What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-03-01 compared with 2022-02-25 · 161 added, 150 removed, 376 unchanged (45% of the section changed)

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Issuer Purchases of Equity Securities

The table below sets forth information with respect to purchases of our common stock made by or on behalf of us during the three months ended December 31, 2021:

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (2)

October 1, 2021 through

October 31, 2021

— $ — — $ 170.0

November 1, 2021 through

November 30, 2021 (1)

393,733 $ 121.91 393,733 $ 110.0

December 1, 2021 through

December 31, 2021 — $ — — $ 110.0

Total 393,733 $ 121.91 393,733 $ 110.0

___________________________________

(1) In November 2021, we entered into an ASR agreement with a third-party financial institution to repurchase $60.0 million of our common stock.

The ASR agreement resulted in the initial delivery of 393,733 shares of our common stock, representing approximately 80% of the shares expected to be repurchased in connection with the transaction.

In January 2022, the remaining 113,824 shares under the ASR agreement were delivered.

The average price paid per share related to the ASR agreement reflected in the table above was derived using the fair market value of the shares on the date the initial 393,733 shares were delivered.

The amount that may yet be purchased under our share repurchase programs, as presented in the above table, was reduced by the entire $60.0 million payment related to the ASR agreement.

Refer to Note 9 to our Condensed Consolidated Financial Statements for a further discussion of this matter.

(2) The remaining authorized amount to be repurchased is $110.0 million, which has no expiration date.

There were no purchases of our common stock made by or on our behalf during the three months ended December 31, 2022.

The information required by Item 301 and Item 302 of Regulation S-K has been omitted as we have elected to adopt the changes to Item 301 and Item 302 of Regulation S-K contained in SEC Release No.

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We sell a full range of agricultural equipment, including tractors, combines, self-propelled sprayers, hay tools, forage equipment, seeding and tillage equipment, implements, and grain storage and protein production systems.

Our products are widely recognized in the agricultural equipment industry and are marketed under a number of well-known brand names, including:

Challenger ® , Fendt ® , GSI ® , Massey Ferguson ® and Valtra ® , supported by our Fuse ® precision agriculture solutions.

Our products are widely recognized in the agricultural equipment industry and are marketed under a number of well-known brand names, including Fendt ® , GSI ® , Massey Ferguson ® , Precision Planting ® and Valtra ® , supported by our FUSE ® precision agriculture solutions.

We distribute most of our products through a combination of approximately 3,100 dealers and distributors as well as associates and licensees.

In addition, we provide retail and wholesale financing through our finance joint ventures with Rabobank.

The COVID-19 pandemic and other economic factors continue to create volatility in the global economy, initially through government-mandated facility closures, higher absentee rates, and reduced production at both our factories and the factories that supply us with parts and components;

and, more recently, through supply chain disruptions.

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

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

Financial Highlights

We sell our equipment and replacement parts to our independent dealers, distributors and other customers.

A large majority of our sales are to independent dealers and distributors that sell our products to end users.

To the extent practicable, we attempt to sell products to our dealers and distributors on a level basis throughout the year to reduce the effect of seasonal

demands on our manufacturing operations and to minimize our investment in inventories.

To the extent practicable, we attempt to sell products to our dealers and distributors on a level basis throughout the year to reduce the effect of seasonal demands on our manufacturing operations and to minimize our investment in inventories.

However, retail sales by dealers to farmers are highly seasonal and are a function of the timing the planting and harvesting seasons.

In certain markets, particularly in North America, there is often a time lag, which varies based on the timing and level of retail demand, between our sale of the equipment to the dealer and the dealer’s sale to a retail customer.

Financial Highlights

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

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Net income attributable to AGCO Corporation and subsidiaries for 2022 was $889.6 million, or $11.87 per diluted share, compared to $897.0 million, or $11.85 per diluted share, for 2021.

Net sales for 2021 were approximately $11,138.3 million, or 21.7% higher than 2020, primarily due to improved market demand.

Regionally, net sales were higher in all regions during 2021 compared to 2020.

Net sales were negatively impacted by extended COVID-related production shutdowns in both Europe and South America during the first half of 2020.

Net sales for 2022 were approximately $12,651.4 million, or 13.6% higher than 2021, primarily due to robust high horsepower tractor end-market demand and favorable pricing, which helped to offset the negative impacts of currency translation, supply chain constraints and inflationary pressures.

Regionally, net sales were higher in all regions during 2022 compared to 2021, excluding currency translation.

Income from operations was approximately $1,265.4 million in 2022 compared to approximately $1,001.4 million in 2021.

The increase in income from operations during 2021 was primarily the result of higher net sales and production volumes and improved margins, which benefited from positive pricing impacts and a favorable sales mix that offset substantial inflationary material and freight cost pressures along with higher manufacturing costs.

Net income per diluted share was favorably impacted by the reversal of valuation allowances previously established against our deferred tax assets in both the United States and Brazil during 2021.

In addition, our 2020 income from operations included approximately $20.0 million of a non-cash goodwill impairment charge during the second quarter of 2020 related to a tillage and seeding equipment joint venture in which we formerly owned a 50% interest in our North American (“NA”) region.

Regionally, income from operations in our Europe/Middle East (“EME”) region increased by approximately $170.1 million in 2021 compared to 2020, driven primarily by higher net sales and increased production volumes as well as positive pricing realization, which offset higher material costs and engineering expenses.

In our North American region, income from operations improved by approximately $44.4 million compared to the prior year.

Higher net sales and production levels, a

richer product mix and favorable pricing impacts contributed to the improvement in the region and helped to offset material cost inflation.

The increase in income from operations during 2022 was primarily the result of higher net sales and production volumes along with significant pricing to offset inflationary cost increases.

Income from operations during 2022 was impacted by impairment charges recorded during the first quarter related to our joint ventures in Russia of approximately $36.0 million.

Net income per diluted share was impacted by these factors, as well as restructuring expenses.

Regionally, income from operations in Europe/Middle East (“EME”) increased by approximately $28.7 million in 2022 compared to 2021, driven primarily by higher net sales and increased production volumes as well as positive pricing realization, which offset higher material costs and engineering expenses.

In our North American region, income from operations increased by approximately $40.7 million compared to the prior year.

Higher net sales and production levels, as well as favorable net pricing impacts contributed to the improvement in the region and helped to offset higher engineering expenses and material cost inflation.

In South America, income from operations increased approximately $241.7 million in 2022 compared to 2021.

The increase reflects increased net sales and production volumes, a better sales mix and favorable price realization, offsetting increasing material costs.

Income from operations in our Asia/Pacific/African (“APA”) region increased approximately $51.8 million in 2021 compared to 2020, primarily due to higher net sales and an improved product mix.

The increase reflects increased net sales and production volumes, a better sales mix and significant price realization, offsetting increasing material costs.

Income from operations in our Asia/Pacific/Africa (“APA”) region increased

approximately $3.0 million in 2022 compared to 2021, primarily due to higher net sales and an improved product mix which offset higher engineering expenses and material cost inflation.

Industry Market Conditions

Elevated agricultural commodity prices continue to support favorable farm economics resulting in farmers upgrading and replacing aging fleets.

These improved conditions generated industry growth across all the major equipment markets during 2021.

Supportive farm economics are resulting in robust demand for larger agricultural equipment as farmers continue to replace aging machinery.

Supply chain constraints have limited global industry production and dealer inventory levels of new and used large agricultural equipment remain below normal levels across the industry.

Healthy farm income from elevated crop prices helped to offset higher fuel, fertilizer and other input costs.

Future demand for agricultural equipment will be influenced by farm income, which is a function of commodity and protein prices, crop yields and government support.

In North America, industry unit retail sales of utility and high horsepower tractors increased approximately 14% in 2021 compared to 2020.

In North America, industry unit retail sales of utility and high horsepower tractors decreased approximately 5.0% in 2022 compared to 2021.

Industry unit retail sales of combines increased approximately 14.6% in 2022 compared to 2021.

Retail sales growth was strongest for high horsepower tractors in 2021 as compared to 2020 where an extended fleet age and favorable commodity prices stimulated demand.

In Western Europe, industry unit retail sales of tractors for 2021 increased approximately 16% compared to 2020.

Lower sales of smaller tractors, which declined from record levels in 2021, were partially offset by increased sales of higher horsepower tractors and combines.

In Western Europe, industry unit retail sales of tractors for 2022 decreased approximately 8.5% compared to 2021.

Industry unit retail sales of combines for 2022 increased approximately 10.2% compared to 2021.

Industry sales increased across all major markets compared to 2020.

Higher wheat, dairy and livestock prices, combined with improved levels of crop production, generated positive farm economics and farmer sentiment.

Industry retail tractors sales were restricted by supply chain challenges during 2022.

In addition, farmer sentiment in the region has been negatively impacted by the conflict in Ukraine, input cost inflation and while lessening, looming energy concerns.

In South America, industry unit retail sales of tractors for 2022 increased approximately 3.2% compared to 2021.

Industry unit retail sales of combines for 2021 increased approximately 20% compared to 2020.

The improved demand was primarily in the large markets of Brazil and Argentina, as well as in smaller South American markets.

Healthy crop production as well as favorable exchange rates supported positive economic conditions for farmers who continue to replace aged equipment.

Industry unit retail sales of combines for 2022 decreased approximately 1.6% compared to 2021.

The improved demand in tractors was primarily in Argentina and smaller South American markets, offset by modestly lower sales in Brazil despite strong demand for large agricultural equipment.

Healthy crop production and continued expansion in planted acreage, as well as favorable margins, driven by supportive exchange rates, continue to support farm profitability and investments in equipment.

Results of Operations

Net sales for 2021 were $11,138.3 million compared to $9,149.7 million for 2020, primarily as a result of improved market demand.

Net sales for 2022 were $12,651.4 million compared to $11,138.3 million for 2021, primarily as a result of improved high horsepower tractor end-market demand, which resulted in a favorable sales mix, as well as favorable pricing impacts, partially offset by unfavorable foreign currency translation.

The following table sets forth, for the year ended December 31, 2022, the impact to net sales of currency translation by geographical segment (in millions, except percentages):

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2022 2021 $ % $ %

EME $ 6,447.3 $ 6,221.7 $ 225.6 3.6 % $ (922.8) (14.8) %

North America 3,175.1 2,659.2 515.9 19.4 % (20.6) (0.8) %

South America 2,121.6 1,307.7 813.9 62.2 % 73.4 5.6 %

EME 6,221.7 5,366.9 854.8 15.9 % 155.7 2.9 %

APA 907.4 949.7 (42.3) (4.5) % (76.1) (8.0) %

$ 12,651.4 $ 11,138.3 $ 1,513.1 13.6 % $ (946.1) (8.5) %

Regionally, net sales in North America increased in 2021 compared to 2020, with growth in sales of tractors and Precision Planting equipment.

In the EME region, net sales were higher during 2021 compared to 2020, primarily due to increased sales in all major markets, with the largest increases contributed by growth in tractors, combines and replacement parts.

Net sales increased in South America in 2021 compared to 2020, primarily due to higher net sales of tractors, combines, planting equipment, parts as well as grain and protein equipment.

In the APA region, net sales increased in 2021 compared to 2020, primarily due to net sales increases in China and Australia, as well as recovery in Africa.

Regionally, net sales in EME were higher during 2022 compared to 2021, primarily due to increased sales in most major markets in the region, with the largest increases contributed by net sales growth in both tractors and combines.

These positive impacts were partially offset by negative currency translation.

Net sales in North America increased in 2022 compared to 2021, as a result of strong pricing and growth in net sales of high horsepower tractors, combines and precision agricultural equipment.

Net sales increased in South America in 2022 compared to 2021, primarily due to significant pricing realization and higher net sales of high horsepower tractors, combines and planting equipment.

In the APA region, net sales decreased in 2022 compared to 2021, primarily due to unfavorable currency translation and delays in production and corresponding shipments from our European factories.

We estimate that worldwide average price increases were approximately 11.6% and 6.6% in 2022 and 2021, respectively.

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The following table sets forth, for the years ended December 31, 2022 and 2021, the percentage relationship to net sales of certain items included in our Consolidated Statements of Operations (in millions, except percentages):

Net Sales $ % of

Net Sales (1)

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Gross profit as a percentage of net sales increased during 2022 compared to 2021 primarily due to the benefit of higher net sales and production levels, as well as positive pricing, which was partially offset by the impact of material cost inflation.

Production hours increased across all regions during 2021.

Overall, global production hours increased approximately 25% on a global basis during 2021 compared to 2020, primarily as a result of stronger market demand during 2021.

Overall, global production hours increased approximately 5.5% during 2022 compared to 2021, primarily as a result of stronger market demand during 2022.

Our production facilities continue to face supply chain and logistics disruptions as well as material and freight cost inflation.

These disruptions impact our ability to produce and ship units, as well as contribute to labor inefficiencies, and result in carrying higher than anticipated raw material and work in process inventory levels.

These disruptions impact our ability to produce and ship units, as well as contribute to labor inefficiencies, and result in carrying higher raw material and work in process inventory levels.

We were able to meaningfully reduce work-in-process inventory levels during the fourth quarter of 2022 from higher levels during previous quarters.

We expect these conditions to continue, which may impact production levels and net sales and margins in future periods.

Selling, general and administrative expenses (“SG&A expenses”) and engineering expenses, as a percentage of net sales, were lower during 2021 compared to 2020, primarily driven by the increases in net sales.

The absolute level of SG&A expenses increased during 2021 following prior year actions to lower expenses while operations were suspended, such as reduced field sales and marketing activities and lower travel expenses.

Selling, general and administrative expenses (“SG&A expenses”) and engineering expenses, as a percentage of net sales, were lower during 2022 compared to 2021, primarily driven by the increase in net sales and the impact of foreign currency translation.

The absolute level of SG&A expenses increased during 2022 following prior actions to lower expenses in 2021 as a result of the pandemic, such as reduced field sales and marketing activities and lower travel expenses.

We recorded stock compensation expense of approximately $32.7 million and $26.6 million during 2022 and 2021, respectively, within SG&A expenses, as is more fully explained in Notes 1 and 10 of our Consolidated Financial Statements.

During 2020, we recorded a non-cash goodwill impairment charge of approximately $20.0 million related to a tillage and seeding equipment joint venture in which we formerly owned a 50% interest.

The impairment charge was recorded as “Impairment charges” within our Consolidated Statements of Operations, with an offsetting benefit of approximately $10.0 million included within “Net loss attributable to noncontrolling interests.”

We recorded restructuring expenses of approximately $6.1 million and $15.3 million during 2022 and 2021, respectively.

The restructuring expenses primarily related to severance and other related costs associated with the rationalization of employee headcount at various manufacturing facilities and administrative offices located in the United States, Europe and South America during 2021 and 2020, as well as the rationalization of our grain storage and protein production systems operations.

The restructuring expenses primarily related to severance and other related costs associated with the rationalization of certain U.S., China, South American and European manufacturing operations.

See Note 3 of our Consolidated Financial Statements.

Interest expense, net was $6.7 million for 2021 compared to $15.0 million for 2020 resulting primarily from higher interest income in 2021 as compared to 2020.

Also, see below for discussion of impairment and other charges associated with our Russian joint ventures.

Interest expense, net was $13.0 million for 2022 compared to $6.7 million for 2021 resulting primarily from increased debt levels and interest rates in 2022 as compared to 2021.

See “Liquidity and Capital Resources” for further information on our available funding.

Other expense, net was $145.2 million in 2022 compared to $50.4 million in 2021.

We have a minority equity interest in Tractors and Farm Equipment Limited (“TAFE”).

During 2020, TAFE repurchased a portion of its common stock from us resulting in a gain of approximately $32.5 million recorded within “Other expense, net.” See Note 14 of our Consolidated Financial Statements for additional information.

In addition, losses on sales of receivables, primarily related to our accounts receivable sales agreements with our finance joint ventures in North America, Europe and Brazil, were approximately $24.5 million and $24.1 million in 2021 and 2020, respectively.

We recorded an income tax provision of $108.4 million in 2021 compared to $187.7 million in 2020.

Losses on sales of receivables, primarily related to our accounts receivable sales agreements with our finance joint ventures in North America, Europe and Brazil, were approximately $71.1 million and $24.5 million in 2022 and 2021, respectively.

The increase in losses was primarily the result of higher interest rates in 2022 as compared to 2021.

Other expense, net also increased in 2022 as compared to 2021 due to higher foreign exchange losses.

See below for discussion of charges associated with the sale of our Russian joint venture.

We recorded an income tax provision of approximately $296.6 million in 2022 compared to $108.4 million in 2021.

Our tax provision and effective tax rate are impacted by the differing tax rates of the various tax jurisdictions in which we operate, permanent differences for items treated differently for financial accounting and income tax purposes, losses in jurisdictions where no income tax benefit is recorded, and provisions for unrecognized income tax benefits related to uncertain tax positions.

At December 31, 2022 and 2021, we had gross deferred tax assets of $301.2 million and $291.8 million, respectively, including $45.9 million and $69.5 million, respectively, related to net operating loss carryforwards.

At December 31, 2021, we had total valuation allowances as an offset to our gross deferred tax assets of approximately $47.4 million.

This valuation allowance included allowances against deferred tax assets (including net operating loss carryforwards) in the U.S.

At December 31, 2022 and 2021, we had total valuation allowances as an offset to our gross deferred tax assets of approximately $47.3 million and $47.4 million, respectively.

These valuation allowances included allowances against deferred tax assets (including net operating loss carryforwards) in the U.S.

and certain foreign jurisdictions.

As of December 31, 2021, our income tax provision included the benefit of 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.

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 of the valuation allowances.

At December 31, 2020, we had total valuation allowances as an offset to the gross deferred tax assets of approximately $181.0 million.

This valuation allowance included allowances against deferred tax assets (including net operating loss carryforwards) in the United States and certain foreign jurisdictions.

As of December 31, 2021, our income tax provision included the benefit of reversals of approximately $67.8 million and approximately $55.6 million related to valuation allowances previously established against the Company’s net deferred tax assets in the U.S.

and Brazil, respectively.

Improvements in income in the U.S and Brazil during 2020 and 2021, along with updated future projected income levels, supported the reversal of both of the valuation allowances.

Realization of the net deferred tax assets as of December 31, 2022 will depend on generating sufficient taxable income in future periods, net of reversing deferred tax liabilities.

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Refer to Note 6 of our Consolidated Financial Statements for further information.

Equity in net earnings of affiliates, which is primarily comprised of income from our AGCO Finance joint ventures, was $65.6 million in 2021 compared to $45.5 million in 2020, primarily due to higher net earnings from our AGCO Finance joint ventures.

Equity in net earnings of affiliates, which is primarily comprised of income from our AGCO Finance joint ventures, was $64.1 million in 2022 compared to $65.6 million in 2021.

The decrease was primarily due to a write-down of our investment in our Russian finance joint venture of approximately $4.8 million recorded during the first quarter of 2022.

The Russian finance joint venture was sold during the three months ended December 31, 2022.

See “Finance Joint Ventures” for further information regarding our finance joint ventures and their results of operations and Note 5 of our Consolidated Financial Statements for further information.

We previously invested in two joint ventures that operated in Russia primarily for the manufacture and distribution of equipment and parts.

Beginning in 2018, our Russian joint venture partner became subject to sanctions by the United States.

Subsequent to the commencement of these sanctions, we obtained time-limited general licenses from the Office of Foreign Assets Control (“OFAC”) of the U.S.

Department of Treasury that permitted us to continue our participation, which, following the most recent extension, expired on May 25, 2022.

Following that expiration, we “blocked” our interest in our Russian manufacturing joint venture through a process acceptable to OFAC, which had the effect of suspending our role in that joint venture.

During the three months ended March 31, 2022, we assessed the fair value of our gross assets related to the joint ventures for potential impairments and recorded asset impairment charges of approximately $36.0 million.

During the three months ended December 31, 2022, we sold our interest in the Russian distribution joint venture and, as a result, approximately $11.4 million of foreign currency losses accumulated in the joint venture previously recognized within “Accumulated other comprehensive loss” were therefore recorded in “Other expense, net” associated with the divestiture.

2021 Compared to 2020

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Our AGCO Finance joint ventures provide both retail financing and wholesale financing to our dealers in the United States, Canada, Europe, Brazil, Argentina and Australia.

The joint ventures are owned by AGCO and by a wholly-owned subsidiary of Rabobank.

The joint ventures are owned by AGCO and Rabobank.

The majority of the assets of the finance joint ventures consist of finance receivables.

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

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

Under the various joint venture agreements, Rabobank provides financing to the finance joint ventures, primarily through lines of credit.

We do not guarantee the debt obligations of the joint ventures.

In the United States and Canada, we guarantee certain minimum residual values to those joint ventures upon expiration of certain eligible leases between the finance joint ventures and end users.

In the United States and

Canada, we guarantee certain minimum residual values to those joint ventures upon expiration of certain eligible leases between the finance joint ventures and end users.

We also have other guarantees with our other finance joint ventures which are not material.

See “Commitments and Off-Balance Sheet Arrangements” and Note 12 to our Consolidated Financial Statements for additional information.

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During 2022, we did not make additional investments in our finance joint ventures, and we received dividends of approximately $27.0 million from certain of our finance joint ventures.

During 2020, we made approximately $1.9 million of additional investments in our finance joint ventures, and there were no dividends paid from our finance joint ventures.

Our finance joint ventures were restricted from paying dividends to us during 2020 as a result of COVID-19 pandemic banking regulations.

Our share in the earnings of the finance joint ventures, included in “Equity in net earnings of affiliates” within our Consolidated Statements of Operations, was approximately $64.4 million and $45.0 million for the years ended December 31, 2021 and 2020, respectively, with the increase in earnings primarily due to higher income in our finance joint ventures in the U.S., Canada and France during 2021 as compared to 2020.

During 2021, we did not make additional investments in our finance joint ventures, and we received dividends of approximately $84.4 million from certain of our finance joint ventures.

In addition, during the year ended December 31, 2022, we recorded a write-down of our investment in our Russian finance joint venture of approximately $4.8 million, reflected within “Equity in net earnings of affiliates” in our Consolidated Statements of Operations.

The Russian finance joint venture was sold during the three months ended December 31, 2022.

Our operations are subject to the cyclical nature of the agricultural industry.

Sales of our equipment are affected by, among other things, changes in net cash farm income, farm land values, weather conditions, the demand for agricultural commodities, commodity and protein prices and general economic conditions.

Global industry demand for farm equipment is expected to be higher across all major markets during 2022.

Global industry demand for farm equipment, driven by continued strong commodity prices and healthy farm economics, is expected to be flat to moderately higher during 2023 in most major markets.

Our net sales are expected to increase in 2023 compared to 2022, resulting from improved sales volumes and pricing, partially offset by negative foreign currency translation.

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If supply chain performance worsens, our results of operations will be adversely impacted.

Refer to “Risk Factors” for further discussion of the COVID-19 pandemic and other factors.

Refer to “Risk Factors” for further discussion of the COVID-19 pandemic, supply chain and logistic disruptions and other factors.

Liquidity and Capital Resources

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December 31, 2022

Credit facility, expires 2027 $ 200.0

1.002% Senior term loan due 2025 (1)

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(1) The amounts above are gross of debt issuance costs of an aggregate amount of approximately $3.6 million.

In December 2022, we, certain of our subsidiaries and Rabobank, and other named lenders, entered into an amendment to our credit facility providing for a $1.25 billion multi-currency unsecured revolving credit facility (“credit facility”), which replaced our former $800.0 million multi-currency unsecured revolving credit facility.

The amendment provided an additional $450.0 million in borrowing capacity.

An initial borrowing under the credit facility was used to repay and retire a $240.0 million short-term multi-currency revolving credit facility with Rabobank that was due to mature on March 31, 2023.

The credit facility consists of a $325.0 million U.S.

dollar tranche and a $925.0 million multi-currency tranche for loans denominated in U.S.

Dollars, Euros or other currencies to be agreed upon.

The credit facility matures on December 19, 2027.

Interest accrues on amounts outstanding for any borrowings denominated in U.S.

dollars, at the our option, at either (1) the Secured Overnight Financing Rate (“SOFR”) plus 0.1% plus a margin ranging from 0.875% to 1.875% based on our credit rating, or (2) the base rate, which is the highest of (i) the Prime Rate, (ii) the Federal Funds Effective Rate plus 0.5%, and (iii) Term SOFR for a one-month tenor plus 1.0%, plus a margin ranging from 0.000% to 0.875% based on our credit rating.

Interest accrues on amounts outstanding for any borrowings denominated in Euros at the Euro Interbank Offered Rate (“EURIBOR”) plus a margin ranging from 0.875% to 1.875% based on our credit rating.

As of December 31, 2022, we had $200.0 million outstanding borrowings under the revolving credit facility and had the ability to borrow $1,050.0 million.

In June 2022, we entered into an uncommitted revolving credit facility that allows us to borrow up to €100.0 million (or approximately $106.9 million as of December 31, 2022).

The credit facility expires on December 31, 2026.

Any loans will bear interest at the EURIBOR plus a credit spread.

As of December 31, 2022, we had no outstanding borrowings under the revolving credit facility and had the ability to borrow €100.0 million (or approximately $106.9 million).

In April 2022, we entered into a short-term multi-currency revolving credit facility of €225.0 million with Rabobank.

We borrowed $240.0 million in U.S.

dollars (or approximately €225.0 million as of April 26, 2022), with a maturity date of March 31, 2023.

As previously mentioned, during December 2022, we repaid the $240.0 million outstanding borrowings under the facility in U.S.

On October 6, 2021, we issued €600.0 million (or approximately $641.5 million as of December 31, 2022) of senior notes at an issue price of 99.993%.

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

During October 2021, we used the proceeds received from the senior notes to repay our €150.0 million (or approximately $173.4 million as of October 8, 2021) senior term loan due 2022, $370.0 million related to our multi-currency revolving credit facility, and two of our 2016 senior term loans due October 2021 with an aggregate amount outstanding of €192.0 million (or approximately $223.8 million as of October 19, 2021).

In August 2021, prior to the issuance of the senior notes, we repaid two of our 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).

In October 2018, we entered into a multi-currency revolving credit facility of $800.0 million.

The credit facility matures on October 17, 2023.

Interest accrues on amounts outstanding under the credit facility, at our option, at either (1) LIBOR plus a margin ranging from 0.875% to 1.875% based on our credit rating, or (2) the base rate, which is equal to the higher of (i) the administrative agent’s base lending rate for the applicable currency, (ii) the federal funds rate plus 0.5%, and (iii) one-month LIBOR for loans denominated in U.S.

dollars plus 1.0%, plus a margin ranging from 0.0% to 0.875% based on our credit rating.

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

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

As previously mentioned, during December 2022, we amended our credit facility agreement and replaced the $800.0 million multi-currency revolving credit facility with a new $1.25 billion credit facility.

On April 15, 2020, we borrowed €117.5 million and $133.8 million under a term loan facility that had been added to our multi-currency revolving credit facility.

While outstanding, the loans bore interest at one-month LIBOR plus a margin of 1.625%.

We repaid the two loans on February 16, 2021 (for an aggregate amount of approximately $276.0 million as of that date).

Refer to Note 7 of our Consolidated Financial Statements for further information regarding our current facilities.

As described above, our credit facility allows us 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 interest rates reflected in the our 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, we do not believe that moving to the other rates will have a materially adverse effect on our results of operations or financial position.

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

The term loans matured on April 8, 2022.

On January 25, 2019, we borrowed €250.0 million (or approximately $267.3 million as of December 31, 2022) from the European Investment Bank.

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

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

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 our credit rating.

As mentioned previously, during October 2021, we repaid this term loan of approximately $173.4 million as of October 8, 2021 with the proceeds from our 0.800% senior notes due 2028.

In October 2016, we borrowed an aggregate amount of €375.0 million through a group of seven related term loan agreements.

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

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

In August 2018, we borrowed an additional aggregate amount of indebtedness of €338.0 million through a group of another seven related term loan agreements.

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

Additionally, we repaid €192.0 million (or approximately $223.8 million) upon maturity of two 2016 senior term loans in October 2021.

On April 19, 2022, we repaid €1.0 million (or approximately $1.1 million) of one of our 2016 senior term loans due October 2023.

In August 2018, we borrowed an additional aggregate amount of €338.0 million through a group of another seven related term loan agreements.

In August 2021, we repaid two of our 2018 senior term loans upon maturity with an aggregate amount of €72.0 million (or approximately $85.5 million).

On February 1, 2022, we repaid an additional amount of €72.5 million (or approximately $81.7 million) of one of our 2018 senior term loans due August 2023 with existing cash on hand.

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

In aggregate, as of December 31, 2021, we had indebtedness of approximately €393.0 million (or approximately $445.9 million as of December 31, 2021) under a total group of eight remaining term loan agreements.

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

In aggregate, as of December 31, 2022, we had indebtedness of approximately €319.5 million (or approximately $341.6 million) under six remaining term loan agreements with remaining maturities ranging from August 2023 to August 2028.

Two of the term loan agreements in the aggregate amount of €173.0 million (or approximately $184.9 million net of debt issuance costs, as of December 31, 2022) will mature in August and October 2023.

As of December 31, 2022, 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.

For the term loan with a floating interest rate, interest is payable in arrears on a semi-annual basis, with an interest rate based on the EURIBOR plus a margin of 1.10% and a maturity date of August 2025.

As of December 31, 2022 and 2021, we had short-term borrowings due within one year of approximately $8.9 million and $90.8 million, respectively.

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As of December 31, 2022 and 2021, the cash received from receivables sold under the U.S., Canadian, European and Brazilian accounts receivable sales agreements for the years then ended was approximately $1.8 billion and $1.3 billion, respectively.

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

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

As of December 31, 2022 and 2020, the cash received from these arrangements for the years then ended was approximately $226.0 million and $215.4 million, respectively.

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These arrangements are accounted for as off-balance sheet transactions.

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

These arrangements are also accounted for as off-balance sheet transactions.

In order to efficiently manage our liquidity, we generally pay vendors in accordance with negotiated terms.

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Amounts owed to the financial institutions are presented as “Accounts payable” in our Consolidated Balance Sheets.

Should we not be able to negotiate extended payment terms with our vendors, or should financial institutions no longer be willing to participate in early payment programs with us, we would expect to have sufficient liquidity to timely pay our vendors without any material impact on us or our financial position.

Should we not be able to negotiate extended payment terms with our vendors, or should financial institutions no longer

be willing to participate in early payment programs with us, we would expect to have sufficient liquidity to timely pay our vendors without any material impact on us or our financial position.

Our debt to capitalization ratio, which is total indebtedness divided by the sum of total indebtedness and stockholders’ equity, was 27.3% at December 31, 2022 compared to 29.7% at December 31, 2021.

Cash flows provided by operating activities were approximately $838.2 million during 2022 compared to approximately $660.2 million during 2021.

The decrease during 2021 was primarily due to an increase in inventories, partially offset by increases in net income and accounts payable as compared to 2020.

Supply chain disruptions resulted in higher raw material and work-in-process inventory levels during 2021 as compared to the prior year.

Free cash flow, which is defined as “Net cash provided by operating activities” less “Purchases of property, plant and equipment”, was approximately $390.4 million during 2021, as compared to approximately $626.6 million during 2020.

The increase during 2022 primarily was due to increases in accounts payable and accrued expenses compared to 2021.

Supply chain disruptions resulted in higher raw material and work-in-process inventory levels during the course of 2022, although we were able to reduce work-in-process inventories during the fourth quarter of 2022 by approximately $277.6 million.

However, inventory levels as of December 31, 2022 were higher than at December 31, 2021.

Free cash flow, which is defined as “Net cash provided by operating activities” less “Purchases of property, plant and equipment”, was approximately $449.9 million during 2022, as compared to approximately $390.4 million during 2021, despite capital expenditures of approximately $388.3 million during 2022 compared to $269.8 million during 2021.

Our working capital requirements are seasonal, with investments in working capital typically building in the first half of the year and then reducing in the second half of the year.

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Accounts receivable and inventories, combined, at December 31, 2022 were approximately $825.8 million higher than at December 31, 2021, primarily due to higher net sales and production levels, as well as the significant impact of supply chain constraints during 2022.

Share Repurchase Program

Share Repurchase Program and Dividends

We did not purchase any shares directly or enter into any accelerated share repurchase agreements during 2022.

As of December 31, 2022, the remaining amount authorized to be repurchased under board-approved share repurchase authorizations was approximately $110.0 million, which has no expiration date.

In August and November 2021, we entered into two accelerated share repurchase (“ASR”) agreements with financial institutions to repurchase an aggregate of $135.0 million of shares of our common stock.

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On January 19, 2022, we received additional 113,824 shares upon final settlement of our November 2021 ASR agreement.

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

We 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 the our Consolidated Balance Sheets.

In addition, on April 28, 2022, our Board of Directors approved an increase to our quarterly dividend commencing in the second quarter of 2022 by 20% to $0.24 per common share and declared a special variable dividend of $4.50 per common share that was paid during the second quarter of 2022.

During 2021, our Board of Directors declared and we paid a special variable dividend of $4.00 per common share.

Contractual Obligations and Cash Requirements

Our material cash requirements include the following contractual and other obligations:

Indebtedness – As of December 31, 2021, we had approximately $44.4 million of payments due during the year ended December 31, 2022, related to indebtedness and certain short-term obligations, in addition to approximately $15.1 million of interest payments associated with indebtedness we expect to pay during 2022.

Interest payments generally do not vary materially year to year.

Indebtedness – As of December 31, 2022, we had approximately $194.5 million of payments due as of the year ended December 31, 2023, related to indebtedness and certain short-term obligations, in addition to approximately $35.4 million of interest payments associated with indebtedness we expect to pay during 2023.

Our projected amount of interest payments includes assumptions regarding the future fluctuations in interest rates, as well as borrowings under our revolving credit facility and other variable debt instruments.

Indebtedness amounts reflect the principal amount of our 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 our indebtedness.

Refer to the discussion above and Note 7 of the Consolidated Financial Statements for additional information regarding our indebtedness.

In addition, we expect to pay approximately $125.7 million of discounts on the sales of receivables related to our finance joint ventures.

The projected amount of discounts paid includes significant assumptions regarding future amounts of receivables sold to our finance joint ventures as well as future fluctuations in interest rates.

Capital and operating lease obligations – As of December 31, 2022, we had approximately $0.8 million and $47.8 million of payments due during the year ended December 31, 2023, related to capital and operating lease obligations, respectively.

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Unconditional purchase obligations – As of December 31, 2022, we had approximately $209.2 million of outstanding purchase obligations payable during the year ended December 31, 2023.

These obligations generally do not vary materially year to year.

Other short-term and long-term obligations – As of December 31, 2021, we had approximately $40.1 million of income tax liabilities related to uncertain income tax provisions connected with ongoing income tax audits in various jurisdictions due during the year ended December 31, 2022.

Unconditional purchase obligations generally do not vary materially year to year.

Other short-term and long-term obligations – As of December 31, 2022, we had approximately $10.4 million of income tax liabilities related to uncertain income tax provisions connected with ongoing income tax audits in various jurisdictions that we expects to pay or settle within the next 12 months.

Additionally, we had approximately $36.3 million of estimated future minimum contribution requirements under our U.S.

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At December 31, 2022, we had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $4,318.8 million.

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

We also had outstanding designated steel commodity contracts with a gross notional amount of approximately $31.9 million that range in maturity through July 2022.

The outstanding contracts as of December 31, 2022 range in maturity through March 2023.

We also had outstanding designated steel commodity contracts with a gross notional amount of approximately $0.9 million that range in maturity through April 2023.

See Note 11 of our Consolidated Financial Statements for additional information.

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The majority of our net sales outside the United States are denominated in the currency of the customer location, with the exception of sales in Middle East, Africa, Asia and parts of South America, where net sales are primarily denominated in British pounds, Euros or the United States dollar.

We also are subject to the risk of the imposition of limitations by governments on international transfers of funds.

For example, in recent years, the Argentine government has substantially limited the ability of companies to transfer funds out of Argentina.

As a consequence of these limitations, the spread between the official government exchange rate and the exchange rates resulting implicitly from certain capital market operations, usually effected to obtain U.S.

dollars, has broadened significantly.

The net monetary assets of our operations in Argentina denominated in pesos at the official government rate were approximately 4.1 billion (or approximately $23.0 million) as of December 31, 2022, inclusive of approximately 6.8 billion pesos (or approximately $38.1 million) in cash and cash equivalents.

In addition, we have an obligation to reimburse AGCO Capital Argentina S.A., one of our finance joint ventures with Rabobank, up to $10 million under a guarantee related to the ability of AGCO Capital Argentina S.A.

to transfer funds out of Argentina.

The finance joint venture in Argentina has net monetary assets denominated in pesos at the official government rate of approximately 4.1 billion (or approximately $22.9 million) as of December 31, 2022, of which a majority is cash and cash equivalents.

Future impairments and charges are possible in connection with these exposures.

We manage our transactional foreign currency exposure by hedging foreign currency cash flow forecasts and commitments arising from the anticipated settlement of receivables and payables and from future purchases and sales.

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Deferred Income Taxes and Uncertain Income Tax Positions

We recorded an income tax provision of $108.4 million in 2021 compared to $187.7 million in 2020 and $180.8 million in 2019.

We recorded an income tax provision of approximately $296.6 million in 2022 compared to $108.4 million in 2021 and $187.7 million in 2020.

Our tax provision and effective tax rate are impacted by the differing tax rates of the various tax jurisdictions in which we operate, permanent differences for items treated differently for financial accounting and income tax purposes, losses in jurisdictions where no income tax benefit is recorded and provisions for unrecognized income tax benefits related to uncertain tax positions.

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 of the valuation allowances.

In addition, we maintain a valuation allowance to reserve a portion of our net deferred tax assets in the United States and certain foreign jurisdictions.

Improvements in income in the U.S and Brazil during 2020 and 2021, along with updated future projected income levels, supported the reversal of both of the valuation allowances.

We maintain a valuation allowance to reserve a portion of our net deferred tax assets in the U.S.

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.

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At December 31, 2022 and 2021, we had total valuation allowances as an offset to our gross deferred tax assets of $47.3 million and $47.4 million, respectively.

These valuation allowances are held against deferred tax assets (including net operating loss carryforwards) in the United States and certain foreign jurisdictions.

These valuation allowances are held against deferred tax assets (including net operating loss carryforwards) in the U.S and certain foreign jurisdictions.

Realization of the remaining deferred tax assets as of December 31, 2022 depends on generating sufficient taxable income in future periods, net of reversing deferred tax liabilities.

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As of December 31, 2022 and 2021, we had approximately $10.4 million and $40.1 million, respectively, of current accrued taxes related to uncertain income tax positions connected with ongoing tax audits in various jurisdictions that we expect to settle or pay in the next 12 months.

At December 31, 2022 and 2021, the Company had approximately $274.1 million and $196.7 million, respectively, of accrued taxes reflected in “Other noncurrent liabilities”, and approximately $2.8 million of deferred tax assets and $9.6 million of deferred tax liabilities, respectively, related to uncertain tax positions that it expects to settle or pay beyond 12 months, reflected in “Deferred tax assets” and “Deferred tax liabilities,” respectively, in the Company’s Consolidated Balance Sheets.

We recognize interest and penalties related to uncertain income tax positions in income tax expense.

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This plan is closed to new participants.

See Note 8 of our Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary Data,” for additional information regarding costs and assumptions for employee retirement benefits.

See Note 8 of our Consolidated Financial Statements for additional information regarding costs and assumptions for employee retirement benefits.

Nature of Estimates Required.

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• The mortality rates for the U.K.

defined benefit pension plan was updated during 2021 to reflect the latest expected improvements in the life expectancy of the plan participants.

defined benefit pension plan were updated during 2022 to reflect the latest expected improvements in the life expectancy of the plan participants.

The mortality rates for the U.S.

defined benefit pension plans were also updated during 2021 to reflect the Society of Actuaries’ most recent findings on the topic of mortality.

defined benefit pension plans were unchanged from 2021, which reflected the Society of Actuaries’ most recent findings on the topic of mortality.

• The fair value of assets used to determine the expected return on assets does not reflect any delayed recognition of asset gains and losses.

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defined benefit pension plans, including our ENPP, comprised approximately 84% of our consolidated projected benefit obligation as of December 31, 2022.

The effects of a 25 basis point change in certain actuarial assumptions on the 2022 net annual pension and ENPP costs and related benefit obligations as of December 31, 2021 would be as follows:

The effects of a 25 basis point change in certain actuarial

assumptions on the 2023 net annual pension and ENPP costs and related benefit obligations as of December 31, 2022 would be as follows:

Year-end Benefit Obligation 2023 Net Annual Pension Cost

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Unrecognized actuarial net losses related to our defined benefit pension plans and ENPP were $270.0 million as of December 31, 2022 compared to $291.7 million as of December 31, 2021.

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 our ENPP as previously discussed.

The decrease in unrecognized net actuarial losses between years primarily resulted from higher discount rates at December 31, 2022 compared to December 31, 2021.

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.

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Unrecognized prior service cost related to our defined benefit pension plans was $32.5 million as of December 31, 2022 compared to $7.1 million as of December 31, 2021.

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, as well as the amendment in 2021 previously discussed related to our ENPP.

During 2022, the Company updated its estimate of current assumptions, interpretations and approach affecting the Company’s defined benefit pension obligations related to certain defined benefit plans resulting in a revision of its estimate of prior service cost of approximately $25.5 million during 2022.

The 2021 balance also reflects the 2021 plan amendment to the Company’s ENPP, as previously discussed.

The 2021 amendment resulted in both a curtailment gain and a net prior service credit.

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We test goodwill for impairment, at the reporting unit level, annually and when events or circumstances indicate that fair value of a reporting unit may be below its carrying value.

A reporting unit is an operating segment or one level below an operating segment, for example, a component.

A reporting unit is an operating segment or one level below an

operating segment, for example, a component.

We combine and aggregate two or more components of an operating segment as a single reporting unit if the components have similar economic characteristics.

Our reportable segments are not our reporting units.

Goodwill is evaluated for impairment annually as of October 1 using a qualitative assessment or a quantitative one-step assessment.

Goodwill is evaluated for impairment annually as of October 1 st using a qualitative assessment or a quantitative one-step assessment.

If we elect to perform a qualitative assessment and determine the fair value of our reporting units more likely than not exceeds their carrying value of net assets, no further evaluation is necessary.

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Assumptions included in these approaches can positively and negatively impact the results of our assessments such as interest rates, sales and margin growth rates, tax rates, cost structures, market share, pricing, capital expenditures, working capital levels and the use of control premiums.

reporting units, a 10 percent decrease in the estimated fair value would have had no effect on the carrying value of goodwill as of our annual measurement date on October 1, 2021.

For all reporting units, a 10 percent decrease in the estimated fair value would have resulted in a $6.8 million impairment reducing the carrying value of goodwill.

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

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These assumptions require significant judgments on our part, and the conclusions that we reach could vary significantly based upon these judgments.

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.

Based on macroeconomic conditions throughout 2020, we assessed our 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, we concluded there were indicators of impairment during the three months ended June 30, 2020 related to one of our smaller reporting units, which was a 50%-owned tillage and seeding equipment joint venture.

We consolidated the reporting unit as we were determined to be the primary beneficiary of the joint venture.

Deteriorating market conditions for the products the joint venture sold were negatively impacted by the COVID-19 pandemic in the second quarter of 2020, 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 of June 30, 2020.

During the three months ended June 30, 2020, an impairment charge of approximately $20.0 million was recorded as “Goodwill impairment charge” within our Consolidated Statements of Operations, with an offsetting benefit of approximately $10.0 million included within “Net loss attributable to noncontrolling interests.” The joint venture was sold during 2021.

The results of our goodwill and long-lived assets impairment analyses 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 our other reporting units.

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

This impairment charge was a substantial portion of the reporting unit’s goodwill balance.

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

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

The results of our goodwill and long-lived assets impairment analyses conducted as of October 1, 2022 and 2021 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 our other reporting units.

Our goodwill impairment analysis conducted as of October 1, 2022 also indicated that the fair value in excess of the carrying value of our grain and protein production systems Europe/Middle East reporting unit was approximately 5.9%.

In response to weakening market conditions and resulting operating results, new management was put in place over the global grain and protein systems productions systems business in 2022, and from that time, full strategic reviews and operating decisions of the business have been conducted and launched, including several restructuring initiatives aimed at lowering operating costs, improving product portfolios and enhancing customer support, which management believes will result in improved long-term operating results.

If market conditions and our overall results do not improve, we may incur an impairment charge related to this reporting units in the future under the one-step process described above.

The goodwill associated with these reporting units as of December 31, 2022 was approximately $59.0 million.

Numerous facts and circumstances are considered when evaluating the carrying amount of our goodwill.

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As of December 31, 2022, we had approximately $1,310.8 million of goodwill.

While our annual impairment testing in 2021 supported the carrying amount of this goodwill, we may be required to re-evaluate the carrying amount in future periods,

thus utilizing different assumptions that reflect the then current market conditions and expectations, and, therefore, we could conclude that an impairment has occurred.

While our annual impairment testing in 2022 supported the carrying amount of this goodwill, we may be required to re-evaluate the carrying amount in future periods, thus utilizing different assumptions that reflect the then current market conditions and expectations, and, therefore, we could conclude that an impairment has occurred.

Recoverable Indirect Taxes

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These taxes are accumulated as tax credits and create assets that are reduced by the VAT collected from our sales in the Brazilian market.

We regularly assesses the recoverability of these tax credits, and establishes reserves when necessary against them, through analyses that include, amongst others, the history of realization, the transfer of tax credits to third parties as authorized by the government, anticipated changes in the supply chain and the future expectation of tax debits from our ongoing operations.

We regularly assess the recoverability of these tax credits, and establishes reserves when necessary against them, through analyses that include, amongst others, the history of realization, the transfer of tax credits to third parties as authorized by the government, anticipated changes in the supply chain and the future expectation of tax debits from our ongoing operations.

We believe that these tax credits, net of established reserves are realizable.

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity