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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~August 1, 2021~~January 30, 2022

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

For the transition period from ____ to ____

Commission file no: 1-4121

DEERE & COMPANY

(Exact name of registrant as specified in its charter)


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

One John Deere Place

Moline, Illinois 61265

(Address of principal executive offices)

Telephone Number: (309) 765-8000

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
~~8½% Debentures Due 2022~~	~~DE22~~	~~New York Stock Exchange~~
6.55% Debentures Due 2028	DE28	New York Stock Exchange

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

Yes ☒No ☐

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

Yes ☒No ☐

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


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

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

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

Yes ☐No ☒

At ~~August 1, 2021, 310,061,478~~January 30, 2022, 306,784,327 shares of common stock, $1 par value, of the registrant were outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

DEERE & COMPANY

STATEMENT OF CONSOLIDATED INCOME

For the Three Months Ended August 1, 2021 and August 2, 2020

(In millions of dollars and shares except per share amounts) Unaudited


2021

2020

Net Sales and Revenues

Net sales

$
10,413

$
7,859

Finance and interest income

825

838

Other income

289

228

Total

11,527

8,925

Costs and Expenses

Cost of sales

7,574

5,835

Research and development expenses

394

370

Selling, administrative and general expenses

841

752

Interest expense

244

290

Other operating expenses

324

408

Total

9,377

7,655

Income of Consolidated Group before Income Taxes

2,150

1,270

Provision for income taxes

491

457

Income of Consolidated Group

1,659

813

Equity in income (loss) of unconsolidated affiliates

8

(2)

Net Income

1,667

811

Less: Net income attributable to noncontrolling interests

Net Income Attributable to Deere & Company

$
1,667

$
811

Per Share Data

Basic

$
5.36

$
2.59

Diluted

$
5.32

$
2.57

Average Shares Outstanding

Basic

311.0

313.0

Diluted

313.4

315.8


ITEM 1. FINANCIAL STATEMENTS
DEERE & COMPANY
STATEMENTS OF CONSOLIDATED INCOME
For the Three Months Ended January 30, 2022 and January 31, 2021
(In millions of dollars and shares except per share amounts) Unaudited
	2022		2021
Net Sales and Revenues
Net sales	$	8,531	$	8,051
Finance and interest income		800		834
Other income		238		227
Total		9,569		9,112

Costs and Expenses
Cost of sales		6,695		5,805
Research and development expenses		402		366
Selling, administrative and general expenses		781		769
Interest expense		229		271
Other operating expenses		311		373
Total		8,418		7,584

Income of Consolidated Group before Income Taxes		1,151		1,528
Provision for income taxes		250		308

Income of Consolidated Group		901		1,220
Equity in income of unconsolidated affiliates		3		4

Net Income		904		1,224
Less: Net income attributable to noncontrolling interests		1
Net Income Attributable to Deere & Company	$	903	$	1,224

Per Share Data
Basic	$	2.94	$	3.90
Diluted	$	2.92	$	3.87
Dividends declared	$	1.05	$	.76
Dividends paid	$	1.05	$	.76

Average Shares Outstanding
Basic		307.4		313.5
Diluted		309.4		316.1

See Condensed Notes to Interim Consolidated Financial Statements.


DEERE & COMPANY
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
For the Three Months Ended August 1, 2021 and August 2, 2020
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
For the Three Months Ended January 30, 2022 and January 31, 2021
(In millions of dollars) Unaudited
	2021		2020		2022		2021

Net Income	$	1,667	$	811	$	904	$	1,224

Other Comprehensive Income (Loss), Net of Income Taxes
Retirement benefits adjustment		54		51		(345)		63
Cumulative translation adjustment		(114)		331		(267)		396
Unrealized gain on derivatives		1		4		14		4
Unrealized gain on debt securities		8		10
Unrealized loss on debt securities						(15)		(2)
Other Comprehensive Income (Loss), Net of Income Taxes		(51)		396		(613)		461

Comprehensive Income of Consolidated Group		1,616		1,207		291		1,685
Less: Comprehensive income attributable to noncontrolling interests						1
Comprehensive Income Attributable to Deere & Company	$	1,616	$	1,207	$	290	$	1,685

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY

STATEMENT OF CONSOLIDATED INCOME

For the Nine Months Ended August 1, 2021 and August 2, 2020

(In millions of dollars and shares except per share amounts) Unaudited

2021

2020

Net Sales and Revenues

Net sales

$
29,461

$
22,612

Finance and interest income

2,468

2,584

Other income

768

613

Total

32,697

25,809

Costs and Expenses

Cost of sales

21,307

17,206

Research and development expenses

1,137

1,201

Selling, administrative and general expenses

2,448

2,467

Interest expense

783

969

Other operating expenses

1,033

1,199

Total

26,708

23,042

Income of Consolidated Group before Income Taxes

5,989

2,767

Provision for income taxes

1,328

752

Income of Consolidated Group

4,661

2,015

Equity in income (loss) of unconsolidated affiliates

21

(20)

Net Income

4,682

1,995

Less: Net income attributable to noncontrolling interests

2

2

Net Income Attributable to Deere & Company

$
4,680

$
1,993

Per Share Data

Basic

$
14.98

$
6.36

Diluted

$
14.86

$
6.30

Average Shares Outstanding

Basic

312.4

313.3

Diluted

314.9

316.4

~~See Condensed Notes to Interim Consolidated Financial Statements.~~

DEERE & COMPANY

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME

For the Nine Months Ended August 1, 2021 and August 2, 2020

(In millions of dollars) Unaudited

2021

2020

Net Income

$
4,682

$
1,995

Other Comprehensive Income (Loss), Net of Income Taxes

Retirement benefits adjustment

208

338

Cumulative translation adjustment

319

(67)

Unrealized gain (loss) on derivatives

8

(4)

Unrealized gain (loss) on debt securities

(7)

21

Other Comprehensive Income (Loss), Net of Income Taxes

528

288

Comprehensive Income of Consolidated Group

5,210

2,283

Less: Comprehensive income attributable to noncontrolling interests

2

2

Comprehensive Income Attributable to Deere & Company

$
5,208

$
2,281

~~See Condensed Notes to Interim Consolidated Financial Statements.~~


DEERE & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions of dollars) Unaudited
	August 1		November 1		August 2		January 30		October 31		January 31
	2021		2020		2020		2022		2021		2021
Assets
Cash and cash equivalents	$	7,519	$	7,066	$	8,190	$	4,472	$	8,017	$	6,962
Marketable securities		688		641		640		735		728		667
Receivables from unconsolidated affiliates		29		31		26		33		27		28
Trade accounts and notes receivable – net		5,268		4,171		5,473		4,855		4,208		5,037
Financing receivables – net		31,449		29,750		27,814		33,191		33,799		29,438
Financing receivables securitized – net		5,401		4,703		5,469		3,516		4,659		3,931
Other receivables		1,673		1,220		1,217		1,903		1,738		1,141
Equipment on operating leases – net		6,982		7,298		7,158		6,624		6,988		7,030
Inventories		6,410		4,999		5,650		7,935		6,781		5,956
Property and equipment – net		5,649		5,817		5,754		5,665		5,820		5,741
Investments in unconsolidated affiliates		188		193		199		176		175		178
Goodwill		3,148		3,081		2,984		3,192		3,291		3,194
Other intangible assets – net		1,267		1,327		1,301		1,209		1,275		1,342
Retirement benefits		990		863		1,031		3,158		3,601		906
Deferred income taxes		1,767		1,499		1,534		923		1,037		1,556
Other assets		2,260		2,432		2,824		2,027		1,970		2,373
Total Assets	$	80,688	$	75,091	$	77,264	$	79,614	$	84,114	$	75,480

Liabilities and Stockholders’ Equity

Liabilities
Short-term borrowings	$	10,404	$	8,582	$	9,075	$	10,990	$	10,919	$	9,224
Short-term securitization borrowings		5,277		4,682		5,361		3,482		4,605		3,969
Payables to unconsolidated affiliates		116		105		80		172		143		119
Accounts payable and accrued expenses		11,091		10,112		9,565		10,479		12,205		9,404
Deferred income taxes		515		519		479		556		576		532
Long-term borrowings		32,280		32,734		34,037		32,838		32,888		32,772
Retirement benefits and other liabilities		5,272		5,413		5,776		3,289		4,344		5,374
Total liabilities		64,955		62,147		64,373		61,806		65,680		61,394

Commitments and contingencies (Note 18)
Commitments and contingencies (Note 16)

Stockholders’ Equity
Common stock, $1 par value (issued shares at August 1, 2021 – 536,431,204)		5,031		4,895		4,750
Common stock, $1 par value (issued shares at January 30, 2022 – 536,431,204)								5,066		5,054		4,942
Common stock in treasury		(19,780)		(18,065)		(17,671)		(21,139)		(20,533)		(18,377)
Retained earnings		35,491		31,646		31,128		37,029		36,449		32,596
Accumulated other comprehensive income (loss)		(5,011)		(5,539)		(5,319)		(3,152)		(2,539)		(5,078)
Total Deere & Company stockholders’ equity		15,731		12,937		12,888		17,804		18,431		14,083
Noncontrolling interests		2		7		3		4		3		3
Total stockholders’ equity		15,733		12,944		12,891		17,808		18,434		14,086
Total Liabilities and Stockholders’ Equity	$	80,688	$	75,091	$	77,264	$	79,614	$	84,114	$	75,480

See Condensed Notes to Interim Consolidated Financial Statements.


DEERE & COMPANY
STATEMENT OF CONSOLIDATED CASH FLOWS
For the Nine Months Ended August 1, 2021 and August 2, 2020
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Three Months Ended January 30, 2022 and January 31, 2021
(In millions of dollars) Unaudited
	2021		2020		2022		2021
Cash Flows from Operating Activities
Net income	$	4,682	$	1,995	$	904	$	1,224
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision (credit) for credit losses		(17)		123				(5)
Provision for depreciation and amortization		1,569		1,614		486		538
Impairment charges		50		147				50
Share-based compensation expense		64		63		18		15
Undistributed earnings of unconsolidated affiliates		4		(5)		(2)		18
Credit for deferred income taxes		(271)		(160)
Provision (credit) for deferred income taxes						210		(38)
Changes in assets and liabilities:
Trade, notes, and financing receivables related to sales		(444)		626		(106)		(97)
Inventories		(1,817)		(1)		(1,297)		(926)
Accounts payable and accrued expenses		742		(572)		(1,554)		(705)
Accrued income taxes payable/receivable		34		4		(184)		130
Retirement benefits		13		88		(1,010)		(14)
Other		(295)		135		(18)		(47)
Net cash provided by operating activities		4,314		4,057
Net cash provided by (used for) operating activities						(2,553)		143

Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)		14,480		13,237		6,435		5,999
Proceeds from maturities and sales of marketable securities		82		70		21		20
Proceeds from sales of equipment on operating leases		1,510		1,310		479		460
Cost of receivables acquired (excluding receivables related to sales)		(17,161)		(14,449)		(5,603)		(5,300)
Acquisitions of businesses, net of cash acquired		(19)				(24)		(19)
Purchases of marketable securities		(115)		(91)		(48)		(39)
Purchases of property and equipment		(492)		(594)		(193)		(154)
Cost of equipment on operating leases acquired		(1,210)		(1,312)		(391)		(294)
Collateral on derivatives – net		(189)		324
Collateral on derivatives - net						(13)		(88)
Other		12		(12)		(15)		(6)
Net cash used for investing activities		(3,102)		(1,517)
Net cash provided by investing activities						648		579

Cash Flows from Financing Activities
Increase in total short-term borrowings		929		170
Decrease in total short-term borrowings						(1,018)		(695)
Proceeds from long-term borrowings		5,877		8,331		2,353		1,757
Payments of long-term borrowings		(5,172)		(5,797)		(1,940)		(1,441)
Proceeds from issuance of common stock		136		111		11		71
Repurchases of common stock		(1,780)		(263)		(623)		(352)
Dividends paid		(761)		(718)		(327)		(242)
Other		(80)		(110)		(33)		(31)
Net cash provided by (used for) financing activities		(851)		1,724
Net cash used for financing activities						(1,577)		(933)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash		106		80		(74)		103

Net Increase in Cash, Cash Equivalents, and Restricted Cash		467		4,344
Net Decrease in Cash, Cash Equivalents, and Restricted Cash						(3,556)		(108)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period		7,172		3,956		8,125		7,172
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	7,639	$	8,300	$	4,569	$	7,064

See Condensed Notes to Interim Consolidated Financial Statements.


DEERE & COMPANY	DEERE & COMPANY															DEERE & COMPANY
STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY
For the Three and Nine Months Ended August 1, 2021 and August 2, 2020
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY																STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY
For the Three Months Ended January 30, 2022 and January 31, 2021																For the Three Months Ended January 30, 2022 and January 31, 2021
(In millions of dollars) Unaudited	(In millions of dollars) Unaudited															(In millions of dollars) Unaudited
				Total Stockholders’ Equity															Total Stockholders’ Equity
				Deere & Company Stockholders															Deere & Company Stockholders
										Accumulated															Accumulated
		Total								Other				Redeemable			Total								Other
		Stockholders’		Common		Treasury		Retained		Comprehensive		Noncontrolling		Noncontrolling			Stockholders’		Common		Treasury		Retained		Comprehensive		Noncontrolling
		Equity		Stock		Stock		Earnings		Income (Loss)		Interests		Interest			Equity		Stock		Stock		Earnings		Income (Loss)		Interests

Three Months Ended August 2, 2020
Balance May 3, 2020		$	11,865	$	4,713	$	(17,690)	$	30,556	$	(5,715)	$	1
Net income			811						811
Other comprehensive income			396								396
Treasury shares reissued			19				19
Dividends declared			(239)						(239)
Stock options and other			39		37								2
Balance August 2, 2020		$	12,891	$	4,750	$	(17,671)	$	31,128	$	(5,319)	$	3

Nine Months Ended August 2, 2020
Balance November 3, 2019		$	11,417	$	4,642	$	(17,474)	$	29,852	$	(5,607)	$	4	$	14
Balance November 1, 2020																	$	12,944	$	4,895	$	(18,065)	$	31,646	$	(5,539)	$	7
ASU No. 2016-13 adoption																		(35)						(35)
Net income			1,994						1,993				1		1			1,224						1,224
Other comprehensive income			288								288							461								461
Repurchases of common stock			(263)				(263)											(352)				(352)
Treasury shares reissued			66				66											40				40
Dividends declared			(719)						(716)				(3)		(1)			(239)						(239)
Noncontrolling interest redemption (Note 22)															(14)
Stock options and other			108		108				(1)				1					43		47								(4)
Balance August 2, 2020		$	12,891	$	4,750	$	(17,671)	$	31,128	$	(5,319)	$	3
Balance January 31, 2021																	$	14,086	$	4,942	$	(18,377)	$	32,596	$	(5,078)	$	3

Three Months Ended August 1, 2021
Balance May 2, 2021		$	15,096	$	4,999	$	(19,052)	$	34,105	$	(4,960)	$	4

Balance October 31, 2021																	$	18,434	$	5,054	$	(20,533)	$	36,449	$	(2,539)	$	3
Net income			1,667						1,667									904						903				1
Other comprehensive loss			(51)								(51)							(613)								(613)
Repurchases of common stock			(736)				(736)											(623)				(623)
Treasury shares reissued			8				8											17				17
Dividends declared			(282)						(280)				(2)					(323)						(323)
Stock options and other			31		32				(1)									12		12
Balance August 1, 2021		$	15,733	$	5,031	$	(19,780)	$	35,491	$	(5,011)	$	2
Balance January 30, 2022																	$	17,808	$	5,066	$	(21,139)	$	37,029	$	(3,152)	$	4

Nine Months Ended August 1, 2021
Balance November 1, 2020		$	12,944	$	4,895	$	(18,065)	$	31,646	$	(5,539)	$	7
ASU No. 2016-13 adoption (Note 3)			(35)						(35)
Net income			4,682						4,680				2
Other comprehensive income			528								528
Repurchases of common stock			(1,780)				(1,780)
Treasury shares reissued			65				65
Dividends declared			(802)						(800)				(2)
Stock options and other			131		136								(5)
Balance August 1, 2021		$	15,733	$	5,031	$	(19,780)	$	35,491	$	(5,011)	$	2

See Condensed Notes to Interim Consolidated Financial Statements.

Condensed Notes to Interim Consolidated Financial Statements (Unaudited)

(1) Organization and Consolidation

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

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

Equipment Operations – – Represents the enterprise without financial services, while including the Company’s 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.

Financial Services – ~~Includes primarily~~Represents the Company’s financing operations.

Beginning in fiscal year 2021, the Company implemented a new operating model and reporting structure. With this change, the Company’s agriculture and turf operations were divided into two new segments: production and precision agriculture and small agriculture and turf. There were no changes to the construction and forestry and financial services segments. In addition, at the beginning of fiscal year 2021 the Company also reclassified goodwill from identifiable operating assets to corporate assets for segment reporting, as goodwill is no longer considered in evaluating the operating performance of the segments. Additional information on the new segments and the segment financial results are presented in Note 10. Prior period segment information was recast for a consistent presentation. References to agriculture and turf include both production and precision agriculture and small agriculture and turf.

The Company uses a 52/53 week fiscal year with quarters ending on the last Sunday in the reporting period. The ~~third~~first quarter ends for fiscal year 2022 and 2021 were January 30, 2022 and ~~2020 were August 1,~~January 31, 2021, ~~and August 2, 2020,~~ respectively. Both ~~third quarters~~periods contained 13 ~~weeks, while both year-to-date periods contained 39~~ weeks. Unless otherwise stated, references to particular years ~~quarters,~~ or ~~months~~quarters refer to the Company’s fiscal years generally ending in October and the associated periods in those fiscal years.

Prior to ~~November 2, 2020,~~fiscal year 2021, the operating results of the Wirtgen Group (Wirtgen) were incorporated into the Company’s consolidated financial statements ~~using~~on a one-month ~~lag period. In the first quarter of 2021, the~~lag. The reporting lag was eliminated resulting in ~~one additional month~~four months of ~~Wirtgen~~Wirtgen’s activity in the first quarter ~~and the year-to-date period.~~of 2021. The effect was an increase to “Net sales” of $270 million, which the Company considers immaterial to construction and forestry’s annual net sales. ~~Prior period results were not restated.~~

Variable Interest Entities

The Company consolidates certain variable interest entities (VIEs) related to retail note securitizations (see Note ~~12)~~10).

The Company also has an interest in a joint venture that manufactures construction equipment in Indaiatuba, Brazil for local and overseas markets. The joint venture is a VIE; however, the Company is not the primary beneficiary. Therefore, the entity’s financial results are not fully consolidated in the Company’s consolidated financial statements, but are included on the equity basis. The maximum exposure to loss was $14 million, $9 million, ~~$5 million,~~ and ~~$13~~$7 million at ~~August 1,~~January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~August 2, 2020,~~January 31, 2021, respectively. On August 19, 2021, the Company announced the dissolution of the joint venture with Hitachi Construction Machinery Co., Ltd. and the purchase of the shares in the relevant joint venture manufacturing entities including the above referenced factory in Indaiatuba, Brazil. ~~Refer~~The transaction is expected to close in the second quarter of 2022, subject to the ~~Subsequent Events section~~receipt of ~~the MD&A for more details.~~certain required regulatory approvals and satisfaction of certain other customary closing conditions.

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

Use of Estimates in Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. ~~The COVID pandemic has resulted in uncertainties in the Company’s business, which may result in actual~~Actual results ~~differing~~could differ from those estimates.

~~Cash Flow Information~~
~~All cash flows from~~Revenue Recognition
Prior to fiscal year 2022, certain goods were shipped to Canadian dealers on a consignment basis under which the ~~changes in trade accounts~~risk and ~~notes receivable are classified as operating activities in the statement~~rewards of ~~consolidated cash flows as these receivables arise from sales~~ownership were not transferred to the ~~Company’s customers. Cash flows from financing receivables that are related to~~dealer at the time the goods were delivered. Accordingly, sales to the Company’s customers are also included in operating activities. The remaining financing receivables are related to the financing of equipment sold by independent dealers and are included in investing activities.
~~The Company had the following non-cash operating and investing activities that~~ were not ~~included~~recorded until a retail customer purchased the goods. The dealer contract in Canada was changed for goods delivered after November 1, 2021, resulting in transfer of control and revenue recognition upon delivery. For certain goods delivered to Canadian dealers prior to November 1, 2021, the ~~statement~~dealer consignment terms already in place remain in effect. As of ~~consolidated cash flows. The Company transferred~~January 30, 2022 and October 31, 2021, the remaining consigned inventory ~~to equipment on operating leases of approximately $450~~was $91 million and ~~$388~~$150 million, ~~in the first nine months of 2021 and 2020,~~ respectively. ~~The Company also had accounts payable related to purchases of property and equipment of approximately $51 million at both August 1, 2021 and August 2, 2020.~~
~~The Company’s restricted cash held at August 1, 2021, November 1, 2020, August 2, 2020, and November 3, 2019 was as follows in millions of dollars:~~

August 1

November 1

August 2

November 3

2021

2020

2020

2019

Equipment operations

$
13

$
11

$
11

$
21

Financial services

107

95

99

78

Total

$
120

$
106

$
110

$
99

The equipment operations’ restricted cash relates to miscellaneous operational activities. The financial services restricted cash primarily relates to securitization of financing receivables (see Note 12). The restricted cash is recorded in “Other assets” in the consolidated balance sheet.

~~(3)~~ New Accounting Standards
~~New~~The Company closely monitors all Accounting ~~Standards Adopted~~
InStandard Updates (ASUs) issued by the ~~first quarter of 2021, the Company adopted~~ Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments, which establishes Accounting Standards Codification (ASC) 326, Financial Instruments - Credit Losses. This ASU wasand other authoritative guidance. ASUs adopted ~~using a~~ ~~modified-retrospective~~ approach. The ASU, along with related amendments, revised the measurement of credit losses for financial assets measured at amortized cost from an incurred loss to an expected loss methodology. The ASU affects receivables, debt securities, net investment in ~~leases, and most other financial assets that represent a right to receive cash.~~
The Company holds deposits from dealers (dealer deposits), which are recorded in “Accounts payable and accrued expenses” to absorb certain credit losses. Prior to adopting this ASU, the allowance for credit losses was estimated on probable credit losses incurred after consideration of recoveries from dealer deposits. The ASU considers dealer deposits and certain credit insurance contracts as freestanding credit enhancements. As a result, after adoption, credit losses recovered from dealer deposits and certain credit insurance contracts are presented in “Other income” and no longer as part of the allowance for credit losses or the provision for credit losses. The ASU also modified the treatment of the estimated write-off of delinquent receivables by no longer including the estimated benefit of charges to the dealer deposits in the write-off amount. This change increases the estimated write-offs on delinquent financing receivables with the benefit of credit losses recovered from dealer deposits presented in “Other income.” This benefit, in both situations, is recorded when the dealer deposits are charged and no longer based on estimated recoveries.
~~The effects of adopting the ASU on the consolidated balance sheet were as follows in millions of dollars:~~

November 1

Cumulative Effect

November 2

2020

from Adoption

2020

Assets

Trade accounts and note receivable - net

$
4,171

$
2

$
4,173

Financing receivables - net

29,750

(27)

29,723

Financing receivables securitized - net

4,703

(4)

4,699

Deferred income taxes

1,499

1

1,500

Liabilities

Accounts payable and accrued expenses

$
10,112

$
14

$
10,126

Deferred income taxes

519

(7)

512

Stockholders’ equity

Retained earnings

$
31,646

$
(35)

$
31,611

~~Note 11 contains additional disclosures as well as the Company’s updated allowance for credit losses accounting policy.~~
~~The Company also adopted the following standards in 2021, none of which had~~2022 did not have a material ~~effect~~impact on the Company’s ~~consolidated~~ financial ~~statements:~~

~~No. 2018-15~~
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which amends ASC 350-40, Intangibles – Goodwill and Other – Internal-Use Software

~~No. 2019-04~~
~~Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~

~~No. 2021-01~~
~~Reference Rate Reform (Topic 848): Scope~~

~~New Accounting Standards~~statements, and ASUs to be ~~Adopted~~
~~The Company will adopt the following standards~~adopted in future periods ~~none of which~~ are not expected to have a material ~~effect~~impact on the Company’s ~~consolidated~~ financial ~~statements:~~statements.

~~No. 2019-12~~
~~Simplifying the Accounting for Income Taxes, which amends ASC 740, Income Taxes~~

~~No. 2020-08~~
~~Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs~~

~~(4) Revenue Recognition~~(3)Cash Flow Information
All cash flows from the changes in trade accounts and notes receivable are classified as operating activities in the statement of consolidated cash flows as these receivables arise from sales to the Company’s customers. Cash flows from financing receivables that are related to sales to the Company’s customers are also included in operating activities. The remaining financing receivables are related to the financing of equipment sold by independent dealers and are included in investing activities.
The Company had the following non-cash operating and investing activities that were not included in the statement of consolidated cash flows. The Company transferred inventory to equipment on operating leases of $20 million and $84 million in the first three months of 2022 and 2021, respectively. The Company also had accounts payable related to purchases of property and equipment of $43 million and $39 million at January 30, 2022 and January 31, 2021, respectively.
The Company’s ~~revenue by primary geographical market, major product line, and timing of revenue recognition~~restricted cash was as follows in millions of dollars:

Three Months Ended August 1, 2021


Production & Precision Ag

Small Ag & Turf

Construction
& Forestry

Financial
Services

Total

Primary geographical markets:





United States

$
1,995

$
1,753

$
1,559

$
605

$
5,912

Canada

253

153

285

162

853

Western Europe

566

679

455

27

1,727

Central Europe and CIS

398

117

241

10

766

Latin America

758

125

227

60

1,170

Asia, Africa, Australia, New Zealand, and Middle East

368

385

308

38

1,099

Total

$
4,338

$
3,212

$
3,075

$
902

$
11,527

Major product lines:





Production agriculture

$
4,179

$
4,179

Small agriculture

$
2,355

2,355

Turf

719

719

Construction

$
1,283

1,283

Compact construction

398

398

Roadbuilding

948

948

Forestry

342

342

Financial products

13

12

5

$
902

932

Other

146

126

99

371

Total

$
4,338

$
3,212

$
3,075

$
902

$
11,527

Timing of revenue recognition:





Revenue recognized at a point in time

$
4,293

$
3,191

$
3,052

$
27

$
10,563

Revenue recognized over time

45

21

23

875

964

Total

$
4,338

$
3,212

$
3,075

$
902

$
11,527

January 30

October 31

January 31

2022

2021

2021

Equipment operations

$
12

$
12

$
11

Financial services

85

96

91

Total

$
97

$
108

$
102

The restricted cash, recorded in “Other assets” in the consolidated balance sheet, primarily relates to securitizations of financing receivables (see Note 10).

118

Nine Months Ended August 1, 2021

Production & Precision Ag

Small Ag & Turf

Construction
& Forestry

Financial
Services

Total

Primary geographical markets:

United States

$
5,814

$
5,014

$
4,242

$
1,812

$
16,882

Canada

617

376

793

469

2,255

Western Europe

1,604

1,903

1,408

77

4,992

Central Europe and CIS

1,090

361

628

28

2,107

Latin America

1,971

305

617

179

3,072

Asia, Africa, Australia, New Zealand, and Middle East

991

1,230

1,054

114

3,389

Total

$
12,087

$
9,189

$
8,742

$
2,679

$
32,697

Major product lines:





Production agriculture

$
11,656

$
11,656

Small agriculture

$
6,583

6,583

Turf

2,268

2,268

Construction

$
3,402

3,402

Compact construction

1,140

1,140

Roadbuilding

2,924

2,924

Forestry

975

975

Financial products

41

32

17

$
2,679

2,769

Other

390

306

284

980

Total

$
12,087

$
9,189

$
8,742

$
2,679

$
32,697

Timing of revenue recognition:





Revenue recognized at a point in time

$
11,960

$
9,137

$
8,666

$
77

$
29,840

Revenue recognized over time

127

52

76

2,602

2,857

Total

$
12,087

$
9,189

$
8,742

$
2,679

$
32,697

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

Three Months Ended January 30, 2022

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Financial Services

Total

Primary geographic markets:





United States

$
1,608

$
1,438

$
1,260

$
573

$
4,879

Canada

139

122

332

152

745

Western Europe

467

532

358

26

1,383

Central Europe and CIS

202

126

195

11

534

Latin America

776

104

228

68

1,176

Asia, Africa, Australia, New Zealand, and Middle East

241

352

219

40

852

Total

$
3,433

$
2,674

$
2,592

$
870

$
9,569

Major product lines:





Production agriculture

$
3,283

$
3,283

Small agriculture

$
1,932

1,932

Turf

627

627

Construction

$
1,175

1,175

Compact construction

321

321

Roadbuilding

692

692

Forestry

305

305

Financial products

12

11

5

$
870

898

Other

138

104

94

336

Total

$
3,433

$
2,674

$
2,592

$
870

$
9,569

Revenue recognized:





At a point in time

$
3,396

$
2,654

$
2,570

$
24

$
8,644

Over time

37

20

22

846

925

Total

$
3,433

$
2,674

$
2,592

$
870

$
9,569

Three Months Ended August 2, 2020

Three Months Ended January 31, 2021


Production & Precision Ag

Small Ag & Turf

Construction
& Forestry

Financial
Services

Total

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Financial Services

Total

Primary geographical markets:





Primary geographic markets:





United States

$
1,617

$
1,228

$
1,048

$
632

$
4,525

$
1,608

$
1,424

$
1,202

$
598

$
4,832

Canada

199

96

194

146

635

112

79

188

154

533

Western Europe

517

586

376

22

1,501

449

486

439

24

1,398

Central Europe and CIS

219

100

178

9

506

161

84

178

9

432

Latin America

512

90

124

51

777

513

77

170

59

819

Asia, Africa, Australia, New Zealand, and Middle East

312

319

318

32

981

304

401

353

40

1,098

Total

$
3,376

$
2,419

$
2,238

$
892

$
8,925

$
3,147

$
2,551

$
2,530

$
884

$
9,112

Major product lines:









Production agriculture

$
3,210

$
3,210

$
3,011

$
3,011

Small agriculture

$
1,704

1,704

$
1,812

1,812

Turf

651

651

651

651

Construction

$
817

817

$
887

887

Compact construction

303

303

346

346

Roadbuilding

818

818

910

910

Forestry

241

241

290

290

Financial products

14

10

5

$
892

921

16

10

7

$
884

917

Other

152

54

54

260

120

78

90

288

Total

$
3,376

$
2,419

$
2,238

$
892

$
8,925

$
3,147

$
2,551

$
2,530

$
884

$
9,112

Timing of revenue recognition:





Revenue recognized at a point in time

$
3,337

$
2,402

$
2,210

$
28

$
7,977

Revenue recognized over time

39

17

28

864

948

Revenue recognized:





At a point in time

$
3,105

$
2,535

$
2,500

$
24

$
8,164

Over time

42

16

30

860

948

Total

$
3,376

$
2,419

$
2,238

$
892

$
8,925

$
3,147

$
2,551

$
2,530

$
884

$
9,112

129

Nine Months Ended August 2, 2020


Production & Precision Ag

Small Ag & Turf

Construction
& Forestry

Financial
Services

Total

Primary geographical markets:

United States

$
4,892

$
3,833

$
3,331

$
1,880

$
13,936

Canada

460

239

532

453

1,684

Western Europe

1,422

1,570

1,073

66

4,131

Central Europe and CIS

608

269

477

27

1,381

Latin America

1,290

225

418

177

2,110

Asia, Africa, Australia, New Zealand, and Middle East

722

924

825

96

2,567

Total

$
9,394

$
7,060

$
6,656

$
2,699

$
25,809

Major product lines:





Production agriculture

$
8,915

$
8,915

Small agriculture

$
4,953

4,953

Turf

1,925

1,925

Construction

$
2,535

2,535

Compact construction

930

930

Roadbuilding

2,146

2,146

Forestry

769

769

Financial products

48

24

18

$
2,699

2,789

Other

431

158

258

847

Total

$
9,394

$
7,060

$
6,656

$
2,699

$
25,809

Timing of revenue recognition:





Revenue recognized at a point in time

$
9,277

$
7,017

$
6,576

$
80

$
22,950

Revenue recognized over time

117

43

80

2,619

2,859

Total

$
9,394

$
7,060

$
6,656

$
2,699

$
25,809

Following is a description of the Company’s major product lines:
Production agriculture– Includes net sales of large and certain mid-size tractors and associated attachments, combines, cotton pickers, cotton strippers, ~~and~~ sugarcane harvesters, sugarcane loaders and pull behind scrapers, tillage, seeding, and application equipment, including sprayers and nutrient management and soil preparation machinery, and related attachments and service parts.
Small agriculture – Includes net sales of mid-size and utility tractors, self-propelled forage harvesters, hay and forage equipment, balers, mowers, and related attachments and service parts.
Turf – Includes net sales of turf and utility equipment, including riding lawn equipment, golf course equipment, utility vehicles, and commercial mowing equipment, along with a broad line of associated implements, other outdoor power products, and related attachments and service parts.
Construction – Includes net sales of a broad range of machines used in construction, earthmoving, and material handling, including backhoe loaders, crawler dozers and loaders, four-wheel-drive loaders, excavators, motor graders, articulated dump trucks, and related attachments and service parts.
Compact construction – Includes net sales of smaller construction equipment, including compact excavators, compact track loaders, compact wheel loaders, skid steers, landscape loaders, and related attachments and service parts.
Roadbuilding – Includes net sales of equipment used in roadbuilding and renovation, including milling machines, recyclers, slipform pavers, surface miners, asphalt pavers, compactors, tandem and static rollers, mobile crushers and screens, mobile and stationary asphalt plants, and related attachments and service parts.
Forestry – Includes net sales of equipment used in timber harvesting, including log skidders, feller bunchers, log loaders, log forwarders, log harvesters, and related attachments and service parts.
Financial products – Includes finance and interest income primarily from retail notes related to sales of John Deere equipment to ~~end~~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”; and revenue earned over time from precision guidance, telematics, and other information enabled solutions, revenue from service performed at ~~Company~~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.”

The Company invoices in advance of recognizing the sale of certain products and the revenue for certain services. These items are primarily for premiums for extended ~~warranty premiums,~~warranties, advance payments for future equipment sales, and subscription and service revenue related to precision guidance and telematic services. These advanced customer payments are presented as deferred revenue, a contract liability, in “Accounts payable and accrued expenses” in the consolidated balance sheet. The deferred revenue received, but not recognized in revenue, including extended warranty premiums also shown in Note ~~18,~~16, was ~~$1,259~~$1,348 million, ~~$1,090~~$1,344 million, and ~~$1,115~~$1,169 million at ~~August 1,~~January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~August 2, 2020,~~January 31, 2021, respectively. The contract liability is reduced as the revenue is recognized. During the three months ended ~~August 1,~~January 30, 2022 and January 31, 2021, ~~and August 2, 2020, $108~~$265 million and $97 million, respectively, of revenue was recognized from deferred revenue that was recorded as a contract liability at the beginning of the respective fiscal year. During the nine months ended August 1, 2021 and August 2, 2020, $442 million and $375$223 million, respectively, of revenue was recognized from deferred revenue that was recorded as a contract liability at the beginning of the respective fiscal year.

The Company entered into contracts with customers to deliver equipment and services that have not been recognized at August 1, 2021 because the equipment or services have not been provided. These contracts primarily relate to extended warranty and certain precision guidance and telematic services. The amount of unsatisfied performance obligations for contracts with an original duration greater than one year is ~~$957~~$1,056 million at ~~August 1, 2021.~~January 30, 2022. The estimated revenue to be recognized by fiscal year ~~follows~~ in millions of ~~dollars:~~dollars follows: remainder of ~~2021~~ ~~- $113,~~ 2022 - ~~$312,~~ $219, 2023 - ~~$242,~~ $297, 2024 - ~~$152,~~ $232, 2025 - ~~$73,~~ $143, 2026 - ~~$44~~$72, 2027 - $40 and later years - ~~$21. The~~$53. As permitted, the Company ~~discloses unsatisfied~~elected only to disclose remaining performance obligations with an original contract duration greater than one year. The contracts with an expected duration of one year or less are generally for sales ~~to dealers and end customers for~~of equipment, service parts, repair services, and certain telematics services.

During 2020, and to a much lesser extent in 2021, the Company provided short-term payment relief on trade accounts and notes receivables to independent dealers and certain other customers that were negatively affected by the economic effects of COVID. The relief was provided both in regional programs and case-by-case situations with creditworthy customers. This relief generally included payment deferrals not exceeding three months, extending interest-free periods for up to an additional three months with the total interest-free period not to exceed one year, or reducing interest rates for a maximum of three months. The trade receivable balance granted relief since the beginning of the pandemic that remained outstanding at August 1, 2021 was not material.10

(5) Other Comprehensive Income Items
The after-tax ~~changes in~~components of accumulated other comprehensive income (loss) ~~was as follows~~ in millions of ~~dollars:~~dollars follow:










Total

Unrealized

Unrealized

Accumulated

Retirement

Cumulative

Gain (Loss)

Gain (Loss)

Other

Benefits

Translation

on

on

Comprehensive

Adjustment

Adjustment

Derivatives

Debt Securities

Income (Loss)

Balance November 3, 2019

$
(3,915)

$
(1,651)

$
(60)

$
19

$
(5,607)

Other comprehensive income (loss) items before reclassification

179

(75)

(14)

22

112

Amounts reclassified from accumulated other comprehensive income

159

8

10

(1)

176

Net current period other comprehensive income (loss)

338

(67)

(4)

21

288

Balance August 2, 2020

$
(3,577)

$
(1,718)

$
(64)

$
40

$
(5,319)

Balance November 1, 2020

$
(3,918)

$
(1,596)

$
(58)

$
33

$
(5,539)

Other comprehensive income (loss) items before reclassification

27

319

(1)

(7)

338

Amounts reclassified from accumulated other comprehensive income

181

9

190

Net current period other comprehensive income (loss)

208

319

8

(7)

528

Balance August 1, 2021

$
(3,710)

$
(1,277)

$
(50)

$
26

$
(5,011)

January 30

October 31

January 31

2022

2021

2021

Retirement benefits adjustment

$
(1,379)

$
(1,034)

$
(3,855)

Cumulative translation adjustment

(1,745)

(1,478)

(1,200)

Unrealized loss on derivatives

(28)

(42)

(54)

Unrealized gain on debt securities

15

31

Total accumulated other comprehensive income (loss)

$
(3,152)

$
(2,539)

$
(5,078)

Following are amounts recorded in and reclassifications out of other comprehensive income (loss), and the income tax effects, in millions of dollars. Retirement benefits adjustment reclassifications for actuarial gain (loss), prior service (credit) cost, and settlements are included in net periodic pension and other postretirement benefit costs (see Note 8)7).


Before

Tax

After

Tax

(Expense)

Tax

Three Months Ended August 1, 2021

Amount

Credit

Amount

Cumulative translation adjustment

$
(112)

$
(2)

$
(114)

Unrealized gain (loss) on derivatives:

Unrealized hedging gain (loss)

(1)

(1)

Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense

3

(1)

2

Net unrealized gain (loss) on derivatives

2

(1)

1

Unrealized gain (loss) on debt securities:

Unrealized holding gain (loss)

11

(3)

8

Net unrealized gain (loss) on debt securities

11

(3)

8

Retirement benefits adjustment:

Net actuarial gain (loss)

(5)

1

(4)

Reclassification to Other operating expenses through amortization of:

Actuarial (gain) loss

71

(17)

54

Prior service (credit) cost

1

1

Settlements

4

(1)

3

Net unrealized gain (loss) on retirement benefits adjustment

71

(17)

54

Total other comprehensive income (loss)

$
(28)

$
(23)

$
(51)


Before

Tax

After

Tax

(Expense)

Tax

Three Months Ended January 30, 2022

Amount

Credit

Amount

Cumulative translation adjustment

$
(264)

$
(3)

$
(267)

Unrealized gain (loss) on derivatives:

Unrealized hedging gain (loss)

15

(3)

12

Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense

2

2

Net unrealized gain (loss) on derivatives

17

(3)

14

Unrealized gain (loss) on debt securities:

Unrealized holding gain (loss)

(19)

4

(15)

Net unrealized gain (loss) on debt securities

(19)

4

(15)

Retirement benefits adjustment:

Net actuarial gain (loss)

(500)

120

(380)

Reclassification to other operating expenses through amortization of:

Actuarial (gain) loss

40

(10)

30

Prior service (credit) cost

6

(2)

4

Settlements

1

1

Net unrealized gain (loss) on retirement benefits adjustment

(453)

108

(345)

Total other comprehensive income (loss)

$
(719)

$
106

$
(613)


Before

Tax

After

Tax

(Expense)

Tax

Nine Months Ended August 1, 2021

Amount

Credit

Amount

Cumulative translation adjustment

$
319

$
319

Unrealized gain (loss) on derivatives:

Unrealized hedging gain (loss)

(1)

(1)

Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense

11

$
(2)

9

Net unrealized gain (loss) on derivatives

10

(2)

8

Unrealized gain (loss) on debt securities:

Unrealized holding gain (loss)

(6)

(1)

(7)

Net unrealized gain (loss) on debt securities

(6)

(1)

(7)

Retirement benefits adjustment:

Net actuarial gain (loss)

35

(8)

27

Reclassification to Other operating expenses through amortization of:

Actuarial (gain) loss

213

(53)

160

Prior service (credit) cost

5

(1)

4

Settlements

22

(5)

17

Net unrealized gain (loss) on retirement benefits adjustment

275

(67)

208

Total other comprehensive income (loss)

$
598

$
(70)

$
528


Before

Tax

After

Tax

(Expense)

Tax

Three Months Ended January 31, 2021

Amount

Credit

Amount

Cumulative translation adjustment

$
394

$
2

$
396

Unrealized gain (loss) on derivatives:

Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense

5

(1)

4

Net unrealized gain (loss) on derivatives

5

(1)

4

Unrealized gain (loss) on debt securities:

Unrealized holding gain (loss)

(3)

1

(2)

Net unrealized gain (loss) on debt securities

(3)

1

(2)

Retirement benefits adjustment:

Net actuarial gain (loss)

(1)

(1)

Reclassification to other operating expenses through amortization of:

Actuarial (gain) loss

70

(17)

53

Prior service (credit) cost

2

(1)

1

Settlements

13

(3)

10

Net unrealized gain (loss) on retirement benefits adjustment

84

(21)

63

Total other comprehensive income (loss)

$
480

$
(19)

$
461

1511

Before

Tax

After

Tax

(Expense)

Tax

Three Months Ended August 2, 2020

Amount

Credit

Amount

Cumulative translation adjustment:

Unrealized gain (loss) on translation adjustment

$
321

$
2

$
323

Reclassification of (gain) loss to Other operating expenses

8

8

Net unrealized gain (loss) on translation adjustment

329

2

331

Unrealized gain (loss) on derivatives:

Unrealized hedging gain (loss)

(1)

(1)

Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense

7

(2)

5

Net unrealized gain (loss) on derivatives

6

(2)

4

Unrealized gain (loss) on debt securities:

Unrealized holding gain (loss)

13

(2)

11

Reclassification of realized (gain) loss – Other income

(1)

(1)

Net unrealized gain (loss) on debt securities

12

(2)

10

Retirement benefits adjustment:

Net actuarial gain (loss)

(9)

2

(7)

Reclassification to Other operating expenses through amortization of:

Actuarial (gain) loss

69

(17)

52

Prior service (credit) cost

2

2

Settlements

6

(2)

4

Net unrealized gain (loss) on retirement benefits adjustment

68

(17)

51

Total other comprehensive income (loss)

$
415

$
(19)

$
396


Before

Tax

After

Tax

(Expense)

Tax

Nine Months Ended August 2, 2020

Amount

Credit

Amount

Cumulative translation adjustment:

Unrealized gain (loss) on translation adjustment

$
(77)

$
2

$
(75)

Reclassification of (gain) loss to Other operating expenses

8

8

Net unrealized gain (loss) on translation adjustment

(69)

2

(67)

Unrealized gain (loss) on derivatives:

Unrealized hedging gain (loss)

(18)

4

(14)

Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense

13

(3)

10

Net unrealized gain (loss) on derivatives

(5)

1

(4)

Unrealized gain (loss) on debt securities:

Unrealized holding gain (loss)

27

(5)

22

Reclassification of realized (gain) loss – Other income

(1)

(1)

Net unrealized gain (loss) on debt securities

26

(5)

21

Retirement benefits adjustment:

Net actuarial gain (loss)

238

(59)

179

Reclassification to Other operating expenses through amortization of:

Actuarial (gain) loss

207

(62)

145

Prior service (credit) cost

6

(1)

5

Settlements

12

(3)

9

Net unrealized gain (loss) on retirement benefits adjustment

463

(125)

338

Total other comprehensive income (loss)

$
415

$
(127)

$
288

(6) ~~Dividends Declared and Paid~~
~~Dividends declared and paid on a per share basis were as follows:~~

Three Months Ended

Nine Months Ended

August 1

August 2

August 1

August 2

2021

2020

2021

2020

Dividends declared

$
.90

$
.76

$
2.56

$
2.28

Dividends paid

$
.90

$
.76

$
2.42

$
2.28

~~(7)~~Earnings Per Share
A reconciliation of basic and diluted net income per share attributable to Deere & Company follows in millions, except per share amounts:

Three Months Ended

Nine Months Ended

Three Months Ended

August 1

August 2

August 1

August 2

January 30

January 31

2021

2020

2021

2020

2022

2021

Net income attributable to Deere & Company

$
1,667

$
811

$
4,680

$
1,993


$
903

$
1,224

Average shares outstanding

311.0

313.0

312.4

313.3

307.4

313.5

Basic per share

$
5.36

$
2.59

$
14.98

$
6.36

$
2.94

$
3.90

Average shares outstanding

311.0

313.0

312.4

313.3

307.4

313.5

Effect of dilutive share-based compensation

2.4

2.8

2.5

3.1

2.0

2.6

Total potential shares outstanding

313.4

315.8

314.9

316.4

309.4

316.1

Diluted per share

$
5.32

$
2.57

$
14.86

$
6.30

$
2.92

$
3.87

During both the ~~third~~first quarter of 2022 and ~~first nine months of~~ 2021, ~~0 shares were antidilutive. During the third quarter and first nine months of 2020, 1.2~~.1 million shares ~~and .8 million shares, respectively,~~ were excluded from the ~~above per share~~ computation because the incremental shares would have been antidilutive.

~~(8)~~(7) Pension and Other Postretirement Benefits
The Company has several defined benefit pension plans and postretirement benefit (OPEB) plans, primarily health care and life insurance plans, covering its U.S. employees and employees in certain foreign countries.
The ~~worldwide~~ components of net periodic pension cost consisted of the following in millions of dollars:

Three Months Ended

Nine Months Ended

Three Months Ended

August 1

August 2

August 1

August 2

January 30

January 31

2021

2020

2021

2020

2022

2021

Service cost

$
83

$
80

$
251

$
241


$
85

$
85

Interest cost

69

86

207

260

77

69

Expected return on plan assets

(199)

(204)

(599)

(613)

(182)

(200)

Amortization of actuarial loss

64

62

192

186

39

63

Amortization of prior service cost

2

3

8

9

7

3

Settlements

4

6

22

12

1

13

Net cost

$
23

$
33

$
81

$
95

$
27

$
33

The ~~worldwide~~ components of net periodic OPEB cost consisted of the following in millions of dollars:

Three Months Ended

Nine Months Ended

Three Months Ended

August 1

August 2

August 1

August 2

January 30

January 31

2021

2020

2021

2020

2022

2021

Service cost

$
12

$
12

$
36

$
36


$
12

$
12

Interest cost

25

34

76

106

26

26

Expected return on plan assets

(19)

(12)

(58)

(36)

(28)

(19)

Amortization of actuarial loss

7

7

21

21

1

7

Amortization of prior service credit

(1)

(1)

(3)

(3)

(1)

(1)

Curtailments

21

Net cost

$
24

$
40

$
72

$
145

$
10

$
25

The components of net periodic pension and OPEB costs excluding the service cost component are included in the line item “Other operating expenses” in the statement of consolidated income. Overall pension and OPEB net costs decreased from the prior year due to reduced amortization of actuarial losses, partially offset by the impacts of the U.S. hourly pension plan remeasurement.
On November 17, 2021, employees represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) approved a new collective bargaining agreement. In the first quarter of ~~2020,~~2022, the Company remeasured the U.S. ~~salary OPEB health care plans~~hourly pension plan due to the ~~U.S. voluntary employee-separation program (see Note 22),~~new collective bargaining agreement, which ~~resulted~~decreased the plan’s funded status by approximately $495 million and will increase pension expense in ~~a $21~~2022 by nearly $80 million. For the first quarter of 2022, the remeasurement increased pension expense by $14 million, ~~curtailment loss.~~
with $6 million negatively impacting operating profit.

1712

During the first ~~nine~~three months of ~~2021,~~2022, the Company contributed ~~approximately $88~~$18 million to its pension plans and ~~$113~~$1,051 million to its OPEB plans. The OPEB contributions include a voluntary contribution of $1,000 million to a U.S. plan made on November 30, 2021. The Company presently anticipates contributing an additional ~~$11~~$70 million to its pension plans and ~~$29~~$86 million to its OPEB plans during the remainder of fiscal year ~~2021. The~~2022. These pension and OPEB contributions ~~are~~ primarily include direct benefit payments from Company funds. ~~The Company previously planned to make a voluntary contribution to its U.S. OPEB plan for $700 million in the fourth quarter of 2021. This voluntary contribution will be delayed into fiscal year 2022.~~

~~(9)~~(8) ~~Income Taxes~~
The Company’s unrecognized tax benefits at August 1, 2021, November 1, 2020, and August 2, 2020 were $772 million, $668 million, and $657 million, respectively. The liability at August 1, 2021, November 1, 2020, and August 2, 2020 consisted of approximately $213 million, $134 million, and $141 million, respectively, which would affect the effective tax rate if the tax benefits were recognized. The remaining liability was related to tax positions for which there are offsetting tax receivables, or the uncertainty was only related to timing. The Company expects that any reasonably possible change in the amounts of unrecognized tax benefits in the next 12 months would not be significant.
~~(10)~~Segment Reporting
~~Beginning~~Worldwide net sales and revenues, operating profit, and identifiable assets by segment were as follows in ~~fiscal year 2021,~~millions of dollars. Operating profit is income from continuing operations before reconciling items and income taxes. Operating profit of the ~~Company implemented a new operating model and reporting structure. With this change, the Company’s agriculture and turf operations were divided into two new segments, which are described as follows:~~
~~The~~ ~~production and precision agriculture~~ segment is responsible for defining, developing, and delivering global equipment and technology solutions to unlock customer value for production-scale growers of large grains, small grains, cotton, and sugar. Main products include large and certain mid-size tractors, combines, cotton pickers, sugarcane harvesters and loaders, and soil preparation, seeding, application and crop care equipment.
~~The~~ ~~small agriculture and turf~~ segment is responsible for defining, developing, and delivering market-driven products to support mid-size and small growers and producers globally as well as turf customers. The operations are principally organized to support production systems for dairy and livestock, high-value crops, and turf and utility operators. Primary products include certain mid-size and small tractors, as well as hay and forage equipment, riding and commercial lawn equipment, golf course equipment, and utility vehicles.
~~There were no reporting changes for the construction and forestry and~~ financial services ~~segments. As a result,~~segment includes the ~~Company has four reportable segments.~~effect of interest expense and foreign exchange gains and losses. Reconciling items to net income are primarily corporate expenses, certain external interest expenses, certain foreign exchange gains and losses, pension and OPEB benefit costs excluding the service cost component, and net income attributable to noncontrolling interests.

Three Months Ended

January 30

January 31

%


2022

2021

Change

Net sales and revenues:







Production & precision ag net sales

$
3,356

$
3,069

+9

Small ag & turf net sales

2,631

2,515

+5

Construction & forestry net sales

2,544

2,467

+3

Financial services revenues

870

884

-2

Other revenues

168

177

-5

Total net sales and revenues

$
9,569

$
9,112

+5

Operating profit:

Production & precision ag

$
296

$
643

-54

Small ag & turf

371

469

-21

Construction & forestry

272

268

+1

Financial services

296

258

+15

Total operating profit

1,235

1,638

-25

Reconciling items

(82)

(106)

-23

Income taxes

(250)

(308)

-19

Net income attributable to Deere & Company

$
903

$
1,224

-26

Intersegment sales and revenues:

Production & precision ag net sales

$
4

$
6

-33

Small ag & turf net sales

2

3

-33

Construction & forestry net sales

Financial services revenues

46

50

-8

Operating profit outside the U.S. and Canada:

Production & precision ag

$
282

$
228

+24

Small ag & turf

310

242

+28

Construction & forestry

144

93

+55

Financial services

70

66

+6

Total operating profit outside the U.S. and Canada

$
806

$
629

+28


January 30

October 31

January 31

2022

2021

2021

Identifiable assets:

Production & precision ag

$
7,683

$
7,021

$
6,330

Small ag & turf

4,260

3,959

3,510

Construction & forestry

6,358

6,457

6,341

Financial services

50,499

51,624

48,378

Corporate

10,814

15,053

10,921

Total assets

$
79,614

$
84,114

$
75,480

1813

Worldwide net sales and revenues, operating profit, and identifiable assets by segment were as follows in millions of dollars. Operating profit is income from continuing operations before corporate expenses, certain external interest expense, certain foreign exchange gains and losses, and income taxes. Operating profit of the financial services segment includes the effect of interest expense and foreign exchange gains and losses. Reconciling items to net income are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses, pension and OPEB benefit costs excluding the service cost component, and net income attributable to noncontrolling interests.

Three Months Ended

Nine Months Ended

August 1

August 2

%

August 1

August 2

%

  2021

  2020

Change

   2021

   2020

Change

Net sales and revenues:














Production & precision ag net sales

$
4,250

$
3,289

+29

$
11,848

$
9,161

+29

Small ag & turf net sales

3,147

2,383

+32

9,051

6,966

+30

Construction & forestry net sales

3,016

2,187

+38

8,562

6,485

+32

Financial services revenues

902

892

+1

2,679

2,699

-1

Other revenues

212

174

+22

557

498

+12

Total net sales and revenues

$
11,527

$
8,925

+29

$
32,697

$
25,809

+27

Operating profit:

Production & precision ag

$
906

$
605

+50

$
2,557

$
1,391

+84

Small ag & turf

583

337

+73

1,699

718

+137

Construction & forestry

463

205

+126

1,220

394

+210

Financial services

291

243

+20

844

498

+69

Total operating profit

2,243

1,390

+61

6,320

3,001

+111

Reconciling items

(85)

(122)

-30

(312)

(256)

+22

Income taxes

(491)

(457)

+7

(1,328)

(752)

+77

Net income attributable to Deere & Company

$
1,667

$
811

+106

$
4,680

$
1,993

+135

Intersegment sales and revenues:

Production & precision ag net sales

$
8

$
5

+60

$
21

$
18

+17

Small ag & turf net sales

2

9

2

+350

Construction & forestry net sales

Financial services revenues

61

59

+3

172

218

-21

Outside the U.S. and Canada:

Net sales and revenues

$
4,762

$
3,765

+26

$
13,560

$
10,189

+33

Operating profit

931

577

+61

2,565

1,109

+131

At the beginning of fiscal year 2021, the Company reclassified goodwill from identifiable operating segment assets to corporate assets for segment reporting, as goodwill is no longer considered in evaluating the operating performance of the segments. Prior period amounts have been restated for a consistent presentation.


August 1

November 1

August 2

2021

2020

2020

Identifiable assets:

Production & precision ag

$
6,910

$
5,708

$
6,172

Small ag & turf

3,643

3,266

3,376

Construction & forestry

6,378

6,322

6,697

Financial services

51,647

48,719

48,869

Corporate

12,110

11,076

12,150

Total assets

$
80,688

$
75,091

$
77,264

~~(11)~~(9) Financing Receivables
The Company monitors the credit quality of financing receivables based on delinquency status. Past due balances of financing receivables still accruing finance income represent the total balance held (principal plus accrued interest) with any payment amounts 30 days or more past the contractual payment due date. Non-performing financing receivables represent ~~loans~~receivables for which the Company has ceased accruing finance income. The Company ceases accruing finance income ~~and accrued finance income previously recognized is reversed~~ when these receivables are generally 90 days delinquent. Generally, when receivables are 120 days delinquent the estimated uncollectible amount from the customer is written off to the allowance for credit losses. Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is generally resumed when the receivable becomes contractually current and collections are reasonably assured.
Due to the economic effects of COVID, the Company provided short-term payment relief to dealers and retail customers during 2020, and to a much lesser extent in 2021. The relief was provided in regional programs and on a case-by-case basis with customers that were generally current in their payment obligations. Financing receivables granted relief since the beginning of the pandemic that remained outstanding at August 1, 2021 represented approximately 3 percent of the financing receivables balance. The majority of financing receivables granted short-term relief are beyond the deferral period and have either resumed making payments or are reported as delinquent based on the modified payment schedule.
While the Company implemented a new operating model in fiscal year 2021 resulting in new operating segments, assets managed by financial services, including most financing receivables and equipment on operating leases, continue to be evaluated by market (agriculture and turf or construction and forestry).
The credit quality analysis of retail notes, financing leases, and revolving charge accounts (collectively, retail customer receivables) by year of origination was as follows in millions of ~~dollars at August 1, 2021:~~dollars:

Year of Origination

January 30, 2022

2021

2020

2019

2018

2017

Prior

Revolving Charge Accounts

Total

2022

2021

2020

2019

2018

Prior Years

Revolving Charge Accounts

Total

Customer receivables:

























Retail customer receivables:

























Agriculture and turf

Current

$
9,159

$
7,516

$
3,938

$
2,053

$
910

$
317

$
3,658

$
27,551

$
2,492

$
11,580

$
5,988

$
3,038

$
1,440

$
761

$
2,634

$
27,933

30-59 days past due

38

54

35

19

7

3

13

169

5

82

52

30

15

6

25

215

60-89 days past due

14

28

15

6

3

1

4

71

1

23

18

10

5

3

5

65

90+ days past due

1

1

1

1

Non-performing

12

58

63

42

22

30

6

233

1

33

58

52

31

36

6

217

Construction and forestry

Current

2,327

1,845

938

357

84

13

86

5,650

764

2,795

1,376

615

204

49

81

5,884

30-59 days past due

35

44

26

9

4

1

3

122

8

68

35

21

6

2

3

143

60-89 days past due

13

19

10

5

1

1

1

50

30

17

7

3

1

1

59

90+ days past due

4

2

9

5

6

2

28

2

3

3

1

8

17

Non-performing

12

47

41

19

8

4

1

132

33

48

37

14

7

1

140

Total customer receivables

$
11,614

$
9,614

$
5,075

$
2,515

$
1,045

$
372

$
3,772

$
34,007

Total retail customer receivables

$
3,271

$
14,647

$
7,595

$
3,813

$
1,719

$
873

$
2,756

$
34,674

October 31, 2021

2021

2020

2019

2018

2017

Prior Years

Revolving Charge Accounts

Total

Retail customer receivables:


















Agriculture and turf

Current

$
12,877

$
6,676

$
3,463

$
1,738

$
728

$
211

$
3,704

$
29,397

30-59 days past due

43

53

29

16

7

3

14

165

60-89 days past due

16

23

12

6

3

1

4

65

90+ days past due

1

1

Non-performing

23

57

53

32

17

23

7

212

Construction and forestry

Current

3,122

1,575

754

273

57

7

92

5,880

30-59 days past due

50

40

27

7

4

1

3

132

60-89 days past due

15

11

9

6

1

1

43

90+ days past due

1

2

3

3

4

2

15

Non-performing

26

56

39

17

7

3

148

Total retail customer receivables

$
16,173

$
8,494

$
4,389

$
2,098

$
828

$
251

$
3,825

$
36,058

2014

~~The credit quality analysis of customer receivables was as follows in millions of dollars at November 1, 2020 and August 2, 2020:~~

November 1, 2020

August 2, 2020

Retail Notes & Financing Leases

Revolving Charge Accounts

Total

Retail Notes & Financing Leases

Revolving Charge Accounts

Total

Customer receivables:

Agriculture and turf

Current

$
21,597

$
3,787

$
25,384

$
20,261

$
3,876

$
24,137

30-59 days past due

135

13

148

148

20

168

60-89 days past due

64

4

68

77

3

80

90+ days past due

2

2

4

4

Non-performing

263

6

269

329

8

337

Construction and forestry

Current

4,859

88

4,947

4,582

85

4,667

30-59 days past due

111

2

113

90

3

93

60-89 days past due

55

1

56

40

1

41

90+ days past due

14

14

12

12

Non-performing

106

1

107

139

1

140

Total customer receivables

$
27,206

$
3,902

$
31,108

$
25,682

$
3,997

$
29,679

~~The credit quality analysis of wholesale receivables was as follows in millions of dollars at August 1, 2021:~~

Year of Origination

2021

2020

2019

2018

2017

Prior

Revolving

Total

Wholesale receivables:

























Agriculture and turf

Current

$
263

$
110

$
38

$
13

$
3

$
1

$
2,256

$
2,684

30-59 days past due

60-89 days past due

90+ days past due

Non-performing

18

18

Construction and forestry

Current

8

8

8

1

1

1

287

314

30-59 days past due

1

1

60-89 days past due

90+ days past due

Non-performing

Total wholesale receivables

$
271

$
118

$
64

$
14

$
4

$
3

$
2,543

$
3,017

January 31, 2021

2021

2020

2019

2018

2017

Prior Years

Revolving Charge Accounts

Total

Retail customer receivables:


















Agriculture and turf

Current

$
2,531

$
9,427

$
5,129

$
2,817

$
1,400

$
686

$
2,564

$
24,554

30-59 days past due

4

65

49

30

13

7

27

195

60-89 days past due

20

17

11

5

3

5

61

90+ days past due

1

1

Non-performing

40

78

57

36

46

7

264

Construction and forestry

Current

737

2,251

1,276

573

164

39

77

5,117

30-59 days past due

5

53

32

17

6

1

3

117

60-89 days past due

1

15

16

7

3

1

1

44

90+ days past due

9

13

5

4

2

33

Non-performing

26

34

26

14

8

1

109

Total retail customer receivables

$
3,278

$
11,906

$
6,645

$
3,543

$
1,645

$
793

$
2,685

$
30,495

The credit quality analysis of wholesale receivables by year of origination was as follows in millions of ~~dollars at November 1, 2020 and August 2, 2020:~~dollars:

November 1

August 2

January 30, 2022

2020

2020

2022

2021

2020

2019

2018

Prior Years

Revolving

Total

Wholesale receivables:

























Agriculture and turf

Current

$
3,010

$
3,279

$
101

$
244

$
56

$
11

$
7

$
2

$
1,426

$
1,847

30-59 days past due

60-89 days past due

90+ days past due

30+ days past due

Non-performing

47

50

7

7

Construction and forestry

Current

472

473

5

38

4

3

1

285

336

30-59 days past due

60-89 days past due

90+ days past due

30+ days past due

1

1

Non-performing

2

Total wholesale receivables

$
3,529

$
3,804

$
106

$
282

$
60

$
21

$
7

$
4

$
1,711

$
2,191

October 31, 2021

2021

2020

2019

2018

2017

Prior Years

Revolving

Total

Wholesale receivables:

























Agriculture and turf

Current

$
346

$
80

$
22

$
9

$
3

$
1,696

$
2,156

30+ days past due

Non-performing

12

12

Construction and forestry

Current

41

7

7

1

$
1

340

397

30+ days past due

1

1

Non-performing

Total wholesale receivables

$
387

$
87

$
41

$
9

$
4

$
2

$
2,036

$
2,566

The allowance for credit losses is an estimate of the credit losses expected over the life of the Company’s receivable portfolio. The Company measures expected credit losses on a collective basis when similar risk characteristics exist. Risk characteristics

January 31, 2021

2021

2020

2019

2018

2017

Prior Years

Revolving

Total

Wholesale receivables:

























Agriculture and turf

Current

$
78

$
226

$
67

$
18

$
8

$
1

$
2,297

$
2,695

30+ days past due

Non-performing

35

35

Construction and forestry

Current

3

11

20

2

1

2

315

354

30+ days past due

1

1

Non-performing

Total wholesale receivables

$
81

$
237

$
122

$
20

$
9

$
4

$
2,612

$
3,085

2115

considered by the Company include finance product category, market, geography, credit risk, and remaining duration. Receivables that do not share risk characteristics with other receivables in the portfolio are evaluated on an individual basis. Non-performing financing receivables are included in the estimate of expected credit losses.
The Company utilizes loss forecast models, which are selected based on the size and credit risk of the underlying pool of receivables, to estimate expected credit losses. Transition matrix models are used for large and complex customer receivable pools, while weighted average remaining maturity models are used for smaller and less complex customer receivable pools. Expected credit losses on wholesale receivables are based on historical loss rates, adjusted for current economic conditions. The modeled expected credit losses are adjusted based on reasonable and supportable forecasts, which may include economic indicators such as commodity prices, industry equipment sales, unemployment rates, and housing starts. Management reviews each model’s output quarterly, and qualitative adjustments are incorporated as necessary.

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

Retail Notes

Revolving

Three Months Ended January 30, 2022

& Financing

Charge

Wholesale

Retail Notes

Revolving

Leases

Accounts

Receivables

Total

& Financing

Charge

Wholesale

Three Months Ended August 1, 2021

Leases

Accounts

Receivables

Total

Allowance:






















Beginning of period balance

$
152

$
19

$
7

$
178

$
138

$
21

$
7

$
166

Provision

3

3

Provision (credit)

13

(9)

(2)

2

Write-offs

(14)

(9)

(23)

(17)

(5)

(22)

Recoveries

8

8

16

4

8

12

End of period balance

$
149

$
18

$
7

$
174

$
138

$
15

$
5

$
158

Nine Months Ended August 1, 2021

Allowance:


Beginning of period balance

$
133

$
43

$
8

$
184

ASU No. 2016-13 adoption

44

(13)

31

Provision (credit)

(9)

(16)

(1)

(26)

Write-offs

(38)

(23)

(61)

Recoveries

17

27

44

Translation adjustments

2

2

End of period balance

$
149

$
18

$
7

$
174

Financing receivables:

End of period balance

$
30,235

$
3,772

$
3,017

$
37,024

$
31,918

$
2,756

$
2,191

$
36,865

Retail Notes

Revolving

& Financing

Charge

Wholesale

Leases

Accounts

Receivables

Total

Three Months Ended August 2, 2020

Allowance:













Beginning of period balance

$
141

$
43

$
11

$
195

Provision (credit)

6

14

(2)

18

Write-offs

(9)

(22)

(31)

Recoveries

7

8

15

Translation adjustments

3

3

End of period balance

$
148

$
43

$
9

$
200

Nine Months Ended August 2, 2020

Allowance:











Beginning of period balance

$
107

$
40

$
3

$
150

Provision

88

32

4

124

Write-offs

(53)

(51)

(104)

Recoveries

12

22

34

Translation adjustments

(6)

2

(4)

End of period balance

$
148

$
43

$
9

$
200

Financing receivables:

End of period balance

$
25,682

$
3,997

$
3,804

$
33,483

Three Months Ended January 31, 2021

Retail Notes

Revolving

& Financing

Charge

Wholesale

Leases

Accounts

Receivables

Total

Allowance:













Beginning of period balance

$
133

$
43

$
8

$
184

ASU No. 2016-13 adoption

44

(13)

31

Provision (credit)

5

(10)

(1)

(6)

Write-offs

(8)

(5)

(13)

Recoveries

5

9

14

Translation adjustments

1

1

End of period balance

$
180

$
24

$
7

$
211

Financing receivables:

End of period balance

$
27,810

$
2,685

$
3,085

$
33,580

The allowance for credit losses on ~~retail notes and~~ financing ~~lease~~ receivables increased in the first nine months of 2021 due to the impact of adopting ASU No. 2016-13. This was partially offset by lower expected losses on retail notes and financing leases in the construction and forestry market and better than expected performance of accounts granted payment relief due to the economic effects of COVID. The allowance for credit losses on revolving charge accounts decreased in the first ~~nine months~~quarter of ~~2021, reflecting strong payment performance due to continued improvement~~2022 led by a decrease in the revolving charge accounts. This portfolio is benefiting from favorable agricultural ~~market.~~market conditions driven by higher commodity prices and net farm income, which is contributing to stronger payment performance.

A troubled debt restructuring is ~~generally~~ the modification of debt in which a creditor grants a concession it would not otherwise consider to a debtor that is experiencing financial difficulties. These modifications may include a reduction of the stated interest rate, an extension of the maturity ~~date,~~dates, a reduction of the face amount or maturity amount of the debt, or a reduction of accrued interest. During the first ~~nine~~three months of ~~2021,~~2022, the Company identified ~~304~~108 receivable contracts, primarily retail notes, as troubled debt restructurings with aggregate balances of ~~$12~~$5 million pre-modification and ~~$10~~$4 million post-modification. During the first ~~nine~~three months of ~~2020,~~2021, there were ~~413~~98 receivable contracts, primarily ~~wholesale receivables in Argentina,~~retail notes, identified as troubled debt restructurings with aggregate balances of ~~$99~~$5 million pre-modification and ~~$88 million post-modification. The short-term payment relief related to COVID, mentioned earlier, did not meet the definition of a troubled debt restructuring.~~post-modification. During these same periods, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At ~~August 1, 2021,~~January 30, 2022, the Company had 0 commitments to lend to borrowers whose accounts were modified in troubled debt restructurings.

~~(12)~~(10) Securitization of Financing Receivables

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

In these securitizations, the retail notes are transferred to certain SPEs, which in turn issue debt to investors, or to non-VIE banking operations, which ~~in turn issue debt to investors. The debt securities issued~~provide funding directly to the ~~third party investors resulted~~Company. The funding provided by these third-parties results in secured borrowings, which are recorded as “Short-term securitization borrowings” on the balance sheet. The securitized retail notes are recorded as “Financing receivables securitized – net” on the balance sheet. The total restricted assets on the ~~consolidated~~ balance sheet related to these securitizations include the financing receivables securitized, less an allowance for credit losses, and other assets primarily representing restricted cash. Restricted cash results from contractual requirements in securitized borrowing arrangements and serves as a credit enhancement. The restricted cash is used to satisfy payment deficiencies, if any, in the required payments on secured borrowings. The balance of restricted cash is contractually stipulated and is either a fixed amount as determined by the initial balance of the financing receivables securitized or a fixed percentage of the outstanding balance of the securitized financing receivables. The restriction is removed either after all secured borrowing payments are made or proportionally as these receivables are collected and borrowing obligations reduced. For those securitizations in which retail notes are transferred into SPEs, the SPEs supporting the secured borrowings are consolidated unless the Company does not have both the power to direct the activities that most significantly impact the SPEs’ economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the SPEs. No additional support to these SPEs beyond what was previously contractually required has been provided during the reporting periods.

In certain securitizations, the Company consolidates the SPEs since it has both the power to direct the activities that most significantly impact the SPEs’ economic performance through its role as servicer of all the receivables held by the SPEs and the obligation through variable interests in the SPEs to absorb losses or receive benefits that could potentially be significant to the SPEs. The restricted assets (retail notes securitized, allowance for credit losses, and other assets) of the consolidated SPEs totaled ~~$3,605~~$2,649 million, ~~$2,898~~$3,094 million, and ~~$3,342~~$2,425 million at ~~August 1,~~January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~August 2, 2020,~~January 31, 2021, respectively. The liabilities (short-term securitization borrowings and accrued interest) of these SPEs totaled ~~$3,487~~$2,575 million, ~~$2,856~~$3,024 million, and ~~$3,259~~$2,403 million at ~~August 1,~~January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~August 2, 2020,~~January 31, 2021, respectively. The credit holders of these SPEs do not have legal recourse to the Company’s general credit.

~~In certain securitizations,~~The Company has a revolving warehouse facility to utilize bank conduit facilities to securitize retail notes, described further in the following paragraphs. The facility was renewed in November 2021 with an expiration in November 2022 and a reduction of the total capacity or “financing limit” from $2,000 million to $1,000 million. As a result of the reduced capacity, the Company ~~transfers~~repurchased $511 million of outstanding short-term securitization borrowings in November 2021, in addition to the normal payments collected on the retail notes. At the end of the contractual revolving period, unless the banks and the Company agree to renew, the Company would liquidate the secured borrowings over time as payments on the retail notes ~~to non-VIE banking operations, which~~ are ~~not consolidated since~~collected.
Through the Company does not have a controlling interest in the entities. The Company’s carrying values and interests related to the securitizations with the unconsolidated non-VIEs were restricted assets (retail notes securitized, allowance for credit losses, and other assets) of $568 million, $576 million, and $680 million at August 1, 2021, November 1, 2020, and August 2, 2020, respectively. The liabilities (short-term securitization borrowings and accrued interest) were $533 million, $554 million, and $643 million at August 1, 2021, November 1, 2020, and August 2, 2020, respectively.
~~In certain securitizations,~~revolving warehouse facility, the Company transfers retail notes into bank-sponsored, multi-seller, commercial paper conduits, which are SPEs that are not consolidated. The Company does not service a significant portion of the conduits’ receivables, and therefore, does not have the power to direct the activities that most significantly impact the conduits’ economic performance. These conduits provide a funding source to the Company (as well as other transferors into the conduit) as they fund the retail notes through the issuance of commercial paper. The Company’s carrying values and variable interest related to these conduits were restricted assets (retail notes securitized, allowance for credit losses, and other assets) of ~~$1,341~~$767 million, ~~$1,327~~$1,176 million, and ~~$1,551~~$1,120 million at ~~August 1,~~January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~August 2, 2020,~~January 31, 2021, respectively. The liabilities (short-term securitization borrowings and accrued interest) related to these conduits were ~~$1,259~~$720 million, ~~$1,275~~$1,113 million, and ~~$1,463~~$1,097 million at ~~August 1,~~January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~August 2, 2020,~~January 31, 2021, respectively.

The Company’s carrying amount of the liabilities to the unconsolidated conduits, compared to the maximum exposure to loss related to these conduits, which would only be incurred in the event of a complete loss on the restricted assets, was as follows in millions of dollars:


August 1

2021


January 30, 2022

Carrying value of liabilities

$
1,259

$
720

Maximum exposure to loss

1,341

767

The total assets of the unconsolidated ~~VIEs~~conduits related to securitizations were ~~approximately $37~~$14 billion at ~~August 1, 2021.~~January 30, 2022.
In addition, through the revolving warehouse facility, the Company transfers retail notes to banks, which may elect to fund the retail notes through the use of their own funding sources. These non-VIE banking operations are not consolidated since the Company does not have a controlling interest in them. The Company’s carrying values and interests related to the securitizations with the unconsolidated non-VIEs were restricted assets (retail notes securitized, allowance for credit losses, and other assets) of $200 million, $496 million, and $481 million at January 30, 2022, October 31, 2021, and January 31, 2021, respectively. The liabilities (short-term securitization borrowings and accrued interest) were $188 million, $470 million, and $471 million at January 30, 2022, October 31, 2021, and January 31, 2021, respectively.
The components of consolidated restricted assets related to secured borrowings in securitization transactions ~~were as follows~~follow in millions of dollars:


August 1

November 1

August 2

2021

2020

2020

Financing receivables securitized (retail notes)

$
5,421

$
4,716

$
5,484

Allowance for credit losses

(20)

(13)

(15)

Other assets

113

98

104

Total restricted securitized assets

$
5,514

$
4,801

$
5,573


January 30

October 31

January 31

2022

2021

2021

Financing receivables securitized (retail notes)

$
3,526

$
4,673

$
3,946

Allowance for credit losses

(10)

(14)

(15)

Other assets

100

107

95

Total restricted securitized assets

$
3,616

$
4,766

$
4,026

The components of consolidated secured borrowings and other liabilities related to securitizations ~~were as follows~~follow in millions of dollars:


August 1

November 1

August 2


January 30

October 31

January 31

2021

2020

2020

2022

2021

2021

Short-term securitization borrowings

$
5,277

$
4,682

$
5,361

$
3,482

$
4,605

$
3,969

Accrued interest on borrowings

2

3

4

1

2

2

Total liabilities related to restricted securitized assets

$
5,279

$
4,685

$
5,365

$
3,483

$
4,607

$
3,971

The secured borrowings related to these restricted securitized retail notes are obligations that are payable as the retail notes are liquidated. Repayment of the secured borrowings depends primarily on cash flows generated by the restricted assets. Due to the Company’s short-term credit rating, cash collections from these restricted assets are not required to be placed into a segregated collection account until immediately prior to the time payment is required to the secured creditors. At ~~August 1, 2021,~~January 30, 2022, the maximum remaining term of all securitized retail notes was approximately ~~seven~~six years.

2418

~~(13)~~(11) Inventories
Most inventories owned by Deere & Company and its U.S. equipment subsidiaries ~~and certain foreign equipment subsidiaries~~ are valued at cost on the “last-in, first-out” (LIFO) ~~method.~~basis. If all of the Company’s inventories had been valued on a “first-in, first-out” (FIFO) ~~method,~~basis, estimated inventories by major classification in millions of dollars would have been as follows:


August 1

November 1

August 2

2021

2020

2020

Raw materials and supplies

$
2,895

$
1,995

$
2,101

Work-in-process

1,124

648

696

Finished goods and parts

4,176

4,006

4,427

Total FIFO value

8,195

6,649

7,224

Less adjustment to LIFO value

1,785

1,650

1,574

Inventories

$
6,410

$
4,999

$
5,650


January 30

October 31

January 31

2022

2021

2021

Raw materials and supplies

$
4,034

$
3,524

$
2,303

Work-in-process

1,460

994

839

Finished goods and parts

4,790

4,373

4,485

Total FIFO value

10,284

8,891

7,627

Less adjustment to LIFO value

2,349

2,110

1,671

Inventories

$
7,935

$
6,781

$
5,956

~~(14)~~(12) Goodwill and Other Intangible ~~Assets~~–~~Net~~Assets-Net
The changes in amounts of goodwill by operating ~~segments~~segment were as follows in millions of dollars:


Production &

Small Ag

Construction


Precision Ag

& Turf

& Forestry

Total

Goodwill at November 3, 2019

$
310

$
264

$
2,343

$
2,917
��
Translation adjustments and other

1

1

65

67

Goodwill at August 2, 2020

$
311

$
265

$
2,408

$
2,984

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Total

Goodwill at November 1, 2020

$
333

$
268

$
2,480

$
3,081

$
333

$
268

$
2,480

$
3,081

Acquisition

12

12

12

12

Translation adjustments and other

13

(3)

45

55

12

(1)

90

101

Goodwill at August 1, 2021

$
358

$
265

$
2,525

$
3,148

Goodwill at January 31, 2021

$
357

$
267

$
2,570

$
3,194

Goodwill at October 31, 2021

$
542

$
265

$
2,484

$
3,291

Acquisition

7

7

4

18

Translation adjustments and other

(5)

(2)

(110)

(117)

Goodwill at January 30, 2022

$
544

$
270

$
2,378

$
3,192

There were 0 accumulated goodwill impairment losses in the reported periods.
The components of other intangible assets were as follows in millions of dollars:


August 1

November 1

August 2


January 30

October 31

January 31

2021

2020

2020

2022

2021

2021

Amortized intangible assets:

Customer lists and relationships

$
545

$
535

$
515

$
526

$
542

$
553

Technology, patents, trademarks, and other

1,080

1,056

1,021

1,066

1,104

1,099

Total at cost

1,625

1,591

1,536

1,592

1,646

1,652

Less accumulated amortization:

Customer lists and relationships

144

113

103

156

151

128

Technology, patents, trademarks, and other

337

274

255

350

343

305

Total accumulated amortization

481

387

358

506

494

433

Amortized intangible assets, net

1,144

1,204

1,178

Amortized intangible assets

1,086

1,152

1,219

Unamortized intangible assets:

In-process research and development

123

123

123

123

123

123

Other intangible assets – net

$
1,267

$
1,327

$
1,301

$
1,209

$
1,275

$
1,342

The amortization of other intangible assets in the ~~third~~first quarter of 2022 and ~~the first nine months of~~ 2021 was ~~$27~~$28 million and ~~$89 million, and for 2020 was $26 million and $76~~$34 million, respectively. The estimated amortization expense for the next five years is as follows in millions of dollars: remainder of ~~2021 – $26,~~ 2022 – ~~$107,~~$84, 2023 – ~~$106,~~$110, 2024 – $106, 2025 – $102, ~~2025~~2026 – $99, and ~~2026 –$97.~~2027 – $98.

2519

~~(15)~~(13)Total Short-Term Borrowings
Total short-term borrowings were as follows in millions of dollars:

August 1

November 1

August 2

January 30

October 31

January 31


2021

2020

2020


2022

2021

2021

Equipment Operations













Commercial paper

$
60

Notes payable to banks

$
114

$
192

268

$
401

$
273

$
183

Finance lease obligations due within one year

23

21

18

23

23

20

Long-term borrowings due within one year

1,239

79

507

1,092

1,213

191

Total

1,376

292

853

1,516

1,509

394

Financial Services

Commercial paper

1,882

1,238

1,927

2,135

2,230

1,346

Notes payable to banks

19

182

181

118

63

143

Long-term borrowings due within one year

7,127

6,870

6,114

7,221

7,117

7,341

Total

9,028

8,290

8,222

9,474

9,410

8,830

Short-term borrowings

10,404

8,582

9,075

10,990

10,919

9,224

Short-term securitization borrowings













Equipment Operations

12

26

37

8

10

17

Financial Services

5,265

4,656

5,324

3,474

4,595

3,952

Total

5,277

4,682

5,361

3,482

4,605

3,969

Total short-term borrowings

$
15,681

$
13,264

$
14,436

$
14,472

$
15,524

$
13,193

~~(16)~~(14)Long-Term Borrowings
Long-term borrowings were as follows in millions of dollars. The financial services medium-term notes include fair value adjustments ~~related~~ to interest rate swaps.

August 1

November 1

August 2

January 30

October 31

January 31


2021

2020

2020


2022

2021

2021

Equipment Operations













U.S. dollar notes and debentures:

8½% debentures due 2022

$
105

$
105

2.60% notes due 2022

1,000

1,000

$
1,000

2.75% notes due 2025

$
700

700

700

$
700

$
700

700

6.55% debentures due 2028

200

200

200

200

200

200

5.375% notes due 2029

500

500

500

500

500

500

3.10% notes due 2030

700

700

700

700

700

700

8.10% debentures due 2030

250

250

250

250

250

250

7.125% notes due 2031

300

300

300

300

300

300

3.90% notes due 2042

1,250

1,250

1,250

1,250

1,250

1,250

2.875% notes due 2049

500

500

500

500

500

500

3.75% notes due 2050

850

850

850

850

850

850

Euro notes:

.5% notes due 2023 (€500 principal)

594

584

592

557

584

606

1.375% notes due 2024 (€800 principal)

951

934

948

891

934

970

1.85% notes due 2028 (€600 principal)

713

700

711

669

701

727

2.20% notes due 2032 (€600 principal)

713

700

711

669

701

727

1.65% notes due 2039 (€650 principal)

773

759

770

724

759

788

Finance lease obligations and other notes

44

153

193

52

40

131

Less debt issuance costs and debt discounts

56

61

63

(52)

(54)

(60)

Total

8,982

10,124

10,217

8,760

8,915

10,139

Financial Services












Notes and debentures:

Medium-term notes: (principal as of: August 1, 2021 - $21,892, November 1, 2020 - $20,996, August 2, 2020 - $22,032)

22,346

21,661

22,826

Medium-term notes: (principal as of: January 30, 2022 - $22,896, October 31, 2021 - $22,647, January 31, 2021 - $20,978)

22,947

22,899

21,549

Other notes

1,015

1,003

1,051

1,194

1,138

1,141

Less debt issuance costs and debt discounts

63

54

57

(63)

(64)

(57)

Total

23,298

22,610

23,820

24,078

23,973

22,633

Long-term borrowings

$
32,280

$
32,734

$
34,037

$
32,838

$
32,888

$
32,772

2620

~~(17)~~(15)Leases
Lessee
Operating and finance lease right of use assets and liabilities ~~were as follows~~follow in millions of dollars:

August 1

November 1

August 2

January 30

October 31

January 31

2021

2020

2020

2022

2021

2021

Operating leases:

Other assets

$
310

$
324

$
341

$
276

$
291

$
327

Accounts payable and accrued expenses

304

305

318

267

279

315

Finance leases:

Property and equipment - net

$
68

$
63

$
56

Property and equipment – net

$
65

$
71

$
57

Short-term borrowings

$
23

$
21

$
18

23

23

20

Long-term borrowings

42

39

33

32

38

36

Total finance lease liabilities

$
65

$
60

$
51

$
55

$
61

$
56

~~Right of use assets obtained in exchange for lease liabilities were as follows in millions of dollars:~~

Nine Months Ended

August 1, 2021

August 2, 2020

Operating leases

$
80

$
27

Finance leases

25

37

Lessor
The Company leases equipment manufactured or sold by the Company and a limited amount of ~~non-Deere~~non-John Deere equipment to retail customers through sales-type, direct financing, and operating leases. Sales-type and direct financing leases are reported in “Financing receivables -– net” on the consolidated balance ~~sheet. Operating~~sheet, while operating leases are reported in “Equipment on operating leases ~~- net” on the consolidated balance sheet.~~– net.”
Lease revenues earned by the Company were as follows in millions of dollars:

Three Months Ended

Nine Months Ended

Three Months Ended

August 1, 2021

August 2, 2020

August 1, 2021

August 2, 2020

January 30, 2022

January 31, 2021

Sales-type and direct financing lease revenues

$
37

$
33

$
107

$
101

Sales-type and direct finance lease revenues

$
39

$
36

Operating lease revenues

359

361

1,079

1,104

336

363

Variable lease revenues

6

6

18

17

7

6

Total lease revenues

$
402

$
400

$
1,204

$
1,222

$
382

$
405

The Company estimates 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. The Company reviews residual value estimates during the lease term and tests the carrying value of its operating lease assets for impairment when events or circumstances necessitate. In the second quarter of 2020, the Company recorded impairment losses on operating leases of $22 million due to higher expected equipment return rates and lower estimated values of used construction equipment. Operating lease impairments were recorded in “Other operating expenses.”
The Company discusses with lessees and dealers options to purchase the equipment or extend the lease prior to lease maturity. Equipment returned to the Company upon termination of leases is remarketed by the Company. In the second quarter of 2020, the Company recorded impairment losses on matured operating lease inventory of $10 million due to lower estimated values of used construction equipment. These impairment losses were included in “Other operating expenses.”
Due to the significant, negative effects of COVID, the Company provided short-term payment relief to lessees during 2020, and to a much lesser extent in 2021. The relief, which included payment deferrals of three months or less, was provided in regional programs and on a case-by-case basis with customers that were generally current in their payment obligations. The operating leases granted relief since the beginning of the pandemic that remained outstanding at August 1, 2021 represented approximately 3 percent of the Company’s operating lease portfolio. The majority of operating leases granted short-term relief are beyond the deferral period and have resumed making payments.

~~(18)~~(16)Commitments and Contingencies
The Company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and is still under warranty based on dealer inventories and retail sales. The historical claims rate is primarily determined by a review of five-year claims costs and current quality developments.
The premiums for extended warranties are ~~primarily~~ recognized in income in proportion to the costs expected to be incurred over the contract period. These unamortized extended warranty premiums (deferred revenue) included in the following table totaled ~~$709~~$781 million and ~~$621~~$656 million at ~~August 1,~~January 30, 2022 and January 31, 2021, ~~and August 2, 2020,~~ respectively.
A reconciliation of the changes in the warranty liability and unearned premiums ~~was as follows~~ in millions of ~~dollars:~~dollars follows:

Three Months Ended

Nine Months Ended

Three Months Ended

August 1

August 2

August 1

August 2

January 30

January 31

2021

2020

2021

2020

2022

2021

Beginning of period balance

$
1,876

$
1,767

$
1,743

$
1,800


$
2,086

$
1,743

Payments

(209)

(250)

(626)

(703)

(193)

(215)

Amortization of premiums received

(66)

(58)

(193)

(168)

(66)

(63)

Accruals for warranties

299

177

794

609

181

247

Premiums received

96

68

258

202

83

73

Foreign exchange

(2)

27

18

(9)

(27)

18

End of period balance

$
1,994

$
1,731

$
1,994

$
1,731

$
2,064

$
1,803

At ~~August 1, 2021,~~January 30, 2022, the Company had ~~approximately $419~~$374 million of guarantees issued primarily to banks outside the U.S. and Canada related to third-party receivables for the retail financing of John Deere equipment. The Company

may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At ~~August 1, 2021,~~January 30, 2022, the Company had accrued losses of ~~approximately $7~~$5 million under these agreements. The maximum remaining term of the receivables guaranteed at ~~August 1, 2021~~January 30, 2022 was approximately ~~seven~~six years.

At ~~August 1, 2021,~~January 30, 2022, the Company had commitments of ~~approximately $312~~$323 million for the construction and acquisition of property and equipment. Also, at ~~August 1, 2021,~~January 30, 2022, the Company had restricted assets of ~~$72~~$64 million, ~~primarily~~classified as ~~collateral for borrowings and restricted other~~“Other assets.” See Note 1210 for additional restricted assets associated with borrowings related to securitizations.

The Company also had other miscellaneous contingent liabilities totaling approximately ~~$65~~$85 million at ~~August 1, 2021.~~January 30, 2022. The accrued liability for these contingencies was not material at ~~August 1, 2021.~~January 30, 2022.

The Company is subject to various unresolved legal actions which arise in the normal course of its business, the most prevalent of which relate to product liability (including asbestos-related liability), retail credit, employment, patent, and trademark matters. The Company believes the reasonably possible range of losses for these unresolved legal actions would not have a material effect on its consolidated financial statements.

~~(19)~~(17) Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine fair value, the Company uses various methods, including market and income approaches. The Company utilizes valuation models and techniques that maximize the use of observable inputs. The models are industry-standard models that consider various assumptions, including time values and yield curves as well as other economic measures. These valuation techniques are consistently applied.
Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2 measurements include significant other observable inputs, such as quoted prices for similar assets or liabilities in active markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yield curves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs.

2822

The fair values of financial instruments that do not approximate the carrying values were as follows in millions of dollars. Long-term borrowings exclude finance lease liabilities (see Note ~~17)~~15).

August 1, 2021

November 1, 2020

August 2, 2020

January 30, 2022

October 31, 2021

January 31, 2021

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value

Financing receivables – net:








Equipment operations

$
89

$
85

$
105

$
103

$
111

$
102

$
56

$
48

$
73

$
68

$
103

$
100

Financial services

31,360

31,430

29,645

29,838


27,703

27,929

33,135

32,985

33,726

33,650

29,335

29,591

Total

$
31,449

$
31,515

$
29,750

$
29,941

$
27,814

$
28,031

$
33,191

$
33,033

$
33,799

$
33,718

$
29,438

$
29,691

Financing receivables securitized – net:

Equipment operations

$
13

$
13

$
26

$
26

$
37

$
34

$
9

$
9

$
10

$
10

$
18

$
17

Financial services

5,388

5,454

4,677

4,773

5,432

5,544

3,507

3,521

4,649

4,694

3,913

4,002

Total

$
5,401

$
5,467

$
4,703

$
4,799

$
5,469

$
5,578

$
3,516

$
3,530

$
4,659

$
4,704

$
3,931

$
4,019

Short-term
securitization borrowings:

Equipment operations

$
12

$
13

$
26

$
26

$
37

$
37

$
8

$
9

$
10

$
10

$
17

$
17

Financial services

5,265

5,289

4,656

4,698

5,324

5,381

3,474

3,459

4,595

4,600

3,952

3,986

Total

$
5,277

$
5,302

$
4,682

$
4,724

$
5,361

$
5,418

$
3,482

$
3,468

$
4,605

$
4,610

$
3,969

$
4,003

Long-term borrowings due within one year:

Equipment operations

$
1,239

$
1,257

$
79

$
78

$
507

$
504

$
1,092

$
1,096

$
1,213

$
1,222

$
191

$
198

Financial services

7,127

7,183

6,870

6,936

6,114

6,168

7,221

7,226

7,117

7,142

7,341

7,424

Total

$
8,366

$
8,440

$
6,949

$
7,014

$
6,621

$
6,672

$
8,313

$
8,322

$
8,330

$
8,364

$
7,532

$
7,622

Long-term borrowings:

Equipment operations

$
8,940

$
10,586

$
10,085

$
11,837

$
10,184

$
12,163

$
8,728

$
9,724

$
8,877

$
10,244

$
10,103

$
11,813

Financial services

23,298

23,759

22,610

23,170

23,820

24,464

24,078

24,119

23,973

24,262

22,633

23,219

Total

$
32,238

$
34,345

$
32,695

$
35,007

$
34,004

$
36,627

$
32,806

$
33,843

$
32,850

$
34,506

$
32,736

$
35,032

Fair value measurements above were Level 3 for all financing receivables, Level 3 for equipment operations short-term securitization borrowings, and Level 2 for all other borrowings.
Fair values of the financing receivables that were issued long-term were based on the discounted values of their related cash flows at interest rates currently being offered by the Company for similar financing receivables. The fair values of the remaining financing receivables approximated the carrying amounts.
Fair values of long-term borrowings and short-term securitization borrowings were based on current market quotes for identical or similar borrowings and credit risk, or on the discounted values of their related cash flows at current market interest rates. Certain long-term borrowings have been swapped to current variable interest rates. The carrying values of these long-term borrowings included adjustments related to fair value hedges.

2923

Assets and liabilities measured at fair value on a recurring basis in millions of dollars follow, excluding the Company’s cash equivalents, which were carried at cost that approximates fair value and consisted primarily of money market funds and time deposits. ~~Level 3 marketable securities were transferred to Level 2 in 2021.~~


August 1

November 1

August 2

2021

2020

2020

Level 1:

Marketable securities

International equity securities

$
3

$
2

$
2

U.S. equity fund

74

62

68

U.S. government debt securities

60

55

50

Total Level 1 marketable securities

137

119

120

Level 2:

Marketable securities

U.S. government debt securities

124

113

105

Municipal debt securities

71

68

64

Corporate debt securities

217

188

185

International debt securities

3

2

2

Mortgage-backed securities

136

147

159

Total Level 2 marketable securities

551

518

515

Other assets

Derivatives:

Interest rate contracts

389

669

895

Foreign exchange contracts

41

48

57

Cross-currency interest rate contracts

2

8

9

Total Level 2 other assets

432

725

961

Accounts payable and accrued expenses

Derivatives:

Interest rate contracts

83

88

115

Foreign exchange contracts

67

26

55

Cross-currency interest rate contracts

2

1

Total Level 2 accounts payable and accrued expenses

152

115

170

Level 3:

Marketable securities

International debt securities

4

5


January 30

October 31

January 31

2022

2021

2021

Level 1:

Marketable securities

International equity securities

$
2

$
2

$
2

U.S. equity fund

72

75

70

U.S. government debt securities

63

59

60

Total Level 1 marketable securities

137

136

132

Level 2:

Marketable securities

U.S. government debt securities

138

139

119

Municipal debt securities

74

73

71

Corporate debt securities

229

224

197

International debt securities

2

2

8

Mortgage-backed securities*

155

154

140

Total Level 2 marketable securities

598

592

535

Other assets

Derivatives:

Interest rate contracts

184

239

568

Foreign exchange contracts

91

31

34

Cross-currency interest rate contracts

24

5

3

Total Level 2 other assets

299

275

605

Accounts payable and accrued expenses

Derivatives:

Interest rate contracts

212

132

97

Foreign exchange contracts

64

94

76

Cross-currency interest rate contracts

2

2

Total Level 2 accounts payable and accrued expenses

276

228

175

*Primarily issued by U.S. government sponsored enterprises.
The contractual maturities of debt securities at ~~August 1, 2021~~January 30, 2022 in millions of dollars are shown below. Actual maturities may differ from ~~those scheduled as a result of prepayments by the issuers.~~contractual maturities because some securities may be called or prepaid. Because of the potential for prepayment on mortgage-backed securities, they are not categorized by contractual maturity. ~~Mortgage-backed securities were primarily issued by U.S. government sponsored enterprises.~~

Amortized

Fair

Amortized

Fair

Cost

Value

Cost

Value

Due in one year or less

$
21

$
21

$
29

$
29

Due after one through five years

82

86

87

88

Due after five through 10 years

136

142

161

159

Due after 10 years

213

226

231

230

Mortgage-backed securities

132

136

158

155

Debt securities

$
584

$
611

$
666

$
661

Fair value, nonrecurring Level 3 measurements from impairments, excluding financing receivables with specific allowances which were not significant, were as follows in millions of dollars. The fair value measurement losses for the investment in unconsolidated affiliates during the nine months ended August 2, 2020 were Level 1. The other fair value measurements were Level 3. Equipment on operating leasesProperty and equipment – net and Other assets fair ~~values~~value for ~~November 1, 2020~~October 31, 2021 represents the fair value assessment at ~~May 3, 2020.~~January 31, 2021.

Fair Value

Losses

Fair Value

Losses

Three Months Ended

Nine Months Ended

Three Months Ended

August 1

November 1

August 2

August 1

August 2

August 1

August 2

January 30

October 31

January 31

January 30

January 31


2021

2020

2020

2021

2020

2021

2020


2022

2021

2021

2022

2021

Other receivables

$
1

$
1

$
2

$
2

Equipment on operating leases – net

$
371

$
22

Property and equipment – net

$
135

$
8

$
5

$
44

$
67

$
41

$
41

$
44

Investments in unconsolidated affiliates

$
19

$
20

Other intangible assets – net

$
2

$
2

Other assets

$
59

$
19

$
24

$
6

$
34

$
1

$
1

$
6

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

Marketable securities – The portfolio of investments ~~except for the Level 3 measurement international debt securities,~~ is primarily valued on a market approach (matrix pricing model) in which all significant inputs are observable or can be derived from or corroborated by observable market data such as interest rates, yield curves, volatilities, credit risk, and prepayment speeds. Funds are primarily valued using the fund’s net asset value, based on the fair value of the underlying securities. ~~The Level 3 measurement international debt securities were primarily valued using an income approach based on discounted cash flows using yield curves derived from limited, observable market data.~~

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

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

~~Other receivables – The impairment was based on the expected realization of value-added tax receivables related to a closed factory operation (see Note 22).~~

Equipment on operating leases – net – The impairments are based on an income approach (discounted cash flow), using the contractual payments, plus estimates of return rates and equipment sale price at lease maturity. Inputs include historical return rates and realized sales values (see Note 22).

Property and equipment –- net – ~~The impairments~~Impairments are ~~measured at the~~recognized if fair value is lower ofthan the carrying ~~amount, or fair value.~~amount. 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 (see Note ~~22).~~

Investment in unconsolidated affiliates – Other than temporary impairments for investments are measured as the difference between the implied fair value or the estimated realization amount, and the carrying value of the investment. The fair value for publicly traded entities is the share price multiplied by the shares owned, or estimated realization amount (see Note 22).

~~Other intangible assets – net – The impairment was measured at the remaining net book value of customer relationships related to a closed factory operation (see Note 22)~~20).

Other assets – The impairments ~~of matured operating lease inventory are~~were measured at the fair value of ~~that inventory. The valuations were based on a market approach. The inputs include sales~~the right of ~~comparable assets. The impairment of the German lawn mower business was measured at the estimated realizable value. Fair value was based on estimates of the final sale price (see Note 22).~~use operating lease asset.

~~(20)~~(18) Derivative Instruments
It is the Company’s policy that derivative transactions are executed only to manage exposures arising in the normal course of business and not for the purpose of creating speculative positions or trading. The Company’s financial services operations manage the relationship of the types and amounts of their funding sources to their receivable and lease portfolio in an effort to diminish risk due to interest rate and foreign currency fluctuations, while responding to favorable financing opportunities. The Company also has foreign currency exposures at some of its foreign and domestic operations related to buying, selling, and financing in currencies other than the functional currencies. In addition, the Company has interest rate ~~exposure~~and foreign currency exposures at certain equipment operations units for ~~below market retail financing programs that are used as~~ sales ~~incentives and are offered for extended periods.~~incentive programs.
All derivatives are recorded at fair value on the balance sheet. Cash collateral received or paid is not offset against the derivative fair values on the balance sheet. The cash flows from these contracts were recorded in operating activities in the statement of consolidated cash flows. Each derivative is designated as a cash flow hedge, a fair value hedge, or remains undesignated. All designated hedges are formally documented as to the relationship with the hedged item as well as the risk-management strategy. Both at inception and on an ongoing basis the hedging instrument is assessed as to its effectiveness. If and when a derivative is determined not to be highly effective as a hedge, the underlying hedged transaction is no longer likely to occur, the hedge designation is removed, or the derivative is terminated, hedge accounting is discontinued.
Cash Flow Hedges
Certain interest rate contracts (swaps) were designated as hedges of future cash flows from borrowings. The total notional amounts of the receive-variable/pay-fixed interest rate contracts at ~~August 1,~~January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~August 2, 2020~~January 31, 2021 were ~~$1,750~~$2,700 million, ~~$1,550~~$2,700 million, and ~~$1,900~~$2,350 million, respectively. Fair value gains or losses on cash flow hedges were recorded in ~~OCI~~other comprehensive income (OCI) and are subsequently reclassified into interest expense in the same periods during which the hedged transactions affected earnings. These amounts offset the effects of interest rate changes on the related borrowings. ~~The cash flows from these contracts were recorded in operating activities in the statement of consolidated cash flows.~~
The amount of loss recorded in OCI at ~~August 1, 2021~~January 30, 2022 that is expected to be reclassified to interest expense or other operating expenses in the next twelve months if interest rates or exchange rates remain unchanged is ~~approximately~~ $4 million after-tax. NaN gains or losses were reclassified from OCI to earnings based on the probability that the original forecasted transaction would not occur.
Fair Value Hedges
Certain interest rate contracts (swaps) were designated as fair value hedges of borrowings. The total notional amounts of the receive-fixed/pay-variable interest rate contracts at ~~August 1,~~January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~August 2, 2020~~

January 31, 2021 were ~~$8,658~~$8,307 million, ~~$7,239~~$8,043 million, and ~~$8,850~~$8,333 million, respectively. The fair value gains or losses on these contracts were generally offset by fair value gains or losses on the hedged items (fixed-rate borrowings) with both items recorded in interest expense.
The amounts recorded in the consolidated balance sheet related to borrowings designated in fair value hedging relationships ~~were as follows~~ in millions of ~~dollars:~~dollars follow:

Cumulative Increase (Decrease) of Fair

Cumulative Increase (Decrease) of Fair

Value Hedging Adjustments Included in

Value Hedging Adjustments Included in

the Carrying Amount

the Carrying Amount

Carrying

Active

Carrying

Active

Amount of

Hedging

Discontinued

Amount of

Hedging

Discontinued

Hedged Item

Relationships

Relationships

Total

Hedged Item

Relationships

Relationships

Total

August 1, 2021

January 30, 2022

Long-term borrowings due within one year

$
188

$
4

$
(1)

$
3


$
185

$
2

$
8

$
10

Long-term borrowings

8,888

263

190

453

8,147

(130)

181

51

November 1, 2020

October 31, 2021

Long-term borrowings due within one year

$
155

$
2

$
3

$
5

$
189

$
3

$
(2)

$
1

Long-term borrowings

7,725

543

122

665

8,070

29

223

252

August 2, 2020

January 31, 2021

Long-term borrowings due within one year

$
480

$
6

$
2

$
8

$
159

$
2

$
1

$
3

Long-term borrowings

9,140

754

40

794

8,713

435

137

572

Long-term borrowings due within one year are presented in short-term borrowings.
Derivatives not designated as hedging instruments
The Company has certain interest rate contracts (swaps), foreign currency exchange contracts (futures, forwards, and swaps), and cross-currency interest rate contracts (swaps), which were not formally designated as hedges. These derivatives were held as economic hedges for underlying interest rate or foreign currency exposures, primarily for certain borrowings, purchases or sales of inventory, and sales incentive programs. The total notional amounts of these interest rate swaps at January 30, 2022, October 31, 2021, and January 31, 2021 were $10,210 million, $10,848 million, and $8,801 million, the foreign exchange contracts were $7,864 million, $7,584 million, and $5,478 million, and the cross-currency interest rate contracts were $303 million, $238 million, and $145 million, respectively. The fair value gains or losses from derivatives not designated as hedging instruments were recorded in the statement of consolidated income, generally offsetting over time the exposure on the hedged item.

3226

~~Derivatives Not Designated as Hedging Instruments~~
The Company has certain interest rate contracts (swaps), foreign currency exchange contracts (futures, forwards, and swaps), and cross-currency interest rate contracts (swaps), which were not formally designated as hedges. These derivatives were held as economic hedges for underlying interest rate or foreign currency exposures, primarily for certain borrowings, purchases or sales of inventory, and below market retail financing programs. The total notional amounts of these interest rate swaps at August 1, 2021, November 1, 2020, and August 2, 2020 were $9,195 million, $8,514 million, and $7,522 million, the foreign exchange contracts were $6,328 million, $4,903 million, and $4,790 million, and the cross-currency interest rate contracts were $197 million, $113 million, and $125 million, respectively. The fair value gains or losses from the interest rate contracts were recognized currently in interest expense or net sales and the gains or losses from foreign exchange contracts in cost of sales or other operating expenses, generally offsetting over time the expenses on the exposures being hedged. The cash flows from these non-designated contracts were recorded in operating activities in the statement of consolidated cash flows.
Fair values of derivative instruments in the condensed consolidated balance sheet ~~were as follows~~ in millions of ~~dollars:~~dollars follow:


August 1

November 1

August 2


January 30

October 31

January 31

Other Assets

2021

2020

2020

2022

2021

2021

Designated as hedging instruments:

Interest rate contracts

$
332

$
586

$
806

$
102

$
166

$
491

Not designated as hedging instruments:

Interest rate contracts

57

83

89

82

73

77

Foreign exchange contracts

41

48

57

91

31

34

Cross-currency interest rate contracts

2

8

9

24

5

3

Total not designated

100

139

155

197

109

114

Total derivative assets

$
432

$
725

$
961

$
299

$
275

$
605

Accounts Payable and Accrued Expenses

Designated as hedging instruments:

Interest rate contracts

$
40

$
14

$
24

$
185

$
99

$
31

Not designated as hedging instruments:

Interest rate contracts

43

74

91

27

33

66

Foreign exchange contracts

67

26

55

64

94

76

Cross-currency interest rate contracts

2

1

2

2

Total not designated

112

101

146

91

129

144

Total derivative liabilities

$
152

$
115

$
170

$
276

$
228

$
175

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

Three Months Ended

Nine Months Ended

Three Months Ended

August 1

August 2

August 1

August 2

January 30

January 31

2021

2020

2021

2020

2022

2021

Fair Value Hedges:















Interest rate contracts - Interest expense

$
146

$
78

$
(79)

$
589

$
(141)

$
(55)

Cash Flow Hedges:

Recognized in OCI

Interest rate contracts - OCI (pretax)

(1)

(1)

(1)

(18)

15

Reclassified from OCI

Interest rate contracts - Interest expense

(3)

(7)

(11)

(13)

(2)

(5)

Not Designated as Hedges:

Interest rate contracts - Net sales

$
(2)

$
(2)

$
3

$
(26)

$
13

Interest rate contracts - Interest expense *

(2)

(1)

(6)

2

(1)

$
(4)

Foreign exchange contracts - Cost of sales

(7)

(28)

(107)

64

(1)

(52)

Foreign exchange contracts - Other operating expenses *

(5)

(49)

(209)

125

147

(126)

Total not designated

$
(16)

$
(80)

$
(319)

$
165

$
158

$
(182)

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

3327

Counterparty Risk and Collateral
Derivative instruments are subject to significant concentrations of credit risk to the banking sector. The Company manages individual counterparty exposure by setting limits that consider the credit rating of the counterparty, the credit default swap spread of the counterparty, and other financial commitments and exposures between the Company and the counterparty banks. All interest rate derivatives are transacted under International Swaps and Derivatives Association (ISDA) documentation. Some of these agreements include credit support provisions. Each master agreement permits the net settlement of amounts owed in the event of default or termination.
Certain of the Company’s derivative agreements contain credit support provisions that may require the Company to post collateral based on the size of the net liability positions and credit ratings. The aggregate fair value of all derivatives with credit-risk-related contingent features that were in a net liability position at ~~August 1,~~January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~August 2, 2020,~~January 31, 2021 was ~~$87~~$213 million, ~~$89~~$135 million, and ~~$115~~$99 million, respectively. In accordance with the limits established in these agreements, the Company posted $18 million of cash collateral at January 30, 2022. The Company posted 0 cash collateral in accordance with the limits established in those agreements at ~~August 1,~~either October 31, 2021 ~~November 1, 2020,~~ or ~~August 2, 2020.~~January 31, 2021. In addition, the Company paid $8 million of collateral either in cash ~~collateral~~or pledged securities that was outstanding at ~~August 1,~~January 30, 2022, October 31, 2021, and January 31, 2021 to participate in an international futures market to hedge currency exposure, not included in the table below.
Derivatives are recorded without offsetting for netting arrangements or collateral. The impact on the derivative assets and liabilities related to netting arrangements and any collateral received or paid ~~was as follows~~ in millions of ~~dollars:~~dollars follows:

Gross Amounts

Netting

August 1, 2021

Recognized

Arrangements

Collateral

Net Amount

Assets

$
432

$
(94)

$
(88)

$
250

Liabilities

152

(94)

(2)

56

Gross Amounts

Netting

January 30, 2022

Recognized

Arrangements

Collateral

Net Amount

Assets

$
299

$
(91)

$
208

Liabilities

276

(91)

$
(19)

166

Gross Amounts

Netting

October 31, 2021

Recognized

Arrangements

Collateral

Net Amount

Assets

$
275

$
(105)

$
170

Liabilities

228

(105)

$
(5)

118


Gross Amounts

Netting




January 31, 2021

Recognized

Arrangements

Collateral

Net Amount

Assets

$
605

$
(106)

$
(186)

$
313

Liabilities

175

(106)

69

Gross Amounts

Netting

November 1, 2020

Recognized

Arrangements

Collateral

Net Amount

Assets

$
725

$
(93)

$
(274)

$
358

Liabilities

115

(93)

22


Gross Amounts

Netting




August 2, 2020

Recognized

Arrangements

Collateral

Net Amount

Assets

$
961

$
(120)

$
(332)

$
509

Liabilities

170

(120)

50

~~(21)~~(19) Stock Option and Restricted Stock Awards
In December ~~2020,~~2021, the Company granted stock options to employees for the purchase of ~~269~~197 thousand shares of common stock at an exercise price of ~~$254.83~~$343.94 per share and a binomial lattice model fair value of ~~$62.73~~$89.20 per share at the grant date. At ~~August 1, 2021,~~January 30, 2022, options for 2.6 million shares were outstanding with a weighted-average exercise price of ~~$126.13~~$145.37 per share. The Company also granted ~~212~~154 thousand restricted stock units to employees ~~and non-employee directors~~ in the first ~~nine~~three months of ~~2021,~~2022, of which ~~165~~117 thousand are subject to service based only conditions and 4737 thousand are subject to performance/service based conditions. The weighted-average fair value of the service based only units at the grant date was ~~$258.67~~$344.11 per unit based on the market price of a share of underlying common stock. The fair value of the performance/service based units at the grant date was ~~$245.73~~$331.47 per unit based on the market price of a share of underlying common stock excluding dividends. At ~~August 1, 2021,~~January 30, 2022, the Company was authorized to grant awards for an additional ~~17.7~~17.1 million shares under the equity incentive ~~plans.~~plan.

(20) Special Items
On November 17, 2021, employees represented by the UAW approved a new collective bargaining agreement. The agreement, which has a term of six years, covers the wages, hours, benefits, and other terms and conditions of employment for the Company’s UAW-represented employees at 14 U.S. facilities. The labor agreement includes a lump sum ratification bonus payment of $8,500 per eligible employee, totaling $90 million, and an immediate wage increase of 10 percent plus further wage increases over the term of the

3428

~~(22)~~ S~~pecial Items~~

~~2021 Special Items~~
Incontract. The lump sum payment was expensed in the ~~third~~first quarter of 2022. The Company remeasured the U.S. hourly pension plan as of November 30, 2021 due to the ~~Company sold a closed factory that previously produced small agricultural equipment in China, resulting in a $27 million pretax gain.~~ new collective bargaining agreement. See Note 7 for more information on the U.S. hourly plan remeasurement.
During the first quarter of 2021, the fixed assets in an asphalt plant factory in Germany were impaired by $38 million, pretax and after-tax. The Company also continued to assess its manufacturing locations, resulting in additional long-lived asset impairments of $12 million pretax. The impairments were the result of a decline in forecasted financial performance that indicated it was probable future cash flows would not cover the carrying amount of the net assets. These impairments were offset by a favorable indirect tax ruling in Brazil of $58 million pretax.

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Total

2022 Expense:

UAW ratification bonus – Cost of sales

$
53

$
9

$
28

$
90

2021 Expense (benefit):

Long-lived asset impairments – Cost of sales

$
5

$
3

$
42

$
50

Brazil indirect tax – Cost of sales

(53)

(5)

(58)

Total expense (benefit)

$
(48)

$
3

$
37

$
(8)

Quarter over quarter change

$
101

$
6

$
(9)

$
98

See Note 1917 for fair value measurement information.

Nine Months Ended August 1, 2021

Expense (benefit):

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Total

Long-lived asset impairments – Cost of sales

$
5

$
3

$
42

$
50

Brazil indirect tax – Cost of sales

(53)

(5)

(58)

Gain on sale – Other income

(27)

(27)

Total expense (benefit)

$
(48)

$
(24)

$
37

$
(35)

~~2020 Special Items~~(21) Subsequent Events
~~In the second quarter of 2020, the fixed assets in an asphalt plant factory in Germany were impaired by $62 million pretax and~~ ~~after-tax~~. The impairment is the result of a decline in forecasted financial performance that indicated it was probable future cash flows would not cover the carrying amount of the net assets. The equipment on operating leases and matured operating lease inventory were impaired by $22 million and $10 million pretax, respectively, with an income tax benefit of approximately $9 million. The impairments were the result of higher expected equipment return rates and lower estimated values of used construction equipment than originally estimated with the probable effect that the future cash flows would not cover the carrying amount of the net assets. A minority investment in a construction equipment company headquartered in South Africa was impaired by $20 million pretax and ~~after-tax. The impairment was the result of an other than temporary decline in value. In the third quarter of 2020,~~On February 7, 2022, the Company ~~closed~~acquired a ~~factory producing small agricultural equipment~~majority ownership in ~~China. In connection with this closure,~~Kreisel Electric, Inc. (Kreisel), a ~~non-cash impairment~~battery technology provider based in Austria. The transaction includes an option to purchase the remaining ownership interest in Kreisel in 2027. The initial cash outlay was €239 million, consisting of ~~other receivables, property,~~€221 million in consideration for the acquired equity interests and €18 million to reduce the option price. The payment was financed from cash on hand, and will primarily be allocated to intangible assets ~~of $9 million pretax~~ and ~~after-tax~~ ~~was recorded and $4 million pretax and~~ ~~after-tax~~ ~~for severance payments. See Note 19 for fair value measurement information.~~

Nine Months Ended August 2, 2020

Expense:

Small Ag & Turf

Construction & Forestry

Financial Services

Total

Factory closure – Cost of sales

$
13

$
13

Long-lived asset impairments – Cost of sales

$
62

62

Equipment on operating leases & matured operating lease inventory impairments – Other operating expenses

$
32

32

Investments in unconsolidated affiliates impairment – Equity in loss of unconsolidated affiliate

20

20

Total expense

$
13

$
82

$
32

$
127

~~Dispositions~~
In the third quarter of 2020, the Company reached a definitive agreement to sell its German walk-behind lawn mower business. This transaction closed in the fourth quarter of 2020. A non-cash impairment of $24 million pretax and ~~after-tax~~ ~~was recorded in “Other operating expenses” to write the operations down to realizable value. This activity was included in the Company’s small agriculture and turf segment.~~

~~Employee-Separation Program~~
During the first quarter of 2020, the Company announced a broad voluntary employee-separation program for the U.S. salaried workforce that continued the efforts to create a more efficient organization structure and reduce operating costs. The program provided for cash payments based on years of service. The expense was recorded primarily in the period in which the employees irrevocably accepted the separation offer. The payments for the program were also substantially made in the first quarter of 2020. Included in the total pretax expense is a non-cash charge of $21 million resulting from a curtailment in certain OPEB plans (see Note 8), which was recorded outside of operating profit in “~~Other operating expense.~~”

Nine Months Ended August 2, 2020

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Financial Services

Total

Cost of sales

$
21

$
11

$
9

$
41

Research and development expenses

8

7

4

19

Selling, administrative and general expenses

19

19

14

$
3

55

Total operating profit impact

$
48

$
37

$
27

$
3

115

Other operating expenses

23

Total expense

$
138

~~Redeemable Noncontrolling Interest~~
In the second quarter of 2020, the minority interest holder in Hagie Manufacturing Company, LLC exercised its right to sell the remaining 20 percent interest to the Company for $14 million. The arrangement was accounted for as an equity transaction with 0 gain or loss recorded in the statement of consolidated income. This operation is included ingoodwill. Kreisel will be allocated amongst the Company’s production and precision agriculture, ~~segment.~~small agriculture and turf, and construction and forestry segments.
On February 23, 2022, the Company’s Board of Directors declared a quarterly dividend of $1.05 per share payable May 9, 2022, to stockholders of record on March 31, 2022.

3629

~~ITEM~~Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview
Organization
The Company’s equipment operations generate revenues and cash primarily from the sale of equipment to John Deere dealers and distributors. The equipment operations manufacture and distribute a full line of agricultural equipment; a variety of commercial and consumer equipment; and a broad range of equipment for construction, roadbuilding, and forestry. The Company’s financial services primarily provide credit services, which mainly finance sales and leases of equipment by John Deere dealers and trade receivables purchased from the equipment operations. In addition, financial services offers extended equipment warranties. The information in the following discussion is presented in a format that includes information grouped as consolidated, equipment operations, and financial services. The Company also views its operations as consisting of two geographic ~~areas,~~areas: the U.S. and Canada and outside the U.S. and Canada. The Company’s operating segments consist of production and precision agriculture, small agriculture and turf, construction and forestry, and financial services.
Trends and Economic Conditions for Fiscal Year 2022
Industry sales of large agricultural machinery in the U.S. and Canada are ~~expected~~forecasted to be up ~~about 25 percent for 2021 compared to the prior year.~~20 percent. Industry sales of ~~small agricultural~~turf and ~~turf~~utility equipment in the U.S. and Canada are expected to be ~~up about 10 percent in 2021.~~flat. Industry sales of agricultural machinery in Europe are ~~forecast~~forecasted to be up about ~~10 to 15 percent.~~5 percent higher. In South America, industry sales of tractors and combines are projected to ~~be up about 20 percent in 2021. Industry~~increase 5 to 10 percent. Asia industry sales of agricultural machinery ~~in Asia~~ are ~~forecast~~forecasted to be ~~up significantly.~~flat. Construction equipment industry sales in the U.S. and Canada for ~~2021~~2022 are expected to increase ~~about 15~~5 to 2010 percent, while compact construction equipment industry sales in the U.S. and Canada are ~~forecast~~anticipated to ~~increase~~be flat to up about ~~20 to 25~~5 percent. ~~In forestry,~~Forestry global industry equipment sales are expected to be ~~about~~10 to 15 percent higher. ~~The~~Global industry roadbuilding equipment sales are forecasted to be up 5 to 10 percent. Net income for the Company’s financial services operations ~~are~~is expected to ~~benefit from improvement~~be slightly lower than fiscal year 2021 due to a higher provision for credit losses, lower gains on operating lease residual values, ~~a lower provision for credit losses, more favorable financing spreads,~~ and higher selling, general, and administrative expenses. These factors are expected to be partially offset by income earned on a higher average ~~portfolio for fiscal year 2021 compared to the prior year.~~portfolio.
Items of concern include global and regional political conditions, economic and trade policies, uncertainty of the effectiveness of governmental and private sector actions to address ~~COVID, supply of critical parts and components, trade agreements,~~ the ~~uncertainty of the results of monetary and fiscal policies, the impact of elevated levels of sovereign and state debt,~~ongoing pandemic, capital market disruptions, changes in demand and pricing for new and used equipment, ~~geopolitical events,~~ and the other items discussed in the “Safe Harbor Statement” below. Significant fluctuations in foreign currency exchange rates, ~~and~~ volatility in the price of many commodities, and supply chain disruptions could also impact the Company’s results. ~~The future financial effects of COVID are unknown due to many factors. As a result, predicting the Company’s forecasted financial performance is subject to many assumptions.~~
The Company’s ~~strong results, driven~~first quarter performance was noteworthy given production issues following the delayed ratification of the UAW contract in late November as well as persistent challenges posed by ~~essentially all product lines, reflect strong worldwide markets~~the supply chain and pandemic. These factors contributed to higher production costs. Demand for ~~farm~~agriculture and construction equipment ~~and the dedication of the Company’s employees and dealers~~is expected to ~~keep factories running and customers served while enduring significant supply chain pressures.~~continue to benefit from strong fundamentals. The ~~Company’s smart industrial operating model~~Company continues to be demonstrated in enhanced financial performance and strategic investments reinforcing efforts to help customers achieve improved profitability, productivity, and sustainability through the effective use of technology. While increased supply chain pressures are expected to persist through the remainder of the year, the Company is workingwork closely with key suppliers to ~~secure~~manage through the ~~parts~~dynamic environment and ~~components that~~enable the Company’s dealers and customers ~~need~~ to deliver ~~essential~~ food production and critical infrastructure. ~~Despite these challenges, we believe~~The Company remains committed, above all else, to safeguarding the health and well-being of its employees.
2022 Compared with 2021

Three Months Ended

Deere & Company

January 30

January 31

(In millions of dollars, except per share amounts)

2022

2021

Net sales and revenues

$
9,569

$
9,112

Net income attributable to Deere & Company

903

1,224

Diluted earnings per share

2.92

3.87

In the first quarter of 2022, the Company ~~is well positioned~~incurred UAW ratification bonus costs of $90 million. See Note 20 for ~~a strong year, to continue to deliver precision technologies, and to unlock greater value for customers and other stakeholders in the future.~~more information on special items impacting both periods.

3730

~~COVID Effects, Actions, and Recent Developments~~

~~The effects of COVID and the related actions of governments and other authorities to contain COVID continue to affect the Company’s operations, results, cash flows, and forecasts.~~

The U.S. government and many other governments in countries where the Company operates have designated the Company an essential critical infrastructure business. This designation allows the Company to operate in support of its customers to the extent possible.

The Company’s first priority in addressing the effects of COVID continues to be the health, safety, and overall welfare of its employees. The Company effectively activated previously established business continuity plans and proactively implemented health and safety measures at its operations around the world.

The Company broadened its supply base to minimize the impact of potential supply chain disruptions on its ability to meet customer demand. The Company has experienced shortages of critical parts and components, which has presented challenges and production disruptions. The Company continues to monitor the situation and work closely with suppliers.

The Company continued to work closely with distribution channel and equipment user customers in the first nine months of 2021 in connection with short-term payment relief on obligations owed to the Company. Financing receivables and operating leases granted relief since the beginning of the pandemic that remained outstanding at August 1, 2021 represented about 3 percent of the respective portfolio balances. The trade receivable balance granted relief that remained outstanding at August 1, 2021 was not material. Additional information is presented in Notes 4, 11, and 17.

~~2021 Compared with 2020~~

Three Months Ended

Nine Months Ended

Deere & Company

August 1

August 2

%

August 1

August 2

%

(In millions of dollars, except per share amounts)

2021

2020

Change

2021

2020

Change

Net sales and revenues

$
11,527

$
8,925

+29

$
32,697

$
25,809

+27

Net income attributable to Deere & Company

1,667

811

+106

4,680

1,993

+135

Diluted earnings per share

5.32

2.57

14.86

6.30

~~In the third quarter of 2021, the Company sold a closed factory that previously produced small agricultural equipment in China, resulting in a $27 million gain recorded in “Other income.”~~
In the third quarter of 2020, the Company recorded impairments totaling $37 million pretax and after-tax related to an agreement to sell its German turf business and a factory closure in China. In the second quarter of 2020, the Company recorded impairments totaling $114 million pretax and $105 million after-tax related to certain fixed assets, operating lease equipment, and a minority investment in a construction equipment company headquartered in South Africa. In the first nine months of 2020, total voluntary employee-separation program (VSEP) expense recognized was $138 million pretax.
~~See Note 22 for more information on 2021 and 2020 special items.~~


	Three Months Ended					Nine Months Ended					Three Months Ended
Equipment Operations	August 1		August 2		%	August 1		August 2		%	January 30		January 31
(In millions of dollars)	2021		2020		Change	2021		2020		Change	2022		2021		% Change
Worldwide:
Net sales	$	10,413	$	7,859	+32	$	29,461	$	22,612	+30	$	8,531	$	8,051	+6
Operating profit		1,952		1,147	+70		5,476		2,503	+119		939		1,380	-32
Net income		1,440		628	+129		4,026		1,612	+150		672		1,020	-34
Price realization					+6					+6					+7
Currency translation					+4					+3					-2

U.S. and Canada:
Net sales		5,900		4,302	+37		16,586		13,049	+27		4,818		4,529	+6
Price realization					+5					+5					+7
Currency translation					+1					+1

Outside U.S. and Canada:
Net sales		4,513		3,557	+27		12,875		9,563	+35		3,713		3,522	+5
Price realization					+7					+8					+8
Currency translation					+7					+5					-4

The discussion onof net sales and operating profit is included in the Business Segment Results below.


	Three Months Ended					Nine Months Ended					Three Months Ended
Deere & Company	August 1		August 2		%	August 1		August 2		%	January 30		January 31
(In millions of dollars)	2021		2020		Change	2021		2020		Change	2022		2021		% Change
Cost of sales to net sales		72.7%		74.2%			72.3%		76.1%			78.5%		72.1%

Other income	$	289	$	228	+27	$	768	$	613	+25	$	238	$	227	+5
Research and development expenses		394		370	+6		1,137		1,201	-5		402		366	+10
Selling, administrative and general expenses		841		752	+12		2,448		2,467	-1		781		769	+2
Other operating expenses		324		408	-21		1,033		1,199	-14		311		373	-17
Provision for income taxes												250		308	-19

The cost of sales ~~to net sales~~ ratio ~~decreased in the third quarter and the first nine months primarily~~increased due to higher production costs, partially offset by price realization and impairments recorded in 2020 (see Note 22). The first nine months of 2020 were also impacted by VSEP costs. Other income increased in both periods due to a gain on the sale of a factory in China and gains on the disposition of operating lease equipment in 2021.realization. Research and development expenses were higher ~~for the current three months but were lower for the first nine months primarily~~ due to ~~timing of project initiatives. Selling, administrative~~continued focus on developing and general expenses increased in the third quarter primarily due to higher incentive compensation. Selling, administrative and general expenses decreased on a year-to-date basis primarily due to a lower provision for credit losses and VSEP costs recorded in 2020 (see Note 22), partially offset by higher incentive compensation.incorporating technology solutions. Other operating expenses decreased ~~in both periods~~ primarily ~~due to lower retirement benefit costs, lower~~as a result of reduced depreciation of equipment on operating leases and ~~an impairment~~lower retirement benefit costs (see Note 7). The provision for income taxes was lower as a result of the German walk-behind lawn mower business in 2020. Results for the prior nine-month period also included impairments on lease residual values and losses on the disposition of operating lease equipment.reduced pretax income.

3931

Business Segment Results

Three Months Ended

Nine Months Ended

Production and Precision Agriculture

August 1

August 2

%

August 1

August 2

%

(In millions of dollars)

2021

2020

Change

2021

2020

Change

Net sales

$
4,250

$
3,289

+29

$
11,848

$
9,161

+29

Operating profit

906

605

+50

2,557

1,391

+84

Operating margin

21.3%

18.4%

21.6%

15.2%

Three Months Ended

Production and Precision Agriculture

January 30

January 31

(In millions of dollars)

2022

2021

% Change

Net sales

$
3,356

$
3,069

+9

Operating profit

296

643

-54

Operating margin

8.8%

21.0%

Production and precision agriculture sales ~~increased~~ for the quarter increased due to price realization and higher shipment ~~volumes and price realization.~~volumes. Operating profit ~~rose~~declined primarily due to higher ~~shipment volumes /~~production costs and an unfavorable sales ~~mix and price realization.~~mix. These items were partially offset by ~~higher production costs.~~
~~Sales for the first nine months increased mainly as a result of~~price realization and higher shipment ~~volumes and price realization. Operating profit for~~volumes. Affecting the ~~first nine months increased primarily resulting from higher shipment volumes / sales mix, price realization, and~~most recent quarter was the UAW contract ratification bonus, while the prior period was affected by a favorable indirect tax ruling in Brazil. ~~Partially offsetting these factors were higher production costs. The prior year was also impacted by voluntary employee-separation program expenses.~~

4032


	Three Months Ended					Nine Months Ended					Three Months Ended
Small Agriculture and Turf	August 1		August 2		%	August 1		August 2		%	January 30		January 31
(In millions of dollars)	2021		2020		Change	2021		2020		Change	2022		2021		% Change
Net sales	$	3,147	$	2,383	+32	$	9,051	$	6,966	+30	$	2,631	$	2,515	+5
Operating profit		583		337	+73		1,699		718	+137		371		469	-21
Operating margin		18.5%		14.1%			18.8%		10.3%			14.1%		18.6%

Small agriculture and turf sales for the quarter ~~increased due to higher~~improved as price realization more than offset lower shipment ~~volumes and price realization.~~volumes. Operating profit ~~increased~~decreased primarily due to higher ~~shipment volumes~~production costs and lower sales / unfavorable sales ~~mix and price realization.~~mix. These items were partially offset by higher production costs. Results for the current period were positively impacted by a gain on the sale of a factory in China while results for the prior period were affected by impairments and closure costs.

~~Sales for the first nine months increased mainly as a result of higher shipment volumes and~~ price realization. Operating profit for the first nine months increased primarily resulting from higher shipment volumes / sales mix and price realization. Partially offsetting these factors were higher production costs. Results for the current year were positively impacted by a gain on the sale of a factory in China, while results for the prior year were affected by impairments, closure costs and voluntary employee-separation program expenses.

4133


	Three Months Ended					Nine Months Ended					Three Months Ended
Construction and Forestry	August 1		August 2		%	August 1		August 2		%	January 30		January 31
(In millions of dollars)	2021		2020		Change	2021		2020		Change	2022		2021		% Change
Net sales	$	3,016	$	2,187	+38	$	8,562	$	6,485	+32	$	2,544	$	2,467	+3
Operating profit		463		205	+126		1,220		394	+210		272		268	+1
Operating margin		15.4%		9.4%			14.2%		6.1%			10.7%		10.9%

Construction and forestry sales moved higher for the quarter primarily due to price realization and higher shipment ~~volumes and price realization.~~volumes. Last year Wirtgen’s one-month reporting lag was eliminated resulting in four months of Wirtgen activity in the first quarter of 2021, which increased “Net sales” by $270 million. Operating profit ~~increased~~was higher mainly due to ~~higher shipment volumes / sales mix and~~ price realization, partially offset by higher production ~~costs.~~

costs and lower sales / unfavorable sales mix. The segment’s nine-month sales also increased due to higher shipment volumes and price realization. The first nine-month’s operating profit moved higher mainly due to increased shipment volumes / sales mix and price realization, partially offset by higher production costs. The prior yearcurrent period was ~~also~~ impacted by ~~voluntary employee-separation program expenses and impairments in certain fixed assets and an unconsolidated equipment company headquartered in South Africa.~~the UAW contract ratification bonus. Results last year included impairment of long-lived assets.


	Three Months Ended					Nine Months Ended					Three Months Ended
Financial Services	August 1		August 2		%	August 1		August 2		%	January 30		January 31
(In millions of dollars)	2021		2020		Change	2021		2020		Change	2022		2021		% Change
Revenue (including intercompany revenue)	$	963	$	951	+1	$	2,851	$	2,916	-2
Revenue (including intercompany)											$	916	$	934	-2
Interest expense		169		206	-18		539		747	-28		158		188	-16
Operating profit		291		243	+20		844		498	+69
Net income		227		183	+24		654		381	+72		231		204	+13

~~Financial services revenues increased due to higher average portfolio balances and gains on operating lease dispositions for~~While the third quarter of 2021 offset by lower financing rates. Financial services revenues decreased in the first nine months of 2021 due to lower financing rates, partially offset by higher average portfolio balances and gains on operating lease dispositions. The average balance of receivables and leases financed was ~~8 percent higher in the third quarter and 4~~6 percent higher in the first ~~nine~~three months of ~~2021,~~2022, compared with the same ~~periods~~period last ~~year.~~year, revenue decreased due to lower average interest rates. Interest expense decreased 16 percent in the ~~third~~first quarter ~~and first nine months~~ of ~~2021 primarily~~2022 as a result of lower average borrowing rates. ~~Operating profit~~Net income increased ~~for the quarter primarily~~ due to anincome earned on higher average portfolio balances and improvement on operating lease residual values, income earned on a higher average portfolio, a lower provision for credit losses, and more favorable financing spreads. Results for the first nine months increased primarily due to a lower provision for credit losses, an improvement on operating lease residual values, more favorable financing spreads, and income earned on a higher average portfolio. The first nine months of 2020 also included impairments on lease residual values (see Note 22).

~~Safe Harbor Statement~~

~~Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:~~ ~~Statements under “Overview~~” and other forward-looking statements herein that relate to future events, expectations, and trends involve factors that are subject to change, and 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 of the Company’s businesses.

The Company’s agricultural equipment businesses are subject to a number of uncertainties, including certain factors that affect farmers’ confidence and financial condition. These factors include demand for agricultural products, world grain stocks, weather conditions, soil conditions, harvest yields, prices for commodities and livestock, crop and livestock production expenses, availability of transport for crops, trade restrictions and tariffs (e.g., China), global trade agreements, the level of farm product exports (including concerns about genetically modified organisms), the growth and sustainability of non-food uses for some crops (including ethanol and biodiesel production), real estate values, available acreage for farming, the land ownership policies of governments, changes in government farm programs and policies, international reaction to such programs, changes in and effects of crop insurance programs, changes in environmental regulations and their impact on farming practices, animal diseases (e.g., African swine fever) and their effects on poultry, beef, and pork consumption and prices and on livestock feed demand, crop pests and diseases, and the impact of the COVID pandemic on the agricultural industry including demand for, and production and exports of, agricultural products, and commodity prices.

The production and precision agriculture business is dependent on agricultural conditions, and relies in part on hardware and software, guidance, connectivity and digital solutions, and automation and machine intelligence. Many factors contribute to the Company’s precision agriculture sales and results, including the impact to customers’ profitability and/or sustainability outcomes; the rate of adoption and use by customers; availability of technological innovations; speed of research and development; effectiveness of partnerships with third parties; and the dealer channel’s ability to support and service precision technology solutions.

Factors affecting the Company’s small agriculture and turf equipment operations include agricultural conditions, consumer confidence, weather conditions, customer profitability, labor supply, consumer borrowing patterns, consumer purchasing preferences, housing starts and supply, infrastructure investment, spending by municipalities and golf courses, and consumable input costs.

Factors affecting the Company’s construction and forestry equipment operations include consumer spending patterns, real estate and housing prices, the number of housing starts, interest rates, commodity prices such as oil and gas, the levels of public and non-residential construction, and investment in infrastructure. Prices for pulp, paper, lumber, and structural panels affect sales of forestry equipment.

Many of the factors affecting the production and precision agriculture, small agriculture and turf, and construction and forestry segments have been and may continue to be impacted by global economic conditions, including those resulting from the COVID pandemic and responses to the pandemic taken by governments and other authorities.

All of the Company’s businesses and its results are affected by general economic conditions in the global markets and industries in which the Company operates; customer confidence in general economic conditions; government spending and taxing; foreign currency exchange rates and their volatility, especially fluctuations in the value of the U.S. dollar; interest rates (including the availability of IBOR reference rates); inflation and deflation rates; changes in weather patterns; the political and social stability of the global markets in which the Company operates; the effects of, or response to, terrorism and security threats; wars and other conflicts; natural disasters; and the spread of major epidemics (including the COVID pandemic) and government and industry responses to epidemics, such as travel restrictions and extended shut down of businesses.

Uncertainties related to the magnitude and duration of the COVID pandemic may significantly adversely affect the Company’s business and outlook. These uncertainties include: the duration and impact of any resurgence in COVID cases in any country, state, or region; the emergence, contagiousness, and threat of new and different strains of coronavirus; the availability, acceptance, and effects of vaccines; prolonged reduction or closure of the Company’s operations, or a delayed recovery in our operations; additional closures as mandated or otherwise made necessary by governmental authorities; disruptions in the supply chain and a prolonged delay in resumption of operations by one or more key suppliers, or the failure of any key suppliers; the Company’s ability to meet commitments to customers on a timely basis as a result of increased costs and supply challenges; the ability to receive goods on a timely basis and at anticipated costs; increased logistics costs; delays in the Company’s strategic initiatives as a result of reduced spending on research and development; additional operating costs due to remote working arrangements, adherence to social distancing guidelines and other COVID-related challenges; increased risk of cyber-attacks on network connections used in remote working arrangements; increased privacy-related risks due to processing health-related personal information; legal claims related to personal protective equipment designed, made, or provided by the Company or alleged exposure to COVID on Company premises; absence of employees due to illness; the impact of the pandemic on the Company’s customers and dealers, and their delays in their plans to invest in new equipment; requests by the Company’s customers or dealers for payment deferrals and contract modifications; the impact of disruptions in the global capital markets and/or declines in the Company’s financial performance, outlook or credit ratings, which could impact the Company’s ability to obtain funding in the future; and the impact of the pandemic on demand for our products and services as discussed above. It remains unclear when a sustained economic recovery could occur and what a recovery may look like. All of these factors could materially and adversely affect our business, liquidity, results of operations, and financial position.

Significant changes in market liquidity conditions, changes in the Company’s credit ratings, and any failure to comply with financial covenants in credit agreements could impact access to funding and funding costs, which could reduce the Company’s earnings and cash flows. Financial market conditions could also negatively impact customer access to capital for purchases of the Company’s products and customer confidence and purchase decisions, financing and repayment practices, and the number and size of customer delinquencies and defaults. A debt crisis in Europe, Latin America, or elsewhere could negatively impact currencies, global financial markets, social and political stability, funding sources and costs, asset and obligation values, customers, suppliers, demand for equipment, and Company operations and results. The Company’s investment management activities could be impaired by changes in the equity, bond, and other financial markets, which would negatively affect earnings.

The withdrawal of the United Kingdom from the European Union and the perceptions as to the impact of the withdrawal may adversely affect business activity, political stability, and economic conditions in the United Kingdom, the European Union, and elsewhere. The economic conditions and outlook could be further adversely affected by (i) uncertainty regarding any new or modified trade arrangements between the United Kingdom and the European Union and/or other countries, (ii) the risk that one or more other European Union countries could come under increasing pressure to leave the European Union, or (iii) the risk that the euro as the single currency of the Eurozone could cease to exist. Any of these developments, or the perception that any of these developments are likely to occur, could affect economic growth or business activity in the United Kingdom or the European Union, and could result in the relocation of businesses, cause business interruptions, lead to economic recession or depression, and impact the stability of the financial markets, availability of credit, currency exchange rates, interest rates, financial institutions, and political, financial, and monetary systems. Any of these developments could affect our businesses, liquidity, results of operations, and financial position.

Additional factors that could materially affect the Company’s operations, access to capital, expenses, and results include changes in, uncertainty surrounding, and the impact of governmental trade, banking, monetary, and fiscal policies, including financial regulatory reform and its effects on the consumer finance industry, derivatives, funding costs, and other areas; governmental programs, policies, and tariffs for the benefit of certain industries or sectors; sanctions in particular jurisdictions; retaliatory actions to such changes in trade, banking, monetary, and fiscal policies; actions by central banks; actions by financial and securities regulators; actions by environmental, health,

and safety regulatory agencies, including those related to engine emissions, carbon and other greenhouse gas emissions, noise, and the effects of climate change; changes to GPS radio frequency bands or their permitted uses; changes in labor and immigration regulations; changes to accounting standards; changes in tax rates, estimates, laws, and regulations and Company actions related thereto; changes to and compliance with privacy, banking, and other regulations; changes to and compliance with economic sanctions and export controls laws and regulations; compliance with U.S. and foreign laws when expanding to new markets and otherwise; and actions by other regulatory bodies.

Other factors that could materially affect the Company’s results include production, design, and technological innovations and difficulties, including capacity and supply constraints and prices; the loss of or challenges to intellectual property rights, whether through theft, infringement, counterfeiting, or otherwise; the availability and prices of strategically sourced materials, components, and whole goods; delays or disruptions in the Company’s supply chain or the loss of liquidity by suppliers; disruptions of infrastructures that support communications, operations, or distribution; the failure of customers, dealers, suppliers, or the Company to comply with laws, regulations, and Company policy pertaining to employment, human rights, health, safety, the environment, sanctions, export controls, anti-corruption, privacy and data protection, and other ethical business practices;events that damage the Company’s reputation or brand; significant investigations, claims, lawsuits, or other legal proceedings; start-up of new plants and products; the success of new product initiatives or business strategies; changes in customer product preferences and sales mix; gaps or limitations in rural broadband coverage, capacity, and speed needed to support technology solutions; oil and energy prices, supplies, and volatility; the availability and cost of freight; actions of competitors in the various industries in which the Company competes, particularly price discounting; dealer practices, especially as to levels of new and used field inventories; changes in demand and pricing for used equipment and resulting impacts on lease residual values; labor relations and contracts; changes in the ability to attract, develop, engage, and retain qualified personnel; acquisitions and divestitures of businesses; greater-than-anticipated transaction costs; the integration of new businesses; the failure or delay in closing or realizing anticipated benefits of acquisitions, joint ventures, or divestitures; the inability to deliver precision technology and agricultural solutions to customers; the implementation of the smart industrial operating model and other organizational changes; the failure to realize anticipated savings or benefits of cost reduction, productivity, or efficiency efforts; difficulties related to the conversion and implementation of enterprise resource planning systems; security breaches, cybersecurity attacks, technology failures, and other disruptions to the information technology infrastructure of the Company and its suppliers and dealers; changes in Company-declared dividends and common stock issuances and repurchases; changes in the level and funding of employee retirement benefits; changes in market values of investment assets, compensation, retirement, discount, and mortality rates which impact retirement benefit costs; and significant changes in health care costs.

The liquidity and ongoing profitability of John Deere Capital Corporation and the Company’s other financial services subsidiaries depend largely on timely access to capital in order to meet future cash flow requirements, and to fund operations, costs, and purchases of the Company’s products. If general economic conditions deteriorate or capital markets become more volatile, including as a result of the COVID pandemic, funding could be unavailable or insufficient. Additionally, customer confidence levels may result in declines in credit applications and increases in delinquencies and default rates, which could materially impact write-offs and provisions for credit losses.

The Company’s forward-looking statements are based upon assumptions relating to the factors described above, which are sometimes based upon estimates and data prepared by government agencies. Such estimates and data are often revised. The Company, except as required by law, undertakes no obligation to update or revise its forward-looking statements, whether as a result of new developments or otherwise. Further information concerning the Company and its businesses, including factors that could materially affect the Company’s financial results, is included in the Company’s other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. Risk Factors of the Company’s most recent annual report on Form 10-K and quarterly reports on Form 10-Q).
values.
Critical Accounting ~~Policies~~Estimates
See the Company’s critical accounting ~~policies~~estimates discussed in the Management’s Discussion and Analysis of the most ~~recent~~recently filed annual report ~~filed~~ on Form 10-K. There have been no material changes to these ~~policies, other than as described below related to the allowance for credit losses, as a result of the adoption of ASU No. 2016-13 during the first quarter of 2021.~~policies.
The allowance for credit losses is an estimate of the credit losses expected over the life of the Company’s receivable portfolio. The Company measures expected credit losses on a collective basis when similar risk characteristics exist. Risk characteristics considered by the Company include finance product category, market, geography, credit risk,

4534

~~and remaining duration. Receivables that do not share risk characteristics with other receivables in the portfolio are evaluated on an individual basis.~~

The Company utilizes loss forecast models, which are selected based on the size and credit risk of the underlying pool of receivables, to estimate expected credit losses. Transition matrix models are used for large and complex customer receivable pools, while weighted average remaining maturity models are used for smaller and less complex customer receivable pools. Expected credit losses on wholesale receivables are based on historical loss rates, adjusted for current economic conditions. The modeled expected credit losses are adjusted based on reasonable and supportable forecasts, which may include economic indicators such as commodity prices, industry equipment sales, unemployment rates, and housing starts. Management reviews each model’s output quarterly, and qualitative adjustments are incorporated as necessary. While the Company believes its allowance is sufficient to provide for losses over the life of its existing receivable portfolio, different assumptions or changes in economic conditions would result in changes to the allowance for credit losses and the provision for credit losses.

CAPITAL RESOURCES AND LIQUIDITY

The discussion of capital resources and liquidity has been organized to review separately, where appropriate, the Company’s consolidated totals, equipment operations, and financial services operations.

Consolidated

~~Positive cash flows~~Cash outflows from consolidated operating activities in the first ~~nine~~three months of ~~2021~~2022 were ~~$4,314~~$2,553 million. This ~~cash inflow~~ resulted ~~primarily~~mainly from a working capital change and a $1,000 million voluntary contribution to a U.S. OPEB plan. These were partially offset by net income adjusted for non-cash ~~provisions and an increase in accounts payable and accrued expenses, partially offset by a seasonal increase in inventories and receivables related to sales.~~provisions. Cash ~~outflows~~inflows from investing activities were ~~$3,102~~$648 million in the first ~~nine~~three months of ~~2021, primarily due to the cost of receivables and equipment on operating leases acquired exceeding~~this year. The primary driver was collections of receivables (excluding receivables related to sales) and proceeds from sales of equipment on operating leases exceeding the cost of receivables and equipment on operating leases acquired, partially offset by ~~$2,381 million,~~ purchases of property and equipment of $492 million, a change in collateral on derivatives – net of $189 million, and purchases of marketable securities exceeding proceeds from maturities and sales by $33 million. Negative cash flowsequipment. Cash outflows from financing activities were ~~$851~~$1,577 million in the first ~~nine~~three months of 2021 primarily due to repurchases of common stock of $1,780 million and dividends paid of $761 million, partially offset by an increase in borrowings of $1,634 million and proceeds from issuance of common stock of $136 million (resulting from the exercise of stock options).2022. Cash, cash equivalents, and restricted cash ~~increased $467~~decreased $3,556 million during the first ~~nine~~three months of this year.
In February 2022, the Company acquired majority ownership in Kreisel Electric, Inc., a battery technology provider based in Austria. The initial cash outlay was €239 million, which was financed from cash on hand (see Note 21). Additional cash requirements anticipated in the remainder of 2022 include the dissolution of the joint venture agreement between the Company and Hitachi Construction Machinery Co., Ltd. (Hitachi). In connection with the termination, the Company will purchase all of Hitachi’s shares in the relevant joint venture manufacturing entities and receive certain intellectual property rights. The initial cash consideration consists of $275 million for the shares and an intellectual property license. The transaction is expected to close in the second quarter of 2022, subject to the receipt of certain required regulatory approvals and satisfaction of certain other customary closing conditions. This consideration will be paid out of cash on hand.
Positive cash flows from consolidated operating activities in the first ~~nine~~three months of ~~2020~~2021 were ~~$4,057~~$143 million. This ~~cash inflow~~ resulted primarily from net income adjusted for non-cash provisions ~~a decrease in receivables related to sales, and a change in net retirement benefits,~~ partially offset by ~~a decrease~~changes in ~~accounts payable and accrued expenses.~~working capital. Cash ~~outflows~~inflows from investing activities were ~~$1,517~~$579 million in the first ~~nine~~three months of ~~2020, primarily~~2021, largely due to ~~the cost of receivables and equipment on operating leases acquired exceeding~~ collections of receivables (excluding receivables related to sales) and proceeds from sales of equipment on operating leases exceeding the cost of receivables and equipment on operating leases acquired. This was partially offset by ~~$1,214 million,~~ purchases of property and equipment of $594 million, and purchases of marketable securities exceeding proceeds from maturities and sales by $21 million, partially offset by a change in collateral on derivatives – net of $324 million. Positiveequipment. Negative cash flows from financing activities were ~~$1,724~~$933 million in the first ~~nine~~three months of 2020 primarily due to an increase in borrowings of $2,704 million and proceeds from issuance of common stock of $111 million (resulting from the exercise of stock options), partially offset by dividends paid of $718 million and repurchases of common stock of $263 million.2021. Cash, cash equivalents, and restricted cash ~~increased $4,344~~decreased $108 million during the first ~~nine~~three months of ~~2020. The increase in cash was primarily to provide added liquidity due to the financial uncertainty created by COVID in 2020.~~2021.
The Company has access to most global markets at a reasonable cost and expects to have sufficient sources of global funding and liquidity to meet its funding ~~needs.~~needs in the short term and long term. Sources of liquidity for the Company include cash and cash equivalents, marketable securities, funds from operations, the issuance of commercial paper and term debt, the securitization of retail notes (both public and private markets), and committed and uncommitted bank lines of credit. The Company’s commercial paper outstanding at ~~August 1,~~January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~August 2, 2020~~January 31, 2021 was ~~$1,882~~$2,135 million, ~~$1,238~~$2,230 million, and ~~$1,987~~$1,346 million, respectively, while the total cash, ~~and~~ cash equivalents, and marketable securities position was ~~$8,207~~$5,207 million, ~~$7,707~~$8,745 million, and ~~$8,830~~$7,629 million, respectively. The total cash, ~~and~~ cash equivalents, and marketable securities held by foreign subsidiaries was ~~$5,690~~$3,047 million, ~~$5,010~~$5,817 million, and ~~$4,816~~$4,956 million at ~~August 1,~~January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~August 2, 2020,~~January 31, 2021, respectively. During the first quarter of 2022, the Company’s foreign subsidiaries returned $3,500 million of cash and cash equivalents to the U.S.
Lines of Credit. The Company also has access to bank lines of credit with various banks throughout the world. Worldwide lines of credit totaled ~~$8,146~~$8,519 million at ~~August 1, 2021, $6,131~~January 30, 2022, $5,865 million of which were unused. For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings, excluding secured

borrowings and the current portion of long-term borrowings, were primarily considered to constitute utilization. Included in the total credit lines at ~~August 1, 2021~~January 30, 2022 was a 364-day credit facility agreement of $3,000 million, expiring in fiscal April 2022. In addition, total credit lines included long-term credit facility agreements of $2,500 million, expiring in fiscal April 2025, and $2,500 million, expiring in fiscal March 2026. The Company expects to extend the terms of these credit facilities. These credit agreements require John Deere Capital Corporation (Capital Corporation) to maintain its consolidated ratio of earnings to fixed charges at not less than 1.05 to 1 for each fiscal quarter and the ratio of senior debt, excluding securitization indebtedness, to capital base (total subordinated debt and stockholder’s equity excluding accumulated other comprehensive income (loss)) at not more than 11 to 1 at the end of any fiscal quarter. The credit agreements also require the equipment operations to maintain a ratio of total debt to total capital (total debt and stockholders’ equity excluding accumulated other comprehensive income (loss)) of 65 percent or less at the end of each fiscal quarter. Under this provision, the Company’s excess equity capacity and retained earnings balance free of restriction at ~~August 1, 2021~~January 30, 2022 was ~~$15,195~~$15,452 million. Alternatively under this provision, the equipment operations had the capacity to incur additional debt of ~~$28,219~~$28,697 million at ~~August 1, 2021.~~January 30, 2022. All of these requirements of the credit ~~agreement requirements~~agreements have been met during the periods included in the financial statements.

Debt Ratings. To access public debt capital markets, the Company relies on credit rating agencies to assign short-term and long-term credit ratings to the Company’s 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 Company securities. A credit rating agency may change or withdraw Company ratings based on its assessment of the Company’s current and future ability to meet interest and principal repayment obligations. Each agency’s rating should be evaluated independently of any other rating. Lower credit ratings generally result in higher borrowing costs, including costs of derivative transactions, and reduced access to debt capital markets. The senior long-term and short-term debt ratings and outlook currently assigned to unsecured Company ~~debt~~ securities by the rating agencies engaged by the Company are as follows:


	Senior
	Long-Term	Short-Term	Outlook
Fitch Ratings	A	F1	Stable
Moody’s Investors Service, Inc.	A2	Prime-1	Stable
Standard & Poor’s	A	A-1	Stable

Trade Accounts and Notes Receivable. Trade accounts and notes receivable primarily arise from sales of goods to independent dealers. Trade receivables increased ~~$1,097~~$647 million during the first ~~nine~~three months of ~~2021, primarily~~2022, mostly due to a seasonal ~~increase and higher overall demand.~~increase. These receivables decreased ~~$205~~$182 million, compared to a year ago. The ratios of ~~worldwide~~ trade accounts and notes receivable to the last 12 months’ net sales were 1412 percent at ~~August 1, 2021,~~January 30, 2022, compared to 1311 percent at ~~November 1, 2020~~October 31, 2021 and 1715 percent at ~~August 2, 2020.~~January 31, 2021. Production and precision agriculture trade receivables decreased ~~$286~~$218 million, small agriculture and turf trade receivables ~~increased $103~~decreased $220 million, and construction and forestry trade receivables ~~decreased $22~~increased $256 million, compared to a year ago. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 21 percent, ~~at August~~ 1 ~~2021, 3~~ percent, ~~at November 1, 2020,~~ and 3 percent at ~~August 2, 2020.~~

~~Deere & Company stockholders’ equity was $15,731 million at August 1,~~January 30, 2022, October 31, 2021, ~~compared with $12,937 million at November 1, 2020~~ and ~~$12,888 million at August 2, 2020. The increase of $2,794 million during the first nine months of~~January 31, 2021, resulted primarily from net income attributable to Deere & Company of $4,680 million, a change in the cumulative translation adjustment of $319 million, a retirement benefits adjustment of $208 million, and an increase in common stock of $136 million, partially offset by an increase in treasury stock of $1,715 million and dividends declared of $800 million.

~~The Company previously planned to make a voluntary contribution to its U.S. OPEB plan for $700 million in the fourth quarter of 2021. This voluntary contribution will be delayed into fiscal year 2022.~~respectively.

Equipment Operations

The Company’s equipment businesses are capital intensive and are subject to seasonal variations in financing requirements for inventories and certain receivables from dealers. The equipment operations sell a significant portion of their trade receivables to financial services. ~~To the extent necessary, funds~~Funds provided from operations are supplemented by external financing ~~sources.~~sources as needed.

Cash used for operating activities of the equipment operations, including intercompany cash flows, in the first three months of 2022 was $2,488 million. This resulted largely from a change in working capital and a $1,000 million voluntary contribution to a U.S. OPEB plan exceeding cash inflows from net income adjusted for non-cash provisions. Cash, cash equivalents, and restricted cash decreased $3,592 million in the first three months of 2022.

Cash provided by operating activities of the equipment operations, including intercompany cash flows, in the first ~~nine~~three months of 2021 was ~~$4,185~~$348 million. ~~This resulted primarily from cash~~Cash inflows from net income adjusted for non-cash provisions ~~an increase~~were partially offset by changes in ~~accounts payable and accrued expenses, and a change in accrued income taxes payable/receivable. Partially offsetting these operating cash inflows were cash outflows from an increase in~~

~~inventories and trade and financing receivables held by the equipment operations.~~working capital. Cash, cash equivalents, and restricted cash ~~increased $495~~decreased $71 million in the first ~~nine~~three months of 2021.

Cash provided by operating activities of the equipment operations, including intercompany cash flows, in the first nine months of 2020 was $2,855 million. This resulted primarily from cash inflows from net income adjusted for non-cash provisions, a decrease in inventories and trade and financing receivables held by the equipment operations, and a change in net retirement benefits. Partially offsetting these operating cash inflows were cash outflows from a decrease in accounts payable and accrued expenses and a change in accrued income taxes payable/receivable. Cash, cash equivalents, and restricted cash increased $4,255 million in the first nine months of 2020. The increase in cash was primarily to provide added liquidity due to the financial uncertainty created by COVID in 2020.

Trade receivables held by the equipment operations ~~increased $114~~decreased $159 million during the first ~~nine~~three months of 2022 and ~~decreased $124~~increased $96 million from a year ago. The equipment operations sell a significant portion of their trade receivables to financial services. See the previous consolidated discussion of trade receivables.

Inventories increased by ~~$1,411~~$1,154 million during the first ~~nine~~three months, primarily ~~reflecting~~due to a seasonal ~~increase, increased overall demand, and foreign currency translation.~~increase. Inventories increased ~~by $760~~$1,979 million, compared to a year ago, due to ~~increased overall demand.~~higher forecasted shipment volumes and a raw material build-up related to the UAW work stoppage, partially offset by the effect of foreign currency translation. A majority of these inventories are valued on the last-in, first-out (LIFO) method. The ratios of inventories on a first-in, first-out (FIFO) basis (see Note 13), which approximates current cost, to the last 12 months’ cost of sales were 29 percent at August 1, 2021, compared to 28 percent at November 1, 2020 and 30 percent at August 2, 2020.

Total interest-bearing debt, excluding finance lease liabilities, of the equipment operations was ~~$10,305~~$10,229 million at ~~August 1, 2021,~~January 30, 2022, compared with ~~$10,382~~$10,373 million at ~~November 1, 2020~~October 31, 2021 and ~~$11,056~~$10,494 million at ~~August 2, 2020.~~January 31, 2021. The ratios of debt to total capital (total interest-bearing debt and ~~Deere & Company’s~~ stockholders’ equity) were 4036 percent, 4536 percent, and 4643 percent at ~~August 1,~~January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~August 2, 2020,~~January 31, 2021, respectively.

In the second quarter of 2020, the equipment operations issued three tranches of notes in the U.S. with aggregate principal totaling $2,250 million that are due from 2025 to 2050. The equipment operations also issued Euro-Medium-Term notes with aggregate principal totaling €2,000 million (approximately $2,170 million based on the exchange rate at the issue date) that are due from 2024 to 2032. In the first nine months of 2020, the equipment operations issued commercial paper in the U.S. with aggregate principal totaling $466 million, of which $448 million had an original term greater than 90 days. Commercial paper repaid in the third quarter of 2020 was $406 million. The net increase is presented in “Increase in total short-term borrowings” in the consolidated statement of cash flows.

Property and equipment cash expenditures for the equipment operations in the first ~~nine~~three months of ~~2021~~2022 were ~~$491~~$193 million, compared with ~~$591~~$154 million in the same period last year. Capital expenditures for the equipment operations in ~~2021~~2022 are estimated to be approximately ~~$900~~$1,175 million.

Financial Services

The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios. Their primary sources of funds for this purpose are a combination of commercial paper, term debt, securitization of retail notes, equity capital, and borrowings from Deere & Company.

During the first ~~nine~~three months of 2022 and 2021, the cash provided by operating and ~~financing~~investing activities was used primarily to increase receivables and leases. Cash flows provided by operating activities, including intercompany cash flows, were $1,445 million in the first nine months. Cash used for investing activities totaled $3,662 million in the first nine months of 2021 primarily due the cost of receivables (excluding trade and wholesale) and cost of equipment on operating leases acquired exceeding the collection of these receivables and proceeds from sales of equipment on operating leases by $2,953 million, an increase in trade and wholesale receivables of $481 million, a change in collateral on derivatives - net of $185 million, and purchases of marketable securities exceeding proceeds from maturities and sales by $37 million. Cash provided by financing activities totaled $2,160 million, resulting primarily from an increase in external borrowings of $1,798 million and an increase in borrowings from Deere & Company of $624 million, partially offset by dividends paid to Deere & Company of $240 million. Cash, cash equivalents, and restricted cash decreased $28 million in the first nine months of 2021.

During the first nine months of 2020, the cash provided by operating activities was used primarily to increase receivables and leases. Cash flows provided by operating activities, including intercompany cash flows, were $1,442 million in the first nine months of 2020. Cash used for investing activities totaled $858 million in the first nine months of 2020 primarily due to the cost of receivables (excluding trade and wholesale) and cost of equipment on

operating leases acquired exceeding the collection of these receivables and proceeds from sales of equipment on operating leases by $1,541 million and purchases of marketable securities exceeding proceeds from maturities and sales by $21 million, partially offset by a decrease in trade and wholesale receivables of $423 million and a change in collateral on derivatives - net of $330 million. Cash used for financing activities totaled $480 million, resulting primarily from a decrease in external borrowings of $1,677 million and dividends paid to Deere & Company of $260 million, partially offset by an increase in borrowings from Deere & Company of $1,468 million.activities. Cash, cash equivalents, and restricted cash increased ~~$89~~$36 million in the first ~~nine~~three months of ~~2020.~~2022 and decreased $37 million in the first three months of 2021.

Receivables and leases held by the financial services operations consist of retail notes originated in connection with ~~retail sales~~financing of new and used equipment, ~~by dealers of John Deere products, retail notes from non-Deere equipment customers,~~operating leases, trade receivables, ~~wholesale notes,~~ revolving charge accounts, ~~credit enhanced international export financing generally involving John Deere products,~~ sales-type and direct financing leases, and ~~operating leases. Total~~wholesale notes. Trade and financing receivables and equipment on operating leases ~~increased $3,192~~decreased $1,149 million during the first ~~nine months~~quarter of ~~2021~~2022, primarily due to seasonal payments, and increased ~~$3,161~~$2,490 million in the past 12 months. ~~Acquisition~~Total acquisition volumes of receivables (excluding trade and wholesale) and leases were 173 percent higher in the first ~~nine~~three months of ~~2021,~~2022, compared with the same period last year, as volumes of ~~financing~~operating and finance leases, ~~and~~ retail notes, ~~were higher, while volumes of operating leases~~ and revolving charge accounts were ~~slightly lower. The amount of total trade receivables and wholesale notes increased~~higher compared to ~~November 1, 2020 and decreased compared to August 2, 2020.~~January 31, 2021.

Total external interest-bearing debt of the financial services operations was ~~$37,591~~$37,026 million at ~~August 1, 2021,~~January 30, 2022, compared with ~~$35,556~~$37,978 million at ~~November 1, 2020~~October 31, 2021 and ~~$37,366~~$35,415 million at ~~August 2, 2020.~~January 31, 2021. Total external borrowings have generally changed ~~generally~~ corresponding with the level of receivable and lease portfolio, the level of cash and cash equivalents, the change in payables owed to Deere & Company, and the change in investment from Deere & Company. The financial services operations’ ratio of interest-bearing debt ~~including intercompany debt,~~ to stockholder’s equity was ~~7.6~~7.4 to 1 at ~~August 1, 2021,~~January 30, 2022, compared with 7.8 to 1 at ~~November 1, 2020~~October 31, 2021 and ~~7.9~~7.6 to 1 at ~~August 2, 2020.~~January 31, 2021.

Capital Corporation has a revolving ~~credit agreement~~warehouse facility to utilize bank conduit facilities to securitize retail notes (see Note ~~12)~~10). ~~At August 1,~~The facility was renewed in November 2021 ~~this facility had~~with an expiration in November 2022 and a reduction of the total capacity or “financing ~~limit,” of up to~~limit” from $2,000 million to $1,000 million. As a result of ~~secured financings at any time. After a two-year revolving period, unless~~ the ~~banks and Capital Corporation agree~~reduced capacity, the Company repurchased $511 million of outstanding short-term securitization borrowings in November 2021, in addition to ~~renew, Capital Corporation would liquidate~~ the ~~secured borrowings over time as~~normal payments collected on the retail ~~notes are collected. At August 1, 2021, $1,779 million of short-term securitization borrowings was outstanding under the agreement.~~notes.

In the first ~~nine~~three months of ~~2021,~~2022, the financial services operations ~~issued $2,801 million and~~ retired ~~$2,190~~$1,123 million of retail note securitization borrowings, which are presented in “Increase (decrease) in total short-term borrowings.” In addition, during the first ~~nine~~three months of ~~2021,~~2022, the financial services operations issued ~~$5,877~~$2,335 million and retired ~~$5,101~~$1,816 million of long-term borrowings, which were primarily medium-term notes.

~~Subsequent Events~~Safe Harbor Statement

~~On August 5, 2021,~~Safe Harbor Statement under the ~~Company acquired Bear Flag Robotics, Inc. (Bear Flag), based in Silicon Valley,~~Private Securities Litigation Reform Act of 1995: Statements under “Overview” and other forward-looking statements herein that relate to ~~further accelerate Deere’s development~~future events, expectations, and ~~delivery~~trends involve factors that are subject to change, and assumptions, risks, and uncertainties that could cause actual results to differ materially. Some of ~~advanced technology. Bear Flag’s technology enables a tractor to work in a field autonomously. The total cash consideration was $250 million, which was financed from cash on hand,~~these risks and ~~will primarily be allocated to intangible assets and goodwill. Bear Flag will be part~~uncertainties could affect particular lines of business, while others could affect all of the Company’s businesses.

The Company’s agricultural equipment businesses are subject to a number of uncertainties, including certain factors that affect farmers’ confidence and financial condition. These factors include demand for agricultural products; world grain stocks; weather conditions and the effects of climate change; soil conditions; harvest yields; prices for commodities and livestock; crop and livestock production expenses; availability of transport for crops (including as a result of reduced state and local transportation budgets); trade restrictions and tariffs (e.g., China); global trade agreements; the level of farm product exports (including concerns about genetically modified organisms); the growth and sustainability of non-food uses for some crops (including ethanol and biodiesel production); real estate values; available acreage for farming; land ownership policies of governments; changes in government farm programs and policies; international reaction to such programs; changes in and effects of crop insurance programs; changes in environmental regulations and their impact on farming practices; animal diseases (e.g., African swine fever) and their effects on poultry, beef, and pork consumption and prices and on livestock feed demand; crop pests and diseases; and the impact of the COVID pandemic on the agricultural industry including demand for, and production and exports of, agricultural products, and commodity prices.
The production and precision agriculture ~~segment.~~

~~On August 19, 2021,~~business is dependent on agricultural conditions, and relies in part on hardware and software, guidance, connectivity and digital solutions, and automation and machine intelligence. Many factors contribute to the ~~Company~~Company’s precision agriculture sales and ~~Hitachi Construction Machinery Co., Ltd. (Hitachi) entered into a Joint Venture Dissolution Agreement (Dissolution Agreement) pursuant~~results, including the impact to ~~which~~customers’ profitability and/or sustainability outcomes; the ~~parties agreed to voluntarily terminate (Termination) the joint venture agreement dated May 16, 1988 between the Company~~rate of adoption and ~~Hitachi. The joint venture agreement governs the terms~~use by customers; availability of ~~the joint venture between the Company~~technological innovations; speed of research and ~~Hitachi for the manufacture and distribution~~development; effectiveness of ~~excavators in North, Central, and South America under the John Deere and Hitachi trademarks and tradenames. In connection~~partnerships with the Termination, the Company will purchase all of Hitachi’s shares in the relevant joint venture manufacturing entities located in Kernersville, North Carolina, U.S.; Langley, British Columbia, Canada; and Indaiatuba, Brazil. The Company will receive certain intellectual property rights relating to certain manufacturing processes under a perpetual license agreement. The initial cash consideration consists of $275 million for the shares and an intellectual property license. The cash consideration will be offset by cash acquiredthird parties; and the ~~settlement of intercompany balances. The Company will also assume substantially all liabilities and debt of the joint venture entities. In addition~~dealer channel’s ability to ~~the foregoing payments, Hitachi will pay the book value of certain pre-existing inventory. Following the Termination, the Company will purchase John Deere-branded excavators, components,~~support and service parts from Hitachi under a new supply agreement with a duration that ranges from 5 to 30 years. The Company will also continue to manufacture 10-50 metric ton John Deere-branded excavators. The Termination is expected to close duringprecision technology solutions.
Factors affecting the ~~first half~~Company’s small agriculture and turf equipment operations include agricultural conditions; consumer confidence; weather conditions and the effects of ~~fiscal year 2022, subject to the receipt of certain required regulatory~~climate change; customer profitability; labor supply;

4937

~~approvals~~consumer borrowing patterns; consumer purchasing preferences; housing starts and supply; infrastructure investment; spending by municipalities and golf courses; and consumable input costs.

Factors affecting the Company’s construction and forestry equipment operations include consumer spending patterns; real estate and housing prices; the number of housing starts; interest rates; commodity prices such as ~~well~~oil and gas; the levels of public and non-residential construction; and investment in infrastructure. Prices for pulp, paper, lumber, and structural panels affect sales of forestry equipment.

Many of the factors affecting the production and precision agriculture, small agriculture and turf, and construction and forestry segments have been and may continue to be impacted by global economic conditions, including those resulting from the COVID pandemic and responses to the pandemic taken by governments and other authorities.

All of the Company’s businesses and its results are affected by general economic conditions in the global markets and industries in which the Company operates; customer confidence in general economic conditions; government spending and taxing; foreign currency exchange rates and their volatility, especially fluctuations in the value of the U.S. dollar; interest rates (including the availability of interbank overnight rate reference rates); inflation and deflation rates; changes in weather and climate patterns; the political and social stability of the global markets in which the Company operates; the effects of, or response to, terrorism and security threats; wars and other conflicts; natural disasters; and the spread of major epidemics or pandemics (including the COVID pandemic) and government and industry responses to such epidemics or pandemics, such as travel restrictions and extended shut downs of businesses.

Continued uncertainties related to the magnitude, duration, and persistent effects of the COVID pandemic may significantly adversely affect the Company’s business and outlook. These uncertainties include, among other things: the duration and impact of the resurgence in COVID cases in any country, state, or region; the emergence, contagiousness, and threat of new and different strains of virus; the availability, acceptance, and effectiveness of vaccines; additional closures as mandated or otherwise made necessary by governmental authorities; disruptions in the supply chain, including those caused by industry capacity constraints, material availability, and global logistics delays and constraints arising from, among other things, the transportation capacity of ocean shipping containers, and continued disruptions in the operations of one or more key suppliers, or the failure of any key suppliers; an increasingly competitive labor market due to a sustained labor shortage or increased turnover caused by the COVID pandemic; the Company’s ability to meet commitments to customers on a timely basis as a result of increased costs and supply and transportation challenges; increased logistics costs; additional operating costs due to continued remote working arrangements and other COVID-related challenges; increased risk of cyber-attacks on network connections used in remote working arrangements; increased privacy-related risks due to processing health-related personal information; legal claims related to personal protective equipment designed, made, or provided by the Company or alleged exposure to COVID on Company premises; absence of employees due to illness; and the impact of the pandemic on the Company’s customers and dealers. The sustainability of the economic recovery from the pandemic remains unclear and significant volatility could continue for a prolonged period. These factors, and others that are currently unknown or considered immaterial, could materially and adversely affect our business, liquidity, results of operations, and financial position.
Significant changes in market liquidity conditions, changes in the Company’s credit ratings, and any failure to comply with financial covenants in credit agreements could impact access to funding and funding costs, which could reduce the Company’s earnings and cash flows. Financial market conditions could also negatively impact customer access to capital for purchases of the Company’s products and customer confidence and purchase decisions, financing and repayment practices, and the number and size of customer delinquencies and defaults. A debt crisis in Europe, Latin America, or elsewhere could negatively impact currencies, global financial markets, social and political stability, funding sources and costs, asset and obligation values, customers, suppliers, demand for equipment, and Company operations and results. The Company’s investment management activities could be impaired by changes in the equity, bond, and other financial markets, which would negatively affect earnings.
Additional factors that could materially affect the Company’s operations, access to capital, expenses, and results include changes in, uncertainty surrounding, and the impact of governmental trade, banking, monetary, and fiscal policies, including financial regulatory reform and its effects on the consumer finance industry, derivatives, funding costs, and other areas; the potential default of the U.S. federal government if Congress fails to pass a 2022 budget resolution; governmental programs, policies, and tariffs for the benefit of certain industries or sectors; sanctions in particular jurisdictions, including those imposed in connection with the military confrontation between Russia and Ukraine; retaliatory actions to such changes in trade, banking, monetary, and fiscal policies; actions by central banks; actions by financial and securities regulators; actions by environmental, health, and safety regulatory agencies, including those related to engine emissions, carbon and other ~~customary~~greenhouse gas emissions, noise, and the effects of climate change; changes to GPS radio frequency bands or their permitted uses; changes in labor and immigration regulations; changes to accounting standards; changes in tax rates, estimates, laws, and regulations and Company actions related thereto; changes to and compliance with privacy, banking, and other regulations; changes

to and compliance with economic sanctions and export controls laws and regulations; compliance with U.S. and foreign laws when expanding to new markets and otherwise; and actions by other regulatory bodies.

Other factors that could materially affect the Company’s results include security breaches, cybersecurity attacks, technology failures, and other disruptions to the information technology infrastructure of the Company and its suppliers and dealers; security breaches with respect to the Company’s products; production, design, and technological innovations and difficulties, including capacity and supply constraints and prices; the loss of or challenges to intellectual property rights, whether through theft, infringement, counterfeiting, or otherwise; the availability and prices of strategically sourced materials, components, and whole goods; delays or disruptions in the Company’s supply chain or the loss of liquidity by suppliers; disruptions of infrastructures that support communications, operations, or distribution; the failure of customers, dealers, suppliers, or the Company to comply with laws, regulations, and Company policy pertaining to employment, human rights, health, safety, the environment, sanctions, export controls, anti-corruption, privacy and data protection, and other ethical business practices;introduction of legislation that could affect the Company’s business model and intellectual property, such as right to repair or right to modify; events that damage the Company’s reputation or brand; significant investigations, claims, lawsuits, or other legal proceedings; start-up of new plants and products; the success of new product initiatives or business strategies; changes in customer product preferences and sales mix; gaps or limitations in rural broadband coverage, capacity, and speed needed to support technology solutions; oil and energy prices, supplies, and volatility; the availability and cost of freight; actions of competitors in the various industries in which the Company competes, particularly price discounting; dealer practices, especially as to levels of new and used field inventories; changes in demand and pricing for used equipment and resulting impacts on lease residual values; labor relations and contracts, including work stoppages and other disruptions; changes in the ability to attract, develop, engage, and retain qualified personnel; acquisitions and divestitures of businesses; greater-than-anticipated transaction costs; the integration of new businesses; the failure or delay in closing ~~conditions.~~or realizing anticipated benefits of acquisitions, joint ventures, or divestitures; the inability to deliver precision technology and agricultural solutions to customers; the implementation of the smart industrial operating model and other organizational changes; the failure to realize anticipated savings or benefits of cost reduction, productivity, or efficiency efforts; difficulties related to the conversion and implementation of enterprise resource planning systems; changes in Company-declared dividends and common stock issuances and repurchases; changes in the level and funding of employee retirement benefits; changes in market values of investment assets, compensation, retirement, discount, and mortality rates which impact retirement benefit costs; and significant changes in health care costs.
The liquidity and ongoing profitability of John Deere Capital Corporation and the Company’s other financial services subsidiaries depend largely on timely access to capital in order to meet future cash flow requirements, and to fund operations, costs, and purchases of the Company’s products. If general economic conditions deteriorate or capital markets become more volatile, funding could be unavailable or insufficient. Additionally, customer confidence levels may result in declines in credit applications and increases in delinquencies and default rates, which could materially impact write-offs and provisions for credit losses.
The Company’s forward-looking statements are based upon assumptions relating to the factors described above, which are sometimes based upon estimates and data prepared by government agencies. Such estimates and data are often revised. The Company, ~~expects~~except as required by law, undertakes no obligation to ~~fund~~update or revise its forward-looking statements, whether as a result of new developments or otherwise. Further information concerning the ~~initial consideration~~Company and its businesses, including factors that could materially affect the Company’s financial results, is included in the Company’s other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. Risk Factors of the Company’s most recent annual report on Form 10-K and the ~~transaction expenses from cash~~Company’s subsequent quarterly reports on ~~hand.~~
Form 10-Q).
On August 25, 2021, the Company’s Board of Directors declared a quarterly dividend of $1.05 per share payable November 8, 2021, to stockholders of record on September 30, 2021. The new quarterly rate represents an additional 15 cents per share over the previous level, an increase of approximately 17 percent.

Supplemental Consolidating Information
The supplemental consolidating data presented on the subsequent pages is presented for informational purposes. The equipment operations represents the enterprise without financial services. The equipment operations includes the Company’s production and precision agriculture operations, small agriculture and turf operations, construction and forestry operations, and other corporate assets, liabilities, revenues, and expenses not reflected within financial services. Transactions between the “equipment operations” and “financial services” have been eliminated to arrive at the consolidated financial statements.
The equipment operations and financial services participate in different industries. The equipment operations primarily generate earnings and cash flows by manufacturing and distributing equipment, service parts, and technology solutions to dealers and ~~end users.~~retail customers. Financial services primarily finances sales and leases by dealers of new and used equipment that is largely manufactured by the Company. ~~The financial services’~~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. ~~These~~The two businesses are capitalized differently and have separate performance metrics. The supplemental consolidating data ~~assists~~is also used by management ~~in evaluating~~due to these ~~two businesses.~~

differences.

5039

DEERE & COMPANY
DEERE & COMPANY

DEERE & COMPANY

SUPPLEMENTAL CONSOLIDATING DATA
SUPPLEMENTAL CONSOLIDATING DATA

SUPPLEMENTAL CONSOLIDATING DATA

STATEMENT OF INCOME

For the Three Months Ended August 1, 2021 and August 2, 2020

STATEMENTS OF INCOME
STATEMENTS OF INCOME

For the Three Months Ended January 30, 2022 and January 31, 2021
For the Three Months Ended January 30, 2022 and January 31, 2021

(In millions of dollars) Unaudited
(In millions of dollars) Unaudited

(In millions of dollars) Unaudited

EQUIPMENT

FINANCIAL

EQUIPMENT

FINANCIAL

OPERATIONS¹

SERVICES

ELIMINATIONS

CONSOLIDATED

OPERATIONS¹

SERVICES

ELIMINATIONS

CONSOLIDATED

2021

2020

2021

2020

2021

2020

2021

2020

2022

2021

2022

2021

2022

2021

2022

2021

Net Sales and Revenues































Net sales

$
10,413

$
7,859

$
10,413

$
7,859

$
8,531

$
8,051

$
8,531

$
8,051

Finance and interest income

33

25

$
867

$
878

$
(75)

$
(65)

825

838
²

34

32

$
829

$
862

$
(63)

$
(60)

800

834
²

Other income

263

206

96

73

(70)

(51)

289

228
³

217

220

87

72

(66)

(65)

238

227
³

Total

10,709

8,090

963

951

(145)

(116)

11,527

8,925

8,782

8,303

916

934

(129)

(125)

9,569

9,112

Costs and Expenses

Cost of sales

7,574

5,836

(1)

7,574

5,835
⁴

6,696

5,806

(1)

(1)

6,695

5,805
⁴

Research and development expenses

394

370

394

370

402

366

402

366

Selling, administrative and general expenses

702

616

141

137

(2)

(1)

841

752
⁴

657

653

126

117

(2)

(1)

781

769
⁴

Interest expense

92

91

169

206

(17)

(7)

244

290
⁵

90

95

158

188

(19)

(12)

229

271
⁵

Interest compensation to Financial Services

58

58

(58)

(58)

⁵

44

48

(44)

(48)

⁵

Other operating expenses

32

94

360

363

(68)

(49)

324

408
⁶

39

67

335

369

(63)

(63)

311

373
⁶

Total

8,852

7,065

670

706

(145)

(116)

9,377

7,655

7,928

7,035

619

674

(129)

(125)

8,418

7,584

Income before Income Taxes

1,857

1,025

293

245

2,150

1,270

854

1,268

297

260

1,151

1,528

Provision for income taxes

425

395

66

62

491

457

182

252

68

56

250

308

Income after Income Taxes

1,432

630

227

183

1,659

813

672

1,016

229

204

901

1,220

Equity in income (loss) of unconsolidated affiliates

8

(2)

8

(2)

Equity in income of unconsolidated affiliates

1

4

2

3

4

Net Income

1,440

628

227

183

1,667

811

673

1,020

231

204

904

1,224

Less: Net income attributable to noncontrolling interests

1

1

Net Income Attributable to Deere & Company

$
1,440

$
628

$
227

$
183

$
1,667

$
811

$
672

$
1,020

$
231

$
204

$
903

$
1,224

¹ The equipment operations represents the enterprise without financial services. The equipment operations includes the Company’s 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.
² Elimination of financial services’ interest income earned from equipment operations.
³ Elimination of equipment operations’ margin from inventory transferred to equipment on operating leases (see Note 2)3).
⁴ Elimination of intercompany service fees.
⁵ Elimination of equipment operations’ interest expense to financial services.
⁶ Elimination of financial services’ lease depreciation expense related to inventory transferred to equipment on operating leases.

5140

DEERE & COMPANY

SUPPLEMENTAL CONSOLIDATING DATA (Continued)

STATEMENT OF INCOME

For the Nine Months Ended August 1, 2021 and August 2, 2020

(In millions of dollars) Unaudited

EQUIPMENT

FINANCIAL

OPERATIONS¹

SERVICES

ELIMINATIONS

CONSOLIDATED

2021

2020

2021

2020

2021

2020

2021

2020

Net Sales and Revenues

















Net sales

$
29,461

$
22,612

$
29,461

$
22,612

Finance and interest income

95

75

$
2,582

$
2,720

$
(209)

$
(211)

2,468

2,584
²

Other income

712

597

269

196

(213)

(180)

768

613
³

Total

30,268

23,284

2,851

2,916

(422)

(391)

32,697

25,809

Costs and Expenses

Cost of sales

21,309

17,208

(2)

(2)

21,307

17,206
⁴

Research and development expenses

1,137

1,201

1,137

1,201

Selling, administrative and general expenses

2,089

1,989

365

483

(6)

(5)

2,448

2,467
⁴

Interest expense

287

237

539

747

(43)

(15)

783

969
⁵

Interest compensation to Financial Services

166

195

(166)

(195)

⁵

Other operating expenses

140

186

1,098

1,187

(205)

(174)

1,033

1,199
⁶

Total

25,128

21,016

2,002

2,417

(422)

(391)

26,708

23,042

Income before Income Taxes

5,140

2,268

849

499

5,989

2,767

Provision for income taxes

1,130

632

198

120

1,328

752

Income after Income Taxes

4,010

1,636

651

379

4,661

2,015

Equity in income (loss) of unconsolidated affiliates

18

(22)

3

2

21

(20)

Net Income

4,028

1,614

654

381

4,682

1,995

Less: Net income attributable to noncontrolling interests

2

2

2

2

Net Income Attributable to Deere & Company

$
4,026

$
1,612

$
654

$
381

$
4,680

$
1,993

¹ The equipment operations represents the enterprise without financial services. The equipment operations includes the Company’s 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.
² ~~Elimination of financial services’ interest income earned from equipment operations.~~
³ ~~Elimination of equipment operations’ margin from inventory transferred to equipment on operating leases (see Note 2).~~
⁴ ~~Elimination of intercompany service fees.~~
⁵ ~~Elimination of equipment operations’ interest expense to financial services.~~
⁶ ~~Elimination of financial services’ lease depreciation expense related to inventory transferred to equipment on operating leases.~~

DEERE & COMPANY

SUPPLEMENTAL CONSOLIDATING DATA (Continued)

CONDENSED BALANCE SHEETS

(In millions of dollars) Unaudited

EQUIPMENT

FINANCIAL

OPERATIONS¹

SERVICES

ELIMINATIONS

CONSOLIDATED

Jan 30

Oct 31

Jan 31

Jan 30

Oct 31

Jan 31

Jan 30

Oct 31

Jan 31

Jan 30

Oct 31

Jan 31

2022

2021

2021

2022

2021

2021

2022

2021

2021

2022

2021

2021

Assets



































Cash and cash equivalents

$
3,596

$
7,188

$
6,074

$
876

$
829

$
888

$
4,472

$
8,017

$
6,962

Marketable securities

2

3

8

733

725

659

735

728

667

Receivables from unconsolidated affiliates

5,340

5,591

5,151

$
(5,307)

$
(5,564)

$
(5,123)

33

27

28
⁷

Trade accounts and notes receivable – net

996

1,155

900

4,843

3,895

5,341

(984)

(842)

(1,204)

4,855

4,208

5,037
⁸

Financing receivables – net

56

73

103

33,135

33,726

29,335

33,191

33,799

29,438

Financing receivables securitized – net

9

10

18

3,507

4,649

3,913

3,516

4,659

3,931

Other receivables

1,785

1,602

1,010

153

159

151

(35)

(23)

(20)

1,903

1,738

1,141
⁸

Equipment on operating leases – net

6,624

6,988

7,030

6,624

6,988

7,030

Inventories

7,935

6,781

5,956

7,935

6,781

5,956

Property and equipment – net

5,629

5,783

5,703

36

37

38

5,665

5,820

5,741

Investments in unconsolidated affiliates

153

153

157

23

22

21

176

175

178

Goodwill

3,192

3,291

3,194

3,192

3,291

3,194

Other intangible assets – net

1,209

1,275

1,342

1,209

1,275

1,342

Retirement benefits

3,095

3,539

903

65

64

60

(2)

(2)

(57)

3,158

3,601

906
⁹

Deferred income taxes

1,095

1,215

1,797

50

53

51

(222)

(231)

(292)

923

1,037

1,556
¹⁰

Other assets

1,577

1,493

1,485

454

477

891

(4)

(3)

2,027

1,970

2,373

Total Assets

$
35,669

$
39,152

$
33,801

$
50,499

$
51,624

$
48,378

$
(6,554)

$
(6,662)

$
(6,699)

$
79,614

$
84,114

$
75,480

Liabilities and Stockholders’ Equity

Liabilities

Short-term borrowings

$
1,516

$
1,509

$
394

$
9,474

$
9,410

$
8,830

$
10,990

$
10,919

$
9,224

Short-term securitization borrowings

8

10

17

3,474

4,595

3,952

3,482

4,605

3,969

Payables to unconsolidated affiliates

172

143

119

5,307

5,564

5,123

$
(5,307)

$
(5,564)

$
(5,123)

172

143

119
⁷

Accounts payable and accrued expenses

9,532

11,055

8,672

1,970

2,015

1,959

(1,023)

(865)

(1,227)

10,479

12,205

9,404
⁸

Deferred income taxes

425

438

394

353

369

430

(222)

(231)

(292)

556

576

532
¹⁰

Long-term borrowings

8,760

8,915

10,139

24,078

23,973

22,633

32,838

32,888

32,772

Retirement benefits and other liabilities

3,182

4,239

5,325

109

107

106

(2)

(2)

(57)

3,289

4,344

5,374
⁹

Total liabilities

23,595

26,309

25,060

44,765

46,033

43,033

(6,554)

(6,662)

(6,699)

61,806

65,680

61,394

Commitments and contingencies (Note 16)

Stockholders’ Equity

Total Deere & Company stockholders’ equity

17,804

18,431

14,083

5,734

5,591

5,345

(5,734)

(5,591)

(5,345)

17,804

18,431

14,083
¹¹

Noncontrolling interests

4

3

3

4

3

3

Financial Services’ equity

(5,734)

(5,591)

(5,345)

5,734

5,591

5,345

¹¹

Adjusted total stockholders’ equity

12,074

12,843

8,741

5,734

5,591

5,345

17,808

18,434

14,086

Total Liabilities and Stockholders’ Equity

$
35,669

$
39,152

$
33,801

$
50,499

$
51,624

$
48,378

$
(6,554)

$
(6,662)

$
(6,699)

$
79,614

$
84,114

$
75,480

DEERE & COMPANY

SUPPLEMENTAL CONSOLIDATING DATA (Continued)

CONDENSED BALANCE SHEET

(In millions of dollars) Unaudited

EQUIPMENT

FINANCIAL

OPERATIONS¹

SERVICES

ELIMINATIONS

CONSOLIDATED

Aug 1

Nov 1

Aug 2

Aug 1

Nov 1

Aug 2

Aug 1

Nov 1

Aug 2

Aug 1

Nov 1

Aug 2

2021

2020

2020

2021

2020

2020

2021

2020

2020

2021

2020

2020

Assets





































Cash and cash equivalents

$
6,638

$
6,145

$
7,440

$
881

$
921

$
750

$
7,519

$
7,066

$
8,190

Marketable securities

3

7

8

685

634

632

688

641

640

Receivables from unconsolidated affiliates

5,942

5,290

3,619

$
(5,913)

$
(5,259)

$
(3,593)

29

31

26
⁷

Trade accounts and notes receivable – net

1,127

1,013

1,251

5,319

4,238

5,595

(1,178)

(1,080)

(1,373)

5,268

4,171

5,473
⁸

Financing receivables – net

89

106

111

31,360

29,644

27,703

31,449

29,750

27,814

Financing receivables securitized – net

13

26

37

5,388

4,677

5,432

5,401

4,703

5,469

Other receivables

1,516

1,117

1,083

171

151

162

(14)

(48)

(28)

1,673

1,220

1,217
⁸

Equipment on operating leases – net

6,982

7,298

7,158

6,982

7,298

7,158

Inventories

6,410

4,999

5,650

6,410

4,999

5,650

Property and equipment – net

5,612

5,778

5,711

37

39

43

5,649

5,817

5,754

Investments in unconsolidated affiliates

166

174

180

22

19

19

188

193

199

Goodwill

3,148

3,081

2,984

3,148

3,081

2,984

Other intangible assets – net

1,267

1,327

1,301

1,267

1,327

1,301

Retirement benefits

986

859

972

63

59

59

(59)

(55)

990

863

1,031
⁹

Deferred income taxes

1,959

1,763

1,865

59

45

56

(251)

(309)

(387)

1,767

1,499

1,534
¹⁰

Other assets

1,581

1,439

1,566

680

994

1,260

(1)

(1)

(2)

2,260

2,432

2,824

Total Assets

$
36,457

$
33,124

$
33,778

$
51,647

$
48,719

$
48,869

$
(7,416)

$
(6,752)

$
(5,383)

$
80,688

$
75,091

$
77,264

Liabilities and Stockholders’ Equity

Liabilities

Short-term borrowings

$
1,376

$
292

$
853

$
9,028

$
8,290

$
8,222

$
10,404

$
8,582

$
9,075

Short-term securitization borrowings

12

26

37

5,265

4,656

5,324

5,277

4,682

5,361

Payables to unconsolidated affiliates

116

104

80

5,913

5,260

3,593

$
(5,913)

$
(5,259)

$
(3,593)

116

105

80
⁷

Accounts payable and accrued expenses

10,368

9,114

8,834

1,916

2,127

2,134

(1,193)

(1,129)

(1,403)

11,091

10,112

9,565
⁸

Deferred income taxes

371

385

398

395

443

468

(251)

(309)

(387)

515

519

479
¹⁰

Long-term borrowings

8,982

10,124

10,217

23,298

22,610

23,820

32,280

32,734

34,037

Retirement benefits and other liabilities

5,219

5,366

5,671

112

102

105

(59)

(55)

5,272

5,413

5,776
⁹

Total liabilities

26,444

25,411

26,090

45,927

43,488

43,666

(7,416)

(6,752)

(5,383)

64,955

62,147

64,373

Commitments and contingencies (Note 18)

Stockholders’ Equity

Total Deere & Company stockholders’ equity

15,731

12,937

12,888

5,720

5,231

5,203

(5,720)

(5,231)

(5,203)

15,731

12,937

12,888
¹¹

Noncontrolling interests

2

7

3

2

7

3

Financial Services’ equity

(5,720)

(5,231)

(5,203)

5,720

5,231

5,203

¹¹

Adjusted total stockholders’ equity

10,013

7,713

7,688

5,720

5,231

5,203

15,733

12,944

12,891

Total Liabilities and Stockholders’ Equity

$
36,457

$
33,124

$
33,778

$
51,647

$
48,719

$
48,869

$
(7,416)

$
(6,752)

$
(5,383)

$
80,688

$
75,091

$
77,264

¹ The equipment operations represents the enterprise without financial services. The equipment operations includes the Company’s 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.
⁷ Elimination of receivables / payables between equipment operations and financial services.
⁸ ~~Reclassification~~Primarily reclassification of sales incentive accruals on receivables sold to financial services.
⁹ Reclassification of net pension assets / liabilities.
¹⁰ Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions.
¹¹ Elimination of financial services’ equity.

5341


DEERE & COMPANY	DEERE & COMPANY																			DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA (Continued)	SUPPLEMENTAL CONSOLIDATING DATA (Continued)																			SUPPLEMENTAL CONSOLIDATING DATA (Continued)
STATEMENT OF CASH FLOWS
For the Nine Months Ended August 1, 2021 and August 2, 2020
STATEMENTS OF CASH FLOWS																				STATEMENTS OF CASH FLOWS
For the Three Months Ended January 30, 2022 and January 31, 2021																				For the Three Months Ended January 30, 2022 and January 31, 2021
(In millions of dollars) Unaudited																				(In millions of dollars) Unaudited
		EQUIPMENT					FINANCIAL														EQUIPMENT				FINANCIAL
		OPERATIONS¹					SERVICES				ELIMINATIONS				CONSOLIDATED						OPERATIONS¹				SERVICES				ELIMINATIONS				CONSOLIDATED
		2021			2020		2021		2020		2021		2020		2021		2020				2022		2021		2022		2021		2022		2021		2022		2021
Cash Flows from Operating Activities
Net income		$	4,028		$	1,614	$	654	$	381					$	4,682	$	1,995			$	673	$	1,020	$	231	$	204					$	904	$	1,224
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision (credit) for credit losses			5			6		(22)		117						(17)		123				(2)		(2)		2		(3)								(5)
Provision for depreciation and amortization			803			787		866		925	$	(100)	$	(98)		1,569		1,614	¹²			257		279		266		294	$	(37)	$	(35)		486		538	¹²
Impairment charges			50			115				32						50		147						50												50
Share-based compensation expense												64		63		64		63	¹³											18		15		18		15	¹³
Undistributed earnings of unconsolidated affiliates			246			257		(2)		(1)		(240)		(261)		4		(5)	¹⁴			42		154		(2)		(1)		(42)		(135)		(2)		18	¹⁴
Credit for deferred income taxes			(218)			(57)		(53)		(103)						(271)		(160)
Provision (credit) for deferred income taxes																						223		(27)		(13)		(11)						210		(38)
Changes in assets and liabilities:
Trade, notes, and financing receivables related to sales			(73)			116						(371)		510		(444)		626	^{15, 17, 18}			158		156						(264)		(253)		(106)		(97)	^{15, 17, 18}
Inventories			(1,367)			387						(450)		(388)		(1,817)		(1)	¹⁶			(1,277)		(842)						(20)		(84)		(1,297)		(926)	¹⁶
Accounts payable and accrued expenses			860			(567)		(20)		(38)		(98)		33		742		(572)	¹⁷			(1,346)		(529)		(66)		(53)		(142)		(123)		(1,554)		(705)	¹⁷
Accrued income taxes payable/receivable			43			(25)		(9)		29						34		4				(192)		173		8		(43)						(184)		130
Retirement benefits			8			77		5		11						13		88				(1,012)		(16)		2		2						(1,010)		(14)
Other			(200)			145		26		89		(121)		(99)		(295)		135	^{12, 13, 16}			(12)		(68)		(17)		31		11		(10)		(18)		(47)	^{12, 13, 16}
Net cash provided by operating activities			4,185			2,855		1,445		1,442		(1,316)		(240)		4,314		4,057
Net cash provided by (used for) operating activities																						(2,488)		348		411		420		(476)		(625)		(2,553)		143

Cash Flows from Investing Activities				��
Collections of receivables (excluding receivables related to sales)								15,704		14,352		(1,224)		(1,115)		14,480		13,237	¹⁵							6,845		6,416		(410)		(417)		6,435		5,999	¹⁵
Proceeds from maturities and sales of marketable securities			4					78		70						82		70								21		20						21		20
Proceeds from sales of equipment on operating leases								1,510		1,310						1,510		1,310								479		460						479		460
Cost of receivables acquired (excluding receivables related to sales)								(18,349)		(15,367)		1,188		918		(17,161)		(14,449)	¹⁵							(5,719)		(5,559)		116		259		(5,603)		(5,300)	¹⁵
Acquisitions of businesses, net of cash acquired			(19)													(19)						(24)		(19)										(24)		(19)
Purchases of marketable securities								(115)		(91)						(115)		(91)								(48)		(39)						(48)		(39)
Purchases of property and equipment			(491)			(591)		(1)		(3)						(492)		(594)				(193)		(154)										(193)		(154)
Cost of equipment on operating leases acquired								(1,818)		(1,836)		608		524		(1,210)		(1,312)	¹⁶							(419)		(408)		28		114		(391)		(294)	¹⁶
Decrease (increase) in trade and wholesale receivables								(481)		423		481		(423)					¹⁵
Increase in trade and wholesale receivables																										(684)		(523)		684		523					¹⁵
Collateral on derivatives – net			(4)			(6)		(185)		330						(189)		324				4				(17)		(88)						(13)		(88)
Other			(14)			(55)		(5)		(46)		31		89		12		(12)	^{14, 18}			(22)		(8)		(9)		(9)		16		11		(15)		(6)	¹⁸
Net cash used for investing activities			(524)			(652)		(3,662)		(858)		1,084		(7)		(3,102)		(1,517)
Net cash provided by (used for) investing activities																						(235)		(181)		449		270		434		490		648		579

Cash Flows from Financing Activities
Increase (decrease) in total short-term borrowings			(93)			(32)		1,022		202						929		170				123		(20)		(1,141)		(675)						(1,018)		(695)
Change in intercompany receivables/payables			(624)			(1,468)		624		1,468												150		264		(150)		(264)
Proceeds from long-term borrowings						4,592		5,877		3,739						5,877		8,331				18				2,335		1,757						2,353		1,757
Payments of long-term borrowings			(71)			(179)		(5,101)		(5,618)						(5,172)		(5,797)				(124)		(20)		(1,816)		(1,421)						(1,940)		(1,441)
Proceeds from issuance of common stock			136			111										136		111				11		71										11		71
Repurchases of common stock			(1,780)			(263)										(1,780)		(263)				(623)		(352)										(623)		(352)
Dividends paid			(761)			(718)		(240)		(260)		240		260		(761)		(718)	¹⁴			(327)		(242)		(42)		(135)		42		135		(327)		(242)	¹⁴
Other			(50)			(86)		(22)		(11)		(8)		(13)		(80)		(110)	¹⁴			(22)		(22)		(11)		(9)						(33)		(31)
Net cash provided by (used for) financing activities			(3,243)			1,957		2,160		(480)		232		247		(851)		1,724
Net cash used for financing activities																						(794)		(321)		(825)		(747)		42		135		(1,577)		(933)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash			77			95		29		(15)						106		80				(75)		83		1		20						(74)		103

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash			495			4,255		(28)		89						467		4,344				(3,592)		(71)		36		(37)						(3,556)		(108)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period			6,156			3,196		1,016		760						7,172		3,956				7,200		6,156		925		1,016						8,125		7,172
Cash, Cash Equivalents, and Restricted Cash at End of Period		$	6,651		$	7,451	$	988	$	849					$	7,639	$	8,300			$	3,608	$	6,085	$	961	$	979					$	4,569	$	7,064

¹ The equipment operations represents the enterprise without financial services. The equipment operations includes the Company’s 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.

¹² Elimination of depreciation on leases related to inventory transferred to equipment on operating leases (see Note 2)3).

¹³ Reclassification of share-based compensation expense.

¹⁴ Elimination of dividends from financial services to the equipment operations, which are included in the equipment ~~operations’~~operations net cash provided by operating ~~activities, and capital investments in financial services from the equipment operations.~~activities.

¹⁵ Primarily reclassification of receivables related to the sale of equipment.

¹⁶ Reclassification of direct lease agreements with ~~direct~~retail customers.

¹⁷ Reclassification of sales incentive accruals on receivables sold to financial services.

¹⁸ Elimination and reclassification of the effects of financial ~~services’~~services partial financing of the construction and forestry retail locations sales and subsequent collection of those amounts.

5442

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See the Company’s most ~~recent~~recently filed annual ~~report filed~~ on Form 10-K (Part II, Item 7A). There has been no material change in this information.

Item 4. CONTROLS AND PROCEDURES
The Company’s principal executive officer and its principal financial officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) were effective as of ~~August 1, 2021,~~January 30, 2022, based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Exchange Act. During the ~~third~~first quarter of 2022, there were no changes that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings
The Company is subject to various unresolved legal actions which arise in the normal course of its business, the most prevalent of which relate to product liability (including asbestos-related liability), retail credit, employment, patent, and trademark matters. Item 103 of the SEC’s Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions that John Deere reasonably believes could exceed $300,000. The following matter is disclosed solely pursuant to that requirement: on October 3, 2018, the Provincia Santa Fe Ministerio de Medio Ambiente (MoE) in Argentina issued a Notice of Violation to Industrias John Deere Argentina (IJDA) in connection with alleged groundwater contamination at the site; the Company worked with the appropriate authorities to implement corrective actions to remediate the site. On December 16, 2019, the MoE issued a Notice of Fine. The current amount of the fine is approximately $401,000. IJDA has filed an appeal, which is still pending. On March 26, 2021, IJDA received a notice from the MoE requesting payment of the fine. On July 5, 2021, IJDA communicated an objection to the MoE and requested the fine be vacated or, in the alternative, reduced. The Company believes the reasonably possible range of losses for ~~this and other~~these unresolved legal actions would not have a material effect on its consolidated financial statements.

Item 1A. Risk Factors
See the Company’s most ~~recent~~recently filed annual report ~~filed~~ on Form 10-K (Part I, Item 1A). There has been no material change in this information. The risks described in the annual report on Form 10-K, and the “Safe Harbor Statement” in this report, are not the only risks faced by the Company. Additional risks and uncertainties may also materially affect the Company’s business, financial condition, or operating results. One should not consider the risk factors to be a complete discussion of risks, uncertainties, and assumptions.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The Company’s purchases of its common stock during the ~~third~~first quarter of ~~2021~~2022 were as follows:






Total Number of







Total Number of


Shares Purchased as

Maximum Number of

Shares Purchased as

Maximum Number of

Total Number of

Part of Publicly

Shares that May Yet Be

Total Number of

Part of Publicly

Shares that May Yet Be

Shares

Announced Plans or

Purchased under the

Shares

Announced Plans or

Purchased under the

Purchased

Average Price

Programs (1)

Plans or Programs (1)

Purchased (2)

Average Price

Programs (1)

Plans or Programs (1)

Period

(thousands)

Paid Per Share

(thousands)

(millions)

(thousands)

Paid Per Share

(thousands)

(millions)

May 3 to May 30

630

$
372.74

630

19.6

May 31 to Jun 27

679

346.88

679

18.9

Jun 28 to Aug 1

760

349.45

760

18.2

Nov 1 to Nov 28

616

$
354.70

616

15.0

Nov 29 to Dec 26

666

350.83

627

14.4

Dec 27 to Jan 30

459

371.69

459

13.9

Total

2,069

2,069

1,741

1,702

(1) ~~During the third quarter of 2021, the~~The Company ~~had~~has a share repurchase plan that was announced in December 2019 to purchase up to $8,000 million of shares of the Company’s common stock. The maximum number of shares that may yet be purchased under ~~this~~the December 2019 plan was based on the end of the ~~third~~first quarter closing share price of ~~$361.59~~$373.79 per share. At the end of the ~~third~~first quarter of ~~2021, $6,569~~2022, $5,202 million of common stock ~~remained~~remains to be purchased under the plan.
(2) In the first quarter of 2022, 39 thousand shares were purchased from plan participants at a market price to pay payroll taxes on certain restricted stock awards. The shares were valued at a weighted-average market price of $358.36.

Item 3. Defaults Upon Senior Securities
None.

Item 4. Mine Safety Disclosures
Not applicable.

Item 5. Other Information
~~Not applicable.~~Disclosure Pursuant to Section 13(r) of the Exchange Act.
Under Section 13(r) of the Exchange Act, the Company is required to disclose in its periodic reports if it or any of its affiliates knowingly conducted transactions or dealings with entities or individuals designated pursuant to certain executive orders issued by the U.S. government. On March 2, 2021, the U.S. Secretary of State designated the Russian Federal Security Service (FSB) as a blocked party under Executive Order 13382. On the same day, the U.S. Department of the Treasury’s Office of Foreign Assets Control updated General License No. 1B to authorize certain transactions and activities with the FSB related to the importation, distribution, or use of certain information technology products in the Russian Federation. In the ordinary course of business, including during the three-month period ended January 30, 2022, certain of the Company’s subsidiaries requested and/or received legally required administrative notifications with the FSB in connection with the importation and/or use of certain of the Company’s products in the Russian Federation, as authorized by General License No. 1B. Neither the Company nor its subsidiaries made any payments, nor did they receive gross revenues or net profits, in connection with these activities. The Company expects that certain of its subsidiaries will continue to engage with the FSB in activities necessary to conduct business in the Russian Federation in accordance with applicable U.S. laws and regulations so long as it remains lawful to do so.

Item 6. Exhibits
Certain instruments relating to long-term borrowings 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 file copies of such instruments upon request of the Commission.

3.1
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
Bylaws, as amended (Exhibit 3.1 to Form 8-K of registrant filed on December 3, 2020, Securities and Exchange Commission File Number 1-4121*)

31.1
Rule 13a-14(a)/15d-14(a) Certification

31.2
Rule 13a-14(a)/15d-14(a) Certification

32
Section 1350 Certifications (furnished herewith)

101.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. ~~Copies of these exhibits are available from the Company upon request.~~

5645

SIGNATURES

Pursuant to the requirements 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

Date:
~~August 26, 2021~~February 24, 2022

By:
/s/ Ryan D. Campbell

Ryan D. Campbell
Senior Vice President and Chief Financial Officer ~~(Principal~~

(Principal Financial Officer and
Principal Accounting Officer)

5746


ITEM 1. FINANCIAL STATEMENTS
DEERE & COMPANY
STATEMENT OF CONSOLIDATED INCOME
For the Three Months Ended August 1, 2021 and August 2, 2020
(In millions of dollars and shares except per share amounts) Unaudited
	2021		2020
Net Sales and Revenues
Net sales	$	10,413	$	7,859
Finance and interest income		825		838
Other income		289		228
Total		11,527		8,925

Costs and Expenses
Cost of sales		7,574		5,835
Research and development expenses		394		370
Selling, administrative and general expenses		841		752
Interest expense		244		290
Other operating expenses		324		408
Total		9,377		7,655

Income of Consolidated Group before Income Taxes		2,150		1,270
Provision for income taxes		491		457

Income of Consolidated Group		1,659		813
Equity in income (loss) of unconsolidated affiliates		8		(2)

Net Income		1,667		811
Less: Net income attributable to noncontrolling interests
Net Income Attributable to Deere & Company	$	1,667	$	811

Per Share Data
Basic	$	5.36	$	2.59
Diluted	$	5.32	$	2.57

Average Shares Outstanding
Basic		311.0		313.0
Diluted		313.4		315.8


	November 1		Cumulative Effect		November 2
	2020		from Adoption		2020
Assets
Trade accounts and note receivable - net	$	4,171	$	2	$	4,173
Financing receivables - net		29,750		(27)		29,723
Financing receivables securitized - net		4,703		(4)		4,699
Deferred income taxes		1,499		1		1,500

Liabilities
Accounts payable and accrued expenses	$	10,112	$	14	$	10,126
Deferred income taxes		519		(7)		512

Stockholders’ equity
Retained earnings	$	31,646	$	(35)	$	31,611


~~No. 2018-15~~	Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which amends ASC 350-40, Intangibles – Goodwill and Other – Internal-Use Software
~~No. 2019-04~~	~~Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~
~~No. 2021-01~~	~~Reference Rate Reform (Topic 848): Scope~~


~~No. 2019-12~~	~~Simplifying the Accounting for Income Taxes, which amends ASC 740, Income Taxes~~
~~No. 2020-08~~	~~Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs~~


	Three Months Ended August 1, 2021
	Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total
Primary geographical markets:
United States	$	1,995	$	1,753	$	1,559	$	605	$	5,912
Canada		253		153		285		162		853
Western Europe		566		679		455		27		1,727
Central Europe and CIS		398		117		241		10		766
Latin America		758		125		227		60		1,170
Asia, Africa, Australia, New Zealand, and Middle East		368		385		308		38		1,099
Total	$	4,338	$	3,212	$	3,075	$	902	$	11,527

Major product lines:
Production agriculture	$	4,179							$	4,179
Small agriculture			$	2,355						2,355
Turf				719						719
Construction					$	1,283				1,283
Compact construction						398				398
Roadbuilding						948				948
Forestry						342				342
Financial products		13		12		5	$	902		932
Other		146		126		99				371
Total	$	4,338	$	3,212	$	3,075	$	902	$	11,527

Timing of revenue recognition:
Revenue recognized at a point in time	$	4,293	$	3,191	$	3,052	$	27	$	10,563
Revenue recognized over time		45		21		23		875		964
Total	$	4,338	$	3,212	$	3,075	$	902	$	11,527


	Nine Months Ended August 1, 2021
	Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total
Primary geographical markets:
United States	$	5,814	$	5,014	$	4,242	$	1,812	$	16,882
Canada		617		376		793		469		2,255
Western Europe		1,604		1,903		1,408		77		4,992
Central Europe and CIS		1,090		361		628		28		2,107
Latin America		1,971		305		617		179		3,072
Asia, Africa, Australia, New Zealand, and Middle East		991		1,230		1,054		114		3,389
Total	$	12,087	$	9,189	$	8,742	$	2,679	$	32,697

Major product lines:
Production agriculture	$	11,656							$	11,656
Small agriculture			$	6,583						6,583
Turf				2,268						2,268
Construction					$	3,402				3,402
Compact construction						1,140				1,140
Roadbuilding						2,924				2,924
Forestry						975				975
Financial products		41		32		17	$	2,679		2,769
Other		390		306		284				980
Total	$	12,087	$	9,189	$	8,742	$	2,679	$	32,697

Timing of revenue recognition:
Revenue recognized at a point in time	$	11,960	$	9,137	$	8,666	$	77	$	29,840
Revenue recognized over time		127		52		76		2,602		2,857
Total	$	12,087	$	9,189	$	8,742	$	2,679	$	32,697


	Three Months Ended January 30, 2022
	Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total
Primary geographic markets:
United States	$	1,608	$	1,438	$	1,260	$	573	$	4,879
Canada		139		122		332		152		745
Western Europe		467		532		358		26		1,383
Central Europe and CIS		202		126		195		11		534
Latin America		776		104		228		68		1,176
Asia, Africa, Australia, New Zealand, and Middle East		241		352		219		40		852
Total	$	3,433	$	2,674	$	2,592	$	870	$	9,569

Major product lines:
Production agriculture	$	3,283							$	3,283
Small agriculture			$	1,932						1,932
Turf				627						627
Construction					$	1,175				1,175
Compact construction						321				321
Roadbuilding						692				692
Forestry						305				305
Financial products		12		11		5	$	870		898
Other		138		104		94				336
Total	$	3,433	$	2,674	$	2,592	$	870	$	9,569

Revenue recognized:
At a point in time	$	3,396	$	2,654	$	2,570	$	24	$	8,644
Over time		37		20		22		846		925
Total	$	3,433	$	2,674	$	2,592	$	870	$	9,569


	Three Months Ended August 2, 2020										Three Months Ended January 31, 2021
	Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total		Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total
Primary geographical markets:
Primary geographic markets:
United States	$	1,617	$	1,228	$	1,048	$	632	$	4,525	$	1,608	$	1,424	$	1,202	$	598	$	4,832
Canada		199		96		194		146		635		112		79		188		154		533
Western Europe		517		586		376		22		1,501		449		486		439		24		1,398
Central Europe and CIS		219		100		178		9		506		161		84		178		9		432
Latin America		512		90		124		51		777		513		77		170		59		819
Asia, Africa, Australia, New Zealand, and Middle East		312		319		318		32		981		304		401		353		40		1,098
Total	$	3,376	$	2,419	$	2,238	$	892	$	8,925	$	3,147	$	2,551	$	2,530	$	884	$	9,112

Major product lines:
Production agriculture	$	3,210							$	3,210	$	3,011							$	3,011
Small agriculture			$	1,704						1,704			$	1,812						1,812
Turf				651						651				651						651
Construction					$	817				817					$	887				887
Compact construction						303				303						346				346
Roadbuilding						818				818						910				910
Forestry						241				241						290				290
Financial products		14		10		5	$	892		921		16		10		7	$	884		917
Other		152		54		54				260		120		78		90				288
Total	$	3,376	$	2,419	$	2,238	$	892	$	8,925	$	3,147	$	2,551	$	2,530	$	884	$	9,112

Timing of revenue recognition:
Revenue recognized at a point in time	$	3,337	$	2,402	$	2,210	$	28	$	7,977
Revenue recognized over time		39		17		28		864		948
Revenue recognized:
At a point in time											$	3,105	$	2,535	$	2,500	$	24	$	8,164
Over time												42		16		30		860		948
Total	$	3,376	$	2,419	$	2,238	$	892	$	8,925	$	3,147	$	2,551	$	2,530	$	884	$	9,112


	Nine Months Ended August 2, 2020
	Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total
Primary geographical markets:
United States	$	4,892	$	3,833	$	3,331	$	1,880	$	13,936
Canada		460		239		532		453		1,684
Western Europe		1,422		1,570		1,073		66		4,131
Central Europe and CIS		608		269		477		27		1,381
Latin America		1,290		225		418		177		2,110
Asia, Africa, Australia, New Zealand, and Middle East		722		924		825		96		2,567
Total	$	9,394	$	7,060	$	6,656	$	2,699	$	25,809

Major product lines:
Production agriculture	$	8,915							$	8,915
Small agriculture			$	4,953						4,953
Turf				1,925						1,925
Construction					$	2,535				2,535
Compact construction						930				930
Roadbuilding						2,146				2,146
Forestry						769				769
Financial products		48		24		18	$	2,699		2,789
Other		431		158		258				847
Total	$	9,394	$	7,060	$	6,656	$	2,699	$	25,809

Timing of revenue recognition:
Revenue recognized at a point in time	$	9,277	$	7,017	$	6,576	$	80	$	22,950
Revenue recognized over time		117		43		80		2,619		2,859
Total	$	9,394	$	7,060	$	6,656	$	2,699	$	25,809


									Total
					Unrealized		Unrealized		Accumulated
	Retirement		Cumulative		Gain (Loss)		Gain (Loss)		Other
	Benefits		Translation		on		on		Comprehensive
	Adjustment		Adjustment		Derivatives		Debt Securities		Income (Loss)
Balance November 3, 2019	$	(3,915)	$	(1,651)	$	(60)	$	19	$	(5,607)
Other comprehensive income (loss) items before reclassification		179		(75)		(14)		22		112
Amounts reclassified from accumulated other comprehensive income		159		8		10		(1)		176
Net current period other comprehensive income (loss)		338		(67)		(4)		21		288
Balance August 2, 2020	$	(3,577)	$	(1,718)	$	(64)	$	40	$	(5,319)

Balance November 1, 2020	$	(3,918)	$	(1,596)	$	(58)	$	33	$	(5,539)
Other comprehensive income (loss) items before reclassification		27		319		(1)		(7)		338
Amounts reclassified from accumulated other comprehensive income		181				9				190
Net current period other comprehensive income (loss)		208		319		8		(7)		528
Balance August 1, 2021	$	(3,710)	$	(1,277)	$	(50)	$	26	$	(5,011)


	Before		Tax		After
	Tax		(Expense)		Tax
Three Months Ended August 1, 2021	Amount		Credit		Amount
Cumulative translation adjustment	$	(112)	$	(2)	$	(114)
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)		(1)				(1)
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest expense		3		(1)		2
Net unrealized gain (loss) on derivatives		2		(1)		1
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)		11		(3)		8
Net unrealized gain (loss) on debt securities		11		(3)		8
Retirement benefits adjustment:
Net actuarial gain (loss)		(5)		1		(4)
Reclassification to Other operating expenses through amortization of:
Actuarial (gain) loss		71		(17)		54
Prior service (credit) cost		1				1
Settlements		4		(1)		3
Net unrealized gain (loss) on retirement benefits adjustment		71		(17)		54
Total other comprehensive income (loss)	$	(28)	$	(23)	$	(51)


	Year of Origination																January 30, 2022
	2021		2020		2019		2018		2017		Prior		Revolving Charge Accounts		Total		2022		2021		2020		2019		2018		Prior Years		Revolving Charge Accounts		Total
Customer receivables:
Retail customer receivables:
Agriculture and turf
Current	$	9,159	$	7,516	$	3,938	$	2,053	$	910	$	317	$	3,658	$	27,551	$	2,492	$	11,580	$	5,988	$	3,038	$	1,440	$	761	$	2,634	$	27,933
30-59 days past due		38		54		35		19		7		3		13		169		5		82		52		30		15		6		25		215
60-89 days past due		14		28		15		6		3		1		4		71		1		23		18		10		5		3		5		65
90+ days past due				1												1				1												1
Non-performing		12		58		63		42		22		30		6		233		1		33		58		52		31		36		6		217
Construction and forestry
Current		2,327		1,845		938		357		84		13		86		5,650		764		2,795		1,376		615		204		49		81		5,884
30-59 days past due		35		44		26		9		4		1		3		122		8		68		35		21		6		2		3		143
60-89 days past due		13		19		10		5		1		1		1		50				30		17		7		3		1		1		59
90+ days past due		4		2		9		5		6		2				28				2		3		3		1		8				17
Non-performing		12		47		41		19		8		4		1		132				33		48		37		14		7		1		140
Total customer receivables	$	11,614	$	9,614	$	5,075	$	2,515	$	1,045	$	372	$	3,772	$	34,007
Total retail customer receivables																	$	3,271	$	14,647	$	7,595	$	3,813	$	1,719	$	873	$	2,756	$	34,674


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


	November 1, 2020						August 2, 2020
	Retail Notes & Financing Leases		Revolving Charge Accounts		Total		Retail Notes & Financing Leases		Revolving Charge Accounts		Total
Customer receivables:
Agriculture and turf
Current	$	21,597	$	3,787	$	25,384	$	20,261	$	3,876	$	24,137
30-59 days past due		135		13		148		148		20		168
60-89 days past due		64		4		68		77		3		80
90+ days past due		2				2		4				4
Non-performing		263		6		269		329		8		337
Construction and forestry
Current		4,859		88		4,947		4,582		85		4,667
30-59 days past due		111		2		113		90		3		93
60-89 days past due		55		1		56		40		1		41
90+ days past due		14				14		12				12
Non-performing		106		1		107		139		1		140
Total customer receivables	$	27,206	$	3,902	$	31,108	$	25,682	$	3,997	$	29,679


	January 31, 2021
	2021		2020		2019		2018		2017		Prior Years		Revolving Charge Accounts		Total
Retail customer receivables:
Agriculture and turf
Current	$	2,531	$	9,427	$	5,129	$	2,817	$	1,400	$	686	$	2,564	$	24,554
30-59 days past due		4		65		49		30		13		7		27		195
60-89 days past due				20		17		11		5		3		5		61
90+ days past due						1										1
Non-performing				40		78		57		36		46		7		264
Construction and forestry
Current		737		2,251		1,276		573		164		39		77		5,117
30-59 days past due		5		53		32		17		6		1		3		117
60-89 days past due		1		15		16		7		3		1		1		44
90+ days past due				9		13		5		4		2				33
Non-performing				26		34		26		14		8		1		109
Total retail customer receivables	$	3,278	$	11,906	$	6,645	$	3,543	$	1,645	$	793	$	2,685	$	30,495


	Retail Notes		Revolving						Three Months Ended January 30, 2022
	& Financing		Charge		Wholesale				Retail Notes		Revolving
	Leases		Accounts		Receivables		Total		& Financing		Charge		Wholesale
Three Months Ended August 1, 2021
									Leases		Accounts		Receivables		Total
Allowance:
Beginning of period balance	$	152	$	19	$	7	$	178	$	138	$	21	$	7	$	166
Provision		3						3
Provision (credit)										13		(9)		(2)		2
Write-offs		(14)		(9)				(23)		(17)		(5)				(22)
Recoveries		8		8				16		4		8				12
End of period balance	$	149	$	18	$	7	$	174	$	138	$	15	$	5	$	158

Nine Months Ended August 1, 2021
Allowance:
Beginning of period balance	$	133	$	43	$	8	$	184
ASU No. 2016-13 adoption		44		(13)				31
Provision (credit)		(9)		(16)		(1)		(26)
Write-offs		(38)		(23)				(61)
Recoveries		17		27				44
Translation adjustments		2						2
End of period balance	$	149	$	18	$	7	$	174
Financing receivables:
End of period balance	$	30,235	$	3,772	$	3,017	$	37,024	$	31,918	$	2,756	$	2,191	$	36,865


	Production &		Small Ag		Construction
	Precision Ag		& Turf		& Forestry		Total
Goodwill at November 3, 2019	$	310	$	264	$	2,343	$	2,917	��
Translation adjustments and other		1		1		65		67
Goodwill at August 2, 2020	$	311	$	265	$	2,408	$	2,984
										Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Total
Goodwill at November 1, 2020	$	333	$	268	$	2,480	$	3,081		$	333	$	268	$	2,480	$	3,081
Acquisition		12						12			12						12
Translation adjustments and other		13		(3)		45		55			12		(1)		90		101
Goodwill at August 1, 2021	$	358	$	265	$	2,525	$	3,148
Goodwill at January 31, 2021										$	357	$	267	$	2,570	$	3,194

Goodwill at October 31, 2021										$	542	$	265	$	2,484	$	3,291
Acquisition											7		7		4		18
Translation adjustments and other											(5)		(2)		(110)		(117)
Goodwill at January 30, 2022										$	544	$	270	$	2,378	$	3,192


	Nine Months Ended
	August 1, 2021		August 2, 2020
Operating leases	$	80	$	27
Finance leases		25		37


	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	21	$	21	$	29	$	29
Due after one through five years		82		86		87		88
Due after five through 10 years		136		142		161		159
Due after 10 years		213		226		231		230
Mortgage-backed securities		132		136		158		155
Debt securities	$	584	$	611	$	666	$	661


	Fair Value					Losses							Fair Value					Losses
						Three Months Ended			Nine Months Ended									Three Months Ended
	August 1	November 1		August 2		August 1	August 2		August 1		August 2		January 30	October 31		January 31		January 30	January 31
	2021	2020		2020		2021	2020		2021		2020		2022	2021		2021		2022	2021
Other receivables		$	1	$	1		$	2			$	2
Equipment on operating leases – net		$	371								$	22
Property and equipment – net		$	135	$	8		$	5	$	44	$	67		$	41	$	41		$	44
Investments in unconsolidated affiliates		$	19								$	20
Other intangible assets – net							$	2			$	2
Other assets		$	59	$	19		$	24	$	6	$	34		$	1	$	1		$	6


			Cumulative Increase (Decrease) of Fair								Cumulative Increase (Decrease) of Fair
			Value Hedging Adjustments Included in								Value Hedging Adjustments Included in
			the Carrying Amount								the Carrying Amount
	Carrying		Active						Carrying		Active
	Amount of		Hedging		Discontinued				Amount of		Hedging		Discontinued
	Hedged Item		Relationships		Relationships		Total		Hedged Item		Relationships		Relationships		Total
August 1, 2021
January 30, 2022
Long-term borrowings due within one year	$	188	$	4	$	(1)	$	3	$	185	$	2	$	8	$	10
Long-term borrowings		8,888		263		190		453		8,147		(130)		181		51

November 1, 2020
October 31, 2021
Long-term borrowings due within one year	$	155	$	2	$	3	$	5	$	189	$	3	$	(2)	$	1
Long-term borrowings		7,725		543		122		665		8,070		29		223		252

August 2, 2020
January 31, 2021
Long-term borrowings due within one year	$	480	$	6	$	2	$	8	$	159	$	2	$	1	$	3
Long-term borrowings		9,140		754		40		794		8,713		435		137		572


	Gross Amounts		Netting
August 1, 2021	Recognized		Arrangements		Collateral		Net Amount
Assets	$	432	$	(94)	$	(88)	$	250
Liabilities		152		(94)		(2)		56


	Nine Months Ended August 1, 2021
Expense (benefit):	Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Total
Long-lived asset impairments – Cost of sales	$	5	$	3	$	42	$	50
Brazil indirect tax – Cost of sales		(53)				(5)		(58)
Gain on sale – Other income				(27)				(27)
Total expense (benefit)	$	(48)	$	(24)	$	37	$	(35)


	Nine Months Ended August 2, 2020
Expense:		Small Ag & Turf		Construction & Forestry		Financial Services		Total
Factory closure – Cost of sales		$	13					$	13
Long-lived asset impairments – Cost of sales				$	62				62
Equipment on operating leases & matured operating lease inventory impairments – Other operating expenses						$	32		32
Investments in unconsolidated affiliates impairment – Equity in loss of unconsolidated affiliate					20				20
Total expense		$	13	$	82	$	32	$	127


	Three Months Ended					Nine Months Ended
Production and Precision Agriculture	August 1		August 2		%	August 1		August 2		%
(In millions of dollars)	2021		2020		Change	2021		2020		Change
Net sales	$	4,250	$	3,289	+29	$	11,848	$	9,161	+29
Operating profit		906		605	+50		2,557		1,391	+84
Operating margin		21.3%		18.4%			21.6%		15.2%


DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
STATEMENT OF INCOME
For the Nine Months Ended August 1, 2021 and August 2, 2020
(In millions of dollars) Unaudited
	EQUIPMENT				FINANCIAL
	OPERATIONS¹				SERVICES				ELIMINATIONS				CONSOLIDATED
	2021		2020		2021		2020		2021		2020		2021		2020
Net Sales and Revenues
Net sales	$	29,461	$	22,612									$	29,461	$	22,612
Finance and interest income		95		75	$	2,582	$	2,720	$	(209)	$	(211)		2,468		2,584	²
Other income		712		597		269		196		(213)		(180)		768		613	³
Total		30,268		23,284		2,851		2,916		(422)		(391)		32,697		25,809

Costs and Expenses
Cost of sales		21,309		17,208						(2)		(2)		21,307		17,206	⁴
Research and development expenses		1,137		1,201										1,137		1,201
Selling, administrative and general expenses		2,089		1,989		365		483		(6)		(5)		2,448		2,467	⁴
Interest expense		287		237		539		747		(43)		(15)		783		969	⁵
Interest compensation to Financial Services		166		195						(166)		(195)					⁵
Other operating expenses		140		186		1,098		1,187		(205)		(174)		1,033		1,199	⁶
Total		25,128		21,016		2,002		2,417		(422)		(391)		26,708		23,042

Income before Income Taxes		5,140		2,268		849		499						5,989		2,767
Provision for income taxes		1,130		632		198		120						1,328		752

Income after Income Taxes		4,010		1,636		651		379						4,661		2,015
Equity in income (loss) of unconsolidated affiliates		18		(22)		3		2						21		(20)

Net Income		4,028		1,614		654		381						4,682		1,995
Less: Net income attributable to noncontrolling interests		2		2										2		2
Net Income Attributable to Deere & Company	$	4,026	$	1,612	$	654	$	381					$	4,680	$	1,993


DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
CONDENSED BALANCE SHEETS
(In millions of dollars) Unaudited
	EQUIPMENT						FINANCIAL
	OPERATIONS¹						SERVICES						ELIMINATIONS						CONSOLIDATED
	Jan 30		Oct 31		Jan 31		Jan 30		Oct 31		Jan 31		Jan 30		Oct 31		Jan 31		Jan 30		Oct 31		Jan 31
	2022		2021		2021		2022		2021		2021		2022		2021		2021		2022		2021		2021
Assets
Cash and cash equivalents	$	3,596	$	7,188	$	6,074	$	876	$	829	$	888							$	4,472	$	8,017	$	6,962
Marketable securities		2		3		8		733		725		659								735		728		667
Receivables from unconsolidated affiliates		5,340		5,591		5,151							$	(5,307)	$	(5,564)	$	(5,123)		33		27		28	⁷
Trade accounts and notes receivable – net		996		1,155		900		4,843		3,895		5,341		(984)		(842)		(1,204)		4,855		4,208		5,037	⁸
Financing receivables – net		56		73		103		33,135		33,726		29,335								33,191		33,799		29,438
Financing receivables securitized – net		9		10		18		3,507		4,649		3,913								3,516		4,659		3,931
Other receivables		1,785		1,602		1,010		153		159		151		(35)		(23)		(20)		1,903		1,738		1,141	⁸
Equipment on operating leases – net								6,624		6,988		7,030								6,624		6,988		7,030
Inventories		7,935		6,781		5,956														7,935		6,781		5,956
Property and equipment – net		5,629		5,783		5,703		36		37		38								5,665		5,820		5,741
Investments in unconsolidated affiliates		153		153		157		23		22		21								176		175		178
Goodwill		3,192		3,291		3,194														3,192		3,291		3,194
Other intangible assets – net		1,209		1,275		1,342														1,209		1,275		1,342
Retirement benefits		3,095		3,539		903		65		64		60		(2)		(2)		(57)		3,158		3,601		906	⁹
Deferred income taxes		1,095		1,215		1,797		50		53		51		(222)		(231)		(292)		923		1,037		1,556	¹⁰
Other assets		1,577		1,493		1,485		454		477		891		(4)				(3)		2,027		1,970		2,373
Total Assets	$	35,669	$	39,152	$	33,801	$	50,499	$	51,624	$	48,378	$	(6,554)	$	(6,662)	$	(6,699)	$	79,614	$	84,114	$	75,480

Liabilities and Stockholders’ Equity

Liabilities
Short-term borrowings	$	1,516	$	1,509	$	394	$	9,474	$	9,410	$	8,830							$	10,990	$	10,919	$	9,224
Short-term securitization borrowings		8		10		17		3,474		4,595		3,952								3,482		4,605		3,969
Payables to unconsolidated affiliates		172		143		119		5,307		5,564		5,123	$	(5,307)	$	(5,564)	$	(5,123)		172		143		119	⁷
Accounts payable and accrued expenses		9,532		11,055		8,672		1,970		2,015		1,959		(1,023)		(865)		(1,227)		10,479		12,205		9,404	⁸
Deferred income taxes		425		438		394		353		369		430		(222)		(231)		(292)		556		576		532	¹⁰
Long-term borrowings		8,760		8,915		10,139		24,078		23,973		22,633								32,838		32,888		32,772
Retirement benefits and other liabilities		3,182		4,239		5,325		109		107		106		(2)		(2)		(57)		3,289		4,344		5,374	⁹
Total liabilities		23,595		26,309		25,060		44,765		46,033		43,033		(6,554)		(6,662)		(6,699)		61,806		65,680		61,394

Commitments and contingencies (Note 16)

Stockholders’ Equity
Total Deere & Company stockholders’ equity		17,804		18,431		14,083		5,734		5,591		5,345		(5,734)		(5,591)		(5,345)		17,804		18,431		14,083	¹¹
Noncontrolling interests		4		3		3														4		3		3
Financial Services’ equity		(5,734)		(5,591)		(5,345)								5,734		5,591		5,345							¹¹
Adjusted total stockholders’ equity		12,074		12,843		8,741		5,734		5,591		5,345								17,808		18,434		14,086
Total Liabilities and Stockholders’ Equity	$	35,669	$	39,152	$	33,801	$	50,499	$	51,624	$	48,378	$	(6,554)	$	(6,662)	$	(6,699)	$	79,614	$	84,114	$	75,480


DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
CONDENSED BALANCE SHEET
(In millions of dollars) Unaudited
	EQUIPMENT						FINANCIAL
	OPERATIONS¹						SERVICES						ELIMINATIONS						CONSOLIDATED
	Aug 1		Nov 1		Aug 2		Aug 1		Nov 1		Aug 2		Aug 1		Nov 1		Aug 2		Aug 1		Nov 1		Aug 2
	2021		2020		2020		2021		2020		2020		2021		2020		2020		2021		2020		2020
Assets
Cash and cash equivalents	$	6,638	$	6,145	$	7,440	$	881	$	921	$	750							$	7,519	$	7,066	$	8,190
Marketable securities		3		7		8		685		634		632								688		641		640
Receivables from unconsolidated affiliates		5,942		5,290		3,619							$	(5,913)	$	(5,259)	$	(3,593)		29		31		26	⁷
Trade accounts and notes receivable – net		1,127		1,013		1,251		5,319		4,238		5,595		(1,178)		(1,080)		(1,373)		5,268		4,171		5,473	⁸
Financing receivables – net		89		106		111		31,360		29,644		27,703								31,449		29,750		27,814
Financing receivables securitized – net		13		26		37		5,388		4,677		5,432								5,401		4,703		5,469
Other receivables		1,516		1,117		1,083		171		151		162		(14)		(48)		(28)		1,673		1,220		1,217	⁸
Equipment on operating leases – net								6,982		7,298		7,158								6,982		7,298		7,158
Inventories		6,410		4,999		5,650														6,410		4,999		5,650
Property and equipment – net		5,612		5,778		5,711		37		39		43								5,649		5,817		5,754
Investments in unconsolidated affiliates		166		174		180		22		19		19								188		193		199
Goodwill		3,148		3,081		2,984														3,148		3,081		2,984
Other intangible assets – net		1,267		1,327		1,301														1,267		1,327		1,301
Retirement benefits		986		859		972		63		59		59		(59)		(55)				990		863		1,031	⁹
Deferred income taxes		1,959		1,763		1,865		59		45		56		(251)		(309)		(387)		1,767		1,499		1,534	¹⁰
Other assets		1,581		1,439		1,566		680		994		1,260		(1)		(1)		(2)		2,260		2,432		2,824
Total Assets	$	36,457	$	33,124	$	33,778	$	51,647	$	48,719	$	48,869	$	(7,416)	$	(6,752)	$	(5,383)	$	80,688	$	75,091	$	77,264

Liabilities and Stockholders’ Equity

Liabilities
Short-term borrowings	$	1,376	$	292	$	853	$	9,028	$	8,290	$	8,222							$	10,404	$	8,582	$	9,075
Short-term securitization borrowings		12		26		37		5,265		4,656		5,324								5,277		4,682		5,361
Payables to unconsolidated affiliates		116		104		80		5,913		5,260		3,593	$	(5,913)	$	(5,259)	$	(3,593)		116		105		80	⁷
Accounts payable and accrued expenses		10,368		9,114		8,834		1,916		2,127		2,134		(1,193)		(1,129)		(1,403)		11,091		10,112		9,565	⁸
Deferred income taxes		371		385		398		395		443		468		(251)		(309)		(387)		515		519		479	¹⁰
Long-term borrowings		8,982		10,124		10,217		23,298		22,610		23,820								32,280		32,734		34,037
Retirement benefits and other liabilities		5,219		5,366		5,671		112		102		105		(59)		(55)				5,272		5,413		5,776	⁹
Total liabilities		26,444		25,411		26,090		45,927		43,488		43,666		(7,416)		(6,752)		(5,383)		64,955		62,147		64,373

Commitments and contingencies (Note 18)

Stockholders’ Equity
Total Deere & Company stockholders’ equity		15,731		12,937		12,888		5,720		5,231		5,203		(5,720)		(5,231)		(5,203)		15,731		12,937		12,888	¹¹
Noncontrolling interests		2		7		3														2		7		3
Financial Services’ equity		(5,720)		(5,231)		(5,203)								5,720		5,231		5,203							¹¹
Adjusted total stockholders’ equity		10,013		7,713		7,688		5,720		5,231		5,203								15,733		12,944		12,891
Total Liabilities and Stockholders’ Equity	$	36,457	$	33,124	$	33,778	$	51,647	$	48,719	$	48,869	$	(7,416)	$	(6,752)	$	(5,383)	$	80,688	$	75,091	$	77,264


				Total Number of					Total Number of
				Shares Purchased as	Maximum Number of				Shares Purchased as	Maximum Number of
	Total Number of			Part of Publicly	Shares that May Yet Be	Total Number of			Part of Publicly	Shares that May Yet Be
	Shares			Announced Plans or	Purchased under the	Shares			Announced Plans or	Purchased under the
	Purchased	Average Price		Programs (1)	Plans or Programs (1)	Purchased (2)	Average Price		Programs (1)	Plans or Programs (1)
Period	(thousands)	Paid Per Share		(thousands)	(millions)	(thousands)	Paid Per Share		(thousands)	(millions)
May 3 to May 30	630	$	372.74	630	19.6
May 31 to Jun 27	679		346.88	679	18.9
Jun 28 to Aug 1	760		349.45	760	18.2
Nov 1 to Nov 28						616	$	354.70	616	15.0
Nov 29 to Dec 26						666		350.83	627	14.4
Dec 27 to Jan 30						459		371.69	459	13.9
Total	2,069			2,069		1,741			1,702



3.1		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		Bylaws, as amended (Exhibit 3.1 to Form 8-K of registrant filed on December 3, 2020, Securities and Exchange Commission File Number 1-4121*)

31.1		Rule 13a-14(a)/15d-14(a) Certification

31.2		Rule 13a-14(a)/15d-14(a) Certification

32		Section 1350 Certifications (furnished herewith)

101.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)