What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-09 · 404 added, 225 removed, 660 unchanged (49% of the section changed)

3 unchanged sentences

(unaudited and in millions, except share amounts)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Current Assets:

32 unchanged sentences

Common stock;

$ 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

$ 0.01 par value, 150,000,000 shares authorized, 74,876,364 and 74,600,815 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 36.1 30.2

9 unchanged sentences

(unaudited and in millions, except per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Net sales $ 3,822.7 $ 2,945.2

5 unchanged sentences

Amortization of intangibles

Restructuring expenses

Bad debt expense 1.0 1.6

Income from operations 496.4 263.5

Interest expense, net

Other expense, net

Income before income taxes and equity in net earnings of affiliates 412.6 235.9

Income tax provision

Income before equity in net earnings of affiliates 301.6 164.4

Equity in net earnings of affiliates

Net income 319.2 177.6

Net loss attributable to noncontrolling interests — 0.1

Net income attributable to AGCO Corporation and subsidiaries $ 319.2 $ 177.7

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

$ 4.26 $ 2.38

$ 4.26 $ 2.37

Cash dividends declared and paid per common share $ 5.28 $ 4.72

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 OPERATIONS

(unaudited and in millions, except per share data)

Six Months Ended June 30,

Net sales $ 7,156.2 $ 5,630.9

Cost of goods sold 5,295.6 4,309.1

Gross profit 1,860.6 1,321.8

Operating expenses:

Selling, general and administrative expenses 679.6 573.6

Engineering expenses

Amortization of intangibles

Impairment charges — 36.0

9 unchanged sentences

Net income 551.8 314.6

Net income attributable to noncontrolling interests — 14.8

Net loss attributable to noncontrolling interests — 14.9

Net income attributable to AGCO Corporation and subsidiaries $ 551.8 $ 329.5

8 unchanged sentences

(unaudited and in millions)

Three Months Ended March 31,

Three Months Ended June 30,

Net income $ 319.2 $ 177.6

Other comprehensive income, net of reclassification adjustments:

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

Foreign currency translation adjustments 74.2 ( 124.5 )

1 unchanged sentence

Deferred gains and losses on derivatives, net of tax ( 4.5 ) ( 3.2 )

Other comprehensive income (loss), net of reclassification adjustments 71.6 ( 126.0 )

Comprehensive income 390.8 51.6

Comprehensive (income) loss attributable to noncontrolling interests — —

Comprehensive income attributable to AGCO Corporation and subsidiaries $ 390.8 $ 51.6

Six Months Ended June 30,

Net income $ 551.8 $ 314.6

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

Foreign currency translation adjustments 118.6 13.8

Defined benefit pension plans, net of tax 3.7 3.4

Deferred gains and losses on derivatives, net of tax ( 4.0 ) ( 6.5 )

Other comprehensive income, net of reclassification adjustments 118.3 10.7

Comprehensive income 670.1 325.3

Comprehensive income attributable to noncontrolling interests — 14.0

Comprehensive loss attributable to noncontrolling interests — 14.0

Comprehensive income attributable to AGCO Corporation and subsidiaries $ 670.1 $ 339.3

3 unchanged sentences

(unaudited and in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

21 unchanged sentences

Investments in unconsolidated affiliates ( 26.2 ) ( 1.5 )

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

Purchase of businesses, net, and net of cash acquired ( 0.9 ) ( 111.3 )

Other ( 3.9 ) —

6 unchanged sentences

Distributions to noncontrolling interest — ( 11.6 )

Payment of debt issuance costs — ( 0.2 )

Net cash provided by financing activities 334.5 546.1

12 unchanged sentences

Results for interim periods are not necessarily indicative of the results for the year.

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.

1 unchanged sentence

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.

For the six months ended and as of June 30, 2023, the Company's wholly-owned subsidiary in Turkey had net sales of approximately $ 221.7 million and total assets of approximately 3.7 billion Turkish lira (or approximately $ 141.4 million).

The monetary assets and liabilities denominated in the Turkish lira were approximately 3.0 billion Turkish lira (or approximately $ 117.0 million) and approximately 2.6 billion Turkish lira (or approximately $ 98.5 million), respectively, as of June 30, 2023.

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

The Turkish lira significantly depreciated during the month of June 2023, and as a result, the Company experienced and recorded foreign exchange losses during the second quarter of 2023 associated with the devaluation.

The Company is subject to the risk of the imposition of limitations by governments on international transfers of funds.

3 unchanged sentences

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.

The Company determined that the Argentina economy was highly inflationary during the third quarter of 2018.

For the six months ended and as of June 30, 2023, the Company's wholly-owned subsidiary in Argentina had net sales of approximately $ 93.6 million and total assets of approximately 44.4 billion pesos (or approximately $ 173.2 million).

The monetary assets of the Company's operations in Argentina denominated in pesos at the official government rate were approximately 14.9 billion pesos (or approximately $ 58.0 million), inclusive of approximately 7.5 billion pesos (or approximately $ 29.2 million) in cash and cash equivalents, as of June 30, 2023.

The monetary liabilities of the Company's operations in Argentina denominated in pesos at the official government rate were approximately 6.7 billion pesos (or approximately $ 28.4 million) as of June 30, 2023.

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.

The finance joint venture in Argentina has net monetary assets denominated in pesos at the official government rate of approximately 24.0 billion (or approximately $ 6.2 million) as of June 30, 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.

Recent Accounting Pronouncements

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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.

Early adoption was permitted.

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

1 unchanged sentence

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.

28 unchanged sentences

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):

Restructuring expenses activity during the three and six months ended June 30, 2023 is summarized as follows (in millions):

Employee Severance Other Related

Closure Costs Total

Balance as of December 31, 2022 $ 6.8 $ — $ 6.8

1 unchanged sentence

First quarter 2023 cash activity ( 1.0 ) — ( 1.0 )

Foreign currency translation — — —

Balance as of March 31, 2023 $ 7.2 — $ 7.2

Second quarter 2023 provision 4.1 2.0 6.1

Second quarter 2023 cash activity ( 1.7 ) — ( 1.7 )

Foreign currency translation ( 0.4 ) — ( 0.4 )

Balance as of June 30, 2023 $ 9.2 2.0 $ 11.2

Impairment Charges

2 unchanged sentences

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

Notes to Condensed Consolidated Financial Statements - Continued

STOCK COMPENSATION PLANS

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,

The Company recorded stock compensation expense as follows for the three and six months ended June 30, 2023 and 2022 (in millions):

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

2023 2022 2023 2022

Cost of goods sold $ 0.5 $ 0.3 $ 1.0 $ 0.6

3 unchanged sentences

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

As of March 31, 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.

As of June 30, 2023, of the 10,000,000 shares reserved for issuance under the Plan, 3,591,131 shares were available for grant, assuming the maximum performance level, or 200 %, and target, or 100 %, total shareholder return are achieved 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 (“RSUs”) and restricted stock awards to employees, officers and non-employee directors of the Company.

Long-Term Incentive Plan and Related Performance Awards

The weighted average grant-date fair value of performance awards granted under the Plan during the three months ended March 31, 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 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

Shares awarded 279,724

Shares forfeited ( 13,018 )

Shares vested —

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.

As of June 30, 2023, the Company had 806,222 performance shares outstanding with a weighted-average grant price of $ 128.93 per share, assuming the Company were to achieve its maximum level of performance, or 200 %, and that the total shareholder return modifier related to the 2023, 2022 and 2021 performances awards are achieved at target, or 100 %.

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 $ 56.3 million, and the weighted average period over which it is expected to be recognized is approximately two years .

Restricted Stock Unit 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.

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

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

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

RSUs awarded 100,835

RSUs forfeited ( 4,563 )

RSUs vested ( 96,176 )

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

During the six months ended June 30, 2023, 16,191 shares were issued related to RSUs previously granted in 2020 to certain executives, net of 11,277 shares withheld for taxes.

In addition, the shares issued included an adjustment of 25 % additional shares based on a total margin improvement metric relative to the Company’s defined peer group that was applicable to executive RSU grants made in 2020.

At June 30, 2023, 211,269 restricted stock units were outstanding with weighted-average grant price of $ 121.57 per share.

The total compensation cost related to unearned restricted stock units not yet recognized was approximately $ 20.4 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 (“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 .

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 98,259 SSARs outstanding as of June 30, 2023.

As of June 30, 2023, the total compensation cost related to the unvested SSARs not yet recognized was approximately $ 0.1 million, and the weighted average period over which it is expected to be recognized is approximately six months .

Director Restricted Stock Grants

1 unchanged sentence

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 in April 2023 associated with these grants.

The Company recorded stock compensation expense of approximately $ 1.5 million during the six months ended June 30, 2023 associated with these grants.

Notes to Condensed Consolidated Financial Statements - Continued

GOODWILL AND OTHER INTANGIBLE ASSETS

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

Changes in the carrying amount of goodwill during the six months ended June 30, 2023 are summarized as follows (in millions):

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

1 unchanged sentence

Foreign currency translation 0.9 8.2 8.8 ( 1.7 ) 16.2

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

Balance as of June 30, 2023 $ 668.2 $ 94.2 $ 453.1 $ 111.5 $ 1,327.0

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

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

Notes to Condensed Consolidated Financial Statements - Continued

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

Changes in the carrying amount of acquired intangible assets during the six months ended June 30, 2023 are summarized as follows (in millions):

Gross carrying amounts:

2 unchanged sentences

Foreign currency translation 1.7 4.3 1.8 ( 0.3 ) 7.5

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

Balance as of June 30, 2023 $ 193.5 $ 578.8 $ 152.4 $ 6.2 $ 930.9

Accumulated amortization:

3 unchanged sentences

Foreign currency translation 0.8 4.1 1.1 ( 0.2 ) 5.8

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

Balance as of June 30, 2023 $ 109.1 $ 463.3 $ 108.0 $ 1.5 $ 681.9

Indefinite-lived intangible assets:

2 unchanged sentences

Foreign currency translation 0.6

Balance as of March 31, 2023 $ 85.4

Balance as of June 30, 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

External-use software, net, developed by the Company and marketed externally, was approximately $ 6.6 million as of June 30, 2023 and classified within “Intangible assets, net.” Amortization costs of external-use software were approximately $ 1.1 million for the six months ended June 30, 2023 and were classified within “Cost of goods sold.”

Notes to Condensed Consolidated Financial Statements - Continued

Long-term debt consisted of the following at June 30, 2023 and December 31, 2022 (in millions):

June 30, 2023 December 31, 2022

Credit facility, expires 2027 $ 927.9 $ 200.0

11 unchanged sentences

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.

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 matured on March 31, 2023.

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

5 unchanged sentences

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.

As of June 30, 2023, the Company had $ 927.9 million outstanding borrowings under the revolving credit facility and had the ability to borrow $ 322.1 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 $ 108.9 million as of March 31, 2023).

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 $ 109.2 million as of June 30, 2023).

The credit facility expires on December 31, 2026.

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).

As of June 30, 2023, the Company had no outstanding borrowings under the revolving credit facility.

0.800 % Senior Notes Due 2028

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 %.

On October 6, 2021, the Company issued € 600.0 million (or approximately $ 655.0 million as of June 30, 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 %.

2 unchanged sentences

1.002 % Senior Term Loan Due 2025

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.

On January 25, 2019, the Company borrowed € 250.0 million (or approximately $ 272.9 million as of June 30, 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

2 unchanged sentences

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.

In aggregate, as of June 30, 2023, the Company had indebtedness of € 319.5 million (or approximately $ 348.8 million as of June 30, 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 $ 188.8 million net of debt issuance costs, as of June 30, 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 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.

As of June 30, 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.

On August 1, 2023, the Company repaid its 2018 senior term loan due August 2023 of € 99.5 million (or approximately $ 109.2 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.

As of June 30, 2023 and December 31, 2022, the Company had short-term borrowings due within one year of approximately $ 56.0 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

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.

At June 30, 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 $ 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

The Company had recorded approximately $ 109.3 million and $ 94.6 million, respectively, of VAT tax credits, net of reserves, as of June 30, 2023 and December 31, 2022.

Inventories at June 30, 2023 and December 31, 2022 were as follows (in millions):

June 30, 2023 December 31, 2022

Finished goods $ 1,458.0 $ 994.9

3 unchanged sentences

Inventories, net $ 3,829.9 $ 3,189.7

Notes to Condensed Consolidated Financial Statements - Continued

PRODUCT WARRANTY

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,

The warranty reserve activity for the three and six months ended June 30, 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 June 30, Six Months Ended June 30,

2023 2022 2023 2022

Balance at beginning of period $ 677.0 $ 614.5 $ 640.0 $ 592.5

2 unchanged sentences

Foreign currency translation 5.8 ( 36.9 ) 17.6 ( 40.5 )

Balance at March 31 $ 677.0 $ 614.5

Balance at June 30 $ 727.2 $ 589.5 $ 727.2 $ 589.5

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 $ 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.

Approximately $ 613.6 million, $ 546.0 million and $ 499.8 million of warranty reserves are included in “Accrued expenses” in the Company’s Condensed Consolidated Balance Sheets as of June 30, 2023, December 31, 2022 and June 30, 2022, respectively.

Approximately $ 113.6 million, $ 94.0 million and $ 89.7 million of warranty reserves are included in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets as of June 30, 2023, December 31, 2022, and June 30, 2022, respectively.

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

When specifics of the recovery have been agreed upon with the Company’s suppliers through the confirmation of liability for the recovery, the Company records the recovery within “Accounts and notes receivable, net.” Estimates of the amount of warranty claim recoveries to be received from the Company’s suppliers based upon contractual supplier arrangements are recorded within “Other current assets.”

Notes to Condensed Consolidated Financial Statements - Continued

SUPPLIER FINANCE PROGRAMS

6 unchanged sentences

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.

As of June 30, 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.

As of June 30, 2023, and December 31, 2022, the amount outstanding that remains unpaid to the banks or other intermediaries totaled $ 93.8 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

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during each period.

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 months ended March 31, 2023 and 2022 is as follows (in millions, except per share data):

Three Months Ended March 31,

Diluted net income per common share assumes the exercise of outstanding SSARs and the vesting of performance share awards and RSUs, when applicable, 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.

Notes to Condensed Consolidated Financial Statements - Continued

A reconciliation of net income attributable to AGCO Corporation and subsidiaries and weighted average common shares outstanding for purposes of calculating basic and diluted net income per share for the three and six months ended June 30, 2023 and 2022 is as follows (in millions, except per share data):

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

2023 2022 2023 2022

Basic net income per share:

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Diluted net income per share attributable to AGCO Corporation and subsidiaries $ 4.26 $ 2.37 $ 7.36 $ 4.40

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.

There were no SSARs outstanding for the three and six months ended June 30, 2023 and 2022 that had an antidilutive impact.

At June 30, 2023 and December 31, 2022, the Company had approximately $ 321.3 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 June 30, 2023 and December 31, 2022 exclude certain indirect favorable effects that relate to other tax jurisdictions of approximately $ 89.2 million and $ 74.0 million, respectively.

In addition, the gross unrecognized income tax benefits as of June 30, 2023 and December 31, 2022 exclude certain deposits made in a foreign jurisdiction of approximately $ 46.0 million and $ 45.1 million, respectively, associated with an ongoing audit.

At June 30, 2023 and December 31, 2022, the Company had approximately $ 25.6 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 Company’s Condensed Consolidated Balance Sheets.

At June 30, 2023 and December 31, 2022, the Company had approximately $ 298.7 million and $ 274.1 million, respectively, of accrued taxes reflected in “Other noncurrent liabilities”, and approximately $ 3.0 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 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.

At June 30, 2023 and December 31, 2022, the Company had accrued interest and penalties related to unrecognized tax benefits of approximately $ 27.8 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 March 31, 2023, a number of income tax examinations in foreign jurisdictions are ongoing.

As of June 30, 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.

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

Notes to Condensed Consolidated Financial Statements - Continued

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 amount of the tax disallowance through June 30, 2023, not including interest and penalties, would have been approximately 131.5 million Brazilian reais (or approximately $ 27.3 million).

The amount ultimately in dispute would have been 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 Company has been contesting the disallowance and historically has 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.

Enrollment in the amnesty program would not be considered an admission of guilt with respect to outstanding cases.

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

After weighing various impacts involved with enrollment, including the avoidance of potential interest, penalties and legal costs, the Company concluded that it would 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 182.6 million Brazilian reais (or approximately $ 34.8 million) within “Income tax provision” for the six months ended June 30, 2023, net of associated U.S.

income tax credits of approximately $ 8.4 million.

The Company has paid installment payments of 102.7 million Brazilian reais (or approximately $ 20.3 million) during the six months ended June 30, 2023 related to the program and expects to pay the remaining balance totaling approximately $ 16.8 million, inclusive of approximately $ 2.3 million of positive currency translation, through October 2023.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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

Notes to Condensed Consolidated Financial Statements - Continued

The total notional value of derivatives that were designated as cash flow hedges was approximately $ 392.9 million and $ 364.8 million as of June 30, 2023 and December 31, 2022, respectively.

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 $ 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):

The total notional value of derivatives that were designated as cash flow hedges was approximately $ 2.6 million and $ 0.9 million as of June 30, 2023 and December 31, 2022, respectively.

Notes to Condensed Consolidated Financial Statements - Continued

The following tables summarize the after-tax impact that changes in the fair value of derivatives designated as cash flow hedges had on accumulated other comprehensive loss and net income during the three and six months ended June 30, 2023 and 2022 (in millions):

Recognized in Net Income

Three Months Ended March 31, 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)

Three Months Ended June 30, Loss Recognized in Accumulated

Other Comprehensive Loss Classification of Loss Loss Reclassified from Accumulated

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

Foreign currency contracts (1)

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Total $ ( 7.2 ) $ ( 4.0 )

Recognized in Net Income

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

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

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

Foreign currency contracts (1)

$ ( 6.9 ) Cost of goods sold $ ( 2.6 ) $ 5,295.6

Commodity contracts (2)

0.2 Cost of goods sold ( 0.1 ) $ 5,295.6

Total $ ( 6.7 ) $ ( 2.7 )

Foreign currency contracts $ ( 6.5 ) Cost of goods sold ( 2.0 ) $ 4,309.1

Commodity contracts ( 3.1 ) Cost of goods sold ( 1.1 ) $ 4,309.1

Total $ ( 9.6 ) $ ( 3.1 )

____________________________________

(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):

(1) The outstanding contracts as of June 30, 2023 range in maturity through December 2023.

(2) The outstanding contracts as of June 30, 2023 range in maturity through October 2023.

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 June 30, 2023 (in millions):

Before-Tax Amount Income Tax After-Tax Amount

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

Net changes in fair value of derivatives ( 7.9 ) ( 2.2 ) ( 5.7 )

Net losses reclassified from accumulated other comprehensive loss into income 1.8 0.6 1.2

Accumulated derivative net losses as of June 30, 2023 $ ( 6.7 ) $ ( 1.8 ) $ ( 4.9 )

The following table summarizes the activity in accumulated other comprehensive loss related to the derivatives held by the Company during the six months ended June 30, 2023 (in millions):

Before-Tax Amount Income Tax After-Tax Amount

Accumulated derivative net losses as of December 31, 2022 $ ( 1.0 ) $ ( 0.1 ) $ ( 0.9 )

1 unchanged sentence

Net losses reclassified from accumulated other comprehensive loss into income 3.6 0.9 2.7

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.

Accumulated derivative net losses as of June 30, 2023 $ ( 6.7 ) $ ( 1.8 ) $ ( 4.9 )

As of June 30, 2023, approximately $ 1.3 million of derivative realized net losses and $ 0.4 million of derivative realized net gains, before taxes, remain in accumulated other comprehensive loss related to foreign currency contracts and commodity contracts, respectively, associated with inventory that had not yet been sold.

Net Investment Hedges

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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

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.

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.

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 $ 270.0 million as of March 31, 2023) 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 $ 270.6 million as of June 30, 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.

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):

During the six months ended June 30, 2023, the Company designated € 150.0 million (or approximately $ 163.7 million as of June 30, 2023) of its multi-currency revolving credit facility maturing December 2027 as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment.

Notes to Condensed Consolidated Financial Statements - Continued

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

Notional Amount as of

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Cross currency swap contract $ 300.0 $ 300.0

Foreign currency denominated debt 163.7 —

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

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 six months ended June 30, 2023 and 2022 (in millions):

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

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

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

March 31, 2022 4.2 ( 1.1 ) 3.1 — — —

June 30, 2023 $ ( 5.7 ) $ 1.5 $ ( 4.2 ) $ ( 6.7 ) $ 1.7 $ ( 5.0 )

June 30, 2022 16.6 ( 4.3 ) 12.3 20.8 ( 5.4 ) 15.4

The following table summarizes the changes in the fair value of foreign currency denominated debt designated as a net investment hedge during the three and six months ended June 30, 2023 and 2022 (in millions):

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

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

June 30, 2023 $ 0.4 $ ( 0.3 ) $ 0.1 $ 1.3 $ ( 0.3 ) $ 1.0

June 30, 2022 — — — — — —

Derivative Transactions Not Designated as Hedging Instruments

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

As of March 31, 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.

As of June 30, 2023 and December 31, 2022, the Company had outstanding foreign currency contracts with a notional amount of approximately $ 4.1 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):

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

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

Classification of Gain (Loss)

March 31, 2023 March 31, 2022

June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022

Foreign currency contracts Other expense, net $ 37.9 $ 0.4 $ 49.1 $ ( 13.4 )

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):

The table below sets forth the fair value of derivative instruments as of June 30, 2023 (in millions):

Asset Derivatives as of

March 31, 2023 Liability Derivatives as of

March 31, 2023

June 30, 2023 Liability Derivatives as of

June 30, 2023

Balance Sheet Location Fair Value Balance Sheet Location Fair Value

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__________________________________

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

(1) The outstanding contracts as of June 30, 2023 range in maturity through September 2023.

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

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CHANGES IN STOCKHOLDERS’ EQUITY

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

The following tables set forth changes in stockholders’ equity attributed to AGCO Corporation and its subsidiaries and to noncontrolling interests for the three and six months ended June 30, 2023 and 2022 (in millions):

Stock Additional

3 unchanged sentences

Interests Total Stockholders’

Balance, December 31, 2022 $ 0.7 $ 30.2 $ 5,654.6 $ ( 1,803.1 ) $ 0.2 $ 3,882.6

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

Stock compensation — 13.3 — — — 13.3

11 unchanged sentences

Payment of dividends to stockholders — — ( 396.1 ) — — ( 396.1 )

Balance, June 30, 2023 $ 0.7 $ 36.1 $ 5,786.8 $ ( 1,684.8 ) $ 0.2 $ 4,139.0

Stock Additional

Paid-in Capital Retained

Earnings Accumulated Other

Comprehensive Loss Noncontrolling

Interests Total Stockholders’

Balance, December 31, 2022 $ 0.7 $ 30.2 $ 5,654.6 $ ( 1,803.1 ) $ 0.2 $ 3,882.6

Stock compensation — 27.3 — — — 27.3

Issuance of stock awards — ( 20.2 ) — — — ( 20.2 )

SSARs exercised — ( 1.2 ) — — — ( 1.2 )

Comprehensive income:

Net income — — 551.8 — — 551.8

Other comprehensive income, net of reclassification adjustments:

Foreign currency translation adjustments — — — 118.6 — 118.6

Defined benefit pension plans, net of tax — — — 3.7 — 3.7

Deferred gains and losses on derivatives, net of tax — — — ( 4.0 ) — ( 4.0 )

Payment of dividends to stockholders — — ( 414.1 ) — — ( 414.1 )

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

Balance, June 30, 2023 $ 0.7 $ 36.1 $ 5,786.8 $ ( 1,684.8 ) $ 0.2 $ 4,139.0

Notes to Condensed Consolidated Financial Statements - Continued

Stock Additional

Paid-in Capital Retained

Earnings Accumulated Other

Comprehensive Loss Noncontrolling

Interests Total Stockholders’

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

Stock compensation — 10.6 — — — 10.6

Issuance of stock awards

— ( 0.2 ) — — — ( 0.2 )

Comprehensive income:

Net income (loss) — — 177.7 — ( 0.1 ) 177.6

Other comprehensive loss, net of reclassification adjustments:

Foreign currency translation adjustments

— — — ( 124.6 ) 0.1 ( 124.5 )

Defined benefit pension plans, net of tax

— — — 1.7 — 1.7

Deferred gains and losses on derivatives, net of tax

— — — ( 3.2 ) — ( 3.2 )

Payment of dividends to stockholders

— — ( 353.6 ) — — ( 353.6 )

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

Stock Additional

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Comprehensive income:

Net income — — 151.8 — ( 14.8 ) 137.0

Net income (loss) — — 329.5 — ( 14.9 ) 314.6

Other comprehensive income, net of reclassification adjustments:

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

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

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

Notes to Condensed Consolidated Financial Statements - Continued

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,

Total comprehensive income (loss) attributable to noncontrolling interests for the three and six months ended June 30, 2023 and 2022 was as follows (in millions):

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

2023 2022 2023 2022

Net income (loss) $ — $ ( 0.1 ) $ — $ ( 14.9 )

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 three months ended March 31, 2023 (in millions):

The following table sets forth changes in accumulated other comprehensive loss by component, net of tax, attributed to AGCO Corporation and its subsidiaries for the six months ended June 30, 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 income (loss) before reclassifications — ( 1.0 ) 44.4 43.4

Other comprehensive (loss) income before reclassifications — ( 6.7 ) 118.6 111.9

Net losses reclassified from accumulated other comprehensive loss 3.7 2.7 — 6.4

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

Accumulated other comprehensive loss, March 31, 2023

Other comprehensive income (loss), net of reclassification adjustments 3.7 ( 4.0 ) 118.6 118.3

Accumulated other comprehensive loss, June 30, 2023

$ ( 227.5 ) $ ( 4.9 ) $ ( 1,452.4 ) $ ( 1,684.8 )

The following table sets forth reclassification adjustments out of accumulated other comprehensive loss by component attributed to AGCO Corporation and its subsidiaries for the three months ended March 31, 2023 and 2022 (in millions):

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 and six months ended June 30, 2023 and 2022 (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 March 31, 2023 (1)

Three Months Ended March 31, 2022 (1)

Details about Accumulated Other Comprehensive Loss Components Three Months Ended June 30, 2023 (1)

Three Months Ended June 30, 2022 (1)

Net losses on foreign currency contracts $ 1.3 $ 2.6 Cost of goods sold

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

Net losses on commodity contracts 0.5 2.8 Cost of goods sold

Reclassification before tax 1.8 5.4

9 unchanged sentences

__________________________________

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

(1) Losses included within the Condensed Consolidated Statements of Operations for the three months ended June 30, 2023 and 2022, respectively.

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

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements - Continued

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

Statements of Operations

Details about Accumulated Other Comprehensive Loss Components Six Months Ended June 30, 2023 (1)

Six Months Ended June 30, 2022 (1)

Net losses on foreign currency contracts $ 3.5 $ 2.7 Cost of goods sold

Net losses on commodity contracts 0.1 1.5 Cost of goods sold

Reclassification before tax 3.6 4.2

( 0.9 ) ( 1.1 ) Income tax provision

Reclassification net of tax $ 2.7 $ 3.1

Defined benefit pension plans:

Amortization of net actuarial losses $ 4.2 $ 4.4 Other expense, net (2)

Amortization of prior service cost 0.8 0.2 Other expense, net (2)

Reclassification before tax 5.0 4.6

( 1.3 ) ( 1.2 ) Income tax provision

Reclassification net of tax $ 3.7 $ 3.4

Net losses reclassified from accumulated other comprehensive loss $ 6.4 $ 6.5

__________________________________

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

Share Repurchase Program

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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 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.

During the three and six months ended June 30, 2023, the Company did not purchase any shares directly or enter into any accelerated share repurchase agreements.

As of June 30, 2023, the remaining amount authorized to be repurchased under board-approved share repurchase authorizations was approximately $ 110.0 million, which has no expiration date.

ACCOUNTS RECEIVABLE SALES AGREEMENTS

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

As of March 31, 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.

As of June 30, 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 $ 1.9 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.

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

Notes to Condensed Consolidated Financial Statements - Continued

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.

2 unchanged sentences

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

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.

As of June 30, 2023 and December 31, 2022, the cash received from these arrangements was approximately $ 227.4 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 $ 30.3 million and $ 58.8 million during the three and six months ended June 30, 2023, respectively.

Losses on sales of receivables associated with the accounts receivable financing facilities discussed above, reflected within “Other expense, net” in the Company’s Condensed Consolidated Statements of Operations, were approximately $ 10.2 million and $ 18.1 million, respectively, during the three and six ended June 30, 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 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.

As of June 30, 2023 and December 31, 2022, these finance joint ventures had approximately $ 130.0 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

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.

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.

PENSION AND POSTRETIREMENT BENEFIT PLANS

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

Three Months Ended March 31,

Net periodic pension and postretirement benefit cost for the Company’s defined pension and postretirement benefit plans for the three and six months ended June 30, 2023 and 2022 are set forth below (in millions):

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

Pension benefits 2023 2022 2023 2022

5 unchanged sentences

Net periodic pension cost $ 4.9 $ 4.9 $ 9.6 $ 9.9

Three Months Ended March 31,

Notes to Condensed Consolidated Financial Statements - Continued

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

Postretirement benefits 2023 2022 2023 2022

4 unchanged sentences

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

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

The following table summarizes the activity in accumulated other comprehensive loss related to the Company's defined pension and postretirement benefit plans during the six months ended June 30, 2023 (in millions):

Before-Tax Amount Income Tax After-Tax Amount

2 unchanged sentences

Amortization of net actuarial losses 4.2 1.1 3.1

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.

Accumulated other comprehensive loss as of June 30, 2023 $ ( 299.4 ) $ ( 71.9 ) $ ( 227.5 )

During the six months ended June 30, 2023, the Company made approximately $ 18.3 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 $ 34.3 million.

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.

During the six months ended June 30, 2023, the Company made approximately $ 0.8 million of contributions to its postretirement health care and life insurance benefit plans.

The Company currently estimates that it will make approximately $ 1.7 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 March 31, 2023 and December 31, 2022 are summarized below (in millions):

As of March 31, 2023

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 are summarized below (in millions):

As of June 30, 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 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).

At June 30, 2023, the estimated fair value of the Company's 0.800 % senior notes due 2028, based on listed market values, was approximately € 500.6 million (or approximately $ 546.4 million as of June 30, 2023), compared to the carrying value of € 600.0 million (or approximately $ 655.0 million as of June 30, 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 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

Segment results for the three and six months ended June 30, 2023 and 2022 and assets as of June 30, 2023 and December 31, 2022 based on the Company’s reportable segments are as follows (in millions):

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

Net sales $ 996.8 $ 598.6 $ 1,990.8 $ 236.5 $ 3,822.7

6 unchanged sentences

Capital expenditures 15.2 11.2 42.5 4.0 72.9

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

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

Net sales $ 1,919.9 $ 1,102.4 $ 3,694.6 $ 439.3 $ 7,156.2

Income from operations 239.0 220.9 534.6 39.0 1,033.5

Depreciation 30.1 16.7 54.5 8.8 110.1

Capital expenditures 71.7 33.8 129.8 1.7 237.0

Net sales $ 1,440.9 $ 875.6 $ 2,870.7 $ 443.7 $ 5,630.9

Income from operations 105.5 131.6 323.5 64.7 625.3

Depreciation 30.2 14.6 53.5 8.2 106.5

Capital expenditures 30.9 21.2 81.7 5.4 139.2

As of June 30, 2023 $ 1,990.5 $ 1,577.4 $ 3,039.6 $ 847.1 $ 7,454.6

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 March 31,

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

2023 2022 2023 2022

Segment income from operations $ 574.4 $ 328.1 $ 1,033.5 $ 625.3

5 unchanged sentences

Consolidated income from operations $ 496.4 $ 263.5 $ 883.7 $ 467.5

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Segment assets $ 7,454.6 $ 6,176.2

7 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Off-Balance Sheet Arrangements

The Company maintains a remarketing agreement with its U.S.

finance joint venture, AGCO Finance LLC, whereby the Company is obligated to repurchase up to $ 6.0 million of repossessed equipment each calendar year.

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

At March 31, 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.

Losses under such guarantees historically have been insignificant.

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

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

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

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

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.

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

Lease payment amounts for operating and finance leases with remaining terms greater than one year as of June 30, 2023 and December 31, 2022 were as follows (in millions):

June 30, 2023 December 31, 2022

Operating Leases (1)

14 unchanged sentences

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

At March 31, 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

Off-Balance Sheet Arrangements

The Company maintains a remarketing agreement with its U.S.

finance joint venture, AGCO Finance LLC, whereby the Company is obligated to repurchase up to $ 6.0 million of repossessed equipment each calendar year.

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 June 30, 2023, the Company had outstanding guarantees of indebtedness owed to related and third parties of approximately $ 33.1 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.

Losses under such guarantees historically have been insignificant.

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

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

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

In addition, at June 30, 2023, the Company had accrued approximately $ 15.4 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 $ 187.0 million.

At June 30, 2023, the Company had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $ 4,474.4 million.

The outstanding contracts as of June 30, 2023 range in maturity through December 2023.

The Company also had outstanding designated steel commodity contracts with a gross notional amount of approximately $ 2.6 million that range in maturity through October 2023.

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.

3 unchanged sentences

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.

See Note 12 for the discussion of the Company's resolution of the disputed deductions under a tax amnesty program.

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.

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.

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 with the U.S.

Court of Appeals for the Federal Circuit.

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

6 unchanged sentences

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

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

Three Months Ended March 31,

Significant changes in the balance of contract liabilities for the three and six months ended June 30, 2023 and 2022 were as follows (in millions):

Three Months Ended June 30,

Balance at beginning of period $ 259.6 $ 232.4

3 unchanged sentences

Foreign currency translation 1.7 ( 11.9 )

Balance at March 31 $ 259.6 $ 232.4

Balance at June 30 $ 274.6 $ 217.7

Six Months Ended June 30,

Balance at beginning of period $ 239.0 $ 226.2

Advance consideration received 116.5 74.5

Revenue recognized during the period for extended warranty contracts, maintenance services and technology services ( 51.7 ) ( 39.0 )

Revenue recognized during the period related to grain storage and protein production systems ( 33.9 ) ( 28.5 )

Foreign currency translation 4.7 ( 15.5 )

Balance at June 30 $ 274.6 $ 217.7

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

During the three 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.

During the three and six months ended June 30, 2023, the Company recognized approximately $ 34.3 million and $ 70.0 million of revenue that was recorded as a contract liability at the beginning of 2023.

During the three and six months ended June 30, 2022, the Company recognized approximately $ 28.3 million and $ 52.4 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 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 estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2023 are $ 85.2 million for the remainder of 2023, $ 83.3 million in 2024, $ 51.9 million in 2025, $ 25.5 million in 2026 and $ 14.2 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.

1 unchanged sentence

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):

Net sales for the three months ended June 30, 2023 disaggregated by primary geographical markets and major products consisted of the following (in millions):

North America South America (1)

Europe/Middle East (1)

Asia/Pacific/Africa Consolidated

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

Primary geographical markets:

24 unchanged sentences

Notes to Condensed Consolidated Financial Statements - Continued

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

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

North America South America Europe/Middle East (1)

25 unchanged sentences

(1) Rounding may impact the summation of amounts.

Notes to Condensed Consolidated Financial Statements - Continued

Net sales for the six months ended June 30, 2023 disaggregated by primary geographical markets and major products consisted of the following (in millions):

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

Primary geographical markets:

United States $ 1,531.8 $ — $ — $ — $ 1,531.8

Canada 312.6 — — — 312.6

Brazil — 937.5 — — 937.5

Other South America — 157.1 — — 157.1

Germany — — 848.6 — 848.6

France — — 675.1 — 675.1

United Kingdom and Ireland — — 347.8 — 347.8

Finland and Scandinavia — — 405.9 — 405.9

Italy — — 233.8 — 233.8

Other Europe — — 957.0 — 957.0

Middle East and Algeria — — 226.4 — 226.4

Africa — — — 65.5 65.5

Asia — — — 188.8 188.8

Australia and New Zealand — — — 185.0 185.0

Mexico, Central America and Caribbean 75.5 7.8 — — 83.3

$ 1,919.9 $ 1,102.4 $ 3,694.6 $ 439.3 $ 7,156.2

Major products:

Tractors $ 647.5 $ 654.6 $ 2,599.0 $ 239.1 $ 4,140.2

Replacement parts 232.0 82.3 582.3 50.8 947.4

Grain storage and protein production systems 336.3 79.6 83.8 69.2 568.9

Combines, application equipment and other machinery 704.1 285.9 429.5 80.2 1,499.7

$ 1,919.9 $ 1,102.4 $ 3,694.6 $ 439.3 $ 7,156.2

Notes to Condensed Consolidated Financial Statements - Continued

Net sales for the six months ended June 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 Consolidated

Primary geographical markets:

United States $ 1,153.7 $ — $ — $ — $ 1,153.7

Canada 226.9 — — — 226.9

Brazil — 697.1 — — 697.1

Other South America — 171.3 — — 171.3

Germany — — 605.3 — 605.3

France — — 529.2 — 529.2

United Kingdom and Ireland — — 303.2 — 303.2

Finland and Scandinavia — — 393.1 — 393.1

Italy — — 175.2 — 175.2

Other Europe — — 784.7 — 784.7

Middle East and Algeria — — 80.0 — 80.0

Africa — — — 70.5 70.5

Asia — — — 201.9 201.9

Australia and New Zealand — — — 171.3 171.3

Mexico, Central America and Caribbean 60.3 7.2 — — 67.5

$ 1,440.9 $ 875.6 $ 2,870.7 $ 443.7 $ 5,630.9

Major products:

Tractors $ 515.3 $ 497.9 $ 1,891.6 $ 237.8 $ 3,142.6

Replacement parts 214.1 74.8 556.8 49.8 895.5

Grain storage and protein production systems 286.7 81.6 77.0 81.1 526.4

Combines, application equipment and other machinery 424.9 221.3 345.2 75.0 1,066.4

$ 1,440.9 $ 875.6 $ 2,870.7 $ 443.7 $ 5,630.9

____________________________________

(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