Deere Reports Third Quarter Net Income of $2.978 Billion

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Aug 18, 2023, 06:31 ET

Sound execution contributes to 10% increase in net sales and higher earnings.
Strong order books, positive industry fundamentals driving strong results.
Full-year net income forecast increased to $9.75 billion to $10.00 billion.

MOLINE, Ill., Aug. 18, 2023 /PRNewswire/ -- Deere & Company (NYSE: DE) reported net income of $2.978 billion for the third quarter ended July 30, 2023, or $10.20 per share, compared with net income of $1.884 billion, or $6.16 per share, for the quarter ended July 31, 2022. For the first nine months of the year, net income attributable to Deere & Company was $7.797 billion, or $26.35 per share, compared with $4.885 billion, or $15.88 per share, for the same period last year.

Deere Reports Third Quarter Net Income of $2.978 Billion

Worldwide net sales and revenues increased 12 percent, to $15.801 billion, for the third quarter of 2023 and rose 24 percent, to $45.839 billion, for nine months. Net sales were $14.284 billion for the quarter and $41.765 billion for nine months, compared with $13.000 billion and $33.565 billion last year.

"Reflected by our strong third-quarter results, Deere continues to benefit from favorable market conditions and an operating environment showing further improvement," said John C. May, chairman and chief executive officer. "We are also being helped by stabilizing conditions in the supply chain, the sound execution of our business plans, and an improving ability to meet demand for our products and serve customers."

Company Outlook & Summary

Net income attributable to Deere & Company for fiscal 2023 is forecast to be in a range of $9.75 billion to $10.00 billion.

"Deere is well on the way to another year of exceptional achievement due in large part to positive fundamentals in the farm and construction sectors and the unwavering commitment of the Deere team, including our dealers and suppliers," May said. "Fundamentals are expected to continue fueling solid demand for our equipment, supported by a strong advance-order position. At the same time, through the company's smart industrial operating model, we are delivering differentiated value to our customers, enabling them to do their jobs more profitably and sustainably."


Deere & Company	Third Quarter					Year to Date
$ in millions, except per share amounts	2023		2022		% Change	2023		2022		% Change
Net sales and revenues	$	15,801	$	14,102	12 %	$	45,839	$	37,041	24 %
Net income	$	2,978	$	1,884	58 %	$	7,797	$	4,885	60 %
Fully diluted EPS	$	10.20	$	6.16		$	26.35	$	15.88

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	2023		2022		% Change
Net sales	$	6,806	$	6,096	12 %
Operating profit	$	1,782	$	1,293	38 %
Operating margin		26.2 %		21.2 %

Production and precision agriculture sales increased for the quarter as a result of price realization. Operating profit rose due to price realization and improved shipment volumes / sales mix. These items were partially offset by higher production costs, increased SA&G and R&D expenses, and the unfavorable impact of foreign currency exchange.


Small Agriculture & Turf	Third Quarter
$ in millions	2023		2022		% Change
Net sales	$	3,739	$	3,635	3 %
Operating profit	$	732	$	552	33 %
Operating margin		19.6 %		15.2 %

Small agriculture and turf sales increased for the quarter due to price realization, partially offset by lower shipment volumes. Operating profit improved due to price realization, partially offset by higher production costs, lower shipment volumes, and increased SA&G and R&D expenses.


Construction & Forestry	Third Quarter
$ in millions	2023		2022		% Change
Net sales	$	3,739	$	3,269	14 %
Operating profit	$	716	$	514	39 %
Operating margin		19.1 %		15.7 %

Construction and forestry sales increased for the quarter due to price realization and higher shipment volumes. Operating profit rose primarily due to price realization and improved shipment volumes. These items were partially offset by increased SA&G and R&D expenses, higher production costs, and the unfavorable impact of foreign currency exchange.


Financial Services	Third Quarter
$ in millions	2023		2022		% Change
Net income	$	216	$	209	3 %

Financial services net income for the quarter increased due to income earned on a higher average portfolio, partially offset by less-favorable financing spreads.


Industry Outlook for Fiscal 2023
Agriculture & Turf
U.S. & Canada:
Large Ag						Up ~ 10%
Small Ag & Turf						Down 5 to 10%
Europe						Flat to Up 5%
South America (Tractors & Combines)						Flat to Down 5%
Asia						Down moderately

Construction & Forestry
U.S. & Canada:
Construction Equipment						Flat to Up 5%
Compact Construction Equipment						Flat to Up 5%
Global Forestry						Flat to Down 5%
Global Roadbuilding						Flat to Up 5%


Deere Segment Outlook for Fiscal 2023		Currency	Price
$ in millions	Net Sales	Translation	Realization
Production & Precision Ag	Up ~ 20%	0 %	+15 %
Small Ag & Turf	Up ~ 5%	-1 %	+9 %
Construction & Forestry	Up 15% to 20%	0 %	+11 %

Financial Services	Net Income	$ 630

Financial Services. Fiscal-year 2023 net income attributable to Deere & Company for the financial services operations is forecast to be $630 million. Results are expected to be lower than fiscal year 2022 due to less-favorable financing spreads, a correction of the accounting treatment for financing incentives offered to John Deere dealers (recorded in the second quarter of 2023), a higher provision for credit losses, higher SA&G expenses, and lower gains on operating-lease dispositions. These factors are expected to be partially offset by income earned on a higher average portfolio.

FORWARD-LOOKING STATEMENTS
Certain statements contained herein, including in the section entitled "Company Outlook & Summary," "Industry Outlook," and "Deere Segment Outlook," 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:

compliance with, and changes in U.S. and international laws, regulations, and policies relating to trade, spending, taxing, banking, monetary, environmental (including climate change and engine emission), and farming policies;
political, economic, and social instability of the geographies in which the company operates;
wars and other conflicts, including the war between Russia and Ukraine;
adverse macroeconomic conditions, including unemployment, inflation, rising interest rates, changes in consumer practices due to slower economic growth or possible recession, and regional or global liquidity constraints;
growth and sustainability of non-food uses for crops (including ethanol and biodiesel production);
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;
changes to governmental communications channels (radio frequency technology);
gaps or limitations in rural broadband coverage, capacity, and speed needed to support technology solutions;
the company's ability to adapt in highly competitive markets;
dealer practices and their ability to manage distribution of John Deere products and support and service precision technology solutions;
changes in climate patterns, unfavorable weather events, and natural disasters;
higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for our products and solutions;
changes in the company's credit ratings, and failure to comply with financial covenants in credit agreements could impact access to funding;
availability and price of raw materials, components, whole goods, and used equipment;
delays or disruptions in the company's supply chain;
the ability to attract, develop, engage, and retain qualified personnel;
security breaches, cybersecurity attacks, technology failures, and other disruptions to the information technology infrastructure of the company and its products;
loss of or challenges to intellectual property rights;
investigations, claims, lawsuits, or other legal proceedings;
events that damage the company's reputation or brand;
world grain stocks, available farm acres, soil conditions, harvest yields, prices for commodities and livestock, input costs, and availability of transport for crops; and
housing starts and supply, real estate and housing prices, levels of public and non-residential construction, and infrastructure investment.

Further information concerning 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 subsequent Quarterly Reports 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.

DEERE & COMPANY THIRD QUARTER 2023 PRESS RELEASE (In millions of dollars) Unaudited
	Three Months Ended					Nine Months Ended
	July 30		July 31		%	July 30		July 31		%
	2023		2022		Change	2023		2022		Change
Net sales and revenues:
Production & precision ag net sales	$	6,806	$	6,096	+12	$	19,826	$	14,568	+36
Small ag & turf net sales		3,739		3,635	+3		10,886		9,836	+11
Construction & forestry net sales		3,739		3,269	+14		11,053		9,161	+21
Financial services revenues		1,228		903	+36		3,375		2,637	+28
Other revenues		289		199	+45		699		839	-17
Total net sales and revenues	$	15,801	$	14,102	+12	$	45,839	$	37,041	+24

Operating profit: *
Production & precision ag	$	1,782	$	1,293	+38	$	5,160	$	2,646	+95
Small ag & turf		732		552	+33		2,028		1,443	+41
Construction & forestry		716		514	+39		2,179		1,599	+36
Financial services		286		287			565		864	-35
Total operating profit		3,516		2,646	+33		9,932		6,552	+52
Reconciling items **		98		(108)			29		(303)
Income taxes		(636)		(654)	-3		(2,164)		(1,364)	+59
Net income attributable to Deere & Company	$	2,978	$	1,884	+58	$	7,797	$	4,885	+60


*	Operating profit is income from continuing operations before corporate expenses, certain external interest expense, certain foreign exchange gains and losses, and income taxes. Operating profit of the financial services segment 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, equity in income of unconsolidated affiliates, and net income attributable to noncontrolling interests.

DEERE & COMPANY STATEMENTS OF CONSOLIDATED INCOME For the Three and Nine Months Ended July 30, 2023 and July 31, 2022 (In millions of dollars and shares except per share amounts) Unaudited
	Three Months Ended				Nine Months Ended
	2023		2022		2023		2022
Net Sales and Revenues
Net sales	$	14,284	$	13,000	$	41,765	$	33,565
Finance and interest income		1,253		846		3,326		2,441
Other income		264		256		748		1,035
Total		15,801		14,102		45,839		37,041

Costs and Expenses
Cost of sales		9,624		9,511		28,288		25,124
Research and development expenses		528		481		1,571		1,336
Selling, administrative and general expenses		1,110		959		3,392		2,672
Interest expense		623		296		1,671		713
Other operating expenses		310		316		971		954
Total		12,195		11,563		35,893		30,799

Income of Consolidated Group before Income Taxes		3,606		2,539		9,946		6,242
Provision for income taxes		636		654		2,164		1,364

Income of Consolidated Group		2,970		1,885		7,782		4,878
Equity in income of unconsolidated affiliates		2				5		8

Net Income		2,972		1,885		7,787		4,886
Less: Net income (loss) attributable to noncontrolling interests		(6)		1		(10)		1
Net Income Attributable to Deere & Company	$	2,978	$	1,884	$	7,797	$	4,885

Per Share Data
Basic	$	10.24	$	6.20	$	26.48	$	15.97
Diluted		10.20		6.16		26.35		15.88
Dividends declared		1.25		1.13		3.70		3.23
Dividends paid		1.25		1.05		3.58		3.15

Average Shares Outstanding
Basic		290.8		304.1		294.4		305.8
Diluted		292.1		305.7		295.9		307.7

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (In millions of dollars) Unaudited
	July 30		October 30		July 31
	2023		2022		2022
Assets
Cash and cash equivalents	$	6,576	$	4,774	$	4,359
Marketable securities		841		734		719
Trade accounts and notes receivable - net		9,297		6,410		6,696
Financing receivables - net		41,302		36,634		35,056
Financing receivables securitized - net		7,001		5,936		5,141
Other receivables		3,118		2,492		1,999
Equipment on operating leases - net		6,709		6,623		6,554
Inventories		9,350		8,495		9,121
Property and equipment - net		6,418		6,056		5,666
Goodwill		3,994		3,687		3,754
Other intangible assets - net		1,199		1,218		1,281
Retirement benefits		3,573		3,730		3,125
Deferred income taxes		1,360		824		1,110
Other assets		2,659		2,417		2,236
Total Assets	$	103,397	$	90,030	$	86,817

Liabilities and Stockholders' Equity

Liabilities
Short-term borrowings	$	17,143	$	12,592	$	14,176
Short-term securitization borrowings		6,608		5,711		4,920
Accounts payable and accrued expenses		15,340		14,822		12,986
Deferred income taxes		506		495		561
Long-term borrowings		38,112		33,596		32,132
Retirement benefits and other liabilities		2,536		2,457		2,911
Total liabilities		80,245		69,673		67,686

Redeemable noncontrolling interest		101		92		95

Stockholders' Equity
Total Deere & Company stockholders' equity		23,048		20,262		19,033
Noncontrolling interests		3		3		3
Total stockholders' equity		23,051		20,265		19,036
Total Liabilities and Stockholders' Equity	$	103,397	$	90,030	$	86,817

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY STATEMENTS OF CONSOLIDATED CASH FLOWS For the Nine Months Ended July 30, 2023 and July 31, 2022 (In millions of dollars) Unaudited
	2023		2022
Cash Flows from Operating Activities
Net income	$	7,787	$	4,886
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for credit losses		(64)		62
Provision for depreciation and amortization		1,527		1,443
Impairments and other adjustments		173		81
Share-based compensation expense		112		64
Gain on remeasurement of previously held equity investment				(326)
Credit for deferred income taxes		(429)		(6)
Changes in assets and liabilities:
Receivables related to sales		(5,059)		(2,357)
Inventories		(663)		(2,526)
Accounts payable and accrued expenses		47		(15)
Accrued income taxes payable/receivable		(595)		82
Retirement benefits		(116)		(1,014)
Other		176		44
Net cash provided by operating activities		2,896		418

Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)		17,592		15,774
Proceeds from sales of equipment on operating leases		1,445		1,501
Cost of receivables acquired (excluding receivables related to sales)		(20,714)		(18,578)
Acquisitions of businesses, net of cash acquired		(82)		(488)
Purchases of property and equipment		(887)		(596)
Cost of equipment on operating leases acquired		(1,968)		(1,717)
Collateral on derivatives - net		240		(193)
Other		(189)		(133)
Net cash used for investing activities		(4,563)		(4,430)

Cash Flows from Financing Activities
Increase in total short-term borrowings		5,040		4,267
Proceeds from long-term borrowings		9,972		6,281
Payments of long-term borrowings		(5,862)		(6,578)
Repurchases of common stock		(4,663)		(2,477)
Dividends paid		(1,065)		(971)
Other		(43)		(7)
Net cash provided by financing activities		3,379		515

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash		125		(143)

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash		1,837		(3,640)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period		4,941		8,125
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	6,778	$	4,485

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY Condensed Notes to Interim Consolidated Financial Statements (In millions of dollars) Unaudited

(1) Special Items

2023

In the third quarter of 2023, a favorable tax ruling in Brazil allowed the company to record a $243 million reduction in the provision for income taxes and $47 million of interest income.

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.

2022

In the second quarter of 2022, the company acquired full ownership of three former Deere-Hitachi joint venture factories. The remeasurement of the previously held equity investment resulted in a non-cash gain of $326 million (pretax and after-tax).

In the second quarter of 2022, the company suspended shipments of machines and service parts to Russia. As a result, the company impaired its long-lived assets, increased reserves of certain financial assets, introduced an employee voluntary-separation program, and recorded an accrual for various contractual uncertainties.

In the first quarter of 2022, the company had a one-time payment related to the ratification of the UAW collective bargaining agreement, totaling $90 million.

The following table summarizes the operating profit impact, in millions of dollars, of the special items recorded for the three months and nine months ended July 30, 2023 and July 31, 2022:

	Three Months									Nine Months
	PPA		SAT	CF		FS		Total		PPA		SAT		CF		FS		Total
2023 Expense:
Financing incentive – SA&G expense																$	173	$	173

2022 Expense (benefit):
Gain on remeasurement of equity investment – Other income														$	(326)				(326)
Total Russia/Ukraine events expense (benefit)	$	(1)		$	1	$	7	$	7	$	45	$	1		48		33		127
UAW ratification bonus – Cost of sales											53		9		28				90
Total expense (benefit)		(1)			1		7		7		98		10		(250)		33		(109)

Period over period change	$	1		$	(1)	$	(7)	$	(7)	$	(98)	$	(10)	$	250	$	140	$	282

(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."

DEERE & COMPANY (3) SUPPLEMENTAL CONSOLIDATING DATA STATEMENTS OF INCOME For the Three Months Ended July 30, 2023 and July 31, 2022 (In millions of dollars) Unaudited
	EQUIPMENT				FINANCIAL
	OPERATIONS				SERVICES				ELIMINATIONS				CONSOLIDATED
	2023		2022		2023		2022		2023		2022		2023		2022
Net Sales and Revenues
Net sales	$	14,284	$	13,000									$	14,284	$	13,000
Finance and interest income		210		60	$	1,335	$	905	$	(292)	$	(119)		1,253		846	¹
Other income		222		228		110		79		(68)		(51)		264		256	^{2, 3}
Total		14,716		13,288		1,445		984		(360)		(170)		15,801		14,102

Costs and Expenses
Cost of sales		9,630		9,512						(6)		(1)		9,624		9,511	⁴
Research and development expenses		528		481										528		481
Selling, administrative and general expenses		913		805		199		156		(2)		(2)		1,110		959	⁴
Interest expense		94		109		622		223		(93)		(36)		623		296	⁵
Interest compensation to Financial Services		199		83						(199)		(83)					⁵
Other operating expenses		34		47		336		317		(60)		(48)		310		316	^{6, 7}
Total		11,398		11,037		1,157		696		(360)		(170)		12,195		11,563

Income before Income Taxes		3,318		2,251		288		288						3,606		2,539
Provision for income taxes		564		574		72		80						636		654

Income after Income Taxes		2,754		1,677		216		208						2,970		1,885
Equity in income (loss) of unconsolidated affiliates		2		(1)				1						2

Net Income		2,756		1,676		216		209						2,972		1,885
Less: Net income (loss) attributable to noncontrolling interests		(6)		1										(6)		1
Net Income Attributable to Deere & Company	$	2,762	$	1,675	$	216	$	209					$	2,978	$	1,884

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.

DEERE & COMPANY SUPPLEMENTAL CONSOLIDATING DATA (Continued) STATEMENTS OF INCOME For the Nine Months Ended July 30, 2023 and July 31, 2022 (In millions of dollars) Unaudited
	EQUIPMENT				FINANCIAL
	OPERATIONS				SERVICES				ELIMINATIONS				CONSOLIDATED
	2023		2022		2023		2022		2023		2022		2023		2022
Net Sales and Revenues
Net sales	$	41,765	$	33,565									$	41,765	$	33,565
Finance and interest income		444		131	$	3,609	$	2,580	$	(727)	$	(270)		3,326		2,441	¹
Other income		639		1,028		378		271		(269)		(264)		748		1,035	^{2, 3}
Total		42,848		34,724		3,987		2,851		(996)		(534)		45,839		37,041

Costs and Expenses
Cost of sales		28,306		25,126						(18)		(2)		28,288		25,124	⁴
Research and development expenses		1,571		1,336										1,571		1,336
Selling, administrative and general expenses		2,630		2,215		769		463		(7)		(6)		3,392		2,672	⁴
Interest expense		298		297		1,604		493		(231)		(77)		1,671		713	⁵
Interest compensation to Financial Services		496		189						(496)		(189)					⁵
Other operating expenses		172		186		1,043		1,028		(244)		(260)		971		954	^{6, 7}
Total		33,473		29,349		3,416		1,984		(996)		(534)		35,893		30,799

Income before Income Taxes		9,375		5,375		571		867						9,946		6,242
Provision for income taxes		2,020		1,142		144		222						2,164		1,364

Income after Income Taxes		7,355		4,233		427		645						7,782		4,878
Equity in income of unconsolidated affiliates		3		4		2		4						5		8

Net Income		7,358		4,237		429		649						7,787		4,886
Less: Net income (loss) attributable to noncontrolling interests		(10)		1										(10)		1
Net Income Attributable to Deere & Company	$	7,368	$	4,236	$	429	$	649					$	7,797	$	4,885

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.

DEERE & COMPANY SUPPLEMENTAL CONSOLIDATING DATA (Continued) CONDENSED BALANCE SHEETS (In millions of dollars) Unaudited
	EQUIPMENT						FINANCIAL
	OPERATIONS						SERVICES						ELIMINATIONS						CONSOLIDATED
	Jul 30		Oct 30		Jul 31		Jul 30		Oct 30		Jul 31		Jul 30		Oct 30		Jul 31		Jul 30		Oct 30		Jul 31
	2023		2022		2022		2023		2022		2022		2023		2022		2022		2023		2022		2022
Assets
Cash and cash equivalents	$	4,858	$	3,767	$	3,540	$	1,718	$	1,007	$	819							$	6,576	$	4,774	$	4,359
Marketable securities		3		61		2		838		673		717								841		734		719
Receivables from Financial Services		5,312		6,569		5,055							$	(5,312)	$	(6,569)	$	(5,055)							⁸
Trade accounts and notes receivable - net		1,589		1,273		1,342		9,991		6,434		6,738		(2,283)		(1,297)		(1,384)		9,297		6,410		6,696	⁹
Financing receivables - net		60		47		45		41,242		36,587		35,011								41,302		36,634		35,056
Financing receivables securitized - net						2		7,001		5,936		5,139								7,001		5,936		5,141
Other receivables		2,599		1,670		1,676		599		832		371		(80)		(10)		(48)		3,118		2,492		1,999	⁹
Equipment on operating leases - net								6,709		6,623		6,554								6,709		6,623		6,554
Inventories		9,350		8,495		9,121														9,350		8,495		9,121
Property and equipment - net		6,385		6,021		5,630		33		35		36								6,418		6,056		5,666
Goodwill		3,994		3,687		3,754														3,994		3,687		3,754
Other intangible assets - net		1,199		1,218		1,281														1,199		1,218		1,281
Retirement benefits		3,503		3,666		3,062		71		66		65		(1)		(2)		(2)		3,573		3,730		3,125	¹⁰
Deferred income taxes		1,393		940		1,248		65		45		48		(98)		(161)		(186)		1,360		824		1,110	¹¹
Other assets		2,083		1,794		1,727		583		626		510		(7)		(3)		(1)		2,659		2,417		2,236	⁹
Total Assets	$	42,328	$	39,208	$	37,485	$	68,850	$	58,864	$	56,008	$	(7,781)	$	(8,042)	$	(6,676)	$	103,397	$	90,030	$	86,817

Liabilities and Stockholders' Equity

Liabilities
Short-term borrowings	$	1,773	$	1,040	$	471	$	15,370	$	11,552	$	13,705							$	17,143	$	12,592	$	14,176
Short-term securitization borrowings						2		6,608		5,711		4,918								6,608		5,711		4,920
Payables to Equipment Operations								5,312		6,569		5,055	$	(5,312)	$	(6,569)	$	(5,055)							⁸
Accounts payable and accrued expenses		14,403		12,962		11,925		3,307		3,170		2,494		(2,370)		(1,310)		(1,433)		15,340		14,822		12,986	⁹
Deferred income taxes		420		380		436		184		276		311		(98)		(161)		(186)		506		495		561	¹¹
Long-term borrowings		7,299		7,917		8,481		30,813		25,679		23,651								38,112		33,596		32,132
Retirement benefits and other liabilities		2,423		2,351		2,799		114		108		114		(1)		(2)		(2)		2,536		2,457		2,911	¹⁰
Total liabilities		26,318		24,650		24,114		61,708		53,065		50,248		(7,781)		(8,042)		(6,676)		80,245		69,673		67,686

Redeemable noncontrolling interest		101		92		95														101		92		95

Stockholders' Equity
Total Deere & Company stockholders' equity		23,048		20,262		19,033		7,142		5,799		5,760		(7,142)		(5,799)		(5,760)		23,048		20,262		19,033	¹²
Noncontrolling interests		3		3		3														3		3		3
Financial Services equity		(7,142)		(5,799)		(5,760)								7,142		5,799		5,760							¹²
Adjusted total stockholders' equity		15,909		14,466		13,276		7,142		5,799		5,760								23,051		20,265		19,036
Total Liabilities and Stockholders' Equity	$	42,328	$	39,208	$	37,485	$	68,850	$	58,864	$	56,008	$	(7,781)	$	(8,042)	$	(6,676)	$	103,397	$	90,030	$	86,817

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.

DEERE & COMPANY SUPPLEMENTAL CONSOLIDATING DATA (Continued) STATEMENTS OF CASH FLOWS For the Nine Months Ended July 30, 2023 and July 31, 2022 (In millions of dollars) Unaudited
	EQUIPMENT				FINANCIAL
	OPERATIONS				SERVICES				ELIMINATIONS				CONSOLIDATED
	2023		2022		2023		2022		2023		2022		2023		2022
Cash Flows from Operating Activities
Net income	$	7,358	$	4,237	$	429	$	649					$	7,787	$	4,886
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for credit losses		3				(67)		62						(64)		62
Provision for depreciation and amortization		872		806		757		790	$	(102)	$	(153)		1,527		1,443	¹³
Impairments and other adjustments				81		173								173		81
Share-based compensation expense										112		64		112		64	¹⁴
Gain on remeasurement of previously held equity investment				(326)												(326)
Distributed earnings of Financial Services		31		368						(31)		(368)					¹⁵
Provision (credit) for deferred income taxes		(322)		44		(107)		(50)						(429)		(6)
Changes in assets and liabilities:
Receivables related to sales		(293)		(215)						(4,766)		(2,142)		(5,059)		(2,357)	^{16, 18, 19}
Inventories		(534)		(2,415)						(129)		(111)		(663)		(2,526)	¹⁷
Accounts payable and accrued expenses		730		491		303		36		(986)		(542)		47		(15)	¹⁸
Accrued income taxes payable/receivable		(619)		52		24		30						(595)		82
Retirement benefits		(115)		(1,020)		(1)		6						(116)		(1,014)
Other		247		103		(15)		(108)		(56)		49		176		44	^{13, 14, 17}
Net cash provided by operating activities		7,358		2,206		1,496		1,415		(5,958)		(3,203)		2,896		418

Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)						18,440		16,927		(848)		(1,153)		17,592		15,774	¹⁶
Proceeds from sales of equipment on operating leases						1,445		1,501						1,445		1,501
Cost of receivables acquired (excluding receivables related to sales)						(21,043)		(19,069)		329		491		(20,714)		(18,578)	¹⁶
Acquisitions of businesses, net of cash acquired		(82)		(488)										(82)		(488)
Purchases of property and equipment		(885)		(595)		(2)		(1)						(887)		(596)
Cost of equipment on operating leases acquired						(2,143)		(1,868)		175		151		(1,968)		(1,717)	¹⁷
Increase in investment in Financial Services		(811)								811							²⁰
Increase in trade and wholesale receivables						(6,270)		(3,318)		6,270		3,318					¹⁶
Collateral on derivatives – net				5		240		(198)						240		(193)
Other		(79)		(87)		(111)		(74)		1		28		(189)		(133)	¹⁹
Net cash used for investing activities		(1,857)		(1,165)		(9,444)		(6,100)		6,738		2,835		(4,563)		(4,430)

Cash Flows from Financing Activities
Increase (decrease) in total short-term borrowings		(152)		58		5,192		4,209						5,040		4,267
Change in intercompany receivables/payables		1,476		70		(1,476)		(70)
Proceeds from long-term borrowings		60		137		9,912		6,144						9,972		6,281
Payments of long-term borrowings		(116)		(1,372)		(5,746)		(5,206)						(5,862)		(6,578)
Repurchases of common stock		(4,663)		(2,477)										(4,663)		(2,477)
Capital Investment from Equipment Operations						811				(811)							²⁰
Dividends paid		(1,065)		(971)		(31)		(368)		31		368		(1,065)		(971)	¹⁵
Other		4		16		(47)		(23)						(43)		(7)
Net cash provided by (used for) financing activities		(4,456)		(4,539)		8,615		4,686		(780)		368		3,379		515

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash		108		(148)		17		5						125		(143)

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash		1,153		(3,646)		684		6						1,837		(3,640)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period		3,781		7,200		1,160		925						4,941		8,125
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	4,934	$	3,554	$	1,844	$	931					$	6,778	$	4,485

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.

DEERE & COMPANY
OTHER FINANCIAL INFORMATION

The company evaluates its business results on the basis of accounting principles generally accepted in the United States. In addition, it uses a metric referred to as Shareholder Value Added (SVA), which management believes is an appropriate measure for the performance of its businesses. SVA is, in effect, the pretax profit left over after subtracting the cost of enterprise capital. The company is aiming for a sustained creation of SVA and is using this metric for various performance goals. Certain compensation is also determined on the basis of performance using this measure. For purposes of determining SVA, each of the equipment segments is assessed a pretax cost of assets, which on an annual basis is approximately 12 percent of the segment's average identifiable operating assets during the applicable period with inventory at standard cost. Management believes that valuing inventories at standard cost more closely approximates the current cost of inventory and the company's investment in the asset. The Financial Services segment is assessed an annual pretax cost of approximately 13 percent of the segment's average equity. The cost of assets or equity, as applicable, is deducted from the operating profit or added to the operating loss of each segment to determine the amount of SVA.


	Equipment						Production &						Small Ag						Construction
For the Nine Months Ended	Operations						Precision Ag						& Turf						& Forestry
	Jul 30			Jul 31			Jul 30			Jul 31			Jul 30			Jul 31			Jul 30			Jul 31
Dollars in Millions	2023			2022			2023			2022			2023			2022			2023			2022
Net Sales	$	41,765		$	33,565		$	19,826		$	14,568		$	10,886		$	9,836		$	11,053		$	9,161
Average Identifiable Assets
With Inventories as Reported	$	21,304		$	19,283		$	9,361		$	8,223		$	4,687		$	4,330		$	7,256		$	6,730
With Inventories at Standard Cost		23,369			20,872			10,438			9,017			5,240			4,788			7,691			7,067
Operating Profit	$	9,367		$	5,688		$	5,160		$	2,646		$	2,028		$	1,443		$	2,179		$	1,599
Percent of Net Sales		22.4	%		16.9	%		26.0	%		18.2	%		18.6	%		14.7	%		19.7	%		17.5	%
Operating Return on Assets
With Inventories as Reported		44.0	%		29.5	%		55.1	%		32.2	%		43.3	%		33.3	%		30.0	%		23.8	%
With Inventories at Standard Cost		40.1	%		27.3	%		49.4	%		29.3	%		38.7	%		30.1	%		28.3	%		22.6	%
SVA Cost of Assets	$	(2,103)		$	(1,878)		$	(939)		$	(811)		$	(471)		$	(431)		$	(693)		$	(636)
SVA		7,264			3,810			4,221			1,835			1,557			1,012			1,486			963

	Financial
For the Nine Months Ended	Services
	Jul 30			Jul 31
Dollars in Millions	2023			2022
Net Income Attributable to Deere & Company	$	429		$	649
Average Equity		6,440			5,706
Return on Equity		6.7	%		11.4	%
Operating Profit	$	565		$	864
Cost of Equity		(646)			(576)
SVA		(81)			288