2 0 2 4
A N N U A L
R E P O R T
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark one)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 27, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 1-4121
DEERE & COMPANY
(Exact name of registrant as specified in its charter)
Delaware
36-2382580
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
One John Deere Place, Moline, Illinois
61265
(309) 765-8000
(Address of principal executive offices)
(Zip Code)
(Registrant’s telephone number, including area
code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT
Title of each class
Trading symbol
Name of each exchange on which registered
Common stock, $1 par value
DE
New York Stock Exchange
6.55% Debentures Due 2028
DE28
New York Stock Exchange
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 ☒ No ☐
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 ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-
2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant 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. ☒
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. ☐
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). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate quoted market price of voting stock of the registrant held by non-affiliates at April 26, 2024 was $108,321,022,524. At November 29, 2024,
271,575,282 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 26, 2025 are incorporated
by reference into Part III of this Form 10-K.
1
TABLE OF CONTENTS
Page
PART I
ITEM 1.
BUSINESS
2
ITEM 1A.
RISK FACTORS
13
ITEM 1B.
UNRESOLVED STAFF COMMENTS
23
ITEM 1C.
CYBERSECURITY
23
ITEM 2.
PROPERTIES
24
ITEM 3.
LEGAL PROCEEDINGS
24
ITEM 4.
MINE SAFETY DISCLOSURES
24
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
24
ITEM 6.
[RESERVED]
26
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
26
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
26
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
26
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
26
ITEM 9A.
CONTROLS AND PROCEDURES
26
ITEM 9B.
OTHER INFORMATION
26
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
26
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
27
ITEM 11.
EXECUTIVE COMPENSATION
27
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
27
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
27
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
27
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
28
ITEM 16.
FORM 10-K SUMMARY
28
2
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 collectively 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
• Large and Certain
Mid- Size Tractors
• Combines
• Cotton Pickers and
Cotton Strippers
• Sugarcane Harvesters
• Sugarcane Loaders
• Soil Preparation,
Tillage, Seeding,
Application, and Crop
Care Equipment
• 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
• Backhoe Loaders
• Crawler Dozers and
Loaders
• Skid Steers
• Scraper Systems
• 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
• Retail Notes
• Revolving Charge
Accounts
• Wholesale Receivables
• Leases
• Extended Warranties
CROPS/FUNCTION
• Corn and Soy
• Small Grain
• Cotton
• Sugarcane
• Dairy and Livestock
• Lawn and Property
Maintenance
• Golf Course
Maintenance
• High-Value Crops and
Small Acreage Crops
• Earthmoving
• Forestry
• Roadbuilding
• Financial Solutions
3
Smart Industrial Operating Model and Leap Ambitions
Our Smart Industrial Operating 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 these core technologies across the enterprise, including digital capabilities, automation and machine learning,
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.
Our Leap Ambitions are a framework designed to boost economic value and sustainability for our customers. The Leap Ambitions set goals
to measure the results of our Smart Industrial Operating Model. 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. 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 measuring our customers’ utilization
of our technology, in part, by the number of engaged acres, which is a measure of our PPA and SAT customers’ use of the John Deere
Operations Center (our online farm management system). Engaged acres generally reflects the number of unique acres with at least one
operation pass recorded in the Operations Center in the past 12 months. We are also introducing viable alternative power technologies for
various product families. Furthermore, we plan to enhance how we deliver value by investing in a Solutions as a Service business model.
We also aim to enable our customers to be more sustainable in their production steps. For example, we provide our agricultural customers
with technology solutions that help to improve their crops’ nitrogen use efficiency and increase their crops’ protection efficiency. Across
all segments we believe we will deliver ongoing value by continuing to focus on reducing the CO2e emissions from our equipment,
including offering hybrid-electric and electric options where feasible in our product families. We also continue to work toward production
of a fully autonomous, battery-powered agricultural tractor and have launched several models of electric turf and compact construction
products. We also expect to support sustainable outcomes and deliver value through increasing the use of grade management control for
earthmoving customers, intelligent boom control for forestry customers, and precision solutions for roadbuilding customers.
Equipment Operations
Our equipment operations consist of three of our business segments: PPA, SAT, and CF. In fiscal year 2024, PPA generated $20,834
net sales, or 47 percent of equipment operations net sales; SAT generated $10,969 net sales, or 24 percent of equipment operations
net sales; and CF generated $12,956 net sales, or 29 percent of equipment operations net sales.
Production and Precision Agriculture
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, and related harvesting front-end equipment. In addition,
the segment includes tillage, seeding, and application equipment, including sprayers and nutrient management and soil preparation
machinery.
4
We continue to invest in the development and production of advanced technology through integrated agricultural solutions and
precision technologies across our portfolio of equipment. For example, we have advanced our planting and crop care offerings for
corn and soy production systems to better meet customer demands throughout the cultivation cycle.
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 improving productivity, crop yields, and sustainability.
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 connection 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.
In fiscal year 2024, we introduced the new S7 Series combines and updated 9RX tractors, designed to enhance customer value and
address key agricultural challenges, such as time constraints caused by variable weather, labor shortages, and rising costs. The S7
Series combines feature advanced automation packages and the 9RX tractors come with new engine options, updated technology
packages, and modernized cabins.
In addition to John Deere brand names, the table below provides a list of PPA products and their associated brand names:
PRODUCT
BRAND NAME
Sprayers
Hagie, Mazzotti
Planters and Cultivators
Monosem
Sprayers and Planters
PLA
Carbon Fiber Sprayer Booms
King Agro
Sugarcane Harvester Aftermarket Parts
Sunbelt Outdoor Products, Unimil by John Deere
Aftermarket Parts for PPA Products
Vapormatic, A & I, Unimil, Alternatives by John Deere,
Frontier
Small Agriculture and Turf
SAT is committed to meeting the needs of our customers through defining, developing, and delivering global equipment and technology
solutions designed to unlock value and sustainability for dairy and livestock producers, high-value crop and small acre 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.
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.
5
In addition to John Deere brand names, the table below provides a list of SAT products and their associated brand names:
PRODUCT
BRAND NAME
Equipment Attachments
Frontier, Kemper, GreenSystem, Smart Apply
Aftermarket Parts for SAT
Vapormatic, A&I, Alternatives by John Deere, Frontier
Agriculture and Turf Operations
Smart Industrial Operating Model. 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 is organized around four geographic regions: U.S., Canada, and
Australia; Latin America and South America; Europe, and the Commonwealth of Independent States (CIS); and Africa, Asia, and the
Middle East.
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, and the amount and timing of
government payments. 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 and related policies, tax policies, policies related to climate change, 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.
With challenging economic conditions including higher interest rates and decreasing crop prices, innovations in machinery and
technology may have an even greater influence on agricultural equipment purchasing. For example, larger, more productive
equipment is well accepted where farmers are striving for more efficiency in their operations to increase profits. 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 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 (1) tractors over 100 horsepower, (2) self-propelled combines, cotton pickers, forage harvesters, and
sprayers, and (3) seeding equipment. In addition, small tractors are an important part of our global business.
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 rates, and inflation.
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 is estimated in advance, and equipment is 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 who 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 combines, cotton harvesting equipment, and sprayers are 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.
6
Construction and Forestry
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.
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™ supplement
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.
Our primary construction products include excavators, wheel loaders, motor graders, dozers, backhoes, articulated dump trucks, 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™.
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 rates, 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
BRAND NAME
Roadbuilding Equipment
Wirtgen, Vögele, Hamm, Kleemann, Benninghoven, 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 global
expansion of many competitors. The competitive environment for the agriculture and turf operations includes some global
competitors, such as AGCO Corporation, CLAAS KGaA mbH, CNH Industrial N.V., Kubota Tractor Corporation, Mahindra & Mahindra
Limited, and The Toro Company. 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.
7
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.
Considerable effort is being directed to manufacturing cost reductions through improvements in process, optimization of factories,
including product line relocation, product design, advanced manufacturing technology, and supply management and logistics, as well as
compensation incentives related to productivity and organizational structure. Our flexible assembly lines, which can accommodate a wide
product mix and deliver products in line with changes in dealer and customer demand, support our process improvements.
See Item 2 “Properties” in this Annual Report on Form 10-K for more information about our manufacturing facilities.
Research and Development; Patents, Trademarks, Copyrights, and Trade Secrets
We make substantial investments in research and development to improve the quality and performance of our products, to develop new
products and technologies to meet our customers’ needs, to integrate sustainable solutions into our products, and to comply with
government, safety, and engine emissions regulations.
Our research and development activities are a vital component in our Smart Industrial Operating Model as customers seek to improve
profitability, productivity, and sustainability through technology. Integration of technology into equipment is a persistent market trend,
and we continue to capitalize on this market trend.
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, compact
construction, and/or forestry equipment. In addition, roadbuilding equipment is sold at approximately 100 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. In addition, certain lawn and garden and compact construction products
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 located 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. 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.
8
Raw Materials
We source 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 source 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 raw materials and components, manage costs
on a globally competitive basis, protect our intellectual property, and minimize other supply-related risks. We are focused on proactively
increasing the resiliency of our supply chain and actively monitoring supply chain risks to minimize the likelihood of business disruptions
caused by the supply base, 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 27, 2024 was approximately $5.2 billion for the PPA segment and $2.1 billion for the
SAT segment, compared with $7.9 billion and $3.3 billion, respectively, at October 29, 2023. 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 $2.2 billion at October 27, 2024, compared with $6.4 billion at October 29, 2023. 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 operations, 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
9
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 27, 2024, we were in compliance with all of our obligations, and no payments were required under this agreement in fiscal year
2024 or fiscal year 2023. As of October 27, 2024, we indirectly owned 100 percent of the voting shares of Capital Corporation’s capital
stock and Capital Corporation’s consolidated tangible net worth was $6,226.2 million.
Outside the U.S. and Canada. The financial services operations also offer financing, primarily for our products, in Argentina, Australia,
Brazil, India, Mexico, New Zealand, and in several other countries in Africa, Asia, Europe, and Latin America. In certain markets, financing is
offered through cooperation agreements or joint ventures with other financial institutions. For example, in the fourth quarter of fiscal
year 2024, we entered into a joint venture agreement with a Brazilian bank, Banco Bradesco S.A. (Bradesco), for Bradesco to invest and
become 50 percent owner of our subsidiary in Brazil, Banco John Deere S.A.. The way the financial services operations offer financing 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 and compliance with emissions regulations adds to the cost of our products. In fiscal year 2024, compliance
with environmental controls 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 environmental controls during fiscal year 2025. 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.
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.
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, anti-bribery, anti-corruption, foreign exchange, employment, tax, environmental, safety,
data privacy, telecommunications, 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 2024, 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 2025. Additional information about the impact of government regulations on our business is included in Item
1A, “Risk Factors – Strategy Risks” and “Compliance Risks.”
10
Human Capital
Our employees are guided by a simple principle: 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 John Deere since
our founding. And while our world and business may change, we continue to be guided by our core values — Integrity, Quality,
Humanity, Commitment, and Innovation. Humanity was added as our fifth core value in fiscal year 2024.
Employees
At October 27, 2024, we had approximately 75,800 employees, of which approximately 35,200 are full-time production employees.
We had 29,600 total employees in the U.S. of which approximately 13,300 were production employees. We also retain consultants,
independent contractors, and temporary and part-time workers.
Unions are certified as bargaining agents for approximately 77 percent of our U.S. production and maintenance employees.
Approximately 8,900 of our active U.S. production and maintenance workers are covered by a collective bargaining agreement with
the United Auto Workers (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 2025 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 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 our founding. In
addition, we maintain a global compliance hotline to report concerns of potential violations of the Code, global policies, or the law.
Health and Safety
We strive to achieve safety excellence through increased focus on injury prevention, leading indicators, risk reduction, and health and
safety management systems. 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, lost time frequency rate, and near-miss rate. Leading and lagging indicators are tracked by most of
our manufacturing facilities and internally reported. In fiscal year 2024, we reported a total recordable incident rate of 1.69 and a lost time
frequency rate of 0.63. To improve our total recordable incident rate, we will prioritize injury prevention and risk reduction strategies and
improve ergonomic programs.
Workplace Practices and Policies
We are an equal opportunity employer committed to providing a workplace free of harassment and discrimination. We believe that a
diverse workforce that reflects the communities we serve is essential to our long-term success. For recruiting and development
opportunities, we work with a variety of professional organizations to support a diverse pipeline of candidates representing the fields of
accounting, agriculture, engineering, general business, science, and technology, and provide development opportunities for employees.
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 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 our employees in building 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.
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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 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
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.
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.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following are our executive officers as of December 3, 2024. 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)
Present Deere Position (Effective Date)
Business Experience (Effective Date)
John C. May (55)
Chairman, Chief Executive Officer, and President
(2020)
-
Chief Executive Officer and President (2019)
-
President and Chief Operating Officer (2019)
Joshua A. Jepsen (47)
Senior Vice President and Chief Financial Officer
(2022)
-
Deputy Financial Officer (2022)
-
Director, Investor Relations (2018)
Ryan D. Campbell (50)
President, Worldwide Construction & Forestry Division
and Power Systems (2022)
-
Senior Vice President and Chief Financial
Officer (2019)
Jahmy J. Hindman (49)
Senior Vice President and Chief Technology Officer
(2023)
-
Chief Technology Officer (2020)
-
Global Director, Tractor Platform Engineering
(2018)
-
Global Manager, Architecture, Systems
Modules (2018)
Rajesh Kalathur (56)
President, John Deere Financial, and Chief Information
Officer (2022)
-
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)
Deanna M. Kovar (46)
President, Worldwide Agriculture & Turf Division,
Small Ag & Turf, Sales and Marketing Regions of
Europe, CIS, Asia, and Africa (2023)
-
Vice President, Production Systems,
Production & Precision Ag (2023)
-
Vice President, Production Systems (2020)
-
Director, Operator Stations (2018)
Felecia J. Pryor (50)
Senior Vice President and Chief People Officer (2022)
-
Executive Vice President & Chief Human
Resources Officer, BorgWarner Inc. (2022)
-
Global Vice President Human Resources,
BorgWarner, Inc. - Morse Systems (2019)
Cory J. Reed (54)
President, Worldwide Agriculture & Turf Division,
Production & Precision Ag, Sales and Marketing
Regions of the Americas and Australia (2020)
-
President, Worldwide Agriculture & Turf
Division, Americas and Australia, Global
Harvesting and Turf Platforms, Agricultural
Solutions (2019)
Justin R. Rose (45)
President, Lifecycle Solutions, Supply Management,
and Customer Success (2022)
-
Senior Partner and Managing Director,
Boston Consulting Group (BCG) (2020)
-
Various roles of increasing responsibility from
Associate to Partner and Managing Director,
BCG (2002)
Kellye L. Walker (58)
Senior Vice President and Chief Legal Officer, Global
Law Services & Regulatory Affairs (2024)
-
Executive Vice President, Chief Legal Officer,
and Corporate Secretary, Eastman Chemical
Company (2020)
-
Executive Vice President and Chief Legal
Officer, Huntington Ingalls Industries (2015)
13
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 we face.
OPERATIONAL RISKS
Our financial results largely depend upon the agricultural market business cycle, as well as general economic conditions and outlook.
Negative conditions in the agricultural industry and general economy cause weakened demand for our equipment and services, limit
access to funding, and result in higher funding costs.
Our success largely depends on the vitality of the agricultural industry. Historically, the agricultural industry has been cyclical and
subject to a variety of economic and other factors. Sales of agricultural equipment, in turn, are also cyclical and generally reflect the
economic health of the agricultural industry. The economic health of the agricultural industry is affected by numerous factors,
including farm income, farmland values, and debt levels and financing costs, all of which are influenced by the levels of commodity and
protein prices, world grain stocks, acreage available and planted, crop yields, agricultural product demand, soil conditions, farm input
costs, government policies, and government subsidies. Downturns in the agricultural industry due to these and other factors, which
could vary by market, have resulted in decreases in demand for agricultural equipment, adversely affecting our performance.
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. In fiscal year 2024, unfavorable market conditions resulted in lower sales
volumes, higher sales discounts, higher receivable write offs, and a higher provision for credit losses. We expect certain of these
conditions to persist in fiscal year 2025. Changes in interest rates and the agricultural market business cycle are driven by factors
outside of our control, and as a result we cannot reasonably foresee when these conditions will fully subside.
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 have had a material adverse effect on our financial results.
Uncertain or negative outlook with respect to pervasive U.S. fiscal issues as well as general economic conditions and outlook, such as
market volatility or interest rate changes, 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 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 to and developing market share and profitability in additional geographic
markets, including, but not limited to, Argentina, Brazil, CIS, 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.
•
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.
•
Expanding business operations globally also increases exposure to currency fluctuations, which can materially affect our
financial results. In Argentina, the government has certain capital and currency controls that restrict our ability to access U.S.
dollars and remit earnings from our Argentine operations, leaving us exposed to long-term currency fluctuations.
•
While our brands are widely recognized in our traditional markets, they are less known in some emerging markets, which
could impede our efforts to successfully compete in these markets.
14
•
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, and sell products, and could otherwise impact
our reputation and business.
•
Market uncertainty and volatility in various geographies have been magnified as a result of potential shifts in U.S. and foreign
trade, economic, and other policies following the 2024 U.S. presidential and congressional elections.
•
Geopolitical tensions, including the Russia/Ukraine war and the conflict in the Middle East, have also exacerbated market
volatility and affected agricultural global production and demand levels.
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 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 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 fuel utilization, including biofuel, 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.
Changes in the availability and price of certain raw materials, components, and whole goods have resulted and could 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.
We have experienced changes in the availability and prices of 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. While we have seen stabilization in the supply chain and inflation, we
anticipate potential future fluctuations due to continued 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 factors.
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. Work interruption or union strikes by employees of
suppliers could also contribute to disruptions within our supply chain. 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.
Failure by our supply base to use ethical business practices and comply with applicable laws and regulations may adversely affect our
business, financial condition, and operational results.
While we conduct due diligence on our suppliers and require their compliance with various policies and contractual covenants, we do
not control our suppliers’ business practices. Accordingly, we cannot guarantee that our due diligence efforts will reveal that they
follow ethical business practices such as fair wage practices and compliance with environmental, safety, labor, human rights, material
sourcing, and other laws. A lack of compliance could lead us to seek alternative suppliers, which could increase our costs and result in
delayed delivery of our products, product shortages, or other disruptions of our operations. If our suppliers or retail partners fail to
comply with applicable laws, regulations, safety codes, employment practices, human rights standards, quality standards,
environmental standards, production practices, or other obligations, norms, identification and reporting requirements, or ethical
standards, our reputation and brand could be harmed, and we could be exposed to litigation, investigations, enforcement actions,
monetary liability and additional costs that could have a material adverse effect on our business, financial condition, and results of
operations.
15
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:
•
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 negatively affect demand for agricultural and turf equipment and the financial condition and credit risk
of our dealers and customers.
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. Most recently, Hurricane Helene in the U.S. closed operations at our Augusta, Georgia and Greenville, Tennessee
facilities temporarily. 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.
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.
Rationalization or restructuring of manufacturing facilities, and plant expansions and updates at our manufacturing facilities may
cause capacity constraints, inventory fluctuations, and other issues.
The rationalization or restructuring of our manufacturing facilities, including relocating production or closing facilities, may result in
temporary constraints on our ability to produce the quantity of products necessary to fill orders and thereby complete sales in a timely
manner. In addition, decisions regarding the rationalization, restructuring or relocation of facilities, such as the recently announced
shifting of production of skid steer loaders and compact track loaders from our Dubuque, Iowa factory to Ramos, Mexico, and any
similar actions we may undertake in the future, could also subject us to additional or new tariffs, other issues relating to the
importation of products, fines, and reputational risks. Finally, the expansion and reconfiguration of existing manufacturing facilities,
as well as new or expanded manufacturing operations in emerging markets, such as Brazil, could increase the risk of production delays,
as well as require significant investments.
16
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, as well as changes in government banking, monetary and fiscal policies, could
adversely affect our financials and our earnings and/or cash flows.
While central banks began cutting their policy interest rates in the latter part of fiscal year 2024, interest rates remain above recent
norms. High interest rates can have a dampening effect on overall economic activity and/or the financial condition of our customers,
either or both of which can negatively affect customer demand for our equipment and customers’ ability to repay their obligations to
us. 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 financing spreads—the difference between the yield we earn on our assets and the interest rates we pay for
funding—which has affected our 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.
Moreover, 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 have a material impact on our
customers and markets.
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.
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 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
vulnerable to customers and others defaulting on contractual obligations, and has experienced, and may continue to experience write-
offs and credit losses that, in some cases, exceed our expectations and adversely affect our financial condition and results of
operations as a result of elevated delinquencies. 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. 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.
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STRATEGY RISKS
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, as well as failure to have selected a business strategy that aligns with our
customer needs and market trends, could have an adverse effect on our operational and financial results. 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;
•
Failure to optimize our capital allocation in connection with the Smart Industrial Operating Model; and
•
The adoption of new regulations or policies supporting and/or subsidizing outputs that are inconsistent with our strategy,
such as policies that have the effect of encouraging or supporting the use of conventional sources of energy.
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, but these goals and their timelines
might be modified or updated. We may modify or not be able to achieve these goals for a variety of 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;
•
Certain materials, such as quality battery cells, may become unavailable or too costly;
•
Customers may not embrace the value proposition of the Solutions as a Service license model; and
•
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 timelines.
If we are unable to remain competitive and relevant, including by delivering precision technology solutions to our customers, our
business, results of operations, and financial condition could be adversely affected.
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, our failure to deliver quality products that
meet customer needs, or our failure to price products competitively adversely affects our business, results of operations, and financial
condition. To remain competitive, we need to have a thorough understanding of our existing and potential customers on a global
basis, particularly in growth markets such as Argentina and Brazil.
In addition, if we are unable to remain relevant and effectively develop and deliver technology that customers can easily adopt and
utilize, customer adoption rates could reduce, adversely impacting our business operations and future financial performance.
Therefore, our ability to deliver precision technology and expand value-driven solutions is critical to our business success. If we fail to
stay ahead of both traditional and non-traditional competitors in the technology space, it may hinder our ability to adapt or identify
strategic partnerships within our industries in a timely manner. This could result in increased costs and delays in delivering value to our
customers, ultimately affecting our competitive position and financial condition.
Furthermore, our approach to precision technology involves hardware and software, guidance, connectivity and digital solutions,
automation and machine intelligence, and autonomy. We may make significant investments in research and development, connectivity
solutions, digital security for precision technology solutions, and conduct dealer and employee training. These investments may not
produce solutions that provide the desired results for customers’ profitability or sustainability outcomes, impacting our competitive
position.
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 or inefficiencies, increased
costs, or excess inventory, such as what we experienced in fiscal year 2022 due to supply chain disruptions. Our ability to accurately
forecast demand could be affected by many factors, including changes in customer demand for our products and services, changes in
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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.
We rely on a network of independent dealers to manage the distribution of our products and services. If our 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.
Our dealers carry inventories of finished products as part of their operations and adjust those inventories based on future needs and
market conditions, including the level of used equipment inventory. If the inventory levels of our dealers are higher than they desire,
they may postpone equipment purchases from us, which could cause our sales to be lower and negatively impact our results. Similarly,
our results could be negatively impacted through the loss of time-sensitive sales if our dealers do not maintain inventory levels
sufficient to meet customer demand.
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 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 or negative customer impressions, and may adversely
impact our ability to collect receivables that are associated with that dealer. Dealers could also 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.
We may not realize 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 into, or may enter into 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 integrating acquisitions with our operations, applying internal control processes to these
acquisitions, including those related to cybersecurity, managing strategic investments, assimilating new capabilities to meet
the future needs of our businesses, and/or combining business cultures;
•
We 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; for example, our joint venture with Bradesco in Brazil with respect to Banco John Deere S.A. may not have the
expected result of reducing our incremental risk as we aim to grow in the Brazilian market; and
•
Due diligence evaluations of potential transactions include business, legal, compliance, 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 and terminate joint ventures before their stated expiration. Divestitures of businesses or
dissolutions of joint ventures may involve significant challenges and risks, including failure to advance our business strategy, costs and
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 reputation and brand could be damaged by negative publicity.
Our brand has worldwide recognition and 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. Negative claims or publicity
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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, damages our reputation and brand image, regardless of whether such claims are
accurate. Furthermore, our shareholders, customers, and other stakeholders have evolving, varied and often times conflicting
expectations regarding our culture, values, and our business, which makes it difficult to achieve a uniform positive perception amongst
all stakeholders.
Additionally, negative or inaccurate postings, articles, or comments on social media, the internet, or the press about us have generated
negative publicity that damages the reputation of our brand. For example, in fiscal year 2024, we experienced negative social media
campaigns related to our approach to diversity and inclusion, our customers’ right to maintain and safely repair their equipment,
including with respect to our Memorandum of Understanding with American Farm Bureau Federation, reductions in workforce, and
production relocation. Further, adverse publicity about regulatory or legal action against us, or legal proceedings initiated by us, also
damages our reputation and brand image, undermining customer confidence, and reducing 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.
TALENT 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, our culture and our values have been important contributors to our success to date and promote a sense of pride and
fulfillment in our employees. Failure to preserve our culture or focus on our values could negatively affect our ability to retain and
recruit talent.
While we strive to reduce the impact of the departure of employees, our operations or ability to execute our business strategy may be
affected by the loss of employees, such as in connection with the reduction in workforce we conducted in fiscal year 2024. This
reduction may adversely affect us as a result of decreased employee morale, the loss of institutional knowledge held by departing
employees, the allocation of resources to reorganize and reassign job roles and responsibilities, and the increased risk of litigation from
former employees. In addition, we may not realize the expected cost savings from the reduction in workforce. We may also conduct
other workforce reductions in the future, if deemed appropriate for our business.
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. Certain of our labor agreements expire as early as
2025. 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.
DIGITAL RISKS
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
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 confidential data, including intellectual property, proprietary business information, and the
proprietary business information of our customers, suppliers, and dealers, as well as personal data of our customers and employees in
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data centers, which are often owned by third parties and maintained on their information technology networks. The secure operation
of these information technology networks, and the processing and maintenance of this information, are critical to our business
operations and strategy.
Despite security measures, including exercises, tests, incident simulations, and system assessments designed to discover and address
potential vulnerabilities, 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, and expect to continue to be, 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, acquisition, 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, disruption or shut
down of our dealers’ and customers’ 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 enhance 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 loss of sales based on customers’ loss of
confidence in our products, legal claims or proceedings against us, government investigation, liability, or regulatory penalties, which
could adversely affect our business, results of operations, and financial condition.
Technical or regulatory limitations may impact our ability to effectively implement automation, autonomy, and artificial intelligence
solutions.
We utilize automation and machine learning in some of our products, including consumer-facing features, and leverage generative
artificial intelligence in our business processes. For example, the automation software, digital tools, applications, and analytics utilized
in John Deere’s products are designed to improve customer decision-making, such as the automation package on the S7 Series
Combines and the computer vision and machine learning technology that enables our See & Spray™ targeted spraying solution.
While we believe the use of these emerging technologies can present significant benefits, it also creates risks and challenges as the use
of artificial intelligence is a novel business model without an established track record. Data sourcing, technology, integration and
process issues, programmed bias in decision-making algorithms, concerns over intellectual property, security concerns, and the
protection of privacy could impair the adoption and acceptance of autonomous machine solutions.
Furthermore, any confidential information that we input into a third-party generative artificial intelligence platform could be leaked or
disclosed to others, including sensitive information that is used to train the third parties’ model. Additionally, if the data used to train
the solution or the content, analyses, or recommendations that the machine learning and intelligence applications assist in producing
is deemed to be inaccurate, incomplete, biased or questionable, our brand and reputation may be harmed and we may be subject to
legal liability claims. The development of our own artificial intelligence applications may require additional investment in the
development of proprietary systems, models, or datasets, which are often complex, may be costly and could impact the results of our
operations. Developing, testing, and deploying these technologies may also increase the cost profile of our products due to the level
of investment needed to enable such initiatives.
Disruption of our technology systems or unexpected network interruption could disrupt our business.
We are increasingly dependent on technology systems to operate on a day-to-day basis. The failure of our technology systems to
operate properly or effectively, problems with transitioning to upgraded or replacement systems, or difficulty in integrating new
systems, could adversely affect our business. These disruptions could result in delays, which could reduce demand for our products
and cause our sales to decline. In addition, if changes in technology cause our information systems to become obsolete, or if our
information systems are inadequate to handle our growth and new technologies, we could lose customers. Any significant disruption
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in our technology systems could harm our reputation and credibility and could have a material adverse effect on our business, financial
condition, and results of operations.
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 January 2024, we entered into an agreement with SpaceX and its Starlink network to provide satellite communications (SATCOM)
service to farmers facing rural connectivity challenges, with an initial focus on Brazil. Most recently, Brazil’s regulators threatened to
sanction Starlink’s broadband coverage based on alleged hate speech and misinformation posted on the X platform, which like Starlink, is
owned by Elon Musk. If regulators sanction Starlink or Starlink is otherwise subject to other issues that impair its ability to operate its
SATCOM solution either in Brazil or elsewhere, our rural connectivity offering would be adversely affected or impaired.
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.
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, encryption, and telecommunications. 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. Failure to comply with these laws and
regulations could result in fines and penalties.
In addition, we must comply with the U.S. Foreign Corrupt Practices Act (FCPA) and all applicable foreign anti-bribery and anti-
corruption laws. 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, our employees,
contractors, or agents have violated, and in the future could violate such laws and regulations or our policies and procedures.
Violations of these laws and regulations have resulted in, and could result in the future, in criminal or civil sanctions and may have a
material adverse effect on our reputation, business, results of operations, and financial condition. In fiscal year 2024, we agreed to pay
approximately $10.0 million to the Commission to resolve charges that the Company violated the FCPA arising out of improper
payments by our wholly-owned subsidiary, Wirtgen Thailand.
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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, 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.
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, research and development investments, 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.
Regulators in Europe and the U.S. have also focused efforts on increasing disclosures by companies related to climate change and
mitigation efforts. These disclosure rules increase compliance burdens and associated regulatory costs. Further, our financial services
segment is subject to additional international and national 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.
Legal proceedings, disputes and government inquiries and investigations could harm our business, financial condition, reputation, and
brand.
We routinely are a party to claims and legal actions and the subject of government inquiries and investigations, the most prevalent of
which relate to product liability (including asbestos related liability), employment, patent, trademark, and antitrust matters. The
defense of lawsuits and government inquiries and 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
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John Deere brand agricultural 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.
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 may 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.
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
None.
ITEM 1C.
CYBERSECURITY.
Cybersecurity is an integral part of our overall risk management program. We take a comprehensive approach by incorporating industry
best practices to guide and evaluate our cybersecurity strategy and posture, involving key stakeholders in oversight and decision making,
and assessing the program regularly within a dynamically changing environment. We leverage a multifaceted approach to cybersecurity
including measures designed to prevent, detect, and respond to cyberthreats while monitoring and adapting to the evolving threat and
technology landscapes.
Governance
At the management level, we maintain a dedicated global team of cybersecurity professionals (Cybersecurity Team) led and managed by
the Chief Information Security Officer (CISO). The Cybersecurity Team has members with experience in governance, risk management and
compliance, threat monitoring, threat emulation, penetration testing, and cyber incident management. Our CISO holds a degree in
Management Information Systems and has been with the Company for over ten years. He has over two decades of extensive experience in
information technology and cybersecurity and reports directly to the Chief Information Officer.
In addition, a cross-functional team of senior executives from across the enterprise known as the Digital Risk Governance Council (DRGC)
provides oversight at the management level of the Company’s structures for managing digital risk, including the Cybersecurity Team. The
Audit Review Committee (ARC) of the Board of Directors (Board) shares oversight responsibilities of our cybersecurity program, including
oversight of related risks, with the full Board. Information on trends, strategic initiatives, and metrics is presented quarterly to the ARC by
the CISO and/or members of the Cybersecurity Team. The ARC also receives periodic updates and information from subject matter experts
in areas such as risk management, identity and access management, product security, and information technology.
Risk Management and Strategy
Our cybersecurity program is designed to identify, protect, detect, respond to, and recover from cybersecurity threats and incidents with
the goal of protecting the confidentiality, integrity, and availability of our critical systems and information. We use a risk-based, multi-
layered information security strategy to assess, identify, and manage risks from cybersecurity threats. Our Cybersecurity Team meets
frequently to monitor, assess, and address cybersecurity threats and incidents. We also work with third parties to assess the maturity of
our cybersecurity program, leveraging the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF).
We also utilize third-party service providers as a normal part of our business operations. We have established processes to support the
Company in identifying and managing cybersecurity risks associated with the use of third parties, which include the completion of due
diligence before engaging with a third-party, controls for response to mitigate any significant risks, and assessments and reviews
throughout the relationship. Monitoring such risks and threats is integrated into our overall risk management program.
Also, as part of the program, we periodically conduct cybersecurity awareness training including phishing simulations as well as e-learning
for employees. We maintain cybersecurity policies, standards, and procedures, which include a cyber incident response plan. These
policies and procedures are regularly evaluated and refined with strategies and protocols designed to adapt to changing regulations and
emerging security risks. Regular exercises, tests, incident simulations, and system assessments are conducted to discover and address
24
potential vulnerabilities and improve decision-making, prioritization, monitoring, and overall response effectiveness. As part of our
incident response plan, the Cybersecurity Team uses an established protocol to assess the severity of cybersecurity incidents. In addition,
a cross-functional Cybersecurity Incident Response Team is responsible for cybersecurity incident oversight and response, as needed,
depending on incident severity. Our cyber incident response plan also includes an escalation process to relevant senior management
and/or members of the Board if a cybersecurity incident meets specific rating criteria to prompt response to attempt to minimize potential
disruptions and protect the integrity of our operations.
Based on the information available as of the date of this Annual Report on Form 10-K, cybersecurity risks, including as a result of any
previous cybersecurity incident, have not materially affected, and are not reasonably likely to materially affect, our business strategy,
results of operations, or financial condition. However, we have seen an increase in cyberattack volume, frequency, and sophistication in
the digital environment.
ITEM 2.
PROPERTIES.
In the U.S. and Canada, the equipment operations own and operate 23 factory locations and lease and operate another three 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.
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 and investigations, the most prevalent of which relate to product liability (including
asbestos related liability), employment, patent, trademark, and antitrust matters (including class action litigation). Currently we believe
the reasonably possible range of losses for 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 judgments or
investigations 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.
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. See the information
concerning the number of stockholders in Note 21 to the Consolidated Financial Statements.
(b) Not applicable.
25
(c) Purchases of our common stock during the fourth quarter of 2024 were as follows:
ISSUER PURCHASES OF EQUITY SECURITIES
Maximum
Total Number of Number of Shares
Shares Purchased
that May Yet Be
Total Number of
as Part of Publicly Purchased under
Shares
Announced Plans
the Plans or
Purchased (2)
Average Price
or Programs (1)
Programs (1)
Period
(thousands)
Per Share
(thousands)
(millions)
Jul 29 to Aug 25
877 $
362.97
876
23.1
Aug 26 to Sept 22
515
390.00
515
22.6
Sept 23 to Oct 27
651
412.74
651
21.9
Total
2,043
2,042
(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 21.9 million based on the closing price of our
common stock on the NYSE as of the end of the fourth quarter of 2024 of $407.93 per share. At the end of the fourth quarter of
2024, $8.9 billion of common stock remained to be purchased under this plan.
(2) In the fourth quarter of 2024, 1 thousand shares were acquired from a plan participant at a market price of $373.26 to pay payroll
taxes on the vesting of a restricted stock award.
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change of Deere & Company’s cumulative total shareholder returns (TSR) for the
last five years to that of the S&P 500 Index and the S&P 500 Industrials Index. The S&P 500 Industrials Index represents a focus group
of companies across major industrial manufacturing categories that carry similar operational characteristics to us. The graph assumes
$100 was invested on November 1, 2019, and that dividends were reinvested. The stock performance shown in the graph is not
intended to forecast and does not necessarily indicate future price performance.
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
11/1/2019
10/30/2020
10/29/2021
10/28/2022
10/27/2023
10/25/2024
*$100 invested on 11/1/2019 in stock or Index, including reinvestment of dividends
Comparison of 5 Year Total Cumulative Return*
Deere & Company
S&P 500
S&P 500 Industrials
26
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 27, 2024, 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 U.S. accounting principles.
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 27, 2024, 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 27, 2024, 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.
27
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 2025 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 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.
28
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Page
(1) Financial Statements
Statements of Consolidated Income for the years ended October 27, 2024, October 29, 2023, and October 30, 2022
44
Statements of Consolidated Comprehensive Income for the years ended October 27, 2024, October 29, 2023, and October 30, 2022
45
Consolidated Balance Sheets as of October 27, 2024 and October 29, 2023
46
Statements of Consolidated Cash Flows for the years ended October 27, 2024, October 29, 2023, and October 30, 2022
47
Statements of Changes in Consolidated Stockholders’ Equity for the years ended October 30, 2022, October 29, 2023,
and October 27, 2024
48
Notes to Consolidated Financial Statements
49
(2) Exhibits
See the “Index to Exhibits” on pages 84 – 87 of this report
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. The 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.
MANAGEMENT’S DISCUSSION AND ANALYSIS
29
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 2023 to 2022 results, refer to the
“Management’s Discussion and Analysis” section of our 2023
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, services, and other inputs 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 2024
TRENDS & ECONOMIC
CONDITIONS
Industry Sales Outlook for Fiscal 2025
Agriculture and Turf
Construction and Forestry
Company Trends
Customers seek to improve profitability, productivity, and
sustainability through integrating technology into their
operations. Deeper integration of technology into equipment is a
persistent market trend. These technologies are incorporated into
products within each of our operating segments. We expect this
trend to persist for the foreseeable future. Our Smart Industrial
Operating Model and Leap Ambitions are intended to capitalize on
this market trend. Engaged acres are an indicator we use to
understand customer utilization of our technology. We are
investing in a Solutions as a Service business model to increase
technology adoption and utilization by our customers. Solutions
as a Service products did not represent a significant percentage of
our revenues in 2024.
Company Outlook for 2025
• Agriculture and turf equipment sales are projected to decline in
2025 due to contraction of agriculture markets globally.
• Construction equipment sales are projected to decline in 2025
as healthy end markets are offset by continued uncertainty in
equipment purchases. Roadbuilding equipment sales are
anticipated to be generally flat.
Agriculture and Turf Outlook for 2025
• Demand in the U.S. and Canada is expected to further
moderate amidst weak farm fundamentals, high interest rates,
elevated used inventory levels, and short-term farmer liquidity
concerns heading into the 2025 growing season.
• We expect small agricultural equipment sales to be down from
2024 levels in the U.S. and Canada. The dairy and livestock
segment is anticipated to have another year of strong
profitability as elevated livestock and hay prices are further
enhanced by low input feed costs. This is projected to be more
than offset by restrained demand in the turf and compact utility
tractor markets as single family home sales and home
improvement spending remain stagnant amid high interest
rates.
• In Europe, the industry is forecasted to be down as farm
fundamentals in the region continue to deteriorate, but at a
moderated pace relative to 2024. Adverse factors include
depressed yields from unfavorable weather, reduced regional
commodity prices due to a mixture of excess grain inflows from
Ukraine and global pricing pressures, persistently elevated input
costs, and unfavorable agriculture legislation. These issues
coupled with high interest rates and elevated industry inventory
$51.7 billion
Financial Services
Construction
and Forestry
Production and
Precision Ag
Small Ag and Turf
41%
22%
26%
11%
30
levels are expected to keep industry equipment demand at low
levels throughout 2025.
• Demand in South America is expected to be flat. In Brazil, we
expect crop prices to decline in 2025 offset by decreasing input
costs and improving yields as drought concerns abate. These
factors coupled with continued acreage expansion and recent
appreciation of the U.S. dollar against the Brazilian real will offer
further profitability tailwinds to farmers. Across the rest of
South America, strong yields are expected to be offset by low
commodity prices and elevated interest rates. Argentina industry
sales are forecasted to improve as the currency stabilizes amid
agricultural industry recovery.
• Industry sales in Asia are forecasted to be down slightly, as
foundational technology adoption and improving agriculture
fundamentals in India provide moderate demand.
Construction and Forestry Outlook for 2025
• Construction equipment industry sales are forecasted to be
down in the U.S. and Canada from 2024 levels. The decline is
due to projected modest growth in single family housing starts
and U.S. government infrastructure spending, which is expected
to be more than offset by further slowdowns in multi-family
housing developments, non-residential buildings, and reduced
spending in oil and gas. Historically low levels of earthmoving
rental purchases and rising used inventories are expected to
further pressure equipment sales as market uncertainty persists.
• Global forestry markets are expected to be flat to down as
challenged global markets stabilize at low demand levels.
• Global roadbuilding markets are forecasted to be generally flat,
as a modest recovery in Europe is expected to compensate for
a slight slowdown in other geographies.
Financial Services Outlook for 2025
Net Income
Up
+ Provision for credit losses
Favorable
+ Prior period special items
Favorable
(-) Financing spreads
Unfavorable
Additional Trends
Interest Rates – While interest rates in the U.S. began to decrease
in the fourth quarter of 2024, they remained elevated. Increased
rates impacted us in several ways, primarily affecting the demand
for our products and financing spreads for the financial services
operations.
The markets for our agriculture, turf, and construction products
were negatively impacted in 2024 by elevated interest rates and
their effect on borrowing costs for our customers.
Rising interest rates have historically impacted our borrowing
costs sooner than the benefit is realized from receivable and lease
portfolios.
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 varying demand for our
equipment. In 2024, we experienced unfavorable market
conditions which resulted in lower sales volumes, higher sales
incentives, higher receivable write-offs, and an increase in
expected credit losses.
We introduced cost reduction measures to manage our
profitability and inventory levels. In the third quarter of 2024, we
implemented employee-separation programs for our salaried
workforce to help meet our strategic priorities while reducing
overlap and redundancy in roles and responsibilities. The
programs’ total pretax expenses are estimated to be
approximately $165, of which $157 was recorded in 2024 (see
Note 4). Annual pretax savings from these programs are estimated
to be about $220. Approximately $100 of savings was realized in
2024.
Changes in interest rates and the agricultural market business
cycle are driven by factors outside of our control, and as a result
we cannot reasonably foresee when these conditions will fully
subside.
Other Items of Concern and Uncertainties – Other items that could
impact our results are:
• global and regional political conditions, including the ongoing
war between Russia and Ukraine and the conflict in the Middle
East,
• shifts in energy, economic, tax, and trade policies following the
2024 U.S. presidential and congressional elections,
• new or retaliatory tariffs,
• capital market disruptions,
• foreign currency and capital control policies,
• regulations and legislation regarding right to repair or right to
modify,
• weather conditions,
• marketplace adoption and monetization of technologies we
have invested in,
• our ability to strengthen our digital capabilities, automation,
autonomy, and alternative power technologies,
• workforce reductions’ impact on employee retention, morale,
and institutional knowledge,
• changes in demand and pricing for new and used equipment,
• delays or disruptions in our supply chain,
• significant fluctuations in foreign currency exchange rates,
• volatility in the prices of many commodities, and
• slower economic growth.
31
CONSOLIDATED RESULTS
2024 compared to 2023
Highlights
• Net income declined in 2024 compared to 2023, driven by
declining market conditions.
• We continue to focus on structural profitability and
strategically investing in solutions that deliver value to our
customers.
Net Sales and Revenues
Net Sales (Equipment Operations)
• Net sales decreased in 2024 primarily due to lower sales
volumes driven by declining market conditions (see Business
Segment Results).
Net Income (Attributable to Deere & Company)
Diluted Earnings Per Share (EPS) ($ per share)
• Net income and diluted EPS decreased driven by lower sales.
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:
Deere & Company
2024
2023
% Change
Cost of sales to net sales
68.8%
67.9%
+1
(-) Overhead Costs
Unfavorable
+ Price realization
Favorable
+ Material costs
Favorable
Increased mostly due to higher overhead costs from reduced
volumes resulting in production inefficiencies partially offset
by sales price realization, lower material costs, and lower
employee profit-sharing incentives.
Finance and interest income
$ 5,759 $ 4,683
+23
Increased primarily due to higher average financing receivable
portfolios and higher average financing rates.
Other income
1,198
1,003
+19
Higher primarily due to investment income earned on
international marketable securities, legal settlements
(see Note 4), and increased revenues from services.
Deere & Company
2024
2023
% Change
Research and development expenses
$ 2,290 $
2,177
+5
Higher due to continued focus on developing new technology
solutions and product introductions.
Selling, administrative and
general expenses
4,840
4,595
+5
Increased mostly due to higher provision for credit losses,
employee separation programs' expenses, and higher employee
pay driven by merit increases, partially offset by the effect of a
prior year accounting treatment correction (see Note 4).
Interest expense
3,348
2,453
+36
Increased due to higher average borrowing rates and higher
average borrowings.
Other operating expenses
1,257
1,292
-3
Lower due to foreign exchange, higher pension benefits (see
Note 9), and a settlement of an insurance claim recovery at an
international location.
Provision for income taxes
2,094
2,871
-27
Decreased as a result of lower pretax income, adjustments to
valuation allowance on deferred tax, and the favorable impact
of discrete tax benefits. These items were partially offset by
prior years' favorable income tax ruling in Brazil.
BUSINESS SEGMENT RESULTS
2024 compared to 2023
Each equipment operations segment experienced lower shipment
volumes partially offset by price realization during 2024. Rising
global grain stocks, lower commodity prices, elevated interest
rates, and the effect of inventory management contributed to
lower shipment volumes for large and small agriculture. Declines in
housing starts, decreases in rental purchases, lower levels of
commercial real estate construction, and the effect of inventory
management contributed to lower shipment volumes for
construction equipment.
Production costs were favorable in 2024 due to lower material and
employee profit-sharing incentives costs, partially offset by higher
manufacturing overhead costs driven by lower volumes and
production inefficiencies.
Production and Precision Agriculture Operations
2024
2023
% Change
Net sales
$ 20,834 $ 26,790
-22
Sales volume and other
-24
Price realization
+2
Currency translation
Operating profit
4,514
6,996
-35
Operating margin
21.7%
26.1%
Sales volumes decreased 17 percent in the U.S. and Canada,
40 percent in Brazil, and 30 percent in Europe. Price realization in
the U.S. and Canada was 3 percent driven by inflation, which was
partially offset by an increase in retail and pool funds sales
incentives. Price realization was flat outside the U.S. and Canada
32
due to moderating market conditions. Current period results were
impacted by special items (see Note 4).
Production & Precision Agriculture Operating Profit
2024 compared to 2023
Small Agriculture and Turf Operations
2024
2023
% Change
Net sales
$ 10,969 $ 13,980
-22
Sales volume and other
-24
Price realization
+2
Currency translation
Operating profit
1,627
2,472
-34
Operating margin
14.8%
17.7%
Sales volumes decreased 22 percent in the U.S. and Canada,
28 percent in Europe, and 45 percent in Mexico.
Price realization was 3 percent in the U.S. and Canada and 1 percent
outside the U.S. and Canada driven by inflation. Current period
results were impacted by special items (see Note 4).
Small Agriculture & Turf Operating Profit
2024 compared to 2023
Construction and Forestry Operations
2024
2023
% Change
Net sales
$ 12,956 $ 14,795
-12
Sales volume and other
-12
Price realization
Currency translation
Operating profit
2,009
2,695
-25
Operating margin
15.5%
18.2%
Sales volumes decreased 15 percent in the U.S. and Canada and
8 percent outside the U.S. and Canada. Price realization was about
flat in the U.S. and Canada driven by moderating market conditions
and 1 percent outside the U.S. and Canada. Current and prior
period results were impacted by special items (see Note 4).
Construction & Forestry Operating Profit
2024 compared to 2023
Financial Services Operations
2024
2023
% Change
Revenue (including intercompany)
$ 6,493 $
5,554
+17
Average balance of receivables and
leases
+12
Interest expense
3,182
2,362
+35
Average borrowing rates
+20
Average borrowings
+12
Net income
696
619
+12
Average wholesale receivables increased 26 percent driven by
higher dealer used inventory levels. While new retail note volumes
moderated due to reduced retail demand, average retail portfolio
levels grew due to higher volumes in recent years resulting in a
9 percent increase. Revenue also increased due to higher average
financing rates. Excluding the impact of a one-time correction of
the accounting treatment for financing incentives offered to John
Deere dealers in 2023 (see Note 4), net income declined as a result
of a higher provision for credit losses and less-favorable financing
spreads driven primarily by the receivable portfolio mix. These
factors were partially offset by income earned on higher average
portfolio balances.
Financial Services Net Income
2024 compared to 2023
$4,514
($2,951)
($49)
($15)
($93)
($60)
$6,996
$518
$74
$94
SA&G/
R&D
Special
Items
2023
Volume/
Mix
Price
Currency
Warranty
Production
Costs
Other
2024
$1,627
($1,146)
($38)
($15)
($71)
$2,472
$301
$1
$94
$29
2023
Volume/
Mix
Price
Currency
Warranty
Production
Costs
SA&G/
R&D
Special
Items
Other
2024
$2,009
($656)
($5)
$23
($53)
$36
$2,695
$74
($11)
($94)
SA&G/
R&D
Special
Items
2023
Volume/
Mix
Price
Currency
Warranty
Production
Costs
Other
2024
$68
$619
$180
($76)
($11)
($165)
$12
$69
$696
2023
Average Portfolio
Spread
Operating Lease
Gains/Losses
Provision for
Credit Losses
SA&G
Special Items
Other
2024
33
BUSINESS SEGMENT RESULTS
2023 compared to 2022
Please refer to the “Management’s Discussion and Analysis”
section of our 2023 Form 10-K.
CAPITAL RESOURCES AND
LIQUIDITY
2024 compared to 2023
We have access to global markets at a reasonable cost. Sources of
liquidity include:
• cash, cash equivalents, and marketable securities on hand,
• funds from operations,
• the issuance of commercial paper and term debt,
• the securitization of retail notes, and
• bank lines of credit.
We closely monitor our cash requirements. Based on the available
sources of liquidity, we expect to meet our funding needs in the
short term (next 12 months) and long term (beyond 12 months). We
are forecasting lower operating cash flows from equipment
operations in 2025 compared with 2024 driven by a decrease in
net income adjusted for non-cash provisions, partially offset by
higher cash flows generated from inventory reductions.
We operate in multiple industries, which have unique funding
requirements. The equipment operations are capital intensive.
Historically, these operations have been subject to seasonal
variations in financing requirements for inventories and
receivables from dealers. The financial services operations rely on
their ability to raise substantial amounts of funds to finance their
receivable and lease portfolios.
The assets and liabilities of Banco John Deere S.A. (BJD) were
reclassified to held for sale in the third quarter of 2024 and are
therefore not included within the 2024 balances reflected below
(see Note 4).
Key Metrics and Balance Sheet Changes
Cash, Cash Equivalents and Marketable Securities
• The increase was primarily driven by higher operating cash
flow.
• See the detailed cash flow discussion in the next section.
Trade Accounts and Notes Receivable – Net
• Receivables are generated from the sales of goods and services
to customers.
• The decrease was driven by lower sales.
• 6 percent of receivables were outstanding for periods
exceeding 12 months caused by increased dealer inventory
levels.
Financing Receivables and Equipment on Operating Leases
• The increase is due to higher wholesale receivable portfolios
due to an increase in dealer used inventory levels and higher
retail notes, partially offset by the reclassification of BJD
receivables to “Assets held for sale” (see Note 4).
• Acquisition volumes were flat compared to prior period.
Inventories
• Inventories decreased due to lower forecasted demand.
Property and Equipment
• Cash expenditures were $1.6 billion in 2024.
• Capital expenditures are forecasted to be $1.6 billion in 2025.
Accounts Payable and Accrued Expenses
• Accounts payable decreased due to lower trade payables.
• Accrued expenses decreased due to lower derivative liabilities
and dealer sales incentives.
Borrowings
• Borrowings increased corresponding with the level of
financing receivable and lease portfolios, partially offset by the
reclassification of BJD borrowings to “Liabilities held for sale”
(see Note 4).
Unused Credit Lines
• The increase in unused credit lines was due to a decrease in
commercial paper outstanding.
34
Financial Services Ratio of Interest-Bearing Debt to
Stockholder’s Equity
CASH FLOWS
2024, 2023, and 2022
2024
2023
2022
Net cash provided by operating activities $ 9,231 $ 8,589 $ 4,699
Net cash used for investing activities (6,464) (8,749) (8,485)
Net cash provided by (used for)
financing activities
(2,717)
2,808
826
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(37)
31
(224)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
$
13 $ 2,679 $ (3,184)
Cash inflows from operating activities were $9.2 billion in 2024,
driven by net income adjusted for non-cash provisions and lower
inventories and receivables from a decline in sales. These items
were partially offset by a decrease in vendor payables and a
reduction in dealer sales incentive accruals.
Cash outflows from investing activities were $6.5 billion in 2024
due to growth in the financing receivable and lease portfolios and
capital expenditures.
Cash outflows from financing activities were $2.7 billion in 2024, as
repurchases of common stock and dividends paid were partially
offset by higher borrowings.
Cash Returned to Shareholders
Cash returned to shareholders decreased $3.0 billion in 2024 as
we managed cash flows through the declining business cycle in
accordance with our use-of-cash priorities.
DEBT RATINGS
To access public debt capital markets, we rely on credit rating
agencies to assign short-term and long-term credit ratings to our
debt securities as an indicator of credit quality for fixed income
investors. A security rating is not a recommendation by the rating
agency to buy, sell, or hold our securities. A credit rating agency
may change or withdraw ratings based on its assessment of our
current and future ability to meet interest and principal repayment
obligations. Each agency’s rating should be evaluated
independently of any other rating. Lower credit ratings generally
result in higher borrowing costs, including costs of derivative
transactions, 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
A+
F1
Stable
Moody’s Investors Service, Inc.
A1
Prime-1
Stable
Standard & Poor’s
A
A-1
Stable
CONTRACTUAL OBLIGATIONS
AND CASH REQUIREMENTS
2025 and Beyond
Our material cash requirements include the following:
Borrowings – As of October 27, 2024, we had $17.6 billion of
payments due on borrowings and securitization borrowings in the
next year, along with interest payments of $2.5 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 be lower in 2025.
Purchase Obligations – As of October 27, 2024, our outstanding
purchase obligations were $3.2 billion, with $2.8 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 $1.6 billion are planned for 2025,
• expected quarterly cash dividend throughout 2025 (subject to
change at the discretion of our Board of Directors), and
• total pension and other postretirement benefit (OPEB)
contributions in 2025 are expected to be approximately $760
including a voluntary OPEB contribution of up to $520 (see
Note 7).
Share repurchases will be considered as a means of deploying
excess cash to shareholders, once the previously mentioned
requirements are met.
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,
35
• 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
The accruals recorded against receivables relate to programs where
we have the contractual right and the intent to offset against
existing receivables. The decrease in 2024 resulted from lower
sales.
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 1.0 percent. Holding other assumptions
constant, a 1.0 percent change would have modified the sales
incentive accrual by about $135.
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
The decrease in 2024 is the result of lower sales volumes.
Product warranty accrual estimates are affected by the historical
percent of warranty claims costs as a percentage of gross sales.
Over the last five fiscal years, the percent has varied plus or minus
.09 percent. Holding all other assumptions constant, if this
estimated cost experience percent would have increased or
decreased .09 percent, the warranty accrual at October 27, 2024
would have changed by approximately $50.
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,
• 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.
36
The key pension and OPEB amounts follow:
2024 2023 2022
Pension and OPEB net (benefit) cost
$
(86) $
(13) $
176
Long-term expected return on pension
and OPEB plan assets (as a percent)
6.8
6.2
5.0
Long-term expected return on pension
and OPEB plan assets
1,075
995
836
Actual return (loss) on pension and OPEB
plan assets
1,962
(395) (3,565)
Pension assets, net of pension liabilities
2,003 2,076 2,690
OPEB liabilities, net of OPEB assets
1,191 1,001 1,205
The increase in the 2024 pension and OPEB net benefit was due to
an increase in the expected long-term rates of return on pension
plan assets and the Canadian pension settlement charge
recognized in 2023 (see Note 7).
The effect of hypothetical changes to selected assumptions on our
major U.S. retirement benefit plans would be as follows:
October 27, 2024
2025
Increase
Increase
Percentage
(Decrease)
(Decrease)
Assumptions
Change
PBO/APBO*
Expense
Pensions:
Discount rate**
+/-.5
$
(495)/550
$
4/7
Expected return on
assets
+/-.5
(63)/63
OPEB:
Discount rate**
+/-.5
(138)/149
(3)/1
Expected return on
assets
+/-.5
(11)/11
Health care cost
trend rate**
+/-1.0
263/(230)
33/(35)
* Projected benefit obligation (PBO) for pension plans and accumulated
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,
• market,
• geography,
• credit risk, and
• remaining balance.
We utilize the following loss forecast models to estimate expected
credit losses:
• Linear regression models are used for large and complex retail
customer receivable pools, which represent more than
90 percent of retail customer receivables. These statistical
models utilize independent variables, or predictive features, to
estimate lifetime default rates, which are subsequently
adjusted for expected recoveries to arrive at lifetime credit loss
estimates. Independent variables include credit quality at time
of application, remaining account balance, delinquency status,
and various economic factors, such as commodity prices,
employment levels, and housing data.
• 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.
Management reviews each model’s output quarterly, and
qualitative adjustments are incorporated as necessary to arrive
at management’s best estimate of expected credit losses.
Allowance for Credit Losses
During 2024, we determined that the financial services business in
Brazil met the held for sale criteria. The receivables in Brazil were
reclassified to “Assets held for sale.” The associated allowance for
credit losses was reversed and a valuation allowance for the assets
held for sale was recorded (see Note 4). Excluding the business in
Brazil, the allowance for credit losses increased, primarily due to
higher expected losses as a result of elevated delinquencies and a
decline in market conditions. This increase was partially offset by a
decrease in the allowance on revolving charge accounts, driven by
write-offs of seasonal financing program accounts and recoveries
expected on those accounts in the future.
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. Within the retail customer receivable portfolio, credit loss
estimates are dependent on a number of factors, including credit
quality at time of application, remaining account balances, current
delinquency levels, various economic factors, and estimated
recoveries on defaulted accounts. Changes in any of these factors
could impact our credit losses. Conversely, changes in economic
conditions have historically had limited impact on credit losses
within the wholesale receivable portfolio.
Holding all other factors constant, a 10 percent increase in the
linear regression models’ forecasted defaults and a simultaneous
10 percent decrease in recovery rates would have resulted in a $70
increase to the allowance for credit losses at October 27, 2024.
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,
37
• 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
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 $75. 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 27, 2024 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:
• the agricultural business cycle, which can be unpredictable and
is affected by factors such as world grain stocks, harvest
yields, available farm acres, acreage planted, soil conditions,
prices for commodities and livestock, input costs, availability of
transport for crops as well as adverse macroeconomic
conditions, including unemployment, inflation, interest rate
volatility, changes in consumer practices due to slower
economic growth, and regional or global liquidity constraints;
these constraints may impact our customers and dealers,
resulting in higher provisions for credit losses and write-offs;
• uncertainty of government policies and actions after recent
U.S. elections in respect to global trade, tariffs, trade
agreements, and energy, and the uncertainty of our ability to
internationally sell products based on these actions and
policies;
• 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;
• our ability to adapt in highly competitive markets, including
understanding and meeting customers’ changing expectations
for products and solutions, including delivery and utilization of
precision technology;
38
• housing starts and supply, real estate and housing prices,
levels of public and non-residential construction, and
infrastructure investment;
• political, economic, and social instability of the geographies in
which we operate, including the ongoing war between Russia
and Ukraine and the conflict in the Middle East;
• worldwide demand for food and different forms of renewable
energy impacting the price of farm commodities and
consequently the demand for our equipment;
• availability and price of raw materials, components, and whole
goods;
• delays or disruptions in our supply chain;
• suppliers’ and manufacturers’ business practices and
compliance with applicable laws such as human rights, safety,
environmental, and fair wages;
• changes in climate patterns, unfavorable weather events, and
natural disasters;
• loss of or challenges to intellectual property rights;
• rationalization, restructuring, relocation, expansion and/or
reconfiguration of manufacturing and warehouse facilities;
• the ability to execute business strategies, including our Smart
Industrial Operating Model and Leap Ambitions;
• the ability to understand and meet customers’ changing
expectations and demand for our products and solutions,
including delivery and utilization of precision technology;
• accurately forecasting customer demand for products and
services and adequately managing inventory;
• dealer practices and their ability to manage inventory and
distribution of our products and to provide support and service
for precision technology solutions;
• the ability to realize anticipated benefits of acquisitions and
joint ventures, including challenges with successfully
integrating operations and internal control processes;
• negative claims or publicity that damage our reputation or
brand;
• the ability to attract, develop, engage, and retain qualified
employees;
• the impact of workforce reductions on company culture,
employee retention and morale, and institutional knowledge;
• labor relations and contracts, including work stoppages and
other disruptions;
• security breaches, cybersecurity attacks, technology failures,
and other disruptions to our information technology
infrastructure and products;
• leveraging artificial intelligence and machine learning within
our business processes;
• changes to governmental communications channels (radio
frequency technology);
• changes to existing laws and regulations, including the
implementation of new, more stringent laws, as well as
compliance with a variety of U.S., foreign and international
laws, regulations, and policies relating to, but not limited to the
following: advertising, anti-bribery and anti-corruption, anti-
money laundering, antitrust, consumer finance, cybersecurity,
data privacy, encryption, environmental (including climate
change and engine emissions), farming, health and safety,
foreign exchange controls and cash repatriation restrictions,
foreign ownership and investment, human rights, import /
export and trade, tariffs, labor and employment, product
liability, telematics, and telecommunications;
• governmental and other actions designed to address climate
change in connection with a transition to a lower-carbon
economy;
• investigations, claims, lawsuits, or other legal proceedings; and
• warranty claims, post-sales repairs or recalls, product liability
litigation, and regulatory investigations as a result of the
deficient operation of our products.
Further information concerning us and our businesses, including
factors that could materially affect our financial results, is included
in our other filings with the SEC (including, but not limited to, the
factors discussed in Item 1A. “Risk Factors” of 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.
39
SUPPLEMENTAL CONSOLIDATING DATA
The supplemental consolidating data presented on the subsequent pages is presented for informational purposes. Equipment operations
represent the enterprise without financial services. Equipment operations include production and precision agriculture operations, small
agriculture and turf operations, construction and forestry operations, and other corporate assets, liabilities, revenues, and expenses not
reflected within financial services. Transactions between the equipment operations and financial services have been eliminated to arrive at
the consolidated financial statements.
Equipment operations and financial services participate in different industries. Equipment operations primarily generate earnings and cash
flows by manufacturing and selling equipment, service parts, and technology solutions to dealers and retail customers. Financial services
finance sales and leases by dealers of new and used equipment that is largely manufactured by equipment operations. Those earnings and
cash flows generally are the difference between the finance income received from customer payments less interest expense, and
depreciation on equipment subject to an operating lease. The two businesses are capitalized differently and have separate performance
metrics. The supplemental consolidating data is also used by management due to these differences.
INCOME STATEMENTS
For the Years Ended October 27, 2024, October 29, 2023, and October 30, 2022
Unaudited
EQUIPMENT
FINANCIAL
OPERATIONS
SERVICES
ELIMINATIONS
CONSOLIDATED
2024
2023
2022
2024
2023
2022
2024
2023 2022
2024
2023
2022
Net Sales and Revenues
Net sales
$ 44,759 $ 55,565 $ 47,917
$ 44,759 $ 55,565 $ 47,917
Finance and interest income
596
636
213 $ 6,035 $ 5,055 $ 3,583 $ (872) $ (1,008) $ (431)
5,759
4,683
3,365
1
Other income
1,006
858
1,261
458
499
502
(266)
(354)
(468)
1,198
1,003
1,295 2, 3, 4
Total
46,361 57,059
49,391
6,493
5,554 4,085
(1,138)
(1,362)
(899)
51,716
61,251
52,577
Costs and Expenses
Cost of sales
30,803
37,739
35,341
(28)
(24)
(3)
30,775
37,715
35,338
4
Research and development expenses
2,290
2,177
1,912
2,290
2,177
1,912
Selling, administrative and
general expenses
3,791
3,611
3,137
1,059
994
735
(10)
(10)
(9)
4,840
4,595
3,863
4
Interest expense
396
411
390
3,182
2,362
799
(230)
(320)
(127)
3,348
2,453
1,062
1
Interest compensation to
Financial Services
640
687
299
(640)
(687)
(299)
1
Other operating expenses
133
217
350
1,354
1,396
1,386
(230)
(321)
(461)
1,257
1,292
1,275 3, 4, 5
Total
38,053 44,842
41,429
5,595
4,752 2,920
(1,138)
(1,362)
(899)
42,510 48,232 43,450
Income before Income Taxes
8,308
12,217
7,962
898
802
1,165
9,206
13,019
9,127
Provision for income taxes
1,887
2,685
1,718
207
186
289
2,094
2,871
2,007
Income after Income Taxes
6,421
9,532
6,244
691
616
876
7,112
10,148
7,120
Equity in income (loss)
of unconsolidated affiliates
(29)
4
6
5
3
4
(24)
7
10
Net Income
6,392
9,536
6,250
696
619
880
7,088
10,155
7,130
Less: Net loss attributable to
noncontrolling interests
(12)
(11)
(1)
(12)
(11)
(1)
Net Income Attributable to
Deere & Company
$ 6,404 $ 9,547 $ 6,251 $ 696 $
619 $ 880
$ 7,100 $ 10,166 $
7,131
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 income and expenses between equipment operations and financial services related to intercompany guarantees of investments in certain international
markets.
4 Elimination of intercompany service revenues and fees.
5 Elimination of financial services’ lease depreciation expense related to inventory transferred to equipment on operating leases.
40
SUPPLEMENTAL CONSOLIDATING DATA (continued)
CONDENSED BALANCE SHEETS
As of October 27, 2024 and October 29, 2023
Unaudited
EQUIPMENT
FINANCIAL
OPERATIONS
SERVICES
ELIMINATIONS
CONSOLIDATED
2024
2023
2024
2023
2024
2023
2024
2023
ASSETS
Cash and cash equivalents
$
5,615 $
5,720 $
1,709 $
1,738
$
7,324 $
7,458
Marketable securities
125
104
1,029
842
1,154
946
Receivables from Financial Services
3,043
4,516
$
(3,043) $
(4,516)
6
Trade accounts and notes receivable – net
1,257
1,320
6,225
8,687
(2,156)
(2,268)
5,326
7,739
7
Financing receivables – net
78
64
44,231
43,609
44,309
43,673
Financing receivables securitized – net
2
8,721
7,335
8,723
7,335
Other receivables
2,193
1,813
427
869
(75)
(59)
2,545
2,623
7
Equipment on operating leases – net
7,451
6,917
7,451
6,917
Inventories
7,093
8,160
7,093
8,160
Property and equipment – net
7,546
6,843
34
36
7,580
6,879
Goodwill
3,959
3,900
3,959
3,900
Other intangible assets – net
999
1,133
999
1,133
Retirement benefits
2,839
2,936
83
72
(1)
(1)
2,921
3,007
8
Deferred income taxes
2,262
2,133
43
68
(219)
(387)
2,086
1,814
9
Other assets
2,194
1,948
715
559
(3)
(4)
2,906
2,503
Assets held for sale
2,944
2,944
Total Assets
$ 39,205 $ 40,590 $
73,612 $
70,732 $
(5,497) $
(7,235) $ 107,320 $ 104,087
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Short-term borrowings
$
911 $
1,230 $
12,622 $
16,709
$
13,533 $
17,939
Short-term securitization borrowings
2
8,429
6,995
8,431
6,995
Payables to Equipment Operations
3,043
4,516 $
(3,043) $
(4,516)
6
Accounts payable and accrued expenses
13,534
14,862
3,243
3,599
(2,234)
(2,331)
14,543
16,130
7
Deferred income taxes
434
452
263
455
(219)
(387)
478
520
9
Long-term borrowings
6,603
7,210
36,626
31,267
43,229
38,477
Retirement benefits and other liabilities
2,250
2,032
105
109
(1)
(1)
2,354
2,140
8
Liabilities held for sale
1,827
1,827
Total liabilities
23,734
25,786
66,158
63,650
(5,497)
(7,235)
84,395
82,201
Commitments and contingencies (Note 20)
Redeemable noncontrolling interest (Note 3)
82
97
82
97
STOCKHOLDERS’ EQUITY
Total Deere & Company stockholders’ equity
22,836
21,785
7,454
7,082
(7,454)
(7,082)
22,836
21,785 10
Noncontrolling interests
7
4
7
4
Financial Services' equity
(7,454)
(7,082)
7,454
7,082
10
Adjusted total stockholders' equity
15,389
14,707
7,454
7,082
22,843
21,789
Total Liabilities and Stockholders’ Equity
$ 39,205 $ 40,590 $
73,612 $
70,732 $
(5,497) $
(7,235) $ 107,320 $ 104,087
6 Elimination of receivables / payables between equipment operations and financial services.
7 Primarily reclassification of sales incentive accruals on receivables sold to financial services.
8 Reclassification of net pension assets / liabilities.
9 Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions.
10 Elimination of financial services’ equity.
41
SUPPLEMENTAL CONSOLIDATING DATA (continued)
STATEMENTS OF CASH FLOWS
For the Years Ended October 27, 2024, October 29, 2023, and October 30, 2022
Unaudited
EQUIPMENT
FINANCIAL
OPERATIONS
SERVICES
ELIMINATIONS
CONSOLIDATED
2024 2023
2022
2024
2023
2022
2024 2023
2022
2024
2023
2022
Cash Flows from Operating Activities
Net income
$ 6,392 $ 9,536 $ 6,250 $
696 $
619 $
880
$ 7,088 $ 10,155 $
7,130
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision (credit) for credit losses
14
7
3
296
(23)
189
310
(16)
192
Provision for depreciation and amortization
1,220
1,123
1,041
1,040
1,016
1,050 $ (142) $
(135) $ (196)
2,118
2,004
1,895
11
Impairments and other adjustments
28
18
88
97
173
125
191
88
Share-based compensation expense
208
130
85
208
130
85
12
Gain on remeasurement of previously held equity
investment
(326)
(326)
Distributed earnings of Financial Services
250
215
444
(250)
(215)
(444)
13
Provision (credit) for deferred income taxes
(97)
(959)
8
(197)
169
(74)
(294)
(790)
(66)
Changes in assets and liabilities:
Receivables related to sales
(13)
(58)
(189)
434
(4,195) (2,294)
421
(4,253)
(2,483)
14, 16
Inventories
1,011
474 (1,924)
(223)
(195)
(167)
788
279
(2,091)
15
Accounts payable and accrued expenses
(1,429)
1,352
1,444
277
449
143
112
(971)
(454)
(1,040)
830
1,133
16
Accrued income taxes payable/receivable
(218)
8
166
95
(31)
(25)
(123)
(23)
141
Retirement benefits
(215)
(164)
(1,016)
(12)
(6)
1
(227)
(170)
(1,015)
Other
(38)
367
250
40
(51)
(287)
(145)
(64)
53
(143)
252
16 11, 12, 15
Net cash provided by operating activities
6,905
11,919
6,239
2,332
2,315
1,877
(6) (5,645)
(3,417)
9,231
8,589
4,699
Cash Flows from Investing Activities
Collections of receivables (excluding receivables related
to sales)
26,029
24,128
22,400
(867)
(1,077)
(1,493)
25,162
23,051
20,907
14
Proceeds from maturities and sales of marketable securities
99
59
733
127
79
832
186
79
Proceeds from sales of equipment on operating leases
1,929
1,981
2,093
1,929
1,981
2,093
Cost of receivables acquired (excluding receivables
related to sales)
(29,152) (29,229) (26,903)
336
457
603
(28,816) (28,772) (26,300)
14
Acquisitions of businesses, net of cash acquired
(82)
(498)
(82)
(498)
Purchases of marketable securities
(209)
(173)
(76)
(846)
(318)
(174)
(1,055)
(491)
(250)
Purchases of property and equipment
(1,636) (1,494)
(1,131)
(4)
(4)
(3)
(1,640)
(1,498)
(1,134)
Cost of equipment on operating leases acquired
(3,464)
(3,234)
(2,879)
302
264
225
(3,162)
(2,970)
(2,654)
15
Decrease (increase) in investment in Financial Services
4
(870)
7
(4)
870
(7)
17
Decrease (increase) in trade and wholesale receivables
21
(5,783)
(3,601)
(21)
5,783
3,601
14
Collateral on derivatives – net
(1)
5
413
(11)
(647)
413
(12)
(642)
Other
(125)
(176)
(137)
(8)
31
14
6
3
37
(127)
(142)
(86)
Net cash used for investing activities
(1,867)
(2,737) (1,830)
(4,349)
(12,312)
(9,621)
(248)
6,300
2,966
(6,464)
(8,749)
(8,485)
Cash Flows from Financing Activities
Net proceeds (payments) in short-term borrowings
(original maturities three months or less)
28
(113)
136
(1,884)
4,121
3,716
(1,856)
4,008
3,852
Change in intercompany receivables/payables
1,459 2,090
(1,633)
(1,459)
(2,090)
1,633
Proceeds from borrowings issued (original maturities
greater than three months)
159
342
138
17,937
15,087
10,220
18,096
15,429
10,358
Payments of borrowings (original maturities greater
than three months)
(1,123)
(901)
(1,356)
(12,109)
(7,012)
(7,089)
(13,232)
(7,913)
(8,445)
Repurchases of common stock
(4,007)
(7,216) (3,597)
(4,007)
(7,216)
(3,597)
Capital investment from Equipment Operations
(4)
870
(7)
4
(870)
7
17
Dividends paid
(1,605)
(1,427)
(1,313)
(250)
(215)
(444)
250
215
444
(1,605)
(1,427)
(1,313)
13
Other
(46)
(7)
6
(67)
(66)
(35)
(113)
(73)
(29)
Net cash provided by (used for) financing activities (5,135)
(7,232) (7,619)
2,164
10,695
7,994
254
(655)
451
(2,717)
2,808
826
Effect of Exchange Rate Changes on Cash, Cash
Equivalents, and Restricted Cash
(15)
24
(209)
(22)
7
(15)
(37)
31
(224)
Net Increase (Decrease) in Cash, Cash Equivalents, and
Restricted Cash
(112)
1,974
(3,419)
125
705
235
13
2,679
(3,184)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Year
5,755
3,781
7,200
1,865
1,160
925
7,620
4,941
8,125
Cash, Cash Equivalents, and Restricted Cash at End of Year $ 5,643 $ 5,755 $ 3,781 $ 1,990 $ 1,865 $
1,160
$ 7,633 $ 7,620 $
4,941
Components of Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents
$ 5,615 $ 5,720 $ 3,767 $ 1,709 $
1,738 $
1,007
$ 7,324 $ 7,458 $
4,774
Cash, cash equivalents, and restricted cash (Assets held
for sale)
116
116
Restricted cash (Other assets)
28
35
14
165
127
153
193
162
167
Total Cash, Cash Equivalents, and Restricted Cash
$ 5,643 $ 5,755 $ 3,781 $ 1,990 $ 1,865 $
1,160
$ 7,633 $ 7,620 $
4,941
11 Elimination of depreciation on leases related to inventory transferred to equipment on operating leases (see Note 6).
12 Reclassification of share-based compensation expense.
13 Elimination of dividends from financial services to the equipment operations, which are included in the equipment operations operating activities.
14 Primarily reclassification of receivables related to the sale of equipment.
15 Reclassification of direct lease agreements with retail customers.
16 Reclassification of sales incentive accruals on receivables sold to financial services.
17 Elimination of change in investment from equipment operations to financial services.
42
SELECTED FINANCIAL DATA
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
Net sales and revenues
$
51,716 $ 61,251 $ 52,577 $ 44,024 $ 35,540 $ 39,258 $ 37,358 $ 29,738 $ 26,644 $ 28,863
Net sales
44,759 55,565 47,917 39,737 31,272 34,886 33,351 25,885 23,387 25,775
Finance and interest income
5,759
4,683 3,365 3,296 3,450 3,493 3,107 2,732
2,511
2,381
Research and development expenses
2,290
2,177
1,912
1,587
1,644
1,783 1,658
1,373
1,394
1,410
Selling, administrative and general expenses
4,840
4,595 3,863 3,383
3,477
3,551 3,455 3,098
2,791 2,868
Interest expense
3,348
2,453
1,062
993
1,247 1,466 1,204
899
764
680
Net income*
7,100
10,166
7,131 5,963
2,751
3,253 2,368
2,159
1,524 1,940
Return on net sales
15.9%
18.3%
14.9%
15.0%
8.8%
9.3%
7.1%
8.3%
6.5%
7.5%
Return on beginning Deere & Company
stockholders’ equity
32.6%
50.2%
38.7%
46.1%
24.1%
28.8%
24.8%
33.1%
22.6%
21.4%
Comprehensive income*
6,508 10,099 6,629 8,963
2,819
2,081 3,222
3,221
627
994
Net income per share – basic*
$
25.73 $ 34.80 $ 23.42 $
19.14 $
8.77 $ 10.28 $
7.34 $
6.76 $
4.83 $
5.81
– diluted*
25.62
34.63 23.28 18.99
8.69
10.15
7.24
6.68
4.81
5.77
Dividends declared per share
5.88
5.05
4.36
3.61
3.04
3.04
2.58
2.40
2.40
2.40
Dividends paid per share
5.76
4.83
4.28
3.32
3.04
2.97
2.49
2.40
2.40
2.40
Average number of common shares
outstanding (in millions) – basic
276.0
292.2 304.5
311.6
313.5
316.5 322.6
319.5
315.2 333.6
– diluted
277.1
293.6 306.3
314.0
316.6 320.6 327.3 323.3
316.6 336.0
Total assets
$ 107,320 $ 104,087 $ 90,030 $ 84,114 $ 75,091 $ 73,011 $ 70,108 $ 65,786 $ 57,918 $ 57,883
Trade accounts and notes receivable – net
5,326
7,739 6,410 4,208
4,171 5,230 5,004 3,925
3,011
3,051
Financing receivables – net
44,309 43,673 36,634 33,799 29,750 29,195 27,054 25,104 23,702 24,809
Financing receivables securitized – net
8,723
7,335 5,936 4,659 4,703 4,383 4,022 4,159
5,127 4,835
Equipment on operating leases – net
7,451
6,917 6,623 6,988 7,298 7,567 7,165 6,594 5,902 4,970
Inventories
7,093
8,160 8,495
6,781 4,999 5,975 6,149 3,904
3,341
3,817
Property and equipment – net
7,580
6,879 6,056 5,820
5,817 5,973 5,868 5,068
5,171
5,181
Short-term borrowings
13,533
17,939 12,592 10,919 8,582 10,784 11,062 10,035
6,911 8,425
Short-term securitization borrowings
8,431
6,995
5,711
4,605
4,682
4,321
3,957
4,119
4,998
4,585
Long-term borrowings
43,229
38,477 33,596 32,888 32,734 30,229 27,237 25,891 23,703 23,775
Total Deere & Company stockholders’ equity 22,836
21,785 20,262 18,431 12,937
11,413 11,288 9,557 6,520 6,743
Book value per share*
$
84.03 $
77.37 $ 67.82 $ 59.83 $ 41.25 $ 36.45 $ 35.45 $ 29.70 $ 20.71 $ 21.29
Capital expenditures
$
1,624 $
1,537 $
1,176 $
867 $
762 $ 1,084 $
969 $
586 $
668 $
655
Number of employees (at year end)
75,847 82,956 82,239 75,550 69,634 73,489 74,413 60,476 56,767 57,180
* Attributable to Deere & Company.
43
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 and have remained elevated. Increased rates
impacted us in several ways, primarily affecting the demand for
our products and financing spreads for the financial services
operations. Increased interest rates have historically impacted
our borrowings sooner than the benefit is realized from the
financing receivable and equipment on operating lease
portfolios.
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 27, 2024, and
October 29, 2023, would have been approximately $75 and $10,
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, and
in 2024, we transitioned certain portfolios from the Canadian
Dollar Offered Rate (CDOR) to an alternative reference rate.
These transition activities did not have a material impact on our
financial statements.
Foreign Currency Risk
We hedge significant currency exposures for our equipment
operations. 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 2025 would increase the 2025 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 $25 increase
on the 2024 net cash inflows. The estimated impacts on net cash
inflows by currency follow:
2025
2024
Australian dollar
$
(75) $
(75)
Brazilian real
25
25
British pound
(50)
(50)
Canadian dollar
25
Euro
100
75
Japanese yen
50
75
Mexican peso
25
25
Polish zloty
(25)
(25)
All other
(50)
(25)
Total increase
$
25 $
25
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.
44
DEERE & COMPANY
STATEMENTS OF CONSOLIDATED INCOME
For the Years Ended October 27, 2024, October 29, 2023, and October 30, 2022
2024
2023
2022
Net Sales and Revenues
Net sales
$
44,759
$
55,565
$
47,917
Finance and interest income
5,759
4,683
3,365
Other income
1,198
1,003
1,295
Total
51,716
61,251
52,577
Costs and Expenses
Cost of sales
30,775
37,715
35,338
Research and development expenses
2,290
2,177
1,912
Selling, administrative and general expenses
4,840
4,595
3,863
Interest expense
3,348
2,453
1,062
Other operating expenses
1,257
1,292
1,275
Total
42,510
48,232
43,450
Income of Consolidated Group before Income Taxes
9,206
13,019
9,127
Provision for income taxes
2,094
2,871
2,007
Income of Consolidated Group
7,112
10,148
7,120
Equity in income (loss) of unconsolidated affiliates
(24)
7
10
Net Income
7,088
10,155
7,130
Less: Net loss attributable to noncontrolling interests
(12)
(11)
(1)
Net Income Attributable to Deere & Company
$
7,100
$
10,166
$
7,131
Per Share Data
Basic
$
25.73
$
34.80
$
23.42
Diluted
25.62
34.63
23.28
Dividends declared
5.88
5.05
4.36
Dividends paid
5.76
4.83
4.28
Average Shares Outstanding (in millions of shares)
Basic
276.0
292.2
304.5
Diluted
277.1
293.6
306.3
The notes to consolidated financial statements are an integral part of this statement.
45
DEERE & COMPANY
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
For the Years Ended October 27, 2024, October 29, 2023, and October 30, 2022
2024
2023
2022
Net Income
$
7,088
$
10,155
$
7,130
Other Comprehensive Income (Loss), Net of Income Taxes
Retirement benefits adjustment
(429)
(456)
645
Cumulative translation adjustment
(134)
443
(1,116)
Unrealized gain (loss) on derivatives
(64)
(29)
63
Unrealized gain (loss) on debt securities
36
(16)
(109)
Other Comprehensive Loss, Net of Income Taxes
(591)
(58)
(517)
Comprehensive Income of Consolidated Group
6,497
10,097
6,613
Less: Comprehensive loss attributable to noncontrolling interests
(11)
(2)
(16)
Comprehensive Income Attributable to Deere & Company
$
6,508
$
10,099
$
6,629
The notes to consolidated financial statements are an integral part of this statement.
46
DEERE & COMPANY
CONSOLIDATED BALANCE SHEETS
As of October 27, 2024 and October 29, 2023
2024
2023
ASSETS
Cash and cash equivalents
$
7,324
$
7,458
Marketable securities
1,154
946
Trade accounts and notes receivable – net
5,326
7,739
Financing receivables – net
44,309
43,673
Financing receivables securitized – net
8,723
7,335
Other receivables
2,545
2,623
Equipment on operating leases – net
7,451
6,917
Inventories
7,093
8,160
Property and equipment – net
7,580
6,879
Goodwill
3,959
3,900
Other intangible assets – net
999
1,133
Retirement benefits
2,921
3,007
Deferred income taxes
2,086
1,814
Other assets
2,906
2,503
Assets held for sale
2,944
Total Assets
$
107,320
$
104,087
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Short-term borrowings
$
13,533
$
17,939
Short-term securitization borrowings
8,431
6,995
Accounts payable and accrued expenses
14,543
16,130
Deferred income taxes
478
520
Long-term borrowings
43,229
38,477
Retirement benefits and other liabilities
2,354
2,140
Liabilities held for sale
1,827
Total liabilities
84,395
82,201
Commitments and contingencies (Note 20)
Redeemable noncontrolling interest (Note 3)
82
97
STOCKHOLDERS’ EQUITY
Common stock, $1 par value (authorized – 1,200,000,000 shares;
issued – 536,431,204 shares in 2024 and 2023), at paid-in amount
5,489
5,303
Common stock in treasury, 264,678,912 shares in 2024 and 254,846,927 shares in 2023, at cost
(35,349)
(31,335)
Retained earnings
56,402
50,931
Accumulated other comprehensive income (loss)
(3,706)
(3,114)
Total Deere & Company stockholders’ equity
22,836
21,785
Noncontrolling interests
7
4
Total stockholders’ equity
22,843
21,789
Total Liabilities and Stockholders’ Equity
$
107,320
$
104,087
The notes to consolidated financial statements are an integral part of this statement.
47
DEERE & COMPANY
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Years Ended October 27, 2024, October 29, 2023, and October 30, 2022
2024
2023
2022
Cash Flows from Operating Activities
Net income
$
7,088
$
10,155
$
7,130
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for credit losses
310
(16)
192
Provision for depreciation and amortization
2,118
2,004
1,895
Impairments and other adjustments
125
191
88
Share-based compensation expense
208
130
85
Gain on remeasurement of previously held equity investment
(326)
Credit for deferred income taxes
(294)
(790)
(66)
Changes in assets and liabilities:
Receivables related to sales
421
(4,253)
(2,483)
Inventories
788
279
(2,091)
Accounts payable and accrued expenses
(1,040)
830
1,133
Accrued income taxes payable/receivable
(123)
(23)
141
Retirement benefits
(227)
(170)
(1,015)
Other
(143)
252
16
Net cash provided by operating activities
9,231
8,589
4,699
Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)
25,162
23,051
20,907
Proceeds from maturities and sales of marketable securities
832
186
79
Proceeds from sales of equipment on operating leases
1,929
1,981
2,093
Cost of receivables acquired (excluding receivables related to sales)
(28,816)
(28,772)
(26,300)
Acquisitions of businesses, net of cash acquired
(82)
(498)
Purchases of marketable securities
(1,055)
(491)
(250)
Purchases of property and equipment
(1,640)
(1,498)
(1,134)
Cost of equipment on operating leases acquired
(3,162)
(2,970)
(2,654)
Collateral on derivatives – net
413
(12)
(642)
Other
(127)
(142)
(86)
Net cash used for investing activities
(6,464)
(8,749)
(8,485)
Cash Flows from Financing Activities
Net proceeds (payments) in short-term borrowings (original maturities three months or less)
(1,856)
4,008
3,852
Proceeds from borrowings issued (original maturities greater than three months)
18,096
15,429
10,358
Payments of borrowings (original maturities greater than three months)
(13,232)
(7,913)
(8,445)
Repurchases of common stock
(4,007)
(7,216)
(3,597)
Dividends paid
(1,605)
(1,427)
(1,313)
Other
(113)
(73)
(29)
Net cash provided by (used for) financing activities
(2,717)
2,808
826
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash
(37)
31
(224)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash
13
2,679
(3,184)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Year
7,620
4,941
8,125
Cash, Cash Equivalents, and Restricted Cash at End of Year
$
7,633
$
7,620
$
4,941
Components of Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents
$
7,324
$
7,458
$
4,774
Cash, cash equivalents, and restricted cash (Assets held for sale)
116
Restricted cash (Other assets)
193
162
167
Total Cash, Cash Equivalents, and Restricted Cash
$
7,633
$
7,620
$
4,941
The notes to consolidated financial statements are an integral part of this statement.
48
DEERE & COMPANY
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY
For the Years Ended October 30, 2022, October 29, 2023, and October 27, 2024
Total Stockholders’ Equity
Deere & Company Stockholders
Accumulated
Total
Other
Redeemable
Stockholders’
Common
Treasury
Retained
Comprehensive Noncontrolling Noncontrolling
Equity
Stock
Stock
Earnings
Income (Loss)
Interests
Interest
Balance October 31, 2021
$
18,434 $
5,054 $
(20,533) $
36,449 $
(2,539) $
3
Acquisitions (Note 3)
$
104
Net income (loss)
7,133
7,131
2
(3)
Other comprehensive loss
(517)
(517)
(15)
Repurchases of common stock
(3,597)
(3,597)
Treasury shares reissued
36
36
Dividends declared
(1,329)
(1,327)
(2)
Share based awards and other
105
111
(6)
6
Balance October 30, 2022
20,265
5,165
(24,094)
42,247
(3,056)
3
92
Net income (loss)
10,168
10,166
2
(13)
Other comprehensive income
(loss)
(58)
(58)
9
Repurchases of common stock
(7,274)
(7,274)
Treasury shares reissued
33
33
Dividends declared
(1,477)
(1,472)
(5)
Share based awards and other
132
138
(10)
4
9
Balance October 29, 2023
21,789
5,303
(31,335)
50,931
(3,114)
4
97
Net income (loss)
7,102
7,100
2
(14)
Other comprehensive income
(loss)
(592)
(592)
1
Repurchases of common stock
(4,044)
(4,044)
Treasury shares reissued
30
30
Dividends declared
(1,624)
(1,622)
(2)
Noncontrolling interest
redemption (Note 4)
(10)
Share based awards and other
182
186
(7)
3
8
Balance October 27, 2024
$
22,843 $
5,489 $
(35,349) $
56,402 $
(3,706) $
7 $
82
The notes to consolidated financial statements are an integral part of this statement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
49
Note Listing
Page
1.
Organization and Consolidation
49
2.
Summary of Significant Accounting Policies and
New Accounting Pronouncements
49
3.
Acquisitions and Dispositions
53
4.
Special Items
54
5.
Revenue Recognition
56
6.
Supplemental Cash Flow Information
58
7.
Pension and Other Postretirement Benefits
58
8.
Income Taxes
62
9.
Other Income and Other Operating Expenses
63
10.
Marketable Securities
64
11.
Receivables
64
12.
Securitization of Financing Receivables
69
13.
Inventories
69
14.
Property and Depreciation
69
15.
Goodwill and Other Intangible Assets ‒ Net
69
16.
Other Assets
70
17.
Short-Term Borrowings
70
18.
Accounts Payable and Accrued Expenses
70
19.
Long-Term Borrowings
71
20.
Commitments and Contingencies
71
21.
Capital Stock
71
22.
Share-Based Compensation
72
23.
Other Comprehensive Income Items
73
24.
Leases
74
25.
Fair Value Measurements
76
26.
Derivative Instruments
77
27.
Segment Data
78
28.
Subsequent Events
79
1. ORGANIZATION AND CONSOLIDATION
References to “Deere & Company,” “John Deere,” “Deere,” “we,”
“us,” or “our” include our consolidated subsidiaries, unless
otherwise stated. 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 (John Deere Financial or 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. 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 2024, 2023, and 2022 were October 27, 2024,
October 29, 2023, and October 30, 2022, respectively. Fiscal years
2024, 2023, and 2022 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. Certain prior period amounts have been reclassified to
conform to current period presentation.
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.
Argentine peso-denominated monetary assets and liabilities are
remeasured at each balance sheet date using the official currency
exchange rate. 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 27, 2024 and October 29, 2023, our net investment in
Argentina was $826 and $766, respectively. Net sales and
revenues from our Argentine operations represented
approximately 1 percent of consolidated net sales and revenues for
2024, 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 27, 2024 and
October 29, 2023, the gross peso exposure was $69 and $30,
respectively, while the net peso exposure (after considering the
impact of short-term hedges) was $14 and $5, respectively. In
2024, we invested in U.S. dollar denominated bonds issued by the
central bank of Argentina. The bonds are recorded in “Marketable
securities” and classified as “International debt securities.” These
bonds can be held until maturity or sold in secondary markets
outside of Argentina to settle intercompany debt.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW
ACCOUNTING PRONOUNCEMENTS
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.
50
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
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. One type of sales
incentive program offered to dealers is pool funds in which we
award dealers funds based on new equipment sales. Dealers can
use these funds to incentivize sales from the dealer to the end
customer. Pool funds, as well as some other incentive programs,
are recorded in “Trade accounts and notes receivable – net” as we
have the contractual right and the intent to offset against the
existing dealer receivables. 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.
51
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.
Advertising Costs
Advertising costs are charged to “Selling, administrative and
general expenses” as incurred. Advertising costs were $230 in
2024, $244 in 2023, and $227 in 2022.
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 our receivable portfolio.
Non-performing receivables are included in the estimate of
expected credit losses. 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:
• Linear regression models are used for large and complex
retail customer receivable pools, which represent more than
90 percent of retail customer receivables. These statistical
models utilize independent variables, or predictive features,
to estimate lifetime default rates, which are subsequently
adjusted for expected recoveries to arrive at lifetime credit
loss estimates. Independent variables included in the models
vary by product, but can include credit quality at time of
application, remaining account balance, delinquency status,
and various economic factors, such as commodity prices,
employment levels, and housing data. The economic factors
include forward-looking conditions over our reasonable and
supportable forecast period. In the fourth quarter of 2024,
we transitioned from the use of transition matrix models to
linear regression models to estimate expected credit losses.
This change in methodology did not have a material impact
on our consolidated financial statements.
• 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.
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.
52
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.
• 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
2024, 2023, and 2022 was $63, $159, and $175, respectively.
New Accounting Pronouncements Adopted
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
2024, none of which had a material effect on our consolidated
financial statements:
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
Accounting Pronouncements to be Adopted
In November 2024, the FASB issued ASU 2024-03, Income
Statement – Reporting Comprehensive Income – Expense
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of
Income Statement Expenses, which expands disclosures about
specific expense categories presented on the face of the income
statement. The effective date of the ASU is fiscal year 2028. We are
assessing the effect of this update on our related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes
(Topic 740): Improvements to Income Tax Disclosures, which
expands disclosures in an entity’s income tax rate reconciliation
table and cash income taxes paid both in the U.S. and foreign
jurisdictions. The effective date of the ASU is fiscal year 2026. We
are assessing the effect of this update on our related disclosures.
We will also adopt the following standards in future periods, none
of which are expected to have a material effect on our
consolidated financial statements.
No. 2024-04 — Debt – Debt with Conversion and Other Options
(Subtopic 470-20): Induced Conversions of Convertible Debt
Instruments
No. 2023-07 — Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures
No. 2023-06 — Disclosure Improvements: Codification Amendments in
Response to the SEC’s Disclosure Update and Simplification
Initiative
No. 2023-05 — Business Combinations – Joint Venture Formations
(Subtopic 805-60): Recognition and Initial Measurement
No. 2022-03 — Fair Value Measurement (Topic 820): Fair Value
Measurement of Equity Securities Subject to Contractual Sale
Restrictions
53
3. ACQUISITIONS AND DISPOSITIONS
During the presented periods, we completed acquisitions to
support our Smart Industrial Operating Model and 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:
February 2022
Trade accounts and notes receivable
$
2
Other receivables
11
Inventories
11
Property and equipment
11
Goodwill
218
Other intangible assets
178
Other assets
6
Total assets
$
437
Accounts payable and accrued expenses
$
26
Deferred income taxes
39
Redeemable noncontrolling interest
$
96
The identifiable intangible assets were related to technology,
trade name, and customer relationships with a weighted average
amortization period of 12 years. The goodwill is not deductible for
income tax purposes. Kreisel is allocated amongst the PPA, SAT,
and CF segments.
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 was as follows:
March 2022
Cash consideration for factories
$
205
Cash consideration for license agreement
70
Deferred consideration
271
Total purchase price consideration
546
Less: Cash obtained
(187)
Less: Settlement of intercompany balances
(113)
Net purchase price consideration
246
Fair value of previously held equity investment
444
Total invested capital
$
690
The total purchase price consideration includes deferred
consideration that will be paid as 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. See Note 25 for fair value
measurement information. 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
54
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:
March 2022
Other receivables
$
29
Inventories
286
Property and equipment
180
Goodwill
529
Other intangible assets
70
Deferred income taxes
56
Other assets
3
Total assets
$
1,153
Accounts payable and accrued expenses
$
300
Long-term borrowings
163
Total liabilities
$
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 Ag Systems, Inc. (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:
October 2022
Trade accounts and notes receivable
$
8
Inventories
8
Property and equipment
4
Goodwill
53
Other intangible assets
21
Other assets
60
Total assets
$
154
Accounts payable and accrued expenses
$
6
Deferred income taxes
5
Total liabilities
$
11
Redeemable noncontrolling interest
$
9
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.
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. As of October 27, 2024, our remaining investments in
Russia were not material.
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
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 items.
2024 Special Items
Legal Settlements
In 2024, we reached legal settlements concerning patent
infringement claims. As a result of these settlements, we
recognized a total of $57 pretax gain ($45 after-tax) in "Other
income," providing a benefit of $17 to PPA and $40 to CF. These
settlements resolve the disputes without any admission of liability
by the parties involved. We believe that these settlements
enhance our ability to protect our intellectual property and
reinforce our commitment to innovation and technological
advancement.
Impairment
In the fourth quarter of 2024, we recorded a non-cash charge of
$28 pretax and after-tax in “Equity in income (loss) of
unconsolidated affiliates” for an other than temporary decline in
value of an investment recorded in SAT. See Note 25 for fair value
measurement information.
Employee-Separation Programs
In the third quarter of 2024, we implemented employee-
separation programs for our salaried workforce in several
geographic areas, including the United States, Europe, Asia, and
Latin America. The programs’ main purpose was to help meet our
strategic priorities while reducing overlap and redundancy in roles
and responsibilities. The programs were largely involuntary in
55
nature with the expense recorded when management committed
to a plan, the plan was communicated to the employees, and the
employees were not required to provide service beyond the legal
notification period. For the limited voluntary employee-separation
programs, the expense was recorded in the period in which the
employee irrevocably accepted a separation offer.
The programs’ total pretax expenses are estimated to be
approximately $165. In 2024, we recorded $157 pretax expenses
($124 after-tax) related to the programs, of which $130 was paid in
2024 and $27 is expected to be paid in 2025. The remaining
expenses are associated with programs in international locations
and are expected to be recorded in 2025.
The programs’ pretax expenses in 2024 were as follows:
PPA SAT
CF
FS Total
Employee-Separation Programs:
Cost of sales
$
21 $
11 $
8
$ 40
Research and development
expenses
22
9
2
33
Selling, administrative and
general expenses
34
23
12 $
10
79
Total operating profit decrease $
77 $
43 $
22 $
10 $ 152
Non-operating profit expenses*
5
Total
$ 157
* Relates primarily to corporate expenses.
Banco John Deere S.A.
In August 2024, we entered into a joint venture agreement with a
Brazilian bank, Banco Bradesco S.A. (Bradesco), for Bradesco to
invest and become 50 percent owner of our wholly-owned
subsidiary in Brazil, Banco John Deere S.A. (BJD). BJD is included in
our financial services segment and finances retail and wholesale
loans for agricultural, construction, and forestry equipment. The
transaction is intended to reduce our incremental risk as we
continue to grow in the Brazilian market. On the transaction date,
which is expected to occur in the first half of 2025, Bradesco will
contribute capital equal to our equity investment in BJD. We will
retain a 50 percent equity interest in BJD and expect to report the
results of the joint venture as an equity investment in
unconsolidated affiliates.
The BJD business was reclassified as held for sale in the third
quarter of 2024, as the held for sale criteria was met. A reversal of
$38 in allowance for credit losses was recorded in the third
quarter. At October 27, 2024, a $97 valuation allowance was
recorded on the assets held for sale, which was presented in
“Impairments and other adjustments” in the statements of
consolidated cash flows. The net impact of these entries was a
pretax and after-tax loss of $59 recorded in “Selling,
administrative and general expenses.”
The major classes of the total consolidated assets and liabilities of
BJD classified as held for sale and liabilities of BJD to other
intercompany parties at October 27, 2024 follows. See Note 25 for
fair value measurement information.
October 2024
Cash and cash equivalents
$
115
Trade accounts and notes receivable – net
176
Financing receivables – net
2,693
Deferred income taxes
36
Other miscellaneous assets*
21
Valuation allowance
(97)
Assets held for sale
$
2,944
Short-term borrowings
$
534
Accounts payable and accrued expenses
118
Long-term borrowings
1,174
Retirement benefits and other liabilities
1
Liabilities held for sale
$
1,827
Total intercompany payables
$
654
* Includes $1 restricted cash balance.
Redeemable Noncontrolling Interest
In the third quarter of 2024, we exercised our right to purchase
the remaining 20 percent interest in SurePoint. The arrangement
was accounted for as an equity transaction with no gain or loss
recorded in the statements of consolidated income.
2023 Special Items
Sale of Russian Roadbuilding Business
In October 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 “Selling, administrative and
general expenses” 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.
56
Summary of 2024 and 2023 Special Items
The following table summarizes the operating profit impact of
the special items recorded in 2024 and 2023.
PPA
SAT
CF
FS
Total
2024 Expense (benefit)
Legal settlements
$
(17)
$
(40)
$
(57)
Impairment
$
28
28
Employee-separation
programs
77
43
22 $
10
152
BJD measurement
59
59
Total expense (benefit)
60
71
(18)
69
182
2023 Expense
Russian roadbuilding sale
18
18
Financing incentives
correction
173
173
Total expense
18
173
191
Year over year change
$
60 $
71 $
(36) $ (104) $
(9)
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
In February 2022, 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.
PPA SAT
CF
FS
Total
Inventory reserve – Cost of sales $
14 $
2 $
3
$
19
Fixed asset impairment –
Cost of sales
30
11
41
Intangible asset impairment –
Cost of sales
28
28
Allowance for credit losses –
Financing receivables –
Selling, administrative and
general expenses
$ 153
153
Voluntary-separation program:
– Cost of sales
3
3
– Selling, administrative and
general expenses
4
6
1
11
Intercompany agreement
82
9
62 (153)
Total Russia/Ukraine events
pretax expense
$ 133 $
11 $ 110 $
1
255
Net tax impact
(40)
Total Russia/Ukraine events
after-tax expense
$ 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).
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
2024
Primary geographic
markets:
United States
$
11,741 $ 6,249 $ 8,086 $ 4,166 $ 30,242
Canada
1,818
605
760
717
3,900
Western Europe
2,068
2,203
1,729
189
6,189
Central Europe and CIS
787
284
381
36
1,488
Latin America
3,482
433
1,170
453
5,538
Asia, Africa, Oceania,
and Middle East
1,530
1,480
1,128
221
4,359
Total
$ 21,426 $ 11,254 $ 13,254 $ 5,782 $ 51,716
Major product lines:
Production agriculture $ 20,574
$ 20,574
Small agriculture
$ 7,693
7,693
Turf
3,023
3,023
Construction
$ 5,523
5,523
Compact construction
2,459
2,459
Roadbuilding
3,641
3,641
Forestry
1,108
1,108
Financial products
240
131
67 $ 5,782
6,220
Other
612
407
456
1,475
Total
$ 21,426 $ 11,254 $ 13,254 $ 5,782 $ 51,716
Revenue recognized:
At a point in time
$ 21,059 $ 11,084 $ 13,137 $
133 $ 45,413
Over time
367
170
117 5,649
6,303
Total
$ 21,426 $ 11,254 $ 13,254 $ 5,782 $ 51,716
57
PPA
SAT
CF
FS
Total
2023
Primary geographic
markets:
United States
$ 13,917 $ 7,796 $ 9,109 $ 3,283 $ 34,105
Canada
1,738
687
1,221
641
4,287
Western Europe
2,640 2,824
1,725
132
7,321
Central Europe and CIS
1,218
530
353
36
2,137
Latin America
5,608
707
1,429
453
8,197
Asia, Africa, Oceania,
and Middle East
2,166
1,679
1,183
176
5,204
Total
$ 27,287 $ 14,223 $15,020 $ 4,721 $ 61,251
Major product lines:
Production agriculture $26,450
$26,450
Small agriculture
$ 10,122
10,122
Turf
3,505
3,505
Construction
$ 6,842
6,842
Compact construction
2,451
2,451
Roadbuilding
3,794
3,794
Forestry
1,429
1,429
Financial products
219
96
58 $ 4,721
5,094
Other
618
500
446
1,564
Total
$ 27,287 $ 14,223 $15,020 $ 4,721 $ 61,251
Revenue recognized:
At a point in time
$26,969 $14,092 $ 14,915 $
111 $56,087
Over time
318
131
105 4,610
5,164
Total
$ 27,287 $ 14,223 $15,020 $ 4,721 $ 61,251
PPA
SAT
CF
FS
Total
2022
Primary geographic
markets:
United States
$ 10,975 $ 7,741 $ 7,103 $ 2,419 $ 28,238
Canada
1,387
676
1,238
601
3,902
Western Europe
2,188 2,478
1,576
102
6,344
Central Europe and CIS
1,207
488
545
49
2,289
Latin America
4,991
578
1,467
303
7,339
Asia, Africa, Oceania,
and Middle East
1,570
1,608
1,136
151
4,465
Total
$ 22,318 $13,569 $13,065 $ 3,625 $ 52,577
Major product lines:
Production agriculture $ 21,685
$ 21,685
Small agriculture
$10,027
10,027
Turf
3,027
3,027
Construction
$ 5,864
5,864
Compact construction
1,667
1,667
Roadbuilding
3,441
3,441
Forestry
1,308
1,308
Financial products
60
52
32 $ 3,625
3,769
Other
573
463
753
1,789
Total
$ 22,318 $13,569 $13,065 $ 3,625 $ 52,577
Revenue recognized:
At a point in time
$ 22,178 $ 13,493 $12,980 $
105 $ 48,756
Over time
140
76
85 3,520
3,821
Total
$ 22,318 $13,569 $13,065 $ 3,625 $ 52,577
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,
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 certain mid-size tractors,
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, landscape loaders, crawler dozers and
loaders, four-wheel-drive loaders, excavators, motor graders,
scraper systems, 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, 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.”
58
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 $1,923 and $1,697 at October 27, 2024
and October 29, 2023, 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 $553 in 2024, $547 in 2023, and
$609 in 2022.
The 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 27, 2024
follows:
Year
Net Sales and Revenues
2025
$
512
2026
429
2027
328
2028
208
2029
151
Later years
119
Total
$
1,747
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 (see
Note 11). 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 2024, we issued $5.3 billion and
retired $3.8 billion of retail note securitization borrowings, which
are presented in “Net proceeds (payments) in short-term
borrowings (original maturities three months or less).”
Cash, cash equivalents, and restricted cash recorded in “Assets held
for sale” relates to BJD (see Note 4). 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:
2024
2023
2022
Cash paid for interest
$ 3,298 $ 2,227 $
1,101
Cash paid for income taxes
2,518 3,578 1,940
Inventory transferred to equipment on
operating leases
223
195
167
Accounts payable related to purchases of
property and equipment
208
211
165
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, 2024 of the significant plans follows:
Funded
Enrollment
Status
Status
Pensions:
U.S. salaried qualified
$
1,314
Closed
U.S. hourly qualified
1,217
Open
Other
(528)
Varies
Total
$
2,003
OPEB:
U.S. salaried
$
(1,198)
Closed
U.S. hourly
101
Closed
Other
(94)
Varies
Total
$
(1,191)
The components of net periodic pension and OPEB (benefit) cost
excluding the service cost 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:
2024 2023 2022
Pensions:
Service cost
$
230 $
246 $
349
Interest cost
545
533
330
Expected return on plan assets
(967)
(878)
(726)
Amortization of actuarial (gain) loss
3
(13)
132
Amortization of prior service cost
40
38
34
Settlements/curtailments
38
37
45
Net (benefit) cost
$
(111) $
(37) $
164
Weighted-average assumptions:
Discount rates – service cost
5.8%
5.2%
3.0%
Discount rates – interest cost
5.7%
5.1%
2.6%
Rate of compensation increase
3.8%
3.8%
3.7%
Expected long-term rates of return
7.0%
6.3%
5.1%
Interest crediting rate – U.S. cash
balance plans
4.8%
4.3%
2.1%
During 2024, curtailment expense of $35 was recognized related
to U.S. hourly employee layoffs.
The 2025 net periodic pension benefit is expected to increase by
$100 due to an increase in the expected long-term rates of
return on pension plan assets (estimated to be 7.1 percent) and
the U.S. hourly pension curtailment recognized in 2024,
described above.
59
The components of net periodic OPEB cost and the assumptions
related to the cost consisted of the following:
2024 2023 2022
OPEB:
Service cost
$
17 $
27 $
45
Interest cost
174
176
99
Expected return on plan assets
(108)
(117)
(110)
Amortization of actuarial gain
(54)
(59)
(18)
Amortization of prior service credit
(4)
(3)
(4)
Net cost
$
25 $
24 $
12
Weighted-average assumptions:
Discount rates – service cost
6.7%
6.1%
3.6%
Discount rates – interest cost
5.9%
5.4%
2.3%
Expected long-term rates of return
5.6%
5.7%
4.4%
The benefit plan obligations, funded status, and the assumptions
related to the obligations at October 27, 2024 and October 29, 2023
follow:
Pensions
OPEB
2024
2023
2024 2023
Change in benefit obligations:
Beginning of year balance
$ (9,928) $ (10,529) $ (3,029) $ (3,341)
Service cost
(230)
(246)
(17)
(27)
Interest cost
(545)
(533)
(174)
(176)
Actuarial gain (loss)
(1,097)
504
(385)
285
Benefits paid
746
838
263
260
Health care subsidies
(22)
(27)
Settlement
112
Foreign exchange and other
(23)
(74)
2
(3)
End of year balance
(11,077) (9,928) (3,362) (3,029)
Change in plan assets (fair value):
Beginning of year balance
12,004 13,219 2,028 2,136
Plan assets actual gain (loss)
1,703
(387)
259
(8)
Employer contribution
96
70
145
158
Benefits paid
(746)
(838)
(263) (260)
Settlement
(112)
Foreign exchange and other
23
52
2
2
End of year balance
13,080 12,004
2,171 2,028
Funded status
$ 2,003 $ 2,076 $ (1,191) $ (1,001)
Weighted-average assumptions:
Discount rates
5.1%
5.9%
5.2%
6.0%
Rate of compensation increase
4.3%
3.8%
Interest crediting rate – U.S.
cash balance plans
4.1%
4.9%
The actuarial loss for pension for 2024 was due to a decrease in
discount rates. The actuarial loss for OPEB for 2024 was due to a
decrease in discount rates and changes to health care
assumptions. 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.
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 2024 U.S. benefit plan
obligations used the tables based on the plan’s mortality
experience and the most recent scales issued by the Society of
Actuaries. The mortality assumptions for the 2023 U.S. benefit plan
obligations used the most recent tables and scales issued by the
Society of Actuaries at that time. The 2024 and 2023 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 27, 2024 and
October 29, 2023 accumulated postretirement benefit obligations
were as follows:
2024
2023
Initial year
16.9% (2024 to 2025)
18.7% (2023 to 2024)
Second year
11.5% (2025 to 2026)
8.8% (2024 to 2025)
Ultimate
4.7% (2033 to 2034)
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 2024 and 2023.
Information related to pension plans benefit obligations at
October 27, 2024 and October 29, 2023 follows:
2024
2023
Total accumulated benefit obligations for
all plans
$
10,441 $
9,453
Plans with accumulated benefit obligation
exceeding fair value of plan assets:
Accumulated benefit obligations
1,405
1,147
Fair value of plan assets
920
704
Plans with projected benefit obligation
exceeding fair value of plan assets:
Projected benefit obligations
1,541
1,261
Fair value of plan assets
951
729
60
The pension and OPEB amounts recognized in the balance sheet at
October 27, 2024 and October 29, 2023 consisted of the following:
Pensions
OPEB
2024
2023 2024
2023
Noncurrent asset
$ 2,593 $ 2,608 $ 328 $
399
Less: Current liability
66
59
39
40
Less: Noncurrent liability
524
473 1,480 1,360
Total
$ 2,003 $ 2,076 $ (1,191) $ (1,001)
The retirement benefits and other liabilities recognized in the
balance sheet at October 27, 2024 and October 29, 2023 consisted
of the following:
2024
2023
Deferred compensation – current
$
28 $
25
Deferred compensation and other – noncurrent
217
183
Pensions and OPEB – current
105
99
Pensions and OPEB – noncurrent
2,004
1,833
Total
$
2,354 $
2,140
The amounts recognized in accumulated other comprehensive
income ‒ pretax at October 27, 2024 and October 29, 2023
consisted of the following:
Pensions
OPEB
2024
2023
2024
2023
Net actuarial (gain) loss
$ 2,011 $ 1,660 $
(632) $
(921)
Prior service (credit) cost
329
406
2
(1)
Total
$ 2,340 $ 2,066 $ (630) $
(922)
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 $241 in 2024
and $228 in 2023, which included both required and voluntary
contributions and direct benefit payments.
We expect to contribute approximately $100 to our pension plans
and approximately $660 to our OPEB plans in 2025. In November
2024, a committee of our Board of Directors approved a voluntary
contribution to a U.S. OPEB plan for up to $520 to be made during
the first quarter of 2025. This contribution will increase plan assets.
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
2025 under applicable funding regulations.
Expected Future Benefit Payments
The expected future benefit payments at October 27, 2024 were
as follows:
Pensions OPEB*
2025
$
760 $
257
2026
736
267
2027
728
271
2028
716
273
2029
716
274
2030 to 2034
3,555
1,331
* Net of prescription drug group benefit subsidy under Medicare Part D.
Plan Asset Information
The fair values of the pension plan assets at October 27, 2024
follow:
Total Level 1 Level 2
Cash and short-term investments
$
411 $ 399 $
12
Equity:
U.S. equity securities
451 440
11
International equity securities and funds
238 232
6
Fixed Income:
Government and agency securities
1,250 932
318
Corporate debt securities
4,956
4,956
Mortgage-backed securities
177
177
Other investments
57
36
21
Derivative contracts – assets
130
7
123
Derivative interest rate contracts – liabilities
(161) (119)
(42)
Receivables, prepaids, and payables
(171) (171)
Securities lending collateral
662
662
Securities lending liability
(662)
(662)
Securities sold short
(94) (92)
(2)
Total of Level 1 and Level 2 assets
7,244 $ 1,664 $ 5,580
Investments at net asset value:
Short-term investments
492
U.S. equity funds
174
International equity funds
194
Fixed income funds
1,649
Real estate funds
385
Hedge funds
457
Private equity
1,219
Venture capital
1,219
Other investments
47
Total net assets
$ 13,080
61
The fair values of the OPEB health care assets at October 27, 2024
follow:
Total Level 1 Level 2
Cash and short-term investments
$
77 $
77
Fixed Income:
Government and agency securities
606 561 $
45
Corporate debt securities
551
551
Mortgage-backed securities
92
92
Other
11
7
4
Securities lending collateral
167
167
Securities lending liability
(167)
(167)
Total of Level 1 and Level 2 assets
1,337 $ 645 $ 692
Investments at net asset value:
U.S. equity funds
163
International equity funds
84
Fixed income funds
348
Real estate funds
77
Hedge funds
71
Private equity
41
Venture capital
41
Other investments
9
Total net assets
$
2,171
The fair values of the pension plan assets at October 29, 2023
follow:
Total Level 1 Level 2 Level 3
Cash and short-term investments
$
513 $ 470 $
43
Equity:
U.S. equity securities
342 330
12
International equity securities and
funds
199 197
2
Fixed Income:
Government and agency securities
1,017 759
258
Corporate debt securities
4,389
4,389
Mortgage-backed securities
285
285
Private equity
18
$ 18
Other investments
50
30
20
Derivative contracts – assets
53
17
36
Derivative interest rate
contracts – liabilities
(309) (215)
(94)
Receivables, prepaids, and payables
(137) (137)
Securities lending collateral
615
615
Securities lending liability
(615)
(615)
Securities sold short
(73) (69)
(4)
Total of Level 1, Level 2, and
Level 3 assets
6,347 $ 1,382 $ 4,947 $ 18
Investments at net asset value:
Short-term investments
362
U.S. equity funds
92
International equity funds
151
Fixed income funds
1,418
Real estate funds
462
Hedge funds
491
Private equity
1,306
Venture capital
1,341
Other investments
34
Total net assets
$ 12,004
The fair values of the OPEB health care assets at October 29, 2023
follow:
Total Level 1 Level 2
Cash and short-term investments
$
76 $
76
Fixed Income:
Government and agency securities
637 596 $
41
Corporate debt securities
515
515
Mortgage-backed securities
89
89
Other
8
5
3
Securities lending collateral
122
122
Securities lending liability
(122)
(122)
Total of Level 1 and Level 2 assets
1,325 $ 677 $ 648
Investments at net asset value:
Fixed income funds
392
Real estate funds
104
Hedge funds
104
Private equity
43
Venture capital
43
Other investments
17
Total net assets
$ 2,028
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 using
quoted prices in the active market in which the equity investment
trades, Equity funds are valued using the fund’s NAV, which is
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, which is based on
the fair value of the underlying securities.
62
Real Estate, Venture Capital, Private Equity, and Hedge Funds – The
investments that are structured as limited partnerships, excluding
the private equity investment 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 investment classified as
Level 3 was valued based on the market pricing received in October
2023 for the assets that were sold in a secondary sale in December
2023. The investment was 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 27, 2024 are as
follows:
Pension
Health Care
Assets
Assets
Equity
7%
12%
Debt
70%
78%
Real estate
3%
3%
Other investments
20%
7%
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
extended period of time (i.e., 10 to 20 years). The average annual
return of our U.S. pension fund was approximately 7.2 percent
during the past ten years and approximately 8.0 percent during the
past 20 years.
We have Voluntary Employees’ Beneficiary Association trusts
(VEBAs) for the funding of hourly and salary postretirement health
care benefits. The future expected asset returns for the VEBAs are
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 $326 in 2024,
$288 in 2023, and $263 in 2022. 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:
2024 2023 2022
Current:
U.S.:
Federal
$ 1,253 $ 1,803 $
514
State
257
386
136
Foreign
878 1,472 1,423
Total current
2,388 3,661 2,073
Deferred:
U.S.:
Federal
(326) (485)
29
State
(29)
(65)
24
Foreign
61 (240)
(119)
Total deferred
(294) (790)
(66)
Provision for income taxes
$ 2,094 $ 2,871 $ 2,007
Based upon the location of our operations, the consolidated
income before income taxes in the U.S. in 2024, 2023, and 2022 was
$5.9 billion, $7.8 billion, and $5.0 billion, respectively, and in
foreign countries was $3.3 billion, $5.2 billion, and $4.1 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.
63
A comparison of the statutory and effective income tax provision
and reasons for related differences follow:
2024 2023 2022
U.S. federal income tax provision at the
U.S. statutory rate (21 percent)
$ 1,933 $ 2,734 $ 1,917
State and local taxes, net of federal effect
179
266
133
Other impacts of Tax Cuts and Jobs Act of 2017
(60)
(58)
(29)
Rate differential on foreign subsidiaries
89
142
121
Research and business tax credits
(99) (107)
(65)
Excess tax benefits on equity
compensation
(35)
(49)
(55)
Valuation allowances
(46)
9
179
Unrecognized tax benefits
70
4
93
Other – net
63
(70)
(287)
Provision for income taxes
$ 2,094 $ 2,871 $ 2,007
At October 27, 2024, undistributed profits of subsidiaries outside
the U.S. of approximately $6.0 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 27, 2024 and October 29, 2023 follows:
2024
2023
Deferred Deferred Deferred Deferred
Tax
Tax
Tax
Tax
Assets Liabilities Assets Liabilities
Accrual for employee benefits $
362
$
439
Accrual for sales allowances
847
884
Allowance for credit losses
93
79
Amortization of R&D
expenditures
925
492
Deferred compensation
52
45
Goodwill and other intangible
assets
$
107
$
166
Lessee lease transactions
73
69
68
61
Lessor lease transactions
449
581
OPEB – net
256
193
Pension – net
394
424
Share-based compensation
50
38
Tax loss and tax credit
carryforwards
1,564
1,518
Tax over book depreciation
195
198
Unearned revenue
174
177
Other items
337
313
681
278
Less: valuation allowances
(1,598)
(1,612)
Total
$ 3,135 $ 1,527 $ 3,002 $ 1,708
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 27, 2024, tax loss and tax credit carryforwards of
$1,564 were available with $1,063 expiring from 2025 through 2044
and $501 with an indefinite carryforward period.
A reconciliation of unrecognized tax benefits at October 27, 2024,
October 29, 2023, and October 30, 2022 follows:
2024 2023 2022
Beginning of year balance
$
907 $
891 $
811
Increases to tax positions taken during
the current year
59
68
98
Increases to tax positions taken during
prior years
68
164
29
Decreases to tax positions taken during
the current year
(2)
(3)
Decreases to tax positions taken during
prior years
(99) (209)
(18)
Decreases due to lapse of statute of
limitations
(7)
(10)
(7)
Other
(1)
(4)
2
Foreign exchange
3
10
(24)
End of year balance
$
928 $
907 $
891
The amount of unrecognized tax benefits at October 27, 2024 and
October 29, 2023 that would impact the effective tax rate if the tax
benefits were recognized was $410 and $329, 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:
2024 2023 2022
Other income:
Revenues from services
$
367 $
312 $
283
Extended warranty premiums earned
310
312
289
Trademark licensing income
88
95
89
Operating lease disposition gains
19
33
72
Gain on previously held equity investment
326
Investment income
127
29
14
Other
287
222
222
Total
$ 1,198 $ 1,003 $ 1,295
Other operating expenses:
Depreciation of equipment on operating
leases
$
874 $
853 $
827
Extended warranty claims
340
309
267
Cost of services
248
227
214
Pension and OPEB benefit, excluding the
service cost component
(333)
(286)
(218)
Foreign exchange loss
71
122
132
Other
57
67
53
Total
$ 1,257 $ 1,292 $ 1,275
64
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 2024 and 2023 follow:
Gross
Gross
Amortized Unrealized Unrealized
Fair
Cost
Gains
Losses
Value
2024
Corporate debt securities $
445 $
1 $
23 $
423
International debt securities
169
26
143
Mortgage-backed securities*
193
28
165
Municipal debt securities
78
1
5
74
U.S. government debt
securities
377
28
349
Total debt securities
$
1,262 $
2 $
110
1,154
Marketable securities
$ 1,154
2023
International equity
securities
$
3
International mutual
funds securities
101
U.S. equity fund
86
U.S. fixed income fund
32
Total equity securities
222
Corporate debt securities $
285
$
41
244
International debt securities
5
4
1
Mortgage-backed securities*
225
40
185
Municipal debt securities
87
12
75
U.S. government debt
securities
260
41
219
Total debt securities
$
862
$
138
724
Marketable securities
$
946
* Primarily issued by U.S. government-sponsored enterprises.
The purchases, maturities, and sale proceeds for marketable
securities during 2024, 2023, and 2022 follow:
2024 2023 2022
Purchases
$ 1,055 $
491 $
250
Maturities and sale proceeds
832
186
79
Equity Securities
Unrealized gain (loss) on equity securities during 2024 and 2023
follow:
2024 2023
Net gain recognized on equity securities
$
88
Less: Net gain (loss) on equity securities sold
88 $
(1)
Unrealized gain on equity securities
$
$
1
Debt Securities
The contractual maturities of available-for-sale debt securities at
October 27, 2024 follow:
Amortized
Fair
Cost
Value
Due in one year or less
$
28 $
27
Due after one through five years
386
356
Due after five through 10 years
456
435
Due after 10 years
199
171
Mortgage-backed securities
193
165
Debt securities
$
1,262 $
1,154
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.
Proceeds of available-for-sale debt securities sold or matured
during 2024, 2023, and 2022 were $619, $37, and $74, respectively.
Realized gains and losses on debt securities were not material in
2024, 2023, and 2022.
11. RECEIVABLES
Trade Accounts and Notes Receivable
Trade accounts and notes receivable arise from sales of goods and
services to customers. See Note 2 for our revenue recognition
policy. We evaluate and assess customers creditworthiness on an
ongoing basis. Receivables are secured with collateral or other
credit enhancements. Trade accounts and notes receivable at the
end of 2024 and 2023 follow:
2024
2023
Trade accounts and notes receivable:
Production & precision ag
$
1,532 $
2,642
Small ag & turf
1,657
2,344
Construction & forestry
2,137
2,753
Trade accounts and notes receivable – net $
5,326 $
7,739
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
customer. On a geographic basis, 51 percent of our trade accounts
and notes receivable are located in the U.S. and Canada at
October 27, 2024.
At October 27, 2024 and October 29, 2023 trade accounts and notes
receivable balances outstanding greater than 12 months were $298
and $107, respectively. The increase was due to higher dealer
inventory.
65
The allowance for credit losses on trade accounts and notes
receivable at October 27, 2024, October 29, 2023, and October 30,
2022, as well as the related activity, follow:
2024
2023
2022
Beginning of year balance
$
35 $
36 $
41
Provision
34
7
1
Write-offs
(5)
(8)
(5)
Translation adjustments
2
(1)
End of year balance*
$
66 $
35 $
36
* Individual allowances were not significant.
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 ‒ 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 retail customer utilizes a revolving credit product to
finance parts, service, or input costs.
Financing receivables at the end of 2024 and 2023 follow:
2024
2023
Unrestricted/Securitized Unrestricted/Securitized
Retail notes:
Agriculture and turf
$ 25,102 $
7,203 $ 26,955 $ 6,052
Construction and forestry 4,550
1,754 4,623
1,442
Total
29,652
8,957 31,578 7,494
Wholesale notes
8,951
6,947
Revolving charge accounts 4,730
4,789
Financing leases (direct
and sales-type)
3,032
2,906
Total financing receivables 46,365
8,957 46,220 7,494
Less:
Unearned finance income:
Retail notes
1,467
187 1,906
137
Wholesale notes
24
25
Revolving charge
accounts
76
91
Financing leases
307
350
Total
1,874
187
2,372
137
Allowance for credit losses
182
47
175
22
Financing receivables – net $ 44,309 $
8,723 $ 43,673 $
7,335
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,
89 percent of our financing receivables were located in the U.S.
and Canada at October 27, 2024. 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 ‒ 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 2024 and 2023 were as follows:
2024
2023
Retail notes*:
Agriculture and turf
$
376 $
1,084
Construction and forestry
271
320
Total
647
1,404
Wholesale notes
8,951
6,947
Direct financing and sales-type leases*
295
494
Total financing receivables
9,893
8,845
Less:
Unearned finance income:
Retail notes
37
137
Wholesale notes
24
25
Direct financing and sales-type leases
47
60
Total
108
222
Financing receivables related to our sales
of equipment
$
9,785 $
8,623
* These balances arise from sales and direct financing leases of equipment by
company-owned dealers or through direct sales.
Financing Receivables ‒ Contractual Installment Payments
Financing receivable installments, including unearned finance
income, at October 27, 2024 and October 29, 2023 were scheduled
as follows:
2024
2023
Unrestricted/Securitized Unrestricted/Securitized
Due in months:
0 – 12
$ 23,872 $
3,555 $ 22,176 $ 2,820
13 – 24
8,187
2,507 8,646 2,089
25 – 36
6,356
1,702 6,692 1,509
37 – 48
4,509
918 4,844
824
49 – 60
2,660
266 2,920
241
Thereafter
781
9
942
11
Total
$ 46,365 $
8,957 $ 46,220 $ 7,494
Financing Receivables ‒ 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.
66
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:
October 27, 2024
2024
2023
2022
2021
Retail customer receivables:
Agriculture and turf:
Current
$ 14,394 $
8,305 $
5,191 $ 2,833
30-59 days past due
44
101
55
27
60-89 days past due
22
50
21
10
90+ days past due
1
1
1
2
Non-performing
23
91
76
50
Construction and forestry:
Current
3,100
1,841
1,064
458
30-59 days past due
54
47
25
10
60-89 days past due
25
28
10
7
90+ days past due
1
4
3
1
Non-performing
40
94
67
32
Total
$ 17,704 $ 10,562 $ 6,513 $ 3,430
October 27, 2024
2020 Prior Years
Revolving
Charge
Accounts
Total
Retail customer receivables:
Agriculture and turf:
Current
$
992 $
253 $ 4,465 $ 36,433
30-59 days past due
11
4
40
282
60-89 days past due
8
2
13
126
90+ days past due
5
Non-performing
20
13
15
288
Construction and forestry:
Current
102
45
114
6,724
30-59 days past due
3
2
4
145
60-89 days past due
2
2
74
90+ days past due
9
Non-performing
9
5
1
248
Total
$
1,147 $
324 $ 4,654 $ 44,334
October 29, 2023
2023
2022
2021
2020
Retail customer receivables:
Agriculture and turf:
Current
$
15,191 $
8,430 $ 5,120 $
2,334
30-59 days past due
62
75
39
21
60-89 days past due
18
26
18
10
90+ days past due
2
1
3
3
Non-performing
30
78
62
33
Construction and forestry:
Current
2,927
1,961
1,084
353
30-59 days past due
49
34
27
9
60-89 days past due
19
14
12
5
90+ days past due
6
1
Non-performing
42
80
55
23
Total
$ 18,340 $ 10,705 $ 6,421 $
2,791
October 29, 2023
2019 Prior Years
Revolving
Charge
Accounts
Total
Retail customer receivables:
Agriculture and turf:
Current
$
853 $
280 $ 4,526 $ 36,734
30-59 days past due
9
3
29
238
60-89 days past due
4
2
9
87
90+ days past due
9
Non-performing
22
22
8
255
Construction and forestry:
Current
84
29
119
6,557
30-59 days past due
4
4
127
60-89 days past due
2
2
54
90+ days past due
1
8
Non-performing
9
4
1
214
Total
$
987 $
341 $ 4,698 $ 44,283
67
The credit quality analysis of wholesale receivables by year of
origination was as follows:
October 27, 2024
2024
2023
2022
2021
Wholesale receivables:
Agriculture and turf:
Current
$
650 $
164 $
29 $
6
30+ days past due
Non-performing
Construction and forestry:
Current
21
11
3
12
30+ days past due
Non-performing
Total
$
671 $
175 $
32 $
18
October 27, 2024
2020 Prior Years Revolving
Total
Wholesale receivables:
Agriculture and turf:
Current
$
1
$ 6,718 $ 7,568
30+ days past due
Non-performing
$
1
1
Construction and forestry:
Current
1,311
1,358
30+ days past due
Non-performing
Total
$
1 $
1 $ 8,029 $ 8,927
October 29, 2023
2023
2022
2021
2020
Wholesale receivables:
Agriculture and turf:
Current
$
631 $
93 $
21 $
4
30+ days past due
Non-performing
Construction and forestry:
Current
23
5
20
30+ days past due
Non-performing
Total
$
654 $
98 $
41 $
4
October 29, 2023
2019 Prior Years Revolving
Total
Wholesale receivables:
Agriculture and turf:
Current
$
1 $
160 $
5,175 $ 6,085
30+ days past due
Non-performing
1
1
Construction and forestry:
Current
76
712
836
30+ days past due
Non-performing
Total
$
2 $
236 $ 5,887 $ 6,922
Financing Receivables ‒ 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
2024
Allowance:
Beginning of year balance $
172 $
21 $
4 $
197
Provision
262
52
314
Provision reversal for
assets held for sale
(38)
(38)
Provision subtotal
224
52
276
Write-offs
(186)
(95)
(281)
Recoveries
13
30
43
Translation adjustments
(4)
(2)
(6)
End of year balance*
$
219 $
8 $
2 $
229
Financing receivables:
End of year balance
$ 39,680 $ 4,654 $
8,927 $ 53,261
2023
Allowance:
Beginning of year balance $
299 $
22 $
4 $
325
Provision
97
22
119
Provision reversal for
assets held for sale
(142)
(142)
Provision (credit)
subtotal
(45)
22
(23)
Write-offs
(84)
(45)
(129)
Recoveries
21
22
43
Translation adjustments
(19)
(19)
End of year balance*
$
172 $
21 $
4 $
197
Financing receivables:
End of year balance
$ 39,585 $ 4,698 $
6,922 $ 51,205
2022
Allowance:
Beginning of year balance $
138 $
21 $
7 $
166
Provision (credit)
197
(2)
(3)
192
Write-offs
(61)
(27)
(88)
Recoveries
22
30
52
Translation adjustments
3
3
End of year balance*
$
299 $
22 $
4 $
325
Financing receivables:
End of year balance
$
35,367 $ 4,255 $
3,273 $ 42,895
* Individual allowances were not significant.
We monitor the economy as part of the allowance setting process,
including potential impacts of the agricultural market business
cycle and rising interest rates. Adjustments to the allowance are
incorporated, as necessary.
During 2024, we determined that the financial services business in
Brazil met the held for sale criteria. The receivables in Brazil were
reclassified to “Assets held for sale.” The associated allowance for
credit losses was reversed and a valuation allowance for the assets
held for sale was recorded (see Note 4). The allowance for credit
losses on retail notes and financing lease receivables increased in
2024 primarily due to higher expected losses as a result of elevated
68
delinquencies and a decline in market conditions impacting the
agriculture receivable portfolio. This increase was partially offset
by a decrease in the allowance on revolving charge accounts,
driven by write-offs of seasonal financing program accounts and
recoveries expected on those accounts in the future.
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
and higher expected losses on turf and construction customer
accounts.
Write-offs by year of origination were as follows:
October 27, 2024
2024
2023
2022 2021
Retail customer receivables:
Agriculture and turf
$
5 $
33 $
25 $
11
Construction and forestry
9
38
30
11
Total
$
14 $
71 $
55 $
22
October 27, 2024
2020
Prior
Years
Revolving
Charge
Accounts Total
Retail customer receivables:
Agriculture and turf
$
11 $
5 $
87 $
177
Construction and forestry
5
3
8
104
Total
$
16 $
8 $
95 $ 281
Financing receivable analysis metrics follow:
2024
2023
Percent of the overall financing receivable
portfolio:
Past-due amounts
1.20
1.02
Non-performing
1.01
.92
Allowance for credit losses
.43
.38
Deposits held as credit enhancements
$
142 $
154
Financing Receivables – Modifications
We occasionally grant contractual modifications to customers
experiencing financial difficulties. Before offering a modification,
we evaluate the ability of the customer to meet the modified
payment terms. Modifications offered include payment deferrals,
term extensions, or a combination thereof. Finance charges
continue to accrue during the deferral or extension period with the
exception of modifications related to bankruptcy proceedings. Our
allowance for credit losses incorporates historical loss information,
including the effects of loan modifications with customers.
Therefore, additional adjustments to the allowance are generally
not recorded upon modification of a loan.
At October 27, 2024, the ending amortized cost and performance of
modified loans with borrowers experiencing financial difficulty in
2024 was as follows:
2024
Current
$
78
30-59 days past due
1
60-89 days past due
2
90+ days past due
Non-performing
13
Total
$
94
In 2024, these modifications represented 0.18 percent of our
financing receivable portfolio. The financial effects of payment
deferrals with borrowers experiencing financial difficulty resulted
in a weighted average payment deferral of 8 months to the
modified contracts. Term extensions provided to borrowers
experiencing financial difficulty added a weighted average of
10 months to the terms of the modified contracts. Additionally,
modifications with a combination of both payment deferrals and
term extensions resulted in a weighted average payment deferral
of 4 months and a weighted average term extension of 7 months.
Defaults and subsequent write-offs of loans modified in the prior
twelve months were not significant during 2024. At October 27,
2024, commitments to provide additional financing to these
customers were $27.
Financing Receivables – Troubled Debt Restructurings
Prior to adopting ASU 2022-02, modifications of loans to
borrowers experiencing financial difficulty were considered
troubled debt restructurings when the significant modification of
the receivable resulted in a concession we would not otherwise
consider.
The following table quantifies troubled debt restructurings:
2023
2022
Number of receivable contracts
209
276
Pre-modification balance
$
10 $
12
Post modification balance
9
10
Troubled debt restructurings for the presented periods related to
retail notes. In 2023 and 2022, there were no significant troubled
debt restructurings that subsequently defaulted and were written
off.
Other Receivables
Other receivables at the end of 2024 and 2023 consisted of:
2024
2023
Taxes receivable
$
1,874 $
1,626
Collateral on derivatives
254
667
Receivables from unconsolidated affiliates
3
3
Other
414
327
Other receivables
$
2,545 $
2,623
69
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.
3. Investors are paid back based on cash receipts from the
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 27, 2024, the
revolving agreement had a financing limit of up to $2,000. At
October 27, 2024, $1,398 of securitization borrowings were
outstanding under the revolving agreement. In November 2024,
the agreement was renewed for one year with a capacity of
$2,500.
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 securitization programs were as follows at the
end of 2024 and 2023:
2024
2023
Financing receivables securitized (retail notes) $
8,770 $
7,357
Allowance for credit losses
(47)
(22)
Other assets (primarily restricted cash)
187
152
Total restricted securitized assets
$
8,910 $
7,487
Short-term securitization borrowings
$
8,431 $
6,995
Accrued interest on borrowings
14
13
Total liabilities related to restricted securitized
assets
$
8,445 $
7,008
The weighted-average interest rates on short-term securitization
borrowings at October 27, 2024 and October 29, 2023 were
5.0 percent and 4.7 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 27, 2024 based on the expected liquidation of the retail
notes is as follows: 2025 – $4,036, 2026 – $2,440, 2027 –$1,428,
2028 – $500, 2029 – $37, and later years – $4.
13. INVENTORIES
A majority of inventories owned by us are valued at cost on the
“last-in, first-out” (LIFO) basis. If all inventories valued on a LIFO
basis had been valued on a “first-in, first-out” (FIFO) basis, the
estimated inventories by major classification would have been as
follows at the end of 2024 and 2023:
2024
2023
Raw materials and supplies
$
3,486 $
4,080
Work-in-process
930
1,010
Finished goods and parts
5,364
5,435
Total FIFO value
9,780
10,525
Excess of FIFO over LIFO
2,687
2,365
Inventories
$
7,093 $
8,160
Percent valued on LIFO basis
54%
53%
14. PROPERTY AND DEPRECIATION
A summary of property and equipment at October 27, 2024 and
October 29, 2023 follows:
Useful Lives*
(Years)
2024 2023
Land
$
390 $
338
Buildings and building equipment
22
5,168 4,735
Machinery and equipment
11
7,125 6,613
Dies, patterns, tools, etc.
8
1,797 1,658
All other
5
1,382 1,323
Construction in progress
1,313 1,266
Total at cost
17,175 15,933
Less: accumulated depreciation
(9,595) (9,054)
Property and equipment – net
$ 7,580 $ 6,879
* Weighted-averages
Property and equipment additions and depreciation follows:
2024
2023
2022
Additions
$ 1,707 $ 1,597 $ 1,197
Depreciation
898
838
806
For property and equipment, more than 10 percent resides in the
U.S. and Germany, separately disclosed below:
2024
2023
U.S.
$
4,132 $
3,807
Germany
1,271
1,192
Other countries
2,177
1,880
Total
$
7,580 $
6,879
15. GOODWILL AND OTHER INTANGIBLE ASSETS – NET
The changes in amounts of goodwill by operating segments were
as follows. There were no accumulated goodwill impairment losses.
PPA
SAT
CF
Total
October 30, 2022
$ 646 $
318 $ 2,723 $ 3,687
Acquisitions (Note 3)
41
40
81
Translation adjustments and other
15
5
112
132
October 29, 2023
702
363
2,835 3,900
Translation adjustments and other
(1)
2
58
59
October 27, 2024
$
701 $
365 $ 2,893 $ 3,959
70
The components of other intangible assets were as follows:
2024
2023
Customer lists and relationships
$
508 $
501
Technology, patents, trademarks, and other
1,423
1,387
Total at cost
1,931
1,888
Less accumulated amortization:
Customer lists and relationships
(231)
(195)
Technology, patents, trademarks, and other
(701)
(560)
Total accumulated amortization
(932)
(755)
Other intangible assets – net
$
999 $
1,133
Actual amortization expense for the past three years and the
estimated amortization expense for the next five years follows:
Year
Amortization
2022
$
145
2023
169
2024
166
Estimated – 2025
146
2026
128
2027
121
2028
87
2029
74
16. OTHER ASSETS
Other assets at October 27, 2024 and October 29, 2023 consisted
of the following:
2024
2023
Operating lease asset (Note 24)
$
274 $
283
Capitalized software, net
504
450
Investment in unconsolidated affiliates
122
126
Deferred charges (including prepaids)
412
426
Derivative assets (Note 26)
357
292
Prepaid taxes
238
167
Parts return asset
141
127
Restricted cash
193
162
Matured lease & repossessed inventory
106
59
Other
559
411
Other Assets
$
2,906 $
2,503
Capitalized software has an estimated useful life of three years.
Amortization of these software costs in 2024, 2023, and 2022 was
$180, $144, and $117, respectively.
17. SHORT-TERM BORROWINGS
Short-term borrowings at the end of 2024 and 2023 consisted of:
2024
2023
Commercial paper
$
4,008 $
9,100
Notes payable to banks
377
483
Finance lease obligations due within one year
33
25
Long-term borrowings due within one year
9,115
8,331
Short-term borrowings
$
13,533 $
17,939
The weighted-average interest rates at the end of 2024 and 2023
were:
2024 2023
Short-term borrowings:
Commercial paper
4.8%
5.4%
Notes payable to banks
11.0%
31.6%
The decrease in the weighted-average interest rates of notes
payable to banks is primarily the result of Argentine peso funding
representing a smaller portion of the notes outstanding.
Worldwide lines of credit were $10.9 billion at October 27, 2024,
consisting primarily of:
• a 364-day credit facility agreement of $5.0 billion, expiring in
the second quarter of 2025,
• a credit facility agreement of $2.75 billion, expiring in the
second quarter of 2028, and
• a credit facility agreement of $2.75 billion, expiring in the
second quarter of 2029.
At October 27, 2024, $6.5 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. These credit agreements
require Capital Corporation and other parts of our business to
maintain certain performance metrics and liquidity targets. All
requirements in the credit agreements have been met during the
periods included in the consolidated financial statements.
18. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at the end of 2024 and
2023 consisted of the following:
2024
2023
Accounts payable:
Trade payables
$
2,698 $
3,467
Dividends payable
405
388
Operating lease liabilities
270
281
Deposits withheld from dealers and
merchants
152
163
Payables to unconsolidated affiliates
6
6
Other
204
153
Accrued expenses:
Employee benefits
1,925
2,152
Accrued taxes
1,509
1,558
Product warranties
1,426
1,610
Dealer sales incentives
996
1,243
Extended warranty premium
1,179
1,021
Derivative liabilities
582
1,130
Unearned revenue (contractual liability)
744
676
Unearned operating lease revenue
495
451
Accrued interest
455
434
Parts return liability
420
392
Other
1,077
1,005
Accounts payable and accrued expenses $
14,543 $
16,130
Amounts are presented net of eliminations, which primarily
consist of dealer sales incentives with a right of set-off against
trade receivables of $2,121 at October 27, 2024 and $2,228 at
71
October 29, 2023. Other eliminations were made for accrued
taxes and other accrued expenses.
19. LONG-TERM BORROWINGS
Long-term borrowings at the end of 2024 and 2023 consisted of:
2024
2023
Underwritten term debt:
U.S. dollar notes and debentures:
2.75% notes due 2025
$
700
6.55% debentures due 2028
$
200
200
5.375% notes due 2029
500
500
3.10% notes due 2030
700
700
8.10% debentures due 2030
250
250
7.125% notes due 2031
300
300
3.90% notes due 2042
1,250
1,250
2.875% notes due 2049
500
500
3.75% notes due 2050
850
850
Euro notes:
1.85% notes due 2028 (€600 principal)
650
634
2.20% notes due 2032 (€600 principal)
650
634
1.65% notes due 2039 (€650 principal)
704
687
Serial issuances:
Medium-term notes
36,566
29,638
Other notes and finance lease obligations
265
1,769
Less: debt issuance costs and debt discounts
(156)
(135)
Long-term borrowings
$
43,229 $
38,477
Medium-term notes due through 2034 are offered by prospectus and
issued at fixed and variable rates. All outstanding notes and
debentures are senior unsecured borrowings and rank equally with
each other. The principal balances and weighted-average
interest rates at the end of 2024 and 2023 follow:
2024
2023
Medium-term notes:
Principal
$
37,141 $
30,902
Weighted-average interest rates
5.2%
4.9%
The principal amounts of our long-term borrowings maturing in
each of the next five years are as follows: 2025 – $9,112,
2026 – $8,814, 2027 – $7,720, 2028 – $6,379, and 2029 – $6,078.
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
reconciliation of the changes in the warranty liability follows:
2024
2023
Beginning of year balance
$
1,610 $
1,427
Warranty claims paid
(1,327)
(1,181)
New product warranty accruals
1,157
1,347
Foreign exchange
(14)
17
End of year balance
$
1,426 $
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
2024, the notional value of these guarantees was $141. We may
repossess the equipment collateralizing the receivables. At
October 27, 2024, the accrued losses under these guarantees
were not material.
We also had other miscellaneous contingent liabilities totaling
approximately $130 at October 27, 2024. The accrued liability for
these contingencies was $30 at October 27, 2024.
At October 27, 2024, we had commitments of approximately $435
for the construction and acquisition of property and equipment.
Also, at October 27, 2024, we had restricted assets of $253,
classified as “Other assets.”
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 27, 2024 were:
• $13.8 billion to John Deere dealers, and
• $33.6 billion to retail customers.
We are subject to various unresolved legal actions. The accrued
losses on these matters were not material at October 27, 2024.
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),
• employment,
• patent,
• trademark, and
• antitrust matters (including class action litigation).
21. CAPITAL STOCK
Our stock is listed on the New York Stock Exchange under the
symbol “DE.” At the end of 2024, there were 16,354 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 27, 2024,
October 29, 2023, and October 30, 2022 were 536.4 million.
271.8 million common shares were outstanding at October 27, 2024,
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 2024, this repurchase program had $8.9 billion
(21.9 million shares based on our fiscal year-end closing NYSE
common stock price of $407.93 per share) remaining to be
72
repurchased. Repurchases of our common stock under this plan
are made from time to time, at our discretion, in the open market.
A reconciliation of basic and diluted net income per share
attributable to Deere & Company follows in millions, except per
share amounts:
2024 2023 2022
Net income attributable to Deere & Company $ 7,100 $ 10,166 $
7,131
Average shares outstanding
276.0 292.2 304.5
Basic per share
$ 25.73 $ 34.80 $ 23.42
Average shares outstanding
276.0 292.2 304.5
Effect of dilutive stock options and
unvested restricted stock units
1.1
1.4
1.8
Total potential shares outstanding
277.1 293.6 306.3
Diluted per share
$ 25.62 $ 34.63 $ 23.28
Shares excluded as antidilutive
.3
.1
.2
22. SHARE-BASED COMPENSATION
We issue stock options and restricted stock units (RSU) to key
employees. RSUs are also issued to nonemployee directors for their
services as directors. RSUs consist of service-based,
performance/service-based, and market/service-based awards.
The Long-Term Incentive Cash granted to certain employees is
accounted for as share-based compensation. This incentive
includes a performance metric based, in part, on the price of our
shares. We are authorized to grant shares for equity incentive
awards. The outstanding shares authorized were 15.0 million at
October 27, 2024. We currently use shares that have been
repurchased through our stock repurchase programs to satisfy
share option exercises and RSU conversions. The stock awards
vesting periods and the dividend equivalents earned during the
vesting period follow:
Vesting
Dividend
Period
Equivalents
Stock options
1-3 years
Not included
Service-based RSUs
1-3 years
Included
Performance/service-based RSUs
3 years
Not included
Market/service-based RSUs
3 years
Not included
Stock options expire ten years from the grant date.
Performance/service-based awards are subject to a performance
metric based on our compound annual revenue growth rate,
compared to a benchmark group of companies. Market/service-
based awards are subject to a market related metric based on total
shareholder return, compared to a benchmark group of companies.
The performance/service-based units and market/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. The fair value
of the market/service-based RSUs is determined using a Monte
Carlo model. 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.
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:
2024
2023
2022
Share-based compensation expense
$
208 $
130 $
85
Income tax benefits
34
21
17
Stock options and restricted stock units
vested
110
84
74
At October 27, 2024, there was $110 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:
2024 2023 2022
Risk-free interest rate*
3.96% 2.68%
1.27%
Expected dividends
1.6%
1.1%
1.2%
Volatility*
27.0%
33.0%
32.0%
Expected term (in years)*
5.1
5.1
5.1
* Weighted-averages
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 27, 2024, and
changes during 2024 follow:
Remaining Aggregate
Exercise Contractual Intrinsic
Shares
Price*
Term
Value
(millions) (per share)
(years) (millions)
Outstanding at
beginning of year
1.7 $ 190.08
Granted
.2
377.01
Exercised
(.4) 102.85
Outstanding at end of year
1.5 242.41
5.04 $
249.1
Exercisable at end of year
1.1
197.53
3.96
239.6
* Weighted-averages
The amounts related to stock options were as follows in millions of
dollars unless otherwise noted:
2024
2023
2022
Weighted-average grant date fair value
(per share)
$ 98.04 $ 136.46 $ 89.20
Intrinsic value of options exercised
125
153
169
Cash received from exercises
44
60
63
Tax benefit from exercises
27
34
39
73
Restricted Stock Units
The weighted-average grant date fair values were as follows:
2024
2023
2022
Service-based
$ 377.72 $428.35 $347.59
Performance/service-based
360.53 424.93 331.47
Market/service-based
370.87
Our RSUs at October 27, 2024 and changes during 2024 in
thousands of shares and dollars per share follow:
Grant-Date
Shares
Fair Value*
(per share)
Service-based:
Nonvested at beginning of year
310 $
348.82
Granted
383
377.72
Vested
(196)
330.73
Forfeited
(26)
375.41
Nonvested at end of year
471
378.39
Performance/service-based:
Nonvested at beginning of year
119
331.78
Granted
52
360.53
Vested
(88)
245.73
Performance change
44
245.73
Forfeited
(1)
360.53
Nonvested at end of year
126
373.35
Market/service-based:
Nonvested at beginning of year
Granted
52
370.87
Forfeited
(1)
370.87
Nonvested at end of year
51
370.87
* Weighted-averages
23. OTHER COMPREHENSIVE INCOME ITEMS
The after-tax components of accumulated other comprehensive
income (loss) follow:
2024
2023
2022
Retirement benefits adjustment
$ (1,274) $ (845) $ (389)
Cumulative translation adjustment
(2,286)
(2,151) (2,594)
Unrealized gain (loss) on derivatives
(72)
(8)
21
Unrealized loss on debt securities
(74)
(110)
(94)
Accumulated other comprehensive
income (loss)
$ (3,706) $ (3,114) $ (3,056)
The following tables reflect amounts recorded in other
comprehensive income (loss), as well as reclassifications out of
other comprehensive income (loss).
Before
Tax
After
Tax
(Expense)
Tax
Amount Credit Amount
2024
Cumulative translation adjustment
$ (147) $
12 $
(135)
Unrealized gain (loss) on interest rate
derivatives:
Unrealized hedging gain (loss)
(10)
2
(8)
Reclassification of realized (gain) loss to
Interest expense
(71)
15
(56)
Net unrealized gain (loss) on derivatives
(81)
17
(64)
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)
45
(8)
37
Reclassification of realized (gain) loss to
Other income
(1)
(1)
Net unrealized gain (loss) on debt securities
44
(8)
36
Retirement benefits adjustment:
Net actuarial gain (loss)
(568)
136 (432)
Reclassification to Other operating
expenses through amortization of:
Actuarial (gain) loss
(72)
19
(53)
Prior service (credit) cost
36
(9)
27
Settlements/curtailments
38
(9)
29
Net unrealized gain (loss) on retirement
benefits adjustment
(566)
137 (429)
Total other comprehensive income (loss) $ (750) $
158 $ (592)
Before
Tax
After
Tax
(Expense)
Tax
Amount Credit Amount
2023
Cumulative translation adjustment:
Unrealized translation gain (loss)
$
424 $
(2) $
422
Reclassification of realized (gain) loss to:
Selling, administrative and general
expenses
10
10
Other operating expenses
11
11
Net unrealized translation gain (loss)
445
(2)
443
Unrealized gain (loss) on interest rate
derivatives:
Unrealized hedging gain (loss)
25
(5)
20
Reclassification of realized (gain) loss to
Interest expense
(62)
13
(49)
Net unrealized gain (loss) on derivatives
(37)
8
(29)
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)
(20)
4
(16)
Net unrealized gain (loss) on debt securities
(20)
4
(16)
Retirement benefits adjustment:
Net actuarial gain (loss)
(589)
139 (450)
Reclassification to Other operating
expenses through amortization of:
Actuarial (gain) loss
(81)
20
(61)
Prior service (credit) cost
37
(9)
28
Settlements
37
(10)
27
Net unrealized gain (loss) on retirement
benefits adjustment
(596)
140 (456)
Total other comprehensive income (loss) $ (208) $
150 $
(58)
74
Before
Tax
After
Tax
(Expense)
Tax
Amount
Credit Amount
2022
Cumulative translation adjustment
$ (1,105) $
(11) $ (1,116)
Unrealized gain (loss) on interest rate
derivatives:
Unrealized hedging gain (loss)
89
(19)
70
Reclassification of realized (gain) loss to
Interest expense
(9)
2
(7)
Net unrealized gain (loss) on derivatives
80
(17)
63
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)
(140)
30
(110)
Reclassification of realized (gain) loss to
Other income
1
1
Net unrealized gain (loss) on debt securities (139)
30 (109)
Retirement benefits adjustment:
Net actuarial gain (loss)
1,192
(298) 894
Prior service credit (cost)
(517)
124
(393)
Reclassification to Other operating
expenses through amortization of:
Actuarial (gain) loss
116
(29)
87
Prior service (credit) cost
30
(7)
23
Settlements/curtailment
45
(11)
34
Net unrealized gain (loss) on retirement
benefits adjustment
866
(221) 645
Total other comprehensive income (loss)
$ (298) $
(219) $
(517)
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:
2024
2023
2022
Operating lease expense
$
133 $
129 $
114
Short-term lease expense
38
49
55
Variable lease expense
72
80
74
Finance lease:
Depreciation expense
34
28
26
Interest on lease liabilities
4
2
1
Total lease expense
$
281 $ 288 $
270
Operating and finance lease right of use assets and lease liabilities
follow:
2024
2023
Operating leases:
Other assets
$
274 $
283
Accounts payable and accrued expenses
270
281
Finance leases:
Property and equipment — net
$
89 $
66
Short-term borrowings
33
25
Long-term borrowings
72
49
Total finance lease liabilities
$
105 $
74
The weighted-average remaining lease terms in years and discount
rates follows:
2024
2023
Weighted-average remaining lease terms:
Operating leases
7
7
Finance leases
4
4
Weighted-average discount rates:
Operating leases
3.5%
3.1%
Finance leases
4.3%
3.6%
Lease payment amounts in each of the next five years at
October 27, 2024 follow:
Operating
Finance
Due in:
Leases
Leases
2025
$
97 $
38
2026
57
30
2027
39
22
2028
34
13
2029
22
6
Later years
40
6
Total lease payments
289
115
Less: imputed interest
(19)
(10)
Total lease liabilities
$
270 $
105
Cash paid for amounts included in the measurement of lease
liabilities follows:
2024
2023
2022
Operating cash flows for operating leases $
129 $
132 $
127
Operating cash flows for finance leases
4
2
1
Financing cash flows for finance leases
36
31
28
75
Right of use assets obtained in exchange for lease liabilities follow:
2024
2023
Operating leases
$
75 $
97
Finance leases
67
54
Lessor
We lease equipment manufactured or sold by us through John
Deere Financial. Sales-type and direct financing leases are
reported in “Financing receivables ‒ net.” Operating leases are
reported in “Equipment on operating leases ‒ 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
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:
2024
2023
2022
Sales-type and direct finance lease revenues $
190 $
165 $
154
Operating lease revenues
1,403
1,312
1,318
Variable lease revenues
17
16
26
Total lease revenues
$ 1,610 $ 1,493 $ 1,498
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:
2024
2023
Agriculture and turf
$
1,022 $
1,078
Construction and forestry
1,034
1,048
Total
2,056
2,126
Guaranteed residual values
921
723
Unguaranteed residual values
55
57
Less: unearned finance income
(307)
(350)
Financing lease receivables
$
2,725 $
2,556
Scheduled payments, including guaranteed residual values, on
sales-type and direct financing lease receivables at October 27,
2024 follow:
Due in:
2024
2025
$
1,598
2026
620
2027
389
2028
213
2029
133
Later years
24
Total
$
2,977
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.
The cost of equipment on operating leases by market follow:
2024
2023
Agriculture and turf
$
7,875 $
7,168
Construction and forestry
1,142
1,212
Total
9,017
8,380
Less: accumulated depreciation
(1,566)
(1,463)
Equipment on operating leases – net
$
7,451 $
6,917
Operating lease residual values
$
5,227 $
4,864
First-loss residual value guarantees
1,393
1,188
The equipment is depreciated on a straight-line basis over the term
of the lease. The corresponding depreciation expense was $874 in
2024, $853 in 2023, and $827 in 2022.
Lease payments for operating leases are scheduled as follows:
Due in:
2024
2025
$
1,151
2026
865
2027
534
2028
279
2029
71
Later years
9
Total
$
2,909
76
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 27, 2024 and October 29, 2023
follow:
2024
2023
Carrying Fair Carrying Fair
Value Value* Value Value*
Financing receivables – net $ 44,309 $ 44,336 $ 43,673 $ 42,777
Financing receivables
securitized – net
8,723
8,654
7,335
7,056
Short-term securitization
borrowings
8,431
8,453
6,995
6,921
Long-term borrowings due
within one year**
9,115
9,079
8,331
8,156
Long-term borrowings**
43,157 42,804 38,428 36,873
* 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 27, 2024 and October 29,
2023 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:
2024
2023
Level 1:
Marketable securities
International equity securities
$
3
International mutual funds securities
101
U.S. equity fund
86
U.S. fixed income fund
32
U.S. government debt securities
$
239
78
Total Level 1 marketable securities
239
300
Level 2:
Marketable securities
Corporate debt securities
423
244
International debt securities
143
1
Mortgage-backed securities*
165
185
Municipal debt securities
74
75
U.S. government debt securities
110
141
Total Level 2 marketable securities
915
646
Other assets - Derivatives
357
292
Accounts payable and accrued expenses –
Derivatives
582
1,130
Level 3:
Accounts payable and accrued expenses –
Deferred consideration
147
186
* Primarily issued by U.S. government sponsored enterprises.
Fair value, nonrecurring level 3 measurements from impairments at
October 27, 2024 and October 29, 2023 follow:
Fair Value
Losses
2024 2023 2024 2023 2022
Inventories
$ 19
Property and equipment – net
41
Other intangible assets – net
28
Other assets
$
23
$ 28
Assets held for sale
2,944
97
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.
77
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.
Deferred consideration – The total purchase price consideration for
three former Deere-Hitachi joint venture factories acquired in 2022
included supply agreement price increases beyond inflation
adjustments. This deferred consideration will be paid as we
purchase Deere-branded excavators, components, and service
parts from Hitachi under the agreement with a duration that
ranges from 5 to 30 years (see Note 3). The deferred consideration
balance is reduced as purchases are made and valued on a
discounted cash flow approach using market rates.
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.
Other assets (Investment in unconsolidated affiliates) – Other than
temporary impairments of investments are measured as the
difference between the implied fair value and the carrying value of
the investments. The estimated fair value for privately held entities
is determined by an income approach (discounted cash flows),
which includes inputs such as interest rates and margins (see
Note 4).
Assets held for sale – The impairment was measured at the lower of
the carrying amount or fair value less costs to sell. Fair value was
based on the probable sale price. The inputs included estimates of
the final sale price (see Note 4).
26. DERIVATIVE INSTRUMENTS
Fair values of our derivative instruments and the associated
notional amounts at the end of 2024 and 2023 were as follows.
Assets are recorded in “Other assets,” while liabilities are recorded
in “Accounts payable and accrued expenses.”
Fair Value
Notional Assets Liabilities
2024
Cash flow hedges:
Interest rate contracts
$ 2,875 $
3 $
20
Fair value hedges:
Interest rate contracts
15,864
115
467
Cross-currency interest rate contracts
975
31
Not designated as hedging
instruments:
Interest rate contracts
12,518
97
75
Foreign exchange contracts
7,533
95
20
Cross-currency interest rate contracts
158
16
2023
Cash flow hedges:
Interest rate contracts
$ 1,500 $
45
Fair value hedges:
Interest rate contracts
12,691
$
970
Not designated as hedging
instruments:
Interest rate contracts
13,853
169
98
Foreign exchange contracts
8,117
75
54
Cross-currency interest rate contracts
176
3
8
The amounts recorded, at October 27, 2024 and October 29, 2023,
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.
Active Hedging
Discontinued Hedging
Relationships
Relationships
Carrying Cumulative
Carrying
Cumulative
Amount of Fair Value Amount of Fair Value
Hedged Hedging
Formerly
Hedging
Item
Amount Hedged Item
Amount
2024
Short-term borrowings $
287 $
(1) $
1,782 $
7
Long-term borrowings
16,125
(347)
8,626
(228)
2023
Short-term borrowings
$
1,814 $
15
Long-term borrowings $ 11,660 $
(976)
7,144
(288)
78
The classification and gains (losses), including accrued interest
expense, related to derivative instruments on the statements of
consolidated income consisted of the following:
2024 2023 2022
Fair Value Hedges
Interest rate contracts – Interest expense $
226 $
(542) $ (1,144)
Cash Flow Hedges
Recognized in OCI:
Interest rate contracts – OCI (pretax)
$
(10) $
25 $
89
Reclassified from OCI:
Interest rate contracts – Interest expense
71
62
9
Not Designated as Hedges
Interest rate contracts – Net sales
$
1 $
53
Interest rate contracts – Interest expense $
(4)
40
81
Foreign exchange contracts – Net sales
(2)
(6)
(6)
Foreign exchange contracts – Cost of sales
10
8
(64)
Foreign exchange contracts – Other
operating expenses
(135)
100
402
Total not designated
$
(131) $
143 $
466
The amount of loss recorded in OCI at October 27, 2024 that is
expected to be reclassified to “Interest expense” in the next twelve
months if interest rates remain unchanged is $6 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 27, 2024 and
October 29, 2023, was $562 and $1,076, respectively. In accordance
with the limits established in these agreements, we posted $245
and $659 of cash collateral at October 27, 2024 and October 29,
2023, respectively. In addition, we paid $8 of collateral that was
outstanding at both October 27, 2024 and October 29, 2023 to
participate in an international futures market to hedge currency
exposure, not included in the following table.
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 27, 2024 and October 29, 2023 follows:
Gross Amounts
Netting
Net
Recognized Arrangements Collateral
Amount
2024
Assets
$
357 $
(142)
$
215
Liabilities
582
(142) $
(246)
194
2023
Assets
$
292 $
(152)
$
140
Liabilities
1,130
(152) $
(659)
319
27. SEGMENT DATA
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 segment’s primary products include large and certain mid-size
tractors, combines, cotton pickers, sugarcane harvesters and
loaders, and soil preparation, seeding, application, crop care
equipment, and related attachments and service parts.
The SAT segment defines, develops, and delivers global equipment
and technology solutions to unlock customer value for dairy and
livestock producers, high-value and small acreage crop producers,
and turf and utility customers. The segment’s primary products
include certain mid-size tractors, utility and compact utility
tractors, as well as hay and forage equipment, riding and
commercial lawn equipment, golf course equipment, utility
vehicles, and related attachments and service parts.
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 backhoe loaders, crawler
dozers and loaders, four-wheel-drive loaders, excavators, skid-
steer loaders, milling machines, log harvesters, and related
attachments and service parts.
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.
79
Because of integrated manufacturing operations and common
administrative and marketing support, a substantial number of
allocations must be made to determine operating segment data.
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 27, 2024, October 29, 2023, and
October 30, 2022.
OPERATING SEGMENTS
2024 2023 2022
Net sales and revenues
Unaffiliated customers:
Production & precision ag net sales
$ 20,834 $ 26,790 $ 22,002
Small ag & turf net sales
10,969 13,980
13,381
Construction & forestry net sales
12,956 14,795 12,534
Financial services revenues
5,782
4,721
3,625
Other revenues*
1,175
965
1,035
Total
$ 51,716 $ 61,251 $ 52,577
* Other revenues are primarily the PPA, SAT, and CF revenues for finance and
interest income and other income.
Operating profit
Production & precision ag
$ 4,514 $ 6,996 $ 4,386
Small ag & turf
1,627
2,472
1,949
Construction & forestry
2,009
2,695
2,014
Financial services*
889
795
1,159
Total operating profit*
9,039
12,958
9,508
Interest income
492
559
159
Investment income
68
Interest expense
(396)
(411)
(390)
Foreign exchange loss from equipment
operations’ financing activities
(81)
(114)
(103)
Pension and OPEB benefit, excluding
service cost component
333
286
218
Corporate expenses – net
(273)
(252)
(255)
Income taxes
(2,094)
(2,871)
(2,007)
Total
(1,951)
(2,803)
(2,378)
Net income
7,088
10,155
7,130
Less: Net loss attributable to
noncontrolling interests
(12)
(11)
(1)
Net income attributable to
Deere & Company
$ 7,100 $ 10,166 $
7,131
* Operating profit of the financial services business segment includes the effect of
its interest income, investment income, interest expense, and foreign exchange
gains or losses.
OPERATING SEGMENTS
2024
2023
2022
Interest income*
Production & precision ag
$
48 $
29 $
22
Small ag & turf
42
35
24
Construction & forestry
14
13
8
Financial services
4,620
3,731
2,245
Corporate
492
559
159
Intercompany
(872) (1,008)
(431)
Total
$
4,344 $
3,359 $
2,027
* Does not include finance rental income for equipment on operating leases.
Interest expense
Production & precision ag
$
221 $
282 $
122
Small ag & turf
215
236
105
Construction & forestry
204
169
72
Financial services
3,182
2,362
799
Corporate
396
411
390
Intercompany
(870)
(1,007)
(426)
Total
$ 3,348 $ 2,453 $ 1,062
Depreciation* and amortization expense
Production & precision ag
$
643 $
581 $
523
Small ag & turf
246
241
236
Construction & forestry
331
301
282
Financial services
1,040
1,016
1,050
Intercompany
(142)
(135)
(196)
Total
$ 2,118 $ 2,004 $ 1,895
* Includes depreciation for equipment on operating leases.
Identifiable operating assets
Production & precision ag
$ 8,696 $
8,734 $ 8,414
Small ag & turf
4,130
4,348
4,451
Construction & forestry
7,137
7,139 6,754
Financial services
73,612 70,732 58,864
Corporate
13,745
13,134 11,547
Total
$107,320 $ 104,087 $ 90,030
Capital additions
Production & precision ag
$
1,025 $
896 $
649
Small ag & turf
327
386
329
Construction & forestry
352
311
217
Financial services
3
4
2
Total
$
1,707 $
1,597 $
1,197
28. SUBSEQUENT EVENTS
On December 3, 2024, a quarterly dividend of $1.62 per share was
declared at the Board of Directors meeting, payable on February 10,
2025 to stockholders of record on December 31, 2024.
In November 2024, we entered into a retail note securitization
transaction resulting in $725 of secured borrowings.
80
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 27, 2024 and October 29, 2023, 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 27, 2024, 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 27, 2024 and October 29, 2023, and the results of its operations
and its cash flows for each of the three years in the period ended October 27, 2024, 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 27, 2024, 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 12, 2024, 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-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 retail 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.
81
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
Geography
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. Non-
performing receivables are included in the estimate of expected credit losses. 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:
•
product category
•
market
•
geography
•
credit risk, and
•
remaining balance.
The Company utilizes linear regression models to estimate the expected credit losses for large and complex retail customer receivable
pools, which represent more than 90 percent of retail customer receivables. These statistical models utilize independent variables, or
predictive features, to estimate lifetime default rates, which are subsequently adjusted for expected recoveries to arrive at lifetime
credit loss estimates. Independent variables included in the models vary by product, but can include credit quality at time of
application, remaining account balance, delinquency status, and various economic factors, such as commodity prices, employment
levels, and housing data. The economic factors include forward-looking conditions over the reasonable and supportable forecast
period.
Management reviews each model’s output quarterly, and qualitative adjustments are incorporated as necessary to arrive at
management’s best estimate of expected credit losses.
We identified the allowance for credit losses by the linear regression models and related independent variables and qualitative
adjustments used in determining the Company’s United States and Canada retail customer receivable portfolios 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 retail customer
receivable portfolio by the linear regression models and related independent variables and qualitative adjustments included the
following, among others:
•
We tested the effectiveness of management’s controls over the methodology, data and assumptions used to estimate the
allowance for credit losses.
•
We tested the accuracy and evaluated the relevance of the underlying historical data used in the Company’s linear
regression models.
82
•
With the assistance of our credit specialists, we evaluated the reasonableness and accuracy of the linear regression 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.
•
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 12, 2024
We have served as the Company’s auditor since 1910.
83
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 27,
2024, 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 27, 2024, 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 27, 2024 of the Company and our report dated
December 12, 2024, 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 12, 2024
84
Index to Exhibits
3.1
Restated 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*)
3.2
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*)
3.3
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*)
4.1
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*)
4.2
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*)
4.3
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*)
4.4
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, as amended on June 12, 2024, to increase the authorization to $9,000,000,000
4.5
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*)
4.6
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
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*)
10.2
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*)
10.3
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*)
10.4
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*)
10.5
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*)
85
10.6†
Deere & Company Voluntary Deferred Compensation Plan, as amended October 31, 2024
10.7†
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*)
10.8†
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*)
10.9†
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 2024
10.11†
Form of Terms and Conditions for John Deere Restricted Stock Units granted fiscal 2024
10.12†
Form of Terms and Conditions for John Deere Performance Stock Options granted fiscal 2024
10.13†
Form of Terms and Conditions for John Deere Nonqualified Stock Options granted fiscal 2023 (Exhibit 10.10 to Form 10-K
of registrant for the year ended October 29, 2023, Securities and Exchange Commission File Number 1-4121*)
10.14†
Form of Terms and Conditions for John Deere Restricted Stock Units and Performance Stock Units granted fiscal 2023
(Exhibit 10.11 to Form 10-K of registrant for the year ended October 29, 2023, Securities and Exchange Commission File
Number 1-4121*)
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*)
10.16†
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*)
10.17†
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*)
10.18†
Form of John Deere Restricted Stock Unit Grant for Directors granted fiscal 2023 (Exhibit 10.16 to Form 10-K of registrant
for the year ended October 29, 2023, Securities and Exchange Commission File Number 1-4121*)
10.19†
Form of John Deere Restricted Stock Unit Grant for Directors (Exhibit 10.13 to Form 10-K of registrant for the year ended
October 31, 2008, Securities and Exchange Commission File Number 1-4121*)
10.20†
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*)
10.21†
John Deere Defined Contribution Restoration Plan, as amended October 31, 2024
10.22†
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*)
10.23†
John Deere Senior Supplementary Pension Benefit Plan, as amended October 31, 2022
10.24†
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*)
10.25†
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*)
86
10.26†
Deere & Company Nonemployee Director Stock Ownership Plan, as amended February 23, 2022 (Appendix C to Proxy
Statement of registrant filed on January 7, 2022, Securities and Exchange Commission File Number 1-4121*)
10.27†
Deere & Company Nonemployee Director Deferred Compensation Plan, as amended October 31, 2023 (Exhibit 10.25 to
Form 10-K of registrant for the year ended October 29, 2023, Securities and Exchange Commission File Number 1-4121*)
10.28†
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*)
10.29†
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*)
10.30
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*)
10.31
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*)
10.32
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*)
10.33
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*)
10.34
2028 Credit Agreement, dated March 25, 2024, 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 28, 2024, Securities and Exchange Commission File Number 1-4121*)
10.35
2029 Credit Agreement, dated March 25, 2024, 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 28,2024, Securities and Exchange Commission File Number 1-4121*)
10.36
364-Day Credit Agreement, dated March 25, 2024, 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 28, 2024, Securities and Exchange Commission File Number 1-4121*)
19.
Global Insider Trader Policy
21.
Subsidiaries
22.
List of Guarantors and Subsidiary Issuers of Guaranteed Securities
23.
Consent of Deloitte & Touche LLP
24.
Power of Attorney (included on signature page)
31.1
Rule 13a-14(a)/15d-14(a) Certification
87
31.2
Rule 13a-14(a)/15d-14(a) Certification
32.
Section 1350 Certifications (furnished herewith)
97.
Incentive Compensation Recovery Policy effective August 29, 2023 (Exhibit 10.27 to Form 10-K of registrant for the year
ended October 29, 2023, Securities and Exchange Commission File Number 1-4121*)
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)
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.
88
SIGNATURES
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.
DEERE & COMPANY
By:
/s/ John C. May
John C. May
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: December 12, 2024
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
Date
/s/ Leanne G. Caret
Director
)
December 12, 2024
Leanne G. Caret
)
)
)
/s/ Tamra A. Erwin
Director
)
Tamra A. Erwin
)
)
)
/s/ R. Preston Feight
Director
)
R. Preston Feight
)
)
)
/s/ Alan C. Heuberger
Director
)
Alan C. Heuberger
)
)
)
/s/ L. Neil Hunn
Director
)
L. Neil Hunn
)
)
)
/s/ Joshua A. Jepsen
Senior Vice President and
)
Joshua A. Jepsen
Chief Financial Officer
)
(Principal Financial Officer and Principal
)
Accounting Officer)
)
)
)
/s/ Michael O. Johanns
Director
)
Michael O. Johanns
)
)
)
/s/ Clayton M. Jones
Director
)
Clayton M. Jones
)
)
)
89
/s/ John C. May
Chairman and Chief Executive Officer
)
John C. May
(Principal Executive Officer)
)
)
)
/s/ Gregory R. Page
Director
)
Gregory R. Page
)
)
)
/s/ Sherry M. Smith
Director
)
Sherry M. Smith
)
)
)
/s/ Dmitri L. Stockton
Director
)
Dmitri L. Stockton
)
)
)
/s/ Sheila G. Talton
Director
)
Sheila G. Talton
)
EXHIBIT 21
DEERE & COMPANY
AND CONSOLIDATED SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
As of October 27, 2024
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
Organized
under the
laws of
Subsidiaries included in consolidated financial statements *
Banco John Deere S.A.
Brazil
Deere Capital, Inc.
Nevada
Deere Credit, Inc.
Delaware
Deere Credit Services, Inc.
Delaware
Deere Receivables LLC
Nevada
FPC Receivables, Inc.
Nevada
Hamm AG
Germany
Industrias John Deere Argentina S.A.
Argentina
John Deere Asia (Singapore) Private Limited
Singapore
John Deere Bank S.A.
Luxembourg
John Deere Brasil LTDA.
Brazil
John Deere Canada ULC
Canada
John Deere Capital Corporation
Delaware
John Deere Cash Management
Luxembourg
John Deere (China) Investment Co., Ltd.
China
John Deere Construction & Forestry Company
Delaware
John Deere Financial Inc.
Canada
John Deere Financial India Private Limited
India
John Deere Financial Limited
Australia
John Deere Financial Mexico, S.A. de C.V. SOFOM, ENR
Mexico
John Deere Financial Services, Inc.
Delaware
John Deere Forestry Oy
Finland
John Deere GmbH & Co. KG
Germany
John Deere India Private Limited
India
John Deere Kernersville LLC
Delaware
John Deere Limited
Australia
John Deere Limited
Scotland
John Deere Receivables LLC
Nevada
John Deere, S. de R.L. de C.V.
Mexico
John Deere Sales Hispanoamérica, S. de R.L. de C.V.
Mexico
John Deere Shared Services LLC
Iowa
John Deere Walldorf GmbH & Co. KG
Germany
John Deere Walldorf International GmbH
Germany
John Deere Warranty, Inc.
Vermont
Joseph Vögele Aktiengesellschaft
Germany
Wirtgen America, Inc.
Tennessee
Wirtgen Deutschland Vertriebs- und Service GmbH
Germany
Wirtgen GmbH
Germany
____________________________
* One-hundred eighty-two 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.
EXHIBIT 22
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.
Name of Subsidiary Issuer
Jurisdiction
Deere Funding Canada Corporation
Ontario
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-273045 on Form S-3 and Registration
Statement Nos. 333-165069, 333-62669, 333-132013, 333-140980, 333-140981, 333-202299 and 333-236655 on Form S-8 of
our reports dated December 12, 2024, 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-K
for the year ended October 27, 2024.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
December 12, 2024
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 12, 2024
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 12, 2024
By:
/s/ Joshua A. Jepsen
Joshua A. Jepsen
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
Exhibit 32
STATEMENT PURSUANT TO
18 U.S.C. SECTION 1350
AS REQUIRED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Deere & Company (the “Company”) on Form 10-K for the period ended October 27,
2024, 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 12, 2024
/s/ John C. May
Chairman and Chief Executive Officer
John C. May
(Principal Executive Officer)
December 12, 2024
/s/ Joshua A. Jepsen
Senior Vice President and Chief Financial Officer
(Principal Financial Officer and Principal
Joshua A. Jepsen
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