Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

All amounts are presented in millions of dollars unless otherwise specified.

Overview

Organization

Deere & Company is a global leader in the production of agricultural, turf, construction, and forestry equipment and solutions. John Deere Financial provides financing for John Deere equipment, parts, services, and other input costs customers need to run their operations. Our operations are managed through the production and precision agriculture (PPA), small agriculture and turf (SAT), construction and forestry (CF), and financial services operating segments. References to “equipment operations” include PPA, SAT, and CF, while references to “agriculture and turf” include both PPA and SAT.

Smart Industrial Operating Model and Leap Ambitions

We announced the Smart Industrial Operating Model in 2020. This operating model is based on three focus areas:

(a)	Production systems: A strategic alignment of products and solutions around our customers’ operations.

(b)	Technology stack: Investments in technology, as well as research and development, that deliver intelligent solutions to our customers through digital capabilities, automation, autonomy, and alternative power technologies.

(c)	Lifecycle solutions: The integration of our aftermarket and support capabilities to more effectively manage customer equipment, service, and technology needs across the full lifetime of a John Deere product.

Our Leap Ambitions were launched in 2022. These ambitions are designed to boost economic value and sustainability for our customers. The ambitions align across our customers’ production systems seeking to optimize their operations to deliver better outcomes with fewer resources.

Trends and Economic Conditions

Industry Sales Outlook for Fiscal Year 2024

Agriculture and Turf

Construction and Forestry

Company Trends

Customers seek to improve profitability, productivity, and sustainability through technology. Integration of technology into equipment is a persistent market trend. Our Smart Industrial Operating Model and Leap Ambitions are intended to capitalize on this market trend. These technologies are incorporated into products within each of our operating segments. We expect this trend to persist for the foreseeable future. Our progress is demonstrated, in part, by the growing use of the John Deere Operations Center (our digital operations management system) engaging more agricultural acres globally. Engaged acres give us a foundational understanding of customer utilization of John Deere technology. The investments in these technologies and establishing a Solutions as a Service business model may increase our operating costs and decrease operating margins during the transition period.

Company Outlook for 2024

Production volumes are expected to continue to decline during the remainder of 2024 due to demand shifts amid challenges in the global agricultural and turf sectors coupled with proactive production and inventory management while the construction industry remains relatively stable.

​

Agriculture and Turf Outlook for 2024

●	We expect large and small agricultural equipment sales to be down from 2023 levels in North America, Europe, and South America.

●	Agricultural fundamentals across all our major markets are expected to moderate in 2024 due to rising global stocks, lower commodity prices, elevated interest rates, and weather volatility. In the U.S. and Canada, this is partially offset by resilient farm balance sheets.

●	The U.S. equipment fleet age is elevated for both tractors and combines. However, increases in used inventory levels are impacting purchasing decisions.

●	In Europe, the dairy and livestock sector is expected to improve due to stronger pricing amid lower feed costs while spring weather conditions have caused uncertainty about winter seeded crop yields. In addition, persistent, elevated input costs have decreased demand in Europe.

●	Demand in Brazil is expected to be down due to strong global yields driving down commodity prices, adverse weather conditions, and high interest rates.

●	Industry sales in Asia are forecasted to be down moderately due to commodity price changes, inventory reductions, and weather impacts.

●	Due to macro-economic trends in U.S. consumer markets including lower levels of home sales, persistently higher interest rates, and inventory reductions, sales of compact utility tractors and riding lawn equipment continue to be lower.

Construction and Forestry Outlook for 2024

●	Construction equipment industry sales are forecasted to be flat to down from 2023 levels.

●	Benefits from increasing U.S. infrastructure spending, elevated manufacturing investment levels, and improving single family housing starts are expected to partially offset declines in commercial real estate construction and softening rental demand.

●	Roadbuilding demand remains strong in the U.S., largely offset by softening demand in Europe.

Financial Services Outlook for 2024

​	​	​	​	​	​	​	​
Net Income			​	Up moderately			​
+ Higher average portfolio			​	Favorable			​
+ Nonrecurring prior period special item			​	Favorable			​
(-) Provision for credit losses			​	Unfavorable			​
(-) Financing spreads			​	Unfavorable			​

Additional Trends

Agricultural Market Business Cycle. The agricultural market is affected by various factors including commodity prices, acreage planted, crop yields, and government policies. These factors affect farmers’ income and may result in lower demand for equipment. We may experience any of the following effects during unfavorable market conditions: lower net sales, higher sales discounts, higher receivable write-offs, and losses on equipment on operating leases. A potential benefit is that customers may invest in integrated technology solutions and precision agriculture to lower input costs and improve margins.

Interest Rates. Central bank policy interest rates increased in 2023 and have remained elevated. Increased rates impacted us in several ways, primarily affecting the financing spreads for the financial services operations and demand for our products.

The market for our products is negatively impacted by higher interest rates. We expect higher borrowing costs for our customers to affect product sales in 2024.

Most retail customer receivables are fixed rate. Wholesale financing receivables generally are variable rate. Both types of receivables are financed with fixed and floating rate borrowings. We manage our exposure to interest rate fluctuations by matching our receivables with our funding sources. We also enter into interest rate swap agreements to match our interest rate exposure.

Rising interest rates have historically impacted our borrowings sooner than the benefit is realized from receivable and lease portfolios. As a result, our financial services operations experienced $35 (after-tax) less favorable financing spreads in 2024 compared to 2023. We expect to continue experiencing spread compression in 2024, but at a moderating pace relative to spread compression experienced in 2023.

Higher interest rates are driven by factors outside of our control, and as a result we cannot reasonably foresee when this condition will subside.

​

Other Items of Concern and Uncertainties – Other items that could impact our results are:

●	global and regional political conditions, including the ongoing war between Russia and Ukraine and the conflict in the Middle East,

●	economic, tax, and trade policies,

●	new or retaliatory tariffs,

●	capital market disruptions,

●	foreign currency and capital control policies,

●	regulations and legislation regarding right to repair or right to modify,

●	weather conditions,

●	marketplace adoption and monetization of technologies we have invested in,

●	our ability to strengthen our digital capabilities, automation, autonomy, and alternative power technologies,

●	changes in demand and pricing for new and used equipment,

●	delays or disruptions in our supply chain,

●	significant fluctuations in foreign currency exchange rates,

●	volatility in the prices of many commodities, and

●	slower economic growth or recession.

Consolidated Results – 2024 Compared with 2023

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended							​	Six Months Ended							​
Deere & Company	​	April 28		​	April 30		​	%	​	April 28		​	April 30		​	%	​
(In millions of dollars, except per share amounts)	​	2024		​	2023		​	Change	​	2024		​	2023		​	Change	​
Net sales and revenues	​	$	15,235	​	$	17,387	​	-12	​	$	27,420	​	$	30,038	​	-9	​
Net income attributable to Deere & Company	​	​	2,370	​	​	2,860	​	-17	​	​	4,121	​	​	4,819	​	-14	​
Diluted earnings per share	​	​	8.53	​	​	9.65	​	​	​	​	14.74	​	​	16.18	​	​	​

​

Net sales and revenues decreased for both the quarter and year-to-date periods primarily due to lower sales volumes. Net income and diluted EPS decreased driven by lower sales. The discussion of net sales and operating profit is included in the Business Segment Results below.

An explanation of the cost of sales to net sales ratio and other significant statement of consolidated income changes follow:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended							​	Six Months Ended							​
​	​	April 28		​	April 30		​	%	​	April 28		​	April 30		​	%	​
Deere & Company	​	2024		​	2023		​	Change	​	2024		​	2023		​	Change	​
Cost of sales to net sales	​	​	67.3%	​	​	66.7%	​	​	​	​	67.9%	​	​	67.9%	​	​	​
(+) Price realization	​	​	​	​	​	Favorable			​	​	​	​	​	Favorable			​
(+) Inbound freight	​	​	​	​	​	Favorable			​	​	​	​	​	Favorable			​
(–) Overhead spending	​	​	​	​	​	Unfavorable			​	​	​	​	​	Unfavorable			​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other income	​	$	238	​	$	229	​	+4	​	$	577	​	$	484	​	+19	​
Higher for the first six months due to investment income earned on international mutual funds securities.																	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Research and development expenses	​	​	565	​	​	547	​	+3	​	​	1,098	​	​	1,043	​	+5	​
Higher due to continued focus on developing and incorporating technology solutions.																	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Selling, administrative and general expenses	​	​	1,265	​	​	1,330	​	-5	​	​	2,330	​	​	2,283	​	+2	​
Lower in the second quarter as the prior period was impacted by the cumulative correction of the accounting treatment for financing incentives offered to John Deere dealers of $173 pretax ($135 after-tax). Excluding the impact of this item, selling, administrative and general expenses have increased for both periods mostly due to a higher provision for credit losses and higher employee pay driven by inflationary conditions and profit sharing incentives.																	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest expense	​	​	836	​	​	569	​	+47	​	​	1,638	​	​	1,049	​	+56	​
Increased for both periods primarily due to higher average borrowing rates and higher average borrowings.																	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other operating expenses	​	​	295	​	​	363	​	-19	​	​	664	​	​	660	​	+1	​
Lower in the second quarter due to higher pension benefits (see Note 6) and lower foreign exchange losses.																	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Provision for income taxes	​	​	751	​	​	991	​	-24	​	​	1,220	​	​	1,528	​	-20	​
Decreased for both periods as a result of lower pretax income.																	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

​

Business Segment Results – 2024 Compared with 2023

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended							​	Six Months Ended							​
​	​	April 28		​	April 30		​	%	​	April 28		​	April 30		​	%	​
Production and Precision Agriculture	​	2024		​	2023		​	Change	​	2024		​	2023		​	Change	​
Net sales	​	$	6,581	​	$	7,822	​	-16	​	$	11,430	​	$	13,021	​	-12	​
Operating profit	​	​	1,650	​	​	2,170	​	-24	​	​	2,695	​	​	3,378	​	-20	​
Operating margin	​	​	25.1%	​	​	27.7%	​	​	​	​	23.6%	​	​	25.9%	​	​	​
Price realization	​	​	​	​	​	​	​	+2	​	​	​	​	​	​	​	+3	​
Currency translation impact on Net sales	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

Production and precision agriculture sales decreased for the quarter as a result of lower shipment volumes (primarily in Brazil, the U.S., and Europe), driven by softened demand. This was partially offset by price realization in the U.S. and Canada. Operating profit decreased primarily due to lower shipment volumes and higher production costs, partially offset by price realization.

Production & Precision Agriculture Operating Profit

Second Quarter 2024 Compared to Second Quarter 2023

Sales for the first six months decreased as a result of lower shipment volumes (primarily in Brazil, the U.S., and Europe), partially offset by price realization in the U.S. and Canada. Operating profit for the first six months decreased due to lower sales volume, higher selling, administrative, and general expenses and research and development expenses, partially offset by price realization.

Production & Precision Agriculture Operating Profit

First Six Months 2024 Compared to First Six Months 2023

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended							​	Six Months Ended							​
​	​	April 28		​	April 30		​	%	​	April 28		​	April 30		​	%	​
Small Agriculture and Turf	​	2024		​	2023		​	Change	​	2024		​	2023		​	Change	​
Net sales	​	$	3,185	​	$	4,145	​	-23	​	$	5,610	​	$	7,146	​	-21	​
Operating profit	​	​	571	​	​	849	​	-33	​	​	897	​	​	1,296	​	-31	​
Operating margin	​	​	17.9%	​	​	20.5%	​	​	​	​	16.0%	​	​	18.1%	​	​	​
Price realization	​	​	​	​	​	​	​	+2	​	​	​	​	​	​	​	+2	​
Currency translation impact on Net sales	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

Small agriculture and turf sales decreased for the quarter due to lower shipment volumes (primarily in the U.S., Europe, and Mexico), partially offset by price realization in the U.S. Operating profit decreased due to lower shipment volumes, partially offset by price realization.

Small Agriculture & Turf Operating Profit

Second Quarter 2024 Compared to Second Quarter 2023

Sales for the first six months decreased as a result of lower shipment volumes (primarily in the U.S., Europe, and Mexico), partially offset by price realization. Operating profit for the first six months decreased primarily as a result of lower sales volumes, higher selling, administrative, and general expenses and research and development expenses, and higher warranty expenses. These items were partially offset by price realization, favorable mix, and lower production costs.

Small Agriculture & Turf Operating Profit

First Six Months 2024 Compared to First Six Months 2023

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended							​	Six Months Ended							​
​	​	April 28		​	April 30		​	%	​	April 28		​	April 30		​	%	​
Construction and Forestry	​	2024		​	2023		​	Change	​	2024		​	2023		​	Change	​
Net sales	​	$	3,844	​	$	4,112	​	-7	​	$	7,057	​	$	7,314	​	-4	​
Operating profit	​	​	668	​	​	838	​	-20	​	​	1,234	​	​	1,463	​	-16	​
Operating margin	​	​	17.4%	​	​	20.4%	​	​	​	​	17.5%	​	​	20.0%	​	​	​
Price realization	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	+1	​
Currency translation impact on Net sales	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

​

Construction and forestry sales decreased for the quarter due to lower worldwide shipment volumes. Operating profit decreased due to lower sales volumes and increased selling, administrative, and general expenses and research and development expenses.

Construction & Forestry Operating Profit

Second Quarter 2024 Compared to Second Quarter 2023

The segment’s six-month sales decreased due to lower shipment volumes in all major regions outside the U.S., partially offset by price realization and the favorable impact of currency translation. The first six-month’s operating profit decreased due to lower sales volumes, higher selling, administrative, and general expenses and research and development expenses, increased production costs, and the unfavorable impact of currency translation. These factors were partially offset by price realization.

Construction & Forestry Operating Profit

First Six Months 2024 Compared to First Six Months 2023

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended							​	Six Months Ended							​
​	​	April 28		​	April 30		​	%	​	April 28		​	April 30		​	%	​
Financial Services	​	2024		​	2023		​	Change	​	2024		​	2023		​	Change	​
Revenue (including intercompany)	​	$	1,588	​	$	1,297	​	+22	​	$	3,140	​	$	2,542	​	+24	​
Interest expense	​	​	780	​	​	540	​	+44	​	​	1,542	​	​	983	​	+57	​
Net income	​	​	162	​	​	28	​	+479	​	​	370	​	​	212	​	+75	​

​

The average balance of receivables and leases financed was 16 percent higher in the second quarter of 2024 and 18 percent higher in the first six months of 2024 compared with the same periods last year. Revenue also increased due to higher average financing rates in both periods. Interest expense increased compared to both prior periods as a result of higher average borrowings and higher average borrowing rates. Financial services net income in both periods increased due to income earned on higher average portfolio balances, partially offset by a higher provision for credit losses and less favorable financing spreads. The results of both periods were also affected by a correction of the accounting treatment for financing incentives offered to John Deere dealers. The cumulative effect of this correction, $173 pretax ($135 after-tax), was recorded in the second quarter of 2023.

Critical Accounting Estimates

See our critical accounting estimates discussed in the Management’s Discussion and Analysis of the most recently filed Annual Report on Form 10-K. There have been no material changes to these policies.

Capital Resources and Liquidity – 2024 Compared with 2023

We have access to global markets at a reasonable cost. Sources of liquidity include:

●	cash, cash equivalents, and marketable securities on hand,

●	funds from operations,

●	the issuance of commercial paper and term debt,

●	the securitization of retail notes, and

●	bank lines of credit.

We closely monitor our cash requirements. Based on the available sources of liquidity, we expect to meet our funding needs in the short term (next 12 months) and long term (beyond 12 months). We are forecasting lower operating cash flows in 2024 compared with 2023.

We operate in multiple industries, which have unique funding requirements. The equipment operations are capital intensive. Historically, these operations have been subject to seasonal variations in financing requirements for inventories and receivables from dealers.

The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios.

Key metrics are provided in the following table:

​	​	​	​	​	​	​	​	​	​	​
​	​	April 28		​	October 29		​	April 30		​
​	​	2024		​	2023		​	2023		​
Cash, cash equivalents, and marketable securities	​	$	6,647	​	$	8,404	​	$	6,123	​
​	​	​	​	​	​	​	​	​	​	​
Trade accounts and notes receivable – net	​	​	8,880	​	​	7,739	​	​	9,971	​
Ratio to prior 12 month’s net sales	​	​	17%	​	​	14%	​	​	18%	​
​	​	​	​	​	​	​	​	​	​	​
Inventories	​	​	8,443	​	​	8,160	​	​	9,713	​
Ratio to prior 12 month’s cost of sales	​	​	24%	​	​	22%	​	​	25%	​
​	​	​	​	​	​	​	​	​	​	​
Unused credit lines	​	​	2,787	​	​	841	​	​	785	​
​	​	​	​	​	​	​	​	​	​	​
Financial Services:	​	​	​	​	​	​	​	​	​	​
Ratio of interest-bearing debt to stockholder’s equity	​	​	8.7 to 1	​	​	8.4 to 1	​	​	8.0 to 1	​

​

In the first half of 2024, we invested $177 in U.S. dollar denominated bonds issued by the central bank of Argentina. The bonds are recorded in “Marketable securities,” classified as “International debt securities.” These bonds can be held until maturity or sold in a secondary market outside of Argentina to settle intercompany debt (see Note 17).

The increase in unused credit lines in 2024 compared to both prior periods relates to a decrease in commercial paper outstanding.

​

We are forecasting lower operating cash flows in 2024 compared to 2023 driven by a decrease in net income adjusted for non-cash provisions and a reduction in accrued expenses.

There have been no material changes to the contractual obligations and other cash requirements identified in our most recently filed Annual Report on Form 10-K.

Cash Flows

​	​	​	​	​	​	​	​
​	​	Six Months Ended					​
​	​	April 28, 2024		​	April 30, 2023		​
Net cash provided by (used for) operating activities	​	$	944	​	$	(147)	​
Net cash used for investing activities	​	​	(1,670)	​	​	(1,494)	​
Net cash provided by (used for) financing activities	​	​	(1,162)	​	​	2,017	​
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	​	​	(5)	​	​	70	​
Net increase (decrease) in cash, cash equivalents, and restricted cash	​	$	(1,893)	​	$	446	​

​

Cash inflows from consolidated operating activities in the first six months of 2024 were $944. This resulted mainly from net income adjusted for non-cash provisions, partially offset by a working capital change. Included in the working capital change was a cash outflow of $1,300 from accounts payable and accrued expenses due to a higher profit sharing payout in the first quarter of 2024 based on strong fiscal year 2023 results, lower accrued expenses related to dealer sales discounts, and less trade payables consistent with our forecasted decrease in production. Cash outflows from investing activities were $1,670 in the first six months of this year. The primary drivers were purchases of property and equipment and growth in the retail customer receivable portfolio and equipment on operating leases. Cash outflows from financing activities were $1,162 in the first six months of 2024, as cash returned to shareholders was partially offset by higher external borrowings. Cash returned to shareholders was $3,218 in the first six months of 2024. Cash, cash equivalents, and restricted cash decreased $1,893 during the first six months of 2024.

Key Metrics and Balance Sheet Changes

Trade Accounts and Notes Receivable. Trade accounts and notes receivable arise from sales of goods to customers. Trade receivables increased $1,141 during the first six months of 2024, primarily due to a seasonal increase. These receivables decreased $1,091, compared to a year ago, due to lower sales volumes. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 2 percent at April 28, 2024, 1 percent at October 29, 2023, and 1 percent at April 30, 2023.

Financing Receivables and Equipment on Operating Leases. Financing receivables and equipment on operating leases consist of retail notes originated in connection with financing of new and used equipment, operating leases, revolving charge accounts, sales-type and direct financing leases, and wholesale notes. Financing receivables and equipment on operating leases increased $1,580 during the first six months of 2024 and increased $8,368 in the past 12 months due to higher dealer inventory levels and elevated sales of new and used retail inventory. Total acquisition volumes of financing receivables and equipment on operating leases were 16 percent higher in the first six months of 2024, compared with the same period last year, as volumes of wholesale notes, retail notes, financing leases, and operating leases were higher, while revolving charge accounts were flat compared to April 30, 2023.

Inventories. Inventories increased by $283 during the first six months of 2024, primarily due to a seasonal increase. Inventories decreased by $1,270 compared to a year ago due to lower forecasted shipment volumes. A majority of these inventories are valued on the last-in, first out (LIFO) method.

Property and Equipment. Property and equipment cash expenditures in the first six months of 2024 were $719 compared with $584 in the same period last year. Capital expenditures in 2024 are estimated to be approximately $1,900.

Accounts Payable and Accrued Expenses. Accounts payable and accrued expenses decreased by $1,521 in the first six months of 2024, primarily due to a decrease in accrued expenses associated with dealer sales discounts and employee benefits, and decreased accounts payable associated with trade payables. Accounts payable and accrued expenses decreased $107 compared to a year ago due to a decrease in accounts payable associated with trade payables, partially offset by an increase in accrued expenses associated with derivative liabilities, extended warranty liabilities, and accrued interest.

Borrowings. Total external borrowings increased by $2,226 in the first six months of 2024 and increased $7,538 compared to a year ago, generally corresponding with the level of the receivable and lease portfolios, as well as other working capital requirements.

​

John Deere Capital Corporation (Capital Corporation), a U.S. financial services subsidiary, has a revolving warehouse facility to utilize bank conduit facilities to securitize retail notes (see Note 9). The facility was renewed in November 2023 with an expiration in November 2024 and with an increase in the total capacity or “financing limit” from $1,500 to $2,000. At April 28, 2024, $1,434 of securitization borrowings were outstanding under the facility. At the end of the contractual revolving period, unless the banks and Capital Corporation agree to renew, Capital Corporation would liquidate the secured borrowings over time as payments on the retail notes are collected.

In the first six months of 2024, the financial services operations issued $1,880 and retired $1,900 of retail note securitization borrowings, which are presented in “Net proceeds in short-term borrowings (original maturities three months or less).”

Lines of Credit. We also have access to bank lines of credit with various banks throughout the world. Worldwide lines of credit totaled $10,934 at April 28, 2024, $2,787 of which were unused. For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings were considered to constitute utilization. Included in the total credit lines at April 28, 2024 was a 364-day credit facility agreement of $5,000 expiring in the second quarter of 2025. In addition, total credit lines included long-term credit facility agreements of $2,750 expiring in the second quarter of 2028 and $2,750 expiring in the second quarter of 2029. These credit agreements require Capital Corporation and other parts of our business to maintain certain performance metrics and liquidity targets. All requirements in the credit agreements have been met during the periods included in the financial statements.

Debt Ratings. To access public debt capital markets, we rely on credit rating agencies to assign short-term and long-term credit ratings to our debt securities as an indicator of credit quality for fixed income investors. A security rating is not a recommendation by the rating agency to buy, sell, or hold our securities. A credit rating agency may change or withdraw ratings based on its assessment of our current and future ability to meet interest and principal repayment obligations. Each agency’s rating should be evaluated independently of any other rating. Lower credit ratings generally result in higher borrowing costs, including costs of derivative transactions, and reduced access to debt capital markets. The senior long-term and short-term debt ratings and outlook currently assigned to unsecured company securities by the rating agencies engaged by us are as follows:

​	​	​	​	​	​	​	​
​		Senior		​		​
​	​	Long-Term	​	Short-Term	​	Outlook
Fitch Ratings	​	A+	​	F1	​	Stable	​
Moody’s Investors Service, Inc.		A1		Prime-1		Stable	​
Standard & Poor’s		A		A-1		Stable	​

​

FORWARD-LOOKING STATEMENTS

Certain statements contained herein, including in the section entitled “Overview” relating to future events, expectations, and trends constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 and involve factors that are subject to change, assumptions, risks, and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect all lines of our operations generally while others could more heavily affect a particular line of business.

Forward-looking statements are based on currently available information and current assumptions, expectations, and projections about future events and should not be relied upon. Except as required by law, we expressly disclaim any obligation to update or revise our forward-looking statements. Many factors, risks, and uncertainties could cause actual results to differ materially from these forward-looking statements. Among these factors are risks related to:

●	changes in and compliance with U.S., foreign, and international laws, regulations, and policies relating to trade, economic sanctions, data privacy, spending, taxing, banking, monetary, environmental (including climate change and engine emissions), and farming policies;

●	political, economic, and social instability of the geographies in which we operate, including the ongoing war between Russia and Ukraine and the conflict in the Middle East;

●	adverse macroeconomic conditions, including unemployment, inflation, rising interest rates, changes in consumer practices due to slower economic growth, and regional or global liquidity constraints;

●	worldwide demand for food and different forms of renewable energy;

●	the ability to execute business strategies, including our Smart Industrial Operating Model, Leap Ambitions, and mergers and acquisitions;

●	the ability to understand and meet customers’ changing expectations and demand for John Deere products and solutions;

●	accurately forecasting customer demand for products and services and adequately managing inventory;

●	the ability to integrate new technology, including automation and machine learning, and deliver precision technology and solutions to customers;

​

●	changes to governmental communications channels (radio frequency technology);

●	the ability to adapt in highly competitive markets;

●	dealer practices and their ability to manage distribution of John Deere products and support and service precision technology solutions;

●	changes in climate patterns, unfavorable weather events, and natural disasters;

●	governmental and other actions designed to address climate change in connection with a transition to a lower-carbon economy;

●	higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for John Deere products and solutions;

●	availability and price of raw materials, components, and whole goods;

●	delays or disruptions in our supply chain;

●	the failure of our equipment to perform as expected, which could result in warranty claims, post-sales repairs or recalls, product liability litigation, and regulatory investigations;

●	the ability to attract, develop, engage, and retain qualified personnel;

●	security breaches, cybersecurity attacks, technology failures, and other disruptions to John Deere information technology infrastructure and products;

●	loss of or challenges to intellectual property rights;

●	legislation introduced or enacted that could affect our business model and intellectual property, such as right to repair or right to modify legislation;

●	investigations, claims, lawsuits, or other legal proceedings;

●	events that damage our reputation or brand;

●	the agricultural business cycle, which can be unpredictable and is affected by factors such as world grain stocks, available farm acres, acreage planted, soil conditions, harvest yields, prices for commodities and livestock, input costs, and availability of transport for crops; and

●	housing starts and supply, real estate and housing prices, levels of public and non-residential construction, and infrastructure investment.

Further information concerning us and our businesses, including factors that could materially affect our financial results, is included in our other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. “Risk Factors” of our most recent Annual Report on Form 10-K and this Quarterly Report on Form 10-Q). There also may be other factors that we cannot anticipate or that are not described herein because we do not currently perceive them to be material.

SUPPLEMENTAL CONSOLIDATING DATA

The supplemental consolidating data presented on the subsequent pages is presented for informational purposes. Equipment operations represents the enterprise without financial services. Equipment operations includes production and precision agriculture operations, small agriculture and turf operations, construction and forestry operations, and other corporate assets, liabilities, revenues, and expenses not reflected within financial services. Transactions between the equipment operations and financial services have been eliminated to arrive at the consolidated financial statements.

Equipment operations and financial services participate in different industries. Equipment operations primarily generate earnings and cash flows by manufacturing and selling equipment, service parts, and technology solutions to dealers and retail customers. Financial services finances sales and leases by dealers of new and used equipment that is largely manufactured by equipment operations. Those earnings and cash flows generally are the difference between the finance income received from customer payments less interest expense, and depreciation on equipment subject to an operating lease. The two businesses are capitalized differently and have separate performance metrics. The supplemental consolidating data is also used by management due to these differences.

​

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
DEERE & COMPANY																									​	​
SUPPLEMENTAL CONSOLIDATING DATA																									​	​
STATEMENTS OF INCOME																									​	​
For the Three Months Ended April 28, 2024 and April 30, 2023																									​	​
Unaudited																									​	​
​	​	EQUIPMENT					​	FINANCIAL					​	​					​	​					​	​
​	​	OPERATIONS					​	SERVICES					​	ELIMINATIONS					​	CONSOLIDATED					​
​	​	2024		​	2023		​	2024		​	2023		​	2024		​	2023		​	2024		​	2023		​
Net Sales and Revenues		​			​	​		​			​	​		​			​	​		​			​	​	​	​
Net sales	​	$	13,610	​	$	16,079	​	​	​	​	​	​	​	​	​	​	​	​	​	$	13,610	​	$	16,079	​	​
Finance and interest income	​	​	129	​		121	​	$	1,496	​	$	1,206	​	$	(238)	​	$	(248)	​	​	1,387	​	​	1,079	1 ​	​
Other income	​	​	198	​		185	​	​	92	​		91	​	​	(52)	​		(47)	​	​	238	​		229	2, 3​	​
Total	​	​	13,937	​		16,385	​	​	1,588	​		1,297	​	​	(290)	​		(295)	​	​	15,235	​		17,387	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Costs and Expenses	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Cost of sales	​	​	9,164	​		10,737	​	​	​	​	​	​	​	​	(7)	​		(7)	​	​	9,157	​	​	10,730	4 ​	​
Research and development expenses	​	​	565	​		547	​	​	​	​	​	​	​	​	​	​	​	​	​	​	565	​	​	547	​	​
Selling, administrative and general expenses	​	​	1,007	​		935	​	​	260	​		397	​	​	(2)	​		(2)	​	​	1,265	​		1,330	4 ​	​
Interest expense	​	​	114	​		103	​	​	780	​		540	​	​	(58)	​		(74)	​	​	836	​		569	1 ​	​
Interest compensation to Financial Services	​	​	180	​		174	​	​	​	​	​	​	​	​	(180)	​		(174)	​	​	​	​	​	​	1 ​	​
Other operating expenses	​	​	1	​		85	​	​	337	​		316	​	​	(43)	​		(38)	​	​	295	​		363	3, 5​	​
Total	​	​	11,031	​		12,581	​	​	1,377	​		1,253	​	​	(290)	​		(295)	​	​	12,118	​		13,539	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Income before Income Taxes	​	​	2,906	​		3,804	​	​	211	​		44	​	​	​	​		​	​	​	3,117	​		3,848	​	​
Provision for income taxes	​	​	700	​		974	​	​	51	​		17	​	​	​	​		​	​	​	751	​		991	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Income after Income Taxes	​	​	2,206	​		2,830	​	​	160	​		27	​	​	​	​		​	​	​	2,366	​		2,857	​	​
Equity in income of unconsolidated affiliates	​	​	​	​		1	​	​	2	​		1	​	​	​	​	​	​	​	​	2	​	​	2	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Income	​	​	2,206	​		2,831	​	​	162	​		28	​	​	​	​		​	​	​	2,368	​		2,859	​	​
Less: Net loss attributable to noncontrolling interests	​	​	(2)	​		(1)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(2)	​	​	(1)	​	​
Net Income Attributable to Deere & Company	​	$	2,208	​	$	2,832	​	$	162	​	$	28	​	​	​	​	​	​	​	$	2,370	​	$	2,860	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

1 Elimination of intercompany interest income and expense.

2 Elimination of equipment operations’ margin from inventory transferred to equipment on operating leases.

3 Elimination of income and expenses between equipment operations and financial services related to intercompany guarantees of investments in certain international markets and intercompany service revenues and expenses.

4 Elimination of intercompany service fees.

5 Elimination of financial services’ lease depreciation expense related to inventory transferred to equipment on operating leases.

​

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
DEERE & COMPANY																									​	​
SUPPLEMENTAL CONSOLIDATING DATA (Continued)																									​	​
STATEMENTS OF INCOME																									​	​
For the Six Months Ended April 28, 2024 and April 30, 2023																									​	​
Unaudited																									​	​
​	​	EQUIPMENT					​	FINANCIAL					​	​					​	​					​	​
​	​	OPERATIONS					​	SERVICES					​	ELIMINATIONS					​	CONSOLIDATED					​
​	​	2024		​	2023		​	2024		​	2023		​	2024		​	2023		​	2024		​	2023		​
Net Sales and Revenues		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Net sales	​	$	24,097	​	$	27,481	​	​	​	​	​	​	​	​	​	​	​	​	​	$	24,097	​	$	27,481	​	​
Finance and interest income	​	​	285	​		234	​	$	2,929	​	$	2,274	​	$	(468)	​	$	(435)	​	​	2,746	​	​	2,073	1 ​	​
Other income	​	​	487	​		417	​	​	211	​		268	​	​	(121)	​		(201)	​	​	577	​		484	2, 3​	​
Total	​	​	24,869	​		28,132	​	​	3,140	​		2,542	​	​	(589)	​		(636)	​	​	27,420	​		30,038	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Costs and Expenses	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Cost of sales	​	​	16,371	​		18,675	​	​	​	​	​	​	​	​	(14)	​		(12)	​	​	16,357	​	​	18,663	4 ​	​
Research and development expenses	​	​	1,098	​		1,043	​	​	​	​	​	​	​	​	​	​	​	​	​	​	1,098	​	​	1,043	​	​
Selling, administrative and general expenses	​	​	1,882	​		1,719	​	​	453	​		569	​	​	(5)	​		(5)	​	​	2,330	​		2,283	4 ​	​
Interest expense	​	​	223	​		204	​	​	1,542	​		983	​	​	(127)	​		(138)	​	​	1,638	​		1,049	1 ​	​
Interest compensation to Financial Services	​	​	341	​		297	​	​	​	​	​	​	​	​	(341)	​		(297)	​	​	​	​	​	​	1 ​	​
Other operating expenses	​	​	91	​		137	​	​	675	​		707	​	​	(102)	​		(184)	​	​	664	​		660	3, 5​	​
Total	​	​	20,006	​		22,075	​	​	2,670	​		2,259	​	​	(589)	​		(636)	​	​	22,087	​		23,698	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Income before Income Taxes	​	​	4,863	​		6,057	​	​	470	​		283	​	​	​	​		​	​	​	5,333	​		6,340	​	​
Provision for income taxes	​	​	1,117	​		1,455	​	​	103	​		73	​	​	​	​		​	​	​	1,220	​		1,528	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Income after Income Taxes	​	​	3,746	​		4,602	​	​	367	​		210	​	​	​	​		​	​	​	4,113	​		4,812	​	​
Equity in income of unconsolidated affiliates	​	​	​	​		1	​	​	3	​		2	​	​	​	​	​	​	​	​	3	​	​	3	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Income	​	​	3,746	​		4,603	​	​	370	​		212	​	​	​	​		​	​	​	4,116	​		4,815	​	​
Less: Net loss attributable to noncontrolling interests	​	​	(5)	​		(4)	​	​	​	​		​	​	​	​	​	​	​	​	​	(5)	​	​	(4)	​	​
Net Income Attributable to Deere & Company	​	$	3,751	​	$	4,607	​	$	370	​	$	212	​	​	​	​	​	​	​	$	4,121	​	$	4,819	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

1 Elimination of intercompany interest income and expense.

2 Elimination of equipment operations’ margin from inventory transferred to equipment on operating leases.

3 Elimination of income and expenses between equipment operations and financial services related to intercompany guarantees of investments in certain international markets and intercompany service revenues and expenses.

4 Elimination of intercompany service fees.

5 Elimination of financial services’ lease depreciation expense related to inventory transferred to equipment on operating leases.

​

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
DEERE & COMPANY										​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
SUPPLEMENTAL CONSOLIDATING DATA (Continued)										​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
CONDENSED BALANCE SHEETS										​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Unaudited										​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	EQUIPMENT								​	FINANCIAL								​	​								​	​								​	​
​	​	OPERATIONS								​	SERVICES								​	ELIMINATIONS								​	CONSOLIDATED								​	​
​	​	Apr 28		​	Oct 29		​	Apr 30		​	Apr 28		​	Oct 29		​	Apr 30		​	Apr 28		​	Oct 29		​	Apr 30		​	Apr 28		​	Oct 29		​	Apr 30		​	​
​	​	2024		​	2023		​	2023		​	2024		​	2023		​	2023		​	2024		​	2023		​	2023		​	2024		​	2023		​	2023		​	​
Assets																																					​	​
Cash and cash equivalents	​	$	3,800	​	$	5,720	​	$	3,587	​	$	1,753	​	$	1,738	​	$	1,680	​	​	​	​	​	​	​	​	​	​	$	5,553	​	$	7,458	​	$	5,267	​	​
Marketable securities	​	​	148	​		104	​		14	​	​	946	​		842	​		842	​	​	​	​		​	​		​	​	​	1,094	​		946	​		856	​	​
Receivables from Financial Services	​	​	4,480	​		4,516	​		5,899	​	​	​	​	​	​	​	​	​	​	$	(4,480)	​	$	(4,516)	​	$	(5,899)	​	​	​	​	​	​	​	​	​	6 ​	​
Trade accounts and notes receivable – net	​	​	1,320	​		1,320	​		1,562	​	​	10,263	​		8,687	​		10,422	​	​	(2,703)	​		(2,268)	​		(2,013)	​	​	8,880	​		7,739	​		9,971	7 ​	​
Financing receivables – net	​	​	80	​		64	​		54	​	​	45,198	​		43,609	​		38,900	​	​	​	​		​	​		​	​	​	45,278	​		43,673	​		38,954	​	​
Financing receivables securitized – net	​	​	​	​	​	​	​	​	1	​	​	7,262	​		7,335	​		5,658	​	​	​	​		​	​		​	​	​	7,262	​		7,335	​		5,659	​	​
Other receivables	​	​	1,822	​		1,813	​		2,201	​	​	760	​		869	​		481	​	​	(47)	​		(59)	​		(89)	​	​	2,535	​		2,623	​		2,593	7 ​	​
Equipment on operating leases – net	​	​	​	​	​	​	​	​	​	​	​	6,965	​		6,917	​		6,524	​	​	​	​		​	​		​	​	​	6,965	​		6,917	​		6,524	​	​
Inventories	​	​	8,443	​		8,160	​		9,713	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	8,443	​	​	8,160	​	​	9,713	​	​
Property and equipment – net	​	​	6,999	​		6,843	​		6,254	​	​	35	​		36	​		34	​	​	​	​		​	​		​	​	​	7,034	​		6,879	​		6,288	​	​
Goodwill	​	​	3,936	​		3,900	​		3,963	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	3,936	​	​	3,900	​	​	3,963	​	​
Other intangible assets – net	​	​	1,064	​		1,133	​		1,222	​	​	​	​		​	​		​	​	​	​	​		​	​		​	​	​	1,064	​		1,133	​		1,222	​	​
Retirement benefits	​	​	2,980	​		2,936	​		3,450	​	​	77	​		72	​		69	​	​	(1)	​		(1)	​		​	​	​	3,056	​		3,007	​		3,519	8 ​	​
Deferred income taxes	​	​	2,210	​		2,133	​		1,355	​	​	71	​		68	​		59	​	​	(345)	​		(387)	​		(106)	​	​	1,936	​		1,814	​		1,308	9 ​	​
Other assets	​	​	2,105	​		1,948	​		1,961	​	​	504	​		559	​		564	​	​	(17)	​		(4)	​		(15)	​	​	2,592	​		2,503	​		2,510	​	​
Total Assets	​	$	39,387	​	$	40,590	​	$	41,236	​	$	73,834	​	$	70,732	​	$	65,233	​	$	(7,593)	​	$	(7,235)	​	$	(8,122)	​	$	105,628	​	$	104,087	​	$	98,347	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liabilities and Stockholders’ Equity	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Short-term borrowings	​	$	1,055	​	$	1,230	​	$	1,755	​	$	16,644	​	$	16,709	​	$	15,354	​	​	​	​	​	​	​	​	​	​	$	17,699	​	$	17,939	​	$	17,109	​	​
Short-term securitization borrowings	​	​	​	​	​	​	​	​	​	​	​	6,976	​		6,995	​		5,379	​	​	​	​		​	​		​	​	​	6,976	​		6,995	​		5,379	​	​
Payables to Equipment Operations	​	​	​	​		​	​		​	​	​	4,480	​		4,516	​		5,899	​	$	(4,480)	​	$	(4,516)	​	$	(5,899)	​	​	​	​		​	​		​	6 ​	​
Accounts payable and accrued expenses	​	​	13,771	​		14,862	​		13,759	​	​	3,605	​		3,599	​		3,074	​	​	(2,767)	​		(2,331)	​		(2,117)	​	​	14,609	​		16,130	​		14,716	7 ​	​
Deferred income taxes	​	​	421	​		452	​		402	​	​	415	​		455	​		215	​	​	(345)	​		(387)	​		(106)	​	​	491	​		520	​		511	9 ​	​
Long-term borrowings	​	​	6,575	​		7,210	​		7,310	​	​	34,387	​		31,267	​		28,301	​	​	​	​		​	​		​	​	​	40,962	​		38,477	​		35,611	​	​
Retirement benefits and other liabilities	​	​	1,995	​		2,032	​		2,410	​	​	111	​		109	​		110	​	​	(1)	​		(1)	​		​	​	​	2,105	​		2,140	​		2,520	8 ​	​
Total liabilities	​	​	23,817	​	​	25,786	​	​	25,636	​	​	66,618	​	​	63,650	​	​	58,332	​	​	(7,593)	​	​	(7,235)	​	​	(8,122)	​	​	82,842	​	​	82,201	​	​	75,846	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Commitments and contingencies (Note 16)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Redeemable noncontrolling interest	​	​	98	​	​	97	​	​	102	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	98	​	​	97	​	​	102	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stockholders’ Equity	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total Deere & Company stockholders’ equity	​	​	22,684	​		21,785	​		22,395	​	​	7,216	​	​	7,082	​	​	6,901	​	​	(7,216)	​	​	(7,082)	​	​	(6,901)	​	​	22,684	​	​	21,785	​	​	22,395	10 ​	​
Noncontrolling interests	​	​	4	​		4	​		4	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	4	​	​	4	​	​	4	​	​
Financial Services’ equity	​	​	(7,216)	​		(7,082)	​		(6,901)	​	​	​	​	​	​	​	​	​	​	​	7,216	​	​	7,082	​	​	6,901	​	​	​	​	​	​	​	​	​	10 ​	​
Adjusted total stockholders’ equity	​	​	15,472	​		14,707	​		15,498	​	​	7,216	​		7,082	​		6,901	​	​	​	​		​	​		​	​	​	22,688	​		21,789	​		22,399	​	​
Total Liabilities and Stockholders’ Equity	​	$	39,387	​	$	40,590	​	$	41,236	​	$	73,834	​	$	70,732	​	$	65,233	​	$	(7,593)	​	$	(7,235)	​	$	(8,122)	​	$	105,628	​	$	104,087	​	$	98,347	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

6 Elimination of receivables / payables between equipment operations and financial services.

7 Primarily reclassification of sales incentive accruals on receivables sold to financial services.

8 Reclassification of net pension assets / liabilities.

9 Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions.

10 Elimination of financial services’ equity.

​

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
DEERE & COMPANY																									​	​
SUPPLEMENTAL CONSOLIDATING DATA (Continued)																									​	​
STATEMENTS OF CASH FLOWS																									​	​
For the Six Months Ended April 28, 2024 and April 30, 2023																									​	​
Unaudited	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	EQUIPMENT					​	FINANCIAL					​	​					​	​					​	​
​	​	OPERATIONS					​	SERVICES					​	ELIMINATIONS					​	CONSOLIDATED					​	​
​	​	2024		​	2023		​	2024		​	2023		​	2024		​	2023		​	2024		​	2023		​	​
Cash Flows from Operating Activities	​	​			​			​			​			​			​			​			​			​
Net income	​	$	3,746	​	$	4,603	​	$	370	​	$	212	​	​	​	​	​	​	​	$	4,116	​	$	4,815	​	​
Adjustments to reconcile net income to net cash provided by (used for) operating activities:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Provision (credit) for credit losses	​		10	​		4	​		121	​		(93)	​		​	​		​	​		131	​		(89)	​	​
Provision for depreciation and amortization	​		608	​		565	​		509	​		500	​	$	(72)	​	$	(70)	​		1,045	​		995	11 ​	​
Other non-cash adjustments (Note 21)	​	​	​	​		​	​		​	​		173	​		​	​		​	​		​	​		173	​	​
Share-based compensation expense	​	​	​	​	​	​	​	​	​	​	​	​	​	​	104	​	​	54	​	​	104	​	​	54	12 ​	​
Distributed earnings of Financial Services	​		247	​		12	​		​	​		​	​		(247)	​		(12)	​		​	​		​	13 ​	​
Credit for deferred income taxes	​		(74)	​		(304)	​		(46)	​		(73)	​		​	​		​	​		(120)	​		(377)	​	​
Changes in assets and liabilities:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Receivables related to sales	​		(58)	​		(255)	​	​	​	​	​	​	​	​	(2,411)	​	​	(4,152)	​	​	(2,469)	​	​	(4,407)	14, 16​	​
Inventories	​		(300)	​		(910)	​	​	​	​	​	​	​	​	(109)	​	​	(72)	​	​	(409)	​	​	(982)	15 ​	​
Accounts payable and accrued expenses	​		(1,012)	​		161	​		147	​		243	​		(435)	​		(717)	​		(1,300)	​		(313)	16 ​	​
Accrued income taxes payable/receivable	​		(20)	​		(97)	​		(9)	​		1	​		​	​		​	​		(29)	​		(96)	​	​
Retirement benefits	​		(205)	​		(67)	​		(3)	​		(1)	​		​	​		​	​		(208)	​		(68)	​	​
Other	​		89	​		54	​		65	​		103	​		(71)	​		(9)	​		83	​		148	11, 12, 15​	​
Net cash provided by (used for) operating activities	​		3,031	​		3,766	​		1,154	​		1,065	​		(3,241)	​		(4,978)	​		944	​		(147)	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Cash Flows from Investing Activities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Collections of receivables (excluding receivables related to sales)	​	​	​	​	​	​	​		14,175	​		13,169	​		(472)	​		(576)	​		13,703	​		12,593	14 ​	​
Proceeds from maturities and sales of marketable securities	​		58	​		62	​		142	​		36	​		​	​		​	​		200	​		98	​	​
Proceeds from sales of equipment on operating leases	​	​	​	​	​	​	​		1,011	​		993	​		​	​		​	​		1,011	​		993	​	​
Cost of receivables acquired (excluding receivables related to sales)	​	​	​	​	​	​	​		(14,238)	​		(13,584)	​		147	​		133	​		(14,091)	​		(13,451)	14 ​	​
Purchases of marketable securities	​	​	(226)	​		(21)	​		(206)	​		(167)	​		​	​		​	​		(432)	​		(188)	​	​
Purchases of property and equipment	​		(718)	​		(583)	​		(1)	​		(1)	​		​	​		​	​		(719)	​		(584)	​	​
Cost of equipment on operating leases acquired	​	​	​	​	​	​	​		(1,516)	​		(1,327)	​		147	​		98	​		(1,369)	​		(1,229)	15 ​	​
Decrease (increase) in investment in Financial Services	​	​	10	​	​	(799)	​		​	​		​	​		(10)	​		799	​		​	​		​	17 ​	​
Increase in trade and wholesale receivables	​	​	​	​	​	​	​		(3,171)	​		(5,310)	​		3,171	​		5,310	​		​	​		​	14 ​	​
Collateral on derivatives – net	​	​	​	​	​	​	​	​	96	​	​	367	​	​	​	​	​	​	​	​	96	​	​	367	​	​
Other	​		(68)	​		(119)	​		(2)	​		25	​		1	​		1	​		(69)	​		(93)	​	​
Net cash used for investing activities	​		(944)	​		(1,460)	​		(3,710)	​		(5,799)	​		2,984	​		5,765	​		(1,670)	​		(1,494)	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Cash Flows from Financing Activities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net proceeds (payments) in short-term borrowings (original maturities three months or less)	​		189	​		(225)	​		(131)	​		4,217	​		​	​		​	​		58	​		3,992	​	​
Change in intercompany receivables/payables	​		31	​		932	​		(31)	​		(932)	​		​	​		​	​		​	​		​	​	​
Proceeds from borrowings issued (original maturities greater than three months)	​		34	​		41	​		10,155	​		4,827	​		​	​		​	​		10,189	​		4,868	​	​
Payments of borrowings (original maturities greater than three months)	​		(1,012)	​		(47)	​		(7,127)	​		(3,520)	​		​	​		​	​		(8,139)	​		(3,567)	​	​
Repurchases of common stock	​		(2,422)	​		(2,546)	​	​	​	​	​	​	​	​	​	​	​	​	​	​	(2,422)	​	​	(2,546)	​	​
Capital investment from Equipment Operations	​	​	​	​		​	​	​	(10)	​	​	799	​	​	10	​	​	(799)	​	​	​	​	​	​	17 ​	​
Dividends paid	​		(796)	​		(697)	​		(247)	​	​	(12)	​		247	​	​	12	​		(796)	​	​	(697)	13 ​	​
Other	​		(27)	​		(5)	​		(25)	​		(28)	​		​	​		​	​		(52)	​		(33)	​	​
Net cash provided by (used for) financing activities	​		(4,003)	​		(2,547)	​		2,584	​		5,351	​		257	​		(787)	​		(1,162)	​		2,017	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash	​		​	​		62	​		(5)	​		8	​		​	​		​	​		(5)	​		70	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash	​		(1,916)	​		(179)	​		23	​		625	​		​	​		​	​		(1,893)	​		446	​	​
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	​		5,755	​		3,781	​		1,865	​		1,160	​		​	​		​	​		7,620	​		4,941	​	​
Cash, Cash Equivalents, and Restricted Cash at End of Period	​	$	3,839	​	$	3,602	​	$	1,888	​	$	1,785	​	​	​	​	​	​	​	$	5,727	​	$	5,387	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Components of Cash, Cash Equivalents, and Restricted Cash	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Cash and cash equivalents	​	$	3,800	​	$	3,587	​	$	1,753	​	$	1,680	​	​	​	​	​	​	​	$	5,553	​	$	5,267	​	​
Restricted cash (Other assets)	​	​	39	​	​	15	​	​	135	​	​	105	​	​	​	​	​	​	​	​	174	​	​	120	​	​
Total Cash, Cash Equivalents, and Restricted Cash	​	$	3,839	​	$	3,602	​	$	1,888	​	$	1,785	​	​	​	​	​	​	​	$	5,727	​	$	5,387	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

11 Elimination of depreciation on leases related to inventory transferred to equipment on operating leases.

12 Reclassification of share-based compensation expense.

13 Elimination of dividends from financial services to the equipment operations, which are included in the equipment operations’ operating activities.

14 Primarily reclassification of receivables related to the sale of equipment.

15 Reclassification of direct lease agreements with retail customers.

16 Reclassification of sales incentive accruals on receivables sold to financial services.

17 Elimination of change in investment from equipment operations to financial services.

​

​

​