Cover and table of contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 1, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission file no: 1-4121

DEERE & COMPANY

(Exact name of registrant as specified in its charter)

​	​	​
Delaware(State of incorporation)	​	36-2382580(IRS employer identification no.)

​

One John Deere Place

Moline**,** Illinois 61265

(Address of principal executive offices)

Telephone Number: (309) 765-8000

​

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Securities Registered Pursuant to Section 12(b) of the Act:

​	​	​	​	​
Title of each class	​	Trading symbol	​	Name of each exchange on which registered
Common stock, $1 par value	​	DE	​	New York Stock Exchange
6.55% Debentures Due 2028	​	DE28	​	New York Stock Exchange

​

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
	​	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

​

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

At May 1, 2022, 305,635,672 shares of common stock, $1 par value, of the registrant were outstanding.

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PART I. FINANCIAL INFORMATION

​	​	​	​	​	​	​	​
ITEM 1. FINANCIAL STATEMENTS	​	​	​	​	​	​	​
DEERE & COMPANY	​	​	​	​	​	​	​
STATEMENTS OF CONSOLIDATED INCOME	​	​	​	​	​	​	​
For the Three Months Ended May 1, 2022 and May 2, 2021	​	​	​	​	​	​	​
(In millions of dollars and shares except per share amounts) Unaudited	​	​	​	​	​	​	​
​		2022			2021
Net Sales and Revenues	​	​	​	​	​	​	​
Net sales		$	12,034	​	$	10,998	​
Finance and interest income	​	​	796	​		809	​
Other income	​	​	540	​		251	​
Total	​	​	13,370	​		12,058	​
​	​	​	​	​	​	​	​
Costs and Expenses	​	​	​	​	​	​	​
Cost of sales	​	​	8,918	​		7,928	​
Research and development expenses	​	​	453	​		377	​
Selling, administrative and general expenses	​	​	932	​		838	​
Interest expense	​	​	187	​		268	​
Other operating expenses	​	​	328	​		335	​
Total	​	​	10,818	​		9,746	​
​	​	​	​	​	​	​	​
Income of Consolidated Group before Income Taxes	​	​	2,552	​		2,312	​
Provision for income taxes	​	​	461	​		530	​
​	​	​	​	​	​	​	​
Income of Consolidated Group	​	​	2,091	​		1,782	​
Equity in income of unconsolidated affiliates	​	​	6	​		8	​
​	​	​	​	​	​	​	​
Net Income	​	​	2,097	​		1,790	​
Less: Net loss attributable to noncontrolling interests	​	​	(1)	​		​	​
Net Income Attributable to Deere & Company		$	2,098	​	$	1,790	​
​	​	​	​	​	​	​	​
Per Share Data	​	​	​	​	​	​	​
Basic		$	6.85	​	$	5.72	​
Diluted		$	6.81	​	$	5.68	​
Dividends declared	​	$	1.05	​	$	.90	​
Dividends paid	​	$	1.05	​	$	.76	​
​	​	​	​	​	​	​	​
Average Shares Outstanding	​	​	​	​	​	​	​
Basic	​	​	306.2	​		312.8	​
Diluted	​	​	308.1	​		315.2	​
​	​	​	​	​	​	​	​

​

See Condensed Notes to Interim Consolidated Financial Statements.

​

​

​

​	​	​	​	​	​	​	​
DEERE & COMPANY	​	​	​	​	​	​	​
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME	​	​	​	​	​	​	​
For the Three Months Ended May 1, 2022 and May 2, 2021	​	​	​	​	​	​	​
(In millions of dollars) Unaudited	​	​	​	​	​	​	​
​		2022			2021
​	​	​	​	​	​	​
Net Income		$	2,097	​	$	1,790	​
​	​	​	​	​	​	​	​
Other Comprehensive Income (Loss), Net of Income Taxes	​	​	​	​	​	​	​
Retirement benefits adjustment	​	​	129	​		91	​
Cumulative translation adjustment	​	​	(248)	​		37	​
Unrealized gain on derivatives	​	​	28	​		3	​
Unrealized loss on debt securities	​	​	(48)	​		(13)	​
Other Comprehensive Income (Loss), Net of Income Taxes	​	​	(139)	​		118	​
​	​	​	​	​	​	​	​
Comprehensive Income of Consolidated Group	​	​	1,958	​		1,908	​
Less: Comprehensive loss attributable to noncontrolling interests	​	​	(5)	​		​	​
Comprehensive Income Attributable to Deere & Company		$	1,963	​	$	1,908	​
​	​	​	​	​	​	​	​

​

See Condensed Notes to Interim Consolidated Financial Statements.

​

​

​

​

​	​	​	​	​	​	​	​
DEERE & COMPANY	​	​	​	​	​	​	​
STATEMENTS OF CONSOLIDATED INCOME	​	​	​	​	​	​	​
For the Six Months Ended May 1, 2022 and May 2, 2021	​	​	​	​	​	​	​
(In millions of dollars and shares except per share amounts) Unaudited	​	​	​	​	​	​	​
​		2022			2021
Net Sales and Revenues	​	​	​	​	​	​	​
Net sales		$	20,565	​	$	19,049	​
Finance and interest income	​	​	1,595	​		1,644	​
Other income	​	​	779	​		477	​
Total	​	​	22,939	​		21,170	​
​	​	​	​	​	​	​	​
Costs and Expenses	​	​	​	​	​	​	​
Cost of sales	​	​	15,613	​		13,734	​
Research and development expenses	​	​	855	​		743	​
Selling, administrative and general expenses	​	​	1,713	​		1,607	​
Interest expense	​	​	417	​		538	​
Other operating expenses	​	​	638	​		708	​
Total	​	​	19,236	​		17,330	​
​	​	​	​	​	​	​	​
Income of Consolidated Group before Income Taxes	​	​	3,703	​		3,840	​
Provision for income taxes	​	​	710	​		838	​
​	​	​	​	​	​	​	​
Income of Consolidated Group	​	​	2,993	​		3,002	​
Equity in income of unconsolidated affiliates	​	​	8	​		12	​
​	​	​	​	​	​	​	​
Net Income	​	​	3,001	​		3,014	​
Less: Net income attributable to noncontrolling interests	​	​	​	​		1	​
Net Income Attributable to Deere & Company		$	3,001	​	$	3,013	​
​	​	​	​	​	​	​	​
Per Share Data	​	​	​	​	​	​	​
Basic		$	9.78	​	$	9.62	​
Diluted		$	9.72	​	$	9.55	​
Dividends declared	​	$	2.10	​	$	1.66	​
Dividends paid	​	$	2.10	​	$	1.52	​
​	​	​	​	​	​	​	​
Average Shares Outstanding	​	​	​	​	​	​	​
Basic	​	​	306.8	​		313.1	​
Diluted	​	​	308.8	​		315.6	​
​	​	​	​	​	​	​	​

​

See Condensed Notes to Interim Consolidated Financial Statements.

​

​

​

​	​	​	​	​	​	​	​
DEERE & COMPANY	​	​	​	​	​	​	​
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME	​	​	​	​	​	​	​
For the Six Months Ended May 1, 2022 and May 2, 2021	​	​	​	​	​	​	​
(In millions of dollars) Unaudited	​	​	​	​	​	​	​
​		2022			2021
​	​	​	​	​	​	​
Net Income		$	3,001	​	$	3,014	​
​	​	​	​	​	​	​	​
Other Comprehensive Income (Loss), Net of Income Taxes	​	​	​	​	​	​	​
Retirement benefits adjustment	​	​	(216)	​		154	​
Cumulative translation adjustment	​	​	(515)	​		433	​
Unrealized gain on derivatives	​	​	42	​		7	​
Unrealized loss on debt securities	​	​	(63)	​		(15)	​
Other Comprehensive Income (Loss), Net of Income Taxes	​	​	(752)	​		579	​
​	​	​	​	​	​	​	​
Comprehensive Income of Consolidated Group	​	​	2,249	​		3,593	​
Less: Comprehensive income (loss) attributable to noncontrolling interests	​	​	(4)	​		1	​
Comprehensive Income Attributable to Deere & Company		$	2,253	​	$	3,592	​
​	​	​	​	​	​	​	​

​

See Condensed Notes to Interim Consolidated Financial Statements.

​

​

​

​

​	​	​	​	​	​	​	​	​	​	​
DEERE & COMPANY	​	​	​	​	​	​	​	​	​	​
CONDENSED CONSOLIDATED BALANCE SHEETS	​	​	​	​	​	​	​	​	​	​
(In millions of dollars) Unaudited	​	​	​	​	​	​	​	​	​	​
​		May 1			October 31			May 2
​	​	2022		​	2021		​	2021
Assets	​	​	​	​	​	​	​	​	​	​
Cash and cash equivalents		$	3,878	​	$	8,017	​	$	7,182	​
Marketable securities	​	​	682	​		728	​		668	​
Trade accounts and notes receivable – net	​	​	6,258	​		4,208	​		6,158	​
Financing receivables – net	​	​	34,085	​		33,799	​		30,994	​
Financing receivables securitized – net	​	​	4,073	​		4,659	​		4,107	​
Other receivables	​	​	2,306	​		1,765	​		1,504	​
Equipment on operating leases – net	​	​	6,465	​		6,988	​		7,108	​
Inventories	​	​	9,030	​		6,781	​		6,042	​
Property and equipment – net	​	​	5,715	​		5,820	​		5,704	​
Goodwill	​	​	3,812	​		3,291	​		3,190	​
Other intangible assets – net	​	​	1,352	​		1,275	​		1,310	​
Retirement benefits	​	​	3,059	​		3,601	​		951	​
Deferred income taxes	​	​	1,104	​		1,037	​		1,724	​
Other assets	​	​	2,280	​		2,145	​		2,337	​
Total Assets		$	84,099	​	$	84,114	​	$	78,979	​
​	​	​	​	​	​	​	​	​	​	​
Liabilities and Stockholders’ Equity	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​
Liabilities	​	​	​	​	​	​	​	​	​	​
Short-term borrowings	​	$	12,413	​	$	10,919	​	$	9,911	​
Short-term securitization borrowings	​	​	4,006	​		4,605	​		4,106	​
Accounts payable and accrued expenses	​	​	12,679	​		12,348	​		10,682	​
Deferred income taxes	​	​	584	​		576	​		533	​
Long-term borrowings	​	​	32,447	​		32,888	​		33,346	​
Retirement benefits and other liabilities	​	​	2,964	​		4,344	​		5,305	​
Total liabilities	​	​	65,093	​		65,680	​		63,883	​
​	​	​	​	​	​	​	​	​	​	​
Commitments and contingencies (Note 15)	​	​	​	​	​	​	​	​	​	​
Redeemable noncontrolling interest (Note 19)	​	​	99	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​
Stockholders’ Equity	​	​	​	​	​	​	​	​	​	​
Common stock, $1 par value (issued shares at May 1, 2022 – 536,431,204)	​	​	5,117	​		5,054	​		4,999	​
Common stock in treasury	​	​	(21,727)	​		(20,533)	​		(19,052)	​
Retained earnings	​	​	38,805	​		36,449	​		34,105	​
Accumulated other comprehensive income (loss)	​	​	(3,291)	​		(2,539)	​		(4,960)	​
Total Deere & Company stockholders’ equity	​	​	18,904	​		18,431	​		15,092	​
Noncontrolling interests	​	​	3	​		3	​		4	​
Total stockholders’ equity	​	​	18,907	​		18,434	​		15,096	​
Total Liabilities and Stockholders’ Equity	​	$	84,099	​	$	84,114	​	$	78,979	​
​	​	​	​	​	​	​	​	​	​	​

​

See Condensed Notes to Interim Consolidated Financial Statements.

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​

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​	​	​	​	​	​	​	​
DEERE & COMPANY	​	​	​	​	​	​	​
STATEMENTS OF CONSOLIDATED CASH FLOWS	​	​	​	​	​	​	​
For the Six Months Ended May 1, 2022 and May 2, 2021	​	​	​	​	​	​	​
(In millions of dollars) Unaudited	​	​	​	​	​	​	​
​		2022			2021
Cash Flows from Operating Activities	​	​		​	​		​
Net income		$	3,001	​	$	3,014	​
Adjustments to reconcile net income to net cash provided by (used for) operating activities:	​	​	​	​	​	​	​
Provision (credit) for credit losses	​	​	45	​		(24)	​
Provision for depreciation and amortization	​	​	933	​		1,054	​
Impairment charges	​	​	77	​		50	​
Share-based compensation expense	​	​	44	​		45	​
Gain on remeasurement of previously held equity investment	​	​	(326)	​		​	​
Undistributed earnings of unconsolidated affiliates	​	​	(2)	​		11	​
Provision (credit) for deferred income taxes	​	​	37	​		(213)	​
Changes in assets and liabilities:	​	​	​	​	​	​	​
Trade, notes, and financing receivables related to sales	​	​	(1,535)	​		(1,124)	​
Inventories	​	​	(2,265)	​		(1,193)	​
Accounts payable and accrued expenses	​	​	(443)	​		318	​
Accrued income taxes payable/receivable	​	​	(139)	​		54	​
Retirement benefits	​	​	(1,020)	​		(5)	​
Other	​	​	(169)	​		(201)	​
Net cash provided by (used for) operating activities	​	​	(1,762)	​		1,786	​
​	​	​	​	​	​	​	​
Cash Flows from Investing Activities	​	​	​	​	​	​	​
Collections of receivables (excluding receivables related to sales)	​	​	11,190	​		10,367	​
Proceeds from sales of equipment on operating leases	​	​	1,035	​		1,011	​
Cost of receivables acquired (excluding receivables related to sales)	​	​	(11,971)	​		(11,359)	​
Acquisitions of businesses, net of cash acquired	​	​	(473)	​		(19)	​
Purchases of property and equipment	​	​	(346)	​		(320)	​
Cost of equipment on operating leases acquired	​	​	(1,004)	​		(764)	​
Collateral on derivatives – net	​	​	(248)	​	​	(255)	​
Other	​	​	(71)	​		(48)	​
Net cash used for investing activities	​	​	(1,888)	​		(1,387)	​
​	​	​	​	​	​	​	​
Cash Flows from Financing Activities	​	​	​	​	​	​	​
Increase in total short-term borrowings	​	​	812	​		212	​
Proceeds from long-term borrowings	​	​	4,298	​		3,967	​
Payments of long-term borrowings	​	​	(3,625)	​		(3,157)	​
Proceeds from issuance of common stock	​	​	50	​		116	​
Repurchases of common stock	​	​	(1,226)	​		(1,044)	​
Dividends paid	​	​	(649)	​		(480)	​
Other	​	​	(46)	​		(55)	​
Net cash used for financing activities	​	​	(386)	​		(441)	​
​	​	​	​	​	​	​	​
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash	​	​	(110)	​		151	​
​	​	​	​	​	​	​	​
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash	​	​	(4,146)	​	​	109	​
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	​	​	8,125	​		7,172	​
Cash, Cash Equivalents, and Restricted Cash at End of Period	​	$	3,979	​	$	7,281	​
​	​	​	​	​	​	​	​
Components of cash, cash equivalents, and restricted cash	​	​	​	​	​	​	​
Cash and cash equivalents	​	$	3,878	​	$	7,182	​
Restricted cash (Other assets)	​	​	101	​	​	99	​
Total cash, cash equivalents, and restricted cash	​	$	3,979	​	$	7,281	​
​	​	​	​	​	​	​	​

​

See Condensed Notes to Interim Consolidated Financial Statements.

​

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​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
DEERE & COMPANY																							​
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY																							​
For the Three and Six Months Ended May 1, 2022 and May 2, 2021																							​
(In millions of dollars) Unaudited																							​
​	​	​	​	​	Total Stockholders’ Equity														​	​	​	​	​
​	​	​	​	​	Deere & Company Stockholders											​	​		​	​	​	​	​
​	​	​		​	​		​	​		​	​		​	Accumulated		​	​		​	​	​		​
​	​	Total		​	​		​	​		​	​		​	Other		​	​		​	​	Redeemable		​
​	​	Stockholders’		​	Common		​	Treasury		​	Retained		​	Comprehensive		​	Noncontrolling		​	​	Noncontrolling		​
​		Equity			Stock			Stock			Earnings			Income (Loss)			Interests				Interest		​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​		​	​	​		​
Three Months Ended May 2, 2021				​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance January 31, 2021		$	14,086	​	$	4,942	​	$	(18,377)	​	$	32,596	​	$	(5,078)	​	$	3	​	​	​	​	​
Net income	​		1,790	​	​	​	​	​	​	​	​	1,790	​	​	​	​	​	​	​	​	​	​	​
Other comprehensive income	​		118	​	​	​	​	​	​	​	​	​	​	​	118	​	​	​	​	​	​	​	​
Repurchases of common stock	​		(692)	​	​	​	​	​	(692)	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury shares reissued	​		17	​	​	​	​	​	17	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Dividends declared	​		(282)	​	​	​	​	​	​	​	​	(282)	​	​	​	​	​	​	​	​	​	​	​
Stock options and other	​		59	​	​	57	​	​	​	​	​	1	​	​	​	​	​	1	​	​	​	​	​
Balance May 2, 2021	​	$	15,096	​	$	4,999	​	$	(19,052)	​	$	34,105	​	$	(4,960)	​	$	4	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended May 2, 2021				​	​	​	​	​	​	​	​	​	​	​	​	​	​		​	​	​		​
Balance November 1, 2020		$	12,944	​	$	4,895	​	$	(18,065)	​	$	31,646	​	$	(5,539)	​	$	7	​	​	​	​
ASU No. 2016-13 adoption	​	​	(35)	​	​	​	​	​	​	​	​	(35)	​	​	​	​	​	​	​	​	​	​	​
Net income	​		3,014	​	​	​	​	​	​	​	​	3,013	​	​	​	​	​	1	​	​	​	​	​
Other comprehensive income	​		579	​	​	​	​	​	​	​	​	​	​	​	579	​	​	​	​	​	​	​	​
Repurchases of common stock	​		(1,044)	​	​	​	​	​	(1,044)	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury shares reissued	​		57	​	​	​	​	​	57	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Dividends declared	​		(520)	​	​	​	​	​	​	​	​	(520)	​	​	​	​	​	​	​	​	​	​	​
Stock options and other	​		101	​	​	104	​	​	​	​	​	1	​	​	​	​	​	(4)	​	​	​	​	​
Balance May 2, 2021	​	$	15,096	​	$	4,999	​	$	(19,052)	​	$	34,105	​	$	(4,960)	​	$	4	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Three Months Ended May 1, 2022				​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance January 30, 2022	​	$	17,808	​	$	5,066	​	$	(21,139)	​	$	37,029	​	$	(3,152)	​	$	4	​	​	​	​	​
Acquisitions (see Note 19)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	$	105	​
Net income (loss)	​	​	2,098	​	​	​	​	​	​	​	​	2,098	​	​	​	​	​	​	​	​	​	(1)	​
Other comprehensive loss	​	​	(139)	​	​	​	​	​	​	​	​	​	​	​	(139)	​	​	​	​	​	​	(4)	​
Repurchases of common stock	​	​	(603)	​	​	​	​	​	(603)	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury shares reissued	​	​	15	​	​	​	​	​	15	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Dividends declared	​	​	(323)	​	​	​	​	​	​	​	​	(322)	​	​	​	​	​	(1)	​	​	​	​	​
Stock options and other	​	​	51	​	​	51	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(1)	​
Balance May 1, 2022	​	$	18,907	​	$	5,117	​	$	(21,727)	​	$	38,805	​	$	(3,291)	​	$	3	​	​	$	99	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended May 1, 2022				​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance October 31, 2021	​	$	18,434	​	$	5,054	​	$	(20,533)	​	$	36,449	​	$	(2,539)	​	$	3	​	​	​	​	​
Acquisitions (see Note 19)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	$	105	​
Net income (loss)	​	​	3,002	​	​	​	​	​	​	​	​	3,001	​	​	​	​	​	1	​	​	​	(1)	​
Other comprehensive loss	​	​	(752)	​	​	​	​	​	​	​	​	​	​	​	(752)	​	​	​	​	​	​	(4)	​
Repurchases of common stock	​	​	(1,226)	​	​	​	​	​	(1,226)	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury shares reissued	​	​	32	​	​	​	​	​	32	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Dividends declared	​	​	(646)	​	​	​	​	​	​	​	​	(645)	​	​	​	​	​	(1)	​	​	​	​	​
Stock options and other	​	​	63	​	​	63	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(1)	​
Balance May 1, 2022	​	$	18,907	​	$	5,117	​	$	(21,727)	​	$	38,805	​	$	(3,291)	​	$	3	​	​	$	99	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

​

See Condensed Notes to Interim Consolidated Financial Statements.

​

Condensed Notes to Interim Consolidated Financial Statements (Unaudited)

(1)  Organization and Consolidation

The information in the notes and related commentary are presented in a format which includes data grouped as follows:

Consolidated – Represents the consolidation of the equipment operations and financial services. References to “Deere & Company” or “the Company” refer to the entire enterprise.

Equipment Operations – Represents the enterprise without financial services (FS), while including the Company’s production and precision agriculture operations (PPA), small agriculture and turf operations (SAT), construction and forestry operations (CF), and other corporate assets, liabilities, revenues, and expenses not reflected within financial services.

Financial Services – Represents the Company’s financing operations. Assets managed by financial services, including most financing receivables and equipment on operating leases, continue to be evaluated by market (agriculture and turf or construction and forestry).

The Company uses a 52/53 week fiscal year with quarters ending on the last Sunday in the reporting period. The second quarter ends for fiscal year 2022 and 2021 were May 1, 2022 and May 2, 2021, respectively. Both second quarters contained 13 weeks, while both year-to-date periods contained 26 weeks. Unless otherwise stated, references to particular years or quarters refer to the Company’s fiscal years generally ending in October and the associated periods in those fiscal years.

Prior to fiscal year 2021, the operating results of the Wirtgen Group (Wirtgen) were incorporated into the Company’s consolidated financial statements using a one-month lag period. The reporting lag was eliminated resulting in one additional month of Wirtgen activity in both the first quarter and the year-to-date period of 2021. The effect was an increase to Net sales of $270 million, which the Company considers immaterial to construction and forestry’s annual net sales.

As a result of recent acquisitions (see Note 19), the Company updated the presentation on the consolidated balance sheet to remove the following lines: Receivables from unconsolidated affiliates, Investments in unconsolidated affiliates, and Payables to unconsolidated affiliates. These balances are now immaterial to the Company’s consolidated balance sheet and have been reclassified into Other receivables, Other assets, and Accounts payable and accrued expenses, respectively.

The Company consolidates certain variable interest entities (VIEs) related to retail note securitizations (see Note 9).

​

​

(2)  Summary of Significant Accounting Policies and New Accounting Standards

Quarterly Financial Statements

The interim consolidated financial statements of Deere & Company have been prepared by the Company, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted as permitted by such rules and regulations. All adjustments, consisting of normal recurring adjustments, have been included. Management believes the disclosures are adequate to present fairly the financial position, results of operations, and cash flows at the dates and for the periods presented. It is suggested these interim consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto appearing in the Company’s latest Annual Report on Form 10-K. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year.

Use of Estimates in Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates.

Revenue Recognition

Prior to fiscal year 2022, certain goods were shipped to Canadian dealers on a consignment basis under which the risk and rewards of ownership were not transferred to the dealer at the time the goods were delivered. Accordingly, sales were not recorded until a retail customer purchased the goods. The dealer contract in Canada was changed for goods delivered after November 1, 2021, resulting in transfer of control and revenue recognition upon delivery. For certain goods delivered to Canadian dealers prior to November 1, 2021, the dealer consignment terms already in place remain in effect. As of May 1, 2022 and October 31, 2021, the remaining consigned inventory was $46 million and $150 million, respectively.

​

New Accounting Standards

The Company closely monitors all Accounting Standard Updates (ASUs) issued by the Financial Accounting Standards Board and other authoritative guidance. ASUs adopted in 2022 did not have a material impact on the Company’s financial statements, and ASUs to be adopted in future periods are being evaluated and at this point are not expected to have a material impact on the Company’s financial statements.

(3)  Revenue Recognition

The Company’s net sales and revenues by primary geographic market, major product line, and timing of revenue recognition in millions of dollars follow:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended May 1, 2022														​
​		Production & Precision Ag			Small Ag & Turf			Construction & Forestry			Financial Services			Total		​
Primary geographic markets:	​	​	​	​	​	​	​	​	​	​	​		​	​		​
United States	​	$	2,434	​	$	2,103	​	$	2,108	​	$	569	​	$	7,214	​
Canada	​	​	309	​	​	161	​	​	355	​		149	​		974	​
Western Europe	​	​	536	​	​	658	​	​	464	​		25	​		1,683	​
Central Europe and CIS	​	​	404	​	​	151	​	​	146	​		11	​		712	​
Latin America	​	​	1,126	​	​	134	​	​	333	​		73	​		1,666	​
Asia, Africa, Australia, New Zealand, and Middle East	​	​	367	​	​	399	​	​	318	​	​	37	​	​	1,121	​
Total	​	$	5,176	​	$	3,606	​	$	3,724	​	$	864	​	$	13,370	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Major product lines:	​	​	​	​	​	​	​	​	​	​	​		​	​		​
Production agriculture	​	$	5,032	​	​	​	​	​	​	​	​	​	​	$	5,032	​
Small agriculture	​	​	​	​	$	2,668	​	​	​	​		​	​		2,668	​
Turf	​	​	​	​	​	817	​	​	​	​		​	​		817	​
Construction	​	​	​	​	​	​	​	$	1,516	​		​	​		1,516	​
Compact construction	​	​	​	​	​	​	​	​	427	​	​	​	​	​	427	​
Roadbuilding	​	​	​	​	​	​	​	​	1,017	​		​	​		1,017	​
Forestry	​	​	​	​	​	​	​	​	325	​		​	​		325	​
Financial products	​	​	10	​	​	9	​	​	6	​	$	864	​		889	​
Other	​	​	134	​	​	112	​	​	433	​		​	​		679	​
Total	​	$	5,176	​	$	3,606	​	$	3,724	​	$	864	​	$	13,370	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Revenue recognized:	​	​	​	​	​	​	​	​	​	​	​		​	​		​
At a point in time	​	$	5,144	​	$	3,593	​	$	3,707	​	$	26	​	$	12,470	​
Over time	​	​	32	​	​	13	​	​	17	​	​	838	​	​	900	​
Total	​	$	5,176	​	$	3,606	​	$	3,724	​	$	864	​	$	13,370	​

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		Six Months Ended May 1, 2022														​
​	​	Production & Precision Ag			Small Ag & Turf			Construction & Forestry			Financial Services			Total		​
Primary geographic markets:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
United States	​	$	4,042	​	$	3,541	​	$	3,368	​	$	1,142	​	$	12,093	​
Canada	​	​	448	​	​	283	​	​	687	​		301	​		1,719	​
Western Europe	​	​	1,003	​	​	1,190	​	​	822	​		51	​		3,066	​
Central Europe and CIS	​	​	606	​	​	277	​	​	341	​		22	​		1,246	​
Latin America	​	​	1,902	​	​	238	​	​	561	​		141	​		2,842	​
Asia, Africa, Australia, New Zealand, and Middle East	​	​	608	​	​	751	​	​	537	​	​	77	​	​	1,973	​
Total	​	$	8,609	​	$	6,280	​	$	6,316	​	$	1,734	​	$	22,939	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Major product lines:	​	​	​	​	​	​	​	​	​	​	​		​	​		​
Production agriculture	​	$	8,315	​	​	​	​	​	​	​	​	​	​	$	8,315	​
Small agriculture	​	​	​	​	$	4,600	​	​	​	​		​	​		4,600	​
Turf	​	​	​	​	​	1,444	​	​	​	​		​	​		1,444	​
Construction	​	​	​	​	​	​	​	$	2,691	​		​	​		2,691	​
Compact construction	​	​	​	​	​	​	​	​	748	​	​	​	​	​	748	​
Roadbuilding	​	​	​	​	​	​	​	​	1,709	​		​	​		1,709	​
Forestry	​	​	​	​	​	​	​	​	630	​	​	​	​		630	​
Financial products	​	​	22	​	​	20	​	​	11	​	$	1,734	​		1,787	​
Other	​	​	272	​	​	216	​	​	527	​		​	​		1,015	​
Total	​	$	8,609	​	$	6,280	​	$	6,316	​	$	1,734	​	$	22,939	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Revenue recognized:	​	​	​	​	​	​	​	​	​	​	​		​	​		​
At a point in time	​	$	8,540	​	$	6,247	​	$	6,277	​	$	50	​	$	21,114	​
Over time	​	​	69	​	​	33	​	​	39	​	​	1,684	​	​	1,825	​
Total	​	$	8,609	​	$	6,280	​	$	6,316	​	$	1,734	​	$	22,939	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended May 2, 2021														​
​		Production & Precision Ag			Small Ag & Turf			Construction & Forestry			Financial Services			Total		​
Primary geographic markets:	​	​	​	​	​	​	​	​	​	​	​		​	​		​
United States	​	$	2,211	​	$	1,838	​	$	1,481	​	$	608	​	$	6,138	​
Canada	​	​	252	​	​	144	​	​	320	​		153	​		869	​
Western Europe	​	​	589	​	​	738	​	​	514	​	​	26	​		1,867	​
Central Europe and CIS	​	​	531	​	​	160	​	​	209	​	​	9	​		909	​
Latin America	​	​	700	​	​	103	​	​	220	​	​	60	​		1,083	​
Asia, Africa, Australia, New Zealand, and Middle East	​	​	319	​	​	444	​	​	393	​	​	36	​	​	1,192	​
Total	​	$	4,602	​	$	3,427	​	$	3,137	​	$	892	​	$	12,058	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Major product lines:	​	​	​	​	​	​	​	​	​	​	​		​	​		​
Production agriculture	​	$	4,466	​	​	​	​	​	​	​	​	​	​	$	4,466	​
Small agriculture	​	​	​	​	$	2,417	​	​	​	​		​	​		2,417	​
Turf	​	​	​	​	​	898	​	​	​	​		​	​		898	​
Construction	​	​	​	​	​	​	​	$	1,232	​		​	​		1,232	​
Compact construction	​	​	​	​	​	​	​	​	396	​	​	​	​	​	396	​
Roadbuilding	​	​	​	​	​	​	​	​	1,066	​		​	​		1,066	​
Forestry	​	​	​	​	​	​	​	​	343	​		​	​		343	​
Financial products	​	​	12	​	​	10	​	​	5	​	$	892	​		919	​
Other	​	​	124	​	​	102	​	​	95	​		​	​		321	​
Total	​	$	4,602	​	$	3,427	​	$	3,137	​	$	892	​	$	12,058	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Revenue recognized:	​	​	​	​	​	​	​	​	​	​	​		​	​		​
At a point in time	​	$	4,562	​	$	3,412	​	$	3,114	​	$	26	​	$	11,114	​
Over time	​	​	40	​	​	15	​	​	23	​	​	866	​	​	944	​
Total	​	$	4,602	​	$	3,427	​	$	3,137	​	$	892	​	$	12,058	​

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six Months Ended May 2, 2021														​
​		Production & Precision Ag			Small Ag & Turf			Construction & Forestry			Financial Services			Total		​
Primary geographic markets:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
United States	​	$	3,820	​	$	3,261	​	$	2,683	​	$	1,206	​	$	10,970	​
Canada	​	​	364	​	​	223	​	​	508	​	​	307	​		1,402	​
Western Europe	​	​	1,038	​	​	1,224	​	​	953	​	​	50	​		3,265	​
Central Europe and CIS	​	​	692	​	​	244	​	​	387	​	​	18	​		1,341	​
Latin America	​	​	1,213	​	​	180	​	​	390	​	​	119	​		1,902	​
Asia, Africa, Australia, New Zealand, and Middle East	​	​	623	​	​	845	​	​	746	​	​	76	​	​	2,290	​
Total	​	$	7,750	​	$	5,977	​	$	5,667	​	$	1,776	​	$	21,170	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Major product lines:	​	​	​	​	​	​	​	​	​	​	​		​	​		​
Production agriculture	​	$	7,478	​	​	​	​	​	​	​	​	​	​	$	7,478	​
Small agriculture	​	​	​	​	$	4,228	​	​	​	​	​	​	​		4,228	​
Turf	​	​	​	​	​	1,549	​	​	​	​	​	​	​		1,549	​
Construction	​	​	​	​	​	​	​	$	2,119	​	​	​	​		2,119	​
Compact construction	​	​	​	​	​	​	​	​	742	​	​	​	​	​	742	​
Roadbuilding	​	​	​	​	​	​	​	​	1,976	​	​	​	​		1,976	​
Forestry	​	​	​	​	​	​	​	​	633	​	​	​	​		633	​
Financial products	​	​	28	​	​	20	​	​	12	​	$	1,776	​		1,836	​
Other	​	​	244	​	​	180	​	​	185	​	​	​	​		609	​
Total	​	$	7,750	​	$	5,977	​	$	5,667	​	$	1,776	​	$	21,170	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Revenue recognized:	​	​	​	​	​	​	​	​	​	​	​		​	​		​
At a point in time	​	$	7,668	​	$	5,946	​	$	5,614	​	$	50	​	$	19,278	​
Over time	​	​	82	​	​	31	​	​	53	​	​	1,726	​	​	1,892	​
Total	​	$	7,750	​	$	5,977	​	$	5,667	​	$	1,776	​	$	21,170	​

​

The Company invoices in advance of recognizing the sale of certain products and the revenue for certain services. These items are primarily for premiums for extended warranties, advance payments for future equipment sales, and subscription and service revenue related to precision guidance and telematic services. These advanced customer payments are presented as deferred revenue, a contract liability, in Accounts payable and accrued expenses in the consolidated balance sheets. The deferred revenue received, but not recognized in revenue, including extended warranty premiums also shown in Note 15, was $1,423 million, $1,344 million, and $1,249 million at May 1, 2022, October 31, 2021, and May 2, 2021, respectively. The contract liability is reduced as the revenue is recognized. During the three months ended May 1, 2022 and May 2, 2021, $130 million and $111 million, respectively, of revenue was recognized from deferred revenue that was recorded as a contract liability at the beginning of the respective fiscal year. During the six months ended May 1, 2022 and May 2, 2021, $395 million and $335 million, respectively, of revenue was recognized from deferred revenue that was recorded as a contract liability at the beginning of the respective fiscal year.

The amount of unsatisfied performance obligations for contracts with an original duration greater than one year is $1,116 million at May 1, 2022. The estimated revenue to be recognized by fiscal year follows in millions of dollars: remainder of 2022 - $173, 2023 - $311, 2024 - $260, 2025 - $168, 2026 - $87, 2027 - $52 and later years - $65. As permitted, the Company elected only to disclose remaining performance obligations with an original contract duration greater than one year. The contracts with an expected duration of one year or less are generally for sales of equipment, service parts, repair services, and certain telematics services.

​

(4)  Other Comprehensive Income Items

The after-tax components of accumulated other comprehensive income (loss) in millions of dollars follow:

​	​	​	​	​	​	​	​	​	​	​
​	​	May 1		​	October 31		​	May 2		​
​	​	2022		​	2021		​	2021		​
Retirement benefits adjustment	​	$	(1,250)	​	$	(1,034)	​	$	(3,764)	​
Cumulative translation adjustment	​	​	(1,993)	​	​	(1,478)	​	​	(1,163)	​
Unrealized loss on derivatives	​	​	​	​	​	(42)	​	​	(51)	​
Unrealized gain (loss) on debt securities	​	​	(48)	​	​	15	​	​	18	​
Total accumulated other comprehensive income (loss)	​	$	(3,291)	​	$	(2,539)	​	$	(4,960)	​

​

​

Following are amounts recorded in and reclassifications out of other comprehensive income (loss), and the income tax effects, in millions of dollars. Retirement benefits adjustment reclassifications for actuarial gain (loss), prior service (credit) cost, and settlements are included in net periodic pension and other postretirement benefit costs (see Note 6).

​	​	​	​	​	​	​	​	​	​	​
​		Before			Tax			After
​	​	Tax		​	(Expense)		​	Tax
Three Months Ended May 1, 2022	​	Amount		​	Credit		​	Amount
Cumulative translation adjustment	​	$	(243)	​	$	(5)	​	$	(248)	​
Unrealized gain (loss) on derivatives:	​	​	​	​	​	​	​	​	​	​
Unrealized hedging gain (loss)	​	​	35	​	​	(7)	​	​	28	​
Reclassification of realized (gain) loss to:	​	​	​	​	​	​	​	​	​	​
Interest rate contracts – Interest expense	​	​	1	​	​	(1)	​	​	​	​
Net unrealized gain (loss) on derivatives	​	​	36	​	​	(8)	​	​	28	​
Unrealized gain (loss) on debt securities:	​	​	​	​	​	​	​	​	​	​
Unrealized holding gain (loss)	​	​	(61)	​	​	13	​	​	(48)	​
Net unrealized gain (loss) on debt securities	​	​	(61)	​	​	13	​	​	(48)	​
Retirement benefits adjustment:	​	​	​	​	​	​	​	​	​	​
Net actuarial gain (loss)	​	​	128	​	​	(30)	​	​	98	​
Reclassification to Other operating expenses through amortization of:	​	​	​	​	​	​	​	​	​	​
Actuarial (gain) loss	​	​	27	​	​	(7)	​	​	20	​
Prior service (credit) cost	​	​	8	​	​	(2)	​	​	6	​
Settlements	​	​	7	​	​	(2)	​	​	5	​
Net unrealized gain (loss) on retirement benefits adjustment	​	​	170	​	​	(41)	​	​	129	​
Total other comprehensive income (loss)		$	(98)	​	$	(41)	​	$	(139)	​

​

​	​	​	​	​	​	​	​	​	​	​
​		Before			Tax			After
​	​	Tax		​	(Expense)		​	Tax
Six Months Ended May 1, 2022	​	Amount		​	Credit		​	Amount
Cumulative translation adjustment		$	(507)	​	$	(8)	​	$	(515)	​
Unrealized gain (loss) on derivatives:	​	​	​	​	​	​	​	​	​	​
Unrealized hedging gain (loss)	​	​	50	​	​	(10)	​	​	40	​
Reclassification of realized (gain) loss to:	​	​	​	​	​	​	​	​	​	​
Interest rate contracts – Interest expense	​	​	3	​	​	(1)	​	​	2	​
Net unrealized gain (loss) on derivatives	​	​	53	​	​	(11)	​	​	42	​
Unrealized gain (loss) on debt securities:	​	​	​	​	​	​	​	​	​	​
Unrealized holding gain (loss)	​	​	(80)	​	​	17	​	​	(63)	​
Net unrealized gain (loss) on debt securities	​	​	(80)	​	​	17	​	​	(63)	​
Retirement benefits adjustment:	​	​	​	​	​	​	​	​	​	​
Net actuarial gain (loss)	​	​	(372)	​	​	90	​	​	(282)	​
Reclassification to Other operating expenses through amortization of:	​	​	​	​	​	​	​	​	​	​
Actuarial (gain) loss	​	​	67	​	​	(17)	​	​	50	​
Prior service (credit) cost	​	​	14	​	​	(4)	​	​	10	​
Settlements	​	​	8	​	​	(2)	​	​	6	​
Net unrealized gain (loss) on retirement benefits adjustment	​	​	(283)	​	​	67	​	​	(216)	​
Total other comprehensive income (loss)		$	(817)	​	$	65	​	$	(752)	​

​

​

​	​	​	​	​	​	​	​	​	​	​
​		Before			Tax			After
​	​	Tax		​	(Expense)		​	Tax
Three Months Ended May 2, 2021	​	Amount		​	Credit		​	Amount
Cumulative translation adjustment		$	37	​	​	​	​	$	37	​
Unrealized gain (loss) on derivatives:	​	​	​	​	​	​	​	​	​	​
Reclassification of realized (gain) loss to:	​	​	​	​	​	​	​	​	​	​
Interest rate contracts – Interest expense	​	​	4	​	$	(1)	​	​	3	​
Net unrealized gain (loss) on derivatives	​	​	4	​	​	(1)	​	​	3	​
Unrealized gain (loss) on debt securities:	​	​	​	​	​	​	​	​	​	​
Unrealized holding gain (loss)	​	​	(14)	​	​	1	​	​	(13)	​
Net unrealized gain (loss) on debt securities	​	​	(14)	​	​	1	​	​	(13)	​
Retirement benefits adjustment:	​	​	​	​	​	​	​	​	​	​
Net actuarial gain (loss)	​	​	41	​	​	(9)	​	​	32	​
Reclassification to Other operating expenses through amortization of:	​	​	​	​	​	​	​	​	​	​
Actuarial (gain) loss	​	​	72	​	​	(19)	​	​	53	​
Prior service (credit) cost	​	​	2	​	​	​	​	​	2	​
Settlements	​	​	5	​	​	(1)	​	​	4	​
Net unrealized gain (loss) on retirement benefits adjustment	​	​	120	​	​	(29)	​	​	91	​
Total other comprehensive income (loss)		$	147	​	$	(29)	​	$	118	​

​

​	​	​	​	​	​	​	​	​	​	​
​		Before			Tax			After
​	​	Tax		​	(Expense)		​	Tax
Six Months Ended May 2, 2021	​	Amount		​	Credit		​	Amount
Cumulative translation adjustment		$	431		$	2	​	$	433	​
Unrealized gain (loss) on derivatives:	​	​	​	​	​	​	​	​	​	​
Reclassification of realized (gain) loss to:	​	​	​	​	​	​	​	​	​	​
Interest rate contracts – Interest expense	​	​	9	​	​	(2)	​	​	7	​
Net unrealized gain (loss) on derivatives	​	​	9	​	​	(2)	​	​	7	​
Unrealized gain (loss) on debt securities:	​	​	​	​	​	​	​	​	​	​
Unrealized holding gain (loss)	​	​	(17)	​	​	2	​	​	(15)	​
Net unrealized gain (loss) on debt securities	​	​	(17)	​	​	2	​	​	(15)	​
Retirement benefits adjustment:	​	​	​	​	​	​	​	​	​	​
Net actuarial gain (loss)	​	​	40	​	​	(9)	​	​	31	​
Reclassification to Other operating expenses through amortization of:	​	​	​	​	​	​	​	​	​	​
Actuarial (gain) loss	​	​	142	​	​	(36)	​	​	106	​
Prior service (credit) cost	​	​	4	​	​	(1)	​	​	3	​
Settlements	​	​	18	​	​	(4)	​	​	14	​
Net unrealized gain (loss) on retirement benefits adjustment	​	​	204	​	​	(50)	​	​	154	​
Total other comprehensive income (loss)		$	627	​	$	(48)	​	$	579	​

​

​

(5)  Earnings Per Share

A reconciliation of basic and diluted net income per share attributable to Deere & Company follows in millions, except per share amounts:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
	​	Three Months Ended					​	Six Months Ended
​	​	May 1		​	May 2		​	May 1		​	May 2
​	​	2022		​	2021		​	2022		​	2021
Net income attributable to Deere & Company		$	2,098		$	1,790		$	3,001		$	3,013	​
Average shares outstanding	​	​	306.2	​		312.8	​	​	306.8	​		313.1	​
Basic per share	​	$	6.85	​	$	5.72	​	$	9.78	​	$	9.62	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Average shares outstanding	​	​	306.2	​		312.8	​	​	306.8	​		313.1	​
Effect of dilutive share-based compensation	​	​	1.9	​		2.4	​	​	2.0	​		2.5	​
Total potential shares outstanding	​	​	308.1	​		315.2	​	​	308.8	​		315.6	​
Diluted per share	​	$	6.81	​	$	5.68	​	$	9.72	​	$	9.55	​

​

During the second quarter and first six months of 2022, .2 million shares and .1 million shares, respectively, were excluded from the computation because the incremental shares would have been antidilutive. During the second quarter and first six months of 2021, no shares were antidilutive.

​

​

(6)  Pension and Other Postretirement Benefits

The Company has several defined benefit pension plans and postretirement benefit (OPEB) plans, primarily health care and life insurance plans, covering its U.S. employees and employees in certain foreign countries.

The components of net periodic pension cost consisted of the following in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	May 1		​	May 2		​	May 1		​	May 2
​	​	2022		​	2021		​	2022		​	2021
Service cost		$	94		$	83		$	179		$	168	​
Interest cost	​	​	80	​		69	​	​	157	​		138	​
Expected return on plan assets	​	​	(180)	​		(200)	​	​	(362)	​		(400)	​
Amortization of actuarial loss	​	​	37	​		65	​	​	76	​		128	​
Amortization of prior service cost	​	​	9	​		3	​	​	16	​		6	​
Settlements	​	​	7	​		5	​	​	8	​		18	​
Net cost	​	$	47	​	$	25	​	$	74	​	$	58	​

The components of net periodic OPEB (benefit) cost consisted of the following in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	May 1		​	May 2		​	May 1		​	May 2
​	​	2022		​	2021		​	2022		​	2021
Service cost		$	11		$	12		$	23		$	24	​
Interest cost	​	​	23	​		25	​	​	49	​		51	​
Expected return on plan assets	​	​	(27)	​		(20)	​	​	(55)	​		(39)	​
Amortization of actuarial (gain) loss	​	​	(10)	​		7	​	​	(9)	​		14	​
Amortization of prior service credit	​	​	(1)	​		(1)	​	​	(2)	​		(2)	​
Net (benefit) cost	​	$	(4)	​	$	23	​	$	6	​	$	48	​

​

The components of net periodic pension and OPEB costs excluding the service cost component are included in the line item Other operating expenses in the statements of consolidated income.

On November 17, 2021, employees represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) approved a new collective bargaining agreement. In the first quarter of 2022, the Company remeasured the U.S. hourly pension plan due to the new collective bargaining agreement, which decreased the plan’s funded status by approximately $495 million and will increase pension expense in 2022 by nearly $80 million with $35 million negatively impacting operating profit in 2022.

During the first six months of 2022, the Company contributed $47 million to its pension plans and $1,085 million to its OPEB plans. The OPEB contributions include a voluntary contribution of $1,000 million to a U.S. plan on November 30, 2021. The Company presently anticipates contributing an additional $43 million to its pension plans and $50 million to its OPEB plans during the remainder of fiscal year 2022. The remaining pension and OPEB contributions are primarily direct benefit payments from Company funds.

​

​

(7)  Segment Reporting

Worldwide net sales and revenues, operating profit, and identifiable assets by segment were as follows in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended							​	Six Months Ended
	​	May 1		​	May 2		​	%	​	May 1		​	May 2		​	%
​	​	2022		​	2021		​	Change	​	2022		​	2021		​	Change
Net sales and revenues:		​			​					​	​		​				​
Production & precision ag net sales		$	5,117	​	$	4,529	​	+13		$	8,473	​	$	7,599	​	+12	​
Small ag & turf net sales	​	​	3,570	​	​	3,390	​	+5	​	​	6,201	​	​	5,904	​	+5	​
Construction & forestry net sales	​	​	3,347	​		3,079	​	+9	​	​	5,891	​		5,546	​	+6	​
Financial services revenues	​	​	864	​		892	​	-3	​	​	1,734	​		1,776	​	-2	​
Other revenues	​	​	472	​		168	​	+181	​	​	640	​		345	​	+86	​
Total net sales and revenues		$	13,370	​	$	12,058	​	+11		$	22,939	​	$	21,170	​	+8	​
Operating profit:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Production & precision ag		$	1,057	​	$	1,007	​	+5		$	1,353	​	$	1,651	​	-18	​
Small ag & turf	​	​	520	​	​	648	​	-20	​	​	891	​	​	1,117	​	-20	​
Construction & forestry	​	​	814	​		489	​	+66	​	​	1,085	​		756	​	+44	​
Financial services	​	​	279	​		295	​	-5	​	​	577	​		553	​	+4	​
Total operating profit	​	​	2,670	​		2,439	​	+9	​	​	3,906	​		4,077	​	-4	​
Reconciling items	​	​	(111)	​		(119)	​	-7	​	​	(195)	​		(226)	​	-14	​
Income taxes	​	​	(461)	​		(530)	​	-13	​	​	(710)	​		(838)	​	-15	​
Net income attributable to Deere & Company		$	2,098	​	$	1,790	​	+17		$	3,001	​	$	3,013	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Intersegment sales and revenues:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Production & precision ag net sales		$	6	​	$	7	​	-14		$	10	​	$	13	​	-23	​
Small ag & turf net sales	​	​	4	​	​	4	​	​	​	​	6	​	​	8	​	-25	​
Construction & forestry net sales	​	​	​	​	​	​	​	​	​	​	​	​		​	​	​	​
Financial services revenues	​	​	87	​		62	​	+40	​	​	133	​		112	​	+19	​

​

Operating profit is income from continuing operations before reconciling items and income taxes. Operating profit of the financial services segment includes the effect of interest expense and foreign exchange gains and losses. Reconciling items to net income are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses, pension and OPEB benefit costs excluding the service cost component, and net income attributable to noncontrolling interests.

​

​	​	​	​	​	​	​	​	​	​	​
​		May 1			October 31		​	May 2
​	​	2022		​	2021		​	2021
Identifiable assets:	​	​	​	​	​	​	​	​	​	​
Production & precision ag		$	8,680	​	$	7,021	​	$	6,602	​
Small ag & turf	​	​	4,431	​	​	3,959	​	​	3,605	​
Construction & forestry	​	​	6,984	​		6,457	​		6,500	​
Financial services	​	​	53,110	​		51,624	​		50,849	​
Corporate	​	​	10,894	​		15,053	​		11,423	​
Total assets		$	84,099	​	$	84,114	​	$	78,979	​

​

​

(8)  Financing Receivables

The Company monitors the credit quality of financing receivables based on delinquency status. Past due balances of financing receivables still accruing finance income represent the total balance held (principal plus accrued interest) with any payment amounts 30 days or more past the contractual payment due date. Non-performing financing receivables represent receivables for which the Company has ceased accruing finance income. The Company ceases accruing finance income when these receivables are generally 90 days delinquent. Generally, when receivables are 120 days delinquent the estimated uncollectible amount from the customer is written off to the allowance for credit losses. Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is generally resumed when the receivable becomes contractually current and collections are reasonably assured.

​

The credit quality analysis of retail notes, financing leases, and revolving charge accounts (collectively, retail customer receivables) by year of origination was as follows in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	May 1, 2022																							​
​	​	2022		​	2021		​	2020		​	2019		​	2018		​	Prior Years		​	Revolving Charge Accounts		​	Total		​
Retail customer receivables:																									​
Agriculture and turf	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	$	5,540	​	$	10,141	​	$	5,318	​	$	2,684	​	$	1,286	​	$	723	​	$	3,381	​	$	29,073	​
30-59 days past due	​	​	20	​	​	75	​	​	36	​	​	20	​	​	9	​	​	5	​	​	12	​	​	177	​
60-89 days past due	​	​	4	​	​	29	​	​	14	​	​	9	​	​	5	​	​	2	​	​	4	​	​	67	​
90+ days past due	​	​	​	​	​	​	​	​	1	​	​	​	​	​	​	​	​	​	​	​	​	​	​	1	​
Non-performing	​	​	3	​	​	40	​	​	44	​	​	41	​	​	25	​	​	31	​	​	14	​	​	198	​
Construction and forestry	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	​	1,506	​	​	2,404	​	​	1,211	​	​	577	​	​	234	​	​	105	​	​	91	​	​	6,128	​
30-59 days past due	​	​	20	​	​	52	​	​	33	​	​	17	​	​	6	​	​	2	​	​	3	​	​	133	​
60-89 days past due	​	​	7	​	​	25	​	​	15	​	​	6	​	​	1	​	​	1	​	​	1	​	​	56	​
90+ days past due	​	​	​	​	​	1	​	​	1	​	​	1	​	​	1	​	​	5	​	​	​	​	​	9	​
Non-performing	​	​	3	​	​	46	​	​	50	​	​	29	​	​	12	​	​	5	​	​	1	​	​	146	​
Total retail customer receivables	​	$	7,103	​	$	12,813	​	$	6,723	​	$	3,384	​	$	1,579	​	$	879	​	$	3,507	​	$	35,988	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	October 31, 2021																							​
​	​	2021		​	2020		​	2019		​	2018		​	2017		​	Prior Years		​	Revolving Charge Accounts		​	Total		​
Retail customer receivables:																									​
Agriculture and turf	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	$	12,877	​	$	6,676	​	$	3,463	​	$	1,738	​	$	728	​	$	211	​	$	3,704	​	$	29,397	​
30-59 days past due	​	​	43	​	​	53	​	​	29	​	​	16	​	​	7	​	​	3	​	​	14	​	​	165	​
60-89 days past due	​	​	16	​	​	23	​	​	12	​	​	6	​	​	3	​	​	1	​	​	4	​	​	65	​
90+ days past due	​	​	​	​	​	1	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	1	​
Non-performing	​	​	23	​	​	57	​	​	53	​	​	32	​	​	17	​	​	23	​	​	7	​	​	212	​
Construction and forestry	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	​	3,122	​	​	1,575	​	​	754	​	​	273	​	​	57	​	​	7	​	​	92	​	​	5,880	​
30-59 days past due	​	​	50	​	​	40	​	​	27	​	​	7	​	​	4	​	​	1	​	​	3	​	​	132	​
60-89 days past due	​	​	15	​	​	11	​	​	9	​	​	6	​	​	1	​	​	​	​	​	1	​	​	43	​
90+ days past due	​	​	1	​	​	2	​	​	3	​	​	3	​	​	4	​	​	2	​	​	​	​	​	15	​
Non-performing	​	​	26	​	​	56	​	​	39	​	​	17	​	​	7	​	​	3	​	​	​	​	​	148	​
Total retail customer receivables	​	$	16,173	​	$	8,494	​	$	4,389	​	$	2,098	​	$	828	​	$	251	​	$	3,825	​	$	36,058	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	May 2, 2021																							​
​	​	2021		​	2020		​	2019		​	2018		​	2017		​	Prior Years		​	Revolving Charge Accounts		​	Total		​
Retail customer receivables:																									​
Agriculture and turf	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	$	6,017	​	$	8,375	​	$	4,436	​	$	2,402	​	$	1,136	​	$	494	​	$	3,221	​	$	26,081	​
30-59 days past due	​	​	20	​	​	64	​	​	41	​	​	19	​	​	10	​	​	5	​	​	20	​	​	179	​
60-89 days past due	​	​	5	​	​	34	​	​	18	​	​	9	​	​	4	​	​	2	​	​	5	​	​	77	​
90+ days past due	​	​	​	​	​	​	​	​	1	​	​	1	​	​	​	​	​	​	​	​	​	​	​	2	​
Non-performing	​	​	2	​	​	51	​	​	69	​	​	54	​	​	29	​	​	33	​	​	16	​	​	254	​
Construction and forestry	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	​	1,568	​	​	2,077	​	​	1,106	​	​	454	​	​	118	​	​	22	​	​	81	​	​	5,426	​
30-59 days past due	​	​	21	​	​	43	​	​	35	​	​	14	​	​	5	​	​	1	​	​	3	​	​	122	​
60-89 days past due	​	​	6	​	​	13	​	​	12	​	​	7	​	​	3	​	​	1	​	​	1	​	​	43	​
90+ days past due	​	​	​	​	​	2	​	​	10	​	​	5	​	​	6	​	​	3	​	​	​	​	​	26	​
Non-performing	​	​	1	​	​	38	​	​	37	​	​	22	​	​	11	​	​	7	​	​	1	​	​	117	​
Total retail customer receivables	​	$	7,640	​	$	10,697	​	$	5,765	​	$	2,987	​	$	1,322	​	$	568	​	$	3,348	​	$	32,327	​

​

​

The credit quality analysis of wholesale receivables by year of origination was as follows in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	May 1, 2022																							​
​	​	2022		​	2021		​	2020		​	2019		​	2018		​	Prior Years		​	Revolving		​	Total		​
Wholesale receivables:																									​
Agriculture and turf	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	$	224	​	$	155	​	$	43	​	$	8	​	$	1	​	$	2	​	$	1,605	​	$	2,038	​
30+ days past due	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Non-performing	​	​	​	​	​	​	​	​	​	​	​	5	​	​	​	​	​	​	​	​	​	​	​	5	​
Construction and forestry	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	​	6	​	​	35	​	​	4	​	​	2	​	​	​	​	​	1	​	​	268	​	​	316	​
30+ days past due	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	1	​	​	​	​	​	1	​
Non-performing	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total wholesale receivables	​	$	230	​	$	190	​	$	47	​	$	15	​	$	1	​	$	4	​	$	1,873	​	$	2,360	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	October 31, 2021																							​
​	​	2021		​	2020		​	2019		​	2018		​	2017		​	Prior Years		​	Revolving		​	Total		​
Wholesale receivables:																									​
Agriculture and turf	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	$	346	​	$	80	​	$	22	​	$	9	​	$	3	​	​	​	​	$	1,696	​	$	2,156	​
30+ days past due	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Non-performing	​	​	​	​	​	​	​	​	12	​	​	​	​	​	​	​	​	​	​	​	​	​	​	12	​
Construction and forestry	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	​	41	​	​	7	​	​	7	​	​	​	​	​	1	​	$	1	​	​	340	​	​	397	​
30+ days past due	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	1	​	​	​	​	​	1	​
Non-performing	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total wholesale receivables	​	$	387	​	$	87	​	$	41	​	$	9	​	$	4	​	$	2	​	$	2,036	​	$	2,566	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	May 2, 2021																							​
​	​	2021		​	2020		​	2019		​	2018		​	2017		​	Prior Years		​	Revolving		​	Total		​
Wholesale receivables:																									​
Agriculture and turf	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	$	191	​	$	144	​	$	55	​	$	13	​	$	4	​	$	1	​	$	2,146	​	$	2,554	​
30+ days past due	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Non-performing	​	​	​	​	​	​	​	​	22	​	​	​	​	​	​	​	​	​	​	​	​	​	​	22	​
Construction and forestry	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Current	​	​	5	​	​	10	​	​	15	​	​	1	​	​	1	​	​	3	​	​	341	​	​	376	​
30+ days past due	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Non-performing	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total wholesale receivables	​	$	196	​	$	154	​	$	92	​	$	14	​	$	5	​	$	4	​	$	2,487	​	$	2,952	​

​

​

​

An analysis of the allowance for credit losses and investment in financing receivables in millions of dollars during the periods follows:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Retail Notes		​	Revolving		​	​	​	​	​	​	​
​	​	& Financing		​	Charge		​	Wholesale		​	​	​	​
​	​	Leases		​	Accounts		​	Receivables		​	Total		​
Three Months Ended May 1, 2022	​	​	​	​	​	​	​	​	​	​	​	​	​
Allowance:											​	​
Beginning of period balance		$	138		$	15	​	$	5	​	$	158	​
Provision	​	​	39	​	​	3	​	​	​	​	​	42	​
Write-offs	​	​	(18)	​	​	(8)	​	​	​	​	​	(26)	​
Recoveries	​	​	5	​	​	7	​	​	​	​	​	12	​
Translation adjustments	​	​	4	​	​	​	​	​	​	​	​	4	​
End of period balance		$	168		$	17	​	$	5	​	$	190	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended May 1, 2022	​	​	​	​	​	​	​	​	​	​	​	​	​
Allowance:		​	​	​	​	​	​	​	​	​	​	​	​
Beginning of period balance		$	138		$	21	​	$	7	​	$	166	​
Provision (credit)	​	​	52	​	​	(7)	​	​	(2)	​	​	43	​
Write-offs	​	​	(35)	​	​	(12)	​	​	​	​	​	(47)	​
Recoveries	​	​	9	​	​	15	​	​	​	​	​	24	​
Translation adjustments	​	​	4	​	​	​	​	​	​	​	​	4	​
End of period balance		$	168		$	17	​	$	5	​	$	190	​
Financing receivables:	​	​	​	​	​	​	​	​	​	​	​	​	​
End of period balance		$	32,481		$	3,507	​	$	2,360	​	$	38,348	​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Retail Notes		​	Revolving		​	​	​	​	​	​
​	​	& Financing		​	Charge		​	Wholesale		​	​	​
​	​	Leases		​	Accounts		​	Receivables		​	Total		​
Three Months Ended May 2, 2021	​	​	​	​	​	​	​	​	​	​	​	​	​
Allowance:		​			​			​			​		​
Beginning of period balance	​	$	180		$	24	​	$	7	​	$	211	​
Provision (credit)	​		(17)	​	​	(6)	​	​	​	​		(23)	​
Write-offs	​		(15)	​	​	(9)	​	​	​	​		(24)	​
Recoveries	​		4	​	​	10	​	​	​	​		14	​
End of period balance	​	$	152	​	$	19	​	$	7	​	$	178	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended May 2, 2021	​	​	​	​	​	​	​	​	​	​	​	​	​
Allowance:											​	​	​
Beginning of period balance	​	$	133		$	43	​	$	8	​	$	184	​
ASU No. 2016-13 adoption	​	​	44	​	​	(13)	​	​	​	​	​	31	​
Provision (credit)	​		(13)	​	​	(16)	​	​	(1)	​		(30)	​
Write-offs	​		(23)	​	​	(14)	​	​	​	​		(37)	​
Recoveries	​		10	​	​	19	​	​	​	​		29	​
Translation adjustments	​	​	1	​	​	​	​	​	​	​		1	​
End of period balance	​	$	152	​	$	19	​	$	7	​	$	178	​
Financing receivables:	​	​	​	​	​	​	​	​	​	​	​	​	​
End of period balance	​	$	28,979		$	3,348	​	$	2,952	​	$	35,279	​

​

The allowance for credit losses increased in the second quarter and the first six months of 2022 mainly due to higher reserves related to the events in Russia / Ukraine and higher portfolio balances.

A troubled debt restructuring is the modification of debt in which a creditor grants a concession it would not otherwise consider to a debtor that is experiencing financial difficulties. These modifications may include a reduction of the stated interest rate, an extension of the maturity date, a reduction of the face amount or maturity amount of the debt, or a reduction of accrued interest. During the first six months of 2022, the Company identified 184 receivable contracts, primarily retail notes, as troubled debt restructurings with aggregate balances of $8 million pre-modification and $7 million post-modification. During the first six months of 2021, the Company identified 199 receivable contracts, primarily retail notes, as troubled debt restructurings with aggregate balances of $8 million pre-modification and $7 million post-modification. During these same

​

periods, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At May 1, 2022, the Company had no commitments to lend to borrowers whose accounts were modified in troubled debt restructurings.

​

(9)  Securitization of Financing Receivables

As a part of its overall funding strategy, the Company periodically transfers certain financing receivables (retail notes) into VIEs that are special purpose entities (SPEs), or non-VIE banking operations, as part of its asset-backed securities programs (securitizations). The structure of these transactions is such that the transfer of the retail notes does not meet the accounting criteria for sales of receivables, and is, therefore, accounted for as a secured borrowing. SPEs utilized in securitizations of retail notes differ from other entities included in the Company’s consolidated statements because the assets they hold are legally isolated. Use of the assets held by the SPEs or the non-VIEs is restricted by terms of the documents governing the securitization transactions.

The components of consolidated restricted assets, secured borrowings, and other liabilities related to secured borrowings in securitization transactions were as follows in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​
​		May 1			October 31			May 2
​	​	2022		​	2021		​	2021
Financing receivables securitized (retail notes)		$	4,085	​	$	4,673	​	$	4,122	​
Allowance for credit losses	​	​	(12)	​		(14)	​		(15)	​
Other assets (primarily restricted cash)	​	​	124	​		107	​		91	​
Total restricted securitized assets		$	4,197	​	$	4,766	​	$	4,198	​
​	​	​	​	​	​	​	​	​	​	​
Short-term securitization borrowings	​	$	4,006	​	$	4,605	​	$	4,106	​
Accrued interest on borrowings	​	​	2	​	​	2	​		3	​
Total liabilities related to restricted securitized assets	​	$	4,008	​	$	4,607	​	$	4,109	​

​

​

(10)  Inventories

Most inventories owned by Deere & Company and its U.S. equipment subsidiaries are valued at cost on the last-in, first-out (LIFO) basis. If all of the Company’s inventories had been valued on a first-in, first-out (FIFO) basis, estimated inventories by major classification in millions of dollars would have been as follows:

​

​	​	​	​	​	​	​	​	​	​	​
​		May 1			October 31			May 2
​	​	2022		​	2021		​	2021
Raw materials and supplies		$	4,384	​	$	3,524	​	$	2,469	​
Work-in-process	​	​	1,640	​		994	​		967	​
Finished goods and parts	​	​	5,434	​		4,373	​		4,334	​
Total FIFO value	​	​	11,458	​		8,891	​		7,770	​
Less adjustment to LIFO value	​	​	2,428	​		2,110	​		1,728	​
Inventories		$	9,030	​	$	6,781	​	$	6,042	​

​

​

​

(11)  Goodwill and Other Intangible Assets–Net

The changes in amounts of goodwill by operating segments were as follows in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		Production &			Small Ag			Construction			​	​
​	​	Precision Ag		​	& Turf		​	& Forestry		​	Total
Goodwill at November 1, 2020	​	$	333	​	$	268	​	$	2,480	​	$	3,081	​
Acquisition	​		12	​	​	​	​	​	​	​	​	12	​
Translation adjustments	​		10	​	​	(2)	​	​	89	​	​	97	​
Goodwill at May 2, 2021	​	$	355	​	$	266	​	$	2,569	​	$	3,190	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Goodwill at October 31, 2021	​	$	542	​	$	265	​	$	2,484	​	$	3,291	​
Acquisitions	​	​	122	​	​	69	​	​	600	​	​	791	​
Translation adjustments	​	​	(11)	​	​	(7)	​	​	(252)	​	​	(270)	​
Goodwill at May 1, 2022	​	$	653	​	$	327	​	$	2,832	​	$	3,812	​

There were no accumulated goodwill impairment losses in the reported periods.

​

The components of other intangible assets were as follows in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​
​		May 1			October 31			May 2
​	​	2022		​	2021		​	2021
Amortized intangible assets:	​	​	​	​	​	​	​	​	​	​
Customer lists and relationships	​	$	520	​	$	542	​	$	549	​
Technology, patents, trademarks, and other	​	​	1,350	​		1,104	​		1,097	​
Total at cost	​	​	1,870	​		1,646	​		1,646	​
Less accumulated amortization:	​	​	​	​		​	​		​	​
Customer lists and relationships	​	​	158	​	​	151	​	​	136	​
Technology, patents, trademarks, and other	​	​	360	​	​	343	​	​	323	​
Total accumulated amortization	​	​	518	​	​	494	​	​	459	​
Amortized intangible assets, net	​	​	1,352	​	​	1,152	​	​	1,187	​
Unamortized intangible assets:	​	​	​	​	​	​	​	​	​	​
In-process research and development	​	​	​	​	​	123	​	​	123	​
Other intangible assets – net	​	$	1,352	​	$	1,275	​	$	1,310	​

​

In September 2017, the Company acquired Blue River Technology’s in-process research and development related to machine learning technology to optimize the use of farm inputs. Those research and development activities were completed, and the Company started amortizing the acquired technology in the second quarter of 2022.

The amortization of other intangible assets in the second quarter and the first six months of 2022 was $34 million and $62 million, and for 2021 was $27 million and $62 million, respectively. The estimated amortization expense for the next five years is as follows in millions of dollars: remainder of 2022 – $107, 2023 – $167, 2024 – $163, 2025 – $135, 2026 – $116, and 2027 – $114.

(12)  Total Short-Term Borrowings

Total short-term borrowings were as follows in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​
​	​	May 1		​	October 31		​	May 2		​
​		2022			2021			2021		​
Equipment Operations	​	​		​	​		​	​		​
Notes payable to banks	​	$	407	​	$	273	​	$	122	​
Finance lease obligations due within one year	​	​	21	​	​	23	​	​	24	​
Long-term borrowings due within one year	​		1,126	​		1,213	​		206	​
Total	​		1,554	​		1,509	​		352	​
Financial Services	​	​	​	​	​	​	​	​	​	​
Commercial paper	​		3,403	​		2,230	​		2,259	​
Notes payable to banks	​		148	​		63	​		89	​
Long-term borrowings due within one year	​		7,308	​		7,117	​		7,211	​
Total	​		10,859	​		9,410	​		9,559	​
Short-term borrowings	​		12,413	​		10,919	​		9,911	​
Short-term securitization borrowings	​	​		​	​		​	​		​
Equipment Operations	​	​	5	​	​	10	​	​	14	​
Financial Services	​	​	4,001	​	​	4,595	​	​	4,092	​
Total	​	​	4,006	​	​	4,605	​	​	4,106	​
Total short-term borrowings		$	16,419		$	15,524		$	14,017	​

​

​

(13)  Long-Term Borrowings

Long-term borrowings were as follows in millions of dollars. The financial services medium-term notes include fair value adjustments related to interest rate swaps.

​	​	​	​	​	​	​	​	​	​	​
​	​	May 1		​	October 31		​	May 2		​
​		2022			2021			2021		​
Equipment Operations	​	​		​	​		​	​		​
U.S. dollar notes and debentures:	​	​	​	​	​	​	​	​	​	​
2.60% notes due 2022	​	​	​	​		​	​	$	1,000	​
2.75% notes due 2025	​	$	700	​	$	700	​	​	700	​
6.55% debentures due 2028	​		200	​		200	​		200	​
5.375% notes due 2029	​		500	​		500	​		500	​
3.10% notes due 2030	​	​	700	​	​	700	​	​	700	​
8.10% debentures due 2030	​		250	​		250	​		250	​
7.125% notes due 2031	​		300	​		300	​		300	​
3.90% notes due 2042	​		1,250	​		1,250	​		1,250	​
2.875% notes due 2049	​	​	500	​	​	500	​	​	500	​
3.75% notes due 2050	​	​	850	​	​	850	​	​	850	​
Euro notes:	​	​	​	​	​	​	​	​	​	​
.5% notes due 2023 (€500 principal)	​	​	525	​	​	584	​	​	606	​
1.375% notes due 2024 (€800 principal)	​	​	840	​	​	934	​	​	969	​
1.85% notes due 2028 (€600 principal)	​	​	630	​	​	701	​	​	727	​
2.20% notes due 2032 (€600 principal)	​	​	630	​	​	701	​	​	727	​
1.65% notes due 2039 (€650 principal)	​	​	682	​	​	759	​	​	788	​
Finance lease obligations and other notes	​		50	​		40	​		115	​
Less debt issuance costs and debt discounts	​	​	(51)	​	​	(54)	​	​	(58)	​
Total		​	8,556		​	8,915		​	10,124	​
Financial Services		​	​		​	​		​	​	​
Notes and debentures:	​	​	​	​	​	​	​	​	​	​
Medium-term notes (principal as of: May 1, 2022 - $23,247, October 31, 2021 - $22,647, May 2, 2021 - $21,800)		​	22,740	​	​	22,899	​	​	22,161	​
Other notes	​		1,216	​		1,138	​		1,121	​
Less debt issuance costs and debt discounts	​	​	(65)	​	​	(64)	​	​	(60)	​
Total	​		23,891	​		23,973	​		23,222	​
Long-term borrowings		$	32,447	​	$	32,888	​	$	33,346	​

​

In April 2022, the Company’s financial services operations issued $600 million of sustainability-linked medium-term notes with an initial interest rate of 3.35 percent, which are due in 2029. This transaction supports the Company’s commitment to environmental sustainability. Failure to meet the stated sustainability performance target will result in a 25-basis point increase to the interest rate payable on the 2029 notes from and including April 2026.

(14)  Leases - Lessor

The Company leases equipment manufactured or sold by the Company and a limited amount of non-John Deere equipment to retail customers through sales-type, direct financing, and operating leases. Sales-type and direct financing leases are reported in Financing receivables - net on the consolidated balance sheets, while operating leases are reported in Equipment on operating leases - net.

Lease revenues earned by the Company were as follows in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended					​
​		May 1, 2022			May 2, 2021			May 1, 2022			May 2, 2021		​
Sales-type and direct finance lease revenues	​	$	35	​	$	34	​	$	74	​	$	70	​
Operating lease revenues	​	​	330	​	​	358	​	​	665	​	​	721	​
Variable lease revenues	​	​	7	​	​	6	​	​	14	​	​	12	​
Total lease revenues	​	$	372	​	$	398	​	$	753	​	$	803	​

​

​

​

(15)  Commitments and Contingencies

The Company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and is still under warranty based on dealer inventories and retail sales. The historical claims rate is primarily determined by a review of five-year claims costs and current quality developments.

The premiums for extended warranties are primarily recognized in income in proportion to the costs expected to be incurred over the contract period. These unamortized extended warranty premiums (deferred revenue) included in the following table totaled $809 million and $681 million at May 1, 2022 and May 2, 2021, respectively.

A reconciliation of the changes in the warranty liability and unearned premiums was as follows in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	May 1		​	May 2		​	May 1		​	May 2
​	​	2022		​	2021		​	2022		​	2021
Beginning of period balance		$	2,064		$	1,803		$	2,086		$	1,743	​
Payments	​	​	(224)	​		(202)	​	​	(417)	​		(417)	​
Amortization of premiums received	​	​	(64)	​		(65)	​	​	(130)	​		(128)	​
Accruals for warranties	​	​	223	​		248	​	​	404	​		495	​
Premiums received	​	​	91	​		90	​	​	174	​		163	​
Foreign exchange	​	​	5	​		2	​	​	(22)	​		20	​
End of period balance	​	$	2,095	​	$	1,876	​	$	2,095	​	$	1,876	​

​

At May 1, 2022, the Company had approximately $352 million of guarantees issued primarily to banks outside the U.S. and Canada related to third-party receivables for the retail financing of John Deere equipment. The Company may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At May 1, 2022, the Company had accrued losses of $4 million under these agreements. The maximum remaining term of the receivables guaranteed at May 1, 2022 was approximately six years.

At May 1, 2022, the Company had commitments of $392 million for the construction and acquisition of property and equipment. Also, at May 1, 2022, the Company had restricted assets of $69 million, classified as Other assets. See Note 9 for additional restricted assets associated with borrowings related to securitizations.

The Company also had other miscellaneous contingent liabilities totaling approximately $75 million at May 1, 2022. The accrued liability for these contingencies was not material at May 1, 2022.

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. The Company believes the reasonably possible range of losses for these unresolved legal actions would not have a material effect on its consolidated financial statements.

​

(16)  Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine fair value, the Company uses various methods including market and income approaches. The Company utilizes valuation models and techniques that maximize the use of observable inputs. The models are industry-standard models that consider various assumptions including time values and yield curves as well as other economic measures. These valuation techniques are consistently applied.

Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2 measurements include significant other observable inputs such as quoted prices for similar assets or liabilities in active markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yield curves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs.

​

The fair values of financial instruments that do not approximate the carrying values were as follows in millions of dollars. Long-term borrowings exclude finance lease liabilities.

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	May 1, 2022					​	October 31, 2021					​	May 2, 2021
​	​	Carrying Value		​	Fair Value		​	Carrying Value		​	Fair Value		​	Carrying Value		​	Fair Value
Financing receivables – net	​	$	34,085	​	$	33,540	​	$	33,799	​	$	33,718	​	$	30,994	​	$	31,165	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Financing receivables securitized – net	​	$	4,073	​	$	4,016	​	$	4,659	​	$	4,704	​	$	4,107	​	$	4,188	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Short-term securitization borrowings:	​	​	​	​	​	​	​		​	​	​	​	​	​	​	​	​	​	​
Equipment operations	​	$	5	​	$	6	​	$	10	​	$	10	​	$	14	​	$	15	​
Financial services	​	​	4,001	​	​	3,938	​	​	4,595	​	​	4,600	​	​	4,092	​	​	4,117	​
Total	​	$	4,006	​	$	3,944	​	$	4,605	​	$	4,610	​	$	4,106	​	$	4,132	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Long-term borrowings due within one year:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Equipment operations	​	$	1,126	​	$	1,128	​	$	1,213		$	1,222	​	$	206	​	$	211	​
Financial services	​	​	7,308	​	​	7,270	​		7,117	​		7,142	​		7,211	​	​	7,293	​
Total	​	$	8,434	​	$	8,398	​	$	8,330	​	$	8,364	​	$	7,417	​	$	7,504	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Long-term borrowings:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Equipment operations	​	$	8,519	​	$	8,546	​	$	8,877		$	10,244	​	$	10,079	​	$	11,391	​
Financial services	​	​	23,891	​	​	23,429	​		23,973	​		24,262	​		23,222	​	​	23,701	​
Total	​	$	32,410	​	$	31,975	​	$	32,850	​	$	34,506	​	$	33,301	​	$	35,092	​

Fair value measurements above were Level 3 for all financing receivables, Level 3 for equipment operations short-term securitization borrowings, and Level 2 for all other borrowings.

Fair values of the financing receivables that were issued long-term were based on the discounted values of their related cash flows at interest rates currently being offered by the Company for similar financing receivables. The fair values of the remaining financing receivables approximated the carrying amounts.

Fair values of long-term borrowings and short-term securitization borrowings were based on current market quotes for identical or similar borrowings and credit risk, or on the discounted values of their related cash flows at current market interest rates. Certain long-term borrowings have been swapped to current variable interest rates. The carrying values of these long-term borrowings included adjustments related to fair value hedges.

​

Assets and liabilities measured at fair value on a recurring basis in millions of dollars follow, excluding the Company’s cash equivalents, which were carried at cost that approximates fair value and consisted primarily of money market funds and time deposits.

​	​	​	​	​	​	​	​	​	​	​
​		May 1			October 31			May 2
​	​	2022		​	2021		​	2021
Level 1:	​	​	​	​	​	​	​	​	​	​
Marketable securities	​	​	​	​	​	​	​	​	​	​
International equity securities	​	$	2	​	$	2	​	$	2	​
U.S. equity fund	​	​	65	​	​	75	​	​	71	​
U.S. government debt securities	​	​	59	​		59	​		59	​
Total Level 1 marketable securities	​	​	126	​	​	136	​	​	132	​
​	​	​	​	​	​	​	​	​	​	​
Level 2:	​	​	​	​	​	​	​	​	​	​
Marketable securities	​	​	​	​	​	​	​	​	​	​
U.S. government debt securities	​	​	130	​	​	139	​	​	121	​
Municipal debt securities	​	​	67	​		73	​		69	​
Corporate debt securities	​	​	206	​		224	​		202	​
International debt securities	​	​	2	​	​	2	​	​	4	​
Mortgage-backed securities	​	​	151	​		154	​		140	​
Total Level 2 marketable securities	​	​	556	​		592	​		536	​
Other assets	​	​	​	​	​	​	​	​	​	​
Derivatives	​	​	407	​	​	275	​	​	402	​
Accounts payable and accrued expenses	​	​	​	​	​	​	​	​	​	​
Derivatives	​	​	780	​	​	228	​	​	223	​
​	​	​	​	​	​	​	​	​	​	​
Level 3:	​	​	​	​	​	​	​	​	​	​
Accounts payable and accrued expenses – Deferred consideration	​	​	262	​	​	​	​	​	​	​

​

The contractual maturities of debt securities at May 1, 2022 in millions of dollars are shown below. Actual maturities may differ from contractual maturities because some securities may be called or prepaid. Because of the potential for prepayment on mortgage-backed securities, they are not categorized by contractual maturity. Mortgage-backed securities were primarily issued by U.S. government sponsored enterprises. Unrealized losses of debt securities at May 1, 2022 were not recognized in income due to the ability and intent to hold to maturity.

​	​	​	​	​	​	​	​
​	​	Amortized		​	Fair		​
​	​	Cost		​	Value		​
Due in one year or less		$	27	​	$	27	​
Due after one through five years	​	​	92	​	​	90	​
Due after five through 10 years	​	​	171	​	​	155	​
Due after 10 years	​	​	221	​	​	192	​
Mortgage-backed securities	​	​	167	​	​	151	​
Debt securities		$	678		$	615	​

​

Fair value, nonrecurring Level 3 measurements from impairments, excluding financing receivables with specific allowances which were not significant, were as follows in millions of dollars. Property and equipment – net and Other assets fair value for October 31, 2021 represents the fair value assessment at January 31, 2021.

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Fair Value								​	Losses											​
​	​	​	​	​	​	​	​	​	​	​	Three Months Ended					​	Six Months Ended					​
​	​	May 1		​	October 31		​	May 2		​	May 1		​	May 2		​	May 1		​	May 2		​
​		2022			2021			2021			2022			2021			2022			2021
Inventories	​	$	19	​	​	​	​	​	​	​	$	8	​	​	​	​	$	8	​	​	​	​
Property and equipment – net	​	$	15	​	$	41	​	​	​	​	$	41	​	​	​	​	$	41	​	$	44	​
Other intangible assets – net	​	​	​	​	​	​	​	​	​	​	$	28	​	​	​	​	$	28	​	​	​	​
Other assets	​	​	​	​	$	1	​	​	​	​	​	​	​	​	​	​	​	​	​	$	6	​

​

​

The following is a description of the valuation methodologies the Company uses to measure certain balance sheet items at fair value:

Marketable securities – The portfolio of investments is primarily valued on a market approach (matrix pricing model) in which all significant inputs are observable or can be derived from or corroborated by observable market data such as interest rates, yield curves, volatilities, credit risk, and prepayment speeds. Funds are primarily valued using the fund’s net asset value, based on the fair value of the underlying securities.

Derivatives – The Company’s derivative financial instruments consist of interest rate contracts (swaps), foreign currency exchange contracts (futures, forwards, and swaps), and cross-currency interest rate contracts (swaps). The portfolio is valued based on an income approach (discounted cash flow) using market observable inputs, including swap curves and both forward and spot exchange rates for currencies.

Financing receivables – Specific reserve impairments are based on the fair value of the collateral, which is measured using a market approach (appraisal values or realizable values). Inputs include a selection of realizable values.

Inventories – The service parts inventory impairment was based on net realizable value, less reasonably predictable selling and disposal costs.

Property and equipment – net – The valuations were based on cost and market approaches. The inputs include replacement cost estimates adjusted for physical deterioration and economic obsolescence.

Other intangible assets – net – The Company considered external valuations based on the Company’s probability weighted cash flow analysis.

Other assets – The impairments were measured at the fair value of the right of use operating lease asset.

(17)  Derivative Instruments

It is the Company’s policy that derivative transactions are executed only to manage exposures arising in the normal course of business and not for the purpose of creating speculative positions or trading. The Company’s financial services operations manage the relationship of the types and amounts of their funding sources to their receivable and lease portfolio in an effort to diminish risk due to interest rate and foreign currency fluctuations, while responding to favorable financing opportunities. The Company also has foreign currency exposures at some of its foreign and domestic operations related to buying, selling, and financing in currencies other than the functional currencies. In addition, the Company has interest rate and foreign currency exposures at certain equipment operations units for sales incentive programs.

All derivatives are recorded at fair value on the balance sheet. Cash collateral received or paid is not offset against the derivative fair values on the balance sheet. The cash flows from these contracts were recorded in operating activities in the statements of consolidated cash flows. Each derivative is designated as a cash flow hedge, a fair value hedge, or remains undesignated. All designated hedges are formally documented as to the relationship with the hedged item as well as the risk-management strategy. Both at inception and on an ongoing basis the hedging instrument is assessed as to its effectiveness. If and when a derivative is determined not to be highly effective as a hedge, the underlying hedged transaction is no longer likely to occur, the hedge designation is removed, or the derivative is terminated, hedge accounting is discontinued.

Cash Flow Hedges

Certain interest rate contracts (swaps) were designated as hedges of future cash flows from borrowings. The total notional amounts of the receive-variable/pay-fixed interest rate contracts at May 1, 2022, October 31, 2021, and May 2, 2021 were $2,450 million, $2,700 million, and $1,850 million, respectively. Fair value gains or losses on cash flow hedges were recorded in other comprehensive income (OCI) and are subsequently reclassified into interest expense in the same periods during which the hedged transactions affected earnings. These amounts offset the effects of interest rate changes on the related borrowings.

The amount of gain recorded in OCI at May 1, 2022 that is expected to be reclassified to interest expense in the next twelve months if interest rates remain unchanged is approximately $23 million after-tax. No gains or losses were reclassified from OCI to earnings based on the probability that the original forecasted transaction would not occur.

Fair Value Hedges

Certain interest rate contracts (swaps) were designated as fair value hedges of borrowings. The total notional amounts of the receive-fixed/pay-variable interest rate contracts at May 1, 2022, October 31, 2021, and May 2, 2021 were $8,655 million, $8,043 million, and $8,340 million, respectively. The fair value gains or losses on these contracts were generally offset by fair value gains or losses on the hedged items (fixed-rate borrowings) with both items recorded in interest expense.

​

The amounts recorded in the consolidated balance sheet related to borrowings designated in fair value hedging relationships were as follows in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Cumulative Increase (Decrease) of Fair
​	​	​	​	​	Value Hedging Adjustments Included in								​
​	​	​	​	​	the Carrying Amount								​
​	​	Carrying		​	Active		​	​		​	​
​	​	Amount of		​	Hedging		​	Discontinued		​	​	​	​
​	​	Hedged Item		​	Relationships		​	Relationships		​	Total
May 1, 2022	​	​	​	​	​	​	​	​	​	​	​	​	​
Long-term borrowings due within one year		$	185		$	1		$	7		$	8	​
Long-term borrowings	​	​	7,933	​	​	(613)	​	​	106	​	​	(507)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
October 31, 2021	​	​	​	​	​	​	​	​	​	​	​	​	​
Long-term borrowings due within one year	​	$	189	​	$	3	​	$	(2)	​	$	1	​
Long-term borrowings	​	​	8,070	​	​	29	​	​	223	​	​	252	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
May 2, 2021	​	​	​	​	​	​	​	​	​	​	​	​	​
Long-term borrowings due within one year	​	$	163	​	$	1	​	$	(1)	​	​	​	​
Long-term borrowings	​	​	8,502	​	​	190	​	​	171	​	$	361	​

Long-term borrowings due within one year are presented in short-term borrowings.

Derivatives not designated as hedging instruments

The Company has certain interest rate contracts (swaps), foreign currency exchange contracts (futures, forwards, and swaps), and cross-currency interest rate contracts (swaps), which were not formally designated as hedges. These derivatives were held as economic hedges for underlying interest rate or foreign currency exposures, primarily for certain borrowings, purchases or sales of inventory, and sales incentive programs. The total notional amounts of these interest rate swaps at May 1, 2022, October 31, 2021, and May 2, 2021 were $9,912 million, $10,848 million, and $8,694 million, the foreign exchange contracts were $7,640 million, $7,584 million, and $6,239 million, and the cross-currency interest rate contracts were $264 million, $238 million, and $151 million, respectively. The fair value gains or losses from derivatives not designated as hedging instruments were recorded in the statements of consolidated income, generally offsetting over time the exposure on the hedged item.

Fair values of derivative instruments in the condensed consolidated balance sheets were as follows in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​
​		May 1			October 31			May 2
Other Assets	​	2022		​	2021		​	2021
Designated as hedging instruments:	​	​	​	​	​	​	​	​	​	​
Interest rate contracts		$	63	​	$	166	​	$	301	​
	​	​	​	​	​	​	​	​	​	​
Not designated as hedging instruments:	​	​	​	​	​	​	​	​	​	​
Interest rate contracts	​	​	180	​		73	​		67	​
Foreign exchange contracts	​	​	125	​		31	​		30	​
Cross-currency interest rate contracts	​	​	39	​		5	​		4	​
Total not designated	​	​	344	​		109	​		101	​
	​	​	​	​	​	​	​	​	​	​
Total derivative assets		$	407	​	$	275	​	$	402	​
	​	​	​	​	​	​	​	​	​	​
Accounts Payable and Accrued Expenses	​	​	​	​	​	​	​	​	​	​
Designated as hedging instruments:	​	​	​	​	​	​	​	​	​	​
Interest rate contracts		$	591	​	$	99	​	$	80	​
	​	​	​	​	​	​	​	​	​	​
Not designated as hedging instruments:	​	​	​	​	​	​	​	​	​	​
Interest rate contracts	​	​	75	​	​	33	​	​	52	​
Foreign exchange contracts	​	​	114	​		94	​		89	​
Cross-currency interest rate contracts	​	​	​	​		2	​		2	​
Total not designated	​	​	189	​		129	​		143	​
	​	​	​	​	​	​	​	​	​	​
Total derivative liabilities		$	780	​	$	228	​	$	223	​

​

​

The classification and gains (losses) including accrued interest expense related to derivative instruments consisted of the following in millions of dollars:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	May 1		​	May 2		​	May 1		​	May 2
​	​	2022		​	2021		​	2022		​	2021
Fair Value Hedges:					​	​					​	​
Interest rate contracts - Interest expense		$	(514)	​	$	(170)		$	(656)	​	$	(225)	​
	​	​	​	​	​	​	​	​	​	​	​	​	​
Cash Flow Hedges:	​	​	​	​	​	​	​	​	​	​	​	​	​
Recognized in OCI	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest rate contracts - OCI (pretax)	​	​	35	​		​	​	​	50	​		​	​
Reclassified from OCI	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest rate contracts - Interest expense	​	​	(1)	​		(4)	​	​	(3)	​		(9)	​
	​	​	​	​	​	​	​	​	​	​	​	​	​
Not Designated as Hedges:	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest rate contracts - Net sales	​	$	31	​	$	5	​	$	44	​	$	5	​
Interest rate contracts - Interest expense *		​	61	​	​	​		​	59	​	​	(4)	​
Foreign exchange contracts - Net sales	​	​	(1)	​	​	​	​	​	(1)	​	​	​	​
Foreign exchange contracts - Cost of sales	​	​	(79)	​		(48)	​	​	(80)	​	​	(100)	​
Foreign exchange contracts - Other operating expenses *	​	​	26	​		(78)	​	​	173	​		(204)	​
Total not designated		$	38	​	$	(121)		$	195	​	$	(303)	​

* Includes interest and foreign exchange gains (losses) from cross-currency interest rate contracts.

​

Counterparty Risk and Collateral

Derivative instruments are subject to significant concentrations of credit risk to the banking sector. The Company manages individual counterparty exposure by setting limits that consider the credit rating of the counterparty, the credit default swap spread of the counterparty, and other financial commitments and exposures between the Company and the counterparty banks. All interest rate derivatives are transacted under International Swaps and Derivatives Association (ISDA) documentation. Some of these agreements include credit support provisions. Each master agreement permits the net settlement of amounts owed in the event of default or termination.

Certain of the Company’s derivative agreements contain credit support provisions that may require the Company to post collateral based on the size of the net liability positions and credit ratings. The aggregate fair value of all derivatives with credit-risk-related contingent features that were in a net liability position at May 1, 2022, October 31, 2021, and May 2, 2021, was $673 million, $135 million, and $136 million, respectively. In accordance with the limits established in these agreements, the Company posted $254 million of cash collateral at May 1, 2022. The Company posted no cash collateral in accordance with the limits established in those agreements at either October 31, 2021 or May 2, 2021. In addition, the Company paid $8 million of cash collateral that was outstanding at May 1, 2022, October 31, 2021, and May 2, 2021 to participate in an international futures market to hedge currency exposure, not included in the table below.

Derivatives are recorded without offsetting for netting arrangements or collateral. The impact on the derivative assets and liabilities related to netting arrangements and any collateral received or paid was as follows in millions of dollars:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Gross Amounts		​	Netting		​	​		​	​	​
May 1, 2022		Recognized			Arrangements			Collateral			Net Amount
Assets		$	407		$	(110)		​	​		$	297	​
Liabilities	​	​	780	​	​	(110)	​	$	(254)	​	​	416	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Gross Amounts		​	Netting		​	​		​	​	​
October 31, 2021		Recognized			Arrangements			Collateral			Net Amount
Assets	​	$	275		$	(105)	​	​	​		$	170	​
Liabilities	​	​	228	​	​	(105)	​	$	(5)	​	​	118	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		Gross Amounts			Netting			​			​	​
May 2, 2021	​	Recognized		​	Arrangements		​	Collateral		​	Net Amount
Assets	​	$	402	​	$	(125)	​	$	(21)	​	$	256	​
Liabilities	​		223	​		(125)	​	​	(1)	​		97	​

​

​

​

(18)  Stock Option and Restricted Stock Awards

In December 2021, the Company granted stock options to employees for the purchase of 197 thousand shares of common stock at an exercise price of $343.94 per share and a binomial lattice model fair value of $89.20 per share at the grant date. At May 1, 2022, options for 2.2 million shares were outstanding with a weighted-average exercise price of $152.99 per share. The Company also granted 160 thousand restricted stock units to employees and non-employee directors in the first six months of 2022, of which 123 thousand are subject to service based only conditions and 37 thousand are subject to performance/service based conditions. The weighted-average fair value of the service based only units at the grant date was $345.94 per unit based on the market price of a share of underlying common stock. The fair value of the performance/service based units at the grant date was $331.47 per unit based on the market price of a share of underlying common stock excluding dividends. At May 1, 2022, the Company was authorized to grant an additional 17.2 million shares under the equity incentive plan.

​

(19)  Acquisitions

Kreisel Acquisition

On February 7, 2022, the Company acquired majority ownership in Kreisel Electric Inc. (Kreisel), a pioneer in the development of immersion-cooled battery technology. The Austrian company manufactures high-density, high-durability electric battery modules and packs for high-performance and off-highway applications and has created a battery-buffered, high-powered charging infrastructure platform.

The transaction includes a call option to purchase the remaining ownership interest in Kreisel in 2027. The minority interest holders also have a put option that would require the Company to purchase the holder’s ownership interest in 2027. The put and call options cannot be separated from the noncontrolling interest. Due to the redemption features, the minority interest is classified as redeemable noncontrolling interest in the Company’s consolidated balance sheets.

The total cash purchase price was $276 million, consisting of $253 million for the acquired equity interests, $21 million to reduce the option price, and customary working capital adjustments, net of cash acquired. The preliminary fair values assigned to the assets and liabilities of the acquired entity in millions of dollars, which is based on information as of the acquisition date and available at May 1, 2022 follows:

​

​	​	​	​	​
​	​	February 7		​
​	​	2022		​
Trade accounts and notes receivable	​	$	2	​
Other receivables	​	​	11	​
Inventories	​	​	11	​
Property and equipment	​	​	11	​
Goodwill	​	​	217	​
Other intangible assets	​	​	178	​
Other assets	​	​	6	​
Total assets	​	$	436	​
​	​	​	​	​
Accounts payable and accrued expenses	​	$	28	​
Deferred income taxes	​	​	36	​
​	​	​	​	​
Redeemable noncontrolling interest	​	$	96	​

​

The identifiable intangible assets were related to technology, trade name, and customer relationships with a weighted average amortization period of 12 years. The goodwill is not deductible for income tax purposes. Kreisel will be allocated amongst the Company’s production and precision agriculture, small agriculture and turf, and construction and forestry segments.

Acquisition of Excavator Factories

On February 28, 2022, the Company acquired full ownership of three former Deere-Hitachi joint venture factories and began new license and supply agreements with Hitachi Construction Machinery (Hitachi). The two companies also ended their joint venture manufacturing and marketing agreements. The former joint venture factories will continue to manufacture Deere-branded construction excavators and forestry equipment. Through a new supply agreement with Hitachi, Deere will continue to offer a full portfolio of excavators. Deere’s marketing arrangement for Hitachi-branded construction excavators and mining equipment in the Americas has ended with Hitachi assuming distribution and support of these products. John Deere dealers may continue to support their existing field population of Hitachi-branded excavators.

With the completion of this acquisition, the Company now has complete control over its excavator design, product, and feature updates, making it possible to more rapidly respond to customer requirements and integrate excavators with other construction products in the John Deere product portfolio. The Company can leverage technology developed for other product lines and

​

production systems across the enterprise and extend those advanced solutions to Deere-designed excavators, strengthening the entire product portfolio.

The total invested capital follows:

​	​	​	​	​
​	​	February 28		​
​	​	2022		​
Cash consideration for factories	​	$	205	​
Cash consideration for license agreement	​	​	70	​
Deferred consideration	​	​	271	​
Total purchase price consideration	​	​	546	​
Less: Cash obtained	​	​	(187)	​
Less: Settlement of intercompany balances	​	​	(113)	​
Net purchase price consideration	​	​	246	​
Fair value of previously held equity investment	​	​	444	​
Total invested capital	​	$	690	​

​

The total purchase price consideration includes deferred consideration that will be paid as the Company purchases John Deere-branded excavators, components, and service parts from Hitachi under the new supply agreement with a duration that ranges from 5 to 30 years. The deferred consideration represents the price increases under the new supply arrangement. Excluding inflation adjustments, the price increases for products to be acquired by the Company from Hitachi are as much as 27 percent higher than the prior supply arrangement. At May 1, 2022, the net present value of the deferred consideration was approximately $262 million, subject to changes in market conditions, developments in the Company’s product offerings, and sourcing changes. The Company financed the acquisition and associated transaction expenses from cash on hand. The fair value of the previously held equity investment created a non-cash gain of $326 million (pretax and after-tax), which was recorded in Other income and included in the construction and forestry segment’s operating profit.

Prior to the acquisition, the Company purchased John Deere and Hitachi-branded excavators, components, and parts from the Deere-Hitachi joint venture factories for sale to John Deere dealers. These purchases were included in Cost of sales, while the sale to John Deere dealers were included in Net sales. Cost of sales also included profit-sharing payments to Hitachi in accordance with the previous marketing agreements. Following the acquisition, Net sales will only include the sale of John Deere-branded excavators to John Deere dealers, while Cost of sales will reflect market pricing to purchase and manufacture excavators, as well as the related components and service parts.

The preliminary fair values assigned to the assets and liabilities of the acquired factories in millions of dollars, which is based on information as of the acquisition date and available at May 1, 2022 follows:

​	​	​	​	​
​	​	February 28		​
​	​	2022		​
Other receivables	​	$	29	​
Inventories	​	​	286	​
Property and equipment	​	​	182	​
Goodwill	​	​	534	​
Other intangible assets	​	​	70	​
Deferred income taxes	​	​	49	​
Total assets	​	$	1,150	​
​	​	​	​	​
Accounts payable and accrued expenses	​	$	297	​
Long-term borrowings	​	​	163	​
Total liabilities	​	$	460	​

​

The identifiable intangible assets were related to technology with a 10-year amortization period. The goodwill is not deductible for income tax purposes. The excavator factories will be reported in the Company’s construction and forestry segment.

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Other Acquisitions

In the first six months of the year, the Company acquired AgriSync Inc., a technology service provider; an 80 percent stake in SureFire Ag Systems, Inc. and SureFire Electronics, LLC, which design and manufacture liquid fertilizer application and spray tendering systems; and a 40 percent equity method investment in GUSS Automation LLC, a pioneer in semi-autonomous orchard and vineyard sprayers. The combined cost of the acquisitions was $109 million, net of cash acquired of $3 million. The preliminary asset and liability fair values at the respective acquisition dates follow in millions of dollars:

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​	​	​	​	​
​	​	May 1		​
​	​	2022		​
Trade accounts and notes receivable	​	$	7	​
Inventories	​	​	8	​
Property and equipment	​	​	4	​
Goodwill	​	​	40	​
Other intangible assets	​	​	20	​
Other assets	​	​	50	​
Total assets	​	$	129	​
​	​	​	​	​
Accounts payable and accrued expenses	​	$	6	​
Deferred income taxes	​	​	5	​
Total liabilities	​	$	11	​
​	​	​	​	​
Redeemable noncontrolling interest	​	$	9	​

​

The identifiable intangible assets related to trade name, technology, and customer relationships with a weighted average amortization period of 6 years. AgriSync will be allocated amongst the Company’s production and precision agriculture, small agriculture and turf, and construction and forestry segments, while SureFire will be allocated to the production and precision agriculture segment. GUSS Automation will be assigned to the small agriculture and turf segment.

For all acquisitions, the goodwill was the result of future cash flows and related fair value exceeding the fair value of the identified assets and liabilities. The pro forma results of operations as if these acquisitions had occurred at the beginning of the current or comparative fiscal year would not differ significantly from the reported results.

(20)  S****pecial Items

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2022 Special Items

Impact of events in Russia / Ukraine

The recent events in Russia / Ukraine have resulted in the Company suspending shipments of machines and service parts to Russia. The Company has equipment operations in Russia / Ukraine, and financial services operations in Russia. As of May 1, 2022, the Company's net exposure in Russia / Ukraine was approximately $454 million. Net sales from the Company’s Russian operations represented 2 percent of consolidated annual net sales from 2017 to 2021. The Ukraine operations were not material to the consolidated financial statements.

The suspension of shipments to Russia will reduce forecasted revenue for the region, which makes it probable future cash flows will not cover the carrying value of certain assets. The accounting consequences during the second quarter of 2022 were impairments of most long-lived assets, an increase in reserves of certain financial assets, and an accrual for various contractual uncertainties. No significant reserves were established on trade receivables or complete goods inventory, as the Company continues to experience strong payment performance and requires prepayment of existing inventories. However, the situation

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is fluid, and the Company continues to closely monitor all financial and operational risks. A summary of the reserves and impairments recorded in the second quarter of 2022 follows in millions of dollars:

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​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended May 1, 2022														​
​	​	PPA			SAT			CF			FS			Total		​
2022 Expense:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Inventory reserve – Cost of sales	​	$	6	​	​	​	​	$	2	​	​	​	​	$	8	​
Fixed asset impairment – Cost of sales	​	​	30	​	​	​	​	​	11	​	​	​	​	​	41	​
Intangible asset impairment – Cost of sales	​	​	​	​	​	​	​	​	28	​	​	​	​	​	28	​
Allowance for credit losses – Financing receivables – SA&G expenses	​	​	​	​	​	​	​	​	​	​	$	26	​	​	26	​
Contingent liabilities – Other operating expenses	​	​	10	​	$	1	​	​	6	​	​	​	​	​	17	​
Total Russia/Ukraine events pretax expense	​	$	46	​	$	1	​	$	47	​	$	26	​	$	120	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net tax impact	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(14)	​
Total Russia/Ukraine events after-tax expense	​	​	​	​	​	​	​	​	​	​	​	​	​	$	106	​

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Gain on Previously Held Equity Investment

On February 28, 2022, the Company acquired full ownership of three former Deere-Hitachi joint venture factories and began new license and supply agreements with Hitachi. The fair value of the previous equity investment resulted in a non-cash gain of $326 million (pretax and after-tax; see Note 19).

UAW Collective Bargaining Agreement

On November 17, 2021, employees represented by the UAW approved a new collective bargaining agreement. The agreement, which has a term of six years, covers the wages, hours, benefits, and other terms and conditions of employment for the Company’s UAW-represented employees at 14 U.S. facilities. The labor agreement includes a lump sum ratification bonus payment of $8,500 per eligible employee, totaling $90 million, and an immediate wage increase of 10 percent plus further wage increases over the term of the contract. The lump sum payment was expensed in the first quarter of 2022. The Company remeasured the U.S. hourly pension plan as of November 30, 2021 due to the new collective bargaining agreement. See Note 6 for more information on the U.S. hourly plan remeasurement.

2021 Special Items

During the first quarter of 2021, the fixed assets in an asphalt plant factory in Germany were impaired by $38 million, pretax and after-tax. The Company also continued to assess its manufacturing locations, resulting in additional long-lived asset impairments of $12 million pretax. The impairments were the result of a decline in forecasted financial performance that indicated it was probable future cash flows would not cover the carrying amount of the net assets. These impairments were offset by a favorable indirect tax ruling in Brazil of $58 million pretax. See Note 16 for fair value measurement information.

The following table summarizes the operating profit impact, in millions of dollars, of the special items recorded for the three months and six months ended May 1, 2022 and May 2, 2021:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months														​	Six Months														​
​	​	PPA			SAT			CF			FS			Total		​	PPA			SAT			CF			FS			Total		​
2022 Expense (benefit):	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Gain on remeasurement of equity investment – Other income (see Note 19)	​	​	​	​	​	​	​	$	(326)	​	​	​	​	$	(326)	​	​	​	​	​	​	​	$	(326)	​	​	​	​	$	(326)	​
Total Russia/Ukraine events pretax expense	​	$	46	​	$	1	​	​	47	​	$	26	​	​	120	​	$	46	​	$	1	​	​	47	​	$	26	​	​	120	​
UAW ratification bonus – Cost of sales	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	53	​	​	9	​	​	28	​	​	​	​	​	90	​
Total expense (benefit)	​	$	46	​	$	1	​	$	(279)	​	$	26	​	$	(206)	​	$	99	​	$	10	​	$	(251)	​	$	26	​	$	(116)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
2021 Expense (benefit):	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Long-lived asset impairments – Cost of sales	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	$	5	​	$	3	​	$	42	​	​	​	​	$	50	​
Brazil indirect tax – Cost of sales	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(53)	​	​	​	​	​	(5)	​	​	​	​	​	(58)	​
Total expense (benefit)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	$	(48)	​	$	3	​	$	37	​	​	​	​	$	(8)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Period over period change	​	$	46	​	$	1	​	$	(279)	​	$	26	​	$	(206)	​	$	147	​	$	7	​	$	(288)	​	$	26	​	$	(108)	​

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