UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from ____ to ____
Commission file no:
(Exact name of registrant as specified in its charter)
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(Address of principal executive offices)
Telephone Number:
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Securities Registered Pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading symbol |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
At January 28, 2024,
PART I. FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS |
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DEERE & COMPANY |
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STATEMENTS OF CONSOLIDATED INCOME |
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For the Three Months Ended January 28, 2024 and January 29, 2023 |
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(In millions of dollars and shares except per share amounts) Unaudited |
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2024 |
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2023 |
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Net Sales and Revenues |
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Net sales |
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$ |
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$ |
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Finance and interest income |
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Other income |
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Total |
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Costs and Expenses |
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Cost of sales |
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Research and development expenses |
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Selling, administrative and general expenses |
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Interest expense |
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Other operating expenses |
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Total |
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Income of Consolidated Group before Income Taxes |
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Provision for income taxes |
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Income of Consolidated Group |
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Equity in income of unconsolidated affiliates |
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Net Income |
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Less: Net loss attributable to noncontrolling interests |
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Net Income Attributable to Deere & Company |
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$ |
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$ |
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Per Share Data |
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Basic |
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$ |
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$ |
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Diluted |
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Dividends declared |
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Dividends paid |
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Average Shares Outstanding |
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Basic |
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Diluted |
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See Condensed Notes to Interim Consolidated Financial Statements.
2
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DEERE & COMPANY |
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STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME |
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For the Three Months Ended January 28, 2024 and January 29, 2023 |
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(In millions of dollars) Unaudited |
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2024 |
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2023 |
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Net Income |
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$ |
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$ |
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Other Comprehensive Income (Loss), Net of Income Taxes |
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Retirement benefits adjustment |
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(
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Cumulative translation adjustment |
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Unrealized loss on derivatives |
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Unrealized gain on debt securities |
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Other Comprehensive Income, Net of Income Taxes |
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Comprehensive Income of Consolidated Group |
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Less: Comprehensive income (loss) attributable to noncontrolling interests |
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(
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Comprehensive Income Attributable to Deere & Company |
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$ |
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$ |
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See Condensed Notes to Interim Consolidated Financial Statements.
3
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DEERE & COMPANY |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In millions of dollars) Unaudited |
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January 28 |
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October 29 |
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January 29 |
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2024 |
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2023 |
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2023 |
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Assets |
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Cash and cash equivalents |
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$ |
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$ |
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$ |
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Marketable securities |
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Trade accounts and notes receivable – net |
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Financing receivables – net |
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Other receivables |
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Equipment on operating leases – net |
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Inventories |
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Property and equipment – net |
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Goodwill |
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Other intangible assets – net |
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Retirement benefits |
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Deferred income taxes |
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Other assets |
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Total Assets |
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$ |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Liabilities |
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Short-term borrowings |
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$ |
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$ |
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$ |
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Short-term securitization borrowings |
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Accounts payable and accrued expenses |
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Deferred income taxes |
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Long-term borrowings |
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Retirement benefits and other liabilities |
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Total liabilities |
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Commitments and contingencies (Note 16) |
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Redeemable noncontrolling interest |
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Stockholders’ Equity |
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Common stock, $
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Common stock in treasury |
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(
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(
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(
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Retained earnings |
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Accumulated other comprehensive income (loss) |
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(
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(
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(
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Total Deere & Company stockholders’ equity |
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Noncontrolling interests |
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Total stockholders’ equity |
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Total Liabilities and Stockholders’ Equity |
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$ |
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$ |
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$ |
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See Condensed Notes to Interim Consolidated Financial Statements.
4
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DEERE & COMPANY |
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STATEMENTS OF CONSOLIDATED CASH FLOWS |
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For the Three Months Ended January 28, 2024 and January 29, 2023 |
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(In millions of dollars) Unaudited |
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2024 |
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2023 |
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Cash Flows from Operating Activities |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash used for operating activities: |
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Provision (credit) for credit losses |
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(
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Provision for depreciation and amortization |
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Share-based compensation expense |
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Provision (credit) for deferred income taxes |
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(
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Changes in assets and liabilities: |
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Receivables related to sales |
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(
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Inventories |
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Accounts payable and accrued expenses |
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(
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(
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Accrued income taxes payable/receivable |
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Retirement benefits |
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(
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(
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Other |
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Net cash used for operating activities |
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(
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Cash Flows from Investing Activities |
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Collections of receivables (excluding receivables related to sales) |
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Proceeds from sales of equipment on operating leases |
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Cost of receivables acquired (excluding receivables related to sales) |
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(
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(
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Purchases of property and equipment |
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(
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(
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Cost of equipment on operating leases acquired |
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(
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Collateral on derivatives – net |
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Other |
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(
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(
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Net cash provided by investing activities |
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Cash Flows from Financing Activities |
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Net proceeds (payments) in short-term borrowings (original maturities three months or less) |
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(
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Proceeds from borrowings issued (original maturities greater than three months) |
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Payments of borrowings (original maturities greater than three months) |
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(
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(
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Repurchases of common stock |
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(
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Dividends paid |
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(
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Other |
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(
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(
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Net cash used for financing activities |
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(
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Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash |
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Net Decrease in Cash, Cash Equivalents, and Restricted Cash |
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(
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Cash, Cash Equivalents, and Restricted Cash at Beginning of Period |
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Cash, Cash Equivalents, and Restricted Cash at End of Period |
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$ |
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$ |
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Components of Cash, Cash Equivalents, and Restricted Cash |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash (Other assets) |
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Total Cash, Cash Equivalents, and Restricted Cash |
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$ |
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$ |
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See Condensed Notes to Interim Consolidated Financial Statements.
5
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DEERE & COMPANY |
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STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY |
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For the Three Months Ended January 28, 2024 and January 29, 2023 |
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(In millions of dollars) Unaudited |
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Total Stockholders’ Equity |
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Deere & Company Stockholders |
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Accumulated |
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Total |
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Other |
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Redeemable |
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Stockholders’ |
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Common |
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Treasury |
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Retained |
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Comprehensive |
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Noncontrolling |
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Noncontrolling |
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Equity |
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Stock |
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Stock |
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Earnings |
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Income (Loss) |
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Interests |
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Interest |
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Balance October 30, 2022 |
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$ |
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$ |
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$ |
(
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$ |
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$ |
(
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$ |
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$ |
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Net income (loss) |
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(
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Other comprehensive income |
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Repurchases of common stock |
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(
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(
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Treasury shares reissued |
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Dividends declared |
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(
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(
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Share based awards and other |
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(
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Balance January 29, 2023 |
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$ |
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$ |
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$ |
(
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$ |
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$ |
(
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$ |
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$ |
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Balance October 29, 2023 |
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$ |
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$ |
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$ |
(
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$ |
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$ |
(
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$ |
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$ |
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Net income (loss) |
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(
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Other comprehensive income |
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Repurchases of common stock |
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(
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(
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Treasury shares reissued |
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|
Dividends declared |
|
|
(
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|
|
|
|
|
|
|
(
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|
|
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|
|
|
Share based awards and other |
|
|
|
|
|
|
|
|
|
|
|
(
|
|
|
|
|
|
(
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|
|
|
|
|
|
Balance January 28, 2024 |
|
$ |
|
|
$ |
|
|
$ |
(
|
|
$ |
|
|
$ |
(
|
|
$ |
|
|
|
$ |
|
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|
|
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|
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|
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See Condensed Notes to Interim Consolidated Financial Statements.
6
Condensed Notes to Interim Consolidated Financial Statements (Unaudited)
(1) Organization and Consolidation
Deere & Company has been developing innovative solutions to help its customers become more profitable for more than 185 years. References to “Deere & Company,” “John Deere,” “we,” “us,” or “our” include our consolidated subsidiaries. We manage our business through the following operating segments: production and precision agriculture (PPA), small agriculture and turf (SAT), construction and forestry (CF), and financial services (FS). References to “agriculture and turf” include both PPA and SAT.
We use a 52/53 week fiscal year with quarters ending on the last Sunday in the reporting period. The first quarter ends for fiscal year 2024 and 2023 were January 28, 2024 and January 29, 2023, respectively. Both periods contained
All amounts are presented in millions of dollars, unless otherwise specified.
(2) Summary of Significant Accounting Policies and New Accounting Standards
Quarterly Financial Statements
T he interim consolidated financial statements of Deere & Company have been prepared by us, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted as permitted by such rules and regulations. All normal recurring adjustments have been included. Management believes the disclosures are adequate to present fairly the financial position, results of operations, and cash flows at the dates and for the periods presented. It is suggested these interim consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto appearing in our latest Annual Report on Form 10-K. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year.
Use of Estimates in Financial Statements
Certain accounting policies require management to make estimates and assumptions in determining the amounts reflected in the financial statements and related disclosures. Actual results could differ from those estimates.
New Accounting Standards
We closely monitor all Accounting Standard Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) and other authoritative guidance. We adopted the following standards in 2024, none of which had a material effect on our consolidated financial statements.
|
Accounting Standards Adopted |
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Accounting Standards to be Adopted
In December 2023, the FASB issued ASU
We will also adopt the following standards in future periods, none of which are expected to have a material effect on our consolidated financial statements.
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7
(3) Revenue Recognition
Our net sales and revenues by primary geographic market, major product line, and timing of revenue recognition follow:
|
|
|
Three Months Ended January 28, 2024 |
|
|||||||||||||
|
|
|
Production & Precision Ag |
|
Small Ag & Turf |
|
Construction & Forestry |
|
Financial Services |
|
Total |
|
|||||
|
Primary geographic markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Europe and CIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia, Africa, Oceania, and Middle East |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Major product lines: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production agriculture |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
Small agriculture |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Turf |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
Compact construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roadbuilding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forestry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial products |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue recognized: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At a point in time |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Over time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
Three Months Ended January 29, 2023 |
|
|||||||||||||
|
|
|
Production & Precision Ag |
|
Small Ag & Turf |
|
Construction & Forestry |
|
Financial Services |
|
Total |
|
|||||
|
Primary geographic markets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Western Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Europe and CIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia, Africa, Oceania, and Middle East |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Major product lines: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production agriculture |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
Small agriculture |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Turf |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
Compact construction |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roadbuilding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forestry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial products |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue recognized: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At a point in time |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Over time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
8
We invoice in advance of recognizing the sale of certain products and the revenue for certain services. These relate to extended warranty premiums, advance payments for future equipment sales, and subscription and service revenue related to precision guidance, telematic services, and other information enabled solutions. These advanced customer payments are presented as deferred revenue, a contract liability, in “Accounts payable and accrued expenses.” The deferred revenue received, but not recognized in revenue, was $
The amount of unsatisfied performance obligations for contracts with an original duration greater than one year was $
(4) Other Comprehensive Income Items
The after-tax components of accumulated other comprehensive income (loss) follow:
|
|
|
January 28 |
|
October 29 |
|
January 29 |
|
|||
|
|
|
2024 |
|
2023 |
|
2023 |
|
|||
|
Retirement benefits adjustment |
|
$ |
(
|
|
$ |
(
|
|
$ |
(
|
|
|
Cumulative translation adjustment |
|
|
(
|
|
|
(
|
|
|
(
|
|
|
Unrealized gain (loss) on derivatives |
|
|
(
|
|
|
(
|
|
|
|
|
|
Unrealized loss on debt securities |
|
|
(
|
|
|
(
|
|
|
(
|
|
|
Total accumulated other comprehensive income (loss) |
|
$ |
(
|
|
$ |
(
|
|
$ |
(
|
|
The following tables reflect amounts recorded in other comprehensive income (loss), as well as reclassifications out of other comprehensive income (loss).
|
|
|
Before |
|
Tax |
|
After |
|
|||
|
|
|
Tax |
|
(Expense) |
|
Tax |
|
|||
|
Three Months Ended January 28, 2024 |
|
Amount |
|
Credit |
|
Amount |
|
|||
|
Cumulative translation adjustment |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Unrealized gain (loss) on derivatives: |
|
|
|
|
|
|
|
|
|
|
|
Unrealized hedging gain (loss) |
|
|
(
|
|
|
|
|
|
(
|
|
|
Reclassification of realized (gain) loss to: |
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts – Interest expense |
|
|
(
|
|
|
|
|
|
(
|
|
|
Net unrealized gain (loss) on derivatives |
|
|
(
|
|
|
|
|
|
(
|
|
|
Unrealized gain (loss) on debt securities: |
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gain (loss) |
|
|
|
|
|
|
|
|
|
|
|
Reclassification of realized (gain) loss – Other income |
|
|
|
|
|
(
|
|
|
|
|
|
Net unrealized gain (loss) on debt securities |
|
|
|
|
|
|
|
|
|
|
|
Retirement benefits adjustment: |
|
|
|
|
|
|
|
|
|
|
|
Net actuarial gain (loss) |
|
|
(
|
|
|
|
|
|
(
|
|
|
Reclassification to Other operating expenses through amortization of: |
|
|
|
|
|
|
|
|
|
|
|
Actuarial (gain) loss |
|
|
(
|
|
|
|
|
|
(
|
|
|
Prior service (credit) cost |
|
|
|
|
|
(
|
|
|
|
|
|
Net unrealized gain (loss) on retirement benefits adjustment |
|
|
(
|
|
|
|
|
|
(
|
|
|
Total other comprehensive income (loss) |
|
$ |
|
|
$ |
|
|
$ |
|
|
9
|
|
|
Before |
|
Tax |
|
After |
|
|||
|
|
|
Tax |
|
(Expense) |
|
Tax |
|
|||
|
Three Months Ended January 29, 2023 |
|
Amount |
|
Credit |
|
Amount |
|
|||
|
Cumulative translation adjustment |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Unrealized gain (loss) on derivatives: |
|
|
|
|
|
|
|
|
|
|
|
Unrealized hedging gain (loss) |
|
|
(
|
|
|
|
|
|
(
|
|
|
Reclassification of realized (gain) loss to: |
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts – Interest expense |
|
|
(
|
|
|
|
|
|
(
|
|
|
Net unrealized gain (loss) on derivatives |
|
|
(
|
|
|
|
|
|
(
|
|
|
Unrealized gain (loss) on debt securities: |
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding gain (loss) |
|
|
|
|
|
(
|
|
|
|
|
|
Net unrealized gain (loss) on debt securities |
|
|
|
|
|
(
|
|
|
|
|
|
Retirement benefits adjustment: |
|
|
|
|
|
|
|
|
|
|
|
Net actuarial gain (loss) |
|
|
(
|
|
|
|
|
|
(
|
|
|
Reclassification to Other operating expenses through amortization of: |
|
|
|
|
|
|
|
|
|
|
|
Actuarial (gain) loss |
|
|
(
|
|
|
|
|
|
(
|
|
|
Prior service (credit) cost |
|
|
|
|
|
(
|
|
|
|
|
|
Net unrealized gain (loss) on retirement benefits adjustment |
|
|
(
|
|
|
|
|
|
(
|
|
|
Total other comprehensive income (loss) |
|
$ |
|
|
$ |
|
|
$ |
|
|
(5) Earnings Per Share
A reconciliation of basic and diluted net income per share attributable to Deere & Company follows in millions, except per share amounts:
|
|
|
Three Months Ended |
|
||||
|
|
|
January 28 |
|
January 29 |
|
||
|
|
|
2024 |
|
2023 |
|
||
|
Net income attributable to Deere & Company |
|
$ |
|
|
$ |
|
|
|
Average shares outstanding |
|
|
|
|
|
|
|
|
Basic per share |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding |
|
|
|
|
|
|
|
|
Effect of dilutive stock options and restricted stock awards |
|
|
|
|
|
|
|
|
Total potential shares outstanding |
|
|
|
|
|
|
|
|
Diluted per share |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Shares excluded from EPS calculation, as antidilutive |
|
|
|
|
|
|
|
10
(6) Pension and Other Postretirement Benefits
We have several funded and unfunded defined benefit pension plans and other postretirement benefit (OPEB) plans. These plans cover U.S. employees and certain foreign employees.
|
|
|
Three Months Ended |
|
||||
|
|
|
January 28 |
|
January 29 |
|
||
|
|
|
2024 |
|
2023 |
|
||
|
Pensions |
|
|
|
|
|
|
|
|
Service cost |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
|
|
(
|
|
|
|
|
|
(
|
|
|
(
|
|
|
|
|
|
|
|
|
|
|
|
Net benefit |
|
$ |
(
|
|
$ |
(
|
|
|
|
|
|
|
|
|
|
|
|
OPEB |
|
|
|
|
|
|
|
|
Service cost |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
|
|
(
|
|
|
|
|
|
(
|
|
|
(
|
|
|
|
|
|
(
|
|
|
(
|
|
|
Net cost |
|
$ |
|
|
$ |
|
|
The components of net periodic pension and OPEB (benefit) cost excluding the service cost component are included in the line item “Other operating expenses.”
During the first three months of 2024, we contributed and expect to contribute the following amounts to our pension and OPEB plans:
|
|
|
Pensions |
|
OPEB |
|
||
|
Contributed |
|
$ |
|
|
$ |
|
|
|
Expected contributions remainder of the year |
|
|
|
|
|
|
|
In December 2023, we contributed $
11
(7) Segment Data
Information relating to operations by operating segment follows.
|
|
|
Three Months Ended |
|
||||||
|
|
|
January 28 |
|
January 29 |
|
% |
|
||
|
|
|
2024 |
|
2023 |
|
Change |
|
||
|
Net sales and revenues: |
|
|
|
|
|
|
|
|
|
|
Production & precision ag net sales |
|
$ |
|
|
$ |
|
|
-
|
|
|
Small ag & turf net sales |
|
|
|
|
|
|
|
-
|
|
|
Construction & forestry net sales |
|
|
|
|
|
|
|
|
|
|
Financial services revenues |
|
|
|
|
|
|
|
+
|
|
|
Other revenues |
|
|
|
|
|
|
|
+
|
|
|
Total net sales and revenues |
|
$ |
|
|
$ |
|
|
-
|
|
|
Operating profit: |
|
|
|
|
|
|
|
|
|
|
Production & precision ag |
|
$ |
|
|
$ |
|
|
-
|
|
|
Small ag & turf |
|
|
|
|
|
|
|
-
|
|
|
Construction & forestry |
|
|
|
|
|
|
|
-
|
|
|
Financial services |
|
|
|
|
|
|
|
+
|
|
|
Total operating profit |
|
|
|
|
|
|
|
-
|
|
|
Reconciling items |
|
|
|
|
|
(
|
|
|
|
|
Income taxes |
|
|
(
|
|
|
(
|
|
-
|
|
|
Net income attributable to Deere & Company |
|
$ |
|
|
$ |
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment sales and revenues: |
|
|
|
|
|
|
|
|
|
|
Production & precision ag net sales |
|
$ |
|
|
$ |
|
|
+
|
|
|
Small ag & turf net sales |
|
|
|
|
|
|
|
-
|
|
|
Construction & forestry net sales |
|
|
|
|
|
|
|
|
|
|
Financial services revenues |
|
|
|
|
|
|
|
-
|
|
Operating profit for PPA, SAT, and CF is income from continuing operations before corporate expenses, certain external interest expenses, certain foreign exchange gains and losses, and income taxes. Operating profit of financial services includes the effect of interest expense and foreign exchange gains and losses. Reconciling items to net income are primarily corporate expenses, certain interest income and expenses, certain foreign exchange gains and losses, pension and OPEB benefit (cost) amounts excluding the service cost component, equity in income of unconsolidated affiliates, and net income attributable to noncontrolling interests.
|
Identifiable operating assets were as follows: |
|
|
|
|
|
|
|
|||
|
|
|
January 28 |
|
October 29 |
|
January 29 |
|
|||
|
|
|
2024 |
|
2023 |
|
2023 |
|
|||
|
Production & precision ag |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Small ag & turf |
|
|
|
|
|
|
|
|
|
|
|
Construction & forestry |
|
|
|
|
|
|
|
|
|
|
|
Financial services |
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
(8)
We monitor the credit quality of financing receivables based on delinquency status, defined as follows:
| ● |
Past due balances represent any payments
|
| ● |
Non-performing financing receivables represent receivables for which we have stopped accruing finance income. This generally occurs when receivables are
|
| ● |
Write-offs generally occur when receivables are
|
12
The credit quality analysis of retail notes, financing leases, and revolving charge accounts (collectively, retail customer receivables) by year of origination was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 28, 2024 |
|
||||||||||||||||||||||
|
|
|
2024 |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
Prior Years |
|
Revolving Charge Accounts |
|
Total |
|
||||||||
|
Retail customer receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
30-59 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60-89 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90+ days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and forestry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60-89 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90+ days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total retail customer receivables |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 29, 2023 |
|
||||||||||||||||||||||
|
|
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
Prior Years |
|
Revolving Charge Accounts |
|
Total |
|
||||||||
|
Retail customer receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
30-59 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60-89 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90+ days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and forestry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60-89 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90+ days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total retail customer receivables |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 29, 2023 |
|
||||||||||||||||||||||
|
|
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
Prior Years |
|
Revolving Charge Accounts |
|
Total |
|
||||||||
|
Retail customer receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
30-59 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60-89 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90+ days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and forestry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60-89 days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90+ days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total retail customer receivables |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
13
The credit quality analysis of wholesale receivables by year of origination was as follows:
|
|
|
January 28, 2024 |
|
||||||||||||||||||||||
|
|
|
2024 |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
Prior Years |
|
Revolving |
|
Total |
|
||||||||
|
Wholesale receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
30+ days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and forestry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30+ days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total wholesale receivables |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
October 29, 2023 |
|
||||||||||||||||||||||
|
|
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
Prior Years |
|
Revolving |
|
Total |
|
||||||||
|
Wholesale receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
30+ days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and forestry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30+ days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total wholesale receivables |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
January 29, 2023 |
|
||||||||||||||||||||||
|
|
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
Prior Years |
|
Revolving |
|
Total |
|
||||||||
|
Wholesale receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
30+ days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and forestry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30+ days past due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total wholesale receivables |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
14
An analysis of the allowance for credit losses and investment in financing receivables follows:
|
|
|
Three Months Ended January 28, 2024 |
|
||||||||||
|
|
|
Retail Notes |
|
Revolving |
|
|
|
|
|
|
|
||
|
|
|
& Financing |
|
Charge |
|
Wholesale |
|
|
|
|
|||
|
|
|
Leases |
|
Accounts |
|
Receivables |
|
Total |
|
||||
|
Allowance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Provision (credit) |
|
|
|
|
|
(
|
|
|
|
|
|
|
|
|
Write-offs |
|
|
(
|
|
|
(
|
|
|
|
|
|
(
|
|
|
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation adjustments |
|
|
|
|
|
|
|
|
(
|
|
|
(
|
|
|
End of period balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
Three Months Ended January 29, 2023 |
|
||||||||||
|
|
|
Retail Notes |
|
Revolving |
|
|
|
|
|
|
|
||
|
|
|
& Financing |
|
Charge |
|
Wholesale |
|
|
|
|
|||
|
|
|
Leases |
|
Accounts |
|
Receivables |
|
Total |
|
||||
|
Allowance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of period balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Provision (credit) |
|
|
|
|
|
(
|
|
|
|
|
|
|
|
|
Provision transferred to held for sale |
|
|
(
|
|
|
|
|
|
|
|
|
(
|
|
|
Provision (credit) |
|
|
(
|
|
|
(
|
|
|
|
|
|
(
|
|
|
Write-offs |
|
|
(
|
|
|
(
|
|
|
|
|
|
(
|
|
|
Recoveries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation adjustments |
|
|
(
|
|
|
|
|
|
(
|
|
|
(
|
|
|
End of period balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
The allowance for credit losses remained generally flat in the first quarter of 2024. In the first quarter of 2023, we determined that the financial services business in Russia met the held for sale criteria. The financing receivables in Russia were reclassified to “Other assets.” The associated allowance for credit losses was reversed and a valuation allowance for the assets held for sale was recorded. These operations were sold in the second quarter of 2023 (see Note 20).
Write-offs by year of origination were as follows:
|
|
|
Three Months Ended January 28, 2024 |
|
||||||||||||||||||||||
|
|
|
2024 |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
Prior Years |
|
Revolving Charge Accounts |
|
Total |
|
||||||||
|
Retail customer receivables: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and turf |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Construction and forestry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total retail customer receivables |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Modifications
We occasionally grant contractual modifications to customers experiencing financial difficulties. Before offering a modification, we evaluate the ability of the customer to meet the modified payment terms. Modifications offered include payment deferrals, term extensions, or a combination thereof. Finance charges continue to accrue during the deferral or extension period. Our allowance for credit losses incorporates historical loss information, including the effects of loan modifications with customers. Therefore, additional adjustments to the allowance are generally not recorded upon modification of a loan.
15
The ending amortized cost of modified loans with borrowers experiencing financial difficulty during the three months ended January 28, 2024 were $
Defaults and subsequent write-offs of loans modified in the prior twelve months were not significant during the three months ended January 28, 2024. In addition, at January 28, 2024, we had
(9) Securitization of Financing Receivables
Our funding strategy includes receivable securitizations, which allows us to receive cash for financing receivables immediately. While these securitization programs are administered in various forms, they are accomplished in the following basic steps:
As part of step 1, these receivables are legally isolated from the claims of our general creditors. This ensures cash receipts from the financing receivables are accessible to pay back securitization program investors. The structure of these transactions does not meet the accounting criteria for a sale of receivables. As a result, they are accounted for as a secured borrowing. The receivables and borrowings remain on our balance sheet and are separately reported as “Financing receivables securitized – net” and “Short-term securitization borrowings,” respectively.
The components of securitization programs were as follows:
|
|
|
January 28 |
|
October 29 |
|
January 29 |
|
|||
|
|
|
2024 |
|
2023 |
|
2023 |
|
|||
|
Financing receivables securitized (retail notes) |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Allowance for credit losses |
|
|
(
|
|
|
(
|
|
|
(
|
|
|
Other assets (primarily restricted cash) |
|
|
|
|
|
|
|
|
|
|
|
Total restricted securitized assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term securitization borrowings |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Accrued interest on borrowings |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities related to restricted securitized assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
(10) Inventories
A majority of inventories owned by us are valued at cost on the “last-in, first-out” (LIFO) basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 28 |
|
October 29 |
|
January 29 |
|
|||
|
|
|
2024 |
|
2023 |
|
2023 |
|
|||
|
Raw materials and supplies |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Work-in-process |
|
|
|
|
|
|
|
|
|
|
|
Finished goods and parts |
|
|
|
|
|
|
|
|
|
|
|
Total FIFO value |
|
|
|
|
|
|
|
|
|
|
|
Excess of FIFO over LIFO |
|
|
|
|
|
|
|
|
|
|
|
Inventories |
|
$ |
|
|
$ |
|
|
$ |
|
|
16
(11) Goodwill and Other Intangible Assets – Net
The changes in amounts of goodwill by operating segments were as follows. There were no accumulated goodwill impairment losses.
|
|
|
Production & Precision Ag |
|
Small Ag & Turf |
|
Construction & Forestry |
|
Total |
|
||||
|
Goodwill at October 30, 2022 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill at January 29, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill at October 29, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Translation adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill at January 28, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
The components of other intangible assets were as follows:
|
|
|
January 28 |
|
October 29 |
|
January 29 |
|
|||
|
|
|
2024 |
|
2023 |
|
2023 |
|
|||
|
Customer lists and relationships |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Technology, patents, trademarks, and other |
|
|
|
|
|
|
|
|
|
|
|
Total at cost |
|
|
|
|
|
|
|
|
|
|
|
Less accumulated amortization: |
|
|
|
|
|
|
|
|
|
|
|
Customer lists and relationships |
|
|
|
|
|
|
|
|
|
|
|
Technology, patents, trademarks, and other |
|
|
|
|
|
|
|
|
|
|
|
Total accumulated amortization |
|
|
|
|
|
|
|
|
|
|
|
Other intangible assets – net |
|
$ |
|
|
$ |
|
|
$ |
|
|
The amortization of other intangible assets in the first quarter of 2024 and 2023 was $
(12) Short-Term Borrowings
Short-term borrowings were as follows:
|
|
|
January 28 |
|
October 29 |
|
January 29 |
|
|||
|
|
|
2024 |
|
2023 |
|
2023 |
|
|||
|
Commercial paper |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Notes payable to banks |
|
|
|
|
|
|
|
|
|
|
|
Finance lease obligations due within one year |
|
|
|
|
|
|
|
|
|
|
|
Long-term borrowings due within one year |
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
$ |
|
|
$ |
|
|
$ |
|
|
17
(13) Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following:
|
|
|
January 28 |
|
October 29 |
|
January 29 |
|
|||
|
|
|
2024 |
|
2023 |
|
2023 |
|
|||
|
Accounts payable: |
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Dividends payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits withheld from dealers and merchants |
|
|
|
|
|
|
|
|
|
|
|
Payables to unconsolidated affiliates |
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses: |
|
|
|
|
|
|
|
|
|
|
|
Employee benefits |
|
|
|
|
|
|
|
|
|
|
|
Product warranties |
|
|
|
|
|
|
|
|
|
|
|
Accrued taxes |
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
Dealer sales discounts |
|
|
|
|
|
|
|
|
|
|
|
Extended warranty premium |
|
|
|
|
|
|
|
|
|
|
|
Unearned revenue (contractual liability) |
|
|
|
|
|
|
|
|
|
|
|
Unearned operating lease revenue |
|
|
|
|
|
|
|
|
|
|
|
Accrued interest |
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|
Amounts are presented net of eliminations, which primarily consist of dealer sales incentives with a right of set-off against trade receivables of $
(14) Long-Term Borrowings
Long-term borrowings consisted of:
|
|
|
January 28 |
|
October 29 |
|
January 29 |
|
|||
|
|
|
2024 |
|
2023 |
|
2023 |
|
|||
|
Underwritten term debt |
|
|
|
|
|
|
|
|
|
|
|
U.S. dollar notes and debentures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Euro notes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Serial issuances: |
|
|
|
|
|
|
|
|
|
|
|
Medium-term notes |
|
|
|
|
|
|
|
|
|
|
|
Other notes and finance lease obligations |
|
|
|
|
|
|
|
|
|
|
|
Less debt issuance costs and debt discounts |
|
|
(
|
|
|
(
|
|
|
(
|
|
|
Long-term borrowings |
|
$ |
|
|
$ |
|
|
$ |
|
|
Medium-term notes due through 2033 are primarily offered by prospectus and issued at fixed and variable rates. The principal balances of the medium-term notes were $
18
(15) Leases - Lessor
We lease equipment manufactured or sold by us through John Deere Financial. Sales-type and direct financing leases are reported in “Financing receivables – net.” Operating leases are reported in “Equipment on operating leases – net.”
Lease revenues earned by us follow:
|
|
|
Three Months Ended |
|
||||
|
|
|
January 28 |
|
January 29 |
|
||
|
|
|
2024 |
|
2023 |
|
||
|
Sales-type and direct finance lease revenues |
|
$ |
|
|
$ |
|
|
|
Operating lease revenues |
|
|
|
|
|
|
|
|
Variable lease revenues |
|
|
|
|
|
|
|
|
Total lease revenues |
|
$ |
|
|
$ |
|
|
(16) Commitments and Contingencies
A standard warranty is provided as assurance that the equipment will function as intended. The standard warranty period varies by product and region. At the time a sale is recognized, we record an estimate of future warranty costs based on historical claims rate experience and estimated population under warranty.
The reconciliation of the changes in the warranty liability follows:
|
|
|
Three Months Ended |
|
||||
|
|
|
January 28 |
|
January 29 |
|
||
|
|
|
2024 |
|
2023 |
|
||
|
Beginning of period balance |
|
$ |
|
|
$ |
|
|
|
Warranty claims paid |
|
|
(
|
|
|
(
|
|
|
New product warranty accruals |
|
|
|
|
|
|
|
|
Foreign exchange |
|
|
|
|
|
|
|
|
End of period balance |
|
$ |
|
|
$ |
|
|
The costs for extended warranty programs are recognized as incurred.
In certain international markets, we provide guarantees to banks for the retail financing of John Deere equipment. At January 28, 2024, the notional value of these guarantees was $
We also had other miscellaneous contingent liabilities and guarantees totaling approximately $
At January 28, 2024, we had commitments of $
We are subject to various unresolved legal actions. The accrued losses on these matters are not material. We believe the reasonably possible range of losses for these unresolved legal actions would not have a material effect on our financial statements. The most prevalent legal claims relate to product liability (including asbestos-related liability), retail credit, employment, patent, trademark, and antitrust matters .
19
(17) Fair Value Measurements
The fair values of financial instruments that do not approximate the carrying values were as follows. Long-term borrowings exclude finance lease liabilities.
|
|
|
January 28, 2024 |
|
October 29, 2023 |
|
January 29, 2023 |
|
||||||||||||
|
|
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
|
||||||
|
Financing receivables – net |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
Financing receivables securitized – net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term securitization borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term borrowings due within one year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurements above were Level 3 for all financing receivables and Level 2 for all borrowings.
Fair values of the financing receivables that were issued long-term were based on the discounted values of their related cash flows at interest rates currently being offered by us for similar financing receivables. The fair values of the remaining financing receivables approximated the carrying amounts.
Fair values of long-term borrowings and short-term securitization borrowings were based on current market quotes for identical or similar borrowings and credit risk, or on the discounted values of their related cash flows at current market interest rates.
Assets and liabilities measured at fair value on a recurring basis follow, excluding our cash equivalents, which were carried at a cost that approximates fair value and consisted of money market funds and time deposits.
|
|
|
January 28 |
|
October 29 |
|
January 29 |
|
|||
|
|
|
2024 |
|
2023 |
|
2023 |
|
|||
|
Level 1: |
|
|
|
|
|
|
|
|
|
|
|
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
International equity securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
International mutual funds securities |
|
|
|
|
|
|
|
|
|
|
|
U.S. equity fund |
|
|
|
|
|
|
|
|
|
|
|
U.S. fixed income fund |
|
|
|
|
|
|
|
|
|
|
|
U.S. government debt securities |
|
|
|
|
|
|
|
|
|
|
|
Total Level 1 marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 2: |
|
|
|
|
|
|
|
|
|
|
|
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
International debt securities |
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
Municipal debt securities |
|
|
|
|
|
|
|
|
|
|
|
U.S. government debt securities |
|
|
|
|
|
|
|
|
|
|
|
Total Level 2 marketable securities |
|
|
|
|
|
|
|
|
|
|
|
Other assets – Derivatives |
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses – Derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 3: |
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses – Deferred consideration |
|
|
|
|
|
|
|
|
|
|
The mortgage-backed securities are primarily issued by U.S. government sponsored enterprises.
20
The contractual maturities of debt securities at January 28, 2024 follow:
|
|
|
|
|
|
|
|
|
|
|
|
Amortized |
|
Fair |
|
||
|
|
|
Cost |
|
Value |
|
||
|
Due in one year or less |
|
$ |
|
|
$ |
|
|
|
Due after one through five years |
|
|
|
|
|
|
|
|
Due after five through 10 years |
|
|
|
|
|
|
|
|
Due after 10 years |
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
|
|
|
|
|
|
|
Debt securities |
|
$ |
|
|
$ |
|
|
Actual maturities may differ from contractual maturities because some securities may be called or prepaid. Mortgage-backed securities contain prepayment provisions and are not categorized by contractual maturity.
The following is a description of the valuation methodologies we use to measure certain financial instruments on the balance sheets at fair value:
Marketable securities – The portfolio of investments is valued on a market approach (matrix pricing model) in which all significant inputs are observable or can be derived from or corroborated by observable market data such as interest rates, yield curves, volatilities, credit risk, and prepayment speeds. Funds are valued using the fund’s net asset value, based on the fair value of the underlying securities. International debt securities are valued using quoted prices for identical assets in inactive markets.
Derivatives – Our derivative financial instruments consist of interest rate contracts (swaps), foreign currency exchange contracts (futures, forwards, and swaps), and cross-currency interest rate contracts (swaps). The portfolio is valued based on an income approach (discounted cash flow) using market observable inputs, including swap curves and both forward and spot exchange rates for currencies.
Financing receivables – Specific reserve impairments are based on the fair value of the collateral, which is measured using a market approach (appraisal values or realizable values).
(18) Derivative Instruments
Fair values of our derivative instruments and the associated notional amounts were as follows. Assets are recorded in “Other assets,” while liabilities are recorded in “Accounts payable and accrued expenses.”
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 28, 2024 |
|
October 29, 2023 |
|
January 29, 2023 |
|
|||||||||||||||||||||
|
|
|
|
|
Fair Value |
|
|
|
Fair Value |
|
|
|
Fair Value |
|
|||||||||||||||
|
|
|
Notional |
|
Assets |
|
Liabilities |
|
Notional |
|
Assets |
|
Liabilities |
|
Notional |
|
Assets |
|
Liabilities |
|
|||||||||
|
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
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|
|
|
|
|
|
Fair value hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
Foreign exchange contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross-currency interest rate contracts |
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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|
21
The amounts recorded in the consolidated balance sheets related to borrowings designated in fair value hedging relationships were as follows. Fair value hedging adjustments are included in the carrying amount of the hedged item.
|
|
|
Active Hedging Relationships |
|
Discontinued Hedging Relationships |
|
||||||||
|
|
|
Carrying Amount |
|
Cumulative Fair Value |
|
Carrying Amount of |
|
Cumulative Fair Value |
|
||||
|
|
|
of Hedged Item |
|
Hedging Amount |
|
Formerly Hedged Item |
|
Hedging Amount |
|
||||
|
January 28, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
$ |
|
|
$ |
(
|
|
$ |
|
|
$ |
|
|
|
Long-term borrowings |
|
|
|
|
|
(
|
|
|
|
|
|
(
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 29, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
|
Long-term borrowings |
|
|
|
|
$ |
(
|
|
|
|
|
|
(
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 29, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|
|
Long-term borrowings |
|
$ |
|
|
$ |
(
|
|
|
|
|
|
(
|
|
The classification and gains (losses) including accrued interest expense related to derivative instruments on the statements of consolidated income consisted of the following:
|
|
|
Three Months Ended |
|
||||
|
|
|
January 28 |
|
January 29 |
|
||
|
|
|
2024 |
|
2023 |
|
||
|
Fair Value Hedges |
|
|
|
|
|
|
|
|
Interest rate contracts - Interest expense |
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Hedges |
|
|
|
|
|
|
|
|
Recognized in OCI: |
|
|
|
|
|
|
|
|
Interest rate contracts - OCI (pretax) |
|
$ |
(
|
|
$ |
(
|
|
|
|
|
|
|
|
|
|
|
|
Reclassified from OCI: |
|
|
|
|
|
|
|
|
Interest rate contracts - Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Not Designated as Hedges |
|
|
|
|
|
|
|
|
Interest rate contracts - Net sales |
|
|
|
|
$ |
(
|
|
|
Interest rate contracts - Interest expense |
|
$ |
(
|
|
|
(
|
|
|
Foreign exchange contracts - Net sales |
|
|
|
|
|
|
|
|
Foreign exchange contracts - Cost of sales |
|
|
(
|
|
|
|
|
|
Foreign exchange contracts - Other operating expenses |
|
|
(
|
|
|
(
|
|
|
Total not designated |
|
$ |
(
|
|
$ |
(
|
|
Certain of our derivative agreements contain credit support provisions that may require us to post collateral based on the size of the net liability positions and credit ratings. The aggregate fair value of all derivatives with credit-risk-related contingent features that were in a net liability position at January 28, 2024, October 29, 2023, and January 29, 2023 was $
22
Derivatives are recorded without offsetting for netting arrangements or collateral. The impact on the derivative assets and liabilities related to netting arrangements and any collateral received or paid follows:
|
|
|
Gross Amounts |
|
Netting |
|
|
|
|
|
|
|||
|
January 28, 2024 |
|
Recognized |
|
Arrangements |
|
Collateral |
|
Net Amount |
|
||||
|
Assets |
|
$ |
|
|
$ |
(
|
|
$ |
(
|
|
$ |
|
|
|
Liabilities |
|
|
|
|
|
(
|
|
|
(
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amounts |
|
Netting |
|
|
|
|
|
|
|||
|
October 29, 2023 |
|
Recognized |
|
Arrangements |
|
Collateral |
|
Net Amount |
|
||||
|
Assets |
|
$ |
|
|
$ |
(
|
|
|
|
|
$ |
|
|
|
Liabilities |
|
|
|
|
|
(
|
|
$ |
(
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amounts |
|
Netting |
|
|
|
|
|
|
|||
|
January 29, 2023 |
|
Recognized |
|
Arrangements |
|
Collateral |
|
Net Amount |
|
||||
|
Assets |
|
$ |
|
|
$ |
(
|
|
$ |
(
|
|
$ |
|
|
|
Liabilities |
|
|
|
|
|
(
|
|
|
(
|
|
|
|
|
(19) Share-Based Awards
At January 28, 2024, we were authorized to grant an additional
During the three months ended January 28, 2024, the restricted stock units (RSUs) granted in thousands of shares and the weighted-average grant date fair values, using the closing price of our common stock on the grant date, in dollars follow:
|
|
|
|
|
Grant Date |
|
|
|
|
|
Shares |
|
Fair Value |
|
|
|
Service-based |
|
|
|
$ |
|
|
|
Performance/service-based |
|
|
|
|
|
|
|
Market/service-based |
|
|
|
|
|
|
In December 2023, we granted market/service-based RSUs. The vesting period for the market/service-based RSUs is
(20) S pecial Item
In January 2023, we reached an agreement to sell our financial services business in Russia (registered in Russia as a leasing company). We reversed the allowance for credit losses and recorded a valuation allowance on the assets held for sale in “Selling, administrative and general expenses.” In March 2023, we sold our financial services business in Russia to Insight Investment Group. The total proceeds, net of restricted cash sold, were $
( 21) Subsequent Events
In February 2024, we entered into a retail note securitization transaction, resulting in $
On February 28, 2024, a quarterly dividend of $
23
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.
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
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. 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.
24
Company Outlook for 2024
Production volumes are expected to decline in 2024 as demand moderates to more normal levels.
Agriculture and Turf Outlook for 2024
| ● | We expect large and small agricultural equipment sales to be down from 2023 levels in North America, Europe, and South America. |
| ● | Sales of compact utility tractors continue to be lower as the industry works to bring down inventory levels, while demand for turf products has stabilized. |
| ● | We continue to produce at levels in line with retail demand in North America. To manage inventory in Europe and Brazil, we are producing at levels below retail demand. |
| ● | Agricultural fundamentals are expected to moderate in 2024 due to lower commodity prices and elevated interest rates, offset by resilient farm balance sheets and lower input costs. |
| ● | The U.S. equipment fleet age is above 20-year averages for both tractors and combines. |
| ● | The dairy and livestock sector continues to benefit from elevated cattle and hay prices. |
| ● | Commodity markets remain disrupted in Central and Eastern Europe due to the Russia/Ukraine war. Western Europe equipment demand is moderately impacted by uncertainty related to current cash crop receipts, agriculture policy changes, and high interest rates. |
| ● | Demand in Brazil is expected to moderate due to adverse weather conditions and high interest rates. |
| ● | Industry sales in Asia are forecasted to be down moderately. |
Construction and Forestry Outlook for 2024
| ● | Construction equipment industry sales are forecasted to be down from 2023 levels. |
| ● | Benefits from increasing U.S. infrastructure spending, elevated manufacturing investment levels, and improving single family housing starts are expected to partially offset moderation in office and retail construction. |
| ● | Roadbuilding demand remains strong in the U.S., largely offset by softening demand in Europe. |
Financial Services Outlook for 2024
|
Net Income |
|
Up moderately |
|
||||
|
+ Nonrecurring prior period special items |
|
Favorable |
|
||||
|
+ Higher average portfolio |
|
Favorable |
|
||||
|
(-) Financing spreads |
|
Unfavorable |
|
||||
|
(-) Provision for credit losses |
|
Unfavorable |
|
||||
Additional Trends
Agricultural Market Business Cycle. The agricultural market is affected by various factors including commodity prices, acreage planted, crop yields, and government policies. These factors affect farmers’ income and may result in lower demand for equipment. We may experience any of the following effects during unfavorable market conditions: lower net sales, higher sales discounts, higher receivable write-offs, or losses on equipment on operating leases. A potential benefit is that customers may invest in integrated technology solutions and precision agriculture to lower input costs and improve margins.
Interest Rates. Central bank policy interest rates increased in 2023 and have remained elevated. Increased rates impacted us in several ways, primarily affecting the financing spreads for the financial services operations and demand for our products.
The market for our products is negatively impacted by higher interest rates. We expect higher borrowing costs for our customers to primarily affect discretionary and residential product sales in 2024.
Most retail customer receivables are fixed rate. Wholesale financing receivables generally are variable rate. Both types of receivables are financed with fixed and floating rate borrowings. We manage our exposure to interest rate fluctuations by matching our receivables with our funding sources. We also enter into interest rate swap agreements to match our interest rate exposure.
Rising interest rates have historically impacted our borrowings sooner than the benefit is realized from receivable and lease portfolios. As a result, our financial services operations experienced $27 (after-tax) less favorable financing spreads in 2024 compared to 2023. We expect to continue experiencing spread compression in 2024, but at a moderating pace relative to spread compression experienced in 2023.
Higher interest rates are driven by factors outside of our control, and as a result we cannot reasonably foresee when this condition will subside.
25
Other Items of Concern and Uncertainties – Other items that could impact our results are:
| ● | global and regional political conditions, including the ongoing war between Russia and Ukraine and the war between Israel and Hamas, |
| ● | economic, tax, and trade policies, |
| ● | new or retaliatory tariffs, |
| ● | capital market disruptions, |
| ● | foreign currency and capital control policies, |
| ● | regulations and legislation regarding right to repair, |
| ● | weather conditions, |
| ● | marketplace adoption and monetization of technologies we have invested in, |
| ● | our ability to strengthen our digital capabilities, automation, autonomy, and alternative power technologies, |
| ● | changes in demand and pricing for new and used equipment, |
| ● | significant fluctuations in foreign currency exchange rates, |
| ● | volatility in the prices of many commodities, and |
| ● | slower economic growth or recession. |
consolidated results – 2024 Compared with 2023
|
|
|
Three Months Ended |
|
||||
|
Deere & Company |
|
January 28 |
|
January 29 |
|
||
|
(In millions of dollars, except per share amounts) |
|
2024 |
|
2023 |
|
||
|
Net sales and revenues |
|
$ |
12,185 |
|
$ |
12,652 |
|
|
Net income attributable to Deere & Company |
|
|
1,751 |
|
|
1,959 |
|
|
Diluted earnings per share |
|
|
6.23 |
|
|
6.55 |
|
Net sales and revenues decreased for the quarter 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.
An explanation of the cost of sales to net sales ratio and other significant statement of consolidated income changes follow:
|
|
|
Three Months Ended |
|
||||||
|
|
|
January 28 |
|
January 29 |
|
|
|
||
|
Deere & Company |
|
2024 |
|
2023 |
|
% Change |
|
||
|
Cost of sales to net sales |
|
|
68.7% |
|
|
69.6% |
|
|
|
|
(+) Price realization |
|
|
|
|
|
|
|
Favorable |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
$ |
339 |
|
$ |
256 |
|
+32 |
|
|
Higher due to investment income earned on international mutual funds securities. |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
|
533 |
|
|
495 |
|
+8 |
|
|
Higher due to continued focus on developing and incorporating technology solutions. |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Selling, administrative and general expenses |
|
|
1,066 |
|
|
952 |
|
+12 |
|
|
Increased mostly due to higher employee pay driven by inflationary conditions and profit-sharing incentives. |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
802 |
|
|
479 |
|
+67 |
|
|
Increased primarily due to higher average borrowing rates and higher average borrowings. |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses |
|
|
369 |
|
|
299 |
|
+23 |
|
|
Increased due to higher foreign exchange losses. |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
469 |
|
|
537 |
|
-13 |
|
|
Decreased as a result of lower pretax income. |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
26
Business Segment Results – 2024 compared with 2023
|
|
|
Three Months Ended |
|
||||||
|
|
|
January 28 |
|
January 29 |
|
|
|
||
|
Production and Precision Agriculture |
|
2024 |
|
2023 |
|
% Change |
|
||
|
Net sales |
|
$ |
4,849 |
|
$ |
5,198 |
|
-7 |
|
|
Operating profit |
|
|
1,045 |
|
|
1,208 |
|
-13 |
|
|
Operating margin |
|
|
21.6% |
|
|
23.2% |
|
|
|
|
Price realization |
|
|
|
|
|
|
|
+4 |
|
|
Currency translation impact on Net sales |
|
|
|
|
|
|
|
+1 |
|
Production and precision agriculture sales 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 & Precision Agriculture Operating Profit
First Quarter 2024 Compared to First Quarter 2023
27
|
|
|
Three Months Ended |
|
||||||
|
|
|
January 28 |
|
January 29 |
|
|
|
||
|
Small Agriculture and Turf |
|
2024 |
|
2023 |
|
% Change |
|
||
|
Net sales |
|
$ |
2,425 |
|
$ |
3,001 |
|
-19 |
|
|
Operating profit |
|
|
326 |
|
|
447 |
|
-27 |
|
|
Operating margin |
|
|
13.4% |
|
|
14.9% |
|
|
|
|
Price realization |
|
|
|
|
|
|
|
+3 |
|
|
Currency translation impact on Net sales |
|
|
|
|
|
|
|
+1 |
|
Small agriculture and turf sales decreased for the 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 & Turf Operating Profit
First Quarter 2024 Compared to First Quarter 2023
28
|
|
|
Three Months Ended |
|
||||||
|
|
|
January 28 |
|
January 29 |
|
|
|
||
|
Construction and Forestry |
|
2024 |
|
2023 |
|
% Change |
|
||
|
Net sales |
|
$ |
3,212 |
|
$ |
3,203 |
|
|
|
|
Operating profit |
|
|
566 |
|
|
625 |
|
-9 |
|
|
Operating margin |
|
|
17.6% |
|
|
19.5% |
|
|
|
|
Price realization |
|
|
|
|
|
|
|
+3 |
|
|
Currency translation impact on Net sales |
|
|
|
|
|
|
|
+1 |
|
Construction and forestry sales were flat for the quarter, with positive price realization in the U.S. and Canada offset by lower shipment volumes. Operating profit decreased primarily due to higher production costs, lower shipment volumes, the unfavorable effects of foreign currency exchange, and higher selling, administrative and general expenses and research and development expenses. These items were partially offset by price realization and a favorable sales mix.
Construction & Forestry Operating Profit
First Quarter 2024 Compared to First Quarter 2023
|
|
|
Three Months Ended |
|
||||||
|
|
|
January 28 |
|
January 29 |
|
|
|
||
|
Financial Services |
|
2024 |
|
2023 |
|
% Change |
|
||
|
Revenue (including intercompany) |
|
$ |
1,552 |
|
$ |
1,244 |
|
+25 |
|
|
Interest expense |
|
|
762 |
|
|
442 |
|
+72 |
|
|
Net income |
|
|
207 |
|
|
185 |
|
+12 |
|
The average balance of receivables and leases financed was 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.
29
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 in 2024 compared with 2023.
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.
Key metrics are provided in the following table:
|
|
|
January 28 |
|
October 29 |
|
January 29 |
|
|||
|
|
|
2024 |
|
2023 |
|
2023 |
|
|||
|
Cash, cash equivalents, and marketable securities |
|
$ |
6,273 |
|
$ |
8,404 |
|
$ |
4,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts and notes receivable – net |
|
|
7,795 |
|
|
7,739 |
|
|
7,609 |
|
|
Ratio to prior 12 month’s net sales |
|
|
14% |
|
|
14% |
|
|
15% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories |
|
|
8,937 |
|
|
8,160 |
|
|
10,056 |
|
|
Ratio to prior 12 month’s cost of sales |
|
|
24% |
|
|
22% |
|
|
27% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unused credit lines |
|
|
1,577 |
|
|
841 |
|
|
1,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services: |
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-bearing debt to stockholder’s equity |
|
|
8.3 to 1 |
|
|
8.4 to 1 |
|
|
8.2 to 1 |
|
In the first quarter, we invested $128 in 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.
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.
30
Cash Flows
|
|
|
Three Months Ended |
|
||||
|
|
|
January 28 |
|
January 29 |
|
||
|
|
|
2024 |
|
2023 |
|
||
|
Net cash used for operating activities |
|
$ |
(908) |
|
$ |
(1,246) |
|
|
Net cash provided by investing activities |
|
|
1,217 |
|
|
760 |
|
|
Net cash used for financing activities |
|
|
(2,645) |
|
|
(339) |
|
|
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
|
16 |
|
|
62 |
|
|
Net decrease in cash, cash equivalents, and restricted cash |
|
$ |
(2,320) |
|
$ |
(763) |
|
Cash 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.
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. 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. 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.
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 January 28, 2024, $1,118 of securitization borrowings were outstanding under the facility. At the end of the contractual revolving period, unless the banks and Capital Corporation agree to renew, Capital Corporation would liquidate the secured borrowings over time as payments on the retail notes are collected.
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).”
31
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. 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. In addition, total credit lines included long-term credit facility agreements of $2,500, expiring in the second quarter of 2027, and $2,500, expiring in the second quarter of 2028. 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. 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 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; |
| ● | adverse macroeconomic conditions, including unemployment, inflation, rising interest rates, 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; |
| ● | 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, alternative power technologies, and solutions to customers, including through our Solutions as a Service business model; |
| ● | changes to governmental communications channels (radio frequency technology); |
| ● | the ability to adapt in highly competitive markets; |
| ● | dealer practices and their ability to manage distribution of John Deere products and support and service precision technology solutions; |
| ● | changes in climate patterns, unfavorable weather events, and natural disasters; |
| ● | governmental and other actions designed to address climate change in connection with a transition to a lower-carbon economy; |
32
| ● | higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for 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 personnel; |
| ● | 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 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; 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 us. Those earnings and cash flows generally are the difference between the finance income received from customer payments less interest expense, and depreciation on equipment subject to an operating lease. The two businesses are capitalized differently and have separate performance metrics. The supplemental consolidating data is also used by management due to these differences.
33
|
DEERE & COMPANY |
|
|
||||||||||||||||||||||||
|
SUPPLEMENTAL CONSOLIDATING DATA |
|
|
||||||||||||||||||||||||
|
STATEMENTS OF INCOME |
|
|
||||||||||||||||||||||||
|
For the Three Months Ended January 28, 2024 and January 29, 2023 |
|
|
||||||||||||||||||||||||
|
Unaudited |
|
|
||||||||||||||||||||||||
|
|
|
EQUIPMENT |
|
FINANCIAL |
|
|
|
|
|
|
||||||||||||||||
|
|
|
OPERATIONS |
|
SERVICES |
|
ELIMINATIONS |
|
CONSOLIDATED |
|
|
||||||||||||||||
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
||||||||
|
Net Sales and Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
10,486 |
|
$ |
11,402 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,486 |
|
$ |
11,402 |
|
|
|
Finance and interest income |
|
|
157 |
|
|
114 |
|
$ |
1,433 |
|
$ |
1,067 |
|
$ |
(230) |
|
$ |
(187) |
|
|
1,360 |
|
|
994 |
1 |
|
|
Other income |
|
|
289 |
|
|
234 |
|
|
119 |
|
|
177 |
|
|
(69) |
|
|
(155) |
|
|
339 |
|
|
256 |
2, 3 |
|
|
Total |
|
|
10,932 |
|
|
11,750 |
|
|
1,552 |
|
|
1,244 |
|
|
(299) |
|
|
(342) |
|
|
12,185 |
|
|
12,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
7,207 |
|
|
7,940 |
|
|
|
|
|
|
|
|
(7) |
|
|
(6) |
|
|
7,200 |
|
|
7,934 |
4 |
|
|
Research and development expenses |
|
|
533 |
|
|
495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
533 |
|
|
495 |
|
|
|
Selling, administrative and general expenses |
|
|
876 |
|
|
783 |
|
|
192 |
|
|
172 |
|
|
(2) |
|
|
(3) |
|
|
1,066 |
|
|
952 |
4 |
|
|
Interest expense |
|
|
108 |
|
|
101 |
|
|
762 |
|
|
442 |
|
|
(68) |
|
|
(64) |
|
|
802 |
|
|
479 |
1 |
|
|
Interest compensation to Financial Services |
|
|
162 |
|
|
123 |
|
|
|
|
|
|
|
|
(162) |
|
|
(123) |
|
|
|
|
|
|
1 |
|
|
Other operating expenses |
|
|
90 |
|
|
53 |
|
|
339 |
|
|
392 |
|
|
(60) |
|
|
(146) |
|
|
369 |
|
|
299 |
3, 5 |
|
|
Total |
|
|
8,976 |
|
|
9,495 |
|
|
1,293 |
|
|
1,006 |
|
|
(299) |
|
|
(342) |
|
|
9,970 |
|
|
10,159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before Income Taxes |
|
|
1,956 |
|
|
2,255 |
|
|
259 |
|
|
238 |
|
|
|
|
|
|
|
|
2,215 |
|
|
2,493 |
|
|
|
Provision for income taxes |
|
|
416 |
|
|
483 |
|
|
53 |
|
|
54 |
|
|
|
|
|
|
|
|
469 |
|
|
537 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income after Income Taxes |
|
|
1,540 |
|
|
1,772 |
|
|
206 |
|
|
184 |
|
|
|
|
|
|
|
|
1,746 |
|
|
1,956 |
|
|
|
Equity in income of unconsolidated affiliates |
|
|
1 |
|
|
|
|
|
1 |
|
|
1 |
|
|
|
|
|
|
|
|
2 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
1,541 |
|
|
1,772 |
|
|
207 |
|
|
185 |
|
|
|
|
|
|
|
|
1,748 |
|
|
1,957 |
|
|
|
Less: Net loss attributable to noncontrolling interests |
|
|
(3) |
|
|
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
|
(2) |
|
|
|
Net Income Attributable to Deere & Company |
|
$ |
1,544 |
|
$ |
1,774 |
|
$ |
207 |
|
$ |
185 |
|
|
|
|
|
|
|
$ |
1,751 |
|
$ |
1,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
34
|
DEERE & COMPANY |
|
|
||||||||||||||||||||||||||||||||||||
|
SUPPLEMENTAL CONSOLIDATING DATA (Continued) |
|
|
||||||||||||||||||||||||||||||||||||
|
CONDENSED BALANCE SHEETS |
|
|
||||||||||||||||||||||||||||||||||||
|
Unaudited |
|
|
||||||||||||||||||||||||||||||||||||
|
|
|
EQUIPMENT |
|
FINANCIAL |
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
OPERATIONS |
|
SERVICES |
|
ELIMINATIONS |
|
CONSOLIDATED |
|
|
||||||||||||||||||||||||||||
|
|
|
Jan 28 |
|
Oct 29 |
|
Jan 29 |
|
Jan 28 |
|
Oct 29 |
|
Jan 29 |
|
Jan 28 |
|
Oct 29 |
|
Jan 29 |
|
Jan 28 |
|
Oct 29 |
|
Jan 29 |
|
|
||||||||||||
|
|
|
2024 |
|
2023 |
|
2023 |
|
2024 |
|
2023 |
|
2023 |
|
2024 |
|
2023 |
|
2023 |
|
2024 |
|
2023 |
|
2023 |
|
|
||||||||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,467 |
|
$ |
5,720 |
|
$ |
2,665 |
|
$ |
1,670 |
|
$ |
1,738 |
|
$ |
1,311 |
|
|
|
|
|
|
|
|
|
|
$ |
5,137 |
|
$ |
7,458 |
|
$ |
3,976 |
|
|
|
Marketable securities |
|
|
147 |
|
|
104 |
|
|
18 |
|
|
989 |
|
|
842 |
|
|
834 |
|
|
|
|
|
|
|
|
|
|
|
1,136 |
|
|
946 |
|
|
852 |
|
|
|
Receivables from Financial Services |
|
|
4,296 |
|
|
4,516 |
|
|
5,348 |
|
|
|
|
|
|
|
|
|
|
$ |
(4,296) |
|
$ |
(4,516) |
|
$ |
(5,348) |
|
|
|
|
|
|
|
|
|
6 |
|
|
Trade accounts and notes receivable – net |
|
|
1,093 |
|
|
1,320 |
|
|
1,342 |
|
|
9,167 |
|
|
8,687 |
|
|
7,827 |
|
|
(2,465) |
|
|
(2,268) |
|
|
(1,560) |
|
|
7,795 |
|
|
7,739 |
|
|
7,609 |
7 |
|
|
Financing receivables – net |
|
|
72 |
|
|
64 |
|
|
51 |
|
|
43,636 |
|
|
43,609 |
|
|
36,831 |
|
|
|
|
|
|
|
|
|
|
|
43,708 |
|
|
43,673 |
|
|
36,882 |
|
|
|
Financing receivables securitized – net |
|
|
|
|
|
|
|
|
|
|
|
6,400 |
|
|
7,335 |
|
|
5,089 |
|
|
|
|
|
|
|
|
|
|
|
6,400 |
|
|
7,335 |
|
|
5,089 |
|
|
|
Other receivables |
|
|
1,515 |
|
|
1,813 |
|
|
1,583 |
|
|
559 |
|
|
869 |
|
|
489 |
|
|
(57) |
|
|
(59) |
|
|
(80) |
|
|
2,017 |
|
|
2,623 |
|
|
1,992 |
7 |
|
|
Equipment on operating leases – net |
|
|
|
|
|
|
|
|
|
|
|
6,751 |
|
|
6,917 |
|
|
6,502 |
|
|
|
|
|
|
|
|
|
|
|
6,751 |
|
|
6,917 |
|
|
6,502 |
|
|
|
Inventories |
|
|
8,937 |
|
|
8,160 |
|
|
10,056 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,937 |
|
|
8,160 |
|
|
10,056 |
|
|
|
Property and equipment – net |
|
|
6,879 |
|
|
6,843 |
|
|
6,178 |
|
|
35 |
|
|
36 |
|
|
34 |
|
|
|
|
|
|
|
|
|
|
|
6,914 |
|
|
6,879 |
|
|
6,212 |
|
|
|
Goodwill |
|
|
3,966 |
|
|
3,900 |
|
|
3,891 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,966 |
|
|
3,900 |
|
|
3,891 |
|
|
|
Other intangible assets – net |
|
|
1,112 |
|
|
1,133 |
|
|
1,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,112 |
|
|
1,133 |
|
|
1,255 |
|
|
|
Retirement benefits |
|
|
3,013 |
|
|
2,936 |
|
|
3,728 |
|
|
75 |
|
|
72 |
|
|
67 |
|
|
(1) |
|
|
(1) |
|
|
(2) |
|
|
3,087 |
|
|
3,007 |
|
|
3,793 |
8 |
|
|
Deferred income taxes |
|
|
2,133 |
|
|
2,133 |
|
|
1,015 |
|
|
72 |
|
|
68 |
|
|
53 |
|
|
(372) |
|
|
(387) |
|
|
(154) |
|
|
1,833 |
|
|
1,814 |
|
|
914 |
9 |
|
|
Other assets |
|
|
2,058 |
|
|
1,948 |
|
|
1,936 |
|
|
546 |
|
|
559 |
|
|
684 |
|
|
(26) |
|
|
(4) |
|
|
(23) |
|
|
2,578 |
|
|
2,503 |
|
|
2,597 |
|
|
|
Total Assets |
|
$ |
38,688 |
|
$ |
40,590 |
|
$ |
39,066 |
|
$ |
69,900 |
|
$ |
70,732 |
|
$ |
59,721 |
|
$ |
(7,217) |
|
$ |
(7,235) |
|
$ |
(7,167) |
|
$ |
101,371 |
|
$ |
104,087 |
|
$ |
91,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
|
$ |
1,203 |
|
$ |
1,230 |
|
$ |
969 |
|
$ |
15,914 |
|
$ |
16,709 |
|
$ |
13,160 |
|
|
|
|
|
|
|
|
|
|
$ |
17,117 |
|
$ |
17,939 |
|
$ |
14,129 |
|
|
|
Short-term securitization borrowings |
|
|
|
|
|
|
|
|
|
|
|
6,116 |
|
|
6,995 |
|
|
4,864 |
|
|
|
|
|
|
|
|
|
|
|
6,116 |
|
|
6,995 |
|
|
4,864 |
|
|
|
Payables to Equipment Operations |
|
|
|
|
|
|
|
|
|
|
|
4,296 |
|
|
4,516 |
|
|
5,348 |
|
$ |
(4,296) |
|
$ |
(4,516) |
|
$ |
(5,348) |
|
|
|
|
|
|
|
|
|
6 |
|
|
Accounts payable and accrued expenses |
|
|
12,677 |
|
|
14,862 |
|
|
11,819 |
|
|
3,232 |
|
|
3,599 |
|
|
2,952 |
|
|
(2,548) |
|
|
(2,331) |
|
|
(1,663) |
|
|
13,361 |
|
|
16,130 |
|
|
13,108 |
7 |
|
|
Deferred income taxes |
|
|
478 |
|
|
452 |
|
|
404 |
|
|
444 |
|
|
455 |
|
|
269 |
|
|
(372) |
|
|
(387) |
|
|
(154) |
|
|
550 |
|
|
520 |
|
|
519 |
9 |
|
|
Long-term borrowings |
|
|
7,270 |
|
|
7,210 |
|
|
8,155 |
|
|
32,663 |
|
|
31,267 |
|
|
26,916 |
|
|
|
|
|
|
|
|
|
|
|
39,933 |
|
|
38,477 |
|
|
35,071 |
|
|
|
Retirement benefits and other liabilities |
|
|
2,006 |
|
|
2,032 |
|
|
2,384 |
|
|
110 |
|
|
109 |
|
|
111 |
|
|
(1) |
|
|
(1) |
|
|
(2) |
|
|
2,115 |
|
|
2,140 |
|
|
2,493 |
8 |
|
|
Total liabilities |
|
|
23,634 |
|
|
25,786 |
|
|
23,731 |
|
|
62,775 |
|
|
63,650 |
|
|
53,620 |
|
|
(7,217) |
|
|
(7,235) |
|
|
(7,167) |
|
|
79,192 |
|
|
82,201 |
|
|
70,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interest |
|
|
100 |
|
|
97 |
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 |
|
|
97 |
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Deere & Company stockholders’ equity |
|
|
22,075 |
|
|
21,785 |
|
|
21,332 |
|
|
7,125 |
|
|
7,082 |
|
|
6,101 |
|
|
(7,125) |
|
|
(7,082) |
|
|
(6,101) |
|
|
22,075 |
|
|
21,785 |
|
|
21,332 |
10 |
|
|
Noncontrolling interests |
|
|
4 |
|
|
4 |
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
4 |
|
|
4 |
|
|
|
Financial Services’ equity |
|
|
(7,125) |
|
|
(7,082) |
|
|
(6,101) |
|
|
|
|
|
|
|
|
|
|
|
7,125 |
|
|
7,082 |
|
|
6,101 |
|
|
|
|
|
|
|
|
|
10 |
|
|
Adjusted total stockholders’ equity |
|
|
14,954 |
|
|
14,707 |
|
|
15,235 |
|
|
7,125 |
|
|
7,082 |
|
|
6,101 |
|
|
|
|
|
|
|
|
|
|
|
22,079 |
|
|
21,789 |
|
|
21,336 |
|
|
|
Total Liabilities and Stockholders’ Equity |
|
$ |
38,688 |
|
$ |
40,590 |
|
$ |
39,066 |
|
$ |
69,900 |
|
$ |
70,732 |
|
$ |
59,721 |
|
$ |
(7,217) |
|
$ |
(7,235) |
|
$ |
(7,167) |
|
$ |
101,371 |
|
$ |
104,087 |
|
$ |
91,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
35
|
DEERE & COMPANY |
|
|
||||||||||||||||||||||||
|
SUPPLEMENTAL CONSOLIDATING DATA (Continued) |
|
|
||||||||||||||||||||||||
|
STATEMENTS OF CASH FLOWS |
|
|
||||||||||||||||||||||||
|
For the Three Months Ended January 28, 2024 and January 29, 2023 |
|
|
||||||||||||||||||||||||
|
Unaudited |
|
|
||||||||||||||||||||||||
|
|
|
EQUIPMENT |
|
FINANCIAL |
|
|
|
|
|
|
||||||||||||||||
|
|
|
OPERATIONS |
|
SERVICES |
|
ELIMINATIONS |
|
CONSOLIDATED |
|
|
||||||||||||||||
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
||||||||
|
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,541 |
|
$ |
1,772 |
|
$ |
207 |
|
$ |
185 |
|
|
|
|
|
|
|
$ |
1,748 |
|
$ |
1,957 |
|
|
|
Adjustments to reconcile net income to net cash provided by (used for) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (credit) for credit losses |
|
|
(2) |
|
|
1 |
|
|
33 |
|
|
(131) |
|
|
|
|
|
|
|
|
31 |
|
|
(130) |
|
|
|
Provision for depreciation and amortization |
|
|
302 |
|
|
279 |
|
|
254 |
|
|
252 |
|
$ |
(36) |
|
$ |
(37) |
|
|
520 |
|
|
494 |
11 |
|
|
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46 |
|
|
23 |
|
|
46 |
|
|
23 |
12 |
|
|
Distributed earnings of Financial Services |
|
|
233 |
|
|
3 |
|
|
|
|
|
|
|
|
(233) |
|
|
(3) |
|
|
|
|
|
|
13 |
|
|
Provision (credit) for deferred income taxes |
|
|
48 |
|
|
(39) |
|
|
(21) |
|
|
(17) |
|
|
|
|
|
|
|
|
27 |
|
|
(56) |
|
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables related to sales |
|
|
209 |
|
|
(23) |
|
|
|
|
|
|
|
|
(486) |
|
|
(992) |
|
|
(277) |
|
|
(1,015) |
14, 16 |
|
|
Inventories |
|
|
(687) |
|
|
(1,254) |
|
|
|
|
|
|
|
|
(36) |
|
|
(25) |
|
|
(723) |
|
|
(1,279) |
15 |
|
|
Accounts payable and accrued expenses |
|
|
(2,155) |
|
|
(1,458) |
|
|
25 |
|
|
145 |
|
|
(197) |
|
|
(264) |
|
|
(2,327) |
|
|
(1,577) |
16 |
|
|
Accrued income taxes payable/receivable |
|
|
165 |
|
|
192 |
|
|
18 |
|
|
7 |
|
|
|
|
|
|
|
|
183 |
|
|
199 |
|
|
|
Retirement benefits |
|
|
(127) |
|
|
(49) |
|
|
(2) |
|
|
1 |
|
|
|
|
|
|
|
|
(129) |
|
|
(48) |
|
|
|
Other |
|
|
(46) |
|
|
17 |
|
|
61 |
|
|
163 |
|
|
(22) |
|
|
6 |
|
|
(7) |
|
|
186 |
11, 12, 15 |
|
|
Net cash provided by (used for) operating activities |
|
|
(519) |
|
|
(559) |
|
|
575 |
|
|
605 |
|
|
(964) |
|
|
(1,292) |
|
|
(908) |
|
|
(1,246) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collections of receivables (excluding receivables related to sales) |
|
|
|
|
|
|
|
|
8,007 |
|
|
7,495 |
|
|
(255) |
|
|
(297) |
|
|
7,752 |
|
|
7,198 |
14 |
|
|
Proceeds from sales of equipment on operating leases |
|
|
|
|
|
|
|
|
506 |
|
|
497 |
|
|
|
|
|
|
|
|
506 |
|
|
497 |
|
|
|
Cost of receivables acquired (excluding receivables related to sales) |
|
|
|
|
|
|
|
|
(6,513) |
|
|
(6,375) |
|
|
66 |
|
|
53 |
|
|
(6,447) |
|
|
(6,322) |
14 |
|
|
Purchases of property and equipment |
|
|
(362) |
|
|
(315) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(362) |
|
|
(315) |
|
|
|
Cost of equipment on operating leases acquired |
|
|
|
|
|
|
|
|
(503) |
|
|
(531) |
|
|
49 |
|
|
34 |
|
|
(454) |
|
|
(497) |
15 |
|
|
Decrease in investment in Financial Services |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
(10) |
|
|
|
|
|
|
|
|
|
17 |
|
|
Increase in trade and wholesale receivables |
|
|
|
|
|
|
|
|
(871) |
|
|
(1,499) |
|
|
871 |
|
|
1,499 |
|
|
|
|
|
|
14 |
|
|
Collateral on derivatives – net |
|
|
|
|
|
|
|
|
310 |
|
|
345 |
|
|
|
|
|
|
|
|
310 |
|
|
345 |
|
|
|
Other |
|
|
10 |
|
|
(9) |
|
|
(98) |
|
|
(137) |
|
|
|
|
|
|
|
|
(88) |
|
|
(146) |
|
|
|
Net cash provided by (used for) investing activities |
|
|
(342) |
|
|
(324) |
|
|
838 |
|
|
(205) |
|
|
721 |
|
|
1,289 |
|
|
1,217 |
|
|
760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds (payments) in short-term borrowings (original maturities three months or less) |
|
|
78 |
|
|
(136) |
|
|
(3,029) |
|
|
833 |
|
|
|
|
|
|
|
|
(2,951) |
|
|
697 |
|
|
|
Change in intercompany receivables/payables |
|
|
288 |
|
|
1,469 |
|
|
(288) |
|
|
(1,469) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings issued (original maturities greater than three months) |
|
|
11 |
|
|
1 |
|
|
5,276 |
|
|
2,504 |
|
|
|
|
|
|
|
|
5,287 |
|
|
2,505 |
|
|
|
Payments of borrowings (original maturities greater than three months) |
|
|
(40) |
|
|
|
|
|
(3,197) |
|
|
(1,925) |
|
|
|
|
|
|
|
|
(3,237) |
|
|
(1,925) |
|
|
|
Repurchases of common stock |
|
|
(1,328) |
|
|
(1,257) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,328) |
|
|
(1,257) |
|
|
|
Capital investment from Equipment Operations |
|
|
|
|
|
|
|
|
(10) |
|
|
|
|
|
10 |
|
|
|
|
|
|
|
|
|
17 |
|
|
Dividends paid |
|
|
(386) |
|
|
(341) |
|
|
(233) |
|
|
(3) |
|
|
233 |
|
|
3 |
|
|
(386) |
|
|
(341) |
13 |
|
|
Other |
|
|
(22) |
|
|
(6) |
|
|
(8) |
|
|
(12) |
|
|
|
|
|
|
|
|
(30) |
|
|
(18) |
|
|
|
Net cash used for financing activities |
|
|
(1,399) |
|
|
(270) |
|
|
(1,489) |
|
|
(72) |
|
|
243 |
|
|
3 |
|
|
(2,645) |
|
|
(339) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash |
|
|
11 |
|
|
48 |
|
|
5 |
|
|
14 |
|
|
|
|
|
|
|
|
16 |
|
|
62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash |
|
|
(2,249) |
|
|
(1,105) |
|
|
(71) |
|
|
342 |
|
|
|
|
|
|
|
|
(2,320) |
|
|
(763) |
|
|
|
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 |
|
$ |
3,506 |
|
$ |
2,676 |
|
$ |
1,794 |
|
$ |
1,502 |
|
|
|
|
|
|
|
$ |
5,300 |
|
$ |
4,178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Cash, Cash Equivalents, and Restricted Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,467 |
|
$ |
2,665 |
|
$ |
1,670 |
|
$ |
1,311 |
|
|
|
|
|
|
|
$ |
5,137 |
|
$ |
3,976 |
|
|
|
Restricted cash (Other assets) |
|
|
39 |
|
|
11 |
|
|
124 |
|
|
191 |
|
|
|
|
|
|
|
|
163 |
|
|
202 |
|
|
|
Total Cash, Cash Equivalents, and Restricted Cash |
|
$ |
3,506 |
|
$ |
2,676 |
|
$ |
1,794 |
|
$ |
1,502 |
|
|
|
|
|
|
|
$ |
5,300 |
|
$ |
4,178 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
36
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.
Item 4. CONTROLS AND PROCEDURES
Our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) were effective as of January 28, 2024, based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Exchange Act. During the first quarter of 2024, there were no changes that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are subject to various unresolved legal actions which arise in the normal course of our business, the most prevalent of which relate to product liability (including asbestos-related liability), retail credit, employment, patent, trademark, and antitrust matters. We believe the reasonably possible range of losses for these unresolved legal actions would not have a material effect on our consolidated financial statements.
Item 1A. Risk Factors
See our most recently filed Annual Report on Form 10-K (Part I, Item 1A). There have been no material changes in this information. The risks described in the Annual Report on Form 10-K, and the “Forward-Looking Statements” in this report, are not the only risks we face. Additional risks and uncertainties may also materially affect our business, financial condition, or operating results. One should not consider the risk factors to be a complete discussion of risks, uncertainties, and assumptions.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Purchases of our common stock during the first quarter of 2024 were as follows:
|
|
|
|
|
|
|
|
Total Number of |
|
|
|
|
|
|
|
|
|
|
|
Shares Purchased as |
|
Maximum Number of |
|
|
|
|
Total Number of |
|
|
|
|
Part of Publicly |
|
Shares that May Yet Be |
|
|
|
|
Shares |
|
|
|
|
Announced Plans or |
|
Purchased under the |
|
|
|
|
Purchased (2) |
|
Average Price |
|
Programs (1) |
|
Plans or Programs (1) |
|
|
|
Period |
|
(thousands) |
|
Per Share |
|
(thousands) |
|
(millions) |
|
|
|
Oct 30 to Nov 26 |
|
1,178 |
|
$ |
377.57 |
|
1,178 |
|
31.8 |
|
|
Nov 27 to Dec 24 |
|
1,296 |
|
|
372.25 |
|
1,259 |
|
30.7 |
|
|
Dec 25 to Jan 28 |
|
1,050 |
|
|
393.54 |
|
1,050 |
|
29.6 |
|
|
Total |
|
3,524 |
|
|
|
|
3,487 |
|
|
|
| (1) | We have a share repurchase plan that was announced in December 2022 to purchase up to $18.0 billion of shares of our common stock. The maximum number of shares that may yet be purchased under this plan was 29.6 million based on the closing price of our common stock on the New York Stock Exchange as of the end of the first quarter of 2024 of $393.62 per share. At the end of the first quarter of 2024, $11.7 billion of common stock remains to be purchased under this plan. |
| (2) | In the first quarter of 2024, 37 thousand shares were acquired from plan participants at a weighted-average market price of $365.60 per share to pay payroll taxes on the vesting of restricted stock awards. |
37
Sales of Unregistered Securities
During the first quarter of 2024, we distributed 1,333 deferred stock awards to a participant account under the 2012 Deere & Company Nonemployee Director Stock Ownership Plan. The deferred stock awards converted to shares of common stock on a one-for-one basis. Deferred stock units and shares of common stock issued under the 2012 Deere & Company Nonemployee Director Stock Ownership Plan are exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of the SEC’s Regulation D thereunder.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Director and Executive Officer Trading Arrangements
Item 6. Exhibits
Certain instruments relating to long-term borrowings constituting less than 10 percent of the registrant’s total assets are not filed as exhibits herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. The registrant will furnish copies of such instruments to the Commission upon request of the Commission.
|
|
|
|
|
3.1 |
||
|
|
|
|
|
3.2 |
||
|
|
|
|
|
31.1 |
||
|
|
|
|
|
31.2 |
||
|
|
|
|
|
32 |
||
|
|
|
|
|
101.INS |
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
|
|
|
|
|
|
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
|
|
|
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
|
|
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
|
|
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
|
|
|
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
|
|
|
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
|
|
|
|
|
* Incorporated by reference.
38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
|
|
DEERE & COMPANY |
|||
|
|
|
|||
|
|
|
|||
|
Date: |
February 29, 2024 |
|
By: |
/s/ Joshua A. Jepsen |
|
|
|
|
|
Joshua A. Jepsen
|
|
|
|
|
|
(Principal Financial Officer and Principal Accounting Officer) |
39