UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file no: 1-4121
DEERE & COMPANY
(Exact name of registrant as specified in its charter)
Delaware(State of incorporation)
36-2382580(IRS employer identification no.)
One John Deere Place
Moline, Illinois 61265
(Address of principal executive offices)
Telephone Number: (309) 765-8000
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol
Name of each exchange on which registered
Common stock, $1 par value
DE
New York Stock Exchange
6.55% Debentures Due 2028
DE28
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.
Yes ☒ No ☐
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.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
Smaller reporting company
Emerging growth company
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 ☐ No ☒
At April 30, 2023, 293,192,141 shares of common stock, $1 par value, of the registrant were outstanding.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STATEMENTS OF CONSOLIDATED INCOME
For the Three and Six Months Ended April 30, 2023 and May 1, 2022
(In millions of dollars and shares except per share amounts) Unaudited
Three Months Ended
Six Months Ended
2023
2022
Net Sales and Revenues
Net sales
$
16,079
12,034
27,481
20,565
Finance and interest income
1,079
796
2,073
1,595
Other income
229
540
484
779
Total
17,387
13,370
30,038
22,939
Costs and Expenses
Cost of sales
10,730
8,918
18,663
15,613
Research and development expenses
547
453
1,043
855
Selling, administrative and general expenses
1,330
932
2,283
1,713
Interest expense
569
187
1,049
417
Other operating expenses
363
328
660
638
13,539
10,818
23,698
19,236
Income of Consolidated Group before Income Taxes
3,848
2,552
6,340
3,703
Provision for income taxes
991
461
1,528
710
Income of Consolidated Group
2,857
2,091
4,812
2,993
Equity in income of unconsolidated affiliates
2
6
3
8
Net Income
2,859
2,097
4,815
3,001
Less: Net loss attributable to noncontrolling interests
(1)
(4)
Net Income Attributable to Deere & Company
2,860
2,098
4,819
Per Share Data
Basic
9.69
6.85
16.26
9.78
Diluted
9.65
6.81
16.18
9.72
Dividends declared
1.25
1.05
2.45
2.10
Dividends paid
1.20
2.33
Average Shares Outstanding
295.1
306.2
296.3
306.8
296.5
308.1
297.8
308.8
See Condensed Notes to Interim Consolidated Financial Statements.
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
(In millions of dollars) Unaudited
Other Comprehensive Income (Loss), Net of Income Taxes
Retirement benefits adjustment
(247)
129
(258)
(216)
Cumulative translation adjustment
100
(248)
781
(515)
Unrealized gain (loss) on derivatives
(18)
28
(31)
42
Unrealized gain (loss) on debt securities
(48)
26
(63)
(166)
(139)
518
(752)
Comprehensive Income of Consolidated Group
2,693
1,958
5,333
2,249
Less: Comprehensive income (loss) attributable to noncontrolling interests
1
(5)
Comprehensive Income Attributable to Deere & Company
2,692
1,963
5,327
2,253
CONDENSED CONSOLIDATED BALANCE SHEETS
April 30
October 30
May 1
Assets
Cash and cash equivalents
5,267
4,774
3,878
Marketable securities
856
734
682
Trade accounts and notes receivable – net
9,971
6,410
6,258
Financing receivables – net
38,954
36,634
34,085
Financing receivables securitized – net
5,659
5,936
4,073
Other receivables
2,593
2,492
2,306
Equipment on operating leases – net
6,524
6,623
6,465
Inventories
9,713
8,495
9,030
Property and equipment – net
6,288
6,056
5,715
Goodwill
3,963
3,687
3,812
Other intangible assets – net
1,222
1,218
1,352
Retirement benefits
3,519
3,730
3,059
Deferred income taxes
1,308
824
1,104
Other assets
2,510
2,417
2,280
Total Assets
98,347
90,030
84,099
Liabilities and Stockholders’ Equity
Liabilities
Short-term borrowings
17,109
12,592
12,413
Short-term securitization borrowings
5,379
5,711
4,006
Accounts payable and accrued expenses
14,716
14,822
12,679
511
495
584
Long-term borrowings
35,611
33,596
32,447
Retirement benefits and other liabilities
2,520
2,457
2,964
Total liabilities
75,846
69,673
65,093
Commitments and contingencies (Note 16)
Redeemable noncontrolling interest
102
92
99
Stockholders’ Equity
Common stock, $1 par value (issued shares at April 30, 2023 – 536,431,204)
5,227
5,165
5,117
Common stock in treasury
(26,630)
(24,094)
(21,727)
Retained earnings
46,336
42,247
38,805
Accumulated other comprehensive income (loss)
(2,538)
(3,056)
(3,291)
Total Deere & Company stockholders’ equity
22,395
20,262
18,904
Noncontrolling interests
4
Total stockholders’ equity
22,399
20,265
18,907
Total Liabilities and Stockholders’ Equity
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Six Months Ended April 30, 2023 and May 1, 2022
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash used for operating activities:
Provision (credit) for credit losses
(89)
45
Provision for depreciation and amortization
995
933
Impairments and other adjustments
173
77
Share-based compensation expense
54
44
Gain on remeasurement of previously held equity investment
(326)
Provision (credit) for deferred income taxes
(377)
37
Changes in assets and liabilities:
Receivables related to sales
(4,407)
(1,535)
(982)
(2,265)
(313)
(443)
Accrued income taxes payable/receivable
(96)
(68)
(1,020)
Other
148
(171)
Net cash used for operating activities
(147)
(1,762)
Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)
12,593
11,190
Proceeds from sales of equipment on operating leases
993
1,035
Proceeds from sales of businesses and unconsolidated affiliates, net of cash sold
36
Cost of receivables acquired (excluding receivables related to sales)
(13,451)
(11,971)
Acquisitions of businesses, net of cash acquired
(41)
(473)
Purchases of property and equipment
(584)
(346)
Cost of equipment on operating leases acquired
(1,229)
(1,004)
Collateral on derivatives - net
367
(178)
(71)
Net cash used for investing activities
(1,494)
(1,888)
Cash Flows from Financing Activities
Increase in total short-term borrowings
3,992
812
Proceeds from long-term borrowings
4,868
4,298
Payments of long-term borrowings
(3,567)
(3,625)
Proceeds from issuance of common stock
30
50
Repurchases of common stock
(2,546)
(1,226)
(697)
(649)
(46)
Net cash provided by (used for) financing activities
2,017
(386)
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash
70
(110)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash
446
(4,146)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period
4,941
8,125
Cash, Cash Equivalents, and Restricted Cash at End of Period
5,387
3,979
Components of Cash, Cash Equivalents, and Restricted Cash
Restricted cash (Other assets)
120
101
Total Cash, Cash Equivalents, and Restricted Cash
5
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY
Total Stockholders’ Equity
Deere & Company Stockholders
Accumulated
Redeemable
Stockholders’
Common
Treasury
Retained
Comprehensive
Noncontrolling
Equity
Stock
Earnings
Income (Loss)
Interests
Interest
Three Months Ended May 1, 2022
Balance January 30, 2022
17,808
5,066
(21,139)
37,029
(3,152)
Acquisitions
105
Net income (loss)
Other comprehensive loss
(603)
Treasury shares reissued
15
(323)
(322)
Share based awards and other
51
Balance May 1, 2022
Six Months Ended May 1, 2022
Balance October 31, 2021
18,434
5,054
(20,533)
36,449
(2,539)
3,002
32
(646)
(645)
63
Three Months Ended April 30, 2023
Balance January 29, 2023
21,336
5,191
(25,333)
43,846
(2,372)
2,861
(2)
Other comprehensive income (loss)
(1,301)
(370)
(369)
35
Balance April 30, 2023
Six Months Ended April 30, 2023
Balance October 30, 2022
4,820
Other comprehensive income
10
(2,558)
22
(726)
(725)
58
62
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, Deere, or the Company include its consolidated subsidiaries and consolidated variable interest entities (VIEs). The Company is managed 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 “equipment operations” include production and precision agriculture, small agriculture and turf, and construction and forestry, while references to “agriculture and turf” include both production and precision agriculture and small agriculture and turf.
The Company uses a 52/53 week fiscal year with quarters ending on the last Sunday in the reporting period. The second quarter ends for fiscal year 2023 and 2022 were April 30, 2023 and May 1, 2022, respectively. Both second quarters contained 13 weeks, while both year-to-date periods contained 26 weeks. Unless otherwise stated, references to particular years, quarters, or months refer to the Company’s fiscal years generally ending in October and the associated periods in those fiscal years.
(2) Summary of Significant Accounting Policies and New Accounting Standards
Quarterly Financial Statements
The interim consolidated financial statements of Deere & Company have been prepared by the Company, 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 the Company’s 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
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates.
New Accounting Standards
The Company closely monitors all Accounting Standard Updates (ASUs) issued by the Financial Accounting Standards Board and other authoritative guidance. ASUs adopted in 2023 did not have a material impact on the Company’s financial statements. ASUs to be adopted in future periods are being evaluated and at this point are not expected to have a material impact on the Company’s financial statements.
7
(3) Revenue Recognition
The Company’s net sales and revenues by primary geographic market, major product line, and timing of revenue recognition in millions of dollars follow:
Production & Precision Ag
Small Ag & Turf
Construction & Forestry
Financial Services
Primary geographic markets:
United States
4,058
2,241
2,561
766
9,626
Canada
546
189
302
153
1,190
Western Europe
758
888
492
31
2,169
Central Europe and CIS
393
212
90
703
Latin America
1,543
201
388
106
2,238
Asia, Africa, Oceania, and Middle East
614
469
335
43
1,461
7,912
4,200
4,168
1,107
Major product lines:
Production agriculture
7,733
Small agriculture
2,952
Turf
1,099
Construction
1,813
Compact construction
663
Roadbuilding
1,134
Forestry
429
Financial products
29
20
12
1,168
150
117
396
Revenue recognized:
At a point in time
7,861
4,171
4,146
27
16,205
Over time
1,080
1,182
6,686
3,906
4,461
1,479
16,532
906
577
303
2,121
1,259
1,452
857
60
3,628
595
165
1,115
2,780
357
727
4,065
989
869
635
84
2,577
13,215
7,254
7,422
2,147
12,845
5,146
1,818
3,295
1,136
1,952
785
38
25
2,270
310
252
791
13,109
7,200
7,375
27,734
47
2,304
2,434
2,103
2,108
7,214
309
161
355
149
974
536
658
464
1,683
404
151
146
11
712
1,126
134
333
73
1,666
399
318
1,121
5,176
3,606
3,724
864
5,032
2,668
817
1,516
427
1,017
325
9
889
112
433
679
5,144
3,593
3,707
12,470
13
17
838
900
4,042
3,541
3,368
1,142
12,093
448
283
687
301
1,719
1,003
822
3,066
606
277
341
1,246
1,902
238
561
141
2,842
608
751
537
1,973
8,609
6,280
6,316
1,734
8,315
4,600
1,444
2,691
748
1,709
630
1,787
272
216
527
1,015
8,540
6,247
6,277
21,114
69
33
39
1,684
1,825
The Company invoices 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 and telematic services. These advanced customer payments are presented as deferred revenue, a contract liability, in “Accounts payable and accrued expenses” in the consolidated balance sheets. The deferred revenue received, but not recognized in revenue, including extended warranty premiums also shown in Note 16, was $1,622 million, $1,423 million, and $1,423 million at April 30, 2023, October 30, 2022, and May 1, 2022, respectively. The contract liability is reduced as the revenue is recognized. During the three months ended April 30, 2023 and May 1, 2022, $129 million and $130 million, respectively, of revenue was recognized from deferred revenue that was recorded as a contract liability at the beginning of the respective fiscal year. During the six months ended April 30, 2023 and May 1, 2022, $343 million and $395 million, respectively, of revenue was recognized from deferred revenue that was recorded as a contract liability at the beginning of the respective fiscal year.
The amount of unsatisfied performance obligations for contracts with an original duration greater than one year was $1,378 million at April 30, 2023. The estimated revenue to be recognized by fiscal year follows in millions of dollars: remainder of 2023 - $238, 2024 - $376, 2025 - $294, 2026 - $191, 2027 - $111, 2028 - $68 and later years - $100. As permitted, the Company elected only to disclose remaining performance obligations with an original contract duration greater than one year. The contracts with an expected duration of one year or less are for sales of equipment, service parts, repair services, and certain telematics services.
(4) Other Comprehensive Income Items
The after-tax components of accumulated other comprehensive income (loss) in millions of dollars follow:
(647)
(389)
(1,250)
(1,813)
(2,594)
(1,993)
(10)
21
(94)
Total accumulated other comprehensive income (loss)
Following are amounts recorded in and reclassifications out of other comprehensive income (loss), and the income tax effects, in millions of dollars. Retirement benefits adjustment reclassifications for actuarial (gain) loss, prior service (credit) cost, and settlements are included in net periodic pension and other postretirement benefit costs (see Note 6).
Before
Tax
After
(Expense)
Amount
Credit
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)
(3)
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest expense
(19)
(15)
Net unrealized gain (loss) on derivatives
(23)
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)
Net unrealized gain (loss) on debt securities
Retirement benefits adjustment:
Net actuarial gain (loss)
(349)
83
(266)
Reclassification of amortized amounts:
Actuarial (gain) loss – Other operating expenses
(20)
Prior service (credit) cost – Other operating expenses
Settlements – Other operating expenses
Net unrealized gain (loss) on retirement benefits adjustment
76
Total other comprehensive income (loss)
82
771
(34)
(27)
(39)
(7)
(350)
(267)
19
14
(336)
78
89
(243)
(8)
(61)
128
(30)
98
170
(98)
(507)
40
53
(11)
(80)
Net actuarial gain (loss) and prior service credit (cost)
(372)
(282)
67
(17)
(283)
(817)
65
(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):
Net income attributable to Deere & Company
Average shares outstanding
Basic per share
Effect of dilutive share-based compensation
1.4
1.9
1.5
2.0
Total potential shares outstanding
Diluted per share
Shares excluded from EPS calculation, as antidilutive
.2
.1
(6) Pension and Other Postretirement Employee Benefits
The Company has several defined benefit pension plans and other postretirement employee benefit (OPEB) plans, primarily health care and life insurance plans, covering its U.S. employees and employees in certain foreign countries. The components of net periodic pension and OPEB (benefit) cost consisted of the following in millions of dollars:
Pension
Service cost
64
94
124
179
Interest cost
80
267
157
Expected return on plan assets
(220)
(180)
(432)
(362)
Amortization of actuarial (gain) loss
(6)
Amortization of prior service cost
16
Settlements
Net cost
18
74
OPEB
23
88
49
(29)
(58)
(55)
Amortization of actuarial gain
(14)
(9)
Amortization of prior service credit
Net (benefit) cost
The reduction in the 2023 pension net cost is due to increases in the expected long-term return rates on plan assets and increases in discount rates. The components of net periodic pension and OPEB (benefit) cost excluding the service cost component are included in the line item “Other operating expenses” in the statements of consolidated income.
During the second quarter of 2023, an international pension plan paid a premium to an insurance company to irrevocably transfer the benefit obligations and administration for the majority of its retired participants. The transaction did not impact the benefits to be received by the retired participants. In connection with the transaction, the Company recognized a one-time, non-cash, pre-tax pension settlement charge of $36 million in the second quarter of 2023 related to the accelerated recognition of actuarial losses included within “Accumulated other comprehensive income (loss)” in the statements of changes in consolidated stockholders’ equity.
(7) Segment Reporting
Worldwide net sales and revenues, operating profit, and identifiable assets by segment were as follows in millions of dollars:
%
Change
Net sales and revenues:
Production & precision ag net sales
7,822
+53
13,021
8,473
+54
Small ag & turf net sales
4,145
3,570
+16
7,146
6,201
+15
Construction & forestry net sales
4,112
3,347
+23
7,314
5,891
+24
Financial services revenues
+28
Other revenues
472
-57
410
640
-36
Total net sales and revenues
+30
+31
Operating profit:
Production & precision ag
2,170
1,057
+105
3,378
1,353
+150
Small ag & turf
849
520
+63
1,296
891
+45
Construction & forestry
814
+3
1,463
1,085
+35
Financial services
41
279
-85
-52
Total operating profit
3,898
2,670
+46
6,416
+64
Reconciling items
(47)
(111)
-58
(69)
(195)
-65
Income taxes
(991)
(461)
+115
(1,528)
(710)
+36
+61
Intersegment sales and revenues:
+33
+20
+17
190
87
+118
395
133
+197
Operating profit for production and precision ag, small ag and turf, and construction and forestry is income from continuing operations before reconciling items and income taxes. Operating profit of the financial services segment includes the effect of interest expense and foreign exchange gains and losses. Reconciling items to net income are primarily corporate expenses, certain external interest expenses, certain foreign exchange gains and losses, pension and OPEB benefit amounts excluding the service cost component, equity in income of unconsolidated affiliates, and net income attributable to noncontrolling interests.
Identifiable assets:
9,504
8,414
8,680
4,743
4,451
4,431
7,299
6,754
6,984
65,233
58,864
53,110
Corporate
11,568
11,547
10,894
Total assets
(8) Financing Receivables
The Company monitors the credit quality of financing receivables based on delinquency status. Past due balances of financing receivables still accruing finance income represent the total balance held (principal plus accrued interest) with any payment amounts 30 days or more past the contractual payment due date. Non-performing financing receivables represent receivables for which the Company has ceased accruing finance income. The Company ceases accruing finance income when these receivables are generally 90 days delinquent. Generally, when receivables are 120 days delinquent the estimated uncollectible amount from the customer is written off to the allowance for credit losses. Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is generally resumed when the receivable becomes contractually current and collections are reasonably assured.
The credit quality analysis of retail notes, financing leases, and revolving charge accounts (collectively, retail customer receivables) by year of origination was as follows in millions of dollars:
April 30, 2023
2021
2020
2019
Prior
Years
Revolving Charge Accounts
Retail customer receivables:
Agriculture and turf
Current
6,718
10,947
6,435
3,155
1,305
619
3,621
32,800
30-59 days past due
55
194
60-89 days past due
24
90+ days past due
Non-performing
222
Construction and forestry
1,442
1,490
557
169
56
6,254
131
71
61
8,190
13,624
8,163
3,869
1,570
743
3,783
39,942
October 30, 2022
2018
PriorYears
13,500
7,984
4,091
1,875
200
4,111
32,546
46
191
66
204
1,974
842
292
108
6,265
52
143
34
16,650
10,239
5,091
2,252
895
240
4,255
39,622
May 1, 2022
5,540
10,141
5,318
2,684
1,286
723
3,381
29,073
75
177
198
1,506
2,404
1,211
234
91
6,128
7,103
12,813
6,723
3,384
1,579
879
3,507
35,988
The credit quality analysis of wholesale receivables by year of origination was as follows in millions of dollars:
Revolving
Wholesale receivables:
265
3,653
4,170
30+ days past due
680
275
4,291
4,851
387
2,371
2,855
377
394
93
2,748
3,273
224
155
1,605
2,038
268
316
230
1,873
2,360
An analysis of the allowance for credit losses and investment in financing receivables in millions of dollars during the periods follows:
Retail Notes
& Financing
Charge
Wholesale
Leases
Accounts
Receivables
Allowance:
Beginning of period balance
140
160
Provision
Write-offs
Recoveries
End of period balance
180
299
Provision transferred to held for sale
(142)
Provision (credit) subtotal
(97)
(93)
(37)
Translation adjustments
Financing receivables:
36,159
44,793
138
158
(26)
168
166
Provision (credit)
(35)
(12)
32,481
38,348
In the first quarter of 2023, the Company determined that the financial services business in Russia met the held for sale criteria. The financing receivables in Russia were reclassified to “Other assets” and the associated allowance for credit losses was reversed in the first quarter of 2023. These operations were sold in the second quarter of 2023 (see Note 20).
Excluding the portfolio in Russia, the allowance for credit losses increased in the second quarter and the first six months of 2023 mainly due to higher portfolio balances and higher expected losses on turf and construction financing receivables. As part of the allowance setting process, the Company continues to monitor the economy, including potential impacts of inflation and interest rates, among other factors, on portfolio performance and adjustments to the allowance are incorporated, as necessary.
(9) Securitization of Financing Receivables
As a part of its overall funding strategy, the Company periodically transfers certain financing receivables (retail notes) into VIEs that are special purpose entities (SPEs), or non-VIE banking operations, as part of its asset-backed securities programs (securitizations). The structure of these transactions is such that the transfer of the retail notes does not meet the accounting criteria for sales of receivables, and is, therefore, accounted for as a secured borrowing. SPEs utilized in securitizations of retail notes differ from other entities included in the Company’s consolidated statements because the assets they hold are legally isolated. Use of the assets held by the SPEs or the non-VIEs is restricted by terms of the documents governing the securitization transactions.
The components of consolidated restricted assets, secured borrowings, and other liabilities related to secured borrowings in securitization transactions were as follows in millions of dollars:
Financing receivables securitized (retail notes)
5,674
5,952
4,085
Allowance for credit losses
(16)
Other assets (primarily restricted cash)
115
Total restricted securitized assets
5,774
6,091
4,197
Accrued interest on borrowings
Total liabilities related to restricted securitized assets
5,717
4,008
(10) Inventories
A majority of inventory owned by Deere & Company and its U.S. equipment subsidiaries are valued at cost on the “last-in, first-out” (LIFO) basis. If all of the Company’s inventories had been valued on a “first-in, first-out” (FIFO) basis, estimated inventories by major classification in millions of dollars would have been as follows:
Raw materials and supplies
4,647
4,442
4,384
Work-in-process
1,262
1,640
Finished goods and parts
5,363
5,434
Total FIFO value
12,344
10,995
11,458
Less adjustment to LIFO value
2,631
2,500
2,428
(11) Goodwill and Other Intangible Assets–Net
The changes in amounts of goodwill by operating segments were as follows in millions of dollars:
Production &
Small Ag
Precision Ag
& Turf
& Forestry
Goodwill at October 31, 2021
542
2,484
3,291
122
600
(252)
(270)
Goodwill at May 1, 2022
653
327
2,832
Goodwill at October 30, 2022
646
2,723
Acquisition
209
235
Goodwill at April 30, 2023
705
326
2,932
There were no accumulated goodwill impairment losses in the reported periods.
The components of other intangible assets were as follows in millions of dollars:
Amortized intangible assets:
Customer lists and relationships
525
493
Technology, patents, trademarks, and other
1,397
1,301
1,350
Total at cost
1,922
1,794
1,870
Less accumulated amortization:
193
507
360
Total accumulated amortization
700
576
The amortization of other intangible assets in the second quarter and the first six months of 2023 was $45 million and $84 million, and for the second quarter and the first six months of 2022 was $34 million and $62 million, respectively. The estimated amortization expense for the next five years is as follows in millions of dollars: remainder of 2023 – $88, 2024 – $168, 2025 – $139, 2026 – $120, 2027 – $119, and 2028 –$86.
(12) Short-Term Borrowings
Short-term borrowings were as follows in millions of dollars:
Commercial paper
9,184
4,703
3,403
Notes payable to banks
284
402
555
Finance lease obligations due within one year
Long-term borrowings due within one year
7,618
7,466
8,434
(13) Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses were as follows in millions of dollars:
Accounts payable:
Trade payables
3,680
3,894
3,631
Payables to unconsolidated affiliates
Dividends payable
371
343
Operating lease liabilities
294
260
Deposits withheld from dealers and merchants
163
214
Accrued expenses:
Dealer sales discounts
605
1,044
400
Product warranties
1,562
1,427
Employee benefits
1,475
1,069
Accrued taxes
1,691
1,255
1,150
Unearned operating lease revenue
441
391
Unearned revenue (contractual liability)
673
Extended warranty premium
949
866
809
Accrued interest
354
288
256
Derivative liabilities
1,231
780
1,566
1,300
1,388
Total 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 $1,979 million at April 30, 2023, $1,280 million at October 30, 2022, and $1,173 million at May 1, 2022. Other eliminations were made for accrued taxes and other accrued expenses.
(14) Long-Term Borrowings
Long-term borrowings were as follows in millions of dollars:
Underwritten term debt
U.S. dollar notes and debentures:
2.75% notes due 2025
6.55% debentures due 2028
5.375% notes due 2029
500
3.10% notes due 2030
8.10% debentures due 2030
250
7.125% notes due 2031
300
3.90% notes due 2042
1,250
2.875% notes due 2049
3.75% notes due 2050
850
Euro notes:
.5% notes due 2023 (€500 principal)
1.375% notes due 2024 (€800 principal)
797
840
1.85% notes due 2028 (€600 principal)
662
598
2.20% notes due 2032 (€600 principal)
1.65% notes due 2039 (€650 principal)
717
648
Serial issuances
Medium-term notes: (principal as of: April 30, 2023 - $27,428, October 30, 2022 - $25,629, May 1, 2022 - $23,247)
26,734
24,604
22,740
Other notes and finance lease obligations
1,707
1,223
1,266
Less debt issuance costs and debt discounts
(121)
(122)
(116)
Medium-term notes serially due through 2032 are primarily offered by prospectus and issued at fixed and variable rates. These notes are presented in the table above with fair value adjustments related to interest rate swaps. All outstanding notes and debentures are senior unsecured borrowings and rank equally with each other.
(15) Leases - Lessor
The Company leases equipment manufactured or sold by the Company and a limited amount of non-John Deere equipment to retail customers through sales-type, direct financing, and operating leases. Sales-type and direct financing leases are reported in Financing receivables – net on the consolidated balance sheets, while operating leases are reported in Equipment on operating leases – net.
Lease revenues earned by the Company were as follows in millions of dollars:
Sales-type and direct finance lease revenues
79
Operating lease revenues
321
330
642
665
Variable lease revenues
Total lease revenues
372
732
753
(16) Commitments and Contingencies
The Company determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has been sold and is still under warranty based on dealer inventories and retail sales. The historical claims rate is determined by a review of five-year claims costs and current quality developments.
The premiums for extended warranties are recognized in other income in the statements of consolidated income in proportion to the costs expected to be incurred over the contract period. The unamortized extended warranty premiums (deferred revenue) included in the following table totaled $949 million and $809 million at April 30, 2023 and May 1, 2022, respectively.
A reconciliation of the changes in the warranty liability and unearned premiums was as follows in millions of dollars:
2,345
2,064
2,293
2,086
Payments
(274)
(224)
(537)
(417)
Amortization of premiums received
(64)
(146)
(130)
Accruals for warranties
392
223
647
Premiums received
215
174
Foreign exchange
(22)
2,511
2,095
At April 30, 2023, the Company had $207 million of guarantees issued to banks outside the U.S. and Canada related to third-party receivables for the retail financing of John Deere equipment. The Company may recover a portion of any required payments incurred under these agreements from repossession of the equipment collateralizing the receivables. At April 30, 2023, the accrued losses under these agreements were not material.
At April 30, 2023, the Company had commitments of $524 million for the construction and acquisition of property and equipment. Also, at April 30, 2023, the Company had restricted assets of $189 million, classified as Other assets.
The Company also had other miscellaneous contingent liabilities and guarantees totaling approximately $65 million at April 30, 2023. The accrued liability for these contingencies was not material at April 30, 2023.
The Company is subject to various unresolved legal actions which arise in the normal course of its business, the most prevalent of which relate to product liability (including asbestos-related liability), retail credit, employment, patent, trademark, and antitrust matters. The Company believes the reasonably possible range of losses for these unresolved legal actions would not have a material effect on its consolidated financial statements.
(17) Fair Value Measurements
The fair values of financial instruments that do not approximate the carrying values were as follows in millions of dollars. Long-term borrowings exclude finance lease liabilities.
CarryingValue
FairValue
38,337
35,526
33,540
5,494
5,698
4,016
5,271
5,577
3,944
7,461
7,322
8,398
35,571
34,802
33,566
31,852
32,410
31,975
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 the Company 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. Certain long-term borrowings have been swapped to current variable interest rates. The carrying values of these long-term borrowings included adjustments related to fair value hedges.
Assets and liabilities measured at fair value on a recurring basis in millions of dollars follow, excluding the Company’s cash equivalents, which were carried at cost that approximates fair value and consisted of money market funds and time deposits.
Level 1:
International equity securities
International mutual funds
U.S. equity fund
U.S. fixed income fund
97
U.S. government debt securities
59
Total Level 1 marketable securities
266
135
126
Level 2:
121
130
Municipal debt securities
Corporate debt securities
213
206
International debt securities
Mortgage-backed securities
Total Level 2 marketable securities
590
599
556
Other assets - Derivatives
373
407
Accounts payable and accrued expenses - Derivatives
Level 3:
Accounts payable and accrued expenses - Deferred consideration
236
262
The contractual maturities of debt securities at April 30, 2023 in millions of dollars are shown below. Actual maturities may differ from contractual maturities because some securities may be called or prepaid. Unrealized losses were not recognized in income due to the ability and intent to hold to maturity. Because of the potential for prepayment on mortgage-backed securities, they are not categorized by contractual maturity.
Amortized
Fair
Cost
Value
Due in one year or less
Due after one through five years
123
116
Due after five through 10 years
192
171
Due after 10 years
Debt securities
739
654
Fair value, nonrecurring Level 3 measurements from impairments, excluding financing receivables with specific allowances which were not significant, were as follows in millions of dollars. Inventories and property and equipment – net fair values for October 30, 2022 represent the fair value assessment at May 1, 2022.
Fair Value
Losses
The following is a description of the valuation methodologies the Company uses to measure certain financial instruments on the balance sheet 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 closing prices in the active market in which the investment trades.
Derivatives – The Company’s 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).
Inventories – The impairment was based on net realizable value.
Property and equipment - net – The valuations were based on cost and market approaches. The inputs include replacement cost estimates adjusted for physical deterioration and economic obsolescence.
Other intangible assets - net – The Company considered external valuations based on the Company’s probability weighted cash flow analysis.
(18) Derivative Instruments
The Company’s policy is to execute derivative transactions to manage exposures arising in the normal course of business and not for the purpose of creating speculative positions or trading. The financial services operations manage the relationship of the types and amounts of their funding sources to their receivable and lease portfolio in an effort to diminish risk due to interest rate and foreign currency fluctuations, while responding to favorable financing opportunities. The Company also has foreign currency exposures at some of its foreign and domestic operations related to buying, selling, and financing in currencies other than the functional currencies. In addition, the Company has interest rate and foreign currency exposure at certain equipment operations units for sales incentive programs.
All derivatives are recorded at fair value on the balance sheets. Cash collateral received or paid is not offset against the derivative fair values on the balance sheet. The cash flows from the derivative contracts were recorded in operating activities in the statements of consolidated cash flows. Each derivative is designated as a cash flow hedge, a fair value hedge, or remains undesignated. All designated hedges are formally documented as to the relationship with the hedged item as well as the risk-management strategy. Both at inception and on an ongoing basis the hedging instrument is assessed as to its effectiveness. If and when a derivative is determined not to be highly effective as a hedge, the underlying hedged transaction is no longer likely to occur, the hedge designation is removed, or the derivative is terminated, hedge accounting is discontinued.
Cash Flow Hedges
Certain interest rate contracts (swaps) were designated as hedges of future cash flows from borrowings. The total notional amounts of the receive-variable/pay-fixed interest rate contracts at April 30, 2023, October 30, 2022, and May 1, 2022 were $2,250 million, $1,950 million, and $2,450 million, respectively. Fair value gains or losses on cash flow hedges were recorded in other comprehensive income (OCI) and are subsequently reclassified into interest expense in the same periods during which the hedged transactions impact earnings. These amounts offset the effects of interest rate changes on the related borrowings.
The amount of gain recorded in OCI at April 30, 2023 that is expected to be reclassified to interest expense in the next twelve months if interest rates remain unchanged is approximately $30 million after-tax. No gains or losses were reclassified from OCI to earnings based on the probability that the original forecasted transaction would not occur.
Fair Value Hedges
Certain interest rate contracts (swaps) were designated as fair value hedges of borrowings. The total notional amounts of the receive-fixed/pay-variable interest rate contracts at April 30, 2023, October 30, 2022, and May 1, 2022 were $10,943 million, $10,112 million, and $8,655 million, respectively. The fair value gains or losses on these contracts were generally offset by fair value gains or losses on the hedged items (fixed-rate borrowings) with both items recorded in interest expense.
The amounts recorded in the consolidated balance sheet related to borrowings designated in fair value hedging relationships were as follows in millions of dollars. 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
of Hedged Item
Hedging Amount
Formerly Hedged Item
1,213
10,334
(562)
5,657
(132)
2,515
9,060
(1,006)
5,520
178
2,607
7,827
(613)
5,120
Derivatives Not Designated as Hedging Instruments
The Company has certain interest rate contracts (swaps), foreign currency exchange contracts (futures, forwards, and swaps), and cross-currency interest rate contracts (swaps), which were not formally designated as hedges. These derivatives were held as economic hedges for underlying interest rate or foreign currency exposures for certain borrowings, purchases or sales of inventory, and sales incentive programs. The total notional amounts of these interest rate swaps at April 30, 2023, October 30, 2022, and May 1, 2022 were $11,956 million, $10,568 million, and $9,912 million, the foreign exchange contracts were $9,163 million, $8,185 million, and $7,640 million, and the cross-currency interest rate contracts were $163 million, $260 million, and $264 million, respectively. The fair value gains or losses from derivatives not designated as hedging instruments were recorded in the statements of consolidated income, generally offsetting over time the exposure on the hedged item.
Fair values of derivative instruments in the condensed consolidated balance sheets were as follows in millions of dollars:
Other Assets
Designated as hedging instruments:
Interest rate contracts
104
Not designated as hedging instruments:
Foreign exchange contracts
125
Cross-currency interest rate contracts
Total not designated
263
286
344
Total derivative assets
Accounts Payable and Accrued Expenses
611
1,004
591
107
118
114
147
227
Total derivative liabilities
The classification and gains (losses) including accrued interest expense related to derivative instruments on the statements of consolidated income consisted of the following in millions of dollars:
Fair Value Hedges:
Interest rate contracts - Interest expense
(514)
(656)
Cash Flow Hedges:
Recognized in OCI
Interest rate contracts - OCI (pretax)
Reclassified from OCI
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
(79)
Foreign exchange contracts - Other operating expenses *
127
195
* Includes interest and foreign exchange gains (losses) from cross-currency interest rate contracts.
Counterparty Risk and Collateral
Derivative instruments are subject to significant concentrations of credit risk to the banking sector. The Company manages individual counterparty exposure by setting limits that consider the credit rating of the counterparty, the credit default swap spread of the counterparty, and other financial commitments and exposures between the Company and the counterparty banks. All interest rate derivatives are transacted under International Swaps and Derivatives Association (ISDA) documentation. Some of these agreements include credit support provisions. Each master agreement permits the net settlement of amounts owed in the event of default or termination.
Certain of the Company’s derivative agreements contain credit support provisions that may require the Company 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 April 30, 2023, October 30, 2022, and May 1, 2022, was $716 million, $1,113 million, and $673 million, respectively. In accordance with the limits established in these agreements, the Company posted $308 million, $701 million, and $254 million of cash collateral at April 30, 2023, October 30, 2022, and May 1, 2022, respectively. In addition, the Company paid $8 million of collateral that was outstanding at April 30, 2023, October 30, 2022, and May 1, 2022 to participate in an international futures market to hedge currency exposure, not included in the table below.
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 in millions of dollars follows:
Gross Amounts
Netting
Recognized
Arrangements
Collateral
Net Amount
(168)
(308)
282
(179)
(54)
(701)
351
297
(254)
416
(19) Stock Option and Restricted Stock Unit Awards
In December 2022, the Company granted stock options to employees for the purchase of 161 thousand shares of common stock at an exercise price of $438.44 per share and a binomial lattice model fair value of $136.46 per share at the grant date. At April 30, 2023, options for 1.9 million shares were outstanding with a weighted-average exercise price of $181.91 per share. The Company also granted 117 thousand of service-based restricted stock units and 41 thousand of performance/service-based restricted stock units to employees in the first six months of 2023. The weighted-average fair value of the service-based restricted stock units at the grant date was $433.30 per unit based on the market price of a share of underlying common stock. The fair value of the performance/service-based restricted stock units at the grant date was $424.93 per unit based on the market price of a share of underlying common stock excluding dividends. At April 30, 2023, the Company was authorized to grant awards for an additional 16.6 million shares under the equity incentive plans.
(20) Disposition
On March 7, 2023, the Company sold its financial services business in Russia (registered in Russia as a leasing company) to Insight Investment Group. The total proceeds, net of restricted cash sold, were $36 million. The operations were included in the Company’s financial services operating segment through the date of sale. At the disposal date, the total assets were $31 million, consisting primarily of financing receivables, the total liabilities were $5 million, and the cumulative translation loss was $10 million. The Company did not incur additional gains or losses upon disposition. At January 29, 2023, the assets and liabilities were classified as “Other assets” and “Accounts payable and accrued expenses”, respectively, which included $100 million of restricted cash. In the first quarter of 2023, the Company reversed the allowance for credit losses and recorded a valuation allowance on the assets held for sale in “Selling, administrative and general expenses.”
(21) Special Items
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. Prior period results for Deere & Company were not restated, as the adjustment is considered immaterial to the Company’s financial statements.
Impact of Events in Russia / Ukraine
In the second quarter of 2022, the Company suspended shipments of machines and service parts to Russia. The suspension of shipments to Russia reduced actual and forecasted revenue for the region, which made it probable future cash flows will not cover the carrying value of certain assets. The accounting consequences during the second quarter of 2022 were impairments of most long-lived assets, an increase in reserves of certain financial assets, and an accrual for various contractual uncertainties.
Gain on Previously Held Equity Investment
In the second quarter of 2022, the Company acquired full ownership of three former Deere-Hitachi joint venture factories and began new license and supply agreements with Hitachi Construction Machinery Co., Ltd. The fair value of the previous equity investment resulted in a non-cash gain of $326 million (pretax and after-tax).
UAW Collective Bargaining Agreement
In the first quarter of 2022, employees represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) approved a new collective bargaining agreement. The labor agreement included a lump sum ratification bonus payment of $8,500 per eligible employee, totaling $90 million, and an immediate wage increase of 10 percent plus further wage increases over the term of the contract. The lump sum payment was expensed in the first quarter of 2022.
The following table summarizes the operating profit impact, in millions of dollars, of the special items recorded for the three months and six months ended April 30, 2023 and May 1, 2022:
Three Months
Six Months
PPA
SAT
CF
FS
2023 Expense:
Financing incentive – SA&G expense
2022 Expense (benefit):
Gain on remeasurement of equity investment – Other income
Total Russia/Ukraine events expense
UAW ratification bonus – Cost of sales
Total 2022 expense (benefit)
(279)
(206)
(251)
Period over period change
379
(99)
251
289
(22) Subsequent Events
On May 22, 2023, the Company entered into a retail note securitization using its revolving warehouse facility that resulted in securitization borrowings of $589 million.
On May 31, 2023, the Company’s Board of Directors declared a quarterly dividend of $1.25 per share payable on August 8, 2023, to stockholders of record on June 30, 2023.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview
Organization
The Company generates net sales from the sale of equipment to John Deere dealers and distributors. The Company manufactures and distributes a full line of agricultural equipment; a variety of commercial and consumer equipment; and a broad range of equipment for construction, roadbuilding, and forestry. These operations (collectively known as the “equipment operations”) are managed through the production and precision agriculture, small agriculture and turf, and construction and forestry operating segments. The Company’s financial services segment provides credit services, which finance sales and leases of equipment by John Deere dealers. In addition, the financial services segment provides wholesale financing to dealers of the foregoing equipment, finances retail revolving charge accounts, and offers extended equipment warranties.
Smart Industrial Operating Model and Leap Ambitions
The Company’s Smart Industrial operating model is focused on making significant investments, strengthening the Company’s capabilities in digital, automation, autonomy, and alternative propulsion technologies. These technologies are intended to increase worksite efficiency, improve yields, lower input costs, and ease labor constraints. The Company’s Leap Ambitions are goals designed to boost economic value and sustainability for the Company’s customers. The Company anticipates opportunities in this area, as the Company and its customers have a vested interest in sustainable practices.
Trends and Economic Conditions
Industry Trends for Fiscal Year 2023 – Industry sales of large agricultural machinery in the U.S. and Canada for 2023 are forecasted to increase approximately 10 percent compared to 2022. Industry sales of small agricultural and turf equipment in the U.S. and Canada are expected to be down about 5 percent in 2023. Industry sales of agricultural machinery in Europe are forecasted to be flat to up 5 percent, while South American industry sales of tractors and combines are expected to be flat in 2023. Asia industry sales are forecasted to be down moderately in 2023. On an industry basis, the U.S. and Canada construction equipment and compact construction equipment sales are both expected to be flat to up 5 percent in 2023. Global forestry and global roadbuilding industry sales are each expected to be flat.
Company Trends – Customers’ demand for integration of technology into equipment is a market trend underlying the Company’s Smart Industrial operating model and Leap Ambitions framework. Customers have sought to improve profitability, productivity, and sustainability through technology. The Company’s approach to technology involves hardware and software; guidance, connectivity and digital solutions; automation and machine intelligence; machine autonomy; and alternative propulsion technologies. This technology is incorporated into products within each of the Company’s operating segments.
Customers continue to adopt technology integrated in the John Deere portfolio of “smart” machines, systems, and solutions. The Company expects this trend to persist for the foreseeable future.
Demand for the Company’s equipment remains strong, as order books are full throughout 2023. Agricultural fundamentals are expected to remain solid through 2023, and retail demand will comprise most of 2023 sales. The North American retail customer fleet age of combines and large tractors is historically high, and dealer inventories are low due to the manufacturing and supply chain constraints over the past few years. The Company expects elevated demand to continue for the second half of the year as evidenced by retail customer orders that extend into 2024. Crop prices remain favorable to our customers in part due to a stock-to-use ratio below the 10-year average for key grains. The Company expects sales volume of large agricultural equipment to be greater in 2023 than 2022 in North America and Europe. Sales volume for small agriculture and turf equipment is expected to be lower than 2022 due to lower demand for consumer-oriented products, partially offset by stronger demand for mid-sized equipment. Construction equipment markets are forecasted to be steady. Strong U.S. infrastructure spending, industrial construction, and rental inventory restocking are expected to more than offset moderation in residential home and commercial real estate construction. Importantly, construction equipment dealer inventory remains below historical averages. Roadbuilding demand remains strongest in the U.S., largely offset by softening demand in Europe and parts of Asia. Net income for the Company’s financial services operations is expected to be lower than
fiscal year 2022 due to less-favorable financing spreads, the correction of the accounting treatment for financing incentives offered to John Deere dealers, unfavorable derivative market valuation adjustments, a higher provision for credit losses, higher selling, administrative and general expenses, and lower gains on operating-lease dispositions. These factors are expected to be partially offset by income earned on higher average portfolio balances.
Additional Trends – Supply chain conditions have improved over 2022; however, the Company continues to experience disruptions above historical norms. Supply chain disruptions impacted many aspects of the business starting in 2022, including parts availability, increased production costs, and higher inventory levels. Past due deliveries from suppliers were at elevated levels during 2022. The Company implemented the following mitigation efforts to minimize the impact of supply chain disruptions on its ability to meet customer demand:
•Worked with the supply base to obtain allocations and improve on-time deliveries of parts.
•Multi-sourced some parts and materials.
•Provided resources to suppliers to address constraints.
•Entered into long-term contracts for some critical components.
•Utilized alternative freight carriers to expedite delivery.
The Company has experienced supply chain improvements in the second quarter of 2023. The reduction in supply chain disruptions contributed to higher levels of production in the second quarter of 2023. However, remaining constraints in the supply base will limit higher levels of production in the second half of the year. As a result, the production schedules in 2023 will be more aligned with the customers’ seasonal use of the Company’s products, marking a return to historical seasonal production patterns.
Central bank policy interest rates increased in the first six months of 2023. Most retail receivables are fixed rate, while wholesale financing receivables are variable rate. The Company has both fixed and variable rate borrowings. The Company manages the risk of interest rate fluctuations by balancing the types and amounts of its funding sources to its financing receivable and equipment on operating lease portfolios. Accordingly, the Company enters into interest rate swap agreements to manage its interest rate exposure. Historically, rising interest rates impact the Company’s borrowings sooner than the benefit is realized from the financing receivable and equipment on operating lease portfolios. As a result, the Company’s financial services operations experienced $84 million (after-tax) of less favorable financing spreads in the first six months of 2023 compared to 2022. The Company expects spread compression to persist during 2023.
Recent banking sector events have resulted in increased liquidity considerations. The Company’s deposits are well diversified, and as a result, the Company was not materially exposed to banks that have entered receivership or encountered liquidity issues. These events have not changed the Company’s access to capital markets. The Company continues to monitor counterparty exposure through regular reviews of various risk metrics and adjusting exposure limits as needed.
Supply chain disruptions, rising interest rates, and recent banking sector events are driven by factors outside of the Company’s control, and as a result, the Company cannot reasonably foresee when these conditions will subside.
Other Items of Concern and Uncertainties – Other items of concern include global and regional political conditions, failure to raise the U.S. debt ceiling, economic and trade policies, imposition of new or retaliatory tariffs against certain countries or covering certain products, post-pandemic effects, capital market disruptions, changes in demand and pricing for new and used equipment, significant fluctuations in foreign currency exchange rates, and volatility in the prices of many commodities. These items could impact the Company’s results. The Company is making investments in technology and in strengthening its capabilities in digital, automation, autonomy, and alternative propulsion technologies. As with most technology investments, marketplace adoption, monetization, and regulation of these features holds an elevated level of uncertainty.
2023 Compared with 2022
Deere & Company
(In millions of dollars, except per share amounts)
Net sales and revenues
Diluted earnings per share
Net sales and revenues increased for both the quarter and year-to-date periods due to higher shipment volumes and price realization. See the Business Segment Results for additional details. Net income in each of the periods presented were impacted by special items. See Note 21 for additional details.
An explanation of the cost of sales to net sales ratio and other significant statement of consolidated income changes follows:
(In millions of dollars)
Cost of sales to net sales
66.7%
74.1%
67.9%
75.9%
-38
+21
+22
+43
+11
The cost of sales ratio improved in the second quarter and the first six months of fiscal 2023 due to price realization, partially offset by higher production costs. The six months ended May 1, 2022 were also impacted by inefficiencies due to the delayed ratification of the UAW labor agreement and contract-ratification bonus costs (see Note 21). Other income decreased compared to both prior periods due to a non-cash gain on the remeasurement of the previously held equity investment in the Deere-Hitachi joint venture recorded in 2022. Research and development expenses were higher due to continued focus on developing and incorporating technology solutions. Selling, administrative and general expenses increased mostly due to higher employee pay driven by inflationary conditions, profit-sharing incentives, commissions paid to dealers, as well as the cumulative correction of the accounting treatment for financing incentives offered to John Deere dealers. The provision for income taxes was higher as a result of higher pretax income as well as the prior period exclusion of the Deere-Hitachi joint-venture remeasurement gain from tax-effected income.
Business Segment Results
For the equipment operations, higher production costs were mostly due to elevated cost of purchased components, energy, salaries, and wages.
Production and Precision Agriculture
Operating profit
Operating margin
27.7%
20.7%
25.9%
16.0%
Price realization
Currency translation impact on Net sales
-3
-2
Production and precision agriculture sales increased for the quarter as a result of higher shipment volumes (primarily in the U.S., Brazil, Europe, and Canada) and price realization in most end markets. Operating profit improved primarily due to price realization and improved sales volumes. These items were partially offset by increased selling, administrative and general expenses and research and development expenses, higher production costs, and the unfavorable effects of foreign currency exchange mostly due to a stronger U.S. dollar.
Sales for the first six months increased as a result of higher shipment volumes (primarily in the U.S., Canada, Brazil, and Europe) and price realization. Operating profit for the first six months increased primarily from price realization and higher sales volume. Partially offsetting these factors were higher production costs, higher selling, administrative, and general expenses and research and development expenses, and the unfavorable effects of foreign currency exchange mostly due to a stronger U.S. dollar.
Small Agriculture and Turf
20.5%
14.6%
18.1%
14.4%
+12
Small agriculture and turf sales increased for the quarter due to price realization in most end markets and higher shipment volumes (primarily in Europe, Mexico, and China), partially offset by the negative effects of foreign currency translation. Operating profit improved primarily as a result of price realization and improved sales volumes / mix. These items were partially offset by higher production costs, increased selling, administrative and general expenses and research and development expenses, and the unfavorable effects of foreign currency exchange mostly due to a stronger U.S. dollar.
Sales for the first six months increased mainly as a result of price realization and higher shipment volumes (primarily in Europe and Mexico), partially offset by the unfavorable impact of currency translation. Operating profit for the first six months improved primarily as a result of price realization and improved sales volumes / mix. These items were partially offset by higher production costs, higher selling, administrative, and general expenses and research and development expenses, and the unfavorable effects of foreign currency exchange mostly due to a stronger U.S. dollar.
Construction and Forestry
20.4%
24.3%
20.0%
18.4%
+13
-1
Construction and forestry sales moved higher for the quarter primarily due to price realization and higher shipment volumes. Operating profit improved due to price realization and improved sales volumes / mix, partially offset by higher production costs, higher selling, administrative, and general expenses and research and development expenses. Prior period results benefited from the non-cash gain on the remeasurement of previously held equity investment in the Deere-Hitachi joint venture.
The segment’s six-month sales increased due to higher shipment volumes and price realization partially offset by the unfavorable impact of currency translation. The first six-month’s operating profit moved higher due to price realization and higher sales volumes, partially offset by higher production costs. Prior period results benefitted from the non-cash gain on the remeasurement of the previously held equity investment in the Deere-Hitachi joint venture.
Revenue (including intercompany)
1,297
951
2,542
1,867
+382
983
270
+264
208
-87
439
The average balance of receivables and leases financed was 18 percent higher in the second quarter of 2023, and 17 percent higher in the first six months of 2023 compared with the same periods last year. Revenue also increased due to higher average financing rates in both periods. Interest expense increased compared to both prior periods as a result of higher average borrowing rates and higher average borrowings. Financial services net income for both periods decreased primarily due to less-favorable financing spreads and a higher provision for credit losses, partially offset by income earned on a higher average portfolio. Net income for the first six months of the year was also impacted by unfavorable derivative market valuation adjustments. Additionally impacting the results for both periods was a $135 million after-tax correction of the accounting treatment for financing incentives offered to John Deere dealers, which affected the timing of expense recognition and the presentation of incentive costs in the consolidated financial statements. The accounting correction is unrelated to current market conditions or the credit quality of the financial services portfolio, which remains strong. The allowance for credit losses, excluding the portfolio in Russia, was .40 percent of financing receivables as of April 30, 2023, compared with .42 percent as of May 1, 2022.
Critical Accounting Estimates
See the Company’s 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
Sources of Liquidity, Key Metrics and Balance Sheet Data
The Company has access to most global capital markets at a reasonable cost. Sources of liquidity for the Company include cash and cash equivalents, marketable securities, funds from operations, the issuance of commercial paper and term debt, the securitization of retail notes (both public and private markets), and bank lines of credit. The Company closely monitors its liquidity sources against the cash requirements and expects to have sufficient sources of global funding and liquidity to meet its funding needs in the short term (next 12 months) and long term (beyond 12 months). The Company operates in multiple industries, which have different funding requirements. The production and precision agriculture, small agriculture and turf, and construction and forestry segments are capital intensive and are typically subject to seasonal variations in financing requirements for inventories and certain receivables from dealers. However, the patterns of seasonality in inventory have been affected by increases in production rates and supply chain disruptions experienced during fiscal year 2022. Supply chain conditions have begun trending towards more normalized levels in 2023, though disruptions remain above historical performance. 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, in millions of dollars:
Cash, cash equivalents, and marketable securities
6,123
5,508
4,560
Ratio to prior 12 month’s net sales
18%
13%
15%
Ratio to prior 12 month’s cost of sales
25%
24%
29%
Unused credit lines
3,284
4,608
Financial Services:
Ratio of interest-bearing debt to stockholder’s equity
8.0 to 1
8.5 to 1
7.8 to 1
The reduction in unused credit lines in 2023 compared to both prior periods relates to an increase in commercial paper outstanding due to changes in receivables and funding mix. The Company forecasts higher operating cash flows in 2023 driven by an increase in net income adjusted for non-cash provisions and a favorable change in working capital.
There have been no material changes to the contractual and other cash requirements identified in the Company’s most recently issued Annual Report on Form 10-K.
Cash Flows (in millions of dollars)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
Net increase (decrease) in cash, cash equivalents, and restricted cash
Cash outflows from operating activities in the first six months of 2023 were $147 million. This resulted mainly from a working capital change, partially offset by net income adjusted for non-cash provisions. Cash outflows from investing activities were $1,494 million in the first six months of 2023. The primary drivers were growth in the retail customer receivable portfolio and purchases of property and equipment. Cash inflows from financing activities were $2,017 million in the first six months of 2023, as higher external borrowings of $5,293 million to support working capital requirements were offset by repurchases of common stock and dividends paid. Cash, cash equivalents, and restricted cash increased $446 million during the first six months of 2023.
Trade Accounts and Notes Receivable. Trade accounts and notes receivable arise from sales of goods to customers. Trade receivables increased $3,561 million during the first six months of 2023, primarily due to a seasonal increase and higher sales volumes, as well as the effect of foreign currency translation. These receivables increased $3,713 million, compared to a year ago, primarily due to higher sales volumes. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 1 percent at each of April 30, 2023, October 30, 2022, and May 1, 2022.
Financing Receivables and Equipment on Operating Leases. Financing receivables and equipment on operating leases consist of retail notes originated in connection with financing of new and used equipment, operating leases, revolving charge accounts, sales-type and direct financing leases, and wholesale notes. Financing receivables and equipment on operating leases increased $1,944 million during the first six months of 2023 and increased $6,514 million in the past 12 months due to strong retail sales. Total acquisition volumes of financing receivables and equipment on operating leases were 31 percent higher in the first six months of 2023, compared with the same period last year, as volumes of wholesale notes, retail notes, revolving charge accounts, operating leases, and finance leases were higher compared to May 1, 2022.
Inventories. Inventories increased by $1,218 million during the first six months of 2023 and increased by $683 million compared to a year ago. The increases were due to higher forecasted sales volumes and supply chain disruptions. The effect of foreign currency translation also increased inventories during the first six months of 2023. 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 six months of 2023 were $584 million, compared with $346 million in the same period last year. Capital expenditures in 2023 are estimated to be approximately $1,500 million.
Accounts Payable and Accrued Expenses. Accounts payable and accrued expenses decreased by $106 million in the first six months of 2023. Accounts payable and accrued expenses increased $2,037 million compared to a year ago due to an increase in accrued expenses associated with accrued taxes, employee benefits, product warranties, and dealer sales discounts.
Borrowings. Total external borrowings have changed 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 2022 with an expiration in November 2023 and increased the total capacity or “financing limit” from $1,000 million to $1,500 million. At April 30, 2023, $948 million of securitization borrowings was 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 six months of 2023, the financial services operations issued $1,289 million and retired $1,622 million of retail note securitization borrowings, which are presented in “Increase (decrease) in total short-term borrowings.”
Lines of Credit. The Company also has access to bank lines of credit with various banks throughout the world. Worldwide lines of credit totaled $10,309 million at April 30, 2023, $785 million of which were unused. For the purpose of computing unused credit lines, commercial paper, and short-term bank borrowings, excluding secured borrowings and the current portion of long-term borrowings, were considered to constitute utilization. Included in the total credit lines at April 30, 2023 was a 364-day credit facility agreement of $5,000 million expiring in the second quarter of 2024. In addition, total credit lines included long-term credit facility agreements of $2,500 million expiring in the second quarter of 2027 and $2,500 million expiring in the second quarter of 2028. These credit agreements require Capital Corporation and other parts of the Company to maintain certain performance metrics and liquidity targets. All of the requirements in the credit agreements have been met during the periods included in the financial statements.
Debt Ratings. To access public debt capital markets, the Company relies on credit rating agencies to assign short-term and long-term credit ratings to the Company’s 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 Company securities. A credit rating agency may change or withdraw ratings based on its assessment of the Company’s 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 the Company are as follows:
Senior
Long-Term
Short-Term
Outlook
Fitch Ratings
A+
F1
Stable
Moody’s Investors Service, Inc.
A2
Prime-1
Positive
Standard & Poor’s
A
A-1
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. 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:
Further information concerning the Company and its businesses, including factors that could materially affect the Company’s financial results, is included in the Company’s other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. “Risk Factors” of our 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 Information
The supplemental consolidating data presented on the subsequent pages is presented for informational purposes. The equipment operations represents the enterprise without financial services. The equipment operations includes the Company’s 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.
The equipment operations and financial services participate in different industries. The 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 the Company. 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.
SUPPLEMENTAL CONSOLIDATING DATA
STATEMENTS OF INCOME
For the Three Months Ended April 30, 2023 and May 1, 2022
EQUIPMENT
FINANCIAL
OPERATIONS
SERVICES
ELIMINATIONS
CONSOLIDATED
1,206
847
(87)
1
185
(148)
2, 3
16,385
12,654
(295)
(235)
10,737
8,919
4
935
397
181
103
(74)
5
Interest compensation to Financial Services
(174)
(62)
85
(38)
6, 7
12,581
10,383
1,253
670
Income before Income Taxes
3,804
2,271
281
Income after Income Taxes
2,830
1,884
207
2,831
1,889
1,890
1 Elimination of financial services’ interest income earned from equipment operations.
2 Elimination of equipment operations’ margin from inventory transferred to equipment on operating leases.
3 Elimination of financial services’ income related to intercompany guarantees of investments in certain international markets and intercompany service revenue.
4 Elimination of intercompany service fees.
5 Elimination of equipment operations’ interest expense to financial services.
6 Elimination of financial services’ lease depreciation expense related to inventory transferred to equipment on operating leases.
7 Elimination of equipment operations’ expense related to intercompany guarantees of investments in certain international markets and intercompany service expenses.
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
2,274
1,675
(435)
(150)
801
(201)
(214)
28,132
21,436
(636)
(364)
18,675
15,614
1,410
307
188
(138)
(297)
(106)
137
707
(184)
(212)
22,075
18,311
2,259
1,289
6,057
3,125
578
1,455
568
142
4,602
2,557
210
436
4,603
2,562
4,607
CONDENSED BALANCE SHEETS
Apr 30
Oct 30
3,587
3,767
3,167
1,680
1,007
711
Receivables from Financial Services
5,899
6,569
5,669
(5,899)
(6,569)
(5,669)
8
1,273
1,358
10,422
6,434
6,079
(2,013)
(1,297)
(1,179)
9
38,900
36,587
34,036
5,658
4,067
2,201
1,670
1,944
481
832
405
(43)
6,021
5,678
3,450
3,666
2,996
10
1,355
940
1,247
(161)
(192)
11
1,961
1,767
564
626
516
41,236
39,208
38,077
(8,122)
(8,042)
(7,088)
1,755
1,040
1,554
15,354
11,552
10,859
4,001
Payables to Equipment Operations
13,759
12,962
11,370
3,074
3,170
2,534
(2,117)
(1,310)
(1,225)
380
454
276
322
7,310
7,917
8,556
28,301
25,679
23,891
2,410
2,351
110
111
25,636
24,650
24,794
58,332
53,065
47,387
6,901
5,799
5,723
(6,901)
(5,799)
(5,723)
12
Financial Services’ equity
Adjusted total stockholders’ equity
15,498
14,466
13,184
8 Elimination of receivables / payables between equipment operations and financial services.
9 Primarily reclassification of sales incentive accruals on receivables sold to financial services.
10 Reclassification of net pension assets / liabilities.
11 Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions.
12 Elimination of financial services’ equity.
STATEMENTS OF CASH FLOWS
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
565
530
(70)
(115)
13
14
Distributed earnings of Financial Services
232
(232)
15
(304)
(73)
(255)
(215)
(4,152)
(1,320)
16, 18, 19
(910)
(2,201)
(72)
17
243
(717)
(337)
18
(144)
(67)
(1,024)
(102)
(117)
48
13, 14, 17
Net cash provided by (used for) operating activities
3,766
1,065
860
(4,978)
(1,976)
13,169
12,004
(576)
(814)
16
(13,584)
(12,260)
(583)
(345)
(1,327)
(1,090)
86
Increase in investment in Financial Services
(799)
799
20
Increase in trade and wholesale receivables
(5,310)
(2,159)
5,310
2,159
Collateral on derivatives – net
(49)
19
(1,460)
(858)
(2,774)
5,765
1,744
Increase (decrease) in total short-term borrowings
(225)
4,217
684
Change in intercompany receivables/payables
(424)
(932)
424
4,827
4,243
(3,520)
(3,317)
Capital investment from Equipment Operations
(28)
(2,547)
(2,401)
5,351
1,783
(787)
(113)
(4,018)
625
(128)
3,781
1,160
925
3,602
3,182
1,785
13 Elimination of depreciation on leases related to inventory transferred to equipment on operating leases.
14 Reclassification of share-based compensation expense.
15 Elimination of dividends from financial services to the equipment operations, which are included in the equipment operations’ operating activities.
16 Primarily reclassification of receivables related to the sale of equipment.
17 Reclassification of direct lease agreements with retail customers.
18 Reclassification of sales incentive accruals on receivables sold to financial services.
19 Elimination and reclassification of the effects of financial services partial financing of the construction and forestry retail locations sales and subsequent collection of those amounts.
20 Elimination of investment from equipment operations to financial services
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See the Company’s most recently filed Annual Report on Form 10-K (Part II, Item 7A). There has been no material change in this information.
Item 4. CONTROLS AND PROCEDURES
The Company’s principal executive officer and its principal financial officer have concluded that the Company’s 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 April 30, 2023, 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 second quarter of 2023, there were no changes that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
See the Company’s most recently filed Annual Report on Form 10-K (Part I, Item 1A). There has been no material change 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 faced by the Company. Additional risks and uncertainties may also materially affect the Company’s 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
The Company’s purchases of its common stock during the second quarter of 2023 were as follows:
Total Number of
Shares Purchased as
Maximum Number of
Part of Publicly
Shares that May Yet Be
Shares
Announced Plans or
Purchased under the
Purchased
Average Price
Programs (1)
Plans or Programs (1)
Period
(thousands)
Per Share
(millions)
Jan 30 to Feb 26
434
418.32
49.8
Feb 27 to Mar 26
1,075
413.41
48.6
Mar 27 to Apr 30
1,716
393.04
46.8
3,225
Sales of Unregistered Securities
During the second quarter of 2023, the Company issued 3,930 deferred stock units under the Deere & Company Nonemployee Director Stock Ownership Plan (“NEDSOP”) to the Company’s non-employee directors for their service on the Board of Directors of the Company. The deferred stock units convert to shares of common stock on a one-for-one basis following a termination of service as described in the plan. Deferred stock units issued under the NEDSOP 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
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
Certificate of Incorporation (Exhibit 3.1 to Form 10-Q of registrant for the quarter ended July 28, 2019, Securities and Exchange Commission File Number 1-4121*)
3.2
Bylaws, as amended (Exhibit 3.1 to Form 8-K of registrant filed on December 3, 2020, Securities and Exchange Commission File Number 1-4121*)
10.1
364-Day Credit Agreement, dated March 27, 2023, among the registrant, John Deere Capital Corporation, John Deere Bank S.A., various financial institutions, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A. and Citibank, N.A., as Co-Syndication Agents, and J.P. Morgan Securities LLC, as Sustainability Structuring Agent
10.2
2027 Credit Agreement, dated March 27, 2023, among the registrant, John Deere Capital Corporation, John Deere Bank S.A., various financial institutions, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A. and Citibank, N.A., as Co-Syndication Agents, and J.P. Morgan Securities LLC, as Sustainability Structuring Agent
10.3
2028 Credit Agreement, dated March 27, 2023, among the registrant, John Deere Capital Corporation, John Deere Bank S.A., various financial institutions, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A. and Citibank, N.A., as Co-Syndication Agents, and J.P. Morgan Securities LLC, as Sustainability Structuring Agent
10.4
Second Amended Agreement, dated March 27, 2023, between the registrant and John Deere Capital Corporation relating to fixed charges ratio, ownership, and minimum net worth of John Deere Capital Corporation
31.1
Rule 13a-14(a)/15d-14(a) Certification
31.2
Section 1350 Certifications (furnished herewith)
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
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Incorporated by reference.
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.
Date:
June 1, 2023
By:
/s/ Joshua A. Jepsen
Joshua A. JepsenSenior Vice President and Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)