What changed in this filing

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Item 1. Financial Statements

2023-05-09 compared with 2022-11-09 · 283 added, 485 removed, 602 unchanged (56% of the section changed)

3 unchanged sentences

(unaudited and in millions, except share amounts)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Current Assets:

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Common stock;

$ 0.01 par value, 150,000,000 shares authorized, 74,598,077 and 74,441,312 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

$ 0.01 par value, 150,000,000 shares authorized, 74,846,174 and 74,600,815 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 24.7 30.2

9 unchanged sentences

(unaudited and in millions, except per share data)

Three Months Ended September 30,

Three Months Ended March 31,

Net sales $ 3,333.5 $ 2,685.7

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Amortization of intangibles

Impairment charges — 36.0

Restructuring expenses

Bad debt (credit) expense ( 1.1 ) 0.4

Bad debt expense 1.5 1.6

Income from operations 387.3 204.0

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AGCO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in millions, except per share data)

Nine Months Ended September 30,

Net sales $ 8,752.5 $ 7,983.1

Cost of goods sold 6,691.8 6,093.5

Gross profit 2,060.7 1,889.6

Operating expenses:

Selling, general and administrative expenses 861.1 803.0

Engineering expenses

Amortization of intangibles

Impairment charge 36.0 —

Restructuring expenses

Bad debt expense (credit) 2.1 ( 0.3 )

Income from operations 799.6 737.4

Interest expense, net

Other expense, net

Income before income taxes and equity in net earnings of affiliates 718.7 690.4

Income tax provision

Income before equity in net earnings of affiliates 512.8 569.0

Equity in net earnings of affiliates

Net income 552.5 618.2

Net loss (income) attributable to noncontrolling interests 14.9 ( 3.3 )

Net income attributable to AGCO Corporation and subsidiaries $ 567.4 $ 614.9

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

$ 7.60 $ 8.16

$ 7.58 $ 8.11

Cash dividends declared and paid per common share $ 5.16 $ 4.53

Weighted average number of common and common equivalent shares outstanding:

See accompanying notes to condensed consolidated financial statements.

AGCO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited and in millions)

Three Months Ended September 30,

Three Months Ended March 31,

Net income $ 232.6 $ 137.0

Other comprehensive loss, net of reclassification adjustments:

Other comprehensive income, net of reclassification adjustments:

Foreign currency translation adjustments 44.4 138.3

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Deferred gains and losses on derivatives, net of tax 0.5 ( 3.3 )

Other comprehensive loss, net of reclassification adjustments ( 91.3 ) ( 66.2 )

Other comprehensive income, net of reclassification adjustments 46.7 136.7

Comprehensive income 279.3 273.7

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Comprehensive income attributable to AGCO Corporation and subsidiaries $ 279.3 $ 287.7

Nine Months Ended September 30,

Net income $ 552.5 $ 618.2

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

Foreign currency translation adjustments ( 61.9 ) ( 31.9 )

Defined benefit pension plans, net of tax ( 13.5 ) 31.7

Deferred gains and losses on derivatives, net of tax ( 5.2 ) 6.9

Other comprehensive (loss) income, net of reclassification adjustments ( 80.6 ) 6.7

Comprehensive income 471.9 624.9

Comprehensive loss (income) attributable to noncontrolling interests 14.0 ( 3.7 )

Comprehensive income attributable to AGCO Corporation and subsidiaries $ 485.9 $ 621.2

See accompanying notes to condensed consolidated financial statements.

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(unaudited and in millions)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net income $ 232.6 $ 137.0

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

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

Depreciation 53.6 54.7

3 unchanged sentences

Equity in net earnings of affiliates, net of cash received ( 16.4 ) ( 11.1 )

Deferred income tax provision (benefit) 5.7 ( 67.3 )

Deferred income tax benefit ( 3.9 ) ( 5.0 )

Other 2.4 ( 8.8 )

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Total adjustments ( 789.7 ) ( 713.5 )

Net cash (used in) provided by operating activities ( 295.1 ) 41.5

Net cash used in operating activities ( 557.1 ) ( 576.5 )

Cash flows from investing activities:

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Investments in unconsolidated affiliates ( 0.1 ) ( 0.1 )

(Purchase) sale of businesses, net, and net of cash acquired ( 111.3 ) ( 16.8 )

Purchase businesses, net, and net of cash acquired ( 0.9 ) ( 61.9 )

Other ( 2.6 ) —

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Repayments of indebtedness ( 4.4 ) ( 459.1 )

Purchases and retirement of common stock — ( 75.0 )

Payment of dividends to stockholders ( 18.0 ) ( 14.9 )

Payment of minimum tax withholdings on stock compensation ( 17.7 ) ( 16.0 )

Payment of debt issuance costs ( 0.2 ) —

Distributions to noncontrolling interest — ( 11.6 )

Net cash provided by (used in) financing activities 469.6 ( 377.6 )

Net cash provided by financing activities 461.6 479.1

Effects of exchange rate changes on cash, cash equivalents and restricted cash ( 6.5 ) ( 8.0 )

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GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly the Company’s financial position, results of operations, comprehensive income (loss) and cash flows at the dates and for the periods presented.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly the Company’s financial position, results of operations, comprehensive income and cash flows at the dates and for the periods presented.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

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

The Company has a wholly-owned subsidiary in Turkey that distributes agricultural equipment and replacement parts within Turkey.

On the basis of currently available data related to inflation indices and as a result of the devaluation of the Turkish lira relative to the United States dollar, the Turkish economy was determined to be highly inflationary.

A highly inflationary economy is one where the cumulative inflation rate for the three years preceding the beginning of the reporting period, including interim reporting periods, is in excess of 100 percent.

For the three months ended March 31, 2023, the Company's wholly-owned subsidiary in Turkey had net sales of approximately $ 114.2 million and total assets of approximately $ 172.5 million as of March 31, 2023.

The monetary assets and liabilities denominated in the Turkish lira were approximately 2.8 billion Turkish lira (or approximately $ 146.7 million) and approximately 2.3 billion Turkish lira (or approximately $ 122.8 million), respectively, as of March 31, 2023.

The monetary assets and liabilities were remeasured based on current published exchange rates.

The Company is 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 Company has a wholly-owned subsidiary in Argentina that assembles and distributes agricultural equipment and replacement parts within Argentina.

The net monetary assets of the Company’s operations in Argentina denominated in pesos at the official government rate were approximately 3.9 billion pesos (or approximately $ 18.5 million) as of March 31, 2023, inclusive of approximately 6.7 billion pesos (or approximately $ 32.0 million) in cash and cash equivalents.

In addition, the Company has an obligation to reimburse AGCO Capital Argentina S.A., one of its 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 5.2 billion (or approximately $ 24.8 million) as of March 31, 2023, of which a majority is cash and cash equivalents.

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

The Company cannot predict the future impact of the COVID-19 pandemic on its business, including any related impacts on the global economic and political environments, market demand for its products, supply chain disruptions, possible workforce unavailability, exchange rates, commodity prices and availability of financing, and their impact to the Company’s net sales, production volumes, costs and overall financial conditions.

New Accounting Pronouncements to be Adopted

Recent Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13 “Financial Instruments - Credit Losses (Topic 326):

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Effective Dates,” which delays the effective date of ASU 2016-13 for smaller reporting companies and other non-SEC reporting entities.

This applies to the Company’s equity method finance joint ventures, which are now required to adopt ASU 2016-13 for annual periods beginning after December 15, 2022 and interim periods within those annual periods.

The standard, and its subsequent modification, likely will impact the results of operations and financial condition of the Company’s finance joint ventures.

Therefore, adoption of the standard by the Company’s finance joint ventures likely will impact the Company’s “Investments in affiliates” and “Equity in net earnings of affiliates.” The adoption of ASU 2016-13 is not expected to have a material impact on the Company's results of operations, financial condition or cash flows.

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 adoption of ASU 2021-10 is not expected to have a material impact on the Company's annual disclosures.

This applies to the Company’s equity method finance joint ventures, which were required to adopt ASU 2016-13 for annual periods beginning after December 15, 2022 and interim periods within those annual periods.

The standard, and its subsequent modification, impacts the results of operations and financial condition of the Company’s finance joint ventures.

Notes to Condensed Consolidated Financial Statements - Continued

adoption of the standard by the Company’s finance joint ventures on January 1, 2023 under the modified retrospective approach, the Company recognized the cumulative effect of ASU 2016-13 as an adjustment to the opening balance of stockholders’ equity as of January 1, 2023 within “Retained earnings.” The cumulative effect was approximately $ 5.5 million.

In September 2022, the FASB issued ASU 2022-04, “Liabilities-Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.” The new standard requires that a buyer in a supplier finance program disclose sufficient information about the key terms of the program, the amount of outstanding confirmed obligations at period end, where the obligations are presented in the balance sheet, and a rollforward of the obligations during the annual period.

This guidance will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the rollforward, which is effective for fiscal years beginning after December 15, 2023.

This guidance was effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the rollforward, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

The Company is currently evaluating the impact of the new guidance on the Company's quarterly and annual disclosures.

The Company will adopt the following pronouncement, effective for fiscal years beginning after December 15, 2022, which is not expected to have a material impact on the Company's results of operations, financial condition or cash flows.

• ASU 2021-08 – “Business Combinations:

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

Notes to Condensed Consolidated Financial Statements - Continued

The adoption of ASU 2022-04 resulted in disclosure of the Company's supplier financing programs.

Refer to Note 10 for further details.

The Company has adopted ASU 2021-08, “Business Combinations:

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” effective for fiscal years beginning after December 15, 2022, which did not have a material impact on the Company's results of operations, financial condition or cash flows but is dependent on future acquisitions.

On May 2, 2022, the Company acquired JCA Industries, Inc.

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Proforma financial information related to the acquisition of Appareo was not material to the Company’s results of operations.

The acquired identifiable intangible assets of JCA and Appareo as of the date of their respective acquisitions during the first nine months in 2022 are summarized in the following table (in millions):

Notes to Condensed Consolidated Financial Statements - Continued

The acquired identifiable intangible assets of JCA and Appareo as of the date of their respective acquisitions during 2022 are summarized in the following table (in millions):

Intangible Asset

4 unchanged sentences

Non-competition agreements 1.4 5 years

Notes to Condensed Consolidated Financial Statements - Continued

RESTRUCTURING EXPENSES AND IMPAIRMENT CHARGES

Restructuring Expenses

Restructuring expenses activity during the three and nine months ended September 30, 2022 is summarized as follows (in millions):

Employee Severance Other Related Closure Costs Total

In recent years, the Company has announced and initiated several actions to rationalize employee headcount in various manufacturing facilities and administrative offices located in the U.S., Europe, South America, Africa and China as well as the rationalization of its grain and protein business, in order to reduce costs in response to fluctuating global market demand.

Restructuring expenses activity, which relates solely to employee severance, during the three months ended March 31, 2023 is summarized as follows (in millions):

Balance as of December 31, 2022 $ 6.8

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First quarter 2023 cash activity ( 1.0 )

Foreign currency translation ( 0.3 ) 0.1 ( 0.2 )

Balance as of March 31, 2023 $ 7.2

Second quarter 2022 provision 0.8 — 0.8

Second quarter 2022 provision reversal ( 0.4 ) — ( 0.4 )

Second quarter 2022 cash activity ( 3.3 ) — ( 3.3 )

Foreign currency translation ( 0.6 ) — ( 0.6 )

Balance as of June 30, 2022 $ 10.3 $ 0.3 $ 10.6

Third quarter 2022 provision 1.0 — 1.0

Third quarter 2022 provision reversal — — —

Third quarter 2022 cash activity ( 3.4 ) — ( 3.4 )

Foreign currency translation ( 0.6 ) — ( 0.6 )

Balance as of September 30, 2022 $ 7.3 $ 0.3 $ 7.6

Impairment Charges

In light of the current conflict between Russia and Ukraine, during the three months ended March 31, 2022, the Company assessed the fair value of its gross assets related to the joint ventures operating in Russia for potential impairment and recorded asset impairment charges of approximately $ 36.0 million, reflected as “Impairment charges” in its Condensed Consolidated Statements of Operations, with an offsetting benefit of approximately $ 12.2 million included within “Net loss (income) attributable to noncontrolling interests.” In addition, during the three months ended March 31, 2022, the Company recorded a write-down of its investment in its Russian finance joint venture of approximately $ 4.8 million, reflected within “Equity in net earnings of affiliates” in its Condensed Consolidated Statements of Operations.

As a consequence of the conflict between Russia and Ukraine, during the three months ended March 31, 2022, the Company assessed the fair value of its gross assets related to the joint ventures operating in Russia for potential impairment and recorded asset impairment charges of approximately $ 36.0 million, reflected as “Impairment charges” in its Condensed Consolidated Statements of Operations, with an offsetting benefit of approximately $ 12.2 million included within “Net income attributable to noncontrolling interests.” The Company sold its interest in its Russian distribution joint venture during the three months ended December 31, 2022.

In addition, during the three months ended March 31, 2022, the Company recorded a write-down of its investment in its Russian finance joint venture of approximately $ 4.8 million, reflected within “Equity in net earnings of affiliates” in its Condensed Consolidated Statements of Operations.

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

STOCK COMPENSATION PLANS

The Company recorded stock compensation expense as follows for the three and nine months ended September 30, 2022 and 2021 (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The Company recorded stock compensation expense as follows for the three months ended March 31, 2023 and 2022 (in millions):

Three Months Ended March 31,

Cost of goods sold $ 0.5 $ 0.3

1 unchanged sentence

Total stock compensation expense $ 14.0 $ 7.0

Notes to Condensed Consolidated Financial Statements - Continued

Stock Incentive Plan

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

As of September 30, 2022, of the 10,000,000 shares reserved for issuance under the Plan, 3,735,396 shares were available for grant, assuming the maximum number of shares are earned related to the performance award grants discussed below.

As of March 31, 2023, of the 10,000,000 shares reserved for issuance under the Plan, 3,586,952 shares were available

Notes to Condensed Consolidated Financial Statements - Continued

for grant, assuming the maximum number of shares are earned related to the performance award grants discussed below.

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

Long-Term Incentive Plan and Related Performance Awards

The weighted average grant-date fair value of performance awards granted under the Plan during the nine months ended September 30, 2022 and 2021 was $ 119.35 and $ 123.33 , respectively.

During the nine months ended September 30, 2022, the Company granted 320,120 performance awards related to varying performance periods.

The weighted average grant-date fair value of performance awards granted under the Plan during the three months ended March 31, 2023 and 2022 was $ 144.24 and $ 124.12 , respectively.

During the three months ended March 31, 2023, the Company granted 279,724 performance awards related to varying performance periods.

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

Performance award transactions during the nine months ended September 30, 2022 are presented as if the Company were to achieve its maximum levels of performance and assume the 2022 and 2021 performance awards subject to the total shareholder return modifier are achieved at target levels under the plan awards and were as follows:

Performance award transactions during the three months ended March 31, 2023 are presented as if the Company were to achieve its maximum levels of performance and assume the 2023 and 2022 performance awards subject to the total shareholder return modifier are achieved at target levels under the plan awards and were as follows:

Shares awarded but not earned at January 1 543,904

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Shares vested —

Shares awarded but not earned at September 30 815,400

As of September 30, 2022, the total compensation cost related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performance that will be achieved, was approximately $ 38.4 million, and the weighted average period over which it is expected to be recognized is approximately two years .

Shares awarded but not earned at March 31 810,610

As of March 31, 2023, the total compensation cost related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performance that will be achieved, was approximately $ 65.0 million, and the weighted average period over which it is expected to be recognized is approximately two years .

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

Restricted Stock Unit Awards

The weighted average grant-date fair value of the restricted stock units (“RSUs”) granted under the Plan during the nine months ended September 30, 2022 and 2021 was $ 109.09 and $ 113.91 , respectively.

During the nine months ended September 30, 2022, the Company granted 133,546 RSU awards.

The weighted average grant-date fair value of the restricted stock units (“RSUs”) granted under the Plan during the three months ended March 31, 2023 and 2022 was $ 135.53 and $ 117.08 , respectively.

During the three months ended March 31, 2023, the Company granted 100,835 RSU awards.

RSUs granted in 2023, 2022 and 2021 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.

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

RSU transactions during the nine months ended September 30, 2022 assume the 2020 RSUs subject to the total shareholder return modifier are achieved at target levels, and were as follows:

RSU transactions during the three months ended March 31, 2023 assume the 2020 RSUs subject to the total shareholder return modifier are achieved at target levels, and were as follows:

RSUs awarded but not vested at January 1 213,198

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RSUs vested ( 96,176 )

RSUs awarded but not vested at September 30 222,908

RSUs awarded but not vested at March 31 213,294

As of March 31, 2023, the total compensation cost related to the unvested RSUs not yet recognized was approximately $ 23.4 million, and the weighted average period over which it is expected to be recognized is approximately one and one-half years.

Notes to Condensed Consolidated Financial Statements - Continued

As of September 30, 2022, the total compensation cost related to the unvested RSUs not yet recognized was approximately $ 16.1 million, and the weighted average period over which it is expected to be recognized is approximately one and one-half years.

Stock-Settled Appreciation Rights

The compensation expense associated with the stock-settled appreciation rights (“SSARs”) is amortized ratably over the requisite service period for the awards that are expected to vest.

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

SSAR transactions during the nine months ended September 30, 2022 were as follows:

SSARs outstanding at January 1 194,611

SSARs granted —

SSARs exercised ( 38,051 )

SSARs canceled or forfeited —

SSARs outstanding at September 30 156,560

The Company did not grant any SSARs during the nine months ended September 30, 2022, and does not currently anticipate granting any SSARs in the future.

As of September 30, 2022, the total compensation cost related to the unvested SSARs not yet recognized was approximately $ 0.4 million, and the weighted average period over which it is expected to be recognized is approximately one year .

Stock-Settled Appreciation Rights (“SSARs”)

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 since the year ended December 31, 2020 and does not currently anticipate granting any SSARs in the future.There were 102,009 SSARs outstanding as of March 31, 2023.

As of March 31, 2023, the total compensation cost related to the unvested SSARs not yet recognized was approximately $ 0.2 million, and the weighted average period over which it is expected to be recognized is approximately one year .

Director Restricted Stock Grants

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The 2023 grant was made on April 27, 2023 and equated to 12,069 shares of common stock, of which 10,524 shares of common stock were issued after shares were withheld for taxes.

The Company recorded stock compensation expense of approximately $ 1.5 million during the nine months ended September 30, 2022 associated with these grants.

The Company recorded stock compensation expense of approximately $ 1.5 million in April 2023 associated with these grants.

GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill during the nine months ended September 30, 2022 are summarized as follows (in millions):

Changes in the carrying amount of goodwill during the three months ended March 31, 2023 are summarized as follows (in millions):

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

Balance as of December 31, 2022 $ 667.3 $ 86.0 $ 444.3 $ 113.2 $ 1,310.8

Acquisitions 54.8 — — — 54.8

Foreign currency translation — 3.3 7.4 1.0 11.7

Balance as of September 30, 2022 $ 661.9 $ 84.2 $ 410.5 $ 106.9 $ 1,263.5

Balance as of March 31, 2023 $ 667.3 $ 89.3 $ 451.7 $ 114.2 $ 1,322.5

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

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Notes to Condensed Consolidated Financial Statements - Continued

Changes in the carrying amount of acquired intangible assets during the nine months ended September 30, 2022 are summarized as follows (in millions):

Changes in the carrying amount of acquired intangible assets during the three months ended March 31, 2023 are summarized as follows (in millions):

Gross carrying amounts:

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Balance as of December 31, 2022 $ 191.8 $ 574.5 $ 150.6 $ 6.5 $ 923.4

Acquisitions 7.1 15.4 15.4 — 37.9

Foreign currency translation 1.3 3.3 1.4 — 6.0

Balance as of September 30, 2022 $ 185.9 $ 562.3 $ 144.2 $ 6.3 $ 898.7

Balance as of March 31, 2023 $ 193.1 $ 577.8 $ 152.0 $ 6.5 $ 929.4

Accumulated amortization:

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Foreign currency translation 0.6 3.0 1.0 — 4.6

Balance as of September 30, 2022 $ 98.4 $ 421.3 $ 93.8 $ 1.5 $ 615.0

Balance as of March 31, 2023 $ 106.4 $ 453.4 $ 105.2 $ 1.6 $ 666.6

Indefinite-lived intangible assets:

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Foreign currency translation 0.6

Balance as of September 30, 2022 $ 82.1

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

External-use software, for which amortization has not started, was approximately $ 1.8 million as of September 30, 2022 and classified within "Intangible assets, net."

Long-term debt consisted of the following at September 30, 2022 and December 31, 2021 (in millions):

September 30, 2022 December 31, 2021

Balance as of March 31, 2023 $ 85.4

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

External-use software, net, developed by the Company and marketed externally, was approximately $ 5.8 million as of March 31, 2023 and classified within “Intangible assets, net.” Amortization costs of external-use software was approximately $ 0.8 million as of March 31, 2023 and classified within “Cost of goods sold.”

Long-term debt consisted of the following at March 31, 2023 and December 31, 2022 (in millions):

March 31, 2023 December 31, 2022

Credit facility, expires 2027 $ 706.2 $ 200.0

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1,981.7 1,451.9

Senior term loans due 2023, net of debt issuance costs ( 188.4 ) ( 184.9 )

Current portion of other long-term debt ( 2.2 ) ( 2.2 )

Total long-term indebtedness, less current portion $ 1,791.1 $ 1,264.8

Credit Facility

In December 2022, the Company, certain of its subsidiaries and Rabobank, and other named lenders entered into an amendment to its credit facility providing for a $ 1.25 billion multi-currency unsecured revolving credit facility (“credit facility”), which replaced the Company’s 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

Notes to Condensed Consolidated Financial Statements - Continued

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 Company’s 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 the Company’s 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 the Company’s 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 the Company’s credit rating.

As of March 31, 2023, the Company had $ 706.2 million outstanding borrowings under the revolving credit facility and had the ability to borrow $ 543.8 million.

Uncommitted Credit Facility

In June 2022, the Company entered into an uncommitted revolving credit facility that allows the Company to borrow up to € 100.0 million (or approximately $ 97.7 million as of September 30, 2022).

In June 2022, the Company entered into an uncommitted revolving credit facility that allows the Company to borrow up to € 100.0 million (or approximately $ 108.9 million as of March 31, 2023).

The credit facility expires on December 31, 2026.

Any loans will bear interest at the Euro Interbank Offered Rate (“EURIBOR”) plus a credit spread.

As of September 30, 2022, the Company had no outstanding borrowings under the revolving credit facility and had the ability to borrow € 100.0 million (or approximately $ 97.7 million).

Notes to Condensed Consolidated Financial Statements - Continued

Short-term Credit Facility

In April 2022, the Company entered into a short-term multi-currency revolving credit facility of € 225.0 million with Coöperatieve Rabobank U.A., or “Rabobank.” The Company 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, which remained outstanding as of September 30, 2022.

Interest accrues on amounts outstanding under the credit facility, at the Company’s option, at either (1) the secured overnight financing rate (“SOFR”) for borrowings denominated in U.S.

dollars or EURIBOR for borrowings denominated in Euros plus a margin of 0.75 %, 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 %, or (iii) one-month adjusted term SOFR plus 1.0 %, plus a margin of 0.75 %.

The credit facility contains covenants restricting, among other things, the incurrence of indebtedness and the making of certain payments, including dividends.

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

If, on the last business day of any quarter, the outstanding borrowings on the credit facility exceed the U.S.

dollar equivalent of € 225.0 million (as of that date) by 5 % or more, the Company is required to repay the amount above such 5 % allowance.

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

As of March 31, 2023, the Company had no outstanding borrowings under the revolving credit facility and had the ability to borrow € 100.0 million (or approximately $ 108.9 million).

0.800 % Senior Notes Due 2028

On October 6, 2021, the Company issued € 600.0 million (or approximately $ 586.4 million as of September 30, 2022) of senior notes at an issue price of 99.993 %.

On October 6, 2021, the Company issued € 600.0 million (or approximately $ 653.5 million as of March 31, 2023) 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 %.

1 unchanged sentence

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

Credit Facility

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

The credit facility expires on October 17, 2023.

Interest accrues on amounts outstanding under the credit facility, at the Company’s option, at either (1) LIBOR plus a margin ranging from 0.875 % to 1.875 % based on the Company’s 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 the Company’s credit rating.

As of September 30, 2022, the Company had $ 800.0 million of outstanding borrowings under the credit facility and therefore had no additional availability.

As of December 31, 2021 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 credit facility to include incremental term loans (“2020 term loans”) that allowed the Company to borrow aggregate principal amounts of € 235.0 million and $ 267.5 million.

The Company borrowed and then repaid amounts under the term loans in 2020 and 2021, respectively.

The 2020 term loans matured on April 8, 2022.

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 already are not available for loans denominated in other currencies.

The interest rates reflected in the Company’s credit facility were designed to accommodate the discontinuation of LIBOR-based rates and a shift to SOFR or a base rate, and, as such, the Company does not believe that moving to other rates will have a materially adverse effect on the Company’s 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 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 $ 244.3 million as of September 30, 2022) from the European Investment Bank.

On January 25, 2019, the Company borrowed € 250.0 million (or approximately $ 272.3 million as of March 31, 2023) from the European Investment Bank.

The loan matures on January 24, 2025.

1 unchanged sentence

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

Notes to Condensed Consolidated Financial Statements - Continued

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 a group of another seven related term loan agreements.

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

Additionally, the Company 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.

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

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, as of September 30, 2022, the Company had indebtedness of € 319.5 million (or approximately $ 312.2 million as of September 30, 2022) through a group of six remaining related term loan agreements.

Of the 2016 term loans, the Company repaid an aggregate amount of € 249.0 million in October 2019, October 2021 and April 2022.

Of the 2018 senior term loans, the Company repaid an aggregate amount of € 144.5 million in August 2021 and February 2022.

In aggregate, as of March 31, 2023, the Company had indebtedness of € 319.5 million (or approximately $ 348.0 million as of March 31, 2023) through a group of six remaining related term loan agreements.

Two of the term loan agreements in the aggregate amount of € 173.0 million (or approximately $ 188.4 million net of debt issuance costs, as of March 31, 2023) will mature in August and October 2023.

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

As of September 30, 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.

As of March 31, 2023, for the term loans with a fixed interest rate, interest is payable in arrears on an annual basis, with interest rates ranging from 1.20 % to 2.26 % and maturity dates between August 2023 and August 2028.

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.

Short-Term Borrowings

As of September 30, 2022 and December 31, 2021, the Company had short-term borrowings due within one year of approximately $ 261.8 million and $ 90.8 million, respectively.

The balance as of September 30, 2022 related to short-term borrowings includes the short-term multi-currency revolving credit facility discussed previously of approximately $ 240.0 million.

Other Short-Term Borrowings

As of March 31, 2023 and December 31, 2022, the Company had short-term borrowings due within one year of approximately $ 4.9 million and $ 8.9 million, respectively.

Standby Letters of Credit and Similar Instruments

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

At September 30, 2022 and December 31, 2021, outstanding letters of credit totaled approximately $ 14.4 million and $ 14.6 million, respectively.

Notes to Condensed Consolidated Financial Statements - Continued

insurance coverage.

At March 31, 2023 and December 31, 2022, outstanding letters of credit totaled approximately $ 14.7 million and $ 14.4 million, respectively.

RECOVERABLE INDIRECT TAXES

3 unchanged sentences

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

The Company had recorded approximately $ 117.3 million and $ 114.4 million, respectively, of VAT tax credits, net of reserves, as of September 30, 2022 and December 31, 2021.

Notes to Condensed Consolidated Financial Statements - Continued

Inventories at September 30, 2022 and December 31, 2021 were as follows (in millions):

September 30, 2022 December 31, 2021

The Company had recorded approximately $ 101.6 million and $ 94.6 million, respectively, of VAT tax credits, net of reserves, as of March 31, 2023 and December 31, 2022.

Inventories at March 31, 2023 and December 31, 2022 were as follows (in millions):

March 31, 2023 December 31, 2022

Finished goods $ 1,248.4 $ 994.9

4 unchanged sentences

PRODUCT WARRANTY

The warranty reserve activity for the three and nine months ended September 30, 2022 and 2021, including deferred revenue associated with the Company's extended warranties that have been sold, was as follows (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The warranty reserve activity for the three months ended March 31, 2023 and 2022, including deferred revenue associated with the Company's extended warranties that have been sold, was as follows (in millions):

Three Months Ended March 31,

Balance at beginning of period $ 640.0 $ 592.5

2 unchanged sentences

Foreign currency translation 11.8 ( 3.6 )

Balance at September 30 $ 561.9 $ 568.7 $ 561.9 $ 568.7

Balance at March 31 $ 677.0 $ 614.5

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

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

Approximately $ 482.1 million, $ 492.7 million and $ 473.5 million of warranty reserves are included in “Accrued expenses” in the Company’s Condensed Consolidated Balance Sheets as of September 30, 2022, December 31, 2021 and September 30, 2021, respectively.

Approximately $ 79.8 million, $ 99.8 million and $ 95.2 million of warranty reserves are included in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets as of September 30, 2022, December 31, 2021, and September 30, 2021, respectively.

Approximately $ 572.1 million, $ 546.0 million and $ 519.6 million of warranty reserves are included in “Accrued expenses” in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2023, December 31, 2022 and March 31, 2022, respectively.

Approximately $ 104.9 million, $ 94.0 million and $ 94.9 million of warranty reserves are included in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2023, December 31, 2022, and March 31, 2022, respectively.

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

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements - Continued

SUPPLIER FINANCE PROGRAMS

The Company has supplier financing arrangements with certain banks or other intermediaries whereby a bank or intermediary purchases receivables held by the Company’s suppliers.

Under the program, suppliers have the option to be paid by the bank or intermediary earlier than the payment due date.

When the supplier receives an early payment, they receive discounted amounts, and the Company pays the bank or intermediary the face amount of the invoice on the payment due date.

The Company does not reimburse suppliers for any costs incurred for participation in the program.

The Company and its suppliers agree on the contractual terms, including prices, quantities and payment terms, regardless of whether the supplier elects to participate in the supplier finance programs.

The suppliers’ voluntary inclusion in the supplier financing programs has no bearing on the Company’s payment terms.

The Company has no economic interest in a supplier’s decision to participate in the programs, and the Company has no direct financial relationship with the banks or other intermediaries as it relates to the supplier finance programs.

As of March 31, 2023, payment terms with the majority of the Company’s suppliers are generally 30 to 180 days, which correspond to the contractual terms, with rates that are based on market rates (such as SOFR) plus a credit spread.

There are no assets pledged as security under the programs.

As of March 31, 2023, and December 31, 2022, the amount outstanding that remains unpaid to the banks or other intermediaries totaled $ 108.9 million and $ 121.5 million, respectively, and is reflected in “Accounts payable” in the Company’s Condensed Consolidated Balance Sheets.

NET INCOME PER COMMON SHARE

1 unchanged sentence

Diluted net income per common share assumes the exercise of outstanding SSARs and the vesting of performance share awards and RSUs using the treasury stock method when there is no other circumstance other than the passage of time under which they would not be issued, and the effects of such assumptions are dilutive.

A reconciliation of net income attributable to AGCO Corporation and subsidiaries and weighted average common shares outstanding for purposes of calculating basic and diluted net income per share for the three and nine months ended September 30, 2022 and 2021 is as follows (in millions, except per share data):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

A reconciliation of net income attributable to AGCO Corporation and subsidiaries and weighted average common shares outstanding for purposes of calculating basic and diluted net income per share for the three months ended March 31, 2023 and 2022 is as follows (in millions, except per share data):

Three Months Ended March 31,

Basic net income per share:

8 unchanged sentences

Diluted net income per share attributable to AGCO Corporation and subsidiaries $ 3.10 $ 2.03

There were no SSARs outstanding for the three and nine months ended September 30, 2022 and 2021 that had an antidilutive impact.

At September 30, 2022 and December 31, 2021, the Company had approximately $ 246.5 million and $ 246.4 million, respectively, of gross unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized.

Gross unrecognized income tax benefits as of September 30, 2022 and December 31, 2021 exclude certain indirect favorable effects that relate to other tax jurisdictions of approximately $ 62.3 million and $ 70.2 million, respectively.

In addition, the gross unrecognized income tax benefits as of September 30, 2022 and December 31, 2021 exclude certain deposits made in a foreign jurisdiction of approximately $ 41.2 million and $ 6.7 million, respectively, associated with an ongoing audit.

At September 30, 2022 and December 31, 2021, the Company had approximately $ 10.4 million and $ 40.1 million, respectively, of accrued or deferred taxes related to uncertain income tax positions connected with ongoing income tax audits in various jurisdictions that it expects to settle or pay in the next 12 months, reflected in “Other current liabilities” in the Company’s Condensed Consolidated Balance Sheets.

At September 30, 2022 and December 31, 2021, the Company had approximately $ 236.7 million and $ 196.7 million, respectively, of accrued taxes reflected in “Other noncurrent liabilities”, and approximately $ 0.5 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 Condensed Consolidated Balance Sheets.

There were no SSARs outstanding for the three months ended March 31, 2023 and 2022 that had an antidilutive impact.

At March 31, 2023 and December 31, 2022, the Company had approximately $ 301.9 million and $ 281.7 million, respectively, of gross unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized.

Gross unrecognized income tax benefits as of March 31, 2023 and December 31, 2022 exclude certain indirect favorable effects that relate to other tax jurisdictions of approximately $ 80.9 million and $ 74.0 million, respectively.

In addition, the gross unrecognized income tax benefits as of March 31, 2023 and December 31, 2022 exclude certain deposits made in a foreign jurisdiction of approximately $ 45.9 million and $ 45.1 million, respectively, associated with an ongoing audit.

At March 31, 2023 and December 31, 2022, the Company had approximately $ 12.4 million and $ 10.4 million, respectively, of accrued or deferred taxes related to uncertain income tax positions connected with ongoing income tax audits in various jurisdictions that it expects to settle or pay in the next 12 months, reflected in “Other current liabilities” in the

Notes to Condensed Consolidated Financial Statements - Continued

Company’s Condensed Consolidated Balance Sheets.

At March 31, 2023 and December 31, 2022, the Company had approximately $ 292.4 million and $ 274.1 million, respectively, of accrued taxes reflected in “Other noncurrent liabilities”, and approximately $ 2.9 million and $ 2.8 million, respectively, of deferred tax assets related to uncertain tax positions that it expects to settle or pay beyond 12 months, reflected in “Deferred tax assets” in the Company’s Condensed Consolidated Balance Sheets.

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

At September 30, 2022 and December 31, 2021, the Company had accrued interest and penalties related to unrecognized tax benefits of approximately $ 22.4 million and $ 32.7 million, respectively.

The decrease in accrued interest and penalties primarily resulted from a foreign jurisdiction interest rate reduction announced during the three months ended September 30, 2022.

At March 31, 2023 and December 31, 2022, the Company had accrued interest and penalties related to unrecognized tax benefits of approximately $ 27.7 million and $ 25.8 million, respectively.

Generally, tax years 2017 through 2022 remain open to examination by taxing authorities in the United States and certain other foreign tax jurisdictions.

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

As of September 30, 2022, a number of income tax examinations in foreign jurisdictions are ongoing.

Notes to Condensed Consolidated Financial Statements - Continued

The Company’s income tax provision as of September 30, 2021 includes the benefit of a reversal of approximately $ 67.8 million related to a valuation allowance previously established against the Company’s net deferred tax assets in the United States that the Company recorded as of June 30, 2021.

Improvements in income in the United States during 2021, along with updated future projected income levels, supported the reversal of the valuation allowance.

As of March 31, 2023, a number of income tax examinations in foreign jurisdictions are ongoing.

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

3 unchanged sentences

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

In 2008 and 2012, as part of routine audits, the Brazilian taxing authorities disallowed deductions relating to the amortization of certain goodwill recognized in connection with a reorganization of the Company’s Brazilian operations and the related transfer of certain assets to the Company’s Brazilian subsidiaries.

The amount of the tax disallowance through March 31, 2023, not including interest and penalties, was approximately 131.5 million Brazilian reais (or approximately $ 25.8 million).

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

The Company has been historically and currently advised by its legal and tax advisors that its position with respect to the deductions is allowable under the tax laws of Brazil.

The Company has been contesting the disallowance and has historically maintained that it is not likely that the assessment, interest or penalties would be required to be paid.

The ultimate outcome of the case would not have been determined until the Brazilian tax appeal process was completed and the Company’s legal advisors have indicated that would likely take several years.

On January 12, 2023, the Brazilian government issued a “Litigation Zero” tax amnesty program, whereby cases being disputed at the administrative court level of review for a period of more than ten years can be considered for amnesty.

If companies choose to enroll in the amnesty program, it would not be considered an admission of guilt with respect to outstanding cases.

The amnesty program allows companies to settle outstanding contested cases at a significant monetary discount.

After weighing various impacts involved with enrollment in the tax amnesty program, including potential interest, penalties and legal costs, the Company concluded that it would apply to enroll in the program prior to the quarter ended March 31, 2023.

The Company recorded its best estimate of the ultimate settlement under the amnesty program of approximately $ 29.5 million within “Income tax provision” for the three months ended March 31, 2023, net of associated U.S.

income tax credits.

The Company paid an initial installment payment of 40.6 million Brazilian reais (or approximately $ 7.7 million) in March 2023 related to the enrollment.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

6 unchanged sentences

During 2023 and 2022, the Company designated certain foreign currency contracts as cash flow hedges of expected future sales and purchases.

The total notional value of derivatives that were designated as cash flow hedges was approximately $ 150.6 million as of September 30, 2022.

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 approximately $ 242.2 million and $ 364.8 million as of March 31, 2023 and December 31, 2022, respectively.

Notes to Condensed Consolidated Financial Statements - Continued

Steel Commodity Contracts

During 2023 and 2022, 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 $ 2.0 million and $ 31.9 million as of September 30, 2022 and December 31, 2021, respectively.

Notes to Condensed Consolidated Financial Statements - Continued

The following tables summarize the after-tax impact that changes in the fair value of derivatives designated as cash flow hedges had on accumulated other comprehensive loss and net income during the three and nine months ended September 30, 2022 and 2021 (in millions):

Recognized in Net Income

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

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

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

Foreign currency contracts (1)

$ ( 3.4 ) Cost of goods sold $ ( 4.3 ) $ 2,382.7

Commodity contracts (2)

( 0.4 ) Cost of goods sold ( 0.8 ) $ 2,382.7

Total $ ( 3.8 ) $ ( 5.1 )

Foreign currency contracts $ 1.8 Cost of goods sold $ ( 1.3 ) $ 2,098.4

Commodity contracts ( 0.2 ) Cost of goods sold 6.3 2,098.4

Total $ 1.6 $ 5.0

The total notional value of derivatives that were designated as cash flow hedges was approximately $ 7.2 million and $ 0.9 million as of March 31, 2023 and December 31, 2022, respectively.

The following tables summarize the after-tax impact that changes in the fair value of derivatives designated as cash flow hedges had on accumulated other comprehensive loss and net income during the three months ended March 31, 2023 and 2022 (in millions):

Recognized in Net Income

Nine Months Ended September 30, Gain (Loss) Recognized in Accumulated

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

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

8 unchanged sentences

Total $ ( 2.4 ) $ 0.9

(1) The outstanding contracts as of September 30, 2022 range in maturity through December 2022.

(2) The outstanding contracts as of September 30, 2022 range in maturity through November 2022.

Notes to Condensed Consolidated Financial Statements - Continued

The following table summarizes the activity in accumulated other comprehensive loss related to the derivatives held by the Company during the three months ended September 30, 2022 (in millions):

Before-Tax Amount Income Tax After-Tax Amount

Accumulated derivative net losses as of June 30, 2022 $ ( 9.6 ) $ ( 2.7 ) $ ( 6.9 )

Net changes in fair value of derivatives ( 5.1 ) ( 1.3 ) ( 3.8 )

Net losses reclassified from accumulated other comprehensive loss into income 6.6 1.5 5.1

Accumulated derivative net losses as of September 30, 2022 $ ( 8.1 ) $ ( 2.5 ) $ ( 5.6 )

The following table summarizes the activity in accumulated other comprehensive loss related to the derivatives held by the Company during the nine months ended September 30, 2022 (in millions):

____________________________________

(1) The outstanding contracts as of March 31, 2023 range in maturity through December 2023.

(2) The outstanding contracts as of March 31, 2023 range in maturity through July 2023.

The following table summarizes the activity in accumulated other comprehensive loss related to the derivatives held by the Company during the three months ended March 31, 2023 (in millions):

Before-Tax Amount Income Tax After-Tax Amount

2 unchanged sentences

Net losses reclassified from accumulated other comprehensive loss into income 1.8 0.3 1.5

Accumulated derivative net losses as of September 30, 2022 $ ( 8.1 ) $ ( 2.5 ) $ ( 5.6 )

As of September 30, 2022, approximately $ 1.2 million and $ 1.9 million of derivative realized net losses, 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.

Accumulated derivative net losses as of March 31, 2023 $ ( 0.6 ) $ ( 0.2 ) $ ( 0.4 )

As of March 31, 2023, approximately $ 0.5 million and $ 0.1 million of derivative realized net losses, 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 a net investment hedge relationship, changes in the value of the foreign currency denominated debt are recorded in earnings through the maturity date.

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

The cross currency swap expired on January 19, 2021.

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

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

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

Notes to Condensed Consolidated Financial Statements - Continued

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

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

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

At maturity of the cross currency swap contract, the Company will deliver the notional amount of approximately € 247.9 million (or approximately $ 242.3 million as of September 30, 2022) 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 $ 270.0 million as of March 31, 2023) and will receive $ 300.0 million from the counterparties.

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

Notes to Condensed Consolidated Financial Statements - Continued

During the three months ended March 31, 2023, the Company designated € 150.0 million (or approximately $ 163.4 million as of March 31, 2023) of its multi-currency revolving credit facility with a maturity date of May 25, 2023 as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment.

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

Notional Amount as of

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Cross currency swap contract $ 300.0 $ 300.0

The following table summarizes the changes in the fair value of the cross currency swap contract designated as a net investment hedge during the three and nine months ended September 30, 2022 and 2021 (in millions):

Gain Recognized in Accumulated

Other Comprehensive Loss for the

Three Months Ended Gain Recognized in Accumulated

Other Comprehensive Loss for the Nine Months Ended

Foreign currency denominated debt 163.4 —

The following table summarizes the changes in the fair value of the cross currency swap contract designated as a net investment hedge during the three months ended March 31, 2023 and 2022 (in millions):

Cross currency swap contract Foreign currency denominated debt

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

Before-Tax Amount Income Tax After-Tax Amount Before-Tax Amount Income Tax After-Tax Amount

September 30, 2022 $ 13.7 $ 3.5 $ 10.2 $ 34.5 $ 8.9 $ 25.6

September 30, 2021 5.8 1.8 4.0 5.5 1.8 3.7

March 31, 2023 $ ( 1.0 ) $ 0.2 $ ( 0.8 ) $ 0.9 $ — $ 0.9

March 31, 2022 4.2 ( 1.1 ) 3.1 — — —

Derivative Transactions Not Designated as Hedging Instruments

2 unchanged sentences

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

As of September 30, 2022 and December 31, 2021, the Company had outstanding foreign currency contracts with a notional amount of approximately $ 3.1 billion and $ 3.7 billion, respectively.

As of March 31, 2023 and December 31, 2022, the Company had outstanding foreign currency contracts with a notional amount of approximately $ 3.9 billion and $ 3.7 billion, respectively.

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

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

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

Classification of Gain (Loss)

September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

March 31, 2023 March 31, 2022

Foreign currency contracts Other expense, net $ 11.2 $ ( 13.8 )

The table below sets forth the fair value of derivative instruments as of September 30, 2022 (in millions):

Notes to Condensed Consolidated Financial Statements - Continued

The table below sets forth the fair value of derivative instruments as of March 31, 2023 (in millions):

Asset Derivatives as of

September 30, 2022 Liability Derivatives as of

September 30, 2022

March 31, 2023 Liability Derivatives as of

March 31, 2023

Balance Sheet Location Fair Value Balance Sheet Location Fair Value

7 unchanged sentences

Total derivative instruments $ 43.8 $ 18.6

(1) The outstanding contracts as of September 30, 2022 range in maturity through December 2022.

Notes to Condensed Consolidated Financial Statements - Continued

__________________________________

(1) The outstanding contracts as of March 31, 2023 range in maturity through July 2023.

The table below sets forth the fair value of derivative instruments as of December 31, 2022 (in millions):

11 unchanged sentences

Total derivative instruments $ 40.9 $ 40.4

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

___________________________________

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

Notes to Condensed Consolidated Financial Statements - Continued

CHANGES IN STOCKHOLDERS’ EQUITY

The following tables set forth changes in stockholders’ equity attributed to AGCO Corporation and its subsidiaries and to noncontrolling interests for the three and nine months ended September 30, 2022 (in millions):

Stock Additional

Paid-in Capital Retained

Earnings Accumulated Other

Comprehensive Loss Noncontrolling

Interests Total Stockholders’

Balance, June 30, 2022 $ 0.7 $ 13.3 $ 5,130.3 $ ( 1,761.1 ) $ 0.1 $ 3,383.3

Stock compensation — 7.8 — — — 7.8

Issuance of stock awards

— 0.7 — — — 0.7

SSARs exercised — — — — — —

Comprehensive income:

Net income — — 237.9 — — 237.9

Other comprehensive loss, net of reclassification adjustments:

Foreign currency translation adjustments

— — — ( 75.7 ) — ( 75.7 )

Defined benefit pension plans, net of tax — — — ( 16.9 ) — ( 16.9 )

Deferred gains and losses on derivatives, net of tax

— — — 1.3 — 1.3

Payment of dividends to stockholders — — ( 17.9 ) — — ( 17.9 )

Change in noncontrolling interest

— — — — 0.1 0.1

Balance, September 30, 2022 $ 0.7 $ 21.8 $ 5,350.3 $ ( 1,852.4 ) $ 0.2 $ 3,520.6

The following tables set forth changes in stockholders’ equity attributed to AGCO Corporation and its subsidiaries and to noncontrolling interests for the three months ended March 31, 2023 and 2022 (in millions):

Stock Additional

6 unchanged sentences

Issuance of stock awards

SSARs exercised — ( 1.0 ) — — — ( 1.0 )

Comprehensive income:

Net income (loss) — — 567.4 — ( 14.9 ) 552.5

Other comprehensive income, net of reclassification adjustments:

Foreign currency translation adjustments — — — ( 62.8 ) 0.9 ( 61.9 )

Defined benefit pension plans, net of tax — — — ( 13.5 ) — ( 13.5 )

Deferred gains and losses on derivatives, net of tax — — — ( 5.2 ) — ( 5.2 )

Payment of dividends to stockholders — — ( 386.4 ) — — ( 386.4 )

Distributions to noncontrolling interest — — — — ( 13.8 ) ( 13.8 )

Change in noncontrolling interest — — — — 0.1 0.1

Balance, September 30, 2022 $ 0.7 $ 21.8 $ 5,350.3 $ ( 1,852.4 ) $ 0.2 $ 3,520.6

Notes to Condensed Consolidated Financial Statements - Continued

Stock Additional

Paid-in Capital Retained

Earnings Accumulated Other

Comprehensive Loss Noncontrolling

Interests Total Stockholders’

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

Stock compensation — 5.9 — — — 5.9

— ( 18.4 ) — — — ( 18.4 )

SSARs exercised — ( 1.1 ) — — — ( 1.1 )

5 unchanged sentences

Defined benefit pension plans, net of tax — — — 1.8 — 1.8

— — — 2.6 — 2.6

Deferred gains and losses on derivatives, net of tax

1 unchanged sentence

Payment of dividends to stockholders — — ( 18.0 ) — — ( 18.0 )

— — ( 15.0 ) — — ( 15.0 )

Purchases and retirement of common stock

( 0.1 ) ( 13.5 ) ( 61.4 ) — — ( 75.0 )

Balance, September 30, 2021 $ 0.7 $ 3.6 $ 4,969.0 $ ( 1,804.5 ) $ 27.6 $ 3,196.4

Adoption of ASU 2016-13 by finance joint ventures — — ( 5.5 ) — — ( 5.5 )

Balance, March 31, 2023 $ 0.7 $ 24.7 $ 5,863.7 $ ( 1,756.4 ) $ 0.2 $ 4,132.9

Stock Additional

19 unchanged sentences

— — ( 14.9 ) — — ( 14.9 )

Purchases and retirement of common stock

( 0.1 ) ( 13.5 ) ( 61.4 ) — — ( 75.0 )

Distributions to noncontrolling interest — — — — ( 13.8 ) ( 13.8 )

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

Balance, September 30, 2021 $ 0.7 $ 3.6 $ 4,969.0 $ ( 1,804.5 ) $ 27.6 $ 3,196.4

Balance, March 31, 2022 $ 0.7 $ 2.9 $ 5,306.2 $ ( 1,635.0 ) $ 0.1 $ 3,674.9

Notes to Condensed Consolidated Financial Statements - Continued

Total comprehensive income (loss) attributable to noncontrolling interests for the three and nine months ended September 30, 2022 and 2021 was as follows (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Total comprehensive income (loss) attributable to noncontrolling interests for the three months ended March 31, 2023 and 2022 was as follows (in millions):

Three Months Ended March 31,

Net income (loss) $ — $ ( 14.8 )

2 unchanged sentences

Total comprehensive income (loss) $ — $ ( 14.0 )

The following table sets forth changes in accumulated other comprehensive loss by component, net of tax, attributed to AGCO Corporation and its subsidiaries for the nine months ended September 30, 2022 (in millions):

The following table sets forth changes in accumulated other comprehensive loss by component, net of tax, attributed to AGCO Corporation and its subsidiaries for the three months ended March 31, 2023 (in millions):

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

1 unchanged sentence

$ ( 231.2 ) $ ( 0.9 ) $ ( 1,571.0 ) $ ( 1,803.1 )

Other comprehensive loss before reclassifications ( 18.3 ) ( 13.4 ) ( 62.8 ) ( 94.5 )

Other comprehensive income (loss) before reclassifications — ( 1.0 ) 44.4 43.4

Net losses reclassified from accumulated other comprehensive loss 1.8 1.5 — 3.3

Other comprehensive loss, net of reclassification adjustments ( 13.5 ) ( 5.2 ) ( 62.8 ) ( 81.5 )

Accumulated other comprehensive loss, September 30, 2022

Other comprehensive income, net of reclassification adjustments 1.8 0.5 44.4 46.7

Accumulated other comprehensive loss, March 31, 2023

$ ( 229.4 ) $ ( 0.4 ) $ ( 1,526.6 ) $ ( 1,756.4 )

The following table sets forth reclassification adjustments out of accumulated other comprehensive loss by component attributed to AGCO Corporation and its subsidiaries for the three months ended September 30, 2022 and 2021 (in millions):

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

Statements of Operations

Details about Accumulated Other Comprehensive Loss Components Three Months Ended September 30, 2022 (1)

Three Months Ended September 30, 2021 (1)

Net losses on foreign currency contracts $ 5.5 $ 1.5 Cost of goods sold

Net losses (gains) on commodity contracts $ 1.1 $ ( 8.5 ) Cost of goods sold

Reclassification before tax 6.6 ( 7.0 )

( 1.5 ) 2.0 Income tax provision

Reclassification net of tax $ 5.1 $ ( 5.0 )

Defined benefit pension plans:

Amortization of net actuarial losses $ 2.0 $ 3.4 Other expense, net (2)

Amortization of prior service cost — 0.1 Other expense, net (2)

Reclassification before tax 2.0 3.5

( 0.6 ) ( 0.9 ) Income tax provision

Reclassification net of tax $ 1.4 $ 2.6

Net losses (gains) reclassified from accumulated other comprehensive loss $ 6.5 $ ( 2.4 )

(1) Losses (gains) included within the Condensed Consolidated Statements of Operations for the three months ended September 30, 2022 and 2021, respectively.

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

See Note 15 for additional information on the Company’s defined benefit pension plans.

Notes to Condensed Consolidated Financial Statements - Continued

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

Statements of Operations

Details about Accumulated Other Comprehensive Loss Components Nine Months Ended September 30, 2022 (1)

Nine Months Ended September 30, 2021 (1)

Details about Accumulated Other Comprehensive Loss Components Three Months Ended March 31, 2023 (1)

Three Months Ended March 31, 2022 (1)

Net losses on foreign currency contracts $ 2.2 $ 0.1 Cost of goods sold

Net losses (gains) on commodity contracts 2.6 ( 10.4 ) Cost of goods sold

Net gains on commodity contracts ( 0.4 ) ( 1.3 ) Cost of goods sold

Reclassification before tax 1.8 ( 1.2 )

8 unchanged sentences

Net losses reclassified from accumulated other comprehensive loss $ 3.3 $ 0.8

(1) Losses (gains) included within the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022 and 2021, respectively.

__________________________________

(1) Losses (gains) included within the Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022, respectively.

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

See Note 16 for additional information on the Company’s defined benefit pension plans.

Notes to Condensed Consolidated Financial Statements - Continued

Share Repurchase Program

3 unchanged sentences

All shares received under the ASR agreement 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 Condensed Consolidated Balance Sheets.

During the three and nine months ended September 30, 2022, the Company did not purchase any shares directly or enter into any accelerated share repurchase agreements.

As of September 30, 2022, the remaining amount authorized to be repurchased under board-approved share repurchase authorizations was approximately $ 110.0 million, which has no expiration date.

On April 28, 2022, the Company's Board of Directors approved an increase to its 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 the three months ended March 31, 2023, the Company did not purchase any shares directly or enter into any accelerated share repurchase agreements.

As of March 31, 2023, the remaining amount authorized to be repurchased under board-approved share repurchase authorizations was approximately $ 110.0 million, which has no expiration date.

On April 27, 2023, the Company's Board of Directors approved an increase to its quarterly dividend commencing in the second quarter of 2023 by 21 % to $ 0.29 per common share and declared a special variable dividend of $ 5.00 per common share that is to be paid during the second quarter of 2023.

ACCOUNTS RECEIVABLE SALES AGREEMENTS

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

As of September 30, 2022 and December 31, 2021, the cash received from receivables sold under the U.S., Canadian, European and Brazilian accounts receivable sales agreements was approximately $ 1.2 billion and $ 1.3 billion, respectively.

Notes to Condensed Consolidated Financial Statements - Continued

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

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 receivable 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, which, in turn, 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 Condensed Consolidated Statements of Operations.

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

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

As of March 31, 2023 and December 31, 2022, the cash received from receivables sold under the U.S., Canadian, European and Brazilian accounts receivable sales agreements was approximately $ 1.7 billion and $ 1.8 billion, respectively.

Under the terms of the accounts receivable sales agreements in North America, Europe and Brazil, the Company pays

an annual fee related to the servicing of the receivables sold.

The Company also pays the respective AGCO Finance entities a subsidized interest payment with respect to the accounts receivable sales agreements, calculated 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.

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

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 September 30, 2022 and December 31, 2021, the cash received from these arrangements was approximately $ 170.8 million and $ 215.4 million, respectively.

Losses on sales of receivables associated with the accounts receivable sales agreements discussed above, reflected within “Other expense, net” in the Company’s Condensed Consolidated Statements of Operations, were approximately $ 20.4 million and $ 38.5 million, respectively, during the three and nine months ended September 30, 2022.

Losses on sales of receivables associated with the accounts receivable sales agreements discussed above, reflected within “Other expense, net” in the Company’s Condensed Consolidated Statements of Operations, were approximately $ 7.4 million and $ 17.1 million, respectively, during the three and nine months ended September 30, 2021.

As of March 31, 2023 and December 31, 2022, the cash received from these arrangements was approximately $ 233.3 million and $ 226.0 million, respectively.

Losses on sales of receivables associated with the accounts receivable sales agreements discussed above, reflected within “Other expense, net” in the Company’s Condensed Consolidated Statements of Operations, were approximately $ 28.5 million and $ 7.9 million for the three months ended March 31, 2023 and 2022, respectively.

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

1 unchanged sentence

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

As of September 30, 2022 and December 31, 2021, these finance joint ventures had approximately $ 45.8 million and $ 42.6 million, respectively, of outstanding accounts receivable associated with these arrangements.

As of March 31, 2023 and December 31, 2022, these finance joint ventures had approximately $ 108.3 million and $ 69.5 million, respectively, of outstanding accounts receivable associated with these arrangements.

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

2 unchanged sentences

The only right the finance joint ventures retain with respect to the title are those enabling recovery of the goods in the event of customer default on payment.

The dealer or distributor may not return equipment or replacement parts to the Company while its contract with the finance joint venture is in force, and can only return the equipment to the retail finance joint venture with penalties that would generally not make it economically beneficial to do so.

The dealer or distributor may not return equipment or replacement

Notes to Condensed Consolidated Financial Statements - Continued

parts to the Company while its contract with the finance joint venture is in force, and can only return the equipment to the retail finance joint venture with penalties that would generally not make it economically beneficial to do so.

PENSION AND POSTRETIREMENT BENEFIT PLANS

Net periodic pension and postretirement benefit cost for the Company’s defined pension and postretirement benefit plans for the three and nine months ended September 30, 2022 and 2021 are set forth below (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

Net periodic pension and postretirement benefit cost for the Company’s defined pension and postretirement benefit plans for the three months ended March 31, 2023 and 2022 are set forth below (in millions):

Three Months Ended March 31,

Pension benefits 2023 2022

4 unchanged sentences

Amortization of prior service cost 0.3 0.1

Curtailment (1)

— — — $ ( 1.2 )

Net periodic pension cost $ 4.7 $ 5.0

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

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

Notes to Condensed Consolidated Financial Statements - Continued

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

Postretirement benefits 2023 2022

1 unchanged sentence

Interest cost 0.3 0.2

Amortization of net actuarial losses — 0.1 — 0.1

Amortization of prior service cost 0.1 0.1

1 unchanged sentence

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

The following table summarizes the activity in accumulated other comprehensive loss related to the Company's defined pension and postretirement benefit plans during the nine months ended September 30, 2022 (in millions):

The following table summarizes the activity in accumulated other comprehensive loss related to the Company's defined pension and postretirement benefit plans during the three months ended March 31, 2023 (in millions):

Before-Tax Amount Income Tax After-Tax Amount

Accumulated other comprehensive loss, December 31, 2022 $ ( 304.4 ) $ ( 73.2 ) $ ( 231.2 )

Amortization of net actuarial losses 6.4 1.7 4.7

Amortization of prior service cost 0.4 0.1 0.3

Revision of prior service cost estimate ( 24.4 ) ( 6.1 ) ( 18.3 )

Accumulated other comprehensive loss as of September 30, 2022 $ ( 320.2 ) $ ( 76.3 ) $ ( 243.9 )

The Company’s defined benefit pension obligation has been reflected on the manner in which its defined benefit plans are being administered or expected to be administered in the future.

The obligation and resulting liability or asset is calculated employing both actuarial and legal assumptions.

These assumptions include, but are not limited to, future inflation, the return on pension assets, discount rates, life expectancy and potential salary increases.

There are also assumptions related to the manner in which individual benefit plan benefits are calculated, some of which are legal in nature and include, but are not limited to, member eligibility, years of service, and the uniformity of both guaranteed minimum pension benefits and member normal retirement ages for men and women.

Some of these assumptions also are subject to the outcome of certain legal cases, which are currently unknown.

In the event that any of these assumptions or the administration approach are proven to be different from the Company’s current interpretations and approach, there could be material increases or decreases in the Company’s defined benefit pension obligation and related amounts such as prior service cost and actuarial gains and losses, as well as the related amount and timing of future contributions to be paid by the Company.

During the three months ended September 30, 2022, the Company updated its estimate of current assumptions, interpretations and approach affecting the Company’s defined benefit pension obligation related to certain defined benefit plans and recorded a revision of its estimate of prior service cost of approximately $ 24.4 million.

During the nine months ended September 30, 2022, the Company made approximately $ 26.3 million of contributions to its defined pension benefit plans.

Amortization of net actuarial losses 2.0 0.5 1.5

Accumulated other comprehensive loss as of March 31, 2023 $ ( 302.0 ) $ ( 72.6 ) $ ( 229.4 )

During the three months ended March 31, 2023, the Company made approximately $ 10.4 million of contributions to its defined pension benefit plans.

The Company currently estimates its minimum contributions for 2023 to its defined pension benefit plans will aggregate approximately $ 33.8 million.

During the nine months ended September 30, 2022, the Company made approximately $ 1.2 million of contributions to its postretirement health care and life insurance benefit plans.

During the three months ended March 31, 2023, the Company made approximately $ 0.5 million of contributions to its postretirement health care and life insurance benefit plans.

The Company currently estimates that it will make approximately $ 1.5 million of contributions to its postretirement health care and life insurance benefit plans during 2023.

17 unchanged sentences

See Note 13 for additional information on the Company’s derivative instruments and hedging activities.

Assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 are summarized below (in millions):

As of September 30, 2022

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 are summarized below (in millions):

As of March 31, 2023

Level 1 Level 2 Level 3 Total

6 unchanged sentences

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 September 30, 2022, the estimated fair value of the Company's 0.800 % senior notes due 2028, based on listed market values, was approximately € 462.5 million (or approximately $ 452.0 million as of September 30, 2022), compared to the carrying value of € 600.0 million (or approximately $ 586.4 million as of September 30, 2022).

At March 31, 2023, the estimated fair value of the Company's 0.800 % senior notes due 2028, based on listed market values, was approximately € 497.5 million (or approximately $ 541.8 million as of March 31, 2023), compared to the carrying value of € 600.0 million (or approximately $ 653.5 million as of March 31, 2023).

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

6 unchanged sentences

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

Segment results for the three and nine months ended September 30, 2022 and 2021 and assets as of September 30, 2022 and December 31, 2021 based on the Company’s reportable segments are as follows (in millions):

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

Net sales $ 910.5 $ 571.2 $ 1,390.1 $ 249.8 $ 3,121.6

Income from operations 112.7 107.5 142.1 33.0 395.3

Depreciation 15.4 7.1 24.5 3.6 50.6

Capital expenditures 57.8 15.7 51.4 6.4 131.3

Net sales $ 638.7 $ 383.3 $ 1,462.4 $ 240.7 $ 2,725.1

Income from operations 35.8 44.4 192.3 28.6 301.1

Depreciation 14.8 6.7 28.6 4.2 54.3

Capital expenditures 10.5 8.9 55.6 3.1 78.1

Nine Months Ended September 30, North America South America Europe/Middle East Asia/Pacific/Africa Consolidated

Segment results for the three months ended March 31, 2023 and 2022 and assets as of March 31, 2023 and December 31, 2022 based on the Company’s reportable segments are as follows (in millions):

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

Net sales $ 923.1 $ 503.8 $ 1,703.8 $ 202.8 $ 3,333.5

6 unchanged sentences

Capital expenditures 15.7 10.0 39.2 1.4 66.3

As of September 30, 2022 $ 1,742.8 $ 1,197.8 $ 2,507.7 $ 624.5 $ 6,072.8

As of March 31, 2023 $ 1,957.8 $ 1,386.8 $ 2,898.0 $ 771.7 $ 7,014.3

As of December 31, 2022 1,790.3 1,259.8 2,475.6 650.5 6,176.2

Notes to Condensed Consolidated Financial Statements - Continued

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Segment income from operations $ 459.1 $ 297.2

5 unchanged sentences

Consolidated income from operations $ 387.3 $ 204.0

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Segment assets $ 7,014.3 $ 6,176.2

5 unchanged sentences

Consolidated total assets $ 10,811.6 $ 10,103.7

Notes to Condensed Consolidated Financial Statements - Continued

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

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

At September 30, 2022, the Company has outstanding guarantees of indebtedness owed to related and third parties of approximately $ 27.9 million, primarily related to dealer and end-user financing of equipment.

At March 31, 2023, the Company has outstanding guarantees of indebtedness owed to related and third parties of approximately $ 30.3 million, primarily related to dealer and end-user financing of equipment.

Such guarantees generally obligate the Company to repay outstanding finance obligations owed to financial institutions if dealers or end users default on such loans through 2028.

4 unchanged sentences

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

In addition, at September 30, 2022, the Company had accrued approximately $ 19.8 million of outstanding guarantees of residual values that may be owed to its finance joint ventures in the United States and Canada due upon expiration of certain eligible operating leases between the finance joint ventures and end users.

In addition, at March 31, 2023, the Company had accrued approximately $ 16.7 million of outstanding guarantees of residual values that may be owed to its finance joint ventures in the United States and Canada due upon expiration of certain eligible operating leases between the finance joint ventures and end users.

The maximum potential amount of future payments under these guarantees is approximately $ 190.4 million.

Notes to Condensed Consolidated Financial Statements - Continued

Lease payment amounts for operating and finance leases with remaining terms greater than one year as of September 30, 2022 and December 31, 2021 were as follows (in millions):

September 30, 2022 December 31, 2021

Lease payment amounts for operating and finance leases with remaining terms greater than one year as of March 31, 2023 and December 31, 2022 were as follows (in millions):

March 31, 2023 December 31, 2022

Operating Leases (1)

11 unchanged sentences

Present value of leased liabilities $ 164.5 $ 6.1 $ 167.6 $ 6.1

__________________________________

(1) Operating lease payments include options to extend or terminate at the Company's sole discretion, which are included in the determination of lease term when they are reasonably certain to be exercised.

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

At September 30, 2022, the Company had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $ 3,277.9 million.

The outstanding contracts as of September 30, 2022 range in maturity through December 2022.

The Company also had outstanding designated steel commodity contracts with a gross notional amount of approximately $ 2.0 million that range in maturity through November 2022.

At March 31, 2023, the Company had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $ 4,188.5 million.

The outstanding contracts as of March 31, 2023 range in maturity

Notes to Condensed Consolidated Financial Statements - Continued

through December 2023.

The Company also had outstanding designated steel commodity contracts with a gross notional amount of approximately $ 7.2 million that range in maturity through July 2023.

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.

2 unchanged sentences

Contingencies

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

The amount of the tax disallowance through September 30, 2022, not including interest and penalties, was approximately 131.5 million Brazilian reais (or approximately $ 24.4 million).

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

The Company has been advised by its legal and tax advisors that its position with respect to the deductions is allowable under the tax laws of Brazil.

The Company is contesting the disallowance and believes that it is not likely that the assessment, interest or penalties will be required to be paid.

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

The amount of the tax disallowance through March 31, 2023, not including interest and penalties, was approximately 131.5 million Brazilian reais (or approximately $ 25.8 million).

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

The Company has been historically and currently advised by its legal and tax advisors that its position with respect to the deductions is allowable under the tax laws of Brazil.

The Company has been contesting the disallowance and has historically maintained that it is not likely that the assessment, interest or penalties would be required to be paid.

If companies choose to enroll in the amnesty program, it would not be considered an admission of guilt with respect to outstanding cases.

The amnesty program allows companies to settle outstanding contested cases at a significant monetary discount.

income tax credits.

The Company paid an initial installment payment of 40.6 million Brazilian reais (or approximately $ 7.7 million) in March 2023 related to the enrollment.

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

4 unchanged sentences

In July 2022, the case was tried before a jury, which determined that the Company and Precision Planting had not infringed the Deere patents.

The case currently is subject to customary post-trial procedures, including the right of the parties to appeal.

Following customary post-trial procedures, the Court entered a judgement in the Company’s favor, and in April 2023 Deere filed a Notice of Appeal.

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.

Notes to Condensed Consolidated Financial Statements - Continued

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

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

Notes to Condensed Consolidated Financial Statements - Continued

Contract Liabilities

1 unchanged sentence

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

Significant changes in the balance of contract liabilities for the three and nine months ended September 30, 2022 and 2021 were as follows (in millions):

Three Months Ended September 30,

Balance at beginning of period $ 217.7 $ 201.2

Advance consideration received 52.7 54.7

Revenue recognized during the period for extended warranty contracts, maintenance services and technology services ( 19.4 ) ( 18.8 )

Revenue recognized during the period related to grain storage and protein production systems ( 29.6 ) ( 24.2 )

Foreign currency translation ( 12.0 ) ( 3.5 )

Balance at September 30 $ 209.4 $ 209.4

Nine Months Ended September 30,

Significant changes in the balance of contract liabilities for the three months ended March 31, 2023 and 2022 were as follows (in millions):

Three Months Ended March 31,

Balance at beginning of period $ 239.0 $ 226.2

3 unchanged sentences

Foreign currency translation 3.0 ( 3.6 )

Balance at September 30 $ 209.4 $ 209.4

Balance at March 31 $ 259.6 $ 232.4

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

During the three and nine months ended September 30, 2022, the Company recognized approximately $ 22.0 million and $ 74.2 million, respectively, of revenue that was recorded as a contract liability at the beginning of 2022.

During the three and nine months ended September 30, 2021, the Company recognized approximately $ 18.7 million and $ 61.9 million, respectively, of revenue that was recorded as a contract liability at the beginning of 2021.

During the three months ended March 31, 2023, the Company recognized approximately $ 35.7 million of revenue that was recorded as a contract liability at the beginning of 2023.

During the three months ended March 31, 2022, the Company recognized approximately $ 24.0 million of revenue that was recorded as a contract liability at the beginning of 2022.

Remaining Performance Obligations

The estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2022 are $ 26.4 million for the remainder of 2022, $ 68.7 million in 2023, $ 47.9 million in 2024, $ 23.9 million in 2025 and $ 15.9 million thereafter, and relate primarily to extended warranty contracts.

Notes to Condensed Consolidated Financial Statements - Continued

The estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2023 are $ 86.6 million for the remainder of 2023, $ 75.2 million in 2024, $ 45.5 million in 2025, $ 22.2 million in 2026 and $ 11.5 million thereafter, and relate primarily to extended warranty contracts.

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

Disaggregated Revenue

Net sales for the three months ended September 30, 2022 disaggregated by primary geographical markets and major products consisted of the following (in millions):

North America (1)

South America Europe/Middle East (1)

Asia/Pacific/Africa (1)

Consolidated (1)

Primary geographical markets:

United States $ 730.7 $ — $ — $ — $ 730.7

Canada 140.6 — — — 140.6

South America — 568.1 — — 568.1

Germany — — 294.9 — 294.9

France — — 253.1 — 253.1

United Kingdom and Ireland — — 148.1 — 148.1

Finland and Scandinavia — — 176.4 — 176.4

Other Europe — — 462.8 — 462.8

Middle East and Algeria — — 54.8 — 54.8

Africa — — — 44.7 44.7

Asia — — — 94.0 94.0

Australia and New Zealand — — — 111.1 111.1

Mexico, Central America and Caribbean 39.2 3.1 — — 42.3

$ 910.5 $ 571.2 $ 1,390.1 $ 249.8 $ 3,121.6

Major products:

Tractors $ 328.2 $ 294.0 $ 977.2 $ 137.5 $ 1,736.9

Replacement parts 109.5 41.4 246.2 28.0 425.1

Grain storage and protein production systems 175.3 56.8 43.0 37.3 312.4

Combines, application equipment and other machinery 297.4 179.0 123.8 47.1 647.3

$ 910.5 $ 571.2 $ 1,390.1 $ 249.8 $ 3,121.6

(1) Rounding may impact the summation of amounts.

Notes to Condensed Consolidated Financial Statements - Continued

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

Disaggregated Revenue

Net sales for the three months ended March 31, 2023 disaggregated by primary geographical markets and major products consisted of the following (in millions):

North America South America (1)

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

Europe/Middle East (1)

Asia/Pacific/Africa Consolidated

Primary geographical markets:

1 unchanged sentence

Canada 127.9 — — — 127.9

South America — 379.8 — — 379.8

Brazil 425.4 425.4

Other South America — 73.7 — — 73.7

Germany — — 395.4 — 395.4

2 unchanged sentences

Finland and Scandinavia — — 180.0 — 180.0

Italy 92.2 92.2

Other Europe — — 444.3 — 444.3

11 unchanged sentences

$ 923.1 $ 503.8 $ 1,703.8 $ 202.8 $ 3,333.5

(1) Rounding may impact the summation of amounts.

Notes to Condensed Consolidated Financial Statements - Continued

Net sales for the nine months ended September 30, 2022 disaggregated by primary geographical markets and major products consisted of the following (in millions):

North America (1)

South America Europe/Middle East (1)

Asia/Pacific/Africa (1)

Consolidated (1)

Primary geographical markets:

United States $ 1,884.4 $ — $ — $ — $ 1,884.4

Canada 367.5 — — — 367.5

South America — 1,436.5 — — 1,436.5

Germany — — 900.2 — 900.2

France — — 782.3 — 782.3

United Kingdom and Ireland — — 451.3 — 451.3

Finland and Scandinavia — — 569.5 — 569.5

Other Europe — — 1,422.7 — 1,422.7

Middle East and Algeria — — 134.8 — 134.8

Africa — — — 115.2 115.2

Asia — — — 295.9 295.9

Australia and New Zealand — — — 282.4 282.4

Mexico, Central America and Caribbean 99.5 10.3 — — 109.8

____________________________________

Major products:

Tractors $ 843.5 $ 791.9 $ 2,868.8 $ 375.3 $ 4,879.5

Replacement parts 323.6 116.2 803.1 77.8 1,320.7

Grain storage and protein production systems 461.9 138.4 120.0 118.4 838.7

Combines, application equipment and other machinery 722.3 400.3 469.0 122.1 1,713.7

$ 2,351.4 $ 1,446.8 $ 4,260.8 $ 693.5 $ 8,752.5

(1) Rounding may impact the summation of amounts.

Notes to Condensed Consolidated Financial Statements - Continued

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

North America South America (1)

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

Net sales for the three months ended March 31, 2022 disaggregated by primary geographical markets and major products consisted of the following (in millions):

North America South America Europe/Middle East (1)

Asia/Pacific/Africa Consolidated (1)

Primary geographical markets:

1 unchanged sentence

Canada 101.1 — — — 101.1

South America — 894.4 — — 894.4

Brazil 273.8 273.8

Other South America — 79.1 — — 79.1

Germany — — 317.2 — 317.2

2 unchanged sentences

Finland and Scandinavia — — 197.0 — 197.0

Italy 71.4 71.4

Other Europe — — 367.2 — 367.2

11 unchanged sentences

$ 701.0 $ 356.4 $ 1,403.1 $ 225.2 $ 2,685.7

____________________________________

(1) Rounding may impact the summation of amounts.

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

What changed 10-Q

Item 1. Financial Statements