DEERE & CO

Previous wording

Customers seek to improve profitability, productivity, and sustainability through integrating technology into their operations. Deeper integration of technology into equipment is a persistent market trend. These technologies are incorporated into products within each of our operating segments. We expect this trend to persist for the foreseeable future. Our Smart Industrial Operating Model and Leap Ambitions are intended to capitalize on this market trend. Engaged acres are an indicator we use to understand customer utilization of our technology. We continue to invest in a Solutions as a Service business model to increase technology adoption and utilization by our customers. Solutions as a Service products did not represent a significant percentage of our revenues in the periods presented.

Current wording

Customers seek to improve profitability, productivity, and sustainability through integrating technology into their operations. Deeper integration of technology into equipment is a persistent market trend. These technologies are incorporated into products within each of our operating segments. We expect this trend to persist for the foreseeable future. Our Smart Industrial Operating Model and Leap Ambitions are intended to capitalize on this market trend. Engaged acres are an indicator we use to understand customer utilization of our technology. We remain focused on a Solutions as a Service business model to increase technology adoption and utilization by our customers. Solutions as a Service products did not represent a significant percentage of our revenues in the periods presented.

Previous wording

Agriculture and turf and construction equipment sales volumes during the remainder of 2025 are expected to continue to be lower than the prior year due to reduced demand.

Current wording

Agriculture and turf and construction equipment sales volumes for fiscal 2025 are expected to be lower than the prior year due to reduced demand.

Previous wording

Global Trade Policies. In the second quarter of 2025, new tariffs were imposed in the U.S. for imports from a broad range of countries. Certain countries also implemented or proposed retaliatory tariffs on imports from the U.S. Trade policies are rapidly evolving causing uncertainty in the agriculture and construction industries.

Current wording

Global Trade Policies. During 2025, new tariffs were imposed in the U.S. for imports from a broad range of countries and materials. Certain countries also implemented or proposed retaliatory tariffs on imports from the U.S. and barriers to trade. Trade policies are rapidly evolving causing uncertainty in the agriculture and construction industries.

Previous wording

Trade policies impact us in various ways. We are a net exporter of agriculture and turf equipment from the U.S. Nearly 80% of our domestic sales are assembled in the U.S., with the remaining products imported primarily from Europe, Mexico, India, and Japan. The current effective incremental tariffs have adversely affected the cost of components. Uncertainties surrounding trade policies may also result in supply chain disruptions and could impact the availability of raw materials and components. In addition, retaliatory tariffs by regions outside the U.S., currently in effect or adopted in the future, may impact the prices of our exported products and the profit realized from these exports. The direct impact of incremental tariffs incurred by us was approximately $95 in the second quarter of 2025, excluding the impact of tariffs on our suppliers and market demand. We are actively taking steps to limit potential impacts on our business.

Current wording

Trade policies impact us in various ways. We are a net exporter of agriculture and turf equipment from the U.S. Nearly 80% of our domestic sales are assembled in the U.S., with the remaining products imported primarily from Europe, Mexico, India, and Japan. During 2025, incremental import tariffs have adversely affected the cost of our products and components and may continue to do so. In addition, retaliatory tariffs by regions outside the U.S., currently in effect or adopted in the future, may impact the prices of our exported products and the profit realized from these exports. The direct impact of incremental tariffs incurred by us in the first nine months of 2025 was approximately $300, excluding the impact of tariffs on our suppliers and market demand. On August 18, 2025, the scope of steel and aluminum derivative duties was expanded to include additional Harmonized Tariff Schedule codes. The updated tariff coverage is expected to further increase the cost of our products and components. We are actively taking steps to mitigate, to the extent possible, potential impacts on our business.

Previous wording

Interest Rates. While interest rates in the U.S. decreased in the fourth quarter of 2024, they remain elevated. High rates impact 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 are negatively impacted by elevated interest rates and their effect on borrowing costs for our customers.

Current wording

Interest Rates. Interest rates in the U.S. and Brazil have remained elevated in 2025. Higher rates and volatility in rates impact 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 are negatively impacted by elevated interest rates and their effect on borrowing costs for our customers.

Previous wording

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 primarily due to lower sales volumes and the unfavorable effects of foreign currency exchange, partially offset by lower production costs and discrete tax items in the first quarter of 2025 (see Note 21). The discussion of net sales and operating profit is included in the Business Segment Results below.

Current wording

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 in the third quarter primarily due to lower sales volumes, higher tariffs, and unfavorable price realization. Results for the first nine months were also affected by lower production costs, driven by reduced material costs, and favorable discrete tax items (see Note 21). The discussion of net sales and operating profit is included in the Business Segment Results below.

Previous wording

An explanation of the cost of sales to net sales ratio and other significant statement of consolidated income changes follows:

Current wording

An explanation of the cost of sales to net sales ratio and other significant statements of consolidated income changes follows:

Previous wording

The equipment operations segment results were impacted by incremental tariffs in 2025. The tariff costs were included in production costs and other items, and were offset by cost reductions in the same categories.

Current wording

The equipment operations segment results were impacted by incremental tariffs in 2025. The cost of additional tariffs was included in the “Production costs” and “Other” categories below.

Previous wording

Production and precision agriculture sales decreased for the quarter as a result of lower U.S. shipment volumes driven mainly by higher interest rates and used inventory levels. Operating profit decreased primarily due to lower shipment volumes / sales mix and unfavorable effects of foreign currency exchange. This was partially offset by decreased production costs from lower material costs and employee profit-sharing incentives, and price realization.

Current wording

Production and precision agriculture sales decreased for the quarter as a result of lower U.S. shipment volumes driven mainly by higher interest rates, global uncertainty, and used inventory levels. Increased shipment volumes in Brazil and Europe partially offset this decrease. Price realization was unfavorable for the quarter due to incremental incentive programs deployed to address used inventory levels in North America. Operating profit decreased primarily due to lower shipment volumes / sales mix.

Previous wording

Sales for the first six months decreased as a result of lower shipment volumes (primarily in the U.S. and Europe). Operating profit for the first six months decreased due to lower shipment volumes / sales mix driven by higher interest rates and used inventory levels, partially offset by decreased production costs from lower material costs and employee profit-sharing incentives, and price realization.

Current wording

Sales for the first nine months decreased as a result of lower shipment volumes (primarily in the U.S. and Europe) driven by higher interest rates and used inventory levels. Operating profit for the first nine months decreased due to lower shipment volumes / sales mix.

Previous wording

Small agriculture and turf sales decreased for the quarter as a result of lower shipment volumes (primarily in the U.S., offset by India) driven mainly by economic uncertainties and higher interest rates, partially offset by price realization in the U.S. and Canada. Operating profit remained steady as favorable factors including lower production costs from lower material costs, lower warranty expenses, and price realization were offset by lower shipment volumes / sales mix.

Current wording

Small agriculture and turf sales decreased for the quarter as a result of lower shipment volumes (primarily in the U.S., offset by Europe and India) driven mainly by economic uncertainties and higher interest rates, partially offset by favorable currency translation and price realization in the U.S. and Canada. Operating profit decreased due to higher tariffs, partially offset by favorable factors including reductions in warranty expenses and lower production costs from lower material costs.

Previous wording

Sales for the first six months decreased as a result of lower shipment volumes (primarily in the U.S. and Europe) driven mainly by economic uncertainties and higher interest rates. Operating profit for the first six months decreased primarily as a result of lower shipment volumes / sales mix, partially offset by decreased production costs driven by lower material costs, and price realization.

Current wording

Sales for the first nine months decreased as a result of lower shipment volumes (primarily in the U.S.) driven mainly by economic uncertainties and higher interest rates. Operating profit for the first nine months decreased primarily as a result of lower shipment volumes / sales mix, partially offset by decreased production costs driven by lower material costs and price realization.

Previous wording

Construction and forestry sales decreased for the quarter due to lower shipment volumes (primarily in the U.S. and Brazil) driven by economic uncertainties and elevated interest rates. Operating profit decreased primarily due to lower shipment volumes / sales mix and unfavorable price realization due to pressures from the competitive environment.

Current wording

Sales for the first nine months decreased due to lower shipment volumes (primarily in the U.S.) and unfavorable price realization in the U.S. due to pressures from the competitive environment. Operating profit decreased primarily due to lower shipment volumes / sales mix and unfavorable price realization.

Previous wording

The average balance of receivables and leases financed was 6% lower in the second quarter of 2025 and 4% lower in the first six months of 2025 compared with the same periods last year, primarily due to the deconsolidation of BJD in 2025 (see Note 20). Excluding the impact of BJD, revenue was flat in the second quarter of 2025 and increased slightly in the first six months of 2025.

Current wording

The average balance of receivables and leases financed was 6% lower in the third quarter of 2025 and 5% lower in the first nine months of 2025 compared with the same periods last year, primarily due to the deconsolidation of BJD. Revenue decreased for both periods as a result of a lower average portfolio.

Previous wording

The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolio. In the second quarter of 2025, the BJD business was deconsolidated (see Note 20). BJD assets and liabilities were reclassified to held for sale in the third quarter of 2024 and maintained that classification until the deconsolidation; they are not included within balances at year-end 2024.

Current wording

The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolio. In the second quarter of 2025, the BJD business was deconsolidated (see Note 20). BJD assets and liabilities were reclassified to held for sale in the third quarter of 2024 and maintained that classification until the deconsolidation; they are not included within balances of any of the periods presented.

Previous wording

The decrease in unused credit lines during the first six months of 2025 relates to an increase in commercial paper outstanding partially offset by an increase in bank lines of credit. The increase in unused credit lines compared to a year ago was due to a decrease in commercial paper outstanding and an increase in bank lines of credit.

Current wording

The decrease in unused credit lines during the first nine months of 2025 relates to an increase in commercial paper outstanding, partially offset by an increase in bank lines of credit. The increase in unused credit lines compared to a year ago was due to an increase in bank lines of credit and a small decrease in commercial paper outstanding.

Previous wording

Cash inflows from consolidated operating activities in the first six months of 2025 were $568. This resulted mainly from net income adjusted for non-cash provisions, partially offset by an increase in receivables related to sales, an increase in inventories, employee profit-sharing incentives, an OPEB contribution, and a reduction in dealer sales incentive accruals. Cash inflows from investing activities were $779 in the first six months of this year. The primary drivers were collections of receivables (excluding receivables related to sales) exceeding the cost of receivables acquired, partially offset by purchases of property and equipment. Cash outflows from financing activities were $821 in the first six months of 2025, as cash returned to shareholders was partially offset by higher external borrowings. Cash returned to shareholders was $1,681 in the first six months of 2025. Cash, cash equivalents, and restricted cash increased $546 during the first six months of 2025.

Current wording

Cash inflows from consolidated operating activities in the first nine months of 2025 were $3,464. This resulted mainly from net income adjusted for non-cash provisions, partially offset by an OPEB contribution, a decrease in accrued employee profit-sharing incentives, an increase in inventories, and an increase in receivables related to sales. Cash outflows from investing activities were $801 in the first nine months of this year. The primary drivers were purchases of property and equipment and growth in equipment on operating leases, partially offset by collections of receivables (excluding receivables related to sales) exceeding the cost of receivables acquired. Cash outflows from financing activities were $1,557 in the first nine months of 2025, as cash returned to shareholders was partially offset by higher external borrowings. Cash returned to shareholders was $2,418 in the first nine months of 2025. Cash, cash equivalents, and restricted cash increased $1,214 during the first nine months of 2025.

Previous wording

Trade Accounts and Notes Receivable. Trade accounts and notes receivable arise from sales of goods to customers. Trade receivables increased $1,422 during the first six months of 2025, primarily due to a seasonal increase. These receivables decreased $2,132 compared to a year ago due to lower sales volumes. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 7% at April 27, 2025, 6% at October 27, 2024, and 2% at April 28, 2024.

Current wording

Trade Accounts and Notes Receivable. Trade accounts and notes receivable arise from sales of goods to customers. Trade receivables increased $777 during the first nine months of 2025, primarily due to a seasonal increase. These receivables decreased $1,366 compared to a year ago due to lower sales volumes. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 3% at July 27, 2025, 6% at October 27, 2024, and 3% at July 28, 2024.

Previous wording

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 $2,353 during the first six months of 2025, primarily due to lower retail customer receivables, seasonal payments, and a decline in wholesale notes. Financing receivables and equipment on operating leases decreased $1,375 in the past 12 months due to the sale of 50% ownership in BJD and deconsolidation of related receivables in the second quarter of 2025 (see Note 20). Excluding the related BJD receivables from April 28, 2024 balances, financing receivables and equipment on operating leases increased $1,589 due to higher retail customer receivables and wholesale notes. Total acquisition volumes of financing receivables and equipment on operating leases were 17% lower in the first six months of 2025, compared with the same period last year excluding BJD receivables, as volumes of wholesale notes, retail notes, operating leases, and financing leases were lower, while revolving charge accounts were higher compared to the same period last year.

Current wording

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 $1,093 during the first nine months of 2025 and increased $102 in the past 12 months. The decrease during the first nine months of 2025 was due to lower retail customer receivables. Total acquisition volumes of financing receivables and equipment on operating leases were 15% lower in the first nine months of 2025, compared with the same period last year excluding BJD receivables, as volumes of wholesale notes, retail notes, financing leases, and operating leases were lower, while revolving charge accounts were slightly higher compared to the same period last year.

Previous wording

Inventories. Inventories increased by $777 during the first six months of 2025 primarily due to a seasonal increase, and decreased by $573 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.

Current wording

Inventories. Inventories increased by $620 during the first nine months of 2025 primarily due to a seasonal increase, and increased by $17 compared to a year ago. A majority of these inventories are valued at cost on the “last-in, first-out” (LIFO) method.

Previous wording

Property and Equipment. Property and equipment cash expenditures in the first six months of 2025 were $555 compared with $719 in the same period last year. Capital expenditures in 2025 are estimated to be approximately $1,430.

Current wording

Property and Equipment. Property and equipment cash expenditures in the first nine months of 2025 were $852 compared with $1,043 in the same period last year. Capital expenditures in 2025 are estimated to be approximately $1,450.

Previous wording

Accounts Payable and Accrued Expenses. Accounts payable and accrued expenses decreased by $1,198 in the first six months of 2025, primarily due to a decrease in accrued expenses associated with employee benefits and dealer sales discounts. Accounts payable and accrued expenses decreased $1,264 compared to a year ago due to a decrease in accrued expenses associated with derivative liabilities, employee benefits, and warranty liabilities, and a decrease in accounts payable associated with trade payables.

Current wording

Accounts Payable and Accrued Expenses. Accounts payable and accrued expenses decreased by $961 in the first nine months of 2025, primarily due to a decrease in accrued expenses associated with employee benefits and dealer sales discounts. Accounts payable and accrued expenses decreased $815 compared to a year ago due to a decrease in accrued expenses associated with employee benefits, warranty liabilities, and dealer sales discounts.

Previous wording

Borrowings. Total external borrowings increased by $1,128 in the first six months of 2025 and increased $684 compared to a year ago, which contributed to higher cash, cash equivalents, and restricted cash balances. The change in borrowings compared to a year ago was also impacted by the sale of 50% ownership in BJD and deconsolidation of related borrowings in the second quarter of 2025 (see Note 20). BJD borrowings at year-end were included in “Liabilities held for sale.”

Current wording

Borrowings. Total external borrowings increased by $1,453 in the first nine months of 2025 and increased $791 compared to a year ago, which contributed to higher cash and cash equivalents.

Previous wording

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 has an expiration in November 2025 and total capacity or “financing limit” of $2,500. At April 27, 2025, $1,643 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.

Current wording

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 has an expiration in November 2025 and total capacity or “financing limit” of $2,500. At July 27, 2025, $1,783 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.

Previous wording

In the first six months of 2025, the financial services operations issued $1,480 and retired $2,351 of retail note securitization borrowings, which are presented in “Net proceeds (payments) in short-term borrowings (original maturities three months or less).”

Current wording

In the first nine months of 2025, the financial services operations issued $2,618 and retired $3,441 of retail note securitization borrowings, which are presented in “Net proceeds (payments) in short-term borrowings (original maturities three months or less).”

Previous wording

Worldwide lines of credit totaled $11.9 billion at April 27, 2025, consisting primarily of:

Current wording

Worldwide lines of credit totaled $12.2 billion at July 27, 2025, consisting primarily of:

Previous wording

At April 27, 2025, $4,866 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.

Current wording

At July 27, 2025, $6,150 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.