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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, 2022
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)
Delaware 58-1960019
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
4205 River Green Parkway
Duluth, Georgia 30096
(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 Class Trading Symbol Name of exchange on which registered
Common stock AGCO New 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 5, 2022, there were 74,543,687 shares of the registrant’s common stock, par value of $0.01 per share, outstanding.


AGCO CORPORATION AND SUBSIDIARIES
INDEX
    Page
Numbers
Item 1.
3
4
5
6
7
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

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, 2022 December 31, 2021
ASSETS
Current Assets:
Cash, cash equivalents and restricted cash $ 655.7  $ 889.1 
Accounts and notes receivable, net 1,108.2  991.5 
Inventories, net 3,259.7  2,593.7 
Other current assets 613.4  539.8 
Total current assets 5,637.0  5,014.1 
Property, plant and equipment, net 1,463.6  1,464.8 
Right-of-use lease assets 163.9  154.1 
Investments in affiliates 423.2  413.5 
Deferred tax assets 186.4  169.3 
Other assets 300.9  293.3 
Intangible assets, net 396.8  392.2 
Goodwill 1,304.7  1,280.8 
Total assets $ 9,876.5  $ 9,182.1 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt $ 2.1  $ 2.1 
Short-term borrowings 93.2  90.8 
Accounts payable 1,276.4  1,078.3 
Accrued expenses 1,844.0  2,062.2 
Other current liabilities 219.5  221.2 
Total current liabilities 3,435.2  3,454.6 
Long-term debt, less current portion and debt issuance costs 1,899.4  1,411.2 
Operating lease liabilities 125.8  115.5 
Pension and postretirement health care benefits 208.7  209.0 
Deferred tax liabilities 113.6  116.9 
Other noncurrent liabilities 418.9  431.1 
Total liabilities 6,201.6  5,738.3 
Commitments and contingencies (Note 18)
Stockholders’ Equity:
AGCO Corporation stockholders’ equity:
Preferred stock; $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding in 2022 and 2021
 —  — 
Common stock; $0.01 par value, 150,000,000 shares authorized, 74,542,772 and 74,441,312 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively
 0.7  0.7 
Additional paid-in capital 2.9  3.9 
Retained earnings 5,306.2  5,182.2 
Accumulated other comprehensive loss (1,635.0) (1,770.9)
Total AGCO Corporation stockholders’ equity 3,674.8  3,415.9 
Noncontrolling interests 0.1  27.9 
Total stockholders’ equity 3,674.9  3,443.8 
Total liabilities and stockholders’ equity $ 9,876.5  $ 9,182.1 
See accompanying notes to condensed consolidated financial statements.
3
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in millions, except per share data)
Three Months Ended March 31,
2022 2021
Net sales $ 2,685.7  $ 2,378.7 
Cost of goods sold 2,054.4  1,808.2 
Gross profit 631.3  570.5 
Selling, general and administrative expenses 271.1  260.6 
Operating expenses:
Engineering expenses
 100.3  96.3 
Amortization of intangibles
 15.3  17.5 
Impairment charges 36.0  — 
Restructuring expenses
 3.0  1.3 
Bad debt expense (credit) 1.6  (0.4)
Income from operations 204.0  195.2 
Interest expense, net
 0.4  3.4 
Other expense, net
 17.5  11.5 
Income before income taxes and equity in net earnings of affiliates 186.1  180.3 
Income tax provision
 60.2  43.6 
Income before equity in net earnings of affiliates 125.9  136.7 
Equity in net earnings of affiliates
 11.1  14.7 
Net income 137.0  151.4 
Net loss (income) attributable to noncontrolling interests 14.8  (0.6)
Net income attributable to AGCO Corporation and subsidiaries $ 151.8  $ 150.8 
Net income per common share attributable to AGCO Corporation and subsidiaries:
Basic
 $ 2.03  $ 2.00 
Diluted
 $ 2.03  $ 1.99 
Cash dividends declared and paid per common share $ 0.20  $ 0.16 
Weighted average number of common and common equivalent shares outstanding:
Basic
 74.6  75.3 
Diluted
 74.9  75.9 
See accompanying notes to condensed consolidated financial statements.
4

AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited and in millions)
Three Months Ended March 31,
2022 2021
Net income $ 137.0  $ 151.4 
Other comprehensive income (loss), net of reclassification adjustments:
Foreign currency translation adjustments 138.3  (47.3)
Defined benefit pension plans, net of tax 1.7  35.1 
Deferred gains and losses on derivatives, net of tax (3.3) 4.7 
Other comprehensive income (loss), net of reclassification adjustments 136.7  (7.5)
Comprehensive income 273.7  143.9 
Comprehensive loss (income) attributable to noncontrolling interests 14.0  (0.2)
Comprehensive income attributable to AGCO Corporation and subsidiaries $ 287.7  $ 143.7 
See accompanying notes to condensed consolidated financial statements.
5
AGCO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in millions)
Three Months Ended March 31,
2022 2021
Cash flows from operating activities:
Net income $ 137.0  $ 151.4 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation 54.7  54.8 
Amortization of intangibles 15.3  17.5 
Stock compensation expense 7.0  6.8 
Impairment charges 36.0  — 
Equity in net earnings of affiliates, net of cash received (11.1) (14.7)
Deferred income tax (benefit) provision (5.0) 4.1 
Other (8.8) 1.9 
Changes in operating assets and liabilities:
Accounts and notes receivable, net (113.3) (232.3)
Inventories, net (595.2) (466.1)
Other current and noncurrent assets (48.7) (45.8)
Accounts payable 193.4  296.7 
Accrued expenses (219.5) (175.7)
Other current and noncurrent liabilities (18.3) 86.1 
Total adjustments (713.5) (466.7)
Net cash used in operating activities (576.5) (315.3)
Cash flows from investing activities:
Purchases of property, plant and equipment (66.3) (63.5)
Proceeds from sale of property, plant and equipment 0.3  0.1 
Investments in unconsolidated affiliates (0.1) (0.1)
Purchase of businesses, net, and net of cash acquired (61.9) (0.8)
Other —  (2.5)
Net cash used in investing activities (128.0) (66.8)
Cash flows from financing activities:
Proceeds from indebtedness 980.7  195.3 
Repayments of indebtedness (459.1) (416.8)
Payment of dividends to stockholders (14.9) (12.0)
Payment of minimum tax withholdings on stock compensation (16.0) (26.5)
Distributions to noncontrolling interest (11.6) — 
Net cash provided by (used in) financing activities 479.1  (260.0)
Effects of exchange rate changes on cash, cash equivalents and restricted cash (8.0) (23.3)
Decrease in cash, cash equivalents and restricted cash (233.4) (665.4)
Cash, cash equivalents and restricted cash, beginning of period 889.1  1,119.1 
Cash, cash equivalents and restricted cash, end of period $ 655.7  $ 453.7 
See accompanying notes to condensed consolidated financial statements.
6
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, 2021. 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 future impact of the COVID-19 pandemic on its business, including any related impacts on the global economic and political environments, market demand for its products, supply chain disruptions, possible workforce unavailability, exchange rates, commodity prices and availability of financing, and their impact to the Company’s net sales, production volumes, costs and overall financial conditions.

New Accounting Pronouncements to be Adopted
    In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13 “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” 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, which are now required to adopt ASU 2016-13 for annual periods beginning after December 15, 2022 and interim periods within those annual periods. The standard, and its subsequent modification, likely will impact the results of operations and financial condition of the Company’s finance joint ventures. Therefore, adoption of the standard by the Company’s finance joint ventures likely will impact the Company’s “Investments in affiliates” and “Equity in net earnings of affiliates.” The Company’s finance joint ventures currently are evaluating the impact of ASU 2016-13 to their results of operations and financial condition.
    In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance,” which improves the transparency of government assistance received by most business entities by requiring the disclosure of: (1) the types of government assistance received; (2) the accounting for such assistance; and (3) the effect of the assistance on a business entity's financial statements. This guidance will be effective for annual periods beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the impact of the new
guidance on the Company's annual disclosures.

    Additionally, the Company will adopt the following pronouncement, effective for fiscal years beginning after December 15, 2022, which is not expected to have a material impact the Company's results of operations, financial condition and cash flows.
•ASU 2021-08 – “Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”
7
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



2.     ACQUISITIONS

    On May 2, 2022, the Company acquired JCA Industries, Inc. (“JCA”) for 63.0 million Canadian dollars (or approximately $49.2 million as of May 2, 2022). JCA is located in Winnipeg, Manitoba, Canada, and specializes in the design of electronic systems and software development to automate and control agricultural equipment. The Company is in the process of determining the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed.

    On January 1, 2022, the Company acquired Appareo Systems, LLC (“Appareo”) for approximately $61.9 million, net of approximately $0.5 million of cash. As a result of the acquisition of the remaining 50% interest in IAS, the Company's previous operating joint venture with Appareo, the Company recorded a gain of approximately $3.4 million on the remeasurement of the previously held equity interest within “Other expense, net” in the Company's Condensed Consolidated Statements of Operations. The fair value of the previously held 50% interest in the joint venture as of the acquisition date was approximately $11.2 million. Appareo is headquartered in Fargo, North Dakota and offers engineering, manufacturing, and technology for end-to-end product development. The Company allocated the purchase price to the assets acquired and liabilities assumed based on preliminary estimates of their fair values as of the acquisition date. The acquired net assets primarily consisted of accounts receivable, inventories, other current and noncurrent assets, assets held for sale, lease right-of-use assets and liabilities, accounts payable, accrued expenses, other current and noncurrent liabilities, property, plant and equipment, as well as customer relationship, technology, non-competition agreements and trademark identifiable intangible assets. The Company recorded approximately $20.5 million of goodwill associated with the acquisition. The results of operations of Appareo have been included in the Company’s Condensed Consolidated Financial Statements as of and from the date of acquisition. The associated goodwill has been included in the Company’s North America geographical reportable segment. Proforma financial information related to the acquisition of Appareo was not material to the Company’s results of operations.

    The preliminary estimate of acquired identifiable intangible assets of Appareo as of the date of the acquisition are summarized in the following table (in millions):

Intangible Asset
 Amount Weighted-Average Useful Life
Customer relationships $ 9.8  12 years
Technology 6.3 9 years
Trademarks 4.9 10 years
Non-competition agreements 1.4  5 years
$ 22.4 

8
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)




3.    RESTRUCTURING EXPENSES AND IMPAIRMENT CHARGES

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. Restructuring expenses activity during the three months ended March 31, 2022 is summarized as follows (in millions):
Employee Severance Other Related Closure Costs Total
Balance as of December 31, 2021 $ 14.5  $ 0.2  $ 14.7 
First quarter 2022 provision 3.0  —  3.0 
First quarter 2022 cash activity (3.4) —  (3.4)
Foreign currency translation (0.3) 0.1  (0.2)
Balance as of March 31, 2022 $ 13.8  $ 0.3  $ 14.1 

Impairment Charges

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

4.    STOCK COMPENSATION PLANS

    The Company recorded stock compensation expense as follows for the three months ended March 31, 2022 and 2021 (in millions):
Three Months Ended March 31,
2022 2021
Cost of goods sold $ 0.3  $ 0.3 
Selling, general and administrative expenses 6.7  6.5 
Total stock compensation expense $ 7.0  $ 6.8 

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, 2022, of the 10,000,000 shares reserved for issuance under the Plan, 3,823,268 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’ Talent and Compensation Committee, to make grants of performance shares, stock appreciation rights, restricted stock units and restricted stock awards to employees, officers and non-employee directors of the Company.

Long-Term Incentive Plan and Related Performance Awards

    The weighted average grant-date fair value of performance awards granted under the Plan during the three months ended March 31, 2022 and 2021 was $124.12 and $123.26, respectively.

9
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    During the three months ended March 31, 2022, the Company granted 274,566 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. The 2022 and 2021 grants of performance award shares are subject to a total shareholder return modifier.

    Performance award transactions during the three months ended March 31, 2022 are presented as if the Company were to achieve its maximum levels of performance and assume the 2022 and 2021 performance awards subject to the total shareholder return modifier are achieved at target levels under the plan awards, and were as follows:
Shares awarded but not earned at January 1 514,714 
Shares awarded 274,566 
Shares forfeited (8,780)
Shares vested (2,534)
Shares awarded but not earned at March 31 777,966 

    As of March 31, 2022, the total compensation cost related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performance that will be achieved, was approximately $46.0 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

    The weighted average grant-date fair value of the restricted stock units (“RSUs”) granted under the Plan during the three months ended March 31, 2022 and 2021 was $117.08 and $113.63, respectively.

    During the three months ended March 31, 2022, the Company granted 91,583 RSU awards. RSUs granted in 2022 and 2021 entitle the participant to receive one share of the Company’s common stock for each RSU granted and vest one-third per year over a three-year requisite service period. The 2020 grant of RSU’s to certain executives has a three-year cliff vesting requirement subject to adjustment based on a total shareholder return modifier relative to the Company's defined peer group. The compensation expense associated with these awards is being amortized ratably over the requisite service period for the awards that are expected to vest.

    RSU transactions during the three months ended March 31, 2022 assume the 2020 RSUs subject to the total shareholder return modifier are achieved at target levels, and were as follows:
RSUs awarded but not vested at January 1 159,228 
RSUs awarded 91,583 
RSUs forfeited (2,400)
RSUs vested (65,025)
RSUs awarded but not vested at March 31 183,386 

    As of March 31, 2022, the total compensation cost related to the unvested RSUs not yet recognized was approximately $17.0 million, and the weighted average period over which it is expected to be recognized is approximately one and one-half years.

10
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



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, 2022 were as follows:
SSARs outstanding at January 1 194,611 
SSARs granted — 
SSARs exercised (38,051)
SSARs canceled or forfeited — 
SSARs outstanding at March 31 156,560 

    The Company did not grant any SSARs during the three months ended March 31, 2022, and does not currently anticipate granting any SSARs in the future. As of March 31, 2022, the total compensation cost related to the unvested SSARs not yet recognized was approximately $0.7 million, and the weighted average period over which it is expected to be recognized is approximately one 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 2022 grant was made on April 28, 2022 and equated to 11,664 shares of common stock, of which 10,301 shares of common stock were issued after shares were withheld for taxes. The Company recorded stock compensation expense of approximately $1.5 million during the three months ended June 30, 2022 associated with these grants.


5.    GOODWILL AND OTHER INTANGIBLE ASSETS

    Changes in the carrying amount of goodwill during the three months ended March 31, 2022 are summarized as follows (in millions):
North America South America Europe/Middle East Asia/Pacific/Africa Consolidated
Balance as of December 31, 2021 $ 609.6  $ 81.7  $ 469.5  $ 120.0  $ 1,280.8 
Acquisition 20.5  —  —  —  20.5 
Foreign currency translation 0.1  14.1  (9.5) (1.3) 3.4 
Balance as of March 31, 2022 $ 630.2  $ 95.8  $ 460.0  $ 118.7  $ 1,304.7 

    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.

11
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    Changes in the carrying amount of acquired intangible assets during the three months ended March 31, 2022 are summarized as follows (in millions):
Gross carrying amounts: Trademarks and Tradenames Customer Relationships Patents and Technology Land Use Rights Total
Balance as of December 31, 2021 $ 189.0  $ 568.6  $ 139.9  $ 7.0  $ 904.5 
Acquisition 6.3  9.8  6.3  —  22.4 
Foreign currency translation (1.3) 0.9  (1.5) 0.1  (1.8)
Balance as of March 31, 2022 $ 194.0  $ 579.3  $ 144.7  $ 7.1  $ 925.1 
Accumulated amortization: Trademarks and Tradenames Customer Relationships Patents and Technology Land Use Rights Total
Balance as of December 31, 2021 $ 93.1  $ 409.7  $ 94.7  $ 1.5  $ 599.0 
Amortization expense 3.4  9.5  2.4  —  15.3 
Foreign currency translation (0.4) 1.4  (1.2) 0.1  (0.1)
Balance as of March 31, 2022 $ 96.1  $ 420.6  $ 95.9  $ 1.6  $ 614.2 
Indefinite-lived intangible assets: Trademarks and
Tradenames
Balance as of December 31, 2021 $ 86.7 
Foreign currency translation (0.8)
Balance as of March 31, 2022 $ 85.9 
    
    The Company currently amortizes certain acquired intangible assets, primarily on a straight-line basis, over their estimated useful lives, which range from three to 50 years.

12
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



6.    INDEBTEDNESS

    Long-term debt consisted of the following at March 31, 2022 and December 31, 2021 (in millions):
March 31, 2022 December 31, 2021
Credit facility, expires 2023 $ 600.0  $ — 
1.002% Senior term loan due 2025
 277.3  283.7 
Senior term loans due between 2023 and 2028 355.5  445.9 
0.800% Senior notes due 2028
 665.6  680.8 
Other long-term debt 7.5  7.7 
Debt issuance costs (4.4) (4.8)
1,901.5  1,413.3 
Current portion of other long-term debt (2.1) (2.1)
Total long-term indebtedness, less current portion $ 1,899.4  $ 1,411.2 

Short-term Credit Facility

    In April 2022, the Company entered into a short-term revolving credit facility of €225.0 million with Coöperatieve Rabobank U.A., or “Rabobank.” The €225.0 million (or approximately $240.0 million) was borrowed on April 26, 2022, with a maturity date of March 31, 2023. Interest accrues on amounts outstanding under the credit facility, at the Company’s option, at either (1) the secured overnight financing rate (“SOFR”) for borrowings denominated in U.S. dollars or Euro Interbank Offered Rate (“EURIBOR”) for borrowings denominated in Euros plus a margin of 0.75%, or (2) the base rate, which is equal to the higher of (i) the administrative agent’s base lending rate for the applicable currency, (ii) the federal funds rate plus 0.5%, or (iii) one-month adjusted term SOFR plus 1.0%, plus a margin of 0.75%. The credit facility contains covenants restricting, among other things, the incurrence of indebtedness and the making of certain payments, including dividends. The Company also has to fulfill financial covenants with respect to a total debt to EBITDA ratio and an interest coverage ratio.

0.800% Senior Notes Due 2028

    On October 6, 2021, the Company issued €600.0 million (or approximately $665.6 million as of March 31, 2022) 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.

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, 2022 the Company had $600.0 million of outstanding borrowings under the revolving credit facility and had the ability to borrow approximately $200.0 million under the revolving credit facility. During April 2022, the Company borrowed $200.0 million under its revolving credit facility. As of December 31, 2021 the Company had no outstanding borrowings under the revolving credit facility and had the ability to borrow approximately $800.0 million under the facility.

    On April 9, 2020, the Company entered into an amendment to its credit facility to include incremental term loans (“2020 term loans”) that allow the Company to borrow aggregate principal amounts of €235.0 million and $267.5 million (or an aggregate of approximately $528.2 million as of March 31, 2022). 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 was April 8, 2022. On April 15, 2020, the Company borrowed €117.5 million and $133.8 million of 2020 term loans. There were no other borrowings on the 2020 term loans subsequent to
13
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



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, 2022, the Company had the ability to borrow €117.5 million and $133.7 million (or an aggregate of approximately $264.0 million) of the 2020 term loans.

    As described above, the Company’s credit facility allows it to select from among various interest rate options. Due to the phase-out of LIBOR, LIBOR-based rates no longer will be available for borrowings denominated in U.S. dollars after December 31, 2022, and already are not available for loans denominated in other currencies. The interest rates reflected in the Company’s credit facility were designed to accommodate the discontinuation of LIBOR-based rates and a shift to SOFR or a base rate, and, as such, the Company does not believe that moving to other rates will have a materially adverse effect on the Company’s results of operations or financial position. In addition, the credit facility agreement also provides for an expedited amendment process once a replacement for LIBOR is established, which the Company may elect to utilize to add additional interest-rate alternatives.

1.002% Senior Term Loan Due 2025

    On January 25, 2019, the Company borrowed €250.0 million (or approximately $277.3 million as of March 31, 2022) 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 2023 and 2028

    In October 2016, the Company borrowed an aggregate amount of €375.0 million through a group of seven related term loan agreements, and in August 2018, the Company borrowed an additional aggregate amount of €338.0 million through a group of another seven related term loan agreements. Of the 2016 term loans, the Company repaid an aggregate amount of €56.0 million (or approximately $61.1 million) upon maturity of two term loan agreements in October 2019. Additionally, the Company repaid €192.0 million (or approximately $223.8 million as of October 19, 2021) upon maturity of two 2016 senior term loans in October 2021. In August 2021, prior to the issuance of the senior notes due 2028, the Company repaid two of its 2018 senior term loans upon maturity with an aggregate amount of €72.0 million (or approximately $85.5 million as of August 1, 2021). On February 1, 2022, the Company repaid €72.5 million (or approximately $81.7 million) of one of its 2018 senior term loans due August 2023 with existing cash on hand.

    In aggregate, as of March 31, 2022, the Company had indebtedness of €320.5 million (or approximately $355.5 million as of March 31, 2022) through a group of seven 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, 2022, for the term loans with a fixed interest rate, interest is payable in arrears on an annual basis, with interest rates ranging from 0.90% to 2.26% and maturity dates between August 2023 and August 2028. For the term loans with a floating interest rate, interest is payable in arrears on a semi-annual basis, with interest rates based on the EURIBOR plus a margin ranging from 1.10% to 1.25% and maturity dates between October 2023 and August 2025.

Short-Term Borrowings

    As of March 31, 2022 and December 31, 2021, the Company had short-term borrowings due within one year of approximately $93.2 million and $90.8 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 both March 31, 2022 and December 31, 2021, outstanding letters of credit totaled approximately $14.6 million.

7.    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
14
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



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 $142.3 million and $114.4 million, respectively, of VAT tax credits, net of reserves, as of March 31, 2022 and December 31, 2021.

8.    INVENTORIES

    Inventories at March 31, 2022 and December 31, 2021 were as follows (in millions):
March 31, 2022 December 31, 2021
Finished goods $ 857.1  $ 718.2 
Repair and replacement parts 747.0  697.8 
Work in process 593.0  282.8 
Raw materials 1,062.6  894.9 
Inventories, net $ 3,259.7  $ 2,593.7 

9.    PRODUCT WARRANTY

    The warranty reserve activity for the three months ended March 31, 2022 and 2021, including deferred revenue associated with the Company's extended warranties that have been sold, was as follows (in millions):
Three Months Ended March 31,
2022 2021
Balance at beginning of period $ 592.5  $ 521.8 
Accruals for warranties issued during the period 83.3  93.3 
Settlements made (in cash or in kind) during the period (57.7) (55.3)
Foreign currency translation (3.6) (17.8)
Balance at March 31 $ 614.5  $ 542.0 

    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. Approximately $519.6 million, $492.7 million and $450.0 million of warranty reserves are included in “Accrued expenses” in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2022, December 31, 2021 and March 31, 2021, respectively. Approximately $94.9 million, $99.8 million and $92.0 million of warranty reserves are included in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets as of March 31, 2022, December 31, 2021, and March 31, 2021, 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.”

10.    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.

15
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    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, 2022 and 2021 is as follows (in millions, except per share data):
Three Months Ended March 31,
2022 2021
Basic net income per share:
Net income attributable to AGCO Corporation and subsidiaries $ 151.8  $ 150.8 
Weighted average number of common shares outstanding 74.6  75.3 
Basic net income per share attributable to AGCO Corporation and subsidiaries $ 2.03  $ 2.00 
Diluted net income per share:
Net income attributable to AGCO Corporation and subsidiaries $ 151.8  $ 150.8 
Weighted average number of common shares outstanding 74.6  75.3 
Dilutive SSARs, performance share awards and RSUs 0.3  0.6 
Weighted average number of common shares and common share equivalents outstanding for purposes of computing diluted net income per share
 74.9  75.9 
Diluted net income per share attributable to AGCO Corporation and subsidiaries $ 2.03  $ 1.99 

    There were no SSARs outstanding for the three months ended March 31, 2022 and 2021 that had an antidilutive impact.

11.    INCOME TAXES

    At March 31, 2022 and December 31, 2021, the Company had approximately $256.5 million and $246.4 million, respectively, of gross unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized. Gross unrecognized income tax benefits as of March 31, 2022 and December 31, 2021 exclude certain indirect favorable effects that relate to other tax jurisdictions of approximately $61.5 million and $70.2 million, respectively. In addition, the gross unrecognized income tax benefits as of March 31, 2022 and December 31, 2021 exclude certain deposits made in a foreign jurisdiction of approximately $46.8 million and $6.7 million, respectively, associated with an ongoing audit. At March 31, 2022 and December 31, 2021, the Company had approximately $12.7 million and $40.1 million, respectively, of accrued or deferred taxes related to uncertain income tax positions connected with ongoing income tax audits in various jurisdictions that it expects to settle or pay in the next 12 months, reflected in “Other current liabilities” in the Company’s Condensed Consolidated Balance Sheets. At March 31, 2022 and December 31, 2021, the Company had approximately $234.3 million and $196.7 million, respectively, of accrued taxes and approximately $9.5 million and $9.6 million, respectively, of deferred taxes related to uncertain tax positions that it expects to settle or pay beyond 12 months, reflected in “Other noncurrent liabilities” and “Deferred tax liabilities,” respectively, 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, 2022 and December 31, 2021, the Company had accrued interest and penalties related to unrecognized tax benefits of approximately $31.7 million and $32.7 million, respectively. Generally, tax years 2016 through 2021 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, 2022, a number of income tax examinations in foreign jurisdictions are ongoing.

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

16
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



12.    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 2022 and 2021, 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 $235.9 million as of March 31, 2022. The Company did not have any derivatives that were designated as cash flow hedges related to foreign currency contracts as of December 31, 2021.

Steel Commodity Contracts

    During 2022 and 2021, 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 $21.6 million and $31.9 million as of March 31, 2022 and December 31, 2021, 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, 2022 and 2021 (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)
2022
Foreign currency contracts(1)
 $ (3.8) Cost of goods sold $ (0.1) $ 2,054.4 
Commodity contracts(2)
 1.4  Cost of goods sold 1.0  $ 2,054.4 
Total $ (2.4) $ 0.9 
2021
Foreign currency contracts $ (6.8) Cost of goods sold $ (3.7) $ 1,808.2 
Commodity contracts 7.8  Cost of goods sold —  1,808.2 
Total $ 1.0  $ (3.7)
(1) The outstanding contracts as of March 31, 2022 range in maturity through December 2022.
(2) The outstanding contracts as of March 31, 2022 range in maturity through August 2022.

17
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    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, 2022 (in millions):    

Before-Tax Amount Income Tax After-Tax Amount
Accumulated derivative net losses as of December 31, 2021 $ (0.5) $ (0.1) $ (0.4)
Net changes in fair value of derivatives (3.1) (0.7) (2.4)
Net gains reclassified from accumulated other comprehensive loss into income (1.2) (0.3) (0.9)
Accumulated derivative net losses as of March 31, 2022 $ (4.8) $ (1.1) $ (3.7)
    As of March 31, 2022, approximately $2.4 million of derivatives net losses, before taxes, remain in accumulated other comprehensive loss held by the Company related to commodity contracts, as the inventory associated with the losses 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.

    In January 2018, the Company entered into a cross currency swap contract as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment. The cross currency swap expired on January 19, 2021. At maturity of the cross currency swap contract, the Company delivered the notional amount of approximately €245.7 million (or approximately $297.1 million as of January 19, 2021) and received $300.0 million from the counterparties, resulting in a gain of approximately $2.9 million that was recognized in accumulated other comprehensive loss. The Company received quarterly interest payments from the counterparties based on a fixed interest rate until the maturity of the cross currency swap.

    On January 29, 2021, the Company entered into a new cross currency swap contract as a hedge of its net investment in foreign operations to offset foreign currency translation gains or losses on the net investment. The cross currency swap has an expiration date of January 29, 2028. At maturity of the cross currency swap contract, the Company will deliver the notional amount of approximately €247.9 million (or approximately $275.0 million as of March 31, 2022) 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.

    The following table summarizes the notional values of the instrument designated as a net investment hedge (in millions):
Notional Amount as of
March 31, 2022 December 31, 2021
Cross currency swap contract $ 300.0  $ 300.0 

18
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    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, 2022 and 2021 (in millions):
Gain (Loss) Recognized in Accumulated
Other Comprehensive Loss for the Three Months Ended
Before-Tax Amount Income Tax After-Tax Amount
March 31, 2022 $ 4.2  $ 1.1  $ 3.1 
March 31, 2021 (4.1) —  (4.1)

Derivative Transactions Not Designated as Hedging Instruments

    During 2022 and 2021, the Company entered into foreign currency contracts to economically hedge receivables and payables on the Company and its subsidiaries’ balance sheets that are denominated in foreign currencies other than the functional currency. These contracts were 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, 2022 and December 31, 2021, the Company had outstanding foreign currency contracts with a notional amount of approximately $3,360.9 million and $3,681.9 million, respectively.

    The following table summarizes the impact that changes in the fair value of derivatives not designated as hedging instruments had on net income (in millions):
(Loss) Gain Recognized in Net Income for the Three Months Ended
Classification of (Loss) Gain
 March 31, 2022 March 31, 2021
Foreign currency contracts Other expense, net $ (13.8) $ 34.4 

    The table below sets forth the fair value of derivative instruments as of March 31, 2022 (in millions):
Asset Derivatives as of
March 31, 2022		 Liability Derivatives as of
March 31, 2022
Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Derivative instruments designated as hedging instruments:
Foreign currency contracts Other current assets $ 1.3  Other current liabilities $ 6.3 
Commodity contracts Other current assets 3.2  Other current liabilities 0.7 
Cross currency swap contract Other noncurrent assets 16.7  Other noncurrent liabilities — 
Derivative instruments not designated as hedging instruments:
Foreign currency contracts(1)
 Other current assets 10.9  Other current liabilities 22.7 
Total derivative instruments $ 32.1  $ 29.7 
(1) The outstanding contracts as of March 31, 2022 range in maturity through October 2022.
19
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    The table below sets forth the fair value of derivative instruments as of December 31, 2021 (in millions):
Asset Derivatives as of
December 31, 2021		 Liability Derivatives as of
December 31, 2021
Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Derivative instruments designated as hedging instruments:
Foreign currency contracts Other current assets $ —  Other current liabilities $ — 
Commodity contracts Other current assets 0.2  Other current liabilities 2.0 
Cross currency swap contract Other noncurrent assets 12.5  Other noncurrent liabilities — 
Derivative instruments not designated as hedging instruments:
Foreign currency contracts(1)
 Other current assets 15.1  Other current liabilities 5.1 
Total derivative instruments $ 27.8  $ 7.1 
(1) The outstanding contracts as of December 31, 2021 range in maturity through October 2022.

20
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



13.    CHANGES IN STOCKHOLDERS’ EQUITY

    The following tables set forth changes in stockholders’ equity attributed to AGCO Corporation and its subsidiaries and to noncontrolling interests for the three months ended March 31, 2022 and 2021 (in millions):
Common
Stock		 Additional
Paid-in Capital		 Retained
Earnings		 Accumulated Other
Comprehensive Loss		 Noncontrolling
Interests		 Total Stockholders’
Equity
Balance, December 31, 2021 $ 0.7  $ 3.9  $ 5,182.2  $ (1,770.9) $ 27.9  $ 3,443.8 
Stock compensation —  7.0  —  —  —  7.0 
Issuance of stock awards
 —  (7.0) (12.9) —  —  (19.9)
SSARs exercised —  (1.0) —  —  —  (1.0)
Comprehensive income:
Net income (loss) —  —  151.8  —  (14.8) 137.0 
Other comprehensive loss, net of reclassification adjustments:
Foreign currency translation adjustments
 —  —  —  137.5  0.8  138.3 
Defined benefit pension plans, net of tax —  —  —  1.7  —  1.7 
Deferred gains and losses on derivatives, net of tax
 —  —  —  (3.3) —  (3.3)
Payment of dividends to stockholders —  —  (14.9) —  —  (14.9)
Distributions to noncontrolling interest —  —  —  —  (13.8) (13.8)
Balance, March 31, 2022 $ 0.7  $ 2.9  $ 5,306.2  $ (1,635.0) $ 0.1  $ 3,674.9 
Common
Stock		 Additional
Paid-in Capital		 Retained
Earnings		 Accumulated Other
Comprehensive Loss		 Noncontrolling
Interests		 Total Stockholders’
Equity
Balance, December 31, 2020 $ 0.8  $ 30.9  $ 4,759.1  $ (1,810.8) $ 38.0  $ 3,018.0 
Stock compensation —  6.8  —  —  —  6.8 
Issuance of stock awards
 —  (29.5) —  —  —  (29.5)
SSARs exercised —  (2.5) —  —  —  (2.5)
Comprehensive income:
Net income —  —  150.8  —  0.6  151.4 
Other comprehensive loss, net of reclassification adjustments:
Foreign currency translation adjustments
 —  —  —  (46.9) (0.4) (47.3)
Defined benefit pension plans, net of tax
 —  —  —  35.1  —  35.1 
Deferred gains and losses on derivatives, net of tax
 —  —  —  4.7  —  4.7 
Payment of dividends to stockholders
 —  —  (12.0) —  —  (12.0)
Balance, March 31, 2021 $ 0.8  $ 5.7  $ 4,897.9  $ (1,817.9) $ 38.2  $ 3,124.7 

21
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    Total comprehensive (loss) income attributable to noncontrolling interests for the three months ended March 31, 2022 and 2021 was as follows (in millions):
Three Months Ended March 31,
2022 2021
Net (loss) income $ (14.8) $ 0.6 
Other comprehensive income (loss):
Foreign currency translation adjustments 0.8  (0.4)
Total comprehensive (loss) income $ (14.0) $ 0.2 

    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, 2022 (in millions):
Defined Benefit Pension Plans Deferred Net (Losses) Gains on Derivatives Cumulative Translation Adjustment Total
Accumulated other comprehensive loss,
December 31, 2021
 $ (230.4) $ (0.4) $ (1,540.1) $ (1,770.9)
Other comprehensive income (loss) before reclassifications —  (2.4) 137.5  135.1 
Net losses (gains) reclassified from accumulated other comprehensive loss 1.7  (0.9) —  0.8 
Other comprehensive income (loss), net of reclassification adjustments 1.7  (3.3) 137.5  135.9 
Accumulated other comprehensive loss,
March 31, 2022
 $ (228.7) $ (3.7) $ (1,402.6) $ (1,635.0)

    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, 2022 and 2021 (in millions):
Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item within the Condensed Consolidated
Statements of Operations
Details about Accumulated Other Comprehensive Loss Components
Three Months Ended March 31, 2022(1)
Three Months Ended March 31, 2021(1)
Derivatives:
Net losses on foreign currency contracts $ 0.1  $ 3.4  Cost of goods sold
Net gains on commodity contracts $ (1.3) $ —  Cost of goods sold
Reclassification before tax (1.2) 3.4 
0.3  0.3  Income tax provision
Reclassification net of tax $ (0.9) $ 3.7 
Defined benefit pension plans:
Amortization of net actuarial losses $ 2.2  $ 4.0 
Other expense, net(2)
Amortization of prior service cost 0.2  0.5 
Other expense, net(2)
Reclassification before tax 2.4  4.5 
(0.7) (0.6) Income tax provision
Reclassification net of tax $ 1.7  $ 3.9 
Net losses reclassified from accumulated other comprehensive loss $ 0.8  $ 7.6 
(1) Losses (gains) included within the Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021, respectively.
(2) These accumulated other comprehensive loss components are included in the computation of net periodic pension and postretirement benefit cost. See Note 15 for additional information on the Company’s defined benefit pension plans.
22
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)




Share Repurchase Program

    In November 2021, the Company entered into an accelerated share repurchase (“ASR”) agreement with a financial institution to repurchase an aggregate of $60.0 million shares of its common stock. The Company received 393,733 shares in this transaction as of December 31, 2021. On January 19, 2022, the Company received an additional 113,824 shares upon final settlement of its November 2021 ASR agreement. All shares received under the ASR agreement discussed above 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.

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

Dividends

    On April 28, 2022, the Company's Board of Directors approved an increase to its quarterly dividend commencing in the second quarter of 2022 by 20% to $0.24 per common share and declared a special dividend of $4.50 per common share that will be paid during the second quarter of 2022.

14.    ACCOUNTS RECEIVABLE SALES AGREEMENTS

    The Company has accounts receivable sales agreements that permit the sale, on an ongoing basis, of a majority of its wholesale receivables in North America, Europe and Brazil to its U.S., Canadian, European and Brazilian finance joint ventures. As of March 31, 2022 and December 31, 2021, the cash received from receivables sold under the U.S., Canadian, European and Brazilian accounts receivable sales agreements was approximately $1.2 billion and $1.3 billion, respectively.

    Under the terms of the accounts receivable sales agreements in North America, Europe and Brazil, the Company pays an annual fee related to the servicing of the receivables sold. The Company also pays the respective AGCO Finance entities a subsidized interest payment with respect to the accounts receivable sales agreements, calculated based upon LIBOR plus a margin on any non-interest bearing accounts receivable outstanding and sold under the accounts receivable sales agreements. Following the phase out of LIBOR-denominated rates, the Company expects this funding to be based upon the interest rate charged by Rabobank to its affiliate, which, in turn, such affiliate then lends to the AGCO Finance entities plus an agreed-upon margin. These fees are reflected within losses on the sales of receivables included within “Other expense, net” in the Company’s Condensed Consolidated Statements of Operations. The Company does not service the receivables after the sales occur and does not maintain any direct retained interest in the receivables. The Company accounts for the receivable sales agreements as off-balance sheet transactions.

    In addition, the Company sells certain trade receivables under factoring arrangements to other financial institutions around the world. As of March 31, 2022 and December 31, 2021, the cash received from these arrangements was approximately $181.2 million and $215.4 million, respectively.

    Losses on sales of receivables associated with the accounts receivable sales agreements discussed above, reflected within “Other expense, net” in the Company’s Condensed Consolidated Statements of Operations, were approximately $7.9 million and $4.6 million for the three months ended March 31, 2022 and 2021, respectively.

    The Company’s finance joint ventures in Europe, Brazil and Australia also provide wholesale financing directly to the Company’s dealers. The receivables associated with these arrangements are without recourse to the Company. The Company does not service the receivables after the sale occurs and does not maintain any direct retained interest in the receivables. As of March 31, 2022 and December 31, 2021, these finance joint ventures had approximately $87.8 million and $82.1 million, respectively, of outstanding accounts receivable associated with these arrangements. The Company accounts for these arrangements as off-balance sheet transactions.

23
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



15.    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, 2022 and 2021 are set forth below (in millions):
Three Months Ended March 31,
Pension benefits 2022 2021
Service cost $ 3.3  $ 4.1 
Interest cost 4.0  3.2 
Expected return on plan assets (4.6) (7.8)
Amortization of net actuarial losses 2.2  4.0 
Amortization of prior service cost 0.1  0.5 
Curtailment(1)
 —  (1.2)
Net periodic pension cost $ 5.0  $ 2.8 
(1) During the three months ended March 31, 2021, the Company amended its Executive Nonqualified Pension Plan (“ENPP”) to freeze the plan as of December 31, 2024 to future salary benefit accruals, and to eliminate a life-time annuity feature for participants reaching age 65 subsequent to December 31, 2022. This amendment resulted in a curtailment gain related to the ENPP's net prior service credit.
Three Months Ended March 31,
Postretirement benefits 2022 2021
Service cost $ 0.1  $ 0.1 
Interest cost 0.2  0.2 
Amortization of prior service cost 0.1  — 
Net periodic postretirement benefit cost $ 0.4  $ 0.3 

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

    The following table summarizes the activity in accumulated other comprehensive loss related to the Company's defined pension and postretirement benefit plans during the three months ended March 31, 2022 (in millions):
Before-Tax Amount Income Tax After-Tax Amount
Accumulated other comprehensive loss, December 31, 2021 $ (302.4) $ (72.0) $ (230.4)
Amortization of net actuarial losses 2.2  0.6  1.6 
Amortization of prior service cost 0.2  0.1  0.1 
Accumulated other comprehensive loss as of March 31, 2022 $ (300.0) $ (71.3) $ (228.7)

    During the three months ended March 31, 2022, the Company made approximately $10.6 million of contributions to its defined pension benefit plans. The Company currently estimates its minimum contributions for 2022 to its defined pension benefit plans will aggregate approximately $36.4 million.

    During the three months ended March 31, 2022, the Company made approximately $0.3 million of contributions to its postretirement health care and life insurance benefit plans. The Company currently estimates that it will make approximately $1.5 million of contributions to its postretirement health care and life insurance benefit plans during 2022.

24
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



16.    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 12 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, 2022 and December 31, 2021 are summarized below (in millions):
As of March 31, 2022
Level 1 Level 2 Level 3 Total
Derivative assets $ —  $ 32.1  $ —  $ 32.1 
Derivative liabilities —  29.7  —  29.7 
As of December 31, 2021
Level 1 Level 2 Level 3 Total
Derivative assets $ —  $ 27.8  $ —  $ 27.8 
Derivative liabilities —  7.1  —  7.1 

    The carrying amounts of long-term debt under the Company’s 1.002% senior term loan due 2025 and senior term loans due between 2023 and 2028 approximate fair value based on the borrowing rates currently available to the Company for loans with similar terms and average maturities. At March 31, 2022, the estimated fair value of the Company's 0.800% senior notes due 2028, based on listed market values, was approximately €541.7 million (or approximately $600.9 million as of March 31, 2022), compared to the carrying value of €600.0 million (or approximately $665.6 million as of March 31, 2022). See Note 6 for additional information on the Company’s long-term debt.

25
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



17.    SEGMENT REPORTING

    The Company’s four reportable segments distribute a full range of agricultural equipment and related replacement parts. The Company evaluates segment performance primarily based on income from operations. Sales for each segment are based on the location of the third-party customer. The Company’s selling, general and administrative expenses and engineering expenses are generally charged to each segment based on the region and division where the expenses are incurred. As a result, the components of income from operations for one segment may not be comparable to another segment. Segment results for the three months ended March 31, 2022 and 2021 and assets as of March 31, 2022 and December 31, 2021 based on the Company’s reportable segments are as follows (in millions):
Three Months Ended March 31, North America South America Europe/Middle East Asia/Pacific/Africa Consolidated
2022
Net sales $ 701.0  $ 356.4  $ 1,403.1  $ 225.2  $ 2,685.7 
Income from operations 54.8  46.1  162.3  34.0  297.2 
Depreciation 15.2  7.0  28.2  4.3  54.7 
Capital expenditures 15.7  10.0  39.2  1.4  66.3 
2021
Net sales $ 611.1  $ 240.5  $ 1,327.2  $ 199.9  $ 2,378.7 
Income from operations 74.9  16.2  144.3  21.0  256.4 
Depreciation 15.6  6.6  28.4  4.2  54.8 
Capital expenditures 12.3  6.6  43.5  1.1  63.5 
Assets
As of March 31, 2022 $ 1,594.6  $ 1,151.3  $ 2,598.1  $ 656.1  $ 6,000.1 
As of December 31, 2021 1,328.1  922.7  2,348.7  610.6  5,210.1 
    A reconciliation from the segment information to the consolidated balances for income from operations and total assets is set forth below (in millions):
Three Months Ended March 31,
2022 2021
Segment income from operations $ 297.2  $ 256.4 
Impairment charges (36.0) — 
Corporate expenses (32.2) (35.9)
Amortization of intangibles (15.3) (17.5)
Stock compensation expense (6.7) (6.5)
Restructuring expenses (3.0) (1.3)
Consolidated income from operations $ 204.0  $ 195.2 
March 31, 2022 December 31, 2021
Segment assets $ 6,000.1  $ 5,210.1 
Cash, cash equivalents and restricted cash 655.7  889.1 
Investments in affiliates 423.2  413.5 
Deferred tax assets, other current and noncurrent assets 1,096.0  996.4 
Intangible assets, net 396.8  392.2 
Goodwill 1,304.7  1,280.8 
Consolidated total assets $ 9,876.5  $ 9,182.1 

26
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



18.    COMMITMENTS AND CONTINGENCIES

Off-Balance Sheet Arrangements

Guarantees

    The Company maintains a remarketing agreement with its U.S. finance joint venture, AGCO Finance LLC, whereby the Company is obligated to repurchase up to $6.0 million of repossessed equipment each calendar year. The Company believes that any losses that it might incur on the resale of this equipment will not be material, due to the fair value of the underlying equipment.

    At March 31, 2022, the Company has outstanding guarantees of indebtedness owed to related and third parties of approximately $24.9 million, primarily related to dealer and end-user financing of equipment. Such guarantees generally obligate the Company to repay outstanding finance obligations owed to financial institutions if dealers or end users default on such loans through 2027. Losses under such guarantees historically have been insignificant. In addition, the Company generally would expect to be able to recover a significant portion of the amounts paid under such guarantees from the sale of the underlying financed farm equipment, as the fair value of such equipment is expected to be sufficient to offset a substantial portion of the amounts paid. The Company also has obligations to guarantee indebtedness owed to certain of its finance joint ventures if dealers or end users default on loans. Losses under such guarantees historically have been insignificant, and the guarantees are not material. The Company believes the credit risk associated with these guarantees is not material.

    In addition, at March 31, 2022, the Company had accrued approximately $22.4 million of outstanding guarantees of residual values that may be owed to its finance joint ventures in the United States and Canada due upon expiration of certain eligible operating leases between the finance joint ventures and end users. The maximum potential amount of future payments under these guarantees is approximately $174.4 million.

Leases

    Lease payment amounts for operating and finance leases with remaining terms greater than one year as of March 31, 2022 and December 31, 2021 were as follows (in millions):
March 31, 2022 December 31, 2021
Operating Leases(1)
 Finance Leases
Operating Leases(1)
 Finance Leases
2022 $ 35.1  $ 3.4  $ 45.7  $ 4.0 
2023 39.1  0.8  36.2  0.9 
2024 27.6  0.5  24.5  0.6 
2025 19.9  0.4  17.3  0.4 
2026 14.5  0.2  12.3  0.2 
Thereafter 52.3  6.4  39.1  6.3 
Total lease payments 188.5  11.7  175.1  12.4 
Less: imputed interest(2)
 (21.0) (2.3) (17.3) (2.5)
Present value of leased liabilities $ 167.5  $ 9.4  $ 157.8  $ 9.9 
(1) Operating lease payments include options to extend or terminate at the Company's sole discretion, which are included in the determination of lease term when they are reasonably certain to be exercised.
(2) Calculated for each lease using either the implicit interest rate or the incremental borrowing rate when the implicit interest rate is not readily available.

Other

    At March 31, 2022, the Company had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $3,596.8 million. The outstanding contracts as of March 31, 2022 range in maturity through December 2022. The Company also had outstanding designated steel commodity contracts with a gross notional amount of approximately $21.6 million that range in maturity through August 2022.

27
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    The Company sells a majority of its wholesale receivables in North America, Europe and Brazil to its U.S., Canadian, European and Brazilian finance joint ventures. The Company also sells certain accounts receivable under factoring arrangements to financial institutions around the world. The Company accounts for the sale of such receivables as off-balance sheet transactions.

Contingencies

    In August 2008, as part of routine audits, the Brazilian taxing authorities disallowed deductions relating to the amortization of certain goodwill recognized in connection with a reorganization of the Company’s Brazilian operations and the related transfer of certain assets to the Company’s Brazilian subsidiaries. The amount of the tax disallowance through March 31, 2022, not including interest and penalties, was approximately 131.5 million Brazilian reais (or approximately $27.8 million). The amount ultimately in dispute will be significantly greater because of interest and penalties. The Company has been advised by its legal and tax advisors that its position with respect to the deductions is allowable under the tax laws of Brazil. The Company is contesting the disallowance and believes that it is not likely that the assessment, interest or penalties will be required to be paid. However, the ultimate outcome will not be determined until the Brazilian tax appeal process is complete, which could take several years.

    During 2017, the Company purchased Precision Planting, which provides precision agricultural technology solutions. In 2018, Deere & Company filed separate complaints in the U.S. District Court of Delaware against the Company and its Precision Planting subsidiary alleging that certain products of those entities infringe certain patents of Deere. The two complaints subsequently were consolidated into a single case, Case No. 1:18-cv-00827-CFC (CONSOLIDATED), that currently is scheduled for trial in July 2022. It is the Company’s position that no patents have been, or are continuing to be, infringed, and the Company is vigorously contesting the allegations in the complaint. The Company has an indemnity right under the purchase agreement related to the acquisition of Precision Planting from its previous owner. Pursuant to that right, the previous owner of Precision Planting currently is responsible for the litigation costs associated with the complaint and is obligated to reimburse AGCO for some or all of the damages in the event of an adverse outcome in the litigation. In the event of an adverse outcome, the Company estimates that the range of possible damages, based upon the advice of third-party specialists, would be up to approximately $7.0 million. Deere & Company has provided an estimate of its damages that is significantly higher than the Company estimates and that the Company believes does not have merit.

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

19.    REVENUE

Contract Liabilities

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

28
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    Significant changes in the balance of contract liabilities for the three months ended March 31, 2022 and 2021 were as follows (in millions):
Three Months Ended March 31,
2022 2021
Balance at beginning of period $ 226.2  $ 172.0 
Advance consideration received 43.0  57.1 
Revenue recognized during the period for extended warranty contracts, maintenance services and technology services (18.6) (13.0)
Revenue recognized during the period related to grain storage and protein production systems (14.6) (27.2)
Foreign currency translation (3.6) (2.6)
Balance at March 31 $ 232.4  $ 186.3 
    The contract liabilities are classified as either “Accrued expenses” or “Other current liabilities” and “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets. During the three months ended March 31, 2022, we recognized approximately $24.0 million of revenue that was recorded as a contract liability at the beginning of 2022. During the three months ended March 31, 2021, we recognized approximately $25.7 million of revenue that was recorded as a contract liability at the beginning of 2021.

Remaining Performance Obligations

    The estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2022 are $58.7 million for the remainder of 2022, $69.1 million in 2023, $42.5 million in 2024, $20.2 million in 2025 and $10.9 million thereafter, and relate primarily to extended warranty contracts. The Company applied the practical expedient in ASU 2014-09 and has not disclosed information about remaining performance obligations that have original expected durations of 12 months or less.

29
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



Disaggregated Revenue

    Net sales for the three months ended March 31, 2022 disaggregated by primary geographical markets and major products consisted of the following (in millions):
North America South America
Europe/Middle East(1)
 Asia/Pacific/Africa
Consolidated(1)
Primary geographical markets:
United States $ 570.3  $ —  $ —  $ —  $ 570.3 
Canada 101.1  —  —  —  101.1 
South America —  352.9  —  —  352.9 
Germany —  —  317.2  —  317.2 
France —  —  271.6  —  271.6 
United Kingdom and Ireland —  —  145.4  —  145.4 
Finland and Scandinavia —  —  197.0  —  197.0 
Other Europe —  —  438.6  —  438.6 
Middle East and Algeria —  —  33.4  —  33.4 
Africa —  —  —  36.0  36.0 
Asia —  —  —  104.6  104.6 
Australia and New Zealand —  —  —  84.6  84.6 
Mexico, Central America and Caribbean 29.6  3.5  —  —  33.1 
$ 701.0  $ 356.4  $ 1,403.1  $ 225.2  $ 2,685.7 
Major products:
Tractors $ 251.9  $ 206.6  $ 915.1  $ 125.4  $ 1,499.0 
Replacement parts 94.6  38.2  286.1  26.7  445.6 
Grain storage and protein production systems 131.1  40.0  31.3  37.5  239.9 
Combines, application equipment and other machinery 223.4  71.6  170.6  35.6  501.2 
$ 701.0  $ 356.4  $ 1,403.1  $ 225.2  $ 2,685.7 
(1) Rounding may impact the summation of amounts.

30
Notes to Condensed Consolidated Financial Statements - Continued
(unaudited)



    Net sales for the three months ended March 31, 2021 disaggregated by primary geographical markets and major products consisted of the following (in millions):
North America South America Europe/Middle East Asia/Pacific/Africa Consolidated
Primary geographical markets:
United States $ 498.7  $ —  $ —  $ —  $ 498.7 
Canada 91.6  —  —  —  91.6 
South America —  238.6  —  —  238.6 
Germany —  —  345.5  —  345.5 
France —  —  215.5  —  215.5 
United Kingdom and Ireland —  —  128.4  —  128.4 
Finland and Scandinavia —  —  157.4  —  157.4 
Other Europe —  —  423.5  —  423.5 
Middle East and Algeria —  —  56.9  —  56.9 
Africa —  —  —  25.8  25.8 
Asia —  —  —  102.3  102.3 
Australia and New Zealand —  —  —  71.8  71.8 
Mexico, Central America and Caribbean 20.8  1.9  —  —  22.7 
$ 611.1  $ 240.5  $ 1,327.2  $ 199.9  $ 2,378.7 
Major products:
Tractors $ 190.3  $ 111.2  $ 881.3  $ 94.0  $ 1,276.8 
Replacement parts 85.1  29.0  261.0  23.5  398.6 
Grain storage and protein production systems 106.4  21.6  29.1  56.9  214.0 
Combines, application equipment and other machinery 229.3  78.7  155.8  25.5  489.3 
$ 611.1  $ 240.5  $ 1,327.2  $ 199.9  $ 2,378.7 



31
ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL
    Our operations are subject to the cyclical nature of the agricultural industry. Sales of our equipment are affected by, among other things, changes in net cash farm income, farm land values, weather conditions, the demand for agricultural commodities, commodity prices and general economic conditions. We record sales when we sell equipment and replacement parts to our independent dealers, distributors and other customers. To the extent possible, we attempt to sell products to our dealers and distributors on a level basis throughout the year to reduce the effect of seasonal demands on manufacturing operations and to minimize our investment in inventories. However, retail sales by dealers to farmers are highly seasonal and largely are a function of the timing of the planting and harvesting seasons. As a result, our net sales historically have been the lowest in the first quarter and have increased in subsequent quarters.

    The COVID-19 pandemic and other economic and geopolitical factors, including inflation and the conflict in Ukraine, continue to create volatility in the global economy, including employment disruptions, supply chain constraints and delays in deliveries, as well as logistics interruptions. These factors along with increasing industrial demand are negatively affecting production levels, particularly caused by delays in the receipts of parts and components. Supply chain issues of particular concern include a wide range of parts and components with a portion arising from the global semiconductor shortage. We may continue to face supplier bottlenecks and delays in all regions as well as challenges with freight logistics, and we continue to work to mitigate the impact of these issues in order to meet end-market demand.

    On May 5, 2022, we discovered that we had been subject to a ransomware cyber attack. Upon becoming aware of the attack and in order to minimize any damage to our information technology environment, we suspended the use of several key systems, which, in turn, resulted in the closing of a majority of our production sites and parts operations. Our efforts to restore our systems and business operations are ongoing. Currently we anticipate restarting some the effected production sites and parts operations at the end of the week of May 9, 2022, with the balance progressively restarting during the week of May 16, 2022, although damage from the attack could require more in-depth, and lengthy, remediation and recovery than currently is expected. We have not fully assessed the impact of the attack, although we expect to be able to mitigate its effects on our operating results by increasing production over the remainder of 2022.

RESULTS OF OPERATIONS
    For the three months ended March 31, 2022, we generated net income of approximately $151.8 million, or $2.03 per share, compared to approximately $150.8 million, or $1.99 per share, for the same period in 2021.

    Net sales during the three months ended March 31, 2022 were approximately $2,685.7 million, which were approximately 12.9% higher than the same period in 2021. This increase was primarily the result of robust end-market demand and favorable pricing during the three months ended March 31, 2022 compared to the same period in 2021. Regionally, net sales were higher in all regions for the three months ended March 31, 2022 compared to 2021.

    Income from operations for the three months ended March 31, 2022 was approximately $204.0 million compared to approximately $195.2 million for the same period in 2021. This increase was primarily the result of higher net sales and production volumes during the three months ended March 31, 2022, which helped to offset material, freight and labor cost inflation compared to the same period in 2021. Income from operations for the three months ended March 31, 2022 was also impacted by impairment charges recorded during the first quarter related to our joint ventures in Russia of approximately $36.0 million, as discussed below.

    Regionally, income from operations in our Europe/Middle East (“EME”) region increased for the three months ended March 31, 2022 compared to the same period in 2021, primarily due to higher net sales and production volumes. In our North American region, income from operations decreased for the three months ended March 31, 2022 compared to the same period in 2021. The decrease was primarily due to a weaker sales mix primarily caused by chip-related supply chain constraints related to our Precision Planting business, as well as the impact of higher production costs. In our South American region, income from operations increased in the three months ended March 31, 2022 compared to the same period in 2021. The increase reflects significant increases in end-market demand and a favorable sales mix. In our Asia/Pacific/African (“APA”) region, income from operations increased for the three months ended March 31, 2022 compared to the same period in 2021, primarily due to higher net sales and a richer sales mix.

32
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(continued)
Industry Market Conditions
    Agricultural commodity prices continue to support favorable farm fundamentals resulting in strong demand for machinery. Despite favorable demand, supply chain constraints and limited global industry production have negatively impacted the level of retail sales in the first quarter of 2022. Future demand for agricultural equipment will be influenced by farm income, which is a function of commodity and protein prices, crop yields and government support.

    In North America, industry unit retail sales of utility and high horsepower tractors for the first three months of 2022 decreased approximately 1% compared to the same period in 2021. Industry unit retail sales of combines for the first three months of 2022 decreased approximately 23% compared to the same period in 2021. Lower sales of smaller tractors, which declined from record levels in 2021, were partially offset by increased sales of high horsepower units. Despite continued strong demand, sales of large row-crop agricultural equipment declined from the same period in 2021 due to supply chain constraints, which limited deliveries.

    In Western Europe, industry unit retail sales of tractors decreased approximately 6% for the first three months of 2022 compared to the same period in 2021. Industry unit retail sales of combines for the first three months of 2022 decreased approximately 10% compared to the first three months of 2021. Industry retail tractor sales were restricted by supply chain challenges during the first three months of 2022 compared to the same period in 2021.