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Item 8. Financial Statements and Supplementary Data

2022-02-25 compared with 2021-03-01 · 373 added, 386 removed, 1781 unchanged (30% of the section changed)

1 unchanged sentence

The following Consolidated Financial Statements of AGCO and its subsidiaries for each of the years in the three-year period ended December 31, 2021 are included in this Item:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (Firm ID:

Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019

4 unchanged sentences

Notes to Consolidated Financial Statements

The information under the heading “Quarterly Results” of Item 7 of this Form 10-K is incorporated herein by reference.

Report of Independent Registered Public Accounting Firm

2 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of AGCO Corporation and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes and financial statement schedule II — Valuation and Qualifying Accounts (collectively, the consolidated financial statements).

We have audited the accompanying consolidated balance sheets of AGCO Corporation and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes and financial statement schedule II — Valuation and Qualifying Accounts (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S.

1 unchanged sentence

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 25, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

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

Basis for Opinion

20 unchanged sentences

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

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

Significant assumptions included estimated incentive rates,

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

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

12 unchanged sentences

We involved tax professionals with specialized skills and knowledge, who assisted in:

• inspecting correspondence and assessments from the taxing authorities

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

28 unchanged sentences

Cost of goods sold 8,566.0 7,092.2 7,057.1

2,057.5 1,984.3 1,996.7

Gross profit 2,572.3 2,057.5 1,984.3

Operating expenses:

Selling, general and administrative expenses 1,088.2 1,001.5 1,040.3

1,001.5 1,040.3 1,069.4

Engineering expenses 405.8 342.6 343.4

342.6 343.4 355.2

Amortization of intangibles 61.1 59.5 61.1

1 unchanged sentence

Restructuring expenses 15.3 19.7 9.0

19.7 9.0 12.0

Bad debt expense 0.5 14.5 5.8

1 unchanged sentence

Interest expense, net 6.7 15.0 19.9

15.0 19.9 53.8

Other expense, net 50.4 22.7 67.1

22.7 67.1 74.9

Income before income taxes and equity in net earnings of affiliates 944.3 562.0 261.1

Income tax provision 108.4 187.7 180.8

187.7 180.8 110.9

Income before equity in net earnings of affiliates 835.9 374.3 80.3

Equity in net earnings of affiliates 65.6 45.5 42.5

45.5 42.5 34.3

Net income 901.5 419.8 122.8

Net loss attributable to noncontrolling interests 7.3 2.4 1.8

Net (income) loss attributable to noncontrolling interests ( 4.5 ) 7.3 2.4

Net income attributable to AGCO Corporation and subsidiaries $ 897.0 $ 427.1 $ 125.2

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

$ 5.69 $ 1.64 $ 3.62

$ 5.65 $ 1.63 $ 3.58

Basic $ 11.93 $ 5.69 $ 1.64

Diluted $ 11.85 $ 5.65 $ 1.63

Cash dividends declared and paid per common share $ 4.74 $ 0.63 $ 0.63

Weighted average number of common and common equivalent shares outstanding:

75.0 76.2 78.8

75.6 77.0 79.7

Basic 75.2 75.0 76.2

Diluted 75.7 75.6 77.0

See accompanying notes to Consolidated Financial Statements.

AGCO CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

2 unchanged sentences

Net income $ 901.5 $ 419.8 $ 122.8

Other comprehensive loss, net of reclassification adjustments:

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

Defined benefit pension plans, net of taxes:

1 unchanged sentence

Net loss recognized due to settlement 0.1 0.3 0.6

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

Net loss recognized due to curtailment 6.3 — —

Net actuarial gain (loss) arising during the year 53.6 ( 32.7 ) ( 23.3 )

Amortization of prior service cost included in net periodic pension cost 0.6 2.1 1.6

Amortization of net actuarial losses included in net periodic pension cost 12.3 13.1 11.8

13.1 11.8 11.7

Derivative adjustments:

Net changes in fair value of derivatives 5.1 5.1 ( 2.6 )

5.1 ( 2.6 ) ( 1.1 )

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

( 6.3 ) ( 0.1 ) 7.2

Net gains reclassified from accumulated other comprehensive loss into income ( 3.0 ) ( 6.3 ) ( 0.1 )

Foreign currency translation adjustments ( 45.5 ) ( 201.8 ) ( 20.6 )

( 201.8 ) ( 20.6 ) ( 206.8 )

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

Other comprehensive gain (loss), net of reclassification adjustments 39.5 ( 219.9 ) ( 37.3 )

Comprehensive income 941.0 199.9 85.5

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

Comprehensive (income) loss attributable to noncontrolling interests ( 4.1 ) 11.6 ( 0.1 )

Comprehensive income attributable to AGCO Corporation and subsidiaries $ 936.9 $ 211.5 $ 85.4

12 unchanged sentences

Right-of-use lease assets 154.1 165.1

Investment in affiliates 442.7 380.2

Investments in affiliates 413.5 442.7

Deferred tax assets 169.3 77.6

42 unchanged sentences

Adjustment Deferred

(Losses) Gains on

Gains (Losses) on

Derivatives Accumulated

8 unchanged sentences

Stock compensation — — 40.3 — — — — — — 40.3

Investment by noncontrolling interest

— — — — — — — — 1.0 1.0

Investment by noncontrolling interests — — — — — — — — 2.0 2.0

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

— — — — — — — — ( 0.1 ) ( 0.1 )

Changes in noncontrolling interest — — — — — — — — ( 9.1 ) ( 9.1 )

Purchases and retirement of common stock ( 1,794,256 ) — ( 30.4 ) ( 99.6 ) — — — — — ( 130.0 )

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

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

Defined benefit pension plans, net of taxes:

3 unchanged sentences

Amortization of prior service cost included in net periodic pension cost — — — — 1.6 — — 1.6 — 1.6

— — — — 1.3 — — 1.3 — 1.3

Amortization of net actuarial losses included in net periodic pension cost — — — — 11.8 — — 11.8 — 11.8

— — — — 11.7 — — 11.7 — 11.7

Deferred gains and losses on derivatives, net — — — — — — ( 2.7 ) ( 2.7 ) — ( 2.7 )

— — — — — — 6.1 6.1 — 6.1

Change in cumulative translation adjustment — — — — — ( 23.1 ) — ( 23.1 ) 2.5 ( 20.6 )

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

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

6 unchanged sentences

Investment by noncontrolling interests — — — — — — — — 0.2 0.2

— — — — — — — — 2.0 2.0

Distribution to noncontrolling interest — — — — — — — — ( 3.3 ) ( 3.3 )

Changes in noncontrolling interest — — — — — — — — ( 0.5 ) ( 0.5 )

— — — — — — — — ( 9.1 ) ( 9.1 )

Purchases and retirement of common stock ( 970,141 ) — ( 3.4 ) ( 51.6 ) — — — — — ( 55.0 )

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

Defined benefit pension plans, net of taxes:

Prior service cost arising during year

— — — — ( 4.7 ) — — ( 4.7 ) — ( 4.7 )

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

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

— — — — 0.6 — — 0.6 — 0.6

Net actuarial loss arising during year — — — — ( 32.7 ) — — ( 32.7 ) — ( 32.7 )

Amortization of prior service cost included in net periodic pension cost — — — — 2.1 — — 2.1 — 2.1

— — — — 1.6 — — 1.6 — 1.6

Amortization of net actuarial losses included in net periodic pension cost — — — — 13.1 — — 13.1 — 13.1

— — — — 11.8 — — 11.8 — 11.8

Deferred gains and losses on derivatives, net — — — — — — ( 1.2 ) ( 1.2 ) — ( 1.2 )

— — — — — — ( 2.7 ) ( 2.7 ) — ( 2.7 )

Change in cumulative translation adjustment — — — — — ( 197.5 ) — ( 197.5 ) ( 4.3 ) ( 201.8 )

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

Balance, December 31, 2020 74,962,231 0.8 30.9 4,759.1 ( 313.3 ) ( 1,495.0 ) ( 2.5 ) ( 1,810.8 ) 38.0 3,018.0

Net income (loss) — — — 427.1 — — — — ( 7.3 ) 419.8

Net income — — — 897.0 — — — — 4.5 901.5

Payment of dividends to shareholders — — — ( 358.5 ) — — — — — ( 358.5 )

3 unchanged sentences

Stock compensation — — 26.1 — — — — — — 26.1

Investment by noncontrolling interests — — — — — — — — 0.2 0.2

Distribution to noncontrolling interest — — — — — — — — ( 3.6 ) ( 3.6 )

Changes in noncontrolling interest — — — — — — — — ( 0.5 ) ( 0.5 )

Sale of noncontrolling interests — — — — — — — — ( 10.6 ) ( 10.6 )

Purchases and retirement of common stock ( 952,204 ) ( 0.1 ) ( 19.5 ) ( 115.4 ) — — — — — ( 135.0 )

2 unchanged sentences

Net loss recognized due to settlement — — — — 0.1 — — 0.1 — 0.1

Net actuarial loss arising during year — — — — ( 32.7 ) — — ( 32.7 ) — ( 32.7 )

Net loss recognized due to curtailment — — — — 6.3 — — 6.3 — 6.3

Net actuarial gain arising during year — — — — 53.6 — — 53.6 — 53.6

Amortization of prior service cost included in net periodic pension cost — — — — 0.6 — — 0.6 — 0.6

17 unchanged sentences

Equity in net earnings of affiliates, net of cash received ( 1.9 ) ( 43.7 ) —

Deferred income tax provision (benefit) 3.4 15.1 ( 14.7 )

Loss on extinguishment of debt — — 24.5

Deferred income tax (benefit) provision ( 117.9 ) 3.4 15.1

Other 20.5 ( 7.4 ) 6.9

12 unchanged sentences

Purchase of businesses, net of cash acquired ( 22.6 ) ( 2.8 ) —

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

Sale of, distributions from (investments in) unconsolidated affiliates, net 13.1 29.1 ( 3.1 )

Other ( 15.4 ) — —

8 unchanged sentences

(Distributions to) investments by noncontrolling interests, net ( 3.5 ) ( 3.1 ) 1.6

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

Net cash (used in) provided by financing activities ( 539.5 ) 22.7 ( 313.4 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 62.3 ) 8.8 ( 4.2 )

Increase (decrease) in cash, cash equivalents and restricted cash 686.3 106.7 ( 41.6 )

(Decrease) increase in cash, cash equivalents and restricted cash ( 230.0 ) 686.3 106.7

Cash, cash equivalents and restricted cash, beginning of year 1,119.1 432.8 326.1

9 unchanged sentences

The Company distributes most of its products through a combination of approximately 3,200 independent dealers and distributors as well as the Company utilizes associates and licensees to provide a distribution channel for its products.

In addition, the Company provides retail financing through its finance joint ventures with Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., or “Rabobank.”

In addition, the Company provides retail financing through its finance joint ventures with CoöperatieveRabobank U.A., or “Rabobank.”

Basis of Presentation and Consolidation

11 unchanged sentences

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

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

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

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

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

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

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

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

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

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

In the event economic conditions were to deteriorate, the Company and its finance joint ventures may not collect accounts receivable at expected levels, and the operating results of its finance joint ventures may be negatively impacted, thus negatively impacting the Company's results of operations and financial condition.

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

AGCO CORPORATION

48 unchanged sentences

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

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

When the Company is responsible for installation services, fixed payment schedules may include upfront deposits, progress payments and final payment upon customer acceptance.

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

32 unchanged sentences

$ 40.6 $ 49.3

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

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

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

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

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

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

The Company transfers certain accounts receivable under its accounts receivable sales agreements with its finance joint ventures and other financial institutions (see Note 4).

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

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

20 unchanged sentences

Property, plant and equipment are recorded at cost, less accumulated depreciation and amortization.

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

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

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

23 unchanged sentences

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

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

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

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

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

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

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

The results of our goodwill and long-lived assets impairment analyses conducted as of October 1, 2021 indicated that no indicators of impairment existed and no reduction in the carrying amount of goodwill and long-lived assets was required.

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

Based on macroeconomic conditions throughout 2020, the Company assessed its goodwill and other intangible assets for indications of impairment, and 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 was a 50 %-owned tillage and seeding equipment joint venture.

As a result, the entire goodwill balance of this reporting unit was impaired, and during the three months ended June 30,

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

of June 30, 2020.

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

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

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

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

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

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

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

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

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

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

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

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

6 unchanged sentences

Balance as of December 31, 2018 $ 611.1 $ 116.7 $ 649.6 $ 118.1 $ 1,495.5

Adjustments — — 8.4 — 8.4

Impairment charge — — ( 173.6 ) — ( 173.6 )

Sale of a joint venture ( 5.1 ) — — — ( 5.1 )

Foreign currency translation — ( 4.5 ) ( 12.7 ) ( 1.3 ) ( 18.5 )

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

Acquisition 7.2 — — — 7.2

Impairment charge ( 20.0 ) — — — ( 20.0 )

Sale of a joint venture ( 5.1 ) — — — ( 5.1 )

Foreign currency translation 0.2 ( 24.7 ) 38.0 7.5 21.0

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

Acquisitions 16.2 — 0.6 — 16.8

Foreign currency translation — ( 5.8 ) ( 32.4 ) ( 4.3 ) ( 42.5 )

Impairment charge ( 20.0 ) — — — ( 20.0 )

Acquisition 7.2 — — — 7.2

Balance as of December 31, 2021 $ 609.6 $ 81.7 $ 469.5 $ 120.0 $ 1,280.8

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

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

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

AGCO CORPORATION

15 unchanged sentences

The Valmet name transitioned to the Valtra name over a period of time in the marketplace.

The Valtra brand is currently sold in over 70 countries around the world.

The Valtra brand is currently sold in approximately 60 countries around the world.

Both the Massey Ferguson brand and the Valtra brand are primary product lines of the Company’s business, and the Company plans to use these trademarks for an indefinite period of time.

2 unchanged sentences

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Changes in the carrying amount of acquired intangible assets during 2021 and 2020 are summarized as follows (in millions):

5 unchanged sentences

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

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

Impairment charge ( 1.1 ) ( 0.8 ) ( 1.1 ) — ( 3.0 )

Foreign currency translation 6.7 6.4 6.9 0.6 20.6

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

Acquisitions 0.7 3.2 6.1 — 10.0

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

Foreign currency translation ( 5.5 ) ( 10.8 ) ( 6.3 ) 0.2 ( 22.4 )

Balance as of December 31, 2021 $ 199.9 $ 573.4 $ 140.7 $ 9.3 $ 923.3

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Accumulated Amortization Trademarks and

4 unchanged sentences

Amortization expense 10.1 39.9 9.4 0.1 59.5

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

Foreign currency translation 2.0 3.0 5.1 0.2 10.3

1 unchanged sentence

Amortization expense 10.8 37.4 12.5 0.2 60.9

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

Foreign currency translation ( 1.7 ) ( 8.0 ) ( 5.0 ) 0.2 ( 14.5 )

6 unchanged sentences

Balance as of December 31, 2021 $ 86.7

During the year ended December 31, 2021, the Company acquired approximately $ 16.3 million of functional intellectual property licenses associated with various component technology related to the Company’s products.

The Company is amortizing these licenses over a period of five years , and recorded amortization expense of approximately $ 0.2 million during 2021, resulting in a remaining unamortized amount of approximately $ 16.1 million as of December 31, 2021, reflected within “Other assets” in the Company's Consolidated Balance Sheets.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Accrued Expenses

5 unchanged sentences

Other 362.4 323.4

$ 1,916.7 $ 1,654.2

Balance at the end of the year $ 2,062.2 $ 1,916.7

Warranty Reserves

10 unchanged sentences

Approximately $ 99.8 million and $ 90.2 million of warranty reserves are included in “Other noncurrent liabilities” in the Company’s Consolidated Balance Sheets as of December 31, 2021 and 2020, respectively.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

8 unchanged sentences

The Company does not recognize revenue in cases where collectability is not probable, and defers the recognition until collection is probable or payment is received.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company generates revenue from the manufacture and distribution of agricultural equipment and replacement parts.

14 unchanged sentences

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

14 unchanged sentences

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

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

The revenue associated with the sale of extended warranty contracts is not significant.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Precision Technology Services Revenue.

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

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

The revenue associated with the sale of precision technology services is not significant.

The costs of the software directly associated with the installation and functionality of precision technology products and services, including amortization and hosting costs, are reflected within "Cost of goods sold" and "Engineering expenses" within the Company's Consolidated Statements of Operations.

See Note 16 for additional information regarding the Company’s sources of revenue and associated contract liabilities and performance obligations.

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Advertising Costs

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$ 6.7 $ 15.0 $ 19.9

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

Refer to Note 6 for further information.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Income taxes are accounted for under the asset and liability method.

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

A reconciliation of net income attributable to AGCO Corporation and subsidiaries and weighted average common shares outstanding for purposes of calculating basic and diluted net income per share during the years ended December 31, 2021, 2020 and 2019 is as follows (in millions, except per share data):

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Diluted net income per share attributable to AGCO Corporation and subsidiaries $ 11.85 $ 5.65 $ 1.63

SSARs to purchase approximately 0.3 million shares, 0.2 million shares and 0.5 million shares of the Company’s common stock for the years ended December 31, 2020, 2019 and 2018, respectively, were outstanding but not included in the calculation of weighted average common and common equivalent shares outstanding because they had an antidilutive impact.

There were no SSARs outstanding for the year ended December 31, 2021 that had an antidilutive impact.

SSARs to purchase approximately 0.3 million shares and 0.2 million shares of the Company’s common stock for the years ended December 31, 2020 and 2019, respectively, were outstanding but not included in the calculation of weighted average common and common equivalent shares outstanding because they had an antidilutive impact.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Comprehensive Income (Loss)

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

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

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

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

The components of other comprehensive income (loss) and the related tax effects for the years ended December 31, 2021, 2020 and 2019 are as follows (in millions):

AGCO Corporation and Subsidiaries Noncontrolling Interests

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Defined benefit pension plans $ 110.1 $ ( 27.2 ) $ 82.9 $ —

Net loss on derivatives ( 1.5 ) 0.3 ( 1.2 ) —

Net gain on derivatives 2.5 ( 0.4 ) 2.1 —

Foreign currency translation adjustments ( 45.1 ) — ( 45.1 ) ( 0.4 )

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

Total components of other comprehensive income $ 67.5 $ ( 27.6 ) $ 39.9 $ ( 0.4 )

AGCO Corporation and Subsidiaries Noncontrolling Interests

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

AGCO Corporation and Subsidiaries Noncontrolling Interests

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

Net gain on derivatives 7.6 ( 1.5 ) 6.1 —

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

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

Total components of other comprehensive income $ ( 194.2 ) $ 0.4 $ ( 193.8 ) $ ( 4.2 )

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

The Company uses foreign currency contracts to hedge the foreign currency exposure of certain receivables and payables.

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Recent Accounting Pronouncements

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

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

In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” (“ASU 2019-04”), which provides, among other things, targeted improvements to certain aspects of accounting for credit losses addressed by ASU 2016-13.

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

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

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

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

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

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

See Note 6 for additional information.

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

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848).” The amendments in this update provide optional expedients and exceptions for applying Generally Accepted Accounting Principles (“GAAP”) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

In January 2021, the FASB issued ASU 2021-01, which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

The amendments in these updates are effective for all entities as of March 12, 2020 through December 31, 2022.

The Company has adopted this guidance and the adoption did not have a material impact on the Company's results of operations, financial condition and cash flows.

The Company adopted the following pronouncements, none of which had 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.

• ASU 2020-01 – “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)” was adopted as of January 1, 2021.

• ASU 2020-08 – “Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs” was adopted as of January 1, 2021.

New Accounting Pronouncements to be Adopted

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

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

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

In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832):

Disclosure by Business Entities about Government Assistance,” which improves the transparency of government assistance received by most business entities by requiring the disclosure of:

(1) the types of government assistance received;

(2) the accounting for such assistance;

and (3) the effect of the assistance on a business entity's financial statements.

This guidance will be effective for annual periods beginning after December 15, 2021.

Early adoption is permitted.

The Company is currently evaluating the impact of the new guidance on the Company's results of operations, financial condition and cash flows.

Additionally, the Company will adopt the following pronouncement, which is not expected to have a material impact the Company's results of operations, financial condition and cash flows.

• ASU 2021-08 – “Business Combinations:

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

On January 01, 2022 the Company acquired Appareo Systems, LLC (“Appareo”) for approximately $ 61.4 million, net of cash acquired of approximately $ 0.5 million, as well as indebtedness payable to the Company's former 50 % joint venture with Appareo of approximately $ 0.9 million.

Appareo is headquartered in Fargo, North Dakota and specializes in the research, development, design, and manufacture of tangible technology focused on communication, monitoring, sensing, tracking and controlling devices and systems used in the agricultural and aviation industries as well as other off-road businesses.

The Company is in the process of determining the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed.

On December 01, 2021, the Company acquired Creatives Sites Media, Inc.

(“CSM”) for approximately $ 5.7 million.

CSM is headquartered in Bloomington, Illinois and creates and designs customized mobile-enabled technology applications and websites.

The acquired net assets were insignificant.

The Company recorded approximately $ 5.7 million of goodwill associated with the acquisition.

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

On September 10, 2021, the Company acquired Farm Robotics and Automation S.L.

(“Faromatics”) for approximately € 4.6 million (or approximately $ 5.5 million) net of approximately € 0.1 million (or approximately $ 0.1 million) of cash and € 0.8 million (or approximately $ 0.9 million) of escrowed cash which could be payable by the Company within 18 months of the acquisition date.

Faromatics is headquartered in Barcelona, Spain, and manufactures and sells ChickenBoy ® , the world's first ceiling-suspended robot that monitors broiler chickens and helps farmers increase animal welfare and farm productivity.

The Company recorded approximately € 4.4 million (or approximately $ 5.2 million) of technology and approximately € 1.8 million (or approximately $ 2.2 million) of goodwill associated with the acquisition.

The associated goodwill has been included in the Company’s North American and Europe/Middle East geographical reportable segments.

On August 13, 2021, the Company acquired Headsight, LLC (“Headsight”) for approximately $ 16.8 million.

Headsight is headquartered in Bremen, Indiana and manufactures header height sensors used in corn and grain harvesting operations.

The Company recorded approximately $ 4.8 million of customer relationship, technology and trademark identifiable intangible assets and approximately $ 8.9 million of goodwill associated with the acquisition.

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

The acquired identifiable intangible assets of Headsight and Faromatics as of the date of their respective acquisitions during 2021 are summarized in the following table (in millions):

Intangible Asset

Amount Weighted-Average Useful Life

Customer relationships $ 3.2 7 years

Technology 6.1 10 - 15 years

Trademarks 0.7 7 years

The Company allocated the purchase price of the assets acquired and liabilities assumed of the CSM, Faromatics and Headsight acquisitions based on estimates of their fair values of their respective acquisition dates.

The acquired net assets related to these acquisitions generally consisted of accounts receivable, inventories, lease right-of-use assets and liabilities, property, plant and equipment, accounts payable and accrued expenses.

Proforma financial information related to these acquisitions was not material to the Company's results of operations.

On September 10, 2020, the Company acquired 151 Research, Inc.

for approximately $ 2.8 million.

151 Research develops intelligent security, remote monitoring and management and enhanced imaging solutions for grain storage operations.

The acquired net assets were insignificant.

The Company recorded goodwill of approximately $ 7.2 million associated with the acquisition.

In addition, the Company agreed to further contingent consideration related to the acquisition and recorded a liability of approximately $ 4.4 million to reflect estimated achievement of agreed-upon targets as of the acquisition date.

During 2021, the Company paid approximately $ 0.5 million of contingent consideration and updated the estimated achievement of related agreed-upon targets, resulting in a reversal of approximately $ 3.3 million of the liability.

The remaining $ 0.8 million of contingent consideration as of December 31, 2021, included approximately $ 0.2 million of positive foreign currency translation impacts.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Restructuring Expenses

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

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

These rationalizations were taken to reduce costs in response to fluctuating global market demand.

During 2021, the Company recorded severance and related costs associated with these rationalizations in connection with the termination of approximately 150 employees.

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

As a result of the final payments received from the former joint venture partner related to the sale during 2021 the Company recorded a gain of approximately $ 2.5 million, also reflected within “Restructuring expenses” in the Company’s Condensed Consolidated Statements of Operations.

AGCO CORPORATION

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The Company also pays the respective AGCO Finance entities a subsidized interest payment with respect to the accounts receivable sales agreements, calculated based upon LIBOR plus a margin on any non-interest bearing accounts receivable outstanding and sold under the accounts receivables sales agreements.

Following the phase out of LIBOR-denominated rates, the Company expects this funding to be based upon the interest rate charged by Rabobank to its affiliate, and such affiliate then lends to the AGCO Finance entities plus an agreed-upon margin.

These fees are reflected within losses on the sales of receivables included within “Other expense, net” in the Company’s Consolidated Statements of Operations.

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The Company reviewed its accounting for the accounts receivable sales agreements and determined that these facilities should be accounted for as off-balance sheet transactions.

In addition, the Company sells certain trade receivables under factoring arrangements to other financial institutions around the world.

As of December 31, 2021 and 2020, the cash received from these arrangements was approximately $ 215.4 million and $ 199.9 million, respectively.

Losses on sales of receivables associated with the accounts receivable financing facilities discussed above, reflected within “Other expense, net” in the Company’s Consolidated Statements of Operations, were approximately $ 24.5 million, $ 24.1 million and $ 42.4 million during 2021, 2020 and 2019, respectively.

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The Company reviewed its accounting for these arrangements and determined that these arrangements should be accounted for as off-balance sheet transactions.

In addition, the Company sells certain trade receivables under factoring arrangements to other financial institutions around the world.

The Company reviewed the sale of such receivables and determined that these arrangements should be accounted for as off-balance sheet transactions.

Investments in Affiliates

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

The other joint ventures represent investments in farm equipment manufacturers, an electronic and software system manufacturer, distributors and licensees.

The other joint ventures represent investments in farm equipment manufacturers, an electronic and software system manufacturer, precision agriculture technology providers, distributors and licensees.

AGCO CORPORATION

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The portion of the Company’s retained earnings balance that represents undistributed retained earnings of equity method investees was approximately $ 365.6 million and $ 375.5 million as of December 31, 2021 and 2020, respectively.

During 2021, the Company received dividends of approximately $ 84.4 million from certain finance joint ventures.

Approximately $ 22.7 million of these dividends were a return of investment in excess of earnings related to a certain finance joint venture.

AGCO CORPORATION

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United States $ 3.4 $ 4.1 $ ( 4.4 )

Federal $ 1.0 $ ( 6.5 ) $ ( 9.1 )

State 3.1 2.1 1.2

Foreign 222.9 180.2 170.1

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United States ( 70.0 ) 1.3 1.3

Federal 1.3 1.3 —

Foreign ( 47.9 ) 2.1 13.8

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$ 108.4 $ 187.7 $ 180.8

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

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

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

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

The Company’s income tax provision as of December 31, 2021 includes the benefit of the reversals of approximately $ 67.8 million and $ 55.6 million related to valuation allowances previously established against the Company’s net deferred tax assets in the United States and Brazil, respectively.

The Company recorded the reversal of a portion of the United States valuation allowance during the three months ended June 30, 2021, and the reversal of a portion of its Brazilian valuation allowance during the three months ended December 31, 2021.

Improvements in income in the United States and Brazil during 2020 and 2021, along with updated future projected income levels, supported the reversal of both valuation allowances during those respective periods in 2021.

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

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

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

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

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

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

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

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

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

A reconciliation of income taxes computed at the United States federal statutory income tax rate (21% for 2021, 2020, and 2019) to the provision for income taxes reflected in the Company’s Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019 is as follows (in millions):

2021 2020 2019

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Total deferred tax liabilities 192.0 214.7

Net deferred tax liabilities $ ( 34.8 ) $ ( 13.2 )

Net deferred tax assets (liabilities) $ 52.4 $ ( 34.8 )

Amounts recognized in Consolidated Balance Sheets:

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$ 52.4 $ ( 34.8 )

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

As reflected in the preceding table, the Company recorded a net deferred tax asset of $ 52.4 million as of December 31, 2021 and a net deferred tax liability of $ 34.8 million as of December 31, 2020, and had a valuation allowance against its gross deferred tax assets of approximately $ 47.4 million and $ 181.0 million as of December 31, 2021 and 2020, respectively.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

In addition, the Company maintains a valuation allowance to fully reserve its net deferred tax assets in the United States and certain 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.

The Company assessed the likelihood that its deferred tax assets would be recovered from estimated future taxable income and available tax planning strategies and determined that all adjustments to the valuation allowance were appropriate.

In making this assessment, all available evidence was considered including the current economic climate, as well as reasonable tax planning strategies.

The Company maintains a valuation allowance to reserve a portion of its net deferred tax assets in the United States and certain foreign jurisdictions.

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

The Company assessed the likelihood that its deferred tax assets would be recovered from estimated future taxable income and the current economic climate, as well as available tax planning strategies, and determined that all adjustments to the valuation allowance were appropriate.

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

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2023 - $ 23.9 million;

2023 - $ 46.7 million and thereafter or unlimited - $ 134.0 million.

2024 and thereafter - $ 51.0 million and unlimited - $ 146.5 million.

The net operating loss carryforwards of $ 235.6 million are entirely in tax jurisdictions outside of the United States.

The Company does not have any material U.S.

state net operating loss carryforwards.

The amount of the Company's U.S.

state net operating loss carryforwards is not material.

The Company paid income taxes of $ 247.3 million, $ 181.4 million and $ 144.4 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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Gross unrecognized income tax benefits at the end of the year $ 246.4 $ 227.9

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

The reconciliation of gross unrecognized income tax benefits above for 2021 and 2020 excludes certain indirect favorable effects that relate to other tax jurisdictions of approximately $ 70.2 million and $ 64.1 million, respectively.

The change in certain indirect favorable effects between 2021 and 2020 includes approximately $ 9.9 million related to additions and reductions for tax positions of current and prior years, changes in judgments and lapses of statutes of limitations.

In addition, the gross unrecognized income tax benefits as of December 31, 2021 exclude certain deposits made in a foreign jurisdiction of approximately $ 6.7 million associated with an ongoing audit.

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

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

In certain foreign jurisdictions, there are either statutory expirations or the Company’s settlement expectations such that approximately

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

$ 40.1 million could be concluded within the next 12 months.

Although there are ongoing examinations in various federal and state jurisdictions, the 2017 through 2021 tax years generally remain subject to examination in the United States by applicable authorities.

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Senior term loan due 2022 $ — $ 184.0

$ 184.0 $ 168.1

Credit facility, expires 2023 — 277.9

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Senior term loans due between 2023 and 2028 (1)

0.800 % Senior Notes Due 2028

Other long-term debt 7.7 10.5

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Current Indebtedness

Senior Term Loan Due 2022

In October 2018, the Company entered in a term loan agreement with Rabobank in the amount of € 150.0 million (or approximately $ 184.0 million as of December 31, 2020).

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

Interest is payable on the term loan quarterly in arrears at an annual rate, equal to the EURIBOR plus a margin ranging from 0.875 % to 1.875 % based on the Company’s credit rating.

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

0.800 % Senior Notes Due 2028

On October 6, 2021, the Company issued € 600.0 million (or approximately $ 680.8 million as of December 31, 2021) of senior notes at an issue price of 99.993 %.

The notes mature on October 6, 2028, and interest is payable annually, in arrears, at 0.800 %.

The senior notes contain covenants restricting, among other things, the incurrence of certain secured indebtedness.

The senior notes are subject to both optional and mandatory redemption in certain events.

During October 2021, the Company used the proceeds received from the senior notes to repay its € 150.0 million (or approximately $ 173.4 million as of October 8, 2021) senior term loan due 2022, $ 370.0 million related to its multi-currency revolving credit facility, and two of its 2016 senior term loans due October 2021 with an aggregate amount outstanding of

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

€ 192.0 million (or approximately $ 223.8 million as of October 19, 2021).

In August 2021, prior to the issuance of the senior notes, the Company repaid two of its 2018 senior term loans due August 2021 with an aggregate amount of € 72.0 million (or approximately $ 85.5 million as of August 1, 2021).

Credit Facility

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

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

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

As mentioned previously, on October 15, 2021, the Company repaid $ 370.0 million of its multicurrency revolving credit facility as a result of the issuance of our 0.800 % senior notes due 2028.

As of December 31, 2021 and 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.

On April 9, 2020, the Company entered into an amendment to its $ 800.0 million multi-currency revolving credit facility to include incremental term loans (“2020 term loans”) that allow the Company to borrow an aggregate principal amount of € 235.0 million and $ 267.5 million, respectively (or an aggregate amount of approximately $ 534.1 million as of December 31, 2021).

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

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

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

On April 15, 2020, the Company borrowed € 117.5 million and $ 133.8 million of 2020 term loans.

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

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

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

Interest on U.S.

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

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

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

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

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

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

In connection with the closing of new credit facility in October 2018, the Company repaid its outstanding € 312.0 million (or approximately $ 360.8 million) term loan under the former revolving credit and term loan facility.

The Company recorded approximately $ 0.9 million in “Interest expense, net,” associated with the write-off of deferred debt issuance costs associated with the repayment.

The Company also recorded a loss of approximately $ 3.9 million which was recorded in “Interest expense, net” for the year ended December 31, 2018 associated with the termination of the interest rate swap instrument.

1.002 % Senior Term Loan

In December 2018, the Company entered into a term loan with the European Investment Bank (“EIB”), which provided the Company with the ability to borrow up to € 250.0 million.

The € 250.0 million (or approximately $ 306.7 million as of December 31, 2020) of funding was received on January 25, 2019 with a maturity date of January 24, 2025.

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

As of December 31, 2021, the Company had the ability to borrow approximately € 117.5 million and $ 133.7 million of 2020 term loans (or an aggregate amount of approximately $ 267.0 million).

As described above, the Company’s credit facility allows it to select from among various interest rate options.

Due to the phase-out of LIBOR, LIBOR-based rates no longer will be available for borrowings denominated in U.S.

dollars after December 31, 2022, and for loans denominated in other currencies after December 31, 2021.

The rates reflected in the Company’s credit facility were designed to accommodate the discontinuation of LIBOR-based rates, and a shift to the “Secured Overnight Financing Rate” (“SOFR”) or a base rate, and, as such, the Company does not believe that moving to the other rates will have a materially adverse effect on the Company’s results of operations.

In addition, the credit facility agreement also provides for an expedited amendment process once a replacement for LIBOR is established, which the Company may elect to utilize to add additional interest-rate alternatives.

1.002 % Senior Term Loan Due 2025

On January 25, 2019, the Company borrowed € 250.0 million (or approximately $ 283.7 million as of December 31, 2021) from the European Investment Bank.

The loan matures on January 24, 2025.

The Company is permitted to prepay the term loan before its maturity date.

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

The term loan contains covenants regarding, among other things, the incurrence of indebtedness and the making of certain payments, as well as commitments regarding amounts of future research and development expenses in

Senior Term Loans Due Between 2023 and 2028

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

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

Senior Term Loans Due Between 2021 and 2028

a group of another seven related term loan agreements.

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

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

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

Additionally, as mentioned previously, the Company repaid € 192.0 million (or approximately $ 223.8 million as of October 19, 2021) upon maturity of two of its 2016 senior term loans in October 2021.

In August 2021, prior to the issuance of the senior notes due 2028, the Company repaid two of its 2018 senior term loans upon maturity with an aggregate amount of € 72.0 million (or approximately $ 85.5 million as of August 1, 2021).

On February 1, 2022, the Company repaid € 72.5 million (or approximately $ 81.7 million) of one of its 2018 senior term loans due August 2023 with existing cash on hand.

In aggregate, the Company had indebtedness of € 393.0 million (or approximately $ 445.9 million as of December 31, 2021) through a group of eight remaining related term loan agreements.

As of February 1, 2022, as a result of a further repayment discussed previously, the Company had indebtedness of € 320.5 million (or approximately $ 361.0 million) through a group of seven remaining related term loan agreements.

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

The Company is permitted to prepay the term loans before their maturity dates.

For the term loans with a fixed interest rate, interest is payable in arrears on an annual basis, with interest rates ranging from 0.70 % to 2.26 % and a maturity date between August 2021 and August 2028.

For the term loans with a floating interest rate, interest is payable in arrears on a semi-annual basis, with interest rates based on the EURIBOR plus a margin ranging from 0.70 % to 1.25 % and a maturity date between August 2021 and August 2025.

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

As of December 31, 2021, for the term loans with a fixed interest rate, interest is payable in arrears on an annual basis, with interest rates ranging from 0.90 % to 2.26 % and maturity dates between August 2023 and August 2028.

For the term loans with a floating interest rate, interest is payable in arrears on a semi-annual basis, with interest rates based on the EURIBOR plus a margin ranging from 0.90 % to 1.25 % and maturity dates between August 2023 and August 2025.

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

Former Indebtedness

1.056 % Senior Term Loan

In December 2014, the Company entered into a term loan with the EIB, which provided the Company with the ability to borrow up to € 200.0 million.

The € 200.0 million of funding was received on January 15, 2015 and had a maturity date of January 15, 2020.

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

Senior Term Loans Due 2021

In April 2016, the Company entered into two term loan agreements with Rabobank, in the amount of € 100.0 million and € 200.0 million, respectively.

The provisions of the two term loans were identical in nature.

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

5 7 / 8 % Senior Notes

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

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

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

As a result of the tender offer, the Company repurchased approximately $ 185.9 million of principal amount of the senior notes for approximately $ 200.3 million, plus accrued interest.

In October 2018, the Company repurchased the remaining principal amount of the senior notes of approximately $ 114.1 million for approximately $ 122.5 million, plus accrued interest.

Both repurchases resulted in total losses on extinguishment of debt of approximately $ 24.5 million, including associated fees.

As a result of the repurchase of the 5 7 / 8 % senior notes, the Company recorded a cumulative amount of approximately $ 4.7 million of accelerated amortization of a deferred gain related to a terminated interest rate swap instrument associated with the senior notes.

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Senior Term Loan Due 2022

In October 2018, the Company entered in a term loan agreement with Rabobank in the amount of € 150.0 million.

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

Interest was payable on the term loan quarterly in arrears at an annual rate, equal to the EURIBOR plus a margin ranging from 0.875 % to 1.875 % based on the Company’s credit rating.

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

As mentioned previously, during October 2021, the Company repaid its senior term loan of € 150.0 million (or approximately $ 173.4 million as of October 8, 2021) with the proceeds from its 0.800 % senior notes due 2028.

Short-Term Borrowings

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Benefits under the ENPP vest if the participant has attained age 50 and has at least ten years of service (including five years as a participant in the ENPP), but are not payable until the participant reaches age 65 .

The lifetime annuity benefit generally is available only to vested participants who retire on or after reaching age 65 .

The lifetime annuity benefit generally is available only to vested participants who retire on or after reaching age 65 and was eliminated during 2021 for participants reaching age 65 subsequent to December 31, 2022.

The ENPP is an unfunded, nonqualified defined benefit pension plan.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Net annual pension costs for the years ended December 31, 2021, 2020 and 2019 for the Company’s defined benefit pension plans and ENPP are set forth below (in millions):

6 unchanged sentences

Net loss recognized due to settlement 0.1 0.2 0.5

Curtailment gain (1)

Net annual pension cost $ 12.4 $ 22.1 $ 24.5

___________________________________

(1) During 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 lifetime annuity feature for participants reaching age 65 subsequent to December 31, 2022.

This amendment resulted in a curtailment gain as well as a net prior service credit.

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The weighted average assumptions used to determine the net annual pension costs for the Company’s defined benefit pension plans and ENPP for the years ended December 31, 2021, 2020 and 2019 are as follows:

35 unchanged sentences

Amendments ( 13.6 ) ( 0.3 ) 0.4 —

Curtailment ( 9.7 ) — — —

Settlements ( 0.2 ) ( 0.3 ) — —

13 unchanged sentences

Funded status $ ( 89.2 ) $ ( 225.1 ) $ ( 22.6 ) $ ( 26.4 )

Unrecognized net actuarial losses 385.1 362.2 2.6 3.9

Unrecognized net actuarial losses (gains) 291.7 385.1 ( 1.1 ) 2.6

Unrecognized prior service cost 7.1 20.1 3.2 2.9

14 unchanged sentences

Accumulated other comprehensive loss as of December 31, 2019 $ ( 393.2 ) $ ( 96.8 ) $ ( 296.4 )

Prior service cost arising during the year ( 4.7 ) — ( 4.7 )

Prior service credit arising during the year 0.3 — 0.3

Net loss recognized due to settlement 0.3 — 0.3

3 unchanged sentences

Accumulated other comprehensive loss as of December 31, 2020 $ ( 412.5 ) $ ( 99.2 ) $ ( 313.3 )

Prior service cost arising during the year 0.3 — 0.3

Prior service credit arising during the year 13.1 3.1 10.0

Net loss recognized due to settlement 0.1 — 0.1

Net actuarial loss arising during the year ( 37.8 ) ( 5.1 ) ( 32.7 )

Net loss recognized due to curtailment 8.5 2.2 6.3

Net actuarial gain arising during the year 71.0 17.4 53.6

Amortization of prior service cost 0.8 0.2 0.6

3 unchanged sentences

Unrecognized net actuarial losses $ 291.7 $ 385.1

The increase in unrecognized net actuarial losses between years primarily resulted from lower discount rates at December 31, 2020 compared to December 31, 2019.

The decrease in unrecognized net actuarial losses between years primarily resulted from higher discount rates at December 31, 2021 compared to December 31, 2020, as well as a result of the amendment to the Company's ENPP as previously discussed.

The unrecognized net actuarial losses will be impacted in future periods by actual asset returns, discount rate changes, currency exchange rate fluctuations, actual demographic experience and certain other factors.

10 unchanged sentences

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

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

The decrease also reflects the 2021 plan amendment to the Company's

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

ENPP, as previously discussed.

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

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

and Brazilian postretirement health care benefit plans as of December 31, 2021 and 2020 (in millions):

Unrecognized net actuarial losses (1)

Unrecognized net actuarial (gains) losses (1)

$ ( 1.1 ) $ 2.6

(1) Includes a loss of approximately $ 1.0 million and $ 1.6 million, respectively, related to the Company’s U.S.

___________________________________

(1) Includes a gain of approximately $ 0.2 million and a loss of $ 1.0 million, respectively, related to the Company’s U.S.

postretirement benefit plans.

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

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

The unrecognized net actuarial gains related to the Company’s U.S.

and Brazilian postretirement benefit plans was primarily due to liability gain due to the experience of the plans and assumption changes as of December 31, 2021 as compared to December 31, 2020.

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

2 unchanged sentences

postretirement benefit plans.

As of December 31, 2020 and 2019, the net prior service cost related to the Company’s U.S.

and Brazilian postretirement health care benefit plans was as follows (in millions):

As of December 31, 2021 and 2020, the net prior service cost related to the Company’s Brazilian postretirement health care benefit plans was as follows (in millions):

Net prior service cost $ 3.2 $ 2.9

7 unchanged sentences

Accumulated benefit obligation 125.4 135.4

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

The Company’s U.K.

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

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

The amounts for 2021 and 2020 disclosed above do not include the fair value of plan assets, the projected benefit obligation or the accumulated benefit obligation related to the Company’s U.K.

The Company’s U.K.

plan’s fair value of plan assets was in excess of the plan’s accumulated benefit obligation as of December 31, 2019.

plan’s fair value of plan assets was in excess of the plan’s accumulated benefit obligation as of December 31, 2021 and 2020.

AGCO CORPORATION

9 unchanged sentences

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

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

In addition, GIMA recognized a net actuarial loss due to settlements of approximately $ 0.1 million in 2020.

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

89 unchanged sentences

Global equities $ 102.5 $ 18.2 $ 84.3 $ —

equities 4.7 4.7 — —

equities 65.2 65.2 — —

large cap equities 5.6 5.6 — —

small cap equities 3.9 3.9 — —

Total equity securities 108.1 23.8 84.3 —

1 unchanged sentence

Aggregate fixed income 615.9 615.9 — —

International fixed income 249.5 249.5 — —

Total fixed income share (1)

9 unchanged sentences

______________________________________

(1) 44 % of “fixed income” securities are in investment-grade corporate bonds;

20 % are in government treasuries;

11 % are in high-yield securities;

(1) 50 % of "fixed income" securities are in government treasuries;

20 % are in foreign securities;

6 % are in asset-backed and mortgage-backed securities;

and 9 % are in other various fixed income securities.

13 % are in investment-grade corporate bonds;

8 % are in high-yield securities;

6 % are in other various fixed income securities and 3 % are in asset-backed and mortgage-backed securities.

(2) 42 % of “alternative investments” are in relative value funds;

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As such, the key objective in the pension plans’ financial management is to promote stability and, to the extent appropriate, growth in funded status.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The investment strategy for the plans’ portfolio of assets balances the requirement to generate returns with the need to control risk.

1 unchanged sentence

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

based pension plans are as follow:

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

based pension plans are as follows:

Pension Plans Non-U.S.

14 unchanged sentences

(2) The overall U.S.

pension funds invest in a broad diversification of assets types.

pension funds invest in a broad diversification of asset types.

The Company has noted that over very long periods, this mix of investments would achieve an average return on its U.S.-based pension plans of approximately 4.87 %.

14 unchanged sentences

The Company does not expect to incur a withdrawal liability or expect to significantly increase its contributions over the remainder of the multiemployer plans’ contract periods.

The Company maintains separate defined contribution plans covering certain employees, primarily in the United States, the United Kingdom and Brazil.

The Company maintains separate defined contribution plans covering certain employees and executives, primarily in the United States, the United Kingdom and Brazil.

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

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

The Company contributed approximately $ 16.9 million, $ 15.4 million and $ 15.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

AGCO CORPORATION

3 unchanged sentences

Share Repurchase Program

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

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

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

In August and November 2021, the Company entered into two accelerated share repurchase ("ASR") agreements with financial institutions to repurchase an aggregate of $ 135.0 million of shares of its common stock.

The Company received approximately 952,204 shares associated with these transactions as of December 31, 2021.

On January 19, 2022, the Company received additional 113,824 shares upon final settlement of its November 2021 ASR agreement.

In February and March 2020, the Company entered into two ASR agreements with financial institutions to repurchase an aggregate of $ 55.0 million of shares of its common stock.

The Company received approximately 970,141 shares in these transactions as of December 31, 2020.

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

As of December 31, 2021, the remaining amount authorized to be repurchased under board-approved share repurchase authorizations was approximately $ 110.0 million, which has no expiration date.

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

The Company’s Board of Directors has declared and the Company has paid cash dividends per common share during the following years:

Dividends declared and paid per common share

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(1) The Company’s Board of Directors declared and the Company has paid quarterly cash dividends of $ 0.20 per common share beginning in the second quarter of 2021, from $ 0.16 per common share in the first quarter of 2021.

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

On January 20, 2022, the Company's Board of Directors approved a quarterly dividend of $ 0.20 per common share outstanding commencing in the first quarter of 2022.

In addition, the Company's Board of Directors also declared and the Company paid a special cash dividend of $ 4.00 per common share during 2021 totaling approximately $ 301.5 million.

(2) The Company’s Board of Directors declared and the Company has paid quarterly cash dividends of $ 0.16 per common share beginning in the second quarter of 2019, from $ 0.15 per common share in the first quarter of 2019, through the first quarter of 2021.

AGCO CORPORATION

4 unchanged sentences

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

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

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

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

1 unchanged sentence

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

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

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

Other comprehensive loss, net of reclassification adjustments ( 16.9 ) ( 197.5 ) ( 1.2 ) ( 215.6 )

Other comprehensive income (loss) before reclassifications 70.0 ( 45.1 ) 5.1 30.0

Net losses (gains) reclassified from accumulated other comprehensive income (loss) 12.9 — ( 3.0 ) 9.9

Other comprehensive income (loss), net of reclassification adjustments 82.9 ( 45.1 ) 2.1 39.9

Accumulated other comprehensive loss, December 31, 2021 $ ( 230.4 ) $ ( 1,540.1 ) $ ( 0.4 ) $ ( 1,770.9 )

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

3 unchanged sentences

Year ended December 31, 2020 (1)

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

Net losses (gains) on foreign currency contracts $ 11.4 $ ( 6.4 ) Cost of goods sold

Net gains on commodity contracts ( 17.2 ) — Cost of goods sold

Reclassification before tax ( 5.8 ) ( 6.4 )

12 unchanged sentences

See Note 8 to the Company’s Consolidated Financial Statements.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Stock Incentive Plan

3 unchanged sentences

Long-Term Incentive Plan and Related Performance Awards

The Company’s primary long-term incentive plan is a performance share plan that provides for awards of shares of the Company’s common stock based on achieving financial targets, such as targets for earnings per share, return on invested capital and operating margins, as determined by the Company’s Board of Directors.

The Company’s primary long-term incentive plan is a performance share plan that provides for awards of shares of the Company’s common stock based on achieving financial targets, such as targets for return on invested capital, operating margins, return on net assets and revenue growth, as determined by the Company’s Board of Directors.

The stock awards under the Plan are earned over a performance period, and the number of shares earned is determined based on annual cumulative or average results for the specified period, depending on the measurement.

2 unchanged sentences

Awards earned under the Plan are paid in shares of common stock at the end of each three-year performance period.

The percentage level achievement is determined annually, with the ultimate award that is earned determined based upon the average of the three annual percentages.

The percentage level achievement is determined annually or over the three-year cycle in aggregate, with the ultimate award that is earned determined based upon the average of the three annual percentages.

The 2021 grant of performance award shares is subject to a total

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

shareholder return modifier.

The compensation expense associated with these awards 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 and earned.

Compensation expense recorded during 2020, 2019 and 2018 with respect to awards granted was based upon the stock price as of the grant date.

During 2021, the Company granted 281,310 performance awards related to varying performance periods.

Compensation expense recorded during 2021, 2020 and 2019 with respect to awards granted was based upon the fair value as of the grant date.

For the 2021 awards that included a market condition, the Company measured the fair value using a Monte Carlo simulation.

The weighted average grant-date fair value of performance awards granted under the Plan during 2021, 2020 and 2019 was as follows:

2 unchanged sentences

Weighted average grant-date fair value $ 123.33 $ 70.84 $ 61.01

During 2020, the Company granted 425,440 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 2021 were as follows and are presented as if the Company were to achieve its maximum levels of performance under the plan:

4 unchanged sentences

Shares awarded but not earned at December 31 514,714

Based on the level of performance achieved as of December 31, 2020, 553,084 shares were earned under the related performance period and 233,668 shares were issued in February 2021, net of 149,434 shares that were withheld for taxes related to the earned awards.

Based on the level of performance achieved as of December 31, 2021, 330,174 shares were earned under the related performance period, including 97,818 shares earned as of December 31, 2020 related to certain retirees and other individuals.

330,174 shares were issued in February 2022, net of 125,363 shares that were withheld for taxes related to the earned awards.

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

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

I n addition, assuming the maximum target levels of performance achieved, there were 59,182 shares earned as of December 31, 2021 related to certain retirees and other individuals that will be issued at the end of the relevant performance periods based on the ultimate level of performance achieved with respect to those periods.

As of December 31, 2021, the total compensatio n cost related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performance that will be achieved, was approximately $ 20.6 million , and the weighted average period over which it is expected to be recognized is approximately one and one-half years.

4 unchanged sentences

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

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

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

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

6 unchanged sentences

Shares awarded but not vested at December 31 159,228

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

A majority of the 67,110 shares vested with respect to RSU awards during 2021 were issued in January 2021.

3,830 shares earned during 2021 related to certain retirees.

During January 2022, 44,991 RSUs shares were issued, net of 23,726 shares that were withheld for taxes.

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

As of December 31, 2021, the total compensation cost related to the unvested RSUs not yet recognized was approximately $ 8.5 million, and the weighted average period over which it is expected to be recognized is approximately one and one-half years.

1 unchanged sentence

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

The Company did not grant any SSARs during the year ended December 31, 2021.

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

6 unchanged sentences

The weighted average grant-date fair value of SSAR awards granted under the Plan and the weighted average assumptions under the Black-Scholes option model were as follows for the years ended December 31, 2020 and 2019:

Years Ended December 31,

2020 2019 2018

Weighted average grant-date fair value $ 12.31 $ 11.34

4 unchanged sentences

Expected dividend yield 0.9 % 1.0 %

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SSAR transactions during the year ended December 31, 2021 were as follows:

5 unchanged sentences

SSAR price ranges per share:

Granted $ 72.74

Exercised 43.88 - 73.14

1 unchanged sentence

Weighted average SSAR exercise prices per share:

Granted $ 72.74

Exercised 64.41

1 unchanged sentence

Outstanding at December 31 68.33

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

At December 31, 2021, the weighted average remaining contractual life of SSARs outstanding was approximately four years .

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

As of December 31, 2021, the total compensation cost related to unvested SSARs not yet recognized was approximately $ 0.8 million and the weighted-average period over which it is expected to be recognized is approximately one and one-half years.

The following table sets forth the exercise price range, number of shares, weighted average exercise price, and remaining contractual lives by groups of similar price as of December 31, 2021:

19 unchanged sentences

The Company realized an insignificant tax benefit from the exercise of SSARs, vesting of performance awards and vesting of RSU awards in certain foreign jurisdictions during the years ended December 31, 2021, 2020 and 2019.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

On January 20, 2022, the Company granted 137,283 performance award shares (subject to the Company achieving future target levels of performance) and 91,583 RSUs under the Plan.

10 unchanged sentences

Where naturally offsetting currency positions do not occur, the Company hedges certain, but not all, of its exposures through the use of foreign currency contracts.

The Company’s translation exposure resulting from translating the financial statements of foreign subsidiaries into United States dollars may be partially hedged from time to time.

The Company’s translation exposure resulting from translating the financial

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

statements of foreign subsidiaries into United States dollars may be partially hedged from time to time.

When practical, the translation impact is reduced by financing local operations with local borrowings.

The Company uses floating rate and fixed rate debt to finance its operations.

The floating rate debt obligations expose the Company to variability in interest payments due to changes in the EURIBOR and LIBOR benchmark interest rates.

The floating rate debt obligations expose the Company to variability in interest payments due to changes in the EURIBOR, LIBOR or other applicable benchmark interest rates such as SOFR upon the discontinuation of LIBOR.

The Company believes it is prudent to limit the variability of a portion of its interest payments, and to meet that objective, the Company periodically enters into interest rate swaps to manage the interest rate risk associated with the Company’s borrowings.

13 unchanged sentences

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Counterparty Risk

9 unchanged sentences

These amounts offset the effect of the changes in foreign currency rates on the related sale and purchase transactions.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

During 2021, 2020 and 2019, 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 $ 395.8 million and $ 332.7 million as of December 31, 2020 and 2019, respectively.

The Company did not have any derivatives that were designated as cash flow hedges related to foreign currency contracts as of December 31, 2021.

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

Steel Commodity Contracts

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

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The total notional value of derivatives that were designated as cash flow hedges was approximately $ 31.9 million and $ 14.7 million as of December 31, 2021 and 2020, respectively.

The following table summarizes the after-tax impact that changes in the fair value of derivatives designated as cash flow hedges had on accumulated other comprehensive loss and net income during 2021, 2020 and 2019 (in millions):

3 unchanged sentences

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

Foreign currency contracts (1)

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

Foreign currency contracts $ ( 7.4 ) Cost of goods sold $ ( 10.2 ) $ 8,566.0

Commodity contracts (1)

12.5 Cost of goods sold 13.2 $ 8,566.0

Total $ 5.1 $ 3.0

Foreign currency contracts $ 4.6 Cost of goods sold $ 6.3 $ 7,092.2

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

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

Commodity contracts (1)

0.5 Cost of goods sold — $ 7,092.2

Total $ 5.1 $ 6.3

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

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

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

(1) The outstanding contracts as of December 31, 2021 range in maturity through July 2022.

AGCO CORPORATION

NOTES TO 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 years ended December 31, 2021, 2020 and 2019 (in millions):

1 unchanged sentence

Tax After-Tax

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

Net changes in fair value of derivatives ( 1.0 ) 0.1 ( 1.1 )

Net losses reclassified from accumulated other comprehensive loss into income 8.6 1.4 7.2

Accumulated derivative net gains as of December 31, 2018 $ 1.6 $ 0.2 $ 1.4

5 unchanged sentences

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

Net changes in fair value of derivatives 8.3 3.2 5.1

Net gains reclassified from accumulated other comprehensive loss into income ( 5.8 ) ( 2.8 ) ( 3.0 )

Accumulated derivative net losses as of December 31, 2021 (1)

$ ( 0.5 ) $ ( 0.1 ) $ ( 0.4 )

(1) As of December 31, 2021, approximately $ 0.2 million of derivative realized net losses and approximately $ 1.5 million of derivative realized net gains, before taxes, remain in accumulated other comprehensive loss related to foreign currency contracts and commodity contracts, respectively, associated with inventory that had not yet been sold.

Net Investment Hedges

2 unchanged sentences

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

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

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

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

4 unchanged sentences

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 $ 300.9 million as of January 29, 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 $ 281.3 million as of December 31, 2021) and will receive $ 300.0 million from the counterparties.

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

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

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

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

During September 2019, the Company repaid the designated amount outstanding under its multi-currency revolving credit facility and the foreign currency denominated debt was de-designated as a net investment hedge.

The following table summarizes the notional values of the instrument designated as a net investment hedge (in millions):

2 unchanged sentences

Cross currency swap contract $ 300.0 $ 300.0

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

8 unchanged sentences

As of December 31, 2021 and 2020, the Company had outstanding foreign currency contracts with a notional amount of approximately $ 3,681.9 million and $ 3,326.6 million, respectively.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

16 unchanged sentences

Derivative instruments not designated as hedging instruments:

Foreign currency contracts Other current assets 12.3 Other current liabilities 22.2

Foreign currency contracts (1)

Other current assets 15.1 Other current liabilities 5.1

Total derivative instruments $ 27.8 $ 7.1

(1) The outstanding contracts as of December 31, 2021 range in maturity through October 2022.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

8 unchanged sentences

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

Commodity contracts Other current assets 0.5 Other current liabilities —

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

2 unchanged sentences

Total derivative instruments $ 15.3 $ 26.7

Former Interest Rate Swap Contract

The Company monitors the mix of short-term and long-term debt regularly.

From time to time, the Company manages the risk to interest rate fluctuations through the use of derivative financial instruments.

During 2015, the Company entered into an interest rate swap instrument with a notional amount of € 312.0 million and an expiration date of June 26, 2020.

The swap was designated and accounted for as a cash flow hedge.

Under the swap agreement, the Company paid a fixed interest rate of 0.33 % plus the applicable margin, and the counterparty to the agreement paid a floating interest rate based on the three-month EURIBOR.

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

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

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

Refer to Note 6 for further information.

Commitments and Contingencies

The future payments required under the Company’s significant commitments, excluding indebtedness, as of December 31, 2021 are as follows (in millions):

Payments Due By Period

2021 2022 2023 2024 2025 Thereafter Total

Interest payments related to indebtedness (1)

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

Unconditional purchase obligations (2)

106.2 9.9 0.6 0.2 — — 116.9

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

95.8 19.6 141.7 22.3 8.9 49.2 337.5

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

____________________________________

(1) Estimated interest payments are calculated assuming current interest rates over minimum maturity periods specified in debt agreements.

Debt may be repaid sooner or later than such minimum maturity periods (unaudited).

Refer to Note 6 for more information on the Company's commitments with respect to indebtedness.

(2) Unconditional purchase obligations exclude routine purchase orders entered into in the normal course of business.

(3) Other short-term and long-term obligations include estimates of future minimum contribution requirements under the Company’s U.S.

defined benefit pension and postretirement plans.

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

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

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

See Note 5 for further information.

Amount of Commitment Expiration Per Period

2021 2022 2023 2024 2025 Thereafter Total

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

Interest payments on indebtedness – As of December 31, 2021, the Company had interest payments of approximately $ 15.1 million due during the year ended December 31, 2022.

Interest payments generally do not vary materially year to year.

Indebtedness amounts reflect the principal amount of the Company's senior term loan, senior notes, credit facility and certain short-term borrowings, gross of any debt issuance costs.

Refer to Note 7 of the Consolidated Financial Statements for additional information regarding indebtedness.

Unconditional purchase obligations – As of December 31, 2021, the Company had approximately $ 131.1 million of outstanding purchase obligations payable during the year ended December 31, 2022.

These obligations generally do not vary materially year to year.

Other short-term and long-term obligations – As of December 31, 2021, the Company had approximately $ 40.1 million of income tax liabilities related to uncertain income tax provisions connected with ongoing income tax audits in various jurisdictions that it expects to pay or settle within the next 12 months.

These liabilities and related income tax audits are subject to statutory expiration.

Additionally, the Company had approximately $ 37.8 million of estimated future minimum contribution requirements under its U.S.

defined benefit pension and postretirement plans due during the year ended December 31, 2022.

Refer to Notes 6 and 8 of the Consolidated Financial Statements for additional information regarding the Company's uncertain tax positions and pension and postretirement plans, respectively.

These obligations comprise a majority of the Company's other short-term and long-term obligations.

Off-Balance Sheet Arrangements

6 unchanged sentences

In addition, the Company generally would expect to be able to recover a significant portion of the amounts paid under such guarantees from the sale of the underlying financed farm equipment, as the fair value of such equipment is expected to be sufficient to offset a substantial portion of the amounts paid.

The Company also has obligations to guarantee indebtedness owed to certain of its finance joint ventures if dealers or end users default on loans.

The Company also guarantees indebtedness owed to certain of its finance joint ventures if dealers

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

or end users default on loans.

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

2 unchanged sentences

The maximum potential amount of future payments under the guarantee is approximately $ 160.7 million.

AGCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

At December 31, 2021, the Company had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $ 3,681.9 million.

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

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

The outstanding contracts as of December 31, 2021 range in maturity through October 2022.

The Company also had outstanding designated steel commodity contracts with a gross notional amount of approximately $ 31.9 million that range in maturity through July 2022 (see Note 11).

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

8 unchanged sentences

However, the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which could take several years.

During 2017, the Company purchased Precision Planting, which provides precision agricultural technology solutions.

In 2018, Deere & Company filed separate complaints in the U.S.

District Court of Delaware against the Company and its Precision Planting subsidiary alleging that certain products of those entities infringe certain patents of Deere.

The two complaints subsequently were consolidated into a single case, Case No.

1:18-cv-00827-CFC (CONSOLIDATED), that currently is scheduled for trial in July 2022.

It is the Company’s position that no patents have been, or are continuing to be, infringed, and the Company is vigorously contesting the allegations in the complaint.

The Company has an indemnity right under the purchase agreement related to the acquisition of Precision Planting from its previous owner.

Pursuant to that right, the previous owner of Precision Planting currently is responsible for the litigation costs associated with the complaint and is obligated to reimburse AGCO for some or all of the damages in the event of an adverse outcome in the litigation.

In the event of an adverse outcome, the Company estimates that the range of possible damages, based upon the advice of third-party specialists, would be up to approximately $ 7.0 million.

Deere & Company has provided an estimate of its damages that is significantly higher than the Company estimates and that the Company believes does not have merit.

The Company is a party to various other legal claims and actions incidental to its business.

30 unchanged sentences

Cash and cash equivalents, accounts and notes receivable, net and accounts payable are valued at their carrying amounts in the Company’s Consolidated Balance Sheets, due to the immediate or short-term maturity of these financial instruments.

The carrying amounts of long-term debt under the Company’s senior term loan due 2022, 1.002 % senior term loan due 2025 and senior term loans due between 2021 and 2028 approximate fair value based on the borrowing rates currently available to the Company for loans with similar terms and average maturities.

The carrying amounts of long-term debt under the Company’s 1.002 % senior term loan due 2025 and senior term loans due between 2023 and 2028 approximate fair value based on the borrowing rates currently available to the Company for loans with similar terms and average maturities.

At December 31, 2021, the estimated fair value of the Company's 0.800 % senior notes due 2028, based on listed market values, was approximately € 595.1 million (or approximately $ 675.2 million as of December 31, 2021), compared to the carrying value of € 600.0 million (or approximately $ 680.8 million as of December 31, 2021).

See Note 7 for additional information on the Company’s long-term debt.

7 unchanged sentences

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

During 2021, the Company did not make additional investments in its finance joint ventures.

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

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

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

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

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

During 2021, the Company received approximately $ 84.4 million dividends from certain of its finance joint ventures.

During 2020, the Company did not receive dividends from its finance joint ventures.

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

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

15 unchanged sentences

The Company received dividends from TAFE of approximately $ 2.0 million, $ 1.8 million and $ 2.0 million during 2021, 2020 and 2019, respectively.

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

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

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

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

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

until the business combination of Praxair, Inc.

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

AGCO CORPORATION

14 unchanged sentences

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

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

Income from operations 193.7 29.3 585.3 62.1 870.4

Depreciation 61.3 25.8 110.5 14.9 212.5

31 unchanged sentences

Italy 112.7 129.0

Denmark 101.9 99.2

China 91.6 98.9

Denmark 84.7 101.9

Other 222.0 232.8

14 unchanged sentences

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

In 2021, the Company recognized approximately $ 80.7 million of revenue that was recorded as a contract liability at the beginning of 2021.

In 2020, the Company recognized approximately $ 44.0 million of revenue that was recorded as a contract liability at the beginning of 2020.

Remaining Performance Obligations

61 unchanged sentences

America Europe/

Middle East (1)

Middle East Asia/

Pacific/Africa Consolidated

20 unchanged sentences

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

___________________________________

(1) Rounding may impact summation of amounts.

AGCO CORPORATION

1 unchanged sentence

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

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

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

The new standard continues to allow for two types of leases for income statement recognition purposes:

The Company accounts for these leases pursuant to ASU 2016-02, “Leases”.

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

ROU assets represent the Company’s right to use an underlying asset during the lease term while lease liabilities represent the Company’s obligation to make lease payments during the lease term.

The standard allows for two types of leases for income statement recognition purposes:

operating leases and finance leases.

Operating leases result in the recognition of a single lease expense on a straight-line basis over the lease term, similar to the treatment for operating leases under previous U.S.

Finance leases result in an accelerated expense, also similar to previous U.S.

ASU 2016-02 also contains amended guidance regarding the identification of embedded leases in service and supply contracts, as well as the identification of lease and nonlease components of an arrangement.

ROU assets represent the Company’s right to use an underlying asset for the lease term while lease liabilities represent the Company’s obligation to make lease payments for the lease term.

Operating leases result in the recognition of a single lease expense on a straight-line basis over the lease term whereas finance leases result in an accelerated expense.

ASU 2016-02 also contains guidance regarding the identification of embedded leases in service and supply contracts, as well as the identification of lease and nonlease components of an arrangement.

All leases greater than 12 months result in the recognition of an ROU asset and liability at the lease commencement date based on the present value of the lease payments over the lease term.

2 unchanged sentences

The incremental borrowing rate is estimated using the currency denomination of the lease, the contractual lease term and the Company’s applicable borrowing rate.

The Company does not recognize a ROU asset or lease liability with respect to operating leases with an initial term of 12 months or less and recognizes expense on such leases on a straight-line basis over the lease term.

The Company does not recognize an ROU asset or lease liability with respect to operating leases with an initial term of 12 months or less and recognizes expense on such leases on a straight-line basis over the lease term.

The Company accounts for lease components separately from nonlease components other than for real estate and office equipment.

10 unchanged sentences

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

Total leased assets $ 180.2 $ 206.4

Total lease assets $ 164.7 $ 180.2

Lease Liabilities Classification As of December 31, 2021 As of December 31, 2020

3 unchanged sentences

Finance Other noncurrent liabilities 6.0 9.8

Total leased liabilities $ 182.2 $ 207.4

Total lease liabilities $ 167.6 $ 182.2

____________________________________

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

Total lease costs for 2021 and 2020 are set forth below (in millions):

Classification Year Ended

5 unchanged sentences

Finance lease cost:

Amortization of leased assets Depreciation expense (1)

Interest on leased liabilities Interest expense, net 0.6 0.7

Amortization of lease assets Depreciation expense (1)

Interest on lease liabilities Interest expense, net 0.3 0.6

Total lease cost $ 81.4 $ 71.0

____________________________________

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

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

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

10 unchanged sentences

( 17.3 ) ( 2.5 )

Present value of leased liabilities $ 169.4 $ 12.8

Present value of lease liabilities $ 157.8 $ 9.9

____________________________________

12 unchanged sentences

( 21.5 ) ( 3.5 )

Present value of leased liabilities $ 190.9 $ 16.5

Present value of lease liabilities $ 169.4 $ 12.8

____________________________________

21 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data