DEERE & CO 10-Q

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS All amounts are presented in millions of dollars unless otherwise specified. Overview Organization Deere & Company is a global leader in the production of agricultural, turf, construction, and forestry equipment and solutions. John Deere Financial provides financing for John Deere equipment, parts, services, and other input costs customers need to run their operations. Our operations are managed through the production and precision agriculture (PPA), small agriculture and turf (SAT), construction and forestry (CF), and financial services operating segments. References to “equipment operations” include PPA, SAT, and CF, while references to “agriculture and turf” include both PPA and SAT. Smart Industrial Operating Model and Leap Ambitions We announced the Smart Industrial Operating Model in 2020. This operating model is based on three focus areas: (a) Production systems: A strategic alignment of products and solutions around our customers’ operations. (b) Technology stack: Investments in technology, as well as research and development, that deliver intelligent solutions to our customers through digital capabilities, automation, autonomy, and alternative power technologies. (c) Lifecycle solutions: The integration of our aftermarket and support capabilities to more effectively manage customer equipment, service, and technology needs across the full lifetime of a John Deere product. Our Leap Ambitions were launched in 2022. These ambitions are designed to boost economic value and sustainability for our customers. The ambitions align across our customers’ production systems seeking to optimize their operations to deliver better outcomes with fewer resources. Trends and Economic Conditions Industry Sales Outlook for Fiscal Year 2024 Agriculture and Turf Construction and Forestry Company Trends Customers seek to improve profitability, productivity, and sustainability through technology. Integration of technology into equipment is a persistent market trend. Our Smart Industrial Operating Model and Leap Ambitions are intended to capitalize on this market trend. These technologies are incorporated into products within each of our operating segments. We expect this trend to persist for the foreseeable future. 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 continue to decline during the remainder of 2024 due to reduced demand amid challenges in the global agricultural and turf sectors and construction industry coupled with inventory management through planned underproduction to retail demand. 27 ​ Agriculture and Turf Outlook for 2024 ● We expect large and small agricultural equipment sales to be down from 2023 levels across all our major markets. ● Agricultural fundamentals are expected to continue to moderate in 2024 due to rising global grain stocks from excellent growing conditions, lower commodity prices, elevated interest rates, and geopolitical uncertainty. ● Demand in the U.S. and Canada continues to be affected by declining farm income margins partially offset by stable farm balance sheets. ● The U.S. equipment fleet age is elevated for tractors and in line with historic averages for combines. However, increases in used inventory levels are impacting purchasing decisions. ● Sales of compact utility tractors in the U.S. are forecasted to be down due to higher interest rates, partially offset by small and mid-tractor tailwinds from improving dairy and livestock fundamentals. ● In Europe, volatile weather conditions continue to drive uncertainty about crop yields and along with elevated input costs are impacting demand in the region, while the dairy and livestock sector remains steady due to stronger pricing and lower feed costs. ● Demand in Brazil is expected to be down due to strong global yields driving down commodity prices and persistently high interest rates. ● Industry sales in Asia are forecasted to be down moderately due to commodity price changes, inventory reductions, and weather impacts. Construction and Forestry Outlook for 2024 ● Construction equipment industry sales are forecasted to be down from 2023 levels. ● Benefits from strong U.S. infrastructure spending and increasing manufacturing investment levels are expected to partially offset declines in housing starts, decreases in rental purchases, low levels of commercial real estate construction, and the effect of inventory levels having recovered from historical lows. ● Roadbuilding demand remains strong in the U.S., largely offset by continuing softness in Europe. Financial Services Outlook for 2024 ​ ​ ​ ​ ​ ​ ​ ​ Net Income ​ Up moderately ​ + Higher average portfolio ​ Favorable ​ + Prior period special item ​ Favorable ​ (-) Provision for credit losses ​ Unfavorable ​ (-) Financing spreads ​ 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, and losses on equipment on operating leases. In the third quarter of 2024, we implemented employee-separation programs for our salaried workforce to help meet our strategic priorities while reducing overlap and redundancy in roles and responsibilities. The programs’ total pretax expenses are estimated to be approximately $150, of which $124 was recorded in the third quarter of 2024. Annual pretax savings from these programs are estimated to be approximately $230, with $100 estimated to be realized in 2024 (See Note 21). Interest Rates. Central bank policy interest rates increased in 2023 and have remained elevated. Increased rates impacted us in several ways, primarily affecting the demand for our products and financing spreads for the financial services operations. The markets for our agriculture, turf, and construction products were negatively impacted by elevated interest rates and their effect on borrowing costs for our customers. 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 $66 (after-tax) less favorable financing spreads in 2024 compared to 2023. We expect to continue experiencing spread compression in 2024. Higher interest rates are driven by factors outside of our control, and as a result we cannot reasonably foresee when this condition will subside. 28 ​ Other Items of Concern and Uncertainties Other items that could impact our results are: ● global and regional political conditions, including the ongoing war between Russia and Ukraine and the conflict in the Middle East, ● 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 or right to modify, ● weather conditions, ● marketplace adoption, and monetization of technologies we have invested in, ● our ability to strengthen our digital capabilities, automation, autonomy, and alternative power technologies, ● workforce reductions impact on employee retention, morale, and institutional knowledge, ● changes in demand and pricing for new and used equipment, ● delays or disruptions in our supply chain, ● significant fluctuations in foreign currency exchange rates, ● volatility in the prices of many commodities, and ● slower economic growth or recession. Consolidated Results – 2024 Compared with 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ Deere & Company ​ July 28 ​ July 30 ​ % ​ July 28 ​ July 30 ​ % ​ (In millions of dollars, except per share amounts) ​ 2024 ​ 2023 ​ Change ​ 2024 ​ 2023 ​ Change ​ Net sales and revenues ​ $ 13,152 ​ $ 15,801 ​ -17 ​ $ 40,572 ​ $ 45,839 ​ -11 ​ Net income attributable to Deere & Company ​ ​ 1,734 ​ ​ 2,978 ​ -42 ​ ​ 5,855 ​ ​ 7,797 ​ -25 ​ Diluted earnings per share ​ ​ 6.29 ​ ​ 10.20 ​ ​ ​ ​ 21.04 ​ ​ 26.35 ​ ​ ​ ​ 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. The discussion of net sales and operating profit is included in the Business Segment Results below. Net income in each of the periods presented were impacted by special items. See Note 21 for additional details. An explanation of the cost of sales to net sales ratio and other significant statement of consolidated income changes follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ July 28 ​ July 30 ​ % ​ July 28 ​ July 30 ​ % ​ Deere & Company ​ 2024 ​ 2023 ​ Change ​ 2024 ​ 2023 ​ Change ​ Cost of sales to net sales ​ ​ 68.9% ​ ​ 67.4% ​ ​ ​ ​ 68.2% ​ ​ 67.7% ​ ​ ​ Increased for both periods mostly due to higher overhead costs from reduced volumes resulting in production inefficiencies, partially offset by sales price realization, lower material cost, and reduced inbound freight costs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income ​ $ 304 ​ $ 264 ​ +15 ​ $ 881 ​ $ 748 ​ +18 ​ Higher for the first nine months primarily due to investment income earned on international mutual funds securities. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development expenses ​ ​ 567 ​ ​ 528 ​ +7 ​ ​ 1,664 ​ ​ 1,571 ​ +6 ​ Higher for both periods due to continued focus on developing and incorporating technology solutions. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, administrative and general expenses ​ ​ 1,278 ​ ​ 1,110 ​ +15 ​ ​ 3,608 ​ ​ 3,392 ​ +6 ​ Increased mostly due to a higher provision for credit losses, higher employee pay driven by inflationary conditions and profit sharing incentives, and employee-separation programs’ expenses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ 840 ​ ​ 623 ​ +35 ​ ​ 2,478 ​ ​ 1,671 ​ +48 ​ Increased for both periods primarily due to higher average borrowing rates and higher average borrowings. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other operating expenses ​ ​ 264 ​ ​ 310 ​ -15 ​ ​ 930 ​ ​ 971 ​ -4 ​ Lower in both periods due to higher pension benefits (see Note 6) and lower foreign exchange losses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ ​ 625 ​ ​ 636 ​ -2 ​ ​ 1,845 ​ ​ 2,164 ​ -15 ​ Decreased for both periods as a result of lower pretax income, partially offset by the prior periods’ favorable income tax ruling in Brazil. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 29 ​ Business Segment Results – 2024 Compared with 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ July 28 ​ July 30 ​ % ​ July 28 ​ July 30 ​ % ​ Production and Precision Agriculture ​ 2024 ​ 2023 ​ Change ​ 2024 ​ 2023 ​ Change ​ Net sales ​ $ 5,099 ​ $ 6,806 ​ -25 ​ $ 16,529 ​ $ 19,826 ​ -17 ​ Operating profit ​ ​ 1,162 ​ ​ 1,782 ​ -35 ​ ​ 3,857 ​ ​ 5,160 ​ -25 ​ Operating margin ​ ​ 22.8% ​ ​ 26.2% ​ ​ ​ ​ 23.3% ​ ​ 26.0% ​ ​ ​ Price realization ​ ​ ​ ​ ​ ​ ​ +3 ​ ​ ​ ​ ​ ​ ​ +3 ​ Currency translation impact on Net sales ​ ​ ​ ​ ​ ​ ​ -1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Production and precision agriculture sales decreased for the quarter as a result of lower shipment volumes (primarily in the U.S., Europe, Brazil, and Asia) driven mainly by lower commodity prices and higher interest rates, partially offset by price realization in the U.S. and Canada. Operating profit decreased primarily due to lower shipment volumes and employee-separation programs’ expenses, partially offset by price realization and lower warranty expenses. Production & Precision Agriculture Operating Profit Third Quarter 2024 Compared to Third Quarter 2023 Sales for the first nine 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. and Canada. Operating profit for the first nine months decreased due to lower sales volume, higher selling, administrative, and general expenses and research and development expenses, partially offset by price realization and lower warranty expenses. Production & Precision Agriculture Operating Profit First Nine Months 2024 Compared to First Nine Months 2023 30 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ July 28 ​ July 30 ​ % ​ July 28 ​ July 30 ​ % ​ Small Agriculture and Turf ​ 2024 ​ 2023 ​ Change ​ 2024 ​ 2023 ​ Change ​ Net sales ​ $ 3,053 ​ $ 3,739 ​ -18 ​ $ 8,663 ​ $ 10,886 ​ -20 ​ Operating profit ​ ​ 496 ​ ​ 732 ​ -32 ​ ​ 1,393 ​ ​ 2,028 ​ -31 ​ Operating margin ​ ​ 16.2% ​ ​ 19.6% ​ ​ ​ ​ 16.1% ​ ​ 18.6% ​ ​ ​ Price realization ​ ​ ​ ​ ​ ​ ​ +2 ​ ​ ​ ​ ​ ​ ​ +2 ​ Currency translation impact on Net sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Small agriculture and turf sales decreased for the quarter due to lower shipment volumes (primarily in Europe, the U.S., and Mexico) driven mainly by uncertainty in commodity prices and higher interest rates, partially offset by price realization in the U.S. and Europe. Operating profit decreased due to lower shipment volumes and higher warranty expenses, partially offset by price realization. Small Agriculture & Turf Operating Profit Third Quarter 2024 Compared to Third Quarter 2023 Sales for the first nine 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 nine months decreased primarily as a result of lower sales volumes and higher warranty expenses. These items were partially offset by price realization and lower production costs. Small Agriculture & Turf Operating Profit First Nine Months 2024 Compared to First Nine Months 2023 31 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ July 28 ​ July 30 ​ % ​ July 28 ​ July 30 ​ % ​ Construction and Forestry ​ 2024 ​ 2023 ​ Change ​ 2024 ​ 2023 ​ Change ​ Net sales ​ $ 3,235 ​ $ 3,739 ​ -13 ​ $ 10,292 ​ $ 11,053 ​ -7 ​ Operating profit ​ ​ 448 ​ ​ 716 ​ -37 ​ ​ 1,682 ​ ​ 2,179 ​ -23 ​ Operating margin ​ ​ 13.8% ​ ​ 19.1% ​ ​ ​ ​ 16.3% ​ ​ 19.7% ​ ​ ​ Price realization ​ ​ ​ ​ ​ ​ ​ -1 ​ ​ ​ ​ ​ ​ ​ +1 ​ Currency translation impact on Net sales ​ ​ ​ ​ ​ ​ ​ -1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Construction and forestry sales decreased for the quarter due to lower U.S. shipment volumes, driven by moderating demand and efforts to reduce field inventory. Operating profit decreased due to lower sales volumes, unfavorable mix, and unfavorable price realization. Construction & Forestry Operating Profit Third Quarter 2024 Compared to Third Quarter 2023 Sales for the first nine months decreased due to lower worldwide shipment volumes, partially offset by price realization. Operating profit for the first nine months decreased due to lower sales volumes, increased production costs driven by low volume inefficiencies, and higher selling, administrative, and general expenses and research and development expenses. These factors were partially offset by price realization. Construction & Forestry Operating Profit First Nine Months 2024 Compared to First Nine Months 2023 32 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ July 28 ​ July 30 ​ % ​ July 28 ​ July 30 ​ % ​ Financial Services ​ 2024 ​ 2023 ​ Change ​ 2024 ​ 2023 ​ Change ​ Revenue (including intercompany) ​ $ 1,667 ​ $ 1,445 ​ +15 ​ $ 4,807 ​ $ 3,987 ​ +21 ​ Interest expense ​ ​ 812 ​ ​ 622 ​ +31 ​ ​ 2,354 ​ ​ 1,604 ​ +47 ​ Net income ​ ​ 153 ​ ​ 216 ​ -29 ​ ​ 523 ​ ​ 429 ​ +22 ​ ​ The average balance of receivables and leases financed was 12 percent higher in the third quarter of 2024 and 16 percent higher in the first nine 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 borrowing rates and higher average borrowings. Financial services net income decreased in the third quarter of 2024 due to a higher provision for credit losses and less favorable financing spreads, partially offset by income earned on higher average portfolio balances and favorable discrete tax items. Excluding the impact of an accounting correction in the prior year, financial services net income decreased in the first nine months of 2024 due to a higher provision for credit losses and less favorable financing spreads, partially offset by income earned on higher average portfolio balances. Net income for the first nine months of 2023 was 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 See our 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 We have access to global markets at a reasonable cost. Sources of liquidity include: ● cash, cash equivalents, and marketable securities on hand, ● funds from operations, ● the issuance of commercial paper and term debt, ● the securitization of retail notes, and ● bank lines of credit. We closely monitor our cash requirements. Based on the available sources of liquidity, we expect to meet our funding needs in the short term (next 12 months) and long term (beyond 12 months). We are forecasting lower operating cash flows from equipment operations in 2024 compared with 2023 driven by a decrease in net income adjusted for non-cash provisions and a reduction in accounts payable and accrued expenses. We operate in multiple industries, which have unique funding requirements. The equipment operations are capital intensive. Historically, these operations have been subject to seasonal variations in financing requirements for inventories and receivables from dealers. The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios. Banco John Deere S.A. assets and liabilities were reclassified to held for sale in the third quarter of 2024 (see Note 21). Key metrics are provided in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 28 ​ October 29 ​ July 30 ​ ​ ​ 2024 ​ 2023 ​ 2023 ​ Cash, cash equivalents, and marketable securities ​ $ 8,144 ​ $ 8,404 ​ $ 7,417 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Trade accounts and notes receivable – net ​ ​ 7,469 ​ ​ 7,739 ​ ​ 9,297 ​ Ratio to prior 12 month’s net sales ​ ​ 15% ​ ​ 14% ​ ​ 17% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventories ​ ​ 7,696 ​ ​ 8,160 ​ ​ 9,350 ​ Ratio to prior 12 month’s cost of sales ​ ​ 23% ​ ​ 22% ​ ​ 24% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unused credit lines ​ ​ 4,917 ​ ​ 841 ​ ​ 950 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Financial Services: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ratio of interest-bearing debt to stockholder’s equity ​ ​ 8.5 to 1 ​ ​ 8.4 to 1 ​ ​ 8.1 to 1 ​ ​ 33 ​ In 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. The increase in unused credit lines in 2024 compared to both prior periods relates to a decrease in commercial paper outstanding. 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. Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ ​ July 28, 2024 ​ July 30, 2023 ​ Net cash provided by operating activities ​ $ 4,139 ​ $ 2,896 ​ Net cash used for investing activities ​ ​ (3,671) ​ ​ (4,563) ​ Net cash provided by (used for) financing activities ​ ​ (789) ​ ​ 3,379 ​ Effect of exchange rate changes on cash, cash equivalents, and restricted cash ​ ​ (6) ​ ​ 125 ​ Net increase (decrease) in cash, cash equivalents, and restricted cash ​ $ (327) ​ $ 1,837 ​ ​ Cash inflows from consolidated operating activities in the first nine months of 2024 were $4,139. 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 $1,015 from accounts payable and accrued expenses due to less trade payables consistent with our forecasted decrease in production and lower accrued expenses related to dealer sales discounts and employee benefits. Cash outflows from investing activities were $3,671 in the first nine months of this year. The primary drivers were growth in the retail customer receivable portfolio and equipment on operating leases and purchases of property and equipment. Cash outflows from financing activities were $789 in the first nine months of 2024, as cash returned to shareholders was partially offset by higher external borrowings. Cash returned to shareholders was $4,429 in the first nine months of 2024. Cash, cash equivalents, and restricted cash decreased $327 during the first nine 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 decreased $270 during the first nine months of 2024 and decreased $1,828 compared to a year ago, primarily due to lower sales volumes. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 3 percent at July 28, 2024, 1 percent at October 29, 2023, and 1 percent at July 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 $1,363 during the first nine months of 2024 and increased $4,276 in the past 12 months due to higher dealer inventory levels and an increase in the retail customer receivable portfolio, partially offset by the reclassification of Banco John Deere S.A. receivables to “Assets held for sale” in the third quarter of 2024 (see Note 21). Total acquisition volumes of financing receivables and equipment on operating leases were 8 percent higher in the first nine months of 2024, compared with the same period last year, as volumes of wholesale notes, operating leases, financing leases, and retail notes were higher, while revolving charge accounts were flat compared to July 30, 2023. Inventories. Inventories decreased by $464 during the first nine months of 2024 and decreased by $1,654 compared to a year ago. The decreases were 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 nine months of 2024 were $1,043 compared with $887 in the same period last year. Capital expenditures in 2024 are estimated to be approximately $1,850. Accounts Payable and Accrued Expenses. Accounts payable and accrued expenses decreased by $1,733 in the first nine months of 2024, primarily due to decreased accounts payable associated with trade payables, and a decrease in accrued expenses associated with derivative liabilities, dealer sales discounts, and employee benefits. Accounts payable and accrued expenses decreased $943 compared to a year ago due to a decrease in accounts payable associated with trade payables and a decrease in accrued expenses associated with derivative liabilities, partially offset by an increase in extended warranty liabilities. 34 ​ Borrowings. Total external borrowings increased by $2,444 in the first nine months of 2024 and increased $3,992 compared to a year ago, generally corresponding with the level of the receivable and lease portfolios, as well as other working capital requirements. The change in borrowings was also impacted by the reclassification of Banco John Deere S.A. borrowings to “Liabilities held for sale” in the third quarter of 2024 (see Note 21). 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 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 July 28, 2024, $1,566 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 nine months of 2024, the financial services operations issued $3,722 and retired $2,849 of retail note securitization borrowings, which are presented in “Net proceeds (payments) in short-term borrowings (original maturities three months or less).” Lines of Credit. We have access to bank lines of credit with various banks throughout the world. Worldwide lines of credit totaled $10,930 at July 28, 2024, consisting primarily of: ● a 364-day credit facility agreement of $5,000 expiring in the second quarter of 2025, ● a credit facility agreement of $2,750 expiring in the second quarter of 2028, and ● a credit facility agreement of $2,750 expiring in the second quarter of 2029. At July 28, 2024, $4,917 of these worldwide lines of credit were unused. For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings were considered to constitute utilization. These credit agreements require Capital Corporation and other parts of our business to maintain certain performance metrics and liquidity targets. All requirements in the credit agreements have been met during the periods included in the 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. A security rating is not a recommendation by the rating agency to buy, sell, or hold our securities. A credit rating agency may change or withdraw ratings based on its assessment of our current and future ability to meet interest and principal repayment obligations. Each agency’s rating should be evaluated independently of any other rating. Lower credit ratings generally result in higher borrowing costs, including costs of derivative transactions, and reduced access to debt capital markets. The senior long-term and short-term debt ratings and outlook currently assigned to unsecured company securities by the rating agencies engaged by us are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Senior ​ ​ ​ ​ Long-Term ​ Short-Term ​ Outlook Fitch Ratings ​ A+ ​ F1 ​ Stable ​ Moody’s Investors Service, Inc. A1 Prime-1 Stable ​ Standard & Poor’s A A-1 Stable ​ ​ FORWARD-LOOKING STATEMENTS Certain statements contained herein, including in the section entitled “Overview” relating to future events, expectations, and trends constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 and involve factors that are subject to change, assumptions, risks, and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect all lines of our operations generally while others could more heavily affect a particular line of business. Forward-looking statements are based on currently available information and current assumptions, expectations, and projections about future events and should not be relied upon. Except as required by law, we expressly disclaim any obligation to update or revise our forward-looking statements. Many factors, risks, and uncertainties could cause actual results to differ materially from these forward-looking statements. Among these factors are risks related to: ● changes in 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, interest rate volatility, changes in consumer practices due to slower economic growth, and regional or global liquidity constraints; ● worldwide demand for food and different forms of renewable energy; 35 ​ ● the ability to execute business strategies, including our Smart Industrial Operating Model, Leap Ambitions, and mergers and acquisitions; ● the ability to understand and meet customers’ changing expectations and demand for 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 and solutions to customers; ● changes to governmental communications channels (radio frequency technology); ● the ability to adapt in highly competitive markets; ● dealer practices and their ability to manage inventory and distribution of John Deere products and to provide support and service precision technology solutions; ● changes in climate patterns, unfavorable weather events, and natural disasters; ● governmental and other actions designed to address climate change in connection with a transition to a lower-carbon economy; ● higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for John Deere products and solutions; ● availability and price of raw materials, components, and whole goods; ● 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 ability to attract, develop, engage, and retain qualified employees; ● the impact of workforce reductions on employee retention, morale, and institutional knowledge; ● security breaches, cybersecurity attacks, technology failures, and other disruptions to John Deere information technology infrastructure and products; ● 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 or right to modify legislation; ● investigations, claims, lawsuits, or other legal proceedings; ● events that damage our reputation or brand; ● 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; and ● housing starts and supply, real estate and housing prices, levels of public and non-residential construction, and infrastructure investment. Further information concerning us and our businesses, including factors that could materially affect our financial results, is included in our other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. “Risk Factors” of 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 DATA The supplemental consolidating data presented on the subsequent pages is presented for informational purposes. Equipment operations represents the enterprise without financial services. Equipment operations includes production and precision agriculture operations, small agriculture and turf operations, construction and forestry operations, and other corporate assets, liabilities, revenues, and expenses not reflected within financial services. Transactions between the equipment operations and financial services have been eliminated to arrive at the consolidated financial statements. Equipment operations and financial services participate in different industries. Equipment operations primarily generate earnings and cash flows by manufacturing and selling equipment, service parts, and technology solutions to dealers and retail customers. Financial services 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. The two businesses are capitalized differently and have separate performance metrics. The supplemental consolidating data is also used by management due to these differences. ​ 36 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DEERE & COMPANY ​ ​ SUPPLEMENTAL CONSOLIDATING DATA ​ ​ STATEMENTS OF INCOME ​ ​ For the Three Months Ended July 28, 2024 and July 30, 2023 ​ ​ Unaudited ​ ​ ​ ​ EQUIPMENT ​ FINANCIAL ​ ​ ​ ​ ​ ​ ​ ​ OPERATIONS ​ SERVICES ​ ELIMINATIONS ​ CONSOLIDATED ​ ​ ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ Net Sales and Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 11,387 ​ $ 14,284 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 11,387 ​ $ 14,284 ​ ​ Finance and interest income ​ ​ 155 ​ 210 ​ $ 1,537 ​ $ 1,335 ​ $ (231) ​ $ (292) ​ ​ 1,461 ​ ​ 1,253 1 ​ ​ Other income ​ ​ 246 ​ 222 ​ ​ 130 ​ 110 ​ ​ (72) ​ (68) ​ ​ 304 ​ 264 2, 3 ​ ​ Total ​ ​ 11,788 ​ 14,716 ​ ​ 1,667 ​ 1,445 ​ ​ (303) ​ (360) ​ ​ 13,152 ​ 15,801 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs and Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales ​ ​ 7,855 ​ 9,630 ​ ​ ​ ​ ​ ​ ​ ​ (7) ​ (6) ​ ​ 7,848 ​ ​ 9,624 4 ​ ​ Research and development expenses ​ ​ 567 ​ 528 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 567 ​ ​ 528 ​ ​ Selling, administrative and general expenses ​ ​ 962 ​ 913 ​ ​ 318 ​ 199 ​ ​ (2) ​ (2) ​ ​ 1,278 ​ 1,110 4 ​ ​ Interest expense ​ ​ 91 ​ 94 ​ ​ 812 ​ 622 ​ ​ (63) ​ (93) ​ ​ 840 ​ 623 1 ​ ​ Interest compensation to Financial Services ​ ​ 168 ​ 199 ​ ​ ​ ​ ​ ​ ​ ​ (168) ​ (199) ​ ​ ​ ​ ​ ​ 1 ​ ​ Other operating expenses ​ ​ (16) ​ 34 ​ ​ 343 ​ 336 ​ ​ (63) ​ (60) ​ ​ 264 ​ 310 3, 5 ​ ​ Total ​ ​ 9,627 ​ 11,398 ​ ​ 1,473 ​ 1,157 ​ ​ (303) ​ (360) ​ ​ 10,797 ​ 12,195 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before Income Taxes ​ ​ 2,161 ​ 3,318 ​ ​ 194 ​ 288 ​ ​ ​ ​ ​ ​ ​ 2,355 ​ 3,606 ​ ​ Provision for income taxes ​ ​ 583 ​ 564 ​ ​ 42 ​ 72 ​ ​ ​ ​ ​ ​ ​ 625 ​ 636 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income after Income Taxes ​ ​ 1,578 ​ 2,754 ​ ​ 152 ​ 216 ​ ​ ​ ​ ​ ​ ​ 1,730 ​ 2,970 ​ ​ Equity in income of unconsolidated affiliates ​ ​ ​ ​ 2 ​ ​ 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 ​ ​ 2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income ​ ​ 1,578 ​ 2,756 ​ ​ 153 ​ 216 ​ ​ ​ ​ ​ ​ ​ 1,731 ​ 2,972 ​ ​ Less: Net loss attributable to noncontrolling interests ​ ​ (3) ​ (6) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (3) ​ ​ (6) ​ ​ Net Income Attributable to Deere & Company ​ $ 1,581 ​ $ 2,762 ​ $ 153 ​ $ 216 ​ ​ ​ ​ ​ ​ ​ $ 1,734 ​ $ 2,978 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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. ​ ​ 37 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DEERE & COMPANY ​ ​ SUPPLEMENTAL CONSOLIDATING DATA (Continued) ​ ​ STATEMENTS OF INCOME ​ ​ For the Nine Months Ended July 28, 2024 and July 30, 2023 ​ ​ Unaudited ​ ​ ​ ​ EQUIPMENT ​ FINANCIAL ​ ​ ​ ​ ​ ​ ​ ​ OPERATIONS ​ SERVICES ​ ELIMINATIONS ​ CONSOLIDATED ​ ​ ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ Net Sales and Revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 35,484 ​ $ 41,765 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 35,484 ​ $ 41,765 ​ ​ Finance and interest income ​ ​ 441 ​ 444 ​ $ 4,466 ​ $ 3,609 ​ $ (700) ​ $ (727) ​ ​ 4,207 ​ ​ 3,326 1 ​ ​ Other income ​ ​ 732 ​ 639 ​ ​ 341 ​ 378 ​ ​ (192) ​ (269) ​ ​ 881 ​ 748 2, 3 ​ ​ Total ​ ​ 36,657 ​ 42,848 ​ ​ 4,807 ​ 3,987 ​ ​ (892) ​ (996) ​ ​ 40,572 ​ 45,839 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs and Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales ​ ​ 24,226 ​ 28,306 ​ ​ ​ ​ ​ ​ ​ ​ (21) ​ (18) ​ ​ 24,205 ​ ​ 28,288 4 ​ ​ Research and development expenses ​ ​ 1,664 ​ 1,571 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,664 ​ ​ 1,571 ​ ​ Selling, administrative and general expenses ​ ​ 2,844 ​ 2,630 ​ ​ 771 ​ 769 ​ ​ (7) ​ (7) ​ ​ 3,608 ​ 3,392 4 ​ ​ Interest expense ​ ​ 314 ​ 298 ​ ​ 2,354 ​ 1,604 ​ ​ (190) ​ (231) ​ ​ 2,478 ​ 1,671 1 ​ ​ Interest compensation to Financial Services ​ ​ 510 ​ 496 ​ ​ ​ ​ ​ ​ ​ ​ (510) ​ (496) ​ ​ ​ ​ ​ ​ 1 ​ ​ Other operating expenses ​ ​ 76 ​ 172 ​ ​ 1,018 ​ 1,043 ​ ​ (164) ​ (244) ​ ​ 930 ​ 971 3, 5 ​ ​ Total ​ ​ 29,634 ​ 33,473 ​ ​ 4,143 ​ 3,416 ​ ​ (892) ​ (996) ​ ​ 32,885 ​ 35,893 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before Income Taxes ​ ​ 7,023 ​ 9,375 ​ ​ 664 ​ 571 ​ ​ ​ ​ ​ ​ ​ 7,687 ​ 9,946 ​ ​ Provision for income taxes ​ ​ 1,700 ​ 2,020 ​ ​ 145 ​ 144 ​ ​ ​ ​ ​ ​ ​ 1,845 ​ 2,164 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income after Income Taxes ​ ​ 5,323 ​ 7,355 ​ ​ 519 ​ 427 ​ ​ ​ ​ ​ ​ ​ 5,842 ​ 7,782 ​ ​ Equity in income of unconsolidated affiliates ​ ​ ​ ​ 3 ​ ​ 4 ​ 2 ​ ​ ​ ​ ​ ​ ​ ​ 4 ​ ​ 5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Income ​ ​ 5,323 ​ 7,358 ​ ​ 523 ​ 429 ​ ​ ​ ​ ​ ​ ​ 5,846 ​ 7,787 ​ ​ Less: Net loss attributable to noncontrolling interests ​ ​ (9) ​ (10) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (9) ​ ​ (10) ​ ​ Net Income Attributable to Deere & Company ​ $ 5,332 ​ $ 7,368 ​ $ 523 ​ $ 429 ​ ​ ​ ​ ​ ​ ​ $ 5,855 ​ $ 7,797 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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. ​ ​ 38 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DEERE & COMPANY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL CONSOLIDATING DATA (Continued) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CONDENSED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unaudited ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ EQUIPMENT ​ FINANCIAL ​ ​ ​ ​ ​ ​ ​ ​ OPERATIONS ​ SERVICES ​ ELIMINATIONS ​ CONSOLIDATED ​ ​ ​ ​ Jul 28 ​ Oct 29 ​ Jul 30 ​ Jul 28 ​ Oct 29 ​ Jul 30 ​ Jul 28 ​ Oct 29 ​ Jul 30 ​ Jul 28 ​ Oct 29 ​ Jul 30 ​ ​ ​ ​ 2024 ​ 2023 ​ 2023 ​ 2024 ​ 2023 ​ 2023 ​ 2024 ​ 2023 ​ 2023 ​ 2024 ​ 2023 ​ 2023 ​ ​ Assets ​ ​ Cash and cash equivalents ​ $ 5,385 ​ $ 5,720 ​ $ 4,858 ​ $ 1,619 ​ $ 1,738 ​ $ 1,718 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 7,004 ​ $ 7,458 ​ $ 6,576 ​ ​ Marketable securities ​ ​ 155 ​ 104 ​ 3 ​ ​ 985 ​ 842 ​ 838 ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,140 ​ 946 ​ 841 ​ ​ Receivables from Financial Services ​ ​ 3,951 ​ 4,516 ​ 5,312 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ (3,951) ​ $ (4,516) ​ $ (5,312) ​ ​ ​ ​ ​ ​ ​ ​ ​ 6 ​ ​ Trade accounts and notes receivable – net ​ ​ 1,150 ​ 1,320 ​ 1,589 ​ ​ 8,890 ​ 8,687 ​ 9,991 ​ ​ (2,571) ​ (2,268) ​ (2,283) ​ ​ 7,469 ​ 7,739 ​ 9,297 7 ​ ​ Financing receivables – net ​ ​ 82 ​ 64 ​ 60 ​ ​ 43,814 ​ 43,609 ​ 41,242 ​ ​ ​ ​ ​ ​ ​ ​ ​ 43,896 ​ 43,673 ​ 41,302 ​ ​ Financing receivables securitized – net ​ ​ 2 ​ ​ ​ ​ ​ ​ ​ ​ 8,272 ​ 7,335 ​ 7,001 ​ ​ ​ ​ ​ ​ ​ ​ ​ 8,274 ​ 7,335 ​ 7,001 ​ ​ Other receivables ​ ​ 1,821 ​ 1,813 ​ 2,599 ​ ​ 494 ​ 869 ​ 599 ​ ​ (45) ​ (59) ​ (80) ​ ​ 2,270 ​ 2,623 ​ 3,118 7 ​ ​ Equipment on operating leases – net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,118 ​ 6,917 ​ 6,709 ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,118 ​ 6,917 ​ 6,709 ​ ​ Inventories ​ ​ 7,696 ​ 8,160 ​ 9,350 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,696 ​ ​ 8,160 ​ ​ 9,350 ​ ​ Property and equipment – net ​ ​ 7,058 ​ 6,843 ​ 6,385 ​ ​ 34 ​ 36 ​ 33 ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,092 ​ 6,879 ​ 6,418 ​ ​ Goodwill ​ ​ 3,960 ​ 3,900 ​ 3,994 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,960 ​ ​ 3,900 ​ ​ 3,994 ​ ​ Other intangible assets – net ​ ​ 1,030 ​ 1,133 ​ 1,199 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,030 ​ 1,133 ​ 1,199 ​ ​ Retirement benefits ​ ​ 3,047 ​ 2,936 ​ 3,503 ​ ​ 80 ​ 72 ​ 71 ​ ​ (1) ​ (1) ​ (1) ​ ​ 3,126 ​ 3,007 ​ 3,573 8 ​ ​ Deferred income taxes ​ ​ 2,192 ​ 2,133 ​ 1,393 ​ ​ 35 ​ 68 ​ 65 ​ ​ (329) ​ (387) ​ (98) ​ ​ 1,898 ​ 1,814 ​ 1,360 9 ​ ​ Other assets ​ ​ 2,236 ​ 1,948 ​ 2,083 ​ ​ 675 ​ 559 ​ 583 ​ ​ (8) ​ (4) ​ (7) ​ ​ 2,903 ​ 2,503 ​ 2,659 ​ ​ Assets held for sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,965 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,965 ​ ​ ​ ​ ​ ​ ​ ​ Total Assets ​ $ 39,765 ​ $ 40,590 ​ $ 42,328 ​ $ 74,981 ​ $ 70,732 ​ $ 68,850 ​ $ (6,905) ​ $ (7,235) ​ $ (7,781) ​ $ 107,841 ​ $ 104,087 ​ $ 103,397 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term borrowings ​ $ 983 ​ $ 1,230 ​ $ 1,773 ​ $ 14,311 ​ $ 16,709 ​ $ 15,370 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 15,294 ​ $ 17,939 ​ $ 17,143 ​ ​ Short-term securitization borrowings ​ ​ 1 ​ ​ ​ ​ ​ ​ ​ ​ 7,868 ​ 6,995 ​ 6,608 ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,869 ​ 6,995 ​ 6,608 ​ ​ Payables to Equipment Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,951 ​ 4,516 ​ 5,312 ​ $ (3,951) ​ $ (4,516) ​ $ (5,312) ​ ​ ​ ​ ​ ​ ​ 6 ​ ​ Accounts payable and accrued expenses ​ ​ 13,880 ​ 14,862 ​ 14,403 ​ ​ 3,141 ​ 3,599 ​ 3,307 ​ ​ (2,624) ​ (2,331) ​ (2,370) ​ ​ 14,397 ​ 16,130 ​ 15,340 7 ​ ​ Deferred income taxes ​ ​ 420 ​ 452 ​ 420 ​ ​ 390 ​ 455 ​ 184 ​ ​ (329) ​ (387) ​ (98) ​ ​ 481 ​ 520 ​ 506 9 ​ ​ Long-term borrowings ​ ​ 6,592 ​ 7,210 ​ 7,299 ​ ​ 36,100 ​ 31,267 ​ 30,813 ​ ​ ​ ​ ​ ​ ​ ​ ​ 42,692 ​ 38,477 ​ 38,112 ​ ​ Retirement benefits and other liabilities ​ ​ 2,048 ​ 2,032 ​ 2,423 ​ ​ 109 ​ 109 ​ 114 ​ ​ (1) ​ (1) ​ (1) ​ ​ 2,156 ​ 2,140 ​ 2,536 8 ​ ​ Liabilities held for sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,803 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,803 ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities ​ ​ 23,924 ​ ​ 25,786 ​ ​ 26,318 ​ ​ 67,673 ​ ​ 63,650 ​ ​ 61,708 ​ ​ (6,905) ​ ​ (7,235) ​ ​ (7,781) ​ ​ 84,692 ​ ​ 82,201 ​ ​ 80,245 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (Note 16) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable noncontrolling interest ​ ​ 84 ​ ​ 97 ​ ​ 101 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 84 ​ ​ 97 ​ ​ 101 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Deere & Company stockholders’ equity ​ ​ 23,062 ​ 21,785 ​ 23,048 ​ ​ 7,308 ​ ​ 7,082 ​ ​ 7,142 ​ ​ (7,308) ​ ​ (7,082) ​ ​ (7,142) ​ ​ 23,062 ​ ​ 21,785 ​ ​ 23,048 10 ​ ​ Noncontrolling interests ​ ​ 3 ​ 4 ​ 3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3 ​ ​ 4 ​ ​ 3 ​ ​ Financial Services’ equity ​ ​ (7,308) ​ (7,082) ​ (7,142) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,308 ​ ​ 7,082 ​ ​ 7,142 ​ ​ ​ ​ ​ ​ ​ ​ ​ 10 ​ ​ Adjusted total stockholders’ equity ​ ​ 15,757 ​ 14,707 ​ 15,909 ​ ​ 7,308 ​ 7,082 ​ 7,142 ​ ​ ​ ​ ​ ​ ​ ​ ​ 23,065 ​ 21,789 ​ 23,051 ​ ​ Total Liabilities and Stockholders’ Equity ​ $ 39,765 ​ $ 40,590 ​ $ 42,328 ​ $ 74,981 ​ $ 70,732 ​ $ 68,850 ​ $ (6,905) ​ $ (7,235) ​ $ (7,781) ​ $ 107,841 ​ $ 104,087 ​ $ 103,397 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 6 Elimination of receivables / payables between equipment operations and financial services. 7 Primarily reclassification of sales incentive accruals on receivables sold to financial services. 8 Reclassification of net pension assets / liabilities. 9 Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions. 10 Elimination of financial services’ equity. ​ ​ 39 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DEERE & COMPANY ​ ​ SUPPLEMENTAL CONSOLIDATING DATA (Continued) ​ ​ STATEMENTS OF CASH FLOWS ​ ​ For the Nine Months Ended July 28, 2024 and July 30, 2023 ​ ​ Unaudited ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ EQUIPMENT ​ FINANCIAL ​ ​ ​ ​ ​ ​ ​ ​ OPERATIONS ​ SERVICES ​ ELIMINATIONS ​ CONSOLIDATED ​ ​ ​ ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ ​ Cash Flows from Operating Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 5,323 ​ $ 7,358 ​ $ 523 ​ $ 429 ​ ​ ​ ​ ​ ​ ​ $ 5,846 ​ $ 7,787 ​ ​ Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision (credit) for credit losses ​ 10 ​ 3 ​ 212 ​ (67) ​ ​ ​ ​ ​ 222 ​ (64) ​ ​ Provision for depreciation and amortization ​ 932 ​ 872 ​ 773 ​ 757 ​ $ (107) ​ $ (102) ​ 1,598 ​ 1,527 11 ​ ​ Impairments and other adjustments ​ ​ ​ ​ ​ ​ 53 ​ 173 ​ ​ ​ ​ ​ 53 ​ 173 ​ ​ Share-based compensation expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 159 ​ ​ 112 ​ ​ 159 ​ ​ 112 12 ​ ​ Distributed earnings of Financial Services ​ 250 ​ 31 ​ ​ ​ ​ ​ (250) ​ (31) ​ ​ ​ ​ 13 ​ ​ Credit for deferred income taxes ​ (49) ​ (322) ​ (76) ​ (107) ​ ​ ​ ​ ​ (125) ​ (429) ​ ​ Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Receivables related to sales ​ 106 ​ (293) ​ ​ ​ ​ ​ ​ ​ ​ (2,552) ​ ​ (4,766) ​ ​ (2,446) ​ ​ (5,059) 14, 16 ​ ​ Inventories ​ 391 ​ (534) ​ ​ ​ ​ ​ ​ ​ ​ (157) ​ ​ (129) ​ ​ 234 ​ ​ (663) 15 ​ ​ Accounts payable and accrued expenses ​ (924) ​ 730 ​ 212 ​ 303 ​ (303) ​ (986) ​ (1,015) ​ 47 16 ​ ​ Accrued income taxes payable/receivable ​ 13 ​ (619) ​ 18 ​ 24 ​ ​ ​ ​ ​ 31 ​ (595) ​ ​ Retirement benefits ​ (241) ​ (115) ​ (5) ​ (1) ​ ​ ​ ​ ​ (246) ​ (116) ​ ​ Other ​ (109) ​ 247 ​ 44 ​ (15) ​ (107) ​ (56) ​ (172) ​ 176 11, 12, 15 ​ ​ Net cash provided by operating activities ​ 5,702 ​ 7,358 ​ 1,754 ​ 1,496 ​ (3,317) ​ (5,958) ​ 4,139 ​ 2,896 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Flows from Investing Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Collections of receivables (excluding receivables related to sales) ​ ​ ​ ​ ​ ​ ​ 19,826 ​ 18,440 ​ (683) ​ (848) ​ 19,143 ​ 17,592 14 ​ ​ Proceeds from maturities and sales of marketable securities ​ 56 ​ 68 ​ 277 ​ 59 ​ ​ ​ ​ ​ 333 ​ 127 ​ ​ Proceeds from sales of equipment on operating leases ​ ​ ​ ​ ​ ​ ​ 1,451 ​ 1,445 ​ ​ ​ ​ ​ 1,451 ​ 1,445 ​ ​ Cost of receivables acquired (excluding receivables related to sales) ​ ​ ​ ​ ​ ​ ​ (21,395) ​ (21,043) ​ 282 ​ 329 ​ (21,113) ​ (20,714) 14 ​ ​ Purchases of marketable securities ​ ​ (220) ​ (19) ​ (352) ​ (194) ​ ​ ​ ​ ​ (572) ​ (213) ​ ​ Purchases of property and equipment ​ (1,041) ​ (885) ​ (2) ​ (2) ​ ​ ​ ​ ​ (1,043) ​ (887) ​ ​ Cost of equipment on operating leases acquired ​ ​ ​ ​ ​ ​ ​ (2,377) ​ (2,143) ​ 212 ​ 175 ​ (2,165) ​ (1,968) 15 ​ ​ Decrease (increase) in investment in Financial Services ​ ​ 11 ​ ​ (811) ​ ​ ​ ​ ​ (11) ​ 811 ​ ​ ​ ​ 17 ​ ​ Increase in trade and wholesale receivables ​ ​ ​ ​ ​ ​ ​ (3,255) ​ (6,270) ​ 3,255 ​ 6,270 ​ ​ ​ ​ 14 ​ ​ Collateral on derivatives – net ​ ​ ​ ​ ​ ​ ​ ​ 390 ​ ​ 240 ​ ​ ​ ​ ​ ​ ​ ​ 390 ​ ​ 240 ​ ​ Other ​ (88) ​ (210) ​ (8) ​ 24 ​ 1 ​ 1 ​ (95) ​ (185) ​ ​ Net cash used for investing activities ​ (1,282) ​ (1,857) ​ (5,445) ​ (9,444) ​ 3,056 ​ 6,738 ​ (3,671) ​ (4,563) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash Flows from Financing Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net proceeds (payments) in short-term borrowings (original maturities three months or less) ​ 81 ​ (152) ​ (1,073) ​ 5,192 ​ ​ ​ ​ ​ (992) ​ 5,040 ​ ​ Change in intercompany receivables/payables ​ 558 ​ 1,476 ​ (558) ​ (1,476) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from borrowings issued (original maturities greater than three months) ​ 115 ​ 60 ​ 15,397 ​ 9,912 ​ ​ ​ ​ ​ 15,512 ​ 9,972 ​ ​ Payments of borrowings (original maturities greater than three months) ​ (1,061) ​ (116) ​ (9,731) ​ (5,746) ​ ​ ​ ​ ​ (10,792) ​ (5,862) ​ ​ Repurchases of common stock ​ (3,227) ​ (4,663) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (3,227) ​ ​ (4,663) ​ ​ Capital investment from Equipment Operations ​ ​ ​ ​ ​ ​ ​ (11) ​ ​ 811 ​ ​ 11 ​ ​ (811) ​ ​ ​ ​ ​ ​ 17 ​ ​ Dividends paid ​ (1,202) ​ (1,065) ​ (250) ​ ​ (31) ​ 250 ​ ​ 31 ​ (1,202) ​ ​ (1,065) 13 ​ ​ Other ​ (37) ​ 4 ​ (51) ​ (47) ​ ​ ​ ​ ​ (88) ​ (43) ​ ​ Net cash provided by (used for) financing activities ​ (4,773) ​ (4,456) ​ 3,723 ​ 8,615 ​ 261 ​ (780) ​ (789) ​ 3,379 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash ​ 12 ​ 108 ​ (18) ​ 17 ​ ​ ​ ​ ​ (6) ​ 125 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash ​ (341) ​ 1,153 ​ 14 ​ 684 ​ ​ ​ ​ ​ (327) ​ 1,837 ​ ​ Cash, Cash Equivalents, and Restricted Cash at Beginning of Period ​ 5,755 ​ 3,781 ​ 1,865 ​ 1,160 ​ ​ ​ ​ ​ 7,620 ​ 4,941 ​ ​ Cash, Cash Equivalents, and Restricted Cash at End of Period ​ $ 5,414 ​ $ 4,934 ​ $ 1,879 ​ $ 1,844 ​ ​ ​ ​ ​ ​ ​ $ 7,293 ​ $ 6,778 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Components of Cash, Cash Equivalents, and Restricted Cash ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 5,385 ​ $ 4,858 ​ $ 1,619 ​ $ 1,718 ​ ​ ​ ​ ​ ​ ​ $ 7,004 ​ $ 6,576 ​ ​ Cash, cash equivalents, and restricted cash (Assets held for sale) ​ ​ ​ ​ ​ ​ ​ ​ 108 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 108 ​ ​ ​ ​ ​ Restricted cash (Other assets) ​ ​ 29 ​ ​ 76 ​ ​ 152 ​ ​ 126 ​ ​ ​ ​ ​ ​ ​ ​ 181 ​ ​ 202 ​ ​ Total Cash, Cash Equivalents, and Restricted Cash ​ $ 5,414 ​ $ 4,934 ​ $ 1,879 ​ $ 1,844 ​ ​ ​ ​ ​ ​ ​ $ 7,293 ​ $ 6,778 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 11 Elimination of depreciation on leases related to inventory transferred to equipment on operating leases. 12 Reclassification of share-based compensation expense. 13 Elimination of dividends from financial services to the equipment operations, which are included in the equipment operations’ operating activities. 14 Primarily reclassification of receivables related to the sale of equipment. 15 Reclassification of direct lease agreements with retail customers. 16 Reclassification of sales incentive accruals on receivables sold to financial services. 17 Elimination of change in investment from equipment operations to financial services . ​ ​ 40 ​ Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See our most recently filed Annual Report on Form 10-K (Part II, Item 7A). There have been no material changes in this information.