10-Q 1 agco-20240331.htm 10-Q agco-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________

Commission File Number: 001-12930
AGCO CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware58-1960019
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
4205 River Green Parkway
Duluth,Georgia30096
(Address of principal executive offices)
(Zip Code)
(770) 813-9200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
Title of ClassTrading SymbolName of exchange on which registered
Common stockAGCONew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of April 30, 2024, there were 74,619,501 shares of the registrant’s common stock, par value of $0.01 per share, outstanding.



AGCO CORPORATION
INDEX
  Page
Numbers
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.


PART I.        FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

AGCO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in millions, except share amounts)
March 31, 2024December 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents$2,455.8 $595.5 
Accounts and notes receivable, net1,542.2 1,605.3 
Inventories, net3,781.9 3,440.7 
Other current assets594.2 699.3 
Total current assets8,374.1 6,340.8 
Property, plant and equipment, net1,886.7 1,920.9 
Right-of-use lease assets175.0 176.2 
Investments in affiliates520.5 512.7 
Deferred tax assets489.8 481.6 
Other assets396.4 346.8 
Intangible assets, net291.6 308.8 
Goodwill1,325.8 1,333.4 
Total assets$13,459.9 $11,421.2 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Borrowings due within one year$300.4 $15.0 
Accounts payable1,238.0 1,207.3 
Accrued expenses2,489.2 2,903.8 
Other current liabilities185.6 217.5 
Total current liabilities4,213.2 4,343.6 
Long-term debt, less current portion and debt issuance costs3,425.7 1,377.2 
Operating lease liabilities133.0 134.4 
Pension and postretirement health care benefits167.9 170.5 
Deferred tax liabilities119.5 122.6 
Other noncurrent liabilities645.4 616.1 
Total liabilities8,704.7 6,764.4 
Commitments and contingencies (Note 16)
Stockholders’ Equity:
AGCO Corporation stockholders’ equity:
Preferred stock; $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding in 2024 and 2023
  
Common stock; $0.01 par value, 150,000,000 shares authorized, 74,618,984 and 74,517,973 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
0.7 0.7 
Additional paid-in capital 4.1 
Retained earnings6,505.9 6,360.0 
Accumulated other comprehensive loss(1,751.5)(1,708.1)
Total AGCO Corporation stockholders’ equity4,755.1 4,656.7 
Noncontrolling interests0.1 0.1 
Total stockholders’ equity4,755.2 4,656.8 
Total liabilities and stockholders’ equity$13,459.9 $11,421.2 
See accompanying notes to condensed consolidated financial statements.
3

AGCO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in millions, except per share data)
Three Months Ended March 31,
20242023
Net sales$2,928.7 $3,333.5 
Cost of goods sold2,158.9 2,478.6 
Gross profit769.8 854.9 
Operating expenses:
     Selling, general and administrative expenses350.4 331.8 
Engineering expenses
130.9 119.6 
Amortization of intangibles
13.9 14.8 
Restructuring expenses
1.0 1.4 
Income from operations273.6 387.3 
Interest expense, net
1.9 0.5 
Other expense, net
50.8 50.4 
Income before income taxes and equity in net earnings of affiliates220.9 336.4 
Income tax provision
69.1 120.2 
Income before equity in net earnings of affiliates151.8 216.2 
Equity in net earnings of affiliates
16.2 16.4 
Net income168.0 232.6 
Net loss attributable to noncontrolling interests  
Net income attributable to AGCO Corporation and subsidiaries$168.0 $232.6 
Net income per common share attributable to AGCO Corporation and subsidiaries:
Basic
$2.25 $3.11 
Diluted
$2.25 $3.10 
Cash dividends declared and paid per common share$0.29 $0.24 
Weighted average number of common and common equivalent shares outstanding:
Basic
74.6 74.9 
Diluted
74.7 75.0 
See accompanying notes to condensed consolidated financial statements.
4


AGCO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited and in millions)
Three Months Ended March 31,
20242023
Net income$168.0 $232.6 
Other comprehensive (loss) income:
Foreign currency translation adjustments(52.0)44.4 
Defined benefit pension plans, net of tax1.7 1.8 
Deferred gains and losses on derivatives, net of tax6.9 0.5 
Other comprehensive (loss) income
(43.4)46.7 
Comprehensive income124.6 279.3 
Comprehensive loss attributable to noncontrolling interests
  
Comprehensive income attributable to AGCO Corporation and subsidiaries$124.6 $279.3 
See accompanying notes to condensed consolidated financial statements.
5

AGCO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
Three Months Ended March 31,
20242023
Cash flows from operating activities:
Net income $168.0 $232.6 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation63.3 53.6 
Amortization of intangibles13.9 14.8 
Stock compensation expense8.4 14.0 
Equity in net earnings of affiliates, net of cash received(16.2)(16.4)
Deferred income tax benefit
(7.3)(3.9)
Other17.7 2.4 
Changes in operating assets and liabilities:
Accounts and notes receivable, net24.1 (298.1)
Inventories, net(420.1)(402.6)
Other current and noncurrent assets16.8 (69.9)
Accounts payable74.2 39.2 
Accrued expenses(358.2)(155.9)
Other current and noncurrent liabilities45.4 33.1 
Total adjustments(538.0)(789.7)
Net cash used in operating activities
(370.0)(557.1)
Cash flows from investing activities:
Purchases of property, plant and equipment(95.0)(125.3)
Proceeds from sale of property, plant and equipment0.2 0.1 
Purchase of businesses, net of cash acquired
 (0.9)
Investments in unconsolidated affiliates, net
 (0.1)
Other (2.6)
Net cash used in investing activities(94.8)(128.8)
Cash flows from financing activities:
Proceeds from indebtedness2,380.6 501.7 
Repayments of indebtedness(0.4)(4.4)
Payment of dividends to stockholders (21.6)(18.0)
Payment of minimum tax withholdings on stock compensation(9.7)(17.7)
Payment of debt issuance costs(11.9) 
Net cash provided by financing activities2,337.0 461.6 
Effects of exchange rate changes on cash, cash equivalents and restricted cash(11.9)(6.5)
Increase (decrease) in cash, cash equivalents and restricted cash
1,860.3 (230.8)
Cash, cash equivalents and restricted cash, beginning of period595.5 789.5 
Cash, cash equivalents and restricted cash, end of period$2,455.8 $558.7 
See accompanying notes to condensed consolidated financial statements.
6

AGCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.    BASIS OF PRESENTATION

    The condensed consolidated financial statements of AGCO Corporation and its subsidiaries (the “Company” or “AGCO”) included herein have been prepared in accordance with United States generally accepted accounting principles (“U.S. 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 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, 2023. Results for interim periods are not necessarily indicative of the results for the year. Certain prior-period amounts have been reclassified in the accompanying condensed consolidated financial statements and notes thereto in order to conform to the current period presentation.

    The Company has a wholly-owned subsidiary in Turkey that distributes agricultural equipment and replacement parts. On the basis of 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 during 2022. 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 subsidiaries operating in highly inflationary economies, the United States dollar is the functional currency. Remeasurement adjustments for financial statements in highly inflationary economies and other transactional exchange gains and losses are reported in "Other expense, net" within the Company's Condensed Consolidated Statements of Operations. For the three months ended and as of March 31, 2024, the Company's wholly-owned subsidiary in Turkey had net sales of approximately $156.3 million and total assets of approximately 7.3 billion Turkish lira (or approximately $225.7 million). The monetary assets and liabilities denominated in the Turkish lira were approximately 6.5 billion Turkish lira (or approximately $201.5 million) and approximately 5.6 billion Turkish lira (or approximately $172.3 million), respectively, as of March 31, 2024. The monetary assets and liabilities were remeasured into United States dollar based on exchange rates as of March 31, 2024.

    The Company has a wholly-owned subsidiary in Argentina that assembles and distributes agricultural equipment and replacement parts. 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 from certain capital market operations, usually effected to obtain United States dollars, has broadened significantly. Argentina's economy was determined to be highly inflationary during 2018. In December 2023, the central bank of Argentina adjusted the official foreign currency exchange rate for the Argentine peso, significantly devaluing the currency relative to the United States dollar. For the three months ended and as of March 31, 2024, the Company's wholly-owned subsidiary in Argentina had net sales of approximately $44.2 million and total assets of approximately 220.8 billion pesos (or approximately $265.0 million). The monetary assets of the Company's operations in Argentina denominated in pesos at the official government rate were approximately 82.1 billion pesos (or approximately $98.5 million), inclusive of approximately 33.4 billion pesos (or approximately $40.1 million) in cash and cash equivalents, as of March 31, 2024. The monetary liabilities of the Company's operations in Argentina denominated in pesos at the official government rate were approximately 16.8 billion pesos (or approximately $20.2 million) as of March 31, 2024. The monetary assets and liabilities were remeasured into United States dollar based on exchange rates as of March 31, 2024. The Company's finance joint venture in Argentina, AGCO Capital Argentina S.A. ("AGCO Capital"), had net monetary assets denominated in pesos at the official government rate of approximately 11.8 billion (or approximately $14.1 million) as of March 31, 2024, of which a majority is cash and cash equivalents. All gains and losses resulting from AGCO Capital's remeasurement of its monetary assets and liabilities are reported as part of AGCO Capital's net income, our share of which is included in “Equity in net earnings of affiliates” within our Condensed Consolidated Statements of Operations.

New Accounting Pronouncements to be Adopted

    In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which expands annual and interim disclosure requirements and requires entities to disclose its significant segment expense categories and amounts for each reportable segment. The ASU is effective for public entities for fiscal years
7

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

    In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The requirements will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

2.     ACQUISITIONS

    On September 28, 2023, the Company entered into a Sale and Contribution Agreement among AGCO, Trimble Inc. (“Trimble”) and PTx Trimble, LLC (“PTx Trimble” or the "Joint Venture"), formerly known as Trimble Solutions, LLC, which was subsequently amended and restated on March 31, 2024. On April 1, 2024, pursuant to the terms of an Amended and Restated Sale and Contribution Agreement (the “Agreement”), AGCO and Trimble completed (i) the contribution by Trimble to the Joint Venture of Trimble’s OneAg business, which is Trimble’s agricultural business, excluding certain Global Navigation Satellite System and guidance technologies, and an amount of cash, (ii) the contribution by AGCO to the Joint Venture of its interest in JCA Industries, LLC d/b/a JCA Technologies and an amount of cash, and (iii) the purchase by AGCO from Trimble of membership interests in the Joint Venture in exchange for the payment by AGCO to Trimble of $1,954.0 million in cash, subject to customary working capital and other adjustments. Immediately following the closing and as a result of the transaction, AGCO directly and indirectly owns an 85% interest in the Joint Venture and Trimble owns a 15% interest in the Joint Venture. AGCO will consolidate PTx Trimble within its consolidated financial statements. The Company has not presented a purchase price allocation related to the fair values of assets acquired, liabilities assumed and noncontrolling interests because the initial accounting for the acquisition was incomplete as of the issuance date of the financial statements. The purchase price was funded using net proceeds from the issuance of Senior Notes due 2027 and 2034, a term loan facility and the remainder through other borrowings and cash on hand. Refer to Note 8 for further information.

3.    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. For the three months ended March 31, 2024 and 2023, the cash received from receivables sold under the U.S., Canadian, European and Brazilian accounts receivable sales agreements was approximately $2.4 billion and $1.7 billion, respectively.

    Under the terms of the accounts receivable sales agreements in the U.S., Canada, 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 Condensed 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 receivables sold under these agreements 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. For the three months ended March 31, 2024 and 2023, the cash received from these arrangements was approximately $213.3 million and $233.3 million, respectively. Under these arrangements, the Company is required to continue to service the sold receivables at market rates. The Company does not maintain any direct retained interest in the receivables. The Company reviewed its accounting for the accounts receivable sales agreements and determined that
receivables sold under these agreements should be accounted for as off-balance sheet transactions.

    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 $27.9 million and $28.5 million during the three months ended March 31, 2024 and 2023, respectively.
8

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)




    The Company’s finance joint ventures in Europe, Brazil and Australia also provide wholesale financing directly to the Company’s dealers. As of March 31, 2024 and December 31, 2023, these finance joint ventures had approximately $218.6 million and $211.3 million, respectively, of outstanding accounts receivable associated with these arrangements.

    In certain foreign countries, the Company invoices its finance joint ventures directly and the finance joint ventures retain a form of title to the goods delivered to dealers until the dealer makes payment so that the finance joint ventures can recover the goods in the event of dealer or end customer default on payment. This occurs as the laws of some foreign countries do not provide for a seller’s retention of a security interest in goods in the same manner as established in the United States Uniform Commercial Code. 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.

4.    GOODWILL AND OTHER INTANGIBLE ASSETS

    Changes in the carrying amount of goodwill during the three months ended March 31, 2024 are summarized as follows (in millions):
North AmericaSouth AmericaEurope/Middle EastAsia/Pacific/AfricaConsolidated
Balance as of December 31, 2023$668.2 $93.5 $458.5 $113.2 $1,333.4 
Acquisitions  8.7  8.7 
Foreign currency translation(0.9)(3.0)(10.0)(2.4)(16.3)
Balance as of March 31, 2024$667.3 $90.5 $457.2 $110.8 $1,325.8 

    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 1st each year.

9

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    Changes in the carrying amount of acquired intangible assets during the three months ended March 31, 2024 are summarized as follows (in millions):
Gross carrying amounts:Trademarks and Trade NamesCustomer RelationshipsPatents and TechnologyLand Use RightsTotal
Balance as of December 31, 2023$194.3 $580.7 $148.2 $6.3 $929.5 
Foreign currency translation(1.8)(4.5)(2.1)(0.1)(8.5)
Balance as of March 31, 2024$192.5 $576.2 $146.1 $6.2 $921.0 
Accumulated amortization:Trademarks and Trade NamesCustomer RelationshipsPatents and TechnologyLand Use RightsTotal
Balance as of December 31, 2023$114.5 $483.4 $113.3 $1.7 $712.9 
Amortization expense2.5 9.1 2.3  13.9 
Foreign currency translation(0.9)(3.7)(1.9)(0.1)(6.6)
Balance as of March 31, 2024$116.1 $488.8 $113.7 $1.6 $720.2 
Indefinite-lived intangible assets:Trademarks and Trade Names
Balance as of December 31, 2023$85.9 
Foreign currency translation(0.9)
Balance as of March 31, 2024$85.0 
    
    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. Amortization expense related to acquired intangible assets was $13.9 million and $14.8 million for the three months ended March 31, 2024 and 2023, respectively.

5.    INVENTORIES

    Inventories, net at March 31, 2024 and December 31, 2023 were as follows (in millions):
March 31, 2024December 31, 2023
Finished goods$1,608.6 $1,460.7 
Repair and replacement parts831.9 823.1 
Work in process379.8 255.2 
Raw materials961.6 901.7 
Inventories, net$3,781.9 $3,440.7 

    At March 31, 2024 and December 31, 2023, the Company had recorded $247.7 million and $238.9 million respectively, as a reserve for surplus and obsolete inventories. These reserves are reflected within "Inventories, net" within the Company's Condensed Consolidated Balance Sheets.
10

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



6.    PRODUCT WARRANTY

    The warranty reserve activity for the three months ended March 31, 2024 and 2023, including deferred revenue associated with the Company's extended warranties that have been sold, was as follows (in millions):
Three Months Ended March 31,
20242023
Balance at beginning of period$800.8 $640.0 
Accruals for warranties issued
92.1 89.7 
Settlements made and deferred revenue recognized
(82.0)(64.5)
Foreign currency translation(17.8)11.8 
Balance at March 31$793.1 $677.0 

    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. The Company's extended warranty period for the majority of products ranges from three to five years. Revenue is recognized for the extended warranty contracts on a straight-line basis, which the Company believes approximates the cost expected to be incurred in satisfying the obligations, over the extended warranty period. Approximately $661.9 million, $679.9 million and $572.1 million of warranty reserves are included in “Accrued expenses” in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2024, December 31, 2023 and March 31, 2023, respectively. Approximately $131.2 million, $120.9 million and $104.9 million of warranty reserves are included in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2024, December 31, 2023, and March 31, 2023, respectively.

    The Company recognizes potential 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.”

7.    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, 2024, 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, 2024 and December 31, 2023, the amounts outstanding that remain unpaid to the banks or other intermediaries totaled $87.5 million and $82.7 million, respectively, and are reflected in “Accounts payable” in the Company’s Condensed Consolidated Balance Sheets.

11

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



8.    INDEBTEDNESS

    Long-term debt consisted of the following at March 31, 2024 and December 31, 2023 (in millions):
March 31, 2024December 31, 2023
Credit facility, expires 2027$580.0 $ 
1.002% EIB Senior term loan due 2025
269.7 276.7 
EIB Senior Term Loan due 2029
269.7 276.7 
EIB Senior Term Loan due 2030183.4  
Senior term loans due between 2025 and 2028
158.0 162.1 
0.800% Senior notes due 2028
647.2 664.0 
5.450% Senior notes due 2027
400.0  
5.800% Senior notes due 2034
700.0  
Term Loan Facility borrowings
500.0  
Other long-term debt2.9 3.1 
Debt issuance costs(13.5)(3.1)
3,697.4 1,379.5 
Less:
Current portion of other long-term debt(2.0)(2.3)
1.002% EIB Senior term loan due 2025
(269.7) 
Total long-term indebtedness
$3,425.7 $1,377.2 

Credit Facility and Term Loan 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 matured on March 31, 2023. The Credit Facility consists of a $325.0 million United States dollar tranche and a $925.0 million multi-currency tranche for loans denominated in United States 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 United States 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, 2024, the Company had $580.0 million in outstanding borrowings under the revolving credit facility and had the ability to borrow $670.0 million.

    In December 2023, the Company amended the Credit Facility to allow for incremental borrowings in the form of a delayed draw term loan facility in an aggregate principal amount of $250.0 million. In March 2024, the Company further amended the Credit Facility to increase this amount by $250.0 million, for an aggregate amount of $500.0 million ("Term Loan Facility"). The Company drew down the facility on March 28, 2024. Borrowings under the Term Loan Facility bear interest at the same rate and margin as the Credit Facility. The Term Loan Facility matures on December 19, 2027. As of March 31, 2024, the Company had $500.0 million outstanding under the Term Loan Facility.

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 $107.9 million as of March 31, 2024). The credit facility expires on December 31, 2026.
12

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



Any loans will bear interest at the EURIBOR plus a credit spread. As of March 31, 2024 and December 31, 2023, the Company had no outstanding borrowings under the revolving credit facility and had the ability to borrow €100.0 million (or approximately $107.9 million).

5.450% Senior Notes due 2027 and 5.800% Senior Notes due 2034

    On March 21, 2024, the Company issued (i) $400.0 million aggregate principal amount of 5.450% Senior Notes due 2027 (the “2027 Notes”) and (ii) $700.0 million aggregate principal amount of 5.800% Senior Notes due 2034 (the “2034 Notes”, and together with the 2027 Notes, the “Notes”). The Notes are unsecured and guaranteed on a senior unsecured basis by AGCO International Holdings B.V., AGCO International GmbH, Massey Ferguson Corp. and The GSI Group, LLC, direct and indirect subsidiaries of the Company (collectively, the “Guarantors”). The 2027 Notes mature on March 21, 2027, and interest is payable semi-annually, in arrears, at 5.450%. The 2034 Notes mature on March 21, 2034, and interest is payable semi-annually, in arrears, at 5.800%. The Notes contain covenants restricting among other things, the incurrence of certain secured indebtedness.

    Prior to February 21, 2027, in the case of the 2027 Notes, and December 21, 2033, in the case of the 2034 Notes, the Company may redeem the 2027 Notes and/or the 2034 Notes at its option, in whole or in part, at any time and from time to time, at the applicable “make-whole” redemption price (calculated as set forth in the the Senior Note Indenture and First Supplemental Indenture and applicable series of the Notes). On or after February 21, 2027, in the case of the 2027 Notes, and December 21, 2033, in the case of the 2034 Notes, the Company may redeem the 2027 Notes or the 2034 Notes, as the case may be, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date.

0.800% Senior Notes due 2028

    On October 6, 2021, the Company issued €600.0 million (or approximately $647.2 million as of March 31, 2024) of senior notes at an issue price of 99.993%. The notes mature on October 6, 2028, and interest is payable annually, in arrears, at 0.800%. The notes contain covenants restricting, among other things, the incurrence of certain secured indebtedness. The senior notes are subject to both optional and mandatory redemption in certain events.

1.002% European Investment Bank ("EIB") Senior Term Loan due 2025

    On January 25, 2019, the Company borrowed €250.0 million (or approximately $269.7 million as of March 31, 2024) from the EIB. The loan matures on January 24, 2025. The Company is permitted to prepay the loan before its maturity date. Interest is payable on the loan at 1.002% per annum, payable semi-annually in arrears.

EIB Senior Term Loans due 2029 and 2030

    On September 29, 2023, the Company entered into a multi-currency Finance Contract with the EIB permitting the Company to borrow up to €250.0 million to fund up to 50% of certain investments in research, development and innovation primarily in Germany, France and Finland during the period from 2023 through 2026. On October 26, 2023, the Company borrowed €250.0 million (or approximately $269.7 million as of March 31, 2024) under the arrangement. The loan matures on October 26, 2029. The loan generally can be prepaid at any time upon the election of the Company and must be prepaid upon the occurrence of certain events. Interest is payable on the term loan at 3.980% per annum, payable semi-annually in arrears. The Company also has to fulfill financial covenants with respect to a net leverage ratio and an interest coverage ratio.

13

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    On January 25, 2024, the Company entered into an additional multi-currency Finance Contract with the EIB permitting the Company to borrow up to €170.0 million, for which the proceeds will be used in a similar manner as described for the EIB Senior Term Loan due 2029 above. On February 15, 2024, the Company borrowed €170.0 million (or approximately $183.4 million as of March 31, 2024) under the arrangement. The loan matures on February 15, 2030. The loan generally can be prepaid at any time upon the election of the Company and must be prepaid upon the occurrence of certain events. Interest is payable on the term loan at 3.416% per annum, payable semi-annually in arrears. The Company also has to fulfill financial covenants with respect to a net leverage ratio and an interest coverage ratio.

Senior Term Loans Due Between 2025 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 €322.5 million in October 2019, October 2021, April 2022 and October 2023. Of the 2018 senior term loans, the Company repaid an aggregate amount of €244.0 million in August 2021, February 2022 and August 2023.

    In aggregate, as of March 31, 2024, the Company had indebtedness of €146.5 million (or approximately $158.0 million as of March 31, 2024) through a group of four remaining related term loan agreements. The provisions of the term loan agreements are substantially identical, with the exception of interest rate terms and maturities. As of March 31, 2024, for the term loans with a fixed interest rate, interest is payable in arrears on an annual basis, with interest rates ranging from 1.67% to 2.26% and maturity dates between August 2025 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.

Bridge Facility

    As discussed in Note 2, on September 28, 2023, the Company entered into a bridge facility commitment letter with Morgan Stanley pursuant to which Morgan Stanley committed to provide a $2.0 billion senior unsecured 364-day bridge facility (the "Bridge Facility"). The availability under the Bridge Facility was reduced to zero by certain permanent financing transactions including the net proceeds from the issuance of the Notes, the Company's entry into the Term Loan Facility and by amounts based on the Company's cash flow, and the Company terminated the Bridge Facility on March 25, 2024.

Other Short-Term Borrowings

    As of March 31, 2024 and December 31, 2023, the Company had short-term borrowings due within one year, excluding the current portion of long-term debt, of approximately $28.7 million and $12.7 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 March 31, 2024 and December 31, 2023, outstanding letters of credit totaled approximately $14.7 million and $14.7 million, respectively.

9.    RECOVERABLE INDIRECT TAXES

    The Company’s Brazilian operations incur value added taxes (“VAT”) on certain purchases of raw materials, components and services. These taxes are accumulated as tax credits and create assets that are reduced by the VAT collected from the Company’s sales in the Brazilian market. The Company regularly assesses the recoverability of these tax credits and establishes reserves when necessary against them, through analyses that include, amongst others, the history of realization, the transfer of tax credits to third parties as authorized by the government, anticipated changes in the supply chain and the future expectation of tax debits from the Company’s ongoing operations. The Company believes that these tax credits, net of established reserves, are realizable. The Company had recorded approximately $93.9 million and $93.5 million, respectively, of VAT tax credits, net of reserves, as of March 31, 2024 and December 31, 2023.

14

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



10.    DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivative Transactions Designated as Hedging Instruments

Cash Flow Hedges

Foreign Currency Contracts

    The Company uses cash flow hedges to minimize the variability in cash flows of assets or liabilities or forecasted transactions caused by fluctuations in foreign currency exchange rates. The changes in the fair values of these cash flow hedges are recorded in accumulated other comprehensive loss and are subsequently reclassified into “Cost of goods sold” during the period the sales and purchases are recognized. These amounts offset the effect of the changes in foreign currency rates on the related sale and purchase transactions.

    The Company designates 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 $494.5 million and $262.2 million as of March 31, 2024 and December 31, 2023, respectively.

Steel Commodity Contracts

    The Company designates 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 $1.6 million and $2.5 million as of March 31, 2024 and December 31, 2023, respectively.

Interest Rate Risk

    The Company entered into treasury rate locks in early March 2024 to fix the interest rate for the 2034 Notes issued on March 21, 2024. The derivative position settled on March 28, 2024 with a cash settlement that offset changes in the benchmark treasury rate between the execution of the treasury rate lock and the debt pricing date for the 2034 Notes. This treasury rate lock was designated as a cash flow hedge and the gain at termination of $8.2 million was recognized in accumulated other comprehensive loss. The amount recognized in accumulated other comprehensive loss is reclassified to interest expense as interest payments are made on the 2034 Notes through the maturity date.


15

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    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, 2024 and 2023 (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)
2024
Foreign currency contracts(1)
$(1.2)Cost of goods sold$(2.3)$2,158.9 
Commodity contracts(2)
(0.3)Cost of goods sold $2,158.9 
Treasury rate locks6.1 Interest expense, net $1.9 
Total $4.6 $(2.3)
2023
Foreign currency contracts$(1.9)Cost of goods sold$(1.8)$2,478.6 
Commodity contracts0.9 Cost of goods sold0.3 $2,478.6 
Total$(1.0)$(1.5)
____________________________________
(1) The outstanding contracts as of March 31, 2024 range in maturity through December 2024.
(2) The outstanding contracts as of March 31, 2024 range in maturity through June 2024.

    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, 2024 (in millions):
Before-Tax AmountIncome Tax Expense (Benefit)After-Tax Amount
Accumulated derivative net losses as of December 31, 2023
$(1.3)$(0.5)$(0.8)
Net changes in fair value of derivatives6.8 2.2 4.6 
Net losses reclassified from accumulated other comprehensive loss into income2.6 0.3 2.3 
Accumulated derivative net gains as of March 31, 2024
$8.1 $2.0 $6.1 

    As of March 31, 2024, approximately $0.6 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

    The Company uses non-derivative and derivative instruments to hedge a portion of its net investment in foreign operations against adverse movements in exchange rates. For instruments that are designated as hedges of net investments in foreign operations, changes in the fair value of the derivative instruments are recorded in foreign currency translation adjustments, a component of accumulated other comprehensive loss, to offset changes in the value of the net investments being hedged. 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.

16

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    On January 29, 2021, 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 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 $267.4 million as of March 31, 2024) 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 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. This portion of the multi-currency revolving credit facility was repaid in December 2023. The Company recognized the change in fair value of the foreign currency denominated debt designated as a net investment hedge, a gain of $0.9 million, net of tax, in accumulated other comprehensive loss during the three months ended March 31, 2023.

    The following table summarizes the notional values of the instrument designated as a net investment hedge (in millions):
Notional Amount as of
March 31, 2024December 31, 2023
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 months ended March 31, 2024 and 2023 (in millions):
Cross currency swap contract
Gain (Loss) Recognized in Accumulated Other Comprehensive Loss for the Three Months Ended
Before-Tax Amount
Income Tax Expense (Benefit)
After-Tax Amount
March 31, 2024$4.7 $1.2 $3.5 
March 31, 2023(1.0)(0.2)(0.8)

Derivative Transactions Not Designated as Hedging Instruments

    The Company enters into foreign currency contracts to economically hedge a portion of its receivables and payables on the Company and its subsidiaries’ balance sheets that are denominated in foreign currencies other than the functional currency. These contracts are classified as non-designated derivative instruments. 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, 2024 and December 31, 2023, the Company had outstanding foreign currency contracts with a notional amount of approximately $2,545.2 million and $3,125.1 million, respectively.

    The following table summarizes the results on net income of derivatives not designated as hedging instruments (in millions):
Gain (Loss) Recognized in Net Income for the Three Months Ended
Classification of Gain (Loss)
March 31, 2024March 31, 2023
Foreign currency contractsOther expense, net$(8.3)$11.2 

17

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    The table below sets forth the fair value of derivative instruments as of March 31, 2024 (in millions):
Asset Derivatives as of
March 31, 2024
Liability Derivatives as of
March 31, 2024
Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivative instruments designated as hedging instruments:
Foreign currency contractsOther current assets$3.6 Other current liabilities$2.8 
Commodity contractsOther current assets Other current liabilities0.2 
Cross currency swap contractOther noncurrent assets25.0 Other noncurrent liabilities 
Derivative instruments not designated as hedging instruments:
Foreign currency contracts(1)
Other current assets2.4 Other current liabilities4.8 
Total derivative instruments$31.0 $7.8 
__________________________________
(1) The outstanding contracts as of March 31, 2024 range in maturity through August 2024.

    The table below sets forth the fair value of derivative instruments as of December 31, 2023 (in millions):
Asset Derivatives as of
December 31, 2023
Liability Derivatives as of
December 31, 2023
Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivative instruments designated as hedging instruments:
Foreign currency contractsOther current assets$1.3 Other current liabilities$1.2 
Commodity contractsOther current assets Other current liabilities 
Cross currency swap contractOther noncurrent assets20.3 Other noncurrent liabilities 
Derivative instruments not designated as hedging instruments:
Foreign currency contracts(1)
Other current assets17.1 Other current liabilities12.8 
Total derivative instruments$38.7 $14.0 
___________________________________
(1) The outstanding contracts as of December 31, 2023 range in maturity through February 2024.

18

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



11.    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, 2024 and 2023 (in millions):
Common
Stock
Additional
Paid-in Capital
Retained
Earnings
Accumulated Other
Comprehensive Loss
Noncontrolling
Interests
Total Stockholders’
Equity
Balance, December 31, 2023$0.7 $4.1 $6,360.0 $(1,708.1)$0.1 $4,656.8 
Stock compensation— 8.4 — — — 8.4 
Issuance of stock awards
— (12.4)(0.5)— — (12.9)
SSARs exercised— (0.1)— — — (0.1)
Comprehensive income:
Net income
— — 168.0 — — 168.0 
Other comprehensive (loss) income:
Foreign currency translation adjustments
— — — (52.0)— (52.0)
Defined benefit pension plans, net of tax— — — 1.7 — 1.7 
Deferred gains and losses on derivatives, net of tax
— — — 6.9 — 6.9 
Payment of dividends to stockholders— — (21.6)— — (21.6)
Balance, March 31, 2024$0.7 $ $6,505.9 $(1,751.5)$0.1 $4,755.2 

Common
Stock
Additional
Paid-in Capital
Retained
Earnings
Accumulated Other
Comprehensive Loss
Noncontrolling
Interests
Total Stockholders’
Equity
Balance, December 31, 2022$0.7 $30.2 $5,654.6 $(1,803.1)$0.2 $3,882.6 
Stock compensation— 14.0 — — — 14.0 
Issuance of stock awards
— (18.4)— — — (18.4)
SSARs exercised— (1.1)— — — (1.1)
Comprehensive income:
Net income
— — 232.6 — — 232.6 
Other comprehensive income:
Foreign currency translation adjustments
— — — 44.4  44.4 
Defined benefit pension plans, net of tax
— — — 1.8 — 1.8 
Deferred gains and losses on derivatives, net of tax
— — — 0.5 — 0.5 
Payment of dividends to stockholders
— — (18.0)— — (18.0)
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 

19

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    The Company had no comprehensive loss attributable to noncontrolling interests recorded for the three months ended March 31, 2024 and 2023.

    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, 2024 (in millions):
Defined Benefit Pension Plans Deferred Net (Losses) Gains on DerivativesCumulative Translation AdjustmentTotal
Accumulated other comprehensive loss,
December 31, 2023
$(238.6)$(0.8)$(1,468.7)$(1,708.1)
Other comprehensive income (loss) before reclassifications
 4.6 (52.0)(47.4)
Net losses reclassified from accumulated other comprehensive loss1.7 2.3  4.0 
Other comprehensive income (loss)
1.7 6.9 (52.0)(43.4)
Accumulated other comprehensive loss,
March 31, 2024
$(236.9)$6.1 $(1,520.7)$(1,751.5)

    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, 2024 and 2023 (in millions):
Amount Reclassified from Accumulated Other Comprehensive LossAffected Line Item within the Condensed Consolidated
Statements of Operations
Details about Accumulated Other Comprehensive Loss Components
Three Months Ended March 31, 2024(1)
Three Months Ended March 31, 2023(1)
Derivatives:
Net losses on foreign currency contracts$2.6 $2.2 Cost of goods sold
Net gains on commodity contracts
 (0.4)Cost of goods sold
Reclassification before tax2.6 1.8 
Income tax benefit
(0.3)(0.3)Income tax provision
Reclassification net of tax$2.3 $1.5 
Defined benefit pension plans:
Amortization of net actuarial losses$2.2 $2.0 
Other expense, net(2)
Amortization of prior service cost0.4 0.4 
Other expense, net(2)
Reclassification before tax2.6 2.4 
Income tax benefit
(0.9)(0.6)Income tax provision
Reclassification net of tax$1.7 $1.8 
Net losses reclassified from accumulated other comprehensive loss$4.0 $3.3 
__________________________________
(1) Losses included within the Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023, respectively.
(2) These accumulated other comprehensive loss components are included in the computation of net periodic pension and postretirement benefit cost. See Note 14 for additional information.
Share Repurchase Program

    In November 2023, the Company entered into an accelerated share repurchase (“ASR”) agreement with a financial institution to repurchase $53.0 million of shares of its common stock. The Company received approximately 371,669 shares associated with this transaction as of December 31, 2023. In January 2024, the Company received an additional 82,883 shares upon final settlement of its November 2023 ASR agreement. 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
20

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



ended March 31, 2024, the Company did not purchase any shares directly or enter into any accelerated share repurchase agreements.

    As of March 31, 2024, the remaining amount authorized to be repurchased under board-approved share repurchase authorizations was approximately $57.0 million, which has no expiration date.

Dividends

    During the three months ended March 31, 2024 and March 31, 2023, the Company declared and paid cash dividends of $0.29 and $0.24 per common share, respectively. On April 25, 2024, the Company's Board of Directors declared a regular quarterly dividend of $0.29 per common share to be paid on June 14, 2024, to all stockholders of record as of the close of business on May 15, 2024. In addition, on April 25, 2024, the Company's Board of Directors declared a special variable dividend of $2.50 per common share that will be paid on June 20, 2024, to all stockholders of record as of the close of business on May 20, 2024.

12.    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 stock-settled stock appreciation rights ("SSARs") and the vesting of restricted stock unit awards ("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, 2024 and 2023 is as follows (in millions, except per share data):
Three Months Ended March 31,
20242023
Basic net income per share:
Net income attributable to AGCO Corporation and subsidiaries$168.0 $232.6 
Weighted average number of common shares outstanding74.6 74.9 
Basic net income per share attributable to AGCO Corporation and subsidiaries$2.25 $3.11 
Diluted net income per share:
Net income attributable to AGCO Corporation and subsidiaries$168.0 $232.6 
Weighted average number of common shares outstanding74.6 74.9 
Dilutive SSARs and RSUs
0.1 0.1 
Weighted average number of common shares and common share equivalents outstanding for purposes of computing diluted net income per share74.7 75.0 
Diluted net income per share attributable to AGCO Corporation and subsidiaries$2.25 $3.10 

13.    INCOME TAXES

    At March 31, 2024 and December 31, 2023, the Company had approximately $369.7 million and $351.2 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, 2024 and December 31, 2023 exclude certain indirect favorable effects that relate to other tax jurisdictions of approximately $115.8 million and $103.9 million, respectively. In addition, the gross unrecognized income tax benefits as of March 31, 2024 and December 31, 2023 exclude certain deposits made in a foreign jurisdiction of approximately $26.2 million, net of $19.3 million refunds received, and $26.9 million, net of $19.7 million refunds received, respectively, associated with an ongoing audit.

    At March 31, 2024 and December 31, 2023, the Company had approximately $11.2 million and $9.9 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
21

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



Company’s Condensed Consolidated Balance Sheets. At March 31, 2024 and December 31, 2023, the Company had approximately $361.2 million and $344.2 million, respectively, of accrued taxes reflected in “Other noncurrent liabilities”, and approximately $2.7 million and $2.9 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, 2024 and December 31, 2023, the Company had accrued interest and penalties related to unrecognized tax benefits of approximately $28.8 million and $27.9 million, respectively. Generally, tax years 2019 through 2023 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, 2024, a number of income tax examinations in foreign jurisdictions are ongoing.

    The Company maintains a valuation allowance to reserve against its net deferred tax assets in certain foreign jurisdictions. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company regularly assesses the likelihood that its deferred tax assets will be recovered from estimated future taxable income and available tax planning strategies and has determined that all adjustments to the valuation allowances have been appropriate. In making this assessment, all available evidence was considered including the current economic climate, as well as reasonable tax planning strategies. 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 December 31, 2023 would have been approximately 131.5 million Brazilian reais (or approximately $27.1 million) and subject to significant interest and penalties. In the first quarter of 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 could be considered for amnesty. Enrollment in the amnesty program was not considered an admission of guilt and allowed for outstanding contested cases to be settled at a significant monetary discount. The Company contested the disallowance and had been historically advised by its legal and tax advisors that its position was allowable under the tax laws of Brazil. After weighing various impacts involved with enrollment, including the avoidance of potential interest, penalties and legal costs, the Company enrolled in the program in the quarter ended March 31, 2023. The Company recorded approximately 182.6 million Brazilian reais (or approximately $34.8 million) within “Income tax provision” net of associated U.S. income tax credits of approximately $8.4 million and completed its installment payments related to its enrollment in the program during the year ended December 31, 2023.

14.    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, 2024 and 2023 are set forth below (in millions):
Three Months Ended March 31,
Pension benefits20242023
Service cost$2.1 $2.4 
Interest cost7.0 7.2 
Expected return on plan assets(7.7)(7.2)
Amortization of net actuarial losses2.2 2.0 
Amortization of prior service cost0.3 0.3 
Net periodic pension cost$3.9 $4.7 

22

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



Three Months Ended March 31,
Postretirement benefits20242023
Service cost$0.1 $ 
Interest cost0.4 0.3 
Amortization of prior service cost0.1 0.1 
Net periodic postretirement benefit cost$0.6 $0.4 

    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.

During the three months ended March 31, 2024, the Company made approximately $10.8 million of contributions to its defined pension benefit plans. The Company currently estimates its minimum contributions for 2024 to its defined pension benefit plans will aggregate approximately $29.2 million.

    During the three months ended March 31, 2024, the Company made approximately $0.4 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 2024.

23

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



15.    FAIR VALUE OF FINANCIAL INSTRUMENTS

    The Company categorizes its assets and liabilities into one of three levels based on the assumptions used in valuing the asset or liability. Estimates of fair value for financial assets and liabilities are based on a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. In accordance with this guidance, fair value measurements are classified under the following hierarchy:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Model-derived valuations in which one or more significant inputs are unobservable.
    The Company categorizes its pension plan assets into one of the three levels of the fair value hierarchy.

    The Company enters into foreign currency, commodity and interest rate swap contracts. The fair values of the Company’s derivative instruments are determined using discounted cash flow valuation models. The significant inputs used in these models are readily available in public markets, or can be derived from observable market transactions, and therefore have been classified as Level 2. Inputs used in these discounted cash flow valuation models for derivative instruments include the applicable exchange rates, forward rates or interest rates. Such models used for option contracts also use implied volatility. See Note 10 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, 2024 and December 31, 2023 are summarized below (in millions):
As of March 31, 2024
Level 1Level 2Level 3Total
Derivative assets$ $31.0 $ $31.0 
Derivative liabilities 7.8  7.8 
As of December 31, 2023
Level 1Level 2Level 3Total
Derivative assets$ $38.7 $ $38.7 
Derivative liabilities 14.0  14.0 

    The carrying amounts of long-term debt under the Company’s 1.002% EIB senior term loan due 2025, EIB senior term loans due 2029 and 2030 and senior term loans due between 2025 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, 2024, the estimated fair value of the Company's 0.800% senior notes due 2028, based on listed market values, was approximately €529.1 million (or approximately $570.7 million), compared to the carrying value of €600.0 million (or approximately $647.2 million). At March 31, 2024, the estimated fair value of the Company's 5.450% senior notes due 2027, based on listed market values, was approximately $402.0 million, compared to the carrying value of $400.0 million. At March 31, 2024, the estimated fair value of the Company's 5.800% senior notes due 2034, based on listed market values, was approximately $708.4 million, compared to the carrying value of $700.0 million. See Note 8 for additional information on the Company’s long-term debt.
24

Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



16.    COMMITMENTS AND CONTINGENCIES

Leases

    Lease payment amounts for operating and finance leases with remaining terms greater than one year as of March 31, 2024 and December 31, 2023 were as follows (in millions):
March 31, 2024December 31, 2023
Operating Leases(1)
Finance Leases
Operating Leases(1)
Finance Leases
2024
$41.5 $0.5 $52.8 $0.7 
202547.0 0.6 43.0 0.6 
202636.1 0.4 32.6 0.4 
202722.3 0.4 19.7 0.3 
202816.2 0.2 14.7 0.1