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Commitments and Contingencies | 3 Months Ended
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Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | 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, 2023, the Company has outstanding guarantees of indebtedness owed to related and third parties of approximately $30.3 million, primarily related to dealer and end-user financing of equipment. Such guarantees generally obligate the Company to repay outstanding finance obligations owed to financial institutions if dealers or end users default on such loans through 2028. Losses under such guarantees historically have been insignificant. In addition, the Company generally would expect to be able to recover a significant portion of the amounts paid under such guarantees from the sale of the underlying financed farm equipment, as the fair value of such equipment is expected to be sufficient to offset a substantial portion of the amounts paid. The Company also has obligations to guarantee indebtedness owed to certain of its finance joint ventures if dealers or end users default on loans. Losses under such guarantees historically have been insignificant, and the guarantees are not material. The Company believes the credit risk associated with these guarantees is not material. In addition, at March 31, 2023, the Company had accrued approximately $16.7 million of outstanding guarantees of residual values that may be owed to its finance joint ventures in the United States and Canada due upon expiration of certain eligible operating leases between the finance joint ventures and end users. The maximum potential amount of future payments under these guarantees is approximately $190.4 million. Leases Lease payment amounts for operating and finance leases with remaining terms greater than one year as of March 31, 2023 and December 31, 2022 were as follows (in millions):
|  | March 31, 2023 |  | December 31, 2022
|  | Operating Leases(1) |  | Finance Leases |  | Operating Leases(1) |  | Finance Leases
2023 |  | $ | 36.6 |  |  | $ | 0.6 |  |  | $ | 47.8 |  |  | $ | 0.8 |
2024 |  | 38.2 |  |  | 0.6 |  |  | 36.6 |  |  | 0.6 |
2025 |  | 28.7 |  |  | 0.5 |  |  | 27.0 |  |  | 0.4 |
2026 |  | 20.4 |  |  | 0.3 |  |  | 19.1 |  |  | 0.2 |
2027 |  | 13.9 |  |  | 0.3 |  |  | 13.4 |  |  | 0.2 |
Thereafter |  | 51.4 |  |  | 5.8 |  |  | 51.2 |  |  | 6.0 |
Total lease payments |  | 189.2 |  |  | 8.1 |  |  | 195.1 |  |  | 8.2 |
Less: imputed interest(2) |  | (24.7) |  |  | (2.0) |  |  | (27.5) |  |  | (2.1) |
Present value of leased liabilities |  | $ | 164.5 |  |  | $ | 6.1 |  |  | $ | 167.6 |  |  | $ | 6.1 |
__________________________________ (1) Operating lease payments include options to extend or terminate at the Company's sole discretion, which are included in the determination of lease term when they are reasonably certain to be exercised. (2) Calculated for each lease using either the implicit interest rate or the incremental borrowing rate when the implicit interest rate is not readily available. Other At March 31, 2023, the Company had outstanding designated and non-designated foreign exchange contracts with a gross notional amount of approximately $4,188.5 million. The outstanding contracts as of March 31, 2023 range in maturity through December 2023. The Company also had outstanding designated steel commodity contracts with a gross notional amount of approximately $7.2 million that range in maturity through July 2023. The Company sells a majority of its wholesale receivables in North America, Europe and Brazil to its U.S., Canadian, European and Brazilian finance joint ventures. 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 2008 and 2012, as part of routine audits, the Brazilian taxing authorities disallowed deductions relating to the amortization of certain goodwill recognized in connection with a reorganization of the Company’s Brazilian operations and the related transfer of certain assets to the Company’s Brazilian subsidiaries. The amount of the tax disallowance through March 31, 2023, not including interest and penalties, was approximately 131.5 million Brazilian reais (or approximately $25.8 million). The amount ultimately in dispute would be significantly greater because of interest and penalties. The Company has been historically and currently advised by its legal and tax advisors that its position with respect to the deductions is allowable under the tax laws of Brazil. The Company has been contesting the disallowance and has historically maintained that it is not likely that the assessment, interest or penalties would be required to be paid. The ultimate outcome of the case would not have been determined until the Brazilian tax appeal process was completed and the Company’s legal advisors have indicated that would likely take several years. On January 12, 2023, the Brazilian government issued a “Litigation Zero” tax amnesty program, whereby cases being disputed at the administrative court level of review for a period of more than ten years can be considered for amnesty. If companies choose to enroll in the amnesty program, it would not be considered an admission of guilt with respect to outstanding cases. The amnesty program allows companies to settle outstanding contested cases at a significant monetary discount. After weighing various impacts involved with enrollment in the tax amnesty program, including potential interest, penalties and legal costs, the Company concluded that it would apply to enroll in the program prior to the quarter ended March 31, 2023. The Company recorded its best estimate of the ultimate settlement under the amnesty program of approximately $29.5 million within “Income tax provision” for the three months ended March 31, 2023, net of associated U.S. income tax credits. The Company paid an initial installment payment of 40.6 million Brazilian reais (or approximately $7.7 million) in March 2023 related to the enrollment. During 2017, the Company purchased Precision Planting, which provides precision agricultural technology solutions. In 2018, Deere & Company (“Deere”) filed separate complaints in the U.S. District Court of Delaware against the Company and Precision Planting alleging that certain products of those entities infringed certain patents of Deere. The two complaints subsequently were consolidated into a single case, Case No. 1:18-cv-00827-CFC. In July 2022, the case was tried before a jury, which determined that the Company and Precision Planting had not infringed the Deere patents. Following customary post-trial procedures, the Court entered a judgement in the Company’s favor, and in April 2023 Deere filed a Notice of Appeal. 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. 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.

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