Deere & Co. (DE) 10-K risk factor changes: FY2018 vs FY2017

This discussion of risk factors should be considered closely in conjunction with Management's Discussion and Analysis beginning on page [removed: 19,] [added: 20,] including the risks and uncertainties described in the Safe Harbor Statement on pages [removed: 21] [added: 22] and [removed: 22,] [added: 23,] and the Notes to Consolidated Financial Statements beginning on page [removed: 34.][added: 36.]

Trade restrictions, including [removed: potential limitations on] [added: withdrawal from or modification of] existing trade [removed: agreements and] [added: agreements, negotiation of new] trade [removed: terms,] [added: agreements, and imposition of new (and retaliatory) tariffs against certain countries or covering certain products,] could limit John Deere's ability to capitalize on current and future growth opportunities in international markets and impair John Deere's ability to expand the business by offering new technologies, products and services.

These [removed: restrictions] [added: trade restrictions, and changes in – or uncertainty surrounding – global trade policies] may affect John Deere's competitive position.

[removed: impacting exchange rates and commodity prices or those limiting] the export or import of commodities could have a material adverse effect on the international flow of agricultural and other commodities that may result in a corresponding negative effect on the demand for agricultural and forestry equipment in many areas of the world.

John Deere's agricultural equipment sales could be especially harmed by such policies because farm income strongly influences sales of agricultural equipment around the world, including [added: sales made pursuant to] the [removed: withdrawal or material modification of] [added: United States-Mexico-Canada Agreement, which was agreed on September 30, 2018 and which is designed to replace] the North American Free Trade Agreement.

Embargoes and sanctions laws are changing rapidly for certain geographies, including with respect to Russia, [removed: Cuba,] Iran, and [removed: Sudan.][added: Venezuela.]

Although John Deere has a compliance program in place designed to reduce the likelihood of potential violations of import and export laws and sanctions, violations of these laws or sanctions could have an adverse effect on John Deere's reputation, [removed: business and] [added: business,] results of operations and financial condition.

While John Deere maintains a positive corporate image and [removed: the John Deere brand is] [added: its brands are] widely recognized and valued in its traditional markets, the [removed: brand is] [added: brands are] less well known in some emerging markets which could impede John Deere's efforts to successfully compete in these markets.

While the Company strives to match the interest rate characteristics of our financial assets and liabilities, changing interest rates could have an adverse effect on the Company's net interest rate [removed: margin—the] [added: margin – the] difference between the yield the Company earns on its assets and the interest rates the Company pays for funding, which could in turn affect the Company's net interest income and earnings.

In particular, we heavily rely on certain John Deere trademarks, which contribute to John Deere's identity and the recognition of its products and services, including but not limited to the "John Deere" mark, the leaping deer logo, the "Nothing Runs Like a Deere" [removed: slogan and] [added: slogan,] the prefix "JD" associated with many [removed: products] [added: products,] and the green and yellow equipment colors.

Temperature affects the rate of growth, crop maturity and crop [added: quality.]

Natural calamities such as regional floods, hurricanes or other storms, and droughts can have significant negative effects on [removed: agricultural and livestock production.]

Changes in the availability and price of these raw materials, components and whole goods, which have fluctuated significantly in the past and are more likely to fluctuate during times of economic [removed: volatility and] [added: volatility,] regulatory [removed: instability,] [added: instability or change in custom tariffs,] can significantly increase the costs of production which could have a material negative effect on the profitability of the business, particularly if John Deere, due to pricing considerations or other factors, is unable to recover the increased costs from its customers.

Certain components and parts used in John Deere's products are available from a single supplier and cannot be [removed: re-sourced] [added: alternatively sourced] quickly.

While John Deere has developed and is executing comprehensive plans to meet these [removed: requirements and does not currently foresee significant obstacles that would prevent timely compliance,] [added: requirements,] these plans are subject to many variables that could delay or otherwise affect John Deere's ability to manufacture and distribute certain equipment or engines, which could negatively impact business results.

There is [removed: a] global [removed: political and] scientific consensus that emissions of greenhouse gases (GHG) continue to alter the composition of Earth's atmosphere in ways that are affecting and are expected to continue to affect the global climate.

Despite security measures and business continuity plans, John Deere's information technology networks and infrastructure may be vulnerable to damage, disruptions or shutdowns due to attacks by cyber criminals or breaches due to employee error or malfeasance or other disruptions during the process of upgrading or replacing computer software or hardware, power outages, computer viruses, telecommunication or utility failures, terrorist [removed: acts or] [added: acts,] natural disasters or other catastrophic events.

Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disrupt operations, and damage John Deere's reputation, which could adversely affect John Deere's [removed: business.][added: business, results of operations and financial condition.]

In addition, as security threats continue to evolve [added: and increase in frequency and sophistication,] we may need to invest additional resources to protect the security of our systems.

Many foreign countries and governmental bodies, including the European Union, Canada, and other relevant jurisdictions where we conduct business, have laws and regulations concerning the collection and use of PII and other data obtained from their residents or by businesses operating within their jurisdiction that are more restrictive than those in the U.S. Additionally, in May 2016, the European Union adopted the General Data Protection Regulation that [removed: will impose] [added: imposes] more stringent data protection requirements and [removed: will provide] [added: provides] for greater penalties for [removed: noncompliance beginning in May 2018.][added: noncompliance.]

From time to time, the Company makes strategic acquisitions and [removed: divestitures—such] [added: divestitures – such] as its acquisition of [removed: Wirtgen—or] [added: the Wirtgen Group – or] participates in joint ventures.

[removed: Furthermore,] John Deere may not realize all of the anticipated benefits of these transactions, or the realized benefits may be significantly delayed.

[added: While our] evaluation of any potential transaction includes business, legal, and financial due diligence with the goal of identifying and evaluating the material risks involved, our due diligence reviews may not identify all of the issues necessary to accurately estimate the cost and potential risks of a particular transaction, including potential exposure to regulatory sanctions resulting from an acquisition target's previous activities or costs associated with any quality issues with an acquisition target's products or services.

Policies impacting exchange rates and commodity prices or those limiting

agricultural and livestock production.

Furthermore,

Additionally, John Deere's competitive position and results could be adversely affected by changes in–or uncertainty surrounding–U.S. trade policy.

Policies

Recently, there has been a substantial increase in the global enforcement of anti-corruption laws.

quality.

While our

See the information under the caption "Management's Discussion and Analysis" on pages [removed: 19 – 28.][added: 20–30.]

See the information under "Management's Discussion and Analysis" beginning on page [removed: 19] [added: 20] and in Note 27 to the Consolidated Financial Statements.

Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, and other important information about forward-looking statements are disclosed under Item 1A, "Risk Factors" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations–Safe] [added: Operations – Safe] Harbor Statement" in this Annual Report on Form 10-K.

The _agriculture and turf_ segment primarily manufactures and distributes a full line of agriculture and turf equipment and related service [removed: parts — including] [added: parts, including:] large, [removed: medium] [added: medium,] and utility tractors; tractor loaders; combines, cotton pickers, cotton strippers, and sugarcane harvesters; [removed: related] harvesting front-end equipment; sugarcane loaders and pull-behind scrapers; tillage, seeding and application equipment, including sprayers, nutrient management and soil preparation machinery; hay and forage equipment, including self-propelled forage harvesters and attachments, balers and mowers; turf and utility equipment, including riding lawn equipment and walk-behind mowers, golf course equipment, utility vehicles, and commercial mowing equipment, along with a broad line of associated implements; integrated agricultural management systems technology and solutions; and other outdoor power products.

The _construction and forestry_ segment primarily manufactures and distributes a broad range of machines and service parts used in construction, earthmoving, [added: road building,] material handling and timber [removed: harvesting — including] [added: harvesting, including:] backhoe loaders; crawler dozers and loaders; four-wheel-drive loaders; excavators; motor graders; articulated dump trucks; landscape loaders; skid-steer loaders; [added: milling machines; recyclers; slipform pavers; surface miners; asphalt pavers; compactors; tandem] and [added: static rollers; mobile crushers and screens; mobile and stationary asphalt plants;] log [removed: skidders,] [added: skidders;] feller [removed: bunchers,] [added: bunchers;] log [removed: loaders,] [added: loaders;] log [removed: forwarders,] [added: forwarders;] log harvesters and related [added: logging] attachments.

Additional information is presented in the discussion of business segment and geographic area results on page [removed: 20.][added: 21.]

The information contained on the Company's website is not included in, [removed: or] [added: nor] incorporated by reference into, this annual report on Form 10-K.

The Company's equipment sales are projected to increase by about [removed: 22] [added: 7] percent for fiscal [removed: 2018 and by about 38 percent for the first quarter] [added: 2019] compared with [removed: the same periods of 2017.][added: 2018.]

Net sales and revenues are [removed: projected] [added: expected] to increase [added: by] about [removed: 19] [added: 7] percent for fiscal [removed: 2018,] [added: 2019] with net income attributable to [removed: the] [added: Deere &] Company [removed: of] [added: forecast to be] about [removed: $2.6] [added: $3.6] billion.

_Agriculture & Turf._ The Company's worldwide sales of agriculture and turf equipment are forecast to [removed: increase by] [added: be up] about [removed: 9] [added: 3] percent for [removed: fiscal 2018,] [added: fiscal-year 2019,] including a [removed: positive] [added: negative] currency-translation effect of [removed: about] 2 percent.

Industry sales [removed: for] [added: of] agricultural equipment in the U.S. and Canada are forecast to be [added: about the same to] up 5 [removed: to 10 percent for 2018, supported] [added: percent, helped] by [removed: higher] [added: replacement] demand for large [removed: equipment.][added: equipment and continued demand for small tractors.]

Full-year industry sales in the EU28 member nations are forecast to be [removed: up] about [removed: 5 percent due to improving] [added: the same as a result of drought] conditions in [removed: the dairy and livestock sectors.][added: key markets.]

South American industry sales of tractors and combines are projected to be [removed: flat] [added: about the same] to up 5 percent [removed: as a result of continued positive conditions, particularly] [added: benefiting from strength] in [removed: Argentina.][added: Brazil.]

Industry sales of turf and utility equipment in the U.S. and Canada are expected to be about [removed: flat] [added: the same to up 5 percent] for [removed: 2018.][added: 2019.]

_Construction & Forestry._ The Company's worldwide sales of construction and forestry equipment are anticipated to be up about [removed: 69] [added: 15] percent for [removed: 2018, including a positive currency-translation] [added: 2019, with foreign-currency rates having an unfavorable translation] effect of [removed: about 1] [added: 2] percent.

In forestry, global industry sales are expected to be [removed: flat to] up [removed: 5] [added: about 10] percent mainly as a result of improved [removed: lumber prices in North America.][added: demand throughout the world, led by the U.S.]

_Financial Services._ [removed: Fiscal 2018] [added: Fiscal-year 2019] net income attributable to the Company for the financial services operations is [removed: expected] [added: projected] to be approximately [removed: $515] [added: $630] million.

[removed: 2017] [added: 2018] Consolidated Results Compared with [removed: 2016][added: 2017]

[removed: Worldwide] [added: For fiscal 2018, worldwide] net income attributable to the Company [removed: in fiscal 2017] was [removed: $2,159 million,] [added: $2.368 billion,] or [removed: $6.68] [added: $7.24] per [removed: share diluted ($6.76 basic),] [added: share,] compared with [removed: $1,524 million,] [added: $2.159 billion,] or [removed: $4.81] [added: $6.68] per [removed: share diluted ($4.83 basic),] [added: share,] in [removed: 2016.][added: 2017.]

Worldwide net sales and revenues increased [removed: 12] [added: 26] percent to [removed: $29,738 million] [added: $37.358 billion] in [removed: 2017,] [added: 2018,] compared with [removed: $26,644 million] [added: $29.738 billion] in [removed: fiscal 2016.][added: 2017.]

Sales included price realization of 1 [removed: percent and a favorable] [added: percent, while] currency translation [added: did not have a material] effect [removed: of 1 percent.][added: for the year.]

Equipment net sales in the United States and Canada increased [removed: 5] [added: by 25] percent for fiscal [removed: 2017.][added: 2018, with Wirtgen adding 4 percent.]

Outside [added: of] the U.S. and Canada, net sales [removed: increased 20] [added: rose 34] percent for the year, with [removed: a favorable currency translation effect of 1 percent for fiscal 2017.][added: Wirtgen adding 22 percent.]

Worldwide equipment operations had an operating profit of [removed: $2,821 million] [added: $3.684 billion] in fiscal [removed: 2017,] [added: 2018,] compared with [removed: $1,880 million] [added: $2.859 billion] in fiscal [removed: 2016.][added: 2017.]

Net income of the Company's equipment operations was [removed: $1,707 million] [added: $1.404 billion] for fiscal [removed: 2017,] [added: 2018,] compared with [removed: $1,058 million] [added: $1.707 billion] in fiscal [removed: 2016.][added: 2017.]

The financial services operations reported net income attributable to the Company [removed: in fiscal 2017] of [removed: $477 million,] [added: $942.0 million for fiscal 2018] compared with [removed: $468] [added: $476.9] million in fiscal [removed: 2016.][added: 2017.]

The increase was largely due to [added: a higher average portfolio, a] lower [added: provision for credit losses, and lower] losses on lease residual values, partially offset by [removed: less favorable] [added: less-favorable] financing [removed: spreads, and higher selling, administrative and general expenses.][added: spreads.]

The cost of sales to net sales ratio for [removed: fiscal] [added: 2018 and] 2017 was [removed: 77.0 percent, compared with 78.0 percent last year.][added: 76.7 percent.]

Additional information on fiscal [removed: 2017] [added: 2018] results is presented on pages [removed: 19-21.][added: 20–22.]

The segment's [removed: equipment] operations are consolidated into five product platforms [removed: —] [added: –] crop harvesting (combines, cotton pickers, cotton strippers, and sugarcane harvesters, related harvesting front-end equipment, sugarcane loaders and pull-behind scrapers); turf and utility (utility vehicles, riding lawn equipment, walk-behind mowers, commercial mowing equipment, golf course equipment, implements for mowing, tilling, snow and debris handling, aerating and many other residential, commercial, golf and sports turf care applications and other outdoor power products); hay and forage (self-propelled forage harvesters and attachments, balers and mowers); crop care (tillage, seeding and application equipment, including sprayers, nutrient management and soil preparation machinery); and tractors (loaders and large, medium and utility tractors and related attachments).

John Deere has developed a [removed: comprehensive agricultural management systems] [added: leading] approach [removed: using] [added: to precision agriculture technology through] advanced [removed: communications, data collection] [added: communications] and [added: telematics, on board sensors and computers, and precise] global [added: navigation] satellite [removed: positioning technologies] [added: systems technology] to enable farmers to better control input costs and yields, improve soil conservation, minimize chemical use, [added: and to gather information.]

The segment also manufactures and sells sprayers under the Hagie and Mazzotti brand names, planters and cultivators under the Monosem brand name, [added: sprayers] and [added: planters under the PLA brand name, carbon fiber sprayer booms under the King Agro brand name, and] walk-behind mowers and scarifiers in select European countries under the SABO brand name.

Sales of agricultural equipment are affected by total farm cash receipts, which reflect levels of farm commodity prices, acreage planted, crop yields and government policies, including [added: global trade policies and] the amount and timing of government payments.

John Deere's construction and forestry equipment includes a broad range of backhoe loaders, crawler dozers and loaders, four-wheel-drive loaders, excavators, motor graders, articulated dump trucks, landscape loaders, skid-steer loaders, [added: milling machines, pavers, compactors, rollers, crushers, screens, asphalt plants,] log skidders, log feller bunchers, log loaders, log forwarders, log harvesters and a variety of attachments.

[removed: The construction and forestry machines are distributed under the John Deere brand name, and forestry] [added: Forestry] attachments are distributed under the John Deere and Waratah brand names.

The prevailing levels of residential, commercial and public construction and the condition of the forestry products industry influence retail sales of John Deere construction, earthmoving, [added: road building,] material handling and forestry equipment.

John Deere and Hitachi Construction Machinery Co. (Hitachi) have a joint venture for the manufacture of hydraulic excavators and tracked forestry equipment [removed: and loaders] in the [removed: U.S. and] [added: U.S.,] Canada and [removed: a joint venture for the manufacture of excavators in] Brazil.

The segment has a number of initiatives in the rent-to-rent, or short-term rental, market for construction, [removed: earthmoving] [added: earthmoving, road building] and material handling equipment.

Global competitors of the construction and forestry segment include Caterpillar Inc., [removed: Komatsu Ltd., Volvo Construction Equipment (part of Volvo Group AB),] CNH Global N.V., Doosan Infracore Co., Ltd. and its subsidiary Doosan Bobcat Inc., [added: Fayat Group, Komatsu Ltd., Kubota Tractor Corporation, Ponsse Plc, Terex,] Tigercat Industries [removed: Inc.] [added: Inc., Volvo Construction Equipment (part of Volvo Group AB)] and [removed: Ponsse Plc.][added: XCMG.]

The segment manufactures over 90 percent of the types of construction equipment used in the U.S. and Canada, including construction, forestry, earthmoving, [added: road building,] and material handling equipment.

Outside the U.S. and Canada, the equipment operations own or lease and operate: agriculture and turf equipment factories in Argentina, Brazil, China, France, Germany, India, Israel, Italy, Mexico, the Netherlands, Russia and Spain; construction equipment factories in [removed: Brazil] [added: Brazil, China] and [removed: China;] [added: Germany;] engine, engine/power train, hydraulic, or electronic component factories in Argentina, China, France, India and Mexico; [added: road building equipment factories in Brazil, China, Germany] and [added: India; and] forestry equipment factories in Finland and New Zealand.

These factories and manufacturing operations outside the U.S. and Canada contain approximately [removed: 20] [added: 27] million square feet of floor space.

Included will be a full year of Wirtgen sales in 2019 versus 10 months in 2018, adding about 2 percent to the company's sales in the year ahead.

Foreign-currency rates are expected to have an unfavorable translation effect on equipment sales of about 2 percent for the year.

Asian sales are forecast to be about the same to down slightly.

The forecast includes a full year of Wirtgen sales, versus 10 months in fiscal 2018, with the two additional months adding about 5 percent to division sales for the year.

The outlook reflects continued growth in U.S. housing demand as well as transportation investment and economic growth worldwide.

Excluding the 2018 benefit of tax reform, results are expected to benefit from a higher average portfolio, partially offset by higher selling and administrative expenses, a higher provision for credit losses, and less-favorable financing spreads.

Financial services net income for 2018 of $942 million included a tax benefit related to tax reform of $341 million.

Excluding the tax benefit, net income for 2018 would have been $601 million.

Affecting 2018 net income were increases to the provision for income taxes of $704 million due to the enactment of U.S. tax reform legislation on December 22, 2017 (tax reform).

Net sales of worldwide equipment operations increased 29 percent in fiscal 2018 to $33.351 billion, compared with $25.885 billion last year.

The Company's acquisition of the Wirtgen Group (see Note 4) in December 2017 added 12 percent to net sales for the year.

Currency translation had no material effect for the year.

The Wirtgen Group, whose results are included in these amounts, had operating profit of $116 million for fiscal 2018.

Excluding the Wirtgen Group results, the increase was primarily driven by higher shipment volumes, price realization, and lower warranty costs, partially offset by higher production costs and research and development expenses.

Additionally, fiscal 2017 included an impairment charge for international construction and forestry operations and a gain on the sale of SiteOne Landscapes Supply, Inc. (SiteOne).

In addition to the operating factors mentioned above, income tax adjustments related to tax reform had an unfavorable impact of $1.045 billion for fiscal 2018.

Additionally, income tax adjustments related to tax reform had a favorable effect of $341.2 million for fiscal 2018.

Price realization and lower warranty claims were offset by higher production costs.

The segment also provides integrated precision agriculture technologies across its portfolio of large equipment.

John Deere also manufactures and distributes road building equipment through its wholly-owned subsidiaries of the Wirtgen Group.

The construction and forestry machines are distributed under the John Deere brand name, except for the Wirtgen Group products, which are manufactured and distributed under six brand names: Wirtgen, Vögele, Hamm, Kleeman, Benninghoven, and Ciber.

In addition, in many markets worldwide (most significantly in the EU, India and Australia), the Wirtgen Group sells its products primarily through company-owned sales and service subsidiaries.

The forestry and road construction businesses operate globally.

Common manufacturing facilities

Road building equipment is sold both directly to end customers as well as to independent distributors and dealers for resale.

The Wirtgen Group operates company-owned sales and service subsidiaries in Australia, Austria, Belgium, Brazil, Bulgaria, China, Denmark, Estonia, Finland, France, Georgia, Germany, Hungary, India, Ireland, Italy, Japan, Kazakhstan, Latvia, Lithuania, Malaysia, the Netherlands, Norway, the Philippines, Poland, Romania, Russia, Serbia, Singapore, South Africa, Sweden, Taiwan, Thailand, Turkey, Ukraine and the UK.

The dollar amount of backlog orders for the construction and forestry segment believed to be firm was approximately $3.0 billion at October 28, 2018, compared with no significant amount of backlog orders at October 29, 2017.

The European Union has issued its Stage V Regulation which comes into force in 2019 and 2020 for non-road diesel engines across various power categories for machines used in construction, agriculture, materials handling, industrial use and generator applications.

These standards continue the reduction of particulate and NOx emissions.

Governments are also implementing laws regulating products across their life cycle, including raw material sourcing and the storage, distribution, sale, use, and disposal of products at their end-of-life.

These laws and regulations include green chemistry, right-to-know, restriction of hazardous substances, and product take-back laws.

| John C. May | | | 49 | | President, Worldwide Agriculture & Turf Division, Global Harvesting and Turf Platforms, Ag Solutions Americas and Australia | | 2018 | | 2012 – 2018 President, Agricultural Solutions & Chief Information Officer |

Recent Developments

On December 1, 2017, the Company completed its previously announced acquisition of substantially all of the business operations of Wirtgen Group Holding GmbH (Wirtgen).

Wirtgen, which was a privately-held international company, is the leading manufacturer worldwide of road construction equipment spanning processing, mixing, paving, compaction and rehabilitation.

Headquartered in Germany, the operating group of companies includes product brands "WIRTGEN", "VÖGELE", "HAMM", "KLEEMANN," "BENNINGHOVEN", and "CIBER"; as well as sales and service companies worldwide.

Wirtgen owns and operates 10 factory locations, sells products in more than 100 countries, and has approximately 8,200 employees.

Wirtgen will be included in the Company's construction and forestry operating segment.

For additional information, see Note 30—Subsequent Events.

Included in the forecast is a positive foreign-currency translation effect of about 2 percent for the year and about 3 percent for the first quarter.

The acquisition of the Wirtgen Group closed on December 1, 2017, and is forecast to contribute about $3.1 billion in net sales in fiscal 2018.

Wirtgen is expected to add about 12 percent to Deere's sales for the full year and about 6 percent for the first quarter in

comparison with 2017.

After estimated expenses for purchase accounting and transaction costs, Wirtgen is expected to contribute about $75 million to operating profit and about $25 million to net income in fiscal 2018.

Asian sales are forecast to be flat with strength in India offsetting weakness in China.

Deere's turf sales are expected to outperform the industry owing to the success of new products.

The Wirtgen business is expected to add about 54 percent to the division's sales for the year.

The outlook reflects moderate economic growth worldwide, including higher housing starts in the U.S. and increased activity in the oil and gas sector.

The outlook reflects a higher average portfolio, partially offset by increased selling, administrative and general expenses.

Net sales of the worldwide equipment operations rose 11 percent in fiscal 2017 to $25,885 million from $23,387 million last year.

The operating profit increase was primarily due to higher shipment volumes, a gain on the sale of the remaining interest in SiteOne Landscape Supply, Inc. (SiteOne) (see Note 5), price realization and a favorable product mix, partially offset by increases in production costs, selling, administrative and general expenses, and warranty related expenses.

The operating factors mentioned affected the results.

Additional information is presented in the following discussion of the "Worldwide Financial Services Operations."

The improvement was due primarily to price realization and a favorable product mix, partially offset by increases in production costs and warranty related expenses.

The segment also provides integrated agricultural business and equipment management systems.

and to gather information.

The supply agreement with Hitachi for distribution in certain Asian markets was terminated in 2015; however, Hitachi may place orders for Deere equipment through October of 2018.

The forestry business operates globally.

Engineering and Research

John Deere invests heavily in engineering and research to improve the quality and performance of its products, to develop new products and to comply with government regulations.

Such expenditures were $1,368 million, or 5.3 percent of net sales, in 2017; $1,389 million, or 5.9 percent of net sales, in 2016; and $1,425 million, or 5.5 percent of net sales, in 2015.

_Capital Expenditures._ The equipment operations' capital expenditures totaled $583 million in 2017, compared with $665 million in 2016 and $649 million in 2015.

Provisions for depreciation applicable to these operations' property and equipment during these years were $720 million, $695 million, and $687 million, respectively.

Capital expenditures for the equipment operations in 2018 are currently estimated to be approximately $925 million.

The 2018 expenditures will relate primarily to the modernization and restructuring of key manufacturing facilities, global regulatory requirements, and the development of new products, including capital expenditures for Wirtgen (see Recent Developments on page 3).

Future levels of capital expenditures will depend on business conditions.

John Deere generally produces and ships its construction and forestry equipment on average within approximately 90 days after an order is deemed to become firm; this is an increase from 60 days in 2016 due to higher order volume starting in the second half of 2017.

No significant amount of construction and forestry backlog orders accumulates during any period.

| Max A. Guinn | | | 59 | | President, Worldwide Construction & Forestry | | 2014 | | 2012 – 2014 Senior Vice President, Human Resources, Communications, Public Affairs and Labor Relations |

| John C. May | | | 48 | | President, Agricultural Solutions & Chief Information Officer | | 2012 | | Has held this position for the last five years |

[removed: John Deere] [added: The Company] believes the reasonably possible range of losses for [added: these and other] unresolved legal actions would not have a material effect on its financial statements.

The following matters are disclosed solely pursuant to that requirement: (a) on July 6, 2017, after self-reporting to the Iowa Department of Natural Resources, the Company received a Notice of Violation alleging that one Iowa facility location exceeded permitted emission limits; the Company responded and is actively cooperating with the Iowa Department of Natural Resources to revise the permits and resolve the notice; (b) on March 19, 2018, the Secretaria de Estado de Meio Ambiente e Desenvolvimento Sustentável in Minas Gerais, Brazil issued a fine of approximately $105,000 at current exchange rates against John Deere Equipamentos do Brasil in connection with an oil spill that occurred after an April 2016 roadway accident involving a Company truck; an administrative defense has been filed to cancel the fine; and (c) on October 3, 2018, the Provincia Santa Fe Ministerio de Medio Ambiente issued a Notice of Violation to Industrias John Deere Argentina in connection with alleged groundwater contamination at the site; the Company continues to work with the appropriate authorities to implement corrective actions to remediate the site.

The following matter is disclosed solely pursuant to that requirement: On July 6, 2017, after self-reporting to the Iowa Department of Natural Resources, John Deere received a Notice of Violation alleging that one Iowa facility location exceeded permitted emission limits.

John Deere responded and is actively cooperating with the Iowa Department of Natural Resources to revise the permits and resolve the notice.

EXHIBITS AND FINANCIAL STATEMENT [removed: SCHEDULES.](#ci14602_item_15._exhibits_and_financial_statement_schedules.)][added: SCHEDULES.](#ci78102_item_15._exhibits_and_financial_statement_schedules.)]

[added: | ý | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) [added: OF THE SECURITIES EXCHANGE ACT OF 1934 |]

[added: | o | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)] OF THE SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934 |]

[removed: FOR THE FISCAL YEAR ENDED OCTOBER 29, 2017][added: | | | For the fiscal year ended October 28, 2018 |]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] 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 [removed: and post] such files).

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [removed: o]

| Large accelerated filer ý | | Accelerated filer o | | Non-accelerated filer o [removed: (Do not check if a smaller reporting company)] | | Smaller reporting company o Emerging growth company o |

The aggregate quoted market price of voting stock of registrant held by non-affiliates at April [removed: 30, 2017] [added: 27, 2018] was [removed: $35,641,157,591.][added: $44,528,411,767.]

At November 30, [removed: 2017, 322,595,010] [added: 2018, 318,570,788] shares of common stock, $1 par value, of the registrant were outstanding.

Portions of the proxy statement for the annual meeting of stockholders to be held on February [removed: 28, 2018] [added: 27, 2019] are incorporated by reference into Part III of this Form 10-K.

| [ITEM [removed: 1.](#ca14602_item_1._business.)] [added: 1.](#i1)] | | [removed: [BUSINESS](#ca14602_item_1._business.)] [added: [BUSINESS](#i1)] | | [removed: [2](#ca14602_item_1._business.)] [added: [2](#i1)] |

| [ITEM [removed: 1A.](#cc14602_item_1a._risk_factors.)] [added: 1A.](#i1a)] | | [RISK [removed: FACTORS](#cc14602_item_1a._risk_factors.)] [added: FACTORS](#i1a)] | | [removed: [9](#cc14602_item_1a._risk_factors.)] [added: [9](#i1a)] |

| [ITEM [removed: 1B.](#ce14602_item_1b._unresolved_staff_comments.)] [added: 1B.](#i1b)] | | [UNRESOLVED STAFF [removed: COMMENTS](#ce14602_item_1b._unresolved_staff_comments.)] [added: COMMENTS](#i1b)] | | [removed: [15](#ce14602_item_1b._unresolved_staff_comments.)] [added: [15](#i1b)] |

| [ITEM [removed: 2.](#ce14602_item_2._properties.)] [added: 2.](#i2)] | | [removed: [PROPERTIES](#ce14602_item_2._properties.)] [added: [PROPERTIES](#i2)] | | [removed: [15](#ce14602_item_2._properties.)] [added: [15](#i2)] |

| [ITEM [removed: 3.](#ce14602_item_3._legal_proceedings.)] [added: 3.](#i3)] | | [LEGAL [removed: PROCEEDINGS](#ce14602_item_3._legal_proceedings.)] [added: PROCEEDINGS](#i3)] | | [removed: [15](#ce14602_item_3._legal_proceedings.)] [added: [15](#i3)] |

| [ITEM [removed: 4.](#ce14602_item_4._mine_safety_disclosures.)] [added: 4.](#i4)] | | [MINE SAFETY [removed: DISCLOSURES](#ce14602_item_4._mine_safety_disclosures.)] [added: DISCLOSURES](#i4)] | | [removed: [15](#ce14602_item_4._mine_safety_disclosures.)] [added: [15](#i4)] |

| [removed: [] PART [removed: II](#part2_ce)] [added: II] | | | | |

| [ITEM [removed: 5.](#ce14602_item_5._market_for_registrant___ite04647)] [added: 5.](#i5)] | | [MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#ce14602_item_5._market_for_registrant___ite04647)] [added: SECURITIES](#i5)] | | [removed: [15](#ce14602_item_5._market_for_registrant___ite04647)] [added: [16](#i5)] |

| [ITEM [removed: 6.](#cg14602_item_6._selected_financial_data.)] [added: 6.](#i6)] | | [SELECTED FINANCIAL [removed: DATA](#cg14602_item_6._selected_financial_data.)] [added: DATA](#i6)] | | [removed: [16](#cg14602_item_6._selected_financial_data.)] [added: [16](#i6)] |

| [ITEM [removed: 7.](#cg14602_item_7._management_s_discussio__ite03649)] [added: 7.](#i7)] | | [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#cg14602_item_7._management_s_discussio__ite03649)] [added: OPERATIONS](#i7)] | | [removed: [16](#cg14602_item_7._management_s_discussio__ite03649)] [added: [16](#i7)] |

| [ITEM [removed: 7A.](#cg14602_item_7a._quantitative_and_qual__ite02650)] [added: 7A.](#i7a)] | | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#cg14602_item_7a._quantitative_and_qual__ite02650)] [added: RISK](#i7a)] | | [removed: [16](#cg14602_item_7a._quantitative_and_qual__ite02650)] [added: [16](#i7a)] |

| [ITEM [removed: 8.](#cg14602_item_8._financial_statements_and_supplementary_data.)] [added: 8.](#i8)] | | [FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#cg14602_item_8._financial_statements_and_supplementary_data.)] [added: DATA](#i8)] | | [removed: [16](#cg14602_item_8._financial_statements_and_supplementary_data.)] [added: [16](#i8)] |

| [ITEM [removed: 9.](#cg14602_item_9._changes_in_and_disagre__ite03557)] [added: 9.](#i9)] | | [CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL [removed: DISCLOSURE](#cg14602_item_9._changes_in_and_disagre__ite03557)] [added: DISCLOSURE](#i9)] | | [removed: [16](#cg14602_item_9._changes_in_and_disagre__ite03557)] [added: [17](#i9)] |

| [ITEM [removed: 9A.](#cg14602_item_9a._controls_and_procedures.)] [added: 9A.](#i9a)] | | [CONTROLS AND [removed: PROCEDURES](#cg14602_item_9a._controls_and_procedures.)] [added: PROCEDURES](#i9a)] | | [removed: [16](#cg14602_item_9a._controls_and_procedures.)] [added: [17](#i9a)] |

| [ITEM [removed: 9B.](#cg14602_item_9b._other_information.)] [added: 9B.](#i9b)] | | [OTHER [removed: INFORMATION](#cg14602_item_9b._other_information.)] [added: INFORMATION](#i9b)] | | [removed: [17](#cg14602_item_9b._other_information.)] [added: [17](#i9b)] |

| [removed: [] PART [removed: III](#part3_cg)] [added: III] | | | | |

| [ITEM [removed: 10.](#cg14602_item_10._directors,_executive___ite02317)] [added: 10.](#i10)] | | [DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE [removed: GOVERNANCE](#cg14602_item_10._directors,_executive___ite02317)] [added: GOVERNANCE](#i10)] | | [removed: [17](#cg14602_item_10._directors,_executive___ite02317)] [added: [17](#i10)] |

| [ITEM [removed: 11.](#cg14602_item_11._executive_compensation.)] [added: 11.](#i11)] | | [EXECUTIVE [removed: COMPENSATION](#cg14602_item_11._executive_compensation.)] [added: COMPENSATION](#i11)] | | [removed: [17](#cg14602_item_11._executive_compensation.)] [added: [17](#i11)] |

| [ITEM [removed: 12.](#cg14602_item_12._security_ownership_of__ite03985)] [added: 12.](#i12)] | | [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER [removed: MATTERS](#cg14602_item_12._security_ownership_of__ite03985)] [added: MATTERS](#i12)] | | [removed: [17](#cg14602_item_12._security_ownership_of__ite03985)] [added: [17](#i12)] |

| [ITEM [removed: 13.](#cg14602_item_13._certain_relationships__ite03048)] [added: 13.](#i13)] | | [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR [removed: INDEPENDENCE](#cg14602_item_13._certain_relationships__ite03048)] [added: INDEPENDENCE](#i13)] | | [removed: [17](#cg14602_item_13._certain_relationships__ite03048)] [added: [18](#i13)] |

| [ITEM [removed: 14.](#cg14602_item_14._principal_accountant_fees_and_services.)] [added: 14.](#i14)] | | [PRINCIPAL ACCOUNTANT FEES AND [removed: SERVICES](#cg14602_item_14._principal_accountant_fees_and_services.)] [added: SERVICES](#i14)] | | [removed: [17](#cg14602_item_14._principal_accountant_fees_and_services.)] [added: [18](#i14)] |

| [removed: [] PART [removed: IV](#part4_cg)] [added: IV] | | | | |

| [ITEM [removed: 15.](#ci14602_item_15._exhibits_and_financial_statement_schedules.)] [added: 15.](#i15)] | | [EXHIBITS AND FINANCIAL STATEMENT [removed: SCHEDULES](#ci14602_item_15._exhibits_and_financial_statement_schedules.)] [added: SCHEDULES](#i15)] | | [removed: [18](#ci14602_item_15._exhibits_and_financial_statement_schedules.)] [added: [19](#i15)] |

10-K 1 a2236950z10-k.htm 10-K

| (Mark one) | | |

| or | | |

| | | For the transition period from to |

| | | |

| --- | --- | --- |

10-K 1 a2233505z10-k.htm 10-K

Outside the U.S. and Canada, the equipment operations also own or lease and occupy [removed: four] centralized parts distribution centers in Brazil, Germany, India and Russia and regional parts depots and distribution centers in Argentina, Australia, China, Mexico, South Africa, Sweden and the United Kingdom.

The Company's administrative offices and research facilities, some of which are owned and some of which are leased by John Deere, contain about [removed: 3.8] [added: 4.3] million square feet of floor space globally and miscellaneous other facilities total [removed: 4.2] [added: 7.1] million square feet globally.

Overall, John Deere owns approximately [removed: 59.8] [added: 68.3] million square feet of facilities and leases approximately [removed: 14.9] [added: 9.1] million additional square feet in various locations.

The Company's common stock is listed on the New York Stock [removed: Exchange.][added: Exchange under the symbol "DE".]

See the information concerning [removed: quoted prices of] the [removed: Company's common stock, the] number of stockholders and the data on dividends declared and paid per share in Notes 29 and 30 to the Consolidated Financial Statements.

The Company's purchases of its common stock during the fourth quarter of [removed: 2017] [added: 2018] were as follows:

| Period | | Total Number of Shares Purchased [added: (2)] (thousands) | | | Average Price Paid Per Share | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) (thousands) | | | Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (1) (millions) |

| Total | | | [added: 3,380] | | | | | | [added: 3,380] | | |

During the fourth quarter of [removed: 2017,] [added: 2018,] the Company had a share repurchase plan that was announced in December 2013 to purchase up to $8,000 million of shares of the Company's common stock.

The maximum number of shares above that may yet be purchased under the $8,000 million plan was based on the end of the fourth quarter closing share price of [removed: $133.25] [added: $133.00] per share.

At the end of the fourth quarter of [removed: 2017, $3,260] [added: 2018, $2,312] million of common stock remains to be purchased under this plan.

| Jul 30 to Aug 26 | | | 350 | | $ | 142.55 | | | 350 | | 20.8 |

| Aug 27 to Sept 23 | | | 1,575 | | | 148.46 | | | 1,575 | | 19.0 |

| Sept 24 to Oct 28 | | | 1,455 | | | 151.27 | | | 1,455 | | 17.4 |

(2)

In the fourth quarter of 2018, approximately 1 thousand shares were purchased from plan participants to pay payroll taxes on certain restricted stock awards.

The shares were valued at a weighted-average market price of $151.27.

| Jul 31 to Aug 27 | | | | | | | | | | | 24.5 |

| Aug 28 to Sept 24 | | | | | | | | | | | 24.5 |

| Sept 25 to Oct 29 | | | | | | | | | | | 24.5 |

| (Millions of dollars except per share amounts) | | October [added: 28 2018 | | | October] 29 2017 | | | October 30 2016 | | | November 1 2015 | | | November 2 2014 | | | [removed: October 27 2013 | | |]

| Total net sales and revenues | | $ | [removed: 29,738] [added: 37,358] | | $ | [removed: 26,644] [added: 29,738] | | $ | [removed: 28,863] [added: 26,644] | | $ | [removed: 36,067] [added: 28,863] | | $ | [removed: 37,795] [added: 36,067] | |

| Net income attributable to Deere & Company | | $ | [removed: 2,159] [added: 2,368] | | $ | [removed: 1,524] [added: 2,159] | | $ | [removed: 1,940] [added: 1,524] | | $ | [removed: 3,162] [added: 1,940] | | $ | [removed: 3,537] [added: 3,162] | |

| Net income per share [removed: —] [added: –] basic | | $ | [removed: 6.76] [added: 7.34] | | $ | [removed: 4.83] [added: 6.76] | | $ | [removed: 5.81] [added: 4.83] | | $ | [removed: 8.71] [added: 5.81] | | $ | [removed: 9.18] [added: 8.71] | |

| Net income per share [removed: —] [added: –] diluted | | $ | [removed: 6.68] [added: 7.24] | | $ | [removed: 4.81] [added: 6.68] | | $ | [removed: 5.77] [added: 4.81] | | $ | [removed: 8.63] [added: 5.77] | | $ | [removed: 9.09] [added: 8.63] | |

| Dividends declared per share | | $ | [removed: 2.40] [added: 2.58] | | $ | 2.40 | | $ | 2.40 | | $ | [removed: 2.22] [added: 2.40] | | $ | [removed: 1.99] [added: 2.22] | |

| Total assets | | $ | [removed: 65,786] [added: 70,108] | | $ | [removed: 57,918] [added: 65,786] | | $ | [removed: 57,883] [added: 57,918] | | $ | [removed: 61,267] [added: 57,883] | | $ | [removed: 59,454] [added: 61,267] | |

| Long-term borrowings | | $ | [removed: 25,891] [added: 27,237] | | $ | [removed: 23,703] [added: 25,891] | | $ | [removed: 23,775] [added: 23,703] | | $ | [removed: 24,318] [added: 23,775] | | $ | [removed: 21,518] [added: 24,318] | |

See the Consolidated Financial Statements and notes thereto and supplementary data on pages [removed: 29 – 66.][added: 31–73.]

The Company's principal executive officer and its principal financial officer have concluded that the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) were effective as of October [removed: 29, 2017,] [added: 28, 2018,] based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Exchange Act.

Management assessed the effectiveness of the Company's internal control over financial reporting as of October [removed: 29, 2017,] [added: 28, 2018,] using the criteria set forth in Internal Control [removed: -] [added: –] Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on that assessment, management believes that, as of October [removed: 29, 2017,] [added: 28, 2018,] the Company's internal control over financial reporting was effective.

U.S. Securities and Exchange Commission guidance allows companies to exclude acquisitions from management's report on internal control over financial reporting for the first year after the acquisition when it is not possible to conduct an assessment.

In December 2017, the Company acquired the stock and certain assets of substantially all of the business of Wirtgen Group Holding GmbH (Wirtgen) (see Note 4).

Due to Wirtgen's global operations, management has excluded Wirtgen from the annual assessment of the effectiveness of internal control over financial reporting as of October 28, 2018.

Wirtgen represents 9 percent of both the consolidated total assets and consolidated net sales and revenues of Deere & Company as of and for the year ended October 28, 2018.

The information regarding directors in the definitive proxy statement expected to be filed no later than January [removed: 12, 2018] [added: 11, 2019] (proxy statement), under the captions [removed: "Election] [added: "Item 1–Election] of [removed: Directors," and in the second bullet point in the "Audit Review Committee" item under the caption "Board Committees,"] [added: Directors"] is incorporated herein by reference.

The information in the proxy statement required by Items 405, 407(d)(4) and 407(d)(5) of Regulation S-K under the captions "Section 16(a) Beneficial Ownership Reporting Compliance" and "Corporate Governance–Board Committees–Audit Review Committee" is incorporated herein by reference.

The information [added: required by Item 402 and 407(e)(4) and (e)(5) of Regulation S-K] in the proxy statement under the captions "Compensation of Directors," "Compensation Discussion & Analysis," "Compensation Committee Report" and "Executive Compensation Tables" is incorporated herein by reference.

[removed: Equity compensation plan] [added: The] information [added: required by Item 201(d) of Regulation S-K] in the proxy statement under the caption "Equity Compensation Plan Information" is incorporated herein by reference.

The information [removed: on the security ownership] [added: required by Item 403] of [removed: certain beneficial owners] [added: Regulation S-K] in the proxy statement under the caption "Security Ownership of Certain Beneficial Owners and Management" is incorporated herein by reference.

(a)

_Securities authorized for issuance under equity compensation plans._

(b)

_Security ownership of certain beneficial owners._

(c)

_Security ownership of management._

The information on shares of common stock of the Company beneficially owned by, and under option to (i) each director, (ii) certain named executive officers and (iii) the directors and officers as a group, contained in the proxy statement under the captions "Security Ownership of Certain Beneficial Owners and Management" and "Executive Compensation Tables - Outstanding Equity Awards at Fiscal 2017 Year-End" is incorporated herein by reference.

(d)

_Change in control._

None.

The information [added: required by Item 404 of Regulation S-K] in the proxy statement under the [removed: captions "Our Values," "Director Independence" and] [added: caption] "Review and Approval of Related Person Transactions" is incorporated herein by reference.

The information required by Item 407(a) of Regulation S-K in the proxy statement under the caption "Corporate Governance–Director Independence" is incorporated herein by reference.

The information [added: required by this Item 14 is set forth] in the proxy statement under the [removed: caption "Fees] [added: captions "Ratification of Independent Registered Public Accounting Firm–Fees] Paid to the Independent Registered Public Accounting Firm" [removed: is] [added: and "Pre-approval of Services by the Independent Registered Public Accounting Firm" and] incorporated herein by reference.

| [removed: | | [ Statement of Consolidated Income for] [added: INCOME STATEMENT For] the [removed: years ended] [added: Years Ended] October [added: 28, 2018, October] 29, 2017, [added: and] October 30, [removed: 2016, and November 1, 2015](#inc_fe) | | [ 29](#inc_fe)] [added: 2016 (In millions of dollars)] |

| | | [ Statement of Consolidated Comprehensive Income for the years ended October [added: 28, 2018, October] 29, 2017, [added: and] October 30, [removed: 2016, and November 1, 2015](#com_fg)] [added: 2016](#fg78102_deere___company_statement_of_c__dee05124)] | | [ [removed: 30](#com_fg)] [added: 32](#fg78102_deere___company_statement_of_c__dee05124)] |

| | | [ Consolidated Balance Sheet as of October [removed: 29, 2017] [added: 28, 2018] and October [removed: 30, 2016](#bal_fi)] [added: 29, 2017](#fi78102_deere___company_consolidated_b__dee04494)] | | [ [removed: 31](#bal_fi)] [added: 33](#fi78102_deere___company_consolidated_b__dee04494)] |

| [removed: | | [ Statement of Consolidated Cash Flows for] [added: STATEMENT OF CASH FLOWS For] the [removed: years ended] [added: Years Ended] October [added: 28, 2018, October] 29, 2017, [added: and] October 30, [removed: 2016, and November 1, 2015](#cas_fk) | | [ 32](#cas_fk)] [added: 2016 (In millions of dollars)] |

| | | [ Statement of Changes in Consolidated Stockholders' Equity for the years ended [removed: November 1, 2015,] October 30, 2016, [removed: and] October 29, [removed: 2017](#cha_fm)] [added: 2017, and October 28, 2018](#fm78102_deere___company_statement_of_c__dee05577)] | | [ [removed: 33](#cha_fm)] [added: 35](#fm78102_deere___company_statement_of_c__dee05577)] |

| | | [ Notes to Consolidated Financial [removed: Statements](#notes_fo)] [added: Statements](#fo_notes)] | | [ [removed: 34](#notes_fo)] [added: 36](#fo_notes)] |

[removed: | | | [ Schedule II—Valuation and Qualifying Accounts for] [added: For] the [removed: years ended] [added: Years Ended] October [added: 28, 2018, October] 29, 2017, [added: and] October 30, [removed: 2016, and November 1, 2015](#sch_jg) | | [ 73](#sch_jg) |][added: 2016]

| | | See the "Index to Exhibits" on pages [removed: 68 – 70] [added: 76–78] of this report | | |

| | | The following schedules for the Company and consolidated subsidiaries are omitted because of the absence of the conditions under which they are required: I, [added: II,] III, IV and V. | | |

| RESULTS OF OPERATIONS FOR THE YEARS ENDED OCTOBER [added: 28, 2018, OCTOBER] 29, 2017, [added: AND] OCTOBER 30, [removed: 2016, AND NOVEMBER 1, 2015] [added: 2016] |

The equipment operations manufacture and distribute a full line of agricultural equipment; a variety of commercial and consumer equipment; and a broad range of equipment for [removed: construction] [added: construction, road building,] and forestry.

The company's agriculture and turf equipment sales increased [removed: 9] [added: 15] percent in [removed: 2017] [added: 2018] and are [removed: projected] [added: forecast] to increase about [removed: 9] [added: 3] percent for [removed: 2018.][added: 2019.]

Industry agricultural machinery sales in the U.S. and Canada for [removed: 2018] [added: 2019] are forecast to [removed: increase 5] [added: be about the same] to [removed: 10 percent,] [added: 5 percent higher,] compared to [removed: 2017.][added: 2018.]

Industry sales in the European Union (EU)28 member nations are forecast to [removed: increase approximately 5 percent] [added: be about the same] in [removed: 2018,] [added: 2019,] while South American industry sales are projected to be about the same [removed: or increase] [added: to] 5 percent [added: higher] from [removed: 2017] [added: 2018] levels.

Asian sales are forecast to be about the same [removed: in 2018.][added: to down slightly.]

Industry sales of turf and utility equipment in the U.S. and Canada are expected to be [removed: approximately] [added: about] the same [added: to 5 percent higher] for [removed: 2018.][added: 2019.]

The [removed: company's construction and forestry] [added: segment's] sales [removed: increased 17 percent in 2017 and] are forecast to increase about [removed: 69] [added: 15] percent in [removed: 2018.][added: 2019.]

The [removed: Wirtgen acquisition is expected to add 54 percent to the] [added: company's] construction and forestry [removed: annual] sales [removed: forecast] [added: increased 78 percent in 2018, with Wirtgen] (see Note [removed: 30).][added: 4) adding 53 percent for the year.]

Global forestry industry sales are expected to [removed: be] [added: increase] about [removed: the same to 5] [added: 10] percent [removed: higher] in [removed: 2018,] [added: 2019] compared to [removed: 2017.][added: 2018.]

Net income of the company's financial services operations attributable to Deere & Company in [removed: 2018] [added: 2019] is expected to be approximately [removed: $515] [added: $630] million.

Items of concern include the uncertainty of the effectiveness of governmental actions in respect to monetary and fiscal policies, the impact of sovereign debt, eurozone [added: and Argentine] issues, capital market disruptions, trade agreements, changes in demand and pricing for used equipment, and geopolitical events.

Net sales of the worldwide equipment operations rose 11 percent in 2017 to $25,885 million from $23,387 million [removed: last year.][added: in 2016.]

[removed: Equipment net sales in the] United States and Canada increased 5 percent for 2017.

Worldwide equipment operations had an operating profit of [removed: $2,821] [added: $2,859] million in 2017, compared with [removed: $1,880] [added: $1,908] million in 2016.

The operating profit increase was primarily due to higher shipment volumes, a gain on the sale of the remaining interest in SiteOne [removed: Landscape Supply, Inc. (SiteOne)] (see Note 5), price realization, and a favorable product mix, partially offset by increases in production costs, selling, administrative and general expenses, and warranty related expenses.

The cost of sales to net sales ratio for 2017 was [removed: 77.0] [added: 76.7] percent, compared with [removed: 78.0] [added: 77.8] percent [removed: last year.][added: in 2016.]

Interest expense increased due to higher average [removed: interest] [added: borrowing] rates and higher average borrowings.

The company has several defined benefit pension plans and [removed: defined] [added: other postretirement] benefit [added: (OPEB) plans, primarily] health care and life insurance plans.

The company's [removed: postretirement benefit] costs for these plans in 2017 were $347 million, compared with $312 million in 2016.

The long-term expected return on plan assets, which is reflected in these costs, was an expected gain of [added: 6.8 percent in 2018 and] 7.2 percent in [removed: 2017] [added: 2017, or $797 million] and [added: $807 million, respectively.]

In [removed: 2018,] [added: 2019,] the expected return will be approximately [removed: 6.8] [added: 6.5] percent.

The company's [removed: postretirement] costs [added: under these plans] in [removed: 2018] [added: 2019] are expected to [removed: increase] [added: decrease] approximately [removed: $10] [added: $125] million.

Total company contributions to the plans were $428 million in 2017 and $127 million in 2016, which include direct benefit payments for unfunded [removed: plans.][added: plans and voluntary contributions to plan assets of $301 million in 2017 and $3 million in 2016.]

Total company contributions in [removed: 2018] [added: 2019] are expected to be approximately [removed: $137] [added: $210] million, which are primarily direct benefit [removed: payments for unfunded plans.][added: payments.]

The company has no significant required contributions to U.S. pension plan assets in [removed: 2018] [added: 2019] under applicable funding regulations.

See the discussion in "Critical Accounting Policies" for more information about [removed: postretirement] [added: pension and OPEB] benefit obligations.

The agriculture and turf segment had an operating profit of [removed: $2,484] [added: $2,513] million for the year, compared with [removed: $1,700] [added: $1,719] million in [removed: 2016.]

The construction and forestry segment had an operating profit of [removed: $337] [added: $346] million in 2017, compared with [removed: $180] [added: $189] million in 2016.

The operating profit of the financial services segment was [removed: $722] [added: $715] million in 2017, compared with [removed: $709] [added: $701] million in 2016.

Interest expense increased 25 percent in [added: 2017 as a result of higher average borrowing rates.]

Asian sales are forecast to be about the same or decrease slightly in 2019.

The forecast includes a full year of Wirtgen sales compared to 10 months in 2018.

The company concluded another successful year in which the performance benefited from a further improvement in market conditions and a favorable customer response to its products.

At the same time, the company has continued to face cost pressures for raw materials, which are being addressed

through pricing and cost management.

The company's performance has allowed for significant investments in new products and services, especially those focused on precision technologies, and for providing shareholder returns through dividend payments and share repurchases.

The company believes it remains well positioned to capitalize on the growth in the world's agricultural and construction equipment markets.

In addition, the company is confident in the present direction and believes it is positioned to deliver improved operating performance and value to its customers and investors in the future.

| 2018 COMPARED WITH 2017 |

Affecting 2018 net income were increases to the provision for income taxes of $704 million due to the enactment of U.S. tax reform legislation on December 22, 2017 (tax reform) (see Note 8).

Worldwide net sales and revenues increased 26 percent to $37,358 million in 2018, compared with $29,738 million in 2017.

The company's acquisition of the Wirtgen Group Holding GmbH (Wirtgen) (see Note 4) in December 2017 added 12 percent to net sales for the year.

Currency translation had no material effect.

Wirtgen, whose results are included in 2018 amounts, had operating profit of $116 million in 2018.

Excluding Wirtgen results, the operating profit improvement was primarily driven by higher shipment volumes, price realization, and lower warranty costs, partially offset by higher production costs and research and development expenses.

Additionally, results in 2017 included an impairment charge for international construction and forestry operations and a gain on the sale of SiteOne Landscapes Supply, Inc. (SiteOne) (see Note 5).

In addition to the operating factors mentioned above, income tax adjustments related to tax reform had an unfavorable impact of $1,045 million for 2018 (see Note 8).

Income tax adjustments related to tax reform had a favorable effect of $341 million for 2018.

The cost of sales to net sales ratio for 2018 and 2017 was 76.7 percent.

Price realization and lower warranty claims were offset by higher production costs.

Other income decreased in 2018 primarily due to the 2017 gains on the sale of the remaining interest in SiteOne (see Note 5), partially offset by higher service income largely from Wirtgen (see Note 4).

Research and development expenses increased as a result of new product and improvement initiatives, and acquisitions.

The voluntary contributions to plan assets were $1,305 million in 2018, which included $1,300 million contributions to the U.S. pension and OPEB plans, and $301 million in 2017.

Currency translation did not have a significant effect on net sales.

The operating profit improvement was driven by higher shipment volumes, price realization, and lower warranty related expenses, partially offset by higher production costs and research and development expenses.

Operating profit in 2017 included gains on the SiteOne sale (see Note 5).

Wirtgen contributed $116 million to operating profit in 2018.

Net sales increased 78 percent in 2018, with Wirtgen adding 53 percent for the year.

Net sales were also affected by higher shipment volumes and lower warranty related claims.

Currency translation did not have a material effect on net sales.

Additionally, 2017 included an impairment charge for international operations (see Note 5).

Operating profit benefited from a higher average portfolio, a lower provision for credit losses, and lower losses on lease residual values, partially offset by less favorable financing spreads.

Wirtgen, whose results are included in 2018, had operating profit of $19 million.

Net sales increased 25 percent in 2018 due primarily to higher shipment volumes, with Wirtgen adding 4 percent.

Wirtgen's operating profit outside the U.S. and Canada was $97 million in 2018.

The increase was due primarily to higher shipment volumes, partially offset by higher production costs and research and development expenses.

Net sales increased 34 percent in 2018, with Wirtgen adding 22 percent, compared to 2017.

The increase

was primarily the result of higher shipment volumes.

Included will be a full year of Wirtgen sales in 2019 versus 10 months in 2018, adding about 2 percent to the company's sales in 2019.

| (2) | | _Schedule to Consolidated Financial Statements_ | | |

The company completed a successful year as markets for farm and construction equipment improved.

Sales of farm machinery in South America made especially strong gains.

The Wirtgen acquisition was finalized in December, which will establish the company as a more prominent participant in the global construction equipment markets.

The company is confident in the present course and believes it is positioned to deliver stronger, more consistent results in the future.

7.3 percent in 2016, or $807 million in 2017 and $810 million in 2016.

These contributions also included voluntary contributions to plan assets of $301 million in 2017 and $3 million in 2016.

2017 as a result of higher average borrowing rates.

Included in the forecast is a positive foreign currency translation effect of about 2 percent for the year and about 3 percent for the first quarter.

The acquisition of the Wirtgen Group, which closed in December 2017, is forecast to contribute about $3.1 billion in net sales in fiscal 2018 (see Note 30).

Wirtgen is expected to add about 12 percent to the company's sales for the full year and about 6 percent for the first quarter in comparison with 2017.

After estimated expenses for purchase accounting and transaction costs, Wirtgen is expected to contribute about $75 million to operating profit and about $25 million to net income in fiscal 2018.

Asian sales are projected to be about the same with strength in India offsetting weakness in China.

same for 2018.

The company's turf sales are expected to outperform the industry owing to the success of new products.

The Wirtgen acquisition is expected to add about 54 percent to the segment's sales forecast for the year (see Note 30).

The outlook reflects moderate economic growth worldwide, including higher housing starts in the U.S. and increased activity in the oil and gas sector.

The outlook reflects a higher average portfolio, partially offset by increased selling, administrative and general expenses.

carbon and other greenhouse gas emissions, noise and the effects of climate change; changes to GPS radio frequency bands or their permitted uses; changes in labor regulations; changes to accounting standards; changes in tax rates, estimates, laws, and regulations and company actions related thereto; compliance with U.S. and foreign laws when expanding to new markets and otherwise; and actions by other regulatory bodies.

increases in delinquencies and default rates, which could materially impact write-offs and provisions for credit losses.

| 2016 COMPARED WITH 2015 |

Worldwide net sales and revenues decreased 8 percent to $26,644 million in 2016, compared with $28,863 million in 2015.

The operating profit decline was primarily on account of reduced shipment volumes, the unfavorable effects of foreign currency exchange, and a less favorable product mix, partially offset by price realization, lower production costs, lower selling, administrative and general expenses, and a gain on the sale of a partial interest in the unconsolidated affiliate SiteOne (see Note 5).

In addition to the operating factors mentioned above, a higher effective tax rate in 2016 reduced net income.

The decline was primarily due to less favorable financing spreads, higher losses on lease residual values (see Note 5), and a higher provision for credit losses.

The results in 2015 also benefited from a gain on the sale of the crop insurance business (see Note 4).

The cost of sales to net sales ratio for 2016 was 78.0 percent, compared with 78.1 percent in 2015.

The decrease was due primarily to price realization and lower production costs, largely offset by the unfavorable effects of foreign currency exchange and the impact of a less favorable product mix.

Other income increased due primarily to a gain on the sale of a partial interest in SiteOne

(see Note 5) and was primarily offset by the gain on the sale of the crop insurance operations in 2015 (see Note 4).

Research and development costs decreased largely due to a lower level of activity and the favorable effects of currency translation.

These contributions also included voluntary contributions to plan assets of $3 million in both 2016 and 2015.

Net sales decreased 7 percent in 2016 due to lower shipment volumes and the unfavorable effects of currency translation, partially offset by price realization.

Operating profit was higher primarily due to price realization, lower production costs, lower selling, administrative and general expenses, and a gain on the sale of a partial interest in SiteOne (see Note 5), partially offset by lower shipment volumes, unfavorable effects of foreign currency exchange, and a less favorable product mix.

Net sales decreased 18 percent in 2016 largely as a result of lower shipment volumes and higher sales incentive costs.

Additionally, full year results in 2015 benefited from a gain on the sale of the crop insurance business (see Note 4).

borrowing rates, partially offset by lower average borrowings.

The decline was due primarily to lower shipment volumes, the unfavorable effects of foreign currency exchange, and the impact of a less favorable product mix.

The decline was partially offset by price realization, lower production costs, lower selling, administrative and general expenses, and a gain on the sale of a partial interest in SiteOne (see Note 5).

Net sales were 3 percent lower primarily reflecting the unfavorable effects of foreign currency translation and decreased shipment volumes, partially offset by price realization.