2023 ANNUAL REPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark one)
(cid:1409) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 29, 2023
or
(cid:1407) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 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
(Address of principal executive offices)
61265
(Zip Code)
(309) 765-8000
(Telephone Number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT
Title of each class
Common stock, $1 par value
6.55% Debentures Due 2028
Trading symbol
DE
DE28
Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:1409) No (cid:1407)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes (cid:1407) No (cid:1409)
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 (cid:1409) No (cid:1407)
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 (cid:1409) No (cid:1407)
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 (cid:1409)
Non-accelerated filer (cid:1407)
Accelerated filer (cid:1407)
Smaller reporting company (cid:1407)
Emerging growth company (cid:1407)
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. (cid:1407)
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. (cid:1409)
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. (cid:1407)
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any
of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). (cid:1407)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:1407) No (cid:1409)
The aggregate quoted market price of voting stock of the registrant held by non-affiliates at April 28, 2023 was $110,752,079,592. At November 30, 2023,
280,255,442 shares of common stock, $1 par value, of the registrant were outstanding.
Documents Incorporated by Reference. Portions of the proxy statement for the annual meeting of stockholders to be held on February 28, 2024 are incorporated
by reference into Part III of this Form 10-K.
TABLE OF CONTENTS
BUSINESS
RISK FACTORS
UNRESOLVED STAFF COMMENTS
PROPERTIES
LEGAL PROCEEDINGS
MINE SAFETY DISCLOSURES
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
[RESERVED]
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
CONTROLS AND PROCEDURES
OTHER INFORMATION
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
EXECUTIVE COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
PRINCIPAL ACCOUNTANT FEES AND SERVICES
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
FORM 10-K SUMMARY
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PART I
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4.
PART II
ITEM 5.
ITEM 6.
ITEM 7.
ITEM 7A.
ITEM 8.
ITEM 9.
ITEM 9A.
ITEM 9B.
ITEM 9C.
PART III
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.
PART IV
ITEM 15.
ITEM 16.
1
PART I
ITEM 1.
BUSINESS.
This Annual Report on Form 10-K contains forward-looking statements that are subject to risks and uncertainties. All statements other
than statements of historical fact included in this Annual Report on Form 10-K are forward-looking statements. Forward-looking
statements provide our current expectations and projections relating to our financial condition, results of operations, plans,
objectives, future performance, and business. You can identify forward-looking statements as they do not relate to historical or
current facts and by words such as “believe,” “expect,” “estimate,” “anticipate,” “will,” “aim,” “should,” “plan,” “forecast,” “target,”
“guide,” “project,” “intend,” “could,” and similar words or expressions.
All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that
we expected. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements,
and other important information about forward-looking statements are disclosed under Item 1A, “Risk Factors,” and Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations–Forward-Looking Statements,” in this
Annual Report on Form 10-K.
As used herein, the terms “John Deere,” “we,” “us,” “our,” or “the Company” refer to Deere & Company and its subsidiaries unless
designated or identified otherwise. All amounts are presented in millions of dollars, unless otherwise specified.
Products
The John Deere enterprise has manufactured agricultural equipment since 1837. Deere & Company was incorporated under the laws of
Delaware in 1958. Our business is managed through the following four business segments: production and precision agriculture (PPA),
small agriculture and turf (SAT), construction and forestry (CF), and financial services (John Deere Financial or FS).
BUSINESS SEGMENT
PRODUCTION AND
PRECISION
AGRICULTURE
SMALL
AGRICULTURE
AND TURF
CONSTRUCTION
AND FORESTRY
FINANCIAL
SERVICES
PRODUCTS
CROPS/FUNCTION
•
•
•
•
•
•
•
•
•
•
•
Large and Certain
Mid-Size Tractors
Combines
Cotton Pickers and
Cotton Strippers
Sugarcane
Harvesters
Sugarcane Loaders
and Pull Behind
Scrapers
Soil Preparation,
Seeding,
Application, and
Crop Care
Equipment
Tillage Equipment
Corn and Soy
Small Grain
Cotton
Sugarcane
•
•
•
•
•
•
•
•
•
•
•
Certain Mid-Size,
Utility, and Compact
Utility Tractors
Self-Propelled
Forage Harvesters
Hay and Forage
Equipment
Rotary Mowers
Utility Vehicles
Riding Lawn
Equipment and
Commercial
Mowing Equipment
Golf Course
Equipment
Dairy and Livestock
Lawn and Property
Maintenance
Golf Course
Maintenance
High-Value Crop
Solutions
2
•
•
•
•
•
•
•
•
•
•
Backhoe Loaders
Crawler Dozers and
Loaders
Four-Wheel-Drive
Loaders and
Compact Track
Loaders
Excavators and
Compact Excavators
Equipment used in
Timber Harvesting
Road Building and
Road Rehabilitation
Equipment
Articulated Dump
Trucks and Motor
Graders
Earthmoving
Forestry
Roadbuilding
•
•
Retail Notes
Revolving Charge
Accounts
• Wholesale
Receivables
•
•
Leases
Extended Warranties
•
Financial Solutions
Smart Industrial Operating Model and Leap Ambitions
In fiscal year 2020, we announced our Smart Industrial Operating Model. The model is based on the following three focus areas:
1. Production Systems. A strategic alignment of products and solutions around our customers’ production systems. Production
systems refer to the series of steps our customers take to execute different tasks, operations, and projects to grow an
agricultural product or execute a project.
2. Technology Stack. Investments in technology, as well as research and development, that deliver intelligent solutions to our
customers through hardware and devices, embedded software, connectivity, data platforms, and applications. The technology
stack leverages the core technologies mentioned in the previous sentence across the enterprise, including digital capabilities,
automation, autonomy, and alternative power technologies. The stack has the potential to unlock economic and sustainable
value for customers by optimizing jobs, strengthening decision-making, and better connecting the steps of a production system.
3. Lifecycle Solutions. The enterprise 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, and with a specific lifecycle solution
focus on the ownership experience. This integrated support seeks to enhance customer value through proactive and reactive
support, easy access to parts, value-add services, and precision upgrades, regardless of when a customer purchases our
equipment.
Building upon the Smart Industrial Operating Model, we announced our Leap Ambitions framework in fiscal year 2022. The Leap
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.
The Leap Ambitions framework has three components: (i) size the incremental market opportunity, quantifying the value that can be
created; (ii) identify the key actions required to guide investment in digitalization, autonomy, automation, and alternative power
technologies; and (iii) define the desired financial and sustainable outcomes we hope to achieve to help investors and stakeholders
understand the opportunities that can be unlocked in the future through present investments. Applying this framework, the Leap
Ambitions set goals to measure the results under our Smart Industrial Operating Model. Current financial and sustainability goals for the
Leap Ambitions relate to workforce safety, agriculture customer outcomes, product circularity, environmental footprint, Solutions as a
Service, and equipment operations operating return on sales (OROS).
We aim to deliver ongoing value across our product lines by digitally connecting certain equipment we produce, enabling our customers to
leverage technology for better economic and more sustainable outcomes in their businesses. We are introducing viable alternative power
technologies for various product families. We also plan to enhance how we deliver value by introducing and scaling a Solutions as a Service
business model.
We also aim to enable our agriculture customers to be more sustainable in their production steps by providing technology solutions that
help to improve their nitrogen use efficiency, increase their crop protection efficiency, and reduce their CO2e emissions.
We believe we will deliver ongoing value to our SAT customers by increasing the connectivity of their equipment, offering electric options
where feasible in our product families, and working toward production of a fully autonomous, battery powered electric agricultural tractor.
For our CF customers, we aim to deliver ongoing value by offering electric and hybrid-electric options where feasible in our product
families and increasing the use of grade management control for earthmoving customers, intelligent boom control for forestry customers,
and precision roadbuilding solutions for our roadbuilding customers.
We anticipate enabling sustainable outcomes for our customers. Specifically, we aim to enable our agriculture customers to be more
sustainable in their production steps by providing technology solutions that help to improve their nitrogen use efficiency, increase their
crop protection efficiency, and reduce their CO2e emissions.
Available Information
Our internet address is http://www.deere.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, and amendments to those reports are available on our website free of charge as soon as reasonably practicable after they
are filed or furnished with the United States Securities and Exchange Commission (SEC or Commission). The information contained on
our website is not included in, nor incorporated by reference into, this Annual Report on Form 10-K.
Equipment Operations
Our equipment operations consist of three of our business segments: PPA, SAT, and CF. In fiscal year 2023, PPA generated $26,790
net sales and revenue, or 48 percent of equipment operations net sales and revenues; SAT generated $13,980 net sales and revenues,
or 25 percent of equipment operations net sales and revenues; and CF generated $14,795 net sales and revenues, or 27 percent of
equipment operations net sales.
3
Production and Precision Agriculture
As compared with fiscal year 2022, PPA net sales for fiscal year 2023 were:
(In millions of dollars)
Net Sales
2023
$26,790
2022
$22,002
% Change
22%
The PPA segment is committed to meeting the fundamental needs of our customers through a combination of equipment and
technology designed to enable our customers to overcome some of their biggest challenges: doing more with less, labor shortages,
volatile input costs, and executing jobs in tighter timeframes. This segment defines, develops, and delivers global equipment and
technology solutions for production-scale growers of crops like large grains (such as corn and soy), small grains (such as wheat, oats,
and barley), cotton, and sugarcane. Equipment manufactured and distributed by the segment includes large and certain mid-size
tractors, combines, cotton pickers, cotton strippers, sugarcane harvesters, related harvesting front-end equipment, and pull-behind
scrapers. In addition, the segment includes tillage, seeding, and application equipment, including sprayers and nutrient management
and soil preparation machinery.
We have been bringing innovations to agriculture for nearly 200 years and continue to invest in the development and production of
advanced technology through integrated agricultural solutions and precision technologies across our portfolio of equipment. We
have developed a differentiated, production system-level approach that helps us understand how customers operate, focusing on
their costs, identifying the opportunities for them to reduce inputs, and increasing productivity, yield improvement, and sustainability.
This approach directs our work. Advancements such as precise global navigation satellite systems technology, advanced connectivity
and telematics, on-board sensors and computing power, automation software, digital tools, applications, and analytics provide
seamless integration of information designed to improve customer decision-making and job execution. Our advanced telematics
systems remotely connect equipment owners, business managers, and dealers to equipment in the field. This provides real-time alerts
and information about equipment location, utilization, performance, and maintenance to improve productivity and efficiency, as well
as to monitor agronomic job execution.
We aim to support our customers and their equipment throughout the entire equipment lifecycle. To prevent downtime, we offer a wide
variety of aftermarket and customer solutions to keep equipment running, including machine monitoring, remote diagnostics, predictive
maintenance alerts, and e-commerce solutions.
Examples of recent developments to unlock customer value and address challenges in the field include ExactShot™ and FurrowVision,
which help customers reduce inputs during planting applications, generating cost savings, and lowering their environmental footprint;
our fully autonomous 8R tillage tractor with a GPS guidance system and stereo cameras to execute tillage work without an in-cab
operator, which helps to address farmers’ labor challenges and time constraints; and See & Spray™ Ultimate, which targets the
application of non-residual herbicides on weeds in corn, soybean, and cotton fields.
In addition to John Deere brand names, the table below provides a list of PPA products and their associated brand names:
PRODUCT
Sprayers
Planters and Cultivators
Sprayers and Planters
Carbon Fiber Sprayer Booms
Sugarcane Harvester Aftermarket Parts
BRAND NAME
Hagie, Mazzotti
Monosem
PLA
King Agro
Unimil
Aftermarket Parts for PPA Products
Vapormatic, A&I, Unimil, Alternatives by John Deere
4
Small Agriculture and Turf
As compared with fiscal year 2022, SAT net sales for fiscal year 2023 were:
(In millions of dollars)
Net Sales
2023
$13,980
2022
$13,381
% Change
4%
SAT is committed to meeting the needs of our customers through defining, developing, and delivering global equipment and
technology solutions designed to unlock customer value and sustainability for dairy and livestock producers, high-value crop
producers, and turf and utility customers. The segment works to provide product leadership while extending integrated agricultural
solutions and precision technologies across its portfolio of equipment to unlock incremental value for customers. Similar to PPA, the
SAT segment aims to support customers and their equipment through the entire equipment lifecycle.
Equipment manufactured and distributed by the segment includes certain mid-size, small and utility tractors, and related loaders and
attachments; turf and utility equipment, including riding lawn equipment, commercial mowing equipment, golf course equipment,
utility vehicles, implements for mowing, tilling, snow and debris handling, aerating, and other residential, commercial, golf, and sports
turf care applications; and hay and forage equipment, including self-propelled forage harvesters and attachments, balers, and
mowers. SAT equipment is sold primarily through independent retail dealer networks, although the segment also builds turf products
for sale by mass retailers, including The Home Depot and Lowe’s. Our turf equipment is sold primarily in North American, Western
European, and Australian markets.
In the small agriculture market, we have introduced autonomous solutions, connectivity capabilities, and a path to electrifying our future
by delivering a portfolio that helps current customers meet sustainability goals while finding innovative ways to serve new customers and
unlock new markets for mechanization, at scale. For example, our joint venture with GUSS Automation, LLC in fiscal year 2022 added to
our portfolio an autonomous sprayer to target our high value crop customers’ needs. In fiscal year 2023, we announced the acquisition of
Smart Apply, Inc., a precision spraying equipment company. The Smart Apply Intelligent Spray Control System™ stacked with GUSS
Automation’s remote sprayer is aimed at the needs of our high-value crop customers to improve their productivity and optimize inputs. On
the turf side of the business, in fiscal year 2023 we launched two battery-powered walk behind mowers and announced certain hybrid
innovations.
In addition to John Deere brand names, the table below provides a list of SAT products and their associated brand names:
PRODUCT
Equipment Attachments
Aftermarket Parts for SAT
BRAND NAME
Frontier, Kemper, GreenSystem, Smart Apply
Vapormatic, A&I, Sunbelt, Alternatives by John Deere
Agriculture and Turf Operations
Smart Industrial Operating Model. Our PPA and SAT segments offer a full line of agriculture and turf equipment and related service
parts. As part of our Smart Industrial Operating Model, the segments are aligned around production systems, enabling focus on
delivering equipment, technology, and solutions across all the jobs customers execute during a season. Sales and marketing support
for both the PPA and SAT segments continues to be organized around four geographic regions: U.S., Canada, and Australia; Latin
America and South America; Europe, Middle East, and the Commonwealth of Independent States (CIS); and Africa and Asia.
Business Environment. Sales of agricultural equipment are affected by total farm cash receipts, which reflect levels of farm
commodity prices, acreage planted, crop yields, and government policies, including global trade policies, the amount and timing of
government payments, and policies related to climate change. Sales also are influenced by general economic conditions, farmland
prices, farmers’ debt levels and access to financing, interest and exchange rates, agricultural trends, including the production of and
demand for renewable fuels, labor availability and costs, energy costs, tax policies, and other input costs associated with farming.
Other key factors affecting new agricultural equipment sales are the value, age, and level of used equipment, including tractors,
harvesting equipment, self-propelled sprayers, hay and forage equipment, and seeding equipment. Weather and climatic conditions
also can affect buying decisions of agricultural equipment purchasers.
Innovations in machinery and technology also influence agricultural equipment purchasing. For example, larger, more productive
equipment is well accepted where farmers are striving for more efficiency in their operations. Large, cost-efficient, highly mechanized
agricultural operations account for an important share of worldwide farm output. These customers are increasingly adopting and
integrating precision agricultural technologies like guidance, telematics, automation, and data management in their operations. The
large-size agricultural equipment used on such farms has been particularly important to us. A large proportion of the equipment
5
operations’ total agricultural equipment sales in the U.S. and Canada, as well as in many countries outside the U.S. and Canada, are
comprised of tractors over 100 horsepower, self-propelled combines, self-propelled cotton pickers, self-propelled forage harvesters,
self-propelled sprayers, and seeding equipment. However, small tractors are also an important part of our global business. Further, we
offer a number of harvesting solutions to support development of the mechanized harvesting of grain, oilseeds, cotton, sugarcane,
forage, and biomass.
Retail sales of lawn and garden tractors, compact utility tractors, residential and commercial mowers, utility vehicles, and golf and turf
equipment are influenced by the housing market, weather conditions, consumer spending patterns, and general economic conditions
like unemployment, interest, and inflation rates.
Seasonality. Seasonal patterns in retail demand for agricultural equipment can result in substantial variations in the volume and mix of
products sold to retail customers during the year. Seasonal demand must be estimated in advance, and equipment must be
manufactured in anticipation of such demand to achieve efficient utilization of personnel and facilities throughout the year. The PPA
and SAT segments can incur substantial seasonal variations in cash flows to finance production and inventory of agricultural and turf
equipment. The segments also incur costs to finance sales to dealers in advance of seasonal demand.
For certain equipment, we offer early order programs, which can include discounts to retail customers that place orders well in
advance of the use season. Production schedules are based, in part, on these early order programs; however, during periods of high
demand, some factories may still produce after the use season. New combine and cotton harvesting equipment has been sold under
early order programs with waivers of retail finance charges available to customers who take delivery of machines during non-use
seasons.
In Australia, Canada, and the U.S., there are typically several used equipment trade-in transactions that take place in connection with
most new agricultural equipment sales. To provide support to our dealers in these countries for carrying and ultimately selling this
used inventory to retail customers, we provide these dealers with pools of funds awarded as a percentage of the dealer cost for
eligible new equipment sales at the time of the new equipment settlement.
Retail demand for turf and utility equipment is normally higher in the second and third fiscal quarters. We have pursued a strategy of
building and shipping such equipment as close to retail demand as possible. Consequently, to increase asset turnover and reduce the
average level of field inventories throughout the year, production and shipment schedules of these product lines are normally
proportionately higher in the second and third fiscal quarters of each year, corresponding closely to the seasonal pattern of retail
sales. However, the patterns of seasonality have been affected by the supply chain disruptions experienced during fiscal year 2022.
Construction and Forestry
As compared with fiscal year 2022, CF net sales for fiscal year 2023 were:
(In millions of dollars)
Net Sales
2023
$14,795
2022
$12,534
% Change
18%
Our CF segment is committed to meeting the need for smart and more sustainable solutions to help our customers meet industry
challenges, including jobsite safety, a shortage of skilled labor, volatile input costs, reducing rework, maximizing uptime, and
minimizing their environmental footprint. CF also aims to support customers and their equipment through the entire equipment
lifecycle (see PPA section above).
To address these challenges and unlock value for customers, we deliver a robust portfolio of construction, roadbuilding, and forestry
products with precision technology solutions. Our smart solutions such as SmartWeigh™, grade control offerings, machine and system
automation, and operations center, are designed to allow customers to complete more functions with fewer inputs, reduce rework and
guesswork, and transform data into insights to allow for better decisions. Obstacle detection solutions such as SmartDetect™ supplements
operator visibility on the jobsite through a combination of cameras, radar, and machine learning. Additionally, we plan to deliver hybrid-
electric and battery electric equipment solutions to help customers reduce tailpipe emissions without sacrificing power and performance.
We currently have the 644X four-wheel-drive loader and 944X four-wheel-drive loader in production with an electric drive coupled with a
diesel engine.
Our primary construction products include excavators, wheel loaders, motor graders, dozers, backhoes, articulated dump trucks, compact
construction equipment including skid steers, compact excavators, and compact track loaders, along with a variety of attachments. Our
Wirtgen roadbuilding products include milling machines, pavers, compactors, rollers, crushers, screens, and asphalt plants. Similar to the
construction product lineup, the Wirtgen brand also provides a technology stack aimed at allowing customers to make smarter and more
sustainable decisions. Technology offerings include Wirtgen Performance Tracker, Mill Assist, Level Pro, Vögele Roadscan, Smart
Compact, WITOS Paving, Spective Connect, AutoTrac™, and John Deere Connected Support™.
6
In forestry, our primary products include skidders, wheeled and tracked feller bunchers, forwarders, knuckleboom loaders, wheeled and
tracked harvesters, swing machines, and precision forestry technology solutions such as Intelligent Boom Control, TimberMatic™ maps,
and TimberManager™. These solutions allow customers to closely track jobsite progress and provide visibility into fleet location, utilization,
performance, and maintenance information.
We have a number of initiatives in the rent-to-rent, or short-term rental, market for construction, earthmoving, roadbuilding, and
material handling equipment. These include specially designed rental programs for our dealers and expanded cooperation with major
national equipment rental companies.
We own retail forestry sales operations in Australia, Brazil, Finland, Ireland, New Zealand, Norway, Sweden, and the United Kingdom.
In addition, the Wirtgen Group sells its products primarily through company-owned sales and service subsidiaries in many markets
worldwide (most significantly in Europe, India, and Australia). In most other geographies, we sell through an independent dealer
channel.
The prevailing levels of residential, commercial, and public construction, investment in infrastructure, and the condition of the
forestry products industry influence retail sales of our construction, roadbuilding, and forestry equipment. General economic
conditions, interest rate levels, the availability of credit, and certain commodity prices, such as those applicable to oil and gas, pulp,
paper, and saw logs, also influence sales.
In addition to John Deere brand names, the table below provides a list of CF products and their associated brand names:
PRODUCT
Roadbuilding Equipment
BRAND NAME
Wirtgen, Vögele, Hamm, Kleemann, Benninghoven, and
Ciber
Forestry Attachments
Waratah
Competition
The equipment operations sell products and services in a variety of competitive global and regional markets. The principal competitive
factors in all markets include product performance, innovation, quality, distribution, sustainability, customer service, and value. John
Deere’s brand recognition is a competitive factor in North America and many other parts of the world.
The agricultural equipment industry continues to change and is becoming even more competitive through the emergence and
expanding global capability of many competitors. The competitive environment for the agriculture and turf operations includes some
global competitors, including AGCO Corporation, CLAAS KGaA mbH, CNH Industrial N.V., Kubota Tractor Corporation, Mahindra &
Mahindra Limited, and The Toro Company, as well as many regional and local competitors. These competitors have varying numbers
of product lines competing with our products and each has varying degrees of regional focus. Additional competition within the
agricultural equipment industry has come from a variety of short-line and specialty manufacturers, as well as local or regional
competitors, with differing manufacturing and marketing methods. As technology increasingly enables enhanced productivity in
agriculture, the industry is also attracting non-traditional competitors, including technology-focused companies and start-up
ventures.
Our forestry and roadbuilding businesses operate globally. The construction business operates in competitive markets in North and
South America, as well as other global markets. Global competitors of the CF segment include Caterpillar Inc., CNH Industrial N.V.,
Doosan Infracore Co., Ltd. and its subsidiary Doosan Bobcat Inc., Fayat Group, GOMACO Corporation, Hitachi Construction
Machinery, Komatsu Ltd., Kubota Tractor Corporation, Ponsse Plc, SANY Group Co., Ltd., Terex, Tigercat Industries Inc., Volvo
Construction Equipment (part of Volvo Group AB), and XCMG.
Manufacturing and Assembly
Common manufacturing processes and techniques are used in producing components for PPA, SAT, and CF equipment sold by us and our
dealers. The equipment operations also pursue external sales of selected parts that can be manufactured and supplied to third parties on a
competitive basis, including engines, power train components, and electronic components. The equipment operations’ manufacturing
strategy involves four elements: Build a Stronger Business, Deliver Innovation, Excite the Customer, and Live the Team.(cid:3031)
Build a Stronger Business refers to our ability to execute lean initiatives supported by safety, quality, delivery, and productivity goals.
Deliver Innovation refers to implementing our digitally connected factory projects to improve efficiency and differentiated value.(cid:3031)We
implement technology solutions to support our factories across the globe to increase our speed of manufacturing innovation and allow
the workforce to focus on high-value tasks.
7
Excite the Customer refers to designing operations to be flexible and accommodate product design changes to meet market conditions
and changing customer requirements.
Live the Team refers to building a safety culture by ensuring that employees are safe at work.
To utilize manufacturing facilities and technology more effectively, the equipment operations pursue continuous improvements in
manufacturing processes, including steps to streamline manufacturing processes and enhance responsiveness to customers. Our flexible
assembly lines can accommodate a wider product mix and deliver products in line with dealer and customer demand. Additionally,
considerable effort is being directed to manufacturing cost reduction through process improvement and improvements in product design,
advanced manufacturing technology, and supply management and logistics, as well as compensation incentives related to productivity
and organizational structure.
See Item 2 “Properties” in this Annual Report on Form 10-K for more information about our manufacturing facilities.
Patents, Trademarks, Copyrights, and Trade Secrets
We own a significant number of patents, trademarks, copyrights, trade secrets, and intellectual property licenses related to our
products and services and expect the number to grow as we continue to pursue technological innovations. We further our
competitive position by filing patent and trademark applications in the U.S. and internationally to protect technology, improvements
considered important to the business, and our brand. We believe that, taken together, our rights under these patents and licenses are
important to our operations and competitive position, but do not regard any of our businesses as being dependent upon any single
patent or family of patents. See “Risk Factors- Our business could be adversely affected by the infringement or loss of intellectual
property rights” for more information.
Sales and Distribution
Through the U.S. and Canada, we market products to approximately 2,050 independent dealer locations. Of these, approximately
1,600 sell agricultural equipment, while approximately 450 sell construction, earthmoving, material handling, roadbuilding, and/or
forestry equipment. In addition, roadbuilding equipment is sold at approximately 90 roadbuilding-only locations that may carry
products that compete with our construction, earthmoving, material handling, and/or forestry equipment. Turf equipment is sold at
most John Deere agricultural equipment locations, a few construction, earthmoving, material handling, roadbuilding, and/or forestry
equipment locations, and about 280 turf-only locations, many of which also sell dissimilar lines of non-John Deere products. In
addition, certain lawn and garden product lines are sold through The Home Depot and Lowe’s.
Outside the U.S. and Canada, our agriculture and turf equipment is sold to distributors and dealers for resale in over 100 countries.
Sales and administrative offices are in Argentina, Australia, Brazil, China, France, Germany, India, Italy, Mexico, Poland, Singapore,
Sweden, South Africa, Spain, Ukraine, and the United Kingdom. Turf equipment sales outside the U.S. and Canada occur primarily in
Western Europe and Australia. Construction, earthmoving, material handling, and forestry equipment is sold to distributors and
dealers primarily by sales offices located in Australia, Brazil, Finland, New Zealand, Singapore, and the United Kingdom. Some of these
dealers are independently owned while we own others. Roadbuilding equipment is sold directly to retail customers and independent
distributors and dealers for resale. As of November 1, 2022, we did not renew dealer agreements in Russia, and in October 2023, we
sold our roadbuilding business in Russia. Consequently, we no longer sell equipment in Russia. The Wirtgen Group operates company-
owned sales and service subsidiaries in Australia, Austria, Belgium, Bulgaria, China, Denmark, Estonia, Finland, France, Georgia,
Germany, Hungary, India, Ireland, Italy, Japan, Latvia, Lithuania, Malaysia, the Netherlands, Norway, Poland, Romania, South Africa,
Sweden, Taiwan, Thailand, Turkey, Ukraine, and the United Kingdom. The equipment operations operate centralized parts distribution
warehouses in the U.S., Brazil, and Germany in coordination with regional parts depots and distribution centers in Argentina, Australia,
China, India, Mexico, South Africa, Sweden, and the United Kingdom.
We market engines, power trains, and electronic components worldwide through select sales branches or directly to regional and
global original equipment manufacturers and independently owned engine distributors.
Raw Materials
We purchase raw materials, manufactured components, and replacement parts for our equipment, engines, and other products from
leading suppliers both domestically and internationally. These materials and components include a variety of steel products, metal
castings, forgings, plastics, hydraulics, electronics, and ready-to-assemble components made to certain specifications. We also
purchase various goods and services used for production, logistics, offices, and research and development. We develop and maintain
sourcing strategies for our purchased materials and emphasize long-term supplier relationships at the core of these strategies. We
use a variety of agreements with suppliers intended to drive innovation, ensure availability and delivery of industry-leading quality raw
materials and components, manage costs on a globally competitive basis, protect our intellectual property, and minimize other supply-
related risks. We actively monitor supply chain risks to minimize the likelihood of business disruptions caused by the supply base,
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including supplier financial viability, capacity, business continuity, labor availability, quality, delivery, cybersecurity, weather-related
events, and natural disasters. We have implemented mitigation efforts to minimize the impact of potential and actual supply chain
disruptions on our customers. Examples include working with the supply base to prioritize allocations to improve material availability,
multi-sourcing selected parts and materials, entering long term contracts for some critical components, and using alternative freight
carriers to expedite delivery.
Backlog Orders
The dollar amount of backlog orders as of October 29, 2023 was approximately $7.9 billion for the PPA segment and $3.3 billion for the
SAT segment, compared with $9.7 billion and $4.6 billion, respectively, at October 30, 2022. The agriculture and turf backlog are generally
highest in the second and third quarters due to seasonal buying trends in these industries. The dollar amount of backlog orders for the CF
segment was approximately $6.4 billion at October 29, 2023, compared with $8.2 billion at October 30, 2022, including, for both periods,
backlog orders for roadbuilding equipment, which had not historically been included in discussions of the CF segment’s backlog orders.
Backlog orders for equipment operations include all orders deemed to be firm as of the referenced date. Backlog orders decreased as
demand has declined.
Financial Services
U.S. and Canada. The financial services segment primarily provides and administers financing for retail purchases from our dealers of
new equipment manufactured by our agricultural and turf and construction and forestry markets, as well as used equipment taken in
trade for this equipment. The Company and John Deere Construction & Forestry Company (a wholly owned subsidiary of the
Company) are referred to as the “sales companies.” John Deere Capital Corporation (Capital Corporation), a U.S. financial services
subsidiary, generally purchases retail installment sales and loan contracts (retail notes) from the sales companies. In Canada, John
Deere Financial Inc., a Canadian financial services subsidiary, purchases and finances retail notes acquired by John Deere Canada ULC,
our Canadian sales company. The terms of retail notes and the basis on which the financial services operations acquire retail notes
from the sales companies are governed by agreements with the sales companies. The financial services segment also finances and
services revolving charge accounts, in most cases acquired from and offered through merchants in the agricultural and turf markets.
Additionally, the financial services operations provide wholesale financing to dealers of our agriculture and turf equipment and
construction and forestry equipment (wholesale notes), primarily to finance inventories of equipment for those dealers. The various
financing options offered by the financial services operations are designed to enhance sales of our products and generate financing
income for the financial services operations. In the U.S. and Canada, certain subsidiaries included in the financial services segment
offer extended equipment warranties.
Retail notes acquired by the sales companies are immediately sold to the financial services operations. The equipment operations are
the financial services operations’ major source of business, although many retail purchasers of our products finance their purchases
outside our organization through a variety of sources, including commercial banks and finance and leasing companies.
The financial services operations offer retail leases to equipment users in the U.S. A small number of leases are executed with units of
local governments. Leases are usually written for periods ranging from less than one year to seven years, and typically contain an
option permitting the customer to purchase the equipment at the end of the lease term. Retail leases also are offered in a generally
similar manner to customers in Canada.
The financial services operations’ terms for financing equipment retail sales (other than smaller items financed with unsecured
revolving charge accounts) generally provide for retention of a security interest in the equipment financed. Finance charges are
sometimes waived for specified periods or reduced on certain John Deere products sold or leased in advance of the season of use or in
other sales promotions. The financial services operations generally receive compensation from the sales companies at approximate
market interest rates for periods during which finance charges are waived or reduced on the retail notes or leases. The cost is
accounted for as a deduction in arriving at net sales by the equipment operations.
We have an agreement with Capital Corporation to make payments to Capital Corporation such that its consolidated ratio of earnings
to fixed charges is not less than 1.05 to 1 for any four consecutive fiscal quarterly periods. We also have committed to continuing to
own, directly or through one or more wholly-owned subsidiaries, at least 51 percent of the voting shares of capital stock of Capital
Corporation and to maintain Capital Corporation’s consolidated tangible net worth at not less than $50 million. Our obligations to
make payments to Capital Corporation under this agreement are independent of whether Capital Corporation is in default on its
indebtedness, obligations, or other liabilities. Further, our obligations under the agreement are not measured by the amount of
Capital Corporation’s indebtedness, obligations, or other liabilities. Our obligations to make payments under this agreement are
expressly stated not to be a guaranty of any specific indebtedness, obligation, or liability of Capital Corporation and are enforceable
only by or in the name of Capital Corporation. As of October 29, 2023, we were in compliance with all of our obligations, and no
payments were required under this agreement in fiscal year 2023 or fiscal year 2022. At October 29, 2023, we indirectly owned
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100 percent of the voting shares of Capital Corporation’s capital stock and Capital Corporation’s consolidated tangible net worth was
$5,901.6 million.
Outside the U.S. and Canada. The financial services operations also offer financing, primarily for our products, in Argentina, Australia,
Brazil, China, India, Mexico, New Zealand, and in several other countries in Africa, Asia, Europe, and Latin America. John Deere
Financial sold its financial services business in Russia during the second quarter of fiscal year 2023. In certain markets, financing is
offered through cooperation agreements or joint ventures with other financial institutions. The way the financial services operations
offer financing in these countries is affected by a variety of country-specific laws, regulations, and customs, including those
governing property rights and debtor obligations, which are subject to change, and which may introduce greater risk to the financial
services operations.
The financial services operations also offer to select customers and dealers credit enhanced international export financing primarily
for the purchase of our products.
Additional information on the financial services operations is provided in the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” (MD&A) section in this Annual Report on Form 10-K.
Environmental Matters
We are subject to a variety of local, state, and federal environmental laws and regulations in the U.S., as well as the environmental
laws and regulations of other countries in which we conduct business. We strive to comply with applicable laws and regulations;
however, in the event of noncompliance, we could be subject to fines and other penalties. Compliance with these laws and regulations
adds to the cost of our production operations. Compliance with emissions regulations adds to the cost of our products. However, we
do not expect to incur material capital expenditures for environmental control facilities during fiscal year 2024. In addition to ensuring
compliance with laws and regulations, we aim to reduce our environmental footprint through our Leap Ambitions framework and seek
opportunities to reduce environmental impacts on the communities where we operate.
The U.S., the European Union (EU), India, and other governments throughout the world have enacted, and continue to enact, laws and
regulations to reduce off-road engine emissions. Compliance with these regulations requires significant investments in the
development of new engine technologies and after-treatment systems.
Governments also are implementing laws regulating products across their life cycles, including raw material sourcing and the storage,
distribution, sale, use, and disposal of products at their end-of-life. These laws and regulations include requirements to develop less
hazardous chemical substances and products, right-to-know, restriction of hazardous substances, and product take-back laws.
We are evaluating, cleaning-up, or conducting corrective action at a limited number of sites. We do not expect that these matters or
other expenses or liabilities we may incur in connection with any noncompliance with environmental laws, regulations, or the clean-up
of any additional properties, will have a material adverse effect on our consolidated financial position, results of operations, cash
flows, or competitive position.
We continue to monitor and review developing sustainability frameworks, standards, and global regulations and work to incorporate
those most applicable to our business into our sustainability reporting.
With respect to properties and businesses that have been or will be acquired, we conduct due diligence into potential exposure to
environmental liabilities but cannot be certain that we have identified, or will identify, all adverse environmental conditions.
Compliance with these laws and regulations adds to the cost of our production operations. Compliance with emissions regulations
adds to the cost of our products. However, we do not expect to incur material capital expenditures for environmental controls
facilities during fiscal year 2024. In addition to ensuring compliance with laws and regulations, we aim to reduce our environmental
footprint through our Leap Ambitions framework and seek opportunities to reduce environmental impacts on the communities where
we operate.
New regulations applicable to John Deere products
California promulgated regulations prohibiting the use of small off-road spark-ignition engines under 25 horsepower. These
regulations go into effect in 2024 and will impact some of our products, such as our turf care and golf course maintenance products.
Even though we do not expect a material impact to our business from these regulations, to comply with new laws and regulations that
limit off-road gasoline and diesel-powered engines, we intend to offer an electric option in each turf and compact utility tractor
product family by 2026. However, compliance with emissions regulations has added, and will continue to add, to the cost of our
products.
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Government Regulations
We are subject to a wide variety of local, state, and federal laws and regulations in the countries where we operate. These laws and
regulations include a range of trade, product, foreign exchange, employment, tax, environmental, safety, data privacy, antitrust, and
other laws and regulations.
Compliance with these laws and regulations often requires the dedication of time and effort of our employees, as well as financial
resources. In fiscal year 2023, compliance with the regulations applicable to us did not have a material effect on our capital
expenditures, earnings, or competitive position. At this time, we do not expect to incur material capital expenditures related to
compliance with regulations during fiscal year 2024. Additional information about the impact of government regulations on our
business is included in Item 1A, “Risk Factors – Strategic Risks” and “Legal and Compliance Risks.”
Human Capital
Higher Purpose
Our employees are guided by our higher purpose: We run so life can leap forward. Employees are further guided by our Code of
Business Conduct (Code), which helps them to uphold and strengthen the standards of honor and integrity that have defined us since
our founding. Our world and business may change, yet we continue to be guided by our core values — integrity, quality, commitment,
and innovation.
Employees
At October 29, 2023, we had approximately 83,000 employees, including approximately 33,800 employees in the U.S. and Canada.
We also retain consultants, independent contractors, temporary, and part-time workers. Unions are certified as bargaining agents for
approximately 80 percent of our U.S. production and maintenance employees. Approximately 11,500 of our active U.S. production and
maintenance workers are covered by a collective bargaining agreement with the International Union, United Automobile, Aerospace
and Agricultural Implement Workers of America (UAW), with an expiration date of November 1, 2027. A small number of U.S.
production employees are represented by the International Association of Machinists and Aerospace Workers (IAM). Collective
bargaining agreements covering our employees in the U.S. expire between 2024 and 2027. Unions also represent the majority of
employees at our manufacturing facilities outside the U.S.
There is no guarantee that we will be able to renew collective bargaining agreements or whether such agreements will be on terms
satisfactory to us. For further discussion, see “Risk Factors—Disputes with labor unions may adversely affect our ability to operate in
our facilities as well as impact our financial results.”
Code of Business Conduct
We are committed to conducting business in accordance with the highest ethical standards. We require all employees to complete
training on our Code and, where permitted by law, also require that employees regularly certify compliance with the Code. The Code
provides specific guidance to all our employees, outlining how they can and must uphold and strengthen the integrity that has defined
John Deere since its founding. In addition, we maintain a global compliance hotline to allow for concerns of potential violations of the
Code, global policies, or the law to be brought forward.
Health and Safety
We strive to achieve safety excellence through increased focus on leading indicators, risk reduction, health and safety management
systems, and prevention. We have made progress on implementing best practices and leading indicators for enabling employee safety
over recent years with our Health and Safety Management System.
We utilize a safety balanced scorecard, which includes leading and lagging indicators, and is designed to enable continuous
measurement of safety performance and drive continuous improvement. Leading indicators include incident corrective action closure
rates, ergonomic scorecard, and risk reduction from safety and ergonomic risk assessment projects. Lagging indicators include total
recordable incident rate, ergonomic recordable case rate, and near-miss rate. Leading indicators are tracked by most of our
manufacturing facilities and internally reported. In fiscal year 2023, we reported a total recordable incident rate of 2.08 and a lost time
frequency rate of 0.65. To improve our total recordable incident rate, we will prioritize risk and injury reduction strategies, improve
ergonomic programs, and focus on prevention through design.
We also updated our new employee onboarding in fiscal year 2023 to include training labs, hands-on-training, tooling and process
exposures on the shop floor, operator checklists, and training videos of workstations.
Diversity, Equity, and Inclusion (DEI)
We adhere to the principle of equal employment opportunity and we believe that a diverse workforce is essential to our long-term
success and solving our customers’ most pressing challenges. We strive to foster a diverse, equitable, and inclusive culture. We
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embrace employees’ differences in race, color, religion, age, sex, sexual orientation, gender, gender identity and expression, marital or
partnership status, family status, citizenship, national origin, ancestry, geographic background, military or veteran status, disability
(mental or physical), and any other characteristics that make our employees unique.
Our leadership team works to set a consistent and transparent tone on DEI issues and strategy. We also create spaces for open
conversations and learning through our Employee Resources Groups (ERGs) speaker series and micro-learnings. We sponsor 13 ERGs
that are run by employees, open to all employees, and are a key driver of inclusion. ERGs build organization-wide networks that allow
employees to come together and discuss shared interests. The global chapters work with local teams to support efforts to attract,
retain, and develop the best talent. In addition, our global DEI strategy focuses on embedding DEI into world-wide business
operations and people processes.
In addition to recruiting from a wide array of colleges and universities, we partner with several professional organizations to support
our diversity recruitment strategy, including AnitaB.org – a global organization for women in technology, Minorities in Agriculture
Natural Resources and Related Sciences, the National Association of Black Accountants, Inc., the National Black MBA Association, Inc.,
the National Society of Black Engineers, the Society of Women Engineers, the Thurgood Marshall College Fund Leadership Institute,
and the Society of Hispanic Professional Engineers. Our broad recruiting strategy helps us identify talent from all backgrounds.
Compensation & Benefits
Our total rewards are intended to be competitive, meet the varied needs of our global workforce, and reinforce our values. We are
committed to providing comprehensive and competitive pay and benefits to our employees. We invested, and continue to invest, in
employees through growth and development and well-being initiatives.
Our work environment is designed to promote innovation, well-being, and reward performance. Our total rewards for employees
include a variety of components that aim to support sustainable employment and the ability to build a strong financial future,
including competitive market-based pay and comprehensive benefits. In addition to earning base pay, eligible employees are
compensated for their contributions to our goals with both short-term cash incentives and long-term equity-based incentives.
Eligible full-time employees in the U.S. have access to medical, dental, and vision plans; savings and retirement plans; parental leave
and paid time off; and other resources, such as the Employee Assistance Program, which provides mental health and wellness services.
We also offer a variety of working arrangements to eligible employees, including flexible schedules, remote work, and job sharing to
help employees manage home and work-life situations. Programs and benefits differ internationally for a variety of reasons, such as
local legal requirements, market practices, and negotiations with works councils, trade unions, and other employee representative
bodies.
Training and Development
Employees are critical to the long-term success of our business. We encourage employees to identify the paths that can build the
skills, experience, knowledge, and competencies needed for career advancement. We support employees by creating purpose-driven
work opportunities, comprehensive performance reviews and development plans, mentoring opportunities, and professional and
personal development opportunities.
We encourage employees to provide feedback across the enterprise through our internal voluntary employee experience survey, ad-
hoc “pulse” surveys, and new-hire and exit surveys. Reports from these surveys help equip us to address needs across the employee
lifecycle to improve the overall experience and engagement of our workforce.
Around the world, we offer internships, training, upskilling, apprenticeships, and leadership development at all stages of an
employee’s career. Training programs are tailored to different geographic regions and job functions and include topics such as
technical operation of equipment, equipment assembly, relationships with customers and dealers, our culture and values, compliance
with the Code, compliance with anti-bribery/corruption laws and policies, compliance with management of private data and
cybersecurity, conflicts of interest, discrimination and workplace harassment policies, sexual harassment policies, and leadership
development.
Human Rights and Our Code of Conduct
We honor human rights and respect the individual dignity of all persons globally. Our commitment to human rights requires that we
understand and fulfill our responsibilities consistent with our values and practices. We strive to ensure that human rights are upheld
for our employees and workers in our supply chain. Our commitment to human rights is defined in the Code, our Supplier Code of
Conduct, our Dealer Code of Conduct, related policies and procedures, and our statement “Support of Human Rights in our Business
Practice,” each of which is available on our website under “Governance.” These documents establish guidelines for our employees,
suppliers, and dealers. We do not tolerate human rights abuses, such as forced labor, unlawful child labor, and human trafficking.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following are our executive officers as of December 6, 2023. All executive officers are elected or appointed by the Board of Directors
and hold office until the meeting of the Board of Directors following the annual meeting of stockholders each year.
Name (Age)
John C. May (54)
Joshua A. Jepsen (46)
Ryan D. Campbell (49)
Mary K.W. Jones (55)
Rajesh Kalathur (55)
Present Deere Position (Effective Date)
Business Experience (Effective Date)
Chairman, Chief Executive Officer, and President
(2020)
- Chief Executive Officer and President (2019)
- President and Chief Operating Officer (2019)
- President, Worldwide Agriculture & Turf Division
Global Harvesting and Turf Platforms, Ag
Solutions Americas, and Australia (2018)
Senior Vice President and Chief Financial Officer
(2022)
- Deputy Financial Officer (2022)
- Director, Investor Relations (2018)
President, Worldwide Construction & Forestry Division
and Power Systems (2022)
Senior Vice President, General Counsel and Worldwide
Public Affairs (2019)
- Senior Vice President and General Counsel (2013)
President, John Deere Financial, and Chief Information
Officer (2022)
Jahmy J. Hindman (48)
Senior Vice President and Chief Technology Officer
(2023)
- Senior Vice President and Chief Financial Officer
(2019)
- Deputy Financial Officer (2018)
- Chief Technology Officer (2020)
- Global Director Tractor Platform Engineering (2018)
- Global Manager, Architecture, Systems, Modules
(2018)
- President, John Deere Financial and Senior Vice
President, Global Information Technology and
Chief Financial Officer (2022)
- President, John Deere Financial, and Chief
Information Officer (2019)
- Senior Vice President, Chief Financial Officer and
Chief Information Officer (2018)
- Vice President, Production Systems, Production &
Precision Ag (2023)
- Vice President, Production Systems (2020)
- Director, Operation Station (2018)
- Executive Vice President & Chief Human
Resources Officer, BorgWarner Inc (2022)
- Global Vice President Human Resources,
BorgWarner, Inc. - Morse Systems (2019)
- Vice President Human Resources ASEAN, Ford
Motor Company (2016)
- President, Worldwide Agriculture & Turf Division,
Americas and Australia, Global Harvesting and Turf
Platforms, Agricultural Solutions (2019)
- President, John Deere Financial (2016)
- Senior Partner and Managing Director at the
Boston Consulting Group (BCG) (2020)
- Various roles of increasing responsibility from
Associate to Partner and Managing Director at
BCG (2002)
Deanna M. Kovar (45)
President, Worldwide Agriculture & Turf Division,
Small Ag & Turf, Sales and Marketing Regions of
Europe, CIS, Asia, and Africa (2023)
Felecia J. Pryor (49)
Senior Vice President and Chief People Officer (2022)
Cory J. Reed (53)
President, Worldwide Agriculture & Turf Division,
Production & Precision Ag, Sales and Marketing
Regions of the Americas and Australia (2020)
Justin R. Rose (44)
President, Lifecycle Solutions, Supply Management,
and Customer Success (2022)
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ITEM 1A. RISK FACTORS.
The following risks are considered material to our business based upon current knowledge, information, and assumptions. This
discussion of risk factors should be considered closely in conjunction with the MD&A, including the risks and uncertainties described in
the Forward-Looking Statements, and the Notes to Consolidated Financial Statements. These risk factors and other forward-looking
statements relate to future events, expectations, trends, and operating periods. They involve certain factors that are subject to
change and important risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties
could affect particular lines of business, while others could affect all our businesses. Although the risks are organized by headings and
each risk is discussed separately, many are interrelated. The risks described in this Annual Report on Form 10-K and the Forward-
Looking Statements in this report are not the only risks faced by us.
STRATEGIC RISKS
We may face risks associated with international, national, and regional trade laws, regulations, and policies, and government farm
programs and policies which could significantly impair our profitability and growth prospects.
International, national, and regional laws, regulations, and policies directly or indirectly related to or restricting the import and export
of our products, services, and technology, or those of our customers, or for the benefit of favored industries or sectors, could harm
our global business. We are subject to various regulatory risks including, but not limited to, the following:
• Restricted access to global markets could impair our ability to export goods and services from various manufacturing
locations around the world. Restricted access could limit the ability to access raw materials and high-quality parts and
components at competitive prices on a timely basis. For example, expanding export controls or limits on foreign investment
can impact global supply of key materials and components, and actions taken within the US-China trade conflict can impact
business in China, as well as sales, import/exports, and/or business engagement with Chinese entities globally.
•
•
•
•
Trade restrictions, negotiation of new trade agreements, non-tariff trade barriers, local content requirements, and imposition
of new or retaliatory tariffs against certain countries or covering certain products, including developments in U.S.-China
trade relations, export control and sanctions against Russia, have limited, and could continue to limit, our ability to capitalize
on current and future growth opportunities in international markets. These trade restrictions, and changes in, or uncertainty
surrounding global trade policies, may affect our competitive position.
Trade restrictions could impede those in developing countries from achieving a higher standard of living, which could
negatively impact our future growth opportunities arising from increasing global demand for food, fuel, and infrastructure.
Policies impacting exchange rates and commodity prices, or those limiting the export or import of commodities, could have a
material adverse effect on the international flow of agricultural and other commodities that may result in a corresponding
negative effect on the demand for agricultural and forestry equipment in many areas of the world. Our agricultural
equipment sales could be harmed by such policies because farm income influences sales of agricultural equipment around the
world.
Changes in government farm programs and policies can influence demand for agricultural equipment as well as create
unequal competition for multinational companies relative to domestic companies.
We may be unable to manage increasing political, economic, and social uncertainty in certain regions of the world, which could
significantly change the dynamics of our competition, customer base, and product offerings globally.
Efforts to grow our businesses depend in part upon access and developing market share and profitability in additional geographic
markets, including, but not limited to, Argentina, Brazil, China, India, and South Africa. There are various risks associated with our
global footprint, including, but not limited to, the following:
•
In some cases, these countries have greater political and economic volatility, greater vulnerability to infrastructure and labor
disruptions, and differing customer product preferences and requirements than our other markets. In fiscal year 2023, as a
result of the war in Ukraine, we suspended shipments of machines and service parts to Russia. The suspension of shipments
to Russia reduced actual and forecasted revenue for the region and resulted in impairments of most long-lived assets, among
other impacts. In addition, we initiated a voluntary separation program for employees in Russia in the third quarter of fiscal
year 2022.
• Having business operations in various regions and countries exposes us to multiple and potentially conflicting business
practices and legal and regulatory requirements that are subject to change. These practices and legal requirements are often
complex and difficult to navigate, including those related to tariffs and trade regulations, investments, property ownership
rights, taxation, repatriation of earnings, and advanced technologies.
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•
Expanding business operations globally also increases exposure to currency fluctuations, which can materially affect our
financial results.
• While we maintain a positive corporate image and our brands are widely recognized and valued in our traditional markets, the
brands are less known in some emerging markets, which could impede our efforts to successfully compete in these markets.
•
Changing U.S. export controls and sanctions on various foreign countries and on various parties could affect our ability to
collect receivables, provide aftermarket warranty support for our equipment, sell products, and otherwise impact our
reputation and business.
We may be impacted by general negative economic conditions and outlook, causing weakened demand for our equipment and services,
limiting access to funding, and resulting in higher funding costs.
The demand for our products and services depends on the fundamentals in the markets in which we operate and can be significantly
reduced in an economic environment characterized by high unemployment, high interest rates, cautious consumer spending, inflation,
lower corporate earnings, and lower business investment. Negative or uncertain economic conditions that cause our customers to lack
confidence in the general economic outlook can significantly reduce their likelihood of purchasing our equipment. These economic
events adversely affected and may continue to adversely affect our operations.
Sustained general negative economic conditions and outlook also affect housing starts, energy prices and demand, and other
construction, which dampens demand for certain construction equipment. Our turf operations and our construction and forestry
segments are dependent on construction activity and have also been affected by recent adverse economic conditions. Decreases in
construction activity and housing starts could have a material adverse effect on our financial results.
If negative economic conditions affect the overall farm economy, there could be a similar effect on our agricultural equipment sales.
Uncertain or negative outlook with respect to pervasive U.S. fiscal issues as well as general economic conditions and outlook, such as
market volatility and continuing interest rate increases by the Federal Reserve, have caused and could continue to cause significant
changes in market liquidity conditions. Such changes could impact access to funding and associated funding costs, which could reduce
our earnings and cash flows.
We may be affected by changing worldwide demand for food and different forms of renewable energy, which could impact the price of
farm commodities and consequently the demand for our equipment. This could result in higher research and development costs related
to changing machine fuel requirements.
Changing worldwide demand for farm outputs to meet the world’s growing food and renewable energy demands, driven in part by
government policies, including those related to climate change, and a growing world population, are likely to result in fluctuating
agricultural commodity prices, which directly affect sales of agricultural equipment. Lower agricultural commodity prices directly affect
farm incomes, which could negatively affect sales of agricultural equipment and result in higher credit losses. While higher commodity
prices benefit our crop-producing agricultural equipment customers, they could result in greater feed costs for livestock and poultry
producers, which in turn may result in lower levels of equipment purchased by these customers. In addition, changing energy
renewable demands may cause farmers to change the types or quantities of the crops they raise, with corresponding changes in
equipment demands. Finally, changes in governmental policies regulating bio-fuel utilization could affect commodity demand and
commodity prices, demand for our diesel-fueled equipment, and result in higher research and development costs related to equipment
fuel standards.
We may not realize the anticipated benefits of our Smart Industrial Operating Model and Leap Ambitions.
Failure to realize the anticipated benefits of our Smart Industrial Operating Model and related business strategies in production
systems, precision technologies, and aftermarket support could adversely affect results of our operations and financial condition.
Several factors could impact our ability to successfully execute our Smart Industrial Operating Model, including, among other things:
•
•
•
•
Failure to accurately assess market opportunities and the technology required to address such opportunities;
Failure to develop and introduce new technologies or lack of adoption of such technologies by our customers;
Failure to holistically provide lifecycle solutions; and
Failure to optimize our capital allocation in connection with the Smart Industrial Operating Model.
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Similarly, we may not realize the anticipated benefits of our Leap Ambitions and related goals within the expected timelines, or at all.
As part of our Leap Ambitions we adopted various goals we expect to achieve by 2026 or 2030. We may not be able to achieve these
goals for a variety reasons, some of which may be beyond our control. Examples include:
• Our estimates and assumptions related to efficiency of our products and the adoption of precision technology may not be
accurate;
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Certain materials, such as quality battery cells and cameras, may become unavailable or too costly;
The infrastructure required to achieve our goals, such as sufficient charging stations or fuel availability, may become too
costly or may not be developed on the expected timeline; and
The actual or perceived failure to achieve our Leap Ambitions could negatively impact our ability to execute the Smart
Industrial Operating Model.
We may not realize all anticipated benefits of acquisitions, joint ventures, and divestitures, or these benefits may take longer to realize
than expected.
From time to time, we make strategic acquisitions and divestitures and participate in joint ventures. Acquisitions and joint ventures we
have entered, or may enter in the future, may involve significant challenges and risks, including that the acquisitions or joint ventures
do not advance our business strategy, or fail to produce satisfactory returns on investment. Other risks include:
• We may encounter difficulties in integrating acquisitions with our operations, applying internal control processes to these
acquisitions, managing strategic investments, assimilating new capabilities to meet the future needs of our businesses,
and/or combining business cultures;
• We may choose not to fully integrate businesses and may face regulatory or compliance exposure until appropriate processes
and controls are put in place;
•
Integrating acquisitions is often costly and may require significant attention from management and personnel;
• We may not realize all the anticipated benefits of acquisitions or joint ventures, or the realized benefits may be significantly
delayed; and
• Due diligence evaluations of potential transactions include business, legal, and financial reviews with the goal of identifying
and evaluating the material risks involved. These due diligence reviews may not identify all of the issues necessary to
accurately estimate the cost and potential risks of a particular acquisition or joint venture, including potential exposure to
regulatory sanctions resulting from an acquisition target’s or joint venture partner’s previous activities or costs associated
with any quality issues with an acquisition target’s or joint venture’s products or services.
We may also decide to divest businesses if in the best interests of our shareholders and joint ventures may be terminated at or before
their stated expiration. For example, in March and October 2023, we sold our financial services and roadbuilding businesses in Russia
following the outbreak of the war in Ukraine. Divestitures of businesses or dissolutions of joint ventures may involve significant
challenges and risks, including failure to advance our business strategy, costs or disruptions to us, and negative effects on our product
offerings, which may adversely affect our business, results of operations, and financial condition. Divestitures of businesses and
dissolutions of joint ventures may result in ongoing financial or legal involvement in the divested business through indemnifications or
other financial arrangements, such as retained liabilities, which could affect our future financial results.
Our ability to understand our customers’ preferences and requirements and to develop, manufacture, and market products that meet
customer demand could significantly affect our business results.
Our ability to match new product offerings to global customers’ preferences for different types and sizes of equipment and various
equipment features and functionality, at affordable prices, is critical to our success. This requires a thorough understanding of our
existing and potential customers on a global basis, particularly in growth markets such as Argentina, Brazil, and India. Failure to deliver
quality products that meet customer needs at competitive prices could have an adverse effect on our business.
In addition, customer preferences in the markets we serve are changing as a result of ongoing social and regulatory focus on
sustainability as these markets transition to less carbon-intensive business models. As regulations and social pressure drive change, we
must continue to proactively monitor trends and develop alternatives and enhancements that elevate and complement our product
offerings. For example, even though we plan to offer electric, hybrid-electric, and battery electric equipment solutions, we may be
unable to keep up with the rising demand for electric agriculture, turf, and construction equipment.
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The development of alternative farming techniques, carbon sequestration technologies, and new low-carbon biofuels are changing
farmers’ business models and equipment needs. If we fail to continue to develop or invest in emerging technologies to meet changing
customer demands, we will be at risk of losing potential sources of revenue, which could affect our future financial results.
If we are unable to deliver precision technology and agricultural solutions to our customers, it could affect our business, results of
operations, and financial condition.
Our approach to precision technology involves hardware and software, guidance, connectivity and digital solutions, automation and
machine intelligence, and autonomy. Customers continue to adopt technology integrated in our portfolio of “smart” machines,
systems, and solutions. We expect this trend to persist for the foreseeable future. To create and maintain a competitive
differentiation, we need to successfully develop and introduce new precision technology solutions that improve profitability and
sustainability for our customers. We may make significant investments in research and development, connectivity solutions, digital
security for precision technology solutions, and dealer and employee training. These investments may not produce solutions that
provide the desired results for customers’ profitability or sustainability outcomes. We utilize automation and machine learning and
intelligence in some of our products. While the use of these emerging technologies can present significant benefits, it also creates
risks and challenges. Data sourcing, technology, integration and process issues, program bias into decision-making algorithms,
security problems, and the protection of privacy could impair the adoption and acceptance of autonomous machine solutions. If the
output from these solutions is deemed to be inaccurate or questionable, our brand and reputation may be harmed and we may be
subject to legal liability claims. Automation and machine learning and intelligence may also become the subject of local, state, federal,
and foreign regulatory efforts limiting the features and capabilities of the technology. If we are not able to deliver precision
technology solutions with differentiated features and functionality, or these solutions are not effective, customers may not adopt
technology solutions, which could have a material adverse effect on our reputation and business.
We could be impacted by changes to or reallocation of radio frequency (RF) bands which could disrupt or degrade the reliability of our
high precision augmented Global Positioning System (GPS) or other RF technology, which could impair our ability to develop and
market GPS- and RF-based technology solutions, as well as significantly reduce agricultural and construction customers’ profitability.
Our current and planned integrated agricultural business and equipment management systems, as well as our fleet management
telematics solutions for construction equipment, depend upon the use of RF signals. These signals include, but are not limited to, GPS
signals, other GPS-like satellite signals, augmented GPS services, and other RF technologies that link equipment, operations, owners,
dealers, and technicians. These radio services depend on frequency allocations governed by international and national government
agencies. Any international or national reallocation of frequency bands, including frequency bands segmentation and band spectrum
sharing, or other modifications concerning the regulation of frequency bands, could significantly disrupt or degrade the utility and
reliability of our GPS-based products, which could negatively affect our ability to develop and market GPS-based technology solutions.
In addition, disruptions with GPS signals or the failure of telecommunications network operators to supply the bandwidth we need to
support our products could interfere with the speed, availability, and usability of our equipment and services. If these GPS signals or
RF signals become unavailable, our customers could be unable to use their equipment indefinitely. For our agricultural customers, this
could result in lower crop yields, decreased operational efficiency, and higher equipment maintenance, seed, fertilizer, fuel, and wage
costs. For construction customers, this could result in higher fuel and equipment maintenance costs, as well as lower construction
design and project management efficiencies. These cost increases could significantly reduce customers’ profitability, sustainability,
and demand for our products. As a result, our sales and revenue could significantly decrease, which would have a material adverse
effect on our results of operations and our business.
Our ability to adapt in highly competitive markets could affect our business, results of operations, and financial condition.
We compete in a variety of highly competitive global and regional markets with other manufacturers and distributors that produce and
sell similar products. In addition, our industry is attracting non-traditional competitors, including technology-focused companies and
start-up ventures. We compete on product performance, innovation and quality, distribution, sustainability, customer service, and
price. Aggressive pricing or other strategies of competitors, unanticipated product or manufacturing delays, or our failure to price
products competitively could adversely affect our business, results of operations, and financial condition.
We rely on a network of independent dealers to manage the distribution of our products and services. If dealers are unsuccessful with
their sales and business operations, it could have an adverse effect on our overall sales and revenue.
We rely on the capability of our dealers to develop and implement effective sales plans to create demand among purchasers for the
equipment and related products and services that dealers purchase from us. If our dealers are unsuccessful in these endeavors, we will
be unable to grow our sales and revenue, which would have an adverse effect on our financial condition.
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In addition, the dealer channel’s ability to support and service precision technology solutions and emerging power solutions may affect
customers’ acceptance and adoption rates of these products. The unavailability of specialized technicians to service our equipment
may result in overburdening dealers’ servicing capacity.
Dealers may have trouble funding their day-to-day cash flow needs and paying their obligations due to adverse business conditions
resulting from negative economic effects or other factors. Dealers may exit or we may seek to terminate relationships with certain
dealers if they are unable to meet customer needs. The unplanned loss of any of our dealers could lead to inadequate market coverage,
negative customer impressions, and may adversely impact our ability to collect receivables that are associated with that dealer.
ENVIRONMENTAL, CLIMATE, AND WEATHER RISKS
Unfavorable weather conditions or natural catastrophes that reduce agricultural production and demand for agriculture and turf
equipment could directly and indirectly affect our business.
The purchasing decisions of our customers, particularly the purchasers of agriculture and turf equipment, can be significantly affected
by poor or unusual weather conditions. Such conditions include:
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Insufficient levels of rain, which prevent farmers from planting new crops and may cause growing crops to die or result in
lower yields;
Excessive rain or flooding can prevent planting from occurring at optimal times and may cause crop loss through increased
disease or mold growth;
Temperatures outside normal ranges, which can cause crop failure or decreased yields and may also affect disease incidence;
• Natural disasters such as regional floods, hurricanes or other storms, droughts, diseases, wildfires, and pests, either as a
physical effect of climate change or otherwise, which have had, and could in the future have, significant negative effects on
agricultural and livestock production;
• Adverse weather conditions in a particular geographic region, particularly during the important spring selling season; and
• Drought conditions can adversely affect sales of certain mowing equipment and can similarly cause lower sales volume.
Each of these conditions could have a negative impact on farm income which can affect demand for agricultural equipment and the
financial condition and credit risk of our dealers and customers.
Governmental actions designed to address climate change based on the emergence of new technologies and business models in
connection with the transition to a lower-carbon economy could adversely affect John Deere and our customers.
There is global scientific consensus that greenhouse gas (GHG) emissions continue to alter the composition of Earth’s atmosphere in
ways that are affecting and are expected to continue to affect the global climate. These considerations have led to new international,
national, regional, and local legislative and regulatory responses. Various stakeholders, including legislators and regulators,
shareholders, and non-governmental organizations, as well as companies in many business sectors, including us, are continuing to look
for ways to reduce GHG emissions. The regulation of GHG emissions from certain stationary or mobile sources or the imposition of
carbon pricing mechanisms could result in additional costs to us in the form of taxes or emission allowances, required facilities
improvements, and increased energy costs. These results would increase our operating costs through higher utility, transportation,
and materials cost and could prevent us from selling products into certain markets. Increased input costs, such as fuel and fertilizer,
and compliance-related costs could also affect customer operations and demand for our equipment.
Further, our financial services segment is subject to additional international and national European regulations relating to climate and
environmental risk, which are continually evolving and could affect the financing operations and climate-risk processes developed by
the segment. Regulators in Europe and the U.S. have also focused efforts on increased disclosure related to climate change and
mitigation efforts. The EU recently adopted the European Sustainability Reporting Standards (ESRS) and the Corporate Sustainability
Reporting Directive (CSRD) that will impose disclosure of the risks and opportunities arising from social and environmental issues, and
on the impact of companies’ activities on people and the environment. The CSRD will need to be transposed into Member State law
before it becomes effective, which is expected to occur in 2024. Similarly, the State of California recently passed the Climate Corporate
Data Accountability Act and the Climate-Related Financial Risk Act that will impose broad climate-related disclosure obligations on
certain companies doing business in California, including us, starting in 2026. The SEC has included in its regulatory agenda potential
rulemaking on climate change disclosures that, if adopted, could significantly increase compliance burdens and associated regulatory
costs and complexity.
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Increasingly stringent engine emission regulations or bans on internal combustion engines may impact our ability to manufacture and
distribute certain engines or equipment, which could negatively affect business results.
Our equipment operations must meet increasingly stringent engine emission reduction regulations throughout the world, including the
European Union’s Stage V standard, which limits the amount of certain substances in exhaust gases that off-road engines can emit
into the environment. Governmental agencies throughout the world are enacting more stringent laws and regulations to reduce off-
road engine emissions. These laws and regulations are applicable to engines we manufacture, including those used in agriculture and
CF equipment.
We have incurred, and continue to incur, substantial research and development costs related to the implementation of these more
rigorous laws and regulations. While we have developed and are executing comprehensive plans to meet these requirements, these
plans are subject to variables that could delay or otherwise affect our ability to manufacture and distribute certain equipment or
engines, which could negatively impact business results. Additionally, in certain locations governments have banned, or may in the
future ban, internal combustion engines for some types of products completely. To the extent these bans affect products
manufactured and sold by us, our business, results of operations, and financial condition could be negatively affected.
FINANCIAL RISKS
Changes in government banking, monetary, and fiscal policies could have a negative effect on us.
Policies of the U.S. and other governments regarding banking, monetary, and fiscal policies intended to promote or maintain liquidity,
stabilize financial markets, and/or address local deficit or structural economic issues could have a material impact on our customers
and markets. Central bank policy interest rates continued to increase in fiscal year 2023. Most of our retail receivables are fixed rate,
while wholesale financing receivables are variable rate. We have both fixed and variable rate borrowings. Historically, rising interest
rates impact our borrowings sooner than the benefit is realized from the financing receivable and equipment on operating lease
portfolios.
Our operations and results could also be affected by financial regulatory reform that could, among other things, have an adverse
effect on the financial services segment and on our customers by limiting their ability to enter hedging transactions or to finance
purchases of our products. Government policies on spending can also affect us, especially the CF segment, due to the impact of
government spending on infrastructure development. Our operations, including those outside of the U.S., may also be affected by
non-U.S. regulatory reforms being implemented to further regulate non-U.S. financial institutions and markets.
Changes in tax rates, tax legislation, or exposure to additional tax liabilities could have a negative effect on our business.
We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Our domestic and international tax liabilities are
dependent upon the location of earnings among these different jurisdictions. Tax rates in various jurisdictions may be subject to
significant change. Our effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax
rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretations. If our effective tax
rates were to increase, or if the ultimate determination of taxes owed is for an amount more than amounts previously accrued, our
operating results, cash flows, and financial condition could be adversely affected.
Our consolidated financial results are reported in U.S. dollars while certain assets and other reported items are denominated in foreign
currencies, creating currency exchange and translation risk.
We are a global company with transactions denominated in a variety of currencies. We are subject to currency exchange risk to the
extent that our costs are denominated in currencies other than those in which we earn our revenues.
Additionally, the reporting currency for our consolidated financial statements is the U.S. dollar. Certain of our assets, liabilities,
expenses, and revenues are denominated in other countries’ currencies, which are then translated into U.S. dollars at the applicable
exchange rates and reported in our consolidated financial statements. Therefore, fluctuations in foreign exchange rates affect the
value of those items as reflected in our consolidated financial statements, even if their value remains unchanged in the original
currencies. While the use of currency hedging instruments may provide us with some protection from adverse fluctuations in currency
exchange rates, by utilizing these instruments we potentially forego any benefits that may result from favorable fluctuations in such
rates. In Argentina, we have employed mechanisms to convert Argentine pesos into U.S. dollars to the extent possible. These
mechanisms are short-term in nature, leaving us exposed to long-term currency fluctuations.
Changes in interest rates or market liquidity conditions could adversely affect our financials and our earnings and/or cash flows.
Central bank policy interest rates continued to increase in fiscal year 2023. Rising interest rates could have a dampening effect on
overall economic activity and/or the financial condition of our customers, either or both of which could negatively affect customer
demand for our equipment and customers’ ability to repay their obligations to us. Rising interest rates may cause credit market
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dislocations, that can impact funding costs, which can affect the financial services segment’s ability to offer customers competitive
financing rates. While we strive to match the interest rate characteristics of our financial assets and liabilities, changing interest rates
have had an adverse effect on our net interest rate margin—the difference between the yield we earn on our assets and the interest
rates we pay for funding, which has affected our net interest income and earnings.
In addition, actions by credit rating agencies, such as downgrades or negative changes to ratings outlooks, can affect the availability
and cost of funding for us and can increase our costs of capital and hurt our competitive position.
Because the financial services segment provides financing for a significant portion of our sales worldwide, negative economic
conditions in the financial industry could materially impact our operations and financial results.
Negative economic conditions could have an adverse effect on the financial industry in which the financial services segment operates.
The financial services segment provides financing for a significant portion of our sales worldwide. The financial services segment is
exposed to the risk that customers and others will default on contractual obligations and may experience credit losses that exceed our
expectations and adversely affect our financial condition and results of operations. The financial services segment’s inability to access
funds at cost-effective rates to support our financing activities could have a material adverse effect on our business. The financial
services segment’s liquidity and ongoing profitability depend largely on timely access to capital to meet future cash flow requirements
and to fund operations and costs associated with engaging in diversified funding activities. Additionally, negative market conditions
could reduce customer confidence levels, resulting in declines in credit applications and increases in delinquencies and default rates,
which could materially impact the financial services segment’s write-offs and provision for credit losses. The financial services segment
may also experience residual value losses that exceed our expectations caused by lower pricing for used equipment and higher-than-
expected equipment returns at lease maturity.
We may sustain increases in funding obligations under our pension plans which may impair our liquidity or financial condition.
We maintain certain defined benefit pension plans for certain employees, which impose funding obligations. We use various
assumptions in calculating our future payment obligations under these plans. Significant adverse changes in credit or market
conditions could result in actual rates of return on pension investments being lower than expected. Regulatory changes could cause a
deterioration in the statutory funded status of our plans. We may be required to make significant contributions to our pension plans in
the future. These factors could significantly increase our payment obligations under the plans and adversely affect our business,
results of operations, and financial condition.
MANUFACTURING AND OPERATIONAL RISKS
We may be unable to accurately forecast customer demand for products and services, and to adequately manage inventory, which
could adversely affect our operating results.
To ensure adequate inventory supply, we must forecast inventory needs and expenses and place orders sufficiently in advance with
suppliers and contract manufacturers. These forecasts are based on estimates of future demand for products and services. Failure to
accurately forecast our needs may result in unmet market demand, parts shortages, manufacturing delays, increased costs, or excess
inventory. In fiscal year 2022, supply chain disruptions resulted in higher inventory levels. Although production schedules in fiscal year
2023 were more aligned with the customers’ seasonal use of our products, marking a return to historical seasonal production patterns,
our ability to accurately forecast demand in the future could be affected by many factors, including changes in customer demand for
our products and services, changes in demand for the products and services of competitors, unanticipated changes in general market
conditions, and the weakening of economic conditions or customer confidence in future economic conditions. If the forecasts used to
manage inventory are not accurate, we may experience excess inventory levels, shortage of available products, or reduced
manufacturing efficiencies.
Changes in the availability and price of certain raw materials, components, and whole goods have resulted and could continue to result
in disruptions to the supply chain causing production disruptions, increased costs, and lower profits on sales of our products.
We require access to various raw materials, components, and whole goods at competitive prices to manufacture and distribute our
products. The price and availability of these materials have varied significantly in the last 36 months. For example, in fiscal year 2022,
supply chain disruptions impacted many aspects of our business, including receiving past due deliveries from suppliers, parts
availability, increased production costs, and higher inventory levels. We experienced supply chain improvements in fiscal year 2023
with a return to normal in the second half of the fiscal year.
While we have seen stabilization in the supply chain and some commodity pricing improvements, we anticipate potential fluctuations
due to inflation, geopolitical and economic uncertainty, and regulatory and policy instability, including import tariffs and trade
agreements. The latter have the potential to significantly increase production and logistics costs and have a material negative effect
on the profitability of the business, particularly if we are unable to recover the increased costs due to market considerations or other
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factors. We have experienced changes in the availability and prices of these raw materials, components, whole goods, and freight over
the past several years, especially in fiscal years 2021 and 2022.Global logistics network challenges resulted in delays, shortages of key
manufacturing components, increased order backlogs, increased transportation costs, and production inefficiencies from a higher
number of partially completed machines in inventory, which increased our overall production and overhead costs. Increases in such
costs have had an adverse effect on our business operations.
We rely on our suppliers to acquire the raw materials, components, and whole goods required to manufacture their products.
Significant disruptions to the supply chain resulting from shortages of raw materials, components, and whole goods have and could
continue to adversely affect our ability to meet commitments to our customers. In addition, certain materials and components used in
our products are acquired from a single supplier or are proprietary in nature and cannot be alternatively sourced expeditiously.
Furthermore, if our customers are unwilling to accept price increases for our products, or if we are unable to offset the increases in
costs, raw material costs or shortages could have a material adverse effect on our operational or financial results.
Disputes with labor unions may adversely affect our ability to operate in our facilities as well as impact our financial results.
Many of our production and maintenance employees are represented by labor unions under various collective bargaining agreements
with different expiration dates. Our failure to successfully renegotiate labor agreements as they expire has from time to time led, and
could in the future lead, to work stoppages or other disputes with labor unions. For example, the UAW initiated a labor strike that had
an adverse effect on our results of operations in fiscal 2022 because of reduced productions and shipments. Certain of our labor
agreements expire as early as 2024. Disruptions to our manufacturing and parts-distribution facilities through various forms of labor
disputes could adversely affect us. Any strike, work stoppage, or other dispute with a labor union distracts management from
operating the business, may displace employees from ordinary job positions to fill in vacant positions, may affect our reputation, and
could materially adversely affect our business, results of operations, and financial condition.
Our business may suffer if our equipment fails to perform as expected.
If our equipment does not perform as expected, we may receive warranty claims and have to perform post-sales repairs or recalls. We
may also be subject to regulatory requirements and penalties that will impact our ability to develop, market, and sell equipment. This
may result in product delivery delays. It could also lead to product liability, breach of warranty, and consumer protection claims. These
claims and warranty expenses could be significant. As a manufacturer of equipment, we must manage the cost and risk associated with
product warranties, post-sale repairs and recalls, regulatory penalties, and product liability, breach of warranty, and consumer
protection claims with respect to our products. In addition to post-sale repairs or recalls initiated by us for various reasons,
investigations into our products by government regulators may compel us to initiate product recalls or may result in negative public
perceptions about the safety of our products, even if we disagree with the regulator’s determination. Such post-sale repairs or recalls,
whether voluntary or involuntary, could result in significant expense, supply chain complications, and may harm our brand, business,
prospects, financial condition, and operating results.
RESOURCES RISKS
Our ability to attract, develop, engage, and retain qualified employees could affect our ability to execute our strategy.
Our continued success depends, in part, on our ability to identify and attract qualified candidates with the requisite education,
background, and experience as well as our ability to develop, engage, and retain qualified employees. Failure to attract, develop,
engage, and retain qualified employees, whether as a result of an insufficient number of qualified applicants, difficulty in recruiting
new employees, or inadequate resources to train, integrate, and retain qualified employees, could impair our ability to execute our
business strategy and could adversely affect our business, results of operations, and financial condition. In addition, while we strive to
reduce the impact of the departure of employees, our operations or ability to execute our business strategy and meet our business
objectives may be affected by the loss of employees, particularly when departures involve larger numbers of employees, such as those
we could experience if a surge occurs in the number of employees voluntarily leaving their jobs. Higher rates of employee separations
may adversely affect us through decreased employee morale, the loss of knowledge of departing employees, and the devotion of
resources to recruiting and onboarding new employees.
Security breaches and other disruptions to our information technology infrastructure could interfere with our operations and could
compromise our information as well as information of our employees, customers, suppliers, and/or dealers, exposing us to liability that
could cause our business and reputation to suffer.
In the ordinary course of business, we rely upon information technology networks and systems, some of which are managed by third
parties, to process, transmit, and store electronic information and to manage or support a variety of business processes and activities,
including supply chain, manufacturing, distribution, invoicing, and collection of payments from dealers and other purchasers of our
equipment and from customers of the financial services segment. We use information technology systems to record, process, and
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summarize financial information and results of operations for internal reporting purposes and to comply with regulatory financial
reporting, legal, and tax requirements.
Additionally, we collect and store sensitive data, including intellectual property, proprietary business information, and the proprietary
business information of our customers, suppliers, and dealers, as well as personally identifiable information of our customers and
employees in data centers which are often owned by third parties and on information technology networks. The secure operation of
these information technology networks and the processing and maintenance of this information is critical to our business operations
and strategy.
Despite security measures, including a vulnerability disclosure program, and business continuity plans, our information technology
networks and infrastructure have been and may be vulnerable to intrusion, damage, disruptions, or shutdowns due to attacks by cyber
criminals, employees’, suppliers’, or dealers’ error or malfeasance, supply chain compromise, disruptions during the process of
upgrading or replacing computer software or hardware, power outages, computer viruses, ransomware or other malware,
telecommunication or utility failures, terrorist acts, natural disasters, or other events. Although we have not suffered any significant
cyber incidents that resulted in material business impact, we have from time to time been the target of malicious cyber threat actors.
The occurrence of any significant event could compromise our networks, and the information stored there could be accessed,
obtained, publicly disclosed, lost, altered, misused, or stolen. Any such access, disclosure, alteration, misuse, or other loss of
information could result in legal claims or proceedings, government investigations, liability or regulatory penalties, disruption or shut
down of our operations, and damage to our reputation, which could adversely affect our business, results of operations, and financial
condition. Furthermore, as security threats continue to evolve and increase in frequency and sophistication, we may need to invest
additional resources to protect information security.
Any unauthorized control or manipulation of our products’ systems could result in loss of confidence in us and our products.
Some of our products include connectivity hardware and software typically used for remote system updates. While we have
implemented security measures intended to protect against unauthorized remote access to these products, malicious threat actors
have attempted, and may attempt in the future, to gain unauthorized access to such products in order to gain control of the products,
change the products’ functionality, user interface, or performance characteristics, interfere with the products’ operations, or gain
access to data stored in or generated by the products or to systems to which they connect. In addition, reports of unauthorized access
to our products, systems, and data, regardless of their reliability, may result in the perception that the products, systems, or data are
vulnerable to malicious or unauthorized modifications. Any unauthorized access to or control of our products or systems, any loss of
data, or any perception that products, systems, or data are vulnerable could result in legal claims or proceedings against us,
government investigations, liability, or regulatory penalties, which could adversely affect our business, results of operations, and
financial condition.
Our business could be adversely affected by the infringement or loss of intellectual property rights.
We protect our intellectual property with a combination of patents, trademarks, copyrights, trade secret laws, and legal agreements.
We heavily rely on certain trademarks to protect our identity and customer recognition of our products and services, including, but not
limited to, the “John Deere” mark, the leaping deer logo, the “Nothing Runs Like a Deere” slogan, and the green and yellow color
combination. These trademarks, as well as the many patents that protect innovations used in our products, are integral to our
business, and their loss could have a material adverse effect on us.
Additionally, third parties may initiate legal proceedings to challenge the validity of our intellectual property or allege that we infringe
on their intellectual property. We may incur substantial costs if third parties initiate such legal proceedings, or if we initiate legal
proceedings to protect or enforce our intellectual property. If the outcome of any such legal proceedings is unfavorable to us, our
business could be adversely affected.
LEGAL AND COMPLIANCE RISKS
Our global operations are subject to complex and changing laws and regulations, the violation of which could expose us to potential
liabilities, increased costs, and other adverse effects.
We are subject to numerous international, federal, state, and local laws and regulations, many of which are complex, frequently
changing, and subject to varying interpretations. These laws and regulations cover a variety of subjects, including advertising, anti-
money laundering, antitrust, consumer finance, environmental, climate-related, health and safety, foreign exchange controls and cash
repatriation restrictions, foreign ownership and investment, import/export and trade, human rights, labor and employment, product
liability reporting, cybersecurity, data privacy, telematics, and connectivity.
These laws may vary substantially within the different markets in which we operate. Compliance with these laws and regulations is
expensive and may further increase the cost of conducting our global operations. In addition, we must comply with the U.S. Foreign
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Corrupt Practices Act and all applicable foreign anti-corruption laws, including the U.K. Bribery Act. These laws generally prohibit
companies and their intermediaries from making improper payments or providing anything of value to improperly influence
government officials or private individuals for the purpose of obtaining or retaining a business advantage, regardless of whether those
practices are culturally expected in a particular jurisdiction. Although we have a compliance program in place designed to reduce the
likelihood of potential violations of these laws and regulations, there can be no assurance that our employees, contractors, or agents
will not violate such laws and regulations or our policies and procedures. Violations of these laws and regulations could result in
criminal or civil sanctions and have a material adverse effect on our reputation, business, results of operations, and financial condition.
Changes to existing laws and regulations, or changes to how they are interpreted, or the implementation of new, more stringent laws
or regulations, could adversely affect our business by increasing compliance costs, limiting our ability to offer a product or service,
requiring changes to our business practices, or otherwise making our products and services less attractive to customers. Legislative
and regulatory changes, and other actions that could potentially affect our business may be announced with little or no advance notice
and we may not be able to effectively mitigate all adverse effects from such measures.
We are subject to governmental laws, regulations, and other legal obligations related to privacy and data protection. Any inability or
perceived inability of addressing these requirements could adversely affect our business.
The legislative and regulatory framework for privacy and data protection issues worldwide is rapidly evolving and is likely to remain
uncertain for the foreseeable future. We collect personal information and other data as integral parts of our business processes and
activities. This data is subject to a variety of U.S. and foreign laws and regulations, including oversight by various regulatory and other
governmental bodies. Many foreign countries and governmental bodies, including the EU, China, Canada, and other relevant
jurisdictions where we conduct business, have laws and regulations concerning the collection and use of personal information and
other data obtained from their residents or by businesses operating within their jurisdictions. The EU General Data Protection
Regulation (GDPR), the California Consumer Privacy Act, and the China Personal Information Protection Law, among others, impose
stringent data protection requirements and provide significant penalties for noncompliance. New privacy laws will continue to come
into effect around the world in the future. Any inability or perceived inability to adequately address privacy and data protection
concerns (even if unfounded), or comply with applicable laws, regulations, policies, industry standards, contractual obligations, or
other legal obligations (including at newly acquired companies) could result in additional cost and liability to us, damage our
reputation, inhibit sales, and otherwise adversely affect our business.
Legal proceedings and disputes in which we are, and may in the future be, involved could harm our business, financial condition,
reputation, and brand.
We routinely are a party to claims and legal actions incidental to our business. These include claims for personal injury or property by
users of our equipment, environmental, health, and safety claims, disputes with distributors, vendors and others with respect to
commercial matters, and disputes with taxing and other governmental authorities regarding the conduct of our business. The defense
of lawsuits and government inquiries or investigations has resulted and may result in expenditures of significant financial resources
and the diversion of management’s time and attention away from business operations.
We are currently subject to a consolidated multidistrict class action lawsuit in the Northern District of Illinois alleging that we have
engaged in attempted monopolization, exclusionary conduct, and restraint of the market for repair services for John Deere brand
agricultural equipment by limiting repair resources only to our authorized technicians or independent authorized John Deere dealers. In
addition, the Federal Trade Commission (FTC) is investigating whether we have violated laws in connection with the repair of John
Deere brand agriculture equipment, as well as our information security practices and statements as they relate to the risk of
unauthorized access to our computer systems, products, and services. We are fully cooperating with the FTC. We are currently unable
to predict the outcome of these matters. The development and resolution of these matters could have a material adverse effect on our
business, operations, and financial results.
GENERAL RISKS
Our reputation and brand could be damaged by negative publicity.
Our brand has worldwide recognition and significantly contributes to the success of our business. Our reputation is critical to growing
our customer base. Our brand depends on the ability to maintain a positive customer perception of the business, including the core
values of integrity, quality, innovation, and commitment. Negative claims or publicity involving us, our products or services, our culture
and values, our stance on environmental, social, and governance topics, customer data, or any of our key employees or suppliers, could
damage our reputation and brand image, regardless of whether such claims are accurate. In addition, our stance on environmental,
social, and governance topics damage to our reputation could adversely impact the ability to attract new and maintain existing
customers, employees, dealers, and business relationships. For example, we have been the subject of negative media articles relating
to our customers’ right to maintain and safely repair their equipment.
23
Additionally, negative or inaccurate postings, articles, or comments on social media and the internet about us could generate negative
publicity that could damage the reputation of our brand. Further, adverse publicity about regulatory or legal action against us, or legal
proceedings initiated by us, could also damage our reputation and brand image, undermine customer confidence, and reduce long-
term demand for equipment, even if the regulatory or legal action is unfounded or not material to our operations. If the reputation,
culture, or image of our brands are damaged, or we receive negative publicity, then our sales, financial condition, and results of
operations could be materially and adversely affected.
Unexpected events have increased and may in the future increase our cost of doing business or disrupt our operations.
The occurrence of one or more unexpected events, including war, acts of terrorism, epidemics and pandemics (such as the COVID
pandemic), civil unrest, fires, tornadoes, tsunamis, hurricanes, earthquakes, floods, and other forms of severe weather in the United
States or in other countries in which we operate, or in which our suppliers are located, have adversely affected and could in the future
adversely affect our operations and financial performance. Such events have caused and could cause complete or partial closure of one
or more of our manufacturing facilities or distribution centers, temporary or long-term disruptions in the supply of component
products from some local and international suppliers, and disruption and delay in the transport of products to dealers, end-users, and
distribution centers. Existing insurance coverage may not provide protection from all the costs that may arise from such events.
The potential physical impacts of climate change on our facilities, suppliers, and customers, and therefore on our operations, are highly
uncertain and will be particular to the circumstances developing in various geographic regions. These potential physical effects may
adversely affect the demand for our products and the cost, production, sales, and financial performance of our operations.
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.
PROPERTIES.
In the U.S. and Canada, the equipment operations own and operate 23 factory locations and lease and operate another 3 locations.
Outside of the U.S. and Canada, the equipment operations own or lease and operate 45 factory locations in Argentina, Austria, Brazil,
China, Finland, France, Germany, India, Israel, Italy, Mexico, the Netherlands, New Zealand, and Spain.
In addition, the equipment operations own or lease 12 facilities comprised of three locations supporting centralized parts distribution
and nine regional parts depots and distribution centers throughout the U.S. and Canada. Outside the U.S. and Canada, the equipment
operations also own or lease and occupy 11 total facilities with centralized parts distribution centers in Brazil, Germany, and India and
regional parts depots and distribution centers in Argentina, Australia, China, India, Mexico, South Africa, Sweden, and the United
Kingdom. We also own or lease eight facilities for the manufacture and distribution of other brands of replacement parts.
Our manufacturing facility in Russia was shut down in 2022. Our Eurasian parts distribution center in Russia was also closed, and the
leased premises were returned to the landlord in the second quarter of fiscal year 2023. Premises owned by Wirtgen in Russia
operating in the roadbuilding business were sold in the fourth quarter of fiscal year 2023.
We own or lease 53 administrative offices and research facilities globally as well as many other smaller, miscellaneous facilities.
Overall, we own approximately 70.0 million square feet of facilities and lease approximately 13.1 million additional square feet in various
locations. These properties are adequate and suitable for our business as presently conducted and are well maintained.
ITEM 3.
LEGAL PROCEEDINGS.
We are subject to various unresolved legal actions that arise in the normal course of business, the most prevalent of which relate to
product liability (including asbestos related liability), retail credit, employment, patent, trademark, and antitrust matters. Currently we
believe the reasonably possible range of losses for other unresolved legal actions would not have a material effect on our financial
statements; however, the outcome of any current or future proceedings, claims, or investigations cannot be predicted with certainty.
Adverse decisions in one or more of these proceedings, claims, or investigations could require us to pay substantial damages or fines,
undertake service actions, initiate recall campaigns, or take other costly actions. It is therefore possible that legal judgements could
give rise to expenses that are not covered, or not fully covered by our insurance programs and could affect our financial position and
results.
ITEM 4.
MINE SAFETY DISCLOSURES.
Not applicable.
24
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
(a) Our common stock is listed on the New York Stock Exchange (NYSE) under the symbol “DE.” We have a history of paying quarterly
cash dividends. While we currently expect a cash dividend to be paid in the future, future dividend payments will depend on our
earnings, capital requirements, financial condition, and other factors considered relevant by our Board of Directors. See the
information concerning the number of stockholders in Note 21 to the Consolidated Financial Statements.
(b) Not applicable.
(c) Purchases of our common stock during the fourth quarter of 2023 were as follows:
ISSUER PURCHASES OF EQUITY SECURITIES
Period
Jul 31 to Aug 27
Aug 28 to Sept 24
Sept 25 to Oct 29
Total
Total Number of
Shares
Purchased (2)
(thousands)
682 $
2,204
3,593
6,479
Average Price
Per Share
424.30
410.43
384.94
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (1)
(thousands)
Maximum
Number of Shares
that May Yet Be
Purchased under
the Plans or
Programs (1)
(millions)
681
2,204
3,593
6,478
42.3
39.8
35.9
(1) We have a share repurchase plan that was announced in December 2022 to purchase up to $18.0 billion of shares of our common
stock. The maximum number of shares that may yet be repurchased under this plan was 35.9 million based on the closing price of our
common stock on the NYSE as of the end of the fourth quarter of $361.15 per share. At the end of the fourth quarter of 2023,
$13.0 billion of common stock remains to be repurchased under this plan.
(2) In the fourth quarter of 2023, 1 thousand shares were acquired from a plan participant at a market price of $431.68 to pay payroll
taxes on the vesting of a restricted stock award.
STOCK PERFORMANCE GRAPH
The graph compares the total shareholder returns (TSR) of Deere & Company, the Standard & Poor’s (S&P) 500 Construction
Machinery & Heavy Transportation Equipment Index, the S&P 500 Industrials, and the S&P 500 Stock Index over a five-year period. It
assumes $100 was invested on October 26, 2018 and that dividends were reinvested. Our stock price at October 27, 2023, was $361.15.
Going forward, we intend to use the S&P 500 Industrials to replace the S&P 500 Construction Machinery & Heavy Transportation
Equipment. We believe the S&P 500 Industrials provides a better benchmark to compare our cumulative total returns against the
industry because it comprises those companies included in the S&P 500 that are classified as members of the GICS industrials sector,
and therefore, have many characteristics similar to us, regardless of the specific types of products they offer. In contrast, the
S&P’s 500 Construction Machinery & Heavy Transportation Equipment Index is made up of only four companies (Caterpillar (CAT),
Cummins (CMI), Paccar (PCAR), and Wabtec (WAB)). The stock performance shown in the graph is not intended to forecast and does
not necessarily indicate future price performance.
25
ITEM 6.
[RESERVED]
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
See the information under the caption “Management’s Discussion and Analysis.”
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to a variety of market risks, including interest rates and currency exchange rates. We attempt to actively manage
these risks. See the information under “Management’s Discussion and Analysis,” under “Financial Instrument Market Risk Information”
and in Note 26 to the Consolidated Financial Statements.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See the Consolidated Financial Statements and notes thereto and supplementary data.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
ITEM 9A.
CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
Our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) were effective as of
October 29, 2023, based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Exchange
Act.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control
system was designed to provide reasonable assurance regarding the preparation and fair presentation of published financial
statements in accordance with generally accepted accounting principles.
26
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial statement preparation and presentation in accordance with
generally accepted accounting principles.
Management assessed the effectiveness of our internal control over financial reporting as of October 29, 2023, using the criteria set
forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on that assessment, management concluded that, as of October 29, 2023, our internal control over financial
reporting was effective.
Our independent registered public accounting firm has issued an audit report on the effectiveness of our internal control over financial
reporting. That report is included herein.
Changes in Internal Control Over Financial Reporting
During the fourth quarter, there were no changes that have materially affected or are reasonably likely to materially affect our internal
control over financial reporting.
ITEM 9B.
OTHER INFORMATION.
Director and Executive Officer Trading Arrangements
None.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The information regarding directors required by this Item 10 will be set forth in the definitive proxy statement for our 2024 annual
meeting of stockholders (proxy statement) to be filed with the Commission in advance of such meeting. Information regarding
executive officers is presented in Item 1 of this report under the caption "Information about our Executive Officers."
We have adopted a code of ethics that applies to our executives, including our principal executive officer, principal financial officer,
and principal accounting officer. This code of ethics and our corporate governance policies are posted on our website at
http://www.deere.com/governance. We intend to satisfy disclosure requirements regarding amendments to or waivers from our code
of ethics by posting such information on this website. The charters of the Audit Review, Corporate Governance, Compensation, and
Finance committees of our Board of Directors are available on our website as well. This information is also available in print free of
charge to any person who requests it.
ITEM 11.
EXECUTIVE COMPENSATION.
The information required by this Item 11 will be set forth in the proxy statement to be filed with the Commission.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
The information required by this Item 12 will be set forth in the proxy statement to be filed with the Commission.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required by this Item 13 will be set forth in the proxy statement to be filed with the Commission.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Information required by this Item 14, including aggregate fees billed to us by our principal accountant, Deloitte & Touche LLP (PCAOB
ID No. 34), will be set forth in the proxy statement to be filed with the Commission.
27
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(1) Financial Statements
Statements of Consolidated Income for the years ended October 29, 2023, October 30, 2022, and October 31, 2021
Page
44
Statements of Consolidated Comprehensive Income for the years ended October 29, 2023, October 30, 2022, and October 31, 2021 45
Consolidated Balance Sheets as of October 29, 2023 and October 30, 2022
Statements of Consolidated Cash Flows for the years ended October 29, 2023, October 30, 2022, and October 31, 2021
Statements of Changes in Consolidated Stockholders’ Equity for the years ended October 31, 2021, October 30, 2022,
and October 29, 2023
Notes to Consolidated Financial Statements
(2) Exhibits
See the “Index to Exhibits” on pages 83 – 86 of this report
46
47
48
49
Certain instruments relating to long-term borrowings constituting less than 10 percent of registrant’s total assets are not filed
as exhibits herewith pursuant to Item 601(b)4(iii)(A) of Regulation S-K. Registrant agrees to file copies of such instruments
upon request of the Commission.
Financial Statement Schedules Omitted
The following schedules for the company and consolidated subsidiaries are omitted because of the absence of the conditions
under which they are required: I, II, III, IV, and V.
ITEM 16.
FORM 10-K SUMMARY.
None.
28
MANAGEMENT’S DISCUSSION AND ANALYSIS
Management’s Discussion and Analysis of Financial Condition and
Results of Operations (MD&A) is intended to promote
understanding of our financial condition and results of operations.
The MD&A is provided as a supplement to, and should be read in
conjunction with, the consolidated financial statements and the
accompanying Notes to Consolidated Financial Statements. All
amounts are presented in millions of dollars, unless otherwise
specified. For comparison of 2022 to 2021 results, refer to the
“Management’s Discussion and Analysis” section of our 2022
Form 10-K.
OVERVIEW
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, service, 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.
Net Sales and Revenues by Segment in 2023
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 & ECONOMIC
CONDITIONS
Industry Sales Outlook for Fiscal 2024
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. The investments in these technologies and in establishing
a Solutions as a Service business model might increase our
operating costs and may decrease operating margins during the
transition period. Most notably in 2023, we introduced See &
Spray™ Ultimate and a new model of See & Spray™ Premium. These
technologies were introduced on a limited basis and did not
represent a significant percentage of our sales in 2023.
Company Outlook for 2024
• Demand is expected to decline in 2024.
• Production volumes will decline to more normal levels in 2024.
Agriculture and Turf Outlook for 2024
• We expect large agricultural equipment sales to decline in 2024
in North America, Europe, and South America.
• Demand for small agricultural equipment is expected to
moderate in Europe.
• Turf and utility equipment product sales are expected to be
lower due to the overall U.S. economic condition and elevated
interest rates.
Market Conditions:
• Agricultural fundamentals are expected to moderate in 2024
due to lower commodity prices and elevated interest rates,
offset by declining input costs and improved customer
financials.
29
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 $170 (after-tax) less favorable financing spreads in
2023 compared to 2022. If interest rates continue to rise, we
expect to continue experiencing spread compression in 2024.
Demand for our products is negatively impacted by rising interest
rates. We expect higher borrowing costs for our customers to
primarily affect discretionary and residential product sales in 2024.
Rising interest rates are driven by factors outside of our control,
and as a result, we cannot reasonably foresee when this condition
will subside.
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, or 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.
Other Items of Concern and Uncertainties – Other items that could
impact our results are:
• global and regional political conditions, including the war in
Ukraine and the Israel-Hamas war,
• 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,
• 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,
• significant fluctuations in foreign currency exchange rates,
• volatility in the prices of many commodities, and
• slower economic growth or possible recession.
• The dairy and livestock sector continues to benefit from
elevated protein and hay prices.
• Farm input costs in Europe are declining. Grain prices vary from
favorable in Western Europe to depressed in Eastern Europe
due to the Russia/Ukraine war.
• Dealer inventories are elevated in Brazil due to inventory
oversupply driven by weakening demand in the second half of
2023.
• Industry sales in Asia are impacted by moderating demand in
India, the world’s largest tractor market by number of units.
• The fleet average age is older than in prior business cycles.
Combines are in line with the historical average age, while
tractors are slightly older than historical averages.
Construction and Forestry Outlook for 2024
Market Conditions:
• Construction equipment industry sales are forecasted to be
down from 2023 levels.
• Benefits from rental fleet replenishment, the energy industry,
and U.S. infrastructure spending are expected to partially offset
moderation in residential home, office, and retail construction.
• Roadbuilding demand remains strong, similar to 2023 in the
U.S., largely offset by softening demand in Europe.
Financial Services Outlook for 2024
Net Income
+ Nonrecurring prior period special items
+ Higher average portfolio
(-) Financing spreads
(-) Recoveries on operating lease dispositions
Up moderately
Favorable
Favorable
Unfavorable
Unfavorable
Additional Trends – We experienced supply chain disruptions and
inflationary pressures in 2022. While these issues moderated in
2023, the effect on production schedules and central bank policy
interest rates continued in 2023. These changes are discussed
below.
Supply Chain Impact on Production Schedules. We experienced
supply chain improvements compared to 2022, with a return to
normal in 2023. The ease in supply chain disruptions contributed
to higher levels of production compared to prior year. As a result,
our production schedules in 2023 were more aligned with the
customers’ seasonal use of our products, marking a return to
historical seasonal production patterns and on-time product
delivery. Additionally, supply chain improvements contributed to
reductions in premium freight costs, moderation in material cost
increases, and disciplined inventory management in 2023. In 2022,
supply chain disruptions impacted many aspects of our business,
including receiving past due deliveries from suppliers, parts
availability, increased production costs, and higher inventory
levels.
Interest Rates. Central bank policy interest rates increased in 2022
and 2023. Increased rates impacted us in several ways, primarily
affecting the financing spreads for the financial services
operations, and may impact future demand for our products.
Most retail customer receivables are fixed rate. Wholesale
financing receivables generally are variable rate. Both types of
30
CONSOLIDATED RESULTS
2023 compared to 2022
Highlights
• Net income rose in 2023 compared to 2022, driven by strong
market conditions.
• We continue to focus on structural profitability and strategically
investing in solutions that deliver value to our customers.
Net Sales and Revenues
2023
2022
61,251
52,577
Net Sales (Equipment Operations)
2023
2022
•
55,565
47,917
Favorable industry fundamentals and strong demand for farm
and construction equipment drove the sales increases in
2023.
Net Income (Attributable to Deere & Company)
2023
2022
10,166
7,131
Diluted Earnings Per Share (EPS) ($ per share)
2023
2022
34.63
23.28
• Net income and diluted EPS grew at a faster rate than sales
due to our ability to keep cost increases below price
realization.
Other Significant Statement of Consolidated Income Changes –
An explanation of the cost of sales to net sales ratio and other
significant statement of consolidated income changes follows:
22022
73.7%
%% Change
-8
Favorable
Unfavorable
Deere & Company
Cost of sales to net sales
2023
67.9%
+ Price realization
(-) Production costs
Price realization was 12 percent driven by strong demand.
Production costs increased due to a moderate rise in material
cost and manufacturing overhead. These factors were partially
offset by lower freight costs and production efficiencies
generated by easing supply chain disruptions.
Other income
1,295
Other income was lower due to a non-cash gain on the
remeasurement of the previously held equity investment in the
Deere-Hitachi joint venture in 2022.
1,003 $
$
-23
Research and development
expenses
Research and development expenditures were higher due to
continued focus on developing new technology solutions and
new product introductions.
2,177
1,912
+14
Selling, administrative and
3,863
4,595
general expenses
Selling, administrative and general expenses rose due to higher
salary expenses driven by inflationary conditions, profit-sharing
incentives, and an increase in expenses to support the Leap
Ambitions framework. Also impacting the current year was a
cumulative correction of the accounting treatment for financing
incentives offered to John Deere dealers (see Note 4).
+19
Interest expense
2,453
1,062
+131
Interest expense increased due to higher average borrowing
rates and higher average borrowings.
Other operating expenses
1,292
1,275
+1
See Note 9 for more information.
Provision for income taxes
2,871
2,007
+43
Consistent with higher pretax income.
31
Price realization was 8 percent in the U.S. and Canada driven by
inflation and 12 percent in Western Europe driven by strong
demand.
BUSINESS SEGMENT RESULTS
2023 compared to 2022
Each equipment operation segment experienced price realization
during 2023, as orderbooks were full and most product lines were
on allocation. These factors contributed to higher shipment
volumes for large agriculture and construction equipment.
Production costs were unfavorable in 2023 due to higher material
costs, profit-sharing incentive compensation, and manufacturing
overhead costs, partially offset by lower freight costs and
improved production efficiency. Material costs were higher in the
first three quarters of 2023 but continued to moderate through the
year. In the fourth quarter of 2023, material costs were lower than
in the prior year.
Production and Precision Agriculture Operations
Net sales
Sales volume and other
Price realization
Currency translation
Operating profit
Operating margin
22023
22022
$ 26,790 $ 22,002
%% Change
+22
+7
+15
6,996
26.1%
4,386
19.9%
+60
Sales volumes increased 10 percent in the U.S. and Canada,
32 percent in Australia, and 9 percent in Western Europe, partially
offset by the effect of suspension of shipments to Russia. Price
realization was 17 percent in the U.S. and Canada and 12 percent
outside the U.S. and Canada, driven by strong demand. Prior
period results were impacted by special items (see Note 4).
Construction and Forestry Operations
Net sales
Sales volume and other
Price realization
Currency translation
Operating profit
Operating margin
22023
14,795 $
$
2,695
18.2%
22022
12,534
%% Change
+18
+9
+10
-1
+34
2,014
16.1%
Sales volumes increased 18 percent in the U.S. and Canada but
decreased 6 percent outside the U.S. and Canada driven by lower
sales in Brazil and the suspension of shipments to Russia. Price
realization was 12 percent in the U.S. and Canada driven by strong
demand, and 7 percent outside the U.S. and Canada. Results in
both periods were impacted by special items (see Note 4).
Small Agriculture and Turf Operations
Net sales
Sales volume and other
Price realization
Currency translation
Operating profit
Operating margin
2023
$ 13,980 $
2,472
17.7%
2022
13,381
% Change
+4
-4
+9
-1
+27
1,949
14.6%
Sales volumes decreased 8 percent in the U.S. and Canada but
increased 18 percent in Mexico and 2 percent in Western Europe.
32
Financial Services Operations
Revenue (including intercompany)
$
Average balance of receivables and
leases
Interest expense
Average borrowings
Average borrowing rates
Net income
22023
5,554 $
22022
4,085
%% Change
+36
2,362
799
619
880
+19
+196
+20
+143
-30
Average wholesale receivables increased 72 percent and retail
notes increased 13 percent driven by higher equipment sales.
Revenue also increased due to higher average financing rates. Net
income declined as a result of unfavorable financing spreads and a
correction of the accounting treatment for financing incentives
offered to John Deere dealers (see Note 4). In 2022, financial
services increased the provision for credit losses in Russia and
recorded an intercompany benefit from the equipment operations,
which guarantees financial services’ investments in certain
international markets, including Russia (see Note 4). The Russia-
related impacts are displayed in the “Other” bar below.
are forecasting lower operating cash flows in 2024 compared with
2023 as identified previously in Trends and Economic Conditions.
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. However, the patterns of seasonality
have been affected by the supply chain disruptions experienced
during fiscal year 2022.
The financial services operations rely on their ability to raise
substantial amounts of funds to finance their receivable and lease
portfolios.
Key Metrics and Balance Sheet Changes
Cash, Cash Equivalents and Marketable Securities
2023
8,404
5,508
2022
• See the detailed cash flow discussion in the next section.
• The increase was primarily driven by higher operating cash
flow.
Trade Accounts and Notes Receivable – Net
2023
7,739
2022
• Receivables are generated from the sales of goods to
6,410
customers.
• The increase was driven by higher sales.
Financing Receivables and Equipment on Operating Leases
2023
57,925
2022
49,193
• Acquisition volumes were 30 percent higher driven by higher
retail volumes due to increased retail sales and higher
wholesale receivables.
BUSINESS SEGMENT RESULTS
2022 compared to 2021
Please refer to the “Management’s Discussion and Analysis”
section of our 2022 Form 10-K.
Inventories
2023
8,160
CAPITAL RESOURCES AND
LIQUIDITY
2023 compared to 2022
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
2022
• Inventories decreased due to easing of supply disruption
8,495
constraints and moderation of future demand.
Property and Equipment
2023
6,879
2022
• Cash expenditures were $1.5 billion in 2023.
• Capital expenditures are forecast to be $1.9 billion in 2024.
6,056
33
DEBT RATINGS
To access debt markets, we rely on credit rating agencies to assign
short-term and long-term credit ratings to our debt. These ratings
are an indicator of credit quality for fixed income investors. A debt
rating is not a recommendation by the rating agency to buy, sell, or
hold. A credit rating agency may change or withdraw company
ratings based on its assessment of our current and future ability to
meet interest and principal repayment obligations. Lower credit
ratings or negative changes to ratings outlooks generally result in
higher borrowing costs, including costs of derivative transactions,
and reduced access to debt capital markets, and may adversely
impact our liquidity.
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
Moody’s Investors Service, Inc.
Standard & Poor’s
A+
A2
A
F1
Prime-1
A-1
Stable
Positive
Stable
CONTRACTUAL OBLIGATIONS
AND CASH REQUIREMENTS
2024 and Beyond
Our material cash requirements include the following:
Borrowings – As of October 29, 2023, we had $21.2 billion of
payments due on borrowings and securitization borrowings in the
next year, along with interest payments of $2.2 billion. The
securitization borrowing payments are based on the expected
liquidation of the retail notes. See Notes 12 and 19 for additional
borrowing details. These payments will likely be replaced with new
borrowings to finance the receivable and lease portfolio, which is
expected to grow in 2024.
Purchase Obligations – As of October 29, 2023, our outstanding
purchase obligations were $4.5 billion, with $4.1 billion payable
within one year. These purchase obligations are noncancelable.
Other Cash Requirements – In addition to our contractual
obligations, we have the following commitments:
•
•
capital expenditures of $1.9 billion are planned for 2024,
expected quarterly cash dividend throughout 2024 (subject
to change at the discretion of our Board of Directors), and
total pension and OPEB contributions in 2024 are expected
to be approximately $225.
Share repurchases will be considered as a means of deploying
excess cash to shareholders, once the previously mentioned
requirements are met.
Borrowings
2023
63,411
2022
51,899
• Borrowings increased corresponding with the level of the
financing receivable and lease portfolios.
Unused Credit Lines
2023
841
2022
3,284
• The decrease in unused credit lines was due to an increase in
commercial paper outstanding to fund growth in the receivable
portfolios.
Financial Services Ratio of Interest-Bearing Debt to Stockholder’s
Equity
2023
2022
8.4 to 1
8.5 to 1
CASH FLOWS
2023, 2022, and 2021
Net cash provided by operating activities $
Net cash used for investing activities
Net cash provided by (used for)
22023
8,589 $
(8,749)
22022
4,699 $
(8,485)
22021
7,726
(5,750)
financing activities
2,808
826
(1,078)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
Net increase (decrease) in cash, cash
equivalents, and restricted cash
$
31
(224)
55
2,679 $
(3,184) $
953
Operating cash flows in 2023 were higher due to an increase in net
income and lower inventory offset by higher receivables related to
sales, while operating cash flows in 2022 were impacted by a
$1 billion other postretirement benefit (OPEB) contribution.
Cash outflows from investing activities were $8.7 billion in 2023
due to growth in the financing receivable and lease portfolios, and
purchases of property and equipment.
Cash inflows from financing activities were $2.8 billion in 2023, as
higher borrowings were partially offset by repurchases of common
stock and dividends paid.
Cash Returned to Shareholders
•
2023
1,427
7,216
2022
1,313
3,597
2021
1,040
2,538
Dividends
Share Repurchases
Cash returned to shareholders increased $3.7 billion in 2023.
34
CRITICAL ACCOUNTING
ESTIMATES
The timely preparation of financial statements requires
management to make estimates and assumptions. Those estimates
affect reported amounts in these financial statements. Changes in
those estimates and assumptions could have a significant effect.
The following estimates are the most critical to our financial
statements:
• sales incentives,
• product warranties,
• postretirement benefit obligations,
• allowance for credit losses,
• operating lease residual values, and
• income taxes.
These items require the most difficult, subjective, or complex
judgments. Our accounting policies are described primarily in
Note 2 of our consolidated financial statements.
Sales Incentives
We provide sales incentives to dealers. These incentives are
offered in two forms:
• volume bonuses – awarded based on a dealer’s sales volume
and performance, and
• retail sales incentive programs – discounts or financing
programs that are due when the dealer sells the equipment to a
retail customer.
The estimated cost of these programs is based on:
• historical data,
• announced and expected incentive programs,
• field inventory levels, and
• forecasted sales volumes.
At the time a sale is recognized, we record an estimate of the sales
incentive costs. The final cost is determined at the end of the
volume bonus measurement period or at the time of the retail sale.
There are numerous programs available at any time, and new
programs may be announced after we record the equipment sale
to the dealer. Changes in the mix and types of sales incentive
programs affect these estimates, which are reviewed quarterly.
Actual cost differences from the original cost estimate are
recognized in “Net sales.”
Sales Incentive Accruals
2,286
1,243
1,320
1,044
880
800
2023
2022
2021
Trade A/R
A/P and accrued expenses
The accruals recorded against receivables relate to programs where
we have the contractual right and the intent to offset against
existing receivables. The increase in each of 2023 and 2022
primarily resulted from higher retail sales. Additional factors in
2023 were higher incentives for dealer market share and incentives
provided to offset elevated interest rates.
A key assumption of the retail sales incentive accrual is the
predictive value of the historical percent of retail sales incentive
costs to retail sales. Over the last five fiscal years, this percent has
varied by an average of .7 percent. Holding other assumptions
constant, .7 percent change would have modified the sales
incentive accrual by $105.
Product Warranties
A standard warranty is provided as an assurance that our equipment
will function as intended. The standard warranty period varies by
product and region.
At the time a sale is recognized, we record an estimate of future
warranty costs, based on the following calculation:
• historical claims rate experience – multiplied by –
• the estimated population.
The historical claims rate is determined by a review of five-year
claims costs. The estimated population is based on dealer inventories
and retail sales. These estimates are reviewed quarterly. Adjustments
are also made for current quality developments.
Product Warranty Accruals
2023
2022
2021
1,610
1,427
1,312
The increase in each of 2023 and 2022 related to higher sales
volumes, partially offset by a decrease in the warranty rate.
Product warranty accrual estimates are affected by the historical
percent of warranty claims costs as a percentage of gross sales.
During this time, the percent has varied plus or minus .12 percent.
Holding all other assumptions constant, if this estimated cost
experience percent would have increased or decreased .12 percent,
the warranty accrual at October 29, 2023 would have changed by
approximately $81.
Postretirement Benefit Obligations
The pension and OPEB plan obligations (defined benefit) and
expenses require the use of estimates. The main estimate is the
present value of the projected future benefit payments. These
future benefit payments extend several decades.
The estimates are based on existing retirement plan provisions. No
assumption is made regarding any potential changes to benefit
provisions beyond those to which we are presently committed
(e.g., in existing labor contracts).
The key assumptions used by our actuaries to calculate the
estimates include:
• discount rates,
• health care cost trend rates,
• expected long-term return on plan assets,
• compensation increases,
35
• retirement rates,
• mortality rates, and
• expected contributions.
Assumptions are set each year-end. These assumptions are not
changed during the year unless there is a significant plan event.
Actual results that differ from the assumptions affect future
expenses and obligations.
The key pension and OPEB amounts follow:
Pension and OPEB net
(benefit) cost
$
(13) $
176 $
197
22023
2022
2021
Long-term expected return
on pension and OPEB
plan assets (as a percent)
Long-term expected return
on pension and OPEB
plan assets
Actual return (loss) on
pension and OPEB plan
assets
Pension assets, net of
pension liabilities
OPEB liabilities, net of OPEB
6.2
5.0
5.9
995
836
876
(395)
(3,565)
3,616
2,076
2,690
2,665
assets
1,001
1,205
3,175
The reduction in the 2023 pension and OPEB net (benefit) cost was
due to increased expected long-term return rates on plan assets
and increased discount rates.
The effect of hypothetical changes to selected assumptions on our
major U.S. retirement benefit plans would be as follows:
OOctober 29, 2023
Increase
(Decrease)
PBO/APBO*
22024
Increase
(Decrease)
Expense
Percentage
Change
+/-.5
$
(414)/456
$
3/(3)
+/-.5
+/-.5
+/-.5
(63)/63
(120)/130
(4)/5
(10)/10
Assumptions
Pension
Discount rate**
Expected return on
assets
OPEB
Discount rate**
Expected return on
assets
Health care cost
trend rate**
39/(34)
* Projected benefit obligation (PBO) for pension plans and accumulated
231/(202)
+/-1.0
postretirement benefit obligation (APBO) for OPEB plans.
** Pretax impact on service cost, interest cost, and amortization of gains
or losses.
Allowance for Credit Losses
The allowance for credit losses is an estimate of the credit losses
expected over the life of the receivable portfolio. The allowance is
measured on a collective basis for receivables with similar risk
characteristics. Receivables that do not share risk characteristics
are evaluated on an individual basis. Risk characteristics include:
• finance product category,
36
• market,
• geography,
• credit risk, and
• remaining balance.
We utilize the following loss forecast models to estimate expected
credit losses:
• Transition matrix models are used for large and complex retail
customer receivable pools. These models are used for more
than 90 percent of retail customer receivables. Historical
portfolio performance and current delinquency levels are used
to forecast future defaults. Estimated recovery rates are
applied to the estimated default balance to calculate the
expected credit losses.
• Weighted average remaining maturity (WARM) models are
used for smaller and less complex retail customer receivable
pools.
• Historical loss rate models are used on wholesale receivables,
with consideration of current economic conditions and dealer
financial risk.
The model output is adjusted for forecasted economic conditions,
which may include the following economic indicators:
• commodity prices,
• industry equipment sales,
• unemployment rates, and
• housing starts.
Management reviews each model’s output quarterly, and
qualitative adjustments are incorporated as necessary.
2023
2022
2021
Allowance for Credit Losses
232
207
361
The allowance decreased in 2023 due to the disposition of the
receivable portfolio in Russia (see Note 11). Excluding the portfolio
in Russia, the allowance increased slightly as higher portfolio
balances and higher expected losses on turf and construction
customer accounts. The allowance increased in 2022 due to higher
reserves related to the economic uncertainty in Russia.
While we believe our allowance is sufficient to provide for losses
over the life of our existing receivable portfolio, different
assumptions would result in changes to the allowance for credit
losses, specifically:
• For the wholesale receivable portfolio: Changes in economic
conditions have historically had limited impact on credit losses.
• Within the retail customer receivable portfolio: Credit loss
estimates are dependent on a number of factors, including
historical portfolio performance, current economic conditions,
current delinquency levels, and estimated recoveries on
defaulted accounts.
Holding all other factors constant, a 10 percent increase in the
transition matrix models’ forecasted defaults and a simultaneous
10 percent decrease in recovery rates would have resulted in a $53
increase to the allowance for credit losses at October 29, 2023.
Operating Lease Residual Values
Equipment on operating leases is depreciated to the estimated
residual value over the lease term. The residual values are based on
several factors, including:
• lease term,
• expected hours of usage,
• historical wholesale sales prices,
• return experience,
• intended equipment use,
• market dynamics and trends, and
• dealer residual value guarantees.
We review residual value estimates during the lease term.
Depreciation is adjusted over the remaining lease term if residual
estimates are revised. Impairments are recorded when events or
circumstances necessitate.
At the end of the majority of leases, the equipment is disposed in
the following sequence:
• The lessee has the option to purchase the equipment for the
contractual residual value.
• The dealer has the option to purchase the equipment.
• The equipment is sold to a third party at the equipment’s fair
value. In this situation, we may record a gain or a loss for the
difference between the residual value and the sale price.
Operating Lease Residual Values
2023
2022
2021
4,864
4,640
5,025
Hypothetically, if (a) future market values for this equipment were
to decrease 10 percent from our present estimates and (b) all the
equipment on operating leases were returned to us for
remarketing at the end of the lease term, the total unfavorable
impact after consideration of dealer residual value guarantees
would be approximately $90. This amount would be recognized as
higher depreciation expense over the remaining term of the
operating leases, or potentially as an impairment.
Income Taxes
We are subject to federal, state, and foreign income taxes. These
tax laws can be complex. Significant judgment and interpretation is
required to implement them. Changes in tax laws could materially
affect our consolidated financial statements. We record our tax
positions in the following categories:
• current taxes,
• deferred taxes, and
• uncertain tax positions.
Deferred income taxes represent temporary differences between
the tax and the financial reporting basis of assets and liabilities.
This will result in taxable or deductible amounts in the future. Loss
carryforwards and tax credits are significant components of
deferred tax asset balances. These assets are reviewed regularly for
the following:
• the likelihood of recoverability from future taxable income,
• reversal of deferred tax liabilities, and
• tax planning strategies.
Valuation allowances are established when we determine that the
deferred tax benefit may not be realized. The recoverability
analysis requires significant judgment and relies on estimates. The
valuation allowance as of October 29, 2023 was $1.6 billion.
Changes in foreign income tax laws, income for certain
jurisdictions, or our tax structure could impact the valuation
allowance balance.
Some tax positions contain significant uncertainties. These
positions may be challenged or disallowed by taxing authorities. If
it is likely the position will be disallowed, no tax benefit is recorded.
If it is likely the position will be sustained, a tax benefit is
recognized. The ultimate resolution could take many years. This
may result in a payment that is significantly different from the
original estimate.
See Note 8 for further information on income taxes.
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 U.S., foreign and international laws, regulations,
and policies relating to trade, spending, taxing, banking,
monetary, environmental (including climate change and engine
emission), and farming policies;
• political, economic, and social instability of the geographies in
which we operate, including the ongoing wars between Russia
and Ukraine and between Israel and Hamas;
• adverse macroeconomic conditions, including unemployment,
inflation, rising interest rates, changes in consumer practices
due to slower economic growth or possible recession, and
regional or global liquidity constraints;
37
Further information concerning our businesses, including factors
that could materially affect our financial results, is included in our
filings with the SEC (including, but not limited to, the factors
discussed in Item 1A. “Risk Factors” of this Annual Report on
Form 10-K). 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.
• growth and sustainability of non-food uses for crops (including
ethanol and biodiesel production);
• 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 our products and solutions;
• accurately forecasting customer demand for products and
services and adequately managing inventory;
• our 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);
• our ability to adapt in highly competitive markets;
• dealer practices and their ability to manage distribution of our
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 our products and solutions;
• stress in the banking sector may have adverse impacts on
vendors or customers as well as on our ability to access cash
deposits;
• availability and price of raw materials, components, and whole
goods;
• delays or disruptions in our supply chain;
• labor relations and contracts, including work stoppages and
other disruptions;
• the ability to attract, develop, engage, and retain qualified
personnel;
• security breaches, cybersecurity attacks, technology failures,
and other disruptions to our information technology
infrastructure and products;
• loss of or challenges to intellectual property rights;
• compliance with evolving U.S. and foreign laws, including
economic sanctions, data privacy, and environmental laws and
regulations;
• legislation introduced or enacted that could affect our
business model and intellectual property, such as so-called
right to repair or right to modify legislation;
• investigations, claims, lawsuits, or other legal proceedings;
• events that damage our reputation or brand;
• world grain stocks, available farm acres, 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.
38
SUPPLEMENTAL CONSOLIDATING DATA
The supplemental consolidating data presented on the subsequent pages is presented for informational purposes. The equipment
operations represents the enterprise without financial services. The 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.
The equipment operations and financial services participate in different industries. The equipment operations 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 us. 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.
INCOME STATEMENTS
For the Years Ended October 29, 2023, October 30, 2022, and October 31, 2021
Unaudited
EEQUIPMENT
OOPERATIONS
22022
22023
FFINANCIAL
SSERVICES
22022
22021
22021
22023
$ 55,565 $ 47,917 $ 39,737
EELIMINATIONS
22022
22023
22021
CCONSOLIDATED
22022
22023
22021
Net Sales and Revenues
Net sales
Finance and interest income
Other income
Total
636
858
57,059
213
1,261
49,391
133 $ 5,055 $ 3,583 $ 3,442 $ (1,008) $ (431) $ (279)
(302)
352
941
(581)
3,794
40,811
502
4,085
(354)
(1,362)
499
5,554
(468)
(899)
4,683
1,003
61,251
3,365
1,295
52,577
1
991 2, 3
44,024
$ 55,565 $ 47,917 $ 39,737
3,296
Costs and Expenses
Cost of sales
Research and development expenses
Selling, administrative and
general expenses
Interest expense
Interest compensation to Financial Services
Other operating expenses
Total
37,739
2,177
35,341
1,912
29,119
1,587
(24)
(3)
(3)
37,715
2,177
35,338
1,912
4
29,116
1,587
3,611
411
687
217
44,842
3,137
390
299
350
41,429
2,887
368
217
181
34,359
994
2,362
735
799
504
687
1,396
4,752
1,386
2,920
1,453
2,644
(10)
(320)
(687)
(321)
(1,362)
(9)
(127)
(299)
(461)
(899)
(8)
(62)
(217)
(291)
(581)
4,595
2,453
3,863
1,062
1,292
48,232
1,275
43,450
3,383
993
4
1
1
1,343 5, 6
36,422
Income before Income Taxes
Provision for income taxes
12,217
2,685
7,962
1,718
6,452
1,386
802
186
1,165
289
1,150
272
9,532
6,244
5,066
616
876
878
13,019
2,871
9,127
2,007
7,602
1,658
10,148
7,120
5,944
Income after Income Taxes
Equity in income
of unconsolidated affiliates
Net Income
Less: Net income (loss) attributable to
noncontrolling interests
Net Income Attributable to
Deere & Company
4
6
18
3
4
3
7
10
21
9,536
6,250
5,084
619
880
881
10,155
7,130
5,965
(11)
(1)
2
(11)
(1)
2
$
9,547 $ 6,251 $ 5,082 $
619 $ 880 $ 881
$ 10,166 $
7,131 $ 5,963
1 Elimination of intercompany interest income and expense.
2 Elimination of equipment operations’ margin from inventory transferred to equipment on operating leases (see Note 6).
3 Elimination of financial services’ income related to intercompany guarantees of investments in certain international markets and intercompany service revenues.
4 Elimination of intercompany service fees.
5 Elimination of financial services’ lease depreciation expense related to inventory transferred to equipment on operating leases.
6 Elimination of equipment operations’ expense related to intercompany guarantees of investments in certain international markets and intercompany service expenses.
39
SUPPLEMENTAL CONSOLIDATING DATA (continued)
CONDENSED BALANCE SHEETS
As of October 29, 2023 and October 30, 2022
Unaudited
EEQUIPMENT
OOPERATIONS
FFINANCIAL
SSERVICES
EELIMINATIONS
2023
2022
2023
2022
2023
2022
CCONSOLIDATED
2023
2022
ASSETS
Cash and cash equivalents
Marketable securities
Receivables from Financial Services
Trade accounts and notes receivable – net
Financing receivables – net
Financing receivables securitized – net
Other receivables
Equipment on operating leases – net
Inventories
Property and equipment – net
Goodwill
Other intangible assets – net
Retirement benefits
Deferred income taxes
Other assets
Total Assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Short-term borrowings
Short-term securitization borrowings
Payables to Equipment Operations
Accounts payable and accrued expenses
Deferred income taxes
Long-term borrowings
Retirement benefits and other liabilities
Total liabilities
Commitments and contingencies (Note 20)
Redeemable noncontrolling interest (Note 3)
STOCKHOLDERS’ EQUITY
Total Deere & Company stockholders’ equity
Noncontrolling interests
Financial Services' equity
Adjusted total stockholders' equity
Total Liabilities and Stockholders’ Equity
$
5,720 $
104
4,516
1,320
64
3,767 $
61
6,569
1,273
47
1,813
1,670
8,160
6,843
3,900
1,133
2,936
2,133
1,948
40,590 $
8,495
6,021
3,687
1,218
3,666
940
1,794
39,208 $
$
$
1,230 $
1,040 $
14,862
452
7,210
2,032
25,786
12,962
380
7,917
2,351
24,650
97
92
21,785
4
(7,082)
14,707
40,590 $
20,262
3
(5,799)
14,466
39,208 $
$
1,738 $
842
1,007
673
$
8,687
43,609
7,335
869
6,917
6,434
36,587
5,936
832
6,623
36
35
(4,516) $ (6,569)
(1,297)
(2,268)
(59)
(10)
$
7,458 $
946
4,774
734
7,739
43,673
7,335
2,623
6,917
8,160
6,879
3,900
1,133
3,007
1,814
2,503
7
8
8
6,410
36,634
5,936
2,492
6,623
8,495
6,056
3,687
1,218
3,730
9
824 10
2,417
90,030
72
68
559
70,732 $
66
45
626
58,864 $
(1)
(387)
(4)
(7,235) $
(2)
(161)
(3)
(8,042) $ 104,087 $
16,709 $
6,995
4,516
3,599
455
31,267
109
63,650
11,552
5,711
6,569 $
3,170
276
25,679
108
53,065
$
17,939 $
6,995
12,592
5,711
(4,516) $
(2,331)
(387)
(6,569)
(1,310)
(161)
(1)
(7,235)
(2)
(8,042)
16,130
520
38,477
2,140
82,201
14,822
7
8
495 10
33,596
2,457
69,673
9
7,082
5,799
(7,082)
(5,799)
7,082
5,799
97
92
21,785
4
20,262
3
11
11
7,082
70,732 $
5,799
58,864 $
(7,235) $
(8,042) $ 104,087 $
21,789
20,265
90,030
7 Elimination of receivables / payables between equipment operations and financial services.
8 Primarily reclassification of sales incentive accruals on receivables sold to financial services.
9 Reclassification of net pension assets / liabilities.
10 Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions.
11 Elimination of financial services’ equity.
40
SUPPLEMENTAL CONSOLIDATING DATA (continued)
STATEMENTS OF CASH FLOWS
For the Years Ended October 29, 2023, October 30, 2022, and October 31, 2021
Unaudited
EEQUIPMENT
OOPERATIONS
2022
22023
22021
22023
FFINANCIAL
SSERVICES
2022
22021
EELIMINATIONS
2022
2023
22021
CCONSOLIDATED
2022
22021
2023
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision (credit) for credit losses
Provision for depreciation and amortization
Impairments and other adjustments
Share-based compensation expense
Gain on remeasurement of previously held equity
investment
Distributed earnings of Financial Services
Provision (credit) for deferred income taxes
Changes in assets and liabilities:
Receivables related to sales
Inventories
Accounts payable and accrued expenses
Accrued income taxes payable/receivable
Retirement benefits
Other
Net cash provided by operating activities
$ 9,536 $ 6,250 $ 5,084 $
619 $
880 $
881
$ 10,155 $
7,130 $
5,965
7
1,123
18
3
1,041
88
7
1,043
50
(23)
1,016
173
189
1,050
(13)
1,140 $
(135) $
(196) $
(133)
130
85
82
(215)
(444)
(555)
(16)
2,004
191
130
(6)
2,050
50
82
192
1,895
88
85
(326)
12
13
14
(326)
444
8
555
(369)
(189)
(1,924)
1,444
166
(1,016)
250
6,239
(105)
(1,835)
1,589
13
30
(162)
5,900
215
(959)
(58)
474
1,352
8
(164)
367
11,919
169
(74)
(72)
(790)
(66)
(441)
449
(31)
(6)
(51)
2,315
143
(25)
1
(287)
1,877
57
(2)
(1)
(25)
1,965
(4,195)
(195)
(971)
(2,294)
(167)
(454)
1,074
(662)
238
(64)
(5,645)
53
(3,417)
(183)
(139)
(4,253)
279
830
(23)
(170)
252
8,589
(2,483)
(2,091)
1,133
141
(1,015)
16
4,699
969 15, 17, 18
16
17
(2,497)
1,884
11
29
(370) 12, 13, 16
7,726
15
15
16
19
15
18
19
14
Cash Flows from Investing Activities
Collections of receivables (excluding receivables related
to sales)
Proceeds from sales of equipment on operating leases
Cost of receivables acquired (excluding receivables
related to sales)
Acquisitions of businesses, net of cash acquired
Purchases of property and equipment
Cost of equipment on operating leases acquired
Increase (decrease) in investment in Financial Services
Decrease (increase) in trade and wholesale receivables
Collateral on derivatives – net
Other
Net cash used for investing activities
Cash Flows from Financing Activities
Net proceeds (payments) in short-term borrowings
(original maturities three months or less)
Change in intercompany receivables/payables
Proceeds from borrowings issued (original maturities
24,128
1,981
22,400
2,093
20,527
2,094
(1,077)
(1,493)
(1,568)
23,051
1,981
20,907
2,093
18,959
2,094
(82)
(1,494)
(498)
(1,131)
(244)
(845)
(870)
7
(8)
(1)
(290)
(2,737)
5
(213)
(1,830)
(7)
70
(1,034)
(29,229)
(26,903)
(25,305)
457
603
1,652
(4)
(3,234)
(3)
(2,879)
(3)
(2,627)
(5,783)
(11)
(160)
(12,312)
(3,601)
(647)
(81)
(9,621)
1,364
(274)
(84)
(4,308)
264
870
5,783
225
(7)
3,601
895
8
(1,364)
3
6,300
37
2,966
(31)
(408)
(28,772)
(82)
(1,498)
(2,970)
(26,300)
(498)
(1,134)
(2,654)
(23,653)
(244)
(848)
(1,732)
(12)
(447)
(8,749)
(642)
(257)
(8,485)
(281)
(45)
(5,750)
(113)
2,090
136
(1,633)
65
(354)
4,121
(2,090)
3,716
1,633
753
354
4,008
3,852
818
greater than three months)
342
138
11
15,087
10,220
8,711
15,429
10,358
8,722
Payments of borrowings (original maturities greater
than three months)
Repurchases of common stock
Capital investment from Equipment Operations
Dividends paid
Other
Net cash provided by (used for) financing activities
Effect of Exchange Rate Changes on Cash, Cash
Equivalents, and Restricted Cash
Net Increase (Decrease) in Cash, Cash Equivalents, and
(901)
(7,216)
(1,356)
(3,597)
(94)
(2,538)
(1,427)
(7)
(7,232)
(1,313)
6
(7,619)
(1,040)
87
(3,863)
(7,012)
(7,089)
(6,996)
870
(215)
(66)
10,695
(7)
(444)
(35)
7,994
8
(555)
(37)
2,238
(870)
215
7
444
(8)
555
(655)
451
547
(7,913)
(7,216)
(8,445)
(3,597)
(7,090)
(2,538)
(1,427)
(73)
2,808
(1,313)
(29)
826
(1,040)
50
(1,078)
24
(209)
41
7
(15)
14
31
(224)
55
Restricted Cash
1,974
(3,419)
1,044
705
235
(91)
2,679
(3,184)
953
Cash, Cash Equivalents, and Restricted Cash at
Beginning of Year
3,781
7,200
6,156
1,160
925
1,016
4,941
8,125
7,172
Cash, Cash Equivalents, and Restricted Cash at
End of Year
$ 5,755 $ 3,781 $ 7,200 $
1,865 $
1,160 $
925
$
7,620 $
4,941 $
8,125
Components of Cash, Cash Equivalents, and Restricted
Cash
Cash and cash equivalents
Restricted cash (Other assets)
Total Cash, Cash Equivalents, and Restricted Cash
$ 5,720 $ 3,767 $ 7,188 $
35
14
12
$ 5,755 $ 3,781 $ 7,200 $
1,738 $
127
1,865 $
1,007 $
153
1,160 $
829
96
925
$
$
7,458 $
162
7,620 $
4,774 $
167
4,941 $
8,017
108
8,125
12 Elimination of depreciation on leases related to inventory transferred to equipment on operating leases (see Note 6).
13 Reclassification of share-based compensation expense.
14 Elimination of dividends from financial services to the equipment operations, which are included in the equipment operations operating activities.
15 Primarily reclassification of receivables related to the sale of equipment.
16 Reclassification of direct lease agreements with retail customers.
17 Reclassification of sales incentive accruals on receivables sold to financial services.
18 Elimination and reclassification of the effects of financial services partial financing of the construction and forestry retail locations sales and subsequent collection of those amounts.
19 Elimination of investment from equipment operations to financial services.
41
SELECTED FINANCIAL DATA
Net sales and revenues
Net sales
Finance and interest income
Research and development expenses
Selling, administrative and general expenses
Interest expense
Net income*
Return on net sales
Return on beginning Deere & Company
2017
2018
2021
2016
2019
2020
2023 2022
$ 61,251 $ 52,577 $ 44,024 $ 35,540 $ 39,258 $ 37,358 $ 29,738 $ 26,644 $ 28,863 $ 36,067
31,272 34,886 33,351 25,885 23,387 25,775 32,961
2,282
2,732
3,450
1,437
1,373
1,644
3,266
3,098
3,477
664
899
1,247
3,162
2,159
2,751
9.6%
8.3%
8.8%
47,917 39,737
3,296
3,365
1,587
1,912
3,383
3,863
993
1,062
5,963
7,131
15.0%
14.9%
55,565
4,683
2,177
4,595
2,453
10,166
18.3%
2,381
1,410
2,868
680
1,940
7.5%
3,107
1,658
3,455
1,204
2,368
7.1%
3,493
1,783
3,551
1,466
3,253
9.3%
2,511
1,394
2,791
764
1,524
6.5%
2015
2014
stockholders’ equity
Comprehensive income*
50.2%
10,099
38.7%
6,629
46.1%
8,963
24.1%
2,819
28.8% 24.8%
3,222
2,081
33.1%
3,221
22.6%
627
21.4%
994
30.8%
2,072
Net income per share – basic*
– diluted*
Dividends declared per share
Dividends paid per share
Average number of common shares
outstanding (in millions) – basic
– diluted
$ 34.80 $ 23.42 $ 19.14 $
18.99
3.61
3.32
23.28
4.36
4.28
34.63
5.05
4.83
8.77 $ 10.28 $ 7.34 $
7.24
10.15
8.69
2.58
3.04
3.04
2.49
2.97
3.04
6.76 $
6.68
2.40
2.40
4.83 $
4.81
2.40
2.40
5.81 $
5.77
2.40
2.40
8.71
8.63
2.22
2.13
292.2
293.6
304.5
306.3
311.6
314.0
313.5
316.6
316.5
320.6
322.6
327.3
319.5
323.3
315.2
316.6
333.6
336.0
363.0
366.1
Total assets
Trade accounts and notes receivable – net
Financing receivables – net
Financing receivables securitized – net
Equipment on operating leases – net
Inventories
Property and equipment – net
Short-term borrowings
Short-term securitization borrowings
Long-term borrowings
Total Deere & Company stockholders’ equity
4,171
3,011
7,739
6,410
3,925
4,208
5,230 5,004
$ 104,087 $ 90,030 $ 84,114 $ 75,091 $ 73,011 $ 70,108 $ 65,786 $ 57,918 $ 57,883 $ 61,267
3,278
43,673 36,634 33,799 29,750 29,195 27,054 25,104 23,702 24,809 27,422
4,602
4,016
4,210
5,578
8,018
4,553
3,957
33,596 32,888 32,734 30,229 27,237 25,891 23,703 23,775 24,318
9,063
4,159
4,383
4,022
4,703
6,594
7,567
7,165
7,298
3,904
6,149
5,975
4,999
5,817
5,068
5,973 5,868
8,582 10,784 11,062 10,035
4,119
4,682
7,335
6,917
8,160
6,879
17,939
6,995
38,477
21,785 20,262
5,936
6,623
8,495
6,056
12,592
5,711
4,659
6,988
6,781
5,820
10,919
4,605
5,127
5,902
3,341
5,171
6,911
4,998
4,835
4,970
3,817
5,181
8,425
4,585
11,413 11,288
12,937
18,431
6,520
6,743
9,557
3,051
4,321
Book value per share*
Capital expenditures
Number of employees (at year end)
* Attributable to Deere & Company..
$
$
77.37 $ 67.82 $ 59.83 $ 41.25 $ 36.45 $ 35.45 $ 29.70 $ 20.71 $ 21.29 $ 26.23
655 $ 1,004
1,537 $
82,956 82,239 75,550 69,634 73,489 74,413 60,476 56,767 57,180 59,623
762 $ 1,084 $
1,176 $
668 $
969 $
586 $
867 $
42
Foreign Currency Risk
In the equipment operations, the practice is to hedge significant
currency exposures. Worldwide foreign currency exposures are
reviewed quarterly. Based on the anticipated and committed
foreign currency cash inflows, outflows, and hedging policy for
the next twelve months, we estimate that a hypothetical
10 percent strengthening of the U.S. dollar relative to other
currencies through 2024 would increase the 2024 expected net
cash inflows by approximately $25. At October 29, 2023, a
hypothetical 10 percent strengthening of the U.S. dollar under
similar assumptions and calculations indicated a potential $125
decrease on the 2023 net cash inflows. The estimated impacts by
currency follow:
Australian dollar
Brazilian real
British pound
Canadian dollar
Euro
Japanese yen
Mexican peso
Polish Zloty
All other
Total increase (decrease)
$
$
22024
22023
(75) $
25
(50)
75
75
25
(25)
(25)
25 $
(100)
(150)
(25)
(25)
50
125
25
(25)
(125)
In the financial services operations, our policy is to manage
foreign currency risk through hedging strategies if the currency
of the borrowings does not match the currency of the receivable
portfolio. As a result, a hypothetical 10 percent adverse change
in the value of the U.S. dollar relative to all other foreign
currencies would not have a material effect on the financial
services cash flows.
FINANCIAL INSTRUMENT MARKET RISK INFORMATION
We are naturally exposed to various interest rate and foreign
currency risks. As a result, we enter into derivative transactions
to manage this exposure and not for speculative purposes.
From time to time, we enter into interest rate swap agreements
to manage our interest rate exposure. We also have foreign
currency exposures at some of our foreign and domestic
operations related to buying, selling, and financing in currencies
other than the functional currencies. We have entered into
derivative agreements related to the management of these
foreign currency transaction risks.
Interest Rate Risk
Results of Operations – Central bank policy rates increased in
2022 and 2023. Rising interest rates have historically impacted
our borrowings sooner than the benefit is realized from the
financing receivable and equipment on operating lease
portfolios. As a result, our financial services operations
experienced spread compression in 2023. If interest rates
continue to rise, we expect to continue experiencing spread
compression in 2024.
Fair Value Measurement – Quarterly, we use a combination of
cash flow models to assess the sensitivity of our financial
instruments with interest rate exposure to changes in market
interest rates. The models calculate the effect of adjusting
interest rates as follows:
• cash flows for financing receivables are discounted at the
current prevailing rate for each receivable portfolio,
• cash flows for marketable securities are discounted at the
applicable benchmark yield curve plus market credit spreads,
• cash flows for unsecured borrowings are discounted at the
applicable benchmark yield curve plus market credit spreads
for similarly rated borrowers,
• cash flows for securitized borrowings are discounted at the
swap yield curve plus a market credit spread for similarly
rated borrowers, and
• cash flows for interest rate swaps are projected and
discounted using forward rates from the swap yield curve at
the repricing dates.
The net impact in these financial instruments’ fair values which
would be caused by decreasing or increasing the interest rates
by 10 percent from the market rates at October 29, 2023 and
October 30, 2022 would have been approximately $10 and $50,
respectively.
Reference Rate Reform – We transitioned our financing,
funding, and hedging portfolios from the London Interbank
Offered Rate (LIBOR) to alternative reference rates in 2023. In
2024, we will transition certain portfolios from the Canadian
Dollar Offered Rate (CDOR) to an alternative reference rate.
These transition activities did not / are not expected to have a
material impact on our financial statements.
43
DEERE & COMPANY
STATEMENTS OF CONSOLIDATED INCOME
For the Years Ended October 29, 2023, October 30, 2022, and October 31, 2021
Net Sales and Revenues
Net sales
Finance and interest income
Other income
Total
Costs and Expenses
Cost of sales
Research and development expenses
Selling, administrative and general expenses
Interest expense
Other operating expenses
Total
Income of Consolidated Group before Income Taxes
Provision for income taxes
Income of Consolidated Group
Equity in income of unconsolidated affiliates
Net Income
Less: Net income (loss) attributable to noncontrolling interests
Net Income Attributable to Deere & Company
Per Share Data
Basic
Diluted
Dividends declared
Dividends paid
Average Shares Outstanding (In millions of shares)
Basic
Diluted
The notes to consolidated financial statements are an integral part of this statement.
2023
2022
2021
$
$
$
55,565
4,683
1,003
61,251
37,715
2,177
4,595
2,453
1,292
48,232
13,019
2,871
10,148
7
10,155
(11)
10,166
34.80
34.63
5.05
4.83
292.2
293.6
$
$
$
47,917
3,365
1,295
52,577
35,338
1,912
3,863
1,062
1,275
43,450
9,127
2,007
7,120
10
7,130
(1)
7,131
23.42
23.28
4.36
4.28
304.5
306.3
$
39,737
3,296
991
44,024
29,116
1,587
3,383
993
1,343
36,422
7,602
1,658
5,944
21
5,965
2
5,963
19.14
18.99
3.61
3.32
311.6
314.0
$
$
44
2023
2022
2021
$
10,155
$
7,130
$
5,965
(456)
443
(29)
(16)
(58)
10,097
(2)
10,099
645
(1,116)
63
(109)
(517)
6,613
(16)
6,629
$
2,884
118
16
(18)
3,000
8,965
2
8,963
$
DEERE & COMPANY
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
For the Years Ended October 29, 2023, October 30, 2022, and October 31, 2021
Net Income
Other Comprehensive Income (Loss), Net of Income Taxes
Retirement benefits adjustment
Cumulative translation adjustment
Unrealized gain (loss) on derivatives
Unrealized loss on debt securities
Other Comprehensive Income (Loss), Net of Income Taxes
Comprehensive Income of Consolidated Group
Less: Comprehensive income (loss) attributable to noncontrolling interests
Comprehensive Income Attributable to Deere & Company
$
The notes to consolidated financial statements are an integral part of this statement.
45
2023
2022
$
$
$
7,458
946
7,739
43,673
7,335
2,623
6,917
8,160
6,879
3,900
1,133
3,007
1,814
2,503
104,087
17,939
6,995
16,130
520
38,477
2,140
82,201
$
$
$
4,774
734
6,410
36,634
5,936
2,492
6,623
8,495
6,056
3,687
1,218
3,730
824
2,417
90,030
12,592
5,711
14,822
495
33,596
2,457
69,673
97
92
5,303
(31,335)
50,931
(3,114)
21,785
4
21,789
104,087
$
5,165
(24,094)
42,247
(3,056)
20,262
3
20,265
90,030
$
DEERE & COMPANY
CONSOLIDATED BALANCE SHEETS
As of October 29, 2023 and October 30, 2022
ASSETS
Cash and cash equivalents
Marketable securities
Trade accounts and notes receivable – net
Financing receivables – net
Financing receivables securitized – net
Other receivables
Equipment on operating leases – net
Inventories
Property and equipment – net
Goodwill
Other intangible assets – net
Retirement benefits
Deferred income taxes
Other assets
Total Assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Short-term borrowings
Short-term securitization borrowings
Accounts payable and accrued expenses
Deferred income taxes
Long-term borrowings
Retirement benefits and other liabilities
Total liabilities
Commitments and contingencies (Note 20)
Redeemable noncontrolling interest (Note 3)
STOCKHOLDERS’ EQUITY
Common stock, $1 par value (authorized – 1,200,000,000 shares;
issued – 536,431,204 shares in 2023 and 2022), at paid-in amount
Common stock in treasury, 254,846,927 shares in 2023 and 237,659,289 shares in 2022, at cost
Retained earnings
Accumulated other comprehensive income (loss)
Total Deere & Company stockholders’ equity
Noncontrolling interests
Total stockholders’ equity
Total Liabilities and Stockholders’ Equity
The notes to consolidated financial statements are an integral part of this statement.
46
2023
2022
2021
$
10,155
$
7,130
$
5,965
(16)
2,004
191
130
(790)
(4,253)
279
830
(23)
(170)
252
8,589
23,051
1,981
(28,772)
(82)
(1,498)
(2,970)
(12)
(447)
(8,749)
4,008
15,429
(7,913)
(7,216)
(1,427)
(73)
2,808
31
2,679
4,941
7,620
7,458
162
7,620
192
1,895
88
85
(326)
(66)
(2,483)
(2,091)
1,133
141
(1,015)
16
4,699
20,907
2,093
(26,300)
(498)
(1,134)
(2,654)
(642)
(257)
(8,485)
3,852
10,358
(8,445)
(3,597)
(1,313)
(29)
826
(224)
(3,184)
8,125
4,941
4,774
167
4,941
$
$
$
(6)
2,050
50
82
(441)
969
(2,497)
1,884
11
29
(370)
7,726
18,959
2,094
(23,653)
(244)
(848)
(1,732)
(281)
(45)
(5,750)
818
8,722
(7,090)
(2,538)
(1,040)
50
(1,078)
55
953
7,172
8,125
8,017
108
8,125
$
$
$
DEERE & COMPANY
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Years Ended October 29, 2023, October 30, 2022, and October 31, 2021
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for credit losses
Provision for depreciation and amortization
Impairments and other adjustments
Share-based compensation expense
Gain on remeasurement of previously held equity investment
Credit for deferred income taxes
Changes in assets and liabilities:
Receivables related to sales
Inventories
Accounts payable and accrued expenses
Accrued income taxes payable/receivable
Retirement benefits
Other
Net cash provided by operating activities
Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)
Proceeds from sales of equipment on operating leases
Cost of receivables acquired (excluding receivables related to sales)
Acquisitions of businesses, net of cash acquired
Purchases of property and equipment
Cost of equipment on operating leases acquired
Collateral on derivatives – net
Other
Net cash used for investing activities
Cash Flows from Financing Activities
Net proceeds in short-term borrowings (original maturities three months or less)
Proceeds from borrowings issued (original maturities greater than three months)
Payments of borrowings (original maturities greater than three months)
Repurchases of common stock
Dividends paid
Other
Net cash provided by (used for) financing activities
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash
Cash, Cash Equivalents, and Restricted Cash at Beginning of Year
Cash, Cash Equivalents, and Restricted Cash at End of Year
Components of Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents
Restricted cash (Other assets)
Total Cash, Cash Equivalents, and Restricted Cash
The notes to consolidated financial statements are an integral part of this statement.
$
$
$
47
DEERE & COMPANY
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY
For the Years Ended October 31, 2021, October 30, 2022, and October 29, 2023
Total Stockholders’ Equity
Deere & Company Stockholders
Accumulated
Other
Common
Stock
Treasury
Stock
Retained
Earnings
Comprehensive Noncontrolling
Income (Loss)
Interests
Redeemable
Noncontrolling
Interest
Total
Stockholders’
Equity
Balance November 1, 2020
$
12,944 $
4,895 $
(18,065) $
31,646 $
(5,539) $
ASU No. 2016-13 adoption
Net income
Other comprehensive income
Repurchases of common stock
Treasury shares reissued
Dividends declared
Share based awards and other
Balance October 31, 2021
Acquisitions (see Note 3)
Net income (loss)
Other comprehensive loss
Repurchases of common stock
Treasury shares reissued
Dividends declared
Share based awards and other
Balance October 30, 2022
Net income (loss)
Other comprehensive income
(loss)
Repurchases of common stock
Treasury shares reissued
Dividends declared
Share based awards and other
Balance October 29, 2023
$
(35)
5,965
3,000
(2,538)
70
(1,127)
155
18,434
7,133
(517)
(3,597)
36
(1,329)
105
20,265
10,168
(58)
(7,274)
33
(1,477)
132
21,789 $
(35)
5,963
(1,125)
(2,538)
70
3,000
159
5,054
(20,533)
36,449
(2,539)
7,131
(1,327)
(6)
42,247
10,166
(517)
(3,056)
(58)
(3,597)
36
111
5,165
(24,094)
(7,274)
33
138
5,303 $
(31,335) $
(1,472)
(10)
50,931 $
(3,114) $
(5)
4
4
$
7
2
(2)
(4)
3
2
(2)
3
2
$
104
(3)
(15)
6
92
(13)
9
9
97
The notes to consolidated financial statements are an integral part of this statement.
48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note Listing
1.
2.
Organization and Consolidation
SSummary of Significant Accounting Policies and
Page
49
New Accounting Standards
Acquisitions and Dispositions
SSpecial Items
Revenue Recognition
SSupplemental Cash Flow Information
Pension and Other Postretirement Benefits
IIncome Taxes
Other Income and Other Operating Expenses
MMarketable Securities
Receivables
SSecuritization of Financing Receivables
Inventories
PProperty and Depreciation
Goodwill and Other Intangible Assets (cid:3013) Net
OOther Assets
Short-Term Borrowings
AAccounts Payable and Accrued Expenses
Long-Term Borrowings
CCommitments and Contingencies
Capital Stock
SShare-Based Compensation
Other Comprehensive Income Items
LLeases
Fair Value Measurements
DDerivative Instruments
Segment Data
SSubsequent Event
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
49
52
54
55
57
57
61
62
63
63
67
68
68
68
68
68
69
69
69
70
70
71
73
74
76
77
78
1. ORGANIZATION AND CONSOLIDATION
References to “Deere & Company”, “John Deere”, “Deere”, “we”,
“us”, or “our” include our consolidated subsidiaries. We manage
our business through the following operating segments:
production and precision agriculture (PPA), small agriculture and
turf (SAT), construction and forestry (CF), and financial services
(FS). References to “equipment operations” include PPA, SAT, and
CF, while references to “agriculture and turf” include both PPA and
SAT.
Principles of Consolidation
The consolidated financial statements represent the consolidation
of all companies in which Deere & Company has a controlling
interest. Certain variable interest entities (VIEs) are consolidated
since we are the primary beneficiary. The primary beneficiary has
both the power to direct the activities that most significantly
impact the VIEs’ economic performance and the obligation to
absorb losses or the right to receive benefits that could potentially
be significant to the VIEs. We consolidate certain VIEs related to
retail note securitizations (see Note 12).
We record our investment in each unconsolidated affiliated
company (20 to 50 percent ownership) at cost, plus or minus our
share of the profit or loss after acquisition, and further reduced for
any dividends (see Note 16). Other investments (less than
20 percent ownership) are recorded at cost.
Fiscal Year
We use a 52/53 week fiscal year ending on the last Sunday in the
reporting period, which generally occurs near the end of October.
An additional week is included in the fourth fiscal quarter every
five or six years to realign our fiscal quarters with the calendar. The
fiscal year ends for 2023, 2022, and 2021 were October 29, 2023,
October 30, 2022, and October 31, 2021, respectively. Fiscal years
2023, 2022, and 2021 contained 52 weeks. Unless otherwise stated,
references to particular years, quarters, or months refer to our
fiscal years and the associated periods in those fiscal years.
Presentation of Amounts
All amounts are presented in millions of dollars, unless otherwise
specified.
Argentina
We have equipment operations and financial services operations
in Argentina. The U.S. dollar has historically been the functional
currency for our Argentina operations, as our business is indexed
to the U.S. dollar due to the highly inflationary conditions. The
Argentine government has certain capital and currency controls
that restrict our ability to access U.S. dollars in Argentina and remit
earnings from our Argentine operations. As of October 29, 2023
and October 30, 2022, our net investment in Argentina was $766
and $742, respectively. Net sales and revenues from our Argentine
operations represented approximately 1 percent of consolidated
net sales and revenues for 2023 and 2022. We have employed
mechanisms to convert Argentine pesos into U.S. dollars to the
extent possible. These mechanisms are short-term in nature,
leaving us exposed to long-term currency fluctuations. As of
October 29, 2023 and October 30, 2022, the gross peso exposure
was $30 and $133, respectively, while the net peso exposure (after
considering the impact of short-term hedges) was $5 and $53,
respectively. Argentine peso-denominated monetary assets and
liabilities are remeasured at each balance sheet date using the
official currency exchange rate.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW
ACCOUNTING STANDARDS
The following are significant accounting policies in addition to
those included in other notes to the consolidated financial
statements.
Use of Estimates in Financial Statements
Certain accounting policies require management to make
estimates and assumptions in determining the amounts reflected
in the financial statements and related disclosures. Actual results
could differ from those estimates.
Revenue Recognition
General
Sales of equipment and service parts are recognized when we
transfer control of the good to the independent customer, which
generally occurs upon shipment. In most situations, the
independent customer is a dealer, which subsequently sells the
equipment and service parts purchased from us to a retail
customer, who can finance the equipment with the financial
services segment or another source of financing. In some
49
situations, we sell directly to a retail customer. The term
“customer” includes both dealers and retail customers to whom we
make direct sales.
Interest-Free Periods and Past-Due Interest
We charge dealers interest on outstanding balances from the
earlier of when goods are sold to a retail customer by the dealer or
the expiration of the interest-free period granted at the time of the
sale to the dealer. Interest-free periods are determined based on
the type of equipment sold and the time of year of the sale. These
periods range from one to twelve months for most equipment.
Interest-free periods may not be extended. Interest charged may
not be forgiven, and past due interest rates are charged at higher
rates. If the interest-free or below market interest rate period
exceeds one year, we adjust the expected sales revenue for the
effects of the time value of money using a current market interest
rate. The revenue related to the financing component is
recognized in “Finance and interest income” using the interest
method. We do not adjust the sales price to account for a
financing component if the expected interest-free or below market
period is one year or less.
Right of Return
Generally, no right of return exists on sales of equipment. Dealers
cannot cancel purchases after we recognize a sale and are
responsible for payment even if the equipment is not sold to a
retail customer. Service parts and certain attachment returns are
estimable and accrued at the time a sale is recognized. The
estimated returns are based on historical return rates, current
dealer inventory levels, and current economic conditions. The
estimated returns are recorded in “Other assets” for the inventory
value of estimated returns, adjusted for restocking fees. The
estimated dealer refund liability, adjusted for restocking fees, is
recorded in “Accounts payable and accrued expenses.”
Remanufacturing
We remanufacture used engines and components (cores) that are
sold to dealers and retail customers for maintenance and repair
parts. Revenue for remanufactured components is recognized
using the same criteria as other parts sales. When a
remanufactured part is sold, we collect a deposit that is repaid if
the customer returns a core that meets certain specifications
within a defined time period. The deposit received from the
customer is recognized as a liability in “Accounts payable and
accrued expenses” and the used component that is expected to be
returned is recognized in “Other assets.” When a customer returns
a core, the deposit is repaid, the liability reversed, and the returned
core is recorded in inventory to be remanufactured and sold to
another customer. If a core is not returned within the required
time, the deposit is recognized as revenue in “Net sales,” and the
cost of the core is recorded as an expense in “Cost of sales.”
Bundled Technology
Certain equipment is sold with precision guidance, telematics, and
other information gathering and analyzing capabilities. These
technology solutions require hardware, software, and may include
an obligation to provide services for a period of time. These
solutions are mostly bundled with the sale of the equipment but
can also be purchased or renewed separately. The revenue related
to the hardware and embedded software is recognized at the time
of the equipment sale and recorded in “Net sales.” The revenue for
the future services and usage-based software is deferred and
recognized over the service period. The deferred revenue is
recorded as a contract liability in “Accounts payable and accrued
expenses.”
Financing Revenue and Origination Costs
Financing revenue and deferred costs on the origination of
financing receivables are recorded over the lives of the related
receivables using the interest method. Deferred costs are
recognized as a reduction to “Finance and interest income.”
Income and deferred costs on the origination of operating leases
are recognized on a straight-line basis over the scheduled lease
terms in “Finance and interest income.”
Sales Incentives
We offer sales incentive programs to promote the sale of our
products from the dealer to the retail customer. At the time of the
sale to a dealer, we record an estimated cost for the sales incentive
programs as a reduction to the sales price. The estimated cost is
based on historical data, announced and expected incentive
programs, field inventory levels, and forecasted sales volumes.
The final cost of these programs is determined at the end of the
measurement period for volume-based incentives or when the
dealer sells the equipment to a retail customer. Actual cost
differences from the original cost estimate are recognized in “Net
sales.”
Product Warranties
For equipment and service parts sales, we provide a standard
warranty. At the time a sale is recognized, the estimated future
warranty costs are recorded. The warranty liability is estimated
based on historical warranty claims rate experience and the
estimated amount of equipment still under warranty. The
historical claims rate is primarily determined by a review of five-
year claims costs while also taking into consideration current
quality developments. The amount of equipment still under
warranty is estimated based on dealer inventories and retail sales.
We also offer extended warranty arrangements for purchase at
the customer’s option. The premiums for extended warranties are
recognized in “Other income” primarily in proportion to the costs
expected to be incurred over the contract period. The unamortized
extended warranty premiums (deferred revenue) are recorded in
“Accounts payable and accrued expenses” (see Note 18).
Sales and Transaction Taxes
We collect and remit taxes for revenue producing transactions as
necessary based on various tax laws. These taxes include sales,
use, value-added, and some excise taxes. We elected to exclude
these taxes from the determination of the sales price. These taxes
are not included in revenues.
Contract Costs
Incremental costs of obtaining an equipment revenue contract are
recognized as an expense when incurred since the amortization
period would be one year or less.
50
Advertising Costs
Advertising costs are charged to “Selling, administrative and
general expenses” as incurred. Advertising costs were $244 in
2023, $227 in 2022, and $212 in 2021.
Depreciation and Amortization
Property and equipment, capitalized software, and other
intangible assets are stated at cost less accumulated depreciation
or amortization. These assets are depreciated over their estimated
useful lives using the straight-line method. Equipment on
operating leases is depreciated over the terms of the leases using
the straight-line method. Property and equipment expenditures
for new and revised products, increased capacity, and the
replacement or major renewal of significant items are capitalized.
Expenditures for maintenance, repairs, and minor renewals are
charged to expense as incurred.
Cash and Cash Equivalents
We consider investments with purchased maturities of three
months or less to be cash equivalents.
Receivables and Allowances
All financing and trade receivables are reported on the balance
sheet at outstanding principal and accrued interest, adjusted for:
• write-offs,
• allowance for credit losses, and
• unamortized deferred fees or costs on originated financing
receivables.
The allowance is a reduction to the receivable balances, and the
provision is recorded in “Selling, administrative and general
expenses.” The allowance for credit losses is an estimate of the
credit losses expected over the life of the receivable portfolio. The
allowance is measured on a collective basis for receivables with
similar risk characteristics. Receivables that do not share risk
characteristics are evaluated on an individual basis. Risk
characteristics include:
• finance product category,
• market,
• geography,
• credit risk, and
• remaining balance.
We utilize the following loss forecast models to estimate expected
credit losses:
• Transition matrix models are used for large and complex retail
customer receivable pools. These models are used for more
than 90 percent of retail customer receivables. Historical
portfolio performance and current delinquency levels are
used to forecast future defaults. Estimated recovery rates
are applied to the estimated default balance to calculate the
expected credit losses.
• Weighted average remaining maturity (WARM) models are
used for smaller and less complex retail customer receivable
pools.
• Historical loss rate models are used on wholesale receivables,
with consideration of current economic conditions and dealer
financial risk.
The model output is adjusted for forecasted economic
conditions, which may include the following economic
indicators:
• commodity prices,
• industry equipment sales,
• unemployment rates, and
• housing starts.
Management reviews each model’s output quarterly, and
qualitative adjustments are incorporated as necessary (see
Note 11).
Long-Lived Assets, Goodwill, and Other Intangible Asset Impairment
We evaluate the carrying value of long-lived assets (including
equipment on operating leases, property and equipment, goodwill,
and other intangible assets) when events or circumstances warrant
such a review. Goodwill and unamortized intangible assets are
tested for impairment annually at the end of the third quarter of
each fiscal year, and more often if events or circumstances may
have caused the fair value to fall below the carrying value. If the
carrying value of the long-lived asset is considered impaired, the
long-lived asset is written down to its fair value (see Notes 4
and 25).
Goodwill is allocated and reviewed for impairment by reporting
unit. Goodwill is allocated to the reporting unit in which the
business that created the goodwill resides. To test for goodwill
impairment, the carrying value of each reporting unit is compared
with its fair value. If the carrying value of the goodwill is
considered impaired, the impairment is measured as the reporting
unit’s carrying value minus the fair value.
Derivative Financial Instruments
It is our policy to use derivative transactions only to manage
exposures from the normal course of business. We do not execute
derivative transactions for the purpose of creating speculative
positions or trading. Our financial services operations have interest
rate and foreign currency exposure between (a) the receivable or
lease portfolio and (b) how those portfolios are funded. We also
have foreign currency exposures at some of our foreign and
domestic operations related to buying, selling, and financing in
currencies other than the functional currencies. In addition, we
have interest rate and foreign currency exposure at certain
equipment operations units for sales incentive programs.
All derivatives are recorded at fair value on the consolidated
balance sheets. Cash collateral received or paid is not offset
against the derivative fair values on the balance sheets. The cash
flows from the derivative contracts are recorded in operating
activities in the statements of consolidated cash flows. Each
derivative is designated as a cash flow hedge, fair value hedge, or
remains undesignated.
Changes in the fair value of derivatives are recorded as follows:
• Cash flow hedges: Recorded in other comprehensive income
(OCI) and reclassified to the income statement when the
effects of the item being hedged are recognized in the income
statement. These amounts offset the effects of interest rate
changes on the related borrowings in interest expense.
51
• Fair value hedges: Recorded in interest expense, and the gains
or losses are offset by the fair value gains or losses on the
hedged items (fixed-rate borrowings), which are also recorded
in interest expense.
• Derivatives not designated as hedging instruments: Changes in
the fair value of undesignated hedges are recognized as they
occur in the income statement.
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 for 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 (see Note 26).
Foreign Currency Translation
The functional currencies for most of our foreign operations are
their respective local currencies. The assets and liabilities of these
operations are translated into U.S. dollars using the exchange rates
at the end of the period. The revenues and expenses are translated
at weighted-average rates for the period. The gains or losses from
these translations are recorded in OCI.
Foreign currency gains or losses and foreign exchange components
of derivative contracts are included in net income, with trade flow
activity recorded in “Cost of sales,” sales incentive activity
recorded in “Net sales,” and all other activity recorded in “Other
operating expenses.” The pretax net loss for foreign exchange in
2023, 2022, and 2021 was $159, $175, and $134, respectively.
New Accounting Standards
We closely monitor all Accounting Standard Updates (ASUs) issued
by the Financial Accounting Standards Board (FASB) and other
authoritative guidance. We adopted the following standards in
2023, none of which had a material effect on our consolidated
financial statements:
New Accounting Standards Adopted
No. 2021-10 — Government Assistance (Topic 832): Disclosures by
Business Entities about Government Assistance
No. 2021-05 — Leases (Topic 842): Lessors – Certain Leases with
Variable Lease Payments
No. 2021-04 — Issuer's Accounting for Certain Modifications or
Exchanges of Freestanding Equity Classified Written Call Options
We will adopt the following standards in future periods, none of
which are expected to have a material effect on our consolidated
financial statements.
New Accounting Standards to be Adopted
No. 2022-04 — Liabilities — Supplier Finance Programs (Subtopic 405-
50): Disclosure of Supplier Finance Program Obligations
No. 2022-02 — Financial Instruments – Credit Losses (Topic 326):
Troubled Debt Restructurings and Vintage Disclosures
No. 2022-01 — Derivatives and Hedging (Topic 815): Fair Value
Hedging – Portfolio Layer Method
No. 2021-08 — Business Combinations (Topic 805): Accounting for
Contract Assets and Contract Liabilities from Contracts with Customers
3. ACQUISITIONS AND DISPOSITIONS
During the presented periods, we completed acquisitions to
support our Leap Ambitions, which focus on advancing our
capabilities in technology.
Acquisitions
2023 Acquisitions
In 2023, we acquired SparkAI Inc. (Spark AI) and Smart Apply, Inc.
(Smart Apply) to accelerate the integration of smart technology
innovation in our products. The combined cost of these
acquisitions was $82, net of cash acquired of $2. Spark AI was
assigned to the PPA segment, while Smart Apply was assigned to
the SAT segment. Most of the purchase price for these acquisitions
was allocated to goodwill.
2022 Acquisitions
Kreisel
In February 2022, we 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 us to purchase the
holders’ ownership interests 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 our consolidated balance
sheets.
The total cash purchase price was $276, consisting of $253 for the
acquired equity interests, $21 to reduce the option price, and
customary working capital adjustments, net of cash acquired. The
fair values assigned to the assets and liabilities of the acquired
entity, which are based on information as of the acquisition date
and available at October 30, 2022, follows:
Trade accounts and notes receivable
Other receivables
Inventories
Property and equipment
Goodwill
Other intangible assets
Other assets
Total assets
Accounts payable and accrued expenses
Deferred income taxes
Redeemable noncontrolling interest
FFebruary 2022
2
$
11
11
11
218
178
6
437
$
$
$
26
39
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 is allocated amongst the PPA, SAT,
and CF segments.
52
Excavator Factories
In March 2022, we acquired full ownership of three former Deere-
Hitachi joint venture factories and began new license and supply
agreements with Hitachi Construction Machinery Co., Ltd.
(Hitachi). The two companies also ended their joint venture
manufacturing and marketing agreements. The former joint
venture factories continue to manufacture Deere-branded
construction excavators and forestry equipment. Through a new
supply agreement with Hitachi, Deere continues to offer a full
portfolio of excavators. Deere’s marketing arrangement for
Hitachi-branded construction excavators and mining equipment in
the Americas 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, we now have complete
control over the 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. We 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 is as follows:
MMarch 2022
$
Cash consideration for factories
Cash consideration for license agreement
Deferred consideration
Total purchase price consideration
Less: Cash obtained
Less: Settlement of intercompany balances
Net purchase price consideration
Fair value of previously held equity investment
Total invested capital
$
205
70
271
546
(187)
(113)
246
444
690
The total purchase price consideration includes deferred
consideration that will be paid as we purchase 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 us
from Hitachi are as much as 27 percent higher than the prior supply
arrangement. We 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
(pretax and after-tax), which was recorded in “Other income” and
included in the CF segment’s operating profit.
Prior to the acquisition, we purchased 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 sales 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 only
includes the sale of Deere-branded excavators to John Deere
dealers, while Cost of sales reflects market pricing to purchase and
manufacture excavators, as well as the related components and
service parts.
The fair values assigned to the assets and liabilities of the acquired
factories, which are based on information as of the acquisition
date and available at October 30, 2022, follow:
Other receivables
Inventories
Property and equipment
Goodwill
Other intangible assets
Deferred income taxes
Other assets
Total assets
Accounts payable and accrued expenses
Long-term borrowings
Total liabilities
MMarch 2022
$
29
286
180
529
70
56
3
1,153
300
163
463
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 are reported in the
CF segment.
Other Acquisitions
In 2022, we acquired AgriSync Inc. (AgriSync), a technology service
provider; an 80 percent stake in both SureFire Ag Systems, Inc. and
SureFire Electronics, LLC (renamed after acquisition and
collectively referred to as SurePoint), which design and
manufacture liquid fertilizer application and spray tendering
systems; an equity method investment in GUSS Automation LLC
(GUSS Automation), a pioneer in semi-autonomous orchard and
vineyard sprayers; LGT, LLC (Light), which specializes in depth
sensing and camera-based perception for autonomous vehicles;
and an equity method investment in InnerPlant, Inc. (InnerPlant),
an early-stage biotech company. The combined cost of these
acquisitions was $134, net of cash acquired of $3. The asset and
liability fair values at the respective acquisition dates follow:
$
$
$
$
$
$
$
OOctober 2022
$
8
8
4
53
21
60
154
6
5
11
9
Trade accounts and notes receivable
Inventories
Property and equipment
Goodwill
Other intangible assets
Other assets
Total assets
Accounts payable and accrued expenses
Deferred income taxes
Total liabilities
Redeemable noncontrolling interest
53
The identifiable intangible assets were related to trade name,
technology, and customer relationships with a weighted average
amortization period of 7 years. AgriSync was allocated amongst the
PPA, SAT, and CF segments, while SurePoint, Light, and InnerPlant
were allocated to the PPA segment. GUSS Automation was
assigned to the SAT segment.
2021 Acquisitions
Bear Flag
In August 2021, we acquired Bear Flag Robotics, Inc. (Bear Flag) to
further accelerate Deere’s development and delivery of advanced
technology. Bear Flag’s technology is complementary to other
Deere technology efforts and enables autonomous tractor
operations. The total cash purchase price before final adjustments,
net of cash acquired of $4, was $225, with an additional $25 to be
recognized as compensation expense over the four-year post-
acquisition service period. In addition to the cash purchase price,
$19 of liabilities were assumed. The asset and liability fair values at
the acquisition date follow:
Property and equipment
Goodwill
Other intangible assets
Total assets
Accounts payable and accrued expenses
Deferred income taxes
Total liabilities
AAugust 2021
$
1
189
54
244
1
18
19
$
$
$
The identified intangible was related to technology with a seven-
year amortization period. The goodwill is not deductible for
income tax purposes.
For the 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 results of these operations
have been included in our consolidated financial statements, and
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.
Dispositions
In October 2023, we sold our roadbuilding business in Russia. At
the time of the sale, total assets were $32, consisting primarily of
restricted cash, total liabilities were $1, and the cumulative
translation loss was $11. Total proceeds from the sale include $16 of
cash and $8 of deferred consideration. A pretax and after-tax loss
of $18 was recorded in “Other operating expenses” in the CF
segment.
In March 2023, we sold our financial services business in Russia
(registered in Russia as a leasing company) to Insight Investment
Group. The total proceeds, net of restricted cash sold, were $36.
The operations were included in the financial services operating
segment through the date of sale. At the disposal date, the total
assets were $31, consisting primarily of financing receivables, the
total liabilities were $5, and the cumulative translation loss was
$10. In the first quarter of 2023, we reversed the allowance for
54
credit losses and recorded a valuation allowance on the assets held
for sale in “Selling, administrative and general expenses.” We did
not incur additional gains or losses upon disposition.
4. SPECIAL ITEMS
We were impacted by the following infrequent items. These items
should not be considered recurring in nature.
2023 Special Items
Sale of Russian Roadbuilding Business
In the fourth quarter of 2023, we sold our Russian roadbuilding
business, recognizing a loss of $18 (pretax and after-tax). The loss
was recorded in “Other operating expenses” in the construction
and forestry operations.
Brazil Tax Ruling
In the third quarter of 2023, the Brazil Superior Court of Justice
published a favorable tax ruling regarding taxability of local
incentives, which allowed us to record a $243 reduction in the
provision for income taxes and $47 of interest income.
Financial Services Financing Incentives Correction
In the second quarter of 2023, we corrected the accounting
treatment for financing incentives offered to John Deere dealers,
which impacted the timing of expense recognition and the
presentation of incentive costs in the consolidated financial
statements. The cumulative effect of this correction, $173 pretax
($135 after-tax), was recorded in the second quarter of 2023. Prior
period results for Deere & Company were not restated, as the
adjustment was considered immaterial to our financial statements.
2022 Special Items
UAW Collective Bargaining Agreement
In November 2021, employees represented by the International
Union, United Automobile, Aerospace and Agricultural Implement
Workers of America (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 our UAW-represented employees at 14 U.S.
facilities. The labor agreement included 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.
Impact of Events in Russia / Ukraine
We suspended shipments of machines and service parts to Russia
due to the events in Russia / Ukraine. The suspension of shipments
reduced the forecasted revenue for the region, which made it
probable future cash flows would not cover the carrying value of
certain assets. As a result, an impairment was recorded for most
long-lived assets in Russia, and our U.S. senior management
decided to initiate a voluntary employee-separation program. We
also recorded a reserve on inventory, and increased our allowance
for credit losses, reflecting economic uncertainty in Russia.
The financial services operations received an intercompany benefit
from the equipment operations, which guarantees the financial
services’ investments in certain international markets, including
Russia.
The Russian government imposed certain restrictions on
companies’ abilities to repatriate or remit cash from their Russian-
based operations to locations outside of Russia. Cash in excess of
what was required to fund operations in Russia was reclassified as
restricted. A summary of the reserves, impairments, and voluntary-
separation costs recorded in 2022 follows. See Note 25 for fair
value measurement information.
Inventory reserve –
Cost of sales
Fixed asset impairment –
Cost of sales
Intangible asset impairment –
Cost of sales
Allowance for credit losses –
Financing receivables –
SA&G expenses
Voluntary-separation program:
– Cost of sales
– SA&G expenses
Intercompany agreement
Total Russia/Ukraine events
PPA
SAT
CF
FS
Total
$
14 $
2 $
3
$
19
30
11
28
41
28
$
153
153
3
4
82
6
62
1
(153)
9
3
11
pretax expense
$
133 $
11 $
110 $
1
255
Net tax impact
Total Russia/Ukraine events
after-tax expense
(40)
$
215
Gain on Previously Held Equity Investment
In March 2022, we 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 (pretax and after-
tax; see Note 3).
Summary of 2023 and 2022 Special Items
The following table summarizes the operating profit impact of the
special items recorded in 2023 and 2022:
PPA
SAT
CF
FS
Total
2023 Expense
Russian roadbuilding sale - Other
operating expense
Financing incentive – SA&G
expense
Total expense
2022 Expense (benefit)
Gain on remeasurement of equity
investment – Other income
(Note 3)
Total Russia/Ukraine events
$
18
$
18
$
18
173
173
173
191
(326)
(326)
pretax expense
$
133 $
11
110
1
255
UAW ratification bonus – Cost of
sales
Total expense (benefit)
53
186
9
20
28
(188)
90
19
1
Year over year change
$ (186) $ (20) $ 206 $
172 $
172
5. REVENUE RECOGNITION
Our net sales and revenues by primary geographic market, major
product line, and timing of revenue recognition follow:
PPA
SAT
CF
FS
Total
2023
Primary geographic
markets:
United States
Canada
Western Europe
Central Europe and CIS
Latin America
Asia, Africa, Oceania,
and Middle East
Total
Major product lines:
$ 13,917 $ 7,796 $ 9,109 $ 3,283 $ 34,105
641 4,287
7,321
132
36
2,137
453 8,197
1,738
2,640
1,218
5,608
687
2,824
530
707
1,221
1,725
353
1,429
2,166
176 5,204
$ 27,287 $ 14,223 $15,020 $ 4,721 $ 61,251
1,679
1,183
$ 10,122
3,505
Production agriculture $26,450
Small agriculture
Turf
Construction
Compact construction
Roadbuilding
Forestry
Financial products
Other
$26,450
10,122
3,505
6,842
2,451
3,794
1,429
58 $ 4,721 5,094
1,564
$ 27,287 $ 14,223 $15,020 $ 4,721 $ 61,251
$ 6,842
2,451
3,794
1,429
96
500
219
618
446
$26,969 $ 14,092 $ 14,915 $
111 $56,087
5,164
$ 27,287 $ 14,223 $15,020 $ 4,721 $ 61,251
105 4,610
318
131
Total
Revenue recognized:
At a point in time
Over time
Total
55
PPA
SAT
CF
FS
Total
2022
Primary geographic
markets:
United States
Canada
Western Europe
Central Europe and CIS
Latin America
Asia, Africa, Oceania,
and Middle East
Total
Major product lines:
$ 10,975 $ 7,741 $ 7,103 $ 2,419 $ 28,238
601
3,902
102 6,344
2,289
49
7,339
303
1,387
676
2,188 2,478
488
1,207
578
4,991
1,238
1,576
545
1,467
1,570
151 4,465
$ 22,318 $ 13,569 $ 13,065 $ 3,625 $ 52,577
1,608
1,136
$ 10,027
3,027
Production agriculture $ 21,685
Small agriculture
Turf
Construction
Compact construction
Roadbuilding
Forestry
Financial products
Other
$ 21,685
10,027
3,027
5,864
1,667
3,441
1,308
3,769
1,789
$ 22,318 $ 13,569 $ 13,065 $ 3,625 $ 52,577
$ 5,864
1,667
3,441
1,308
32 $ 3,625
753
52
463
60
573
Total
Revenue recognized:
At a point in time
Over time
Total
2021
Primary geographic
markets:
United States
Canada
Western Europe
Central Europe and CIS
Latin America
Asia, Africa, Oceania,
and Middle East
Total
Major product lines:
$ 22,178 $ 13,493 $ 12,980 $
105 $ 48,756
3,821
$ 22,318 $ 13,569 $ 13,065 $ 3,625 $ 52,577
85 3,520
140
76
PPA
SAT
CF
FS
Total
$ 8,223 $ 6,505 $ 5,697 $ 2,389 $ 22,814
617
3,015
103 6,429
39 2,664
247 4,522
853
2,086
1,322
2,916
498
2,433
475
456
1,047
1,807
828
903
1,417
153 4,580
$ 16,817 $ 12,046 $ 11,613 $ 3,548 $44,024
1,679
1,331
Production agriculture
Small agriculture
Turf
Construction
Compact construction
Roadbuilding
Forestry
Financial products
Other
$ 16,248
$ 8,619
2,853
$ 16,248
8,619
2,853
4,684
1,489
3,749
1,280
3,669
1,433
$ 16,817 $ 12,046 $ 11,613 $ 3,548 $44,024
$ 4,684
1,489
3,749
1,280
20 $ 3,548
391
46
528
55
514
Total
Revenue recognized:
At a point in time
Over time
Total
$ 16,659 $ 11,969 $ 11,522 $
105 $ 40,255
3,769
$ 16,817 $ 12,046 $ 11,613 $ 3,548 $44,024
91 3,443
158
77
Following is a description of the elements of net sales and
revenues for our major product lines:
Production Agriculture – Includes net sales of large and certain
mid-size tractors and associated attachments, combines, cotton
pickers, cotton strippers, sugarcane harvesters, sugarcane loaders
and pull behind scrapers, tillage, seeding, and application
equipment, including sprayers and nutrient management and soil
preparation machinery, and related attachments and service parts.
Small Agriculture – Includes net sales of mid-size, utility, and
compact utility tractors, self-propelled forage harvesters, hay and
forage equipment, balers, mowers, and related attachments and
service parts.
Turf – Includes net sales of turf and utility equipment, including
riding lawn equipment, golf course equipment, utility vehicles, and
commercial mowing equipment, along with a broad line of
associated implements, other outdoor power products, and
related attachments and service parts.
Construction – Includes net sales of a broad range of machines
used in construction, earthmoving, and material handling,
including backhoe loaders, crawler dozers and loaders, four-
wheel-drive loaders, excavators, motor graders, articulated dump
trucks, and related attachments and service parts.
Compact Construction – Includes net sales of smaller construction
equipment, including compact excavators, compact track loaders,
compact wheel loaders, skid steers, landscape loaders, and related
attachments and service parts.
Roadbuilding – Includes net sales of equipment used in
roadbuilding and renovation, including milling machines, recyclers,
slipform pavers, surface miners, asphalt pavers, compactors,
tandem and static rollers, mobile crushers and screens, mobile and
stationary asphalt plants, and related attachments and service
parts.
Forestry – Includes net sales of equipment used in timber
harvesting, including log skidders, feller bunchers, log loaders, log
forwarders, log harvesters, and related attachments and service
parts.
Financial Products – Includes finance and interest income from
retail notes related to sales of John Deere equipment to retail
customers, wholesale financing to dealers of John Deere
equipment, and revolving charge accounts; lease income from
retail leases of John Deere equipment; and revenue from extended
warranties.
Other – Includes sales of components to other equipment
manufacturers that are included in “Net sales;” revenue earned
over time from precision guidance, telematics, and other
information enabled solutions; revenue from service performed at
company owned dealerships and service centers; gains on
disposition of property and businesses; trademark licensing
revenue; and other miscellaneous revenue items that are included
in “Other income.”
56
7. PENSION AND OTHER POSTRETIREMENT BENEFITS
We have several funded and unfunded defined benefit pension
plans and other postretirement benefit (OPEB) plans. These plans
cover U.S. employees and certain foreign employees. The
measurement date of our plans is October 31. The funded status as
of October 31, 2023 of the significant plans follows:
Pensions
U.S. salaried qualified
U.S. hourly qualified
Other
Total
OPEB
U.S. salaried
U.S. hourly
Other
Total
Funded
Status
Enrollment
Status
$
$
$
$
1,511
1,042
(477)
2,076
(1,086)
178
(93)
(1,001)
Closed
Open
Varies
Closed
Closed
Varies
The components of net periodic pension and OPEB cost excluding
the service component are included in the line item “Other
operating expenses.”
The components of net periodic pension (benefit) cost and the
related assumptions consisted of the following:
22023 22022 22021
Pensions
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial (gain) loss
Amortization of prior service cost
Settlements/curtailment
Net (benefit) cost
Weighted-average assumptions
Discount rates - service cost
Discount rates - interest cost
Rate of compensation increase
Expected long-term rates of return
Interest crediting rate - U.S. cash balance plans
$ 246 $ 349 $ 332
276
(799)
259
12
21
$ (37) $ 164 $ 101
330
(726)
132
34
45
533
(878)
(13)
38
37
5.2%
5.1%
3.8%
6.3%
4.3%
3.0%
2.6%
3.7%
5.1%
2.1%
2.5%
2.1%
3.7%
6.0%
1.7%
In November 2021, employees represented by the UAW approved
a new collective bargaining agreement. We remeasured the U.S.
hourly pension plan, which increased the 2022 pension expense by
nearly $80 with $35 negatively impacting operating profit.
The 2024 net periodic pension benefit is expected to increase by
$130 due to an increase in the expected long-term rates of
return on plan assets (estimated to be 7.0 percent) and the
Canadian pension settlement charge recognized in 2023,
described below.
We invoice in advance of recognizing the sale of certain products
and the revenue for certain services. These relate to extended
warranty premiums, advance payments for future equipment
sales, and subscription and service revenue related to precision
guidance, telematic services, and other information enabled
solutions. These advanced customer payments are presented as
deferred revenue, a contract liability, in “Accounts payable and
accrued expenses.” The deferred revenue received, but not
recognized in revenue was $1,697 and $1,423 at October 29, 2023
and October 30, 2022, respectively. The contract liability is
reduced as the revenue is recognized. Revenue recognized from
deferred revenue that was recorded as a contract liability at the
beginning of the fiscal year was $547 in 2023, $609 in 2022, and
$485 in 2021.
The total amount of unsatisfied performance obligations for
contracts with an original duration greater than one year and the
estimated revenue to be recognized by fiscal year at October 29,
2023 follows:
Year
2024
2025
2026
2027
2028
Later years
Total
Net Sales and Revenues
457
$
382
268
161
97
126
1,491
$
As permitted, we 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 for sales to dealers and retail customers for equipment, service
parts, repair services, and certain telematics services.
6. SUPPLEMENTAL CASH FLOW INFORMATION
All cash flows from receivables related to sales are included in
operating activities. This includes all changes in trade accounts and
notes receivables, as well as some financing receivables. Financing
receivables that are related to loans on equipment sold by
independent dealers are included in investing activities.
Our short-term borrowings mature or may require payment within
three months or less. During 2023, we issued $4.5 billion and
retired $3.2 billion of retail note securitization borrowings, which
are presented in “Net proceeds (payments) in short-term
borrowings (original maturities three months or less).”
Restricted cash, recorded in “Other assets,” relates to securitization
of financing receivables (see Note 12) and cash held in Russia.
Supplemental cash flow information follows:
Cash paid for interest
Cash paid for income taxes
Inventory transferred to equipment
22023
$ 2,227 $
22022
22021
1,101 $
3,578
1,940
1,041
2,075
on operating leases
195
167
662
Accounts payable related to purchases
of property and equipment
211
165
121
57
The components of net periodic OPEB cost and the assumptions
related to the cost consisted of the following:
OPEB
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial (gain) loss
Amortization of prior service credit
Net cost
Weighted-average assumptions
Discount rates - service cost
Discount rates - interest cost
Expected long-term rates of return
2023
2022
2021
$
$
27 $
176
(117)
(59)
(3)
24 $
45 $
99
(110)
(18)
(4)
12 $
6.1%
5.4%
5.7%
3.6%
2.3%
4.4%
48
102
(77)
27
(4)
96
3.4%
2.1%
5.4%
The benefit plan obligations, funded status, and the assumptions
related to the obligations at October 29, 2023 and October 30, 2022
follow:
Pensions
OPEB
22023
2022
2023
2022
Change in benefit obligations
Beginning of year balance
Service cost
Interest cost
Actuarial gain
Prior service cost
Benefits paid
Health care subsidies
Settlement
Foreign exchange and other
End of year balance
(246)
(533)
504
$ (10,529) $ (14,525) $ (3,341) $ (4,930)
(45)
(99)
1,492
(12)
282
(33)
(349)
(330)
4,122
(505)
757
(27)
(176)
285
260
(27)
838
112
(74)
4
301
(9,928) (10,529) (3,029) (3,341)
(3)
Change in plan assets (fair value)
Beginning of year balance
Actual loss on plan assets
Employer contribution
Benefits paid
Settlement
Foreign exchange and other
End of year balance
Funded status
1,755
(495)
1,155
(282)
13,219
17,190
(387) (3,070)
85
(757)
2,136
(8)
158
(260)
70
(838)
(112)
3
52
12,004
2,136
$ 2,076 $ 2,690 $ (1,001) $ (1,205)
2
13,219 2,028
(229)
During 2023, we irrevocably transferred to an insurance company
$112 of a Canadian pension plan’s defined benefit obligations and
related plan assets. The transaction resulted in no changes to the
benefits to be received by the retired participants. We recognized a
one-time, non-cash, pretax pension settlement charge of $36
related to the accelerated recognition of actuarial losses included
within “Accumulated other comprehensive income (loss).”
The discount rate assumptions used to determine the pension and
OPEB obligations for all periods presented were based on
hypothetical AA yield curves represented by a series of annualized
individual discount rates. These discount rates represent the rates
at which our benefit obligations could effectively be settled at the
October 31 measurement dates.
The mortality assumptions for the 2023 and 2022 U.S. benefit plan
obligations used the most recent tables and scales issued by the
Society of Actuaries at that time. The 2023 and 2022 mortality
assumptions included an adjustment to the scale related to COVID
for some plans.
The weighted-average annual rates of increase in the per capita
cost of covered health care benefits (the health care cost trend
rates) for medical and prescription drug claims for pre- and post-
65 age groups used to determine the October 29, 2023 and
October 30, 2022 accumulated postretirement benefit obligations
were as follows:
Initial year
Second year
Ultimate
22023
18.7% (2023 to 2024)
8.8% (2024 to 2025)
4.7% (2032 to 2033)
22022
0.0% (2022 to 2023)
12.6% (2023 to 2024)
4.7% (2032 to 2033)
An increase in Medicare Advantage premiums and prescription
drug trends impacted the weighted-average annual rates of
increase for the initial year in 2023. A decrease in Medicare
Advantage premiums impacted the weighted-average annual rates
of increase for the initial year in 2022.
Information related to pension plans benefit obligations at
October 29, 2023 and October 30, 2022 follows:
22023
22022
6.0%
5.6%
for all plans
$
9,453 $
10,068
Total accumulated benefit obligations
Plans with accumulated benefit
obligation exceeding fair value of
plan assets:
Accumulated benefit obligations
Fair value of plan assets
Plans with projected benefit obligation
exceeding fair value of plan assets:
Projected benefit obligations
Fair value of plan assets
1,147
704
1,116
672
1,261
729
1,225
692
Weighted-average assumptions
Discount rates
Rate of compensation increase
Interest crediting rate - U.S.
5.9%
3.8%
5.4%
3.8%
cash balance plans
4.9%
4.4%
The actuarial gain for pension for 2023 was due to an increase in
discount rates. The actuarial gain for OPEB for 2023 was due to
changes to health care assumptions. The actuarial gains for
pension and OPEB for 2022 were due to an increase in discount
rates. The pension prior service cost for 2022 was due to the new
UAW collective bargaining agreement.
58
The pension and OPEB amounts recognized in the balance sheet at
October 29, 2023 and October 30, 2022 consisted of the following:
Pensions
OPEB
Expected Future Benefit Payments
The expected future benefit payments at October 29, 2023 were
as follows:
2024
2025
2026
2027
2028
2029 to 2033
Pensions OPEB*
249
$
252
257
257
257
1,251
746 $
726
727
720
708
3,564
* Net of prescription drug group benefit subsidy under Medicare Part D.
Plan Asset Information
The fair values of the pension plan assets at October 29, 2023
follow:
Cash and short-term investments
Equity:
U.S. equity securities
International equity securities
and funds
Fixed Income:
Government and agency
securities
Corporate debt securities
Mortgage-backed securities
Private equity
Other investments
Derivative contracts - assets
Derivative interest rate contracts -
liabilities
Receivables, prepaids, and payables
Securities lending collateral
Securities lending liability
Securities sold short
Total of Level 1, Level 2, and
Total
$
Level 1 Level 2 Level 3
513 $ 470 $
43
342
330
12
199
197
2
1,017
4,389
285
18
50
53
(309)
(137)
615
(615)
(73)
759
30
17
(215)
(137)
(69)
258
4,389
285
$
20
36
(94)
615
(615)
(4)
18
Level 3 assets
6,347 $
1,382 $ 4,947 $
18
Investments at net asset value:
Short-term investments
U.S. equity funds
International equity funds
Fixed income funds
Real estate funds
Hedge funds
Private equity
Venture capital
Other investments
Total net assets
362
92
151
1,418
462
491
1,306
1,341
34
$ 12,004
Noncurrent asset
Less: Current liability
Less: Noncurrent liability
Total
2023
2022
2022
2023
$ 2,608 $ 3,223 $
399 $ 507
39
40
1,673
1,360
$ 2,076 $ 2,690 $ (1,001) $ (1,205)
42
491
59
473
The retirement benefits and other liabilities recognized in the
balance sheet at October 29, 2023 and October 30, 2022 consisted
of the following:
22023
22022
Deferred compensation - current
Deferred compensation and other -
$
25 $
noncurrent
Pensions and OPEB - current
Pensions and OPEB - noncurrent
Total
$
183
99
1,833
2,140 $
30
182
81
2,164
2,457
The amounts recognized in accumulated other comprehensive
income (cid:3013) pretax at October 29, 2023 and October 30, 2022
consisted of the following:
Pensions
OPEB
Net actuarial (gain) loss
Prior service (credit) cost
Total
2023
2022
2022
2023
$ 1,660 $ 926 $
(921) $ (820)
(4)
$ 2,066 $ 1,372 $ (922) $ (824)
406
446
(1)
Actuarial gains and losses are recorded in accumulated other
comprehensive income (loss). To the extent unamortized gains and
losses exceed 10 percent of the higher of the market-related value
of assets or the benefit obligation, the excess is amortized as a
component of net periodic (benefit) cost over the remaining
service period of the active participants. For plans in which all or
almost all of the plan’s participants are inactive, the amortization
period is the remaining life expectancy of the inactive participants.
Contributions
We make any required contributions to the plan assets under
applicable regulations and voluntary contributions after evaluating
our liquidity position and ability to make tax-deductible
contributions. Total contributions to the plans were $228 in 2023
and $1,240 in 2022, which included both required and voluntary
contributions and direct benefit payments. 2022 OPEB
contributions included a voluntary contribution of $1,000 to a U.S.
plan.
We expect to contribute approximately $85 to our pension plans
and approximately $140 to our OPEB plans in 2024. The
contributions include required and voluntary contributions and
direct benefit payments from company funds. We have no
significant required contributions to U.S. pension plan assets in
2024 under applicable funding regulations.
59
The fair values of the OPEB health care assets at October 29, 2023
follow:
The fair values of the OPEB health care assets at October 30, 2022
follow:
Total
$
76 $
Level 1 Level 2
76
596 $
5
677 $
41
515
89
3
122
(122)
648
Cash and short-term investments
Fixed Income:
Government and agency securities
Corporate debt securities
Mortgage-backed securities
Other
Securities lending collateral
Securities lending liability
Total
$
79 $
Level 1 Level 2
79
597 $
(7)
629
516
83
(4)
98
(98)
32
516
83
3
98
(98)
634
Cash and short-term investments
Fixed Income:
Government and agency securities
Corporate debt securities
Mortgage-backed securities
Other
Securities lending collateral
Securities lending liability
Total of Level 1 and Level 2 assets
Investments at net asset value:
Fixed income funds
Real estate funds
Hedge funds
Private equity
Venture capital
Other investments
Total net assets
637
515
89
8
122
(122)
1,325 $
392
104
104
43
43
17
$ 2,028
The fair values of the pension plan assets at October 30, 2022
follow:
Cash and short-term investments
Equity:
Total
$
Level 1 Level 2
55
338 $ 283 $
U.S. equity securities
International equity securities and funds
311
196
290
195
21
1
Fixed Income:
Government and agency securities
Corporate debt securities
Mortgage-backed securities
Other investments
Derivative contracts - assets
Derivative contracts - liabilities
Receivables, prepaids, and payables
Securities lending collateral
Securities lending liability
Securities sold short
Total of Level 1 and Level 2 assets
Investments at net asset value:
Short-term investments
U.S. equity funds
International equity funds
Fixed income funds
Real estate funds
Hedge funds
Private equity
Venture capital
Other investments
Total net assets
1,296 1,053
4,587
243
4,587
213
18
38
(103)
31
54
(106)
(207)
213
49
92
(209)
(207)
684
(684)
684
(684)
(6)
(58)
6,602 $ 1,535 $ 5,067
(64)
633
54
125
1,736
592
569
1,322
1,553
33
$ 13,219
Total of Level 1 and Level 2 assets
1,303 $ 669 $
Investments at net asset value:
U.S. equity funds
International equity funds
Fixed income funds
Real estate funds
Hedge funds
Private equity
Venture capital
Other investments
Total net assets
40
22
347
140
188
41
48
7
$ 2,136
Investments at net asset value in the preceding tables are
measured at fair value using the net asset value per share practical
expedient and are not classified in the fair value hierarchy. Fair
value measurement levels in the preceding tables are defined in
Note 25.
Fair values are determined as follows:
Cash and Short-Term Investments – The investments include
(1) cash accounts that are valued based on the account value,
which approximates fair value; (2) investments that are valued at
quoted prices in the active markets in which the investment trades
or using a market approach (matrix pricing model) in which all
significant inputs are observable or can be derived from or
corroborated by observable market data; and (3) investment funds
that are valued based on a constant fund net asset value, which is
based on quoted prices in the active market in which the
investment fund trades, or the fund’s net asset value using the net
asset value per share practical expedient (NAV), which is based on
the fair value of the underlying securities.
Equity Securities and Funds – The values are determined by quoted
prices in the active market in which the equity investment trades,
or the fund’s NAV, based on the fair value of the underlying
securities.
Fixed Income Securities and Funds and Other Funds – The
securities are valued using either 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, or they are valued using the quoted prices in the active
market in which the fixed income investment trades. Fixed income
and other funds are valued using the fund’s NAV, based on the fair
value of the underlying securities.
60
extended period of time (i.e., 10 to 20 years). The average annual
return of our U.S. pension fund was approximately 6.8 percent
during the past ten years and approximately 7.8 percent during the
past 20 years.
We have created a Voluntary Employees’ Beneficiary Association
trust (VEBA) for the funding of hourly postretirement health care
benefits. The future expected asset returns for the VEBA is lower
than the expected return on the other pension and health care plan
assets due to investment in a higher proportion of liquid securities.
These assets are in addition to the other postretirement health care
plan assets that have been funded under Section 401(h) of the U.S.
Internal Revenue Code and maintained in a separate account in the
John Deere Pension Trust.
Defined Contribution Plans
We have defined contribution plans related to employee
investment and savings plans primarily in the U.S. Our
contributions and costs under these plans were $288 in 2023,
$263 in 2022, and $207 in 2021. The contribution rate varies based
on employee participation in the plans.
8. INCOME TAXES
We are subject to income taxes in a number of jurisdictions. We
determine our income tax provision using the asset and liability
method. The provision for income taxes by taxing jurisdiction and
by significant component consisted of the following:
2023
2022
2021
Current:
U.S.:
Federal
State
Foreign
Total current
Deferred:
U.S.:
Federal
State
Foreign
Total deferred
Provision for income taxes
$ 1,803 $ 514 $ 899
183
1,017
2,099
136
1,423
2,073
386
1,472
3,661
(485)
(65)
(240)
(790)
(303)
(45)
(93)
(441)
$ 2,871 $ 2,007 $ 1,658
29
24
(119)
(66)
Based upon the location of our operations, the consolidated
income before income taxes in the U.S. in 2023, 2022, and 2021 was
$7.8 billion, $5.0 billion, and $4.1 billion, respectively, and in foreign
countries was $5.2 billion, $4.1 billion, and $3.5 billion, respectively.
Certain foreign operations are branches or partnerships of Deere &
Company and are subject to U.S. as well as foreign income tax
regulations. The pretax income by location and the preceding
analysis of the income tax provision by taxing jurisdiction are not
directly related.
Real Estate, Venture Capital, Private Equity, and Hedge Funds – The
investments that are structured as limited partnerships, excluding
the private equity investments classified as Level 3, are valued at
estimated fair value based on their proportionate share of the
limited partnership’s fair value that is determined by the respective
general partner. These investments are valued using the fund’s
NAV, which is based on the fair value of the underlying
investments. Valuations may be lagged up to six months. The NAV
is adjusted for cash flows (additional investments or contributions,
and distributions) and any known substantive valuation changes
through year end. The private equity investments classified as
Level 3 are valued based on the current market pricing of the
assets related to an expected secondary sale. The investments
were transferred into Level 3 as of October 29, 2023.
Derivative Instruments – The derivatives are valued using either an
income approach (discounted cash flow) using market observable
inputs, including swap curves and both forward and spot exchange
rates, or a market approach (quoted prices in the active market in
which the derivative instrument trades).
The investment objective for the pension and health care plan
assets is to fulfill the projected obligations to the beneficiaries over
a long period of time, while meeting our fiduciary responsibilities.
The asset allocation policy is the most important decision in
managing the assets, and it is reviewed regularly. The asset
allocation policy considers our long-term asset class risk/return
expectations for each plan since the obligations are long-term in
nature. The target asset allocations as of October 29, 2023 are as
follows:
Equity
Debt
Real estate
Other investments
Pension
Assets
Health Care
Assets
5%
68%
4%
23%
9%
83%
2%
6%
The assets are diversified and are managed by professional
investment firms as well as by investment professionals who are
company employees. As a result of our diversified investment
policy, there were no significant concentrations of risk.
A market related value of plan assets is used to calculate the
expected return on assets. The market related value recognizes
changes in the fair value of pension plan assets systematically over
a five-year period. The market related value of the health care plan
assets equals fair value.
The expected long-term rate of return on plan assets reflects
management’s expectations of long-term average rates of return
on funds invested to provide for benefits included in the projected
benefit obligations. The expected return is based on the outlook
for inflation and for returns in multiple asset classes, while also
considering historical returns, asset allocation, and investment
strategy. Our approach has emphasized the long-term nature of
the return estimate such that the return assumption is not
changed significantly unless there are fundamental changes in
capital markets that affect our expectations for returns over an
61
A comparison of the statutory and effective income tax provision
and reasons for related differences follow:
A reconciliation of unrecognized tax benefits at October 29, 2023,
October 30, 2022, and October 31, 2021 follows:
2023
2022
2021
U.S. federal income tax provision at the
U.S. statutory rate (21 percent)
State and local taxes, net of federal effect
Other impacts of Tax Cuts and Jobs Act of 2017
Rate differential on foreign subsidiaries
Research and business tax credits
Excess tax benefits on equity compensation
Valuation allowances
Other - net
Provision for income taxes
$ 2,734 $ 1,917 $ 1,597
119
(85)
148
(48)
(79)
18
(12)
$ 2,871 $ 2,007 $ 1,658
133
(29)
121
(65)
(55)
179
(194)
266
(58)
142
(107)
(49)
9
(66)
At October 29, 2023, undistributed profits of subsidiaries outside
the U.S. of approximately $5.1 billion are considered indefinitely
reinvested. Determination of the amount of a foreign withholding
tax liability on these unremitted earnings is not practicable.
Deferred income taxes arise because there are certain items that
are treated differently for financial accounting than for income tax
reporting purposes. An analysis of the deferred income tax assets
and liabilities at October 29, 2023 and October 30, 2022 follows:
22023
22022
Deferred Deferred Deferred Deferred
Tax
Assets
Tax
Tax
Liabilities Assets
Tax
Liabilities
Accrual for employee
benefits
$
Accrual for sales allowances
Allowance for credit losses
Amortization of R&D
expenditures
Deferred compensation
Goodwill and other intangible
assets
Lessee lease transactions
Lessor lease transactions
OPEB - net
Pension - net
Share-based compensation
Tax loss and tax credit
carryforwards
Tax over book depreciation
Unearned revenue
Other items
Less: valuation allowances
Deferred income tax aassets
439
884
79
492
45
$
68
193
38
$
304
579
90
166
61
581
424
44
$
62
213
41
1,518
177
681
(1,612)
198
278
1,405
154
487
(1,545)
178
57
310
532
174
254
and liabilities
$ 3,002 $
1,708 $
1,834 $
1,505
Deere & Company files a consolidated federal income tax return in
the U.S., which includes the wholly-owned financial services
subsidiaries. These subsidiaries account for income taxes as if they
filed separate income tax returns, with a modification for
realizability of certain tax benefits.
At October 29, 2023, tax loss and tax credit carryforwards of
$1,518 were available with $1,031 expiring from 2024 through 2043
and $487 with an indefinite carryforward period.
Beginning of year balance
Increases to tax positions taken during the
current year
Increases to tax positions taken during prior years
Decreases to tax positions taken during the
current year
Decreases to tax positions taken during prior years
Decreases due to lapse of statute of limitations
Other
Foreign exchange
End of year balance
2023 2022 2021
$ 891 $ 811 $ 668
68
164
98
29
81
100
(3)
(209)
(10)
(4)
10
(18)
(7)
2
(24)
(23)
(12)
(3)
$ 907 $ 891 $ 811
The amount of unrecognized tax benefits at October 29, 2023 and
October 30, 2022 that would impact the effective tax rate if the tax
benefits were recognized was $329 and $303, respectively. The
remaining liability was related to tax positions for which there are
offsetting tax receivables, or the uncertainty was only related to
timing. We expect that any reasonably possible change in the
amounts of unrecognized tax benefits in the next twelve months
would not be significant.
We file our tax returns according to the tax laws of the jurisdictions
in which we operate, which includes the U.S. federal jurisdiction
and various state and foreign jurisdictions. The U.S. Internal
Revenue Service (IRS) has completed the examination of our
federal income tax returns for periods prior to 2015. The federal
income tax returns for years 2015 to 2020 are currently under
examination. Various state and foreign income tax returns also
remain subject to examination by taxing authorities.
9. OTHER INCOME AND OTHER OPERATING EXPENSES
The major components of other income and other operating
expenses consisted of the following:
2023
2022
2021
$ 312 $ 283 $ 322
227
87
65
312
95
33
29
222
41
249
$ 1,003 $ 1,295 $ 991
289
89
72
326
14
222
$ 853 $ 827 $ 983
235
202
309
227
267
214
(286)
122
67
(183)
59
47
$ 1,292 $ 1,275 $ 1,343
(218)
132
53
Other income
Revenues from services
Extended warranty premiums earned
Trademark licensing income
Operating lease disposition gains
Gain on previously held equity investment
Investment income
Other
Total
Other operating expenses
Depreciation of equipment on
operating leases
Extended warranty claims
Cost of services
Pension and OPEB benefit, excluding the
service cost component
Foreign exchange loss
Other
Total
62
10. MARKETABLE SECURITIES
Most marketable securities are classified as available-for-sale.
Realized gains or losses are based on specific identification.
The amortized cost and fair value of marketable securities at the
end of 2023 and 2022 follow:
Gross
Gross
Amortized Unrealized Unrealized
Cost
Gains
Losses
Fair
Value
2023
International equity
securities
International mutual
funds securities
U.S. equity fund
U.S. fixed income fund
Total equity securities
Corporate debt securities $
International debt securities
Mortgage-backed securities*
Municipal debt securities
U.S. government debt
285
5
225
87
260
862
$
securities
Total debt securities
Marketable securities
2022
International equity
securities
U.S. equity fund
Total equity securities
Corporate debt securities $
International debt securities
Mortgage-backed securities*
Municipal debt securities
U.S. government debt
securities
Total debt securities
Marketable securities
$
236
64
186
74
220
780
$
3
101
86
32
222
244
1
185
75
41
4
40
12
41
138
219
724
$ 946
$
36
4
31
11
37
119
$
3
70
73
200
60
155
63
183
661
734
$
$
$
$
* Primarily issued by U.S. government sponsored enterprises.
The purchases, maturities, and sale proceeds for marketable
securities during 2023, 2022, and 2021 follow:
Purchases
Maturities and sale proceeds
$
491 $
186
250 $
79
194
109
2023
2022
2021
Equity Securities
Proceeds of equity securities sold during 2023, 2022, and 2021 were
not material. Unrealized gain (loss) on equity securities during 2023
and 2022 follow:
Net gain (loss) recognized on equity securities
Less: Net gain (loss) on equity securities sold
Unrealized gain (loss) on equity securities
$
$
2023
2022
(11)
$
(1)
1 $
(11)
63
Debt Securities
The contractual maturities of debt securities at October 29, 2023
follow:
Due in one year or less
Due after one through five years
Due after five through 10 years
Due after 10 years
Mortgage-backed securities
Debt securities
$
$
Amortized
Cost
Fair
Value
19
136
214
170
185
724
20 $
147
249
221
225
862 $
Actual maturities may differ from contractual maturities because
some securities may be called or prepaid. Mortgage-backed
securities contain prepayment provisions and are not categorized
by contractual maturity.
The following debt security items were not material in 2023, 2022,
and 2021:
• realized gains,
• realized losses, and
• unrealized losses that have been continuous for over twelve
months.
Unrealized losses at October 29, 2023 and October 30, 2022 were
not recognized in income due to the ability and intent to hold to
maturity. There were no significant impairment write-downs in the
periods reported.
11. RECEIVABLES
Trade Accounts and Notes Receivable
Trade accounts and notes receivable arise from sales of goods to
independent dealers. See Note 2 for our revenue recognition
policy. We evaluate and assess dealers’ credit worthiness on an
ongoing basis. Receivables are secured with collateral or other
credit enhancements. Trade accounts and notes receivable at the
end of 2023 and 2022 follow:
Trade accounts and notes receivable:
Production & precision ag
Small ag & turf
Construction & forestry
Trade accounts and notes receivable – net
2023 2022
$ 2,642 $ 2,397
2,065
1,948
$ 7,739 $ 6,410
2,344
2,753
These receivables have significant concentrations of credit risk in
the agriculture and turf and construction and forestry markets.
Credit losses have been historically low. There is not a
disproportionate concentration of credit risk with any single dealer.
On a geographic basis, 53 percent of our trade accounts and notes
receivable are located in the U.S. and Canada at October 29, 2023.
At October 29, 2023 and October 30, 2022 trade and notes
receivables balances outstanding greater than 12 months were
$107 and $49, respectively.
The allowance for credit losses on trade accounts and notes
receivable at October 29, 2023, October 30, 2022, and October 31,
2021, as well as the related activity, follow:
Beginning of year balance
ASU No. 2016-13
Provision
Write-offs
Translation adjustments
End of year balance
22023
22022
22021
$
36 $
41 $
7
(8)
$
35 $
1
(5)
(1)
36 $
39
(2)
10
(7)
1
41
The equipment operations sell a significant portion of their trade
receivables to financial services. Compensation is provided to
financial services at market interest rates.
Financing Receivables (cid:3013) Overall
Financing receivables originate under the following circumstances:
• Retail customers purchase (or lease) equipment from a dealer
and finance the equipment through John Deere Financial.
• We sell the equipment to a dealer under trade terms. Trade
terms end, and the dealer finances the equipment on a
wholesale receivable. Shown as wholesale notes in “Financing
Receivables related to the Sale of Equipment.”
• A dealer finances the purchase of used equipment through
John Deere Financial.
• We sell (or lease) the equipment directly to a retail customer
with terms typically greater than 12 months. Shown as retail
notes or sales-type leases in the “Financing Receivables related
to the Sale of Equipment.”
• The customer utilizes a revolving credit product to finance
parts, service, or input costs.
Financing receivables at the end of 2023 and 2022 follow:
84 percent of our financing receivables were located in the U.S.
and Canada at October 29, 2023. There is no disproportionate
concentration of credit risk with any single customer or dealer. We
retain as collateral security in the equipment associated with most
financing receivables. Theft and physical damage insurance are
required for this equipment.
Financing Receivables (cid:3013) Related to the Sale of Equipment
Financing receivables related to the sale of equipment are
presented in the operating section of the cash flow statement. The
balances at the end of 2023 and 2022 were as follows:
2023
2022
Retail notes*:
Agriculture and turf
Construction and forestry
Total
Wholesale notes
Direct financing and sales-type leases*
Total
Less:
Unearned finance income:
Retail notes
Wholesale notes
Direct financing and sales-type leases
Total
Financing receivables related to our sales of
320
$ 1,084 $ 1,392
304
1,404 1,696
6,947 3,285
799
5,780
494
8,845
137
25
60
222
133
12
67
212
equipment
$ 8,623 $ 5,568
* These balances arise from sales and direct financing leases of equipment by
company-owned dealers or through direct sales.
Financing Receivables (cid:3013) Contractual Installment Payments
Financing receivable installments, including unearned finance
income, at October 29, 2023 and October 30, 2022 were scheduled
as follows:
22023
22022
Unrestricted/Securitized Unrestricted/Securitized
22023
22022
Unrestricted/Securitized Unrestricted/Securitized
Retail notes:
Agriculture and turf
Construction and forestry
Total
Wholesale notes
Revolving charge accounts
Financing leases (direct
$ 26,955 $ 6,052 $ 23,830 $ 4,868
1,179
6,047
4,623
31,578
6,947
4,789
1,442
4,396
7,494 28,226
3,285
4,316
and sales-type)
Total financing receivables
2,906
46,220
2,832
7,494 38,659
6,047
Less:
Unearned finance income:
Retail notes
Wholesale notes
Revolving charge accounts
Financing leases
Total
Allowance for credit losses
Financing rreceivables – net
1,906
25
91
350
2,372
175
$ 43,673 $
95
137
1,358
12
61
285
95
1,716
16
309
7,335 $ 36,634 $ 5,936
137
22
Assets managed by financial services continue to be evaluated by
market, rather than by operating segment. Financing receivables
have significant concentrations of credit risk in the agriculture and
turf and construction and forestry markets. On a geographic basis,
64
Due in months:
0 – 12
13 – 24
25 – 36
37 – 48
49 – 60
Thereafter
Total
$ 22,176 $ 2,820 $ 17,032 $ 2,226
1,667
2,089
1,209
1,509
709
824
227
241
9
11
$ 46,220 $ 7,494 $ 38,659 $ 6,047
8,646
6,692
4,844
2,920
942
7,975
5,987
4,297
2,559
809
Financing Receivables (cid:3013) Credit Quality Analysis
We monitor the credit quality of financing receivables based on
delinquency status, defined as follows:
• Past due balances represent any payments 30 days or more
past the due date.
• Non-performing financing receivables represent receivables for
which we have stopped accruing finance income. This generally
occurs when receivables are 90 days delinquent.
• Write-offs generally occur when receivables are 120 days
delinquent. In these situations, the estimated uncollectible
amount is written off to the allowance for credit losses. Any
expected recovery is presented as non-performing.
22020
Construction and forestry
22022
October 30, 2022
22020
22021
22019
Retail customer receivables:
Agriculture and turf
Current
30-59 days past due
60-89 days past due
90+ days past due
Non-performing
$ 13,500 $
46
14
1
27
7,984 $ 4,091 $
36
13
63
25
1,875
17
6
60
44
28
Current
30-59 days past due
60-89 days past due
90+ days past due
Non-performing
Total retail
2,964
53
19
1
25
1,974
52
16
4
61
842
23
7
1
34
292
9
3
3
19
customer receivables
$ 16,650 $
10,239 $
5,091 $ 2,252
October 30, 2022
22018
Prior Years
Revolving
Charge
Accounts
Total
Retail customer receivables:
Agriculture and turf
Current
30-59 days past due
60-89 days past due
90+ days past due
Non-performing
Current
30-59 days past due
60-89 days past due
90+ days past due
Non-performing
Total retail
$
785 $
7
2
200 $
3
1
18
73
2
1
7
19
12
1
1
3
19
5
4,111 $ 32,546
191
66
1
204
8
108
3
1
6,265
143
47
10
149
customer receivables
$
895 $
240 $
4,255 $ 39,622
Total
Construction and forestry
Finance income for non-performing receivables is recognized on a
cash basis. Accrual of finance income is 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:
22023
October 29, 2023
22021
22022
Retail customer receivables:
$
Agriculture and turf
Current
30-59 days past due
60-89 days past due
90+ days past due
Non-performing
Construction and forestry
Current
30-59 days past due
60-89 days past due
90+ days past due
Non-performing
Total retail
15,191 $ 8,430 $ 5,120 $ 2,334
21
10
3
33
39
18
3
62
75
26
1
78
62
18
2
30
2,927
49
19
42
1,961
34
14
6
80
1,084
27
12
1
55
353
9
5
23
customer receivables
$ 18,340 $
10,705 $
6,421 $
2,791
October 29, 2023
22019
Prior Years
Revolving
Charge
Accounts
Retail customer receivables:
Agriculture and turf
Current
30-59 days past due
60-89 days past due
90+ days past due
Non-performing
Construction and forestry
Current
30-59 days past due
60-89 days past due
90+ days past due
Non-performing
Total retail
$
853 $
9
4
22
84
4
2
9
3
2
280 $ 4,526 $ 36,734
238
29
87
9
9
255
22
8
29
1
4
119
4
2
1
6,557
127
54
8
214
customer receivables
$
987 $
341 $ 4,698 $ 44,283
65
The credit quality analysis of wholesale receivables by year of
origination was as follows:
22023
October 29, 2023
22021
22022
22020
Wholesale receivables:
Agriculture and turf
Current
30+ days past due
Non-performing
$
631 $
93 $
21 $
4
Construction and forestry
Current
30+ days past due
Non-performing
23
5
20
Total wholesale receivables $
654 $
98 $
41 $
4
October 29, 2023
Prior Years Revolving
22019
Total
Financing Receivables (cid:3013) Allowance for Credit Losses
An analysis of the allowance for credit losses and investment in
financing receivables follows:
Retail Notes Revolving
& Financing Charge Wholesale
Leases
Accounts Receivables Total
2023
Allowance:
Beginning of year balance $
Provision
Provision transferred
to held for sale
Provision (credit)
Write-offs
Recoveries
Translation
adjustments
End of year balance*
$
299 $
97
22 $
22
4 $
(142)
(45)
(84)
21
(19)
172 $
22
(45)
22
21 $
4 $
325
119
(142)
(23)
(129)
43
(19)
197
$
1 $
160 $ 5,175 $ 6,085
Financing receivables:
End of year balance
$
39,585 $ 4,698 $
6,922 $ 51,205
1
1
76
712
836
2022
Allowance:
Beginning of year balance $
Wholesale receivables:
Agriculture and turf
Current
30+ days past due
Non-performing
Construction and forestry
Current
30+ days past due
Non-performing
Total wholesale receivables $
2 $
236 $ 5,887 $
6,922
22022
October 30, 2022
22020
22021
22019
Wholesale receivables:
Agriculture and turf
Current
30+ days past due
Non-performing
$
387 $
64 $
27 $
Construction and forestry
Current
30+ days past due
Non-performing
7
29
2
4
1
1
Total wholesale receivables $
394 $
93 $
29 $
6
October 30, 2022
Prior Years Revolving
22018
Total
$
2 $ 2,371 $ 2,855
1
1
377
417
Wholesale receivables:
Agriculture and turf
Current
30+ days past due
Non-performing
Construction and forestry
Current
30+ days past due
Non-performing
Total wholesale receivables
$
3 $ 2,748 $ 3,273
138 $
197
(61)
22
3
299 $
7 $
(3)
21 $
(2)
(27)
30
22 $
4 $
166
192
(88)
52
3
325
$
35,367 $ 4,255 $
3,273 $ 42,895
133 $
44
(60)
20
1
138 $
8 $
(1)
43 $
(13)
(17)
(28)
36
21 $
7 $
184
31
(18)
(88)
56
1
166
Provision (credit)
Write-offs
Recoveries
Translation
adjustments
End of year balance*
Financing receivables:
End of year balance
2021
Allowance:
Beginning of year balance $
ASU No. 2016-13
Provision (credit)
Write-offs
Recoveries
Translation
adjustments
End of year balance*
Financing receivables:
End of year balance
$
$
$
32,233 $
3,825 $
2,566 $ 38,624
* Individual allowances were not significant.
We monitor the economy as part of the allowance setting process,
including potential impacts of inflation and rising interest rates.
Adjustments to the allowance are incorporated, as necessary.
During 2023, we determined that the financial services business in
Russia met the held for sale criteria. The financing receivables in
Russia were reclassified to “Other assets” and the associated
allowance for credit losses was reversed. These operations were
sold in the second quarter of 2023 (see Note 3). Excluding the
portfolio in Russia, the allowance increased in 2023, primarily
driven by growth in the retail notes and financing lease portfolios
66
and higher expected losses on turf and construction customer
accounts.
In 2022, the allowance for credit losses on retail notes and
financing lease receivables increased due to higher reserves related
to the events in Russia / Ukraine and higher portfolio balances.
These increases were partially offset by continued positive
agricultural market conditions. The revolving portfolio experienced
low write-offs and solid recoveries.
Financing receivable analysis metrics follow:
12. SECURITIZATION OF FINANCING RECEIVABLES
Our funding strategy includes receivable securitizations, which
allows us to receive cash for financing receivables immediately.
While these securitization programs are administered in various
forms, they are accomplished in the following basic steps:
1. We transfer financing receivables into a bankruptcy-remote
special purpose entity (SPE).
2. The SPE issues debt to investors. The debt is secured by the
financing receivables.
22023
22022
3. Investors are paid back based on cash receipts from the
Percent of the overall financing
receivable portfolio:
Past-due amounts
Non-performing
Allowance for credit losses
Deposits held as credit enhancements $
1.02
.92
.38
154 $
1.07
.83
.76
158
The allowance for credit losses as a percent of the overall financing
receivable portfolio follow:
Deere & Company
Closest comparators*
2023
2022
2021
.38
.90
.76
.93
.43
1.15
* Peer companies from the 6153 and 6159 standard industrial classification (SIC) codes.
Financing Receivables (cid:3013) Troubled Debt Restructurings
Infrequently, a customer experiences financial difficulties, and we
grant a concession. These concessions may include:
• a reduction of the stated interest rate,
• an extension of the maturity dates,
• a reduction of the amount of the debt, or
• a reduction of accrued interest.
A troubled debt restructuring is a significant modification of the
receivable. The following table quantifies troubled debt
restructurings:
Number of receivable contracts
Pre-modification balance
Post modification balance
2023
2022
2021
$
209
10
9
$
276
12
10
$
397
18
17
Troubled debt restructurings for the presented periods related to
retail notes. In 2023, 2022, and 2021, there were no significant
troubled debt restructurings that subsequently defaulted and were
written off. At October 29, 2023, we had no commitments to lend
to customers whose accounts were modified in troubled debt
restructurings.
Other Receivables
Other receivables at the end of 2023 and 2022 consisted of:
Taxes receivable
Collateral on derivatives
Receivables from unconsolidated affiliates
Other
Other receivables
2022
$ 1,450
709
2023
$ 1,626
667
3
327
333
$ 2,623 $ 2,492
financing receivables.
As part of step 1, these receivables are legally isolated from the
claims of our general creditors. This ensures cash receipts from the
financing receivables are accessible to pay back securitization
program investors. The structure of these transactions does not
meet the accounting criteria for a sale of receivables. As a result,
they are accounted for as a secured borrowing. The receivables
and borrowings remain on our balance sheet and are separately
reported as “Financing receivables securitized – net” and “Short-
term securitization borrowings,” respectively.
We offer securitization programs to institutional investors and
other financial institutions through public issuances or privately
through a revolving credit agreement. At October 29, 2023, the
revolving agreement had a financing limit of up to $1,500. At
October 29, 2023, $1,281 of securitization borrowings were
outstanding under the revolving agreement. In November 2023,
the agreement was renewed for one year with a capacity of
$2,000.
Restricted cash held by the SPE serves as a credit enhancement. It
would be used to satisfy receivable payment deficiencies, if any.
The cash restriction is removed either after all secured borrowing
payments are made or proportionally as the secured receivables are
collected and the borrowing obligations are reduced.
The components of the securitization programs were as follows at
the end of 2023 and 2022:
Financing receivables securitized (retail notes)
Allowance for credit losses
Other assets (primarily restricted cash)
Total restricted securitized assets
2023 2022
7,357 $ 5,952
$
(16)
155
7,487 $ 6,091
(22)
152
$
5,711
Short-term securitization borrowings
6
Accrued interest on borrowings
Total liabilities related to restricted ssecuritized assets $ 7,008 $ 5,717
$ 6,995 $
13
The weighted-average interest rates on short-term securitization
borrowings at October 29, 2023 and October 30, 2022 were
4.7 percent and 2.8 percent, respectively.
Although these securitization borrowings are classified as short-
term since payment is required if the financing receivables are
liquidated early, the payment schedule for these borrowings at
October 29, 2023 based on the expected liquidation of the retail
notes is as follows: 2024 - $3,278, 2025 - $2,076, 2026 - $1,187,
2027 - $417, 2028 - $44, and later years - $4.
67
13. INVENTORIES
The components of other intangible assets were as follows:
Inventories were valued at the lower of cost or net realizable value,
as follows:
2023
2022
Raw materials and supplies
Work-in-process
Finished goods and parts
Total FIFO value
Excess of FIFO over LIFO
Inventories
Percent valued on LIFO basis
1,010
5,435
10,525
2,365
$ 4,080 $ 4,442
1,190
5,363
10,995
2,500
$ 8,160 $ 8,495
57%
53%
14. PROPERTY AND DEPRECIATION
A summary of property and equipment at October 29, 2023 and
October 30, 2022 follows:
Useful Lives*
(Years)
22
11
8
5
Land
Buildings and building equipment
Machinery and equipment
Dies, patterns, tools, etc.
All other
Construction in progress
Total at cost
Less: accumulated depreciation
Property and equipment - net
* Weighted-averages
338 $
2023 2022
274
$
4,386
6,208
1,558
1,205
818
14,449
8,393
$ 6,879 $ 6,056
4,735
6,613
1,658
1,323
1,266
15,933
9,054
Property and equipment additions and depreciation follows:
Additions
Depreciation
22023
22022
22021
$
1,597 $
838
1,197 $
806
897
830
For property and equipment, more than 10 percent resides in the
U.S. and Germany, separately disclosed below:
U.S.
Germany
Other countries
Total
22023
22022
3,807 $
1,192
1,880
6,879 $
3,452
991
1,613
6,056
$
$
Customer lists and relationships
Technology, patents, trademarks, and other
Total at cost
Less accumulated amortization:
Customer lists and relationships
Technology, patents, trademarks, and other
Total accumulated amortization
Other intangible assets - net
2023
2022
$
501 $
1,387
1,888
195
560
755
1,133 $
$
493
1,301
1,794
166
410
576
1,218
Actual amortization expense for the past three years and the
estimated amortization expense for the next five years follows:
Year
2021
2022
2023
Estimated - 2024
2025
2026
2027
2028
16. OTHER ASSETS
Amortization
$
116
145
169
170
142
119
117
85
Other assets at October 29, 2023 and October 30, 2022 consisted
of the following:
22023
22022
Operating lease asset (Note 24)
Capitalized software, net
Investment in unconsolidated affiliates
Deferred charges (including prepaids)
Derivative assets (Note 26)
Prepaid taxes
Parts return asset
Restricted cash
Matured lease & repossessed inventory
Other
Other Assets
$
$
283 $
450
126
426
292
167
127
162
59
411
2,503 $
299
372
117
383
373
185
119
167
44
358
2,417
Capitalized software has an estimated useful life of three years.
Amortization of these software costs in 2023, 2022, and 2021 was
$144, $117, and $121, respectively.
15. GOODWILL AND OTHER INTANGIBLE ASSETS – NET
17. SHORT-TERM BORROWINGS
The changes in amounts of goodwill by operating segments were
as follows. There are no accumulated goodwill impairment losses.
Short-term borrowings at the end of 2023 and 2022 consisted of:
October 31, 2021
Acquisitions (Note 3)
Translation adjustments and other
October 30, 2022
Acquisitions (Note 3)
Translation adjustments and other
October 29, 2023
CF
SAT
PPA
Total
$ 542 $ 265 $ 2,484 $ 3,291
800
(404)
3,687
81
132
$ 702 $ 363 $ 2,835 $ 3,900
132
(28)
646
41
15
69
(16)
318
40
5
599
(360)
2,723
112
Commercial paper
Notes payable to banks
Finance lease obligations due within one year
Long-term borrowings due within one year
Short-term borrowings
2022
22023
$ 9,100 $ 4,703
402
21
7,466
$ 17,939 $ 12,592
483
25
8,331
68
The weighted-average interest rates at the end of 2023 and 2022
were:
Short-term borrowings:
Commercial paper
Notes payable to banks
Notes payable to banks, excluding Argentina
22023
2022
5.4%
31.6%
8.8%
3.4%
11.9%
6.6%
Worldwide lines of credit were $10.5 billion at October 29, 2023,
consisting primarily of:
• a 364-day credit facility agreement of $5.0 billion, expiring in
the second quarter of 2024,
• a credit facility agreement of $2.5 billion, expiring in the
second quarter of 2027, and
• a credit facility agreement of $2.5 billion, expiring in the
second quarter of 2028.
At October 29, 2023, $.8 billion of these worldwide lines of credit
were unused. For the purpose of computing the unused credit
lines, commercial paper and short-term bank borrowings were
considered to constitute utilization. The credit agreements
governing these lines of credit require us to maintain certain
covenants. All of these credit agreement requirements have been
met during the periods included in the consolidated financial
statements.
18. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at the end of 2023 and
2022 consisted of the following:
19. LONG-TERM BORROWINGS
Long-term borrowings at the end of 2023 and 2022 consisted of:
Underwritten term debt
U.S. dollar notes and debentures:
2.75% notes due 2025
6.55% debentures due 2028
5.375% notes due 2029
3.10% notes due 2030
8.10% debentures due 2030
7.125% notes due 2031
3.90% notes due 2042
2.875% notes due 2049
3.75% notes due 2050
Euro notes:
1.375% notes due 2024 (€800 principal)
1.85% notes due 2028 (€600 principal)
2.20% notes due 2032 (€600 principal)
1.65% notes due 2039 (€650 principal)
Serial issuances
Medium-term notes
Other notes and finance lease obligations
Less: debt issuance costs and debt discounts
Long-term borrowings
22023
2022
$
700 $
200
500
700
250
300
1,250
500
850
634
634
687
700
200
500
700
250
300
1,250
500
850
797
598
598
648
29,638
1,769
(135)
24,604
1,223
(122)
$ 38,477 $ 33,596
Medium-term notes due through 2033 are offered by prospectus. All
outstanding notes and debentures are senior unsecured borrowings
and rank equally with each other. The outstanding principal and
average interest rates at the end of 2023 and 2022 follow:
22023
2022
22023
22022
Medium-term notes:
Accounts payable:
Trade payables
Dividends payable
Operating lease liabilities
Deposits withheld from dealers and merchants
Payables to unconsolidated affiliates
Other
$ 3,467 $ 3,894
343
302
163
11
214
388
281
163
6
153
Accrued expenses:
Employee benefits
Product warranties
Accrued taxes
Derivative liabilities
Dealer sales discounts
Extended warranty premium
Unearned revenue (contractual liability)
Unearned operating lease revenue
Accrued interest
Other
Accounts payable and accrued expenses
2,152
1,610
1,558
1,130
1,243
1,021
676
451
434
1,397
1,528
1,427
1,255
1,231
1,044
866
557
399
288
1,300
$ 16,130 $ 14,822
Amounts are presented net of eliminations, which primarily
consist of dealer sales incentives with a right of set-off against
trade receivables of $2,228 at October 29, 2023 and $1,280 at
October 30, 2022. Other eliminations were made for accrued
taxes and other accrued expenses.
Principal
Average interest rates
$
30,902 $
4.9%
25,629
2.9%
The principal amounts of our long-term borrowings maturing in
each of the next five years are as follows: 2024 - $8,319,
2025 - $9,195, 2026 - $7,867, 2027 - $3,724, and 2028 - $6,080.
20. COMMITMENTS AND CONTINGENCIES
A standard warranty is provided as assurance that the equipment
will function as intended. The standard warranty period varies by
product and region. At the time a sale is recognized, we record an
estimate of future warranty costs based on historical claims rate
experience and estimated population under warranty. The
warranty reconciliation follows:
Beginning of year balance
Warranty claims paid
New product warranty accruals
Foreign exchange
End of year balance
2023 2022
1,312
$ 1,427 $
(951)
(1,181)
1,090
1,347
(24)
17
1,427
1,610 $
$
The costs for extended warranty programs are recognized as
incurred. See Note 9 for extended warranty claim costs.
In certain international markets, we provide guarantees to banks
for the retail financing of John Deere equipment. At the end of
69
A reconciliation of basic and diluted net income per share
attributable to Deere & Company follows in millions, except per
share amounts:
2023 2022 2021
Net income attributable to Deere &
Company
Average shares outstanding
Basic per share
Average shares outstanding
Effect of dilutive stock options
Total potential shares outstanding
Diluted per share
Shares excluded as antidilutive
22. SHARE-BASED COMPENSATION
292.2
$ 10,166 $ 7,131 $ 5,963
304.5
311.6
$ 34.80 $ 23.42 $ 19.14
311.6
304.5
2.4
1.8
306.3
314.0
$ 34.63 $ 23.28 $ 18.99
292.2
1.4
293.6
.1
.2
We issue stock options and restricted stock units to key
employees. Restricted stock units are also issued to nonemployee
directors for their services as directors. Restricted stock units
consist of service-based and performance/service-based awards.
In 2023, we changed the accounting treatment of the Long-Term
Incentive Cash that is granted to certain employees. As the
performance metric related to this incentive plan is based, in part,
on the price of our shares, we now account for it in accordance
with FASB ASC Topic 718. At October 29, 2023, we are authorized to
grant an additional 16.6 million shares related to stock options or
restricted stock units. We currently use shares that have been
repurchased through our stock repurchase programs to satisfy
share option exercises. The stock awards vesting periods and the
dividend equivalents earned during the vesting period follow:
Stock options
Service-based RSUs
Performance/service-based RSUs
Vesting
Period
1-3 years
1-3 years
3 years
Dividend
Equivalents
Not included
Included
Not included
Stock options expire ten years from the grant date.
Performance/service-based awards are subject to a performance
metric. The performance metric is based on our compound annual
revenue growth rate, compared to a benchmark group of
companies. The performance/service-based units award common
stock in a range of zero to 200 percent for each unit granted based
on the level of the metric achieved.
The fair value of stock options and restricted stock units is
determined using our closing price on the grant date. These
awards are expensed over the shorter of the award vesting period
or the employee’s retirement eligibility period. The
performance/service-based units’ expense is adjusted quarterly for
the probable number of shares to be awarded. We recognize the
effect of award forfeitures as an adjustment to compensation
expense in the period the forfeiture occurs.
2023, the notional value of these guarantees was $239. We may
repossess the equipment collateralizing the receivables. At
October 29, 2023, the accrued losses under these guarantees
were not material.
We also had other miscellaneous contingent liabilities totaling
approximately $105 at October 29, 2023. The accrued liability for
these contingencies was not material.
At October 29, 2023, we had commitments of approximately $634
for the construction and acquisition of property and equipment.
We have commitments to extend credit to customers. The
commitments are in the form of lines of credit and other pre-
approved credit arrangements. We have the right to cancel or
amend the terms of these commitments at any time. These
commitments are not expected to be fully drawn upon;
therefore, the total commitment amounts likely do not represent
a future cash requirement. The commitments to extend credit at
October 29, 2023 were:
• $9.3 billion to John Deere dealers, and
• $32.4 billion to retail customers.
We are subject to various unresolved legal actions. The accrued
losses on these matters are not material. We believe the
reasonably possible range of losses for these unresolved legal
actions would not have a material effect on our financial
statements. The most prevalent legal claims relate to:
• product liability (including asbestos-related matters),
• retail credit,
• employment,
• patent,
• trademark, and
• antitrust matters.
21. CAPITAL STOCK
Our stock is listed on the New York Stock Exchange under the
symbol “DE.” At the end of 2023, there were 17,158 holders of record
of our common stock.
The number of common shares we are authorized to issue is
1.2 billion. The common shares issued at October 29, 2023,
October 30, 2022, and October 31, 2021 were 536.4 million.
281.6 million common shares were outstanding at October 29, 2023,
with the remainder held in treasury stock.
The number of authorized preferred shares is 9 million. No
preferred shares have been issued.
In December 2022, the Board of Directors authorized the
repurchase of up to $18.0 billion of common stock. At the end of
fiscal year 2023, this repurchase program had $13.0 billion
(35.9 million shares based on our fiscal year end closing NYSE
common stock price of $361.15 per share) remaining to be
repurchased. Repurchases of our common stock under this plan
are made from time to time, at our discretion, in the open market.
70
The total share-based compensation expense, recognized income
tax benefits, and total grant-date fair values of stock options and
restricted stock units vested consisted of the following:
Share-based compensation expense $
Income tax benefits
Stock options and restricted stock
units vested
22023
22022
22021
130 $
21
85 $
17
84
74
82
16
93
Restricted Stock Units
The weighted-average grant date fair values were as follows:
Service-based
Performance/service-based
$
22023
428.35 $
424.93
22022
347.59 $
331.47
22021
258.86
245.73
Our restricted stock units at October 29, 2023 and changes during
2023 in dollars and thousands of shares follow:
At October 29, 2023, there was $93 of total unrecognized
compensation cost from share-based compensation
arrangements. This compensation is expected to be recognized
over a weighted-average period of approximately 1.5 years.
Stock Options
The fair value of each stock option award was estimated on the
date of grant using a binomial lattice option valuation model. The
assumptions used for the binomial lattice model to determine the
fair value of options follow:
Risk-free interest rate*
Expected dividends
Volatility*
Expected term (in years)*
* Weighted-averages
2023 2022 2021
1.27%
1.2%
32.0%
5.1
2.68%
1.1%
33.0%
5.1
.47%
1.2%
31.0%
5.5
The risk-free rates are based on U.S. Treasury security yields at the
time of grant. Expected volatilities are based on implied volatilities
from traded call options on our stock. We use historical data to
estimate option exercise behavior representing the weighted-
average period that options granted are expected to be
outstanding.
The activity for outstanding stock options at October 29, 2023, and
changes during 2023 follow:
Service-based
Nonvested at beginning of year
Granted
Vested
Forfeited
Nonvested at end of year
Performance/service based
Nonvested at beginning of year
Granted
Vested
Performance change
Nonvested at end of year
* Weighted-averages
Shares
Grant-Date
Fair Value*
404 $
126
(211)
(9)
310
251.42
428.35
211.03
333.29
348.82
143
41
(130)
65
119
227.70
424.93
160.81
160.81
331.78
23. OTHER COMPREHENSIVE INCOME ITEMS
The after-tax components of accumulated other comprehensive
income (loss) follow:
Retirement benefits adjustment
Cumulative translation adjustment
Unrealized gain (loss) on derivatives
Unrealized gain (loss) on debt securities
Total accumulated other
$
22023
(845) $
(2,151)
(8)
(110)
22021
22022
(389) $ (1,034)
(1,478)
(42)
15
(2,594)
21
(94)
comprehensive income (loss)
$
(3,114) $ (3,056) $ (2,539)
Exercise
Shares Price*
(millions) (per share)
Outstanding at
beginning of year
Granted
Exercised
Outstanding at end of year
Exercisable at end of year
* Weighted-averages
2.0 $
153.11
.2 438.44
(.5)
118.54
1.7 190.08
144.71
1.3
Remaining Aggregate
Contractual Intrinsic
Term
(years)
Value
(millions)
4.62 $
3.66
302.3
292.3
The amounts related to stock options were as follows in millions of
dollars unless otherwise noted:
22023
22022
22021
Weighted-average grant date
fair value (per share)
$
Intrinsic value of options exercised
Cash received from exercises
Tax benefit from exercises
136.46 $
153
60
34
89.20 $
169
63
39
62.73
318
148
71
71
The following tables reflect amounts recorded in other
comprehensive income (loss), as well as reclassifications out of
other comprehensive income (loss).
Tax
After
(Expense) Tax
Before
Tax
Amount Credit
Amount
2023
Cumulative translation adjustment
Unrealized translation gain (loss)
Reclassification of realized (gain) loss to:
$
SA&G expenses
Other operating expenses
Net unrealized translation gain (loss)
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest
expense
Net unrealized gain (loss) on derivatives
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)
Net unrealized gain (loss) on debt
securities
Retirement benefits adjustment:
Net actuarial gain (loss)
Reclassification to Other operating
expenses through amortization of:
424 $
(2) $ 422
10
11
445
10
11
443
(2)
25
(5)
20
(62)
(37)
13
8
(49)
(29)
(20)
4
(16)
(20)
4
(16)
(589)
139
(450)
Actuarial (gain) loss
Prior service (credit) cost
Settlements
(81)
37
37
20
(9)
(10)
(61)
28
27
Net unrealized gain (loss) on retirement
benefits adjustment
Total other comprehensive income (loss)
(596)
$ (208) $
140
(456)
150 $ (58)
Tax
After
(Expense) Tax
Before
Tax
Amount Credit
Amount
$ (1,105) $
(11) $ (1,116)
89
(19)
70
(9)
80
2
(17)
(7)
63
(140)
30
(110)
1
1
(139)
30
(109)
1,192
(517)
(298)
124
894
(393)
2022
Cumulative translation adjustment
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest
expense
Net unrealized gain (loss) on derivatives
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)
Reclassification of realized (gain) loss –
Other income
Net unrealized gain (loss) on debt
securities
Retirement benefits adjustment:
Net actuarial gain (loss)
Prior service credit (cost)
Reclassification to Other operating
expenses through amortization of:
Actuarial (gain) loss
Prior service (credit) cost
Settlements/curtailment
116
30
45
(29)
(7)
(11)
87
23
34
Net unrealized gain (loss) on retirement
benefits adjustment
Total other comprehensive income (loss)
866
$ (298) $
(221)
(219) $
645
(517)
Tax
After
(Expense) Tax
Before
Tax
Amount Credit
Amount
$
112
$
112
6
118
6
118
8 $
(2)
6
13
21
(3)
(5)
10
16
(21)
3
(18)
(21)
3
(18)
3,492
(845) 2,647
2021
Cumulative translation adjustment:
Unrealized translation gain (loss)
Reclassification of realized (gain) loss to:
Equity in (income) loss of
unconsolidated affiliates
Net unrealized translation gain (loss)
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest
expense
Net unrealized gain (loss) on derivatives
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)
Net unrealized gain (loss) on debt
securities
Retirement benefits adjustment:
Net actuarial gain (loss)
Reclassification to Other operating
expenses through amortization of:
Actuarial (gain) loss
Prior service (credit) cost
Settlements
283
8
22
(69)
(2)
(5)
214
6
17
Net unrealized gain (loss) on retirement
benefits adjustment
Total other comprehensive income (loss)
3,805
$ 3,923 $
(921) 2,884
(923) $ 3,000
72
24. LEASES
We are both a lessee and a lessor. We lease for our own use
warehouse facilities, office space, production equipment,
information technology equipment, and vehicles. The financial
services operations lease equipment produced or sold by us and a
limited amount of other equipment to retail customers. We
determine if an arrangement is or contains a lease at the contract
inception.
Lessee
The amounts of the lease liability and right of use asset are
determined at lease commencement and are based on the present
value of the lease payments over the lease term. The lease
payments are discounted using our incremental borrowing rate
since the rate implicit in the lease is not readily determinable. We
determine the incremental borrowing rate for each lease based on
the lease term and the economic environment of the country
where the asset will be used, adjusted as if the borrowings were
collateralized. Leases with contractual periods greater than one
year and that do not meet the finance lease criteria are classified as
operating leases.
We have elected to combine lease and nonlease components, such
as maintenance and utilities costs included in a lease contract, for
all asset classes. Leases with an initial term of one year or less are
expensed on a straight-line basis over the lease term and recorded
in short-term lease expense. Variable lease expense includes
warehouse facilities leases with payments based on utilization
exceeding contractual minimum amounts and leases with
payments indexed to inflation when the index changes after lease
commencement.
The lease expense by type consisted of the following:
Operating lease expense
Short-term lease expense
Variable lease expense
Finance lease:
Depreciation expense
Interest on lease liabilities
Total lease expense
22023
22022
22021
$
129 $
49
80
114 $
55
74
116
29
53
28
2
288 $
26
1
270 $
26
1
225
$
Operating and finance lease right of use assets and lease liabilities
follow:
Operating leases:
Other assets
Accounts payable and accrued expenses
22023
22022
$
283 $
281
299
302
Finance leases:
Property and equipment — net
$
66 $
49
Short-term borrowings
Long-term borrowings
Total finance lease liabilities
$
25
49
74 $
21
30
51
The weighted-average remaining lease terms in years and discount
rates follows:
Weighted-average remaining lease terms:
Operating leases
Finance leases
Weighted-average discount rates:
Operating leases
Finance leases
22023
22022
7
4
7
3
3.1%
3.6%
2.4%
1.9%
Lease payment amounts in each of the next five years at
October 29, 2023 follow:
Due in:
2024
2025
2026
2027
2028
Later years
Operating
Leases
$
Finance
Leases
103 $
71
36
24
22
45
301
20
281 $
27
22
14
8
3
6
80
6
74
Total lease payments
Less: imputed interest
Total lease liabilities
$
Cash paid for amounts included in the measurement of lease
liabilities follows:
Operating cash flows for operating leases
Operating cash flows for finance leases
Financing cash flows for finance leases
22023 22022 22021
$
132 $
2
31
127 $ 104
1
25
1
28
Right of use assets obtained in exchange for lease liabilities follow:
Operating leases
Finance leases
22023
22022
$
97 $
54
135
17
Lessor
We lease equipment manufactured by us through John Deere
Financial. Sales-type and direct financing leases are reported in
“Financing receivables (cid:3013) net.” Operating leases are reported in
“Equipment on operating leases (cid:3013) net.”
At the end of the majority of leases, the lessee has the option to
purchase the underlying equipment for the contractual residual
value or return it to the dealer. If the equipment is returned to the
dealer, the dealer also has the option to purchase the equipment or
return it to us for remarketing.
We estimate the residual values for operating leases at lease
inception based on several factors, including lease term, expected
hours of usage, historical wholesale sale prices, return experience,
intended use of the equipment, market dynamics and trends, and
dealer residual guarantees. We review residual value estimates
during the lease term and test the carrying value of our operating
lease assets for impairment when events or circumstances
necessitate. The depreciation is adjusted on a straight-line basis
over the remaining lease term if residual value estimates change.
Lease agreements include usage limits and specifications on
73
machine condition, which allow us to assess lessees for excess use
or damages to the underlying equipment.
We have elected to combine lease and nonlease components. The
nonlease components relate to preventative maintenance and
extended warranty agreements financed by the retail customer. We
have also elected to report consideration related to sales and value
added taxes net of the related tax expense. Property taxes on
leased assets are recorded on a gross basis in “Finance and interest
income” and “Other operating expenses.” Variable lease revenues
relate to property taxes on leased assets in certain markets and late
fees.
Lease revenues earned by us follow:
The cost of equipment on operating leases by market follow:
Agriculture and turf
Construction and forestry
Total
Less: accumulated depreciation
Equipment on operating leases - net
Operating lease residual values
First-loss residual value guarantees
$
$
$
22023
7,168 $
1,212
8,380
(1,463)
6,917 $
4,864 $
1,188
22022
6,912
1,342
8,254
(1,631)
6,623
4,640
1,025
The equipment is depreciated on a straight-line basis over the term
of the lease. The corresponding depreciation expense was $853 in
2023, $827 in 2022, and $983 in 2021.
22021
Lease payments for operating leases are scheduled as follows:
Sales-type and direct finance lease revenues $
Operating lease revenues
Variable lease revenues
Total lease revenues
22023
22022
154 $
1,318
26
165 $
1,312
16
145
1,423
30
$ 1,493 $ 1,498 $ 1,598
At the time of accepting a lease that qualifies as a sales-type or
direct financing lease, we record the gross amount of lease
payments receivable, estimated residual value of the leased
equipment, and unearned finance income. The unearned finance
income is recognized as revenue over the lease term using the
interest method.
Sales-type and direct financing lease receivables by market follow:
Agriculture and turf
Construction and forestry
Total
Guaranteed residual values
Unguaranteed residual values
Less: unearned finance income
Financing lease receivables
$
2023
1,078 $
1,048
2,126
723
57
(350)
$ 2,556 $
2022
1,118
1,167
2,285
491
56
(285)
2,547
Scheduled payments, including guaranteed residual values, on
sales-type and direct financing lease receivables at October 29,
2023 follow:
Due in:
2024
2025
2026
2027
2028
Later years
Total
22023
1,453
642
378
214
142
20
2,849
$
$
Lease payments from operating leases are recorded as income on a
straight-line method over the lease terms. Operating lease assets
are recorded at cost and depreciated to their estimated residual
value on a straight-line method over the terms of the leases.
74
Due in:
2024
2025
2026
2027
2028
Later years
Total
22023
1,044
797
490
258
65
10
2,664
$
$
25. 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, we use various methods including market and
income approaches. We utilize 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.
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 us 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.
The fair values of financial instruments that do not approximate
the carrying values at October 29, 2023 and October 30, 2022
follow:
22023
22022
Carrying Fair Carrying Fair
Value
Value*
Value*
Value
Financing receivables – net $ 43,673 $ 42,777 $ 36,634 $ 35,526
Financing receivables
securitized – net
5,936
7,056
7,335
5,698
Short-term securitization
borrowings
6,995
6,921
5,711
5,577
Long-term borrowings due
within one year**
Long-term borrowings**
8,331
7,322
38,428 36,873 33,566 31,852
7,466
8,156
* Fair value measurements above were Level 3 for all financing receivables and
Level 2 for all borrowings.
** Values exclude finance lease liabilities that are presented as borrowings (see
Note 24).
Assets and liabilities measured at October 29, 2023 and October 30,
2022 at fair value on a recurring basis follow, excluding our cash
equivalents, which were carried at a cost that approximates fair
value and consisted of money market funds and time deposits:
2023 2022
Level 1:
Marketable securities
International equity securities
International mutual funds securities
U.S. equity fund
U.S. fixed income fund
U.S. government debt securities
Total Level 1 marketable securities
$
3 $
3
101
86
32
78
300
70
62
135
Level 2:
Marketable securities
Corporate debt securities
International debt securities
Mortgage-backed securities*
Municipal debt securities
U.S. government debt securities
Total Level 2 marketable securities
Other assets - Derivatives
Accounts payable and accrued expenses -
Derivatives
Level 3:
Accounts payable and accrued expenses –
Deferred consideration
* Primarily issued by U.S. government sponsored enterprises.
244
1
185
75
141
646
292
200
60
155
63
121
599
373
1,130
1,231
Fair value, nonrecurring level 3 measurements from impairments at
October 29, 2023 and October 30, 2022 follow:
Fair Value
2023 2022 1 2023 2022 2021
Losses
Inventories
Property and equipment – net
Other intangible assets – net
Other assets
$
19
15
$ 19
41 $ 44
28
6
1 Related to assessments on the Russian operations, performed at May 1, 2022 and
updated on July 31, 2022 and October 30, 2022.
The following is a description of the valuation methodologies we
use to measure certain financial instruments on the balance sheets
at fair value. For more information on asset impairments, see
Note 4.
Marketable securities – The portfolio of investments is 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 valued
using the fund’s net asset value, based on the fair value of the
underlying securities.
Derivatives – Our 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 (see Note 11).
Inventories – The 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, or quoted prices when available.
Other intangible assets – net – In 2022, we considered external
valuations based on our probability weighted cash flow analysis.
186
236
Other assets – In 2021, the impairments were measured at the fair
value of a right of use operating lease asset.
75
26. DERIVATIVE INSTRUMENTS
Fair values of our derivative instruments and the associated
notional amounts at the end of 2023 and 2022 were as follows.
Assets are recorded in “Other assets,” while liabilities are recorded
in “Accounts payable and accrued expenses.”
Fair Value
Notional
Assets
Liabilities
2023
Cash flow hedges:
Interest rate contracts
$
1,500 $
45
The classification and gains (losses), including accrued interest
expense, related to derivative instruments on the statements of
consolidated income consisted of the following:
Fair Value Hedges
Interest rate contracts – Interest expense
$ (542) $(1,144) $ (236)
2023 2022 2021
Cash Flow Hedges
Recognized in OCI:
Interest rate contracts – OCI (pretax)
$
25 $ 89 $
8
Reclassified from OCI:
Interest rate contracts – Interest expense
62
9
(13)
12,691
$
970
13,853
8,117
169
75
176
3
98
54
8
Not Designated as Hedges
Interest rate contracts – Net sales
Interest rate contracts – Interest expense
Foreign exchange contracts – Net sales
Foreign exchange contracts – Cost of sales
Foreign exchange contracts – Other
operating expenses
Total not designated
$
1 $
40
(6)
8
53 $
81
(6)
(64)
13
14
(101)
100
402
(262)
143 $ 466 $ (336)
$
Fair value hedges:
Interest rate contracts
Not designated as hedging
instruments:
Interest rate contracts
Foreign exchange contracts
Cross-currency interest rate
contracts
2022
Cash flow hedges:
Interest rate contracts
$
1,950 $
87
Fair value hedges:
Interest rate contracts
Not designated as hedging
instruments:
Interest rate contracts
Foreign exchange contracts
Cross-currency interest rate
contracts
10,112
$
1,004
10,568
8,185
212
66
260
8
107
118
2
The amounts recorded, at October 29, 2023 and October 30, 2022,
in the consolidated balance sheets related to borrowings designated
in fair value hedging relationships were as follows. Fair value
hedging adjustments are included in the carrying amount of the
hedged item.
Discontinued Hedging
Relationships
Active Hedging
Relationships
Carrying Cumulative
Cumulative
Amount of Fair Value Amount of Fair Value
Hedging
Hedged
Item
Hedged Item Amount
Hedging
Amount
Formerly
Carrying
2023
Short-term borrowings
Long-term borrowings $ 11,660 $
2022
Short-term borrowings
$
Long-term borrowings $ 9,060 $ (1,006)
$
(976)
1,814 $
7,144
15
(288)
2,515 $
5,520
15
(19)
The amount of gain recorded in OCI at October 29, 2023 that is
expected to be reclassified to “Interest expense” or “Other operating
expenses” in the next twelve months if interest rates or exchange
rates remain unchanged is $31 after-tax. There were no gains or
losses reclassified from OCI to earnings based on the probability that
the original forecasted transaction would not occur.
Counterparty Risk and Collateral
Derivative instruments are subject to significant concentrations of
credit risk to the banking sector. We manage 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 us 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 our derivative agreements contain credit support
provisions that may require us 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 October 29, 2023 and
October 30, 2022, was $1.1 billion and $1.1 billion, respectively. In
accordance with the limits established in these agreements, we
posted $659 of cash collateral at October 29, 2023 and $701 at
October 30, 2022. In addition, we paid $8 of collateral that was
outstanding at both October 29, 2023 and October 30, 2022 to
participate in an international futures market to hedge currency
exposure, not included in the table below.
76
Identifiable assets assigned to the operating segments are those
the units actively manage, consisting of trade receivables,
inventories, property and equipment, intangible assets, and certain
other assets. Corporate assets are managed collectively, including
cash and cash equivalents, retirement benefit net assets, goodwill,
and deferred income tax assets.
Information relating to operations by operating segment follows
for the years ended October 29, 2023, October 30, 2022, and
October 31, 2021.
2023
2022
2021
OPERATING SEGMENTS
Net sales and revenues
Unaffiliated customers:
Production & precision ag net sales
Small ag & turf net sales
Construction & forestry net sales
Financial services revenues
Other revenues*
$ 26,790 $ 22,002 $ 16,509
11,860
11,368
3,548
739
$ 61,251 $ 52,577 $ 44,024
* Other revenues are primarily the production and precision ag, small ag and turf,
and construction and forestry revenues for finance and interest income and
other income.
13,980
14,795
4,721
965
13,381
12,534
3,625
1,035
Total
Operating profit
Production & precision ag
Small ag & turf
Construction & forestry
Financial services*
Total operating profit*
Interest income
Interest expense
Foreign exchange gain (loss) from
equipment operations’ financing
activities
Pension and OPEB benefit (cost),
excluding service cost component
Corporate expenses – net
Income taxes
Total
Net income
Less: Net income (loss) attributable to
noncontrolling interests
Net income attributable to
$ 6,996 $ 4,386 $ 3,334
2,045
2,472
1,489
2,695
1,144
795
8,012
12,958
82
559
(368)
(411)
1,949
2,014
1,159
9,508
159
(390)
(114)
(103)
(45)
286
(252)
(2,871)
(2,803)
10,155
218
(255)
(2,007)
(2,378)
7,130
183
(241)
(1,658)
(2,047)
5,965
(11)
(1)
2
Deere & Company
$ 10,166 $ 7,131 $ 5,963
* Operating profit of the financial services business segment includes the effect of
its interest expense and foreign exchange gains or losses.
Derivatives are recorded without offsetting for netting
arrangements or collateral. The impact on the derivative assets and
liabilities related to netting arrangements and collateral at
October 29, 2023 and October 30, 2022 follows:
Gross Amounts
Recognized
Netting
Net
Arrangements Collateral Amount
2023
Assets
Liabilities
2022
Assets
Liabilities
$
$
27. SEGMENT DATA
292 $
1,130
373 $
1,231
(152)
(152) $
$
(659)
(179) $
(179)
(54) $
(701)
140
319
140
351
Our operations are presently organized and reported in four
business segments. This presentation is consistent with how the
chief operating decision maker (the CEO) assesses the
performance of the segments and makes decisions about resource
allocations.
The PPA segment defines, develops, and delivers global equipment
and technology solutions to unlock customer value for production-
scale growers of large grains, small grains, cotton, and sugarcane.
The main products include large and certain mid-size tractors,
combines, cotton pickers, sugarcane harvesters and loaders, and
soil preparation, seeding, application, and crop care equipment.
The SAT segment defines, develops, and delivers global equipment
and technology solutions to unlock customer value for dairy and
livestock producers, high-value crop producers, and turf and utility
customers. The segment’s primary products include certain mid-
size, utility, and compact utility tractors, as well as hay and forage
equipment, riding and commercial lawn equipment, golf course
equipment, and utility vehicles.
The CF segment defines, develops, and delivers a broad range of
machines and technology solutions organized along the
earthmoving, forestry, and roadbuilding production systems. The
segment’s primary products include crawler dozers and loaders,
four-wheel-drive loaders, excavators, skid-steer loaders, milling
machines, and log harvesters.
The products and services produced by the segments above are
marketed through independent retail dealer networks and major
retail outlets. For roadbuilding products in certain markets outside
the U.S. and Canada, the products are sold through company-
owned sales and service subsidiaries.
The financial services segment finances sales and leases by John
Deere dealers of new and used production and precision
agriculture equipment, small agriculture and turf equipment, and
construction and forestry equipment. In addition, the financial
services segment provides wholesale financing to dealers of the
foregoing equipment, finances retail revolving charge accounts,
and offers extended equipment warranties.
Because of integrated manufacturing operations and common
administrative and marketing support, a substantial number of
allocations must be made to determine operating segment data.
77
OPERATING SEGMENTS
Interest income*
Production & precision ag
Small ag & turf
Construction & forestry
Financial services
Corporate
Intercompany
Total
2023
2022
2021
28. SUBSEQUENT EVENT
On December 6, 2023, a quarterly dividend of $1.47 per share was
declared at the Board of Directors meeting, payable on February 8,
2024 to stockholders of record on December 29, 2023.
$
$
21
22 $
29 $
21
24
35
10
8
13
1,999
2,245
3,731
82
159
559
(1,008)
(279)
(431)
3,359 $ 2,027 $ 1,854
* Does not include finance rental income for equipment on operating leases.
Interest expense
Production & precision ag
Small ag & turf
Construction & forestry
Financial services
Corporate
Intercompany
Total
$
282 $
236
169
2,362
411
(1,007)
84
87
46
687
368
(279)
$ 2,453 $ 1,062 $ 993
122 $
105
72
799
390
(426)
Depreciation* and amortization expense
Production & precision ag
$
Small ag & turf
Construction & forestry
Financial services
Intercompany
Total
581 $
241
301
1,016
(135)
523 $ 495
245
236
303
282
1,140
1,050
(133)
(196)
$ 2,004 $ 1,895 $ 2,050
* Includes depreciation for equipment on operating leases.
Identifiable operating assets
Production & precision ag
Small ag & turf
Construction & forestry
Financial services
Corporate
Total
Capital additions
Production & precision ag
Small ag & turf
Construction & forestry
Financial services
Total
$ 8,734 $ 8,414 $ 7,021
3,959
6,457
51,624
15,053
$ 104,087 $ 90,030 $ 84,114
4,451
6,754
58,864
11,547
4,348
7,139
70,732
13,134
$
$
896 $
386
311
4
1,597 $
649 $
329
217
2
1,197 $
458
253
183
3
897
78
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Deere & Company:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Deere & Company and subsidiaries (the "Company") as of
October 29, 2023 and October 30, 2022, the related statements of consolidated income, consolidated comprehensive income,
changes in consolidated stockholders’ equity and consolidated cash flows for each of the three years in the period ended October 29,
2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of October 29, 2023 and October 30, 2022, and the results of its
operations and its cash flows for each of the three years in the period ended October 29, 2023, in conformity with accounting
principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the Company's internal control over financial reporting as of October 29, 2023, based on criteria established in Internal Control —
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated
December 15, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the
Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or
fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current(cid:4136)period audit of the financial statements that were
communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the
financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical
audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Sales Incentives — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company provides retail discount or financing sales incentives programs to dealers that are due when the dealer sells the equipment to
a retail customer.
The estimated cost of these programs is based on:
•
•
•
•
historical data,
announced and expected incentive programs,
field inventory levels, and
forecasted sales volumes.
At the time a sale is recognized, the Company records an estimate of the sales incentive costs. The final cost is determined at the time of
the retail sale.
There are numerous programs available at any time, and new programs may be announced after the Company records the equipment sale
to the dealer. Changes in the mix and types of sales incentive programs affect these estimates, which are reviewed quarterly. Actual cost
differences from the original cost estimate are recognized in “Net sales.” A key assumption is the predictive value of the historical
percentage of retail sales incentive costs to retail sales.
We identified the United States and Canada sales incentive accrual as a critical audit matter because estimating sales incentive costs
requires significant judgment by management and changes in historical percentage of sales incentive costs to retail sales by dealers could
have a material impact on the sales incentive accrual. Auditing management’s assumptions about the predictive nature of historical sales
incentive costs involves a high degree of auditor judgment and an increased extent of effort to evaluate the reasonableness of
management’s estimates.
79
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to testing management’s assumption that historical sales incentive costs are predictive of future
incentive costs included the following, among others:
• We tested the effectiveness of management’s controls over the assumptions used to estimate the sales incentive accrual.
• We evaluated management’s ability to accurately forecast future incentive costs by performing a retrospective review that
involved comparing actual incentive costs to management’s historical forecasts.
• We tested the completeness of the population used in the accrual calculation by inspecting incentive program
communications to dealers to ensure programs offered were appropriately included in the calculation. We tested the
accuracy of sales incentives transactions by verifying amounts settled with dealers.
• We evaluated the reasonableness of management’s assumption that historical sales incentive costs are predictive of future
incentive costs by:
o Considering the impact of changes in the current economic conditions and competitive environment.
o Comparing historical and current sales incentive data for eligible products in the following manner:
Type and number of programs
(cid:131)
(cid:131) Geography
(cid:131)
Program size and duration
Allowance for Credit Losses – Refer to Notes 2 and 11 to the financial statements
Critical Audit Matter Description
The allowance for credit losses is an estimate of the credit losses expected over the life of the Company’s receivable portfolio. The
allowance is measured on a collective basis for receivables with similar risk characteristics. Receivables that do not share risk
characteristics are evaluated on an individual basis. Risk characteristics include:
finance product category,
•
• market,
•
•
•
geography,
credit risk, and
remaining balance.
The Company utilizes loss forecast models to estimate expected credit losses. Transition matrix models are used for large and complex
retail customer receivable pools. These models are used for more than 90 percent of retail customer receivables. Historical portfolio
performance and current delinquency levels are used to forecast future defaults. Estimated recovery rates are applied to the estimated
default balance to calculate the expected credit losses.
The model output is adjusted for forecasted economic conditions, which may include the following economic indicators:
•
•
•
•
commodity prices,
industry equipment sales,
unemployment rates, and
housing starts.
Management reviews each model’s output quarterly, and qualitative adjustments are incorporated as necessary.
We identified the allowance for credit losses estimated for the Company’s United States and Canada receivable portfolios by the
transition matrix models and related reasonable and supportable forecasts and qualitative adjustments as a critical audit matter
because determining the appropriate methodology and assumptions used in the estimate requires significant judgment by
management. Given the subjective nature and judgment applied by management to determine the allowance for credit losses, auditing
the methodology and assumptions requires a high degree of auditor judgment and an increased extent of effort, including the need to
involve credit specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures to test the allowance for credit losses estimated for the Company’s United States and Canada receivable
portfolios by the transition matrix models and related reasonable and supportable forecasts and qualitative adjustments included
the following, among others:
(cid:131) We tested the effectiveness of management’s controls over the methodology, data and assumptions used to estimate the
allowance for credit losses.
(cid:131) We tested the accuracy and evaluated the relevance of the underlying historical data used in the Company’s transition
matrix models.
80
(cid:131) With the assistance of our credit specialists, we evaluated the reasonableness and accuracy of the transition matrix models
used to estimate the allowance for credit losses, including model assumptions and the selection and application of relevant
risk characteristics and use of qualitative adjustments.
(cid:131) We evaluated qualitative adjustments to the model estimate. Our evaluation included:
o Comparison of qualitative factors used by the Company to source data provided by the Company and/or to
externally available data.
o Consideration and evaluation of contradictory evidence.
(cid:131) We evaluated management’s ability to accurately forecast credit losses by performing a retrospective review, which
involved comparing actual credit losses to historical estimates.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
December 15, 2023
We have served as the Company’s auditor since 1910.
81
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Deere & Company:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Deere & Company and subsidiaries (the “Company”) as of October 29,
2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of October 29, 2023, based on criteria established in Internal Control — Integrated Framework (2013)
issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the consolidated financial statements as of and for the year ended October 29, 2023 of the Company and our report dated December
15, 2023, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial
Reporting appearing under Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
December 15, 2023
82
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
4.6
Index to Exhibits
Certificate of Incorporation (Exhibit 3.1 to Form 10-Q of registrant for the quarter ended July 28, 2019, Securities and
Exchange Commission File Number 1-4121*)
Certificate of Designation Preferences and Rights of Series A Participating Preferred Stock (Exhibit 3.2 to Form 10-K of
registrant for the year ended October 31, 1998, Securities and Exchange Commission File Number 1-4121*)
Bylaws, as amended (Exhibit 3.2 to Form 10-Q of registrant for the quarter ended July 30, 2023, Securities and Exchange
Commission File Number 1-4121*)
Form of common stock certificate (Exhibit 4.6 to Form 10-K of registrant for the year ended October 31, 1998, Securities
and Exchange Commission File Number 1-4121*)
Indenture, dated September 25, 2008, between the registrant and The Bank of New York Mellon, as Trustee (Exhibit 4.1 to
the registration statement on Form S-3ASR no. 333-153704 filed September 26, 2008, Securities and Exchange
Commission File Number 1-4121*)
Indenture, dated June 15, 2020, among Deere Funding Canada Corporation, as issuer, the registrant, as guarantor, and The
Bank of New York Mellon, as Trustee (Exhibit 4.3 to the registration statement on Form S-3ASR no. 333-239165 filed
June 15, 2020, Securities and Exchange Commission File Number 1-4121*)
Terms and Conditions of the Euro Medium Term Notes, published March 31, 2022, applicable to the U.S.
$6,000,000,000 Euro Medium Term Note Programme of the registrant, John Deere Capital Corporation, John Deere Bank
S.A., and John Deere Cash Management (Exhibit 4.5 to Form 10-K of registrant for the year ended October 30, 2022.
Securities and Exchange Commission File Number 1-4121*)
Description of Deere & Company’s Common Stock (Exhibit 4.4 to Form 10-K of registrant for the year ended November 3,
2019, Securities and Exchange Commission File number 1-4121*)
Description of Deere & Company’s 6.55% Debentures Due 2028 (Exhibit 4.6 to Form 10-K of registrant for the year ended
November 3, 2019, Securities and Exchange Commission File Number 1-4121*)
Certain instruments relating to long-term debt constituting less than 10 percent of the registrant’s total assets are not filed as exhibits
herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. The registrant will furnish copies of such instruments to the Commission
upon request.
10.1
10.2
10.3
10.4
10.5
Agreement, as amended November 1, 1994, between the registrant and John Deere Capital Corporation concerning
agricultural retail notes (Exhibit 10.1 to Form 10-K of registrant for the year ended October 31, 1998, Securities and
Exchange Commission File Number 1-4121*)
Agreement, as amended November 1, 1994, between the registrant and John Deere Capital Corporation concerning lawn
and grounds care retail notes (Exhibit 10.2 to Form 10-K of registrant for the year ended October 31, 1998, Securities and
Exchange Commission File Number 1-4121*)
Agreement, as amended November 1, 1994, between John Deere Construction Equipment Company and John Deere
Capital Corporation concerning construction retail notes (Exhibit 10.3 to Form 10-K of registrant for the year ended
October 31, 1998, Securities and Exchange Commission File Number 1-4121*)
Agreement, dated July 14, 1997, between John Deere Construction Equipment Company and John Deere Capital
Corporation concerning construction retail notes (Exhibit 10.4 to Form 10-K of registrant for the year ended October 31,
2003, Securities and Exchange Commission File Number 1-4121*)
Second Amended Agreement, dated March 27, 2023, between the registrant and John Deere Capital Corporation relating
to fixed charges ratio, ownership, and minimum net worth of John Deere Capital Corporation (Exhibit 10.4 to Form 10-Q of
registrant for the quarter ended April 30, 2023, Securities and Exchange Commission File Number 1-4121*)
83
10.6†
Deere & Company Voluntary Deferred Compensation Plan, as amended October 31, 2023
10.7†
10.8†
10.9†
John Deere Short-Term Incentive Bonus Plan, as amended October 27, 2023 (Exhibit 10.1 to Form 8-K of registrant filed
October 30, 2023, Securities and Exchange Commission File Number 1-4121*)
John Deere Long-Term Incentive Cash Plan (Appendix C to Proxy Statement of registrant filed January 12, 2018, Securities
and Exchange Commission File Number 1-4121*)
John Deere Omnibus Equity and Incentive Plan, as amended February 25, 2015 (Appendix D to Proxy Statement of
registrant filed January 14, 2015, Securities and Exchange Commission File Number 1-4121*)
10.10†
Form of Terms and Conditions for John Deere Nonqualified Stock Options granted fiscal 2023
10.11†
Form of Terms and Conditions for John Deere Restricted Stock Units and Performance Stock Units granted fiscal 2023
10.12†
10.13†
10.14†
10.15†
Form of Terms and Conditions for John Deere Nonqualified Stock Options granted fiscal 2022. (Exhibit 10.10 to Form 10-K
of registrant for the year ended October 31, 2022, Securities and Exchange Commission File Number 1-4121*)
Form of Terms and Conditions for John Deere Restricted Stock Units and Performance Stock Units granted fiscal 2022
(Exhibit 10.11 to Form 10-K of registrant for the year ended October 31, 2022, Securities and Exchange Commission File
Number 1-4121*)
Form of Terms and Conditions for John Deere Nonqualified Stock Options granted fiscal 2021 (Exhibit 10.10 to Form 10-K
of registrant for the year ended October 31, 2021, Securities and Exchange Commission File Number 1-4121*)
Form of Terms and Conditions for John Deere Restricted Stock Units and Performance Stock Units granted fiscal 2021
(Exhibit 10.11 to Form 10-K of registrant for the year ended October 31, 2021, Securities and Exchange Commission File
Number 1-4121*)
10.16†
Form of John Deere Restricted Stock Unit Grant for Directors granted fiscal 2023
10.17†
10.18†
Form of John Deere Restricted Stock Unit Grant for Directors (Exhibit 10.13 to Form 10-K of the registrant for the year
ended October 31, 2008, Securities and Exchange Commission File Number 1-4121*)
Form of Terms and Conditions for Deere & Company Nonemployee Director Stock Ownership Plan (Exhibit 10.13 to
Form 10-K of registrant for the year ended October 31, 2021, Securities and Exchange Commission File Number 1-4121*)
10.19†
John Deere Defined Contribution Restoration Plan, as amended October 31, 2023
10.20†
John Deere Supplemental Pension Benefit Plan, as amended December 31, 2020 (Exhibit 10.15 to Form 10-K of registrant
for the year ended October 31, 2021, Securities and Exchange Commission File Number 1-4121*)
10.21†
10.22†
10.23†
John Deere Senior Supplementary Pension Benefit Plan, as amended October 15, 2014 (Exhibit 10.16 to Form 10-K of
registrant for the year ended October 31, 2014, Securities and Exchange Commission File Number 1-4121*)
John Deere ERISA Supplementary Pension Benefit Plan, as amended October 31, 2022 (Exhibit 10.1 to Form 10-Q of
registrant for the quarter ended January 29, 2023, Securities and Exchange Commission File Number 1-4121*)
Deere & Company Nonemployee Director Stock Ownership Plan, as amended February 29, 2012 (Appendix A to Proxy
Statement of registrant filed on January 13, 2012, Securities and Exchange Commission File Number 1-4121*)
10.24†
Deere & Company Nonemployee Director Stock Ownership Plan, February 23, 2022 (Appendix C to Proxy Statement of
registrant filed on January 7, 2022, Securities and Exchange Commission File Number 1-4121*)
10.25†
Deere & Company Nonemployee Director Deferred Compensation Plan, as amended October 31, 2023
84
10.26†
Amended and Restated Change in Control Severance Program of Deere & Company, effective August 29, 2023 (Exhibit 10.1
to Form 10-Q of registrant for the quarter ended July 30, 2023, Securities and Exchange Commission File number 1-4121*)
10.27†
Incentive Compensation Recovery Policy effective August 29, 2023
10.28†
John Deere 2020 Equity and Incentive Plan (Appendix C to Proxy Statement of registrant filed January 10, 2020, Securities
and Exchange Commission File Number 1-4121*)
10.29
10.30
10.31
10.32
10.33
10.34
10.35
21.
22.
23.
24.
31.1
Asset Purchase Agreement, dated October 29, 2001, between the registrant and Deere Capital, Inc. concerning the sale of
trade receivables (Exhibit 10.19 to Form 10-K of registrant for the year ended October 31, 2001, Securities and Exchange
Commission File Number 1-4121*)
Second Amendment, dated February 21, 2020, to the Asset Purchase Agreement dated October 29, 2001, between the
registrant and Deere Capital, Inc. (including conformed copy of the Asset Purchase Agreement as Exhibit A thereto)
(Exhibit 10.1 to Form 10-Q of registrant for the quarter ended February 2, 2020, Securities and Exchange Commission File
Number 1-4121*)
Asset Purchase Agreement, dated October 29, 2001, between John Deere Construction & Forestry Company and Deere
Capital, Inc. concerning the sale of trade receivables (Exhibit 10.20 to Form 10-K of registrant for the year ended
October 31, 2001, Securities and Exchange Commission File Number 1-4121*)
Second Amendment, dated February 21, 2020, to the Asset Purchase Agreement dated October 29, 2001, between John
Deere Construction & Forestry Company and Deere Capital, Inc. (including conformed copy of the Asset Purchase
Agreement as Exhibit A thereto) (Exhibit 10.2 to Form 10-Q of registrant for the quarter ended February 2, 2020, Securities
and Exchange Commission File Number 1-4121*)
2027 Credit Agreement, dated March 27, 2023, among the registrant, John Deere Capital Corporation, John Deere Bank
S.A., various financial institutions, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A. and
Citibank, N.A., as Co-Syndication Agents, and J.P. Morgan Securities LLC, as Sustainability Structuring Agent (Exhibit 10.2
to Form 10-Q of registrant for the quarter ended April 30, 2023, Securities and Exchange Commission File Number 1-4121*)
2028 Credit Agreement, dated March 27, 2023, among the registrant, John Deere Capital Corporation, John Deere Bank
S.A., various financial institutions, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A. and
Citibank, N.A., as Co-Syndication Agents, and J.P. Morgan Securities LLC, as Sustainability Structuring Agent (Exhibit 10.3
to Form 10-Q of registrant for the quarter ended April 30,2023, Securities and Exchange Commission File Number 1-4121*)
364-Day Credit Agreement, dated March 27, 2023, among the registrant, John Deere Capital Corporation, John Deere Bank
S.A., various financial institutions, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America , N.A. and
Citibank, N.A., as Co-Syndication Agents, and J.P. Morgan Securities LLC as Sustainability Structuring Agent (Exhibit 10.1
to Form 10-Q of registrant for the quarter ended April 30, 2023, Securities and Exchange Commission File Number 1-4121*)
Subsidiaries
List of Guarantors and Subsidiary Issuers of Guaranteed Securities
Consent of Deloitte & Touche LLP
Power of Attorney (included on signature page)
Rule 13a-14(a)/15d-14(a) Certification
31.2
Rule 13a-14(a)/15d-14(a) Certification
32.
Section 1350 Certifications (furnished herewith)
101.INS
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags
are embedded within the Inline XBRL document)
85
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
Incorporated by reference.
*
† Management contract or compensatory plan or arrangement.
86
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
DEERE & COMPANY
By:
/s/ John C. May
John C. May
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: December 15, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the date indicated.
Each person signing below also hereby appoints John C. May, Joshua A. Jepsen, and Edward R. Berk, and each of them singly, his or
her lawful attorney-in-fact with full power to execute and file any and all amendments to this report together with exhibits thereto and
generally to do all such things as such attorney-in-fact may deem appropriate to enable Deere & Company to comply with the provisions of
the Securities Exchange Act of 1934 and all requirements of the Securities and Exchange Commission.
Signature
Title
DDate
/s/ Leanne G. Caret
Leanne G. Caret
/s/ Tamra A. Erwin
Tamra A. Erwin
/s/ Alan C. Heuberger
Alan C. Heuberger
/s/ Charles O. Holliday, Jr.
Charles O. Holliday, Jr.
/s/ L. Neil Hunn
L. Neil Hunn
/s/ Joshua A. Jepsen
Joshua A. Jepsen
/s/ Michael O. Johanns
Michael O. Johanns
/s/ Clayton M. Jones
Clayton M. Jones
December 15, 2023
Director
Director
Director
Director
Director
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
Director
Director
87
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
/s/ John C. May
John C. May
/s/ Gregory R. Page
Gregory R. Page
/s/ Sherry M. Smith
Sherry M. Smith
/s/ Dmitri L. Stockton
Dmitri L. Stockton
/s/ Sheila G. Talton
Sheila G. Talton
Chairman and Chief Executive Officer
(Principal Executive Officer)
Director
Director
Director
Director
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
88
EXHIBIT 21
DEERE & COMPANY
AND CONSOLIDATED SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
As of October 29, 2023
Subsidiary companies of Deere & Company are listed below. Except where otherwise indicated, 100 percent
of the voting securities of the companies named is owned directly or indirectly by Deere & Company.
Name of subsidiary
Subsidiaries included in consolidated financial statements *
Deere Credit Services, Inc.
Hamm AG
John Deere Asia (Singapore) Private Limited
John Deere Brasil Ltda.
John Deere Canada ULC
John Deere Capital Corporation
John Deere Cash Management
John Deere Construction & Forestry Company
John Deere GmbH & Co. KG
John Deere Holding (Barbados) SRL
John Deere Holding France S.A.S.
John Deere India Private Limited
John Deere International Manufacturing S.à.r.l.
John Deere Limited
John Deere Limited
John Deere Luxembourg Investment S.à.r.l.
John Deere Sales Hispanoamerica, S. de R.L. de C.V.
John Deere Shared Services LLC
John Deere Technologies S.C.S.
John Deere Walldorf GmbH & Co. KG
John Deere Walldorf International GmbH & Co. KG
Joseph Vögele Aktiengesellschaft
Wirtgen GmbH
Wirtgen America, Inc.
____________________________
Organized
under the
laws of
Delaware
Germany
Singapore
Brazil
Canada
Delaware
Luxembourg
Delaware
Germany
Barbados
France
India
Luxembourg
Australia
Scotland
Luxembourg
Mexico
Iowa
Luxembourg
Germany
Germany
Germany
Germany
Tennessee
* One-hundred ninety-six consolidated subsidiaries and twenty-three unconsolidated affiliates, whose
names are omitted, considered in the aggregate as a single subsidiary, would not constitute a
significant subsidiary.
LIST OF SUBSIDIARY ISSUERS OF GUARANTEED SECURITIES
From time to time, the following 100%-owned subsidiaries of Deere & Company, a Delaware corporation (the
“Company”), may issue debt securities that are fully and unconditionally guaranteed by the Company under a registration
statement on Form S-3 filed with the Securities and Exchange Commission.
EXHIBIT 22
Name of Subsidiary Issuer
Deere Funding Canada Corporation
Jurisdiction
Ontario
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-273045 on Form S(cid:4136)3 and Registration
Statement Nos. 333(cid:4136)165069, 333(cid:4136)62669, 333(cid:4136)132013, 333(cid:4136)140980, 333(cid:4136)140981, 333(cid:4136)202299 and 333(cid:4136)236655 on Form S(cid:4136)8 of
our reports dated December 15, 2023, relating to the consolidated financial statements of Deere & Company, and the
effectiveness of Deere & Company’s internal control over financial reporting, appearing in this Annual Report on Form 10(cid:4136)K
for the year ended October 29, 2023.
Exhibit 23
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
December 15, 2023
Exhibit 31.1
CERTIFICATIONS
I, John C. May, certify that:
1.
I have reviewed this annual report on Form 10-K of Deere & Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: December 15, 2023
By:
/s/ John C. May
John C. May
Chairman and Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATIONS
I, Joshua A. Jepsen, certify that:
1.
I have reviewed this annual report on Form 10-K of Deere & Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: December 15, 2023
By:
/s/ Joshua A. Jepsen
Joshua A. Jepsen
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
STATEMENT PURSUANT TO
18 U.S.C. SECTION 1350
AS REQUIRED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32
In connection with the Annual Report of Deere & Company (the “Company”) on Form 10-K for the period ended October 29,
2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certify
that to the best of our knowledge:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
December 15, 2023
/s/ John C. May
John C. May
Chairman and Chief Executive Officer
(Principal Executive Officer)
December 15, 2023
/s/ Joshua A. Jepsen
Joshua A. Jepsen
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
A signed original of this written statement required by Section 906 has been provided to Deere & Company and will be
retained by Deere & Company and furnished to the Securities and Exchange Commission or its staff upon request.
Deere & Company
One John Deere Place, Moline, Illinois 61265
(309) 765-8000
www.JohnDeere.com