margins were negatively impacted by the slow ramp of production and related start-up costs experienced in the fourth quarter of 2012 associated with our new German tractor assembly facility. Unit production of tractors and combines during 2012 was approximately 3% higher than 2011. We recorded approximately $2.4 million and $1.6 million of stock compensation expense within cost of goods sold during 2012 and 2011, respectively, as is more fully explained in Note 1 to our Consolidated Financial Statements.

SG&A expenses as a percentage of net sales increased during 2012 compared to 2011 primarily due to increased market development and new system upgrade costs. We recorded approximately $34.6 million and $23.0 million of stock

compensation expense, within SG&A expenses during 2012 and 2011, respectively, as is more fully explained in Note 1 to our Consolidated Financial Statements. Engineering expenses increased during 2012 as compared to 2011, primarily due to higher spending for the development of new products and costs to meet new engine emission standards in the United States and Europe.

During the fourth quarter of 2012, we recorded a non-cash impairment charge of approximately $22.4 million related to goodwill and certain other identifiable assets associated with our Chinese harvesting business in accordance with the provisions of Accounting Standard Codification ("ASC") 350, "Intangibles-Goodwill and Other"("ASC 350"). The operating results of our Chinese harvesting business from the date of acquisition in November 2011, combined with recently completed forecasts, resulted in our conclusion that it was more likely than not that the fair value of our Chinese harvesting reporting unit was less than its carrying amount. See Note 1 to our Consolidated Financial Statements for further discussion.

Interest expense, net was $57.6 million for 2012 compared to $30.2 million for 2011. The increase in 2012 was due to increased debt levels during 2012, associated with the funding of recent acquisitions, as is more fully explained in "Liquidity and Capital Resources."

Other expense, net was $34.8 million in 2012 compared to $19.1 million in 2011. Losses on sales of receivables primarily under our accounts receivable sales agreements were approximately $21.8 million and $22.0 million in 2012 and 2011, respectively. Other expense, net increased primarily due to foreign exchange losses in 2012 compared to foreign exchange gains in 2011.

We recorded an income tax provision of $137.9 million in 2012 compared to $24.6 million in 2011. Our tax provision is impacted by the differing tax rates of the various tax jurisdictions in which we operate, permanent differences for items treated differently for financial accounting and income tax purposes, and losses in jurisdictions where no income tax benefit is recorded. Our 2012 income tax rate provision (as reconciled in Note 6 to our Consolidated Financial Statements) includes the usage of approximately $54.7 million of valuation allowance resulting from income generated in the United States during 2012. The 2012 income tax provision also includes a reversal of approximately $13.8 million of the remaining valuation allowance previously established against our U.S. deferred tax assets and the recognition of certain U.S. research and development tax credits of approximately $13.1 million. We assessed the likelihood that our remaining U.S. deferred tax assets would be recovered from estimable future taxable income and determined the reversal was appropriate during the fourth quarter of 2012 as a result of improved profitability during 2012 of our core equipment business, the inclusion of the GSI business that was acquired at the end of 2011, and recently completed forecasts projecting future profitability of the combined businesses.

A valuation allowance is established when it is more likely than not that some portion or all of a company's deferred tax assets will not be realized. We assessed the likelihood that our deferred tax assets would be recovered from estimated future taxable income and available income tax planning strategies. At December 31, 2012 and 2011, we had gross deferred tax assets of $478.0 million and $498.2 million, respectively, including $94.9 million and $181.6 million, respectively, related to net operating loss carryforwards. At December 31, 2012 we had total valuation allowances as an offset to the gross deferred tax assets of $74.5 million primarily related to net operating loss carryforwards in Brazil, Switzerland, China, and Russia. At December 31, 2011, we had total valuation allowances as an offset to the gross deferred tax assets of approximately $145.8 million primarily related to net operating loss carryforwards in Brazil, Switzerland, China, Russia and the United States. Realization of the remaining deferred tax assets as of December 31, 2012 will depend on generating sufficient taxable income in future periods, net of reversing deferred tax liabilities. We believe it is more likely than not that the remaining net deferred tax assets will be realized.

As of December 31, 2012 and 2011, we had approximately $94.5 million and $71.1 million, respectively, of unrecognized tax benefits, all of which would impact our effective tax rate if recognized. As of December 31, 2012 and 2011, we had approximately $23.5 million and $23.0 million, respectively, of current accrued taxes related to uncertain income tax positions connected with ongoing tax audits in various jurisdictions that we expect to settle or pay in the next 12 months. We recognize interest and penalties related to uncertain income tax positions in income tax expense. As of December 31, 2012 and 2011, we had accrued interest and penalties related to unrecognized tax benefits of approximately $11.9 million and $7.6 million, respectively. See Note 6 to our Consolidated Financial Statements for further discussion of our uncertain income tax positions.

Equity in net earnings of affiliates, which is primarily comprised of income from our retail finance joint ventures, was $53.5 million in 2012 compared to $48.9 million in 2011. Refer to "Retail Finance Joint Ventures" for further information regarding our retail finance joint ventures and their results of operations.

2011 Compared to 2010

Net income attributable to AGCO Corporation and subsidiaries for 2011 was $583.3 million, or $5.95 per diluted share, compared to net income for 2010 of $220.5 million, or $2.29 per diluted share.

Net sales for 2011 were approximately $8,773.2 million, or 27.2% higher than 2010 primarily due to sales increases in all our geographical segments, acquisitions and the favorable impact of currency translation. Income from operations was $610.3 million in 2011 compared to $324.2 million in 2010. The increase in income from operations and operating margins during 2011 primarily was due to higher net sales, favorable pricing impacts and increased production volumes in Europe and North America, which were partially offset by higher material costs and increased engineering and marketing expenses.

In our EAME region, income from operations increased approximately $291.2 million in 2011 compared to 2010, primarily due to higher net sales and production volumes, favorable pricing and an improved product mix. Income from operations in our South American region decreased approximately $18.6 million in 2011 compared to 2010, primarily due to a less favorable geographic sales mix, material and labor cost inflation, and higher engineering and product introduction expenses. In our North America region, income from operations increased approximately $41.4 million in 2011 compared to 2010, primarily due to increased net sales, higher production volumes and cost control initiatives. Income from operations in the Asia/Pacific region decreased approximately $1.8 million in 2011 compared to 2010.

Retail Sales

Worldwide industry equipment demand for farm equipment was at relatively high levels during 2011 in most major markets. Industry conditions in Western Europe were very strong compared to weaker industry conditions in 2010, primarily due to improved dairy, meat and grain prices and overall market recovery, which resulted in improved farm income across most of Western Europe. In South America, despite a modest decline in industry conditions, industry demand remained at a higher level due to positive farm economics and continued availability of favorable government financing programs. North American industry demand was robust in 2011, with stable market demand for larger equipment.

In the United States and Canada, industry unit retail sales of tractors increased approximately 2% in 2011 compared to 2010, resulting from growth in industry unit retail sales of high horsepower and mid-range utility tractors. Industry unit retail sales of combines decreased approximately 4% in 2011 compared to 2010 but remained at higher levels. Record farm income in 2011 supported strong industry retail sales of tractors, combines, sprayers and hay equipment. In Western Europe, industry unit retail sales of tractors and combines increased approximately 12% and 35% in 2011, respectively, compared to 2010 due to higher retail volumes in most major Western European markets. Demand was strongest in Germany, France, Scandinavia and Finland. Higher commodity prices and improvement in demand in the dairy and livestock sectors contributed to the increase in 2011. In South America, industry unit retail sales of tractors in 2011 decreased approximately 3% compared to 2010. Industry unit retail sales of tractors in the major markets of Brazil and Argentina decreased approximately 7% and 37%, respectively, during 2011 compared to 2010. Declines in the two largest South American markets were mostly offset by strong growth in other South American markets compared to 2010. Despite the modest decline, industry unit retail sales in Brazil remained at high levels due to attractive farm economics and supportive government financing rates that have been extended through the end of 2012. Industry unit retail sales of combines in South America during 2011 were approximately 20% higher than 2010. Industry unit retail sales of combines in Brazil and Argentina increased approximately 18% and 11%, respectively, during 2011 compared to 2010. Our net sales in our Asia/Pacific segment for 2011 were approximately 22.8% higher than 2010, primarily due to improved market conditions in Australia and New Zealand.

Results of Operations

Net sales for 2011 were $8,773.2 million compared to $6,896.6 million for 2010
primarily due to the positive impacts of market growth, foreign currency
translation and acquisitions. Foreign currency translation positively impacted
net sales by approximately $343.8 million, or 5.0%, primarily due to the
strengthening of the Euro and Brazilian real during 2011 as compared to 2010.
The following table sets forth, for the year ended December 31, 2011, the impact
to net sales of currency translation by geographical segment (in millions,
except percentages):
                                                                                           Change due to Currency
                                                                         Change                 Translation
                                        2011          2010            $           %              $            %
North America                        $ 1,770.6     $ 1,489.3     $   281.3       18.9 %   $        12.7      0.9 %
South America                          1,871.5       1,753.3         118.2        6.7 %            81.7      4.7 %
Europe/Africa/Middle East              4,847.2       3,422.9       1,424.3       41.6 %           226.1      6.6 %
Asia/Pacific                             283.9         231.1          52.8       22.8 %            23.3     10.1 %
                                     $ 8,773.2     $ 6,896.6     $ 1,876.6       27.2 %   $       343.8      5.0 %

Regionally, net sales in North America increased during 2011 compared to 2010 primarily due to increased net sales of high horsepower tractors, combines and sprayers. In the Europe/Africa/Middle East region, net sales increased significantly in 2011 compared to 2010 primarily due to stronger market conditions in Western Europe. We experienced the largest net sales increases in Germany, France, Russia, Eastern Europe, the United Kingdom and Scandinavia. In South America, net sales increased during 2011 compared to 2010. Net sales increased in smaller South American countries, which benefited from higher commodity prices and healthy crop production, while sales in Brazil were flat compared to strong levels in 2010. In the Asia/Pacific region, net sales increased in 2011 compared to 2010, primarily due to net sales increases in Australia and New Zealand. We estimate that worldwide average price increases in 2011 and 2010 were approximately 3% and 2%, respectively. Consolidated net sales of tractors and combines, which consisted of approximately 73% of our net sales in 2011, increased approximately 26% in 2011 compared to 2010. Unit sales of tractors and combines increased approximately 8% during 2011 compared to 2010. The difference between the unit sales increase and the increase in net sales primarily was the result of foreign currency translation, pricing and sales mix changes.

The following table sets forth, for the years ended December 31, 2011 and 2010, the percentage relationship to net sales of certain items included in our Consolidated Statements of Operations (in millions, except percentages):

                                                               2011                       2010
                                                                      % of                       % of
                                                          $        Net Sales         $        Net Sales
Gross profit                                         $ 1,776.1       20.2  %    $ 1,258.7         18.2 %
Selling, general and administrative expenses             869.3        9.9  %        692.1         10.0 %
Engineering expenses                                     275.6        3.1  %        219.6          3.2 %
Restructuring and other infrequent (income) expenses      (0.7 )        -  %          4.4          0.1 %
Amortization of intangibles                               21.6        0.2  %         18.4          0.2 %
Income from operations                               $   610.3        7.0  %    $   324.2          4.7 %

Gross profit as a percentage of net sales increased during 2011 as compared to 2010. Pricing, higher production volumes and material cost control initiatives . . .