What changed in this filing

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Item 1A. Risk Factors

2022-02-25 compared with 2021-03-01 · 94 added, 94 removed, 225 unchanged (46% of the section changed)

We make forward-looking statements in this report, in other materials we file with the SEC, on our website, or in materials that we otherwise release to the public.

We make forward-looking statements in this report, in other materials we file with the SEC, on our website, and in materials that we otherwise release to the public.

In addition, our senior management makes forward-looking statements orally to analysts, investors, the media and others.

Statements, including the statements contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” concerning our future operations, prospects, strategies, products, manufacturing facilities, legal proceedings, financial condition, financial performance (including growth and earnings) and demand for our products and services, and other statements of our strategic plans, beliefs or expectations, net sales, industry conditions, currency translation impacts, market demand, farm incomes, weather conditions, commodity and protein prices, general economic conditions, availability of financing, working capital, capital expenditures, debt service requirements, margins, production volumes, cost reduction initiatives, investments in product development, compliance with financial covenants, support from lenders, recovery of amounts under guarantee, uncertain income tax provisions, funding of our pension and postretirement benefit plans, or realization of net deferred tax assets, are forward-looking statements.

Statements, including the statements contained in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” concerning our future operations, prospects, strategies, products, manufacturing facilities, legal proceedings, financial condition, financial performance (including growth and earnings) and demand for our products and services, as well as other statements of our beliefs or expectations of net sales, industry conditions, currency translation impacts, market demand, supply chain and logistics disruptions, farm incomes, weather conditions, commodity and protein prices, general economic conditions, availability of financing, working capital, capital expenditures, debt service requirements, margins, production volumes, cost reduction initiatives, investments in product development, compliance with financial covenants, support from lenders, recovery of amounts under guarantee, uncertain income tax provisions, funding of our pension and postretirement benefit plans, or realization of net deferred tax assets, are forward-looking statements.

The forward-looking statements we make are not guarantees of future performance and are subject to various assumptions, risks and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements.

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These risks could impact our business in a number of ways, including by negatively impacting our future results of operations, cash flows and financial condition.

For simplicity, below we collectively refer to these potential material impacts on our “performance.”

For simplicity, below we collectively refer to these potential impacts as impacts on our “performance.”

We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Risks Related to the COVID-19 Pandemic

Our business could be materially adversely impacted if the coronavirus outbreak continues in duration and severity or otherwise impacts our manufacturing and supply chain or demand for our products.

The COVID-19 pandemic has, and we expect may continue to, negatively impact our business, and further impacts

will depend on future developments, which are unpredictable, including the duration of the pandemic, the timing, distribution and impact of vaccinations and possible mutations of the virus that are more contagious or resistant to current vaccines.

The COVID-19 pandemic has created significant volatility in the global economy and has led to substantially reduced economic activity, employment disruptions, supply chain constraints and delays, and declines in consumer demand.

Measures taken by governments around the world, as well as businesses, including us, and the general public in order to limit the spread of COVID-19 will continue to negatively impact our business and overall financial condition.

These measures have included travel bans or restriction limits, quarantines, shelter in place orders, curfews, business and government office closures, increased border controls or closures, port closures and transportation restrictions.

The impacts of such measures could include, but are not limited to the following:

• Our industry may experience declines in global market demand, thus reducing sales of our products.

• The COVID-19 pandemic is projected to have minimal impact on global crop production.

Most farm operations, which generally have been deemed “essential” throughout the pandemic, are working to relatively normal levels.

However, the consumption of grain for food, fuel (including ethanol) and livestock feed was negatively impacted by economic constraints caused by the pandemic during the first half of 2020.

During the second half of 2020, grain consumption started to recover, consistent with improving economic activities and increased grain exports to China, thus reducing forecasts for ending grain inventories and raising soft commodity prices.

Future market demand for agricultural equipment will be influenced by, among other things, farm income, farm land values, weather conditions, the demand for agricultural commodities, commodity and protein prices, and general economic conditions, and the decrease in market demand because of these factors could materially negatively impact our results of operations and overall financial condition.

• Deteriorating economic and political conditions, such as increased unemployment, economic slowdown or recessions, could cause further decreases in sales of our products.

• We may experience adverse fluctuations in foreign currency rates, particularly an increase in the value of the U.S.

dollar against key market foreign currencies, which could negatively impact our sales and overall business performance.

• Governmental guidance, directives or regulations around the world could result in factory shutdowns and reduced production related to factory shutdowns or higher absentee rates.

We have had to suspend operations at production facilities due to a rise in COVID-19 infection rates and due to government mandated closures in the past, and may have further factory shutdowns in the future.

• We could incur additional operating costs due to the adherence of cleaning requirements and social distancing guidelines.

• We have severely limited travel by our employees and have taken measures to ensure the health and safety of our employees at our factories.

These measures include employee health screening, using personal protective equipment, enhanced cleaning and sanitation efforts, reworking factory layouts and staggering production schedules to conform with social distancing recommendations.

We may also from time to time have to temporarily close factories due to the level of COVID-19 cases at any factory.

In addition, most of our non-factory workforce are under work-at-home arrangements.

These measures may not be sufficient to prevent material adverse effects of the COVID-19 pandemic.

• We may experience increased costs due to remote working arrangements, adherence to social distancing guidelines and the need for personal protective equipment, in addition to the absence of employees due to illness.

• Our factories are dependent upon parts and components manufactured by others, and to the extent that our suppliers are impacted by the COVID-19 pandemic, it will reduce the availability, or result in delays, of parts and components to us, which in turn could interrupt our ability to produce and sell completed products.

• Freight channels may be disrupted due to additional safety requirements imposed by port authorities and/or capacity constraints experienced by our freight carriers.

As a result, we may also incur increased logistics costs.

• Declines in equity markets and the valuation of assets may negatively affect our pension plan assets, and, if this occurs again, we likely will incur increased pension expenses and funding requirements related to the fair value of our pension plan assets.

• Although we currently believe we have sufficient available funding to support our business, and we have not experienced a significant increase in borrowing costs, the severity and length of the COVID-19 pandemic could have material negative impacts to our financial condition.

Our business has been materially impacted by COVID-19, and the impacts are likely to continue for as long as COVID-19 continues to impact our supply chain, labor force and demand for our products.

COVID-19 has negatively impacted our business, initially through closures, higher absentee rates, and reduced production at both our plants and the plants that supply us with parts and components, and more recently through supply chain challenges, including the inability of some of our suppliers to meet demand and logistics and transportation-related companies to deliver products in a timely manner.

In addition, we have had to incur various costs related to preventing the spread of COVID-19, including changes to our factories and other facilities and those related to enabling remote work.

We expect COVID-19 to continue to impact our business, although the manner and extent to which it impacts us will depend on future developments, including the duration of the pandemic, the timing, distribution and impact of vaccinations, and possible mutations of the virus that are more contagious or resistant to current vaccines.

Measures taken by governments around the world, as well as businesses, including us, and the general public in order to limit the spread of COVID-19 will impact our business as well.

These measures have included travel bans and restrictions, quarantines, shelter in place orders, curfews, business and government office closures, increased border controls or closures, port closures and transportation restrictions.

The impacts of COVID-19 and such measures could include, but are not limited to, the following:

• Overall demand for our products could decline.

While most farm-related operations have been deemed “essential” throughout the pandemic and are working to relatively normal levels, the consumption of grain for food, fuel (including ethanol) and livestock feed was negatively impacted during the first half of 2020 and could be impacted again.

As discussed below, generally decreased demand for agricultural products negatively impacts demand for our products as well.

• To the extents that factory closures, increased absentee rates, or reduced production, whether on our part or the part of our suppliers, or the failure of our suppliers to meet demand or of shipping companies to timely deliver products, reduces our production of completed products, our sales will be less than they otherwise would have been.

In addition, decreases in sales have and can result in increased inventory and related costs.

• Supply chain issues of particular concern include a wide range of parts and components with a portion arising from the global semiconductor shortage.

We may continue to face supplier bottlenecks and delays in all regions, as well as continued challenges with freight logistics, and we continue to work to mitigate the impact of these issues in order to meet end-market demand.

• Adverse fluctuations in foreign currency rates, particularly an increase in the value of the U.S.

dollar against key market foreign currencies, would negatively impact performance.

• We could incur additional costs due to the adherence to cleaning requirements and social distancing guidelines and increased costs of labor, parts and components and shipping.

• We have severely limited travel by our employees, which to the extent that the limitations continue at current levels, could impact our ability to efficiently manage our business, including our ability to participate in trade shows and effectively market our products.

• Declines in the general economy as a result of COVID-19 could negatively affect the value our pension plan assets, and, if this occurs, it likely will result in increased pension expenses and funding requirements related to our pension plan assets and their fair value.

• Declines in performance as a result of COVID-19 could require us to record significant impairment charges with respect to certain noncurrent assets (such as goodwill and other intangible assets) and equity method investments.

We also may be required to write-down inventory that is deemed obsolete due to decreased sales and rising costs that we may not be able to pass on to our customers.

• Should farm economies decline, we could experience slower collections and larger write-offs of accounts receivable.

In addition, our AGCO Finance joint ventures also may experience slower collections and larger write-offs of accounts receivable as well, which would result in reduced earnings, if not losses, for us from our investments in our AGCO Finance joint ventures.

• Although we currently believe we have sufficient available funding to support our business, the severity and length of the COVID-19 pandemic could impact our financial condition.

This, in turn, could affect our credit ratings and borrowing costs.

• While we have initiated several cost-saving and capital deployment measures and strategies to monitor and manage our cash flows and operating expenses, these measures may not be sufficient to prevent adverse effects of the COVID-19 pandemic.

• We may be required to record significant impairment charges with respect to certain 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.

We also may be required to write-down inventory that is deemed obsolete due to decreased sales.

• If economic conditions continue to deteriorate, we may experience slower collections and larger write-offs of accounts receivable.

Our customers and dealers may request payment deferrals or contract modifications.

In addition, our finance joint ventures also may experience slower collections and greater write-offs of accounts receivable, which would result in reduced earnings, if not losses, for us from our investments in the retail joint ventures.

• Government authorities in the U.S.

and throughout the world may increase or impose new income or indirect taxes, or revise interpretations of existing tax regulations, as a means of financing the costs of stimulus and other measures taken, or that might be enacted and taken in the future, to protect populations and economies from the impact of the COVID-19 pandemic.

Such actions could have a negative impact on our results of operations.

• It is unclear when a full economic recovery will occur and both the speed and extent of that recovery.

However, we expect the impact of COVID-19 to continue well into 2021.

Market, Economic and Geopolitical Risks

Our financial results depend entirely upon the agricultural industry, and factors that adversely affect the agricultural industry generally, including declines in the general economy, increases in farm input costs, weather conditions and lower commodity and protein prices, adversely affect us.

Our financial results depend entirely upon the agricultural industry, and factors that adversely affect the agricultural industry generally, including declines in the general economy, increases in farm input costs, unfavorable weather conditions and lower commodity and protein prices, adversely affect us.

Our success depends entirely on the vitality of the agricultural industry.

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Sales of agricultural equipment, in turn, also are cyclical and generally reflect the economic health of the agricultural industry.

The economic health of the agricultural industry is affected by

numerous factors, including farm income, farm input costs, farm land values and debt levels, all of which are influenced by levels of commodity and protein prices, acreage planted, crop yields, agricultural product demand (including crops used as renewable energy sources), government policies and government subsidies.

The economic health also is influenced by general economic conditions, interest rate and exchange rate levels, and the availability of financing for retail customers, including financing subsidies to farmers, which can be significant in countries such as Brazil, as discussed elsewhere in this “Risk Factors” section.

The economic health of the agricultural industry is affected by numerous factors, including farm income, farm input costs, farm land values and debt levels, all of which are influenced by levels of commodity and protein prices, acreage planted, crop yields, agricultural product demand (including crops used as renewable energy sources), government policies and government subsidies.

The economic health also is influenced by general economic conditions, interest rate and exchange rate levels, and the availability of financing for retail customers, including government financing subsidies to farmers, which can be significant in countries such as Brazil, as discussed elsewhere in this “Risk Factors” section.

Trends in the agricultural industry, such as farm consolidations, may affect the agricultural equipment market.

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Most retail sales of our products are financed, either by our AGCO Finance joint ventures or by a bank or other private lender.

The AGCO Finance joint ventures, which are controlled by Rabobank and are dependent upon Rabobank for financing as well, finance approximately 40% to 50% of the retail sales of our tractors and combines in the markets where the joint ventures operate.

Any difficulty by Rabobank in continuing to provide that financing, or any business decision by Rabobank as the controlling member not to fund the business or particular aspects of it (for example, a particular country or region), would require the joint ventures to find other sources of financing (which may be difficult to obtain) or would require us to find other sources of retail financing for our dealers and their retail customers.

If we are unable to obtain other sources, our dealers and their retail customers would be required to utilize other retail financing providers, which may or may not be available.

ventures operate.

Any difficulty by Rabobank in continuing to provide that financing, or any business decision by Rabobank as the controlling member not to fund the business or particular aspects of it (for example, a particular country or region), would require the joint ventures to find other sources of financing (which may be difficult to obtain) or would require us to find other sources of financing for our dealers and their retail customers.

If we are unable to obtain other sources of financing, our dealers and their retail customers would be required to utilize other retail financing providers, which may or may not be available.

In an economic downturn, we expect that financing for capital equipment purchases generally would become more difficult or more expensive to obtain.

To the extent that financing is not available, or available only at unattractive prices, our sales would be negatively impacted.

Both AGCO and our AGCO Finance joint ventures have substantial accounts receivable from dealers and retail customers, and we both are adversely impacted when the collectability of these receivables is not consistent with historical experience.

This collectability is dependent on the financial strength of the agricultural industry, which in turn is dependent upon the factors discussed elsewhere in this “Risk Factors” section.

In addition, the AGCO Finance joint ventures may project estimated credit losses that exceed expectations and adversely affect their financial condition and results of operations.

To the extent that financing is not available, or available only at unattractive prices, our performance would be negatively impacted.

Both AGCO and our AGCO Finance joint ventures have substantial accounts receivable from dealers and retail customers, and we both are adversely impacted when collectability is less than optimal.

Overall collectability depends upon the financial strength of the agricultural industry, which in turn depends upon the factors discussed elsewhere in this “Risk Factors” section.

The finance joint ventures lease equipment as well and also may experience residual value losses that exceed expectations caused by lower pricing for used equipment and higher than expected returns at lease maturity.

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The foreign countries in which our sales are the greatest are Germany, France, Brazil, the United Kingdom, Finland and Canada.

We have significant manufacturing operations in France, Germany, Brazil, Italy and Finland, and we have established manufacturing operations in emerging

markets, such as China.

We have significant manufacturing operations in France, Germany, Brazil, Italy and Finland, and we have established manufacturing operations in emerging markets, such as China.

Many of our sales involve products that are manufactured in one country and sold in a different country, and, therefore, our performance can be adversely affected by adverse changes, in either the country of origin or the country of destination, in the factors discussed elsewhere in this “Risk Factors” section, particularly the factors that impact the delivered cost of our products.

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law, including limitations on where and to whom we may sell products and the Foreign Corrupt Practices Act (“FCPA”).

We have a compliance program in place designed to reduce the likelihood of potential violations of these laws, but it is difficult to identify and prevent violations.

We have a compliance program in place designed to reduce the likelihood of violations of these laws, but it is difficult to identify and prevent violations.

Significant violations could subject us to fines and other penalties as well as increased compliance costs.

Some of our international operations also are, or might become, subject to various risks that are not present in domestic operations, including restrictions on dividends and the repatriation of funds.

Foreign developing markets may present special risks, such as unavailability of financing, inflation, slow economic growth, price controls and difficulties in complying with U.S.

Foreign emerging markets may present special risks, such as unavailability of financing, inflation, slow economic growth, price controls and difficulties in complying with U.S.

Domestic and foreign political developments and government regulations and policies directly affect the international agricultural industry, which affects the demand for agricultural equipment.

If demand for agricultural equipment declines, our performance will be adversely affected.

Declines in demand for agricultural equipment adversely affect our performance.

As discussed previously in “Risks Related to the COVID -19 Pandemic,” the pandemic has caused a global recession and increased economic and demand uncertainty.

The pandemic impacts, in addition to related or unrelated application, modification or adoption of laws, regulations, trade agreements or policies, can adversely affect the agricultural industry, including the imposition of import and export duties and quotas, expropriation and potentially burdensome taxation, could have an adverse effect on our business.

The COVID-19 impacts, in addition to related or unrelated application, modification or adoption of laws, regulations, trade agreements or policies, can adversely affect the agricultural industry, including the imposition of import and export duties and quotas, expropriation and potentially burdensome taxation, could have an adverse effect on our performance.

Trade restrictions, including potential withdrawal from or modification of existing trade agreements, negotiation of new trade agreements, and imposition of new (and retaliatory) tariffs against certain countries or covering certain products, could limit our ability to capitalize on current and future growth opportunities in the international markets in which we operate and impair our ability to expand our business by offering new technologies, products and services.

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Any such reductions likely would result in a decrease in demand for agricultural equipment.

For example, a decrease or elimination of current price protections for commodities or of subsidy payments for farmers in the European Union, the United States, Brazil or elsewhere in South America would negatively impact the operations of farmers in those regions, and, as a result, our sales may decline if these farmers delay, reduce or cancel purchases of our products.

For example, a decrease or elimination of current price protections for commodities or of subsidy payments or financing rate subsidies for farmers in the European Union, the United

States or elsewhere would negatively impact the operations of farmers in those regions, and, as a result, our sales may decline if these farmers delay, reduce or cancel purchases of our products.

In emerging markets, some of these (and other) risks can be greater than they might be elsewhere.

In addition, in some cases, the financing provided by the AGCO Finance joint ventures or by others is supported by a government subsidy or guarantee.

In addition, the financing provided by the AGCO Finance joint ventures or by others is supported by a government subsidy or guarantee in some markets, including financing rate subsidies.

The programs under which those subsidies and guarantees are provided generally are of limited duration and subject to renewal and contain various caps and other limitations.

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In the event the governments that provide this support elect not to renew these programs, and were financing not available on reasonable terms, whether through our joint ventures or otherwise, our performance would be negatively impacted.

As of December 31, 2021, we had approximately 48 employees in Ukraine, and in 2021, we had net sales of approximately $86 million in Ukraine.

As of December 31, 2021, we had less than $10 million in assets in Ukraine.

It is unclear what impact the hostilities in Ukraine will have on our net sales or assets, although we assume that our net sales will decline, possibly significantly.

We will assess the fair value of our assets in Ukraine for potential impairment on a periodic basis as warranted.

As a result of the multinational nature of our business and the acquisitions that we have made over time, our corporate and tax structures are complex, with a significant portion of our operations being held through foreign holding companies.

As a result, it can be inefficient, from a tax perspective, for us to repatriate or otherwise transfer funds, and we may be subject to taxation from multiple tax jurisdictions.

As a result, we are subject to taxation from multiple tax jurisdictions, and it can be inefficient, from a tax perspective, for us to repatriate or otherwise transfer funds.

In addition, we must comply with a greater level of tax-related regulation and reviews by multiple governmental units than do companies with a more simplified structure.

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While we make every effort to comply with all applicable tax laws, audits and other reviews by governmental units could result in our being required to pay additional taxes, interest and penalties.

We face significant competition, and, if we are unable to compete successfully against other agricultural equipment manufacturers, we will lose dealers and their retail customers and our net sales and profitability will decline.

The agricultural equipment business is highly competitive, particularly in our major markets.

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Brexit and political uncertainty in the United Kingdom and the European Union could disrupt our operations and adversely affect our performance.

We have significant operations in the United Kingdom.

The United Kingdom withdrew from the European Union on January 31, 2020, known as “Brexit,” with an effective date of December 31, 2020.

While the United Kingdom and the European Union have agreed that there will be no taxes on goods or limits on the amount that can be traded between the two parties, new documentation requirements, safety checks and customs declarations will be required with potential shipment delays to conduct additional measures.

New procedures at ports and new documentation requirements could lead to disruptions in trade.

Changes in the British regulatory environment likely will increase our compliance costs.

We have significant operations in the United Kingdom and the European Union.

The United Kingdom withdrew from the European Union, in a process known as “Brexit”, effective December 31, 2020.

While the United Kingdom and the European Union have agreed that there will be no taxes on goods or limits on the amount that can be traded between the two jurisdictions, new documentation requirements, safety checks and procedures at ports and new documentation requirements could lead to disruptions in trade.

Over the longer term, changes in the regulatory environment likely will increase our compliance costs.

We may find it more difficult to conduct business in the United Kingdom and the European Union, as Brexit likely will result in increased regulatory complexity and increased restrictions and costs on the movement of capital, goods and personnel.

We may decide to relocate or otherwise alter certain of our European or United Kingdom operations to respond to the new business, legal, regulatory, tax and trade environments.

Brexit may adversely affect our relationships with our dealers and their retail customers, suppliers and employees and our performance could be materially adversely affected.

Brexit may adversely affect our relationships with our dealers and their retail customers, suppliers and employees, which could materially adversely affect our performance.

There could be a risk that other countries may leave the European Union, leaving uncertainty regarding debt burden of certain Eurozone countries and their ability to meet future financial obligations, as well as uncertainty over the long-term stability of the Euro as a single common currency.

These uncertainties and implications could materially adversely impact the financial markets in Europe and globally, as well as our customers, suppliers and lenders.

Inflation can impact our costs and sales.

During 2021, we experienced significant inflation in a range of costs, including for parts and components, transportation, logistics, and energy.

While we have been able to pass along most of those costs through increased prices, there can be no assurance that we will be able to continue to do so.

If we are not, it will impact our performance and results of operations.

Manufacturing and Operations

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Any delays or other problems with our new product launches will adversely affect our performance.

In addition, introducing new products can

result in decreases in revenues from our existing products.

In addition, introducing new products can result in decreases in revenues from our existing products.

Consistent with our strategy of offering new products and product refinements, we expect to make substantial investments in product development and refinement.

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We have to be able to successfully develop and introduce new solutions that improve profitability and result in sustainable farming techniques in order to remain competitive.

We expect to make significant investments in research and development expenses, acquisitions of businesses, collaborative arrangements and other sources to drive these outcomes.

We expect to make significant investments in research and development expenses, acquisitions of businesses, collaborative arrangements and other sources of technology to drive these outcomes.

Such investments may not produce attractive solutions for our customers.

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Rationalization or restructuring of manufacturing facilities, and plant expansions and system upgrades at our manufacturing facilities, may cause production capacity constraints and inventory fluctuations.

The rationalization of our manufacturing facilities has at times resulted in, and similar rationalizations or restructurings in the future may result in, temporary constraints upon our ability to produce the quantity of products necessary to fill orders and thereby complete sales in a timely manner.

The rationalization of our manufacturing facilities has at times resulted in, and similar rationalizations or restructurings (including relocating production from one facility to another) in the future may result in, temporary constraints upon our ability to produce the quantity of products necessary to fill orders and thereby complete sales in a timely manner.

In addition, system upgrades at our manufacturing facilities that impact ordering, production scheduling, manufacturing and other related processes are complex, and could impact or delay production.

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As a result, our ability to timely and efficiently manufacture existing products, to introduce new products, and to shift manufacturing of products from one facility to another depends on the quality of these components and parts and the timeliness of their delivery to our facilities.

During 2021, we experienced significant supply chain interruptions, including delays in timely deliveries of components.

At any particular time, we depend on numerous suppliers, and the failure by one or more of our suppliers to perform as needed will result in fewer products being manufactured, shipped and sold.

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From time-to-time we seek to expand through acquisitions of other businesses.

We expect to realize strategic and other benefits as a result of our acquisitions, including, among other things, the opportunity to extend our reach in the agricultural

industry and provide our dealers and their retail customers with an even wider range of products and services.

We expect to realize strategic and other benefits as a result of our acquisitions, including, among other things, the opportunity to extend our reach in the agricultural industry and provide our dealers and their retail customers with an even wider range of products and services.

However, it is impossible to predict with certainty whether, or to what extent, these benefits will be realized or whether we will be able to integrate acquired businesses in a timely and effective manner.

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• our ability to successfully carry out our growth strategies for acquired businesses often will be affected by, among other things, our ability to maintain and enhance our relationships with their existing customers, our ability to provide additional product distribution opportunities to them through our existing distribution channels, changes in the spending patterns and preferences of customers and potential customers, fluctuating economic and competitive conditions and our ability to retain their key personnel;

• our approach and strategies with respect to the development and introduction of new precision technology solutions to improve the profitability and sustainability for our farmer customers, including technologies we obtain through acquisitions, investments and joint ventures, may not provide the desired results for our customers.

Our ability to address these issues will determine the extent to which we are able to successfully integrate, develop and grow acquired businesses and to realize the expected benefits of these transactions.

Our failure to do so could have a material adverse effect on our performance following the transactions.

Our failure to do so could have a material adverse effect on our performance.

Our business routinely is subject to claims and legal actions, some of which could be material.

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These include claims for personal injuries by users of farm equipment, disputes with distributors, vendors and others with respect to commercial matters, and disputes with taxing and other governmental authorities regarding the conduct of our business, including environmental matters.

While these matters generally are not material, it is entirely possible that a matter will arise that is material to our business.

While these matters generally are not material to our business, it is entirely possible that a matter will arise that is material.

In addition, we use a broad range of technology in our products.

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We have both LIBOR-denominated and EURIBOR-denominated indebtedness or derivative instruments.

The transition to alternatives to LIBOR could be modestly disruptive to the credit markets, and while we do not believe that the impact would be material to us, we do not have definitive insight into what the impacts might be.

event that LIBOR is no longer published, interest on our credit facility will be calculated based upon the Secured Overnight Financing Rate (“SOFR”) or a base rate, as defined in the facility agreement, whichever we believe will be the most cost effective.

The transition to alternatives to LIBOR could be modestly disruptive to the credit markets, and while we do not believe that the impact would be material to us, it is impossible at this time to foresee all of the possible consequences given the absence of clear agreement in the marketplace as to how to replace LIBOR.

In the event that LIBOR is no longer published, interest on our credit facility will be calculated based upon the Secured Overnight Financing Rate (“SOFR”) or a base rate, as defined in the facility agreement, whichever we believe will be the most cost effective.

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

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To the extent that our obligations are unfunded or underfunded, we will have to use cash flow from operations and other sources to fulfill our obligations either as they become due or over some shorter funding period.

In addition, since the assets that we already have provided to fund these obligations are invested in debt instruments and other securities, the value of these assets varies due to market factors.

In addition, since the

assets that we already have provided to fund these obligations are invested in debt instruments and other securities, the value of these assets varies due to market factors.

Historically, these fluctuations have been significant and sometimes adverse, and there can be no assurances that they will not be significant or adverse in the future.

Similarly the amount of our obligations varies depending upon mortality assumptions, discount rates, salary growth, retirement rates and ages, inflation, changes in health care costs and similar factors.

We also are subject to laws and regulations governing the administration of our plans in certain countries, and the specific provisions, benefit formulas and related interpretations of such laws, regulations and provisions can be complex.

Failure to properly administer the provisions of our plans and comply with applicable laws and regulations could have an adverse impact to our results of operations.

As of December 31, 2020, we had substantial unfunded or underfunded obligations related to our pension and other postretirement health care benefits.

We have substantial unfunded or underfunded obligations related to our pension and other postretirement health care benefits.

See the notes to our Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” for more information regarding our unfunded or underfunded obligations.

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There have been ongoing discussions and significant changes to United States trade policies, treaties, tariffs and taxes.

Although the levels change from period to period, we generally have substantial imports into the United States of products and components that are either produced in our foreign locations or are purchased from foreign suppliers, and also have substantial

exports of products and components that we manufacture in the United States.

The impact of any changes to current trade, tariff or tax policies relating to imports and exports of goods is dependent on factors such as the treatment of exports as a credit to imports, and the introduction of any tariffs or taxes relating to imports from specific countries.

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To date, the impact of U.S.

import tariffs on China-sourced equipment has not been material to us because we have been able to redirect production and employ sourcing alternatives for products previously imported into the U.S.

import tariffs on China-sourced equipment has not been material to us because we have been able to redirect production and employ

sourcing alternatives for products previously imported into the U.S.

from our China manufacturing facility.

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Environmental Risks

We increasingly are subject to risks attendant to climate change.

Failure to understand and prepare for the risks related to the transition to a lower-carbon economy, and risks related to the physical impacts of climate change could impact our future performance and operations.

It is widely recognized that global climate change is occurring.

We are unable to predict with any certainty the impacts upon our business of climate change, although we recognize that they are likely to be significant.

Among the risks that we face are (i) increased governmental regulation of both our manufacturing operations and the equipment that we produce, (ii) the possibility that we will not become as resource-efficient in our operations as we need to, including the indirect impacts of supply chain disruptions, (iii) that climate change will reduce demand for our products, (iv) that we will not be able to develop new and improved products that help our farmer customers address climate-related changes and opportunities and that keep our products competitive with the products of others, and (v) the impacts on our physical facilities, including from increased severe weather condition risks.

Addressing each of these risks is likely to entail the incurrence of significant costs by us, and we may not be able to address these risks effectively and efficiently, which would impact our performance.

In addition, investors increasingly are assessing their investments and investment opportunities based upon how businesses are addressing climate change.

Any failure by us to satisfy their assessments could impact the desirability of an investment in AGCO and the share price of our common stock.

For a discussion of some of the actions that we have taken, see Item 1, “Business”, above.

We are subject to extensive environmental laws and regulations, including increasingly stringent engine emissions standards, and our compliance with, or our failure to comply with, existing or future laws and regulations could delay production of our products or otherwise adversely affect our business.

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We may be adversely impacted by costs, liabilities or claims with respect to our operations under existing laws or those that may be adopted in the future that could apply to both future and prior conduct.

If we fail to comply with existing or future laws and regulations, we may be subject to governmental or judicial fines or sanctions, or we may not be able to sell our products and, therefore, our performance could be adversely affected.

In addition, the products that we manufacture or sell, particularly engines, are subject to increasingly stringent environmental regulations, including those that limit GHG emissions.

As a result, on an ongoing basis we incur significant engineering expenses and capital expenditures to modify our products to comply with these regulations.

Further, we may experience production delays if we or our suppliers are unable to design and manufacture components for our products that comply with environmental standards.

Further, we may experience production delays if we or our suppliers are unable to design and manufacture components for our products that

comply with environmental standards.

For instance, as we are required to meet more stringent engine emission reduction standards that are applicable to engines we manufacture or incorporate into our products, we expect to meet these requirements through the introduction of new technology to our products, engines and exhaust after-treatment systems, as necessary.

Failure to meet applicable requirements could materially affect our business and results of operations.

Failure to meet applicable requirements could materially affect our performance.

We are subject to SEC disclosure obligations relating to “conflict minerals” (columbite-tantalite, cassiterite (tin), wolframite (tungsten) and gold) that are sourced from the Democratic Republic of Congo or adjacent countries.

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We rely upon information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities, including supply chain, manufacturing, distribution, invoicing and collection of payments from dealers or other purchasers of our equipment.

We also use information technology systems to record, process and summarize financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal and tax requirements.

We also use information technology systems to record, process and summarize financial information and results

of operations for internal reporting purposes and to comply with regulatory financial reporting, legal and tax requirements.

Additionally, we collect and store sensitive data, including intellectual property and proprietary business information, in data centers and on information technology networks.

The secure operation of these information technology networks and the processing and maintenance of this information is critical to our business operations and strategy.

Despite security measures

and business continuity plans, our information technology networks and infrastructure are vulnerable to damage, disruptions or shutdowns due to attacks by cyber criminals or breaches due to employee error or malfeasance or other disruptions during the process of upgrading or replacing computer software or hardware, power outages, computer viruses, telecommunication or utility failures, terrorist acts or, natural disasters or other catastrophic events.

Despite security measures and business continuity plans, our information technology networks and infrastructure are vulnerable to damage, disruptions or shutdowns due to attacks by cyber criminals or breaches due to employee error or malfeasance or other disruptions during the process of upgrading or replacing computer software or hardware, power outages, computer viruses, telecommunication or utility failures, terrorist acts or, natural disasters or other catastrophic events.

The occurrence of any of these events could compromise our networks, and the information stored there could be accessed, publicly disclosed, lost or stolen.

Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, and could disrupt our operations and damage our reputation, which could adversely affect our performance.

In addition, as security threats continue to evolve and increase in frequency and sophistication, we may need to invest additional resources to protect the security of our systems.

In addition, as security threats continue to evolve and increase in frequency and sophistication, we increasingly are needing to invest additional resources to protect the security of our systems and likely will need to invest even more in the future.

Unresolved Staff Comments

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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 1A. Risk Factors