What changed in this filing

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Item 1. Financial Statements

2021-08-06 compared with 2021-05-07 · 386 added, 149 removed, 624 unchanged (46% of the section changed)

3 unchanged sentences

(unaudited and in millions, except share amounts)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Current Assets:

32 unchanged sentences

Common stock;

$ 0.01 par value, 150,000,000 shares authorized, 75,330,392 and 74,962,231 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

$ 0.01 par value, 150,000,000 shares authorized, 75,385,755 and 74,962,231 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 11.7 30.9

9 unchanged sentences

(unaudited and in millions, except per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Net sales $ 2,879.3 $ 2,006.8

5 unchanged sentences

Amortization of intangibles

Goodwill impairment charge

Restructuring expenses

8 unchanged sentences

Net income 284.4 60.0

Net income attributable to noncontrolling interests ( 0.6 ) ( 1.6 )

Net (income) loss attributable to noncontrolling interests ( 1.6 ) 9.7

Net income attributable to AGCO Corporation and subsidiaries $ 282.8 $ 69.7

6 unchanged sentences

AGCO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in millions, except per share data)

Six Months Ended June 30,

Net sales $ 5,258.0 $ 3,935.1

Cost of goods sold 3,995.1 3,051.9

Gross profit 1,262.9 883.2

Selling, general and administrative expenses 536.9 467.1

Operating expenses:

Engineering expenses

Amortization of intangibles

Goodwill impairment charge

Restructuring expenses

Bad debt (credit) expense ( 0.7 ) 3.2

Income from operations 485.5 197.7

Interest expense, net

Other expense, net

Income before income taxes and equity in net earnings of affiliates 453.8 165.7

Income tax provision

Income before equity in net earnings of affiliates 402.5 105.0

Equity in net earnings of affiliates

Net income 435.8 126.3

Net (income) loss attributable to noncontrolling interests ( 2.2 ) 8.1

Net income attributable to AGCO Corporation and subsidiaries $ 433.6 $ 134.4

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

$ 5.75 $ 1.79

$ 5.71 $ 1.78

Cash dividends declared and paid per common share $ 4.33 $ 0.32

Weighted average number of common and common equivalent shares outstanding:

See accompanying notes to condensed consolidated financial statements.

AGCO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited and in millions)

Three Months Ended March 31,

Three Months Ended June 30,

Net income $ 284.4 $ 60.0

Other comprehensive loss, net of reclassification adjustments:

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

Foreign currency translation adjustments 80.8 ( 30.3 )

1 unchanged sentence

Deferred gains and losses on derivatives, net of tax 5.6 ( 4.4 )

Other comprehensive loss, net of reclassification adjustments ( 7.5 ) ( 201.9 )

Other comprehensive income (loss), net of reclassification adjustments 80.4 ( 31.3 )

Comprehensive income 364.8 28.7

Comprehensive (income) loss attributable to noncontrolling interests ( 2.4 ) 7.2

Comprehensive income attributable to AGCO Corporation and subsidiaries $ 362.4 $ 35.9

Six Months Ended June 30,

Net income $ 435.8 $ 126.3

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

Foreign currency translation adjustments 33.5 ( 245.1 )

Defined benefit pension plans, net of tax 29.1 6.9

Deferred gains and losses on derivatives, net of tax 10.3 5.0

Other comprehensive income (loss), net of reclassification adjustments 72.9 ( 233.2 )

Comprehensive income (loss) 508.7 ( 106.9 )

5 unchanged sentences

(unaudited and in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net income $ 435.8 $ 126.3

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation 109.9 102.3

1 unchanged sentence

Stock compensation expense 15.2 12.7

Goodwill impairment charge — 20.0

Equity in net earnings of affiliates, net of cash received ( 32.6 ) ( 20.7 )

Deferred income tax provision 4.1 3.8

Deferred income tax (benefit) provision ( 65.5 ) 2.8

Other 9.2 11.2

12 unchanged sentences

Investments in unconsolidated affiliates ( 1.0 ) ( 3.1 )

Purchase of businesses, net of cash acquired ( 0.8 ) —

(Purchase) sale of businesses, net of cash acquired 5.4 —

Other ( 2.4 ) —

6 unchanged sentences

Payment of minimum tax withholdings on stock compensation ( 33.6 ) ( 16.1 )

Payment of debt issuance costs — ( 1.4 )

Distributions to noncontrolling interest ( 3.5 ) —

Net cash (used in) provided by financing activities ( 361.7 ) 331.1

13 unchanged sentences

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

The Company cannot predict the ongoing impact of the COVID-19 pandemic on the increased volatility in global economic and political environments, uncertain market demand for its products, supply chain disruptions, possible workforce unavailability, exchange rate and commodity 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 cannot predict the future impact of the COVID-19 pandemic on its business, including any related impacts of the increased volatility in global economic and political environments, uncertain market demand for its products, supply chain disruptions, possible workforce unavailability, exchange rate and commodity 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.

Recently Adopted Accounting Pronouncements

During the three months ended March 31, 2021, the Company adopted the following pronouncements, which did not have a material impact to the Company’s results of operations, financial condition and cash flows.

During the six months ended June 30, 2021, the Company adopted the following pronouncements, which did not have a material impact to the Company’s results of operations, financial condition and cash flows.

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

2 unchanged sentences

New Accounting Pronouncements to be Adopted

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

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments - Credit Losses (Topic 326):Measurement of Credit Losses on Financial Instruments”, which requires measurement and recognition of expected versus incurred credit losses for financial assets.

In November 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

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In recent years, the Company has announced and initiated several actions to rationalize employee headcount in various manufacturing facilities and administrative offices located in the U.S., Europe, South America, Africa and China in order to reduce costs in response to softening global demand.

Restructuring expenses activity during the three months ended March 31, 2021 is summarized as follows (in millions):

Restructuring expenses activity during the three and six months ended June 30, 2021 is summarized as follows (in millions):

Notes to Condensed Consolidated Financial Statements - Continued

Employee Severance Facility Closure Costs Other Related Closure Costs Total

4 unchanged sentences

Balance as of March 31, 2021 $ 10.0 $ — $ 1.6 $ 11.6

Notes to Condensed Consolidated Financial Statements - Continued

Second quarter 2021 provision 3.9 — 1.5 5.4

Second quarter 2021 cash activity ( 1.9 ) — ( 0.7 ) ( 2.6 )

Second quarter 2021 provision reversal ( 0.7 ) — — ( 0.7 )

Foreign currency translation — — 0.2 0.2

Balance as of June 30, 2021 $ 11.3 $ — $ 2.6 $ 13.9

STOCK COMPENSATION PLANS

The Company recorded stock compensation expense as follows for the three months ended March 31, 2021 and 2020 (in millions):

Three Months Ended March 31,

The Company recorded stock compensation expense as follows for the three and six months ended June 30, 2021 and 2020 (in millions):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Cost of goods sold $ 0.3 $ 0.3 $ 0.6 $ 0.4

3 unchanged sentences

Under the Company’s Long-Term Incentive Plan (the “Plan”), up to 10,000,000 shares of AGCO common stock may be issued.

As of March 31, 2021, of the 10,000,000 shares reserved for issuance under the Plan, approximately 3,814,295 shares were 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.

As of June 30, 2021, of the 10,000,000 shares reserved for issuance under the Plan, approximately 3,859,466 shares were 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’ Talent and 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.

Long-Term Incentive Plan and Related Performance Awards

The weighted average grant-date fair value of performance awards granted under the Plan during the three months ended March 31, 2021 and 2020 was $ 123.26 and $ 70.84 , respectively.

During the three months ended March 31, 2021, the Company granted 269,508 performance awards related to varying performance periods.

The weighted average grant-date fair value of performance awards granted under the Plan during the six months ended June 30, 2021 and 2020 was $ 123.26 and $ 70.84 , respectively.

During the six months ended June 30, 2021, the Company granted 269,508 performance awards related to varying performance periods.

The awards granted assume the maximum target levels of performance are achieved.

The compensation expense associated with all awards granted under the Plan is amortized ratably over the vesting or performance period based on the Company’s projected assessment of the level of performance that will be achieved.

Performance award transactions during the three months ended March 31, 2021 were as follows and are presented as if the Company were to achieve its maximum levels of performance under the plan awards:

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

Notes to Condensed Consolidated Financial Statements - Continued

Performance award transactions during the six months ended June 30, 2021 are presented as if the Company were to achieve its maximum levels of performance and assume the 2021 performance awards subject to the total shareholder return modifier are achieved at target levels under the plan awards, and were as follows:

Shares awarded but not earned at January 1 582,952

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Shares earned ( 142 )

Shares awarded but not earned at March 31 850,658

As of March 31, 2021, 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 $ 41.6 million, and the weighted average period over which it is expected to be recognized is approximately two and one-half years.

Shares awarded but not earned at June 30 843,558

As of June 30, 2021, 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 $ 35.3 million, and the weighted average period over which it is expected to be recognized is approximately two years .

The compensation cost not yet recognized could be higher or lower based on actual achieved levels of performance.

Restricted Stock Unit Awards

During the three months ended March 31, 2021, the Company granted 89,775 restricted stock unit (“RSU”) awards.

The weighted average grant-date fair value of the restricted stock units ("RSUs") granted under the Plan during the six months ended June 30, 2021 and 2020 was $ 113.63 and $ 70.83 , respectively.

During the six months ended June 30, 2021, the Company granted 89,892 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.

The 2020 grant of RSU’s to certain executives had a three-year cliff vesting requirement subject to adjustment based on total shareholders return metric relative to the Company's defined peer group.

The compensation expense associated with these 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 three months ended March 31, 2021 and 2020 was $ 113.63 and $ 70.83 , respectively.

RSU transactions during the three months ended March 31, 2021 were as follows:

Notes to Condensed Consolidated Financial Statements - Continued

RSU transactions during the six months ended June 30, 2021 assume the 2020 RSUs subject to the total shareholder return modifier are achieved at target levels, and were as follows:

RSUs awarded but not vested at January 1 143,287

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RSUs vested ( 63,397 )

RSUs awarded but not vested at March 31 169,433

As of March 31, 2021, the total compensation cost related to the unvested RSUs not yet recognized was approximately $ 13.7 million, and the weighted average period over which it is expected to be recognized is approximately one and one-half years.

RSUs awarded but not vested at June 30 168,167

As of June 30, 2021, the total compensation cost related to the unvested RSUs not yet recognized was approximately $ 12.0 million, and the weighted average period over which it is expected to be recognized is approximately one and one-half years.

Stock-Settled Appreciation Rights

1 unchanged sentence

The Company estimates the fair value of the grants using the Black-Scholes option pricing model.

SSAR transactions during the three months ended March 31, 2021 were as follows:

SSAR transactions during the six months ended June 30, 2021 were as follows:

SSARs outstanding at January 1 403,150

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SSARs canceled or forfeited ( 754 )

SSARs outstanding at March 31 298,620

The Company did not grant any SSARs during the three months ended March 31, 2021, and does not currently anticipate granting any SSARs in the future.

As of March 31, 2021, the total compensation cost related to the 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.

SSARs outstanding at June 30 229,153

The Company did not grant any SSARs during the six months ended June 30, 2021, and does not currently anticipate granting any SSARs in the future.

As of June 30, 2021, the total compensation cost related to the unvested SSARs not yet

Notes to Condensed Consolidated Financial Statements - Continued

recognized was approximately $ 1.3 million, and the weighted average period over which it is expected to be recognized is approximately two years .

Director Restricted Stock Grants

1 unchanged sentence

The 2021 grant was made on April 22, 2021 and equated to 9,117 shares of common stock, of which 7,899 shares of common stock were issued after shares were withheld for taxes.

The Company recorded stock compensation expense of approximately $ 1.4 million during the three months ended June 30, 2021 associated with these grants.

The Company recorded stock compensation expense of approximately $ 1.4 million during the six months ended June 30, 2021 associated with these grants.

GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill during the three months ended March 31, 2021 are summarized as follows (in millions):

Changes in the carrying amount of goodwill during the six months ended June 30, 2021 are summarized as follows (in millions):

North America South America Europe/Middle East Asia/Pacific/Africa Consolidated

1 unchanged sentence

Foreign currency translation 0.2 3.4 ( 13.5 ) ( 2.3 ) ( 12.2 )

Balance as of March 31, 2021 $ 593.5 $ 79.4 $ 482.9 $ 121.0 $ 1,276.8

Balance as of June 30, 2021 $ 593.6 $ 90.9 $ 487.8 $ 122.0 $ 1,294.3

Goodwill is tested for impairment on an annual basis and more often if indications of impairment exist.

The Company conducts its annual impairment analyses as of October 1 each fiscal year.

The COVID-19 pandemic continues to adversely impact 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, 2021 and concluded there were no indicators of impairment during the three months ended March 31, 2021.

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 joint venture.

As a result, an impairment of the entire goodwill balance of this reporting unit was necessary as of June 30, 2020.

During the three months ended June 30, 2020, a non-cash impairment charge of approximately $ 20.0 million was recorded as "Impairment charges" within the Company's Condensed Consolidated Statements of Operations, with an offsetting benefit of approximately $ 10.0 million included within "Net loss attributable to noncontrolling interests." During the three months ended June 30, 2021, the Company sold its 50 % interest in the joint venture.

Notes to Condensed Consolidated Financial Statements - Continued

Changes in the carrying amount of acquired intangible assets during the three months ended March 31, 2021 are summarized as follows (in millions):

Changes in the carrying amount of acquired intangible assets during the six months ended June 30, 2021 are summarized as follows (in millions):

Gross carrying amounts:

1 unchanged sentence

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

Sale of business ( 1.3 ) ( 4.4 ) ( 17.1 ) — ( 22.8 )

Foreign currency translation ( 2.1 ) ( 2.7 ) ( 2.6 ) 0.1 ( 7.3 )

Balance as of March 31, 2021 $ 202.6 $ 577.6 $ 154.4 $ 9.1 $ 943.7

Balance as of June 30, 2021 $ 202.6 $ 578.3 $ 138.3 $ 9.2 $ 928.4

Accumulated amortization:

2 unchanged sentences

Amortization expense 5.0 18.6 8.0 0.1 31.7

Sale of business ( 1.3 ) ( 4.4 ) ( 15.2 ) — ( 20.9 )

Foreign currency translation ( 0.5 ) ( 1.6 ) ( 2.0 ) 0.1 ( 4.0 )

Balance as of March 31, 2021 $ 96.7 $ 393.7 $ 106.2 $ 3.4 $ 600.0

Balance as of June 30, 2021 $ 98.6 $ 402.9 $ 94.0 $ 3.6 $ 599.1

Indefinite-lived intangible assets:

2 unchanged sentences

Foreign currency translation ( 1.2 )

Balance as of March 31, 2021 $ 87.8

Balance as of June 30, 2021 $ 88.2

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

Notes to Condensed Consolidated Financial Statements - Continued

Long-term debt consisted of the following at March 31, 2021 and December 31, 2020 (in millions):

March 31, 2021 December 31, 2020

Long-term debt consisted of the following at June 30, 2021 and December 31, 2020 (in millions):

June 30, 2021 December 31, 2020

Senior term loan due 2022 $ 178.1 $ 184.0

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In October 2018, the Company entered into a term loan agreement with Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.

(“Rabobank”) in the amount of € 150.0 million (or approximately $ 176.1 million as of March 31, 2021).

(“Rabobank”) in the amount of € 150.0 million (or approximately $ 178.1 million as of June 30, 2021).

The Company is permitted to prepay the term loan before its maturity date of October 28, 2022.

5 unchanged sentences

dollars plus 1.0 %, plus a margin ranging from 0.0 % to 0.875 % based on the Company’s credit rating.

As of March 31, 2021 and December 31, 2020, the Company had no outstanding borrowings under the revolving credit facility and had the ability to borrow approximately $ 800.0 million under the revolving credit facility.

On April 9, 2020, the Company entered into an amendment to its credit facility to include incremental term loans (“2020 term loans”) that allow the Company to borrow aggregate principal amounts of € 235.0 million and $ 267.5 million (or an aggregate of approximately $ 543.3 million as of March 31, 2021).

As of June 30, 2021 the Company had $ 260.0 million outstanding borrowings under the revolving credit facility and had the ability to borrow approximately $ 540.0 million under the revolving credit facility.

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

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

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

On February 16, 2021, the Company repaid the 2020 term loans of € 117.5 million and $ 133.8 million (or an aggregate of approximately $ 276.0 million as of February 16, 2021).

As of March 31, 2021, the Company had the ability to borrow € 117.5 million and $ 133.7 million (or an aggregate of approximately $ 271.6 million) of 2020 term loans.

On February 16, 2021, the Company repaid the 2020 term loans of € 117.5 million and $ 133.8 million (or an aggregate of

Notes to Condensed Consolidated Financial Statements - Continued

approximately $ 276.0 million as of February 16, 2021).

As of June 30, 2021, the Company had the ability to borrow € 117.5 million and $ 133.7 million (or an aggregate of approximately $ 273.2 million) of the 2020 term loans.

Interest on U.S.

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1.002 % Senior Term Loan Due 2025

On January 25, 2019, the Company borrowed € 250.0 million (or approximately $ 293.4 million as of March 31, 2021) from the European Investment Bank.

On January 25, 2019, the Company borrowed € 250.0 million (or approximately $ 296.8 million as of June 30, 2021) from the European Investment Bank.

The loan matures on January 24, 2025.

4 unchanged sentences

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 $ 771.1 million as of March 31, 2021) through this group of twelve remaining related term loan agreements.

In aggregate, the Company has indebtedness of € 657.0 million (or approximately $ 779.9 million as of June 30, 2021) through this group of twelve remaining related term loan agreements.

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

3 unchanged sentences

Short-Term Borrowings

As of March 31, 2021 and December 31, 2020, the Company had short-term borrowings due within one year of approximately $ 51.8 million and $ 33.8 million, respectively.

As of June 30, 2021 and December 31, 2020, the Company had short-term borrowings due within one year of approximately $ 55.8 million and $ 33.8 million, respectively.

Standby Letters of Credit and Similar Instruments

The Company has arrangements with various banks to issue standby letters of credit or similar instruments, which guarantee the Company’s obligations for the purchase or sale of certain inventories and for potential claims exposure for insurance coverage.

At March 31, 2021 and December 31, 2020, outstanding letters of credit totaled approximately $ 14.6 million and $ 14.4 million, respectively.

At June 30, 2021 and December 31, 2020, outstanding letters of credit totaled approximately $ 14.6 million and $ 14.4 million, respectively.

Notes to Condensed Consolidated Financial Statements - Continued

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The Company believes that these tax credits, net of established reserves, are realizable.

The Company had recorded approximately $ 88.1 million and $ 91.2 million, respectively, of VAT tax credits, net of reserves, as of March 31, 2021 and December 31, 2020.

Inventories at March 31, 2021 and December 31, 2020 were as follows (in millions):

March 31, 2021 December 31, 2020

The Company had recorded approximately $ 114.9 million and $ 91.2 million, respectively, of VAT tax credits, net of reserves, as of June 30, 2021 and December 31, 2020.

Inventories at June 30, 2021 and December 31, 2020 were as follows (in millions):

June 30, 2021 December 31, 2020

Finished goods $ 778.6 $ 641.3

4 unchanged sentences

PRODUCT WARRANTY

The warranty reserve activity for the three months ended March 31, 2021 and 2020 consisted of the following (in millions):

Three Months Ended March 31,

The warranty reserve activity for the three and six months ended June 30, 2021 and 2020, including deferred revenue associated with the Company's extended warranties that have been sold, was as follows (in millions):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Balance at beginning of period $ 542.0 $ 384.6 $ 521.8 $ 392.8

2 unchanged sentences

Foreign currency translation 7.9 5.0 ( 9.9 ) ( 10.1 )

Balance at March 31 $ 542.0 $ 384.6

Balance at June 30 $ 579.3 $ 409.0 $ 579.3 $ 409.0

The Company’s agricultural equipment products generally are warranted against defects in material and workmanship for a period of one to four years .

The Company accrues for future warranty costs at the time of sale based on historical warranty experience.

Approximately $ 450.0 million and $ 431.6 million of warranty reserves are included in “Accrued expenses” in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020, respectively.

Approximately $ 92.0 million and $ 90.2 million of warranty reserves are included in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020, respectively.

Approximately $ 482.2 million, $ 431.6 million and $ 334.3 million of warranty reserves are included in “Accrued expenses” in the Company’s Condensed Consolidated Balance Sheets as of June 30, 2021, December 31, 2020 and June 30, 2020, respectively.

Approximately $ 97.1 million, $ 90.2 million and $ 74.7 million of warranty reserves are included in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets as of June 30, 2021, December 31, 2020, and June 30, 2020, respectively.

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

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Diluted net income per common share assumes the exercise of outstanding SSARs and the vesting of performance share awards and RSUs using the treasury stock method when the effects of such assumptions are dilutive.

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 for the three months ended March 31, 2021 and 2020 is as follows (in millions, except per share data):

Three Months Ended March 31,

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 for the three and six months ended June 30, 2021 and 2020 is as follows (in millions, except per share data):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

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

75.9 75.2 75.9 75.6

Diluted net income per share attributable to AGCO Corporation and subsidiaries $ 3.73 $ 0.93 $ 5.71 $ 1.78

There were no SSARs outstanding for the three months ended March 31, 2021 that had an antidilutive impact.

SSARs to purchase approximately 0.7 million shares of the Company's common stock for the three months ended March 31, 2020 were outstanding but not included in the calculation of weighted average common and common equivalent shares outstanding because they had an antidilutive impact.

At March 31, 2021 and December 31, 2020, the Company had approximately $ 237.4 million and $ 227.9 million, respectively, of gross unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized.

Gross unrecognized income tax benefits as of March 31, 2021 and December 31, 2020 exclude certain indirect favorable effects that relate to other tax jurisdictions of approximately $ 68.5 million and $ 64.1 million, respectively.

At March 31, 2021 and December 31, 2020, the Company had approximately $ 55.2 million and $ 57.1 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.

There were no SSARs outstanding for the three and six months ended June 30, 2021 that had an antidilutive impact.

SSARs to purchase approximately 0.7 million shares of the Company's common stock for both three and six months ended June 30, 2020 were outstanding but not included in the calculation of weighted average common and common equivalent shares outstanding because they had an antidilutive impact.

At June 30, 2021 and December 31, 2020, the Company had approximately $ 251.1 million and $ 227.9 million, respectively, of gross unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized.

Gross unrecognized income tax benefits as of June 30, 2021 and December 31, 2020 exclude certain indirect favorable effects that relate to other tax jurisdictions of approximately $ 63.7 million and $ 64.1 million, respectively.

At June 30, 2021 and December 31, 2020, the Company had approximately $ 54.9 million and $ 57.1 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, reflected in “Other current liabilities” in the Company’s Condensed Consolidated Balance Sheets.

At June 30, 2021 and December 31, 2020, the Company had approximately $ 193.4 million and $ 163.8 million, respectively, of accrued taxes and approximately $ 2.8 million and $ 7.0 million, respectively, of deferred taxes related to uncertain tax positions that it expects to settle or pay beyond 12 months, reflected in “Other noncurrent liabilities” and “Deferred tax liabilities,” respectively, in the Company’s Condensed Consolidated Balance Sheets.

The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes.

At March 31, 2021 and December 31, 2020, the Company had accrued interest and penalties related to unrecognized tax benefits of approximately $ 39.6 million and $ 39.4 million, respectively.

At June 30, 2021 and December 31, 2020, the Company had accrued interest and penalties related to unrecognized tax benefits of approximately $ 41.6 million and $ 39.4 million, respectively.

Generally, tax years 2015 through 2020 remain open to examination by taxing authorities in the United States and certain other foreign tax jurisdictions.

The Company and its subsidiaries are routinely examined by tax authorities in the United States and in various state, local and foreign jurisdictions.

As of March 31, 2021, a number of income tax examinations in foreign jurisdictions are ongoing.

The Company maintains a valuation allowance to fully reserve against its net deferred tax assets in the United States, Brazil and certain other foreign jurisdictions.

As of June 30, 2021, a number of income tax examinations in foreign jurisdictions are ongoing.

During the three months ended June 30, 2021, the Company’s income tax provision includes the benefit of a reversal of approximately $ 67.8 million related to a valuation allowance previously established against the Company’s net deferred tax

Notes to Condensed Consolidated Financial Statements - Continued

assets in the United States.

Improvements in income in the United States during 2020 and year-to-date 2021, along with updated future projected income levels, supported the reversal of the valuation allowance.

The Company maintains a valuation allowance to fully reserve against its net deferred tax assets Brazil and certain other foreign jurisdictions.

A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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The Company believes it is more likely than not that the Company will realize its remaining net deferred tax assets, net of the valuation allowance, in future years.

Notes to Condensed Consolidated Financial Statements - Continued

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

6 unchanged sentences

During 2021 and 2020, the Company designated certain foreign currency contracts as cash flow hedges of expected future sales and purchases.

The total notional value of derivatives that were designated as cash flow hedges was approximately $ 232.1 million and $ 395.8 million as of March 31, 2021 and December 31, 2020, respectively.

The total notional value of derivatives that were designated as cash flow hedges was approximately $ 382.0 million and $ 395.8 million as of June 30, 2021 and December 31, 2020, respectively.

Steel Commodity Contracts

During 2021 and 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 $ 20.9 million and $ 14.7 million as of March 31, 2021 and December 31, 2020, respectively.

The following tables summarize 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 the three months ended March 31, 2021 and 2020 (in millions):

The total notional value of derivatives that were designated as cash flow hedges was approximately $ 16.5 million and $ 14.7 million as of June 30, 2021 and December 31, 2020, respectively.

Notes to Condensed Consolidated Financial Statements - Continued

The following tables summarize 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 the three and six months ended June 30, 2021 and 2020 (in millions):

Recognized in Net Income

Three Months Ended March 31, Gain (Loss) Recognized in Accumulated

Three Months Ended June 30, Gain (Loss) Recognized in Accumulated

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

6 unchanged sentences

Foreign currency contracts $ ( 1.3 ) Cost of goods sold $ 3.1 $ 1,574.1

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

(2) The outstanding contracts as of March 31, 2021 range in maturity through October 2021.

Notes to Condensed Consolidated Financial Statements - Continued

The following table summarizes the activity in accumulated other comprehensive loss related to the derivatives held by the Company during the three months ended March 31, 2021 (in millions):

Recognized in Net Income

Six Months Ended June 30, 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 Condensed Consolidated Statements of Operations Containing Hedge Gains (Losses)

Foreign currency contracts (1)

$ ( 7.6 ) Cost of goods sold $ ( 6.1 ) $ 3,995.1

Commodity contracts (2)

13.7 Cost of goods sold 1.9 $ 3,995.1

Total $ 6.1 $ ( 4.2 )

Foreign currency contracts $ 8.2 Cost of goods sold $ 3.2 $ 3,051.9

(1) The outstanding contracts as of June 30, 2021 range in maturity through December 2021.

(2) The outstanding contracts as of June 30, 2021 range in maturity through January 2022.

The following table summarizes the activity in accumulated other comprehensive loss related to the derivatives held by the Company during the six months ended June 30, 2021 (in millions):

Before-Tax Amount Income Tax After-Tax Amount

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Net losses reclassified from accumulated other comprehensive loss into income 5.0 0.8 4.2

Accumulated derivative net gains as of March 31, 2021 $ 1.7 $ ( 0.5 ) $ 2.2

Accumulated derivative net gains as of June 30, 2021 $ 11.6 $ 3.8 $ 7.8

A s of June 30, 2021, approximately $ 0.5 million of derivative net losses and approximately $ 5.0 million of derivatives net gains, before taxes, remain in accumulated other comprehensive loss held by the Company related to foreign currency contracts and commodity contracts, respectively, as the inventory associated with the losses and gains had not yet been sold.

Notes to Condensed Consolidated Financial Statements - Continued

Net Investment Hedges

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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 € 247.9 million (or approximately $ 291.0 million as of March 31, 2021) 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 $ 294.3 million as of June 30, 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 the maturity of the cross currency swap.

3 unchanged sentences

Notional Amount as of

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Cross currency swap contract $ 300.0 $ 300.0

Notes to Condensed 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 during the three months ended March 31, 2021 and 2020 (in millions):

The following table summarizes the after-tax impact of changes in the fair value of the instrument designated as a net investment hedge during the three and six months ended June 30, 2021 and 2020 (in millions):

Gain (Loss) Recognized in Accumulated

Other Comprehensive Loss for the Three Months Ended

March 31, 2021 March 31, 2020

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

Other Comprehensive Loss for the Six Months Ended

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Cross currency swap contract $ 3.8 $ ( 5.8 ) $ ( 0.3 ) $ 1.5

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These contracts were classified as non-designated derivative instruments.

Gains and losses on such contracts are substantially offset by losses and gains on the remeasurement of the underlying asset or liability being hedged and are immediately recognized into earnings.

As of March 31, 2021 and December 31, 2020, the Company had outstanding foreign currency contracts with a notional amount of approximately $ 3,091.5 million and $ 3,326.6 million, respectively.

Gains and losses on such

Notes to Condensed Consolidated Financial Statements - Continued

contracts are substantially offset by losses and gains on the remeasurement of the underlying asset or liability being hedged and are immediately recognized into earnings.

As of June 30, 2021 and December 31, 2020, the Company had outstanding foreign currency contracts with a notional amount of approximately $ 3,107.2 million and $ 3,326.6 million, respectively.

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):

Gain (Loss) Recognized in Net Income for the Three Months Ended

Loss Recognized in Net Income for the Three Months Ended Gain Recognized in Net Income for the Six Months Ended

Classification of Gain (Loss)

March 31, 2021 March 31, 2020

June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Foreign currency contracts Other expense, net $ ( 5.1 ) $ ( 9.0 ) $ 29.3 $ 23.1

The table below sets forth the fair value of derivative instruments as of March 31, 2021 (in millions):

The table below sets forth the fair value of derivative instruments as of June 30, 2021 (in millions):

Asset Derivatives as of

March 31, 2021 Liability Derivatives as of

March 31, 2021

June 30, 2021 Liability Derivatives as of

June 30, 2021

Balance Sheet Location Fair Value Balance Sheet Location Fair Value

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Total derivative instruments $ 31.1 $ 12.8

Notes to Condensed Consolidated Financial Statements - Continued

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

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CHANGES IN STOCKHOLDERS’ EQUITY

The following tables set forth changes in stockholders’ equity attributed to AGCO Corporation and its subsidiaries and to noncontrolling interests for the three months ended March 31, 2021 and 2020 (in millions):

The following tables set forth changes in stockholders’ equity attributed to AGCO Corporation and its subsidiaries and to noncontrolling interests for the three and six months ended June 30, 2021 (in millions):

Stock Additional

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Interests Total Stockholders’

Balance, March 31, 2021 $ 0.8 $ 5.7 $ 4,897.9 $ ( 1,817.9 ) $ 38.2 $ 3,124.7

Stock compensation — 8.4 — — — 8.4

SSARs exercised — ( 2.4 ) — — — ( 2.4 )

Comprehensive income:

Net income — — 282.8 — 1.6 284.4

Other comprehensive income, net of reclassification adjustments:

Foreign currency translation adjustments

— — — 80.0 0.8 80.8

Defined benefit pension plans, net of tax

— — — ( 6.0 ) — ( 6.0 )

Deferred gains and losses on derivatives, net of tax

— — — 5.6 — 5.6

Payment of dividends to stockholders

— — ( 316.6 ) — — ( 316.6 )

Distributions to noncontrolling interest — — — — ( 3.5 ) ( 3.5 )

Change in noncontrolling interest

— — — — ( 10.6 ) ( 10.6 )

Balance, June 30, 2021 $ 0.8 $ 11.7 $ 4,864.1 $ ( 1,738.3 ) $ 26.5 $ 3,164.8

Stock Additional

Paid-in Capital Retained

Earnings Accumulated Other

Comprehensive Loss Noncontrolling

Interests Total Stockholders’

Balance, December 31, 2020 $ 0.8 $ 30.9 $ 4,759.1 $ ( 1,810.8 ) $ 38.0 $ 3,018.0

5 unchanged sentences

Net income — — 433.6 — 2.2 435.8

Other comprehensive loss, net of reclassification adjustments:

Other comprehensive income, net of reclassification adjustments:

Foreign currency translation adjustments

6 unchanged sentences

— — ( 328.6 ) — — ( 328.6 )

Distributions to noncontrolling interest — — — — ( 3.5 ) ( 3.5 )

Change in noncontrolling interest — — — — ( 10.6 ) ( 10.6 )

Balance, June 30, 2021 $ 0.8 $ 11.7 $ 4,864.1 $ ( 1,738.3 ) $ 26.5 $ 3,164.8

Notes to Condensed Consolidated Financial Statements - Continued

Stock Additional

Paid-in Capital Retained

Earnings Accumulated Other

Comprehensive Loss Noncontrolling

Interests Total Stockholders’

Balance, March 31, 2020 $ 0.8 $ — $ 4,432.7 $ ( 1,791.4 ) $ 48.5 $ 2,690.6

Stock compensation — 10.2 ( 0.1 ) — — 10.1

Issuance of stock awards

— ( 0.1 ) — — — ( 0.1 )

Comprehensive loss:

Net income (loss) — — 69.7 — ( 9.7 ) 60.0

Other comprehensive loss, net of reclassification adjustments:

Foreign currency translation adjustments

— — — ( 32.8 ) 2.5 ( 30.3 )

Defined benefit pension plans, net of tax

— — — 3.4 — 3.4

Deferred gains and losses on derivatives, net of tax

— — — ( 4.4 ) — ( 4.4 )

Payment of dividends to stockholders

— — ( 11.9 ) — — ( 11.9 )

Changes in noncontrolling interests — — — — 0.1 0.1

Balance, June 30, 2020 $ 0.8 $ 10.1 $ 4,490.4 $ ( 1,825.2 ) $ 41.4 $ 2,717.5

Stock Additional

9 unchanged sentences

Comprehensive loss:

Net income — — 64.7 — 1.6 66.3

Net income (loss) — — 134.4 — ( 8.1 ) 126.3

Other comprehensive loss, net of reclassification adjustments:

9 unchanged sentences

— ( 3.4 ) ( 51.6 ) — — ( 55.0 )

Changes in noncontrolling interests — — — — ( 0.6 ) ( 0.6 )

Balance, March 31, 2020 $ 0.8 $ — $ 4,432.7 $ ( 1,791.4 ) $ 48.5 $ 2,690.6

Change in noncontrolling interest — — — — ( 0.5 ) ( 0.5 )

Balance, June 30, 2020 $ 0.8 $ 10.1 $ 4,490.4 $ ( 1,825.2 ) $ 41.4 $ 2,717.5

Notes to Condensed Consolidated Financial Statements - Continued

Total comprehensive income (loss) attributable to noncontrolling interests for the three months ended March 31, 2021 and 2020 was as follows (in millions):

Three Months Ended March 31,

Net income $ 0.6 $ 1.6

Other comprehensive loss:

Total comprehensive income (loss) attributable to noncontrolling interests for the three and six months ended June 30, 2021 and 2020 was as follows (in millions):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net income (loss) $ 1.6 $ ( 9.7 ) $ 2.2 $ ( 8.1 )

Other comprehensive income (loss):

Foreign currency translation adjustments 0.8 2.5 0.4 ( 3.2 )

Total comprehensive income (loss) $ 2.4 $ ( 7.2 ) $ 2.6 $ ( 11.3 )

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 three months ended March 31, 2021 (in millions):

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 six months ended June 30, 2021 (in millions):

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

3 unchanged sentences

Other comprehensive income (loss), net of reclassification adjustments 29.1 10.3 33.1 72.5

Accumulated other comprehensive loss, March 31, 2021 $ ( 278.2 ) $ 2.2 $ ( 1,541.9 ) $ ( 1,817.9 )

The following table sets forth reclassification adjustments out of accumulated other comprehensive loss by component attributed to AGCO Corporation and its subsidiaries for the three months ended March 31, 2021 and 2020 (in millions):

Accumulated other comprehensive loss, June 30, 2021 $ ( 284.2 ) $ 7.8 $ ( 1,461.9 ) $ ( 1,738.3 )

Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item within the Condensed Consolidated

Statements of Operations

Details about Accumulated Other Comprehensive Loss Components Three Months Ended March 31, 2021 (1)

Three Months Ended March 31, 2020 (1)

Details about Accumulated Other Comprehensive Loss Components Three Months Ended June 30, 2021 (1)

Three Months Ended June 30, 2020 (1)

Net losses (gains) on foreign currency contracts $ 3.5 $ ( 3.1 ) Cost of goods sold

Net gains on commodity contracts $ ( 1.9 ) $ — Cost of goods sold

Reclassification before tax 1.6 ( 3.1 )

8 unchanged sentences

Net losses reclassified from accumulated other comprehensive loss $ 2.5 $ 0.3

(1) Losses (gains) included within the Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020, respectively.

(1) Losses (gains) included within the Condensed Consolidated Statements of Operations for the three months ended June 30, 2021 and 2020, respectively.

(2) These accumulated other comprehensive loss components are included in the computation of net periodic pension and postretirement benefit cost.

1 unchanged sentence

Notes to Condensed 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 six months ended June 30, 2021 and 2020 (in millions):

Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item within the Condensed Consolidated

Statements of Operations

Details about Accumulated Other Comprehensive Loss Components Six Months Ended June 30, 2021 (1)

Six Months Ended June 30, 2020 (1)

Net losses (gains) on foreign currency contracts $ 6.9 $ ( 3.2 ) Cost of goods sold

Net gains on commodity contracts ( 1.9 ) — Cost of goods sold

Reclassification before tax 5.0 ( 3.2 )

( 0.8 ) — Income tax provision

Reclassification net of tax $ 4.2 $ ( 3.2 )

Defined benefit pension plans:

Amortization of net actuarial losses $ 7.4 $ 6.7 Other expense, net (2)

Amortization of prior service cost 0.6 1.2 Other expense, net (2)

Reclassification before tax 8.0 7.9

( 2.1 ) ( 1.0 ) Income tax provision

Reclassification net of tax $ 5.9 $ 6.9

Net losses (gains) reclassified from accumulated other comprehensive loss $ 10.1 $ 3.7

(1) Losses (gains) included within the Condensed Consolidated Statements of Operations for the six months ended June 30, 2021 and 2020, respectively.

(2) These accumulated other comprehensive loss components are included in the computation of net periodic pension and postretirement benefit cost.

See Note 14 for additional information on the Company’s defined benefit pension plans.

Share Repurchase Program

During the three months ended March 31, 2021, the Company did not purchase any shares directly or enter into any accelerated share repurchase agreements.

As of March 31, 2021, the remaining amount authorized to be repurchased under board-approved share repurchase authorizations was approximately $ 245.0 million, which has no expiration date.

During the three and six months ended June 30, 2021, the Company did not purchase any shares directly or enter into any accelerated share repurchase agreements.

As of June 30, 2021, the remaining amount authorized to be repurchased under board-approved share repurchase authorizations was approximately $ 245.0 million, which has no expiration date.

In August 2021, the Company entered into an ASR agreement with a financial institution to repurchase an aggregate of $ 75.0 million of shares of its common stock.

The Company received approximately 455,000 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 fourth quarter of 2021.

Notes to Condensed Consolidated Financial Statements - Continued

ACCOUNTS RECEIVABLE SALES AGREEMENTS

The Company has accounts receivable sales agreements that permit the sale, on an ongoing basis, of a majority of its wholesale receivables in North America, Europe and Brazil to its U.S., Canadian, European and Brazilian finance joint ventures.

As of March 31, 2021 and December 31, 2020, the cash received from receivables sold under the U.S., Canadian, European and Brazilian accounts receivable sales agreements was approximately $ 1.3 billion and $ 1.5 billion, respectively.

As of June 30, 2021 and December 31, 2020, the cash received from receivables sold under the U.S., Canadian, European and Brazilian accounts receivable sales agreements was approximately $ 1.4 billion and $ 1.5 billion, respectively.

Under the terms of the accounts receivable sales agreements in North America, Europe and Brazil, the Company pays an annual fee related to the servicing of the receivables sold.

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The Company accounts for the receivable sales agreements as off-balance sheet transactions.

Losses on sales of receivables associated with the accounts receivable sales agreements discussed above, reflected within “Other expense, net” in the Company’s Condensed Consolidated Statements of Operations, were approximately $ 4.6 million and $ 8.1 million, respectively, during the three months ended March 31, 2021 and 2020.

Losses on sales of receivables associated with the accounts receivable sales agreements discussed above, reflected within “Other expense, net” in the Company’s Condensed Consolidated Statements of Operations, were approximately $ 5.1 million and $ 9.7 million, respectively, during the three and six months ended June 30, 2021.

Losses on sales of receivables associated with the accounts receivable sales agreements discussed above, reflected within “Other expense, net” in the Company’s Condensed Consolidated Statements of Operations, were approximately $ 4.3 million and $ 12.4 million, respectively, during the three and six ended June 30, 2020.

The Company’s finance joint ventures in Europe, Brazil and Australia also provide wholesale financing directly to the Company’s dealers.

1 unchanged sentence

The Company does not service the receivables after the sale occurs and does not maintain any direct retained interest in the receivables.

As of March 31, 2021 and December 31, 2020, these finance joint ventures had approximately $ 80.7 million and $ 85.2 million, respectively, of outstanding accounts receivable associated with these arrangements.

As of June 30, 2021 and December 31, 2020, these finance joint ventures had approximately $ 82.7 million and $ 85.2 million, respectively, of outstanding accounts receivable associated with these arrangements.

The Company accounts for these arrangements as off-balance sheet transactions.

3 unchanged sentences

PENSION AND POSTRETIREMENT BENEFIT PLANS

Net periodic pension and postretirement benefit cost for the Company’s defined pension and postretirement benefit plans for the three months ended March 31, 2021 and 2020 are set forth below (in millions):

Three Months Ended March 31,

Net periodic pension and postretirement benefit cost for the Company’s defined pension and postretirement benefit plans for the three and six months ended June 30, 2021 and 2020 are set forth below (in millions):

Three Months Ended June 30, Six Months Ended June 30,

Pension benefits 2021 2020 2021 2020

5 unchanged sentences

Curtailment (1)

— — ( 1.2 ) $ —

Net periodic pension cost $ 2.5 $ 4.9 $ 5.3 $ 9.8

(1) During the three months ended March 31, 2021, the Company amended its Executive Nonqualified Pension Plan (“ENPP”) to freeze the plan as of December 31, 2024 to future salary benefit accruals, and to eliminate a life-time annuity feature for participants reaching age 65 subsequent to December 31, 2022.

(1) During the six months ended June 30, 2021, the Company amended its Executive Nonqualified Pension Plan (“ENPP”) to freeze the plan as of December 31, 2024 to future salary benefit accruals, and to eliminate a life-time annuity feature for participants reaching age 65 subsequent to December 31, 2022.

This amendment resulted in a curtailment gain related to the ENPP's net prior service credit.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Postretirement benefits 2021 2020 2021 2020

2 unchanged sentences

Amortization of net actuarial losses — — — 0.1

Amortization of prior service cost — 0.1 — 0.1

Net periodic postretirement benefit cost $ 0.2 $ 0.4 $ 0.5 $ 0.8

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 Condensed Consolidated Statements of Operations.

The following table summarizes the activity in accumulated other comprehensive loss related to the Company’s defined pension and postretirement benefit plans during the three months ended March 31, 2021 (in millions):

The following table summarizes the activity in accumulated other comprehensive loss related to the Company’s defined pension and postretirement benefit plans during the six months ended June 30, 2021 (in millions):

Before-Tax Amount Income Tax After-Tax Amount

3 unchanged sentences

Plan amendment (1)

Accumulated other comprehensive loss as of March 31, 2021 $ ( 376.8 ) $ ( 98.6 ) $ ( 278.2 )

(1) During the three months ended March 31, 2021, the Company amended its ENPP.

31.2 8.0 23.2

Accumulated other comprehensive loss as of June 30, 2021 $ ( 373.3 ) $ ( 89.1 ) $ ( 284.2 )

(1) During the six months ended June 30, 2021, the Company amended its ENPP.

The amendment resulted in a remeasurement gain of approximately $ 10.5 million as well as the impacts of approximately $ 12.2 million due to the elimination a life-time annuity feature and approximately $ 9.7 million due to the freezing of future salary benefits, partially offset by a curtailment gain of approximately $ 1.2 million.

During the three months ended March 31, 2021, the Company made approximately $ 11.4 million of contributions to its defined pension benefit plans.

During the six months ended June 30, 2021, the Company made approximately $ 20.0 million of contributions to its defined pension benefit plans.

The Company currently estimates its minimum contributions for 2021 to its defined pension benefit plans will aggregate approximately $ 36.9 million.

During the three months ended March 31, 2021, the Company made approximately $ 0.3 million of contributions to its postretirement health care and life insurance benefit plans.

During the six months ended June 30, 2021, the Company made approximately $ 0.6 million of contributions to its postretirement health care and life insurance benefit plans.

The Company currently estimates that it will make approximately $ 1.5 million of contributions to its postretirement health care and life insurance benefit plans during 2021.

17 unchanged sentences

See Note 11 for additional information on the Company’s derivative instruments and hedging activities.

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 are summarized below (in millions):

As of March 31, 2021

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 are summarized below (in millions):

As of June 30, 2021

Level 1 Level 2 Level 3 Total

14 unchanged sentences

As a result, the components of income from operations for one segment may not be comparable to another segment.

Segment results for the three months ended March 31, 2021 and 2020 and assets as of March 31, 2021 and December 31, 2020 based on the Company’s reportable segments are as follows (in millions):

Three Months Ended March 31, North America South America Europe/Middle East Asia/Pacific/Africa Consolidated

Segment results for the three and six months ended June 30, 2021 and 2020 and assets as of June 30, 2021 and December 31, 2020 based on the Company’s reportable segments are as follows (in millions):

Three Months Ended June 30, North America South America Europe/Middle East Asia/Pacific/Africa Consolidated

Net sales $ 734.7 $ 278.3 $ 1,635.2 $ 231.1 $ 2,879.3

3 unchanged sentences

Net sales $ 555.8 $ 178.5 $ 1,125.0 $ 147.5 $ 2,006.8

Income from operations 64.7 5.5 91.0 14.0 175.2

Depreciation 15.2 6.1 26.4 3.0 50.7

Capital expenditures 8.2 3.3 42.8 2.6 56.9

Six Months Ended June 30, North America South America Europe/Middle East Asia/Pacific/Africa Consolidated

Net sales $ 1,345.8 $ 518.8 $ 2,962.4 $ 431.0 $ 5,258.0

Income from operations 178.6 39.3 345.8 47.6 611.3

Depreciation 30.8 13.3 58.0 7.8 109.9

Capital expenditures 21.1 11.6 83.8 4.1 120.6

Net sales $ 1,107.7 $ 332.4 $ 2,238.3 $ 256.7 $ 3,935.1

Income (loss) from operations 125.6 ( 3.3 ) 193.3 12.7 328.3

1 unchanged sentence

Capital expenditures 18.3 10.4 84.5 4.3 117.5

As of March 31, 2021 $ 1,281.3 $ 695.5 $ 2,513.5 $ 533.1 $ 5,023.4

As of June 30, 2021 $ 1,289.6 $ 833.3 $ 2,695.0 $ 587.0 $ 5,404.9

As of December 31, 2020 1,051.9 687.6 2,238.7 536.2 4,514.4

Notes to Condensed Consolidated Financial Statements - Continued

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Segment income from operations $ 354.9 $ 175.2 $ 611.3 $ 328.3

1 unchanged sentence

Amortization of intangibles ( 14.2 ) ( 14.9 ) ( 31.7 ) ( 29.9 )

Goodwill impairment charge — ( 20.0 ) — ( 20.0 )

Stock compensation expense ( 8.2 ) ( 10.1 ) ( 14.7 ) ( 12.6 )

1 unchanged sentence

Consolidated income from operations $ 290.3 $ 97.3 $ 485.5 $ 197.7

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Segment assets $ 5,404.9 $ 4,514.4

11 unchanged sentences

The Company believes that any losses that it might incur on the resale of this equipment will not be material, due to the fair value of the underlying equipment.

At March 31, 2021, the Company has outstanding guarantees of indebtedness owed to related and third parties of approximately $ 18.8 million, primarily related to dealer and end-user financing of equipment.

At June 30, 2021, the Company has outstanding guarantees of indebtedness owed to related and third parties of approximately $ 19.3 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.

4 unchanged sentences

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

In addition, at March 31, 2021, the Company had accrued approximately $ 24.8 million of outstanding guarantees of 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.

In addition, at June 30, 2021, the Company had accrued approximately $ 24.9 million of outstanding guarantees of 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 guarantees is approximately $ 130.6 million.

Lease payment amounts for operating and finance leases with remaining terms greater than one year as of March 31, 2021 and December 31, 2020 were as follows (in millions):

March 31, 2021 December 31, 2020

Lease payment amounts for operating and finance leases with remaining terms greater than one year as of June 30, 2021 and December 31, 2020 were as follows (in millions):

June 30, 2021 December 31, 2020

Operating Leases (1)

13 unchanged sentences

(2) Calculated for each lease using either the implicit interest rate or the incremental borrowing rate when the implicit interest rate is not readily available.

At March 31, 2021, the Company had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $ 3,323.6 million.

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

The Company also had outstanding designated steel commodity contracts with a gross notional amount of approximately $ 20.9 million that range in maturity through October 2021.

At June 30, 2021, the Company had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $ 3,489.2 million.

The outstanding contracts as of June 30, 2021 range in maturity through December 2021.

The Company also had outstanding designated steel commodity contracts with a gross notional amount of approximately $ 16.5 million that range in maturity through January 2022.

Notes to Condensed Consolidated Financial Statements - Continued

4 unchanged sentences

In August 2008, as part of routine audits, the Brazilian taxing authorities disallowed deductions relating to the amortization of certain goodwill recognized in connection with a reorganization of the Company’s Brazilian operations and the related transfer of certain assets to the Company’s Brazilian subsidiaries.

The amount of the tax disallowance through March 31, 2021, not including interest and penalties, was approximately 131.5 million Brazilian reais (or approximately $ 22.9 million).

The amount of the tax disallowance through June 30, 2021, not including interest and penalties, was approximately 131.5 million Brazilian reais (or approximately $ 26.3 million).

The amount ultimately in dispute will be significantly greater because of interest and penalties.

7 unchanged sentences

(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 of consideration precedes the Company’s performance with respect to technology services and where the performance obligation is satisfied over time.

Significant changes in the balance of contract liabilities for the three months ended March 31, 2021 and 2020 were as follows (in millions):

Three Months Ended March 31,

Significant changes in the balance of contract liabilities for the three and six months ended June 30, 2021 and 2020 were as follows (in millions):

Three Months Ended June 30,

Balance at beginning of period $ 186.3 $ 111.6

3 unchanged sentences

Foreign currency translation 1.8 0.6

Balance at March 31 $ 186.3 $ 111.6

Balance at June 30 $ 201.2 $ 118.7

Notes to Condensed Consolidated Financial Statements - Continued

Six Months Ended June 30,

Balance at beginning of period $ 172.0 $ 104.0

Advance consideration received 116.1 69.6

Revenue recognized during the period for extended warranty contracts, maintenance services and technology services ( 26.3 ) ( 22.1 )

Revenue recognized during the period related to grain storage and protein production systems ( 59.8 ) ( 29.0 )

Foreign currency translation ( 0.8 ) ( 3.8 )

Balance at June 30 $ 201.2 $ 118.7

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

During the three and six months ended June 30, 2021, we recognized approximately $ 17.4 million and $ 43.2 million, respectively, of revenue that was recorded as a contract liability at the beginning of 2021.

During the three and six months ended June 30, 2020, we recognized approximately $ 13.8 million and $ 25.8 million, respectively, of revenue that was recorded as a contract liability at the beginning of 2020.

Remaining Performance Obligations

The estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2021 are $ 43.3 million for the remainder of 2021, $ 51.1 million in 2022, $ 33.0 million in 2023, $ 14.9 million in 2024 and $ 7.9 million thereafter, and relate primarily to extended warranty contracts.

The estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2021 are $ 30.6 million for the remainder of 2021, $ 63.0 million in 2022, $ 44.6 million in 2023, $ 21.4 million in 2024 and $ 12.9 million thereafter, and relate primarily to extended warranty contracts.

The Company applied the practical expedient in ASU 2014-09 and has not disclosed information about remaining performance obligations that have original expected durations of 12 months or less.

Notes to Condensed Consolidated Financial Statements - Continued

applied the practical expedient in ASU 2014-09 and has not disclosed information about remaining performance obligations that have original expected durations of 12 months or less.

Disaggregated Revenue

Net sales for the three months ended March 31, 2021 disaggregated by primary geographical markets and major products consisted of the following (in millions):

North America South America Europe/Middle East Asia/Pacific/Africa Consolidated

Net sales for the three months ended June 30, 2021 disaggregated by primary geographical markets and major products consisted of the following (in millions):

North America (1)

South America (1)

Europe/Middle East (1)

Asia/Pacific/Africa Consolidated (1)

Primary geographical markets:

19 unchanged sentences

$ 734.7 $ 278.3 $ 1,635.2 $ 231.1 $ 2,879.3

(1) Rounding may impact the summation of amounts.

Notes to Condensed Consolidated Financial Statements - Continued

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

Net sales for the three months ended June 30, 2020 disaggregated by primary geographical markets and major products consisted of the following (in millions):

North America South America (1)

Europe/Middle East Asia/Pacific/Africa Consolidated (1)

Primary geographical markets:

United States $ 447.4 $ — $ — $ — $ 447.4

Canada 87.4 — — — 87.4

South America — 177.3 — — 177.3

Germany — — 294.3 — 294.3

France — — 221.0 — 221.0

United Kingdom and Ireland — — 111.1 — 111.1

Finland and Scandinavia — — 144.6 — 144.6

Other Europe — — 325.4 — 325.4

Middle East and Algeria — — 28.6 — 28.6

Africa — — — 2.6 2.6

Asia — — — 85.9 85.9

Australia and New Zealand — — — 59.0 59.0

Mexico, Central America and Caribbean 21.0 1.2 — — 22.2

$ 555.8 $ 178.5 $ 1,125.0 $ 147.5 $ 2,006.8

Major products:

Tractors $ 148.6 $ 101.0 $ 682.2 $ 60.5 $ 992.3

Replacement parts 105.8 16.8 257.4 19.3 399.3

Grain storage and protein production systems 142.8 16.9 33.3 48.4 241.4

Combines, application equipment and other machinery 158.6 43.9 152.1 19.3 373.9

$ 555.8 $ 178.5 $ 1,125.0 $ 147.5 $ 2,006.8

(1) Rounding may impact the summation of amounts.

Notes to Condensed Consolidated Financial Statements - Continued

Net sales for the six months ended June 30, 2021 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 Consolidated (1)

Primary geographical markets:

United States $ 1,069.6 $ — $ — $ — $ 1,069.6

Canada 230.5 — — — 230.5

South America — 514.6 — — 514.6

Germany — — 693.9 — 693.9

France — — 510.3 — 510.3

United Kingdom and Ireland — — 295.4 — 295.4

Finland and Scandinavia — — 378.6 — 378.6

Other Europe — — 982.3 — 982.3

Middle East and Algeria — — 101.9 — 101.9

Africa — — — 61.9 61.9

Asia — — — 218.9 218.9

Australia and New Zealand — — — 150.2 150.2

Mexico, Central America and Caribbean 45.8 4.2 — — 50.0

$ 1,345.8 $ 518.8 $ 2,962.4 $ 431.0 $ 5,258.0

Major products:

Tractors $ 433.5 $ 237.4 $ 1,950.5 $ 190.1 $ 2,811.5

Replacement parts 207.5 62.5 559.2 48.9 878.2

Grain storage and protein production systems 264.4 53.7 85.9 125.7 529.7

Combines, application equipment and other machinery 440.4 165.2 366.7 66.3 1,038.6

$ 1,345.8 $ 518.8 $ 2,962.4 $ 431.0 $ 5,258.0

(1) Rounding may impact the summation of amounts.

Notes to Condensed Consolidated Financial Statements - Continued

Net sales for the six months ended June 30, 2020 disaggregated by primary geographical markets and major products consisted of the following (in millions):

North America South America Europe/Middle East (1)

23 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-Q

Item 1. Financial Statements