EX-99.1 2 de-20240815xex99d1.htm EX-99.1

News Release

Graphic

Contact:
Jen Hartmann
Director, Public Relations
HartmannJenniferA@JohnDeere.com

Deere Reports Third Quarter Net Income of $1.734 Billion

Strong ag margins highlight continued value delivery amid market fluctuations.
Global ag fundamentals are expected to remain weak as construction moderates.
Full-year net income forecast unchanged despite challenging environment.

MOLINE, Illinois (August 15, 2024) — Deere & Company reported net income of $1.734 billion for the third quarter ended July 28, 2024, or $6.29 per share, compared with net income of $2.978 billion, or $10.20 per share, for the quarter ended July 30, 2023. For the first nine months of the year, net income attributable to Deere & Company was $5.855 billion, or $21.04 per share, compared with $7.797 billion, or $26.35 per share, for the same period last year.

Worldwide net sales and revenues decreased 17 percent, to $13.152 billion, for the third quarter of 2024 and decreased 11 percent, to $40.572 billion, for nine months. Net sales were $11.387 billion for the quarter and $35.484 billion for nine months, compared with $14.284 billion and $41.765 billion last year, respectively.

“John Deere’s third-quarter results showcase our disciplined execution in the face of challenging conditions in the global agricultural and construction sectors,” said John C. May, chairman and chief executive officer. “Despite facing significant headwinds, our teams have demonstrated resiliency in adapting to market fluctuations, allowing us to remain focused on advancing our strategy and consistently providing exceptional value to our customers.”

Company Outlook & Summary

Net income attributable to Deere & Company for fiscal 2024 is forecasted to be approximately $7.0 billion.

“In response to weak market conditions, we have taken steps to reduce costs and strategically align our production with customer needs,” said May. “Although these decisions were difficult, they are vital for our continued success and competitiveness. Our commitment to our customers is at the heart of everything we do, and we are confident that these proactive measures will allow us to continue investing in innovative, high-quality products and solutions that improve our customers’ lives.”

4


Deere & Company

Third Quarter

Year to Date

$ in millions, except per share amounts

2024

2023

% Change

2024

2023

% Change

Net sales and revenues

$

13,152

 

$

15,801

 

-17%

 

$

40,572

 

$

45,839

 

-11%

Net income

$

1,734

$

2,978

-42%

$

5,855

$

7,797

-25%

Fully diluted EPS

$

6.29

$

10.20

$

21.04

$

26.35

Results for the presented periods were affected by special items. See Note 1 of the financial statements for further details.

Production & Precision Agriculture

Third Quarter

$ in millions

2024

2023

% Change

Net sales

 

$

5,099

 

$

6,806

 

-25%

Operating profit

$

1,162

$

1,782

-35%

Operating margin

22.8%

26.2%

Production and precision agriculture sales decreased for the quarter as a result of lower shipment volumes, partially offset by price realization. Operating profit decreased due to lower shipment volumes and employee-separation programs’ expenses, presented as a special item below. These factors were partially offset by price realization and lower warranty expenses.

Production & Precision Agriculture Operating Profit

Third Quarter 2024 Compared to Third Quarter 2023

$ in millions

Graphic

5


Small Agriculture & Turf

Third Quarter

$ in millions

2024

2023

% Change

Net sales

 

$

3,053

 

$

3,739

 

-18%

Operating profit

$

496

$

732

-32%

Operating margin

16.2%

19.6%

Small agriculture and turf sales decreased for the quarter as a result of lower shipment volumes, partially offset by price realization. Operating profit decreased primarily due to lower shipment volumes and higher warranty expenses, partially offset by price realization.

Small Agriculture & Turf Operating Profit

Third Quarter 2024 Compared to Third Quarter 2023

$ in millions

Graphic

6


Construction & Forestry

Third Quarter

$ in millions

2024

2023

% Change

Net sales

 

$

3,235

 

$

3,739

 

-13%

Operating profit

$

448

$

716

-37%

Operating margin

13.8%

19.1%

Construction and forestry sales decreased for the quarter due to lower shipment volumes. Operating profit decreased primarily due to lower shipment volumes / sales mix and unfavorable price realization.

Construction & Forestry Operating Profit

Third Quarter 2024 Compared to Third Quarter 2023

$ in millions

Graphic

Financial Services

Third Quarter

$ in millions

2024

2023

% Change

Net income

 

$

153

 

$

216

 

-29%

Financial services net income for the quarter decreased due to a higher provision for credit losses and less-favorable financing spreads, partially offset by income earned on higher average portfolio balances and favorable discrete tax items.

7


Industry Outlook for Fiscal 2024

Agriculture & Turf

U.S. & Canada:

Large Ag

Down ~ 15%

Small Ag & Turf

Down ~ 10%

Europe

Down ~ 15%

South America (Tractors & Combines)

Down 15 to 20%

Asia

Down moderately

Construction & Forestry

U.S. & Canada:

Construction Equipment

Down 5 to 10%

Compact Construction Equipment

Flat to Down 5%

Global Forestry

Down ~ 10%

Global Roadbuilding

Flat to Down 5%

Deere Segment Outlook for Fiscal 2024

Currency

Price

$ in millions

Net Sales

Translation

Realization

Production & Precision Ag

Down 20% to 25%

~ Flat

Up ~ 2.0%

Small Ag & Turf

Down 20% to 25%

~ Flat

Up ~ 2.0%

Construction & Forestry

Down 10% to 15%

~ Flat

Up ~ 0.5%

Financial Services

Net Income

~$ 720

Financial Services. Fiscal-year 2024 net income attributable to Deere & Company for the financial services operations is forecasted to be approximately $720 million. Results are expected to be higher than fiscal year 2023 due to income earned on higher average portfolio balances, partially offset by a higher provision for credit losses and less-favorable financing spreads. A correction of the accounting treatment for financing incentives offered to John Deere dealers impacted 2023 financial results. The cumulative effect of this correction, $173 million pretax ($135 million after-tax), was recorded in the second quarter of 2023.

FORWARD-LOOKING STATEMENTS

Certain statements contained herein, including in the section entitled “Company Outlook & Summary,” “Industry Outlook,” “Deere Segment Outlook,” and “Condensed Notes to Interim Consolidated Financial Statements” 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 the company’s operations generally while others could more heavily affect a particular line of business.

Forward-looking statements are based on currently available information and current assumptions, expectations, and projections about future events and should not be relied upon. Except as required by law, the company expressly disclaims any obligation to update or revise its forward-looking statements. Many factors, risks, and uncertainties could cause actual results to differ materially from these forward-looking statements. Among these factors are risks related to:

changes in and compliance with U.S., foreign and international laws, regulations, and policies relating to trade, economic sanctions, data privacy, spending, taxing, banking, monetary, environmental (including climate change and engine emissions), and farming policies;
political, economic, and social instability of the geographies in which the company operates, including the ongoing war between Russia and Ukraine and the conflict in the Middle East;
adverse macroeconomic conditions, including unemployment, inflation, interest rate volatility, changes in consumer practices due to slower economic growth, and regional or global liquidity constraints;
worldwide demand for food and different forms of renewable energy;

8


the ability to execute business strategies, including the company’s Smart Industrial Operating Model, Leap Ambitions, and mergers and acquisitions;
the ability to understand and meet customers’ changing expectations and demand for John Deere products and solutions;
accurately forecasting customer demand for products and services and adequately managing inventory;
the ability to integrate new technology, including automation and machine learning, and deliver precision technology and solutions to customers;
changes to governmental communications channels (radio frequency technology);
the ability to adapt in highly competitive markets;
dealer practices and their ability to manage inventory and distribution of John Deere products and to provide support and service precision technology solutions;
changes in climate patterns, unfavorable weather events, and natural disasters;
governmental and other actions designed to address climate change in connection with a transition to a lower-carbon economy;
higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for John Deere products and solutions;
availability and price of raw materials, components, and whole goods;
delays or disruptions in the company’s supply chain;
the company’s equipment fails to perform as expected, which could result in warranty claims, post-sales repairs or recalls, product liability litigation, and regulatory investigations;
the ability to attract, develop, engage, and retain qualified employees;
the impact of workforce reductions on employee retention, morale, and institutional knowledge;
security breaches, cybersecurity attacks, technology failures, and other disruptions to John Deere information technology infrastructure and products;
loss of or challenges to intellectual property rights;
legislation introduced or enacted that could affect the company’s business model and intellectual property, such as right to repair or right to modify legislation;
investigations, claims, lawsuits, or other legal proceedings;
events that damage the company’s reputation or brand, such as the recent social media campaign targeting the company’s stance on certain social issues or the company’s response thereto;
the agricultural business cycle, which can be unpredictable and is affected by factors such as world grain stocks, available farm acres, acreage planted, soil conditions, harvest yields, prices for commodities and livestock, input costs, and availability of transport for crops; and
housing starts and supply, real estate and housing prices, levels of public and non-residential construction, and infrastructure investment.

Further information concerning the company and its businesses, including factors that could materially affect the financial results, is included in the company’s filings with the SEC (including, but not limited to, the factors discussed in Item 1A. “Risk Factors” of the company’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q). There also may be other factors that the company cannot anticipate or that are not described herein because the company does not currently perceive them to be material.

9


DEERE & COMPANY

THIRD QUARTER 2024 PRESS RELEASE

(In millions of dollars) Unaudited

Three Months Ended

Nine Months Ended

 

July 28

  

July 30

  

%

  

July 28

  

July 30

  

%

2024

2023

Change

2024

2023

Change

Net sales and revenues:

Production & precision ag net sales

$

5,099

$

6,806

 

-25

$

16,529

$

19,826

 

-17

Small ag & turf net sales

3,053

3,739

-18

8,663

10,886

-20

Construction & forestry net sales

 

3,235

 

3,739

 

-13

 

10,292

 

11,053

 

-7

Financial services revenues

 

1,489

 

1,228

 

+21

 

4,259

 

3,375

 

+26

Other revenues

 

276

 

289

 

-4

 

829

 

699

+19

Total net sales and revenues

$

13,152

$

15,801

 

-17

$

40,572

$

45,839

 

-11

Operating profit: *

Production & precision ag

$

1,162

$

1,782

 

-35

$

3,857

$

5,160

 

-25

Small ag & turf

496

732

-32

1,393

2,028

-31

Construction & forestry

 

448

 

716

 

-37

 

1,682

 

2,179

 

-23

Financial services

 

191

 

286

 

-33

 

657

 

565

 

+16

Total operating profit

 

2,297

 

3,516

 

-35

 

7,589

 

9,932

 

-24

Reconciling items **

 

62

 

98

 

-37

 

111

 

29

 

+283

Income taxes

 

(625)

 

(636)

 

-2

 

(1,845)

 

(2,164)

 

-15

Net income attributable to Deere & Company

$

1,734

$

2,978

 

-42

$

5,855

$

7,797

 

-25

*      Operating profit is income from continuing operations before corporate expenses, certain external interest expenses, certain foreign exchange gains and losses, and income taxes. Operating profit for financial services includes the effect of interest expense and foreign exchange gains or losses.

**     Reconciling items are primarily corporate expenses, certain interest income and expenses, certain foreign exchange gains and losses, pension and postretirement benefit costs excluding the service cost component, and net income attributable to noncontrolling interests.

10


DEERE & COMPANY

STATEMENTS OF CONSOLIDATED INCOME

For the Three and Nine Months Ended July 28, 2024 and July 30, 2023

(In millions of dollars and shares except per share amounts) Unaudited

Three Months Ended

Nine Months Ended

  

2024

   

2023

2024

   

2023

Net Sales and Revenues

Net sales

$

11,387

$

14,284

$

35,484

$

41,765

Finance and interest income

 

1,461

 

1,253

 

4,207

 

3,326

Other income

 

304

 

264

 

881

 

748

Total

 

13,152

 

15,801

 

40,572

 

45,839

Costs and Expenses

Cost of sales

 

7,848

 

9,624

 

24,205

 

28,288

Research and development expenses

 

567

 

528

 

1,664

 

1,571

Selling, administrative and general expenses

 

1,278

 

1,110

 

3,608

 

3,392

Interest expense

 

840

 

623

 

2,478

 

1,671

Other operating expenses

 

264

 

310

 

930

 

971

Total

 

10,797

 

12,195

 

32,885

 

35,893

Income of Consolidated Group before Income Taxes

 

2,355

 

3,606

 

7,687

 

9,946

Provision for income taxes

 

625

 

636

 

1,845

 

2,164

Income of Consolidated Group

 

1,730

 

2,970

 

5,842

 

7,782

Equity in income of unconsolidated affiliates

 

1

 

2

 

4

 

5

Net Income

 

1,731

 

2,972

 

5,846

 

7,787

Less: Net loss attributable to noncontrolling interests

 

(3)

 

(6)

 

(9)

 

(10)

Net Income Attributable to Deere & Company

$

1,734

$

2,978

$

5,855

$

7,797

Per Share Data

Basic

$

6.32

$

10.24

$

21.13

$

26.48

Diluted

6.29

10.20

21.04

26.35

Dividends declared

1.47

1.25

4.41

3.70

Dividends paid

1.47

1.25

4.29

3.58

Average Shares Outstanding

Basic

 

274.5

 

290.8

 

277.1

 

294.4

Diluted

 

275.6

 

292.1

 

278.2

 

295.9

See Condensed Notes to Interim Consolidated Financial Statements.

11


DEERE & COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions of dollars) Unaudited

July 28

October 29

July 30

    

2024

    

2023

    

2023

Assets

Cash and cash equivalents

$

7,004

$

7,458

$

6,576

Marketable securities

 

1,140

 

946

 

841

Trade accounts and notes receivable – net

 

7,469

 

7,739

 

9,297

Financing receivables – net

 

43,896

 

43,673

 

41,302

Financing receivables securitized – net

 

8,274

 

7,335

 

7,001

Other receivables

 

2,270

 

2,623

 

3,118

Equipment on operating leases – net

 

7,118

 

6,917

 

6,709

Inventories

 

7,696

 

8,160

 

9,350

Property and equipment – net

 

7,092

 

6,879

 

6,418

Goodwill

 

3,960

 

3,900

 

3,994

Other intangible assets – net

 

1,030

 

1,133

 

1,199

Retirement benefits

 

3,126

 

3,007

 

3,573

Deferred income taxes

 

1,898

 

1,814

 

1,360

Other assets

 

2,903

 

2,503

 

2,659

Assets held for sale

2,965

 

Total Assets

$

107,841

$

104,087

$

103,397

Liabilities and Stockholders’ Equity

Liabilities

Short-term borrowings

$

15,294

$

17,939

$

17,143

Short-term securitization borrowings

 

7,869

 

6,995

 

6,608

Accounts payable and accrued expenses

 

14,397

 

16,130

 

15,340

Deferred income taxes

 

481

 

520

 

506

Long-term borrowings

 

42,692

 

38,477

 

38,112

Retirement benefits and other liabilities

 

2,156

 

2,140

 

2,536

Liabilities held for sale

1,803

 

Total liabilities

 

84,692

 

82,201

 

80,245

Redeemable noncontrolling interest

84

97

101

Stockholders’ Equity

Total Deere & Company stockholders’ equity

 

23,062

 

21,785

 

23,048

Noncontrolling interests

 

3

 

4

 

3

Total stockholders’ equity

 

23,065

 

21,789

 

23,051

Total Liabilities and Stockholders’ Equity

$

107,841

$

104,087

$

103,397

See Condensed Notes to Interim Consolidated Financial Statements.

12


DEERE & COMPANY

STATEMENTS OF CONSOLIDATED CASH FLOWS

For the Nine Months Ended July 28, 2024 and July 30, 2023

(In millions of dollars) Unaudited

    

2024

    

2023

Cash Flows from Operating Activities

Net income

$

5,846

$

7,787

Adjustments to reconcile net income to net cash provided by operating activities:

Provision (credit) for credit losses

 

222

 

(64)

Provision for depreciation and amortization

 

1,598

 

1,527

Impairments and other adjustments

53

 

173

Share-based compensation expense

 

159

 

112

Credit for deferred income taxes

 

(125)

 

(429)

Changes in assets and liabilities:

Receivables related to sales

 

(2,446)

 

(5,059)

Inventories

 

234

 

(663)

Accounts payable and accrued expenses

 

(1,015)

 

47

Accrued income taxes payable/receivable

 

31

 

(595)

Retirement benefits

 

(246)

 

(116)

Other

 

(172)

 

176

Net cash provided by operating activities

 

4,139

 

2,896

Cash Flows from Investing Activities

Collections of receivables (excluding receivables related to sales)

 

19,143

 

17,592

Proceeds from maturities and sales of marketable securities

 

333

 

127

Proceeds from sales of equipment on operating leases

 

1,451

 

1,445

Cost of receivables acquired (excluding receivables related to sales)

 

(21,113)

 

(20,714)

Purchases of marketable securities

 

(572)

 

(213)

Purchases of property and equipment

 

(1,043)

 

(887)

Cost of equipment on operating leases acquired

 

(2,165)

 

(1,968)

Collateral on derivatives – net

390

 

240

Other

 

(95)

 

(185)

Net cash used for investing activities

 

(3,671)

 

(4,563)

Cash Flows from Financing Activities

Net proceeds (payments) in short-term borrowings (original maturities three months or less)

 

(992)

 

5,040

Proceeds from borrowings issued (original maturities greater than three months)

 

15,512

 

9,972

Payments of borrowings (original maturities greater than three months)

 

(10,792)

 

(5,862)

Repurchases of common stock

 

(3,227)

 

(4,663)

Dividends paid

 

(1,202)

 

(1,065)

Other

 

(88)

 

(43)

Net cash provided by (used for) financing activities

 

(789)

 

3,379

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

 

(6)

 

125

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash

 

(327)

 

1,837

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period

 

7,620

 

4,941

Cash, Cash Equivalents, and Restricted Cash at End of Period

$

7,293

$

6,778

See Condensed Notes to Interim Consolidated Financial Statements.

13


DEERE & COMPANY

Condensed Notes to Interim Consolidated Financial Statements

(In millions of dollars) Unaudited

(1)Special Items

2024

Employee-Separation Programs

In the third quarter of 2024, the company implemented employee-separation programs for its salaried workforce in several geographic areas, including the United States, Europe, Asia, and Latin America. The programs’ main purpose was to help meet the company’s strategic priorities while reducing overlap and redundancy in roles and responsibilities. The programs were largely involuntary in nature with the expense recorded when management committed to a plan, the plan was communicated to the employees, and the employees were not required to provide service beyond the legal notification period.

The total programs’ pretax expenses are estimated to be approximately $150 million, with $124 million recorded in the third quarter of 2024. The remaining expenses are expected to be recorded primarily in 2025. The expenses for the three months and nine months ended July 28, 2024 were recorded as follows in millions of dollars:

 

PPA

 

SAT

 

CF

 

FS

 

Total

 

Employee-Separation Programs:

Cost of sales

$

18

$

9

$

8

$

35

Research and development expenses

19

6

1

26

Selling, administrative and general expenses

25

14

11

$

9

59

Total operating profit decrease

$

62

$

29

$

20

$

9

120

Non-operating profit expenses*

4

Total

$

124

*Relates primarily to corporate expenses.

Annual pretax savings from these programs are estimated to be approximately $230 million, of which $100 million is estimated to be realized in 2024.

Banco John Deere

In the third quarter of 2024, the company’s board of directors authorized the sale of 50 percent of the company’s ownership in its wholly owned subsidiary, Banco John Deere S.A. (BJD). BJD, located in Brazil, is included in the company’s financial services segment and finances retail and wholesale loans for agricultural, construction, and forestry equipment. The transaction will reduce the company’s incremental risk as it continues to grow in the Brazilian market. As a result, the company classified the BJD business as held for sale, including a reversal of $38 million in allowance for credit losses, and the establishment of a $53 million valuation allowance on the assets held for sale. The net impact of these entries was a pretax and after-tax loss of $15 million recorded in “Selling, administrative and general expenses.”

In August 2024, the company entered into an agreement with a Brazilian bank, Banco Bradesco S.A., to invest and become 50 percent owner of BJD.

14


2023

Brazil Tax Ruling

In the third quarter of 2023, the Brazil Superior Court of Justice published a favorable tax ruling regarding taxability of local incentives, which allowed the company to record a $243 million reduction in the provision for income taxes and $47 million of interest income.

Financial Services Financing Incentives Correction

In the second quarter of 2023, the company corrected the accounting treatment for financing incentives offered to John Deere dealers, which impacted the timing of expense recognition and the presentation of incentive costs in the consolidated financial statements. The cumulative effect of this correction, $173 million pretax ($135 million after-tax), was recorded in the second quarter of 2023 in “Selling, administrative and general expenses” by financial services.

Summary of 2024 and 2023 Special Items

The following table summarizes the operating profit impact of the special items recorded in millions of dollars for the three months and nine months ended July 28, 2024 and July 30, 2023.

Three Months

Nine Months

 

PPA

 

SAT

 

CF

 

FS

 

Total

 

PPA

 

SAT

 

CF

 

FS

 

Total

2024 Expense:

Employee-separation programs

$

62

$

29

$

20

$

9

$

120

$

62

$

29

$

20

$

9

$

120

BJD remeasurement

15

15

15

15

Total 2024 expense

62

29

20

24

135

62

29

20

24

135

2023 Expense:

Financing incentives correction

173

173

Period over period change

$

62

$

29

$

20

$

24

$

135

$

62

$

29

$

20

$

(149)

$

(38)

(2)The consolidated financial statements represent the consolidation of all Deere & Company’s subsidiaries. The supplemental consolidating data is presented for informational purposes. Transactions between the equipment operations and financial services have been eliminated to arrive at the consolidated financial statements. In the supplemental consolidating data in Note 3 to the financial statements, the “Equipment Operations” represents the enterprise without “Financial Services” which include the company’s production and precision agriculture operations, small agriculture and turf operations, and construction and forestry operations, and other corporate assets, liabilities, revenues, and expenses not reflected within “Financial Services.”

15


DEERE & COMPANY

(3) SUPPLEMENTAL CONSOLIDATING DATA

STATEMENTS OF INCOME

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

(In millions of dollars) Unaudited

EQUIPMENT

FINANCIAL

OPERATIONS

SERVICES

ELIMINATIONS

CONSOLIDATED

 

2024

  

2023

  

2024

  

2023

  

2024

  

2023

  

2024

  

2023

  

Net Sales and Revenues

Net sales

$

11,387

$

14,284

$

11,387

$

14,284

Finance and interest income

 

155

 

210

$

1,537

$

1,335

$

(231)

$

(292)

1,461

1,253

1

Other income

 

246

 

222

 

130

 

110

 

(72)

 

(68)

 

304

 

264

2, 3

Total

 

11,788

 

14,716

 

1,667

 

1,445

 

(303)

 

(360)

 

13,152

 

15,801

Costs and Expenses

Cost of sales

 

7,855

 

9,630

(7)

(6)

7,848

9,624

4

Research and development expenses

 

567

 

528

567

528

Selling, administrative and general expenses

 

962

 

913

 

318

 

199

 

(2)

 

(2)

 

1,278

 

1,110

4

Interest expense

 

91

 

94

 

812

 

622

 

(63)

 

(93)

 

840

 

623

1

Interest compensation to Financial Services

 

168

 

199

(168)

(199)

1

Other operating expenses

 

(16)

 

34

 

343

 

336

 

(63)

 

(60)

 

264

 

310

3, 5

Total

 

9,627

 

11,398

 

1,473

 

1,157

 

(303)

 

(360)

 

10,797

 

12,195

Income before Income Taxes

 

2,161

 

3,318

 

194

 

288

 

 

 

2,355

 

3,606

Provision for income taxes

 

583

 

564

 

42

 

72

 

 

 

625

 

636

Income after Income Taxes

 

1,578

 

2,754

 

152

 

216

 

 

 

1,730

 

2,970

Equity in income of unconsolidated affiliates

 

 

2

1

1

2

Net Income

 

1,578

 

2,756

 

153

 

216

 

 

 

1,731

 

2,972

Less: Net loss attributable to noncontrolling interests

 

(3)

 

(6)

(3)

(6)

Net Income Attributable to Deere & Company

$

1,581

$

2,762

$

153

$

216

$

1,734

$

2,978

1 Elimination of intercompany interest income and expense.

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

3 Elimination of income and expense 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.

16


DEERE & COMPANY

SUPPLEMENTAL CONSOLIDATING DATA (Continued)

STATEMENTS OF INCOME

For the Nine Months Ended July 28, 2024 and July 30, 2023

(In millions of dollars) Unaudited

EQUIPMENT

FINANCIAL

OPERATIONS

SERVICES

ELIMINATIONS

CONSOLIDATED

 

2024

 

2023

 

2024

 

2023

 

2024

 

2023

 

2024

 

2023

  

Net Sales and Revenues

Net sales

$

35,484

$

41,765

$

35,484

$

41,765

Finance and interest income

 

441

 

444

$

4,466

$

3,609

$

(700)

$

(727)

4,207

3,326

1

Other income

 

732

 

639

 

341

 

378

 

(192)

 

(269)

 

881

 

748

2, 3

Total

 

36,657

 

42,848

 

4,807

 

3,987

 

(892)

 

(996)

 

40,572

 

45,839

Costs and Expenses

Cost of sales

 

24,226

 

28,306

(21)

(18)

24,205

28,288

4

Research and development expenses

 

1,664

 

1,571

1,664

1,571

Selling, administrative and general expenses

 

2,844

 

2,630

 

771

 

769

 

(7)

 

(7)

 

3,608

 

3,392

4

Interest expense

 

314

 

298

 

2,354

 

1,604

 

(190)

 

(231)

 

2,478

 

1,671

1

Interest compensation to Financial Services

 

510

 

496

(510)

(496)

1

Other operating expenses

 

76

 

172

 

1,018

 

1,043

 

(164)

 

(244)

 

930

 

971

3, 5

Total

 

29,634

 

33,473

 

4,143

 

3,416

 

(892)

 

(996)

 

32,885

 

35,893

Income before Income Taxes

 

7,023

 

9,375

 

664

 

571

 

 

 

7,687

 

9,946

Provision for income taxes

 

1,700

 

2,020

 

145

 

144

 

 

 

1,845

 

2,164

Income after Income Taxes

 

5,323

 

7,355

 

519

 

427

 

 

 

5,842

 

7,782

Equity in income of unconsolidated affiliates

 

 

3

4

2

4

5

Net Income

 

5,323

 

7,358

 

523

 

429

 

 

 

5,846

 

7,787

Less: Net loss attributable to noncontrolling interests

 

(9)

 

(10)

(9)

(10)

Net Income Attributable to Deere & Company

$

5,332

$

7,368

$

523

$

429

$

5,855

$

7,797

1 Elimination of intercompany interest income and expense.

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

3 Elimination of income and expense 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.

17


DEERE & COMPANY

SUPPLEMENTAL CONSOLIDATING DATA (Continued)

CONDENSED BALANCE SHEETS

(In millions of dollars) Unaudited

EQUIPMENT

FINANCIAL

OPERATIONS

SERVICES

ELIMINATIONS

CONSOLIDATED

 

Jul 28

Oct 29

Jul 30

 

Jul 28

Oct 29

Jul 30

 

Jul 28

Oct 29

Jul 30

 

Jul 28

Oct 29

Jul 30

2024

 

2023

 

2023

2024

 

2023

 

2023

2024

 

2023

 

2023

2024

 

2023

 

2023

 

Assets

Cash and cash equivalents

$

5,385

$

5,720

$

4,858

$

1,619

$

1,738

$

1,718

$

7,004

$

7,458

$

6,576

Marketable securities

155

 

104

 

3

 

985

 

842

 

838

 

 

 

1,140

 

946

 

841

Receivables from Financial Services

 

3,951

 

4,516

 

5,312

$

(3,951)

$

(4,516)

$

(5,312)

6

Trade accounts and notes receivable – net

 

1,150

 

1,320

 

1,589

 

8,890

 

8,687

 

9,991

 

(2,571)

 

(2,268)

 

(2,283)

 

7,469

 

7,739

 

9,297

7

Financing receivables – net

 

82

 

64

 

60

 

43,814

 

43,609

 

41,242

 

 

 

 

43,896

 

43,673

 

41,302

Financing receivables securitized – net

2

 

8,272

 

7,335

 

7,001

 

 

 

 

8,274

 

7,335

 

7,001

Other receivables

 

1,821

 

1,813

 

2,599

 

494

 

869

 

599

 

(45)

 

(59)

 

(80)

 

2,270

 

2,623

 

3,118

7

Equipment on operating leases – net

 

7,118

 

6,917

 

6,709

 

 

 

 

7,118

 

6,917

 

6,709

Inventories

 

7,696

 

8,160

 

9,350

7,696

8,160

9,350

Property and equipment – net

 

7,058

 

6,843

 

6,385

 

34

 

36

 

33

 

 

 

 

7,092

 

6,879

 

6,418

Goodwill

 

3,960

 

3,900

 

3,994

3,960

3,900

3,994

Other intangible assets – net

 

1,030

 

1,133

 

1,199

 

 

 

 

1,030

 

1,133

 

1,199

Retirement benefits

 

3,047

 

2,936

 

3,503

 

80

 

72

 

71

 

(1)

 

(1)

 

(1)

 

3,126

 

3,007

 

3,573

8

Deferred income taxes

 

2,192

 

2,133

 

1,393

 

35

 

68

 

65

 

(329)

 

(387)

 

(98)

 

1,898

 

1,814

 

1,360

9

Other assets

 

2,236

 

1,948

 

2,083

 

675

 

559

 

583

 

(8)

 

(4)

 

(7)

 

2,903

 

2,503

 

2,659

Assets held for sale

 

2,965

2,965

Total Assets

$

39,765

$

40,590

$

42,328

$

74,981

$

70,732

$

68,850

$

(6,905)

$

(7,235)

$

(7,781)

$

107,841

$

104,087

$

103,397

Liabilities and Stockholders’ Equity

Liabilities

Short-term borrowings

$

983

$

1,230

$

1,773

$

14,311

$

16,709

$

15,370

$

15,294

$

17,939

$

17,143

Short-term securitization borrowings

1

 

7,868

 

6,995

 

6,608

 

 

 

 

7,869

 

6,995

 

6,608

Payables to Equipment Operations

 

 

 

 

3,951

 

4,516

 

5,312

$

(3,951)

$

(4,516)

$

(5,312)

 

 

 

6

Accounts payable and accrued expenses

 

13,880

 

14,862

 

14,403

 

3,141

 

3,599

 

3,307

 

(2,624)

 

(2,331)

 

(2,370)

 

14,397

 

16,130

 

15,340

7

Deferred income taxes

 

420

 

452

 

420

 

390

 

455

 

184

 

(329)

 

(387)

 

(98)

 

481

 

520

 

506

9

Long-term borrowings

 

6,592

 

7,210

 

7,299

 

36,100

 

31,267

 

30,813

 

 

 

 

42,692

 

38,477

 

38,112

Retirement benefits and other liabilities

 

2,048

 

2,032

 

2,423

 

109

 

109

 

114

 

(1)

 

(1)

 

(1)

 

2,156

 

2,140

 

2,536

8

Liabilities held for sale

 

1,803

1,803

 

 

Total liabilities

 

23,924

 

25,786

 

26,318

 

67,673

 

63,650

 

61,708

 

(6,905)

 

(7,235)

 

(7,781)

 

84,692

 

82,201

 

80,245

Redeemable noncontrolling interest

84

97

101

84

97

101

Stockholders’ Equity

Total Deere & Company stockholders’ equity

 

23,062

 

21,785

 

23,048

 

7,308

 

7,082

 

7,142

 

(7,308)

 

(7,082)

 

(7,142)

 

23,062

 

21,785

 

23,048

10

Noncontrolling interests

 

3

 

4

 

3

3

4

3

Financial Services equity

(7,308)

(7,082)

(7,142)

7,308

7,082

7,142

10

Adjusted total stockholders' equity

 

15,757

 

14,707

 

15,909

 

7,308

 

7,082

 

7,142

 

 

 

 

23,065

 

21,789

 

23,051

Total Liabilities and Stockholders’ Equity

$

39,765

$

40,590

$

42,328

$

74,981

$

70,732

$

68,850

$

(6,905)

$

(7,235)

$

(7,781)

$

107,841

$

104,087

$

103,397

6 Elimination of receivables / payables between Equipment Operations and Financial Services.

7 Primarily reclassification of sales incentive accruals on receivables sold to Financial Services.

8 Reclassification of net pension assets / liabilities.

9 Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions.

10 Elimination of Financial Services’ equity.

18


DEERE & COMPANY

SUPPLEMENTAL CONSOLIDATING DATA (Continued)

STATEMENTS OF CASH FLOWS

For the Nine Months Ended July 28, 2024 and July 30, 2023

(In millions of dollars) Unaudited

EQUIPMENT

FINANCIAL

OPERATIONS

SERVICES

ELIMINATIONS

CONSOLIDATED

 

2024

  

2023

  

2024

 

2023

 

2024

  

2023

  

2024

  

2023

Cash Flows from Operating Activities

Net income

$

5,323

$

7,358

$

523

$

429

$

5,846

$

7,787

Adjustments to reconcile net income to net cash provided by operating activities:

Provision (credit) for credit losses

 

10

 

3

 

212

 

(67)

 

 

 

222

 

(64)

Provision for depreciation and amortization

 

932

 

872

 

773

 

757

$

(107)

$

(102)

 

1,598

 

1,527

11

Impairments and other adjustments

 

53

173

53

173

Share-based compensation expense

159

112

159

112

12

Distributed earnings of Financial Services

 

250

 

31

 

 

 

(250)

 

(31)

 

 

13

Credit for deferred income taxes

 

(49)

 

(322)

 

(76)

 

(107)

 

 

 

(125)

 

(429)

Changes in assets and liabilities:

Receivables related to sales

 

106

 

(293)

(2,552)

(4,766)

(2,446)

(5,059)

14, 16

Inventories

 

391

 

(534)

(157)

(129)

234

(663)

15

Accounts payable and accrued expenses

 

(924)

 

730

 

212

 

303

 

(303)

 

(986)

 

(1,015)

 

47

16

Accrued income taxes payable/receivable

 

13

 

(619)

 

18

 

24

 

 

 

31

 

(595)

Retirement benefits

 

(241)

 

(115)

 

(5)

 

(1)

 

 

 

(246)

 

(116)

Other

 

(109)

 

247

 

44

 

(15)

 

(107)

 

(56)

 

(172)

 

176

11, 12, 15

Net cash provided by operating activities

 

5,702

 

7,358

 

1,754

 

1,496

 

(3,317)

 

(5,958)

 

4,139

 

2,896

Cash Flows from Investing Activities

Collections of receivables (excluding receivables related to sales)

 

19,826

 

18,440

 

(683)

 

(848)

 

19,143

 

17,592

14

Proceeds from maturities and sales of marketable securities

 

56

 

68

 

277

 

59

 

 

 

333

 

127

Proceeds from sales of equipment on operating leases

 

1,451

 

1,445

 

 

 

1,451

 

1,445

Cost of receivables acquired (excluding receivables related to sales)

 

(21,395)

 

(21,043)

 

282

 

329

 

(21,113)

 

(20,714)

14

Purchases of marketable securities

(220)

 

(19)

 

(352)

 

(194)

 

 

 

(572)

 

(213)

Purchases of property and equipment

 

(1,041)

 

(885)

 

(2)

 

(2)

 

 

 

(1,043)

 

(887)

Cost of equipment on operating leases acquired

 

(2,377)

 

(2,143)

 

212

 

175

 

(2,165)

 

(1,968)

15

Decrease (increase) in investment in Financial Services

11

(811)

 

 

 

(11)

 

811

 

 

17

Increase in trade and wholesale receivables

 

(3,255)

 

(6,270)

 

3,255

 

6,270

 

 

14

Collateral on derivatives – net

390

240

390

240

Other

 

(88)

 

(210)

 

(8)

 

24

 

1

 

1

 

(95)

 

(185)

Net cash used for investing activities

 

(1,282)

 

(1,857)

 

(5,445)

 

(9,444)

 

3,056

 

6,738

 

(3,671)

 

(4,563)

Cash Flows from Financing Activities

Net proceeds (payments) in short-term borrowings (original maturities three months or less)

 

81

 

(152)

 

(1,073)

 

5,192

 

 

 

(992)

 

5,040

Change in intercompany receivables/payables

 

558

 

1,476

 

(558)

 

(1,476)

 

 

 

 

Proceeds from borrowings issued (original maturities greater than three months)

 

115

 

60

 

15,397

 

9,912

 

 

 

15,512

 

9,972

Payments of borrowings (original maturities greater than three months)

 

(1,061)

 

(116)

 

(9,731)

 

(5,746)

 

 

 

(10,792)

 

(5,862)

Repurchases of common stock

 

(3,227)

 

(4,663)

(3,227)

(4,663)

Capital Investment from Equipment Operations

 

 

(11)

811

11

(811)

17

Dividends paid

 

(1,202)

 

(1,065)

 

(250)

 

(31)

 

250

 

31

 

(1,202)

 

(1,065)

13

Other

 

(37)

 

4

 

(51)

 

(47)

 

 

 

(88)

 

(43)

Net cash provided by (used for) financing activities

 

(4,773)

 

(4,456)

 

3,723

 

8,615

 

261

 

(780)

 

(789)

 

3,379

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

 

12

 

108

 

(18)

 

17

 

 

 

(6)

 

125

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash

 

(341)

 

1,153

 

14

 

684

 

 

 

(327)

 

1,837

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period

 

5,755

 

3,781

 

1,865

 

1,160

 

 

 

7,620

 

4,941

Cash, Cash Equivalents, and Restricted Cash at End of Period

$

5,414

$

4,934

$

1,879

$

1,844

$

7,293

$

6,778

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.

19