What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-30 compared with 2024-02-29 · 153 added, 98 removed, 312 unchanged (45% of the section changed)

18 unchanged sentences

The ambitions 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 Quarterly Report on Form 10-Q.

Trends and Economic Conditions

2 unchanged sentences

Construction and Forestry

Company Trends – Customers seek to improve profitability, productivity, and sustainability through technology.

Company Trends

Customers seek to improve profitability, productivity, and sustainability through technology.

Integration of technology into equipment is a persistent market trend.

2 unchanged sentences

We expect this trend to persist for the foreseeable future.

The investments in these technologies and in establishing a Solutions as a Service business model might increase our operating costs and may decrease operating margins during the transition period.

In the first quarter of 2024, we announced an agreement with SpaceX to expand machine connectivity for our customers in rural areas through satellite communication.

Our progress is demonstrated, in part, by the growing use of the John Deere Operations Center (our digital operations management system) engaging more agricultural acres globally.

Engaged acres give us a foundational understanding of customer utilization of John Deere technology.

The investments in these technologies and establishing a Solutions as a Service business model may increase our operating costs and decrease operating margins during the transition period.

Company Outlook for 2024

Production volumes are expected to decline in 2024 as demand moderates to more normal levels.

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

Agriculture and Turf Outlook for 2024

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

● 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.

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.

● Agricultural fundamentals across all our major markets are expected to moderate in 2024 due to rising global stocks, lower commodity prices, elevated interest rates, and weather volatility.

and Canada, this is partially offset by resilient farm balance sheets.

equipment fleet age is elevated for both tractors and combines.

However, increases in used inventory levels are impacting purchasing decisions.

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

In addition, persistent, elevated input costs have decreased demand in Europe.

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

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

● Due to macro-economic trends in U.S.

consumer markets including lower levels of home sales, persistently higher interest rates, and inventory reductions, sales of compact utility tractors and riding lawn equipment continue to be lower.

Construction and Forestry Outlook for 2024

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

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

● Benefits from increasing U.S.

infrastructure spending, elevated manufacturing investment levels, and improving single family housing starts are expected to partially offset moderation in office and retail construction.

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

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

1 unchanged sentence

Up moderately

+ Nonrecurring prior period special items

+ Higher average portfolio

(-) Financing spreads

+ Nonrecurring prior period special item

(-) Provision for credit losses

(-) Financing spreads

Additional Trends

3 unchanged sentences

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.

lower net sales, higher sales discounts, higher receivable write-offs, and losses on equipment on operating leases.

A potential benefit is that customers may invest in integrated technology solutions and precision agriculture to lower input costs and improve margins.

3 unchanged sentences

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.

We expect higher borrowing costs for our customers to affect product sales in 2024.

Most retail customer receivables are fixed rate.

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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,

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

● economic, tax, and trade policies,

2 unchanged sentences

● foreign currency and capital control policies,

● regulations and legislation regarding right to repair,

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

● weather conditions,

2 unchanged sentences

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

● delays or disruptions in our supply chain,

● significant fluctuations in foreign currency exchange rates,

3 unchanged sentences

Three Months Ended

Six Months Ended

Deere & Company

3 unchanged sentences

Diluted earnings per share

Net sales and revenues decreased for the quarter primarily due to lower sales volumes.

Net sales and revenues decreased for both the quarter and year-to-date periods primarily due to lower sales volumes.

Net income and diluted EPS decreased driven by lower sales.

2 unchanged sentences

Three Months Ended

Six Months Ended

Deere & Company

1 unchanged sentence

(+) Price realization

Higher due to investment income earned on international mutual funds securities.

(+) Inbound freight

(–) Overhead spending

Higher for the first six months due to investment income earned on international mutual funds securities.

Research and development expenses

1 unchanged sentence

Selling, administrative and general expenses

Increased mostly due to higher employee pay driven by inflationary conditions and profit-sharing incentives.

Lower in the second quarter as the prior period was impacted by the cumulative correction of the accounting treatment for financing incentives offered to John Deere dealers of $173 pretax ($135 after-tax).

Excluding the impact of this item, selling, administrative and general expenses have increased for both periods mostly due to a higher provision for credit losses and higher employee pay driven by inflationary conditions and profit sharing incentives.

Interest expense

Increased primarily due to higher average borrowing rates and higher average borrowings.

Increased for both periods primarily due to higher average borrowing rates and higher average borrowings.

Other operating expenses

Increased due to higher foreign exchange losses.

Lower in the second quarter due to higher pension benefits (see Note 6) and lower foreign exchange losses.

Provision for income taxes

Decreased as a result of lower pretax income.

Decreased for both periods as a result of lower pretax income.

Business Segment Results – 2024 Compared with 2023

Three Months Ended

Six Months Ended

Production and Precision Agriculture

3 unchanged sentences

Currency translation impact on Net sales

Production and precision agriculture sales decreased for the quarter as a result of lower shipment volumes (primarily in Brazil, the U.S., Canada, and Europe), driven by moderating agriculture fundamentals.

This was partially offset by 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, partially offset by price realization.

Production and precision agriculture sales decreased for the quarter as a result of lower shipment volumes (primarily in Brazil, the U.S., and Europe), driven by softened demand.

This was partially offset by price realization in the U.S.

Operating profit decreased primarily due to lower shipment volumes and higher production costs, partially offset by price realization.

Production & Precision Agriculture Operating Profit

First Quarter 2024 Compared to First Quarter 2023

Second Quarter 2024 Compared to Second Quarter 2023

Sales for the first six months decreased as a result of lower shipment volumes (primarily in Brazil, the U.S., and Europe), partially offset by price realization in the U.S.

Operating profit for the first six months decreased due to lower sales volume, higher selling, administrative, and general expenses and research and development expenses, partially offset by price realization.

Production & Precision Agriculture Operating Profit

First Six Months 2024 Compared to First Six Months 2023

Three Months Ended

Six Months Ended

Small Agriculture and Turf

3 unchanged sentences

Currency translation impact on Net sales

Small agriculture and turf sales decreased for the quarter due to lower shipment volumes (primarily in the U.S., Canada, Europe, and Mexico) driven by moderating market demand.

This was partially offset by price realization in the U.S., Canada, and Europe due to inflation.

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

Operating profit decreased due to lower shipment volumes, partially offset by price realization.

Small Agriculture & Turf Operating Profit

First Quarter 2024 Compared to First Quarter 2023

Second Quarter 2024 Compared to Second Quarter 2023

Sales for the first six months decreased as a result of lower shipment volumes (primarily in the U.S., Europe, and Mexico), partially offset by price realization.

Operating profit for the first six months decreased primarily as a result of lower sales volumes, higher selling, administrative, and general expenses and research and development expenses, and higher warranty expenses.

These items were partially offset by price realization, favorable mix, and lower production costs.

Small Agriculture & Turf Operating Profit

First Six Months 2024 Compared to First Six Months 2023

Three Months Ended

Six Months Ended

Construction and Forestry

3 unchanged sentences

Currency translation impact on Net sales

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.

These items were partially offset by price realization and a favorable sales mix.

Construction and forestry sales decreased for the quarter due to lower worldwide shipment volumes.

Operating profit decreased due to lower sales volumes and increased selling, administrative, and general expenses and research and development expenses.

Construction & Forestry Operating Profit

First Quarter 2024 Compared to First Quarter 2023

Second Quarter 2024 Compared to Second Quarter 2023

The segment’s six-month sales decreased due to lower shipment volumes in all major regions outside the U.S., partially offset by price realization and the favorable impact of currency translation.

The first six-month’s operating profit decreased due to lower sales volumes, higher selling, administrative, and general expenses and research and development expenses, increased production costs, and the unfavorable impact of currency translation.

These factors were partially offset by price realization.

Construction & Forestry Operating Profit

First Six Months 2024 Compared to First Six Months 2023

Three Months Ended

Six Months Ended

Financial Services

1 unchanged sentence

Interest expense

The average balance of receivables and leases financed was 19 percent higher in the first three months of 2024, compared with the same period last year.

Revenue also increased due to higher average financing rates.

Interest expense increased in the first quarter of 2024 as a result of higher average borrowing rates and higher average borrowings.

Net income for the quarter increased mainly due to income earned on higher average portfolio balances, partially offset by less favorable financing spreads as a result of higher interest rates.

The average balance of receivables and leases financed was 16 percent higher in the second quarter of 2024 and 18 percent higher in the first six months of 2024 compared with the same periods last year.

Revenue also increased due to higher average financing rates in both periods.

Interest expense increased compared to both prior periods as a result of higher average borrowings and higher average borrowing rates.

Financial services net income in both periods increased due to income earned on higher average portfolio balances, partially offset by a higher provision for credit losses and less favorable financing spreads.

The results of both periods were also affected by a correction of the accounting treatment for financing incentives offered to John Deere dealers.

The cumulative effect of this correction, $173 pretax ($135 after-tax), was recorded in the second quarter of 2023.

Critical Accounting Estimates

24 unchanged sentences

Ratio of interest-bearing debt to stockholder’s equity

In the first quarter, we invested $128 in U.S.

In the first half of 2024, we invested $177 in U.S.

dollar denominated bonds issued by the central bank of Argentina.

The bonds are recorded in “Marketable securities,” classified as “International debt securities.” These bonds can be held until maturity or sold in a secondary market outside of Argentina to settle intercompany debt (see Note 17).

The increase in unused credit lines at January 28, 2024 compared to October 29, 2023 relates to a decrease in commercial paper outstanding generally corresponding with the level of receivable and lease portfolios.

We forecast lower operating cash flows in 2024 driven by a decrease in net income adjusted for non-cash provisions and an unfavorable change in working capital.

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

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

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

Three Months Ended

Net cash used for operating activities

Net cash provided by investing activities

Net cash used for financing activities

Six Months Ended

April 28, 2024

April 30, 2023

Net cash provided by (used for) operating activities

Net cash used for investing activities

Net cash provided by (used for) financing activities

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

Net decrease in cash, cash equivalents, and restricted cash

Cash outflows from consolidated operating activities in the first three months of 2024 were $908.

This resulted mainly from a working capital change, partially offset by net income adjusted for non-cash provisions.

Cash inflows from investing activities were $1,217 in the first three months of this year.

The primary drivers were collections of receivables (excluding receivables related to sales) exceeding the cost of receivables acquired and a change in collateral on derivatives – net, partially offset by purchases of property and equipment.

Cash outflows from financing activities were $2,645 in the first three months of 2024.

The increase in cash used for financing activities was due primarily to net payments of borrowings.

Cash returned to shareholders was $1,714 in the first three months of 2024.

Cash, cash equivalents, and restricted cash decreased $2,320 during the first three months of this year.

Net increase (decrease) in cash, cash equivalents, and restricted cash

Cash inflows from consolidated operating activities in the first six months of 2024 were $944.

This resulted mainly from net income adjusted for non-cash provisions, partially offset by a working capital change.

Included in the working capital change was a cash outflow of $1,300 from accounts payable and accrued expenses due to a higher profit sharing payout in the first quarter of 2024 based on strong fiscal year 2023 results, lower accrued expenses related to dealer sales discounts, and less trade payables consistent with our forecasted decrease in production.

Cash outflows from investing activities were $1,670 in the first six months of this year.

The primary drivers were purchases of property and equipment and growth in the retail customer receivable portfolio and equipment on operating leases.

Cash outflows from financing activities were $1,162 in the first six months of 2024, as cash returned to shareholders was partially offset by higher external borrowings.

Cash returned to shareholders was $3,218 in the first six months of 2024.

Cash, cash equivalents, and restricted cash decreased $1,893 during the first six months of 2024.

Key Metrics and Balance Sheet Changes

Trade Accounts and Notes Receivable – Trade accounts and notes receivable arise from sales of goods to customers.

Trade receivables increased by $56 during the first three months of 2024, mostly due to a seasonal increase.

These receivables increased $186, compared to a year ago, due to higher dealer inventory levels.

The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 1 percent at each of January 28, 2024, October 29, 2023, and 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 decreased $1,066 during the first quarter of 2024, primarily due to seasonal payments, and increased $8,386 in the past 12 months, due to strong retail sales.

Total acquisition volumes of financing receivables and equipment on operating leases were 16 percent higher in the first three months of 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 were lower compared to the same period last year.

Inventories – Inventories increased by $777 during the first three months, primarily due to a seasonal increase.

Inventories decreased $1,119, compared to a year ago, due to lower forecasted shipment volumes.

Trade Accounts and Notes Receivable.

Trade accounts and notes receivable arise from sales of goods to customers.

Trade receivables increased $1,141 during the first six months of 2024, primarily due to a seasonal increase.

These receivables decreased $1,091, compared to a year ago, due to lower sales volumes.

The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 2 percent at April 28, 2024, 1 percent at October 29, 2023, and 1 percent at April 30, 2023.

Financing Receivables and Equipment on Operating Leases.

Financing receivables and equipment on operating leases consist of retail notes originated in connection with financing of new and used equipment, operating leases, revolving charge accounts, sales-type and direct financing leases, and wholesale notes.

Financing receivables and equipment on operating leases increased $1,580 during the first six months of 2024 and increased $8,368 in the past 12 months due to higher dealer inventory levels and elevated sales of new and used retail inventory.

Total acquisition volumes of financing receivables and equipment on operating leases were 16 percent higher in the first six months of 2024, compared with the same period last year, as volumes of wholesale notes, retail notes, financing leases, and operating leases were higher, while revolving charge accounts were flat compared to April 30, 2023.

Inventories increased by $283 during the first six months of 2024, primarily due to a seasonal increase.

Inventories decreased by $1,270 compared to a year ago due to lower forecasted shipment volumes.

A majority of these inventories are valued on the last-in, first out (LIFO) method.

Property and Equipment – Property and equipment cash expenditures in the first three months of 2024 were $362, compared with $315 in the same period last year.

Property and Equipment.

Property and equipment cash expenditures in the first six months of 2024 were $719 compared with $584 in the same period last year.

Capital expenditures in 2024 are estimated to be approximately $1,900.

Accounts Payable and Accrued Expenses – Accounts payable and accrued expenses decreased by $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 $253 compared to a year ago, due to an increase in accrued expenses associated with extended warranty premium, product warranties, and accrued interest, partially offset by a decrease in accounts payable associated with trade payables.

Borrowings – Total external borrowings decreased 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.

Accounts Payable and Accrued Expenses.

Accounts payable and accrued expenses decreased by $1,521 in the first six months of 2024, primarily due to a decrease in accrued expenses associated with dealer sales discounts and employee benefits, and decreased accounts payable associated with trade payables.

Accounts payable and accrued expenses decreased $107 compared to a year ago due to a decrease in accounts payable associated with trade payables, partially offset by an increase in accrued expenses associated with derivative liabilities, extended warranty liabilities, and accrued interest.

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

John Deere Capital Corporation (Capital Corporation), a U.S.

1 unchanged sentence

The facility was renewed in November 2023 with an expiration in November 2024 and with an increase in the total capacity or “financing limit” from $1,500 to $2,000.

At January 28, 2024, $1,118 of securitization borrowings were outstanding under the facility.

At April 28, 2024, $1,434 of securitization borrowings were outstanding under the facility.

At the end of the contractual revolving period, unless the banks and Capital Corporation agree to renew, Capital Corporation would liquidate the secured borrowings over time as payments on the retail notes are collected.

In the first three months of 2024, the financial services operations retired $881 of retail note securitization borrowings, which are presented in “Net proceeds (payments) in total short-term borrowings (original maturities three months or less).”

Lines of Credit – We also have access to bank lines of credit with various banks throughout the world.

Worldwide lines of credit totaled $10,310 at January 28, 2024, $1,577 of which were unused.

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

Lines of Credit.

We also have access to bank lines of credit with various banks throughout the world.

Worldwide lines of credit totaled $10,934 at April 28, 2024, $2,787 of which were unused.

For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings were considered to constitute utilization.

Included in the total credit lines at January 28, 2024 was a 364-day credit facility agreement of $5,000, expiring in the second quarter of 2024.

Included in the total credit lines at April 28, 2024 was a 364-day credit facility agreement of $5,000 expiring in the second quarter of 2025.

In addition, total credit lines included long-term credit facility agreements of $2,750 expiring in the second quarter of 2028 and $2,750 expiring in the second quarter of 2029.

These credit agreements require Capital Corporation and other parts of our business to maintain certain performance metrics and liquidity targets.

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, we rely on credit rating agencies to assign short-term and long-term credit ratings to our debt securities as an indicator of credit quality for fixed income investors.

Debt Ratings.

To access public debt capital markets, we rely on credit rating agencies to assign short-term and long-term credit ratings to our debt securities as an indicator of credit quality for fixed income investors.

A security rating is not a recommendation by the rating agency to buy, sell, or hold our securities.

13 unchanged sentences

Among these factors are risks related to:

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

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

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

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

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

3 unchanged sentences

● 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;

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

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

7 unchanged sentences

● delays or disruptions in our supply chain;

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

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

1 unchanged sentence

● 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;

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

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

● events that damage our reputation or brand;

● world grain stocks, available farm acres, soil conditions, harvest yields, prices for commodities and livestock, input costs, and availability of transport for crops;

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

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

9 unchanged sentences

Equipment operations primarily generate earnings and cash flows by manufacturing and selling equipment, service parts, and technology solutions to dealers and retail customers.

Financial services finances sales and leases by dealers of new and used equipment that is largely manufactured by us.

Financial services finances sales and leases by dealers of new and used equipment that is largely manufactured by equipment operations.

Those earnings and cash flows generally are the difference between the finance income received from customer payments less interest expense, and depreciation on equipment subject to an operating lease.

4 unchanged sentences

STATEMENTS OF INCOME

For the Three Months Ended January 28, 2024 and January 29, 2023

For the Three Months Ended April 28, 2024 and April 30, 2023

Net Sales and Revenues

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SUPPLEMENTAL CONSOLIDATING DATA (Continued)

STATEMENTS OF INCOME

For the Six Months Ended April 28, 2024 and April 30, 2023

Net Sales and Revenues

Finance and interest income

Costs and Expenses

Cost of sales

Research and development expenses

Selling, administrative and general expenses

Interest expense

Interest compensation to Financial Services

Other operating expenses

Income before Income Taxes

Provision for income taxes

Income after Income Taxes

Equity in income of unconsolidated affiliates

Net loss attributable to noncontrolling interests

Net Income Attributable to Deere & Company

1 Elimination of intercompany interest income and expense.

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

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

4 Elimination of intercompany service fees.

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

DEERE & COMPANY

SUPPLEMENTAL CONSOLIDATING DATA (Continued)

CONDENSED BALANCE SHEETS

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STATEMENTS OF CASH FLOWS

For the Three Months Ended January 28, 2024 and January 29, 2023

For the Six Months Ended April 28, 2024 and April 30, 2023

Cash Flows from Operating Activities

2 unchanged sentences

Provision for depreciation and amortization

Other non-cash adjustments (Note 21)

Share-based compensation expense

Distributed earnings of Financial Services

Provision (credit) for deferred income taxes

Credit for deferred income taxes

Changes in assets and liabilities:

6 unchanged sentences

Collections of receivables (excluding receivables related to sales)

Proceeds from maturities and sales of marketable securities

Proceeds from sales of equipment on operating leases

Cost of receivables acquired (excluding receivables related to sales)

Purchases of marketable securities

Purchases of property and equipment

Cost of equipment on operating leases acquired

Decrease in investment in Financial Services

Decrease (increase) in investment in Financial Services

Increase in trade and wholesale receivables

Collateral on derivatives – net

Net cash provided by (used for) investing activities

Net cash used for investing activities

Cash Flows from Financing Activities

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Dividends paid

Net cash used for financing activities

Net cash provided by (used for) financing activities

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash

17 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis