What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-01 compared with 2020-02-28 · 654 added, 527 removed, 1513 unchanged (44% of the section changed)

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Changes in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for revenue recognition in 2018 due to the adoption of Accounting Standards Codification 606, Revenue from Contracts with Customers.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Codification 842, Leases.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of the reserve and allowance for volume discounts and sales incentive programs in certain geographic regions

Assessment of the reserve and allowance for volume discount and sales incentive programs in certain geographic regions

As discussed in Note 1 to the consolidated financial statements, the Company provides various volume discount and sales incentive programs with respect to its products.

Sales incentive programs include reductions in invoice prices, reduction in retail financial rates, dealer commissions and dealer incentive allowances.

Volume discounts and sales incentives are recorded at the time of sale as a reduction of revenue using the expected value method.

As of December 31, 2020, the Company had accrued volume discounts and sales incentives of approximately $582.9 million and an allowance for sales incentive discounts of approximately $12.9 million.

We identified the assessment of the reserve and allowance for volume discounts and sales incentive programs in certain geographic regions as a critical audit matter.

Sales incentive programs include reductions in invoice prices, reductions in retail financial rates, dealer commissions and dealer incentive allowances.

Volume discounts and sales incentives are recorded at the time of sale as a reduction of revenue using the expected value method.

We identified the assessment of the reserve and allowance for volume discount and sales incentive programs in certain geographic regions as a critical audit matter.

Auditor judgment was required to evaluate certain assumptions which had a higher degree of measurement uncertainty.

Key assumptions included estimated incentive rates, which were the estimated rates at which programs were applied to eligible products, and estimated achievement by dealers of specified cumulative target levels.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s reserve and allowance for volume discounts and sales incentive process, including controls related to the development of the key assumptions.

For certain volume discounts and sales incentive programs, we compared the program details to dealer communications and the key assumptions to historical results for similar programs.

We assessed the Company’s historical ability to estimate key assumptions by comparing the prior year estimated amounts to actual discounts and sales incentives realized by the customers.

We evaluated the Company’s key assumptions by comparing them to actual results, including results of transactions occurring after year-end.

Significant assumptions included estimated incentive rates, which were the estimated rates at which programs were applied to eligible products, and estimated achievement by dealers of specified cumulative targeted purchase levels.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s reserve and allowance for volume discount and sales incentive process, including controls related to the development of the significant assumptions.

For certain volume discount and sales incentive programs, we compared the program details to dealer communications and the significant assumptions to historical results for similar programs.

We assessed the Company’s historical ability to estimate significant assumptions by comparing the prior year estimated amounts to actual discounts and sales incentives realized by the customers.

We evaluated the significant assumptions by comparing them to actual results, including the results of transactions occurring after year-end.

Assessment of gross unrecognized income tax benefits in certain jurisdictions

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We identified the assessment of gross unrecognized income tax benefits in certain jurisdictions as a critical audit matter.

Complex auditor judgment and specialized skills were required in evaluating the Company’s interpretation and application of tax law and the estimate of the amount of tax benefits expected to be realized.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s gross unrecognized income tax benefit process.

Complex auditor judgment and specialized skills were required in evaluating the Company’s interpretation and application of tax laws and the estimate of the amount of tax benefits expected to be realized.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s gross unrecognized income tax benefit process.

This included controls related to the Company’s consideration of information that could affect the recognition or measurement of income tax benefits from uncertain tax positions and the interpretation and application of tax laws.

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• evaluating the Company’s interpretation and application of tax laws

performing an independent assessment of the Company’s tax positions and comparing the results to the Company’s assessment.

Assessment of goodwill impairment for the grain storage and protein production systems Europe/Middle East reporting unit

As discussed in Note 1 to the consolidated financial statements, the Company evaluates goodwill for impairment as of October 1 and when events or circumstances indicate that fair value of a reporting unit may be below its carrying value.

The Company performs its goodwill impairment analysis using either a qualitative or a quantitative assessment.

Based on the Company’s quantitative analysis of its grain storage and protein production systems Europe/Middle East reporting unit, the Company determined that the carrying value of the reporting unit exceeded its fair value.

As a result, the Company recorded the excess as a goodwill impairment charge of approximately $173.6 million.

We identified the assessment of goodwill impairment for the grain storage and protein production systems Europe/Middle East reporting unit as a critical audit matter because a high degree of subjective auditor judgment was required to evaluate the fair value of the reporting unit.

The fair value estimation methodology used the following key

assumptions for which there was limited observable market information:

future cash flows, market multiples, revenue growth rates and discount rate.

The determined fair value, which directly impacted the goodwill impairment charge, was sensitive to changes in these key assumptions.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s goodwill impairment process, including controls over the key assumptions.

We performed sensitivity analyses over the key assumptions to assess their impact on the Company’s determination that the carrying value of the grain storage and protein production systems Europe/Middle East reporting unit exceeded its fair value.

We compared the Company’s future cash flows and revenue growth rates used in the valuation model against underlying business strategies and growth plans.

• developing an expectation of the Company’s tax positions and comparing the results to the Company’s assessment

Assessment of goodwill impairment for certain reporting units

As discussed in Note 1 to the consolidated financial statements, the Company evaluates goodwill for impairment annually as of October 1 and when events or circumstances indicate that fair value of a reporting unit may be below its carrying value.

As of December 31, 2020, the Company has $1,306.5 million of goodwill.

The Company performs its goodwill impairment analyses using either a qualitative or a quantitative assessment.

The fair values of the reporting units are determined based on a combination of valuation techniques, including an income approach and guideline public company method.

Based on the Company’s analysis, the Company determined that the fair values of certain reporting units were in excess of the carrying values and therefore did not record any goodwill impairment for these reporting units.

We identified the assessment of goodwill impairment for certain reporting units as a critical audit matter because a high degree of subjective auditor judgment was required to evaluate the fair value of the reporting units.

The fair value model used the following significant assumptions for which there was limited observable market information:

forecasted revenue growth and discount rates.

The determined fair values were sensitive to changes in these significant assumptions.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s goodwill impairment process, including controls over the significant assumptions.

We performed sensitivity analyses over the significant assumptions to assess their impact on the Company’s fair value determination.

We compared the Company’s forecasted revenue growth used in the valuation model against underlying business strategies and growth plans.

We compared the Company’s historical revenue forecasts to actual results to assess the Company’s ability to forecast.

In addition, we involved valuation professionals with specialized skills and knowledge who assisted in:

comparing the Company’s discount rate inputs and market multiples to market data and publicly available information for comparable entities to test the selected discount rate and market multiples, and

testing the estimate of fair value for the grain storage and protein production systems Europe/Middle East reporting unit using the Company’s cash flow forecast and discount rate, and comparing the results to the Company’s fair value estimate.

• comparing the Company’s discount rate inputs to publicly available information for comparable entities to test the selected discount rate

• recomputing the estimate of fair value for the reporting units using the Company’s significant assumptions and comparing the result to the Company’s fair value estimate

We have served as the Company’s auditor since 2002.

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Years Ended December 31,

2020 2019 2018

Net sales $ 9,149.7 $ 9,041.4 $ 9,352.0

Cost of goods sold 7,092.2 7,057.1 7,355.3

2,057.5 1,984.3 1,996.7

Operating expenses:

Selling, general and administrative expenses

1,001.5 1,040.3 1,069.4

Engineering expenses

Impairment charges

342.6 343.4 355.2

Amortization of intangibles 59.5 61.1 64.7

Impairment charges

Restructuring expenses

19.7 9.0 12.0

Bad debt expense

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Interest expense, net

15.0 19.9 53.8

Other expense, net

22.7 67.1 74.9

Income before income taxes and equity in net earnings of affiliates 562.0 261.1 360.3

Income tax provision

187.7 180.8 110.9

Income before equity in net earnings of affiliates 374.3 80.3 249.4

Equity in net earnings of affiliates

Net loss (income) attributable to noncontrolling interests

45.5 42.5 34.3

Net income 419.8 122.8 283.7

Net loss attributable to noncontrolling interests 7.3 2.4 1.8

Net income attributable to AGCO Corporation and subsidiaries $ 427.1 $ 125.2 $ 285.5

Net income per common share attributable to AGCO Corporation and subsidiaries:

$ 5.69 $ 1.64 $ 3.62

$ 5.65 $ 1.63 $ 3.58

Cash dividends declared and paid per common share $ 0.63 $ 0.63 $ 0.60

Weighted average number of common and common equivalent shares outstanding:

75.0 76.2 78.8

75.6 77.0 79.7

See accompanying notes to Consolidated Financial Statements.

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Years Ended December 31,

Other comprehensive (loss) income, net of reclassification adjustments:

2020 2019 2018

Net income $ 419.8 $ 122.8 $ 283.7

Other comprehensive loss, net of reclassification adjustments:

Defined benefit pension plans, net of taxes:

Prior service cost arising during the year

Prior service credit (cost) arising during the year 0.3 ( 4.7 ) ( 7.0 )

Net loss recognized due to settlement

Net actuarial (loss) gain arising during the year

Net actuarial loss arising during the year ( 32.7 ) ( 23.3 ) ( 4.2 )

Amortization of prior service cost included in net periodic pension cost

Amortization of net actuarial losses included in net periodic pension cost

13.1 11.8 11.7

Derivative adjustments:

Net changes in fair value of derivatives

5.1 ( 2.6 ) ( 1.1 )

Net (gains) losses reclassified from accumulated other comprehensive loss into income

( 6.3 ) ( 0.1 ) 7.2

Foreign currency translation adjustments

Other comprehensive (loss) income, net of reclassification adjustments

( 201.8 ) ( 20.6 ) ( 206.8 )

Other comprehensive loss, net of reclassification adjustments ( 219.9 ) ( 37.3 ) ( 198.0 )

Comprehensive income 199.9 85.5 85.7

Comprehensive (income) loss attributable to noncontrolling interests

Comprehensive loss (income) attributable to noncontrolling interests 11.6 ( 0.1 ) 6.0

Comprehensive income attributable to AGCO Corporation and subsidiaries $ 211.5 $ 85.4 $ 91.7

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(in millions, except share amounts)

2020 December 31,

Current Assets:

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Deferred tax assets 77.6 93.8

Other assets 179.8 153.0

Intangible assets, net 455.6 501.7

Goodwill 1,306.5 1,298.3

Total assets $ 8,504.2 $ 7,759.7

LIABILITIES AND STOCKHOLDERS’ EQUITY

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(in millions, except share amounts)

Accumulated Other Comprehensive Loss

Noncontrolling

Capital Retained

Earnings Accumulated Other Comprehensive Loss Noncontrolling

Interests Total

Stockholders’

Common Stock Defined

Plans Cumulative

Adjustment Deferred

(Losses) Gains on

Derivatives Accumulated

Comprehensive Loss

Shares Amount

Balance, December 31, 2017 79,553,825 $ 0.8 $ 136.6 $ 4,253.8 $ ( 285.1 ) $ ( 1,071.8 ) $ ( 4.7 ) $ ( 1,361.6 ) $ 65.7 $ 3,095.3

Net income (loss) — — — 285.5 — — — — ( 1.8 ) 283.7

Payment of dividends to shareholders — — — ( 47.1 ) — — — — — ( 47.1 )

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Investment by noncontrolling interest

— — — — — — — — 1.0 1.0

Distribution to noncontrolling interest

— — — — — — — — ( 0.1 ) ( 0.1 )

Purchases and retirement of common stock

( 3,120,184 ) — ( 169.0 ) ( 15.3 ) — — — — — ( 184.3 )

Adjustment related to the adoption of ASU 2014-09 — — — 0.4 — — — — — 0.4

Defined benefit pension plans, net of taxes:

Prior service cost arising during year — — — — ( 7.0 ) — — ( 7.0 ) — ( 7.0 )

Net loss recognized due to settlement — — — — 0.9 — — 0.9 — 0.9

Net actuarial gain arising during year

Net actuarial loss arising during year — — — — ( 4.2 ) — — ( 4.2 ) — ( 4.2 )

Amortization of prior service cost included in net periodic pension cost

— — — — 1.3 — — 1.3 — 1.3

Amortization of net actuarial losses included in net periodic pension cost

— — — — 11.7 — — 11.7 — 11.7

Deferred gains and losses on derivatives, net

— — — — — — 6.1 6.1 — 6.1

Change in cumulative translation adjustment

— — — — — ( 202.6 ) — ( 202.6 ) ( 4.2 ) ( 206.8 )

Balance, December 31, 2018 76,536,755 0.8 10.2 4,477.3 ( 282.4 ) ( 1,274.4 ) 1.4 ( 1,555.4 ) 60.6 2,993.5

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Investment by noncontrolling interests

— — — — — — — — 2.0 2.0

Distribution to noncontrolling interest — — — — — — — — ( 0.4 ) ( 0.4 )

Changes in noncontrolling interest

— — — — — — — — ( 9.1 ) ( 9.1 )

Purchases and retirement of common stock

Adjustment related to the adoption of ASU 2014-09

( 1,794,256 ) — ( 30.4 ) ( 99.6 ) — — — — — ( 130.0 )

Defined benefit pension plans, net of taxes:

Prior service cost arising during year

— — — — ( 4.7 ) — — ( 4.7 ) — ( 4.7 )

Net loss recognized due to settlement

— — — — 0.6 — — 0.6 — 0.6

Net actuarial loss arising during year — — — — ( 23.3 ) — — ( 23.3 ) — ( 23.3 )

Amortization of prior service cost included in net periodic pension cost

— — — — 1.6 — — 1.6 — 1.6

Amortization of net actuarial losses included in net periodic pension cost

— — — — 11.8 — — 11.8 — 11.8

Deferred gains and losses on derivatives, net

— — — — — — ( 2.7 ) ( 2.7 ) — ( 2.7 )

Change in cumulative translation adjustment

— — — — — ( 23.1 ) — ( 23.1 ) 2.5 ( 20.6 )

Balance, December 31, 2019 75,471,562 0.8 4.7 4,443.5 ( 296.4 ) ( 1,297.5 ) ( 1.3 ) ( 1,595.2 ) 53.2 2,907.0

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Defined benefit pension plans, net of taxes:

Prior service cost arising during year

Prior service credit arising during year — — — — 0.3 — — 0.3 — 0.3

Net loss recognized due to settlement — — — — 0.3 — — 0.3 — 0.3

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Years Ended December 31,

2020 2019 2018

Cash flows from operating activities:

Net income $ 419.8 $ 122.8 $ 283.7

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 212.5 210.9 225.2

Impairment charges 20.0 176.6 —

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Loss on extinguishment of debt — — 24.5

Other ( 7.4 ) 6.9 2.6

Changes in operating assets and liabilities, net of effects from purchase of businesses:

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Purchase of businesses, net of cash acquired ( 2.8 ) — —

Investments in unconsolidated affiliates

Sale of (investments in) unconsolidated affiliates, net 29.1 ( 3.1 ) ( 5.8 )

Other — — 0.4

Net cash used in investing activities ( 241.7 ) ( 271.6 ) ( 205.5 )

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Payment of debt issuance costs ( 1.4 ) ( 0.5 ) ( 2.7 )

Investments by noncontrolling interests, net

Net cash used in financing activities

(Distributions to) investments by noncontrolling interests, net ( 3.1 ) 1.6 0.9

Net cash provided by (used in) financing activities 22.7 ( 313.4 ) ( 413.3 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash 8.8 ( 4.2 ) ( 18.7 )

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All significant intercompany balances and transactions have been eliminated in the Consolidated Financial Statements.

Certain prior period amounts have been reclassified to conform to the current period presentation.

Use of Estimates

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The estimates made by management primarily relate to accounts and notes receivable, inventories, deferred income tax valuation allowances, uncertain tax positions, goodwill and other identifiable intangible assets, and certain accrued liabilities, principally relating to reserves for volume discounts and sales incentives, warranty obligations, product liability and workers’ compensation obligations, and pensions and postretirement benefits.

The Company cannot predict the ongoing impact of the COVID-19 pandemic due to increased volatility in global economic and political environments, uncertain market demand for its products, supply chain disruptions, possible workforce unavailability, exchange rate and commodity and protein price volatility and availability of financing, and their impact to the Company’s net sales, production volumes, costs and overall financial condition and available funding.

The Company may be required to record significant impairment charges in the future with respect to noncurrent assets such as goodwill and other intangible assets and equity method investments, whose fair values may be negatively affected by the COVID-19 pandemic.

The Company also may be required to write-down obsolete inventory due to decreased customer demand and sales orders.

The Company is closely monitoring the collection of accounts receivable, as well as the operating results of its finance joint ventures around the world.

If economic conditions around the world continue to deteriorate, the Company and its finance joint ventures may not collect accounts receivable at expected levels, and the operating results of its finance joint ventures may be negatively impacted, thus negatively impacting the Company’s results of operations and financial condition.

The Company also is closely assessing its compliance with debt covenants, the recognition of any future insurance recoveries, cash flow hedging forecasts as compared to actual transactions, the fair value of pension assets, accounting for incentive and stock compensation accruals, revenue recognition and discount reserve setting as well as the realization of deferred tax assets in light of the COVID-19 pandemic.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Foreign Currency Translation

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dollar effective July 1, 2018.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents reported in the Consolidated Balance Sheets as of December 31, 2020, 2019 and 2018 and cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 are as follows (in millions):

December 31, 2019

December 31, 2018

December 31, 2017

December 31, 2020 December 31, 2019 December 31, 2018

$ 1,022.0 $ 412.3 $ 290.5

Cash equivalents (2)

89.7 17.3 35.6

Restricted cash (3)

Total $ 1,119.1 $ 432.8 $ 326.1

____________________________________

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Payment terms for some highly seasonal products have a specified due date during the year regardless of the shipment or delivery date.

For sales in most markets outside of the United States and Canada, the Company generally does not charge interest on outstanding receivables with its dealers and distributors.

Sales of replacement parts generally are payable within 30 days to 90 days of shipment, with terms for some larger, seasonal stock orders generally payable within six months of shipment.

In certain markets, there is a time lag, which varies based on the timing and level of retail demand, between the date the Company records a sale and when the dealer sells the equipment to a retail customer.

Sales of grain storage and protein production systems generally are payable within 30 days of shipment.

In certain countries, sales of such systems in which the Company is responsible for construction or installation may be contingent upon customer acceptance, payment terms vary by market and product, with fixed payment schedules on all sales.

For sales in most markets outside of the United States and Canada, the Company generally does not charge

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following summarizes by geographic region, as a percentage of our consolidated net sales, amounts with maximum interest-free periods as presented below (in millions):

Year Ended December 31, 2019

North America

South America

Europe/Middle East

Asia/Pacific/Africa

interest on outstanding receivables with its dealers and distributors.

Sales of replacement parts generally are payable within 30 days to 90 days of shipment, with terms for some larger, seasonal stock orders generally payable within six months of shipment.

Sales of grain storage and protein production systems both in the United States and in other countries generally are payable within 30 days of shipment.

In certain countries, sales of such systems for which the Company is responsible for construction or installation may be contingent upon customer acceptance.

Payment terms vary by market and product, with fixed payment schedules on all sales.

When sales of installation services occur, fixed payment schedules may include upfront deposits, progress payments and final payment upon customer acceptance.

The following summarizes by geographic region, as a percentage of the Company’s consolidated net sales, amounts with maximum interest-free periods as presented below (in millions):

Year Ended December 31, 2020 North

America South

America Europe/

Middle East Asia/

Pacific/Africa Consolidated

0 to 6 months $ 1,506.5 $ 873.8 $ 5,361.4 $ 734.0 $ 8,475.7 92.6 %

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13 to 24 months 23.5 — — — 23.5 0.3 %

$ 2,175.0 $ 873.8 $ 5,366.9 $ 734.0 $ 9,149.7 100.0 %

The Company has an agreement to permit transferring, on an ongoing basis, a majority of its wholesale interest-bearing and non-interest bearing accounts receivable in North America, Europe and Brazil to its U.S., Canadian, European and Brazilian finance joint ventures.

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Globally, reserves for incentive programs that will be paid in cash or credit memos, as is the case with most of the Company’s volume discount programs, as well as sales with incentives associated with accounts receivable sold to its finance joint ventures, are recorded within “Accrued expenses” within the Company’s Consolidated Balance Sheets.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Accounts and notes receivable are shown net of allowances for sales incentive discounts available to dealers and for doubtful accounts.

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Doubtful accounts 36.4 28.8

$ 49.3 $ 54.5

The Company accounts for its provision for doubtful accounts in accordance with ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” (“ASU 2016-13”).

In the United States and Canada, sales incentives can be paid through future cash settlements of receivables and through credit memos to Company’s dealers or through reductions in retail financing rates paid to the Company’s finance joint ventures.

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The Company transfers certain accounts receivable under its accounts receivable sales agreements with its finance joint ventures (see Note 3).

The Company records such transfers as sales of accounts receivable when it is considered to have surrendered control of such

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

receivables under the provisions of Accounting Standards Update (“ASU”) 2009-16, “Transfers and Servicing (Topic 860):

The Company records such transfers as sales of accounts receivable when it is considered to have surrendered control of such receivables under the provisions of Accounting Standards Update (“ASU”) 2009-16, “Transfers and Servicing (Topic 860):

Accounting for Transfers of Financial Assets.” Cash payments made to the Company’s finance joint ventures for sales incentive discounts provided to dealers related to outstanding accounts receivables sold are recorded within “Accrued expenses.”

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The Company had recorded approximately $ 91.2 million and $ 142.3 million, respectively, of VAT tax credits, net of reserves, as of December 31, 2020 and 2019.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Property, Plant and Equipment

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Depreciation is provided on a straight-line basis over the estimated useful lives of ten to 40 years for buildings and improvements, three to 15 years for machinery and equipment and three to ten years for furniture and fixtures.

Expenditures for maintenance and repairs are charged to expense as incurred.

Expenditures for maintenance and repairs are primarily charged to expense as incurred.

Property, plant and equipment, net at December 31, 2020 and 2019 consisted of the following (in millions):

Land $ 147.2 $ 142.5

Buildings and improvements 899.7 808.1

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Property, plant and equipment, net $ 1,508.5 $ 1,416.3

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Goodwill, Other Intangible Assets and Long-Lived Assets

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If the fair value of the reporting unit exceeds its carrying value of net assets, the goodwill is not considered impaired.

If the carrying value of net assets is higher than the fair value of the reporting unit, the impairment charge is the amount by which the carrying value exceeds the reporting unit’s fair value in accordance with ASU 2017-04.

If the carrying value of net assets is higher than the fair value of the reporting unit, an impairment charge is recorded in the amount by which the carrying value exceeds the reporting unit’s fair value in accordance with ASU 2017-04.

The Company reviews its long-lived assets, which include intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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Assets to be disposed of by sale are reported at the lower of the carrying amount or fair value, less estimated costs to sell.

The COVID-19 pandemic has adversely impacted the global economy as a whole.

Based on current macroeconomic conditions, the Company assessed its goodwill and other intangible assets for indications of impairment as of March 31, 2020, June 30, 2020 and September 30, 2020.

As of June 30,2020, the Company concluded there were indicators of impairment during the three months ended June 30, 2020 related to one of its smaller reporting units, which is a 50 %-owned tillage and seeding equipment joint venture.

The Company consolidates the reporting unit as it was determined to be the primary beneficiary of the joint venture.

Deteriorating market conditions for the products the joint venture sells were negatively impacted by the COVID-19 pandemic in the second quarter, greater than initially expected.

As a result, updated strategic reviews with revised forecasts indicated an impairment of the entire goodwill balance of this reporting unit was necessary as

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

of June 30, 2020.

During the three months ended June 30, 2020, an impairment charge of approximately $ 20.0 million was recorded as “Impairment charge” within the Company’s Consolidated Statements of Operations, with an offsetting benefit of approximately $ 10.0 million included within “Net loss attributable to noncontrolling interests.”

The Company’s goodwill impairment analysis conducted as of October 1, 2020 indicated that no other indicators of impairment existed and no reduction in the carrying amount of goodwill and long-lived assets was required related to the Company’s other reporting units.

The Company’s goodwill impairment analysis conducted as of October 1, 2019, indicated that the carrying value of the net assets of the Company’s grain storage and protein production systems operations in Europe/Middle East was in excess of the fair value of the reporting unit, and therefore, the Company recorded a non-cash impairment charge of approximately $ 173.6 million within “Impairment charges” in the Company’s Consolidated Statements of Operations.

In response to weakening market conditions and resulting operating results, new management was put in place over the grain storage and protein productions systems business, tasked with conducting a full strategic review of the business, including that of the Europe/Middle East reporting unit.

That full strategic review was completed in the fourth quarter of 2019, along with revised forecasts to include updated market conditions and strategic operating decisions.

During the three months ended December 31, 2019 , the Company also recorded a non-cash impairment charge of approximately $ 3.0 million within “Impairment charges” in the Company’s Consolidated Statements of Operations.

The impairment charge related to certain long-lived intangible assets associated with the Company’s grain storage and protein production systems operations within North America, due to the discontinuation of a certain brand name and related product, and customers.

The results of the Company’s goodwill and long-lived assets impairment analyses conducted as of October 1, 2018 and 2017 indicated that no reduction in the carrying amount of the Company’s goodwill and long-lived assets was required.

The Company’s accumulated goodwill impairment is approximately $ 354.1 million related to impairment charges the Company recorded during 2019, 2012 and 2006 pertaining to its grain storage and protein production systems business in Europe/Middle East, its Chinese harvesting reporting unit and its former sprayer reporting unit, respectively.

During the three months ended December 31, 2019, the Company also recorded a non-cash impairment charge of approximately $ 3.0 million within “Impairment charge” in the Company’s Consolidated Statements of Operations.

The impairment charge related to certain long-lived assets associated with the Company’s grain storage and protein production systems operations within North America, due to the discontinuation of a certain brand name and related product, and customers.

The results of the Company’s goodwill and long-lived assets impairment analyses conducted as of October 1, 2018 indicated that no reduction in the carrying amount of the Company’s goodwill and long-lived assets was required.

The Company’s accumulated goodwill impairment is approximately $ 374.1 million related to impairment charges the Company recorded during 2020, 2019, 2012 and 2006 pertaining to its 50 %-owned tillage and seeding equipment joint venture, its grain storage and protein production systems business in Europe/Middle East, its Chinese harvesting reporting unit and its former sprayer reporting unit, respectively.

The tillage and seeding equipment joint venture operates within the North American geographical reportable segment.

The Company’s grain storage and protein production systems Europe/Middle East reporting unit operates within the Europe/Middle East geographical reportable segment.

The Chinese harvesting business operates within the Asia/Pacific/Africa geographical reportable segment and the former sprayer reporting unit operates within the North American geographical reportable segment.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Changes in the carrying amount of goodwill during the years ended December 31, 2020, 2019 and 2018 are summarized as follows (in millions):

North America

South America

Europe/Middle East

Asia/Pacific/Africa

Balance as of December 31, 2016

Foreign currency translation

America South

America Europe/

Middle East Asia/

Pacific/Africa Consolidated

Balance as of December 31, 2017 $ 611.1 $ 136.4 $ 671.0 $ 122.9 $ 1,541.4

Adjustments — — 8.4 — 8.4

Foreign currency translation — ( 19.7 ) ( 29.8 ) ( 4.8 ) ( 54.3 )

4 unchanged sentences

Balance as of December 31, 2019 606.0 112.2 463.3 116.8 1,298.3

Foreign currency translation 0.2 ( 24.7 ) 38.0 7.5 21.0

Impairment charge ( 20.0 ) — — — ( 20.0 )

Acquisition 7.2 — — — 7.2

Balance as of December 31, 2020 $ 593.4 $ 87.5 $ 501.3 $ 124.3 $ 1,306.5

On September 10, 2020, the Company acquired 151 Research, Inc., a company specializing in agricultural technology, for approximately $ 2.8 million.

The Company agreed to further contingent consideration related to the acquisition, and therefore recorded a liability of approximately $ 4.4 million to reflect estimated achievement of agreed upon targets.

The acquisition did not have a material impact on the Company.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company amortizes certain acquired identifiable intangible assets primarily on a straight-line basis over their estimated useful lives, which range from five to 50 years.

The acquired intangible assets have a weighted average useful life as follows:

Intangible Assets

Weighted-Average Useful Life

Patents and technology

Customer relationships

Trademarks and trade names

Land use rights

Intangible Assets Weighted-Average Useful Life

Patents and technology 12 years

Customer relationships 13 years

Trademarks and trade names 20 years

Land use rights 45 years

For the years ended December 31, 2020, 2019 and 2018, acquired intangible asset amortization was $ 59.5 million, $ 61.1 million and $ 64.7 million, respectively.

11 unchanged sentences

The Massey Ferguson and Valtra trademark registrations can be renewed at a nominal cost in the countries in which the Company operates.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Changes in the carrying amount of acquired intangible assets during 2020 and 2019 are summarized as follows (in millions):

Trademarks and

Relationships

Land Use Rights

Trade Names Customer

Relationships Patents and

Technology Land Use

Gross carrying amounts:

Balance as of December 31, 2018 $ 203.4 $ 586.3 $ 155.8 $ 8.6 $ 954.1

Foreign currency translation

Balance as of December 31, 2018

Sale of a joint venture ( 1.3 ) ( 2.9 ) ( 1.9 ) — ( 6.1 )

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Balance as of December 31, 2019 199.3 579.0 151.1 8.5 937.9

Trademarks and

Relationships

Land Use Rights

Accumulated amortization:

Foreign currency translation 6.7 6.4 6.9 0.6 20.6

Balance as of December 31, 2020 $ 206.0 $ 585.4 $ 158.0 $ 9.1 $ 958.5

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Accumulated Amortization Trademarks and

Trade Names Customer

Relationships Patents and

Technology Land Use

Balance as of December 31, 2018 $ 73.4 $ 310.8 $ 80.7 $ 3.0 $ 467.9

Amortization expense 11.0 40.1 9.9 0.1 61.1

Sale of a joint venture ( 0.5 ) ( 1.2 ) ( 0.7 ) — ( 2.4 )

Foreign currency translation ( 0.6 ) ( 2.3 ) ( 1.2 ) — ( 4.1 )

1 unchanged sentence

Amortization expense 10.1 39.9 9.4 0.1 59.5

Sale of a joint venture

Foreign currency translation 2.0 3.0 5.1 0.2 10.3

Balance as of December 31, 2020 $ 95.4 $ 390.3 $ 103.2 $ 3.4 $ 592.3

Trademarks and

Indefinite-lived intangible assets:

Indefinite-Lived Intangible Assets Trademarks and

Balance as of December 31, 2018 $ 86.9

9 unchanged sentences

Accrued taxes 249.6 170.3

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Other 323.4 280.8

$ 1,916.7 $ 1,654.2

Warranty Reserves

The warranty reserve activity for the years ended December 31, 2020, 2019 and 2018 consisted of the following (in millions):

2020 2019 2018

Balance at beginning of the year $ 392.8 $ 360.9 $ 316.0

Acquisitions 0.2 — —

Accruals for warranties issued during the year 310.2 234.1 230.5

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Approximately $ 90.2 million and $ 60.9 million of warranty reserves are included in “Other noncurrent liabilities” in the Company’s Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company recognizes recoveries of the costs associated with warranties it provides when the collection is probable.

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Provisions for losses expected under these programs are recorded based on the Company’s estimates of the aggregate liabilities for the claims incurred.

The Company adopted ASU 2014-09, “Revenue from Contracts with Customers,” effective January 1, 2018 using the modified retrospective approach.

Revenue is recognized when the Company satisfies the performance obligation by transferring control over goods or services to a dealer, distributor or other customer.

The Company accounts for revenue recognition pursuant to ASU 2014-09, “Revenue from Contracts with Customers.” Revenue is recognized when the Company satisfies the performance obligation by transferring control over goods or services to a dealer, distributor or other customer.

The amount of revenue recognized is measured as the consideration the Company expects to receive in exchange for those goods or services pursuant to a contract with the customer.

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Estimates for sales incentives are made at the time of sale for expected incentive programs using the expected value method.

These estimates are revised in the event of subsequent

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

modification to the incentive program.

These estimates are revised in the event of subsequent modification to the incentive program.

All incentive programs are recorded and presented as a reduction of revenue, due to the fact that the Company does not receive a distinct good or service in exchange for the consideration provided.

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Shipping and handling costs associated with freight activities after the customer has obtained control are accounted for as fulfillment costs and are expensed and accrued at the time revenue is recognized in “Cost of goods sold” and “Selling, general and administrative expenses” in the Company’s Consolidated Statements of Operations.

The Company applied the practical expedient in ASU 2014-09 to not adjust the amount of revenue to be recognized under a contract with a dealer, distributor or other customer for the time value of money when the difference between the receipt of payment and the recognition of revenue is less than one year.

As afforded under the practical expedient in ASU 2014-09, the Company does not adjust the amount of revenue to be recognized under a contract with a dealer, distributor or other customer for the time value of money when the difference between the receipt of payment and the recognition of revenue is less than one year.

Although, substantially all revenue is recognized at a point in time, a relatively insignificant amount of installation revenue associated with the sale of grain storage and protein production systems is recognized on an “over time” basis as discussed below.

The Company also recognizes revenue “over time” with respect to extended warranty or maintenance contracts and certain technology services.

Generally, all of the contracts with customers that relate to “over time” revenue recognition have contract durations of less than 12 months.

The Company also recognizes revenue “over time” with respect to extended warranty and maintenance contracts and certain precision technology services.

Generally, almost all of the grain storage and protein production systems contracts with customers that relate to “over time” revenue recognition have contract durations of less than 12 months.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Extended warranty, maintenance services contracts and certain precision technology services generally have contract durations of more than 12 months.

Grain Storage and Protein Production Systems Installation Revenue.

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Extended Warranty Contracts.

The Company sells separately priced extended warranty contracts, which extends coverage beyond the base warranty period.

The Company sells separately priced extended warranty contracts and maintenance contracts, which extends coverage beyond the base warranty period, or covers maintenance over a specified period.

Revenue is recognized for the extended warranty contract on a straight-line basis, which the Company believes approximates the costs expected to be incurred in satisfying the obligations, over the extended warranty period.

The extended warranty period ranges from one to five years .

Payment is received at the inception of the extended warranty contract, which is recognized as a contract liability for the amount in excess of the revenue recognized.

Payment is received or revenue is deferred for free contracts at the inception of the extended warranty contract or maintenance contract, which is recognized as a contract liability for the amount in excess of the revenue recognized.

The revenue associated with the sale of extended warranty contracts is insignificant.

Technology Services Revenue.

The Company sells a combination of technology products and services.

Precision Technology Services Revenue.

The Company sells a combination of precision technology products and services.

When the bundled package of technology products and services is sold, the portion of the consideration received related to the services component is recognized over time as the Company satisfies the future performance obligation.

Revenue is recognized for the hardware component when control is transferred to the dealer or distributor.

The revenue associated with the sale of technology services is insignificant .

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Payment is received or revenue is deferred for free subscriptions at inception of the precision technology subscription period, which is recognized as a contract liability for the amount in excess of the revenue recognized.

The revenue associated with the sale of precision technology services is insignificant.

See Note 15 for additional information regarding the Company’s sources of revenue and associated contract liabilities and performance obligations.

Stock Incentive Plans

2 unchanged sentences

Years Ended December 31,

2020 2019 2018

Cost of goods sold $ 1.1 $ 1.7 $ 2.3

3 unchanged sentences

Research and development expenses are expensed as incurred and are included in engineering expenses in the Company’s Consolidated Statements of Operations.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Advertising Costs

7 unchanged sentences

Interest expense, net for the years ended December 31, 2020, 2019 and 2018 consisted of the following (in millions):

2020 2019 2018

Interest expense $ 24.9 $ 28.8 $ 61.9

Interest income ( 9.9 ) ( 8.9 ) ( 8.1 )

$ 15.0 $ 19.9 $ 53.8

During 2018, the Company repurchased its 5 7 / 8 % senior notes due December 1, 2021, and as a result, recorded approximately $ 24.5 million in a loss on extinguishment of debt reflected in “Interest expense, net.” This was offset by approximately $ 4.7 million of accelerated amortization of a deferred gain related to a terminated interest rate swap agreement associated with the senior notes.

5 unchanged sentences

See Note 5 for additional information regarding the Company’s income taxes.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Net Income Per Common Share

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Diluted net income per common share assumes the exercise of outstanding stock-settled stock appreciation rights (“SSARs”) and the vesting of performance share awards and restricted stock units using the treasury stock method when the effects of such assumptions are dilutive.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

A reconciliation of net income attributable to AGCO Corporation and subsidiaries and weighted average common shares outstanding for purposes of calculating basic and diluted net income per share during the years ended December 31, 2020, 2019 and 2018 is as follows (in millions, except per share data):

2020 2019 2018

Basic net income per share:

7 unchanged sentences

Weighted average number of common shares and common share equivalents outstanding for purposes of computing diluted net income per share

75.6 77.0 79.7

Diluted net income per share attributable to AGCO Corporation and subsidiaries $ 5.65 $ 1.63 $ 3.58

1 unchanged sentence

Comprehensive Income (Loss)

The Company reports comprehensive income (loss), defined as the total of net income (loss) and all other non-owner changes in equity, and the components thereof in its Consolidated Statements of Stockholders’ Equity and Consolidated Statements of Comprehensive Income (Loss).

The Company reports comprehensive income (loss), defined as the total of net in

come (loss) and all other non-owner changes in equity, and the components thereof in its Consolidated Statements of Stockholders’ Equity and Consolidated Statements of Comprehensive Income (Loss).

The components of other comprehensive (loss) income and the related tax effects for the years ended December 31, 2020, 2019 and 2018 are as follows (in millions):

AGCO Corporation and Subsidiaries

Noncontrolling Interests

AGCO Corporation and Subsidiaries Noncontrolling Interests

Amount Income

Taxes After-tax

Amount After-tax

Defined benefit pension plans $ ( 19.3 ) $ 2.4 $ ( 16.9 ) $ —

2 unchanged sentences

Total components of other comprehensive loss $ ( 218.3 ) $ 2.7 $ ( 215.6 ) $ ( 4.3 )

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

AGCO Corporation and Subsidiaries

Noncontrolling Interests

AGCO Corporation and Subsidiaries Noncontrolling Interests

Amount Income

Taxes After-tax

Amount After-tax

Defined benefit pension plans $ ( 13.4 ) $ ( 0.6 ) $ ( 14.0 ) $ —

Net gain on derivatives

Net loss on derivatives ( 3.1 ) 0.4 ( 2.7 ) —

Foreign currency translation adjustments ( 23.1 ) — ( 23.1 ) 2.5

Total components of other comprehensive loss $ ( 39.6 ) $ ( 0.2 ) $ ( 39.8 ) $ 2.5

AGCO Corporation and Subsidiaries

Noncontrolling Interests

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

AGCO Corporation and Subsidiaries Noncontrolling Interests

Amount Income

Taxes After-tax

Amount After-tax

Defined benefit pension plans $ 0.8 $ 1.9 $ 2.7 $ —

13 unchanged sentences

The Company uses non-derivative and, periodically, derivative instruments to hedge a portion of the Company’s net investment in foreign operations against adverse movements in exchange rates.

The Company’s gross profit is sensitive to the cost of steel and other raw materials.

From time to time, the Company enters into derivative instruments to hedge a portion of its commodity purchases against adverse movements in commodity prices.

The Company’s hedging policy prohibits it from entering into any foreign currency contracts for speculative trading purposes.

See Note 10 for additional information regarding the Company’s derivative instruments and hedging activities.

Recent Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which eliminates Step 2 from the goodwill impairment test.

Under the standard, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, resulting in an impairment charge that is the amount by which the carrying amount exceeds the reporting unit’s fair value.

The impairment charge, however, should not exceed the total amount of goodwill allocated to a reporting unit.

The impairment assessment under ASU 2017-04 applies to all reporting units, including those with a zero or negative carrying amount.

ASU 2017-04 is effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods using a prospective approach.

Early adoption is permitted for any interim or annual goodwill impairment test performed on testing dates after January 1, 2017.

The Company adopted ASU 2017-04 during the fourth quarter of 2019 and applied the standard to its annual impairment test performed as of October 1, 2019.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”), which superseded the existing lease guidance under current U.S.

ASU 2016-02 is based on the principle that entities should recognize assets and liabilities arising from leases.

The new standard does not significantly change the lessees’ recognition, measurement and presentation of expenses and cash flows from the previous accounting standard and leases continue to be classified as finance or operating.

The primary change under ASU 2016-02 is the requirement for entities to recognize a lease liability for payments and a right-of-use (“ROU”) asset representing the right to use the leased asset during the term of an operating lease arrangement.

Lessees were permitted to make an accounting policy election to not recognize the asset and liability for leases with a term of 12 months or less.

Lessors’ accounting under the new standard was largely unchanged from the previous accounting standard.

In addition, ASU 2016-02 expanded the disclosure requirements of lease arrangements.

Upon adoption, lessees and lessors were required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach.

In July 2018, the FASB issued ASU 2018-11, “Targeted Improvements,” which allowed for a new, optional transition method that provided the option to use the effective date as the date of initial application on transition.

Under this option, the comparative periods continued to apply the legacy guidance in ASC 840, including the disclosure requirements, and a cumulative effect adjustment was recognized in the period of adoption rather than the earliest period presented.

Under this transition option, comparative reporting was not required and the provisions of the standard was applied prospectively to leases in effect at the date of adoption.

The Company adopted the new guidance effective January 1, 2019 using a modified retrospective approach and no cumulative effect adjustment was recorded upon adoption.

Based on the Company’s current lease portfolio, the adoption of the standard as of January 1, 2019 resulted in the recognition on that date of ROU assets and operating lease liabilities in the amount of approximately $ 194.2 million and $ 196.4 million , respectively, in the Company’s Consolidated Balance Sheets.

The adoption of the new standard did not materially impact the Company’s Consolidated Statements of Operations or Consolidated Statements of Cash Flows.

ASU 2016-02 provided a number of optional practical expedients in transition.

The Company elected the “package of practical expedients” which permitted the Company not to reassess its prior conclusions about lease identification, lease classification and initial direct costs.

The Company elected the short-term lease exemption for all leases with a term of 12 months or less for both existing and ongoing operating leases.

The Company elected the practical expedient to separate lease and non-lease components for a majority of its operating leases, other than real estate and office equipment leases.

In connection with the adoption of ASU 2016-02 on January 1, 2019, the Company completed the design of new processes and internal controls, which included the implementation of a software solution and the cataloging of the Company’s existing and ongoing population of leased assets.

See Note 17 for additional information and related disclosures.

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which requires measurement and recognition of expected versus incurred credit losses for financial assets held.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, which requires measurement and recognition of expected versus incurred credit losses for financial assets held.

ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods as the adoption of the standard relates to the Company.

1 unchanged sentence

In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326), Financial Instruments - Credit Losses,” which clarifies the treatment of expected recoveries for amounts previously written-off on purchased receivables, provides transition relief for troubled debt restructurings and allows for certain disclosure simplifications of accrued interest.

The effective dates for both ASU 2019-04 and ASU 2019-11 are the same as the effective dates for ASU 2016-13.

The effective dates for both ASU 2019-04 and ASU 2019-11 were the same as the effective dates for ASU 2016-13.

The Company adopted this standard, and its subsequent modifications, as of January 1, 2020.

The adoption did not have a material impact to the Company’s results of operations, financial condition and cash flows.

The Company also adopted the following pronouncements in 2019, none of which had a material effect on its results of operations, financial condition and cash flows:

ASU 2018-02 - “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”

ASU 2018-13 - “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company also adopted the following pronouncements, none of which had a material impact to the Company’s results of operations, financial condition and cash flows.

• ASU 2020-04 – “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” was adopted in 2020.

See Note 6 for additional information.

• ASU 2018-15 – “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” was adopted in 2020.

• ASU 2019-12 – “Simplifying the Accounting for Income Taxes” was adopted as of January 1, 2021.

New Accounting Pronouncements to be Adopted

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which simplifies various aspects related to accounting for income taxes by removing certain exceptions for investments, intraperiod allocations and interim calculations, and adding guidance to reduce complexity in accounting for income taxes.

ASU 2019-12 is effective for annual periods beginning after December 15, 2020, and interim periods within those annual periods using a prospective approach.

Early adoption is permitted.

Depending on the amendment, adoption may be applied on the retrospective, modified retrospective or prospective basis.

The standard will not have a material impact on the Company's results of operations, financial condition and cash flows.

As discussed above, in June 2016, the FASB issued ASU 2016-13, which requires measurement and recognition of expected versus incurred credit losses for financial assets held.

4 unchanged sentences

Therefore, adoption of the standard by the Company’s finance joint ventures will likely impact the Company’s “Investment in affiliates” and “Equity in net earnings of affiliates.” The Company’s finance joint ventures are currently evaluating the impact of ASU 2016-13 to their results of operations and financial condition.

On October 2, 2017, the Company acquired the hay and forage division of the Lely Group (“Lely”) for approximately € 80.2 million (or approximately $ 94.6 million ), net of cash acquired of approximately € 10.1 million (or approximately $ 11.9 million ).

The Lely acquisition, with manufacturing locations in northern Germany, has allowed the Company to expand its product offering of hay and forage equipment, including balers and loader wagons.

The acquisition was financed by the Company’s credit facility (see Note 7 ).

The fair values of the assets acquired and liabilities assumed as of the acquisition date are presented in the following table (in millions):

Current assets

Property, plant and equipment

Intangible assets

Total assets acquired

Current liabilities

Long-term liabilities

Total liabilities assumed

Net assets acquired

The acquired identifiable intangible assets of Lely as of the date of the acquisition are summarized in the following table (in millions):

Intangible Assets

Weighted-Average Useful Life

Customer relationships

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The results of operations of Lely have been included in the Company’s Consolidated Financial Statements as of and from the date of acquisition.

The associated goodwill has been included in the Company’s Europe/Middle East geographical reportable segment.

Proforma results related to the acquisition were not material.

On September 1, 2017, the Company acquired Precision Planting LLC (“Precision Planting”) for approximately $ 198.1 million , net of cash acquired of approximately $ 1.6 million .

Precision Planting, headquartered in Tremont, Illinois, is a leading manufacturer of high-tech planting equipment.

The acquisition of Precision Planting provided the Company an opportunity to expand its precision farming technology offerings on a global basis.

The acquisition was financed by the Company’s credit facility (see Note 7 ).

The fair values of the assets acquired and liabilities assumed as of the acquisition date are presented in the following table (in millions):

Current assets

Property, plant and equipment

Intangible assets

Total assets acquired

Current liabilities

Total liabilities assumed

Net assets acquired

The acquired identifiable intangible assets of Precision Planting as of the date of the acquisition are summarized in the following table (in millions):

Intangible Assets

Weighted-Average Useful Life

Customer relationships

The results of operations of Precision Planting have been included in the Company’s Consolidated Financial Statements as of and from the date of acquisition.

The associated tax deductible goodwill has been included in the Company’s North America geographical reportable segment.

Proforma results related to the acquisition were not material.

Restructuring Expenses

From 2014 through 2019, the Company announced and initiated several actions to rationalize employee headcount at various manufacturing facilities and various administrative offices located in Europe, South America, Africa, China and the United States to reduce costs in response to softening global market demand and lower production volumes.

The aggregate headcount reduction was approximately 3,890 employees between 2014 and 2018.

In addition, during the three months ended December 31, 2019, the Company initiated various restructuring activities in an effort to rationalize its grain storage and protein production system operations.

The Company recorded severance and related costs associated with these rationalizations in connection with the termination of approximately 270 employee during 2019.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company has announced and initiated actions over the course of several years to rationalize employee headcount at various manufacturing facilities and various administrative offices located in Europe, South America, Africa, China and the United States, as well as the rationalization of its grain storage and protein production system operations.

These rationalizations were taken to reduce costs in response to softening global market demand and lower production volumes.

During 2020, the Company recorded severance and related costs associated with these rationalizations in connection with the termination of approximately 350 employees.

The components of the restructuring expenses are summarized as follows (in millions):

Loss on Sale of Joint Venture

Write-down of Property, Plant

and Equipment

Employee Severance

Facility Closure Costs

Employee Severance Facility Closure Costs Write-down of Property, Plant

and Equipment Other Related

Closure Costs Loss on Sale of

Joint Venture Total

Balance as of December 31, 2017 $ 10.9 $ — $ — $ — $ — $ 10.9

1 unchanged sentence

Non-cash expense — — ( 0.3 ) — — ( 0.3 )

Cash expense 13.8 — — — — 13.8

2018 provision reversal ( 2.1 ) — — — — ( 2.1 )

4 unchanged sentences

Non-cash expense — — ( 1.5 ) — ( 2.1 ) ( 3.6 )

Cash expense 5.6 0.5 — — — 6.1

2019 provision reversal ( 0.7 ) — — — — ( 0.7 )

4 unchanged sentences

Non-cash expense — — ( 2.5 ) — — ( 2.5 )

Cash expense 11.3 4.5 — 1.8 — 17.6

2020 provision reversal ( 0.4 ) — — — — ( 0.4 )

2 unchanged sentences

Balance as of December 31, 2020 $ 11.1 $ 3.9 $ — $ 1.8 $ — $ 16.8

In addition, during the three months ended December 31, 2019 , the Company exited and sold its 50 % interest in its USC, LLC joint venture to its joint venture partner for approximately $ 5.1 million .

During the three months ended December 31, 2019, the Company exited and sold its 50 % interest in its USC, LLC joint venture to its joint venture partner for approximately $ 5.1 million.

The operations of the joint venture were part of the Company's grain storage and production system operations, and the decision to sell the joint venture was as a result of the overall rationalization of the business.

The Company recorded a loss of approximately $ 2.1 million associated with the sale, which was reflected within “Restructuring expenses” in the Company’s Consolidated Statements of Operations.

22 unchanged sentences

Other affiliates 15.6 14.4

The Company’s finance joint ventures are located in the United States, Canada, Europe, Brazil, Argentina and Australia, and provide retail financing and wholesale financing to the Company’s retail customers and dealers, respectively.

See Note 14 for further information on the Company’s finance joint ventures.

$ 442.7 $ 380.2

The Company's finance joint ventures provide retail financing and wholesale financing to its dealers.

The majority of the assets of the Company’s finance joint ventures represent finance receivables.

The majority of the liabilities represent notes payable and accrued interest.

Under the various joint venture agreements, Rabobank or its affiliates provide financing to the joint venture companies.

AGCO has a 49 % interest in the Company’s finance joint ventures (Note 13).

The Company’s manufacturing joint ventures consist of Groupement International De Mecanique Agricole SA (“GIMA”) (a joint venture with a third-party manufacturer to purchase, design and manufacture components for agricultural equipment in France) and a joint venture with a third-party manufacturer to manufacture protein production equipment in China.

3 unchanged sentences

The Company’s equity in net earnings of affiliates for the years ended December 31, 2020, 2019 and 2018 were as follows (in millions):

2020 2019 2018

Finance joint ventures $ 45.0 $ 41.5 $ 34.7

Manufacturing and other joint ventures 0.5 1.0 ( 0.4 )

$ 45.5 $ 42.5 $ 34.3

Summarized combined financial information of the Company’s finance joint ventures as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018 were as follows (in millions):

As of December 31,

Total assets $ 8,033.4 $ 7,773.7

Total liabilities 7,226.7 7,081.9

1 unchanged sentence

For the Years Ended December 31,

2020 2019 2018

Revenues $ 402.2 $ 417.6 $ 390.8

Costs 274.0 299.9 286.7

Income before income taxes $ 128.2 $ 117.7 $ 104.1

The majority of the assets of the Company’s finance joint ventures represent finance receivables.

The majority of the liabilities represent notes payable and accrued interest.

Under the various joint venture agreements, Rabobank or its affiliates provide financing to the joint venture companies.

AGCO has a 49 % interest in the Company’s finance joint ventures (Note 14 ).

At December 31, 2020 and 2019, the Company’s receivables from affiliates were approximately $ 47.5 million and $ 15.2 million, respectively.

1 unchanged sentence

The portion of the Company’s retained earnings balance that represents undistributed retained earnings of equity method investees was approximately $ 375.5 million and $ 310.8 million as of December 31, 2020 and 2019, respectively.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The sources of income before income taxes and equity in net earnings of affiliates were as follows for the years ended December 31, 2020, 2019 and 2018 (in millions):

2020 2019 2018

United States $ ( 73.4 ) $ ( 53.1 ) $ ( 126.0 )

Foreign 635.4 314.2 486.3

Income before income taxes and equity in net earnings of affiliates $ 562.0 $ 261.1 $ 360.3

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The provision for income taxes by location of the taxing jurisdiction for the years ended December 31, 2020, 2019 and 2018 consisted of the following (in millions):

2020 2019 2018

United States:

Federal $ 1.0 $ ( 6.5 ) $ ( 9.1 )

State 3.1 2.1 1.2

Foreign 180.2 170.1 133.5

184.3 165.7 125.6

United States:

Swiss tax reform was enacted during 2019 and eliminates certain preferential tax items as well as implements new tax rates at both the federal and cantonal levels.

Federal 1.3 1.3 —

Foreign 2.1 13.8 ( 14.7 )

3.4 15.1 ( 14.7 )

$ 187.7 $ 180.8 $ 110.9

On March 27, 2020, the CARES Act (the “Act”) was enacted in the United States in response to the COVID-19 pandemic to, among other things, provide tax relief to businesses.

Tax provisions of the Act include the deferral of certain payroll taxes, relief for retaining employees and other provisions.

Other governments around the world have also enacted similar measures and may enact further measures in the future.

To date, the Act and other similar worldwide measures have not had a material impact to the Company’s results of operations or financial condition.

Swiss tax reform was enacted during 2019 and eliminated certain preferential tax items as well as implemented new tax rates at both the federal and cantonal levels.

During the three months ended December 31, 2019, the Company recognized a one-time income tax gain of approximately $ 21.8 million associated with the changing of Swiss federal and cantonal tax rates as well as recognition of a deferred tax asset associated with the estimated value of a tax basis step-up of the Company’s Swiss subsidiary’s assets.

On December 22, 2017, The Tax Cuts and Jobs Act (“the 2017 Tax Act”) was enacted in the United States.

During the three months ended December 31, 2017, the Company recorded a tax provision of approximately $ 42.0 million in accordance with Staff Accounting Bulletin No.

118, which provided SEC Staff guidance for the application of ASC 740 “Income Taxes,” in the reporting period in which the 2017 Tax Act was enacted.

The $ 42.0 million tax provision included a provisional income tax charge related to a one-time transition tax associated with the mandatory deemed repatriation of unremitted foreign earnings.

The tax provision also included a provisional income tax charge associated with the income tax consequences related to the expected future repatriation of certain underlying foreign earnings, as historically, the Company had considered them to be permanently reinvested.

The remaining balance of the tax provision primarily related to the remeasurement of certain net deferred tax assets using the lower enacted U.S.

Corporate tax rate, as well as other miscellaneous related impacts.

During the three months ended December 31, 2018 , the Company finalized its calculations related to the 2017 Tax Act and recorded an income tax benefit of approximately $ 8.4 million .

A reconciliation of income taxes computed at the United States federal statutory income tax rate (21% for 2019, 21% for 2018 (from 35% to 21%), and 35% for 2017) to the provision for income taxes reflected in the Company’s Consolidated Statements of Operations for the years ended December 31, 2019 , 2018 and 2017 is as follows (in millions):

The primary provisions of the 2017 Tax Act affecting the Company in 2018 were a reduction to the corporate tax rate from 35% to 21%, and a transition from a worldwide corporate tax system to a primarily territorial tax system.

Beginning in 2018, the Company was also subject to additional provisions of the 2017 Tax Act.

The main provisions include a tax on global intangible low-taxed income (“GILTI”) and a limitation on the deductibility of certain executive compensation.

The combined effect of these and other provisions did not have a material effect on the Company’s provision for income taxes in 2020 or 2019.

During the three months ended December 31, 2018, the Company finalized its calculations related to the 2017 Tax Act’s one-time transition tax associated with the mandatory deemed repatriation of unremitted foreign earnings, and recorded an income tax benefit of approximately $ 8.4 million.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

A reconciliation of income taxes computed at the United States federal statutory income tax rate (21% for 2020, 2019, and 2018 (from 35% for 2017)) to the provision for income taxes reflected in the Company’s Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018 is as follows (in millions):

2020 2019 2018

Provision for income taxes at United States federal statutory rate $ 118.0 $ 54.8 $ 75.7

6 unchanged sentences

Impacts related to changes in tax laws — ( 21.8 ) ( 8.4 )

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Other 1.4 ( 1.0 ) ( 1.4 )

$ 187.7 $ 180.8 $ 110.9

The significant components of the deferred tax assets and liabilities at December 31, 2020 and 2019 were as follows (in millions):

7 unchanged sentences

Foreign tax credits 5.9 6.4

Other 10.4 17.2

Total gross deferred tax assets 360.9 396.0

4 unchanged sentences

Investment in affiliates 33.1 50.3

Other 14.1 25.5

Total deferred tax liabilities 214.7 240.1

3 unchanged sentences

Deferred tax liabilities - noncurrent ( 112.4 ) ( 107.0 )

$ ( 34.8 ) $ ( 13.2 )

As reflected in the preceding table, the Company recorded a net deferred tax liability of $ 34.8 million and $ 13.2 million as of December 31, 2020 and December 31, 2019, respectively, and had a valuation allowance against its gross deferred tax assets of approximately $ 181.0 million and $ 169.1 million as of December 31, 2020 and 2019, respectively.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

During the three months ended September 30, 2019, the Company recorded a non-cash deferred income tax charge of approximately $ 53.7 million to establish a valuation allowance against its Brazilian net deferred income tax assets.

13 unchanged sentences

The Company recognizes income tax benefits from uncertain tax positions only when there is a more than 50% likelihood that the tax positions will be sustained upon examination by the taxing authorities based on the technical merits of the positions.

At December 31, 2019 and 2018 , the Company had $ 210.7 million and $ 166.1 million , respectively, of

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized.

At December 31, 2020 and 2019, the Company had $ 227.9 million and $ 210.7 million, respectively, of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized.

At December 31, 2020 and 2019, the Company had approximately $ 57.1 million and $ 51.0 million, respectively, of accrued or deferred taxes related to uncertain income tax positions connected with ongoing income tax audits in various jurisdictions that it expects to settle or pay in the next 12 months.

9 unchanged sentences

Lapses of applicable statute of limitations ( 0.2 ) ( 0.8 )

Foreign currency translation

Foreign currency translation and other 19.8 ( 2.8 )

Gross unrecognized income tax benefits at the end of the year $ 227.9 $ 210.7

The reconciliation of gross unrecognized tax benefits above for 2019 excludes certain indirect favorable effects that relate to other tax jurisdictions of approximately $ 44.9 million .

The reconciliation of gross unrecognized tax benefits above for 2020 and 2019 excludes certain indirect favorable effects that relate to other tax jurisdictions of approximately $ 64.1 million and $ 44.9 million, respectively.

The change in certain indirect favorable effects between 2020 and 2019 includes approximately $ 13.1 million related to additions and reductions for tax positions of current and prior years, changes in judgments and lapses of statutes of limitations.

The Company and its subsidiaries file income tax returns in the United States and in various state, local and foreign jurisdictions.

The Company and its subsidiaries are routinely examined by tax authorities in these jurisdictions.

As of December 31, 2019 , a number of income tax examinations in foreign jurisdictions were ongoing.

As of December 31, 2020, a number of income tax examinations in foreign jurisdictions, as well as the United States, were ongoing.

It is possible that certain of these ongoing examinations may be resolved within 12 months.

Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized income tax benefits balance may materially change within the next 12 months.

In certain foreign jurisdictions, there is either statutory expirations or our settlement expectations such that approximately $ 51.0 million could be concluded within the next 12 months .

Although there are ongoing examinations in various federal and state jurisdictions, the 2016 through 2019 tax years generally remain subject to examination in the United States by applicable authorities.

In the Company’s significant foreign jurisdictions, primarily the United Kingdom, France, Germany, Switzerland, Finland and Brazil, the 2014 through 2019 tax years generally remain subject to examination by their respective tax authorities.

In Brazil, the Company is contesting disallowed deductions related to the amortization of certain goodwill amounts (see Note 12 ).

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

foreign jurisdictions, there is either statutory expirations or the Company’s settlement expectations such that approximately $ 57.1 million could be concluded within the next 12 months.

Although there are ongoing examinations in various federal and state jurisdictions, the 2017 through 2020 tax years generally remain subject to examination in the United States by applicable authorities.

In the Company’s significant foreign jurisdictions, primarily the United Kingdom, France, Germany, Switzerland, Finland and Brazil, the 2015 through 2020 tax years generally remain subject to examination by their respective tax authorities.

In Brazil, the Company is contesting disallowed deductions related to amortization of certain goodwill amounts (see Note 11).

Long-term debt consisted of the following at December 31, 2020 and 2019 (in millions):

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Senior term loan due 2022 (1)

$ 184.0 $ 168.1

Credit facility, expires 2023 (1)

1 unchanged sentence

Senior term loans due between 2021 and 2028 (1)

1.056% Senior term loan due 2020 (1)

Other long-term debt 10.5 12.5

Debt issuance costs ( 2.5 ) ( 2.3 )

1,582.6 1,194.7

Senior term loans due 2021, net of debt issuance costs ( 323.6 ) —

Current portion of other long-term debt ( 2.3 ) ( 2.9 )

Senior term loans due 2019

Total indebtedness, less current portion

Total long-term indebtedness, less current portion $ 1,256.7 $ 1,191.8

____________________________________

1 unchanged sentence

At December 31, 2020, the aggregate scheduled maturities of long-term debt, excluding the current portion of long-term debt, are as follows (in millions):

Thereafter 102.6

Cash payments for interest were approximately $ 23.6 million, $ 26.3 million and $ 35.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.

5 unchanged sentences

The Company also has to fulfill financial covenants with respect to a total debt to EBITDA ratio and an interest coverage ratio.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Credit Facility

5 unchanged sentences

The Company also has to fulfill financial covenants with respect to a total debt to EBITDA ratio and an interest coverage ratio.

As of December 31, 2019 , the Company had no outstanding borrowings under the credit facility and the ability to borrow approximately $ 800.0 million

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

under the facility.

As of December 31, 2018, the Company had approximately $ 114.4 million of outstanding borrowings under the credit facility and the ability to borrow approximately $ 685.6 million under the facility.

As of December 31, 2020 and 2019, the Company had no outstanding borrowings under the revolving credit facility and the ability to borrow approximately $ 800.0 million under the facility.

On April 9, 2020, the Company entered into an amendment to its $ 800.0 million multi-currency revolving credit facility to include incremental term loans (“2020 term loans”) that allow the Company to borrow an aggregate principal amount of € 235.0 million and $ 267.5 million, respectively (or an aggregate of approximately $ 555.8 million as of December 31, 2020).

Amounts can be drawn incrementally at any time prior to maturity, but must be drawn down proportionately.

Amounts drawn must be in a minimum principal amount of $ 100.0 million and integral multiples of $ 50.0 million in excess thereof.

Once amounts have been repaid, those amounts are not permitted to be re-drawn.

The maturity date of the 2020 term loans is April 8, 2022.

Interest accrues on amounts outstanding under the 2020 term loans, at the Company’s option, at either (1) LIBOR plus a margin based on the Company’s credit rating ranging from 1.125 % to 2.125 % until April 8, 2021 and ranging from 1.375 % to 2.375 % thereafter, or (2) the base rate, which is equal to the higher of (i) the administrative agent’s base lending rate for the applicable currency, (ii) the federal funds rate plus 0.5 %, and (iii) one-month LIBOR for loans denominated in U.S.

dollars plus 1.0 %, plus a margin based on the Company’s credit rating ranging from 0.125 % to 1.375 % until April 8, 2021 and ranging from 0.375 % to 1.375 % thereafter.

The 2020 term loans contain covenants restricting, among other things, the incurrence of indebtedness and the making of certain payments, including dividends.

The Company also has to fulfill financial covenants with respect to a total debt to EBITDA ratio and an interest coverage ratio.

On April 15, 2020, the Company borrowed € 117.5 million and $ 133.8 million (or an aggregate of approximately $ 277.9 million as of December 31, 2020) of 2020 term loans.

The Company simultaneously repaid € 100.0 million (or approximately $ 108.7 million) of its revolving credit facility from the borrowings received.

There were no other borrowings on the 2020 term loans subsequent to the initial borrowings in April 2020.

As of December 31, 2020, the Company had the ability to borrow approximately $ 277.9 million of 2020 term loans.

Interest on U.S.

dollar borrowings under the Company’s credit facility is calculated based upon LIBOR.

In the event that LIBOR is no longer published, interest will be calculated upon a base rate.

The credit facility also provides for an expedited amendment process once a replacement for LIBOR is established.

In the event that LIBOR is no longer published, interest will be calculated upon either a base rate or the secured overnight financing rate depending on cost.

The credit facility and 2020 term loans also provide for an expedited amendment process once a replacement for LIBOR is established.

The Company’s former revolving credit and term loan facility consisted of an $ 800.0 million multi-currency revolving credit facility and a € 312.0 million term loan facility.

The maturity date of the former credit facility was June 26, 2020.

Under the former credit facility agreement, interest accrued on amounts outstanding, at the Company’s option, depending on the currency borrowed, at either (1) LIBOR or EURIBOR plus a margin ranging from 1.0 % to 1.75 % based on the Company’s leverage ratio, or (2) the base rate, which is equal to the higher of (i) the administrative agent’s base lending rate for the applicable currency, (ii) the federal funds rate plus 0.5 % , and (iii) one-month LIBOR for loans denominated in U.S.

dollars plus 1.0 % plus a margin ranging from 0.0 % to 0.25 % based on the Company’s leverage ratio.

The credit facility contained covenants restricting, among other things, the incurrence of indebtedness and the making of certain payments, including dividends, and was subject to acceleration in the event of a default.

The Company also had to fulfill financial covenants with respect to a total debt to EBITDA ratio and an interest coverage ratio.

As is more fully described in Note 10, the Company entered into an interest rate swap in 2015 to convert the term loan facility’s floating interest rate to a fixed interest rate of 0.33 % plus the applicable margin over the remaining life of the term loan facility.

7 unchanged sentences

Interest is payable on the term loan at 1.002 % per annum, payable semi-annually in arrears.

The term loan contains covenants regarding, among other things, the incurrence of indebtedness and the making of certain payments, as well as commitments regarding amounts of future research and development expenses in Europe, and is subject to acceleration in the events of default.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Europe, and is subject to acceleration in the events of default.

The Company also has to fulfill financial covenants with respect to a net leverage ratio and interest coverage ratio.

1 unchanged sentence

In October 2016, the Company borrowed an aggregate amount of € 375.0 million through a group of seven related term loan agreements, and in August 2018, the Company borrowed an additional aggregate amount of € 338.0 million through a group of another seven related term loan agreements.

Of the 2016 term loans, an aggregate amount of € 56.0 million (or approximately $ 61.1 million ) was repaid upon maturity in October 2019.

Of the 2016 term loans, an aggregate amount of € 56.0 million (or approximately $ 61.1 million) was repaid upon maturity of two term loan agreements in October 2019.

In aggregate, the Company has indebtedness of € 657.0 million (or approximately $ 806.0 million as of December 31, 2020) through a group of twelve related term loan agreements.

Four of the term loan agreements in the aggregate amount of € 264.0 million (or approximately $ 323.60 million net of debt issuance costs, as of December 31, 2020) will mature in August and October 2021.

The provisions of the term loan agreements are substantially identical, with the exception of interest rate terms and maturities.

3 unchanged sentences

The term loans contain covenants restricting, among other things, the incurrence of indebtedness and the making of certain payments, including dividends, and is subject to acceleration in the event of default.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Former Indebtedness

3 unchanged sentences

The Company repaid the € 200.0 million (or approximately $ 220.0 million) term loan in December 2019.

Interest was payable on the term loan at 1.056 % per annum, payable quarterly in arrears.

The term loan contained covenants regarding, among other things, the incurrence of indebtedness and the making of certain payments, as well as commitments regarding amounts of future research and development expenses in Europe, and was subject to acceleration in the events of default.

The Company also had to fulfill financial covenants with respect to a net leverage ratio and interest coverage ratio.

Senior Term Loans Due 2021

2 unchanged sentences

In December 2017, the Company repaid its € 200.0 million (or approximately $ 239.8 million) term loan and in October 2018, in connection with the term loan agreement due 2022 with Rabobank discussed above, the Company repaid its € 100.0 million (or approximately $ 113.2 million) term loan.

The Company had the ability to prepay the term loans before their maturity date on April 26, 2021.

Interest was payable on the term loans per annum, paid quarterly in arrears, equal to the EURIBOR plus a margin ranging from 1.0 % to 1.75 % based on the Company’s net leverage ratio.

The Company also had to fulfill financial covenants with respect to a total debt to EBITDA ratio and an interest coverage ratio.

5 7 / 8 % Senior Notes

The Company’s 5 7 / 8 % senior notes due December 1, 2021 constituted senior unsecured indebtedness.

Interest was payable on the notes semi-annually in arrears.

At any time prior to September 1, 2021, the Company could redeem the notes, in whole or in part from time to time, at its option, at a redemption price equal to the greater of (i) 100 % of the principal amount plus accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest (exclusive of interest accrued to the date of redemption) discounted to the redemption date at the treasury rate plus 0.5 %, plus accrued and unpaid interest, including additional interest, if any.

Beginning September 1, 2021, the Company could redeem the notes, in whole or in part from time to time, at its option, at a redemption price equal to 100 % of the principal amount plus accrued and unpaid interest, including additional interest, if any.

In May 2018, the Company completed a cash tender offer to purchase any and all of its outstanding 5 7 / 8 % senior notes at a cash purchase price of $1,077.50 per $1,000.00 of senior notes.

4 unchanged sentences

The losses on extinguishment as well as the accelerated amortization were reflected in “Interest expense, net,” for the year ended December 31, 2018.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Short-Term Borrowings

3 unchanged sentences

At December 31, 2020 and 2019, outstanding letters of credit totaled $ 14.4 million and $ 13.9 million, respectively.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Employee Benefit Plans

7 unchanged sentences

Pension benefits 2020 2019 2018

Service cost $ 16.2 $ 15.5 $ 16.6

Interest cost 16.5 20.7 19.9

5 unchanged sentences

The components of net periodic pension and postretirement benefits cost, other than the service cost component, are included in “Other expense, net” in the Company’s Consolidated Statements of Operations.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The weighted average assumptions used to determine the net annual pension costs for the Company’s defined benefit pension plans and ENPP for the years ended December 31, 2020, 2019 and 2018 are as follows:

2020 2019 2018

Weighted average discount rate 2.0 % 2.8 % 2.5 %

4 unchanged sentences

Weighted average expected long-term rate of return on plan assets (1)

5.0 % 5.5 % 6.0 %

Rate of increase in future compensation (2)

5.0 % 5.0 % 5.0 %

___________________________________

(1) Applicable for U.S.

3 unchanged sentences

For the Company’s Swiss cash balance plan, the interest crediting rate of 1.0 % for both 2020 and 2019 was set equal to the current annual minimum rate set by the government for the mandatory portion of the account balance.

Amounts above that have an interest crediting rate of 0.25 % .

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Above mandatory amounts have an interest crediting rate of 0.0 % for 2020 and 0.25 % for 2019.

Net annual postretirement benefit costs, and the weighted average discount rate used to determine them, for the years ended December 31, 2020, 2019 and 2018 are set forth below (in millions, except percentages):

Postretirement benefits 2020 2019 2018

Service cost $ 0.1 $ 0.1 $ 0.1

Interest cost 1.2 1.3 1.4

6 unchanged sentences

The following tables set forth reconciliations of the changes in benefit obligation, plan assets and funded status as of December 31, 2020 and 2019 (in millions):

Pension and ENPP Benefits

Postretirement Benefits

Pension and ENPP Benefits Postretirement Benefits

Change in benefit obligation 2020 2019 2020 2019

Benefit obligation at beginning of year $ 917.3 $ 823.1 $ 29.4 $ 25.3

Service cost 16.2 15.5 0.1 0.1

Interest cost 16.5 20.7 1.2 1.3

1 unchanged sentence

Actuarial losses (gains) 86.8 83.3 ( 1.1 ) 4.5

Amendments ( 0.3 ) 4.7 — —

Settlements ( 0.3 ) ( 0.8 ) — —

Benefits paid ( 44.6 ) ( 44.8 ) ( 1.5 ) ( 1.5 )

1 unchanged sentence

Benefit obligation at end of year $ 1,033.7 $ 917.3 $ 26.4 $ 29.4

Pension and ENPP Benefits

Postretirement Benefits

Pension and ENPP Benefits Postretirement Benefits

Change in plan assets 2020 2019 2020 2019

4 unchanged sentences

Benefits paid ( 44.6 ) ( 44.8 ) ( 1.5 ) ( 1.5 )

Settlements ( 0.3 ) ( 0.8 ) — —

Foreign currency exchange rate changes 32.2 16.5 — —

1 unchanged sentence

Funded status $ ( 225.1 ) $ ( 206.3 ) $ ( 26.4 ) $ ( 29.4 )

Unrecognized net actuarial losses (gains)

Unrecognized net actuarial losses 385.1 362.2 2.6 3.9

Unrecognized prior service cost 20.1 22.5 2.9 3.0

11 unchanged sentences

The following table summarizes the activity in accumulated other comprehensive loss related to the Company’s ENPP and defined pension and postretirement benefit plans during the years ended December 31, 2020 and 2019 (in millions):

Amount Income

Tax After-Tax

Accumulated other comprehensive loss as of December 31, 2018 $ ( 379.8 ) $ ( 97.4 ) $ ( 282.4 )

22 unchanged sentences

As of December 31, 2020, the average amortization periods were as follows:

Average amortization period of losses related to defined benefit pension plans

Average amortization period of losses related to defined benefit pension plans 7 years 14 years 19 years

The following table summarizes the unrecognized prior service cost related to the Company’s defined benefit pension plans as of December 31, 2020 and 2019 (in millions):

Unrecognized prior service cost $ 20.1 $ 22.5

The increase in the unrecognized prior service cost between years is due primarily to a plan amendment related to the Company's ENPP.

The decrease in the unrecognized prior service cost between years is due primarily to the amortization of unrecognized prior service cost related to prior plan amendments.

The amortization of unrecognized prior service cost during 2020 also included the initial amortization impacts of an amendment to the Company’s ENPP during 2019.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes the unrecognized net actuarial losses (gains) included in the Company's accumulated other comprehensive loss related to the Company’s U.S.

The following table summarizes the unrecognized net actuarial losses included in the Company’s accumulated other comprehensive loss related to the Company’s U.S.

and Brazilian postretirement health care benefit plans as of December 31, 2020 and 2019 (in millions):

Unrecognized net actuarial losses (gains) (1)

Unrecognized net actuarial losses (1)

___________________________________

1 unchanged sentence

postretirement benefit plans.

The increase in unrecognized net actuarial losses related to the Company’s U.S.

and Brazilian postretirement benefit plans was primarily due to lower discount rates as of December 31, 2019 as compared to December 31, 2018 .

The decrease in unrecognized net actuarial losses related to the Company’s U.S.

and Brazilian postretirement benefit plans was primarily due to liability gain due to the experience of the plans as of December 31, 2020 as compared to December 31, 2019.

The unrecognized net actuarial gains or losses will be impacted in future periods by discount rate changes, actual demographic experience, actual health care inflation and certain other factors.

13 unchanged sentences

Accumulated benefit obligation 135.4 151.9

The 2020 amounts disclosed above do not include balances related to the Company’s U.K.

The Company’s U.K.

plan’s fair value of plan assets was in excess of the plan’s accumulated benefit obligation as of December 31, 2020.

The amounts for 2019 disclosed above do not include the fair value of plan assets, the projected benefit obligation or the accumulated benefit obligation related to the Company’s U.K.

The 2018 amounts disclosed above do include balances related to the Company's U.K.

The Company’s U.K.

3 unchanged sentences

The Company’s accumulated comprehensive loss as of December 31, 2020 and 2019 reflects a reduction in equity related to the following items (in millions):

All plans (1) :

Reduction in equity, net of taxes of $ 98.6 and $ 96.3 at December 31, 2020 and 2019, respectively

$ 410.8 $ 391.6

GIMA joint venture:

4 unchanged sentences

(2) These amounts represented 50 % of GIMA’s unrecognized net actuarial losses and unrecognized prior service cost associated with its pension plan.

In addition, GIMA recognized a net actuarial loss due to settlements of approximately $ 0.1 million during both 2019 and 2018.

In addition, GIMA recognized a net actuarial loss due to settlements of approximately $ 0.1 million for both of 2020 and 2019, respectively.

The Company’s defined benefit pension obligation has been reflected based on the manner in which its defined benefit plans are being administered.

7 unchanged sentences

Rate of increase in future compensation 1.50 %- 5.0 %

1.75 %- 5.0 %

U.S.-based plans:

14 unchanged sentences

Under the settlement and yield curve approaches, the discount rate is set to equal the single discount rate that produces the same present value of all future payments.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

For measuring the expected U.S.

1 unchanged sentence

For measuring the expected U.S.

postretirement benefit

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

obligation at December 31, 2018 , the Company assumed a 6.50 % health care cost trend rate for 2019 decreasing to 5.0 % by 2025.

postretirement benefit obligation at December 31, 2019, the Company assumed a 6.25 % health care cost trend rate for 2020 decreasing to 5.0 % by 2025.

For measuring the Brazilian postretirement benefit plan obligation at December 31, 2020, the Company assumed a 9.96 % health care cost trend rate for 2021, decreasing to 4.28 % by 2032.

12 unchanged sentences

2026 through 2030 7.8

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Investment Strategy and Concentration of Risk

5 unchanged sentences

Other investments 7 % 7 %

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Total 100 % 100 %

The weighted average asset allocation of the Company’s non-U.S.

4 unchanged sentences

Other investments 6 % 7 %

Total 100 % 100 %

The Company categorizes its pension plan assets into one of three levels based on the assumptions used in valuing the asset.

23 unchanged sentences

The fair value of the Company’s pension assets as of December 31, 2020 is as follows (in millions):

Total Level 1 Level 2 Level 3

Equity securities:

Global equities $ 235.3 $ 156.5 $ 78.8 $ —

equities 4.7 4.7 — —

equities 65.2 65.2 — —

large cap equities 5.2 5.2 — —

5 unchanged sentences

Total fixed income share (1)

412.4 412.4 — —

Alternative investments:

3 unchanged sentences

Miscellaneous funds (3)

36.6 — — 36.6

Cash and equivalents measured at net asset value (4)

Total assets $ 808.6 $ 647.9 $ 78.8 $ 38.7

______________________________________

8 unchanged sentences

14 % are in event-driven funds;

7 % are distributed in hedged and non-hedged funds;

and 6 % are in credit funds.

14 % are in credit funds;

and 5 % are distributed in hedged and non-hedged funds.

(3) “Miscellaneous funds” is comprised of insurance contracts in Finland, Norway and Switzerland.

1 unchanged sentence

The following is a reconciliation of Level 3 assets as of December 31, 2020 (in millions):

Alternative Investments

Miscellaneous Funds

Total Alternative Investments Miscellaneous Funds

Beginning balance as of December 31, 2019 $ 33.1 $ 2.3 $ 30.8

8 unchanged sentences

The fair value of the Company’s pension assets as of December 31, 2019 is as follows (in millions):

Total Level 1 Level 2 Level 3

Equity securities:

Global equities $ 183.4 $ 116.5 $ 66.9 $ —

equities 3.8 3.8 — —

equities 65.2 65.2 — —

large cap equities 5.9 5.9 — —

small cap equities 3.4 3.4 — —

Preferred securities

Total equity securities 261.7 194.8 66.9 —

3 unchanged sentences

Total fixed income share (1)

370.1 370.1 — —

Alternative investments:

3 unchanged sentences

Miscellaneous funds (3)

30.8 — — 30.8

Cash and equivalents measured at net asset value (4)

Total assets $ 711.0 $ 564.9 $ 66.9 $ 33.1

_______________________________________

1 unchanged sentence

18 % are in government treasuries;

17 % are in foreign securities;

14 % are in high-yield securities;

10 % are in foreign securities;

9 % are in asset-backed and mortgage-backed securities;

and 6 % are in other various fixed income securities.

7 unchanged sentences

The following is a reconciliation of Level 3 assets as of December 31, 2019 (in millions):

Alternative Investments

Miscellaneous Funds

Total Alternative Investments Miscellaneous Funds

Beginning balance as of December 31, 2018 $ 30.5 $ 2.3 $ 28.2

11 unchanged sentences

The asset mix is recognized as the primary mechanism to influence the reward and risk structure of the pension fund investments in an effort to accomplish the plans’ funding objectives.

The overall investment strategies and target

The overall investment strategies and target allocations of retirement fund investments for the Company’s U.S.-based pension plans and the non-U.S.

based pension plans are as follow:

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

allocations of retirement fund investments for the Company’s U.S.-based pension plans and the non-U.S.

based pension plans are as follow:

Pension Plans

Pension Plans Non-U.S.

Pension Plans (1)

2 unchanged sentences

Assets for longer-term growth 40.0 % 45.0 %

Total 100.0 % 100.0 %

Target allocations:

3 unchanged sentences

Cash and cash equivalents 5.0 % — %

Total 100.0 % 100.0 %

_______________________________________

21 unchanged sentences

Under the plans, the Company contributes a specified percentage of each eligible employee’s compensation.

The Company contributed approximately $ 15.8 million for both the years ended December 31, 2019 and 2018 , and approximately $ 15.1 million for the year ended December 31, 2017 .

The Company contributed approximately $ 15.4 million for the year ended December 31, 2020 and $ 15.8 million for both the years ended December 31, 2019 and 2018.

AGCO CORPORATION

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Share Repurchase Program

During 2019 and 2018 , the Company repurchased 1,794,256 and 3,120,184 shares of its common stock, respectively, for approximately $ 130.0 million and $ 184.3 million , respectively, either through Accelerated Share Repurchase (“ASR”) agreements with financial institutions or through open market transactions.

During the three months ended March 31, 2020 and throughout 2019, the Company repurchased approximately 970,141 and 1,794,256 shares of its common stock, respectively, for approximately $ 55.0 million and $ 130.0 million, respectively, either through accelerated share repurchase agreements with financial institutions or through open market transactions.

All shares received were retired upon receipt, and the excess of the purchase price over par value per share was recorded to a combination of “Additional paid-in capital” and “Retained earnings” within the Company’s Consolidated Balance Sheets.

The Company suspended share repurchases subsequent to March 31, 2020 in light of the COVID-19 pandemic and has not repurchased shares since that period.

As of December 31, 2020, the remaining amount authorized to be repurchased under board-approved share repurchase authorizations was approximately $ 245.0 million, which has no expiration date.

In February 2020, the Company entered into an ASR agreement with a financial institution to repurchase an aggregate of $ 25.0 million of shares of its common stock.

The Company received approximately 297,000 shares to date in this transaction.

Upon settlement of the ASR, the Company may be entitled to receive additional shares of common stock or, under certain circumstances, be required to remit a settlement amount.

The Company expects that the additional shares will be received by the Company upon final settlement of its current ASR agreement, which expires during the second quarter of 2020.

The Company’s Board of Directors has declared and the Company has paid quarterly cash dividends per common share generally beginning in the first quarter of the following years:

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$ 0.16 $ 0.15 $ 0.15

The Company's Board of Directors has declared and the Company has paid quarterly cash dividends of $ 0.16 per common share beginning in the second quarter of 2019, from $ 0.15 per common share in the first quarter of 2019 .

On January 23, 2020, the Company’s Board of Directors approved a quarterly dividend of $ 0.16 per common share beginning in the first quarter of 2020 .

____________________________________

(1) The Company’s Board of Directors declared and the Company has paid quarterly cash dividends of $ 0.16 per common share beginning in the second quarter of 2019, from $ 0.15 per common share in the first quarter of 2019.

On January 21, 2021, the Company’s Board of Directors approved a quarterly dividend of $ 0.16 per common share commencing in the first quarter of 2021.

AGCO CORPORATION

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The following table sets forth changes in accumulated other comprehensive loss by component, net of tax, attributed to AGCO Corporation and its subsidiaries for the years ended December 31, 2020 and 2019 (in millions):

Defined Benefit Pension Plans

Cumulative Translation Adjustment

Deferred Net Gains (Losses) on Derivatives

Defined Benefit Pension Plans Cumulative Translation Adjustment Deferred Net Gains (Losses) on Derivatives Total

Accumulated other comprehensive loss, December 31, 2018 $ ( 282.4 ) $ ( 1,274.4 ) $ 1.4 $ ( 1,555.4 )

Other comprehensive loss before reclassifications ( 27.4 ) ( 23.1 ) ( 2.6 ) ( 53.1 )

Net losses reclassified from accumulated other comprehensive loss

Other comprehensive income (loss), net of reclassification adjustments

Net losses (gains) reclassified from accumulated other comprehensive loss 13.4 — ( 0.1 ) 13.3

Other comprehensive loss, net of reclassification adjustments ( 14.0 ) ( 23.1 ) ( 2.7 ) ( 39.8 )

Accumulated other comprehensive loss, December 31, 2019 ( 296.4 ) ( 1,297.5 ) ( 1.3 ) ( 1,595.2 )

Other comprehensive loss before reclassifications

Other comprehensive loss (gain) before reclassifications ( 32.1 ) ( 197.5 ) 5.1 ( 224.5 )

Net losses (gains) reclassified from accumulated other comprehensive loss 15.2 — ( 6.3 ) 8.9

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Accumulated other comprehensive loss, December 31, 2020 $ ( 313.3 ) $ ( 1,495.0 ) $ ( 2.5 ) $ ( 1,810.8 )

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table sets forth reclassification adjustments out of accumulated other comprehensive loss by component attributed to AGCO Corporation and its subsidiaries for the years ended December 31, 2020 and 2019 (in millions):

Details about Accumulated Other Comprehensive Loss Components

Amount Reclassified from Accumulated Other Comprehensive Loss

Affected Line Item within the Consolidated

Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item within the Consolidated

Statements of Operations

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Year ended December 31, 2019 (1)

Net (gains) losses on foreign currency contracts

Cost of goods sold

Net losses on interest rate swap contract

Interest expense, net

Net gains on foreign currency contracts $ ( 6.4 ) $ ( 0.1 ) Cost of goods sold

Reclassification before tax ( 6.4 ) ( 0.1 )

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Defined benefit pension plans:

Amortization of net actuarial losses

Other expense, net (2)

Amortization of prior service cost

Other expense, net (2)

Amortization of net actuarial losses $ 15.7 $ 14.3 Other expense, net (2)

Amortization of prior service cost 2.2 1.7 Other expense, net (2)

Reclassification before tax 17.9 16.0

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Stock Incentive Plan

Under the Plan, up to 10,000,000 shares of AGCO common stock may be issued.

As of December 31, 2019 , approximately 3,581,614 shares remained available for grant, assuming the maximum number of shares are earned related to the performance award grants discussed below.

Under the Plan, up to 10,000,000 shares of AGCO’s common stock may be issued.

As of December 31, 2020, of the 10,000,000 shares reserved for issuance under the Plan, approximately 3,853,244 shares remained available for grant, assuming the maximum number of shares are earned related to the performance award grants discussed below.

The Plan allows the Company, under the direction of the Board of Directors’ Compensation Committee, to make grants of performance shares, stock appreciation rights, restricted stock units and restricted stock awards to employees, officers and non-employee directors of the Company.

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Years Ended December 31,

2020 2019 2018

Weighted average grant-date fair value $ 70.84 $ 61.01 $ 71.40

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The Plan allows for the participant to have the option of forfeiting a portion of the shares awarded in lieu of a cash payment contributed to the participant’s tax withholding to satisfy the participant’s statutory minimum federal, state and employment taxes which would be payable at the time of grant.

During 2017, the Company recorded approximately $ 4.8 million of accelerated stock compensation expense associated with a stock award declined by the Company’s Chief Executive Officer.

I n addition, there were 169,982 shares earned as of December 31, 2020 related to certain retirees and other individuals that will be issued at the end of the relevant performance periods based on the ultimate level of performance achieved with respect to those periods.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As of December 31, 2019 , the total compensation cost related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performance that will be achieved, was approximately $ 24.0 million , and the weighted average period over which it is expected to be recognized is approximately one and one-half years .

As of December 31, 2020, the total compensatio n cost related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performance that will be achieved, was approximately $ 17.1 million, and the weighted average period over which it is expected to be recognized is approximately one and one-half years .

This estimate is based on the current projected levels of performance of outstanding awards.

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During the year ended December 31, 2020, the Company granted 95,593 restricted stock unit (“RSU”) awards.

These awards entitle the participant to receive one share of the Company’s common stock for each RSU granted and vest one-third per year over a three -year requisite service period, subject to adjustment in certain cases based on performance metric relative to the Company's peer group, commencing in 2020.

The compensation expense associated with these awards is being amortized ratably over the requisite service period for the awards that are expected to vest.

These awards entitle the participant to receive one share of the Company’s common stock for each RSU granted and vest one-third per year over a three-year requisite service period.

The 2020 grant of RSU’s to certain executives was and had a three-year cliff vesting requirement.

The compensation expense associated with all RSU awards is being amortized ratably over the requisite service period for the awards that are expected to vest.

The weighted average grant-date fair value of the RSUs granted under the Plan during the years ended December 31, 2020, 2019 and 2018 were $ 70.83 , $ 61.01 and $ 63.99 , respectively.

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Stock-settled Appreciation Rights

Certain executives and key managers are eligible to receive grants of SSARs.

Certain executives and key managers were eligible to receive grants of SSARs through the year ended December 31, 2020.

The SSARs provide a participant with the right to receive the aggregate appreciation in stock price over the market price of the Company’s common stock at the date of grant, payable in shares of the Company’s common stock.

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Years Ended December 31,

2020 2019 2018

Weighted average grant-date fair value $ 12.31 $ 11.34 $ 12.88

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SSAR price ranges per share:

43.88 - 73.14

Granted $ 72.74

Exercised 43.88 - 73.14

Canceled or forfeited 43.88 - 73.14

43.88 - 73.14

Weighted average SSAR exercise prices per share:

Granted $ 72.74

Exercised 56.61

Canceled or forfeited 67.87

Outstanding at December 31 66.44

At December 31, 2019 , the weighted average remaining contractual life of SSARs outstanding was approximately 4.6 years .

At December 31, 2020, the weighted average remaining contractual life of SSARs outstanding was approximately four years .

As of December 31, 2020, the total compensation cost related to unvested SSARs not yet recognized was approximately $ 1.7 million and the weighted-average period over which it is expected to be recognized is approximately two and one-half years.

The following table sets forth the exercise price range, number of shares, weighted average exercise price, and remaining contractual lives by groups of similar price as of December 31, 2020:

SSARs Outstanding

SSARs Exercisable

Range of Exercise Prices

Weighted Average

SSARs Outstanding SSARs Exercisable

Range of Exercise Prices Number of

Shares Weighted Average

Contractual Life

Weighted Average

Exercise Price

Exercisable as of December 31, 2019

Weighted Average

(Years) Weighted Average

Exercise Price Exercisable as of December 31, 2020 Weighted Average

Exercise Price

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142,106 3.73 $ 60.52 68,756 $ 58.04

$ 63.47 - $ 73.14

261,044 4.21 $ 69.66 101,369 $ 67.56

403,150 170,125 $ 63.71

The total fair value of SSARs vested during 2020 was approximately $ 3.1 million.

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The excess tax benefit realized for tax deductions in the United States related to the exercise of SSARs and vesting of RSU awards and vesting of performance awards under the Plan was approximately $ 2.7 million for the year ended December 31, 2019.

The excess tax benefit realized for tax deductions in the United States related to the exercise of SSARs and vesting of RSU awards under the Plan was less than $ 0.1 million for the year ended December 31, 2017 .

The Company realized an insignificant tax benefit from the exercise of SSARs, vesting of performance awards and vesting of RSU awards in certain foreign jurisdictions during the years ended December 31, 2020, 2019 and 2018.

On January 22, 2020, the Company granted 212,720 performance award shares (subject to the Company achieving future target levels of performance), 187,100 SSARs and 95,820 RSUs under the Plan.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

On January 20, 2021, the Company granted 134,754 performance award shares (subject to the Company achieving future target levels of performance) and 89,775 RSUs under the Plan.

The 2021 grant of performance award shares is subject to a total shareholder return modifier.

Director Restricted Stock Grants

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The component of the gains and losses on the Company’s net investment in the designated foreign operations driven by changes in foreign exchange rates are economically offset by movements in the fair value of the cross currency swap contracts.

The Company is exposed to commodity risk from steel and other raw material purchases where a portion of the contractual purchase price is linked to a variable rate based on publicly available market data.

From time to time, the Company enters into cash flow hedges to mitigate its exposure to variability in commodity prices.

The Company’s senior management establishes the Company’s foreign currency and interest rate risk management policies.

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The Company’s valuation techniques are designed to maximize the use of observable inputs and minimize the use of unobservable inputs.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Counterparty Risk

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There have been no negative impacts to the Company from any non-performance of any counterparties.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Derivative Transactions Designated as Hedging Instruments

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The total notional value of derivatives that were designated as cash flow hedges was $ 395.8 million and $ 332.7 million as of December 31, 2020 and 2019, respectively.

Steel Commodity Contracts

In December 2020, the Company designated certain steel commodity contracts as cash flow hedges of expected future purchases of steel.

The total notional value of derivatives that were designated as cash flow hedges was approximately $ 14.7 million as of December 31, 2020.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes the after-tax impact that changes in the fair value of derivatives designated as cash flow hedges had on accumulated other comprehensive loss and net income during 2020, 2019 and 2018 (in millions):

Recognized in Net Income

(Loss) Gain Recognized in Accumulated

Other Comprehensive Loss

Classification of Gain (Loss)

Gain (Loss) Reclassified from Accumulated

Other Comprehensive Loss into Income

Total Amount of the Line Item in the Consolidated Statements of Operations Containing Hedge Gains (Losses)

Foreign currency contracts (1)

Cost of goods sold

Foreign currency contracts

Cost of goods sold

Interest rate swap contract

Interest expense, net

Gain (Loss) Recognized in Accumulated

Other Comprehensive Loss Classification of Gain (Loss) Gain (Loss) Reclassified from Accumulated

Other Comprehensive Loss into Income Total Amount of the Line Item in the Consolidated Statements of Operations Containing Hedge Gains (Losses)

Foreign currency contracts (1)

$ 4.6 Cost of goods sold $ 6.3 $ 7,092.2

Interest rate swap contract

Interest expense, net

Commodity contracts (2)

Total $ 5.1 $ 6.3

Foreign currency contracts $ ( 2.6 ) Cost of goods sold $ 0.1 $ 7,057.1

Foreign currency contracts $ 0.4 Cost of goods sold $ ( 2.2 ) $ 7,355.3

Interest rate swap contract ( 1.5 ) Interest expense, net ( 5.0 ) 53.8

Total $ ( 1.1 ) $ ( 7.2 )

(1) The outstanding contracts as of December 31, 2020 range in maturity through December 2021.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(2) The outstanding contracts as of December 31, 2020 range in maturity through May 2021.

The following table summarizes the activity in accumulated other comprehensive loss related to the derivatives held by the Company during the years ended December 31, 2020, 2019 and 2018 (in millions):

Accumulated derivative net losses as of December 31, 2016

Net changes in fair value of derivatives

Net losses reclassified from accumulated other comprehensive loss into income

Amount Income

Tax After-Tax

Accumulated derivative net losses as of December 31, 2017 $ ( 6.0 ) $ ( 1.3 ) $ ( 4.7 )

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Accumulated derivative net losses as of December 31, 2019 $ ( 1.5 ) $ ( 0.2 ) $ ( 1.3 )

Net changes in fair value of derivatives 4.9 ( 0.2 ) 5.1

Net gains reclassified from accumulated other comprehensive loss into income ( 6.4 ) ( 0.1 ) ( 6.3 )

Accumulated derivative net losses as of December 31, 2020 $ ( 3.0 ) $ ( 0.5 ) $ ( 2.5 )

Net Investment Hedges

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When the net investment in foreign operations is sold or substantially liquidates, the amounts recorded in accumulated other comprehensive loss are reclassified to earnings.

To the extent foreign currency denominated debt is de-designated from a net investment hedge relationship, changes in the value of the foreign currency denominated debt are recorded in earnings through the maturity date.

To the extent foreign currency denominated debt is de-designated from

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

a net investment hedge relationship, changes in the value of the foreign currency denominated debt are recorded in earnings through the maturity date.

In January 2018, the Company entered into a cross currency swap contract as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment.

The cross currency swap expired on January 19, 2021.

At maturity of the cross currency swap contract, the Company delivered the notional amount of approximately € 245.7 million (or approximately $ 297.1 million as of January 19, 2021) and received $ 300.0 million from the counterparties, resulting in a gain of approximately $ 2.9 million that was recognized in accumulated other comprehensive loss.

The Company received quarterly interest payments from the counterparties based on a fixed interest rate until maturity of the cross currency swap.

On January 29, 2021, the Company entered into a new cross currency swap contract as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment.

The cross currency swap has an expiration date of January 29, 2028.

At maturity of the cross currency swap contract, the Company will deliver the notional amount of approximately € 245.7 million (or approximately $ 275.3 million as of December 31, 2019 ) and will receive $ 300.0 million from the counterparties.

At maturity of the cross currency swap contract, the Company will deliver the notional amount of approximately € 247.9 million (or approximately $ 300.9 million as of January 29, 2021) and will receive $ 300.0 million from the counterparties.

The Company will receive quarterly interest payments from the counterparties based on a fixed interest rate until maturity of the cross currency swap.

During the three months ended March 31, 2020, the Company designated € 110.0 million of its multi-currency revolving credit facility with a maturity date of October 17, 2023 as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment.

In May 2020, the Company repaid the designated amount outstanding under its multi-currency revolving credit facility and the foreign currency denominated debt was de-designated as a net investment hedge.

In January 2019 and September 2019, the Company designated € 160.0 million and € 30.0 million, respectively, of its multi-currency revolving credit facility with a maturity date of October 17, 2023 as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment.

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Notional Amount as of

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Cross currency swap contract $ 300.0 $ 300.0

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes the after-tax impact of changes in the fair value of the instrument designated as a net investment hedge (in millions):

Gain (Loss) Recognized in Accumulated Other Comprehensive Loss for the Years Ended

December 31, 2019

December 31, 2018

December 31, 2017

December 31, 2020 December 31, 2019 December 31, 2018

Foreign currency denominated debt $ 1.7 $ 2.5 $ ( 14.4 )

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As of December 31, 2020 and 2019, the Company had outstanding foreign currency contracts with a notional amount of approximately $ 3,326.6 million and $ 2,800.3 million, respectively.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes the impact that changes in the fair value of derivatives not designated as hedging instruments had on net income (in millions):

1 unchanged sentence

Classification of

December 31, 2019

December 31, 2018

December 31, 2017

Foreign currency contracts

Other expense, net

Gain (Loss) December 31, 2020 December 31, 2019 December 31, 2018

Foreign currency contracts Other expense, net $ 3.7 $ 20.4 $ ( 1.4 )

The table below sets forth the fair value of derivative instruments as of December 31, 2020 (in millions):

Asset Derivatives as of December 31, 2019

Liability Derivatives as of December 31, 2019

Balance Sheet

Asset Derivatives as of

December 31, 2020 Liability Derivatives as of

December 31, 2020

Balance Sheet

Location Fair

Value Balance Sheet

Location Fair

Derivative instruments designated as hedging instruments:

Foreign currency contracts

Other current assets

Other current liabilities

Cross currency swap contract

Other noncurrent assets

Other noncurrent liabilities

Foreign currency contracts Other current assets $ 1.0 Other current liabilities $ 4.5

Commodity contracts Other current assets 0.5 Other current liabilities —

Cross currency swap contract Other noncurrent assets 1.5 Other noncurrent liabilities —

Derivative instruments not designated as hedging instruments:

Foreign currency contracts

Other current assets

Other current liabilities

Foreign currency contracts Other current assets 12.3 Other current liabilities 22.2

Total derivative instruments $ 15.3 $ 26.7

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The table below sets forth the fair value of derivative instruments as of December 31, 2019 (in millions):

Asset Derivatives as of December 31, 2018

Liability Derivatives as of December 31, 2018

Balance Sheet

Asset Derivatives as of

December 31, 2019 Liability Derivatives as of

December 31, 2019

Balance Sheet

Location Fair

Value Balance Sheet

Location Fair

Derivative instruments designated as hedging instruments:

Foreign currency contracts

Other current assets

Other current liabilities

Cross currency swap contract

Other noncurrent assets

Other noncurrent liabilities

Foreign currency contracts Other current assets $ 0.6 Other current liabilities $ 1.9

Cross currency swap contract Other noncurrent assets 27.0 Other noncurrent liabilities —

Derivative instruments not designated as hedging instruments:

Foreign currency contracts

Other current assets

Other current liabilities

Foreign currency contracts Other current assets 11.7 Other current liabilities 13.1

Total derivative instruments $ 39.3 $ 15.0

6 unchanged sentences

Changes in the fair value of the interest rate swap were recorded in accumulated other comprehensive loss and were subsequently reclassified into “Interest expense, net” as a rate adjustment in the same period in which the related interest on the Company’s floating rate term loan facility affected earnings.

As a result of the Company’s new credit facility agreement entered into in October 2018 and the repayment of the € 312.0 million (or approximately $ 360.8 million ) term loan under the Company’s former revolving credit facility, as well as the change in the mix of the Company’s short-term and long-term debt, the Company terminated the interest rate swap instrument and recorded a loss of approximately $ 3.9 million which was recorded in “Interest expense, net” for the year ended December 31, 2018 .

Refer to Note 7 for further information.

As a result of the Company’s credit facility agreement entered into in October 2018 and the repayment of the € 312.0 million (or approximately $ 360.8 million) term loan under the Company’s former revolving credit facility, as well as the change in the mix of the Company’s short-term and long-term debt, the Company

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

terminated the interest rate swap instrument and recorded a loss of approximately $ 3.9 million which was recorded in “Interest expense, net” for the year ended December 31, 2018.

Refer to Note 6 for further information.

Commitments and Contingencies

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Payments Due By Period

2021 2022 2023 2024 2025 Thereafter Total

Interest payments related to indebtedness (1)

$ 16.8 $ 12.5 $ 8.7 $ 6.4 $ 3.0 $ 3.2 $ 50.6

Unconditional purchase obligations (2)

106.2 9.9 0.6 0.2 — — 116.9

Other short-term and long-term obligations (3)

95.8 19.6 141.7 22.3 8.9 49.2 337.5

Total contractual cash obligations $ 218.8 $ 42.0 $ 151.0 $ 28.9 $ 11.9 $ 52.4 $ 505.0

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These estimates are based on current legislation in the countries the Company operates within and are subject to change.

Other short-term and long-term obligations also include income tax liabilities related to uncertain income tax positions connected with ongoing income tax audits in various jurisdictions (unaudited).

Other short-term and long-term obligations also include income tax liabilities related to uncertain income tax positions connected with ongoing income tax audits in various jurisdictions, based on the years of statutory expiration.

The uncertain income tax positions included above are gross of certain indirect favorable effects that relate to other tax jurisdictions (unaudited).

See Note 5 for further information.

Amount of Commitment Expiration Per Period

2021 2022 2023 2024 2025 Thereafter Total

Guarantees $ 13.8 $ 12.2 $ 31.7 $ 18.4 $ 24.9 $ 2.3 $ 103.3

Off-Balance Sheet Arrangements

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The Company believes that any losses that might be incurred on the resale of this equipment will not materially impact the Company’s financial position or results of operations, due to the fair value of the underlying equipment.

At December 31, 2019 , the Company has outstanding guarantees of indebtedness owed to third parties of approximately $ 47.6 million , primarily related to dealer and end-user financing of equipment.

At December 31, 2020, the Company has outstanding guarantees of indebtedness owed to related and third parties of approximately $ 17.9 million, primarily related to dealer and end-user financing of equipment.

Such guarantees generally obligate the Company to repay outstanding finance obligations owed to financial institutions if dealers or end users default on such loans through 2026.

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Losses under such guarantees historically have been insignificant and the guarantees are not material.

The Company believes the credit risk associated with all of these guarantees is not material to its financial position or results of operations.

The Company believes the credit risk associated with these guarantees is not material.

In addition, at December 31, 2020, the Company had accrued approximately $ 25.3 million of outstanding guarantees of minimum residual values that may be owed to its finance joint ventures in the United States and Canada due upon expiration of certain eligible operating leases between the finance joint ventures and end users.

The maximum potential amount of future payments under the guarantee is approximately $ 85.4 million.

At December 31, 2019 , the Company had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $ 3,133.0 million .

The outstanding contracts as of December 31, 2019 range in maturity through December 2020 (see Note 11 ).

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

At December 31, 2020, the Company had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $ 3,722.4 million.

The outstanding contracts as of December 31, 2020 range in maturity through December 2021.

The Company also had outstanding designated steel commodity contracts with a gross notional amount of approximately $ 14.7 million that range in maturity through May 2021 (see Note 10).

The Company sells a majority of its wholesale receivables in North America, Europe and Brazil to its U.S., Canadian, European and Brazilian finance joint ventures.

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The Company believes that none of these claims or actions, either individually or in the aggregate, is material to its business or financial statements as a whole, including its results of operations and financial condition.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Fair Value of Financial Instruments

10 unchanged sentences

See Note 7 for a discussion of the valuation methods used to measure the fair value of the Company’s pension plan assets.

The Company enters into foreign currency and interest rate swap contracts.

The Company enters into foreign currency, commodity and interest rate swap contracts.

The fair values of the Company’s derivative instruments are determined using discounted cash flow valuation models.

3 unchanged sentences

See Note 10 for a discussion of the Company’s derivative instruments and hedging activities.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and 2019 are summarized below (in millions):

As of December 31, 2020

Level 1 Level 2 Level 3 Total

Derivative assets $ — $ 15.3 $ — $ 15.3

1 unchanged sentence

As of December 31, 2019

Level 1 Level 2 Level 3 Total

Derivative assets $ — $ 39.3 $ — $ 39.3

3 unchanged sentences

See Note 6 for additional information on the Company’s long-term debt.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Related Party Transactions

4 unchanged sentences

Under the various joint venture agreements, Rabobank or its affiliates provide financing to the joint venture companies, primarily through lines of credit.

During 2020, the Company made a total of approximately $ 1.9 million of additional investments in its finance joint venture in the Netherlands.

During 2019 and 2018, the Company did not make additional investments in its finance joint ventures.

During 2019 and 2018 , the Company received dividends of approximately $ 40.5 million and $ 29.4 million , respectively, from certain of the Company’s finance joint ventures.

During 2020, the Company did no t receive dividends from its finance joint ventures.

During 2019 and 2018, the Company received approximately $ 40.5 million and $ 29.4 million, respectively, dividends from certain of the its finance joint ventures.

The Company’s finance joint ventures provide retail financing and wholesale financing to its dealers.

2 unchanged sentences

The Company maintains a remarketing agreement with its U.S.

finance joint venture and has other guarantees with its other finance joint ventures which were not material (see Note 12 ).

finance joint venture and has outstanding guarantees of minimum residual values that may be owed to its finance joint ventures in the U.S.

and Canada upon the expiration of certain eligible operating leases and has guarantees with its other finance joint ventures which were not material (see Note 11).

In addition, as part of sales incentives provided to end users, the Company may from time to time subsidize interest rates of retail financing provided by its finance joint ventures.

The cost of those programs is recognized at the time of sale to the Company’s dealers (see Note 1).

Tractors and Farm Equipment Limited (“TAFE”), in which the Company holds a 23.75 % interest, manufactures and sells Massey Ferguson-branded equipment primarily in India, and also supplies tractors and components to the Company for sale in other markets.

Mallika Srinivasan, who is the Chairman and Chief Executive Officer of TAFE, is currently a member of the Company’s Board of Directors.

The Company has a minority equity interest in Tractors and Farm Equipment Limited (“TAFE”), which manufactures and sells Massey Ferguson-branded equipment primarily in India, and also supplies tractors and components to the Company for sale in other markets.

On October 15, 2020, TAFE repurchased 461,000 shares of its common stock from the Company for approximately $ 33.9 million, resulting in an approximate remaining 20.7 % ownership interest.

Mallika Srinivasan, who is the Chairman and Managing Director of TAFE, is currently a member of the Company’s Board of Directors.

As of December 31, 2020, TAFE beneficially owned 12,150,152 shares of the Company’s common stock, not including shares of the Company’s common stock received by Ms.

3 unchanged sentences

During 2020, 2019 and 2018, the Company sold approximately $ 1.3 million, $ 1.5 million and $ 1.8 million, respectively, of parts to TAFE.

The Company received dividends from TAFE of approximately $ 2.0 million during 2019 and $ 1.8 million during both 2018 and 2017 .

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company received dividends from TAFE of approximately $ 1.8 million, $ 2.0 million and $ 1.8 million during 2020, 2019 and 2018, respectively.

During 2020, 2019 and 2018, the Company paid approximately $ 3.3 million, $ 4.4 million and $ 3.5 million, respectively, to PPG Industries, Inc.

for painting materials used in the Company’s manufacturing processes.

The Company’s Chairman, President and Chief Executive Officer is currently a member of the board of directors of PPG Industries, Inc.

The Company’s Chairman, President and Chief Executive Officer, who retired effective on December 31, 2020, serves as a member of the board of directors of PPG Industries, Inc.

During 2020, 2019 and 2018, the Company paid approximately $ 5.6 million, $ 6.2 million and $ 1.6 million, respectively, to Linde PLC (the parent company of Praxair, Inc.) for propane, gas and welding, and laser consumables used in the Company’s manufacturing processes.

The Company’s Chairman, President and Chief Executive Officer served as a member of the board of directors of Praxair, Inc.

The Company’s Chairman, President and Chief Executive Officer, who retired effective on December 31, 2020, served as a member of the board of directors of Praxair, Inc.

until the business combination of Praxair, Inc.

and Linde AG, and is currently a member of the board of directors of Linde PLC, the holding company for the combined business.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Segment Reporting

5 unchanged sentences

Segment results for the years ended December 31, 2020, 2019 and 2018 based on the Company’s reportable segments are as follows (in millions):

Years Ended December 31,

North America

South America

Europe/Middle East

Asia/Pacific/Africa

Income (loss) from operations

Years Ended December 31, North America South America Europe/Middle East Asia/Pacific/Africa Consolidated

Net sales $ 2,175.0 $ 873.8 $ 5,366.9 $ 734.0 $ 9,149.7

Income from operations 193.7 29.3 585.3 62.1 870.4

Depreciation 61.3 25.8 110.5 14.9 212.5

Assets 1,051.9 687.6 2,238.7 536.2 4,514.4

Capital expenditures 42.2 18.8 201.8 7.1 269.9

Net sales $ 2,191.8 $ 802.2 $ 5,328.8 $ 718.6 $ 9,041.4

Income (loss) from operations 121.6 ( 39.4 ) 638.2 43.4 763.8

Depreciation 61.6 32.4 102.7 14.2 210.9

Assets 1,125.6 758.0 2,187.7 430.2 4,501.5

Capital expenditures 52.1 32.9 173.5 14.9 273.4

Income from operations

Net sales $ 2,180.1 $ 959.0 $ 5,385.1 $ 827.8 $ 9,352.0

Income (loss) from operations 103.1 ( 10.1 ) 601.1 49.6 743.7

Depreciation 67.6 30.5 111.3 15.8 225.2

Assets 1,032.1 736.1 1,905.8 501.1 4,175.1

Capital expenditures 43.3 30.4 120.3 9.3 203.3

2 unchanged sentences

A reconciliation from the segment information to the consolidated balances for income from operations and total assets is set forth below (in millions):

2020 2019 2018

Segment income from operations $ 870.4 $ 763.8 $ 743.7

Corporate expenses ( 134.7 ) ( 129.0 ) ( 133.7 )

Impairment charges

Amortization of intangibles ( 59.5 ) ( 61.1 ) ( 64.7 )

Stock compensation expense ( 36.8 ) ( 40.0 ) ( 44.3 )

Impairment charges ( 20.0 ) ( 176.6 ) —

Restructuring expenses ( 19.7 ) ( 9.0 ) ( 12.0 )

5 unchanged sentences

Intangible assets, net 455.6 501.7 573.1

Goodwill 1,306.5 1,298.3 1,495.5

Consolidated total assets $ 8,504.2 $ 7,759.7 $ 7,626.4

Property, plant and equipment and amortizable intangible assets by country as of December 31, 2019 and 2018 was as follows (in millions):

Property, plant and equipment, right-of-use lease assets and amortizable intangible assets by country as of December 31, 2020 and 2019 was as follows (in millions):

United States $ 541.2 $ 604.2

Germany 456.6 392.7

Finland 191.4 156.1

Brazil 150.4 199.9

France 137.6 123.4

Italy 129.0 112.3

Denmark 101.9 99.2

China 98.9 99.8

Other 232.8 231.4

$ 2,039.8 $ 2,019.0

AGCO CORPORATION

2 unchanged sentences

Contract liabilities relate to the following:

(1) unrecognized revenues where advance payment of consideration precedes the Company’s performance with respect to extended warranty contracts and where the performance obligation is satisfied over time, (2) unrecognized revenues where advance payment of consideration precedes the Company’s performance with respect to certain grain storage and protein production systems and where the performance obligation is satisfied over time and (3) unrecognized revenues where advance payment consideration precedes the Company’s performance with respect to technology services and where the performance obligation is satisfied over time.

(1) unrecognized revenues where advance payment of consideration precedes the Company’s performance with respect to extended warranty and maintenance contracts and where the performance obligation is satisfied over time, (2) unrecognized revenues where advance payment of consideration precedes the Company’s performance with respect to certain grain storage and protein production systems and where the performance obligation is satisfied over time and (3) unrecognized revenues where advance payment consideration precedes the Company’s performance with respect to precision technology services and where the performance obligation is satisfied over time.

Significant changes in the balance of contract liabilities for the years ended December 31, 2020 and 2019 were as follows (in millions):

Year Ended December 31, 2019

Year Ended December 31, 2018 (1)

Year Ended December 31, 2020 Year Ended December 31, 2019

Balance at beginning of period $ 104.0 $ 76.8

Advance consideration received 192.7 147.7

Revenue recognized during the period for extended warranty contracts

Revenue recognized during the period related to installation of grain storage and protein production systems

Revenue recognized during the period for extended warranty contracts, maintenance services and technology services ( 46.6 ) ( 33.8 )

Revenue recognized during the period related to grain storage and protein production systems ( 85.6 ) ( 87.4 )

Foreign currency translation 7.5 0.7

Balance as of December 31 $ 172.0 $ 104.0

____________________________________

(1) The beginning of the period is from the date of adoption of ASU 2014-09 or January 1, 2018.

The contract liabilities are classified as either “Other current liabilities” and "Other noncurrent liabilities" or “Accrued expenses” in the Company’s Consolidated Balance Sheets.

6 unchanged sentences

Net sales for the year ended December 31, 2020 disaggregated by primary geographical markets and major products consisted of the following (in millions):

North America

South America

Europe/Middle East

Asia/Pacific/Africa

America Europe/

Middle East Asia/

Pacific/Africa Consolidated

Primary geographical markets:

United States $ 1,781.7 $ — $ — $ — $ 1,781.7

Canada 307.4 — — — 307.4

Germany — — 1,280.6 — 1,280.6

France — — 1,080.2 — 1,080.2

United Kingdom and Ireland — — 557.8 — 557.8

Finland and Scandinavia — — 698.5 — 698.5

Other Europe — — 1,613.1 — 1,613.1

South America — 865.4 — — 865.4

Middle East and Algeria — — 136.7 — 136.7

Africa — — — 58.3 58.3

Asia — — — 373.1 373.1

Australia and New Zealand — — — 302.6 302.6

Mexico, Central America and Caribbean 85.9 8.4 — — 94.3

$ 2,175.0 $ 873.8 $ 5,366.9 $ 734.0 $ 9,149.7

Major products:

Tractors $ 692.0 $ 469.8 $ 3,814.3 $ 296.1 $ 5,272.2

Replacement parts 338.4 84.0 936.1 87.2 1,445.7

Grain storage and protein production systems 471.0 82.8 122.2 226.0 902.0

Other machinery

Combines, application equipment and other machinery 673.6 237.2 494.3 124.7 1,529.8

$ 2,175.0 $ 873.8 $ 5,366.9 $ 734.0 $ 9,149.7

AGCO CORPORATION

1 unchanged sentence

Net sales for the year ended December 31, 2019 disaggregated by primary geographical markets and major products consisted of the following (in millions):

North America

South America

Europe/Middle East (1)

Asia/Pacific/Africa

Consolidated (1)

America South

America Europe/

Middle East Asia/

Pacific/Africa Consolidated

Primary geographical markets:

United States $ 1,799.7 $ — $ — $ — $ 1,799.7

Canada 289.7 — — — 289.7

Germany — — 1,194.3 — 1,194.3

France — — 1,097.6 — 1,097.6

United Kingdom and Ireland — — 561.9 — 561.9

Finland and Scandinavia — — 772.8 — 772.8

Other Europe — — 1,629.0 — 1,629.0

South America — 789.7 — — 789.7

Middle East and Algeria — — 73.2 — 73.2

Africa — — — 116.2 116.2

Asia — — — 344.7 344.7

Australia and New Zealand — — — 257.7 257.7

Mexico, Central America and Caribbean 102.4 12.5 — — 114.9

$ 2,191.8 $ 802.2 $ 5,328.8 $ 718.6 $ 9,041.4

Major products:

Tractors $ 662.4 $ 447.7 $ 3,772.0 $ 300.6 $ 5,182.7

Replacement parts 310.2 88.2 874.8 74.6 1,347.8

Grain storage and protein production systems 547.9 79.5 172.8 234.6 1,034.8

Other machinery

Combines, application equipment and other machinery 671.3 186.8 509.2 108.8 1,476.1

$ 2,191.8 $ 802.2 $ 5,328.8 $ 718.6 $ 9,041.4

Rounding may impact summation of amounts.

AGCO CORPORATION

1 unchanged sentence

Net sales for the year ended December 31, 2018 disaggregated by primary geographical markets and major products consisted of the following (in millions):

North America (1)

South America

Europe/Middle East

Asia/Pacific/Africa (1)

America Europe/

Middle East (1)

Pacific/Africa Consolidated (1)

Primary geographical markets:

United States $ 1,723.6 $ — $ — $ — $ 1,723.6

Canada 329.0 — — — 329.0

Germany — — 1,213.6 — 1,213.6

France — — 1,002.9 — 1,002.9

United Kingdom and Ireland — — 614.4 — 614.4

Finland and Scandinavia — — 826.5 — 826.5

Other Europe — — 1,627.8 — 1,627.8

South America — 943.1 — — 943.1

Middle East and Algeria — — 100.0 — 100.0

Africa — — — 135.5 135.5

Asia — — — 414.5 414.5

Australia and New Zealand — — — 277.8 277.8

Mexico, Central America and Caribbean 127.5 15.9 — — 143.4

$ 2,180.1 $ 959.0 $ 5,385.1 $ 827.8 $ 9,352.0

Major products:

Tractors $ 665.8 $ 599.1 $ 3,743.0 $ 353.2 $ 5,361.1

Replacement parts 298.7 91.0 880.3 76.0 1,346.0

Grain storage and protein production systems 570.3 70.1 187.6 285.5 1,113.5

Other machinery

Combines, application equipment and other machinery 645.3 198.8 574.3 113.1 1,531.5

$ 2,180.1 $ 959.0 $ 5,385.1 $ 827.8 $ 9,352.0

___________________________________

(1) Rounding may impact summation of amounts.

2 unchanged sentences

The Company leases certain land, buildings, machinery, equipment, vehicles and office and computer equipment under finance and operating leases.

As previously discussed in Note 1 , the Company adopted ASU 2016-02 effective January 1, 2019.

The Company adopted ASU 2016-02, “Leases” effective January 1, 2019.

Under the new standard, lessees are required to record an asset (ROU asset or finance lease asset) and a lease liability.

13 unchanged sentences

As such, these leases were not material to the Company’s Consolidated Balance Sheets.

The Company has certain leases that include one or more options to renew, with renewal terms that can extend the lease term from six months to 10 years .

The exercise of the lease renewal options is at the Company’s discretion and are included in the determination of the ROU asset and lease liability when the option is reasonably certain of being exercised.

The Company has certain leases that contain one or more options to terminate or renew that can extend the lease term up to 17 years.

Options that the company is reasonably certain to exercise are included in the lease term.

The depreciable life of ROU assets and leasehold improvements are limited by the expected lease term.

1 unchanged sentence

Generally, the Company’s lease agreements do not contain any residual value guarantees or restrictive covenants.

Total lease assets and liabilities at December 31, 2019 were as follows (in millions):

Classification

As of December 31, 2019

Operating ROU assets

Right-of-use lease assets

Finance lease assets

Property, plant and equipment, net (1)

Total lease assets and liabilities at December 31, 2020 and 2019 were as follows (in millions):

Lease Assets Classification As of December 31, 2020 As of December 31, 2019

Operating ROU assets Right-of-use lease assets $ 165.1 $ 187.3

Finance lease assets Property, plant and equipment, net (1)

Total leased assets $ 180.2 $ 206.4

Lease Liabilities

Classification

As of December 31, 2019

Accrued expenses

Other current liabilities

Operating lease liabilities

Other noncurrent liabilities

Lease Liabilities Classification As of December 31, 2020 As of December 31, 2019

Operating Accrued expenses $ 43.5 $ 42.3

Finance Other current liabilities 3.0 4.5

Operating Operating lease liabilities 125.9 148.6

Finance Other noncurrent liabilities 9.8 12.0

Total leased liabilities $ 182.2 $ 207.4

____________________________________

(1) Finance lease assets are recorded net of accumulated depreciation of $ 15.2 million as of December 31, 2019.

(1) Finance lease assets are recorded net of accumulated depreciation of $ 15.6 million and $ 15.2 million as of December 31, 2020 and 2019, respectively.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Total lease cost for 2019 is set forth below (in millions):

Classification

Total lease cost for 2020 and 2019 are set forth below (in millions):

Classification Year Ended

December 31, 2020 Year Ended

December 31, 2019

Operating lease cost

Selling, general and administrative expenses

Variable lease cost

Selling, general and administrative expenses

Short-term lease cost

Selling, general and administrative expenses

Operating lease cost Selling, general and administrative expenses $ 54.0 $ 55.0

Variable lease cost Selling, general and administrative expenses 1.7 0.6

Short-term lease cost Selling, general and administrative expenses 11.0 8.1

Finance lease cost:

Amortization of leased assets

Depreciation expense (1)

Interest on leased liabilities

Interest expense, net

Amortization of leased assets Depreciation expense (1)

Interest on leased liabilities Interest expense, net 0.6 0.7

Total lease cost $ 71.0 $ 69.1

1 unchanged sentence

(1) Depreciation expense was included in both cost of sales and selling, general and administrative expenses.

The total lease expense under noncancelable operating leases was approximately $ 72.1 million for the year ended December 31, 2018.

The aggregate future minimum lease payments under noncancelable operating and finance leases with remaining terms greater than one year as of December 31, 2019 were as follows (in millions):

Lease payment amounts for operating and finance leases with remaining terms greater than one year as of December 31, 2020 were as follows (in millions):

December 31, 2020

Operating Leases (1)

Finance Leases

Operating Leases Finance Leases

2021 $ 47.6 $ 3.3

2022 37.7 1.4

2023 28.6 1.1

2024 18.9 0.8

2025 13.6 0.6

Thereafter 44.5 9.1

Total lease payments 190.9 16.3

imputed interest (1)

( 21.5 ) ( 3.5 )

Present value of leased liabilities $ 169.4 $ 12.8

____________________________________

(1) Operating lease payments include $ 11.4 million related to options to extend leases that are reasonably certain of being exercised.

(1) Calculated using the implicit interest rate for each lease.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The aggregate future minimum lease payments under noncancelable operating and finance leases with remaining terms greater than one year as of December 31, 2018 were as follows (in millions):

Lease payment amounts for operating and finance leases with remaining terms greater than one year as of December 31, 2019 were as follows (in millions):

December 31, 2019

Operating Leases (2)

Finance Leases (2)

Operating Leases Finance Leases

2020 $ 48.3 $ 4.8

2021 40.8 2.7

2022 31.5 1.2

2023 24.1 0.9

2024 16.7 0.6

Thereafter 61.6 8.7

Total lease payments 223.0 18.9

imputed interest (1)

( 32.1 ) ( 2.4 )

Present value of leased liabilities $ 190.9 $ 16.5

____________________________________

(1) Imputed interest for operating leases as of December 31, 2018 is not applicable as the Company adopted ASC 842 on January 1, 2019.

(2) As determined under ASC 840, “Leases.”

(1) Calculated using the implicit interest rate for each lease.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes the weighted-average remaining lease term and weighted-average discount rate:

As of December 31, 2019

As of December 31, 2020 As of December 31, 2019

Weighted-average remaining lease term:

Operating leases

Finance leases

Operating leases 7 years 7 years

Finance leases 15 years 14 years

Weighted-average discount rate:

1 unchanged sentence

Finance leases 2.7 % 2.9 %

The following table summarizes the supplemental cash flow information for 2019 (in millions):

Year Ended December 31, 2019

The following table summarizes the supplemental cash flow information for 2020 and 2019 (in millions):

Year Ended December 31, 2020 Year Ended December 31, 2019

Cash paid for amounts included in the measurement of lease liabilities:

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data