Deere & Co. (DE) 10-K risk factor changes: FY2019 vs FY2018

This discussion of risk factors should be considered closely in conjunction with [removed: Management's] [added: Management’s] Discussion and Analysis beginning on page [removed: 20,] [added: 22,] including the risks and uncertainties described in the Safe Harbor Statement on pages [removed: 22 and 23,] [added: 24 – 26,] and the Notes to Consolidated Financial Statements beginning on page [removed: 36.][added: 38.]

Some of these risks and uncertainties could affect particular lines of [removed: business, while others could affect all of the Company's businesses.]

Trade restrictions, including withdrawal from or modification of existing trade agreements, [added: the failure to ratify the United States-Mexico-Canada Agreement,] negotiation of new trade agreements, and imposition of new (and retaliatory) tariffs against certain countries or covering certain products, [added: including developments in U.S.-China trade relations,] could limit John [removed: Deere's] [added: Deere’s] ability to capitalize on current and future growth opportunities in international markets and impair John [removed: Deere's] [added: Deere’s] ability to expand the business by offering new technologies, products and services.

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

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

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

[removed: Moreover,] John [removed: Deere's] [added: Deere’s] operations, including those outside of the United States, may also be [removed: impacted] [added: affected] by non-U.S. regulatory reforms being implemented to further regulate non-U.S. financial institutions and markets.

Finally, changes in governmental policies regulating bio-fuel utilization could affect [added: commodity] demand [added: and commodity prices, demand] for John [removed: Deere's] [added: Deere’s] diesel-fueled [removed: equipment] [added: equipment,] and result in higher research and development costs related to equipment fuel standards.

John [removed: Deere's] [added: Deere’s] efforts to grow its businesses depend to a large extent upon access to additional geographic markets, including, but not limited to, [added: Argentina,] Brazil, China, India and Russia, and its success in developing market share and operating profitably in such markets.

Operating and seeking to expand business in a number of different regions and countries exposes John Deere to multiple and potentially conflicting cultural practices, business practices and legal and regulatory requirements that are subject to change, including those related to tariffs and trade barriers, investments, property ownership rights, taxation, sanctions [added: and export control] requirements, repatriation of earnings and advanced technologies.

Expanding business operations globally also increases exposure to currency fluctuations which can materially affect the [added: Company’s financial results.]

[removed: John Deere's turf operations and its] construction and forestry business are dependent on construction activity and general economic conditions.

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 [removed: Company's] [added: 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 [removed: Company's] [added: Company’s] net interest income and [removed: earnings.]

_John [removed: Deere's] [added: Deere’s] business may be directly and indirectly affected by unfavorable weather conditions or natural [removed: disasters] [added: calamities] that reduce agricultural production and demand for agriculture and turf equipment._

Natural calamities such as regional floods, hurricanes or other storms, [added: droughts, diseases] and [removed: droughts] [added: pests] can have significant negative effects on [added: 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 volatility, regulatory instability or change in [removed: custom tariffs,] [added: import tariffs or trade agreements,] 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.

Supply chain disruptions due to supplier financial distress, capacity constraints, [added: trade barriers,] labor shortages, business continuity, quality, delivery [added: issues] or disruptions due to weather-related or natural disaster events could affect John [removed: Deere's] [added: Deere’s] operations and profitability.

_John [removed: Deere's] [added: Deere’s] operations, suppliers and customers are subject to and affected by increasingly rigorous [removed: environmental, health] [added: environmental,_ _health] and safety laws and [removed: regulations of] [added: regulations_ _of] federal, state and local authorities in the U.S. and various regulatory authorities with jurisdiction over John [removed: Deere's] [added: Deere’s] international [removed: operations.][added: operations._ _In addition, private civil litigation on these subjects has increased, primarily in the U.S._]

Various stakeholders, including legislators and regulators, shareholders and non-governmental organizations, as well as companies in many business sectors, including John Deere, are [removed: considering] [added: continuing to look for] ways to reduce GHG emissions.

Despite security measures and business continuity plans, John [removed: Deere's] [added: 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 [added: or supplier] error or malfeasance or other disruptions during [removed: the process of upgrading or replacing computer software or hardware, power outages, computer viruses, telecommunication or utility failures, terrorist acts, natural disasters or other catastrophic events.]

This data is subject to a variety of U.S. and [removed: international] [added: foreign] laws and regulations, including oversight by various regulatory or other governmental bodies.

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 [removed: 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 imposes more stringent data protection requirements and provides for greater penalties for noncompliance.][added: jurisdictions.]

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

[removed: Transactions] [added: Acquisitions or joint ventures] that the Company has entered into, or may enter into in the future, may involve significant challenges and risks, including that the [removed: transactions] [added: acquisitions or joint ventures] do not advance our business strategy, or fail to produce satisfactory returns on our investment.

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

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 [removed: transaction,] [added: acquisition or joint venture,] including potential exposure to regulatory sanctions resulting from an acquisition [removed: target's] [added: target’s or joint venture partner’s] previous activities or costs associated with any quality issues with an acquisition target's [added: or joint venture’s] products or services.

| --- | --- |

business, while others could affect all of the Company’s businesses.

Negative market conditions resulting from economic and political uncertainties in these and other countries could reduce customer confidence, resulting in declines in demand and increases in delinquencies and default rates, which could affect write-offs and provisions for credit losses.

John Deere’s turf operations and its

earnings.

the process of upgrading or replacing computer software or hardware, power outages, computer viruses, telecommunication or utility failures, terrorist acts, natural disasters or other catastrophic events.

The European Union General Data Protection Regulation imposes stringent data protection requirements and provides significant penalties for noncompliance.

New privacy laws will continue to come into effect around the world in 2020, with one of the most significant being the California Consumer Privacy Act on January 1, 2020.

_Changes affecting the availability of the London Interbank Offered Rate (“LIBOR”) may have consequences for John Deere that cannot yet reasonably be predicted._

The Company has outstanding debt, derivative and receivable transactions with variable interest rates based on LIBOR.

The LIBOR benchmark has been subject of national, international, and other regulatory guidance and proposals for reform.

In July 2017, the U.K. Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit rates for calculation of LIBOR after 2021.

These reforms may cause LIBOR to perform differently than in the past and LIBOR may ultimately cease to exist after 2021.

Alternative benchmark rate(s) may replace LIBOR and could affect the Company's debt securities, derivative instruments, receivables, debt payments and receipts.

At this time, it is not possible to predict the effect of any changes to LIBOR, any phase out of LIBOR or any establishment of alternative benchmark rates.

Any new benchmark rate will likely not replicate LIBOR exactly, which could impact our contracts which terminate after 2021.

There is uncertainty about how applicable law, the courts or the Company will address the replacement of LIBOR with alternative rates on variable rate retail loan contracts and other contracts that do not include alternative rate fallback provisions.

In addition, any changes to benchmark rates may have an uncertain impact on our cost of funds and our access to the capital markets, which could impact our results of operations and cash flows.

Uncertainty as to the nature of such potential changes may also adversely affect the trading market for our securities.

We may decide to divest ourselves of acquired businesses if we determine any such divestiture is in the best interests of our shareholders, and our joint ventures may be terminated at or before their stated terms.

Divestitures of businesses or dissolutions of joint ventures may involve significant challenges and risks, including failure to advance our business strategy, costs or disruptions to the Company, or negative effects on the Company’s product offerings, which may adversely affect our business, results of operations and financial condition.

These divestitures of businesses or dissolutions of joint ventures may result in ongoing financial or legal involvement in the divested business, through indemnifications or other financial arrangements, such as retained liabilities, which could affect the Company’s future financial results.

Policies impacting exchange rates and commodity prices or those limiting

The Dodd-Frank Wall Street Reform and Consumer Protection Act and its regulations impose, or may impose, additional reporting, stress testing, leverage, liquidity, capital requirements and other supervisory and financial standards and restrictions that increase regulatory compliance costs for John Deere and John Deere's financial services operations and could adversely affect John Deere and its financial services segment's funding activities, liquidity, structure (including relationships with affiliates), operations and performance.

Company's financial results.

agricultural and livestock production.

In addition, private civil litigation on these subjects has increased, primarily in the U.S._

Furthermore,

See the information under the caption [removed: "Management's] [added: “Management’s] Discussion and [removed: Analysis"] [added: Analysis”] on pages [removed: 20–30.][added: 22 – 32.]

| --- | --- |

See the information under [removed: "Management's] [added: “Management’s] Discussion and [removed: Analysis"] [added: Analysis”] beginning on page [removed: 20] [added: 22] and in Note [removed: 27] [added: 28] 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, [removed: "Risk Factors"] [added: “Risk Factors”] and Item 7, [removed: "Management's] [added: “Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations – Safe] [added: Operations–Safe] Harbor [removed: Statement"] [added: Statement”] in this Annual Report on Form 10-K.

Additional information is presented in the discussion of business segment and geographic area results on [removed: page 21.][added: pages 23 – 24.]

[removed: The Company's] [added: Net income of the Company’s] equipment [removed: sales are projected to increase by about 7 percent] [added: operations was $2.698 billion] for fiscal [removed: 2019] [added: 2019,] compared with [added: $1.404 billion in fiscal] 2018.

_Agriculture & Turf._ The [removed: Company's] [added: Company’s] worldwide sales of agriculture and turf equipment are forecast to be [removed: up] [added: down] about [removed: 3] [added: 5 to 10] percent for fiscal-year [removed: 2019,] [added: 2020,] including [added: price realization of 2 percent and] a negative currency-translation effect of [removed: 2] [added: 1] percent.

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

Full-year industry sales in the [removed: EU28] [added: European Union (EU28)] member nations are forecast to be about the same as [removed: a result] [added: are South American industry sales] of [removed: drought conditions in key markets.][added: tractors and combines.]

Asian sales are forecast to be about the same [removed: to down slightly.][added: as 2019.]

Industry sales of turf and utility equipment in the U.S. and Canada are expected to be about the same [removed: to up 5 percent] for [removed: 2019.][added: 2020.]

_Construction & Forestry._ The [removed: Company's] [added: Company’s] worldwide sales of construction and forestry equipment are anticipated to be [removed: up] [added: down] about [added: 10 to] 15 percent for [removed: 2019,] [added: 2020,] with [added: price realization having a favorable effect of 1 percent and] foreign-currency [removed: rates] [added: translation] having an unfavorable [removed: translation] effect of [removed: 2] [added: 1] percent.

In forestry, global industry sales are expected to be [removed: up] about [removed: 10 percent mainly as a result of improved demand throughout] the [removed: world, led by the U.S.][added: same as 2019.]

_Financial Services._ Fiscal-year [removed: 2019] [added: 2020] net income attributable to the Company for the financial services operations is [removed: projected] [added: expected] to be approximately [removed: $630] [added: $600] million.

[removed: Excluding the 2018 benefit of tax reform, results] [added: These items] are [removed: expected] [added: forecast] to [removed: benefit from a higher average portfolio,] [added: be] partially offset by [removed: higher selling and administrative expenses,] a higher provision for credit losses, [removed: and] less-favorable financing [removed: spreads.][added: spreads, and higher selling and administrative expenses.]

[removed: 2018] [added: 2019] Consolidated Results Compared with [removed: 2017][added: 2018]

For fiscal [removed: 2018,] [added: 2019,] worldwide net income attributable to the Company was [removed: $2.368] [added: $3.253] billion, or [removed: $7.24] [added: $10.15] per share, compared with [removed: $2.159] [added: $2.368] billion, or [removed: $6.68] [added: $7.24] per share, in [removed: 2017.][added: 2018.]

Worldwide net sales and revenues increased [removed: 26] [added: 5] percent to [removed: $37.358] [added: $39.258] billion in [removed: 2018,] [added: 2019,] compared with [removed: $29.738] [added: $37.358] billion in [removed: 2017.][added: 2018.]

Net sales of worldwide equipment operations increased [removed: 29 percent] in fiscal [removed: 2018] [added: 2019] to [removed: $33.351] [added: $34.886] billion, compared with [removed: $25.885] [added: $33.351] billion last year.

Worldwide equipment operations had an operating profit of [removed: $3.684] [added: $3.721] billion in fiscal [removed: 2018,] [added: 2019,] compared with [removed: $2.859] [added: $3.684] billion in fiscal [removed: 2017.][added: 2018.]

Excluding [removed: the Wirtgen Group results, the increase] [added: Wirtgen, Construction & Forestry’s operating profit] was [added: higher in 2019] primarily driven by [added: price realization and] higher shipment volumes, [removed: price realization, and lower warranty costs,] partially offset by higher production costs and [removed: research and development expenses.][added: a less-favorable sales mix.]

[removed: In addition] [added: Net income was favorably affected by discrete adjustments] to the [removed: operating factors mentioned above,] [added: provision for] income [added: taxes of $65 million related to U.S.] tax [added: reform legislation (tax reform), while] adjustments related to tax reform had an unfavorable impact of $1.045 billion for fiscal 2018.

The financial services operations reported net income attributable to the Company of [removed: $942.0] [added: $539] million for fiscal [removed: 2018] [added: 2019] compared with [removed: $476.9] [added: $942] million in fiscal [removed: 2017.][added: 2018.]

The cost of sales to net sales ratio for [removed: 2018 and 2017] [added: 2019] was [added: 76.8 percent, compared with] 76.7 [removed: percent.][added: percent for 2018.]

Additional information on fiscal [removed: 2018] [added: 2019] results is presented on pages [removed: 20–22.][added: 22 – 24.]

The [removed: segment's] [added: segment’s] 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).

[removed: John Deere's advanced telematics systems remotely] connect agricultural equipment owners, business managers and dealers to agricultural equipment in the field, providing real-time alerts and information about equipment location, utilization, performance and maintenance to improve productivity and efficiency.

[removed: _Seasonality._] Seasonal patterns in retail demand for agricultural equipment result in substantial variations in the volume and mix of products sold to retail customers during the year.

In Australia, [removed: Canada] [added: Canada,] and the U.S., there are typically several used equipment trade-in transactions as part of most new agricultural equipment sales.

John [removed: Deere's] [added: 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, milling machines, pavers, compactors, rollers, crushers, screens, asphalt plants, log skidders, log feller bunchers, log loaders, log forwarders, log [removed: harvesters] [added: harvesters,] and a variety of attachments.

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, [removed: Kleeman, Benninghoven, and Ciber.]

The segment also provides comprehensive fleet management telematics solutions designed to improve customer productivity and efficiency through access to fleet location, [removed: utilization] [added: utilization,] and maintenance information.

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

General economic conditions, the level of interest rates, the availability of credit and certain commodity [removed: prices] [added: prices,] such as those applicable to pulp, paper and saw logs also influence sales.

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

John Deere distributes Hitachi brands of construction and mining equipment in North, [removed: Central] [added: Central,] and South America.

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

[removed: Nortrax is] [added: John Deere also owns Nortrax, Inc.,] an authorized John Deere dealer for construction, earthmoving, material handling and forestry equipment in [removed: a variety of markets in] the U.S. [added: John Deere also owns retail forestry sales operations in Australia, Brazil, Finland, Ireland, New Zealand, Norway, Sweden] and [removed: Canada.][added: the United Kingdom.]

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

[removed: An important part of the] [added: Additional] competition within the agricultural equipment industry [removed: during the past decade] has come from a variety of short-line and specialty manufacturers, as well as indigenous regional competitors, with differing manufacturing and marketing methods.

Because of industry conditions, including the merger of certain large integrated competitors and the emergence and expanding global capability of many competitors, particularly in emerging and high potential markets such as Brazil, [removed: China] [added: China,] and India where John Deere seeks to increase market share, the agricultural equipment business continues to undergo significant change and is becoming even more competitive.

The forestry and road [removed: construction] [added: building] businesses operate globally.

[removed: _Manufacturing Plants._] In the U.S. and Canada, the equipment operations own and operate 21 factory locations and lease and operate another two [removed: locations, which contain approximately 29.1 million square feet of floor space.][added: locations.]

| --- | --- |

Net income attributable to Deere & Company for fiscal 2020 is forecast to be in a range of $2.7 billion to $3.1 billion.

The outlook reflects slowing construction activity as well as the Company’s efforts to assist dealers to manage their inventory levels.

Net income is expected to benefit from lower losses on lease residual values as well as income earned on a higher average portfolio.

Wirtgen results are included for the full year while 2018 contained ten months of Wirtgen activity.

The two additional months added about 1 percent to the Company’s 2019 net sales.

Agriculture & Turf sales increased for 2019 due to price realization and higher shipment volumes, partially offset by the unfavorable effects of currency translation.

Construction & Forestry sales were higher for 2019 primarily due to higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation.

The inclusion of Wirtgen’s sales for two additional months in 2019 accounted for about 4 percent of Construction & Forestry’s net sales increase.

Operating profit for Agricultural & Turf decreased for 2019, largely due to higher productions costs, the unfavorable effects of currency exchange, increased research and development costs, higher selling, administrative, and general expenses, and a less-favorable sales mix, partially offset by price realization and higher shipment volumes.

Wirtgen’s operating profit was $343 million for 2019, compared with $116 million for 2018.

Excluding tax-reform adjustments, the decrease was mainly due to impairments and higher losses on operating-lease residual values and unfavorable financing spreads, partially offset by income earned on a higher average portfolio.

The cost of sales to net sales ratio increased compared to 2018 mainly due to higher production costs, the unfavorable effects of foreign currency exchange, and a less favorable product mix, partially offset by price realization.

John Deere’s advanced telematics systems remotely

_Seasonality_.

Kleeman, Benninghoven, and Ciber.

_Manufacturing Plants_.

In fiscal 2019, no significant work stoppages occurred due to shortages of raw materials or other commodities.

By the end of fiscal 2019, John Deere produced and shipped its construction and forestry equipment on average within approximately 90 days after an order was deemed to become firm.

_U.S. and Canada_.

offered through merchants in the agriculture and turf and construction and forestry markets (revolving charge accounts).

_Outside the U.S. and Canada_.

identified or will identify all adverse environmental conditions.

A small number of U.S. production employees are represented by the International Association of Machinists and Aerospace Workers (IAM).

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | |

| Ryan D. Campbell | ​ | 45 | ​ | Senior Vice President and Chief Financial Officer | ​ | 2019 | ​ | 2018 Deputy Financial Officer, 2017 Vice President and Comptroller, 2016 Deputy Comptroller, 2014 – 2015 Director of Finance, Agricultural Division Regions 1 & 2 and Global Tractors ​ | |

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.

Net sales and revenues are expected to increase by about 7 percent for fiscal 2019 with net income attributable to Deere & Company forecast to be about $3.6 billion.

South American industry sales of tractors and combines are projected to be about the same to up 5 percent benefiting from strength in Brazil.

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.

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).

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

Sales included price realization of 1 percent, while currency translation did not have a material effect for the year.

Equipment net sales in the United States and Canada increased by 25 percent for fiscal 2018, with Wirtgen adding 4 percent.

Outside of the U.S. and Canada, net sales rose 34 percent for the year, with Wirtgen adding 22 percent.

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.

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).

Net income of the Company's equipment operations was $1.404 billion for fiscal 2018, compared with $1.707 billion in fiscal 2017.

The increase was largely due to a higher average portfolio, a lower provision for credit losses, and lower losses on lease residual values, partially offset by less-favorable financing spreads.

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.

John Deere also owns Nortrax, Inc. which in turn owns Nortrax Canada Inc. which in turn owns Nortrax Quebec Inc. (collectively called Nortrax).

John Deere also owns retail forestry sales operations in Australia, Brazil, Finland, Ireland, New Zealand, Norway, Sweden and the United Kingdom.

These factories and manufacturing operations outside the U.S. and Canada contain approximately 27 million square feet of floor space.

Common manufacturing facilities

Associated companies doing business in China also sell agricultural equipment.

In fiscal 2018, no significant work stoppages occurred due to shortages of raw materials or other commodities, but John Deere experienced an increasing number of supply chain disruptions linked to supplier material and labor shortages.

EXECUTIVE OFFICERS OF THE REGISTRANT

| | | | | | | | | | |

| Jean H. Gilles | | | 61 | | Senior Vice President, John Deere Power Systems, Worldwide Parts Services, Advanced Technology & Engineering and Global Supply Management and Logistics | | 2010 | | Has held this position for the last five years |

[removed: John Deere] [added: The Company] is subject to various unresolved legal actions which arise in the normal course of its business, the most prevalent of which relate to product liability (including asbestos-related liability), retail credit, employment, patent, and trademark matters.

Item 103 of [removed: the SEC's] Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions that [removed: John Deere] [added: the Company] reasonably believes could exceed $100,000.

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

| --- | --- |

The following matter is disclosed solely pursuant to that requirement: 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 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.

[removed: EXHIBITS] [added: | [ITEM 15.](#Item15_ExhibitsAndFinancialStatementSche) | [EXHIBITS] AND FINANCIAL STATEMENT [removed: SCHEDULES.](#ci78102_item_15._exhibits_and_financial_statement_schedules.)][added: SCHEDULES](#Item15_ExhibitsAndFinancialStatementSche) | 21 |]

UNITED [removed: STATES][added: STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: WASHINGTON,] [added: WASHINGTON,] D.C. 20549

[removed: FORM 10-K][added: FORM 10-K]

[removed: |] (Mark one) [removed: | | |]

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

[removed: | | |] For the fiscal year [removed: ended October 28, 2018 |][added: ended November 3, 2019]

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

[removed: | | |] For the transition period from [added: ____] to [removed: |][added: ____]

Commission file [removed: number 1-4121][added: number 1-4121]

DEERE & [removed: COMPANY][added: COMPANY]

[removed: (Exact] [added: (Exact] name of registrant as specified in its charter)

| [removed: Delaware] (State of incorporation) | [added: ​] | [removed: 36-2382580] (IRS Employer Identification No.) |

| One John Deere [removed: Place, Moline, Illinois (Address of principal executive offices)] [added: Place, Moline, Illinois] | [added: ​] | 61265 [removed: (Zip Code)] | [added: ​] | [removed: (309) 765-8000 (Telephone Number)] [added: (309) 765-8000] |

[removed: SECURITIES] [added: SECURITIES] REGISTERED PURSUANT TO SECTION 12(b) OF THE [removed: ACT][added: ACT]

| [removed: Title] [added: Title] of each [removed: class] [added: class] | [added: ​] | [removed: Name] [added: Trading symbol | ​ | Name] of each exchange on which [removed: registered] [added: registered] |

| Common stock, $1 par value | [added: ​] | [added: DE | ​ |] New York Stock Exchange |

| [removed: 81/2%] [added: 8½%] Debentures Due 2022 | [added: ​] | [added: DE22 | ​ |] New York Stock Exchange |

| 6.55% Debentures Due 2028 | [added: ​] | [added: DE28 | ​ |] New York Stock Exchange |

[removed: SECURITIES] [added: SECURITIES] REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: [removed: NONE][added: NONE]

Yes [removed: ý] [added: ☒] No [removed: o][added: ☐]

Yes [removed: o] [added: ☐] No [removed: ý][added: ☒]

| [removed: Large accelerated filer ý | | Accelerated filer o |] [added: ​] | Non-accelerated filer [removed: o] [added: ☐] | [added: ​] | Smaller reporting company [removed: o Emerging growth company o] [added: ☐] |

The aggregate quoted market price of voting stock of registrant held by non-affiliates at April [removed: 27, 2018] [added: 26, 2019] was [removed: $44,528,411,767.][added: $52,198,315,583.]

At November 30, [removed: 2018, 318,570,788] [added: 2019, 313,275,755] shares of common stock, $1 par value, of the registrant were outstanding.

[removed: Documents] [added: _Documents] Incorporated by [removed: Reference.][added: Reference_.]

Portions of the proxy statement for the annual meeting of stockholders to be held on February [removed: 27, 2019] [added: 26, 2020] are incorporated by reference into Part III of this Form 10-K.

TABLE OF [removed: CONTENTS][added: CONTENTS]

| [removed: | |] [added: ​] | [added: ​] | Page |

| PART I | [removed: | |] [added: ​] | [added: ​] |

| [ITEM [removed: 1.](#i1) | | [BUSINESS](#i1)] [added: 1.](#Item1_Business__194146)] | [added: [BUSINESS](#Item1_Business__194146)] | [removed: [2](#i1)] [added: 2] |

| [ITEM [removed: 1A.](#i1a) |] [added: 1A.](#Item1a_RiskFactors__194719)] | [RISK [removed: FACTORS](#i1a) |] [added: FACTORS](#Item1a_RiskFactors__194719)] | [removed: [9](#i1a)] [added: 10] |

| [ITEM [removed: 1B.](#i1b) |] [added: 1B.](#Item1b_UnresolvedStaffComments__194818)] | [UNRESOLVED STAFF [removed: COMMENTS](#i1b) |] [added: COMMENTS](#Item1b_UnresolvedStaffComments__194818)] | [removed: [15](#i1b)] [added: 17] |

| [ITEM [removed: 2.](#i2) | | [PROPERTIES](#i2)] [added: 2.](#Item2_Properties__194819)] | [added: [PROPERTIES](#Item2_Properties__194819)] | [removed: [15](#i2)] [added: 17] |

| [ITEM [removed: 3.](#i3) |] [added: 3.](#Item3_LegalProceedings__194821)] | [LEGAL [removed: PROCEEDINGS](#i3) |] [added: PROCEEDINGS](#Item3_LegalProceedings__194821)] | [removed: [15](#i3)] [added: 18] |

| [ITEM [removed: 4.](#i4) |] [added: 4.](#Item4_MineSafetyDisclosures__194822)] | [MINE SAFETY [removed: DISCLOSURES](#i4) |] [added: DISCLOSURES](#Item4_MineSafetyDisclosures__194822)] | [removed: [15](#i4)] [added: 18] |

| PART II | [removed: | |] [added: ​] | [added: ​] |

| [ITEM [removed: 5.](#i5) |] [added: 5.](#Item5_MarketForRegistrantsCommonE_194831)] | [MARKET FOR [removed: REGISTRANT'S] [added: REGISTRANT’S] COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#i5) |] [added: SECURITIES](#Item5_MarketForRegistrantsCommonE_194831)] | [removed: [16](#i5)] [added: 18] |

| [ITEM [removed: 6.](#i6) |] [added: 6.](#Item6_SelectedFinancialData__200525)] | [SELECTED FINANCIAL [removed: DATA](#i6) |] [added: DATA](#Item6_SelectedFinancialData__200525)] | [removed: [16](#i6)] [added: 19] |

or

| ​ | ​ | ​ |

| Delaware | ​ | 36-2382580 |

| ​ | ​ | ​ | ​ | ​ |

| (Address of principal executive offices) | ​ | (Zip Code) | ​ | (Telephone Number) |

| ​ | ​ | ​ | ​ | ​ |

Yes ☒ No ☐

Yes ☒ No ☐

| ​ | ​ | ​ | ​ |

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

| ​ | Large accelerated filer ☒ | ​ | Accelerated filer ☐ |

| ​ | ​ | ​ | Emerging growth company ☐ |

Yes ☐ No ☒

| ​ | ​ | ​ |

| ​ | ​ | ​ |

| ​ | ​ | ​ |

| ​ | ​ | ​ |

| [ITEM 16.](#Item16_Form_10K_Summary) | [FORM 10-K SUMMARY](#Item16_Form_10K_Summary) | 21 |

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

Use these links to rapidly review the document

[ITEM 15.

| | | |

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| or | | |

| | | | | |

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.

| | | | | | | |

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

| [ITEM 15.](#i15) | | [EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](#i15) | | [19](#i15) |

| --- | --- |

Outside the U.S. and Canada, the equipment operations also own or lease and occupy [added: 14] 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.

John Deere also owns and leases [added: 16] facilities for the manufacture and distribution of other brands of replacement [removed: parts containing approximately 1.3 million square feet.][added: parts.]

Overall, John Deere owns approximately [removed: 68.3] [added: 67.5] million square feet of facilities and leases approximately [removed: 9.1] [added: 10.3] million additional square feet in various locations.

| --- | --- |

The Company owns and leases 37 administrative offices and research facilities globally and many other smaller, miscellaneous facilities globally.

These facilities contain approximately 5.4 million square feet of floor space.

These facilities contain approximately 3.1 million square feet of floor space.

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

| --- | --- |

[added: | (a) | The Company’s common stock is listed on the New York Stock Exchange under the symbol “DE”.] See the information concerning the number of stockholders and the data on dividends declared and paid per share in Notes [removed: 29 and] 30 [added: and 31] to the Consolidated Financial Statements. [added: |]

[added: | (b) |] Not applicable. [added: |]

[added: | (c) |] The [removed: Company's] [added: Company’s] purchases of its common stock during the fourth quarter of [removed: 2018] [added: 2019] were as follows: [added: |]

[added: | (1) |] During the fourth quarter of [removed: 2018,] [added: 2019,] the Company had a share repurchase plan that was announced in December 2013 to purchase up to $8,000 million of shares of the [removed: Company's] [added: Company’s] common stock. [added: 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 $176.11 per share. At the end of the fourth quarter of 2019, $1,075 million of common stock remains to be purchased under this plan. |]

[added: | (2) |] In the fourth quarter of [removed: 2018,] [added: 2019,] approximately 1 thousand shares were purchased from plan participants to pay payroll taxes on certain restricted stock awards. [added: The shares were valued at a weighted-average market price of $158.70. |]

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| --- | --- |

| --- | --- |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

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

| ​ | | ​ | | ​ | ​ | | ​ | | Maximum | |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | Total Number of | ​ | Number of Shares | |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | Shares Purchased | ​ | that May Yet Be | |

| ​ | ​ | Total Number of | ​ | ​ | ​ | ​ | as Part of Publicly | ​ | Purchased under | |

| ​ | ​ | Shares | ​ | Average Price | | ​ | Announced Plans | ​ | the Plans or | |

| ​ | ​ | Purchased | ​ | Paid Per | | ​ | or Programs (1) | ​ | Programs (1)(3) | |

| Period | ​ | (thousands) (2) | ​ | Share | | ​ | (thousands) | ​ | (millions) | |

| Jul 29 to Aug 25 | | 596 | ​ | $ | 152.30 | | 595 | | 7.7 | ​ |

| Aug 26 to Sept 29 | | 1,082 | ​ | | 158.80 | | 1,082 | | 6.7 | ​ |

| Sept 30 to Nov 3 | | 654 | ​ | | 169.40 | | 654 | | 6.1 | ​ |

| Total | | 2,332 | ​ | ​ | ​ | | 2,331 | ​ | ​ | ​ |

| --- | --- |

| --- | --- |

| (3) | In December 2019, the Board of Directors authorized the repurchase of up to $8,000 million of additional common stock. This additional repurchase amount may be repurchased after November 3, 2019 and is not included in the amounts above (see Note 31). |

| --- | --- |

(a)

The Company's common stock is listed on the New York Stock Exchange under the symbol "DE".

(b)

(c)

| | | | | | | | | | | | |

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

| Period | | Total Number of Shares Purchased (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) |

| 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 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| Total | | | 3,380 | | | | | | 3,380 | | |

(1)

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 $133.00 per share.

At the end of the fourth quarter of 2018, $2,312 million of common stock remains to be purchased under this plan.

(2)

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

| (Millions of dollars except per share amounts) | | [removed: October 28 2018] [added: 2019] | | | [removed: October 29 2017] [added: 2018] | | | [removed: October 30 2016] [added: 2017] | | | [removed: November 1 2015] [added: 2016] | | | [removed: November 2 2014] [added: 2015] | | |

| For the Years Ended: | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| Total net sales and revenues | [added: ​] | $ | [removed: 37,358] [added: 39,258] | [added: ​] | $ | [removed: 29,738] [added: 37,358] | [added: ​] | $ | [removed: 26,644] [added: 29,738] | [added: ​] | $ | [removed: 28,863] [added: 26,644] | [added: ​] | $ | [removed: 36,067] [added: 28,863] | [added: ​] |

| Net income attributable to Deere & Company | [added: ​] | $ | [removed: 2,368] [added: 3,253] | [added: ​] | $ | [removed: 2,159] [added: 2,368] | [added: ​] | $ | [removed: 1,524] [added: 2,159] | [added: ​] | $ | [removed: 1,940] [added: 1,524] | [added: ​] | $ | [removed: 3,162] [added: 1,940] | [added: ​] |

| Net income per share [removed: –] [added: —] basic | [added: ​] | $ | [removed: 7.34] [added: 10.28] | [added: ​] | $ | [removed: 6.76] [added: 7.34] | [added: ​] | $ | [removed: 4.83] [added: 6.76] | [added: ​] | $ | [removed: 5.81] [added: 4.83] | [added: ​] | $ | [removed: 8.71] [added: 5.81] | [added: ​] |

| Net income per share [removed: –] [added: —] diluted | [added: ​] | $ | [removed: 7.24] [added: 10.15] | [added: ​] | $ | [removed: 6.68] [added: 7.24] | [added: ​] | $ | [removed: 4.81] [added: 6.68] | [added: ​] | $ | [removed: 5.77] [added: 4.81] | [added: ​] | $ | [removed: 8.63] [added: 5.77] | [added: ​] |

| Dividends declared per share | [added: ​] | $ | [removed: 2.58] [added: 3.04] | [added: ​] | $ | [removed: 2.40] [added: 2.58] | [added: ​] | $ | 2.40 | [added: ​] | $ | 2.40 | [added: ​] | $ | [removed: 2.22] [added: 2.40] | [added: ​] |

| At Year End: | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] | [added: ​] |

| Total assets | [added: ​] | $ | [removed: 70,108] [added: 73,011] | [added: ​] | $ | [removed: 65,786] [added: 70,108] | [added: ​] | $ | [removed: 57,918] [added: 65,786] | [added: ​] | $ | [removed: 57,883] [added: 57,918] | [added: ​] | $ | [removed: 61,267] [added: 57,883] | [added: ​] |

| Long-term borrowings | [added: ​] | $ | [removed: 27,237] [added: 30,229] | [added: ​] | $ | [removed: 25,891] [added: 27,237] | [added: ​] | $ | [removed: 23,703] [added: 25,891] | [added: ​] | $ | [removed: 23,775] [added: 23,703] | [added: ​] | $ | [removed: 24,318] [added: 23,775] | [added: ​] |

| --- | --- |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| ​ | ​ | November 3 | | ​ | October 28 | | ​ | October 29 | | ​ | October 30 | | ​ | November 1 | | ​ |

| | | | | | | | | | | | | | | | | |

See the Consolidated Financial Statements and notes thereto and supplementary data on pages [removed: 31–73.][added: 33 – 75.]

| --- | --- |

| --- | --- |

The [removed: Company's] [added: Company’s] principal executive officer and its principal financial officer have concluded that the [removed: Company's] [added: 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 [removed: October 28, 2018,] [added: November 3, 2019,] 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 [removed: Company's] [added: Company’s] internal control over financial reporting as of [removed: October 28, 2018,] [added: November 3, 2019,] 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 [removed: October 28, 2018,] [added: November 3, 2019,] the [removed: Company's] [added: Company’s] internal control over financial reporting was effective.

| --- | --- |

Changes in Internal Control Over Financial Reporting

During the fourth quarter, there were no changes that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

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 [added: required by Item 401(a) of Regulation S-K] in the definitive proxy statement [removed: expected] [added: for the annual meeting of stockholders] to be [removed: filed no later than January 11, 2019] [added: held on February 26, 2020] (proxy statement), under the captions "Item [removed: 1–Election] [added: 1 — Election] of Directors" is incorporated herein by reference.

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

Information regarding executive officers is presented in Item 1 of this report under the caption [removed: "Executive Officers of the Registrant."][added: "Information about our Executive Officers."]

| --- | --- |

| --- | --- |

| --- | --- |

The information required by Item 407(a) of Regulation S-K in the proxy statement under the caption [removed: "Corporate Governance–Director Independence"] [added: “Corporate Governance—Director Independence”] is incorporated herein by reference.

| --- | --- |

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

| --- | --- |

| [removed: | |] [added: ​] | [added: ​] | Page |

| (1) | [removed: |] _Financial Statements_ | [removed: |] [added: ​] |

| [removed: |] [added: ​] | [removed: [ Statement] [added: [Statement] of Consolidated Income for the years ended [added: November 3, 2019,] October 28, 2018, [removed: October 29, 2017,] and October [removed: 30, 2016](#fe78102_deere___company_statement_of_c__dee04539) |] [added: 29, 2017](#StatementOfConsolidatedIncom_162154)] | [removed: [ 31](#fe78102_deere___company_statement_of_c__dee04539)] [added: 33] |

| [removed: |] [added: ​] | [removed: [ Statement] [added: [Statement] of Consolidated Comprehensive Income for the years ended [added: November 3, 2019,] October 28, 2018, [removed: October 29, 2017,] and October [removed: 30, 2016](#fg78102_deere___company_statement_of_c__dee05124) |] [added: 29, 2017](#StatementOfConsolidatedComprehens_162202)] | [removed: [ 32](#fg78102_deere___company_statement_of_c__dee05124)] [added: 34] |

| [removed: |] [added: ​] | [removed: [ Consolidated] [added: [Consolidated] Balance Sheet as of [removed: October 28, 2018] [added: November 3, 2019] and October [removed: 29, 2017](#fi78102_deere___company_consolidated_b__dee04494) |] [added: 28, 2018](#ConsolidatedBalanceSheet)] | [removed: [ 33](#fi78102_deere___company_consolidated_b__dee04494)] [added: 35] |

| [removed: |] [added: ​] | [removed: [ Statement] [added: [Statement] of Consolidated Cash Flows for the years ended [added: November 3, 2019,] October 28, 2018, [removed: October 29, 2017,] and October [removed: 30, 2016](#fk78102_deere___company_statement_of_c__dee04709) |] [added: 29, 2017](#StatementOfConsolidatedCashF_162215)] | [removed: [ 34](#fk78102_deere___company_statement_of_c__dee04709)] [added: 36] |

| [removed: |] [added: ​] | [removed: [ Statement] [added: [Statement] of Changes in Consolidated [removed: Stockholders'] [added: Stockholders’] Equity for the years ended October [removed: 30, 2016, October] 29, 2017, [removed: and] October 28, [removed: 2018](#fm78102_deere___company_statement_of_c__dee05577) |] [added: 2018, and November 3, 2019](#StatementOfChangesInConsolidatedS_162223)] | [removed: [ 35](#fm78102_deere___company_statement_of_c__dee05577)] [added: 37] |

| [removed: |] [added: ​] | [removed: [ Notes] [added: [Notes] to Consolidated Financial [removed: Statements](#fo_notes) |] [added: Statements](#Notes_to_Financial_Statements)] | [removed: [ 36](#fo_notes)] [added: 38] |

| [removed: (3) |] [added: (2)] | _Exhibits_ | [removed: |] [added: ​] |

| [removed: |] [added: ​] | See the [removed: "Index] [added: “[Index] to [removed: Exhibits"] [added: Exhibits](#IndexToExhibits_072013)”] on pages [removed: 76–78] [added: 80 – 82] of this report | [removed: |] [added: ​] |

| [removed: |] [added: ​] | Certain instruments relating to long-term borrowings, constituting less than 10 percent of [removed: registrant's] [added: registrant’s] total assets, are not filed as exhibits herewith pursuant to Item 601(b)4(iii)(A) of Regulation S-K. Registrant agrees to file copies of such instruments upon request of the Commission. | [removed: |] [added: ​] |

| Financial Statement Schedules Omitted | | [removed: | |] [added: ​] |

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

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| ​ | ​ | ​ |

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| ​ | ​ | ​ |

| ​ | ​ | ​ |

| ​ | ​ | ​ |

| ​ | ​ | ​ |

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| MANAGEMENT'S DISCUSSION AND ANALYSIS |

| --- |

| RESULTS OF OPERATIONS FOR THE YEARS ENDED OCTOBER 28, 2018, OCTOBER 29, 2017, AND OCTOBER 30, 2016 |

OVERVIEW

Organization

The company's equipment operations generate revenues and cash primarily from the sale of equipment to John Deere dealers and distributors.

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 construction, road building, and forestry.

The company's financial services primarily provide credit services, which mainly finance sales and leases of equipment by John Deere dealers and trade receivables purchased from the equipment operations.

In addition, financial services offers extended equipment warranties.

The information in the following discussion is presented in a format that includes information grouped as consolidated, equipment operations, and financial services.

The company also views its operations as consisting of two geographic areas, the U.S. and Canada, and outside the U.S. and Canada.

The company's operating segments consist of agriculture and turf, construction and forestry, and financial services.

Trends and Economic Conditions

The company's agriculture and turf equipment sales increased 15 percent in 2018 and are forecast to increase about 3 percent for 2019.

Industry agricultural machinery sales in the U.S. and Canada for 2019 are forecast to be about the same to 5 percent higher, compared to 2018.

Industry sales in the European Union (EU)28 member nations are forecast to be about the same in 2019, while South American industry sales are projected to be about the same to 5 percent higher from 2018 levels.

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

Industry sales of turf and utility equipment in the U.S. and Canada are expected to be about the same to 5 percent higher for 2019.

The company's construction and forestry sales increased 78 percent in 2018, with Wirtgen (see Note 4) adding 53 percent for the year.

The segment's sales are forecast to increase about 15 percent in 2019.

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

Global forestry industry sales are expected to increase about 10 percent in 2019 compared to 2018.

Net income of the company's financial services operations attributable to Deere & Company in 2019 is expected to be approximately $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 and Argentine issues, capital market disruptions, trade agreements, changes in demand and pricing for used equipment, and geopolitical events.

Significant fluctuations in foreign currency exchange rates and volatility in the price of many commodities could also impact the company's results.

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 |

CONSOLIDATED RESULTS

Worldwide net income attributable to Deere & Company in 2018 was $2,368 million, or $7.24 per share diluted ($7.34 basic), compared with $2,159 million, or $6.68 per share diluted ($6.76 basic), in 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.

Net sales of the worldwide equipment operations rose 29 percent in 2018 to $33,351 million from $25,885 million last year.

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.

None.

MANAGEMENT’S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS FOR THE YEARS ENDED

NOVEMBER 3, 2019, OCTOBER 28, 2018, AND OCTOBER 29, 2017

OVERVIEW

Organization

The company’s equipment operations generate revenues and cash primarily from the sale of equipment to John Deere dealers and distributors.

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 construction, road building, and forestry.

The company’s financial services primarily provide credit services, which mainly finance sales and leases of equipment by John Deere dealers and trade receivables purchased from the equipment operations.

In addition, financial services offers extended equipment warranties.

The information in the following discussion is presented in a format that includes information grouped as consolidated, equipment operations, and financial services.

The company also views its operations as consisting of two geographic areas, the U.S. and Canada, and outside the U.S. and Canada.

The company’s operating segments consist of agriculture and turf, construction and forestry, and financial services.

Trends and Economic Conditions

The company’s agriculture and turf equipment sales increased 2 percent in 2019 and are forecast to decrease 5 to 10 percent for 2020.

Industry agricultural machinery sales in the U.S. and Canada for 2020 are forecast to decline about 5 percent, compared to 2019.

Industry sales in the European Union (EU)28 member nations and South American industry sales of tractors and combines are forecast to be about the same in 2020.

Asian sales are also forecast to be about the same in 2020.

Industry sales of turf and utility equipment in the U.S. and Canada are expected to be about the same.

The company’s construction and forestry sales increased 10 percent in 2019.

The segment’s sales are forecast to decrease 10 to 15 percent in 2020.

Global forestry industry sales are expected to be about the same as 2019 sales.

Net income of the company’s financial services operations attributable to Deere & Company in 2020 is expected to be approximately $600 million.

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

Significant fluctuations in foreign currency exchange rates and volatility in the price of many commodities could also impact the company’s results.

The company’s results reflected continued uncertainties in the agricultural sector.

Trade tensions and difficult growing and harvesting conditions have caused farmers to become cautious about major equipment purchases.

Financial services’ results were also pressured by operating lease losses.

The favorable general economic conditions supported demand for smaller equipment and led to strong sales and operating profit for the construction and forestry operations.

Despite the present challenges, the longer-term outlook for the company’s businesses remains

positive.

The company believes it is well positioned to be a leader in the delivery of smarter, more efficient, and sustainable solutions.

In addition, a series of measures to create a leaner organization structure have been initiated that will allow the company to operate with more speed and agility.

2019 COMPARED WITH 2018

CONSOLIDATED RESULTS

The following table provides the net income attributable to Deere & Company in millions of dollars as well as diluted and basic earnings per share in dollars:

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

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

| ​ | ​ | 2019 | | ​ | 2018 | | ​ |

| Net income attributable to Deere & Company | ​ | $ | 3,253 | ​ | $ | 2,368 | ​ |