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 July 30,January 28, 20232024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file no: 1-4121
DEERE & COMPANY
(Exact name of registrant as specified in its charter)
| | |
Delaware | | 36-2382580 |
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 |
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 July 30, 2023, 288,000,577January 28, 2024, 278,358,210 shares of common stock, $1 par value, of the registrant were outstanding.
PART I. FINANCIAL INFORMATION
| | | | | | | | | | | | | | | | | | | | |
ITEM 1. FINANCIAL STATEMENTS | ITEM 1. FINANCIAL STATEMENTS | | | | | | | | | |||||||||||
DEERE & COMPANY | DEERE & COMPANY | | | | | | | | | |||||||||||
STATEMENTS OF CONSOLIDATED INCOME | STATEMENTS OF CONSOLIDATED INCOME | | | | | | | | | |||||||||||
For the Three and Nine Months Ended July 30, 2023 and July 31, 2022 | | |||||||||||||||||||
For the Three Months Ended January 28, 2024 and January 29, 2023 | | | | | | | | |||||||||||||
(In millions of dollars and shares except per share amounts) Unaudited | (In millions of dollars and shares except per share amounts) Unaudited | | | | | | | | | |||||||||||
| | Three Months Ended | | Nine Months Ended | | |||||||||||||||
|
| 2023 |
| 2022 |
| 2023 |
| 2022 |
|
| 2024 |
| 2023 |
| ||||||
Net Sales and Revenues | | | | | | | | | | | | | | | | | | | | |
Net sales |
| $ | 14,284 | | $ | 13,000 |
| $ | 41,765 | | $ | 33,565 | |
| $ | 10,486 | | $ | 11,402 | |
Finance and interest income | | | 1,253 | |
| 846 | | | 3,326 | |
| 2,441 | | | | 1,360 | |
| 994 | |
Other income | | | 264 | |
| 256 | | | 748 | |
| 1,035 | | | | 339 | |
| 256 | |
Total | | | 15,801 | |
| 14,102 | | | 45,839 | |
| 37,041 | | | | 12,185 | |
| 12,652 | |
| | | | | | | | | | | | | | | | | | | | |
Costs and Expenses | | | | | | | | | | | | | | | | | | | | |
Cost of sales | | | 9,624 | |
| 9,511 | | | 28,288 | |
| 25,124 | | | | 7,200 | |
| 7,934 | |
Research and development expenses | | | 528 | |
| 481 | | | 1,571 | |
| 1,336 | | | | 533 | |
| 495 | |
Selling, administrative and general expenses | | | 1,110 | |
| 959 | | | 3,392 | |
| 2,672 | | | | 1,066 | |
| 952 | |
Interest expense | | | 623 | |
| 296 | | | 1,671 | |
| 713 | | | | 802 | |
| 479 | |
Other operating expenses | | | 310 | |
| 316 | | | 971 | |
| 954 | | | | 369 | |
| 299 | |
Total | | | 12,195 | |
| 11,563 | | | 35,893 | |
| 30,799 | | | | 9,970 | |
| 10,159 | |
| | | | | | | | | | | | | | | | | | | | |
Income of Consolidated Group before Income Taxes | | | 3,606 | |
| 2,539 | | | 9,946 | |
| 6,242 | | | | 2,215 | |
| 2,493 | |
Provision for income taxes | | | 636 | |
| 654 | | | 2,164 | |
| 1,364 | | | | 469 | |
| 537 | |
| | | | | | | | | | | | | | | | | | | | |
Income of Consolidated Group | | | 2,970 | |
| 1,885 | | | 7,782 | |
| 4,878 | | | | 1,746 | |
| 1,956 | |
Equity in income of unconsolidated affiliates | | | 2 | |
| | | | 5 | |
| 8 | | | | 2 | |
| 1 | |
| | | | | | | | | | | | | | | | | | | | |
Net Income | | | 2,972 | |
| 1,885 | | | 7,787 | |
| 4,886 | | | | 1,748 | |
| 1,957 | |
Less: Net income (loss) attributable to noncontrolling interests | | | (6) | |
| 1 | | | (10) | |
| 1 | | |||||||
Less: Net loss attributable to noncontrolling interests | | | (3) | |
| (2) | | |||||||||||||
Net Income Attributable to Deere & Company |
| $ | 2,978 | | $ | 1,884 |
| $ | 7,797 | | $ | 4,885 | |
| $ | 1,751 | | $ | 1,959 | |
| | | | | | | | | | | | | | | | | | | | |
Per Share Data | | | | | | | | | | | | | | | | | | | | |
Basic |
| $ | 10.24 | | $ | 6.20 |
| $ | 26.48 | | $ | 15.97 | |
| $ | 6.25 | | $ | 6.58 | |
Diluted |
| | 10.20 | | | 6.16 |
| | 26.35 | | | 15.88 | |
| | 6.23 | | | 6.55 | |
Dividends declared | | | 1.25 | | | 1.13 | | | 3.70 | | | 3.23 | | | | 1.47 | | | 1.20 | |
Dividends paid | | | 1.25 | | | 1.05 | | | 3.58 | | | 3.15 | | | | 1.35 | | | 1.13 | |
| | | | | | | | | | | | | | | | | | | | |
Average Shares Outstanding | | | | | | | | | | | | | | | | | | | | |
Basic | | | 290.8 | |
| 304.1 | | | 294.4 | |
| 305.8 | | | | 279.9 | |
| 297.6 | |
Diluted | | | 292.1 | |
| 305.7 | | | 295.9 | |
| 307.7 | | | | 281.1 | |
| 299.1 | |
| | | | | | | | | | | | | | | | | | | | |
See Condensed Notes to Interim Consolidated Financial Statements.
2
| | | | | | | | | | | | | | | | | | | | |
DEERE & COMPANY | DEERE & COMPANY | | | | | | | | | |||||||||||
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME | STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME | | | | | | | | | |||||||||||
For the Three and Nine Months Ended July 30, 2023 and July 31, 2022 | | |||||||||||||||||||
For the Three Months Ended January 28, 2024 and January 29, 2023 | | | | | | | | |||||||||||||
(In millions of dollars) Unaudited | (In millions of dollars) Unaudited | | | | | | | | | |||||||||||
| | Three Months Ended | | Nine Months Ended | | |||||||||||||||
|
| 2023 |
| 2022 |
| 2023 |
| 2022 |
|
| 2024 |
| 2023 |
| ||||||
| | | | | | | | | | | | |
| | | | | | |
|
Net Income |
| $ | 2,972 | | $ | 1,885 |
| $ | 7,787 | | $ | 4,886 | |
| $ | 1,748 | | $ | 1,957 | |
| | | | | | | | | | | | | | | | | | | | |
Other Comprehensive Income (Loss), Net of Income Taxes | | | | | | | | | | | | | | | | | | | | |
Retirement benefits adjustment | | | (9) | |
| 79 | | | (267) | |
| (137) | | | | (21) | |
| (11) | |
Cumulative translation adjustment | | | 144 | |
| (269) | | | 925 | |
| (784) | | | | 274 | |
| 681 | |
Unrealized gain (loss) on derivatives | | | 5 | |
| (1) | | | (26) | |
| 41 | | |||||||
Unrealized gain (loss) on debt securities | | | (13) | |
| 6 | | | 13 | |
| (57) | | |||||||
Other Comprehensive Income (Loss), Net of Income Taxes | | | 127 | |
| (185) | | | 645 | |
| (937) | | |||||||
Unrealized loss on derivatives | | | (15) | |
| (13) | | |||||||||||||
Unrealized gain on debt securities | | | 13 | |
| 27 | | |||||||||||||
Other Comprehensive Income, Net of Income Taxes | | | 251 | |
| 684 | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Comprehensive Income of Consolidated Group | | | 3,099 | |
| 1,700 | | | 8,432 | |
| 3,949 | | | | 1,999 | |
| 2,641 | |
Less: Comprehensive income (loss) attributable to noncontrolling interests | | | (5) | |
| (3) | | | 2 | |
| (8) | | | | (2) | |
| 6 | |
Comprehensive Income Attributable to Deere & Company |
| $ | 3,104 | | $ | 1,703 |
| $ | 8,430 | | $ | 3,957 | |
| $ | 2,001 | | $ | 2,635 | |
| | | | | | | | | | | | | | | | | | | | |
See Condensed Notes to Interim Consolidated Financial Statements.
3
| | | | | | | | | | | | | | | | | | | | |
DEERE & COMPANY | | | | | | | | | | | | | | | | | | | | |
CONDENSED CONSOLIDATED BALANCE SHEETS | | | | | | | | | | | | | | | | | | | | |
(In millions of dollars) Unaudited | | | | | | | | | | | | | | | | | | | | |
|
| July 30 |
| October 30 |
| July 31 |
|
| January 28 |
| October 29 |
| January 29 |
| ||||||
| | 2023 | | 2022 | | 2022 |
| | 2024 | | 2023 | | 2023 |
| ||||||
Assets | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents |
| $ | 6,576 | | $ | 4,774 | | $ | 4,359 | |
| $ | 5,137 | | $ | 7,458 | | $ | 3,976 | |
Marketable securities | | | 841 | |
| 734 | |
| 719 | | | | 1,136 | |
| 946 | |
| 852 | |
Trade accounts and notes receivable – net | | | 9,297 | |
| 6,410 | |
| 6,696 | | | | 7,795 | |
| 7,739 | |
| 7,609 | |
Financing receivables – net | | | 41,302 | |
| 36,634 | |
| 35,056 | | | | 43,708 | |
| 43,673 | |
| 36,882 | |
Financing receivables securitized – net | | | 7,001 | |
| 5,936 | |
| 5,141 | | | | 6,400 | |
| 7,335 | |
| 5,089 | |
Other receivables | | | 3,118 | |
| 2,492 | |
| 1,999 | | | | 2,017 | |
| 2,623 | |
| 1,992 | |
Equipment on operating leases – net | | | 6,709 | |
| 6,623 | |
| 6,554 | | | | 6,751 | |
| 6,917 | |
| 6,502 | |
Inventories | | | 9,350 | |
| 8,495 | |
| 9,121 | | | | 8,937 | |
| 8,160 | |
| 10,056 | |
Property and equipment – net | | | 6,418 | |
| 6,056 | |
| 5,666 | | | | 6,914 | |
| 6,879 | |
| 6,212 | |
Goodwill | | | 3,994 | |
| 3,687 | |
| 3,754 | | | | 3,966 | |
| 3,900 | |
| 3,891 | |
Other intangible assets – net | | | 1,199 | |
| 1,218 | |
| 1,281 | | | | 1,112 | |
| 1,133 | |
| 1,255 | |
Retirement benefits | | | 3,573 | |
| 3,730 | |
| 3,125 | | | | 3,087 | |
| 3,007 | |
| 3,793 | |
Deferred income taxes | | | 1,360 | |
| 824 | |
| 1,110 | | | | 1,833 | |
| 1,814 | |
| 914 | |
Other assets | | | 2,659 | |
| 2,417 | |
| 2,236 | | | | 2,578 | |
| 2,503 | |
| 2,597 | |
Total Assets |
| $ | 103,397 | | $ | 90,030 | | $ | 86,817 | |
| $ | 101,371 | | $ | 104,087 | | $ | 91,620 | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | | | | | | |
Short-term borrowings | | $ | 17,143 | | $ | 12,592 | | $ | 14,176 | | | $ | 17,117 | | $ | 17,939 | | $ | 14,129 | |
Short-term securitization borrowings | | | 6,608 | |
| 5,711 | |
| 4,920 | | | | 6,116 | |
| 6,995 | |
| 4,864 | |
Accounts payable and accrued expenses | | | 15,340 | |
| 14,822 | |
| 12,986 | | | | 13,361 | |
| 16,130 | |
| 13,108 | |
Deferred income taxes | | | 506 | |
| 495 | |
| 561 | | | | 550 | |
| 520 | |
| 519 | |
Long-term borrowings | | | 38,112 | |
| 33,596 | |
| 32,132 | | | | 39,933 | |
| 38,477 | |
| 35,071 | |
Retirement benefits and other liabilities | | | 2,536 | |
| 2,457 | |
| 2,911 | | | | 2,115 | |
| 2,140 | |
| 2,493 | |
Total liabilities | | | 80,245 | |
| 69,673 | |
| 67,686 | | | | 79,192 | |
| 82,201 | |
| 70,184 | |
| | | | | | | | | | | | | | | | | | | | |
Commitments and contingencies (Note 16) | | | | | | | | | | | | | | | | | | | | |
Redeemable noncontrolling interest | | | 101 | | | 92 | | | 95 | | | | 100 | | | 97 | | | 100 | |
| | | | | | | | | | | | | | | | | | | | |
Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | |
Common stock, $1 par value (issued shares at July 30, 2023 – 536,431,204) | | | 5,272 | |
| 5,165 | |
| 5,139 | | ||||||||||
Common stock, $1 par value (issued shares at January 28, 2024 – 536,431,204) | | | 5,335 | |
| 5,303 | |
| 5,191 | | ||||||||||
Common stock in treasury | | | (28,760) | |
| (24,094) | |
| (22,976) | | | | (32,663) | |
| (31,335) | |
| (25,333) | |
Retained earnings | | | 48,947 | |
| 42,247 | |
| 40,346 | | | | 52,266 | |
| 50,931 | |
| 43,846 | |
Accumulated other comprehensive income (loss) | | | (2,411) | |
| (3,056) | |
| (3,476) | | | | (2,863) | |
| (3,114) | |
| (2,372) | |
Total Deere & Company stockholders’ equity | | | 23,048 | |
| 20,262 | |
| 19,033 | | | | 22,075 | |
| 21,785 | |
| 21,332 | |
Noncontrolling interests | | | 3 | |
| 3 | |
| 3 | | | | 4 | |
| 4 | |
| 4 | |
Total stockholders’ equity | | | 23,051 | |
| 20,265 | |
| 19,036 | | | | 22,079 | |
| 21,789 | |
| 21,336 | |
Total Liabilities and Stockholders’ Equity | | $ | 103,397 | | $ | 90,030 | | $ | 86,817 | | | $ | 101,371 | | $ | 104,087 | | $ | 91,620 | |
| | | | | | | | | | | | | | | | | | | | |
See Condensed Notes to Interim Consolidated Financial Statements.
4
| | | | | | | |
DEERE & COMPANY | | | | | | | |
STATEMENTS OF CONSOLIDATED CASH FLOWS | | | | | | | |
For the Nine Months Ended July 30, 2023 and July 31, 2022 | | | | | | | |
(In millions of dollars) Unaudited | | | | | | | |
|
| 2023 |
| 2022 |
| ||
Cash Flows from Operating Activities | | |
| | |
| |
Net income |
| $ | 7,787 | | $ | 4,886 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
Provision (credit) for credit losses | | | (64) | |
| 62 | |
Provision for depreciation and amortization | | | 1,527 | |
| 1,443 | |
Impairments and other adjustments | | | 173 | |
| 81 | |
Share-based compensation expense | | | 112 | |
| 64 | |
Gain on remeasurement of previously held equity investment | | | | |
| (326) | |
Credit for deferred income taxes | | | (429) | |
| (6) | |
Changes in assets and liabilities: | | | | | | | |
Receivables related to sales | | | (5,059) | |
| (2,357) | |
Inventories | | | (663) | |
| (2,526) | |
Accounts payable and accrued expenses | | | 47 | |
| (15) | |
Accrued income taxes payable/receivable | | | (595) | |
| 82 | |
Retirement benefits | | | (116) | |
| (1,014) | |
Other | | | 176 | |
| 44 | |
Net cash provided by operating activities | | | 2,896 | |
| 418 | |
| | | | | | | |
Cash Flows from Investing Activities | | | | | | | |
Collections of receivables (excluding receivables related to sales) | | | 17,592 | |
| 15,774 | |
Proceeds from sales of equipment on operating leases | | | 1,445 | |
| 1,501 | |
Cost of receivables acquired (excluding receivables related to sales) | | | (20,714) | |
| (18,578) | |
Acquisitions of businesses, net of cash acquired | | | (82) | |
| (488) | |
Purchases of property and equipment | | | (887) | |
| (596) | |
Cost of equipment on operating leases acquired | | | (1,968) | |
| (1,717) | |
Collateral on derivatives - net | | | 240 | | | (193) | |
Other | | | (189) | |
| (133) | |
Net cash used for investing activities | | | (4,563) | |
| (4,430) | |
| | | | | | | |
Cash Flows from Financing Activities | | | | | | | |
Increase in total short-term borrowings | | | 5,040 | |
| 4,267 | |
Proceeds from long-term borrowings | | | 9,972 | |
| 6,281 | |
Payments of long-term borrowings | | | (5,862) | |
| (6,578) | |
Repurchases of common stock | | | (4,663) | |
| (2,477) | |
Dividends paid | | | (1,065) | |
| (971) | |
Other | | | (43) | |
| (7) | |
Net cash provided by financing activities | | | 3,379 | |
| 515 | |
| | | | | | | |
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash | | | 125 | |
| (143) | |
| | | | | | | |
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | | | 1,837 | | | (3,640) | |
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | | | 4,941 | |
| 8,125 | |
Cash, Cash Equivalents, and Restricted Cash at End of Period | | $ | 6,778 | | $ | 4,485 | |
| | | | | | | |
Components of Cash, Cash Equivalents, and Restricted Cash | | | | | | | |
Cash and cash equivalents | | $ | 6,576 | | $ | 4,359 | |
Restricted cash (Other assets) | | | 202 | | | 126 | |
Total Cash, Cash Equivalents, and Restricted Cash | | $ | 6,778 | | $ | 4,485 | |
| | | | | | | |
| | | | | | | |
DEERE & COMPANY | | | | | | | |
STATEMENTS OF CONSOLIDATED CASH FLOWS | | | | | | | |
For the Three Months Ended January 28, 2024 and January 29, 2023 | | | | | | | |
(In millions of dollars) Unaudited | | | | | | | |
|
| 2024 |
| 2023 |
| ||
Cash Flows from Operating Activities | | | | | | | |
Net income |
| $ | 1,748 | | $ | 1,957 | |
Adjustments to reconcile net income to net cash used for operating activities: | | | | | | | |
Provision (credit) for credit losses | | | 31 | |
| (130) | |
Provision for depreciation and amortization | | | 520 | |
| 494 | |
Share-based compensation expense | | | 46 | |
| 23 | |
Provision (credit) for deferred income taxes | | | 27 | |
| (56) | |
Changes in assets and liabilities: | | | | | | | |
Receivables related to sales | | | (277) | |
| (1,015) | |
Inventories | | | (723) | |
| (1,279) | |
Accounts payable and accrued expenses | | | (2,327) | |
| (1,577) | |
Accrued income taxes payable/receivable | | | 183 | |
| 199 | |
Retirement benefits | | | (129) | |
| (48) | |
Other | | | (7) | |
| 186 | |
Net cash used for operating activities | | | (908) | |
| (1,246) | |
| | | | | | | |
Cash Flows from Investing Activities | | | | | | | |
Collections of receivables (excluding receivables related to sales) | | | 7,752 | |
| 7,198 | |
Proceeds from sales of equipment on operating leases | | | 506 | |
| 497 | |
Cost of receivables acquired (excluding receivables related to sales) | | | (6,447) | |
| (6,322) | |
Purchases of property and equipment | | | (362) | |
| (315) | |
Cost of equipment on operating leases acquired | | | (454) | |
| (497) | |
Collateral on derivatives – net | | | 310 | | | 345 | |
Other | | | (88) | |
| (146) | |
Net cash provided by investing activities | | | 1,217 | |
| 760 | |
| | | | | | | |
Cash Flows from Financing Activities | | | | | | | |
Net proceeds (payments) in short-term borrowings (original maturities three months or less) | | | (2,951) | |
| 697 | |
Proceeds from borrowings issued (original maturities greater than three months) | | | 5,287 | |
| 2,505 | |
Payments of borrowings (original maturities greater than three months) | | | (3,237) | |
| (1,925) | |
Repurchases of common stock | | | (1,328) | |
| (1,257) | |
Dividends paid | | | (386) | |
| (341) | |
Other | | | (30) | |
| (18) | |
Net cash used for financing activities | | | (2,645) | |
| (339) | |
| | | | | | | |
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash | | | 16 | |
| 62 | |
| | | | | | | |
Net Decrease in Cash, Cash Equivalents, and Restricted Cash | | | (2,320) | | | (763) | |
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | | | 7,620 | |
| 4,941 | |
Cash, Cash Equivalents, and Restricted Cash at End of Period | | $ | 5,300 | | $ | 4,178 | |
| | | | | | | |
Components of Cash, Cash Equivalents, and Restricted Cash | | | | | | | |
Cash and cash equivalents | | $ | 5,137 | | $ | 3,976 | |
Restricted cash (Other assets) | | | 163 | | | 202 | |
Total Cash, Cash Equivalents, and Restricted Cash | | $ | 5,300 | | $ | 4,178 | |
| | | | | | | |
See Condensed Notes to Interim Consolidated Financial Statements.
5
| | | | | | | | | | | | | | | | | | | | | | | |
DEERE & COMPANY | | ||||||||||||||||||||||
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY | | ||||||||||||||||||||||
For the Three and Nine Months Ended July 30, 2023 and July 31, 2022 | | ||||||||||||||||||||||
(In millions of dollars) Unaudited | | ||||||||||||||||||||||
| | | | | Total Stockholders’ Equity | | | | | | |||||||||||||
| | | | | Deere & Company Stockholders | | |
| | | | | | ||||||||||
| | | | | | | | | | Accumulated | | | | | | | |||||||
| | Total | | | | | | | | Other | | | | | Redeemable | | |||||||
| | Stockholders’ | | Common | | Treasury | | Retained | | Comprehensive | | Noncontrolling | | | Noncontrolling | | |||||||
|
| Equity |
| Stock |
| Stock |
| Earnings |
| Income (Loss) |
| Interests |
|
| Interest | | |||||||
| | | | | | | | | | | | | | | | | |
| | | |
| |
Three Months Ended July 31, 2022 | | | | | | | | | | | | | | | | | | | | | |||
Balance May 1, 2022 |
| $ | 18,907 | | $ | 5,117 | | $ | (21,727) | | $ | 38,805 | | $ | (3,291) | | $ | 3 | | | $ | 99 | |
Net income | |
| 1,884 | | | | | | | | | 1,884 | | | | | | | | | | 1 | |
Other comprehensive loss | |
| (185) | | | | | | | | | | | | (185) | | | | | | | (4) | |
Repurchases of common stock | |
| (1,251) | | | | | | (1,251) | | | | | | | | | | | | | | |
Treasury shares reissued | |
| 2 | | | | | | 2 | | | | | | | | | | | | | | |
Dividends declared | |
| (343) | | | | | | | | | (343) | | | | | | | | | | | |
Share based awards and other | |
| 22 | | | 22 | | | | | | | | | | | | | | | | (1) | |
Balance July 31, 2022 | | $ | 19,036 | | $ | 5,139 | | $ | (22,976) | | $ | 40,346 | | $ | (3,476) | | $ | 3 | | | $ | 95 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended July 31, 2022 | | | | | | | | | | | | | | |
| | | |
| | |||
Balance October 31, 2021 |
| $ | 18,434 | | $ | 5,054 | | $ | (20,533) | | $ | 36,449 | | $ | (2,539) | | $ | 3 | | | | |
|
Acquisitions | | | | | | | | | | | | | | | | | | | | | $ | 105 | |
Net income (loss) | |
| 4,887 | | | | | | | | | 4,885 | | | | | | 2 | | | | (1) | |
Other comprehensive loss | |
| (937) | | | | | | | | | | | | (937) | | | | | | | (9) | |
Repurchases of common stock | |
| (2,477) | | | | | | (2,477) | | | | | | | | | | | | | | |
Treasury shares reissued | |
| 34 | | | | | | 34 | | | | | | | | | | | | | | |
Dividends declared | |
| (990) | | | | | | | | | (988) | | | | | | (2) | | | | | |
Share based awards and other | |
| 85 | | | 85 | | | | | | | | | | | | | | | | | |
Balance July 31, 2022 | | $ | 19,036 | | $ | 5,139 | | $ | (22,976) | | $ | 40,346 | | $ | (3,476) | | $ | 3 | | | $ | 95 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended July 30, 2023 | | | | | | | | | | | | | | | | | | | | | |||
Balance April 30, 2023 | | $ | 22,399 | | $ | 5,227 | | $ | (26,630) | | $ | 46,336 | | $ | (2,538) | | $ | 4 | | | $ | 102 | |
Net income (loss) | | | 2,978 | | | | | | | | | 2,978 | | | | | | | | | | (6) | |
Other comprehensive income | | | 127 | | | | | | | | | | | | 127 | | | | | | | 1 | |
Repurchases of common stock | | | (2,139) | | | | | | (2,139) | | | | | | | | | | | | | | |
Treasury shares reissued | | | 9 | | | | | | 9 | | | | | | | | | | | | | | |
Dividends declared | | | (364) | | | | | | | | | (362) | | | | | | (2) | | | | | |
Share based awards and other | | | 41 | | | 45 | | | | | | (5) | | | | | | 1 | | | | 4 | |
Balance July 30, 2023 | | $ | 23,051 | | $ | 5,272 | | $ | (28,760) | | $ | 48,947 | | $ | (2,411) | | $ | 3 | | | $ | 101 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended July 30, 2023 | | | | | | | | | | | | | | | | | | | | | |||
Balance October 30, 2022 | | $ | 20,265 | | $ | 5,165 | | $ | (24,094) | | $ | 42,247 | | $ | (3,056) | | $ | 3 | | | $ | 92 | |
Net income (loss) | | | 7,799 | | | | | | | | | 7,797 | | | | | | 2 | | | | (12) | |
Other comprehensive income | | | 645 | | | | | | | | | | | | 645 | | | | | | | 12 | |
Repurchases of common stock | | | (4,696) | | | | | | (4,696) | | | | | | | | | | | | | | |
Treasury shares reissued | | | 30 | | | | | | 30 | | | | | | | | | | | | | | |
Dividends declared | | | (1,091) | | | | | | | | | (1,088) | | | | | | (3) | | | | | |
Share based awards and other | | | 99 | | | 107 | | | | | | (9) | | | | | | 1 | | | | 9 | |
Balance July 30, 2023 | | $ | 23,051 | | $ | 5,272 | | $ | (28,760) | | $ | 48,947 | | $ | (2,411) | | $ | 3 | | | $ | 101 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
DEERE & COMPANY | | ||||||||||||||||||||||
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY | | ||||||||||||||||||||||
For the Three Months Ended January 28, 2024 and January 29, 2023 | | ||||||||||||||||||||||
(In millions of dollars) Unaudited | | ||||||||||||||||||||||
| | | | | Total Stockholders’ Equity | | | | | | |||||||||||||
| | | | | Deere & Company Stockholders | | |
| | | |
| | ||||||||||
| | | | | | | | | | Accumulated | | | | | | | |||||||
| | Total | | | | | | | | Other | | | | | Redeemable | | |||||||
| | Stockholders’ | | Common | | Treasury | | Retained | | Comprehensive | | Noncontrolling | | | Noncontrolling | | |||||||
|
| Equity |
| Stock |
| Stock |
| Earnings |
| Income (Loss) |
| Interests |
|
| Interest | | |||||||
| | | | | | | | | | | | | | | | | |
| | | | | |
Balance October 30, 2022 | | $ | 20,265 | | $ | 5,165 | | $ | (24,094) | | $ | 42,247 | | $ | (3,056) | | $ | 3 | | | $ | 92 |
|
Net income (loss) | |
| 1,960 | | | | | | | | | 1,959 | | | | | | 1 | | | | (3) | |
Other comprehensive income | |
| 684 | | | | | | | | | | | | 684 | | | | | | | 8 | |
Repurchases of common stock | |
| (1,257) | | | | | | (1,257) | | | | | | | | | | | | | | |
Treasury shares reissued | |
| 18 | | | | | | 18 | | | | | | | | | | | | | | |
Dividends declared | |
| (356) | | | | | | | | | (356) | | | | | | | | | | | |
Share based awards and other | |
| 22 | | | 26 | | | | | | (4) | | | | | | | | | | 3 | |
Balance January 29, 2023 | | $ | 21,336 | | $ | 5,191 | | $ | (25,333) | | $ | 43,846 | | $ | (2,372) | | $ | 4 | | | $ | 100 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Balance October 29, 2023 | | $ | 21,789 | | $ | 5,303 | | $ | (31,335) | | $ | 50,931 | | $ | (3,114) | | $ | 4 | | | $ | 97 | |
Net income (loss) | | | 1,752 | | | | | | | | | 1,751 | | | | | | 1 | | | | (4) | |
Other comprehensive income | | | 251 | | | | | | | | | | | | 251 | | | | | | | 1 | |
Repurchases of common stock | | | (1,340) | | | | | | (1,340) | | | | | | | | | | | | | | |
Treasury shares reissued | | | 12 | | | | | | 12 | | | | | | | | | | | | | | |
Dividends declared | | | (411) | | | | | | | | | (411) | | | | | | | | | | | |
Share based awards and other | | | 26 | | | 32 | | | | | | (5) | | | | | | (1) | | | | 6 | |
Balance January 28, 2024 | | $ | 22,079 | | $ | 5,335 | | $ | (32,663) | | $ | 52,266 | | $ | (2,863) | | $ | 4 | | | $ | 100 | |
| | | | | | | | | | | | | | | | | | | | | | | |
See Condensed Notes to Interim Consolidated Financial Statements.
6
Condensed Notes to Interim Consolidated Financial Statements (Unaudited)
(1) Organization and Consolidation
Deere & Company has been developing innovative solutions to help its customers become more profitable for more than 185 years. References to Deere“Deere & Company, John” “John Deere, Deere,” “we,” “us,” or the Company“our” include itsour consolidated subsidiaries and consolidated variable interest entities (VIEs). The Company is managedsubsidiaries. We manage our business through the following operating segments: production and precision agriculture (PPA), small agriculture and turf (SAT), construction and forestry (CF), and financial services (FS). References to “equipment operations” include production and precision agriculture, small agriculture and turf, and construction and forestry, while references to “agriculture and turf” include both productionPPA and precision agriculture and small agriculture and turf.SAT.
The Company usesWe use a 52/53 week fiscal year with quarters ending on the last Sunday in the reporting period. The thirdfirst quarter ends for fiscal year 2024 and 2023 were January 28, 2024 and 2022 were July 30,January 29, 2023, and July 31, 2022, respectively. Both third quartersperiods contained 13 weeks, while both year-to-date periods contained 39 weeks. Unless otherwise stated, references to particular years, quarters, or months refer to the Company’sour fiscal years generally ending in October and the associated periods in those fiscal years.
All amounts are presented in millions of dollars, unless otherwise specified.
(2)Summary of Significant Accounting Policies and New Accounting Standards
Quarterly Financial Statements
The interim consolidated financial statements of Deere & Company have been prepared by the Company,us, 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 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’sour 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 withCertain accounting principles generally accepted in the U.S. requirespolicies require management to make estimates and assumptions that affectin determining the reported amounts reflected in the financial statements and related disclosures. Actual results could differ from those estimates.
New Accounting Standards
The CompanyWe closely monitorsmonitor all Accounting Standard Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) and other authoritative guidance. ASUsWe adopted the following standards in 2023 did not have2024, none of which had a material impacteffect on the Company’sour consolidated financial statements. ASUs
| |
Accounting Standards Adopted | |
2022-04 — Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations | |
2022-02 — Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures | |
2022-01 — Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method | |
2021-08 — Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers | |
Accounting Standards to be adoptedAdopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and cash taxes paid both in the U.S. and foreign jurisdictions. The effective date of the ASU is fiscal year 2026. We are assessing the effect of this update on our related disclosures.
We will also adopt the following standards in future periods, none of which are being evaluated and at this point are not expected to have a material impacteffect on the Company’sour consolidated financial statementsstatements.
| |
2023-07 — Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures | |
2023-06 — Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative | |
2023-05 — Business Combinations – Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement | |
2022-03 — Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions | |
.
7
(3)Revenue Recognition
The Company’sOur net sales and revenues by primary geographic market, major product line, and timing of revenue recognition in millions of dollars follow:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended July 30, 2023 | | | Three Months Ended January 28, 2024 | | ||||||||||||||||||||||||||
|
| Production & Precision Ag |
| Small Ag & Turf |
| Construction |
| Financial |
| Total | | | Production & Precision Ag | | Small Ag & Turf | | Construction & Forestry | | Financial Services | | Total | | ||||||||||
Primary geographic markets: | | | | | | | | | | | |
| | |
| | | | | | | |
| | |
| |
|
| |
| |
United States | | $ | 3,394 | | $ | 2,098 | | $ | 2,346 | | $ | 860 | | $ | 8,698 | | | $ | 2,721 | | $ | 1,345 | | $ | 2,095 | | $ | 970 | | $ | 7,131 | |
Canada | | | 397 | | | 179 | | | 288 | |
| 165 | |
| 1,029 | | | | 386 | | | 118 | | | 210 | |
| 172 | |
| 886 | |
Western Europe | | | 833 | | | 802 | | | 421 | |
| 35 | |
| 2,091 | | | | 503 | | | 517 | | | 361 | |
| 40 | |
| 1,421 | |
Central Europe and CIS | | | 302 | | | 85 | | | 98 | |
| 6 | |
| 491 | | | | 179 | | | 73 | | | 94 | |
| 8 | |
| 354 | |
Latin America | | | 1,326 | | | 220 | | | 371 | |
| 117 | |
| 2,034 | | | | 819 | | | 98 | | | 256 | |
| 130 | |
| 1,303 | |
Asia, Africa, Oceania, and Middle East | | | 720 | | | 422 | | | 271 | | | 45 | | | 1,458 | | | | 435 | | | 341 | | | 258 | | | 56 | | | 1,090 | |
Total | | $ | 6,972 | | $ | 3,806 | | $ | 3,795 | | $ | 1,228 | | $ | 15,801 | | | $ | 5,043 | | $ | 2,492 | | $ | 3,274 | | $ | 1,376 | | $ | 12,185 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Major product lines: | | | | | | | | | | | |
| | |
| | | | | | | | | | | | |
| | |
| |
Production agriculture | | $ | 6,721 | | | | | | | | | | | $ | 6,721 | | | $ | 4,791 | | | | | | | | | | | $ | 4,791 | |
Small agriculture | | | | | $ | 2,688 | | | | |
| | |
| 2,688 | | | | | | $ | 1,718 | | | | |
| | |
| 1,718 | |
Turf | | | | | | 964 | | | | |
| | |
| 964 | | | | | | | 649 | | | | |
| | |
| 649 | |
Construction | | | | | | | | $ | 1,745 | |
| | |
| 1,745 | | | | | | | | | $ | 1,483 | |
| | |
| 1,483 | |
Compact construction | | | | | | | | | 614 | | | | | | 614 | | | | | | | | | | 626 | | | | | | 626 | |
Roadbuilding | | | | | | | | | 987 | |
| | |
| 987 | | | | | | | | | | 763 | |
| | |
| 763 | |
Forestry | | | | | | | | | 334 | |
| | |
| 334 | | | | | | | | | | 292 | |
| | |
| 292 | |
Financial products | | | 89 | | | 28 | | | 15 | | $ | 1,228 | |
| 1,360 | | | | 60 | | | 26 | | | 18 | | $ | 1,376 | |
| 1,480 | |
Other | | | 162 | | | 126 | | | 100 | |
| | |
| 388 | | | | 192 | | | 99 | | | 92 | |
| | |
| 383 | |
Total | | $ | 6,972 | | $ | 3,806 | | $ | 3,795 | | $ | 1,228 | | $ | 15,801 | | | $ | 5,043 | | $ | 2,492 | | $ | 3,274 | | $ | 1,376 | | $ | 12,185 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue recognized: | | | | | | | | | | | |
| | |
| | | | | | | | | | | | |
| | |
| |
At a point in time | | $ | 6,857 | | $ | 3,769 | | $ | 3,767 | | $ | 30 | | $ | 14,423 | | | $ | 4,955 | | $ | 2,456 | | $ | 3,243 | | $ | 28 | | $ | 10,682 | |
Over time | | | 115 | | | 37 | | | 28 | | | 1,198 | | | 1,378 | | | | 88 | | | 36 | | | 31 | | | 1,348 | | | 1,503 | |
Total | | $ | 6,972 | | $ | 3,806 | | $ | 3,795 | | $ | 1,228 | | $ | 15,801 | | | $ | 5,043 | | $ | 2,492 | | $ | 3,274 | | $ | 1,376 | | $ | 12,185 | |
| | | | | | | | | | | | | | | | |
|
| Nine Months Ended July 30, 2023 | | |||||||||||||
| | Production & Precision Ag |
| Small Ag & Turf |
| Construction |
| Financial |
| Total | | |||||
Primary geographic markets: | | | | | | | | | | | | | | | | |
United States | | $ | 10,079 | | $ | 6,005 | | $ | 6,807 | | $ | 2,339 | | $ | 25,230 | |
Canada | | | 1,303 | | | 514 | | | 865 | |
| 468 | |
| 3,150 | |
Western Europe | | | 2,092 | | | 2,254 | | | 1,278 | |
| 95 | |
| 5,719 | |
Central Europe and CIS | | | 897 | | | 420 | | | 263 | |
| 26 | |
| 1,606 | |
Latin America | | | 4,106 | | | 577 | | | 1,098 | |
| 318 | |
| 6,099 | |
Asia, Africa, Oceania, and Middle East | | | 1,709 | | | 1,291 | | | 906 | | | 129 | | | 4,035 | |
Total | | $ | 20,186 | | $ | 11,061 | | $ | 11,217 | | $ | 3,375 | | $ | 45,839 | |
| | | | | | | | | | | | | | | | |
Major product lines: | | | | | | | | | | | |
| | |
| |
Production agriculture | | $ | 19,565 | | | | | | | | | | | $ | 19,565 | |
Small agriculture | | | | | $ | 7,835 | | | | |
| | |
| 7,835 | |
Turf | | | | | | 2,782 | | | | |
| | |
| 2,782 | |
Construction | | | | | | | | $ | 5,040 | |
| | |
| 5,040 | |
Compact construction | | | | | | | | | 1,750 | | | | | | 1,750 | |
Roadbuilding | | | | | | | | | 2,939 | |
| | |
| 2,939 | |
Forestry | | | | | | | | | 1,119 | | | | |
| 1,119 | |
Financial products | | | 149 | | | 66 | | | 40 | | $ | 3,375 | |
| 3,630 | |
Other | | | 472 | | | 378 | | | 329 | |
| | |
| 1,179 | |
Total | | $ | 20,186 | | $ | 11,061 | | $ | 11,217 | | $ | 3,375 | | $ | 45,839 | |
| | | | | | | | | | | | | | | | |
Revenue recognized: | | | | | | | | | | | |
| | |
| |
At a point in time | | $ | 19,965 | | $ | 10,970 | | $ | 11,142 | | $ | 80 | | $ | 42,157 | |
Over time | | | 221 | | | 91 | | | 75 | | | 3,295 | | | 3,682 | |
Total | | $ | 20,186 | | $ | 11,061 | | $ | 11,217 | | $ | 3,375 | | $ | 45,839 | |
| | | | | | | | | | | | | | | | |
| | Three Months Ended January 29, 2023 | | |||||||||||||
| | Production & Precision Ag | | Small Ag & Turf | | Construction & Forestry | | Financial Services | | Total | | |||||
Primary geographic markets: |
| | |
| | |
| | |
| |
|
| |
| |
United States | | $ | 2,628 | | $ | 1,665 | | $ | 1,901 | | $ | 713 | | $ | 6,907 | |
Canada | | | 360 | | | 146 | | | 275 | |
| 150 | |
| 931 | |
Western Europe | | | 501 | | | 564 | | | 365 | |
| 29 | |
| 1,459 | |
Central Europe and CIS | | | 202 | | | 123 | | | 75 | |
| 12 | |
| 412 | |
Latin America | | | 1,237 | | | 156 | | | 339 | |
| 95 | |
| 1,827 | |
Asia, Africa, Oceania, and Middle East | | | 375 | | | 400 | | | 300 | | | 41 | | | 1,116 | |
Total | | $ | 5,303 | | $ | 3,054 | | $ | 3,255 | | $ | 1,040 | | $ | 12,652 | |
| | | | | | | | | | | | | | | | |
Major product lines: | | | | | | | | | | | |
| | |
| |
Production agriculture | | $ | 5,112 | | | | | | | | | | | $ | 5,112 | |
Small agriculture | | | | | $ | 2,194 | | | | |
| | |
| 2,194 | |
Turf | | | | | | 719 | | | | |
| | |
| 719 | |
Construction | | | | | | | | $ | 1,483 | |
| | |
| 1,483 | |
Compact construction | | | | | | | | | 473 | | | | | | 473 | |
Roadbuilding | | | | | | | | | 818 | |
| | |
| 818 | |
Forestry | | | | | | | | | 356 | |
| | |
| 356 | |
Financial products | | | 31 | | | 18 | | | 13 | | $ | 1,040 | |
| 1,102 | |
Other | | | 160 | | | 123 | | | 112 | |
| | |
| 395 | |
Total | | $ | 5,303 | | $ | 3,054 | | $ | 3,255 | | $ | 1,040 | | $ | 12,652 | |
| | | | | | | | | | | | | | | | |
Revenue recognized: | | | | | | | | | | | |
| | |
| |
At a point in time | | $ | 5,248 | | $ | 3,029 | | $ | 3,230 | | $ | 23 | | $ | 11,530 | |
Over time | | | 55 | | | 25 | | | 25 | | | 1,017 | | | 1,122 | |
Total | | $ | 5,303 | | $ | 3,054 | | $ | 3,255 | | $ | 1,040 | | $ | 12,652 | |
8
| | | | | | | | | | | | | | | | |
| | Three Months Ended July 31, 2022 | | |||||||||||||
|
| Production & Precision Ag |
| Small Ag & Turf |
| Construction |
| Financial |
| Total | | |||||
Primary geographic markets: | | | | | | | | | | | |
| | |
| |
United States | | $ | 2,904 | | $ | 2,177 | | $ | 1,789 | | $ | 602 | | $ | 7,472 | |
Canada | | | 451 | | | 185 | | | 288 | |
| 149 | |
| 1,073 | |
Western Europe | | | 645 | | | 646 | | | 380 | | | 25 | |
| 1,696 | |
Central Europe and CIS | | | 348 | | | 109 | | | 111 | | | 14 | |
| 582 | |
Latin America | | | 1,327 | | | 155 | | | 459 | | | 77 | |
| 2,018 | |
Asia, Africa, Oceania, and Middle East | | | 510 | | | 419 | | | 296 | | | 36 | | | 1,261 | |
Total | | $ | 6,185 | | $ | 3,691 | | $ | 3,323 | | $ | 903 | | $ | 14,102 | |
| | | | | | | | | | | | | | | | |
Major product lines: | | | | | | | | | | | |
| | |
| |
Production agriculture | | $ | 6,019 | | | | | | | | | | | $ | 6,019 | |
Small agriculture | | | | | $ | 2,705 | | | | |
| | |
| 2,705 | |
Turf | | | | | | 842 | | | | |
| | |
| 842 | |
Construction | | | | | | | | $ | 1,506 | |
| | |
| 1,506 | |
Compact construction | | | | | | | | | 460 | | | | | | 460 | |
Roadbuilding | | | | | | | | | 910 | |
| | |
| 910 | |
Forestry | | | | | | | | | 316 | |
| | |
| 316 | |
Financial products | | | 17 | | | 15 | | | 6 | | $ | 903 | |
| 941 | |
Other | | | 149 | | | 129 | | | 125 | |
| | |
| 403 | |
Total | | $ | 6,185 | | $ | 3,691 | | $ | 3,323 | | $ | 903 | | $ | 14,102 | |
| | | | | | | | | | | | | | | | |
Revenue recognized: | | | | | | | | | | | |
| | |
| |
At a point in time | | $ | 6,154 | | $ | 3,672 | | $ | 3,303 | | $ | 27 | | $ | 13,156 | |
Over time | | | 31 | | | 19 | | | 20 | | | 876 | | | 946 | |
Total | | $ | 6,185 | | $ | 3,691 | | $ | 3,323 | | $ | 903 | | $ | 14,102 | |
| | | | | | | | | | | | | | | | |
| | Nine Months Ended July 31, 2022 | | |||||||||||||
|
| Production & Precision Ag |
| Small Ag & Turf |
| Construction |
| Financial |
| Total | | |||||
Primary geographic markets: | | | | | | | | | | | | | | | | |
United States | | $ | 6,946 | | $ | 5,718 | | $ | 5,157 | | $ | 1,744 | | $ | 19,565 | |
Canada | | | 899 | | | 468 | | | 975 | | | 450 | |
| 2,792 | |
Western Europe | | | 1,648 | | | 1,836 | | | 1,202 | | | 76 | |
| 4,762 | |
Central Europe and CIS | | | 954 | | | 386 | | | 452 | | | 36 | |
| 1,828 | |
Latin America | | | 3,229 | | | 393 | | | 1,020 | | | 218 | |
| 4,860 | |
Asia, Africa, Oceania, and Middle East | | | 1,118 | | | 1,170 | | | 833 | | | 113 | | | 3,234 | |
Total | | $ | 14,794 | | $ | 9,971 | | $ | 9,639 | | $ | 2,637 | | $ | 37,041 | |
| | | | | | | | | | | | | | | | |
Major product lines: | | | | | | | | | | | |
| | |
| |
Production agriculture | | $ | 14,333 | | | | | | | | | | | $ | 14,333 | |
Small agriculture | | | | | $ | 7,305 | | | | | | | |
| 7,305 | |
Turf | | | | | | 2,286 | | | | | | | |
| 2,286 | |
Construction | | | | | | | | $ | 4,198 | | | | |
| 4,198 | |
Compact construction | | | | | | | | | 1,208 | | | | | | 1,208 | |
Roadbuilding | | | | | | | | | 2,619 | | | | |
| 2,619 | |
Forestry | | | | | | | | | 946 | | | | |
| 946 | |
Financial products | | | 39 | | | 35 | | | 17 | | $ | 2,637 | |
| 2,728 | |
Other | | | 422 | | | 345 | | | 651 | | | | |
| 1,418 | |
Total | | $ | 14,794 | | $ | 9,971 | | $ | 9,639 | | $ | 2,637 | | $ | 37,041 | |
| | | | | | | | | | | | | | | | |
Revenue recognized: | | | | | | | | | | | |
| | |
| |
At a point in time | | $ | 14,694 | | $ | 9,919 | | $ | 9,580 | | $ | 77 | | $ | 34,270 | |
Over time | | | 100 | | | 52 | | | 59 | | | 2,560 | | | 2,771 | |
Total | | $ | 14,794 | | $ | 9,971 | | $ | 9,639 | | $ | 2,637 | | $ | 37,041 | |
9
The Company invoicesWe invoice in advance of recognizing the sale of certain products and the revenue for certain services. These relate to extended warranty premiums, advance payments for future equipment sales, and subscription and service revenue related to precision guidance, telematic services, and telematic services.other information enabled solutions. These advanced customer payments are presented as deferred revenue, a contract liability, in “Accounts payable and accrued expenses” in the consolidated balance sheets.expenses.” The deferred revenue received, but not recognized in revenue, including extended warranty premiums also shown in Note 16, was $1,753 million, $1,423 million,$1,747, $1,697, and $1,424 million$1,502 at July 30,January 28, 2024, October 29, 2023, October 30, 2022, and July 31, 2022,January 29, 2023, respectively. The contract liability is reduced as the revenue is recognized. During the three months ended July 30,January 28, 2024 and January 29, 2023, $230 and July 31, 2022, $96 million and $93 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 July 30, 2023 and July 31, 2022, $440 million and $488 million,$215, respectively, of revenue was recognized from deferred revenue that was recorded as a contract liability at the beginning of the respective fiscal year.
The amount of unsatisfied performance obligations for contracts with an original duration greater than one year was $1,437 million$1,531 at July 30, 2023.January 28, 2024. The estimated revenue to be recognized by fiscal year follows in millions of dollars:follows: remainder of 20232024 - $139, 2024 - $403,– $373, 2025 - $337,– $409, 2026 - $228,– $304, 2027 - $136,– $179, 2028 - $86– $108, 2029 – $74, and later years - $108.– $84. As permitted, the Companywe elected only to disclose remaining performance obligations with an original contract duration greater than one year. The contracts with an expected duration of one year or less are for sales ofto dealers and retail customers for equipment, service parts, repair services, and certain telematics services.
(4) Other Comprehensive Income Items
The after-tax components of accumulated other comprehensive income (loss) in millions of dollars follow:
| | | | | | | | | | | | | | | | | | | ||
| | July 30 | | October 30 | | July 31 | | | January 28 | | October 29 | | January 29 | | ||||||
| | 2023 | | 2022 | | 2022 | | | 2024 | | 2023 | | 2023 | | ||||||
Retirement benefits adjustment | | $ | (656) | | $ | (389) | | $ | (1,171) | | | $ | (866) | | $ | (845) | | $ | (400) | |
Cumulative translation adjustment | | | (1,669) | | | (2,594) | | | (2,262) | | | | (1,877) | | (2,151) | | (1,913) | | ||
Unrealized gain (loss) on derivatives | | | (5) | | | 21 | | | (1) | | | | (23) | | (8) | | 8 | | ||
Unrealized gain (loss) on debt securities | | | (81) | | | (94) | | | (42) | | ||||||||||
Unrealized loss on debt securities | | | (97) | | | (110) | | | (67) | | ||||||||||
Total accumulated other comprehensive income (loss) | | $ | (2,411) | | $ | (3,056) | | $ | (3,476) | | | $ | (2,863) | | $ | (3,114) | | $ | (2,372) | |
Following areThe following tables reflect amounts recorded in andother comprehensive income (loss), as well as reclassifications out of other comprehensive income (loss), and the income tax effects, in millions of dollars. Retirement benefits adjustment reclassifications for actuarial (gain) loss, prior service (credit) cost, and settlements are included in net periodic pension and other postretirement benefit costs (see Note 6).
| | | | | | | | | | |
|
| Before |
| Tax |
| After |
| |||
| | Tax | | (Expense) | | Tax |
| |||
Three Months Ended July 30, 2023 | | Amount | | Credit | | Amount |
| |||
Cumulative translation adjustment | | $ | 143 | | $ | 1 | | $ | 144 | |
Unrealized gain (loss) on derivatives: | | | | | | | | | | |
Unrealized hedging gain (loss) | | | 24 | | | (5) | | | 19 | |
Reclassification of realized (gain) loss to: | | | | | | | | | | |
Interest rate contracts – Interest expense | | | (18) | | | 4 | | | (14) | |
Net unrealized gain (loss) on derivatives | | | 6 | | | (1) | | | 5 | |
Unrealized gain (loss) on debt securities: | | | | | | | | | | |
Unrealized holding gain (loss) | | | (16) | | | 3 | | | (13) | |
Net unrealized gain (loss) on debt securities | | | (16) | | | 3 | | | (13) | |
Retirement benefits adjustment: | | | | | | | | | | |
Net actuarial gain (loss) | | | (1) | | | | | | (1) | |
Reclassification of amortized amounts: | | | | | | | | | | |
Actuarial (gain) loss – Other operating expenses | | | (20) | | | 5 | | | (15) | |
Prior service (credit) cost – Other operating expenses | | | 9 | | | (2) | | | 7 | |
Net unrealized gain (loss) on retirement benefits adjustment | | | (12) | | | 3 | | | (9) | |
Total other comprehensive income (loss) |
| $ | 121 | | $ | 6 | | $ | 127 | |
| | | | | | | | | | |
|
| Before |
| Tax |
| After |
| |||
| | Tax | | (Expense) | | Tax |
| |||
Three Months Ended January 28, 2024 | | Amount | | Credit | | Amount |
| |||
Cumulative translation adjustment |
| $ | 273 | | $ | 1 | | $ | 274 | |
Unrealized gain (loss) on derivatives: | | | | | | | | | | |
Unrealized hedging gain (loss) | | | (8) | | | 2 | | | (6) | |
Reclassification of realized (gain) loss to: | | | | | | | | | | |
Interest rate contracts – Interest expense | | | (11) | | | 2 | | | (9) | |
Net unrealized gain (loss) on derivatives | | | (19) | | | 4 | | | (15) | |
Unrealized gain (loss) on debt securities: | | | | | | | | | | |
Unrealized holding gain (loss) | | | 1 | | | 6 | | | 7 | |
Reclassification of realized (gain) loss – Other income | | | 8 | | | (2) | | | 6 | |
Net unrealized gain (loss) on debt securities | | | 9 | | | 4 | | | 13 | |
Retirement benefits adjustment: | | | | | | | | | | |
Net actuarial gain (loss) | | | (17) | | | 4 | | | (13) | |
Reclassification to Other operating expenses through amortization of: | | | | | | | | | | |
Actuarial (gain) loss | | | (20) | | | 5 | | | (15) | |
Prior service (credit) cost | | | 9 | | | (2) | | | 7 | |
Net unrealized gain (loss) on retirement benefits adjustment | | | (28) | | | 7 | | | (21) | |
Total other comprehensive income (loss) |
| $ | 235 | | $ | 16 | | $ | 251 | |
109
| | | | | | | | | | |
|
| Before |
| Tax |
| After |
| |||
| | Tax | | (Expense) | | Tax |
| |||
Nine Months Ended July 30, 2023 | | Amount | | Credit | | Amount |
| |||
Cumulative translation adjustment |
| $ | 914 | | $ | 11 | | $ | 925 | |
Unrealized gain (loss) on derivatives: | | | | | | | | | | |
Unrealized hedging gain (loss) | | | 19 | | | (4) | | | 15 | |
Reclassification of realized (gain) loss to: | | | | | | | | | | |
Interest rate contracts – Interest expense | | | (52) | | | 11 | | | (41) | |
Net unrealized gain (loss) on derivatives | | | (33) | | | 7 | | | (26) | |
Unrealized gain (loss) on debt securities: | | | | | | | | | | |
Unrealized holding gain (loss) | | | 17 | | | (4) | | | 13 | |
Net unrealized gain (loss) on debt securities | | | 17 | | | (4) | | | 13 | |
Retirement benefits adjustment: | | | | | | | | | | |
Net actuarial gain (loss) | | | (351) | | | 83 | | | (268) | |
Reclassification of amortized amounts: | | | | | | | | | | |
Actuarial (gain) loss – Other operating expenses | | | (61) | | | 15 | | | (46) | |
Prior service (credit) cost – Other operating expenses | | | 28 | | | (7) | | | 21 | |
Settlements – Other operating expenses | | | 36 | | | (10) | | | 26 | |
Net unrealized gain (loss) on retirement benefits adjustment | | | (348) | | | 81 | | | (267) | |
Total other comprehensive income (loss) |
| $ | 550 | | $ | 95 | | $ | 645 | |
| | | | | | | | | | |
|
| Before |
| Tax |
| After |
| |||
| | Tax | | (Expense) | | Tax |
| |||
Three Months Ended July 31, 2022 | | Amount | | Credit | | Amount |
| |||
Cumulative translation adjustment |
| $ | (267) | | $ | (2) | | $ | (269) | |
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) | | | 6 | | | (1) | | | 5 | |
Reclassification of realized (gain) loss – Other income | | | 1 | | | | | | 1 | |
Net unrealized gain (loss) on debt securities | | | 7 | | | (1) | | | 6 | |
Retirement benefits adjustment: | | | | | | | | | | |
Net actuarial gain (loss) | | | 34 | | | (9) | | | 25 | |
Reclassification of amortized amounts: | | | | | | | | | | |
Actuarial (gain) loss – Other operating expenses | | | 27 | | | (7) | | | 20 | |
Prior service (credit) cost – Other operating expenses | | | 8 | | | (2) | | | 6 | |
Settlements/curtailment – Other operating expenses | | | 36 | | | (8) | | | 28 | |
Net unrealized gain (loss) on retirement benefits adjustment | | | 105 | | | (26) | | | 79 | |
Total other comprehensive income (loss) |
| $ | (157) | | $ | (28) | | $ | (185) | |
| | | | | | | | | | |
|
| Before |
| Tax |
| After |
| |||
| | Tax | | (Expense) | | Tax |
| |||
Three Months Ended January 29, 2023 | | Amount | | Credit | | Amount |
| |||
Cumulative translation adjustment |
| $ | 669 | | $ | 12 | | $ | 681 | |
Unrealized gain (loss) on derivatives: | | | | | | | | | | |
Unrealized hedging gain (loss) | | | (1) | | | | | | (1) | |
Reclassification of realized (gain) loss to: | | | | | | | | | | |
Interest rate contracts – Interest expense | | | (15) | | | 3 | | | (12) | |
Net unrealized gain (loss) on derivatives | | | (16) | | | 3 | | | (13) | |
Unrealized gain (loss) on debt securities: | | | | | | | | | | |
Unrealized holding gain (loss) | | | 34 | | | (7) | | | 27 | |
Net unrealized gain (loss) on debt securities | | | 34 | | | (7) | | | 27 | |
Retirement benefits adjustment: | | | | | | | | | | |
Net actuarial gain (loss) | | | (1) | | | | | | (1) | |
Reclassification to Other operating expenses through amortization of: | | | | | | | | | | |
Actuarial (gain) loss | | | (21) | | | 5 | | | (16) | |
Prior service (credit) cost | | | 9 | | | (3) | | | 6 | |
Net unrealized gain (loss) on retirement benefits adjustment | | | (13) | | | 2 | | | (11) | |
Total other comprehensive income (loss) |
| $ | 674 | | $ | 10 | | $ | 684 | |
11
| | | | | | | | | | |
|
| Before |
| Tax |
| After |
| |||
| | Tax | | (Expense) | | Tax |
| |||
Nine Months Ended July 31, 2022 | | Amount | | Credit | | Amount |
| |||
Cumulative translation adjustment |
| $ | (774) | | $ | (10) | | $ | (784) | |
Unrealized gain (loss) on derivatives: | | | | | | | | | | |
Unrealized hedging gain (loss) | | | 52 | | | (11) | | | 41 | |
Net unrealized gain (loss) on derivatives | | | 52 | | | (11) | | | 41 | |
Unrealized gain (loss) on debt securities: | | | | | | | | | | |
Unrealized holding gain (loss) | | | (74) | | | 16 | | | (58) | |
Reclassification of realized (gain) loss – Other income | | | 1 | | | | | | 1 | |
Net unrealized gain (loss) on debt securities | | | (73) | | | 16 | | | (57) | |
Retirement benefits adjustment: | | | | | | | | | | |
Net actuarial gain (loss) and prior service credit (cost) | | | (338) | | | 81 | | | (257) | |
Reclassification of amortized amounts: | | | | | | | | | | |
Actuarial (gain) loss – Other operating expenses | | | 94 | | | (24) | | | 70 | |
Prior service (credit) cost – Other operating expenses | | | 22 | | | (6) | | | 16 | |
Settlements/curtailment – Other operating expenses | | | 44 | | | (10) | | | 34 | |
Net unrealized gain (loss) on retirement benefits adjustment | | | (178) | | | 41 | | | (137) | |
Total other comprehensive income (loss) |
| $ | (973) | | $ | 36 | | $ | (937) | |
(5) Earnings Per Share
A reconciliation of basic and diluted net income per share attributable to Deere & Company follows in millions, (exceptexcept per share amounts):amounts:
| | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | Three Months Ended |
| ||||||||||||
| | July 30 | | July 31 | | July 30 | | July 31 |
| | January 28 | | January 29 | | ||||||
| | 2023 | | 2022 | | 2023 | | 2022 |
| | 2024 | | 2023 | | ||||||
Net income attributable to Deere & Company |
| $ | 2,978 |
| $ | 1,884 |
| $ | 7,797 |
| $ | 4,885 | |
| $ | 1,751 |
| $ | 1,959 | |
Average shares outstanding | | | 290.8 | |
| 304.1 | | | 294.4 | |
| 305.8 | | | | 279.9 | |
| 297.6 | |
Basic per share | | $ | 10.24 | | $ | 6.20 | | $ | 26.48 | | $ | 15.97 | | | $ | 6.25 | | $ | 6.58 | |
| | | | | | | | | | | | | | | | | | | | |
Average shares outstanding | | | 290.8 | |
| 304.1 | | | 294.4 | |
| 305.8 | | | | 279.9 | |
| 297.6 | |
Effect of dilutive share-based compensation | | | 1.3 | |
| 1.6 | | | 1.5 | |
| 1.9 | | |||||||
Effect of dilutive stock options and restricted stock awards | | | 1.2 | |
| 1.5 | | |||||||||||||
Total potential shares outstanding | | | 292.1 | |
| 305.7 | | | 295.9 | |
| 307.7 | | | | 281.1 | |
| 299.1 | |
Diluted per share | | $ | 10.20 | | $ | 6.16 | | $ | 26.35 | | $ | 15.88 | | | $ | 6.23 | | $ | 6.55 | |
| | | | | | | | | | | | | | | | | | | | |
Shares excluded from EPS calculation, as antidilutive | | | .2 | | | .2 | | | .1 | | | .2 | | | | .2 | | | .1 | |
1210
(6) Pension and Other Postretirement Employee Benefits
The Company hasWe have several funded and unfunded defined benefit pension plans and other postretirement employee benefit (OPEB) plans. These plans primarily health care and life insurance plans, covering itscover U.S. employees and employees in certain foreign countries.employees. The components of net periodic pension and OPEB (benefit) cost consisted of the following in millions of dollars:following:
| | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | Three Months Ended |
| ||||||||||||
| | July 30 | | July 31 | | July 30 | | July 31 |
| | January 28 | | January 29 |
| ||||||
| | 2023 | | 2022 | | 2023 | | 2022 |
| | 2024 | | 2023 |
| ||||||
Pension | | | | | | | | | | | | | | |||||||
Pensions | | | | | | | | |||||||||||||
Service cost |
| $ | 62 |
| $ | 86 |
| $ | 186 |
| $ | 265 | |
| $ | 58 |
| $ | 60 | |
Interest cost | | | 133 | |
| 85 | | | 400 | |
| 242 | | | | 136 | |
| 133 | |
Expected return on plan assets | | | (223) | |
| (182) | | | (655) | |
| (544) | | | | (241) | |
| (212) | |
Amortization of actuarial (gain) loss | | | (5) | |
| 31 | | | (16) | |
| 107 | | |||||||
Amortization of actuarial gain | | | (4) | |
| (5) | | |||||||||||||
Amortization of prior service cost | | | 10 | |
| 9 | | | 30 | |
| 25 | | | | 10 | |
| 10 | |
Settlements/curtailment | | | | |
| 36 | | | 36 | |
| 44 | | |||||||
Net (benefit) cost | | $ | (23) | | $ | 65 | | $ | (19) | | $ | 139 | | |||||||
Net benefit | | $ | (41) | | $ | (14) | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
OPEB | | | | | | | | | | | | | | | | | | | | |
Service cost |
| $ | 7 |
| $ | 11 |
| $ | 20 |
| $ | 34 | | | $ | 5 | | $ | 7 | |
Interest cost | | | 44 | |
| 25 | | | 132 | |
| 74 | | | | 43 | |
| 43 | |
Expected return on plan assets | | | (29) | |
| (28) | | | (87) | |
| (83) | | | | (27) | |
| (29) | |
Amortization of actuarial gain | | | (15) | |
| (4) | | | (45) | |
| (13) | | | | (16) | |
| (16) | |
Amortization of prior service credit | | | (1) | |
| (1) | | | (2) | |
| (3) | | | | (1) | |
| (1) | |
Net cost | | $ | 6 | | $ | 3 | | $ | 18 | | $ | 9 | | | $ | 4 | | $ | 4 | |
The reduction in the 2023 pension net cost is due to increases in the expected long-term return rates on plan assets and increases in discount rates. The components of net periodic pension and OPEB (benefit) cost excluding the service cost component are included in the line item “Other operating expenses” in the statements of consolidated income.expenses.”
During the second quarterfirst three months of 2024, we contributed and expect to contribute the following amounts to our pension and OPEB plans:
| | | | | | | |
| | Pensions | | OPEB | | ||
Contributed |
| $ | 24 |
| $ | 106 |
|
Expected contributions remainder of the year | | | 61 | |
| 34 | |
In December 2023, the Canada pension plan paidwe contributed $60 to a premium to an insurance company to irrevocably transfer the benefit obligations and administration for the majority of its retired participants. The transaction did not impact the benefits to be received by the retired participants. In connection with the transaction, the Company recognized a one-time, non-cash, pre-tax pension settlement charge of $36 millionU.S. non-union Voluntary Employees’ Beneficiary Association trust, which is included in the second quarterOPEB contributed amount. The contribution will be used to fund salary postretirement health care benefits during the remainder of 2023 related to the accelerated recognition of actuarial losses included within “Accumulated other comprehensive income (loss)” in the statements of changes in consolidated stockholders’ equity.
2024.
1311
(7) Segment ReportingData
Worldwide net sales and revenues,Information relating to operations by operating profit, and identifiable assets by segment were as follows in millions of dollars:follows.
| | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| ||||||||||||
| | July 30 | | July 31 | | % | | July 30 | | July 31 | | % |
| ||||
| | 2023 | | 2022 | | Change | | 2023 | | 2022 | | Change |
| ||||
Net sales and revenues: |
| |
|
| |
|
|
|
| | |
| |
|
|
| |
Production & precision ag net sales |
| $ | 6,806 | | $ | 6,096 | | +12 |
| $ | 19,826 | | $ | 14,568 | | +36 | |
Small ag & turf net sales | | | 3,739 | | | 3,635 | | +3 | | | 10,886 | | | 9,836 | | +11 | |
Construction & forestry net sales | | | 3,739 | |
| 3,269 | | +14 | | | 11,053 | |
| 9,161 | | +21 | |
Financial services revenues | | | 1,228 | |
| 903 | | +36 | | | 3,375 | |
| 2,637 | | +28 | |
Other revenues | | | 289 | |
| 199 | | +45 | | | 699 | |
| 839 | | -17 | |
Total net sales and revenues |
| $ | 15,801 | | $ | 14,102 | | +12 |
| $ | 45,839 | | $ | 37,041 | | +24 | |
Operating profit: | | | | | | | | | | | | | | | | | |
Production & precision ag |
| $ | 1,782 | | $ | 1,293 | | +38 |
| $ | 5,160 | | $ | 2,646 | | +95 | |
Small ag & turf | | | 732 | | | 552 | | +33 | | | 2,028 | | | 1,443 | | +41 | |
Construction & forestry | | | 716 | |
| 514 | | +39 | | | 2,179 | |
| 1,599 | | +36 | |
Financial services | | | 286 | |
| 287 | | | | | 565 | |
| 864 | | -35 | |
Total operating profit | | | 3,516 | |
| 2,646 | | +33 | | | 9,932 | |
| 6,552 | | +52 | |
Reconciling items | | | 98 | |
| (108) | | | | | 29 | |
| (303) | | | |
Income taxes | | | (636) | |
| (654) | | -3 | | | (2,164) | |
| (1,364) | | +59 | |
Net income attributable to Deere & Company |
| $ | 2,978 | | $ | 1,884 | | +58 |
| $ | 7,797 | | $ | 4,885 | | +60 | |
| | | | | | | | | | | | | | | | | |
Intersegment sales and revenues: | | | | | | | | | | | | | | | | | |
Production & precision ag net sales |
| $ | 9 | | $ | 5 | | +80 |
| $ | 21 | | $ | 15 | | +40 | |
Small ag & turf net sales | | | 2 | | | 2 | | | | | 10 | | | 8 | | +25 | |
Construction & forestry net sales | | | | | | | | | | | | |
| | | | |
Financial services revenues | | | 217 | |
| 81 | | +168 | | | 612 | |
| 214 | | +186 | |
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| | Three Months Ended |
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| | January 28 | | January 29 | | % |
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| 2024 |
| 2023 |
| Change |
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Net sales and revenues: |
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Production & precision ag net sales |
| $ | 4,849 | | $ | 5,198 | | -7 | |
Small ag & turf net sales | | | 2,425 | | | 3,001 | | -19 | |
Construction & forestry net sales | | | 3,212 | |
| 3,203 | | | |
Financial services revenues | | | 1,376 | |
| 1,040 | | +32 | |
Other revenues | | | 323 | |
| 210 | | +54 | |
Total net sales and revenues |
| $ | 12,185 | | $ | 12,652 | | -4 | |
Operating profit: | | | | | | | | | |
Production & precision ag |
| $ | 1,045 | | $ | 1,208 | | -13 | |
Small ag & turf | | | 326 | | | 447 | | -27 | |
Construction & forestry | | | 566 | |
| 625 | | -9 | |
Financial services | | | 257 | |
| 238 | | +8 | |
Total operating profit | | | 2,194 | |
| 2,518 | | -13 | |
Reconciling items | | | 26 | |
| (22) | | | |
Income taxes | | | (469) | |
| (537) | | -13 | |
Net income attributable to Deere & Company |
| $ | 1,751 | | $ | 1,959 | | -11 | |
| | | | | | | | | |
Intersegment sales and revenues: | | | | | | | | | |
Production & precision ag net sales |
| $ | 8 | | $ | 5 | | +60 | |
Small ag & turf net sales | | | 1 | | | 3 | | -67 | |
Construction & forestry net sales | | | | | | | | | |
Financial services revenues | | | 176 | |
| 204 | | -14 | |
Operating profit for productionPPA, SAT, and precision ag, small ag and turf, and construction and forestryCF is income from continuing operations before reconciling itemscorporate expenses, certain external interest expenses, certain foreign exchange gains and losses, and income taxes. Operating profit forof financial services includes the effect of interest expense and foreign exchange gains and losses. Reconciling items to net income are primarily corporate expenses, certain interest income and expenses, certain foreign exchange gains and losses, pension and OPEB benefit (cost) amounts excluding the service cost component, equity in income of unconsolidated affiliates, and net income attributable to noncontrolling interests.
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Identifiable assets were as follows in millions of dollars: |
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Identifiable operating assets were as follows: |
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| July 30 |
| October 30 | | July 31 |
| | January 28 |
| October 29 |
| January 29 |
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| | 2023 | | 2022 | | 2022 |
| | 2024 | | 2023 | | 2023 | | ||||||
Production & precision ag |
| $ | 9,523 | | $ | 8,414 | | $ | 8,728 | |
| $ | 9,059 | | $ | 8,734 | | $ | 9,393 | |
Small ag & turf | | | 4,482 | | | 4,451 | | | 4,361 | | | | 4,426 | | 4,348 | | 4,893 | | ||
Construction & forestry | | | 7,415 | |
| 6,754 | |
| 6,824 | | | | 7,371 | |
| 7,139 | |
| 7,232 | |
Financial services | | | 68,850 | |
| 58,864 | |
| 56,008 | | | | 69,900 | |
| 70,732 | |
| 59,721 | |
Corporate | | | 13,127 | |
| 11,547 | |
| 10,896 | | | | 10,615 | |
| 13,134 | |
| 10,381 | |
Total assets |
| $ | 103,397 | | $ | 90,030 | | $ | 86,817 | |
| $ | 101,371 | | $ | 104,087 | | $ | 91,620 | |
(8) Financing Receivables
The Company monitorsWe monitor the credit quality of financing receivables based on delinquency status. Past due balances of financing receivables still accruing finance income represent the total balance held (principal plus accrued interest) with any payment amounts 30 days or more past the contractual payment due date. Non-performing financing receivables represent receivables for which the Company has ceased accruing finance income. The Company ceases accruing finance income when these receivables are generally 90 days delinquent. Generally, when receivables are 120 days delinquent the estimated uncollectible amount from the customer is written off to the allowance for credit losses. Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is generally resumed when the receivable becomes contractually current and collection is reasonably assured.status, defined as follows:
● | Past due balances represent any payments 30 days or more past the due date. |
● | Non-performing financing receivables represent receivables for which we have stopped accruing finance income. This generally occurs when receivables are 90 days delinquent. |
● | Write-offs generally occur when receivables are 120 days delinquent. In these situations, the estimated uncollectible amount is written off to the allowance for credit losses. Any expected recovery is presented as non-performing. |
1412
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:follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
| | July 30, 2023 | | | January 28, 2024 | | ||||||||||||||||||||||||||||||||||||||||||||
| | 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior Years | | Revolving Charge Accounts | | Total | | | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior Years | | Revolving Charge Accounts | | Total | | ||||||||||||||||
Retail customer receivables: |
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Agriculture and turf | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Current | | $ | 10,554 | | $ | 9,701 | | $ | 5,792 | | $ | 2,779 | | $ | 1,080 | | $ | 402 | | $ | 4,388 | | $ | 34,696 | | | $ | 3,248 | | $ | 13,626 | | $ | 7,731 | | $ | 4,577 | | $ | 2,032 | | $ | 931 | | $ | 2,798 | | $ | 34,943 | |
30-59 days past due | | 59 | | 85 | | 53 | | 26 | | 13 | | 4 | | | 21 | | 261 | | | | 5 | | | 122 | | | 66 | | | 47 | | | 22 | | | 11 | | | 71 | | | 344 | | |||||||
60-89 days past due | | 19 | | 30 | | 17 | | 10 | | 5 | | 1 | | | 7 | | 89 | | | | 1 | | | 50 | | | 26 | | | 15 | | | 7 | | | 5 | | | 16 | | | 120 | | |||||||
90+ days past due | | | | 1 | | | | | | | | | | | | | 1 | | | | | | | 1 | | | 1 | | | 3 | | | 4 | | | | | | | | | 9 | | |||||||
Non-performing | | 19 | | 80 | | 71 | | 36 | | 24 | | 27 | | | 8 | | 265 | | | | | | | 49 | | | 95 | | | 66 | | | 34 | | | 42 | | | 11 | | | 297 | | |||||||
Construction and forestry | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Current | | 2,167 | | 2,200 | | 1,284 | | 449 | | 124 | | 39 | | | 114 | | 6,377 | | | | 803 | | | 2,698 | | | 1,743 | | | 911 | | | 276 | | | 109 | | | 101 | | | 6,641 | | |||||||
30-59 days past due | | 39 | | 46 | | 38 | | 13 | | 5 | | 2 | | | 4 | | 147 | | | | 8 | | | 73 | | | 46 | | | 26 | | | 8 | | | 3 | | | 5 | | | 169 | | |||||||
60-89 days past due | | 12 | | 23 | | 16 | | 8 | | 2 | | 1 | | | 1 | | 63 | | | | | | | 26 | | | 20 | | | 13 | | | 6 | | | 3 | | | 2 | | | 70 | | |||||||
90+ days past due | | | | 2 | | 1 | | 1 | | | | | | | | | 4 | | | | | | | | | | 2 | | | 1 | | | | | | 1 | | | | | | 4 | | |||||||
Non-performing | | | 20 | | | 83 | | | 61 | | | 26 | | | 11 | | | 5 | | | 1 | | | 207 | | | | 1 | | | 67 | | | 86 | | | 48 | | | 20 | | | 9 | | | 2 | | | 233 | |
Total | | $ | 12,889 | | $ | 12,251 | | $ | 7,333 | | $ | 3,348 | | $ | 1,264 | | $ | 481 | | $ | 4,544 | | $ | 42,110 | | |||||||||||||||||||||||||
Total retail customer receivables | | $ | 4,066 | | $ | 16,712 | | $ | 9,816 | | $ | 5,707 | | $ | 2,409 | | $ | 1,114 | | $ | 3,006 | | $ | 42,830 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | October 30, 2022 | | ||||||||||||||||||||||
| | 2022 | | 2021 | | 2020 | | 2019 | | 2018 | | Prior | | Revolving Charge Accounts | | Total | | ||||||||
Retail customer receivables: |
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Agriculture and turf | | | | | | | | | | | | | | | | | | | | | | | | | |
Current | | $ | 13,500 | | $ | 7,984 | | $ | 4,091 | | $ | 1,875 | | $ | 785 | | $ | 200 | | $ | 4,111 | | $ | 32,546 | |
30-59 days past due | | | 46 | | | 63 | | | 36 | | | 17 | | | 7 | | | 3 | | | 19 | | | 191 | |
60-89 days past due | | | 14 | | | 25 | | | 13 | | | 6 | | | 2 | | | 1 | | | 5 | | | 66 | |
90+ days past due | | | 1 | | | | | | | | | | | | | | | | | | | | | 1 | |
Non-performing | | | 27 | | | 60 | | | 44 | | | 28 | | | 18 | | | 19 | | | 8 | | | 204 | |
Construction and forestry | | | | | | | | | | | | | | | | | | | | | | | | | |
Current | | | 2,964 | | | 1,974 | | | 842 | | | 292 | | | 73 | | | 12 | | | 108 | | | 6,265 | |
30-59 days past due | | | 53 | | | 52 | | | 23 | | | 9 | | | 2 | | | 1 | | | 3 | | | 143 | |
60-89 days past due | | | 19 | | | 16 | | | 7 | | | 3 | | | 1 | | | | | | 1 | | | 47 | |
90+ days past due | | | 1 | | | 4 | | | 1 | | | 3 | | | | | | 1 | | | | | | 10 | |
Non-performing | | | 25 | | | 61 | | | 34 | | | 19 | | | 7 | | | 3 | | | | | | 149 | |
Total | | $ | 16,650 | | $ | 10,239 | | $ | 5,091 | | $ | 2,252 | | $ | 895 | | $ | 240 | | $ | 4,255 | | $ | 39,622 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
| | July 31, 2022 | | | October 29, 2023 | | ||||||||||||||||||||||||||||||||||||||||||||
| | 2022 | | 2021 | | 2020 | | 2019 | | 2018 | | Prior | | Revolving Charge Accounts | | Total | | | 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior Years | | Revolving Charge Accounts | | Total | | ||||||||||||||||
Retail customer receivables: |
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Agriculture and turf | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Current | | $ | 9,161 | | $ | 9,169 | | $ | 4,713 | | $ | 2,234 | | $ | 935 | | $ | 378 | | $ | 3,962 | | $ | 30,552 | | | $ | 15,191 | | $ | 8,430 | | $ | 5,120 | | $ | 2,334 | | $ | 853 | | $ | 280 | | $ | 4,526 | | $ | 36,734 | |
30-59 days past due | | 40 | | 70 | | 38 | | 23 | | 8 | | 4 | | | 18 | | 201 | | | | 62 | | | 75 | | | 39 | | | 21 | | | 9 | | | 3 | | | 29 | | | 238 | | |||||||
60-89 days past due | | 15 | | 24 | | 15 | | 7 | | 3 | | 1 | | | 5 | | 70 | | | | 18 | | | 26 | | | 18 | | | 10 | | | 4 | | | 2 | | | 9 | | | 87 | | |||||||
90+ days past due | | | | | | | | | | | | | | | | | | | | | 2 | | | 1 | | | 3 | | | 3 | | | | | | | | | | | | 9 | | |||||||
Non-performing | | 17 | | 62 | | 48 | | 37 | | 19 | | 27 | | | 7 | | 217 | | | | 30 | | | 78 | | | 62 | | | 33 | | | 22 | | | 22 | | | 8 | | | 255 | | |||||||
Construction and forestry | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Current | | 2,336 | | 2,249 | | 1,004 | | 382 | | 106 | | 20 | | | 102 | | 6,199 | | | | 2,927 | | | 1,961 | | | 1,084 | | | 353 | | | 84 | | | 29 | | | 119 | | | 6,557 | | |||||||
30-59 days past due | | 47 | | 54 | | 26 | | 12 | | 4 | | 1 | | | 3 | | 147 | | | | 49 | | | 34 | | | 27 | | | 9 | | | 4 | | | | | | 4 | | | 127 | | |||||||
60-89 days past due | | 14 | | 14 | | 12 | | 4 | | 1 | | | | | 1 | | 46 | | | | 19 | | | 14 | | | 12 | | | 5 | | | 2 | | | | | | 2 | | | 54 | | |||||||
90+ days past due | | | | 11 | | 3 | | 1 | | | | 3 | | | | | 18 | | | | | | | 6 | | | 1 | | | | | | | | | 1 | | | | | | 8 | | |||||||
Non-performing | | | 13 | | | 63 | | | 49 | | | 25 | | | 9 | | | 4 | | | 1 | | | 164 | | | | 42 | | | 80 | | | 55 | | | 23 | | | 9 | | | 4 | | | 1 | | | 214 | |
Total | | $ | 11,643 | | $ | 11,716 | | $ | 5,908 | | $ | 2,725 | | $ | 1,085 | | $ | 438 | | $ | 4,099 | | $ | 37,614 | | |||||||||||||||||||||||||
Total retail customer receivables | | $ | 18,340 | | $ | 10,705 | | $ | 6,421 | | $ | 2,791 | | $ | 987 | | $ | 341 | | $ | 4,698 | | $ | 44,283 | |
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| | January 29, 2023 | | ||||||||||||||||||||||
| | 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior Years | | Revolving Charge Accounts | | Total | | ||||||||
Retail customer receivables: |
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Agriculture and turf | | | | | | | | | | | | | | | | | | | | | | | | | |
Current | | $ | 2,939 | | $ | 12,435 | | $ | 7,228 | | $ | 3,660 | | $ | 1,600 | | $ | 823 | | $ | 2,753 | | $ | 31,438 | |
30-59 days past due | | | 2 | | | 39 | | | 39 | | | 54 | | | 13 | | | 44 | | | 28 | | | 219 | |
60-89 days past due | | | 1 | | | 15 | | | 14 | | | 20 | | | 5 | | | 15 | | | 6 | | | 76 | |
90+ days past due | | | | | | 1 | | | | | | 3 | | | 1 | | | | | | | | | 5 | |
Non-performing | | | | | | 40 | | | 58 | | | 41 | | | 27 | | | 34 | | | 8 | | | 208 | |
Construction and forestry | | | | | | | | | | | | | | | | | | | | | | | | | |
Current | | | 674 | | | 2,692 | | | 1,702 | | | 684 | | | 224 | | | 80 | | | 99 | | | 6,155 | |
30-59 days past due | | | 2 | | | 18 | | | 29 | | | 36 | | | 16 | | | 52 | | | 5 | | | 158 | |
60-89 days past due | | | | | | 9 | | | 17 | | | 18 | | | 8 | | | 24 | | | 2 | | | 78 | |
90+ days past due | | | | | | 1 | | | 2 | | | 1 | | | 2 | | | 1 | | | | | | 7 | |
Non-performing | | | | | | 46 | | | 58 | | | 30 | | | 16 | | | 7 | | | 1 | | | 158 | |
Total retail customer receivables | | $ | 3,618 | | $ | 15,296 | | $ | 9,147 | | $ | 4,547 | | $ | 1,912 | | $ | 1,080 | | $ | 2,902 | | $ | 38,502 | |
1513
The credit quality analysis of wholesale receivables by year of origination was as follows in millions of dollars:follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
| | July 30, 2023 | | | January 28, 2024 | | ||||||||||||||||||||||||||||||||||||||||||||
| | 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior | | Revolving | | Total | | | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior Years | | Revolving | | Total | | ||||||||||||||||
Wholesale receivables: |
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Agriculture and turf | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Current | | $ | 449 | | $ | 139 | | $ | 28 | | $ | 7 | | $ | 1 | | $ | 1 | | $ | 4,940 | | $ | 5,565 | | | $ | 266 | | $ | 463 | | $ | 68 | | $ | 6 | | $ | 3 | | $ | 1 | | $ | 5,757 | | $ | 6,564 | |
30+ days past due | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | | | | | | | | | | | | | 1 | | |||||||
Non-performing | | | | | | | | | | 1 | | | | | | | 1 | | | | | | | | | | | | | | | | | | | 1 | | | | | | 1 | | |||||||
Construction and forestry | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Current | | 20 | | 6 | | 23 | | 1 | | | | 1 | | | 752 | | 803 | | | | 6 | | | 14 | | | 4 | | | 19 | | | | | | 1 | | | 863 | | | 907 | | |||||||
30+ days past due | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Non-performing | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 469 | | $ | 145 | | $ | 51 | | $ | 8 | | $ | 2 | | $ | 2 | | $ | 5,692 | | $ | 6,369 | | |||||||||||||||||||||||||
Total wholesale receivables | | $ | 272 | | $ | 478 | | $ | 72 | | $ | 25 | | $ | 3 | | $ | 3 | | $ | 6,620 | | $ | 7,473 | |
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| | October 30, 2022 | | ||||||||||||||||||||||
| | 2022 | | 2021 | | 2020 | | 2019 | | 2018 | | Prior | | Revolving | | Total | | ||||||||
Wholesale receivables: |
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Agriculture and turf | | | | | | | | | | | | | | | | | | | | | | | | | |
Current | | $ | 387 | | $ | 64 | | $ | 27 | | $ | 4 | | | | | $ | 2 | | $ | 2,371 | | $ | 2,855 | |
30+ days past due | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-performing | | | | | | | | | | | | 1 | | | | | | | | | | | | 1 | |
Construction and forestry | | | | | | | | | | | | | | | | | | | | | | | | | |
Current | | | 7 | | | 29 | | | 2 | | | 1 | | | | | | 1 | | | 377 | | | 417 | |
30+ days past due | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-performing | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 394 | | $ | 93 | | $ | 29 | | $ | 6 | | | | | $ | 3 | | $ | 2,748 | | $ | 3,273 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
| | July 31, 2022 | | | October 29, 2023 | | ||||||||||||||||||||||||||||||||||||||||||||
| | 2022 | | 2021 | | 2020 | | 2019 | | 2018 | | Prior | | Revolving | | Total | | | 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior Years | | Revolving | | Total | | ||||||||||||||||
Wholesale receivables: |
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Agriculture and turf | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Current | | $ | 289 | | $ | 99 | | $ | 34 | | $ | 6 | | $ | 1 | | $ | 1 | | $ | 2,022 | | $ | 2,452 | | | $ | 631 | | $ | 93 | | $ | 21 | | $ | 4 | | $ | 1 | | $ | 160 | | $ | 5,175 | | $ | 6,085 | |
30+ days past due | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Non-performing | | | | | | | | 1 | | | | | | | | | 1 | | | | | | | | | | | | | | | | 1 | | | | | | | | | 1 | | |||||||
Construction and forestry | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Current | | 11 | | 32 | | 3 | | 1 | | | | 1 | | | 283 | | 331 | | | | 23 | | | 5 | | | 20 | | | | | | | | | 76 | | | 712 | | | 836 | | |||||||
30+ days past due | | | | | | | | | | | | 1 | | | | | 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||
Non-performing | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 300 | | $ | 131 | | $ | 37 | | $ | 8 | | $ | 1 | | $ | 3 | | $ | 2,305 | | $ | 2,785 | | |||||||||||||||||||||||||
Total wholesale receivables | | $ | 654 | | $ | 98 | | $ | 41 | | $ | 4 | | $ | 2 | | $ | 236 | | $ | 5,887 | | $ | 6,922 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | January 29, 2023 | | ||||||||||||||||||||||
| | 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior Years | | Revolving | | Total | | ||||||||
Wholesale receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Agriculture and turf | | | | | | | | | | | | | | | | | | | | | | | | | |
Current | | $ | 115 | | $ | 285 | | $ | 48 | | $ | 21 | | $ | 4 | | $ | 1 | | $ | 2,654 | | $ | 3,128 | |
30+ days past due | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-performing | | | | | | | | | | | | 1 | | | | | | | | | | | | 1 | |
Construction and forestry | | | | | | | | | | | | | | | | | | | | | | | | | |
Current | | | 7 | | | 7 | | | 24 | | | 2 | | | | | | 1 | | | 459 | | | 500 | |
30+ days past due | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-performing | | | | | | | | | | | | | | | | | | | | | | | | | |
Total wholesale receivables | | $ | 122 | | $ | 292 | | $ | 72 | | $ | 24 | | $ | 4 | | $ | 2 | | $ | 3,113 | | $ | 3,629 | |
1614
An analysis of the allowance for credit losses and investment in financing receivables in millions of dollars during the periods follows:
| | | | | | | | | | | | | |
| | Retail Notes | | Revolving | | | | | | | | ||
| | & Financing | | Charge | | Wholesale | | | | | |||
| | Leases | | Accounts | | Receivables | | Total | | ||||
Three Months Ended July 30, 2023 | | | | | | | | | | | | | |
Allowance: |
|
|
|
|
|
|
|
|
|
| | |
|
Beginning of period balance |
| $ | 157 |
| $ | 19 | | $ | 4 | | $ | 180 | |
Provision | | | 14 | | | 11 | | | | | | 25 | |
Write-offs | | | (23) | | | (18) | | | | | | (41) | |
Recoveries | | | 5 | | | 6 | | | | | | 11 | |
Translation adjustments | | | 1 | | | | | | | | | 1 | |
End of period balance |
| $ | 154 |
| $ | 18 | | $ | 4 | | $ | 176 | |
| | | | | | | | | | | | | |
Nine Months Ended July 30, 2023 | | | | ||||||||||
Allowance: |
| | | | | | | | | | | | |
Beginning of period balance |
| $ | 299 |
| $ | 22 | | $ | 4 | | $ | 325 | |
Provision | | | 59 | | | 15 | | | 1 | | | 75 | |
Provision transferred to held for sale | | | (142) | | | | | | | | | (142) | |
Provision (credit) subtotal | | | (83) | | | 15 | | | 1 | | | (67) | |
Write-offs | | | (60) | | | (36) | | | | | | (96) | |
Recoveries | | | 15 | | | 17 | | | | | | 32 | |
Translation adjustments | | | (17) | | | | | | (1) | | | (18) | |
End of period balance |
| $ | 154 |
| $ | 18 | | $ | 4 | | $ | 176 | |
Financing receivables: | | | | | | | | | | | | | |
End of period balance |
| $ | 37,566 |
| $ | 4,544 | | $ | 6,369 | | $ | 48,479 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Retail Notes | | Revolving | | | | | | |
| | Three Months Ended January 28, 2024 | | ||||||||||||
| | & Financing | | Charge | | Wholesale | | | |
| | Retail Notes | | Revolving | | | | | | | | |||||
| | Leases | | Accounts | | Receivables | | Total | | | & Financing | | Charge | | Wholesale | | | | | |||||||
Three Months Ended July 31, 2022 | | | | | | | | | | | | | | |||||||||||||
| | Leases | | Accounts | | Receivables | | Total | | |||||||||||||||||
Allowance: |
| |
|
| |
|
| |
|
| |
| |
|
|
|
|
|
|
|
|
|
| | |
|
Beginning of period balance | | $ | 168 |
| $ | 17 | | $ | 5 | | $ | 190 | |
| $ | 172 |
| $ | 21 | | $ | 4 | | $ | 197 | |
Provision (credit) | |
| 14 | | | 3 | | | (1) | |
| 16 | | | | 35 | | | (2) | | | | | | 33 | |
Write-offs | |
| (12) | | | (10) | | | | |
| (22) | | | | (31) | | | (11) | | | | | | (42) | |
Recoveries | |
| 8 | | | 7 | | | | |
| 15 | | | | 1 | | | 8 | | | | | | 9 | |
Translation adjustments | |
| 3 | | | | | | | |
| 3 | | | | | | | | | | (2) | | | (2) | |
End of period balance | | $ | 181 | | $ | 17 | | $ | 4 | | $ | 202 | |
| $ | 177 |
| $ | 16 | | $ | 2 | | $ | 195 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended July 31, 2022 | | | | |||||||||||||||||||||||
Allowance: |
|
|
|
|
|
|
|
|
|
| | | | |||||||||||||
Beginning of period balance | | $ | 138 |
| $ | 21 | | $ | 7 | | $ | 166 | | |||||||||||||
Provision (credit) | |
| 66 | | | (4) | | | (3) | | | 59 | | |||||||||||||
Write-offs | |
| (47) | | | (22) | | | | | | (69) | | |||||||||||||
Recoveries | |
| 17 | | | 22 | | | | | | 39 | | |||||||||||||
Translation adjustments | | | 7 | | | | | | | |
| 7 | | |||||||||||||
End of period balance | | $ | 181 | | $ | 17 | | $ | 4 | | $ | 202 | | |||||||||||||
Financing receivables: | | | | | | | | | | | | | | | | | | | | | | | | | | |
End of period balance | | $ | 33,515 |
| $ | 4,099 | | $ | 2,785 | | $ | 40,399 | |
| $ | 39,824 |
| $ | 3,006 | | $ | 7,473 | | $ | 50,303 | |
| | | | | | | | | | | | | |
| | Three Months Ended January 29, 2023 |
| ||||||||||
| | Retail Notes | | Revolving | | | | | | |
| ||
| | & Financing | | Charge | | Wholesale | | | |
| |||
| | Leases | | Accounts | | Receivables | | Total | | ||||
Allowance: |
| |
|
| |
|
| |
|
| |
| |
Beginning of period balance | | $ | 299 |
| $ | 22 | | $ | 4 | | $ | 325 | |
Provision (credit) | |
| 15 | | | (4) | | | | |
| 11 | |
Provision transferred to held for sale | | | (142) | | | | | | | | | (142) | |
Provision (credit) | | | (127) | | | (4) | | | | | | (131) | |
Write-offs | |
| (18) | | | (7) | | | | |
| (25) | |
Recoveries | |
| 4 | | | 5 | | | 1 | |
| 10 | |
Translation adjustments | |
| (18) | | | | | | (1) | |
| (19) | |
End of period balance | | $ | 140 | | $ | 16 | | $ | 4 | | $ | 160 | |
| | | | | | | | | | | | | |
Financing receivables: | | | | | | | | | | | | | |
End of period balance | | $ | 35,600 |
| $ | 2,902 | | $ | 3,629 | | $ | 42,131 | |
The allowance for credit losses remained generally flat in the first quarter of 2024. In the first quarter of 2023, the Companywe determined that the financial services business in Russia met the held for sale criteria. The financing receivables in Russia were reclassified to “Other assets” and theassets.” The associated allowance for credit losses was reversed inand a valuation allowance for the first quarter of 2023.assets held for sale was recorded. These operations were sold in the second quarter of 2023 (see Note 20).
Write-offs by year of origination were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended January 28, 2024 | | ||||||||||||||||||||||
| | 2024 | | 2023 | | 2022 | | 2021 | | 2020 | | Prior Years | | Revolving Charge Accounts | | Total | | ||||||||
Retail customer receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Agriculture and turf | | | | | $ | 2 | | $ | 4 | | $ | 3 | | $ | 4 | | $ | 1 | | $ | 9 | | $ | 23 | |
Construction and forestry | | | | | | 6 | | | 7 | | | 2 | | | 1 | | | 1 | | | 2 | | | 19 | |
Total retail customer receivables | | | | | $ | 8 | | $ | 11 | | $ | 5 | | $ | 5 | | $ | 2 | | $ | 11 | | $ | 42 | |
Modifications
We occasionally grant contractual modifications to customers experiencing financial difficulties. Before offering a modification, we evaluate the ability of the customer to meet the modified payment terms. Modifications offered include payment deferrals, term extensions, or a combination thereof. Finance charges continue to accrue during the deferral or extension period. Our allowance for credit losses incorporates historical loss information, including the effects of loan modifications with customers. Therefore, additional adjustments to the allowance are generally not recorded upon modification of a loan.
1715
The allowance for credit losses decreased slightlyending amortized cost of modified loans with borrowers experiencing financial difficulty during the three months ended January 28, 2024 were $17, of which $16 were current and $1 were non-performing. These modifications represented 0.03 percent of our financing receivable portfolio at January 28, 2024.
Defaults and subsequent write-offs of loans modified in the third quarter of 2023 as strong fundamentals withinprior twelve months were not significant during the agriculture market continuedthree months ended January 28, 2024. In addition, at January 28, 2024, we had no commitments to benefit the portfolio. Excluding the portfolio in Russia, the allowance for the first nine months of 2023 increased slightly as higher portfolio balances and higher expected losses on turf and construction customer accounts offset the favorable benefits in the agricultural customer accounts. The Company continuesprovide additional financing to monitor the economy as part of the allowance setting process, including potential impacts of inflation and interest rates, among other factors, and qualitative adjustments to the allowance are incorporated as necessary.
these customers.
(9) Securitization of Financing Receivables
Our funding strategy includes receivable securitizations, which allows us to receive cash for financing receivables immediately. While these securitization programs are administered in various forms, they are accomplished in the following basic steps:
As a part of its overall funding strategy,step 1, these receivables are legally isolated from the Company periodically transfers certainclaims of our general creditors. This ensures cash receipts from the 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).accessible to pay back securitization program investors. The structure of these transactions is such that the transfer of the retail notes does not meet the accounting criteria for salesa sale of receivables, and is, therefore,receivables. As a result, they are 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 holdThe receivables and borrowings remain on our balance sheet and are legally isolated. Use of the assets held by the SPEs or the non-VIEs is restricted by terms of the documents governing theseparately reported as “Financing receivables securitized – net” and “Short-term securitization transactions.borrowings,” respectively.
The components of consolidated restricted assets, secured borrowings, and other liabilities related to secured borrowings in securitization transactionsprograms were as follows in millions of dollars:follows:
| | | | | | | | | | | | | | | | | | | ||
|
| July 30 |
| October 30 |
| July 31 |
|
| January 28 |
| October 29 |
| January 29 |
| ||||||
| | 2023 | | 2022 | | 2022 |
| | 2024 | | 2023 | | 2023 |
| ||||||
Financing receivables securitized (retail notes) |
| $ | 7,019 | | $ | 5,952 | | $ | 5,156 | |
| $ | 6,418 | | $ | 7,357 | | $ | 5,102 | |
Allowance for credit losses | | | (18) | |
| (16) | |
| (15) | | | | (18) | |
| (22) | |
| (13) | |
Other assets (primarily restricted cash) | | | 153 | |
| 155 | |
| 136 | | | | 140 | |
| 152 | |
| 97 | |
Total restricted securitized assets |
| $ | 7,154 | | $ | 6,091 | | $ | 5,277 | |
| $ | 6,540 | | $ | 7,487 | | $ | 5,186 | |
| | | | | | | | | | | | | | | | | | | ||
Short-term securitization borrowings | | $ | 6,608 | | $ | 5,711 | | $ | 4,920 | | | $ | 6,116 | | $ | 6,995 | | $ | 4,864 | |
Accrued interest on borrowings | | | 15 | | | 6 | |
| 4 | | | | 10 | | | 13 | |
| 6 | |
Total liabilities related to restricted securitized assets | | $ | 6,623 | | $ | 5,717 | | $ | 4,924 | | | $ | 6,126 | | $ | 7,008 | | $ | 4,870 | |
(10) Inventories
A majority of inventoryinventories owned by Deere & Company and its U.S. equipment subsidiariesus are valued at cost on the “last-in, first-out” (LIFO) basis. If all of the Company’s inventories had been valued on a “first-in, first-out” (FIFO) basis, the estimated inventories by major classification in millions of dollars would have been as follows:
| | | | | | | | | | |
|
| July 30 |
| October 30 |
| July 31 |
| |||
| | 2023 | | 2022 | | 2022 |
| |||
Raw materials and supplies |
| $ | 4,492 | | $ | 4,442 | | $ | 4,508 | |
Work-in-process | | | 1,307 | |
| 1,190 | |
| 1,621 | |
Finished goods and parts | | | 6,164 | |
| 5,363 | |
| 5,434 | |
Total FIFO value | | | 11,963 | |
| 10,995 | |
| 11,563 | |
Less adjustment to LIFO value | | | 2,613 | |
| 2,500 | |
| 2,442 | |
Inventories |
| $ | 9,350 | | $ | 8,495 | | $ | 9,121 | |
| | | | | | | | | | |
|
| January 28 |
| October 29 |
| January 29 |
| |||
| | 2024 | | 2023 | | 2023 |
| |||
Raw materials and supplies |
| $ | 4,117 | | $ | 4,080 | | $ | 4,975 | |
Work-in-process | | | 1,223 | |
| 1,010 | |
| 1,478 | |
Finished goods and parts | | | 6,146 | |
| 5,435 | |
| 6,347 | |
Total FIFO value | | | 11,486 | |
| 10,525 | |
| 12,800 | |
Excess of FIFO over LIFO | | | 2,549 | |
| 2,365 | |
| 2,744 | |
Inventories |
| $ | 8,937 | | $ | 8,160 | | $ | 10,056 | |
1816
(11) Goodwill and Other Intangible Assets – Net
The changes in amounts of goodwill by operating segments were as follows in millions of dollars:
| | | | | | | | | | | | | |
|
| Production & |
| Small Ag |
| Construction |
| | |
| |||
| | Precision Ag | | & Turf | | & Forestry | | Total |
| ||||
Goodwill at October 31, 2021 | | $ | 542 | | $ | 265 | | $ | 2,484 | | $ | 3,291 | |
Acquisitions | |
| 132 | | | 69 | | | 597 | | | 798 | |
Translation adjustments | |
| (23) | | | (11) | | | (301) | | | (335) | |
Goodwill at July 31, 2022 | | $ | 651 | | $ | 323 | | $ | 2,780 | | $ | 3,754 | |
| | | | | | | | | | | | | |
Goodwill at October 30, 2022 | | $ | 646 | | $ | 318 | | $ | 2,723 | | $ | 3,687 | |
Acquisitions | | | 41 | | | 39 | | | | | | 80 | |
Translation adjustments | | | 23 | | | 8 | | | 196 | | | 227 | |
Goodwill at July 30, 2023 | | $ | 710 | | $ | 365 | | $ | 2,919 | | $ | 3,994 | |
follows. There were no accumulated goodwill impairment losses in the reported periods.losses.
| | | | | | | | | | | | | |
| | Production & Precision Ag | | Small Ag & Turf | | Construction & Forestry | | Total |
| ||||
Goodwill at October 30, 2022 | | $ | 646 | | $ | 318 | | $ | 2,723 | | $ | 3,687 | |
Translation adjustments | |
| 15 | | | 7 | | | 182 | |
| 204 | |
Goodwill at January 29, 2023 | | $ | 661 | | $ | 325 | | $ | 2,905 | | $ | 3,891 | |
| | | | | | | | | | | | | |
Goodwill at October 29, 2023 | | $ | 702 | | $ | 363 | | $ | 2,835 | | $ | 3,900 | |
Translation adjustments | | | 4 | | | 2 | | | 60 | | | 66 | |
Goodwill at January 28, 2024 | | $ | 706 | | $ | 365 | | $ | 2,895 | | $ | 3,966 | |
The components of other intangible assets were as follows in millions of dollars:follows:
| | | | | | | | | | | | | | | | | | | | |
|
| July 30 |
| October 30 |
| July 31 |
|
| January 28 |
| October 29 |
| January 29 |
| ||||||
| | 2023 | | 2022 | | 2022 |
| | 2024 | | 2023 | | 2023 |
| ||||||
Amortized intangible assets: | | | | | | | | | | | ||||||||||
Customer lists and relationships | | $ | 524 | | $ | 493 | | $ | 507 | |
| $ | 509 | | $ | 501 | | $ | 522 | |
Technology, patents, trademarks, and other | | | 1,415 | |
| 1,301 | |
| 1,320 | | | | 1,412 | |
| 1,387 | |
| 1,387 | |
Total at cost | | | 1,939 | |
| 1,794 | |
| 1,827 | | | | 1,921 | |
| 1,888 | |
| 1,909 | |
Less accumulated amortization: | | | | |
| | |
| | | | | | | | | | | | |
Customer lists and relationships | | | 201 | | | 166 | | | 162 | | | | 207 | | | 195 | | | 184 | |
Technology, patents, trademarks, and other | | | 539 | | | 410 | | | 384 | | | | 602 | | | 560 | | | 470 | |
Total accumulated amortization | | | 740 | | | 576 | | | 546 | | | | 809 | | | 755 | | | 654 | |
Other intangible assets – net | | $ | 1,199 | | $ | 1,218 | | $ | 1,281 | |
| $ | 1,112 | | $ | 1,133 | | $ | 1,255 | |
The amortization of other intangible assets in the thirdfirst quarter of 2024 and the first nine months of 2023 was $42 million and $126 million, and for the third quarter and the first nine months of 2022 was $42 million and $104 million,$39, respectively. The estimated amortization expense for the next five years is as follows in millions of dollars:follows: remainder of 2023 – $57, 2024 – $179,$131, 2025 – $147,$144, 2026 – $122,$121, 2027 – $120, and$119, 2028 – $88.$87, and 2029 – $74.
(12)Short-Term Borrowings
Short-term borrowings were as follows in millions of dollars:follows:
| | | | | | | | | | | | | | | | | | | ||
| | July 30 | | October 30 | | July 31 | | | January 28 |
| October 29 |
| January 29 | | ||||||
|
| 2023 |
| 2022 |
| 2022 | |
| 2024 | | 2023 | | 2023 | | ||||||
Commercial paper | | $ | 9,003 | | $ | 4,703 | | $ | 6,035 | | | $ | 8,378 | | $ | 9,100 | | $ | 6,425 | |
Notes payable to banks | | | 352 | | | 402 | | | 427 | | | | 310 | | 483 | | 303 | | ||
Finance lease obligations due within one year | | | 23 | | | 21 | | | 21 | | | | 27 | | 25 | | 23 | | ||
Long-term borrowings due within one year | |
| 7,765 | |
| 7,466 | |
| 7,693 | | |
| 8,402 | |
| 8,331 | |
| 7,378 | |
Short-term borrowings | | $ | 17,143 | | $ | 12,592 | | $ | 14,176 | | | $ | 17,117 | | $ | 17,939 | | $ | 14,129 | |
1917
(13)Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses were as follows in millionsconsisted of dollars:the following:
| | | | | | | | | | | | | | | | | | | ||
|
| July 30 |
| October 30 |
| July 31 |
|
| January 28 |
| October 29 |
| January 29 |
| ||||||
|
| 2023 |
| 2022 | | 2022 | |
| 2024 |
| 2023 | | 2023 | | ||||||
Accounts payable: | | | | | | | | | | | | | | | | | | | ||
Trade payables |
| $ | 3,308 |
| $ | 3,894 | | $ | 3,577 | |
| $ | 3,184 |
| $ | 3,467 | | $ | 3,616 | |
Payables to unconsolidated affiliates | | | 4 | | | 11 | | | 5 | | ||||||||||
Dividends payable | |
| 365 | |
| 343 | |
| 347 | | |
| 413 | |
| 388 | |
| 358 | |
Operating lease liabilities | | | 308 | | | 302 | | | 251 | | | | 293 | | 281 | | 305 | | ||
Deposits withheld from dealers and merchants | | | 158 | | | 163 | | | 154 | | | | 153 | | 163 | | 153 | | ||
Payables to unconsolidated affiliates | | | 6 | | 6 | | 10 | | ||||||||||||
Other | |
| 173 | |
| 214 | |
| 162 | | |
| 183 | |
| 153 | |
| 156 | |
Accrued expenses: | | | | | | | | | | | | | | | | | | | ||
Employee benefits | |
| 1,107 | |
| 2,152 | |
| 1,015 | | ||||||||||
Product warranties | |
| 1,589 | |
| 1,610 | |
| 1,444 | | ||||||||||
Accrued taxes | | | 1,364 | | 1,558 | | 1,336 | | ||||||||||||
Derivative liabilities | | | 744 | | 1,130 | | 891 | | ||||||||||||
Dealer sales discounts | |
| 902 | |
| 1,044 | |
| 586 | | |
| 243 | |
| 1,243 | |
| 256 | |
Product warranties | |
| 1,619 | |
| 1,427 | |
| 1,398 | | ||||||||||
Employee benefits | |
| 1,808 | |
| 1,528 | |
| 1,280 | | ||||||||||
Accrued taxes | | | 1,595 | | | 1,255 | | | 1,171 | | ||||||||||
Extended warranty premium | | | 1,047 | | 1,021 | | 901 | | ||||||||||||
Unearned revenue (contractual liability) | |
| 700 | |
| 676 | |
| 601 | | ||||||||||
Unearned operating lease revenue | | | 428 | | | 399 | | | 378 | | | | 456 | | 451 | | 406 | | ||
Unearned revenue (contractual liability) | |
| 754 | |
| 557 | |
| 586 | | ||||||||||
Extended warranty premium | | | 999 | | | 866 | | | 839 | | ||||||||||
Accrued interest | | | 402 | | | 288 | | | 260 | | | | 502 | | 434 | | 371 | | ||
Derivative liabilities | | | 948 | | | 1,231 | | | 667 | | ||||||||||
Other | |
| 1,569 | |
| 1,300 | |
| 1,325 | | |
| 1,377 | |
| 1,397 | |
| 1,289 | |
Total accounts payable and accrued expenses |
| $ | 15,340 |
| $ | 14,822 | | $ | 12,986 | | ||||||||||
Accounts payable and accrued expenses |
| $ | 13,361 |
| $ | 16,130 | | $ | 13,108 | |
Amounts are presented net of eliminations, which primarily consist of dealer sales incentives with a right of set-off against trade receivables of $2,240 million$2,410 at July 30, 2023, $1,280 millionJanuary 28, 2024, $2,228 at October 30, 2022,29, 2023, and $1,370 million$1,540 at July 31, 2022.January 29, 2023. Other eliminations were made for accrued taxes and other accrued expenses.
(14)Long-Term Borrowings
Long-term borrowings were as follows in millions of dollars:consisted of:
| | | | | | | | | | | | | | | | | | | ||
| | July 30 | | October 30 | | July 31 | | | January 28 |
| October 29 |
| January 29 | | ||||||
|
| 2023 |
| 2022 |
| 2022 | |
| 2024 | | 2023 | | 2023 | | ||||||
Underwritten term debt | | |
| | |
| | |
| | | |
| |
| |
| | ||
U.S. dollar notes and debentures: | | | | | | | | | | | | | | | | | | | ||
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) | | | | | | | | | 510 | | ||||||||||
1.375% notes due 2024 (€800 principal) | | | | | | 797 | | | 816 | | | | | | | | 871 | | ||
1.85% notes due 2028 (€600 principal) | | | 659 | | | 598 | | | 612 | | | | 651 | | 634 | | 653 | | ||
2.20% notes due 2032 (€600 principal) | | | 659 | | | 598 | | | 612 | | | | 651 | | 634 | | 653 | | ||
1.65% notes due 2039 (€650 principal) | | | 713 | | | 648 | | | 663 | | | | 705 | | 687 | | 708 | | ||
Serial issuances | | | | | | | | | | | ||||||||||
Medium-term notes: (principal as of: July 30, 2023 - $30,348, October 30, 2022 - $25,629, July 31, 2022 - $22,983) |
| | 29,355 | | | 24,604 | | | 22,593 | | ||||||||||
Serial issuances: | | | | | | | | | ||||||||||||
Medium-term notes |
| | 31,001 | | 29,638 | | 25,618 | | ||||||||||||
Other notes and finance lease obligations | |
| 1,605 | |
| 1,223 | |
| 1,191 | | |
| 1,810 | |
| 1,769 | |
| 1,440 | |
Less debt issuance costs and debt discounts | | | (129) | | | (122) | | | (115) | | | | (135) | | | (135) | | | (122) | |
Long-term borrowings |
| $ | 38,112 | | $ | 33,596 | | $ | 32,132 | |
| $ | 39,933 | | $ | 38,477 | | $ | 35,071 | |
Medium-term notes serially due through 20322033 are primarily offered by prospectus and issued at fixed and variable rates. TheseThe principal balances of the medium-term notes are presented in the table above with fair value adjustments related to interest rate swaps.were $31,808, $30,902, and $26,367 at January 28, 2024, October 29, 2023, and January 29, 2023, respectively. All outstanding notes and debentures are senior unsecured borrowings and rank equally with each other.
2018
(15)Leases - Lessor
The Company leasesWe lease equipment manufactured or sold by the Company and a limited amount of non-Johnus through John Deere equipment to retail customers through sales-type, direct financing, and operating leases.Financial. Sales-type and direct financing leases are reported in Financing“Financing receivables – net on the consolidated balance sheets, while operatingnet.” Operating leases are reported in Equipment“Equipment on operating leases – net.”
Lease revenues earned by the Company were as follows in millions of dollars:us follow:
| | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | | | Three Months Ended | | ||||||||||||
| | July 30 | | July 31 | | July 30 | | July 31 | | | January 28 | | January 29 | | ||||||
| | 2023 | | 2022 | | 2023 | | 2022 | | | 2024 | | 2023 | | ||||||
Sales-type and direct finance lease revenues | | $ | 41 | | $ | 39 | | $ | 120 | | $ | 113 | | | $ | 47 | | $ | 41 | |
Operating lease revenues | | | 332 | | | 326 | | | 974 | | | 991 | | | | 339 | | | 321 | |
Variable lease revenues | | | | | | 6 | | | 11 | | | 20 | | | | 4 | | | 6 | |
Total lease revenues | | $ | 373 | | $ | 371 | | $ | 1,105 | | $ | 1,124 | | | $ | 390 | | $ | 368 | |
(16)Commitments and Contingencies
A standard warranty is provided as assurance that the equipment will function as intended. The Company determines its totalstandard warranty liabilityperiod varies by applyingproduct and region. At the time a sale is recognized, we record an estimate of future warranty costs based on historical claims rate experience to theand estimated amount of equipment that has been sold and is stillpopulation under warranty based on dealer inventories and retail sales. The historical claims rate is determined by a review of five-year claims costs and current quality developments.warranty.
The premiums for extended warranties are recognized in other income in the statements of consolidated income in proportion to the costs expected to be incurred over the contract period. The unamortized extended warranty premiums (deferred revenue) included in the following table totaled $999 million and $839 million at July 30, 2023 and July 31, 2022, respectively.
A reconciliation of the changes in the warranty liability and unearned premiums was as follows in millions of dollars:follows:
| | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | Three Months Ended | | ||||||||||||
| | July 30 | | July 31 | | July 30 | | July 31 |
| | January 28 | | January 29 | | ||||||
| | 2023 | | 2022 | | 2023 | | 2022 |
| | 2024 | | 2023 | | ||||||
Beginning of period balance |
| $ | 2,511 |
| $ | 2,095 |
| $ | 2,293 |
| $ | 2,086 | |
| $ | 1,610 |
| $ | 1,427 | |
Payments | | | (314) | |
| (240) | | | (851) | |
| (657) | | |||||||
Amortization of premiums received | | | (75) | |
| (70) | | | (221) | |
| (200) | | |||||||
Accruals for warranties | | | 363 | |
| 358 | | | 1,010 | |
| 762 | | |||||||
Premiums received | | | 123 | |
| 103 | | | 338 | |
| 277 | | |||||||
Warranty claims paid | | | (309) | |
| (262) | | |||||||||||||
New product warranty accruals | | | 281 | |
| 256 | | |||||||||||||
Foreign exchange | | | 10 | |
| (10) | | | 49 | |
| (32) | | | | 7 | |
| 23 | |
End of period balance | | $ | 2,618 | | $ | 2,236 | | $ | 2,618 | | $ | 2,236 | | | $ | 1,589 | | $ | 1,444 | |
At July 30, 2023, the Company had $201 million ofThe costs for extended warranty programs are recognized as incurred.
In certain international markets, we provide guarantees issued to banks outside the U.S. and Canada related to third-party receivables for the retail financing of John Deere equipment. The CompanyAt January 28, 2024, the notional value of these guarantees was $166. We may recover a portion of any required payments incurred under these agreements from repossession ofrepossess the equipment collateralizing the receivables. At July 30, 2023,January 28, 2024, the accrued losses under these agreements were not material.
We also had other miscellaneous contingent liabilities and guarantees totaling approximately $115 at January 28, 2024. The accrued liability for these contingencies was not material at January 28, 2024.
At July 30, 2023, the CompanyJanuary 28, 2024, we had commitments of $649 million$597 for the construction and acquisition of property and equipment. Also, at July 30, 2023, the CompanyJanuary 28, 2024, we had restricted assets of $270 million,$214, classified as Other“Other assets.”
The Company also had other miscellaneous contingent liabilities and guarantees totaling approximately $115 million at July 30, 2023. The accrued liability for these contingencies was not material at July 30, 2023.
The Company isWe are 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, trademark, and antitrust matters.actions. The Company believesaccrued losses on these matters are not material. We believe the reasonably possible range of losses for these unresolved legal actions would not have a material effect on its consolidatedour financial statements.
The most prevalent legal claims relate to product liability (including asbestos-related liability), retail credit, employment, patent, trademark, and antitrust matters.
2119
(17) Fair Value Measurements
The fair values of financial instruments that do not approximate the carrying values were as follows in millions of dollars.follows. Long-term borrowings exclude finance lease liabilities.
| | | | | | | | | | | | | | | | | | | |
| | July 30, 2023 | | October 30, 2022 | | July 31, 2022 |
| ||||||||||||
| | Carrying | | Fair | | Carrying | | Fair | | Carrying | | Fair |
| ||||||
Financing receivables – net | | $ | 41,302 | | $ | 40,675 | | $ | 36,634 | | $ | 35,526 | | $ | 35,056 | | $ | 34,158 | |
Financing receivables securitized – net | | | 7,001 | | | 6,818 | | | 5,936 | | | 5,698 | | | 5,141 | | | 4,990 | |
Short-term securitization borrowings | | | 6,608 | | | 6,538 | | | 5,711 | | | 5,577 | | | 4,920 | | | 4,862 | |
Long-term borrowings due within one year | | | 7,765 | | | 7,568 | | | 7,466 | | | 7,322 | | | 7,693 | | | 7,608 | |
Long-term borrowings | | | 38,064 | | | 37,121 | | | 33,566 | | | 31,852 | | | 32,101 | | | 31,741 | |
| | | | | | | | | | | | | | | | | | | |
| | January 28, 2024 | | October 29, 2023 | | January 29, 2023 |
| ||||||||||||
| | Carrying | | Fair | | Carrying | | Fair | | Carrying | | Fair |
| ||||||
Financing receivables – net | | $ | 43,708 | | $ | 43,236 | | $ | 43,673 | | $ | 42,777 | | $ | 36,882 | | $ | 35,894 | |
Financing receivables securitized – net | | | 6,400 | | | 6,225 | | | 7,335 | | | 7,056 | | | 5,089 | | | 4,869 | |
Short-term securitization borrowings | | | 6,116 | | | 6,104 | | | 6,995 | | | 6,921 | | | 4,864 | | | 4,785 | |
Long-term borrowings due within one year | | | 8,402 | | | 8,283 | | | 8,331 |
| | 8,156 | | | 7,378 | | | 7,220 | |
Long-term borrowings | | | 39,878 | | | 39,321 | | | 38,428 |
| | 36,873 | | | 35,035 | | | 34,149 | |
Fair value measurements above were Level 3 for all financing receivables and Level 2 for all 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 Companyus for similar financing receivables. The fair values of the remaining financing receivables approximated the carrying amounts.
Fair values of long-term borrowings and short-term securitization borrowings were based on current market quotes for identical or similar borrowings and credit risk, or on the discounted values of their related cash flows at current market interest rates. Certain long-term borrowings have been swapped to current variable interest rates. The carrying values of these long-term borrowings included adjustments related to fair value hedges.
Assets and liabilities measured at fair value on a recurring basis in millions of dollars follow. The Company’sfollow, excluding our cash equivalents, which were carried at a cost that approximates fair value and consisted of money market funds and time deposits, are excluded as these assets were carried at cost that approximates fair value.deposits.
| | | | | | | | | | |
|
| July 30 |
| October 30 |
| July 31 |
| |||
| | 2023 | | 2022 | | 2022 |
| |||
Level 1: | | | | | | | | | | |
Marketable securities | | | | | | | | | | |
International equity securities | | $ | 3 | | $ | 3 | | $ | 2 | |
U.S. equity fund | | | 101 | | | 70 | | | 75 | |
U.S. fixed income fund | | | 85 | |
| | |
| | |
U.S. government debt securities | | | 63 | |
| 62 | |
| 63 | |
Total Level 1 marketable securities | | | 252 | | | 135 | | | 140 | |
| | | | | | | | | | |
Level 2: | | | | | | | | | | |
Marketable securities | | | | | | | | | | |
U.S. government debt securities | | | 134 | | | 121 | | | 134 | |
Municipal debt securities | | | 69 | |
| 63 | |
| 70 | |
Corporate debt securities | | | 221 | |
| 200 | |
| 213 | |
International debt securities | | | 2 | | | 60 | | | 1 | |
Mortgage-backed securities | | | 163 | |
| 155 | |
| 161 | |
Total Level 2 marketable securities | | | 589 | |
| 599 | |
| 579 | |
Other assets - Derivatives |
| | 324 | | | 373 | | | 280 | |
Accounts payable and accrued expenses - Derivatives |
| | 948 | | | 1,231 | | | 667 | |
| | | | | | | | | | |
Level 3: | | | | | | | | | | |
Accounts payable and accrued expenses - Deferred consideration | | | 202 | | | 236 | | | 252 | |
| | | | | | | | | | |
|
| January 28 |
| October 29 |
| January 29 |
| |||
| | 2024 | | 2023 | | 2023 |
| |||
Level 1: | | | | | | | | | | |
Marketable securities |
| | | | | | | | | |
International equity securities | | $ | 5 | | $ | 3 | | $ | 2 | |
International mutual funds securities | | | 57 | | | 101 | | | | |
U.S. equity fund | | | 105 | | | 86 | | | 86 | |
U.S. fixed income fund | | | 34 | |
| 32 | |
| 118 | |
U.S. government debt securities | | | 274 | |
| 78 | |
| 64 | |
Total Level 1 marketable securities | | | 475 | | | 300 | | | 270 | |
| | | | | | | | | | |
Level 2: | | | | | | | | | | |
Marketable securities | | | | | | | | | | |
Corporate debt securities | | | 220 | |
| 244 | |
| 209 | |
International debt securities | | | 87 | | | 1 | | | 18 | |
Mortgage-backed securities | | | 161 | |
| 185 | |
| 157 | |
Municipal debt securities | | | 69 | |
| 75 | |
| 71 | |
U.S. government debt securities | | | 124 | | | 141 | | | 127 | |
Total Level 2 marketable securities | | | 661 | |
| 646 | |
| 582 | |
Other assets – Derivatives |
| | 253 | | | 292 | | | 360 | |
Accounts payable and accrued expenses – Derivatives | | | 744 | | | 1,130 | | | 891 | |
| | | | | | | | | | |
Level 3: | | | | | | | | | | |
Accounts payable and accrued expenses – Deferred consideration |
| | 176 | | | 186 | | | 225 | |
The mortgage-backed securities are primarily issued by U.S. government sponsored enterprises.
2220
The contractual maturities of debt securities at July 30, 2023 in millions of dollars are shown below. January 28, 2024 follow:
| | | | | | | |
| | Amortized | | Fair | | ||
| | Cost | | Value | | ||
Due in one year or less |
| $ | 22 | | $ | 21 | |
Due after one through five years | | | 242 | | | 194 | |
Due after five through 10 years | | | 421 | | | 398 | |
Due after 10 years | | | 192 | | | 161 | |
Mortgage-backed securities | | | 189 | | | 161 | |
Debt securities |
| $ | 1,066 |
| $ | 935 | |
Actual maturities may differ from contractual maturities because some securities may be called or prepaid. Unrealized losses were not recognized in income due to the abilityMortgage-backed securities contain prepayment provisions and intent to hold to maturity. Because of the potential for prepayment on mortgage-backed securities, they are not categorized by contractual maturity.
| | | | | | | |
| | Amortized | | Fair | | ||
| | Cost | | Value | | ||
Due in one year or less |
| $ | 25 | | $ | 24 | |
Due after one through five years | | | 130 | | | 121 | |
Due after five through 10 years | | | 193 | | | 170 | |
Due after 10 years | | | 211 | | | 174 | |
Mortgage-backed securities | | | 194 | | | 163 | |
Debt securities |
| $ | 753 |
| $ | 652 | |
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. Inventories and property and equipment – net fair values for October 30, 2022 represent the fair value assessment at July 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | |
| | Fair Value | | Losses | | |||||||||||||||||
| | | | | | | | | | | Three Months Ended | | Nine Months Ended | | ||||||||
| | July 30 | | October 30 | | July 31 | | July 30 | | July 31 | | July 30 | | July 31 | | |||||||
|
| 2023 |
| 2022 |
| 2022 |
| 2023 |
| 2022 |
| 2023 |
| 2022 |
| |||||||
Inventories | | | | | $ | 19 | | $ | 13 | | | | | $ | 4 | | | | | $ | 12 | |
Property and equipment – net | | | | | | 15 | | | | | | | | | | | | | | | 41 | |
Other intangible assets – net | | | | | | | | | | | | | | | | | | | | | 28 | |
The following is a description of the valuation methodologies the Company useswe use to measure certain financial instruments on the balance sheetsheets at fair value:
Marketable securities – The portfolio of investments is valued on a market approach (matrix pricing model) in which all significant inputs are observable or can be derived from or corroborated by observable market data such as interest rates, yield curves, volatilities, credit risk, and prepayment speeds. Funds are valued using closingthe fund’s net asset value, based on the fair value of the underlying securities. International debt securities are valued using quoted prices for identical assets in the active market in which the investment trades.inactive markets.
Derivatives – The Company’sOur 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).
Inventories – The impairment was based on net realizable value.
Property and equipment - net – The valuations were based on cost and market approaches. The inputs include replacement cost estimates adjusted for physical deterioration and economic obsolescence.
Other intangible assets - net – The Company considered external valuations based on the Company’s probability weighted cash flow analysis.
23
(18) Derivative Instruments
The fair valueFair values of the Company’sour derivative instruments and the associated notional amounts were as follows in millions of dollars.follows. Assets are recorded in “Other assets” on the consolidated balance sheets,assets,” while liabilities are recorded in “Accounts payable and accrued expenses.”
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | July 30, 2023 | | October 30, 2022 | | July 31, 2022 |
| |||||||||||||||||||||
| | | | Fair Value | | | | Fair Value | | | | Fair Value |
| |||||||||||||||
| | Notional | | Assets | | Liabilities | | Notional | | Assets | | Liabilities | | Notional | | Assets | | Liabilities |
| |||||||||
Cash flow hedges: |
|
|
|
| | |
| | |
|
|
|
| | |
| | |
|
|
|
| | |
| | |
|
Interest rate contracts |
| $ | 1,500 | | $ | 48 | | $ | 3 |
| $ | 1,950 | | $ | 87 | | | |
| $ | 2,350 | | $ | 59 | | $ | 1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fair value hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest rate contracts | | | 12,160 | | | 4 | | | 729 | | | 10,112 | | | | | $ | 1,004 | | | 8,303 | | | 23 | | | 433 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Not designated as hedging instruments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest rate contracts | | | 13,233 | | | 221 | | | 109 | | | 10,568 | | | 212 | | | 107 | | | 9,880 | | | 163 | | | 79 | |
Foreign exchange contracts | | | 8,630 | | | 51 | | | 82 | | | 8,185 | |
| 66 | |
| 118 | | | 7,457 | |
| 30 | |
| 149 | |
Cross-currency interest rate contracts | | | 155 | | | | | | 25 | | | 260 | |
| 8 | |
| 2 | | | 276 | |
| 5 | |
| 5 | |
The amounts recorded in the consolidated balance sheet related to borrowings designated in fair value hedging relationships were as follows in millions of dollars. Fair value hedging adjustments are included in the carrying amount of the hedged item.
| | | | | | | | | | | | | |
| | Active Hedging Relationships | | Discontinued Hedging Relationships | | ||||||||
| | Carrying Amount | | Cumulative Fair Value | | Carrying Amount of | | Cumulative Fair Value | | ||||
| | of Hedged Item | | Hedging Amount | | Formerly Hedged Item | | Hedging Amount | | ||||
July 30, 2023 | | | | | | | | | | | | | |
Short-term borrowings | | | | | | | | $ | 2,324 | | $ | 25 | |
Long-term borrowings | | $ | 11,379 | | $ | (728) | | | 6,319 | | | (265) | |
| | | | | | | | | | | | | |
October 30, 2022 | | | | | | | | | | | | | |
Short-term borrowings | | | | | | | | $ | 2,515 | | $ | 15 | |
Long-term borrowings | | $ | 9,060 | | $ | (1,006) | | | 5,520 | | | (19) | |
| | | | | | | | | | | | | |
July 31, 2022 | | | | | | | | | | | | | |
Short-term borrowings | | | | | | | | $ | 2,605 | | $ | 5 | |
Long-term borrowings | | $ | 7,835 | | $ | (430) | | | 5,728 | | | 39 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | January 28, 2024 | | October 29, 2023 | | January 29, 2023 |
| |||||||||||||||||||||
| | | | Fair Value | | | | Fair Value | | | | Fair Value |
| |||||||||||||||
| | Notional | | Assets | | Liabilities | | Notional | | Assets | | Liabilities | | Notional | | Assets | | Liabilities |
| |||||||||
Cash flow hedges: |
|
|
|
| | |
| | |
|
|
|
| | |
| | |
|
|
|
| | |
| | |
|
Interest rate contracts |
| $ | 2,200 | | $ | 27 | | $ | 4 |
| $ | 1,500 | | $ | 45 | | | |
| $ | 1,950 | | $ | 69 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fair value hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest rate contracts | | | 12,633 | | | 58 | | | 592 | | | 12,691 | | | | | $ | 970 | | | 10,802 | | | 21 | | $ | 678 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Not designated as hedging instruments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest rate contracts | | | 14,200 | | | 129 | | | 82 | | | 13,853 | | | 169 | | | 98 | | | 11,147 | | | 188 | | | 97 | |
Foreign exchange contracts | | | 7,856 | | | 39 | | | 53 | | | 8,117 | |
| 75 | |
| 54 | | | 9,304 | |
| 71 | |
| 110 | |
Cross-currency interest rate contracts | | | 189 | | | | | | 13 | | | 176 | |
| 3 | |
| 8 | | | 234 | |
| 11 | |
| 6 | |
2421
The amounts recorded in the consolidated balance sheets related to borrowings designated in fair value hedging relationships were as follows. Fair value hedging adjustments are included in the carrying amount of the hedged item.
| | | | | | | | | | | | | |
| | Active Hedging Relationships | | Discontinued Hedging Relationships | | ||||||||
| | Carrying Amount | | Cumulative Fair Value | | Carrying Amount of | | Cumulative Fair Value | | ||||
| | of Hedged Item | | Hedging Amount | | Formerly Hedged Item | | Hedging Amount | | ||||
January 28, 2024 |
| | |
| | |
| | |
| | |
|
Short-term borrowings | | $ | 288 | | $ | (9) | | $ | 1,960 | | $ | 10 | |
Long-term borrowings | | | 11,745 | | | (537) | | | 7,711 | | | (270) | |
| | | | | | | | | | | | | |
October 29, 2023 | | | | | | | | | | | | | |
Short-term borrowings | | | | | | | | $ | 1,814 | | $ | 15 | |
Long-term borrowings | | $ | 11,660 | | $ | (976) | | | 7,144 | | | (288) | |
| | | | | | | | | | | | | |
January 29, 2023 | | | | | | | | | | | | | |
Short-term borrowings | | | | | | | | $ | 1,915 | | $ | 15 | |
Long-term borrowings | | $ | 10,088 | | $ | (666) | | | 5,506 | | | (83) | |
The classification and gains (losses) including accrued interest expense related to derivative instruments on the statements of consolidated income consisted of the following in millions of dollars:
following:
| | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| ||||||||
| | July 30 | | July 31 | | July 30 | | July 31 |
| ||||
| | 2023 | | 2022 | | 2023 | | 2022 |
| ||||
Fair Value Hedges: |
|
|
|
| | |
|
|
|
| | |
|
Interest rate contracts - Interest expense |
| $ | (375) | | $ | 149 |
| $ | (146) | | $ | (507) | |
| | | | | | | | | | | | | |
Cash Flow Hedges: | | | | | | | | | | | | | |
Recognized in OCI | | | | | | | | | | | | | |
Interest rate contracts - OCI (pretax) | | $ | 24 | | $ | 1 | | $ | 19 | | $ | 52 | |
Reclassified from OCI | | | | | | | | | | | | | |
Interest rate contracts - Interest expense | | | 18 | |
| 3 | | | 52 | |
| | |
| | | | | | | | | | | | | |
Not Designated as Hedges: | | | | | | | | | | | | | |
Interest rate contracts - Net sales | | $ | 6 | | | | | | | | $ | 44 | |
Interest rate contracts - Interest expense * |
| | 48 | | $ | (18) |
| $ | 45 | | | 41 | |
Foreign exchange contracts - Net sales | | | 3 | | | (1) | | | 2 | | | (2) | |
Foreign exchange contracts - Cost of sales | | | (78) | |
| (29) | | | (14) | | | (109) | |
Foreign exchange contracts - Other operating expenses * | | | (142) | |
| (20) | | | (157) | |
| 153 | |
Total not designated |
| $ | (163) | | $ | (68) |
| $ | (124) | | $ | 127 | |
*Includes interest and foreign exchange gains (losses) from cross-currency interest rate contracts.
| | | | | | | |
| | Three Months Ended |
| ||||
| | January 28 | | January 29 |
| ||
| | 2024 | | 2023 |
| ||
Fair Value Hedges |
|
|
|
| | |
|
Interest rate contracts - Interest expense |
| $ | 344 | | $ | 239 | |
| | | | | | | |
Cash Flow Hedges | | | | | | | |
Recognized in OCI: | | | | | | | |
Interest rate contracts - OCI (pretax) |
| $ | (8) | | $ | (1) | |
| | | | | | | |
Reclassified from OCI: | | | | | | | |
Interest rate contracts - Interest expense |
| | 11 | |
| 15 | |
| | | | | | | |
Not Designated as Hedges | | | | | | | |
Interest rate contracts - Net sales | | | | | $ | (7) | |
Interest rate contracts - Interest expense |
| $ | (9) | | | (8) | |
Foreign exchange contracts - Net sales | | | 5 | | | 1 | |
Foreign exchange contracts - Cost of sales |
| | (30) | |
| 5 | |
Foreign exchange contracts - Other operating expenses |
| | (181) | |
| (142) | |
Total not designated | | $ | (215) | | $ | (151) | |
Certain of the Company’sour derivative agreements contain credit support provisions that may require the Companyus 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 July 30,January 28, 2024, October 29, 2023, October 30, 2022, and July 31, 2022,January 29, 2023 was $865 million, $1,113 million,$691, $1,076, and $518 million,$781, respectively. In accordance with the limits established in these agreements, the Companywe posted $435 million, $701 million,$368, $659, and $238 million$349 of cash collateral at July 30,January 28, 2024, October 29, 2023, and January 29, 2023, respectively. In addition, we paid $8 of collateral that was outstanding at January 28, 2024, October 30, 2022,29, 2023, and July 31, 2022, respectively.
Derivatives are recorded without offsetting for netting arrangements or collateral. The impact on the derivative assets and liabilities relatedJanuary 29, 2023 to netting arrangements and any collateral received or paidparticipate in millions of dollars follows:
| | | | | | | | | | | | | |
| | Gross Amounts | | Netting | | | | | |
| |||
July 30, 2023 |
| Recognized |
| Arrangements |
| Collateral |
| Net Amount |
| ||||
Assets |
| $ | 324 |
| $ | (160) |
| $ | (28) |
| $ | 136 | |
Liabilities | | | 948 | | | (160) | | | (435) | | | 353 | |
| | | | | | | | | | | | | |
| | Gross Amounts | | Netting | | | | | |
| |||
October 30, 2022 |
| Recognized |
| Arrangements |
| Collateral |
| Net Amount |
| ||||
Assets | | $ | 373 |
| $ | (179) | | $ | (54) |
| $ | 140 | |
Liabilities | | | 1,231 | | | (179) | | | (701) | | | 351 | |
| | | | | | | | | | | | | |
|
| Gross Amounts |
| Netting |
| |
| | |
| |||
July 31, 2022 | | Recognized | | Arrangements | | Collateral | | Net Amount |
| ||||
Assets | | $ | 280 | | $ | (125) | | $ | (40) | | $ | 115 | |
Liabilities | |
| 667 | |
| (125) | | | (238) | |
| 304 | |
(19)Stock Option and Restricted Stock Unit Awards
In December 2022, the Company granted stock optionsan international futures market to employees for the purchase of 161 thousand shares of common stock at an exercise price of $438.44 per share and a binomial lattice model fair value of $136.46 per share at the grant date. At July 30, 2023, options for 1.8 million shares were outstanding with a weighted-average exercise price of $187.53 per share. The Company also granted 125 thousand of service-based restricted stock units and 41 thousand of performance/service-based restricted stock units to employeeshedge currency exposure, not included in the first nine months of 2023. The weighted-average fair value of the service-based restricted stock units at the grant date was $428.49 per unit based on the market price of a share of underlying common stock. The fair value of the performance/service-based restricted stock units at the grant date was $424.93 per unit based on the market price of a share of underlying common stock excluding dividends. At July 30, 2023, the Company was authorized to grant awards for an additional 16.6 million shares under the equity incentive plans.
table below.
25
(20) Disposition
On March 7, 2023, the Company sold its financial services business in Russia (registered in Russia as a leasing company) to Insight Investment Group. The total proceeds, net of restricted cash sold, were $36 million. The operations were included in the Company’s financial services operating segment through the date of sale. At the disposal date, the total assets were $31 million, consisting primarily of financing receivables, the total liabilities were $5 million, and the cumulative translation loss was $10 million. The Company did not incur additional gains or losses upon disposition. At January 29, 2023, the assets and liabilities were classified as “Other assets” and “Accounts payable and accrued expenses”, respectively, which included $100 million of restricted cash. In the first quarter of 2023, the Company reversed the allowance for credit losses and recorded a valuation allowance on the assets held for sale in “Selling, administrative and general expenses.”
(21) Special Items
2023
Brazil Tax Ruling
In the third quarter of 2023, the Brazil Superior Court of Justice published a favorable tax ruling regarding taxability of local incentives, which allowed the Company to record a $243 million reduction in the provision for income taxes and $47 million of interest income.
Financial Services Financing Incentives Correction
In the second quarter of 2023, the Company corrected the accounting treatment for financing incentives offered to John Deere dealers, which impacted the timing of expense recognition and the presentation of incentive costs in the consolidated financial statements. The cumulative effect of this correction, $173 million pretax ($135 million after-tax), was recorded in the second quarter of 2023. Prior period results for Deere & Company were not restated, as the adjustment is considered immaterial to the Company’s financial statements.
2022
Impact of Events in Russia / Ukraine
In the second quarter of 2022, the Company suspended shipments of machines and service parts to Russia. The suspension of shipments to Russia reduced actual and forecasted revenue for the region, which made it probable future cash flows will not cover the carrying value of certain assets. The accounting consequences in 2022 were impairments of most long-lived assets, an increase in reserves of certain financial assets, and an accrual for various contractual uncertainties. In addition, the Company initiated a voluntary separation program for employees in Russia in the third quarter of 2022.
Gain on Previously Held Equity Investment
In the second quarter of 2022, the Company acquired full ownership of three former Deere-Hitachi joint venture factories and began new license and supply agreements with Hitachi Construction Machinery Co., Ltd. The fair value of the previous equity investment resulted in a non-cash gain of $326 million (pretax and after-tax).
UAW Collective Bargaining Agreement
In the first quarter of 2022, employees represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) approved a new collective bargaining agreement. The labor agreement included a lump sum ratification bonus payment of $8,500 per eligible employee, totaling $90 million, and an immediate wage increase of 10 percent plus further wage increases over the term of the contract. The lump sum payment was expensed in the first quarter of 2022.
2622
Derivatives are recorded without offsetting for netting arrangements or collateral. The following table summarizesimpact on the operating profit impact, in millions of dollars, of the special items recorded for the three monthsderivative assets and nine months ended July 30, 2023liabilities related to netting arrangements and July 31, 2022:any collateral received or paid follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months | | Nine Months | | ||||||||||||||||||||||||||
| | PPA |
| SAT |
| CF |
| FS |
| Total | | PPA | | SAT |
| CF |
| FS |
| Total | | ||||||||||
2023 Expense: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financing incentive – SA&G expense | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 173 | | $ | 173 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2022 Expense (benefit): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gain on remeasurement of equity investment – Other income | | | | | | | | | | | | | | | | | | | | | | | $ | (326) | | | | | | (326) | |
Total Russia/Ukraine events expense (benefit) | | $ | (1) | | | | | $ | 1 | | $ | 7 | | $ | 7 | | $ | 45 | | $ | 1 | | | 48 | | | 33 | | | 127 | |
UAW ratification bonus – Cost of sales | | | | | | | | | | | | | | | | | | 53 | | | 9 | | | 28 | | | | | | 90 | |
Total 2022 expense (benefit) | | | (1) | | | | | | 1 | | | 7 | | | 7 | | | 98 | | | 10 | | | (250) | | | 33 | | | (109) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Period over period change | | $ | 1 | | | | | $ | (1) | | $ | (7) | | $ | (7) | | $ | (98) | | $ | (10) | | $ | 250 | | $ | 140 | | $ | 282 | |
| | | | | | | | | | | | | |
| | Gross Amounts | | Netting | | | | | |
| |||
January 28, 2024 |
| Recognized |
| Arrangements |
| Collateral |
| Net Amount |
| ||||
Assets |
| $ | 253 |
| $ | (112) |
| $ | (19) |
| $ | 122 | |
Liabilities | | | 744 | | | (112) | | | (368) | | | 264 | |
| | | | | | | | | | | | | |
| | Gross Amounts | | Netting | | | | | | | |||
October 29, 2023 |
| Recognized |
| Arrangements |
| Collateral |
| Net Amount |
| ||||
Assets | | $ | 292 |
| $ | (152) |
| | |
| $ | 140 | |
Liabilities | | | 1,130 | |
| (152) | | $ | (659) | | | 319 | |
| | | | | | | | | | | | | |
| | Gross Amounts | | Netting | | | | | | | |||
January 29, 2023 | | Recognized |
| Arrangements |
| Collateral |
| Net Amount |
| ||||
Assets | | $ | 360 |
| $ | (162) |
| $ | (47) | | $ | 151 | |
Liabilities | |
| 891 | | | (162) | | | (349) | |
| 380 | |
(22)(19)Share-Based Awards
At January 28, 2024, we were authorized to grant an additional 15.0 million shares related to stock options and restricted stock units. In December 2023, we granted stock options to employees for the purchase of 216 thousand shares of common stock at an exercise price of $377.01 per share and a binomial lattice model fair value of $98.04 per share at the grant date. At January 28, 2024, options for 1.9 million shares were outstanding with a weighted-average exercise price of $214.88 per share.
During the three months ended January 28, 2024, the restricted stock units (RSUs) granted in thousands of shares and the weighted-average grant date fair values, using the closing price of our common stock on the grant date, in dollars follow:
| | | | | | |
| | | | Grant Date | | |
| | Shares | | Fair Value | | |
Service-based |
| 360 |
| $ | 377.04 |
|
Performance/service-based | | 52 | | | 360.53 | |
Market/service-based | | 52 | | | 370.87 | |
In December 2023, we granted market/service-based RSUs. The vesting period for the market/service-based RSUs is three years and dividend equivalents are not earned during the vesting period. The market/service-based RSUs are subject to a market related metric based on total shareholder return, compared to a benchmark group of companies, and award common stock in a range of zero to 200 percent for each unit granted based on the level of the metric achieved. The fair value of the market/service based RSUs was determined using a Monte Carlo model.
(20) Special Item
In January 2023, we reached an agreement to sell our financial services business in Russia (registered in Russia as a leasing company). We reversed the allowance for credit losses and recorded a valuation allowance on the assets held for sale in “Selling, administrative and general expenses.” In March 2023, we sold our financial services business in Russia to Insight Investment Group. The total proceeds, net of restricted cash sold, were $36. The operations were included in the financial services operating segment through the date of sale. At the disposal date, the total assets were $31, consisting primarily of financing receivables, the total liabilities were $5, and the cumulative translation loss was $10. We did not incur additional gains or losses upon disposition.
(21) Subsequent EventEvents
In February 2024, we entered into a retail note securitization transaction, resulting in $529 of secured borrowings.
On August 30, 2023, the Company’s Board of Directors declaredFebruary 28, 2024, a quarterly dividend of $1.35$1.47 per share was declared at the Board of Directors meeting, payable on NovemberMay 8, 2023,2024, to stockholders of record on SeptemberMarch 29, 2023.2024.
2723
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
OverviewAll amounts are presented in millions of dollars unless otherwise specified.
OrganizationOVERVIEW
TheOrganization
Deere & Company generates net sales fromis a global leader in the saleproduction of agricultural, turf, construction, and forestry equipment toand solutions. John Deere dealersFinancial provides financing for John Deere equipment, parts, services, and distributors. The Company manufactures and distributes a full line of agricultural equipment; a variety of commercial and consumer equipment; and a broad range of equipment for construction, roadbuilding, and forestry. Theseother input costs customers need to run their operations. Our operations (collectively known as the “equipment operations”) are managed through the production and precision agriculture (PPA), small agriculture and turf and(SAT), construction and forestry (CF), and financial services operating segments. The Company’s financial services segment provides credit services, which finance salesReferences to “equipment operations” include PPA, SAT, and leases of equipment by John Deere dealers. In addition, the financial services segment provides wholesale financingCF, while references to dealers of the foregoing equipment, finances retail revolving charge accounts,“agriculture and offers extended equipment warranties.turf” include both PPA and SAT.
Smart Industrial Operating Model and Leap Ambitions
The Company’sWe announced the Smart Industrial Operating Model in 2020. This operating model is focusedbased on making significant investments, strengthening the Company’s capabilities in digitalization, automation, autonomy, and alternative propulsion technologies. These technologies are intended to increase worksite efficiency, improve yields, lower input costs, and ease labor constraints. The Company’sthree focus areas:
(a) | Production systems: A strategic alignment of products and solutions around our customers’ operations. |
(b) | Technology stack: Investments in technology, as well as research and development, that deliver intelligent solutions to our customers through digital capabilities, automation, autonomy, and alternative power technologies. |
(c) | Lifecycle solutions: The integration of our aftermarket and support capabilities to more effectively manage customer equipment, service, and technology needs across the full lifetime of a John Deere product. |
Our Leap Ambitions were launched in 2022. These ambitions are goals designed to boost economic value and sustainability for the Company’sour customers. The Company anticipates opportunitiesambitions align across our customers’ production systems seeking to optimize their operations to deliver better outcomes with fewer resources.
In January 2024, we released our 2023 Business Impact Report, available at JohnDeere.com/sustainability. This report identifies important progress on our Leap Ambitions in fiscal year 2023. The information in our 2023 Business Impact Report is not incorporated by reference into, and does not form a part of, this area, as the Company and its customers have a vested interest in sustainable practices.Quarterly Report on Form 10-Q.
Trends and Economic Conditions
Industry TrendsSales Outlook for Fiscal Year 2023 – Industry sales of large agricultural machinery in the U.S.2024
Agriculture and Canada for 2023 are forecasted to increase approximately 10 percent compared to 2022. Industry sales of small agricultural and turf equipment in the U.S. and Canada are expected to be down 5 to 10 percent in 2023. Industry sales of agricultural machinery in Europe are forecasted to be flat to up 5 percent, while South American industry sales of tractors and combines are expected to be flat to down 5 percent in 2023. Asia industry sales of agricultural machinery are forecasted to be down moderately in 2023 as volumes in India remain subdued. On an industry basis, U.S. and Canada construction, U.S. and Canada compact construction, and global roadbuilding equipment sales are expected to be flat to up 5 percent in 2023. Global forestry industry sales are expected to be flat to down 5 percent.Turf
Construction and Forestry
Company Trends – Customers’ demand for integration of technology into equipment is a market trend underlying the Company’s Smart Industrial operating model and Leap Ambitions. Customers have soughtseek to improve profitability, productivity, and sustainability through technology. The Company’s approachIntegration of technology into equipment is a persistent market trend. Our Smart Industrial Operating Model and Leap Ambitions are intended to technology involves hardware and software; guidance, connectivity and digital solutions; automation and machine intelligence; machine autonomy; and alternative propulsion technologies. This technology iscapitalize on this market trend. These technologies are incorporated into products within each of the Company’sour operating segments.
Customers continue to adopt technology integrated in the John Deere portfolio of “smart” machines, systems, and solutions. The Company expects We expect this trend to persist for the foreseeable future.
Demand The investments in these technologies and in establishing a Solutions as a Service business model might increase our operating costs and may decrease operating margins during the transition period. In the first quarter of 2024, we announced an agreement with SpaceX to expand machine connectivity for the Company’s equipment remains strong, as order books are full throughout 2023. Agricultural fundamentals are expected to remain solid through 2023 with farm net income in the U.S. and Canada expected to be near historical highs. Crop prices remain favorable to our customers in part due to weather conditions putting downward pressure on yields. The Company expects sales volume of large agricultural equipment to be greater in 2023 than 2022 in North America. Sales volume for small agriculture and turf equipment is expected to be lower compared to 2022 due to less demand for consumer-oriented products, partially offset by stronger demand for mid-sized equipment. Construction equipment markets are forecasted to be steady. Strong U.S. infrastructure spending, industrial construction, rental inventory restocking, and housing stabilization are expected to more than offset moderation in office and commercial real estate construction. Roadbuilding demand remains strongest in the U.S. and emerging markets in South America and India, largely offsetting flat fundamentals in Europe. Net income for the Company’s financial services operations is expected to be lower than fiscal year 2022 due to less-favorable financing spreads, a correction of the accounting treatment for financing incentives offered to John Deere dealers recorded in the second quarter of 2023, a higher provision for credit losses, higher selling, administrative andrural areas through satellite communication.
28
general expenses, and lower gains on operating lease dispositions. These factors are expected to be partially offset by income earned on a higher average portfolio.
Additional Trends – The Company has experienced supply chain improvements over 2022 beginning in the second quarter of 2023. The reduction in supply chain disruptions contributed to higher levels of production compared to 2022. As a result, the production schedules in 2023 are more aligned with the customers’ seasonal use of the Company’s products, marking a return to historical seasonal production patterns. Additionally, supply chain improvements have contributed to meaningful reductions in production costs including premium freight and material costs. Supply chain disruptions impacted many aspects of the business in 2022, including receiving past due deliveries from suppliers, parts availability, increased production costs, and higher inventory levels.
Central bank policy interest rates increased in the first nine months of 2023. Most retail receivables are fixed rate, while wholesale financing receivables are variable rate. The Company has both fixed and variable rate borrowings. The Company manages the risk of interest rate fluctuations by balancing the types and amounts of its funding sources to its financing receivable and equipment on operating lease portfolios. Accordingly, the Company enters into interest rate swap agreements to manage its interest rate exposure. Historically, rising interest rates impact the Company’s borrowings sooner than the benefit is realized from the financing receivable and equipment on operating lease portfolios. As a result, the Company’s financial services operations experienced $133 million (after-tax) of less favorable financing spreads in the first nine months of 2023 compared to 2022. The Company expects spread compression to persist for the remainder of 2023.
Remaining supply chain disruptions and rising interest rates are driven by factors outside of the Company’s control, and as a result, the Company cannot reasonably foresee when these conditions will subside.
Other Items of Concern and Uncertainties – Other items of concern include global and regional political conditions, economic and trade policies, imposition of new or retaliatory tariffs against certain countries or covering certain products, capital market disruptions, changes in demand and pricing for new and used equipment, significant fluctuations in foreign currency exchange rates, and volatility in the prices of many commodities. These items could impact the Company’s results. The Company is making investments in technology and in strengthening its capabilities in digitalization, automation, autonomy, and alternative propulsion technologies. As with most technology investments, marketplace adoption, monetization, and regulation of these features holds an elevated level of uncertainty.
2924
Company Outlook for 2024
Production volumes are expected to decline in 2024 as demand moderates to more normal levels.
Agriculture and Turf Outlook for 2024
● | We expect large and small agricultural equipment sales to be down from 2023 levels in North America, Europe, and South America. |
● | Sales of compact utility tractors continue to be lower as the industry works to bring down inventory levels, while demand for turf products has stabilized. |
● | We continue to produce at levels in line with retail demand in North America. To manage inventory in Europe and Brazil, we are producing at levels below retail demand. |
● | Agricultural fundamentals are expected to moderate in 2024 due to lower commodity prices and elevated interest rates, offset by resilient farm balance sheets and lower input costs. |
● | The U.S. equipment fleet age is above 20-year averages for both tractors and combines. |
● | The dairy and livestock sector continues to benefit from elevated cattle and hay prices. |
● | Commodity markets remain disrupted in Central and Eastern Europe due to the Russia/Ukraine war. Western Europe equipment demand is moderately impacted by uncertainty related to current cash crop receipts, agriculture policy changes, and high interest rates. |
● | Demand in Brazil is expected to moderate due to adverse weather conditions and high interest rates. |
● | Industry sales in Asia are forecasted to be down moderately. |
Construction and Forestry Outlook for 2024
● | Construction equipment industry sales are forecasted to be down from 2023 levels. |
● | Benefits from increasing U.S. infrastructure spending, elevated manufacturing investment levels, and improving single family housing starts are expected to partially offset moderation in office and retail construction. |
● | Roadbuilding demand remains strong in the U.S., largely offset by softening demand in Europe. |
Financial Services Outlook for 2024
| | | | | | | |
Net Income | | Up moderately | | ||||
+ Nonrecurring prior period special items | | Favorable | | ||||
+ Higher average portfolio | | Favorable | | ||||
(-) Financing spreads | | Unfavorable | | ||||
(-) Provision for credit losses | | Unfavorable | |
Additional Trends
Agricultural Market Business Cycle. The agricultural market is affected by various factors including commodity prices, acreage planted, crop yields, and government policies. These factors affect farmers’ income and may result in lower demand for equipment. We may experience any of the following effects during unfavorable market conditions: lower net sales, higher sales discounts, higher receivable write-offs, or losses on equipment on operating leases. A potential benefit is that customers may invest in integrated technology solutions and precision agriculture to lower input costs and improve margins.
Interest Rates. Central bank policy interest rates increased in 2023 and have remained elevated. Increased rates impacted us in several ways, primarily affecting the financing spreads for the financial services operations and demand for our products.
The market for our products is negatively impacted by higher interest rates. We expect higher borrowing costs for our customers to primarily affect discretionary and residential product sales in 2024.
Most retail customer receivables are fixed rate. Wholesale financing receivables generally are variable rate. Both types of receivables are financed with fixed and floating rate borrowings. We manage our exposure to interest rate fluctuations by matching our receivables with our funding sources. We also enter into interest rate swap agreements to match our interest rate exposure.
Rising interest rates have historically impacted our borrowings sooner than the benefit is realized from receivable and lease portfolios. As a result, our financial services operations experienced $27 (after-tax) less favorable financing spreads in 2024 compared to 2023. We expect to continue experiencing spread compression in 2024, but at a moderating pace relative to spread compression experienced in 2023.
Higher interest rates are driven by factors outside of our control, and as a result we cannot reasonably foresee when this condition will subside.
25
Other Items of Concern and Uncertainties – Other items that could impact our results are:
● | global and regional political conditions, including the ongoing war between Russia and Ukraine and the war between Israel and Hamas, |
● | economic, tax, and trade policies, |
● | new or retaliatory tariffs, |
● | capital market disruptions, |
● | foreign currency and capital control policies, |
● | regulations and legislation regarding right to repair, |
● | weather conditions, |
● | marketplace adoption and monetization of technologies we have invested in, |
● | our ability to strengthen our digital capabilities, automation, autonomy, and alternative power technologies, |
● | changes in demand and pricing for new and used equipment, |
● | significant fluctuations in foreign currency exchange rates, |
● | volatility in the prices of many commodities, and |
● | slower economic growth or recession. |
consolidated results – 2024 Compared with 20222023
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | | | Three Months Ended | | ||||||||||||||||
Deere & Company | | July 30 | | July 31 | | % | | July 30 | | July 31 | | % | | | January 28 | | January 29 | | ||||||
(In millions of dollars, except per share amounts) | | 2023 | | 2022 | | Change | | 2023 | | 2022 | | Change | | | 2024 | | 2023 | | ||||||
Net sales and revenues | | $ | 15,801 | | $ | 14,102 | | +12 | | $ | 45,839 | | $ | 37,041 | | +24 | | | $ | 12,185 | | $ | 12,652 | |
Net income attributable to Deere & Company | | | 2,978 | | | 1,884 | | +58 | | | 7,797 | | | 4,885 | | +60 | | | | 1,751 | | | 1,959 | |
Diluted earnings per share | | | 10.20 | | | 6.16 | | | | | 26.35 | | | 15.88 | | | | | | 6.23 | | | 6.55 | |
Net sales and revenues increaseddecreased for both the quarter and year-to-date periods primarily due to price realization. Seelower sales volumes. Net income and diluted EPS decreased driven by lower sales. The discussion of net sales and operating profit is included in the Business Segment Results for additional details. Net income in each of the periods presented were impacted by special items. See Note 21 for additional details on special items.below.
An explanation of the cost of sales to net sales ratio and other significant statement of consolidated income changes follows:follow:
| | | | | | | | | |
| | Three Months Ended | | ||||||
| | January 28 | | January 29 | | | | ||
Deere & Company | | 2024 | | 2023 | | % Change | | ||
Cost of sales to net sales | | | 68.7% | | | 69.6% | | | |
(+) Price realization | | | | | | | | Favorable | |
| | | | | | | | | |
Other income | | $ | 339 | | $ | 256 | | +32 | |
Higher due to investment income earned on international mutual funds securities. | | ||||||||
| | | | | | | | | |
Research and development expenses | | | 533 | | | 495 | | +8 | |
Higher due to continued focus on developing and incorporating technology solutions. | | ||||||||
| | | | | | | | | |
Selling, administrative and general expenses | | | 1,066 | | | 952 | | +12 | |
Increased mostly due to higher employee pay driven by inflationary conditions and profit-sharing incentives. | | ||||||||
| | | | | | | | | |
Interest expense | | | 802 | | | 479 | | +67 | |
Increased primarily due to higher average borrowing rates and higher average borrowings. | | ||||||||
| | | | | | | | | |
Other operating expenses | | | 369 | | | 299 | | +23 | |
Increased due to higher foreign exchange losses. | | ||||||||
| | | | | | | | | |
Provision for income taxes | | | 469 | | | 537 | | -13 | |
Decreased as a result of lower pretax income. | | ||||||||
| | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | | ||||||||||||
Deere & Company | | July 30 | | July 31 | | % | | July 30 | | July 31 | | % | | ||||
(In millions of dollars) | | 2023 | | 2022 | | Change | | 2023 | | 2022 | | Change | | ||||
Cost of sales to net sales | | | 67.4% | | | 73.2% | | | | | 67.7% | | | 74.9% | | | |
| | | | | | | | | | | | | | | | | |
Other income | | $ | 264 | | $ | 256 | | +3 | | $ | 748 | | $ | 1,035 | | -28 | |
Research and development expenses | | | 528 | | | 481 | | +10 | | | 1,571 | | | 1,336 | | +18 | |
Selling, administrative and general expenses | | | 1,110 | | | 959 | | +16 | | | 3,392 | | | 2,672 | | +27 | |
Other operating expenses | | | 310 | | | 316 | | -2 | | | 971 | | | 954 | | +2 | |
Provision for income taxes | | | 636 | | | 654 | | -3 | | | 2,164 | | | 1,364 | | +59 | |
The cost of sales ratio improved in the third quarter and the first nine months of fiscal 2023 due to price realization, partially offset by higher production costs. Other income decreased year-to-date due to a non-cash gain on the remeasurement of the previously held equity investment in the Deere-Hitachi joint venture recorded in 2022. Research and development expenses were higher due to continued focus on developing and incorporating technology solutions. Selling, administrative and general expenses increased mostly due to higher employee pay driven by inflationary conditions and profit-sharing incentives. Additionally, the nine-month period was impacted by a cumulative correction of the accounting treatment for financing incentives offered to John Deere dealers and higher commissions paid to dealers. The provision for income taxes was lower in the third quarter of 2023 due to a favorable income tax ruling in Brazil, partially offset by the effect of higher pretax income. The provision for income taxes was higher in the first nine months as a result of higher pretax income and the prior period’s exclusion of the Deere-Hitachi joint-venture remeasurement gain from tax-effected income, which were partially offset by the favorable income tax ruling in Brazil.
Business Segment Results
For the equipment operations, higher production costs were mostly due to elevated cost of purchased components, energy, salaries, and wages.
3026
Business Segment Results – 2024 compared with 2023
| | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | | ||||||||||||
Production and Precision Agriculture | | July 30 | | July 31 | | % | | July 30 | | July 31 | | % | | ||||
(In millions of dollars) | | 2023 | | 2022 | | Change | | 2023 | | 2022 | | Change | | ||||
Net sales | | $ | 6,806 | | $ | 6,096 | | +12 | | $ | 19,826 | | $ | 14,568 | | +36 | |
Operating profit | | | 1,782 | | | 1,293 | | +38 | | | 5,160 | | | 2,646 | | +95 | |
Operating margin | | | 26.2% | | | 21.2% | | | | | 26.0% | | | 18.2% | | | |
Price realization | | | | | | | | +12 | | | | | | | | +17 | |
Currency translation impact on Net sales | | | | | | | | +1 | | | | | | | | -1 | |
| | | | | | | | | |
| | Three Months Ended | | ||||||
| | January 28 | | January 29 | | | | ||
Production and Precision Agriculture |
| 2024 |
| 2023 |
| % Change | | ||
Net sales | | $ | 4,849 | | $ | 5,198 | | -7 | |
Operating profit | | | 1,045 | | | 1,208 | | -13 | |
Operating margin | | | 21.6% | | | 23.2% | | | |
Price realization | | | | | | | | +4 | |
Currency translation impact on Net sales | | | | | | | | +1 | |
Production and precision agriculture sales increaseddecreased for the quarter as a result of price realization in most end markets. Operating profit rose due to price realization and improved shipment volumes / sales mix. These items were partially offset by higher production costs, increased selling, administrative and general expenses and research and development expenses, and the unfavorable effects of foreign currency exchange.
Sales for the first nine months increased as a result of higher shipment volumes (primarily in the U.S., Canada, Europe, and Brazil) and price realization. Operating profit for the first nine months increased primarily from price realization and higher sales volume. Partially offsetting these factors were higher production costs, higher selling, administrative, and general expenses and research and development expenses, and the unfavorable effects of foreign currency exchange mostly due to a stronger U.S. dollar.
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| | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | | ||||||||||||
Small Agriculture and Turf | | July 30 | | July 31 | | % | | July 30 | | July 31 | | % | | ||||
(In millions of dollars) | | 2023 | | 2022 | | Change | | 2023 | | 2022 | | Change | | ||||
Net sales | | $ | 3,739 | | $ | 3,635 | | +3 | | $ | 10,886 | | $ | 9,836 | | +11 | |
Operating profit | | | 732 | | | 552 | | +33 | | | 2,028 | | | 1,443 | | +41 | |
Operating margin | | | 19.6% | | | 15.2% | | | | | 18.6% | | | 14.7% | | | |
Price realization | | | | | | | | +9 | | | | | | | | +11 | |
Currency translation impact on Net sales | | | | | | | | | | | | | | | | -2 | |
Small agriculture and turf sales increased for the quarter due to price realization in most end markets, partially offset by lower shipment volumes (primarily in Brazil, the U.S.). Operating profit improved due to price realization,, Canada, and Europe), driven by moderating agriculture fundamentals. This was partially offset by higher production costs,price realization in the U.S., Canada, and Europe due to inflation. Operating profit decreased primarily due to lower shipment volumes and increased selling, administrative and general expenses and research and development expenses.expenses, partially offset by price realization.
Production & Precision Agriculture Operating Profit
SalesFirst Quarter 2024 Compared to First Quarter 2023
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| | | | | | | | | |
| | Three Months Ended | | ||||||
| | January 28 | | January 29 | | | | ||
Small Agriculture and Turf |
| 2024 |
| 2023 |
| % Change | | ||
Net sales | | $ | 2,425 | | $ | 3,001 | | -19 | |
Operating profit | | | 326 | | | 447 | | -27 | |
Operating margin | | | 13.4% | | | 14.9% | | | |
Price realization | | | | | | | | +3 | |
Currency translation impact on Net sales | | | | | | | | +1 | |
Small agriculture and turf sales decreased for the first nine months increased mainly as a result of price realization and higherquarter due to lower shipment volumes (primarily in the U.S., Canada, Europe, and Mexico), driven by moderating market demand. This was partially offset by price realization in the unfavorable impact of currency translation.U.S., Canada, and Europe due to inflation. Operating profit for the first nine months improveddecreased primarily as a result of price realizationlower shipment volumes and improved sales volumes / mix.increased selling, administrative and general expenses and research and development expenses. These items were partially offset by price realization and lower production costs, driven by a decrease in material and freight costs.
Small Agriculture & Turf Operating Profit
First Quarter 2024 Compared to First Quarter 2023
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| | | | | | | | | |
| | Three Months Ended | | ||||||
| | January 28 | | January 29 | | | | ||
Construction and Forestry |
| 2024 |
| 2023 |
| % Change | | ||
Net sales | | $ | 3,212 | | $ | 3,203 | | | |
Operating profit | | | 566 | | | 625 | | -9 | |
Operating margin | | | 17.6% | | | 19.5% | | | |
Price realization | | | | | | | | +3 | |
Currency translation impact on Net sales | | | | | | | | +1 | |
Construction and forestry sales were flat for the quarter, with positive price realization in the U.S. and Canada offset by lower shipment volumes. Operating profit decreased primarily due to higher production costs, lower shipment volumes, the unfavorable effects of foreign currency exchange, and higher selling, administrative and general expenses and research and development expenses, and the unfavorable effects of foreign currency exchange mostly due to a stronger U.S. dollar.
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| | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | | ||||||||||||
Construction and Forestry | | July 30 | | July 31 | | % | | July 30 | | July 31 | | % | | ||||
(In millions of dollars) | | 2023 | | 2022 | | Change | | 2023 | | 2022 | | Change | | ||||
Net sales | | $ | 3,739 | | $ | 3,269 | | +14 | | $ | 11,053 | | $ | 9,161 | | +21 | |
Operating profit | | | 716 | | | 514 | | +39 | | | 2,179 | | | 1,599 | | +36 | |
Operating margin | | | 19.1% | | | 15.7% | | | | | 19.7% | | | 17.5% | | | |
Price realization | | | | | | | | +10 | | | | | | | | +12 | |
Currency translation impact on Net sales | | | | | | | | | | | | | | | | -1 | |
Construction and forestry sales moved higher for the quarter primarily due to price realization and higher shipment volumes (primarily in the U.S.). Operating profit rose primarily due to price realization and improved sales volumes.expenses. These items were partially offset by increased selling, administrative, and general expenses and research and development expenses, higher production costs, and the unfavorable impact of foreign currency exchange.
The segment’s nine-month sales increased due to price realization and higher shipment volumes (primarily in the U.S.) partially offset by the unfavorable impact of currency translation. The first nine-month’s operating profit moved higher duea favorable sales mix.
Construction & Forestry Operating Profit
First Quarter 2024 Compared to price realization and higher sales volumes, partially offset by higher production costs. Prior period results benefitted from the non-cash gain on the remeasurement of the previously held equity investment in the Deere-Hitachi joint venture.First Quarter 2023
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| | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | | Nine Months Ended | | ||||||||||||
Financial Services | | July 30 | | July 31 | | % | | July 30 | | | July 31 | | % | | ||||
(In millions of dollars) | | 2023 | | 2022 | | Change | | 2023 | | | 2022 | | Change | | ||||
Revenue (including intercompany) | | $ | 1,445 | | $ | 984 | | +47 | | $ | 3,987 | | | $ | 2,851 | | +40 | |
Interest expense | | | 622 | | | 223 | | +179 | | | 1,604 | | | | 493 | | +225 | |
Net income | | | 216 | | | 209 | | +3 | | | 429 | | | | 649 | | -34 | |
| | | | | | | | | |
| | Three Months Ended | | ||||||
| | January 28 | | January 29 | | | | ||
Financial Services | | 2024 | | 2023 | | % Change | | ||
Revenue (including intercompany) | | $ | 1,552 | | $ | 1,244 | | +25 | |
Interest expense | | | 762 | | | 442 | | +72 | |
Net income | | | 207 | | | 185 | | +12 | |
The average balance of receivables and leases financed was 22 percent higher in the third quarter of 2023, and 1819 percent higher in the first ninethree months of 20232024, compared with the same periodsperiod last year. Revenue also increased due to higher average financing rates in both periods.rates. Interest expense increased compared to both prior periodsin the first quarter of 2024 as a result of higher average borrowing rates and higher average borrowings. Financial services netNet income infor the third quarter of 2023 increased mainly due to income earned on higher average portfolio balances, partially offset by less favorable financing spreads as a result of income earned on a higher average portfolio, partially offset by less-favorable financing spreads. Net income for the first nine months of 2023 decreased primarily due to a cumulative correction of the accounting treatment for financing incentives offered to John Deere dealers recorded in the second quarter, less-favorable financing spreads, and a higher provision for credit losses. These items were partially offset by income earned on a higher average portfolio. The accounting correction is unrelated to current market conditions or the credit quality of the financial services portfolio, which remains strong. The allowance for credit losses, excluding the portfolio in Russia, was .36 percent of financing receivables as of July 30, 2023, compared with .40 percent as of July 31, 2022.interest rates.
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Critical Accounting Estimates
See the Company’sour critical accounting estimates discussed in the Management’s Discussion and Analysis of the most recently filed Annual Report on Form 10-K. There have been no material changes to these policies.
CAPITAL RESOURCES AND LIQUIDITY – 2024 compared with 2023
Sources of Liquidity, Key Metrics and Balance Sheet Data
The Company hasWe have access to most global capital markets at a reasonable cost. Sources of liquidity forinclude:
● | cash, cash equivalents, and marketable securities on hand, |
● | funds from operations, |
● | the issuance of commercial paper and term debt, |
● | the securitization of retail notes, and |
● | bank lines of credit. |
We closely monitor our cash requirements. Based on the 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 bank lines of credit. The Company closely monitors its liquidity sources against the cash requirements and expects to have sufficientavailable sources of global funding and liquidity, we expect to meet itsour funding needs in the short term (next 12 months) and long term (beyond 12 months). The Company operatesWe are forecasting lower operating cash flows in 2024 compared with 2023.
We operate in multiple industries, which have differentunique funding requirements. The production and precision agriculture, small agriculture and turf, and construction and forestry segmentsequipment operations are capital intensive and are typicallyintensive. Historically, these operations have been subject to seasonal variations in financing requirements for inventories and certain receivables from dealers.
The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios.
Key metrics are provided in the following table,table:
| | | | | | | | | | |
| | January 28 | | October 29 | | January 29 | | |||
| | 2024 | | 2023 | | 2023 | | |||
Cash, cash equivalents, and marketable securities | | $ | 6,273 | | $ | 8,404 | | $ | 4,828 | |
| | | | | | | | | | |
Trade accounts and notes receivable – net | | | 7,795 | | | 7,739 | | | 7,609 | |
Ratio to prior 12 month’s net sales | | | 14% | | | 14% | | | 15% | |
| | | | | | | | | | |
Inventories | | | 8,937 | | | 8,160 | | | 10,056 | |
Ratio to prior 12 month’s cost of sales | | | 24% | | | 22% | | | 27% | |
| | | | | | | | | | |
Unused credit lines | | | 1,577 | | | 841 | | | 1,581 | |
| | | | | | | | | | |
Financial Services: | | | | | | | | | | |
Ratio of interest-bearing debt to stockholder’s equity | | | 8.3 to 1 | | | 8.4 to 1 | | | 8.2 to 1 | |
In the first quarter, we invested $128 in millionsU.S. dollar denominated bonds issued by the central bank of dollars:Argentina. The bonds are recorded in “Marketable securities,” classified as “International debt securities.” These bonds can be held until maturity or sold in a secondary market outside of Argentina to settle intercompany debt (see note 17).
| | | | | | | | | | |
| | July 30 | | October 30 | | July 31 | | |||
| | 2023 | | 2022 | | 2022 | | |||
Cash, cash equivalents, and marketable securities | | $ | 7,417 | | $ | 5,508 | | $ | 5,078 | |
| | | | | | | | | | |
Trade accounts and notes receivable – net | | | 9,297 | | | 6,410 | | | 6,696 | |
Ratio to prior 12 month’s net sales | | | 17% | | | 13% | | | 15% | |
| | | | | | | | | | |
Inventories | | | 9,350 | | | 8,495 | | | 9,121 | |
Ratio to prior 12 month’s cost of sales | | | 24% | | | 24% | | | 28% | |
| | | | | | | | | | |
Unused credit lines | | | 950 | | | 3,284 | | | 1,957 | |
| | | | | | | | | | |
Financial Services: | | | | | | | | | | |
Ratio of interest-bearing debt to stockholder’s equity | | | 8.1 to 1 | | | 8.5 to 1 | | | 8.2 to 1 | |
The reductionincrease in unused credit lines in 2023at January 28, 2024 compared to both prior periodsOctober 29, 2023 relates to an increasea decrease in commercial paper outstanding due to growth in financing receivablesgenerally corresponding with the level of receivable and funding mix. The Company forecasts higherlease portfolios. We forecast lower operating cash flows in 20232024 driven by an increasea decrease in net income adjusted for non-cash provisions and a favorablean unfavorable change in working capital.
34
There have been no material changes to the contractual obligations and other cash requirements identified in the Company’sour most recently issuedfiled Annual Report on Form 10-K.
Cash Flows (in millions of dollars)
| | | | | | | |
| | Nine Months Ended | | ||||
| | July 30, 2023 | | July 31, 2022 | | ||
Net cash provided by operating activities | | $ | 2,896 | | $ | 418 | |
Net cash used for investing activities | | | (4,563) | | | (4,430) | |
Net cash provided by financing activities | | | 3,379 | | | 515 | |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | | | 125 | | | (143) | |
Net increase (decrease) in cash, cash equivalents, and restricted cash | | $ | 1,837 | | $ | (3,640) | |
30
Cash Flows
| | | | | | | |
| | Three Months Ended | | ||||
| | January 28 | | January 29 | | ||
|
| 2024 |
| 2023 |
| ||
Net cash used for operating activities | | $ | (908) | | $ | (1,246) | |
Net cash provided by investing activities | | | 1,217 | | | 760 | |
Net cash used for financing activities | | | (2,645) | | | (339) | |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | | | 16 | | | 62 | |
Net decrease in cash, cash equivalents, and restricted cash | | $ | (2,320) | | $ | (763) | |
Cash inflowsoutflows from consolidated operating activities in the first ninethree months of 20232024 were $2,896 million.$908. This resulted mainly from a working capital change, partially offset by net income adjusted for non-cash provisions, partially offset by a working capital change and change in accrued income taxes payable.provisions. Cash outflowsinflows from investing activities were $4,563 million$1,217 in the first ninethree months of 2023.this year. The primary drivers were growthcollections of receivables (excluding receivables related to sales) exceeding the cost of receivables acquired and a change in the retail customer receivable portfolio andcollateral on derivatives – net, partially offset by purchases of property and equipment. Cash inflowsoutflows from financing activities were $3,379 million$2,645 in the first ninethree months of 2023, as higher external borrowings2024. The increase in cash used for financing activities was due primarily to support working capital requirements and financing receivable growth were offset by repurchasesnet payments of common stock and dividends paid.borrowings. Cash returned to shareholders was $1,714 in the first three months of 2024. Cash, cash equivalents, and restricted cash increased $1,837 milliondecreased $2,320 during the first ninethree months of 2023.this year.
Key Metrics and Balance Sheet Changes
Trade Accounts and Notes Receivable.Receivable – Trade accounts and notes receivable arise from sales of goods to customers. Trade receivables increased $2,887 millionby $56 during the first ninethree months of 2023, primarily2024, mostly due to a seasonal increase and higher sales volumes, as well as the effect of foreign currency translation.increase. These receivables increased $2,601 million,$186, compared to a year ago, primarily due to higher sales volumes.dealer inventory levels. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 1 percent at each of July 30,January 28, 2024, October 29, 2023, October 30, 2022, and July 31, 2022.January 29, 2023.
Financing Receivables and Equipment on Operating Leases. – Financing receivables and equipment on operating leases consist of retail notes originated in connection with financing of new and used equipment, operating leases, revolving charge accounts, sales-type and direct financing leases, and wholesale notes. Financing receivables and equipment on operating leases increased $5,819 milliondecreased $1,066 during the first nine monthsquarter of 20232024, primarily due to seasonal payments, and increased $8,261 million$8,386 in the past 12 months, due to strong retail sales. Total acquisition volumes of financing receivables and equipment on operating leases were 3216 percent higher in the first ninethree months of 2023,2024, compared with the same period last year, as volumes of wholesale notes, retail notes, and financing leases were higher, while revolving charge accounts and operating leases and finance leases were higherlower compared to July 31, 2022.the same period last year.
Inventories. – Inventories increased by $855 million$777 during the first ninethree months, of 2023 and increased by $229 millionprimarily due to a seasonal increase. Inventories decreased $1,119, compared to a year ago. The increases wereago, due to higherlower forecasted salesshipment volumes. The effect of foreign currency translation also increased inventories during the first nine months of 2023. A majority of these inventories are valued on the last-in, first outfirst-out (LIFO) method.
Property and Equipment. – Property and equipment cash expenditures in the first ninethree months of 20232024 were $887 million,$362, compared with $596 million$315 in the same period last year. Capital expenditures in 20232024 are estimated to be approximately $1,650 million.$1,900.
Accounts Payable and Accrued Expenses. – Accounts payable and accrued expenses decreased by $2,769 in the first three months of 2024, primarily due to a decrease in accrued expenses associated with employee benefits, dealer sales discounts, and derivative liabilities. Accounts payable and accrued expenses increased by $518 million in the first nine months of 2023. Accounts payable and accrued expenses increased $2,354 million$253 compared to a year ago, due to an increase in accrued expenses associated with employee benefits,extended warranty premium, product warranties, and accrued taxes, dealer sales discounts, and derivative liabilities.interest, partially offset by a decrease in accounts payable associated with trade payables.
Borrowings. – Total external borrowings have changeddecreased by $245 in the first three months of 2024 and increased $9,102 compared to a year ago, generally corresponding with the level of the receivable and the lease portfolio, as well as other working capital requirements.
John Deere Capital Corporation (Capital Corporation), a U.S. financial services subsidiary, has a revolving warehouse facility to utilize bank conduit facilities to securitize retail notes (see Note 9). The facility was renewed in November 20222023 with an expiration in November 20232024 and increasedwith an increase in the total capacity or “financing limit” from $1,000 million$1,500 to $1,500 million.$2,000. At July 30, 2023, $1,415 millionJanuary 28, 2024, $1,118 of securitization borrowings were outstanding under the facility. At the end of the contractual revolving period, unless the banks and Capital Corporation agree to renew, Capital Corporation would liquidate the secured borrowings over time as payments on the retail notes are collected.
35
In the first ninethree months of 2023,2024, the financial services operations issued $3,207 million and retired $2,309 million$881 of retail note securitization borrowings, which are presented in “Increase (decrease)“Net proceeds (payments) in total short-term borrowings.borrowings (original maturities three months or less).”
31
Lines of Credit. The Company – We also hashave access to bank lines of credit with various banks throughout the world. Worldwide lines of credit totaled $10,352 million$10,310 at July 30, 2023, $950 millionJanuary 28, 2024, $1,577 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 considered to constitute utilization. Included in the total credit lines at July 30, 2023January 28, 2024 was a 364-day credit facility agreement of $5,000, million expiring in the second quarter of 2024. In addition, total credit lines included long-term credit facility agreements of $2,500, million expiring in the second quarter of 2027, and $2,500, million expiring in the second quarter of 2028. These credit agreements require Capital Corporation and other parts of the Companyour business to maintain certain performance metrics and liquidity targets. We expect to extend the terms of these credit facilities. All requirements in the credit agreements have been met during the periods included in the financial statements.
Debt Ratings. – To access public debt capital markets, the Company relieswe rely on credit rating agencies to assign short-term and long-term credit ratings to the Company’sour debt securities as an indicator of credit quality for fixed income investors. A security rating is not a recommendation by the rating agency to buy, sell, or hold Companyour securities. A credit rating agency may change or withdraw ratings based on its assessment of the Company’sour 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, and may adversely impact the Company’s liquidity.markets. The senior long-term and short-term debt ratings and outlook currently assigned to unsecured Companycompany securities by the rating agencies engaged by the Companyus are as follows:
| | | | | | | |
|
| Senior |
| |
| |
|
| | Long-Term | | Short-Term | | Outlook |
|
Fitch Ratings | | A+ | | F1 | | Stable | |
Moody’s Investors Service, Inc. |
|
|
| Prime-1 |
|
| |
Standard & Poor’s |
| A |
| A-1 |
| Stable | |
Forward-Looking StatementsFORWARD-LOOKING STATEMENTS
Certain statements contained herein, including in the section entitled “Overview,”“Overview” relating to future events, expectations, and trends constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995.1995 and involve factors that are subject to change, assumptions, risks, and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect all lines of the Company’sour operations generally while others could more heavily affect a particular line of business.
Forward-looking statements are based on currently available information and current assumptions, expectations, and projections about future events and should not be relied upon. Except as required by law, the Companywe expressly disclaimsdisclaim any obligation to update or revise itsour forward-looking statements. Many factors, risks, and uncertainties could cause actual results to differ materially from these forward-looking statements. Among these factors are risks related to:
● | changes and compliance with |
● | political, economic, and social instability of the geographies in which |
● | adverse macroeconomic conditions, including unemployment, inflation, rising interest rates, changes in consumer practices due to slower economic growth, |
● |
● | the ability to execute business strategies, including |
● | the ability to understand and meet customers’ changing expectations and demand for John Deere products and solutions; |
● | accurately forecasting customer demand for products and services and adequately managing inventory; |
● | the ability to integrate new technology, including automation and machine learning, and deliver precision technology, alternative power technologies, and solutions to customers, including through our Solutions as a Service business model; |
● | changes to governmental communications channels (radio frequency technology); |
● |
the |
● | dealer practices and their ability to manage distribution of John Deere products and support and service precision technology solutions; |
● | changes in climate patterns, unfavorable weather events, and natural disasters; |
● | governmental and other actions designed to address climate change in connection with a transition to a lower-carbon economy; |
32
● | higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for |
36
● | availability and price of raw materials, components, and whole |
● | delays or disruptions in |
● | our equipment fails to perform as expected, which could result in warranty claims, post-sales repairs or recalls, product liability litigation, and regulatory investigations; |
● | the ability to attract, develop, engage, and retain qualified personnel; |
● | security breaches, cybersecurity attacks, technology failures, and other disruptions to |
● | loss of or challenges to intellectual property rights; |
● | legislation introduced or enacted that could affect our business model and intellectual property, such as right to repair legislation; |
● | investigations, claims, lawsuits, or other legal proceedings; |
● | events that damage |
● | world grain stocks, available farm acres, soil conditions, harvest yields, prices for commodities and livestock, input costs, and availability of transport for crops; and |
● | housing starts and supply, real estate and housing prices, levels of public and non-residential construction, and infrastructure investment. |
Further information concerning the Companyus and itsour businesses, including factors that could materially affect the Company’sour financial results, is included in the Company’sour other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. “Risk Factors” of our most recent Annual Report on Form 10-K and this Quarterly Report on Form 10-Q). There also may be other factors that we cannot anticipate or that are not described herein because we do not currently perceive them to be material.
Supplemental Consolidating InformationSUPPLEMENTAL CONSOLIDATING DATA
The supplemental consolidating data presented on the subsequent pages is presented for informational purposes. The equipmentEquipment operations represents the enterprise without financial services. The equipmentEquipment 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 equipmentEquipment operations and financial services participate in different industries. The equipmentEquipment operations primarily generate earnings and cash flows by manufacturing and selling equipment, service parts, and technology solutions to dealers and retail customers. Financial services finances sales and leases by dealers of new and used equipment that is largely manufactured by the Company.us. Those earnings and cash flows generally are the difference between the finance income received from customer payments less interest expense, and depreciation on equipment subject to an operating lease. The two businesses are capitalized differently and have separate performance metrics. The supplemental consolidating data is also used by management due to these differences.
differences.
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DEERE & COMPANY | DEERE & COMPANY | | | DEERE & COMPANY | | | ||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL CONSOLIDATING DATA | SUPPLEMENTAL CONSOLIDATING DATA | | | SUPPLEMENTAL CONSOLIDATING DATA | | | ||||||||||||||||||||||||||||||||||||||||||||||
STATEMENTS OF INCOME | STATEMENTS OF INCOME | | | STATEMENTS OF INCOME | | | ||||||||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended July 30, 2023 and July 31, 2022 | | | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions of dollars) Unaudited | | | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended January 28, 2024 and January 29, 2023 | For the Three Months Ended January 28, 2024 and January 29, 2023 | | | |||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited | Unaudited | | | |||||||||||||||||||||||||||||||||||||||||||||||||
| | EQUIPMENT | | FINANCIAL | | | | | | | | EQUIPMENT | | FINANCIAL | | | | | | | ||||||||||||||||||||||||||||||||
| | OPERATIONS | | SERVICES | | ELIMINATIONS | | CONSOLIDATED | |
| | OPERATIONS | | SERVICES | | ELIMINATIONS | | CONSOLIDATED | |
| ||||||||||||||||||||||||||||||||
| | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | |
| | 2024 | | 2023 | | 2024 | | 2023 | | 2024 | | 2023 | | 2024 | | 2023 | |
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Net Sales and Revenues |
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Net sales | | $ | 14,284 | | $ | 13,000 | | | | | | | | | | | | $ | 14,284 | | $ | 13,000 | | | | $ | 10,486 | | $ | 11,402 | | | | | | | | | | $ | 10,486 | | $ | 11,402 | | | ||||||
Finance and interest income | | | 210 | |
| 60 | | $ | 1,335 | | $ | 905 | | $ | (292) | | $ | (119) | | | 1,253 | | 846 | 1 | | | | 157 | |
| 114 | | $ | 1,433 | | $ | 1,067 | | $ | (230) | | $ | (187) | | 1,360 | | 994 | 1 | | |||
Other income | | | 222 | |
| 228 | | | 110 | |
| 79 | | | (68) | |
| (51) | | | 264 | |
| 256 | 2, 3 | | | | 289 | |
| 234 | | | 119 | |
| 177 | | | (69) | |
| (155) | | | 339 | |
| 256 | 2, 3 | |
Total | | | 14,716 | |
| 13,288 | | | 1,445 | |
| 984 | | | (360) | |
| (170) | | | 15,801 | |
| 14,102 | | | | | 10,932 | |
| 11,750 | | | 1,552 | |
| 1,244 | | | (299) | |
| (342) | | | 12,185 | |
| 12,652 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||
Costs and Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||
Cost of sales | | | 9,630 | |
| 9,512 | | | | | | | | (6) | |
| (1) | | | 9,624 | | 9,511 | 4 | | | | 7,207 | |
| 7,940 | | | | | | (7) | | (6) | | 7,200 | | 7,934 | 4 | | ||||||||
Research and development expenses | | | 528 | |
| 481 | | | | | | | | | | | | | 528 | | 481 | | | | | 533 | |
| 495 | | | | | | | | | | 533 | | 495 | | | |||||||||
Selling, administrative and general expenses | | | 913 | |
| 805 | | | 199 | |
| 156 | | | (2) | |
| (2) | | | 1,110 | |
| 959 | 4 | | | | 876 | |
| 783 | | 192 | |
| 172 | | (2) | |
| (3) | | 1,066 | |
| 952 | 4 | | |||
Interest expense | | | 94 | |
| 109 | | | 622 | |
| 223 | | | (93) | |
| (36) | | | 623 | |
| 296 | 5 | | | | 108 | |
| 101 | | 762 | |
| 442 | | (68) | |
| (64) | | 802 | |
| 479 | 1 | | |||
Interest compensation to Financial Services | | | 199 | |
| 83 | | | | | | | | (199) | |
| (83) | | | | | | 5 | | | | 162 | |
| 123 | | | | | | (162) | | (123) | | | | | 1 | | ||||||||
Other operating expenses | | | 34 | |
| 47 | | | 336 | |
| 317 | | | (60) | |
| (48) | | | 310 | |
| 316 | 6, 7 | | | | 90 | |
| 53 | | | 339 | |
| 392 | | | (60) | |
| (146) | | | 369 | |
| 299 | 3, 5 | |
Total | | | 11,398 | |
| 11,037 | | | 1,157 | |
| 696 | | | (360) | |
| (170) | | | 12,195 | |
| 11,563 | | | | | 8,976 | |
| 9,495 | | | 1,293 | |
| 1,006 | | | (299) | |
| (342) | | | 9,970 | |
| 10,159 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||
Income before Income Taxes | | | 3,318 | |
| 2,251 | | | 288 | |
| 288 | | | | |
| | | | 3,606 | |
| 2,539 | | | | | 1,956 | |
| 2,255 | | 259 | |
| 238 | | | |
| | | 2,215 | |
| 2,493 | | | |||
Provision for income taxes | | | 564 | |
| 574 | | | 72 | |
| 80 | | | | |
| | | | 636 | |
| 654 | | | | | 416 | |
| 483 | | | 53 | |
| 54 | | | | |
| | | | 469 | |
| 537 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||
Income after Income Taxes | | | 2,754 | |
| 1,677 | | | 216 | |
| 208 | | | | |
| | | | 2,970 | |
| 1,885 | | | | | 1,540 | |
| 1,772 | | 206 | |
| 184 | | | |
| | | 1,746 | |
| 1,956 | | | |||
Equity in income (loss) of unconsolidated affiliates | | | 2 | |
| (1) | | | | |
| 1 | | | | | | | | | 2 | | | | | | ||||||||||||||||||||||||||
Equity in income of unconsolidated affiliates | | | 1 | |
| | | | 1 | | | 1 | | | | | | | | | 2 | | | 1 | | | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||
Net Income | | | 2,756 | |
| 1,676 | | | 216 | |
| 209 | | | | |
| | | | 2,972 | |
| 1,885 | | | | | 1,541 | |
| 1,772 | | 207 | |
| 185 | | | |
| | | 1,748 | |
| 1,957 | | | |||
Less: Net income (loss) attributable to noncontrolling interests | | | (6) | |
| 1 | | | | | | | | | | | | | | | (6) | | | 1 | | | ||||||||||||||||||||||||||
Less: Net loss attributable to noncontrolling interests | | | (3) | |
| (2) | | | | | | | | | | | | | | | (3) | | | (2) | | | ||||||||||||||||||||||||||
Net Income Attributable to Deere & Company | | $ | 2,762 | | $ | 1,675 | | $ | 216 | | $ | 209 | | | | | | | | $ | 2,978 | | $ | 1,884 | | | | $ | 1,544 | | $ | 1,774 | | $ | 207 | | $ | 185 | | | | | | | | $ | 1,751 | | $ | 1,959 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 Elimination of financial services’intercompany interest income earned from equipment operations.and expense.
2 Elimination of equipment operations’ margin from inventory transferred to equipment on operating leases.
3 Elimination of income and expenses between equipment operations and financial services’ incomeservices related to intercompany guarantees of investments in certain international markets and intercompany service revenue.revenues and expenses.
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.
7 Elimination of equipment operations’ expense related to intercompany guarantees of investments in certain international markets and intercompany service expenses.
3834
| | | | | | | | | | | | | | | | | | | | | | | | | | |
DEERE & COMPANY | | | ||||||||||||||||||||||||
SUPPLEMENTAL CONSOLIDATING DATA (Continued) | | | ||||||||||||||||||||||||
STATEMENTS OF INCOME | | | ||||||||||||||||||||||||
For the Nine Months Ended July 30, 2023 and July 31, 2022 | | | ||||||||||||||||||||||||
(In millions of dollars) Unaudited | | | ||||||||||||||||||||||||
| | EQUIPMENT | | FINANCIAL | | | | | | | ||||||||||||||||
| | OPERATIONS | | SERVICES | | ELIMINATIONS | | CONSOLIDATED | |
| ||||||||||||||||
| | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | |
| ||||||||
Net Sales and Revenues |
| | |
| | |
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| | |
| | |
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| | |
| | |
| |
Net sales | | $ | 41,765 | | $ | 33,565 | | | | | | | | | | | | | | $ | 41,765 | | $ | 33,565 | | |
Finance and interest income | | | 444 | |
| 131 | | $ | 3,609 | | $ | 2,580 | | $ | (727) | | $ | (270) | | | 3,326 | | | 2,441 | 1 | |
Other income | | | 639 | |
| 1,028 | | | 378 | |
| 271 | | | (269) | |
| (264) | | | 748 | |
| 1,035 | 2, 3 | |
Total | | | 42,848 | |
| 34,724 | | | 3,987 | |
| 2,851 | | | (996) | |
| (534) | | | 45,839 | |
| 37,041 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Costs and Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of sales | | | 28,306 | |
| 25,126 | | | | | | | | | (18) | |
| (2) | | | 28,288 | | | 25,124 | 4 | |
Research and development expenses | | | 1,571 | |
| 1,336 | | | | | | | | | | | | | | | 1,571 | | | 1,336 | | |
Selling, administrative and general expenses | | | 2,630 | |
| 2,215 | | | 769 | |
| 463 | | | (7) | |
| (6) | | | 3,392 | |
| 2,672 | 4 | |
Interest expense | | | 298 | |
| 297 | | | 1,604 | |
| 493 | | | (231) | |
| (77) | | | 1,671 | |
| 713 | 5 | |
Interest compensation to Financial Services | | | 496 | |
| 189 | | | | | | | | | (496) | |
| (189) | | | | | | | 5 | |
Other operating expenses | | | 172 | |
| 186 | | | 1,043 | |
| 1,028 | | | (244) | |
| (260) | | | 971 | |
| 954 | 6, 7 | |
Total | | | 33,473 | |
| 29,349 | | | 3,416 | |
| 1,984 | | | (996) | |
| (534) | | | 35,893 | |
| 30,799 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Income before Income Taxes | | | 9,375 | |
| 5,375 | | | 571 | |
| 867 | | | | |
| | | | 9,946 | |
| 6,242 | | |
Provision for income taxes | | | 2,020 | |
| 1,142 | | | 144 | |
| 222 | | | | |
| | | | 2,164 | |
| 1,364 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Income after Income Taxes | | | 7,355 | |
| 4,233 | | | 427 | |
| 645 | | | | |
| | | | 7,782 | |
| 4,878 | | |
Equity in income of unconsolidated affiliates | | | 3 | |
| 4 | | | 2 | |
| 4 | | | | | | | | | 5 | | | 8 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income | | | 7,358 | |
| 4,237 | | | 429 | |
| 649 | | | | |
| | | | 7,787 | |
| 4,886 | | |
Less: Net income (loss) attributable to noncontrolling interests | | | (10) | |
| 1 | | | | |
| | | | | | | | | | (10) | | | 1 | | |
Net Income Attributable to Deere & Company | | $ | 7,368 | | $ | 4,236 | | $ | 429 | | $ | 649 | | | | | | | | $ | 7,797 | | $ | 4,885 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
1 Elimination of financial services’ interest income earned from equipment operations.
2 Elimination of equipment operations’ margin from inventory transferred to equipment on operating leases.
3 Elimination of financial services’ income related to intercompany guarantees of investments in certain international markets and intercompany service revenue.
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.
7 Elimination of equipment operations’ expense related to intercompany guarantees of investments in certain international markets and intercompany service expenses.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
DEERE & COMPANY | | | ||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL CONSOLIDATING DATA (Continued) | | | ||||||||||||||||||||||||||||||||||||
CONDENSED BALANCE SHEETS | | | ||||||||||||||||||||||||||||||||||||
Unaudited | | | ||||||||||||||||||||||||||||||||||||
| | EQUIPMENT | | FINANCIAL | | | | | | | ||||||||||||||||||||||||||||
| | OPERATIONS | | SERVICES | | ELIMINATIONS | | CONSOLIDATED | |
| ||||||||||||||||||||||||||||
| | Jan 28 | | Oct 29 | | Jan 29 | | Jan 28 | | Oct 29 | | Jan 29 | | Jan 28 | | Oct 29 | | Jan 29 | | Jan 28 | | Oct 29 | | Jan 29 | |
| ||||||||||||
| | 2024 | | 2023 | | 2023 | | 2024 | | 2023 | | 2023 | | 2024 | | 2023 | | 2023 | | 2024 | | 2023 | | 2023 | |
| ||||||||||||
Assets |
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Cash and cash equivalents | | $ | 3,467 | | $ | 5,720 | | $ | 2,665 | | $ | 1,670 | | $ | 1,738 | | $ | 1,311 | | | | | | | | | | | $ | 5,137 | | $ | 7,458 | | $ | 3,976 | | |
Marketable securities | | | 147 | |
| 104 | |
| 18 | | | 989 | |
| 842 | |
| 834 | | | | |
| | |
| | | | 1,136 | |
| 946 | |
| 852 | | |
Receivables from Financial Services | | | 4,296 | |
| 4,516 | |
| 5,348 | | | | | | | | | | | $ | (4,296) | | $ | (4,516) | | $ | (5,348) | | | | | | | | | | 6 | |
Trade accounts and notes receivable – net | | | 1,093 | |
| 1,320 | |
| 1,342 | | | 9,167 | |
| 8,687 | |
| 7,827 | | | (2,465) | |
| (2,268) | |
| (1,560) | | | 7,795 | |
| 7,739 | |
| 7,609 | 7 | |
Financing receivables – net | | | 72 | |
| 64 | |
| 51 | | | 43,636 | |
| 43,609 | |
| 36,831 | | | | |
| | |
| | | | 43,708 | |
| 43,673 | |
| 36,882 | | |
Financing receivables securitized – net | | | | | | | | | | | | 6,400 | |
| 7,335 | |
| 5,089 | | | | |
| | |
| | | | 6,400 | |
| 7,335 | |
| 5,089 | | |
Other receivables | | | 1,515 | |
| 1,813 | |
| 1,583 | | | 559 | |
| 869 | |
| 489 | | | (57) | |
| (59) | |
| (80) | | | 2,017 | |
| 2,623 | |
| 1,992 | 7 | |
Equipment on operating leases – net | | | | | | | | | | | | 6,751 | |
| 6,917 | |
| 6,502 | | | | |
| | |
| | | | 6,751 | |
| 6,917 | |
| 6,502 | | |
Inventories | | | 8,937 | |
| 8,160 | |
| 10,056 | | | | | | | | | | | | | | | | | | | | | 8,937 | | | 8,160 | | | 10,056 | | |
Property and equipment – net | | | 6,879 | |
| 6,843 | |
| 6,178 | | | 35 | |
| 36 | |
| 34 | | | | |
| | |
| | | | 6,914 | |
| 6,879 | |
| 6,212 | | |
Goodwill | | | 3,966 | |
| 3,900 | |
| 3,891 | | | | | | | | | | | | | | | | | | | | | 3,966 | | | 3,900 | | | 3,891 | | |
Other intangible assets – net | | | 1,112 | |
| 1,133 | |
| 1,255 | | | | |
| | |
| | | | | |
| | |
| | | | 1,112 | |
| 1,133 | |
| 1,255 | | |
Retirement benefits | | | 3,013 | |
| 2,936 | |
| 3,728 | | | 75 | |
| 72 | |
| 67 | | | (1) | |
| (1) | |
| (2) | | | 3,087 | |
| 3,007 | |
| 3,793 | 8 | |
Deferred income taxes | | | 2,133 | |
| 2,133 | |
| 1,015 | | | 72 | |
| 68 | |
| 53 | | | (372) | |
| (387) | |
| (154) | | | 1,833 | |
| 1,814 | |
| 914 | 9 | |
Other assets | | | 2,058 | |
| 1,948 | |
| 1,936 | | | 546 | |
| 559 | |
| 684 | | | (26) | |
| (4) | |
| (23) | | | 2,578 | |
| 2,503 | |
| 2,597 | | |
Total Assets | | $ | 38,688 | | $ | 40,590 | | $ | 39,066 | | $ | 69,900 | | $ | 70,732 | | $ | 59,721 | | $ | (7,217) | | $ | (7,235) | | $ | (7,167) | | $ | 101,371 | | $ | 104,087 | | $ | 91,620 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Short-term borrowings | | $ | 1,203 | | $ | 1,230 | | $ | 969 | | $ | 15,914 | | $ | 16,709 | | $ | 13,160 | | | | | | | | | | | $ | 17,117 | | $ | 17,939 | | $ | 14,129 | | |
Short-term securitization borrowings | | | | | | | | | | | | 6,116 | |
| 6,995 | |
| 4,864 | | | | |
| | |
| | | | 6,116 | |
| 6,995 | |
| 4,864 | | |
Payables to Equipment Operations | | | | |
| | |
| | | | 4,296 | |
| 4,516 | |
| 5,348 | | $ | (4,296) | | $ | (4,516) | | $ | (5,348) | | | | |
| | |
| | 6 | |
Accounts payable and accrued expenses | | | 12,677 | |
| 14,862 | |
| 11,819 | | | 3,232 | |
| 3,599 | |
| 2,952 | | | (2,548) | |
| (2,331) | |
| (1,663) | | | 13,361 | |
| 16,130 | |
| 13,108 | 7 | |
Deferred income taxes | | | 478 | |
| 452 | |
| 404 | | | 444 | |
| 455 | |
| 269 | | | (372) | |
| (387) | |
| (154) | | | 550 | |
| 520 | |
| 519 | 9 | |
Long-term borrowings | | | 7,270 | |
| 7,210 | |
| 8,155 | | | 32,663 | |
| 31,267 | |
| 26,916 | | | | |
| | |
| | | | 39,933 | |
| 38,477 | |
| 35,071 | | |
Retirement benefits and other liabilities | | | 2,006 | |
| 2,032 | |
| 2,384 | | | 110 | |
| 109 | |
| 111 | | | (1) | |
| (1) | |
| (2) | | | 2,115 | |
| 2,140 | |
| 2,493 | 8 | |
Total liabilities | | | 23,634 | | | 25,786 | | | 23,731 | | | 62,775 | | | 63,650 | | | 53,620 | | | (7,217) | | | (7,235) | | | (7,167) | | | 79,192 | | | 82,201 | | | 70,184 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commitments and contingencies (Note 16) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Redeemable noncontrolling interest | | | 100 | | | 97 | | | 100 | | | | | | | | | | | | | | | | | | | | | 100 | | | 97 | | | 100 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Deere & Company stockholders’ equity | | | 22,075 | |
| 21,785 | |
| 21,332 | | | 7,125 | | | 7,082 | | | 6,101 | | | (7,125) | | | (7,082) | | | (6,101) | | | 22,075 | | | 21,785 | | | 21,332 | 10 | |
Noncontrolling interests | | | 4 | |
| 4 | |
| 4 | | | | | | | | | | | | | | | | | | | | | 4 | | | 4 | | | 4 | | |
Financial Services’ equity | | | (7,125) | | | (7,082) | | | (6,101) | | | | | | | | | | | | 7,125 | | | 7,082 | | | 6,101 | | | | | | | | | | 10 | |
Adjusted total stockholders’ equity | | | 14,954 | |
| 14,707 | |
| 15,235 | | | 7,125 | |
| 7,082 | |
| 6,101 | | | | |
| | |
| | | | 22,079 | |
| 21,789 | |
| 21,336 | | |
Total Liabilities and Stockholders’ Equity | | $ | 38,688 | | $ | 40,590 | | $ | 39,066 | | $ | 69,900 | | $ | 70,732 | | $ | 59,721 | | $ | (7,217) | | $ | (7,235) | | $ | (7,167) | | $ | 101,371 | | $ | 104,087 | | $ | 91,620 | | |
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39
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DEERE & COMPANY | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
SUPPLEMENTAL CONSOLIDATING DATA (Continued) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
CONDENSED BALANCE SHEETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
(In millions of dollars) Unaudited | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||
| | EQUIPMENT | | FINANCIAL | | | | | | | ||||||||||||||||||||||||||||
| | OPERATIONS | | SERVICES | | ELIMINATIONS | | CONSOLIDATED | | | ||||||||||||||||||||||||||||
| | Jul 30 | | Oct 30 | | Jul 31 | | Jul 30 | | Oct 30 | | Jul 31 | | Jul 30 | | Oct 30 | | Jul 31 | | Jul 30 | | Oct 30 | | Jul 31 | | | ||||||||||||
| | 2023 | | 2022 | | 2022 | | 2023 | | 2022 | | 2022 | | 2023 | | 2022 | | 2022 | | 2023 | | 2022 | | 2022 | | | ||||||||||||
Assets |
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Cash and cash equivalents | | $ | 4,858 | | $ | 3,767 | | $ | 3,540 | | $ | 1,718 | | $ | 1,007 | | $ | 819 | | | | | | | | | | | $ | 6,576 | | $ | 4,774 | | $ | 4,359 | | |
Marketable securities | | | 3 | |
| 61 | |
| 2 | | | 838 | |
| 673 | |
| 717 | | | | |
| | |
| | | | 841 | |
| 734 | |
| 719 | | |
Receivables from Financial Services | | | 5,312 | |
| 6,569 | |
| 5,055 | | | | | | | | | | | $ | (5,312) | | $ | (6,569) | | $ | (5,055) | | | | | | | | | | 8 | |
Trade accounts and notes receivable – net | | | 1,589 | |
| 1,273 | |
| 1,342 | | | 9,991 | |
| 6,434 | |
| 6,738 | | | (2,283) | |
| (1,297) | |
| (1,384) | | | 9,297 | |
| 6,410 | |
| 6,696 | 9 | |
Financing receivables – net | | | 60 | |
| 47 | |
| 45 | | | 41,242 | |
| 36,587 | |
| 35,011 | | | | |
| | |
| | | | 41,302 | |
| 36,634 | |
| 35,056 | | |
Financing receivables securitized – net | | | | | | | | | 2 | | | 7,001 | |
| 5,936 | |
| 5,139 | | | | |
| | |
| | | | 7,001 | |
| 5,936 | |
| 5,141 | | |
Other receivables | | | 2,599 | |
| 1,670 | |
| 1,676 | | | 599 | |
| 832 | |
| 371 | | | (80) | |
| (10) | |
| (48) | | | 3,118 | |
| 2,492 | |
| 1,999 | 9 | |
Equipment on operating leases – net | | | | | | | | | | | | 6,709 | |
| 6,623 | |
| 6,554 | | | | |
| | |
| | | | 6,709 | |
| 6,623 | |
| 6,554 | | |
Inventories | | | 9,350 | |
| 8,495 | |
| 9,121 | | | | | | | | | | | | | | | | | | | | | 9,350 | | | 8,495 | | | 9,121 | | |
Property and equipment – net | | | 6,385 | |
| 6,021 | |
| 5,630 | | | 33 | |
| 35 | |
| 36 | | | | |
| | |
| | | | 6,418 | |
| 6,056 | |
| 5,666 | | |
Goodwill | | | 3,994 | |
| 3,687 | |
| 3,754 | | | | | | | | | | | | | | | | | | | | | 3,994 | | | 3,687 | | | 3,754 | | |
Other intangible assets – net | | | 1,199 | |
| 1,218 | |
| 1,281 | | | | |
| | |
| | | | | |
| | |
| | | | 1,199 | |
| 1,218 | |
| 1,281 | | |
Retirement benefits | | | 3,503 | |
| 3,666 | |
| 3,062 | | | 71 | |
| 66 | |
| 65 | | | (1) | |
| (2) | |
| (2) | | | 3,573 | |
| 3,730 | |
| 3,125 | 10 | |
Deferred income taxes | | | 1,393 | |
| 940 | |
| 1,248 | | | 65 | |
| 45 | |
| 48 | | | (98) | |
| (161) | |
| (186) | | | 1,360 | |
| 824 | |
| 1,110 | 11 | |
Other assets | | | 2,083 | |
| 1,794 | |
| 1,727 | | | 583 | |
| 626 | |
| 510 | | | (7) | |
| (3) | |
| (1) | | | 2,659 | |
| 2,417 | |
| 2,236 | 9 | |
Total Assets | | $ | 42,328 | | $ | 39,208 | | $ | 37,485 | | $ | 68,850 | | $ | 58,864 | | $ | 56,008 | | $ | (7,781) | | $ | (8,042) | | $ | (6,676) | | $ | 103,397 | | $ | 90,030 | | $ | 86,817 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Short-term borrowings | | $ | 1,773 | | $ | 1,040 | | $ | 471 | | $ | 15,370 | | $ | 11,552 | | $ | 13,705 | | | | | | | | | | | $ | 17,143 | | $ | 12,592 | | $ | 14,176 | | |
Short-term securitization borrowings | | | | | | | | | 2 | | | 6,608 | |
| 5,711 | |
| 4,918 | | | | |
| | |
| | | | 6,608 | |
| 5,711 | |
| 4,920 | | |
Payables to Equipment Operations | | | | |
| | |
| | | | 5,312 | |
| 6,569 | |
| 5,055 | | $ | (5,312) | | $ | (6,569) | | $ | (5,055) | | | | |
| | |
| | 8 | |
Accounts payable and accrued expenses | | | 14,403 | |
| 12,962 | |
| 11,925 | | | 3,307 | |
| 3,170 | |
| 2,494 | | | (2,370) | |
| (1,310) | |
| (1,433) | | | 15,340 | |
| 14,822 | |
| 12,986 | 9 | |
Deferred income taxes | | | 420 | |
| 380 | |
| 436 | | | 184 | |
| 276 | |
| 311 | | | (98) | |
| (161) | |
| (186) | | | 506 | |
| 495 | |
| 561 | 11 | |
Long-term borrowings | | | 7,299 | |
| 7,917 | |
| 8,481 | | | 30,813 | |
| 25,679 | |
| 23,651 | | | | |
| | |
| | | | 38,112 | |
| 33,596 | |
| 32,132 | | |
Retirement benefits and other liabilities | | | 2,423 | |
| 2,351 | |
| 2,799 | | | 114 | |
| 108 | |
| 114 | | | (1) | |
| (2) | |
| (2) | | | 2,536 | |
| 2,457 | |
| 2,911 | 10 | |
Total liabilities | | | 26,318 | | | 24,650 | | | 24,114 | | | 61,708 | | | 53,065 | | | 50,248 | | | (7,781) | | | (8,042) | | | (6,676) | | | 80,245 | | | 69,673 | | | 67,686 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commitments and contingencies (Note 16) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Redeemable noncontrolling interest | | | 101 | | | 92 | | | 95 | | | | | | | | | | | | | | | | | | | | | 101 | | | 92 | | | 95 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Deere & Company stockholders’ equity | | | 23,048 | |
| 20,262 | |
| 19,033 | | | 7,142 | | | 5,799 | | | 5,760 | | | (7,142) | | | (5,799) | | | (5,760) | | | 23,048 | | | 20,262 | | | 19,033 | 12 | |
Noncontrolling interests | | | 3 | |
| 3 | |
| 3 | | | | | | | | | | | | | | | | | | | | | 3 | | | 3 | | | 3 | | |
Financial Services’ equity | | | (7,142) | |
| (5,799) | |
| (5,760) | | | | | | | | | | | | 7,142 | | | 5,799 | | | 5,760 | | | | | | | | | | 12 | |
Adjusted total stockholders’ equity | | | 15,909 | |
| 14,466 | |
| 13,276 | | | 7,142 | |
| 5,799 | |
| 5,760 | | | | |
| | |
| | | | 23,051 | |
| 20,265 | |
| 19,036 | | |
Total Liabilities and Stockholders’ Equity | | $ | 42,328 | | $ | 39,208 | | $ | 37,485 | | $ | 68,850 | | $ | 58,864 | | $ | 56,008 | | $ | (7,781) | | $ | (8,042) | | $ | (6,676) | | $ | 103,397 | | $ | 90,030 | | $ | 86,817 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
86 Elimination of receivables / payables between equipment operations and financial services.
97 Primarily reclassification of sales incentive accruals on receivables sold to financial services.
108 Reclassification of net pension assets / liabilities.
119 Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions.
1210 Elimination of financial services’ equity.
4035
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
DEERE & COMPANY | DEERE & COMPANY | | | DEERE & COMPANY | | | ||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL CONSOLIDATING DATA (Continued) | SUPPLEMENTAL CONSOLIDATING DATA (Continued) | | | SUPPLEMENTAL CONSOLIDATING DATA (Continued) | | | ||||||||||||||||||||||||||||||||||||||||||||||
STATEMENTS OF CASH FLOWS | STATEMENTS OF CASH FLOWS | | | STATEMENTS OF CASH FLOWS | | | ||||||||||||||||||||||||||||||||||||||||||||||
For the Nine Months Ended July 30, 2023 and July 31, 2022 | | | ||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions of dollars) Unaudited | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
For the Three Months Ended January 28, 2024 and January 29, 2023 | For the Three Months Ended January 28, 2024 and January 29, 2023 | | | |||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited | Unaudited | | | |||||||||||||||||||||||||||||||||||||||||||||||||
| | EQUIPMENT | | FINANCIAL | | | | | | | | EQUIPMENT | | FINANCIAL | | | | | | | ||||||||||||||||||||||||||||||||
| | OPERATIONS | | SERVICES | | ELIMINATIONS | | CONSOLIDATED | | | | OPERATIONS | | SERVICES | | ELIMINATIONS | | CONSOLIDATED | | | ||||||||||||||||||||||||||||||||
| | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | | | 2024 | | 2023 | | 2024 | | 2023 | | 2024 | | 2023 | | 2024 | | 2023 | | | ||||||||||||||||
Cash Flows from Operating Activities |
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Net income | | $ | 7,358 | | $ | 4,237 | | $ | 429 | | $ | 649 | | | | | | | | $ | 7,787 | | $ | 4,886 | | | | $ | 1,541 | | $ | 1,772 | | $ | 207 | | $ | 185 | | | | | | | | $ | 1,748 | | $ | 1,957 | | |
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 | |
| 3 | |
| | |
| (67) | |
| 62 | |
| | |
| | |
| (64) | |
| 62 | | | |
| (2) | |
| 1 | |
| 33 | |
| (131) | |
| | |
| | |
| 31 | |
| (130) | | |
Provision for depreciation and amortization | |
| 872 | |
| 806 | |
| 757 | |
| 790 | | $ | (102) | | $ | (153) | |
| 1,527 | |
| 1,443 | 13 | | |
| 302 | |
| 279 | |
| 254 | |
| 252 | | $ | (36) | | $ | (37) | |
| 520 | |
| 494 | 11 | |
Impairments and other adjustments | | | | |
| 81 | |
| 173 | |
| | |
| | |
| | |
| 173 | |
| 81 | | | ||||||||||||||||||||||||||
Share-based compensation expense | | | | | | | | | | | | | | | 112 | | | 64 | | | 112 | | | 64 | 14 | | | | | |
| | | | | | | | | | 46 | | | 23 | | | 46 | | | 23 | 12 | |
Gain on remeasurement of previously held equity investment | | | | |
| (326) | |
| | |
| | |
| | |
| | |
| | |
| (326) | | | ||||||||||||||||||||||||||
Distributed earnings of Financial Services | |
| 31 | |
| 368 | |
| | |
| | |
| (31) | |
| (368) | |
| | |
| | 15 | | |
| 233 | |
| 3 | |
| | |
| | |
| (233) | |
| (3) | |
| | |
| | 13 | |
Provision (credit) for deferred income taxes | |
| (322) | |
| 44 | |
| (107) | |
| (50) | |
| | |
| | |
| (429) | |
| (6) | | | |
| 48 | |
| (39) | |
| (21) | |
| (17) | |
| | |
| | |
| 27 | |
| (56) | | |
Changes in assets and liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Receivables related to sales | |
| (293) | |
| (215) | | | | | | | | | (4,766) | | | (2,142) | | | (5,059) | | | (2,357) | 16, 18, 19 | | |
| 209 | |
| (23) | | | | | | | | | (486) | | | (992) | | | (277) | | | (1,015) | 14, 16 | |
Inventories | |
| (534) | |
| (2,415) | | | | | | | | | (129) | | | (111) | | | (663) | | | (2,526) | 17 | | |
| (687) | |
| (1,254) | | | | | | | | | (36) | | | (25) | | | (723) | | | (1,279) | 15 | |
Accounts payable and accrued expenses | |
| 730 | |
| 491 | |
| 303 | |
| 36 | |
| (986) | |
| (542) | |
| 47 | |
| (15) | 18 | | |
| (2,155) | |
| (1,458) | |
| 25 | |
| 145 | |
| (197) | |
| (264) | |
| (2,327) | |
| (1,577) | 16 | |
Accrued income taxes payable/receivable | |
| (619) | |
| 52 | |
| 24 | |
| 30 | |
| | |
| | |
| (595) | |
| 82 | | | |
| 165 | |
| 192 | |
| 18 | |
| 7 | |
| | |
| | |
| 183 | |
| 199 | | |
Retirement benefits | |
| (115) | |
| (1,020) | |
| (1) | |
| 6 | |
| | |
| | |
| (116) | |
| (1,014) | | | |
| (127) | |
| (49) | |
| (2) | |
| 1 | |
| | |
| | |
| (129) | |
| (48) | | |
Other | |
| 247 | |
| 103 | |
| (15) | |
| (108) | |
| (56) | |
| 49 | |
| 176 | |
| 44 | 13, 14, 17 | | |
| (46) | |
| 17 | |
| 61 | |
| 163 | |
| (22) | |
| 6 | |
| (7) | |
| 186 | 11, 12, 15 | |
Net cash provided by operating activities | |
| 7,358 | |
| 2,206 | |
| 1,496 | |
| 1,415 | |
| (5,958) | |
| (3,203) | |
| 2,896 | |
| 418 | | | ||||||||||||||||||||||||||
Net cash provided by (used for) operating activities | |
| (519) | |
| (559) | |
| 575 | |
| 605 | |
| (964) | |
| (1,292) | |
| (908) | |
| (1,246) | | | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Flows from Investing Activities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Collections of receivables (excluding receivables related to sales) | | | | | | | |
| 18,440 | |
| 16,927 | |
| (848) | |
| (1,153) | |
| 17,592 | |
| 15,774 | 16 | | | | | | | | |
| 8,007 | |
| 7,495 | |
| (255) | |
| (297) | |
| 7,752 | |
| 7,198 | 14 | |
Proceeds from sales of equipment on operating leases | | | | | | | |
| 1,445 | |
| 1,501 | |
| | |
| | |
| 1,445 | |
| 1,501 | | | | | | | | | |
| 506 | |
| 497 | |
| | |
| | |
| 506 | |
| 497 | | |
Cost of receivables acquired (excluding receivables related to sales) | | | | | | | |
| (21,043) | |
| (19,069) | |
| 329 | |
| 491 | |
| (20,714) | |
| (18,578) | 16 | | | | | | | | |
| (6,513) | |
| (6,375) | |
| 66 | |
| 53 | |
| (6,447) | |
| (6,322) | 14 | |
Acquisitions of businesses, net of cash acquired | | | (82) | | | (488) | |
| | |
| | |
| | |
| | |
| (82) | |
| (488) | | | ||||||||||||||||||||||||||
Purchases of property and equipment | |
| (885) | |
| (595) | |
| (2) | |
| (1) | |
| | |
| | |
| (887) | |
| (596) | | | |
| (362) | |
| (315) | |
| | |
| | |
| | |
| | |
| (362) | |
| (315) | | |
Cost of equipment on operating leases acquired | | | | | | | |
| (2,143) | |
| (1,868) | |
| 175 | |
| 151 | |
| (1,968) | |
| (1,717) | 17 | | | | | | | | |
| (503) | |
| (531) | |
| 49 | |
| 34 | |
| (454) | |
| (497) | 15 | |
Increase in investment in Financial Services | | | (811) | | | | |
| | |
| | |
| 811 | |
| | |
| | |
| | 20 | | ||||||||||||||||||||||||||
Decrease in investment in Financial Services | | | 10 | | | | |
| | |
| | |
| (10) | |
| | |
| | |
| | 17 | | ||||||||||||||||||||||||||
Increase in trade and wholesale receivables | | | | | | | |
| (6,270) | |
| (3,318) | |
| 6,270 | |
| 3,318 | |
| | |
| | 16 | | | | | | | | |
| (871) | |
| (1,499) | |
| 871 | |
| 1,499 | |
| | |
| | 14 | |
Collateral on derivatives – net | | | | | | 5 | | | 240 | | | (198) | | | | | | | | | 240 | | | (193) | | | | | | | | | | | 310 | | | 345 | | | | | | | | | 310 | | | 345 | | |
Other | |
| (79) | |
| (87) | |
| (111) | |
| (74) | |
| 1 | |
| 28 | |
| (189) | |
| (133) | 19 | | |
| 10 | |
| (9) | |
| (98) | |
| (137) | |
| | |
| | |
| (88) | |
| (146) | | |
Net cash used for investing activities | |
| (1,857) | |
| (1,165) | |
| (9,444) | |
| (6,100) | |
| 6,738 | |
| 2,835 | |
| (4,563) | |
| (4,430) | | | ||||||||||||||||||||||||||
Net cash provided by (used for) investing activities | |
| (342) | |
| (324) | |
| 838 | |
| (205) | |
| 721 | |
| 1,289 | |
| 1,217 | |
| 760 | | | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Flows from Financing Activities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Increase (decrease) in total short-term borrowings | |
| (152) | |
| 58 | |
| 5,192 | |
| 4,209 | |
| | |
| | |
| 5,040 | |
| 4,267 | | | ||||||||||||||||||||||||||
Net proceeds (payments) in short-term borrowings (original maturities three months or less) | |
| 78 | |
| (136) | |
| (3,029) | |
| 833 | |
| | |
| | |
| (2,951) | |
| 697 | | | ||||||||||||||||||||||||||
Change in intercompany receivables/payables | |
| 1,476 | |
| 70 | |
| (1,476) | |
| (70) | |
| | |
| | |
| | |
| | | | |
| 288 | |
| 1,469 | |
| (288) | |
| (1,469) | |
| | |
| | |
| | |
| | | |
Proceeds from long-term borrowings | |
| 60 | |
| 137 | |
| 9,912 | |
| 6,144 | |
| | |
| | |
| 9,972 | |
| 6,281 | | | ||||||||||||||||||||||||||
Payments of long-term borrowings | |
| (116) | |
| (1,372) | |
| (5,746) | |
| (5,206) | |
| | |
| | |
| (5,862) | |
| (6,578) | | | ||||||||||||||||||||||||||
Proceeds from borrowings issued (original maturities greater than three months) | |
| 11 | |
| 1 | |
| 5,276 | |
| 2,504 | |
| | |
| | |
| 5,287 | |
| 2,505 | | | ||||||||||||||||||||||||||
Payments of borrowings (original maturities greater than three months) | |
| (40) | |
| | |
| (3,197) | |
| (1,925) | |
| | |
| | |
| (3,237) | |
| (1,925) | | | ||||||||||||||||||||||||||
Repurchases of common stock | |
| (4,663) | |
| (2,477) | | | | | | | | | | | | | | | (4,663) | | | (2,477) | | | |
| (1,328) | |
| (1,257) | | | | | | | | | | | | | | | (1,328) | | | (1,257) | | |
Capital investment from Equipment Operations | | | | |
| | | | 811 | | | | | | (811) | | | | | | | | | | 20 | | |
| | |
| | | | (10) | | | | | | 10 | | | | | | | | | | 17 | |
Dividends paid | |
| (1,065) | |
| (971) | |
| (31) | | | (368) | |
| 31 | | | 368 | |
| (1,065) | | | (971) | 15 | | |
| (386) | |
| (341) | |
| (233) | | | (3) | |
| 233 | | | 3 | |
| (386) | | | (341) | 13 | |
Other | |
| 4 | |
| 16 | |
| (47) | |
| (23) | |
| | |
| | |
| (43) | |
| (7) | | | |
| (22) | |
| (6) | |
| (8) | |
| (12) | |
| | |
| | |
| (30) | |
| (18) | | |
Net cash provided by (used for) financing activities | |
| (4,456) | |
| (4,539) | |
| 8,615 | |
| 4,686 | |
| (780) | |
| 368 | |
| 3,379 | |
| 515 | | | ||||||||||||||||||||||||||
Net cash used for financing activities | |
| (1,399) | |
| (270) | |
| (1,489) | |
| (72) | |
| 243 | |
| 3 | |
| (2,645) | |
| (339) | | | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash | |
| 108 | |
| (148) | |
| 17 | |
| 5 | |
| | |
| | |
| 125 | |
| (143) | | | |
| 11 | |
| 48 | |
| 5 | |
| 14 | |
| | |
| | |
| 16 | |
| 62 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | |
| 1,153 | |
| (3,646) | |
| 684 | |
| 6 | |
| | |
| | |
| 1,837 | |
| (3,640) | | | |
| (2,249) | |
| (1,105) | |
| (71) | |
| 342 | |
| | |
| | |
| (2,320) | |
| (763) | | |
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | |
| 3,781 | |
| 7,200 | |
| 1,160 | |
| 925 | |
| | |
| | |
| 4,941 | |
| 8,125 | | | |
| 5,755 | |
| 3,781 | |
| 1,865 | |
| 1,160 | |
| | |
| | |
| 7,620 | |
| 4,941 | | |
Cash, Cash Equivalents, and Restricted Cash at End of Period | | $ | 4,934 | | $ | 3,554 | | $ | 1,844 | | $ | 931 | | | | | | | | $ | 6,778 | | $ | 4,485 | | | | $ | 3,506 | | $ | 2,676 | | $ | 1,794 | | $ | 1,502 | | | | | | | | $ | 5,300 | | $ | 4,178 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Components of Cash, Cash Equivalents, and Restricted Cash | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 4,858 | | $ | 3,540 | | $ | 1,718 | | $ | 819 | | | | | | | | $ | 6,576 | | $ | 4,359 | | | | $ | 3,467 | | $ | 2,665 | | $ | 1,670 | | $ | 1,311 | | | | | | | | $ | 5,137 | | $ | 3,976 | | |
Restricted cash (Other assets) | | | 76 | | | 14 | | | 126 | | | 112 | | | | | | | | | 202 | | | 126 | | | | | 39 | | | 11 | | | 124 | | | 191 | | | | | | | | | 163 | | | 202 | | |
Total Cash, Cash Equivalents, and Restricted Cash | | $ | 4,934 | | $ | 3,554 | | $ | 1,844 | | $ | 931 | | | | | | | | $ | 6,778 | | $ | 4,485 | | | | $ | 3,506 | | $ | 2,676 | | $ | 1,794 | | $ | 1,502 | | | | | | | | $ | 5,300 | | $ | 4,178 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1311 Elimination of depreciation on leases related to inventory transferred to equipment on operating leases.
1412 Reclassification of share-based compensation expense.
1513 Elimination of dividends from financial services to the equipment operations, which are included in the equipment operations’ operating activities.
1614 Primarily reclassification of receivables related to the sale of equipment.
1715 Reclassification of direct lease agreements with retail customers.
1816 Reclassification of sales incentive accruals on receivables sold to financial services.
19Elimination and reclassification of the effects of financial services partial financing of the construction and forestry retail locations sales and subsequent collection of those amounts.
2017 Elimination of change in investment from equipment operations to financial services.
4136
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See the Company’sour most recently filed Annual Report on Form 10-K (Part II, Item 7A). There hashave been no material changechanges in this information.
Item 4. CONTROLS AND PROCEDURES
The Company’sOur principal executive officer and its principal financial officer have concluded that the Company’sour 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 July 30, 2023,January 28, 2024, 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 thirdfirst quarter of 2023,2024, there were no changes that have materially affected or are reasonably likely to materially affect the Company’sour internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company isWe are subject to various unresolved legal actions which arise in the normal course of itsour business, the most prevalent of which relate to product liability (including asbestos-related liability), retail credit, employment, patent, trademark, and antitrust matters. The Company believesWe believe the reasonably possible range of losses for these unresolved legal actions would not have a material effect on itsour consolidated financial statements.
Item 1A. Risk Factors
See the Company’sour most recently filed Annual Report on Form 10-K (Part I, Item 1A). There hashave been no material changechanges in this information. The risks described in the Annual Report on Form 10-K, and the “Forward-Looking Statements” in this report, are not the only risks faced by the Company.we face. Additional risks and uncertainties may also materially affect the Company’sour 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
Issuer Purchases of Equity Securities
The Company’s purchasesPurchases of itsour common stock during the thirdfirst quarter of 20232024 were as follows:
| | | | | | | | | | | | | | | | | | | | | |
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| |
| | | | Total Number of |
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| |
|
| |
| | |
| Total Number of |
| |
|
| | | | | | | Shares Purchased as | | Maximum Number of |
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| | | | | | | Shares Purchased as | | Maximum Number of |
|
| | Total Number of | | | | | Part of Publicly | | Shares that May Yet Be |
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| | 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) |
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| | Purchased (2) | | Average Price | | Programs (1) | | Plans or Programs (1) |
| ||
Period | | (thousands) | | Per Share | | (thousands) | | (millions) |
|
| | (thousands) | | Per Share | | (thousands) | | (millions) |
| ||
May 1 to May 28 | | 1,581 |
| $ | 375.70 | | 1,581 | | 40.0 | | | ||||||||||
May 29 to Jun 25 | | 1,525 | | | 385.90 | | 1,525 | | 38.6 | | | ||||||||||
Jun 26 to Jul 30 | | 2,285 | | | 418.54 | | 2,285 | | 36.4 | | | ||||||||||
Oct 30 to Nov 26 | | 1,178 |
| $ | 377.57 | | 1,178 | | 31.8 | | |||||||||||
Nov 27 to Dec 24 | | 1,296 | | | 372.25 | | 1,259 | | 30.7 | | |||||||||||
Dec 25 to Jan 28 | | 1,050 | | | 393.54 | | 1,050 | | 29.6 | | |||||||||||
Total | | 5,391 | | | | | 5,391 | | | | | | 3,524 | | | | | 3,487 | | | |
(1) |
(2) | In the first quarter of 2024, 37 thousand shares were acquired from plan participants at a weighted-average market price of $365.60 per share to pay payroll taxes on the vesting of restricted stock awards. |
37
Sales of Unregistered Securities
During the first quarter of 2024, we distributed 1,333 deferred stock awards to a participant account under the 2012 Deere & Company Nonemployee Director Stock Ownership Plan. The deferred stock awards converted to shares of common stock on a one-for-one basis. Deferred stock units and shares of common stock issued under the 2012 Deere & Company Nonemployee Director Stock Ownership Plan are exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of the SEC’s Regulation D thereunder.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
42
Item 5. Other Information
Amendment to Bylaws
On August 30, 2023, the Board of Directors of the Company adopted amendments to the Company’s bylaws (as amended, the “Amended Bylaws”), effective as of such date. The amendments set forth in the Amended Bylaws, among other things, (1) revise the procedures and disclosure requirements for the nomination of directors and the submission of proposals for consideration at annual meetings of the stockholders of the Company, including, among other things, adding a requirement that a stockholder seeking to nominate director(s) at an annual meeting deliver to the Company reasonable evidence that it has complied with the requirements of Rule 14a-19 of the Exchange Act within eight business days of the meeting; (2) revise the majority voting provision to clarify when an election of directors will be deemed contested; (3) allow for the establishment of rules, regulations, or procedures of a meeting of the Company’s stockholders by the Board of Directors and/or the presiding person of a meeting and clarify the power of the chair of a stockholder meeting to adjourn any meeting of stockholders; (4) adopt gender-neutral terms when referring to particular positions, offices, or title holders; and (5) make certain administrative, modernizing, clarifying, and conforming changes, including making updates to reflect recent amendments to the General Corporation Law of the State of Delaware.
The foregoing description of the Amended Bylaws is qualified in its entirety by reference to the Bylaws, as amended, a copy of which is filed as Exhibit 3.2 hereto and is incorporated herein by reference.
Amended & Restated Change in Control Severance Program
On August 29, 2023, the Compensation Committee of the Board of Directors (the “Committee”) of the Company adopted amendments to the Company’s Amended and Restated Change in Control Severance Program (the “Program”). The amendments to the Program, among other things, reduced the multiplier applicable to cash severance payments in the event of a change in control and a qualifying termination for the Chief Executive Officer of the Company from 3.0x to 2.99x base salary. The multiplier for the Tier 1 and Tier 2 Participants, as those terms are defined in the Program, were unchanged and remain at 2.0x and 1.5x, respectively. The amendments to the Program result from the Committee’s periodic review of the Company’s executive compensation program, which includes consideration of shareholder feedback.
The foregoing description of the amendments to the Program is qualified in its entirety by reference to the Amended & Restated Change in Control Severance Program, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Director and Executive Officer Trading Arrangements
On June 2, 2023, Ryan D. Campbell, President, Worldwide Construction & Forestry and Power Systems adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c). The plan covers the exercise of 6,073 employee stock options and the related sale of such shares. The plan expires on May 31, 2024.None.
43
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 furnish copies of such instruments to the Commission upon request of the Commission.
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3.1 | ||
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3.2 | ||
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31.1 | ||
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31.2 | ||
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32 | ||
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101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
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101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
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101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
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101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
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101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
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104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |
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* Incorporated by reference.
4438
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: |
| | By: | /s/ Joshua A. Jepsen |
| | | | Joshua A. Jepsen |
| | | | (Principal Financial Officer and Principal Accounting Officer) |
4539