We are a leading manufacturer and distributor of agricultural equipment and
related replacement parts throughout the world. We sell a full range of
agricultural equipment, including tractors, combines, self-propelled sprayers,
hay tools, forage equipment, seeding and tillage equipment, implements, and
grain storage and protein production systems. Our products are widely recognized
in the agricultural equipment industry and are marketed under a number of
well-known brand names, including: Challenger®, Fendt®, GSI®, Massey Ferguson®
and Valtra®. We distribute most of our products through a combination of
approximately 3,275 dealers and distributors as well as associates and
licensees. In addition, we provide retail financing through our finance joint
ventures with Rabobank.

Financial Highlights

We sell our equipment and replacement parts to our independent dealers,
distributors and other customers. A large majority of our sales are to
independent dealers and distributors that sell our products to end users. To the
extent practicable, 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
our manufacturing operations and to minimize our investment in inventories.
However, retail sales by dealers to farmers are highly seasonal and are linked
to the planting and harvesting seasons. In certain markets, particularly in
North America, there is often a time lag, which varies based on the timing and
level of retail demand, between our sale of the equipment to the dealer and the
dealer's sale to a retail customer.

The following table sets forth, for the periods indicated, the percentage
relationship to net sales of certain items included in our Consolidated
Statements of Operations:
                                                             Years Ended December 31,
                                                          2019(1)     2018(1)     2017(1)
Net sales                                                 100.0 %      100.0 %    100.0  %
Cost of goods sold                                         78.1         78.6       78.7
Gross profit                                               21.9         21.4       21.3
Selling, general and administrative expenses               11.5         11.4       11.6
Engineering expenses                                        3.8          3.8        3.9
Impairment charges                                          2.0            -          -
Amortization of intangibles                                 0.7          0.7        0.7
Restructuring expenses                                      0.1          0.1        0.1
Bad debt expense                                            0.1          0.1        0.1
Income from operations                                      3.9          5.3        4.9
Interest expense, net                                       0.2          0.6        0.5
Other expense, net                                          0.7

0.8 0.9 Income before income taxes and equity in net earnings of affiliates

                                                  2.9          3.9        3.4
Income tax provision                                        2.0          1.2        1.6
Income before equity in net earnings of affiliates          0.9          2.7        1.8
Equity in net earnings of affiliates                        0.5          0.4        0.5
Net income                                                  1.4          3.0        2.3
Net loss (income) attributable to noncontrolling
interests                                                     -            -          -
Net income attributable to AGCO Corporation and
subsidiaries                                                1.4 %

3.1 % 2.2 %

___________________________________

(1) Rounding may impact summation of amounts.


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2019 Compared to 2018

Net income attributable to AGCO Corporation and subsidiaries for 2019 was $125.2
million, or $1.63 per diluted share, compared to $285.5 million, or $3.58 per
diluted share for 2018.

Net sales for 2019 were approximately $9,041.4 million, or 3.3% lower than 2018,
primarily due to decreased sales volumes in our South American and
Asia/Pacific/African ("APA") regions and the negative impact of currency
translation. Income from operations was $348.1 million in 2019 compared to
$489.0 million in 2018. The decrease in income from operations during 2019 was
primarily the result of non-cash goodwill and other intangible asset impairment
charges recorded during the fourth quarter of 2019 related to our grain storage
and protein production systems operations in our Europe/Middle East ("EME")
region. Excluding the impact of $176.6 million of non-cash impairment charges,
income from operations during 2019 increased compared to 2018 due to improved
gross profit margins, which largely offset the adverse impact of foreign
currency translation.

Regionally, income from operations in EME increased by approximately $37.1
million in 2019 compared to 2018, driven primarily by the benefit of higher
sales and margin improvement resulting from the impacts of pricing, better
factory productivity and a favorable sales mix. In our North American region,
income from operations improved by approximately $18.5 million. Increased net
sales levels and the benefit of favorable pricing impacts and expense control
initiatives contributed to the improvement in the region. In South America,
operating losses increased approximately $29.3 million in 2019 compared to 2018.
The losses reflect low levels of industry demand and company production, as well
as unfavorable cost impacts of newer product technology into our Brazilian
factories. Income from operations in our APA region decreased approximately $6.2
million in 2019 compared to 2018, primarily due to lower net sales and
production volumes.

Industry Market Conditions



Farm economics remain challenged across the major crop-producing regions, and
low commodity prices and international trade tensions continue to weigh on
farmer sentiment, resulting in decreased global equipment demand during 2019. In
North America, industry unit retail sales of utility and high horsepower
tractors for 2019 decreased slightly compared to 2018. Industry unit retail
sales of combines for 2019 decreased approximately 6% compared to 2018. A
difficult growing season, as well as the uncertainty regarding the outcome of
trade negotiations related to agricultural products and delayed market
facilitation aid payments in the U.S., all contributed to weak demand in the
large farm sector during 2019. In Western Europe, industry unit retail sales of
tractors for 2019 declined approximately 2% compared to 2018. Industry unit
retail sales of combines for 2019 decreased approximately 18% compared to 2018.
Industry demand trended progressively lower throughout 2019 due to the impact of
lower wheat and milk prices as well as higher input costs for dairy producers.
During 2019, industry sales declines experienced in Italy, the United Kingdom
and Germany were partially offset by industry sales growth in France and
Finland. In South America, industry unit retail sales of tractors for 2019
dropped approximately 16% compared to 2018. Industry unit retail sales of
combines for 2019 decreased approximately 5% compared to 2018. Despite improved
grain production in Brazil and Argentina, industry demand was negatively
impacted by interruptions in the government subsidized finance program in Brazil
and weak economic conditions in Argentina.

Results of Operations



Net sales for 2019 were $9,041.4 million compared to $9,352.0 million for 2018,
primarily as a result of sales declines in our South American and APA regions,
partially offset by sales growth in our North American and EME regions, on a
constant currency basis. The following table sets forth, for the year ended
December 31, 2019, the impact to net sales of currency translation by
geographical segment (in millions, except percentages):
                                                                                        Change due to Currency
                                                                 Change                      Translation
                                2019          2018           $            %              $                  %
North America                $ 2,191.8     $ 2,180.1     $   11.7         0.5  %   $     (8.5 )             (0.4 )%
South America                    802.2         959.0       (156.8 )     (16.4 )%        (49.9 )             (5.2 )%
EME                            5,328.8       5,385.1        (56.3 )      (1.0 )%       (295.0 )             (5.5 )%
APA                              718.6         827.8       (109.2 )     (13.2 )%        (35.8 )             (4.3 )%
                             $ 9,041.4     $ 9,352.0     $ (310.6 )      (3.3 )%   $   (389.2 )             (4.2 )%




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Regionally, net sales in North America increased during 2019 compared to 2018,
with sales growth driven by a growth in net sales of low horsepower tractors,
combines and parts, largely offset by a reduction in sales of protein production
equipment and utility tractors. In the EME region, net sales, excluding the
negative impact of foreign currency translation, increased during 2019 compared
to 2018, primarily due to net sales growth in France, Germany and Italy,
partially offset by declines in the United Kingdom and Eastern Europe. Net sales
decreased in South America in 2019 compared to 2018, primarily due to weaker
industry conditions resulting in sales declines in Brazil and other South
American markets as well as the negative impact of foreign currency translation.
In the APA region, net sales decreased in 2019 compared to 2018, primarily due
to lower sales in China, Southeast Asia and Africa. We estimate that worldwide
average price increases were approximately 1.9% and 1.4% in 2019 and 2018,
respectively. Consolidated net sales of tractors and combines, which comprised
approximately 61% of our net sales in 2019, decreased approximately 3.7% in 2019
compared to 2018. Unit sales of tractors and combines decreased approximately
9.5% during 2019 compared to 2018. The unit sales decrease and the decrease in
net sales can differ due to foreign currency translation, pricing and sales mix
changes.

The following table sets forth, for the years ended December 31, 2019 and 2018, the percentage relationship to net sales of certain items included in our Consolidated Statements of Operations (in millions, except percentages):


                                                             2019                         2018
                                                                    % of                         % of
                                                      $         Net Sales(1)         $        Net Sales
Gross profit                                     $ 1,984.3           21.9 %     $ 1,996.7         21.4 %
Selling, general and administrative expenses       1,040.3           11.5 %       1,069.4         11.4 %
Engineering expenses                                 343.4            3.8 %         355.2          3.8 %
Impairment charges                                   176.6            2.0 %             -            - %
Amortization of intangibles                           61.1            0.7 %          64.7          0.7 %
Restructuring expenses                                 9.0            0.1 %          12.0          0.1 %
Bad debt expense                                       5.8            0.1 %           6.4          0.1 %
Income from operations                           $   348.1            3.9 %     $   489.0          5.3 %

____________________________________

(1) Rounding may impact summation of amounts.



Gross profit as a percentage of net sales increased during 2019 compared to
2018, primarily due to the benefit of pricing in excess of material cost
increases, partially offset by the cost impact of lower production levels.
Production hours decreased in both North America and South America, while
production hours increased in Europe during 2019. Overall, production hours
decreased approximately 2% on a global basis during 2019 compared to 2018. We
recorded stock compensation expense of approximately $1.7 million and $2.3
million during 2019 and 2018, respectively, within cost of goods sold, as is
more fully explained in Note 1 of our Consolidated Financial Statements
contained in Item 8, "Financial Statements and Supplementary Data."

Selling, general and administrative expenses ("SG&A expenses") and engineering
expenses, as a percentage of net sales, were relatively flat during 2019
compared to 2018. We recorded stock compensation expense of approximately
$40.0 million and $44.3 million during 2019 and 2018, respectively, within SG&A
expenses, as is more fully explained in Note 1 of our Consolidated Financial
Statements contained in Item 8, "Financial Statements and Supplementary Data."

We recorded restructuring expenses of approximately $9.0 million and $12.0
million during 2019 and 2018, respectively. The restructuring expenses primarily
related to severance and related costs associated with the rationalization of
employee headcount at various manufacturing facilities and administrative
offices located in Europe, South America, China, Africa and the United States
during 2019, as well as the rationalization of our grain storage and protein
production systems operations initiated in the fourth quarter of 2019. In
addition, we recorded a loss of approximately $2.1 million within "Restructuring
expenses" associated with the sale of our 50% interest in our USC, LLC joint
venture. See Note 3 of our Consolidated Financial Statements contained in Item
8, "Financial Statements and Supplementary Data," for additional information.

During the three months ended December 31, 2019, we recorded non-cash goodwill
and other intangible asset impairment charges of approximately $173.6 million
associated with our grain storage and protein production systems operations in
Europe/Middle East, as well as the impairment of long-lived intangible assets of
approximately $3.0 million associated with brand and product rationalization
within our grain storage and protein production systems operations in North

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America. These impairment charges are more fully described in "Critical Accounting Estimates - Goodwill, Other Intangible Assets and Long-Lived Assets" and Note 1 to our Consolidated Financial Statements contained in Item 8, "Financial Statements and Supplementary Data."



Interest expense, net was $19.9 million for 2019 compared to $53.8 million for
2018. The decline was primarily the result of debt extinguishment costs incurred
in 2018 associated with debt refinancings completed during 2018 that included
the replacement of higher interest-bearing debt with lower interest-bearing
debt. During 2018, we repurchased approximately $300.0 million of our
outstanding 57/8% senior notes. The repurchase resulted in a loss on
extinguishment of debt of approximately $24.5 million, including associated
fees, offset by approximately $4.7 million of accelerated amortization of a
deferred gain related to a terminated interest rate swap instrument associated
with the senior notes. In addition, we repaid our outstanding term loan under
our former revolving credit and term loan facility. We recorded approximately
$0.7 million associated with the write-off of deferred debt issuance costs and a
loss of approximately $3.9 million from a terminated interest rate swap
instrument related to the term loan.

Other expense, net was $67.1 million in 2019 compared to $74.9 million in 2018.
Losses on sales of receivables, primarily related to our accounts receivable
sales agreements with our finance joint ventures in North America, Europe and
Brazil, were approximately $42.4 million and $36.0 million in 2019 and 2018,
respectively. Other expense, net for 2018 also included higher foreign exchanges
losses, primarily associated with the significant devaluation of the Argentine
peso.

We recorded an income tax provision of $180.8 million in 2019 compared to $110.9
million in 2018. Our tax provision and effective tax rate are impacted by the
differing tax rates of the various tax jurisdictions in which we operate,
permanent differences for items treated differently for financial accounting and
income tax purposes and for losses in jurisdictions where no income tax benefit
is recorded. At December 31, 2019 and 2018, we had gross deferred tax assets of
$396.0 million and $350.2 million, respectively, including $72.0 million and
$74.5 million, respectively, related to net operating loss carryforwards. During
2019, we recognized a one-time income tax gain of approximately $21.8 million
associated with the changing of Swiss federal and cantonal tax rates, as well as
recognition of a deferred tax asset associated with the estimated value of a tax
basis step-up of our Swiss subsidiary's assets. During 2019, we also recorded a
non-cash adjustment to establish a valuation allowance against our Brazilian net
deferred income tax assets of approximately $53.7 million. At December 31, 2019,
we had total valuation allowances as an offset to our gross deferred tax assets
of approximately $169.1 million. This valuation allowance included allowances
primarily against net operating loss carryforwards in Brazil, China, Hungary,
the United Kingdom and the Netherlands, as well as allowances against our net
deferred taxes primarily in the U.S. and Brazil. At December 31, 2018, we had
total valuation allowances as an offset to the gross deferred tax assets of
approximately $83.9 million, primarily related to net operating loss
carryforwards in Brazil, China, the United Kingdom and the Netherlands, as well
as allowances against our net deferred taxes in the U.S. Realization of the net
deferred tax assets as of December 31, 2019 will depend on generating sufficient
taxable income in future periods, net of reversing deferred tax liabilities. We
believe it is more likely than not that the remaining net deferred tax assets
will be realized. Refer to Note 6 of our Consolidated Financial Statements
contained in Item 8, "Financial Statements and Supplementary Data," for further
information.

Equity in net earnings of affiliates, which is primarily comprised of income
from our AGCO Finance joint ventures, was $42.5 million in 2019 compared to
$34.3 million in 2018, primarily due to higher net earnings from our AGCO
Finance joint ventures. See "Finance Joint Ventures" for further information
regarding our finance joint ventures and their results of operations and Note 5
of our Consolidated Financial Statements contained in Item 8, "Financial
Statements and Supplementary Data," for further information.

2018 Compared to 2017

A comparison of the results of operations for 2018 versus that of 2017 was included in our Annual Report on Form 10-K for the year ended December 31, 2018.


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Quarterly Results

The following table presents unaudited interim operating results. We believe that the following information includes all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our results of operations for the periods presented.


                                                           Three Months Ended
                                       March 31       June 30        September 30      December 31
                                                  (in millions, except per share data)
2019:
Net sales                            $  1,995.8     $  2,422.6     $      2,109.4     $    2,513.6
Gross profit                              456.7          563.9              450.2            513.5
Income (loss) from operations              92.4          199.6              105.9            (49.8 )
Net income (loss)                          65.7          140.4                6.3            (89.6 )
Net (income) loss attributable to
noncontrolling interests                   (0.6 )          0.4                1.3              1.3
Net income (loss) attributable to
AGCO Corporation and subsidiaries          65.1          140.8                7.6            (88.3 )
Net income (loss) per common share
attributable to AGCO Corporation and
subsidiaries - diluted                     0.84           1.82               0.10            (1.17 )
2018:
Net sales                            $  2,007.5     $  2,537.6     $      2,214.7     $    2,592.2
Gross profit                              428.0          556.3              473.7            538.7
Income from operations                     50.5          168.1              111.3            159.1
Net income                                 25.0           90.4               70.7             97.6
Net (income) loss attributable to
noncontrolling interests                   (0.7 )          1.0                0.4              1.1
Net income attributable to AGCO
Corporation and subsidiaries               24.3           91.4               71.1             98.7
Net income per common share
attributable to AGCO Corporation and
subsidiaries - diluted                     0.30           1.14               0.89             1.26



AGCO Finance Joint Ventures

Our AGCO Finance joint ventures provide both retail financing and wholesale
financing to our dealers in the United States, Canada, Europe, Brazil, Argentina
and Australia. The joint ventures are owned by AGCO and by a wholly-owned
subsidiary of Rabobank. The majority of the assets of the finance joint ventures
consist of finance receivables. The majority of the liabilities consist of notes
payable and accrued interest. Under the various joint venture agreements,
Rabobank or its affiliates provide financing to the finance joint ventures,
primarily through lines of credit. We do not guarantee the debt obligations of
the joint ventures. As of December 31, 2019, our capital investment in the
finance joint ventures, which is included in "Investment in affiliates" on our
Consolidated Balance Sheets, was approximately $339.0 million compared to $358.7
million as of December 31, 2018. The total finance portfolio in our finance
joint ventures was approximately $9.6 billion and $8.8 billion as of
December 31, 2019 and 2018, respectively. The total finance portfolio as of
December 31, 2019 and 2018 included approximately $7.7 billion and $7.2 billion,
respectively, of retail receivables and $1.9 billion and $1.6 billion,
respectively, of wholesale receivables from AGCO dealers. The wholesale
receivables either were sold directly to AGCO Finance without recourse from our
operating companies or AGCO Finance provided the financing directly to the
dealers. During 2019 and 2018, we did not make additional investments in our
finance joint ventures. During 2019 and 2018, we received dividends of
approximately $40.5 million and $29.4 million, respectively, from certain of our
finance joint ventures. Our share in the earnings of the finance joint ventures,
included in "Equity in net earnings of affiliates" within our Consolidated
Statements of Operations, was $41.5 million and $34.7 million for the years
ended December 31, 2019 and 2018, respectively, with the increase in earnings
primarily due to higher income in our European, Brazilian and U.S. finance joint
ventures during 2019 as compared to 2018.


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Outlook

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.

Our net sales are expected to increase in 2020 compared to 2019, resulting from
relatively flat net sales volumes and positive pricing impacts. Gross and
operating margins are expected to improve from 2019 levels, reflecting the
positive impact of pricing and cost control initiatives. This assumes that the
coronavirus outbreak does not significantly impact our business. See, "Risk
Factors."

Liquidity and Capital Resources



Our financing requirements are subject to variations due to seasonal changes in
inventory and receivable levels. Internally generated funds are supplemented
when necessary from external sources, primarily our credit facility and accounts
receivable sales agreement facilities. We believe that the following facilities,
together with available cash and internally generated funds, will be sufficient
to support our working capital, capital expenditures and debt service
requirements for the foreseeable future (in millions):
                                                December 31, 2019
1.002% Senior term loan due 2025(1)            $             280.2
Senior term loan due 2022(1)                                 168.1
Credit facility, expires 2023                                    -
Senior term loans due between 2021 and 2028(1)               736.2
Other long-term debt                                          12.5

____________________________________

(1) The amounts above are gross of debt issuance costs of an aggregate amount of approximately $2.3 million.



Interest on U.S. dollar borrowings under our credit facility is calculated based
upon LIBOR. In the event that LIBOR is no longer published, interest will be
calculated based upon a base rate. The credit facility also provides for an
expedited amendment process once a replacement for LIBOR is established.

In December 2018, we entered into a term loan agreement with the European
Investment Bank ("EIB"), which provided us with the ability to borrow up to
€250.0 million. The €250.0 million (or approximately $280.2 million as of
December 31, 2019) of funding was received on January 25, 2019 with a maturity
date of January 24, 2025. We have the ability 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. We had an additional term loan with the EIB in the
amount of €200.0 million that was entered into in December 2014 and had a
maturity date of January 15, 2020. We repaid this €200.0 million (or
approximately $220.0 million) term loan in December 2019.

In October 2018, we entered into a term loan agreement with Rabobank in the
amount of €150.0 million (or approximately $168.1 million as of December 31,
2019). We have the ability to prepay the term loan before its maturity date on
October 28, 2022. Interest is payable on the term loan quarterly in arrears at
an annual rate, equal to the EURIBOR plus a margin ranging from 0.875% to 1.875%
based on our credit rating.

In October 2018, we entered into a multi-currency revolving credit facility of
$800.0 million. The maturity date of the credit facility is October 17, 2023.
Interest accrues on amounts outstanding under the credit facility, at our
option, at either (1) LIBOR plus a margin ranging from 0.875% to 1.875% based on
our 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 our
credit rating.

In October 2016, we borrowed an aggregate amount of €375.0 million through a
group of seven related term loan agreements. These agreements had maturities
ranging from October 2019 to October 2026. In October 2019, we repaid an
aggregate amount of €56.0 million (or approximately $61.1 million) of these term
loans. In August 2018, we borrowed an additional aggregate amount of
indebtedness of €338.0 million through a group of another seven related term
loan agreements. Proceeds from the borrowings were used to repay borrowings
under our former revolving credit facility. The provisions of the term loan
agreements are identical in nature with the exception of interest rate terms and
maturities. In aggregate, as of

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December 31, 2019, we have indebtedness of approximately €657.0 million (or
approximately $736.2 million) under a total group of twelve term loan agreements
with remaining maturities ranging from August 2021 to August 2028.

We are in compliance with the financial covenants contained in these facilities
and expect to continue to maintain such compliance. Should we ever encounter
difficulties, our historical relationship with our lenders has been strong and
we anticipate their continued long-term support of our business. Refer to Note 7
to the Consolidated Financial Statements contained in Item 8, "Financial
Statements and Supplementary Data," for additional information regarding our
current facilities, including the financial covenants contained in each debt
instrument.

Our accounts receivable sales agreements in North America, Europe and Brazil
permit the sale, on an ongoing basis, of a majority of our receivables to our
U.S., Canadian, European and Brazilian finance joint ventures. The sales of all
receivables are without recourse to us. We do not service the receivables after
the sales occur, and we do not maintain any direct retained interest in the
receivables. These agreements are accounted for as off-balance sheet
transactions and have the effect of reducing accounts receivable and short-term
liabilities by the same amount. As of December 31, 2019 and 2018, the cash
received from receivables sold under the U.S., Canadian, European and Brazilian
accounts receivable sales agreements was approximately $1.6 billion and $1.4
billion, respectively.

Our finance joint ventures in Europe, Brazil and Australia also provide
wholesale financing directly to our dealers. The receivables associated with
these arrangements also are without recourse to us. As of December 31, 2019 and
2018, these finance joint ventures had approximately $104.3 million and $82.5
million, respectively, of outstanding accounts receivable associated with these
arrangements. These arrangements are accounted for as off-balance sheet
transactions. In addition, we sell certain trade receivables under factoring
arrangements to other financial institutions around the world. These
arrangements also are accounted for as off-balance sheet transactions.

Our debt to capitalization ratio, which is total indebtedness divided by the sum
of total indebtedness and stockholders' equity, was 30.4% at December 31, 2019
compared to 32.8% at December 31, 2018.

Cash Flows



Cash flows provided by operating activities were $695.9 million during 2019
compared to $595.9 million during 2018 and $577.6 million during 2017. The
increase during 2019 was primarily due to a source of cash in operating assets
and liabilities in 2019 compared to a use of cash in 2018. In addition, we
received an increased amount of dividends from our finance joint ventures in
2019 as compared to 2018.

Our working capital requirements are seasonal, with investments in working
capital typically building in the first half of the year and then reducing in
the second half of the year. We had $844.6 million in working capital at
December 31, 2019, as compared with $770.7 million at December 31, 2018.
Accounts receivable and inventories, combined, at December 31, 2019 were $90.2
million higher than at December 31, 2018. Inventories as of December 31, 2019
included stock related to the transition of production to products meeting new
emissions standards in Europe. Weaker market conditions in many key markets
contributed to lower net sales and resulting higher finished goods inventories
as compared to 2018.

Share Repurchase Program

During 2019 and 2018, we repurchased 1,794,256 and 3,120,184 shares of our
common stock, respectively, for approximately $130.0 million and $184.3 million,
respectively, either through Accelerated Share Repurchase ("ASR") agreements
with financial institutions or through open market transactions. All shares
received 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 our Consolidated Balance Sheets.

In February 2020, we entered into an ASR agreement with a financial institution
to repurchase an aggregate of $25.0 million of shares of our common stock. We
received approximately 297,000 shares to date in this transaction. Upon
settlement of the ASR, we may be entitled to receive additional shares of common
stock or, under certain circumstances, be required to remit a settlement amount.
We expect that the additional shares will be received by us upon final
settlement of our current ASR agreement, which expires during the second quarter
of 2020.


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Contractual Obligations

The future payments required under our significant contractual obligations,
excluding foreign currency option and forward contracts, as of December 31, 2019
are as follows (in millions):
                                                            Payments Due By Period
                                                                                                   2025 and
                                    Total         2020        2021 to 2022      2023 to 2024        Beyond
Indebtedness(1)                  $ 1,270.9     $    76.8     $       468.3     $       280.8     $     445.0
Interest payments related to
indebtedness(2)                       57.4          13.9              24.0              13.8             5.7
Capital lease obligations             18.9           4.8               3.9               1.5             8.7
Operating lease obligations          223.0          48.3              72.3              40.8            61.6
Unconditional purchase
obligations                          127.7         102.1              25.4               0.2               -
Other short-term and long-term
obligations(3)                       296.0          91.7             105.8              50.9            47.6
Total contractual cash
obligations                      $ 1,993.9     $   337.6     $       699.7     $       388.0     $     568.6

                                                  Amount of Commitment Expiration Per Period
                                                                                                   2025 and
                                    Total         2020        2021 to 2022      2023 to 2024        Beyond
Standby letters of credit and
similar instruments              $    14.8     $    14.8     $           -     $           -     $         -
Guarantees                            66.6          44.7              13.0               8.4             0.5
Total commercial commitments and
letters of credit                $    81.4     $    59.5     $        13.0

$ 8.4 $ 0.5

_______________________________________

(1) Indebtedness amounts reflect the principal amount of our senior term loan,

senior notes and credit facility.

(2) Estimated interest payments are calculated assuming current interest rates

over minimum maturity periods specified in debt agreements. Debt may be

repaid sooner or later than such minimum maturity periods.

(3) Other short-term and long-term obligations include estimates of future

minimum contribution requirements under our U.S. and non-U.S. defined benefit

pension and postretirement plans. These estimates are based on current

legislation in the countries we operate within and are subject to change.

Other short-term and long-term obligations also include income tax

liabilities related to uncertain income tax positions connected with ongoing

income tax audits in various jurisdictions.

Commitments and Off-Balance Sheet Arrangements

Guarantees



We maintain a remarketing agreement with our finance joint venture in the United
States, whereby we are obligated to repurchase up to $6.0 million of repossessed
equipment each calendar year. We believe any losses that might be incurred on
the resale of this equipment will not materially impact our financial position
or results of operations, due to the fact that the repurchase obligation would
be equivalent to the fair value of the underlying equipment.

At December 31, 2019, we guaranteed indebtedness owed to third parties of
approximately $47.6 million, primarily related to dealer and end-user financing
of equipment. Such guarantees generally obligate us to repay outstanding finance
obligations owed to financial institutions if dealers or end users default on
such loans through 2025. Losses under such guarantees historically have been
insignificant. In addition, we 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 offset a substantial portion of the amounts paid. We also have
obligations to guarantee indebtedness owed to certain of our 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. We
believe the credit risk associated with all of these guarantees is not material
to our financial position or results of operations.

In addition, at December 31, 2019, we had accrued approximately $18.9 million of
outstanding guarantees of minimum residual values that may be owed to our
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 the guarantee is
approximately $26.7 million.


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Other

At December 31, 2019, we had outstanding designated and non-designated foreign
exchange contracts with a gross notional amount of approximately $3,133.0
million. The outstanding contracts as of December 31, 2019 range in maturity
through December 2020.

As discussed in "Liquidity and Capital Resources," we sell a majority of our
wholesale accounts receivable in North America, Europe and Brazil to our U.S.,
Canadian, European and Brazilian finance joint ventures. We also sell certain
accounts receivable under factoring arrangements to financial institutions
around the world. We have determined that these facilities should be accounted
for as off-balance sheet transactions.

Contingencies



We are party to various claims and lawsuits arising in the normal course of
business. We closely monitor these claims and lawsuits and frequently consult
with our legal counsel to determine whether they may, when resolved, have a
material adverse effect on our financial position or results of operations and
accrue and/or disclose loss contingencies as appropriate. See Note 12 of our
Consolidated Financial Statements contained in Item 8, "Financial Statements and
Supplementary Data," and Item 3, "Legal Proceedings," for further information.

Related Parties



In the ordinary course of business, the Company engages in transactions with
related parties. See Note 14 of our Consolidated Financial Statements contained
in Item 8, "Financial Statements and Supplementary Data," for information
regarding related party transactions and their impact to our consolidated
results of operations and financial position.

Foreign Currency Risk Management



We have significant manufacturing locations in the United States, France,
Germany, Finland, Italy, China and Brazil, and we purchase a portion of our
tractors, combines and components from third-party foreign suppliers, primarily
in various European countries and in Japan. We also sell products in
approximately 140 countries throughout the world. The majority of our net sales
outside the United States are denominated in the currency of the customer
location, with the exception of sales in Middle East, Africa, Asia and parts of
South America, where net sales are primarily denominated in British pounds,
Euros, or the United States dollar.

We manage our transactional foreign currency exposure by hedging foreign
currency cash flow forecasts and commitments arising from the anticipated
settlement of receivables and payables and from future purchases and sales.
Where naturally offsetting currency positions do not occur, we hedge certain,
but not all, of our exposures through the use of foreign currency contracts. Our
translation exposure resulting from translating the financial statements of
foreign subsidiaries into United States dollars may be partially hedged from
time to time. When practical, this translation impact is reduced by financing
local operations with local borrowings. Our hedging policy prohibits use of
foreign currency contracts for speculative trading purposes.

The total notional value of our foreign currency instruments was $3,133.0
million and $1,462.8 million as of December 31, 2019 and 2018, respectively,
inclusive of both those instruments that are designated and qualified for hedge
accounting and non-designated derivative instruments. We enter into 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, and we enter into foreign currency contracts to economically hedge
receivables and payables on our balance sheets that are denominated in foreign
currencies other than the functional currency. In addition, we use derivative
and non-derivative instruments to hedge a portion of our net investment in
foreign operations against adverse movements in exchange rates. See Note 11 of
our Consolidated Financial Statements contained in Item 8, "Financial Statements
and Supplementary Data," for further information about our hedging transactions
and derivative instruments.

Assuming a 10% change relative to the currency of the hedge contracts, the fair
value of the foreign currency instruments could be negatively impacted by
approximately $22.3 million as of December 31, 2019. Due to the fact that these
instruments are primarily entered into for hedging purposes, the gains or losses
on the contracts would largely be offset by losses and gains on the underlying
firm commitment or forecasted transaction.


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Interest Rate Risk

Our interest expense is, in part, sensitive to the general level of interest
rates. We manage our exposure to interest rate risk through our mix of floating
rate and fixed rate debt. From time to time, we enter into interest rate swap
agreements to manage our exposure to interest rate fluctuations. See Notes 7 and
11 of our Consolidated Financial Statements contained in Item 8, "Financial
Statements and Supplementary Data," for additional information about our
interest rate swap agreements.

Based on our floating rate debt and our accounts receivable sales facilities
outstanding at December 31, 2019, a 10% increase in interest rates, would have
increased, collectively, "Interest expense, net" and "Other expense, net" for
the year ended December 31, 2019 by approximately $5.6 million.

Recent Accounting Pronouncements

See Note 1 of our Consolidated Financial Statements contained in Item 8, "Financial Statements and Supplementary Data," for information regarding recent accounting pronouncements and their impact to our consolidated results of operations and financial position.

Critical Accounting Estimates



We prepare our Consolidated Financial Statements in conformity with
U.S. generally accepted accounting principles. In the preparation of these
financial statements, we make judgments, estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. The significant
accounting policies followed in the preparation of the financial statements are
detailed in Note 1 of our Consolidated Financial Statements contained in Item 8,
"Financial Statements and Supplementary Data." We believe that our application
of the policies discussed below involves significant levels of judgment,
estimates and complexity.

Due to the levels of judgment, complexity and period of time over which many of
these items are resolved, actual results could differ from those estimated at
the time of preparation of the financial statements. Adjustments to these
estimates would impact our financial position and future results of operations.

Discount and Sales Incentive Allowances



We provide various volume bonus and sales incentive programs with respect to our
products. These sales incentive programs include reductions in invoice prices,
reductions in retail financing rates, dealer commissions and dealer incentive
allowances. In most cases, incentive programs are established and communicated
to our dealers on a quarterly basis. The incentives are paid either at the time
of the cash settlement of the receivable (which is generally at the time of
retail sale), at the time of retail financing, at the time of warranty
registration, or at a subsequent time based on dealer purchase volumes. The
incentive programs are product line specific and generally do not vary by
dealer. The cost of sales incentives associated with dealer commissions and
dealer incentive allowances is estimated based upon the terms of the programs
and historical experience, is based on a percentage of the sales price, and
estimates for sales incentives are made and recorded at the time of sale for
expected incentive programs using the expected value method. These estimates are
reassessed each reporting period and are revised in the event of subsequent
modifications to incentive programs, as they are communicated to dealers. The
related provisions and accruals are made on a product or product-line basis and
are monitored for adequacy and revised at least quarterly in the event of
subsequent modifications to the programs. Interest rate subsidy payments, which
are a reduction in retail financing rates, are recorded in the same manner as
dealer commissions and dealer incentive allowances. Volume discounts are
estimated and recognized based on historical experience, and related reserves
are monitored and adjusted based on actual dealer purchase volumes and the
dealers' progress towards achieving specified cumulative target levels.
Estimates of these incentives are based on the terms of the programs and
historical experience. All incentive programs are recorded and presented as a
reduction of revenue, due to the fact that we do not receive a distinct good or
service in exchange for the consideration provided. In the United States and
Canada, reserves for incentive programs related to accounts receivable not sold
to our U.S. and Canadian finance joint ventures are recorded as "accounts
receivable allowances" within our Consolidated Balance Sheets due to the fact
that the incentives are paid through a reduction of future cash settlement of
the receivable. Globally, reserves for incentive programs that will be paid in
cash or credit memos, as is the case with most of our volume discount programs,
as well as sales incentives associated with accounts receivable sold to our
finance joint ventures, are recorded within "Accrued expenses" within our
Consolidated Balance Sheets.

At December 31, 2019, we had recorded an allowance for discounts and sales incentives of approximately $606.1 million that will be paid either through a reduction of future cash settlements of receivables and through credit memos


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to our dealers or through reductions in retail financing rates paid to our
finance joint ventures. If we were to allow an additional 1% of sales incentives
and discounts at the time of retail sale for those sales subject to such
discount programs, our reserve would increase by approximately $21.0 million as
of December 31, 2019. Conversely, if we were to decrease our sales incentives
and discounts by 1% at the time of retail sale, our reserve would decrease by
approximately $21.0 million as of December 31, 2019.

Deferred Income Taxes and Uncertain Income Tax Positions



We recorded an income tax provision of $180.8 million in 2019 compared to $110.9
million in 2018 and $133.6 million in 2017. Our tax provision and effective tax
rate are impacted by the differing tax rates of the various tax jurisdictions in
which we operate, permanent differences for items treated differently for
financial accounting and income tax purposes, and for losses in jurisdictions
where no income tax benefit is recorded.

During the third quarter of 2019, we recorded a non-cash adjustment to establish
a valuation allowance against our Brazilian net deferred income tax assets of
approximately $53.7 million. In addition, we maintain a valuation allowance to
fully reserve against our net deferred tax assets in the United States and
certain other foreign jurisdictions. A valuation allowance is established when
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. We assessed the likelihood that our deferred tax assets
would be recovered from estimated future taxable income and available tax
planning strategies and determined that the adjustment to the valuation
allowance was appropriate. In making this assessment, all available evidence was
considered including the current economic climate, as well as reasonable tax
planning strategies. We believe it is more likely than not that we will realize
our remaining net deferred tax assets, net of the valuation allowance, in future
years.

Swiss tax reform was enacted during 2019 and eliminates certain preferential tax
items as well as implements new tax rates at both the federal and cantonal
levels. During the three months ended December 31, 2019, the Company recognized
a one-time income tax gain of approximately $21.8 million associated with the
changing of Swiss federal and cantonal tax rates as well as recognition of a
deferred tax asset associated with the estimated value of a tax basis step-up of
our Swiss subsidiary's assets.

On December 22, 2017, the Tax Cuts and Jobs Act ("the 2017 Tax Act") was enacted
in the United States. During the three months ended December 31, 2017, we
recorded a tax provision of approximately $42.0 million in accordance with Staff
Accounting Bulletin No. 118, which provided SEC Staff guidance for the
application of Accounting Standards Codification ("ASC") 740 "Income Taxes," in
the reporting period in which the 2017 Tax Act was enacted. The $42.0 million
tax provision included a provisional income tax charge related to a one-time
transition tax associated with the mandatory deemed repatriation of unremitted
foreign earnings. The tax provision also included a provisional income tax
charge associated with the income tax consequences related to the expected
future repatriation of certain underlying foreign earnings, as historically, we
have considered them to be permanently reinvested. The remaining balance of the
tax provision primarily related to the remeasurement of certain net deferred tax
assets using the lower enacted U.S. Corporate tax rate (from 35% to 21%), as
well as other miscellaneous related impacts. During the three months ended
December 31, 2018, we finalized our calculations related to the 2017 Tax Act and
recorded an income tax benefit of approximately $8.4 million.

At December 31, 2019 and 2018, we had gross deferred tax assets of $396.0
million and $350.2 million, respectively, including $72.0 million and $74.5
million, respectively, related to net operating loss carryforwards. At
December 31, 2019 and 2018, we had total valuation allowances as an offset to
our gross deferred tax assets of $169.1 million and $83.9 million, respectively,
which included allowances primarily against net operating loss carryforwards in
Brazil, China, Hungary, the United Kingdom and the Netherlands, as well as
allowances against our net deferred taxes primarily in the U.S. and Brazil, as
previously discussed. Realization of the remaining deferred tax assets as of
December 31, 2019 will depend on generating sufficient taxable income in future
periods, net of reversing deferred tax liabilities. We believe it is more likely
than not that the remaining net deferred tax assets will be realized.

We recognize income tax benefits from uncertain tax positions only when there is
a more than 50% likelihood that the tax positions will be sustained upon
examination by the taxing authorities based on the technical merits of the
positions. As of December 31, 2019 and 2018, we had approximately $210.7 million
and $166.1 million, respectively, of gross unrecognized tax benefits, all of
which would impact our effective tax rate if recognized. As of December 31, 2019
and 2018, we had approximately $51.0 million and $58.5 million, respectively, of
current accrued taxes related to uncertain income tax positions connected with
ongoing tax audits in various jurisdictions that we expect to settle or pay in
the next 12 months. We recognize interest and penalties related to uncertain
income tax positions in income tax expense. As of December 31, 2019 and 2018, we
had accrued interest and penalties related to unrecognized tax benefits of
approximately $28.4 million and $27.2 million, respectively. See Note 6 of our
Consolidated Financial Statements for further discussion of our uncertain income
tax positions.

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Pensions

We sponsor defined benefit pension plans covering certain employees, principally
in the United Kingdom, the United States, Germany, Switzerland, Finland, France,
Norway and Argentina. Our primary plans cover certain employees in the United
States and the United Kingdom.

In the United States, we sponsor a funded, qualified defined benefit pension
plan for our salaried employees, as well as a separate funded qualified defined
benefit pension plan for our hourly employees. Both plans are closed to new
entrants and frozen, and we fund at least the minimum contributions required
under the Employee Retirement Income Security Act of 1974 and the Internal
Revenue Code to both plans. In addition, we maintain an unfunded, nonqualified
defined benefit pension plan for certain senior executives, which is our
Executive Nonqualified Pension Plan ("ENPP"). The ENPP is also closed to new
entrants.

In the United Kingdom, we sponsor a funded defined benefit pension plan that
provides an annuity benefit based on participants' final average earnings and
service. Participation in this plan is limited to certain older, longer service
employees and existing retirees. This plan is closed to new participants.

See Note 8 of our Consolidated Financial Statements contained in Item 8, "Financial Statements and Supplementary Data," for additional information regarding costs and assumptions for employee retirement benefits.



Nature of Estimates Required. The measurement date for all of our benefit plans
is December 31. The measurement of our pension obligations, costs and
liabilities is dependent on a variety of assumptions provided by management and
used by our actuaries. These assumptions include estimates of the present value
of projected future pension payments to all plan participants, taking into
consideration the likelihood of potential future events such as salary increases
and demographic experience. These assumptions may have an effect on the amount
and timing of future contributions.

Assumptions and Approach Used. The assumptions used in developing the required estimates include, but are not limited to, the following key factors: • Discount rates

            •  Inflation
•  Salary growth             •  Expected return on plan assets

• Retirement rates and ages • Mortality rates





For the years ended December 31, 2019, 2018 and 2017, we used a globally
consistent methodology to set the discount rate in the countries where our
largest benefit obligations exist. In the United States, the United Kingdom and
the Euro Zone, we constructed a hypothetical bond portfolio of high-quality
corporate bonds and then applied the cash flows of our benefit plans to those
bond yields to derive a discount rate. The bond portfolio and plan-specific cash
flows vary by country, but the methodology in which the portfolio is constructed
is consistent. In the United States, the bond portfolio is large enough to
result in taking a "settlement approach" to derive the discount rate, in which
high-quality corporate bonds are assumed to be purchased and the resulting
coupon payments and maturities are used to satisfy our U.S. pension plans'
projected benefit payments. In the United Kingdom and the Euro Zone, the
discount rate is derived using a "yield curve approach," in which an individual
spot rate, or zero coupon bond yield, for each future annual period is developed
to discount each future benefit payment and, thereby, determine the present
value of all future payments. The Company uses a spot yield curve to determine
the discount rate applicable in the United Kingdom to measure the U.K. pension
plan's service cost and interest cost. Under the settlement and yield curve
approaches, the discount rate is set to equal the single discount rate that
produces the same present value of all future payments.

The other key assumptions and methods were set as follows: • Our inflation assumption is based on an evaluation of external market

indicators.

• The salary growth assumptions reflect our long-term actual experience, the

near-term outlook and assumed inflation.

• The expected return on plan asset assumptions reflects asset allocations,

investment strategy, historical experience and the views of investment

managers, and reflects a projection of the expected arithmetic returns

over ten years.

• Determination of retirement rates and ages as well as termination rates,


       based on actual plan experience, actuarial standards of practice and the
       manner in which our defined benefit plans are being administered.



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• The mortality rates for the U.K. defined benefit pension plan was updated

in 2019 to reflect the latest expected improvements in the life expectancy

of the plan participants. The mortality rates for the U.S. defined benefit

pension plans were updated in 2019 to reflect the Society of Actuaries'

most recent findings on the topic of mortality.

• The fair value of assets used to determine the expected return on assets

does not reflect any delayed recognition of asset gains and losses.





The effects of actual results differing from our assumptions are accumulated and
amortized over future periods and, therefore, generally affect our recognized
expense in such periods.

Our U.S. and U.K. defined benefit pension plans, including our ENPP, comprised
approximately 86% of our consolidated projected benefit obligation as of
December 31, 2019. If the discount rate used to determine the 2019 projected
benefit obligation for our U.S. qualified defined benefit pension plans and our
ENPP was decreased by 25 basis points, our projected benefit obligation would
have increased by approximately $4.8 million at December 31, 2019, and our 2020
pension expense would increase by approximately $0.5 million. If the discount
rate used to determine the 2019 projected benefit obligation for our U.S.
qualified defined benefit pension plans and our ENPP was increased by 25 basis
points, our projected benefit obligation would have decreased by approximately
$4.5 million at December 31, 2019, and our 2020 pension expense would decrease
by approximately $0.5 million. If the discount rate used to determine the
projected benefit obligation for our U.K. defined benefit pension plan was
decreased by 25 basis points, our projected benefit obligation would have
increased by approximately $25.3 million at December 31, 2019, and our 2020
pension expense would increase by approximately $0.2 million. If the discount
rate used to determine the projected benefit obligation for our U.K. defined
benefit pension plan was increased by 25 basis points, our projected benefit
obligation would have decreased by approximately $23.1 million at December 31,
2019, and our 2020 pension expense would decrease by approximately $0.3 million.
In addition, if the expected long-term rate of return on plan assets related to
our U.K. defined benefit pension plan was increased or decreased by 25 basis
points, our 2020 pension expense would decrease or increase by approximately
$1.6 million each, respectively. The impact to our U.S. defined benefit pension
plans for a 25-basis-point change in our expected long-term rate of return would
decrease or increase our 2020 pension expense by approximately $0.1 million,
respectively.

Unrecognized actuarial net losses related to our defined benefit pension plans
and ENPP were $362.2 million as of December 31, 2019 compared to $356.7 million
as of December 31, 2018. The increase in unrecognized net actuarial losses
between years primarily resulted from lower discount rates at December 31, 2019
compared to December 31, 2018. The unrecognized net actuarial losses will be
impacted in future periods by actual asset returns, discount rate changes,
currency exchange rate fluctuations, actual demographic experience and certain
other factors. For some of our defined benefit pension plans, these losses, to
the extent they exceed 10% of the greater of the plan's liabilities or the fair
value of assets ("the gain/loss corridor"), will be amortized on a straight-line
basis over the periods discussed as follows. For our U.S. salaried, U.S. hourly
and U.K. defined benefit pension plans, the population covered is predominantly
inactive participants, and losses related to those plans, to the extent they
exceed the gain/loss corridor, will be amortized over the average remaining
lives of those participants while covered by the respective plan. For our ENPP,
the population is predominantly active participants, and losses related to the
plan will be amortized over the average future working lifetime of the active
participants expected to receive benefits. As of December 31, 2019, the average
amortization periods were as follows:
                                                       ENPP     U.S. Plans   U.K. Plan
Average amortization period of losses related to
defined benefit pension plans                         7 years     15 years

19 years





Unrecognized prior service cost related to our defined benefit pension plans was
$22.5 million as of December 31, 2019 compared to $19.5 million as of
December 31, 2018. The increase in the unrecognized prior service cost between
years is due primarily to a plan amendment related to our ENPP.

As of December 31, 2019, our unfunded or underfunded obligations related to our
defined benefit pension plans and ENPP were approximately $206.3 million,
primarily related to our defined benefit pension plans in Europe and the United
States. In 2019, we contributed approximately $30.6 million towards those
obligations, and we expect to fund approximately $33.6 million in 2020. Future
funding is dependent upon compliance with local laws and regulations and changes
to those laws and regulations in the future, as well as the generation of
operating cash flows in the future. We currently have an agreement in place with
the trustees of the U.K. defined benefit plan that obligates us to fund
approximately £15.3 million per year (or approximately $20.2 million) towards
that obligation through December 2021. The funding arrangement is based upon the
current funded status and could change in the future as discount rates, local
laws and regulations, and other factors change.


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See Note 8 of our Consolidated Financial Statements contained in Item 8, "Financial Statements and Supplementary Data," for more information regarding the investment strategy and concentration of risk.

Goodwill, Other Intangible Assets and Long-Lived Assets



We test goodwill for impairment, at the reporting unit level, annually and when
events or circumstances indicate that fair value of a reporting unit may be
below its carrying value. A reporting unit is an operating segment or one level
below an operating segment, for example, a component. We combine and aggregate
two or more components of an operating segment as a single reporting unit if the
components have similar economic characteristics. Our reportable segments are
not our reporting units.

Goodwill is evaluated for impairment annually as of October 1 using a
qualitative assessment or a quantitative one-step assessment. If we elect to
perform a qualitative assessment and determine the fair value of our reporting
units more likely than not exceeds their carrying value of net assets, no
further evaluation is necessary. For reporting units where we perform a one-step
quantitative assessment, we compare the fair value of each reporting unit to its
respective carrying value of net assets, including goodwill. If the fair value
of the reporting unit exceeds its carrying value of net assets, the goodwill is
not considered impaired. If the carrying value of net assets is higher than the
fair value of the reporting unit, the impairment charge is the amount by which
the carrying value exceeds the reporting unit's fair value.

We utilize a combination of valuation techniques, including a discounted cash
flow approach and a market multiple approach, when making quantitative goodwill
assessments.

We review our long-lived assets, which include intangible assets subject to
amortization, for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
evaluation for recoverability is performed at a level where independent cash
flows may be attributed to either an asset or asset group. If we determine that
the carrying amount of an asset or asset group is not recoverable based on the
expected undiscounted future cash flows of the asset or asset group, an
impairment loss is recorded equal to the excess of the carrying amounts over the
estimated fair value of the long-lived assets. Estimates of future cash flows
are based on many factors, including current operating results, expected market
trends and competitive influences. We also evaluate the amortization periods
assigned to our intangible assets to determine whether events or changes in
circumstances warrant revised estimates of useful lives. Assets to be disposed
of by sale are reported at the lower of the carrying amount or fair value, less
estimated costs to sell.

We make various assumptions, including assumptions regarding future cash flows,
market multiples, growth rates and discount rates, in our assessments of the
impairment of goodwill, other indefinite-lived intangible assets and long-lived
assets. The assumptions about future cash flows and growth rates are based on
the current and long-term business plans of the reporting unit or related to the
long-lived assets. Discount rate assumptions are based on an assessment of the
risk inherent in the future cash flows of the reporting unit or long-lived
assets. These assumptions require significant judgments on our part, and the
conclusions that we reach could vary significantly based upon these judgments.

Our goodwill impairment analysis conducted as of October 1, 2019 indicated that
the carrying value of the net assets of our grain storage and protein production
systems business in Europe/Middle East was in excess of the fair value of the
reporting unit, and therefore, we recorded a non-cash impairment charge of
approximately $173.6 million within "Impairment charges" in our Consolidated
Statements of Operations. In response to weakening market conditions and
resulting operating results, new management was put in place over the grain
storage and protein productions systems business, tasked with conducting a full
strategic review of the business, including that of the Europe/Middle East
reporting unit. That full strategic review was completed in the fourth quarter
of 2019, along with revised forecasts to include updated market conditions and
strategic operating decisions. This impairment charge was a substantial portion
of the reporting unit's goodwill balance as of October 1, 2019.

During the three months ended December 31, 2019, we also recorded a non-cash
impairment charge of approximately $3.0 million within "Impairment charges" in
our Consolidated Statements of Operations. The impairment charge related to
certain long-lived intangible assets associated with our grain storage and
protein production systems operations within North America due to the
discontinuation of a certain brand name and related products and customers.

Finally, our goodwill impairment analysis conducted as of October 1, 2019 also
indicated that the fair value in excess of the carrying value of one of our
smaller reporting units was less than 10%, due to deteriorating market
conditions for the products it sells. If market conditions and our overall
results do not improve, we may incur an impairment charge related to this
reporting unit in the future under the one-step process described above. The
goodwill associated with this reporting unit as of December 31, 2019 was
approximately $20.0 million.

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The results of our goodwill and long-lived assets impairment analyses conducted as of October 1, 2018 and 2017 indicated that no reduction in the carrying amount of goodwill and long-lived assets was required.



Numerous facts and circumstances are considered when evaluating the carrying
amount of our goodwill. The fair value of a reporting unit is impacted by the
reporting unit's expected financial performance, which is dependent upon the
agricultural industry and other factors that could adversely affect the
agricultural industry, including but not limited to, declines in the general
economy, increases in farm input costs, weather conditions, lower commodity
prices and changes in the availability of credit. The estimated fair value of
the individual reporting units is assessed for reasonableness by reviewing a
variety of indicators evaluated over a reasonable period of time.

As of December 31, 2019, we had approximately $1,298.3 million of goodwill,
after the goodwill impairment charge we recorded during the three months ended
December 31, 2019. While our annual impairment testing in 2019 supported the
carrying amount of this goodwill, we may be required to re-evaluate the carrying
amount in future periods, thus utilizing different assumptions that reflect the
then current market conditions and expectations, and, therefore, we could
conclude that an impairment has occurred.

Recoverable Indirect Taxes



Our 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 our sales
in the Brazilian market. We regularly assesses the recoverability of these tax
credits, and establishes reserves when necessary against them, through analyses
that include, amongst others, the history of realization, the transfer of tax
credits to third parties as authorized by the government, anticipated changes in
the supply chain and the future expectation of tax debits from our ongoing
operations. We believe that these tax credits, net of established reserves are
realizable. Our assessment of realization of these tax assets involves
significant judgments on our part, and the conclusions that we reach could vary
significantly based upon these judgments. We recorded approximately $142.3
million and $156.0 million, respectively, of VAT tax credits, net of reserves,
as of December 31, 2019 and 2018.

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