Company Quick10K Filing
⚲
AGCO
Financials
Price76.18 EPS3
Shares77 P/E27
MCap5,873 P/FCF-73
Net Debt1,051 EBIT370
TEV6,924 TEV/EBIT19
TTM 2019-09-30, in MM, except price, ratios
Filings
10-Q 2021-03-31 Filed 2021-05-07
10-K 2020-12-31 Filed 2021-03-01
10-Q 2020-09-30 Filed 2020-11-09
10-Q 2020-06-30 Filed 2020-08-07
10-Q 2020-03-31 Filed 2020-05-08
10-K 2019-12-31 Filed 2020-02-28
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-09
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-03-01
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-09
10-K 2017-12-31 Filed 2018-02-28
10-Q 2017-09-30 Filed 2017-11-08
10-Q 2017-06-30 Filed 2017-08-08
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-02-28
10-Q 2016-09-30 Filed 2016-11-08
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-06
10-K 2015-12-31 Filed 2016-02-26
10-Q 2015-09-30 Filed 2015-11-09
10-Q 2015-06-30 Filed 2015-08-07
10-Q 2015-03-31 Filed 2015-05-07
10-K 2014-12-31 Filed 2015-02-27
10-Q 2014-09-30 Filed 2014-11-07
10-Q 2014-06-30 Filed 2014-08-08
10-Q 2014-03-31 Filed 2014-05-09
10-K 2013-12-31 Filed 2014-02-28
10-Q 2013-09-30 Filed 2013-11-07
10-Q 2013-06-30 Filed 2013-08-08
10-Q 2013-03-31 Filed 2013-05-08
10-K 2012-12-31 Filed 2013-02-27
10-Q 2012-09-30 Filed 2012-11-07
10-Q 2012-06-30 Filed 2012-08-07
10-Q 2012-03-31 Filed 2012-05-09
10-K 2011-12-31 Filed 2012-02-27
10-Q 2011-09-30 Filed 2011-11-04
10-Q 2011-06-30 Filed 2011-08-05
10-Q 2011-03-31 Filed 2011-05-06
10-K 2010-12-31 Filed 2011-02-25
10-Q 2010-09-30 Filed 2010-11-05
10-Q 2010-06-30 Filed 2010-08-06
10-Q 2010-03-31 Filed 2010-05-07
10-K 2009-12-31 Filed 2010-02-26
Reports
8-K 2021-02-04
8-K 2021-01-21
8-K 2020-12-14
8-K 2020-12-11
8-K 2020-12-03
8-K 2020-11-28
8-K 2020-11-03
8-K 2020-08-20
8-K 2020-07-30
8-K 2020-05-05
8-K 2020-04-30
8-K 2020-04-09
8-K 2020-02-06
8-K 2019-10-29
8-K 2019-09-25
8-K 2019-07-30
8-K 2019-05-02
8-K 2019-04-25
8-K 2019-04-24
8-K 2019-02-05
8-K 2019-01-22
8-K 2018-10-30
8-K 2018-10-26
8-K 2018-07-31
8-K 2018-07-25
8-K 2018-05-15
8-K 2018-05-01
8-K 2018-04-26
8-K 2018-02-06

AGCO 10Q Quarterly Report

Content
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
Exhibits
EX-31.1 agcoex311-q12021.htm
EX-31.2 agcoex312-q12021.htm
EX-32.1 agcoex321-q12021.htm

AGCO Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
 3.12.51.81.20.5-0.12012201420172020
Rev, G Profit, Net Income
 0.70.40.2-0.1-0.3-0.62012201420172020
Ops, Inv, Fin
agco-20210331
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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, 2021
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
(Registrants 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 filer☐Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐Emerging 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 May 3, 2021, there were 75,351,472 shares of the registrant’s common stock, par value of $0.01 per share, outstanding.


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

Table of Contents
PART I.        FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in millions, except share amounts)
March 31, 2021December 31, 2020
ASSETS
Current Assets:
Cash and cash equivalents$453.7 $1,119.1 
Accounts and notes receivable, net1,048.2 856.0 
Inventories, net2,360.3 1,974.4 
Other current assets436.1 418.9 
Total current assets4,298.3 4,368.4 
Property, plant and equipment, net1,448.3 1,508.5 
Right-of-use lease assets158.5 165.1 
Investment in affiliates444.1 442.7 
Deferred tax assets70.8 77.6 
Other assets184.0 179.8 
Intangible assets, net431.5 455.6 
Goodwill1,276.8 1,306.5 
Total assets$8,312.3 $8,504.2 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt$311.9 $325.9 
Short-term borrowings51.8 33.8 
Accounts payable1,097.5 855.1 
Accrued expenses1,685.1 1,916.7 
Other current liabilities268.3 231.3 
Total current liabilities3,414.6 3,362.8 
Long-term debt, less current portion and debt issuance costs936.6 1,256.7 
Operating lease liabilities119.6 125.9 
Pension and postretirement health care benefits216.2 253.4 
Deferred tax liabilities109.1 112.4 
Other noncurrent liabilities391.5 375.0 
Total liabilities5,187.6 5,486.2 
Commitments and contingencies (Note 17)
Stockholders’ Equity:
AGCO Corporation stockholders’ equity:
Preferred stock; $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding in 2021 and 2020
— — 
Common stock; $0.01 par value, 150,000,000 shares authorized, 75,330,392 and 74,962,231 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively
0.8 0.8 
Additional paid-in capital5.7 30.9 
Retained earnings4,897.9 4,759.1 
Accumulated other comprehensive loss(1,817.9)(1,810.8)
Total AGCO Corporation stockholders’ equity3,086.5 2,980.0 
Noncontrolling interests38.2 38.0 
Total stockholders’ equity3,124.7 3,018.0 
Total liabilities and stockholders’ equity$8,312.3 $8,504.2 
See accompanying notes to condensed consolidated financial statements.
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AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in millions, except per share data)
Three Months Ended March 31,
20212020
Net sales$2,378.7 $1,928.3 
Cost of goods sold1,808.2 1,477.8 
Gross profit570.5 450.5 
Selling, general and administrative expenses260.6 247.6 
Operating expenses:
Engineering expenses
96.3 84.9 
Amortization of intangibles
17.5 15.0 
Restructuring expenses
1.3 0.8 
Bad debt (credit) expense(0.4)1.8 
Income from operations195.2 100.4 
Interest expense, net
3.4 3.4 
Other expense, net
11.5 12.5 
Income before income taxes and equity in net earnings of affiliates180.3 84.5 
Income tax provision
43.6 29.4 
Income before equity in net earnings of affiliates136.7 55.1 
Equity in net earnings of affiliates
14.7 11.2 
Net income151.4 66.3 
Net income attributable to noncontrolling interests(0.6)(1.6)
Net income attributable to AGCO Corporation and subsidiaries$150.8 $64.7 
Net income per common share attributable to AGCO Corporation and subsidiaries:
Basic
$2.00 $0.86 
Diluted
$1.99 $0.85 
Cash dividends declared and paid per common share$0.16 $0.16 
Weighted average number of common and common equivalent shares outstanding:
Basic
75.3 75.3 
Diluted
75.9 75.9 
See accompanying notes to condensed consolidated financial statements.
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AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited and in millions)
Three Months Ended March 31,
20212020
Net income$151.4 $66.3 
Other comprehensive loss, net of reclassification adjustments:
Foreign currency translation adjustments(47.3)(214.8)
Defined benefit pension plans, net of tax35.1 3.5 
Deferred gains and losses on derivatives, net of tax4.7 9.4 
Other comprehensive loss, net of reclassification adjustments(7.5)(201.9)
Comprehensive income (loss)143.9 (135.6)
Comprehensive (income) loss attributable to noncontrolling interests(0.2)4.1 
Comprehensive income (loss) attributable to AGCO Corporation and subsidiaries$143.7 $(131.5)
See accompanying notes to condensed consolidated financial statements.
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AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
Three Months Ended March 31,
20212020
Cash flows from operating activities:
Net income $151.4 $66.3 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation54.8 51.6 
Amortization of intangibles17.5 15.0 
Stock compensation expense6.8 2.6 
Equity in net earnings of affiliates, net of cash received(14.7)(11.2)
Deferred income tax provision4.1 3.8 
Other1.9 4.1 
Changes in operating assets and liabilities:
Accounts and notes receivable, net(232.3)(109.6)
Inventories, net(466.1)(252.1)
Other current and noncurrent assets(45.8)(65.4)
Accounts payable296.7 (32.7)
Accrued expenses(175.7)(206.7)
Other current and noncurrent liabilities86.1 99.0 
Total adjustments(466.7)(501.6)
Net cash used in operating activities(315.3)(435.3)
Cash flows from investing activities:
Purchases of property, plant and equipment(63.5)(60.6)
Proceeds from sale of property, plant and equipment0.1 0.4 
Investments in unconsolidated affiliates(0.1)(2.5)
Purchase of businesses, net of cash acquired(0.8)— 
Other(2.5)— 
Net cash used in investing activities(66.8)(62.7)
Cash flows from financing activities:
Proceeds from indebtedness195.3 710.1 
Repayments of indebtedness(416.8)(150.3)
Purchases and retirement of common stock— (55.0)
Payment of dividends to stockholders (12.0)(12.1)
Payment of minimum tax withholdings on stock compensation(26.5)(16.0)
Net cash (used in) provided by financing activities(260.0)476.7 
Effects of exchange rate changes on cash, cash equivalents and restricted cash(23.3)(24.8)
Decrease in cash, cash equivalents and restricted cash(665.4)(46.1)
Cash, cash equivalents and restricted cash, beginning of period1,119.1 432.8 
Cash, cash equivalents and restricted cash, end of period$453.7 $386.7 
See accompanying notes to condensed consolidated financial statements.
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AGCO CORPORATION AND SUBSIDIARIES
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 (loss) 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, 2020. 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 cannot predict the ongoing impact of the COVID-19 pandemic on the increased volatility in global economic and political environments, uncertain market demand for its products, supply chain disruptions, possible workforce unavailability, exchange rate and commodity price volatility and availability of financing, and their impact to the Company’s net sales, production volumes, costs and overall financial condition and available funding.

Recently Adopted Accounting Pronouncements
    During the three months ended March 31, 2021, the Company adopted the following pronouncements, which did not have a material impact to the Company’s results of operations, financial condition and cash flows.
•ASU 2019-12 – “Simplifying the Accounting for Income Taxes” was adopted as of January 1, 2021.
•ASU 2021-01 – “Reference Rate Reform: Scope” was adopted as of January 1, 2021.

New Accounting Pronouncements to be Adopted
    In June 2016, the FASB issued ASU 2016-13, which requires measurement and recognition of expected versus incurred credit losses for financial assets. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates,” which delays the effective date of ASU 2016-13 for smaller reporting companies and other non-SEC reporting entities. This applies to the Company’s equity method finance joint ventures, who are now required to adopt ASU 2016-13 for annual periods beginning after December 15, 2022 and interim periods within those annual periods. The standard, and its subsequent modification, will likely impact the results of operations and financial condition of the Company’s finance joint ventures. Therefore, adoption of the standard by the Company’s finance joint ventures likely will impact the Company’s “Investment in affiliates” and “Equity in net earnings of affiliates.” The Company’s finance joint ventures currently are evaluating the impact of ASU 2016-13 to their results of operations and financial condition.

2.    RESTRUCTURING EXPENSES

    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 in order to reduce costs in response to softening global demand. Restructuring expenses activity during the three months ended March 31, 2021 is summarized as follows (in millions):
Employee SeveranceFacility Closure CostsOther Related Closure CostsTotal
Balance as of December 31, 2020$11.1 $3.9 $1.8 $16.8 
First quarter 2021 provision1.3 — — 1.3 
First quarter 2021 cash activity(2.3)(3.9)— (6.2)
Foreign currency translation(0.1)— (0.2)(0.3)
Balance as of March 31, 2021$10.0 $— $1.6 $11.6 
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Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)




3.    STOCK COMPENSATION PLANS

    The Company recorded stock compensation expense as follows for the three months ended March 31, 2021 and 2020 (in millions):
Three Months Ended March 31,
20212020
Cost of goods sold$0.3 $0.1 
Selling, general and administrative expenses6.5 2.5 
Total stock compensation expense$6.8 $2.6 

Stock Incentive Plan

    Under the Company’s Long-Term Incentive Plan (the “Plan”), up to 10,000,000 shares of AGCO common stock may be issued. As of March 31, 2021, of the 10,000,000 shares reserved for issuance under the Plan, approximately 3,814,295 shares were available 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’ Compensation Committee, to make grants of performance shares, stock appreciation rights, restricted stock units and restricted stock awards to employees, officers and non-employee directors of the Company.

Long-Term Incentive Plan and Related Performance Awards

    The weighted average grant-date fair value of performance awards granted under the Plan during the three months ended March 31, 2021 and 2020 was $123.26 and $70.84, respectively.

    During the three months ended March 31, 2021, the Company granted 269,508 performance awards related to varying performance periods. The awards granted assume the maximum target levels of performance are achieved. The compensation expense associated with all awards granted under the Plan is amortized ratably over the vesting or performance period based on the Company’s projected assessment of the level of performance that will be achieved.

    Performance award transactions during the three months ended March 31, 2021 were as follows and are presented as if the Company were to achieve its maximum levels of performance under the plan awards:
Shares awarded but not earned at January 1582,952 
Shares awarded269,508 
Shares forfeited(1,660)
Shares earned(142)
Shares awarded but not earned at March 31850,658 

    As of March 31, 2021, 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 $41.6 million, and the weighted average period over which it is expected to be recognized is approximately two and one-half years. The compensation cost not yet recognized could be higher or lower based on actual achieved levels of performance.

Restricted Stock Unit Awards

    During the three months ended March 31, 2021, the Company granted 89,775 restricted stock unit (“RSU”) awards. These awards entitle the participant to receive one share of the Company’s common stock for each RSU granted and vest one-third per year over a three-year requisite service period. The compensation expense associated with these awards is being amortized ratably over the requisite service period for the awards that are expected to vest. The weighted average grant-date fair value of the RSUs granted under the Plan during the three months ended March 31, 2021 and 2020 was $113.63 and $70.83, respectively. RSU transactions during the three months ended March 31, 2021 were as follows:
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Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



RSUs awarded but not vested at January 1143,287 
RSUs awarded89,775 
RSUs forfeited(349)
RSUs vested(63,280)
RSUs awarded but not vested at March 31169,433 

    As of March 31, 2021, the total compensation cost related to the unvested RSUs not yet recognized was approximately $13.7 million, and the weighted average period over which it is expected to be recognized is approximately one and one-half years.

Stock-Settled Appreciation Rights

    The compensation expense associated with the stock-settled appreciation rights (“SSARs”) is amortized ratably over the requisite service period for the awards that are expected to vest. The Company estimates the fair value of the grants using the Black-Scholes option pricing model. SSAR transactions during the three months ended March 31, 2021 were as follows:
SSARs outstanding at January 1403,150 
SSARs granted— 
SSARs exercised(103,776)
SSARs canceled or forfeited(754)
SSARs outstanding at March 31298,620 

    The Company did not grant any SSARs during the three months ended March 31, 2021, and does not currently anticipate granting any SSARs in the future. As of March 31, 2021, the total compensation cost related to the unvested SSARs not yet recognized was approximately $1.7 million, and the weighted average period over which it is expected to be recognized is approximately two and one-half years.

Director Restricted Stock Grants

    The Plan provides for annual restricted stock grants of the Company’s common stock to all non-employee directors. The 2021 grant was made on April 22, 2021 and equated to 9,117 shares of common stock, of which 7,899 shares of common stock were issued after shares were withheld for taxes. The Company recorded stock compensation expense of approximately $1.4 million during the three months ended June 30, 2021 associated with these grants.

4.    GOODWILL AND OTHER INTANGIBLE ASSETS

    Changes in the carrying amount of goodwill during the three months ended March 31, 2021 are summarized as follows (in millions):
North AmericaSouth AmericaEurope/Middle EastAsia/Pacific/AfricaConsolidated
Balance as of December 31, 2020$593.4 $87.5 $501.3 $124.3 $1,306.5 
Foreign currency translation0.1 (8.1)(18.4)(3.3)(29.7)
Balance as of March 31, 2021$593.5 $79.4 $482.9 $121.0 $1,276.8 

    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 1 each fiscal year. The COVID-19 pandemic continues to adversely impact the global economy as a whole. Based on current macroeconomic conditions, the Company assessed its goodwill and other intangible assets for indications of impairment as of March 31, 2021 and concluded there were no indicators of impairment during the three months ended March 31, 2021.

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Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    Changes in the carrying amount of acquired intangible assets during the three months ended March 31, 2021 are summarized as follows (in millions):
Gross carrying amounts:Trademarks and TradenamesCustomer RelationshipsPatents and TechnologyLand Use RightsTotal
Balance as of December 31, 2020$206.0 $585.4 $158.0 $9.1 $958.5 
Foreign currency translation(3.4)(7.8)(3.6)— (14.8)
Balance as of March 31, 2021$202.6 $577.6 $154.4 $9.1 $943.7 
Accumulated amortization:Trademarks and TradenamesCustomer RelationshipsPatents and TechnologyLand Use RightsTotal
Balance as of December 31, 2020$95.4 $390.3 $103.2 $3.4 $592.3 
Amortization expense2.5 9.3 5.7 — 17.5 
Foreign currency translation(1.2)(5.9)(2.7)— (9.8)
Balance as of March 31, 2021$96.7 $393.7 $106.2 $3.4 $600.0 
Indefinite-lived intangible assets:Trademarks and
Tradenames
Balance as of December 31, 2020$89.4 
Foreign currency translation(1.6)
Balance as of March 31, 2021$87.8 
    The Company currently amortizes certain acquired intangible assets, primarily on a straight-line basis, over their estimated useful lives, which range from five to 50 years.

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Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



5.    INDEBTEDNESS

    Long-term debt consisted of the following at March 31, 2021 and December 31, 2020 (in millions):
March 31, 2021December 31, 2020
Senior term loan due 2022$176.1 $184.0 
Credit facility, expires 2023— 277.9 
1.002% Senior term loan due 2025
293.4 306.7 
Senior term loans due between 2021 and 2028771.1 806.0 
Other long-term debt10.0 10.5 
Debt issuance costs(2.1)(2.5)
1,248.5 1,582.6 
Senior term loans due 2021, net of debt issuance costs(309.7)(323.6)
Current portion of other long-term debt(2.2)(2.3)
Total long-term indebtedness, less current portion$936.6 $1,256.7 

Senior Term Loan Due 2022

    In October 2018, the Company entered into a term loan agreement with Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank”) in the amount of €150.0 million (or approximately $176.1 million as of March 31, 2021). The Company is permitted to prepay the term loan before its maturity date of October 28, 2022. Interest is payable on the term loan quarterly in arrears at an annual rate equal to the Euro Interbank Offered Rate (“EURIBOR”) plus a margin ranging from 0.875% to 1.875% based on the Company’s credit rating.

Credit Facility

    In October 2018, the Company entered into a multi-currency revolving credit facility of $800.0 million. The credit facility expires on October 17, 2023. Interest accrues on amounts outstanding under the credit facility, at the Company’s option, at either (1) LIBOR plus a margin ranging from 0.875% to 1.875% based on the Company’s credit rating, or (2) the base rate, which is equal to the higher of (i) the administrative agent’s base lending rate for the applicable currency, (ii) the federal funds rate plus 0.5%, and (iii) one-month LIBOR for loans denominated in U.S. dollars plus 1.0%, plus a margin ranging from 0.0% to 0.875% based on the Company’s credit rating. As of March 31, 2021 and December 31, 2020, the Company had no outstanding borrowings under the revolving credit facility and had the ability to borrow approximately $800.0 million under the revolving credit facility.

    On April 9, 2020, the Company entered into an amendment to its credit facility to include incremental term loans (“2020 term loans”) that allow the Company to borrow aggregate principal amounts of €235.0 million and $267.5 million (or an aggregate of approximately $543.3 million as of March 31, 2021). Amounts can be drawn incrementally at any time prior to maturity, but must be drawn down proportionately. Amounts drawn must be in a minimum principal amount of $100.0 million and integral multiples of $50.0 million in excess thereof. Once amounts have been repaid, those amounts are not permitted to be re-drawn. The maturity date of the 2020 term loans is April 8, 2022. Interest accrues on amounts outstanding under the 2020 term loans, at the Company's option, at either (1) LIBOR plus a margin based on the Company's credit rating ranging from 1.125% to 2.125% until April 8, 2021 and ranging from 1.375% to 2.375% thereafter, or (2) the base rate, which is equal to the higher of (i) the administrative agent’s base lending rate for the applicable currency, (ii) the federal funds rate plus 0.5%, and (iii) one-month LIBOR for loans denominated in U.S. dollars plus 1.0%, plus a margin based on the Company’s credit rating ranging from 0.125% to 1.375% until April 8, 2021 and ranging from 0.375% to 1.375% thereafter. The 2020 term loans contain covenants restricting, among other things, the incurrence of indebtedness and the making of certain payments, including dividends. The Company also has to fulfill financial covenants with respect to a total debt to EBITDA ratio and an interest coverage ratio. On April 15, 2020, the Company borrowed €117.5 million and $133.8 million of 2020 term loans. The Company simultaneously repaid €100.0 million (or approximately $108.7 million) of its revolving credit facility from the borrowings received. There were no other borrowings on the 2020 term loans subsequent to the initial borrowings in April 2020. On February 16, 2021, the Company repaid the 2020 term loans of €117.5 million and $133.8 million (or an aggregate of approximately $276.0 million as of February 16, 2021). As of March 31, 2021, the Company had the ability to borrow €117.5 million and $133.7 million (or an aggregate of approximately $271.6 million) of 2020 term loans.
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Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)




    Interest on U.S. dollar borrowings under the Company’s credit facility and the 2020 term loans is calculated based upon LIBOR. In the event that LIBOR is no longer published, interest will be calculated upon either a base rate or the secured overnight financing rate depending on cost. The credit facility and 2020 term loans also provide for an expedited amendment process once a replacement for LIBOR is established.

1.002% Senior Term Loan Due 2025

    On January 25, 2019, the Company borrowed €250.0 million (or approximately $293.4 million as of March 31, 2021) from the European Investment Bank. The loan matures on January 24, 2025. The Company is permitted to prepay the term loan before its maturity date. Interest is payable on the term loan at 1.002% per annum, payable semi-annually in arrears.

Senior Term Loans Due Between 2021 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, an aggregate amount of €56.0 million (or approximately $61.1 million) was repaid upon maturity of two term loan agreements in October 2019.

    In aggregate, the Company has indebtedness of €657.0 million (or approximately $771.1 million as of March 31, 2021) through this group of twelve remaining related term loan agreements. The provisions of the term loan agreements are substantially identical, with the exception of interest rate terms and maturities. The Company is permitted to prepay the term loans before their maturity dates. For the term loans with a fixed interest rate, interest is payable in arrears on an annual basis, with interest rates ranging from 0.70% to 2.26% and maturity dates between August 2021 and August 2028. For the term loans with a floating interest rate, interest is payable in arrears on a semi-annual basis, with interest rates based on the EURIBOR plus a margin ranging from 0.70% to 1.25% and maturity dates between August 2021 and August 2025.

Short-Term Borrowings

    As of March 31, 2021 and December 31, 2020, the Company had short-term borrowings due within one year of approximately $51.8 million and $33.8 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, 2021 and December 31, 2020, outstanding letters of credit totaled approximately $14.6 million and $14.4 million, respectively.

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Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



6.    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 $88.1 million and $91.2 million, respectively, of VAT tax credits, net of reserves, as of March 31, 2021 and December 31, 2020.

7.    INVENTORIES

    Inventories at March 31, 2021 and December 31, 2020 were as follows (in millions):
March 31, 2021December 31, 2020
Finished goods$768.9 $641.3 
Repair and replacement parts684.8 652.3 
Work in process317.0 175.1 
Raw materials589.6 505.7 
Inventories, net$2,360.3 $1,974.4 

8.    PRODUCT WARRANTY

    The warranty reserve activity for the three months ended March 31, 2021 and 2020 consisted of the following (in millions):
Three Months Ended March 31,
20212020
Balance at beginning of period$521.8 $392.8 
Accruals for warranties issued during the period93.3 56.3 
Settlements made (in cash or in kind) during the period(55.3)(49.4)
Foreign currency translation(17.8)(15.1)
Balance at March 31$542.0 $384.6 

    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 $450.0 million and $431.6 million of warranty reserves are included in “Accrued expenses” in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020, respectively. Approximately $92.0 million and $90.2 million of warranty reserves are included in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020, 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 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.”

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Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



9.    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 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, 2021 and 2020 is as follows (in millions, except per share data):
Three Months Ended March 31,
20212020
Basic net income per share:
Net income attributable to AGCO Corporation and subsidiaries$150.8 $64.7 
Weighted average number of common shares outstanding75.3 75.3 
Basic net income per share attributable to AGCO Corporation and subsidiaries$2.00 $0.86 
Diluted net income per share:
Net income attributable to AGCO Corporation and subsidiaries$150.8 $64.7 
Weighted average number of common shares outstanding75.3 75.3 
Dilutive SSARs, performance share awards and RSUs0.6 0.6 
Weighted average number of common shares and common share equivalents outstanding for purposes of computing diluted net income per share
75.9 75.9 
Diluted net income per share attributable to AGCO Corporation and subsidiaries$1.99 $0.85 

    There were no SSARs outstanding for the three months ended March 31, 2021 that had an antidilutive impact. SSARs to purchase approximately 0.7 million shares of the Company's common stock for the three months ended March 31, 2020 were outstanding but not included in the calculation of weighted average common and common equivalent shares outstanding because they had an antidilutive impact.

10.    INCOME TAXES

    At March 31, 2021 and December 31, 2020, the Company had approximately $237.4 million and $227.9 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, 2021 and December 31, 2020 exclude certain indirect favorable effects that relate to other tax jurisdictions of approximately $68.5 million and $64.1 million, respectively. At March 31, 2021 and December 31, 2020, the Company had approximately $55.2 million and $57.1 million, respectively, of accrued or deferred taxes related to uncertain income tax positions connected with ongoing income tax audits in various jurisdictions that it expects to settle or pay in the next 12 months. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. At March 31, 2021 and December 31, 2020, the Company had accrued interest and penalties related to unrecognized tax benefits of approximately $39.6 million and $39.4 million, respectively. Generally, tax years 2015 through 2020 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, 2021, 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 the United States, Brazil and certain other 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.

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Table of Contents
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



11.    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.

    During 2021 and 2020, 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 $232.1 million and $395.8 million as of March 31, 2021 and December 31, 2020, respectively.

Steel Commodity Contracts

    During 2021 and 2020, the Company designated certain steel commodity contracts as cash flow hedges of expected future purchases of steel. The total notional value of derivatives that were designated as cash flow hedges was approximately $20.9 million and $14.7 million as of March 31, 2021 and December 31, 2020, 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, 2021 and 2020 (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)
2021
Foreign currency contracts(1)
$(6.8)Cost of goods sold$(3.7)$1,808.2 
Commodity contracts(2)
7.8 Cost of goods sold— $1,808.2 
Total $1.0 $(3.7)
2020
Foreign currency contracts$9.5 Cost of goods sold$0.1 $1,477.8