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 January ~~31, 2021~~30, 2022

☐ 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~~
~~8½% Debentures Due 2022~~	~~DE22~~	New York Stock Exchange
6.55% Debentures Due 2028	DE28	New York Stock Exchange

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).

Yes ☒ No ☐

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 January ~~31, 2021, 313,438,923~~30, 2022, 306,784,327 shares of common stock, $1 par value, of the registrant were outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

DEERE & COMPANY

STATEMENT OF CONSOLIDATED INCOME

For the Three Months Ended January 31, 2021 and February 2, 2020

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


2021

2020

Net Sales and Revenues

Net sales

$
8,051

$
6,530

Finance and interest income

834

896

Other income

227

205

Total

9,112

7,631

Costs and Expenses

Cost of sales

5,805

5,077

Research and development expenses

366

425

Selling, administrative and general expenses

769

809

Interest expense

271

336

Other operating expenses

373

415

Total

7,584

7,062

Income of Consolidated Group before Income Taxes

1,528

569

Provision for income taxes

308

50

Income of Consolidated Group

1,220

519

Equity in income (loss) of unconsolidated affiliates

4

(1)

Net Income

1,224

518

Less: Net income attributable to noncontrolling interests

1

Net Income Attributable to Deere & Company

$
1,224

$
517

Per Share Data

Basic

$
3.90

$
1.65

Diluted

$
3.87

$
1.63

Average Shares Outstanding

Basic

313.5

313.5

Diluted

316.1

317.2

~~See Condensed Notes to Interim Consolidated Financial Statements.~~

DEERE & COMPANY

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME

For the Three Months Ended January 31, 2021 and February 2, 2020

(In millions of dollars) Unaudited

2021

2020

Net Income

$
1,224

$
518

Other Comprehensive Income (Loss), Net of Income Taxes

Retirement benefits adjustment

63

230

Cumulative translation adjustment

396

43

Unrealized gain on derivatives

4

Unrealized gain (loss) on debt securities

(2)

5

Other Comprehensive Income (Loss), Net of Income Taxes

461

278

Comprehensive Income of Consolidated Group

1,685

796

Less: Comprehensive income attributable to noncontrolling interests

1

Comprehensive Income Attributable to Deere & Company

$
1,685

$
795

~~See Condensed Notes to Interim Consolidated Financial Statements.~~

DEERE & COMPANY

CONDENSED CONSOLIDATED BALANCE SHEET

(In millions of dollars) Unaudited


January 31

November 1

February 2

2021

2020

2020

Assets

Cash and cash equivalents

$
6,962

$
7,066

$
3,602

Marketable securities

667

641

609

Receivables from unconsolidated affiliates

28

31

38

Trade accounts and notes receivable – net

5,037

4,171

5,360

Financing receivables – net

29,438

29,750

27,294

Financing receivables securitized – net

3,931

4,703

4,478

Other receivables

1,141

1,220

1,367

Equipment on operating leases – net

7,030

7,298

7,504

Inventories

5,956

4,999

6,482

Property and equipment – net

5,741

5,817

5,900

Investments in unconsolidated affiliates

178

193

217

Goodwill

3,194

3,081

2,945

Other intangible assets – net

1,342

1,327

1,349

Retirement benefits

906

863

900

Deferred income taxes

1,556

1,499

1,414

Other assets

2,373

2,432

2,362

Total Assets

$
75,480

$
75,091

$
71,821

Liabilities and Stockholders’ Equity

Liabilities

Short-term borrowings

$
9,224

$
8,582

$
10,008

Short-term securitization borrowings

3,969

4,682

4,416

Payables to unconsolidated affiliates

119

105

147

Accounts payable and accrued expenses

9,404

10,112

8,630

Deferred income taxes

532

519

491

Long-term borrowings

32,772

32,734

30,475

Retirement benefits and other liabilities

5,374

5,413

5,710

Total liabilities

61,394

62,147

59,877

Commitments and contingencies (Note 16)

Redeemable noncontrolling interest

14

Stockholders’ Equity

Common stock, $1 par value (issued shares at
January 31, 2021 – 536,431,204)

4,942

4,895

4,675

Common stock in treasury

(18,377)

(18,065)

(17,549)

Retained earnings

32,596

31,646

30,129

Accumulated other comprehensive income (loss)

(5,078)

(5,539)

(5,329)

Total Deere & Company stockholders’ equity

14,083

12,937

11,926

Noncontrolling interests

3

7

4

Total stockholders’ equity

14,086

12,944

11,930

Total Liabilities and Stockholders’ Equity

$
75,480

$
75,091

$
71,821


ITEM 1. FINANCIAL STATEMENTS
DEERE & COMPANY
STATEMENTS OF CONSOLIDATED INCOME
For the Three Months Ended January 30, 2022 and January 31, 2021
(In millions of dollars and shares except per share amounts) Unaudited
	2022		2021
Net Sales and Revenues
Net sales	$	8,531	$	8,051
Finance and interest income		800		834
Other income		238		227
Total		9,569		9,112

Costs and Expenses
Cost of sales		6,695		5,805
Research and development expenses		402		366
Selling, administrative and general expenses		781		769
Interest expense		229		271
Other operating expenses		311		373
Total		8,418		7,584

Income of Consolidated Group before Income Taxes		1,151		1,528
Provision for income taxes		250		308

Income of Consolidated Group		901		1,220
Equity in income of unconsolidated affiliates		3		4

Net Income		904		1,224
Less: Net income attributable to noncontrolling interests		1
Net Income Attributable to Deere & Company	$	903	$	1,224

Per Share Data
Basic	$	2.94	$	3.90
Diluted	$	2.92	$	3.87
Dividends declared	$	1.05	$	.76
Dividends paid	$	1.05	$	.76

Average Shares Outstanding
Basic		307.4		313.5
Diluted		309.4		316.1

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY

STATEMENT OF CONSOLIDATED CASH FLOWS

For the Three Months Ended January 31, 2021 and February 2, 2020

(In millions of dollars) Unaudited

2021

2020

Cash Flows from Operating Activities

Net income

$
1,224

$
518

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

Provision (credit) for credit losses

(5)

15

Provision for depreciation and amortization

538

538

Impairment charges

50

Share-based compensation expense

15

19

Undistributed earnings of unconsolidated affiliates

18

Credit for deferred income taxes

(38)

(29)

Changes in assets and liabilities:

Trade, notes, and financing receivables related to sales

(97)

70

Inventories

(926)

(642)

Accounts payable and accrued expenses

(705)

(1,134)

Accrued income taxes payable/receivable

130

(53)

Retirement benefits

(14)

36

Other

(47)

154

Net cash provided by (used for) operating activities

143

(508)

Cash Flows from Investing Activities

Collections of receivables (excluding receivables related to sales)

5,999

5,664

Proceeds from maturities and sales of marketable securities

20

18

Proceeds from sales of equipment on operating leases

460

426

Cost of receivables acquired (excluding receivables related to sales)

(5,300)

(4,303)

Acquisitions of businesses, net of cash acquired

(19)

Purchases of marketable securities

(39)

(34)

Purchases of property and equipment

(154)

(271)

Cost of equipment on operating leases acquired

(294)

(517)

Collateral on derivatives - net

(88)

26

Other

(6)

17

Net cash provided by investing activities

579

1,026

Cash Flows from Financing Activities

Decrease in total short-term borrowings

(695)

(473)

Proceeds from long-term borrowings

1,757

1,702

Payments of long-term borrowings

(1,441)

(1,651)

Proceeds from issuance of common stock

71

53

Repurchases of common stock

(352)

(114)

Dividends paid

(242)

(242)

Other

(31)

(38)

Net cash used for financing activities

(933)

(763)

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

103

(1)

Net Decrease in Cash, Cash Equivalents, and Restricted Cash

(108)

(246)

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

7,172

3,956

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

$
7,064

$
3,710


DEERE & COMPANY
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
For the Three Months Ended January 30, 2022 and January 31, 2021
(In millions of dollars) Unaudited
	2022		2021

Net Income	$	904	$	1,224

Other Comprehensive Income (Loss), Net of Income Taxes
Retirement benefits adjustment		(345)		63
Cumulative translation adjustment		(267)		396
Unrealized gain on derivatives		14		4
Unrealized loss on debt securities		(15)		(2)
Other Comprehensive Income (Loss), Net of Income Taxes		(613)		461

Comprehensive Income of Consolidated Group		291		1,685
Less: Comprehensive income attributable to noncontrolling interests		1
Comprehensive Income Attributable to Deere & Company	$	290	$	1,685

See Condensed Notes to Interim Consolidated Financial Statements.


DEERE & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions of dollars) Unaudited
	January 30		October 31		January 31
	2022		2021		2021
Assets
Cash and cash equivalents	$	4,472	$	8,017	$	6,962
Marketable securities		735		728		667
Receivables from unconsolidated affiliates		33		27		28
Trade accounts and notes receivable – net		4,855		4,208		5,037
Financing receivables – net		33,191		33,799		29,438
Financing receivables securitized – net		3,516		4,659		3,931
Other receivables		1,903		1,738		1,141
Equipment on operating leases – net		6,624		6,988		7,030
Inventories		7,935		6,781		5,956
Property and equipment – net		5,665		5,820		5,741
Investments in unconsolidated affiliates		176		175		178
Goodwill		3,192		3,291		3,194
Other intangible assets – net		1,209		1,275		1,342
Retirement benefits		3,158		3,601		906
Deferred income taxes		923		1,037		1,556
Other assets		2,027		1,970		2,373
Total Assets	$	79,614	$	84,114	$	75,480

Liabilities and Stockholders’ Equity

Liabilities
Short-term borrowings	$	10,990	$	10,919	$	9,224
Short-term securitization borrowings		3,482		4,605		3,969
Payables to unconsolidated affiliates		172		143		119
Accounts payable and accrued expenses		10,479		12,205		9,404
Deferred income taxes		556		576		532
Long-term borrowings		32,838		32,888		32,772
Retirement benefits and other liabilities		3,289		4,344		5,374
Total liabilities		61,806		65,680		61,394

Commitments and contingencies (Note 16)

Stockholders’ Equity
Common stock, $1 par value (issued shares at January 30, 2022 – 536,431,204)		5,066		5,054		4,942
Common stock in treasury		(21,139)		(20,533)		(18,377)
Retained earnings		37,029		36,449		32,596
Accumulated other comprehensive income (loss)		(3,152)		(2,539)		(5,078)
Total Deere & Company stockholders’ equity		17,804		18,431		14,083
Noncontrolling interests		4		3		3
Total stockholders’ equity		17,808		18,434		14,086
Total Liabilities and Stockholders’ Equity	$	79,614	$	84,114	$	75,480

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY

STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY

For the Three Months Ended January 31, 2021 and February 2, 2020

(In millions of dollars) Unaudited

Total Stockholders’ Equity

Deere & Company Stockholders

Accumulated

Total

Other

Redeemable

Stockholders’

Common

Treasury

Retained

Comprehensive

Noncontrolling

Noncontrolling


Equity

Stock

Stock

Earnings

Income (Loss)

Interests

Interest

Balance November 3, 2019

$
11,417

$
4,642

$
(17,474)

$
29,852

$
(5,607)

$
4

$
14

Net income

517

517

1

Other comprehensive income

278

278

Repurchases of common stock

(114)

(114)

Treasury shares reissued

39

39

Dividends declared

(239)

(239)

(1)

Stock options and other

32

33

(1)

Balance February 2, 2020

$
11,930

$
4,675

$
(17,549)

$
30,129

$
(5,329)

$
4

$
14

Balance November 1, 2020

$
12,944

$
4,895

$
(18,065)

$
31,646

$
(5,539)

$
7

ASU No. 2016-13 adoption*

(35)

(35)

Net income

1,224

1,224

Other comprehensive income

461

461

Repurchases of common stock

(352)

(352)

Treasury shares reissued

40

40

Dividends declared

(239)

(239)

Stock options and other

43

47

(4)

Balance January 31, 2021

$
14,086

$
4,942

$
(18,377)

$
32,596

$
(5,078)

$
3

*   See Note 3


DEERE & COMPANY
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Three Months Ended January 30, 2022 and January 31, 2021
(In millions of dollars) Unaudited
	2022		2021
Cash Flows from Operating Activities
Net income	$	904	$	1,224
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision (credit) for credit losses				(5)
Provision for depreciation and amortization		486		538
Impairment charges				50
Share-based compensation expense		18		15
Undistributed earnings of unconsolidated affiliates		(2)		18
Provision (credit) for deferred income taxes		210		(38)
Changes in assets and liabilities:
Trade, notes, and financing receivables related to sales		(106)		(97)
Inventories		(1,297)		(926)
Accounts payable and accrued expenses		(1,554)		(705)
Accrued income taxes payable/receivable		(184)		130
Retirement benefits		(1,010)		(14)
Other		(18)		(47)
Net cash provided by (used for) operating activities		(2,553)		143

Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)		6,435		5,999
Proceeds from maturities and sales of marketable securities		21		20
Proceeds from sales of equipment on operating leases		479		460
Cost of receivables acquired (excluding receivables related to sales)		(5,603)		(5,300)
Acquisitions of businesses, net of cash acquired		(24)		(19)
Purchases of marketable securities		(48)		(39)
Purchases of property and equipment		(193)		(154)
Cost of equipment on operating leases acquired		(391)		(294)
Collateral on derivatives - net		(13)		(88)
Other		(15)		(6)
Net cash provided by investing activities		648		579

Cash Flows from Financing Activities
Decrease in total short-term borrowings		(1,018)		(695)
Proceeds from long-term borrowings		2,353		1,757
Payments of long-term borrowings		(1,940)		(1,441)
Proceeds from issuance of common stock		11		71
Repurchases of common stock		(623)		(352)
Dividends paid		(327)		(242)
Other		(33)		(31)
Net cash used for financing activities		(1,577)		(933)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash		(74)		103

Net Decrease in Cash, Cash Equivalents, and Restricted Cash		(3,556)		(108)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period		8,125		7,172
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	4,569	$	7,064

See Condensed Notes to Interim Consolidated Financial Statements.


DEERE & COMPANY
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY
For the Three Months Ended January 30, 2022 and January 31, 2021
(In millions of dollars) Unaudited
			Total Stockholders’ Equity
			Deere & Company Stockholders
									Accumulated
	Total								Other
	Stockholders’		Common		Treasury		Retained		Comprehensive		Noncontrolling
	Equity		Stock		Stock		Earnings		Income (Loss)		Interests

Balance November 1, 2020	$	12,944	$	4,895	$	(18,065)	$	31,646	$	(5,539)	$	7
ASU No. 2016-13 adoption		(35)						(35)
Net income		1,224						1,224
Other comprehensive income		461								461
Repurchases of common stock		(352)				(352)
Treasury shares reissued		40				40
Dividends declared		(239)						(239)
Stock options and other		43		47								(4)
Balance January 31, 2021	$	14,086	$	4,942	$	(18,377)	$	32,596	$	(5,078)	$	3


Balance October 31, 2021	$	18,434	$	5,054	$	(20,533)	$	36,449	$	(2,539)	$	3
Net income		904						903				1
Other comprehensive loss		(613)								(613)
Repurchases of common stock		(623)				(623)
Treasury shares reissued		17				17
Dividends declared		(323)						(323)
Stock options and other		12		12
Balance January 30, 2022	$	17,808	$	5,066	$	(21,139)	$	37,029	$	(3,152)	$	4

See Condensed Notes to Interim Consolidated Financial Statements.

Condensed Notes to Interim Consolidated Financial Statements (Unaudited)

(1) Organization and Consolidation

The information in the notes and related commentary are presented in a format which includes data grouped as follows:

Consolidated – Represents the consolidation of the equipment operations and financial services. References to “Deere & Company” or “the Company” refer to the entire enterprise.

Equipment Operations – Represents the enterprise without financial services, while including 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.

Financial Services – ~~Includes primarily~~Represents the Company’s financing operations.

~~Consolidated~~ – ~~Represents the consolidation of the equipment operations and financial services. References to “Deere & Company” or “the Company” refer to the entire enterprise.~~

Beginning in fiscal year 2021, the Company implemented a new strategy, operating model, and reporting structure. With this change, the Company’s agriculture and turf operations were divided into two new segments: production and precision agriculture and small agriculture and turf. There were no changes to the construction and forestry and financial services segments. In addition, at the beginning of fiscal year 2021 the Company also reclassified goodwill from identifiable operating assets to corporate assets for segment reporting, as goodwill is no longer considered in evaluating the operating performance of the segments. Additional information on the new segments and the segment financial results are presented in Note 10. Prior period segment information was recast for a consistent presentation. 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 first quarter ends for fiscal year ~~2021~~2022 and ~~2020~~2021 were January 30, 2022 and January 31, 2021, ~~and February 2, 2020,~~ respectively. Both periods contained 13 weeks. Unless otherwise stated, references to particular years or quarters refer to the Company’s fiscal years generally ending in October and the associated periods in those fiscal years.

Prior to ~~November 2, 2020,~~fiscal year 2021, the operating results of the Wirtgen Group (Wirtgen) were incorporated into the Company’s consolidated financial statements ~~using~~on a one-month ~~lag period. In the first quarter of 2021, the~~lag. The reporting lag was eliminated resulting in four months of Wirtgen’s activity in the ~~quarter.~~first quarter of 2021. The effect was an increase to “Net sales” of $270 million, which the Company considers immaterial to construction and forestry’s annual net sales. ~~Prior period results were not restated.~~

Variable Interest Entities

The Company consolidates certain variable interest entities (VIEs) related to retail note securitizations (see Note ~~12)~~10).

The Company also has an interest in a joint venture that manufactures construction equipment in Indaiatuba, Brazil for local and overseas markets. The joint venture is a VIE; however, the Company is not the primary beneficiary. Therefore, the entity’s financial results are not fully consolidated in the Company’s consolidated financial statements, but are included on the equity basis. The maximum exposure to loss was $7$14 million, $5$9 million, and ~~$19~~$7 million at January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020,~~January 31, 2021, respectively. On August 19, 2021, the Company announced the dissolution of the joint venture with Hitachi Construction Machinery Co., Ltd. and the purchase of the shares in the relevant joint venture manufacturing entities including the above referenced factory in Indaiatuba, Brazil. The transaction is expected to close in the second quarter of 2022, subject to the receipt of certain required regulatory approvals and satisfaction of certain other customary closing conditions.

(2) Summary of Significant Accounting Policies and ~~Cash Flow Information~~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 adjustments, consisting of normal recurring adjustments, have been included. Management believes ~~that~~ 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 ~~that~~ 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. ~~The COVID pandemic has resulted in uncertainties in the Company’s business, which may result in actual~~Actual results ~~differing~~could differ from those estimates.

~~Cash Flow Information~~Revenue Recognition
~~All cash flows from~~Prior to fiscal year 2022, certain goods were shipped to Canadian dealers on a consignment basis under which the ~~changes in trade accounts~~risk and ~~notes receivable are classified as operating activities in the statement~~rewards of ~~consolidated cash flows as these receivables arise from sales~~ownership were not transferred to the ~~Company’s customers. Cash flows from financing receivables that are related to~~dealer at the time the goods were delivered. Accordingly, sales to the Company’s customers are also included in operating activities. The remaining financing receivables are related to the financing of equipment sold by independent dealers and are included in investing activities.
~~The Company had the following non-cash operating and investing activities that~~ were not ~~included~~recorded until a retail customer purchased the goods. The dealer contract in Canada was changed for goods delivered after November 1, 2021, resulting in transfer of control and revenue recognition upon delivery. For certain goods delivered to Canadian dealers prior to November 1, 2021, the ~~statement~~dealer consignment terms already in place remain in effect. As of ~~consolidated cash flows. The Company transferred~~January 30, 2022 and October 31, 2021, the remaining consigned inventory ~~to equipment on operating leases of approximately $84~~was $91 million and ~~$112~~$150 million, in the first three months of 2021 and 2020, respectively. The Company also had accounts payable related to purchases of property and equipment of approximately $39 million and $48 million at January 31, 2021 and February 2, 2020, respectively.
~~The Company’s restricted cash held at January 31, 2021, November 1, 2020, February 2, 2020, and November 3, 2019 was as follows in millions of dollars:~~

January 31

November 1

February 2

November 3

2021

2020

2020

2019

Equipment operations

$
11

$
11

$
21

$
21

Financial services

91

95

87

78

Total

$
102

$
106

$
108

$
99

The equipment operations’ restricted cash relates to miscellaneous operational activities. The financial services restricted cash primarily relates to securitization of financing receivables (see Note 12). The restricted cash is recorded in “Other assets” in the consolidated balance sheet.

~~(3)~~~~New Accounting Standards~~Revenue Recognition
~~New Accounting Standards Adopted~~
In the first quarter of 2021, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments, which establishes Accounting Standards Codification (ASC) 326, Financial Instruments - Credit Losses. This ASU was adopted using a ~~modified-retrospective~~ approach. The ASU, along with related amendments, revised the measurement of credit losses for financial assets measured at amortized cost from an incurred loss to an expected loss methodology. The ASU affects receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash.
~~The Company holds deposits from dealers (dealer deposits), which are recorded in “Accounts payable and accrued liabilities” to absorb certain credit losses.~~ Prior to ~~adopting this ASU,~~fiscal year 2022, certain goods were shipped to Canadian dealers on a consignment basis under which the ~~allowance for credit losses was estimated on probable credit losses incurred after consideration~~risk and rewards of recoveries from dealer deposits. The ASU considers dealer deposits and certain credit insurance contracts as freestanding credit enhancements. As a result, after adoption, credit losses recovered from dealer deposits and certain credit insurance contracts are presented in “Other income” and no longer as part of the allowance for credit losses or the provision for credit losses. The ASU also modified the treatment of the estimated write-off of delinquent receivables by no longer including the estimated benefit of chargesownership were not transferred to the dealer ~~deposits~~at the time the goods were delivered. Accordingly, sales were not recorded until a retail customer purchased the goods. The dealer contract in ~~the write-off amount. This change increases the estimated write-offs on delinquent financing receivables with the benefit~~Canada was changed for goods delivered after November 1, 2021, resulting in transfer of ~~credit losses recovered from dealer deposits presented in “Other income.” This benefit, in both situations, is recorded when~~control and revenue recognition upon delivery. For certain goods delivered to Canadian dealers prior to November 1, 2021, the dealer ~~deposits are charged~~consignment terms already in place remain in effect. As of January 30, 2022 and ~~no longer based on estimated recoveries.~~

~~The effects of adopting~~October 31, 2021, the ~~ASU on the consolidated balance sheet follows in millions of dollars:~~

November 1

Cumulative Effect

November 2

2020

from Adoption

2020

Assets

Trade accounts and note receivable - net

$
4,171

$
2

$
4,173

Financing receivables - net

29,750

(27)

29,723

Financing receivables securitized - net

4,703

(4)

4,699

Deferred income taxes

1,499

1

1,500

Liabilities

Accounts payable and accrued expenses

$
10,112

$
14

$
10,126

Deferred income taxes

519

(7)

512

Stockholders’ equity

Retained earnings

$
31,646

$
(35)

$
31,611

remaining consigned inventory was $91 million and $150 million, respectively.
~~Note 11 contains additional disclosures as well as the Company’s updated allowance for credit losses accounting policy.~~
~~The Company also adopted the following standards in 2021, none of which had a material effect on the Company’s consolidated financial statements:~~

~~No. 2018-15~~
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which amends ASC 350-40, Intangibles – Goodwill and Other – Internal-Use Software

~~No. 2019-04~~
~~Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~

~~No. 2021-01~~
~~Reference Rate Reform (Topic 848): Scope~~

~~New Accounting Standards to be Adopted~~
~~The Company will adopt the following standards in future periods, none of which are expected to have a material effect on the Company’s consolidated financial statements:~~

~~No. 2019-12~~
~~Simplifying the Accounting for Income Taxes, which amends ASC 740, Income Taxes~~

~~No. 2020-08~~
~~Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs~~

~~(4)~~Revenue Recognition
Prior to fiscal year 2022, certain goods were shipped to Canadian dealers on a consignment basis under which the risk and rewards of ownership were not transferred to the dealer at the time the goods were delivered. Accordingly, sales were not recorded until a retail customer purchased the goods. The dealer contract in Canada was changed for goods delivered after November 1, 2021, resulting in transfer of control and revenue recognition upon delivery. For certain goods delivered to Canadian dealers prior to November 1, 2021, the dealer consignment terms already in place remain in effect. As of January 30, 2022 and October 31, 2021, the remaining consigned inventory was $91 million and $150 million, respectively.
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 2022 did not have a material impact on the Company’s financial statements, and ASUs to be adopted in future periods are not expected to have a material impact on the Company’s financial statements.

(3)Cash Flow Information
All cash flows from the changes in trade accounts and notes receivable are classified as operating activities in the statement of consolidated cash flows as these receivables arise from sales to the Company’s customers. Cash flows from financing receivables that are related to sales to the Company’s customers are also included in operating activities. The remaining financing receivables are related to the financing of equipment sold by independent dealers and are included in investing activities.
The Company had the following non-cash operating and investing activities that were not included in the statement of consolidated cash flows. The Company transferred inventory to equipment on operating leases of $20 million and $84 million in the first three months of 2022 and 2021, respectively. The Company also had accounts payable related to purchases of property and equipment of $43 million and $39 million at January 30, 2022 and January 31, 2021, respectively.
The Company’s restricted cash was as follows in millions of dollars:

January 30

October 31

January 31

2022

2021

2021

Equipment operations

$
12

$
12

$
11

Financial services

85

96

91

Total

$
97

$
108

$
102

The restricted cash, recorded in “Other assets” in the consolidated balance sheet, primarily relates to securitizations of financing receivables (see Note 10).

(4)Revenue Recognition
The Company’s ~~revenue~~net sales and revenues by primary ~~geographical~~geographic market, major product line, and timing of revenue recognition in millions of dollars follow:

Three Months Ended January 31, 2021

Three Months Ended January 30, 2022

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Financial Services

Total

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Financial Services

Total

Primary geographical markets:





Primary geographic markets:





United States

$
1,608

$
1,424

$
1,202

$
598

$
4,832

$
1,608

$
1,438

$
1,260

$
573

$
4,879

Canada

112

79

188

154

533

139

122

332

152

745

Western Europe

449

486

439

24

1,398

467

532

358

26

1,383

Central Europe and CIS

161

84

178

9

432

202

126

195

11

534

Latin America

513

77

170

59

819

776

104

228

68

1,176

Asia, Africa, Australia, New Zealand, and Middle East

304

401

353

40

1,098

241

352

219

40

852

Total

$
3,147

$
2,551

$
2,530

$
884

$
9,112

$
3,433

$
2,674

$
2,592

$
870

$
9,569

Major product lines:









Production Agriculture

$
3,011

$
3,011

Small Agriculture

$
1,812

1,812

Production agriculture

$
3,283

$
3,283

Small agriculture

$
1,932

1,932

Turf

651

651

627

627

Construction

$
887

887

$
1,175

1,175

Compact Construction

346

346

Compact construction

321

321

Roadbuilding

910

910

692

692

Forestry

290

290

305

305

Financial Products

16

10

7

$
884

917

Financial products

12

11

5

$
870

898

Other

120

78

90

288

138

104

94

336

Total

$
3,147

$
2,551

$
2,530

$
884

$
9,112

$
3,433

$
2,674

$
2,592

$
870

$
9,569

Timing of revenue recognition:





Revenue recognized at a point in time

$
3,105

$
2,535

$
2,500

$
24

$
8,164

Revenue recognized over time

42

16

30

860

948

Revenue recognized:





At a point in time

$
3,396

$
2,654

$
2,570

$
24

$
8,644

Over time

37

20

22

846

925

Total

$
3,147

$
2,551

$
2,530

$
884

$
9,112

$
3,433

$
2,674

$
2,592

$
870

$
9,569

Three Months Ended February 2, 2020

Three Months Ended January 31, 2021

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Financial Services

Total

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Financial Services

Total

Primary geographical markets:





Primary geographic markets:





United States

$
1,433

$
1,067

$
1,020

$
643

$
4,163

$
1,608

$
1,424

$
1,202

$
598

$
4,832

Canada

75

63

172

156

466

112

79

188

154

533

Western Europe

365

413

339

22

1,139

449

486

439

24

1,398

Central Europe and CIS

131

89

159

10

389

161

84

178

9

432

Latin America

383

72

159

66

680

513

77

170

59

819

Asia, Africa, Australia, New Zealand, and Middle East

189

315

256

34

794

304

401

353

40

1,098

Total

$
2,576

$
2,019

$
2,105

$
931

$
7,631

$
3,147

$
2,551

$
2,530

$
884

$
9,112

Major product lines:









Production Agriculture

$
2,425

$
2,425

Small Agriculture

$
1,479

1,479

Production agriculture

$
3,011

$
3,011

Small agriculture

$
1,812

1,812

Turf

468

468

651

651

Construction

$
841

841

$
887

887

Compact Construction

288

288

Compact construction

346

346

Roadbuilding

605

605

910

910

Forestry

274

274

290

290

Financial Products

18

9

7

$
931

965

Financial products

16

10

7

$
884

917

Other

133

63

90

286

120

78

90

288

Total

$
2,576

$
2,019

$
2,105

$
931

$
7,631

$
3,147

$
2,551

$
2,530

$
884

$
9,112

Timing of revenue recognition:





Revenue recognized at a point in time

$
2,536

$
2,004

$
2,079

$
26

$
6,645

Revenue recognized over time

40

15

26

905

986

Revenue recognized:





At a point in time

$
3,105

$
2,535

$
2,500

$
24

$
8,164

Over time

42

16

30

860

948

Total

$
2,576

$
2,019

$
2,105

$
931

$
7,631

$
3,147

$
2,551

$
2,530

$
884

$
9,112

109

~~The~~Following is a description of the Company’s major product ~~lines are described as follows:~~lines:

Production ~~Agriculture~~agriculture – Includes net sales of large and certain mid-size tractors and associated attachments, combines, cotton pickers, cotton strippers, ~~and~~ sugarcane harvesters, sugarcane loaders and pull behind scrapers, tillage, seeding, and application equipment, including sprayers and nutrient management and soil preparation machinery, and related attachments and service parts.

Small ~~Agriculture~~agriculture – Includes net sales of mid-size and utility tractors, self-propelled forage harvesters, hay and forage equipment, balers, mowers, and related attachments and service parts.

Turf – Includes net sales of turf and utility equipment, including riding lawn equipment, golf course equipment, utility vehicles, and commercial mowing equipment, along with a broad line of associated implements, other outdoor power products, and related attachments and service parts.

Construction – Includes net sales of a broad range of machines used in construction, earthmoving, and material handling, including backhoe loaders, crawler dozers and loaders, four-wheel-drive loaders, excavators, motor graders, articulated dump trucks, and related attachments and service parts.

Compact ~~Construction~~construction – Includes net sales of smaller construction equipment, including compact excavators, compact track loaders, compact wheel loaders, skid steers, landscape loaders, and related attachments and service parts.

Roadbuilding – Includes net sales of equipment used in roadbuilding and renovation, including milling machines, recyclers, slipform pavers, surface miners, asphalt pavers, compactors, tandem and static rollers, mobile crushers and screens, mobile and stationary asphalt plants, and related attachments and service parts.

Forestry – Includes net sales of equipment used in timber harvesting, including log skidders, feller bunchers, log loaders, log forwarders, log harvesters, and related attachments and service parts.

Financial ~~Products~~products – Includes finance and interest income primarily from retail notes related to sales of John Deere equipment to ~~end~~retail customers, wholesale financing to dealers of John Deere equipment, and revolving charge accounts; ~~lease~~ income from retail leases of John Deere equipment; and revenue from extended warranties.

Other – Includes sales of ~~certain~~ components to other equipment manufacturers that are included in “Net sales”; and revenue earned over time from precision guidance, telematics, and other information enabled solutions, revenue from service performed at ~~Company~~company owned dealerships and service centers, gains on disposition of property and businesses, trademark licensing revenue, and other miscellaneous revenue ~~items.~~items that are included in “Other income.”

The Company invoices in advance of recognizing the sale of certain products and the revenue for certain services. These items are primarily for premiums for extended warranties, 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 sheet. The deferred revenue received, but not recognized in revenue, including extended warranty premiums also shown in Note 16, was ~~$1,169~~$1,348 million, ~~$1,090~~$1,344 million, and ~~$1,070~~$1,169 million at January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020,~~January 31, 2021, respectively. The contract liability is reduced as the revenue is recognized. During the three months ended January 30, 2022 and January 31, 2021, ~~and February 2, 2020, $223~~$265 million and ~~$181~~$223 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 Company entered into contracts with customers to deliver equipment and services that have not been recognized at January 31, 2021 because the equipment or services have not been provided. These contracts primarily relate to extended warranty and certain precision guidance and telematic services. The amount of unsatisfied performance obligations for contracts with an original duration greater than one year is ~~$925~~$1,056 million at January ~~31, 2021.~~30, 2022. The estimated revenue to be recognized by fiscal year in millions of dollars follows: remainder of ~~2021~~ ~~- $274,~~ 2022 - ~~$291,~~$219, 2023 - ~~$195,~~$297, 2024 - ~~$104,~~$232, 2025 - ~~$43,~~$143, 2026 - ~~$15~~$72, 2027 - $40 and later years - ~~$3. The~~$53. As permitted, the Company ~~discloses unsatisfied~~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 generally for sales ~~to dealers and end customers for~~of equipment, service parts, repair services, and certain telematics services.

During 2020, the Company provided short-term payment relief on trade accounts and notes receivables to independent dealers and certain other customers that were negatively affected by the economic effects of COVID. The relief was provided both in regional programs and case-by-case situations with creditworthy

1110

customers. This relief generally included payment deferrals not exceeding three months, extending interest-free periods for up to an additional three months with the total interest-free period not to exceed one year, or reducing interest rates for a maximum of three months. The trade receivable balance granted relief and remaining outstanding at January 31, 2021 was not material.

(5) Other Comprehensive Income Items
The after-tax ~~changes in~~components of accumulated other comprehensive income (loss) in millions of dollars follow:










Total

Unrealized

Unrealized

Accumulated

Retirement

Cumulative

Gain (Loss)

Gain (Loss)

Other

Benefits

Translation

on

on

Comprehensive

Adjustment

Adjustment

Derivatives

Debt Securities

Income (Loss)

Balance November 3, 2019

$
(3,915)

$
(1,651)

$
(60)

$
19

$
(5,607)

Other comprehensive income (loss) items before reclassification

186

43

(1)

5

233

Amounts reclassified from accumulated other comprehensive income

44

1

45

Net current period other comprehensive income (loss)

230

43

5

278

Balance February 2, 2020

$
(3,685)

$
(1,608)

$
(60)

$
24

$
(5,329)

Balance November 1, 2020

$
(3,918)

$
(1,596)

$
(58)

$
33

$
(5,539)

Other comprehensive income (loss) items before reclassification

(1)

396

(2)

393

Amounts reclassified from accumulated other comprehensive income

64

4

68

Net current period other comprehensive income (loss)

63

396

4

(2)

461

Balance January 31, 2021

$
(3,855)

$
(1,200)

$
(54)

$
31

$
(5,078)

January 30

October 31

January 31

2022

2021

2021

Retirement benefits adjustment

$
(1,379)

$
(1,034)

$
(3,855)

Cumulative translation adjustment

(1,745)

(1,478)

(1,200)

Unrealized loss on derivatives

(28)

(42)

(54)

Unrealized gain on debt securities

15

31

Total accumulated other comprehensive income (loss)

$
(3,152)

$
(2,539)

$
(5,078)

~~Amounts~~Following are amounts recorded in and reclassifications out of other comprehensive income (loss), and the income tax effects, in millions of ~~dollars follow:~~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 7).


Before

Tax

After


Before

Tax

After

Tax

(Expense)

Tax

Tax

(Expense)

Tax

Three Months Ended January 31, 2021

Amount

Credit

Amount

Three Months Ended January 30, 2022

Amount

Credit

Amount

Cumulative translation adjustment

$
394

$
2

$
396

$
(264)

$
(3)

$
(267)

Unrealized gain (loss) on derivatives:

Unrealized hedging gain (loss)

15

(3)

12

Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense

5

(1)

4

2

2

Net unrealized gain (loss) on derivatives

5

(1)

4

17

(3)

14

Unrealized gain (loss) on debt securities:

Unrealized holding gain (loss)

(3)

1

(2)

(19)

4

(15)

Net unrealized gain (loss) on debt securities

(3)

1

(2)

(19)

4

(15)

Retirement benefits adjustment:

Net actuarial gain (loss)

(1)

(1)

(500)

120

(380)

Reclassification to other operating expenses through amortization of: *

Reclassification to other operating expenses through amortization of:

Actuarial (gain) loss

70

(17)

53

40

(10)

30

Prior service (credit) cost

2

(1)

1

6

(2)

4

Settlements

13

(3)

10

1

1

Net unrealized gain (loss) on retirement benefits adjustment

84

(21)

63

(453)

108

(345)

Total other comprehensive income (loss)

$
480

$
(19)

$
461

$
(719)

$
106

$
(613)


Before

Tax

After

Tax

(Expense)

Tax

Three Months Ended January 31, 2021

Amount

Credit

Amount

Cumulative translation adjustment

$
394

$
2

$
396

Unrealized gain (loss) on derivatives:

Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense

5

(1)

4

Net unrealized gain (loss) on derivatives

5

(1)

4

Unrealized gain (loss) on debt securities:

Unrealized holding gain (loss)

(3)

1

(2)

Net unrealized gain (loss) on debt securities

(3)

1

(2)

Retirement benefits adjustment:

Net actuarial gain (loss)

(1)

(1)

Reclassification to other operating expenses through amortization of:

Actuarial (gain) loss

70

(17)

53

Prior service (credit) cost

2

(1)

1

Settlements

13

(3)

10

Net unrealized gain (loss) on retirement benefits adjustment

84

(21)

63

Total other comprehensive income (loss)

$
480

$
(19)

$
461

1211

Before

Tax

After

Tax

(Expense)

Tax

Three Months Ended February 2, 2020

Amount

Credit

Amount

Cumulative translation adjustment

$
43

$
43

Unrealized gain (loss) on derivatives:

Unrealized hedging gain (loss)

(2)

$
1

(1)

Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense

2

(1)

1

Net unrealized gain (loss) on derivatives

Unrealized gain (loss) on debt securities:

Unrealized holding gain (loss)

6

(1)

5

Net unrealized gain (loss) on debt securities

6

(1)

5

Retirement benefits adjustment:

Net actuarial gain (loss)

246

(60)

186

Reclassification to other operating expenses through amortization of: *

Actuarial (gain) loss

69

(28)

41

Prior service (credit) cost

2

(1)

1

Settlements

3

(1)

2

Net unrealized gain (loss) on retirement benefits adjustment

320

(90)

230

Total other comprehensive income (loss)

$
369

$
(91)

$
278

*~~These accumulated other comprehensive income amounts are included in net periodic pension and OPEB costs. See Note 8 for additional detail.~~
~~In the first quarter of~~ ~~2021~~ ~~and~~ ~~2020, the noncontrolling interests’ comprehensive income was NaN and $1 million, respectively, which consisted of net income.~~

(6) ~~Dividends Declared and Paid~~
~~Dividends declared and paid on a per share basis were as follows:~~

Three Months Ended

January 31

February 2

2021

2020

Dividends declared

$
.76

$
.76

Dividends paid

$
.76

$
.76

~~(7)~~Earnings Per Share
A reconciliation of basic and diluted net income per share attributable to Deere & Company follows in millions, except per share amounts:

Three Months Ended

Three Months Ended

January 31

February 2

January 30

January 31

2021

2020

2022

2021

Net income attributable to Deere & Company

$
1,224

$
517


$
903

$
1,224

Average shares outstanding

313.5

313.5

307.4

313.5

Basic per share

$
3.90

$
1.65

$
2.94

$
3.90

Average shares outstanding

313.5

313.5

307.4

313.5

Effect of dilutive share-based compensation

2.6

3.7

2.0

2.6

Total potential shares outstanding

316.1

317.2

309.4

316.1

Diluted per share

$
3.87

$
1.63

$
2.92

$
3.87

During both the first quarter of ~~2021~~2022 and ~~2020,~~2021, .1 million shares ~~and .2 million shares, respectively,~~ were excluded from the computation because the incremental shares would have been antidilutive.

~~(8)~~(7) Pension and Other Postretirement Benefits
The Company has several defined benefit pension plans and postretirement benefit (OPEB) plans, primarily health care and life insurance plans, covering its U.S. employees and employees in certain foreign countries.
The ~~worldwide~~ components of net periodic pension cost consisted of the following in millions of dollars:

Three Months Ended

Three Months Ended

January 31

February 2

January 30

January 31

2021

2020

2022

2021

Service cost

$
85

$
84


$
85

$
85

Interest cost

69

87

77

69

Expected return on plan assets

(200)

(205)

(182)

(200)

Amortization of actuarial loss

63

62

39

63

Amortization of prior service cost

3

3

7

3

Settlements

13

3

1

13

Net cost

$
33

$
34

$
27

$
33

The ~~worldwide~~ components of net periodic OPEB cost consisted of the following in millions of dollars:

Three Months Ended

Three Months Ended

January 31

February 2

January 30

January 31

2021

2020

2022

2021

Service cost

$
12

$
12


$
12

$
12

Interest cost

26

37

26

26

Expected return on plan assets

(19)

(12)

(28)

(19)

Amortization of actuarial loss

7

7

1

7

Amortization of prior service credit

(1)

(1)

(1)

(1)

Curtailments

21

Net cost

$
25

$
64

$
10

$
25

The components of net periodic pension and OPEB costs excluding the service cost component are included in the line item “Other operating expenses” in the statement of consolidated income. Overall pension and OPEB net costs decreased from the prior year due to reduced amortization of actuarial losses, partially offset by the impacts of the U.S. hourly pension plan remeasurement.
On November 17, 2021, employees represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) approved a new collective bargaining agreement. In the first quarter of ~~2020,~~2022, the Company remeasured the U.S. ~~salary OPEB health care plans~~hourly pension plan due to the ~~U.S. voluntary employee-separation program (see Note 20),~~new collective bargaining agreement, which ~~resulted~~decreased the plan’s funded status by approximately $495 million and will increase pension expense in ~~a $21~~2022 by nearly $80 million. For the first quarter of 2022, the remeasurement increased pension expense by $14 million, ~~curtailment loss.~~with $6 million negatively impacting operating profit.

During the first three months of ~~2021,~~2022, the Company contributed ~~approximately $42~~$18 million to its pension plans and ~~$57~~$1,051 million to its OPEB plans. The OPEB contributions include a voluntary contribution of $1,000 million to a U.S. plan made on November 30, 2021. The Company presently anticipates contributing an additional ~~$58~~$70 million to its pension plans and ~~$789~~$86 million to its OPEB plans during the remainder of fiscal year ~~2021. The anticipated OPEB contributions include a voluntary $700 million in the fourth quarter to a U.S. plan, which will increase plan assets.~~2022. These pension and ~~remaining~~ OPEB contributions primarily include direct benefit payments from Company funds.

~~(9)~~~~Income Taxes~~

In January 2020, the Company changed the corporate structure of two foreign holding subsidiaries to be indirect branches of Deere & Company. The change in tax status generated a capital loss that will be carried back in the Company’s U.S. income tax return, which resulted in a $43 million benefit in the first quarter of 2020. In addition, the Company recognized a discrete benefit for the excess tax benefits related to vesting or exercise of share-based compensation awards of $39 million and $24 million in the first quarters of 2021 and 2020, respectively.

The Company’s unrecognized tax benefits at January 31, 2021 were $710 million, compared to $668 million at November 1, 2020. The liability at January 31, 2021, November 1, 2020, and February 2, 2020 consisted of approximately $148 million, $134 million, and $105 million, respectively, which would affect the effective tax rate if the tax benefits were recognized. The remaining liability was related to tax positions for which there are offsetting tax receivables, or the uncertainty was only related to timing. The changes in the unrecognized tax benefits for the first three months of 2021 were not significant. The Company expects that any reasonably possible change in the amounts of unrecognized tax benefits in the next 12 months would not be material.

~~(10)~~(8) Segment Reporting
Beginning in fiscal year 2021, the Company implemented a new strategy, operating model, and reporting structure. With this change, the Company’s agriculture and turf operations were divided into two new segments, which are described as follows:
~~The~~ ~~production and precision agriculture~~ segment is responsible for defining, developing, and delivering global equipment and technology solutions to unlock customer value for production-scale growers of large grains, small grains, cotton, and sugar. Main products include large and certain mid-size tractors, combines, cotton pickers, sugarcane harvesters and loaders, and soil preparation, seeding, application and crop care equipment.
~~The~~ ~~small agriculture and turf~~ segment is responsible for defining, developing, and delivering market-driven products to support mid-size and small growers and producers globally as well as turf customers. The operations are principally organized to support production systems for dairy and livestock, high-value crops, and turf and utility operators. Primary products include certain mid-size and small tractors, as well as hay and forage equipment, riding and commercial lawn equipment, golf course equipment, and utility vehicles.
~~There were no reporting changes for the construction and forestry and financial services segments. As a result, the Company has 4 reportable segments.~~
Worldwide net sales and revenues, operating profit, and identifiable assets by segment were as follows in millions of ~~dollars follow:~~

Three Months Ended

January 31

February 2

%


2021

2020

Change

Net sales and revenues:







Production & precision ag

$
3,069

$
2,507

+22

Small ag & turf

2,515

1,979

+27

Construction & forestry

2,467

2,044

+21

Total net sales

8,051

6,530

+23

Financial services

884

931

-5

Other revenues

177

170

+4

Total net sales and revenues

$
9,112

$
7,631

+19

Operating profit: *

Production & precision ag

$
643

$
218

+195

Small ag & turf

469

155

+203

Construction & forestry

268

93

+188

Financial services

258

179

+44

Total operating profit

1,638

645

+154

Reconciling items **

(106)

(78)

+36

Income taxes

(308)

(50)

+516

Net income attributable to Deere & Company

$
1,224

$
517

+137

Intersegment sales and revenues:

Production & precision ag net sales

$
6

$
6

Small ag & turf net sales

3

1

+200

Construction & forestry net sales

Financial services

50

67

-25

Equipment operations outside the U.S. and Canada:

Net sales

$
3,522

$
2,780

+27

Operating profit

563

225

+150

*dollars. Operating profit is income from continuing operations before ~~corporate expenses, certain external interest expense, certain foreign exchange gains and losses,~~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 ~~expense,~~expenses, certain foreign exchange gains and losses, pension and ~~postretirement~~OPEB benefit costs excluding the service cost component, and net income attributable to noncontrolling interests.

Three Months Ended

January 30

January 31

%


2022

2021

Change

Net sales and revenues:







Production & precision ag net sales

$
3,356

$
3,069

+9

Small ag & turf net sales

2,631

2,515

+5

Construction & forestry net sales

2,544

2,467

+3

Financial services revenues

870

884

-2

Other revenues

168

177

-5

Total net sales and revenues

$
9,569

$
9,112

+5

Operating profit:

Production & precision ag

$
296

$
643

-54

Small ag & turf

371

469

-21

Construction & forestry

272

268

+1

Financial services

296

258

+15

Total operating profit

1,235

1,638

-25

Reconciling items

(82)

(106)

-23

Income taxes

(250)

(308)

-19

Net income attributable to Deere & Company

$
903

$
1,224

-26

Intersegment sales and revenues:

Production & precision ag net sales

$
4

$
6

-33

Small ag & turf net sales

2

3

-33

Construction & forestry net sales

Financial services revenues

46

50

-8

Operating profit outside the U.S. and Canada:

Production & precision ag

$
282

$
228

+24

Small ag & turf

310

242

+28

Construction & forestry

144

93

+55

Financial services

70

66

+6

Total operating profit outside the U.S. and Canada

$
806

$
629

+28


January 30

October 31

January 31

2022

2021

2021

Identifiable assets:

Production & precision ag

$
7,683

$
7,021

$
6,330

Small ag & turf

4,260

3,959

3,510

Construction & forestry

6,358

6,457

6,341

Financial services

50,499

51,624

48,378

Corporate

10,814

15,053

10,921

Total assets

$
79,614

$
84,114

$
75,480

1513

At the beginning of fiscal year 2021, the Company reclassified goodwill from identifiable operating segment assets to corporate assets for segment reporting, as goodwill is no longer considered in evaluating the operating performance of the segments. Prior period amounts have been restated for a consistent presentation.


January 31

November 1

February 2

2021

2020

2020

Identifiable assets:

Production & precision ag

$
6,330

$
5,708

$
6,407

Small ag & turf

3,510

3,266

3,838

Construction & forestry

6,341

6,322

7,002

Financial services

48,378

48,719

47,279

Corporate

10,921

11,076

7,295

Total assets

$
75,480

$
75,091

$
71,821

~~(11)~~(9) 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 ~~loans~~receivables for which the Company has ceased accruing finance income. The Company ceases accruing finance income ~~and accrued finance income previously recognized is reversed~~ 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.
Due to the economic effects of COVID, the Company provided short-term relief to dealers and retail customers during 2020, and to a much lesser extent in 2021. The relief was provided in regional programs and on a case-by-case basis with customers that were generally current in their payment obligations. Financing receivables granted relief represented approximately 4 percent of the financing receivables balance at January 31, 2021. The majority of financing receivables granted short-term relief during 2020 are beyond the deferral period and have either resumed making payments or are reported as delinquent based on the modified payment schedule.
While the Company implemented a new strategy in fiscal year 2021 resulting in new operating segments, assets managed by financial services, including most financing receivables and equipment on operating leases, continue to be evaluated by market (agriculture and turf or construction and forestry).
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 at January 31, 2021 was as follows:~~dollars:

Year of Origination

January 30, 2022

2021

2020

2019

2018

2017

Prior

Revolving Charge Accounts

Total

2022

2021

2020

2019

2018

Prior Years

Revolving Charge Accounts

Total

Customer receivables:

























Retail customer receivables:

























Agriculture and turf

Current

$
2,531

$
9,427

$
5,129

$
2,817

$
1,400

$
686

$
2,564

$
24,554

$
2,492

$
11,580

$
5,988

$
3,038

$
1,440

$
761

$
2,634

$
27,933

30-59 days past due

4

65

49

30

13

7

27

195

5

82

52

30

15

6

25

215

60-89 days past due

20

17

11

5

3

5

61

1

23

18

10

5

3

5

65

90+ days past due

1

1

1

1

Non-performing

40

78

57

36

46

7

264

1

33

58

52

31

36

6

217

Construction and forestry

Current

737

2,251

1,276

573

164

39

77

5,117

764

2,795

1,376

615

204

49

81

5,884

30-59 days past due

5

53

32

17

6

1

3

117

8

68

35

21

6

2

3

143

60-89 days past due

1

15

16

7

3

1

1

44

30

17

7

3

1

1

59

90+ days past due

9

13

5

4

2

33

2

3

3

1

8

17

Non-performing

26

34

26

14

8

1

109

33

48

37

14

7

1

140

Total customer receivables

$
3,278

$
11,906

$
6,645

$
3,543

$
1,645

$
793

$
2,685

$
30,495

Total retail customer receivables

$
3,271

$
14,647

$
7,595

$
3,813

$
1,719

$
873

$
2,756

$
34,674

October 31, 2021

2021

2020

2019

2018

2017

Prior Years

Revolving Charge Accounts

Total

Retail customer receivables:


















Agriculture and turf

Current

$
12,877

$
6,676

$
3,463

$
1,738

$
728

$
211

$
3,704

$
29,397

30-59 days past due

43

53

29

16

7

3

14

165

60-89 days past due

16

23

12

6

3

1

4

65

90+ days past due

1

1

Non-performing

23

57

53

32

17

23

7

212

Construction and forestry

Current

3,122

1,575

754

273

57

7

92

5,880

30-59 days past due

50

40

27

7

4

1

3

132

60-89 days past due

15

11

9

6

1

1

43

90+ days past due

1

2

3

3

4

2

15

Non-performing

26

56

39

17

7

3

148

Total retail customer receivables

$
16,173

$
8,494

$
4,389

$
2,098

$
828

$
251

$
3,825

$
36,058

1614

~~The credit quality analysis of customer receivables in millions of dollars at November 1, 2020 and February 2, 2020 was as follows:~~

November 1, 2020

February 2, 2020

Customer receivables:

Retail Notes & Financing Leases

Revolving Charge Accounts

Total

Retail Notes & Financing Leases

Revolving Charge Accounts

Total

Agriculture and turf

Current

$
21,597

$
3,787

$
25,384

$
19,455

$
2,578

$
22,033

30-59 days past due

135

13

148

162

53

215

60-89 days past due

64

4

68

71

15

86

90+ days past due

2

2

4

4

Non-performing

263

6

269

301

6

307

Construction and forestry

Current

4,859

88

4,947

4,362

75

4,437

30-59 days past due

111

2

113

121

4

125

60-89 days past due

55

1

56

46

1

47

90+ days past due

14

14

19

19

Non-performing

106

1

107

156

1

157

Total customer receivables

$
27,206

$
3,902

$
31,108

$
24,697

$
2,733

$
27,430

January 31, 2021

2021

2020

2019

2018

2017

Prior Years

Revolving Charge Accounts

Total

Retail customer receivables:


















Agriculture and turf

Current

$
2,531

$
9,427

$
5,129

$
2,817

$
1,400

$
686

$
2,564

$
24,554

30-59 days past due

4

65

49

30

13

7

27

195

60-89 days past due

20

17

11

5

3

5

61

90+ days past due

1

1

Non-performing

40

78

57

36

46

7

264

Construction and forestry

Current

737

2,251

1,276

573

164

39

77

5,117

30-59 days past due

5

53

32

17

6

1

3

117

60-89 days past due

1

15

16

7

3

1

1

44

90+ days past due

9

13

5

4

2

33

Non-performing

26

34

26

14

8

1

109

Total retail customer receivables

$
3,278

$
11,906

$
6,645

$
3,543

$
1,645

$
793

$
2,685

$
30,495

The credit quality analysis of wholesale receivables by year of origination was as follows in millions of ~~dollars at January 31, 2021 was as follows:~~dollars:

Year of Origination

January 30, 2022

2021

2020

2019

2018

2017

Prior

Revolving

Total

2022

2021

2020

2019

2018

Prior Years

Revolving

Total

Wholesale receivables:

















































Agriculture and turf

Current

$
78

$
226

$
67

$
18

$
8

$
1

$
2,297

$
2,695

$
101

$
244

$
56

$
11

$
7

$
2

$
1,426

$
1,847

30-59 days past due

60-89 days past due

90+ days past due

30+ days past due

Non-performing

35

35

7

7

Construction and forestry

Current

3

11

20

2

1

2

315

354

5

38

4

3

1

285

336

30-59 days past due

60-89 days past due

90+ days past due

1

1

30+ days past due

1

1

Non-performing

Total wholesale receivables

$
81

$
237

$
122

$
20

$
9

$
4

$
2,612

$
3,085

$
106

$
282

$
60

$
21

$
7

$
4

$
1,711

$
2,191

October 31, 2021

2021

2020

2019

2018

2017

Prior Years

Revolving

Total

Wholesale receivables:

























Agriculture and turf

Current

$
346

$
80

$
22

$
9

$
3

$
1,696

$
2,156

30+ days past due

Non-performing

12

12

Construction and forestry

Current

41

7

7

1

$
1

340

397

30+ days past due

1

1

Non-performing

Total wholesale receivables

$
387

$
87

$
41

$
9

$
4

$
2

$
2,036

$
2,566

~~The credit quality analysis of wholesale receivables in millions of dollars at November 1, 2020 and February 2, 2020 was as follows:~~

January 31, 2021

November 1

February 2

2021

2020

2019

2018

2017

Prior Years

Revolving

Total

Wholesale receivables:

2020

2020

























Agriculture and turf

Current

$
3,010

$
3,938

$
78

$
226

$
67

$
18

$
8

$
1

$
2,297

$
2,695

30-59 days past due

1

60-89 days past due

90+ days past due

30+ days past due

Non-performing

47

76

35

35

Construction and forestry

Current

472

482

3

11

20

2

1

2

315

354

30-59 days past due

60-89 days past due

90+ days past due

30+ days past due

1

1

Non-performing

2

Total wholesale receivables

$
3,529

$
4,499

$
81

$
237

$
122

$
20

$
9

$
4

$
2,612

$
3,085

1715

The allowance for credit losses is an estimate of the credit losses expected over the life of the Company’s receivable portfolio. The Company measures expected credit losses on a collective basis when similar risk characteristics exist. Risk characteristics considered by the Company include finance product category, market, geography, credit risk, and remaining duration. Receivables that do not share risk characteristics with other receivables in the portfolio are evaluated on an individual basis.
The Company utilizes loss forecast models, which are selected based on the size and credit risk of the underlying pool of receivables, to estimate expected credit losses. Transition matrix models are used for large and complex customer receivable pools, while weighted average remaining maturity models are used for smaller and less complex customer receivable pools. Expected credit losses on wholesale receivables are based on historical loss rates, adjusted for current economic conditions. The modeled expected credit losses are adjusted based on reasonable and supportable forecasts, which may include economic indicators such as commodity prices, industry equipment sales, unemployment rates, and housing starts. Management reviews each model’s output quarterly, and qualitative adjustments are incorporated as necessary.
An analysis of the allowance for credit losses and investment in financing receivables in millions of dollars during the periods follows:

Three Months Ended January 31, 2021

Three Months Ended January 30, 2022

Retail Notes

Revolving

Retail Notes

Revolving

& Financing

Charge

Wholesale

& Financing

Charge

Wholesale

Leases

Accounts

Receivables

Total

Leases

Accounts

Receivables

Total

Allowance:






















Beginning of period balance

$
133

$
43

$
8

$
184

$
138

$
21

$
7

$
166

ASU No. 2016-13 adoption

44

(13)

31

Provision (credit)

5

(10)

(1)

(6)

13

(9)

(2)

2

Write-offs

(8)

(5)

(13)

(17)

(5)

(22)

Recoveries

5

9

14

4

8

12

Translation adjustments

1

1

End of period balance

$
180

$
24

$
7

$
211

$
138

$
15

$
5

$
158

Financing receivables:

End of period balance

$
27,810

$
2,685

$
3,085

$
33,580

$
31,918

$
2,756

$
2,191

$
36,865

Three Months Ended February 2, 2020

Three Months Ended January 31, 2021

Retail Notes

Revolving

Retail Notes

Revolving

& Financing

Charge

Wholesale

& Financing

Charge

Wholesale

Leases

Accounts

Receivables

Total

Leases

Accounts

Receivables

Total

Allowance:


























Beginning of period balance

$
107

$
40

$
3

$
150

$
133

$
43

$
8

$
184

ASU No. 2016-13 adoption

44

(13)

31

Provision (credit)

16

(1)

6

21

5

(10)

(1)

(6)

Write-offs

(18)

(7)

(25)

(8)

(5)

(13)

Recoveries

2

8

10

5

9

14

Translation adjustments

(1)

2

1

1

1

End of period balance

$
106

$
40

$
11

$
157

$
180

$
24

$
7

$
211

Financing receivables:

End of period balance

$
24,697

$
2,733

$
4,499

$
31,929

$
27,810

$
2,685

$
3,085

$
33,580

The allowance for credit losses on financing receivables decreased in the first quarter of 2022 led by a decrease in the revolving charge accounts. This portfolio is benefiting from favorable agricultural market conditions driven by higher commodity prices and net farm income, which is contributing to stronger payment performance.
A troubled debt restructuring is ~~generally~~ the modification of debt in which a creditor grants a concession it would not otherwise consider to a debtor that is experiencing financial difficulties. These modifications may include a reduction of the stated interest rate, an extension of the maturity dates, a reduction of the face amount or maturity amount of the debt, or a reduction of accrued interest. During the first three months of ~~2021,~~2022, the Company identified 98108 receivable contracts, primarily retail notes, as troubled debt restructurings with aggregate balances of $5 million pre-modification and ~~post-modification~~.$4 million post-modification. During the first three months of ~~2020,~~2021, there were 8898 receivable contracts, primarily ~~wholesale receivables in Argentina,~~retail notes, identified as troubled debt restructurings with aggregate balances of ~~$85~~$5 million pre-modification and ~~$74 million post-modification. The short-term payment relief related to COVID, mentioned earlier, did not meet the definition of a troubled debt restructuring.~~post-modification. During these same periods, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At January ~~31, 2021,~~30, 2022, the Company had 0 commitments to lend to borrowers whose accounts were modified in troubled debt restructurings.

1816

~~(12)~~(10) Securitization of Financing Receivables

~~The Company, as~~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 ~~did~~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.

In these securitizations, the retail notes are transferred to certain SPEs, which in turn issue debt to investors, or to non-VIE banking operations, which ~~in turn issue debt to investors. The debt securities issued~~provide funding directly to the ~~third party investors resulted~~Company. The funding provided by these third-parties results in secured borrowings, which are recorded as “Short-term securitization borrowings” on the balance sheet. The securitized retail notes are recorded as “Financing receivables securitized – net” on the balance sheet. The total restricted assets on the ~~consolidated~~ balance sheet related to these securitizations include the financing receivables securitized, less an allowance for credit losses, and other assets primarily representing restricted cash. Restricted cash results from contractual requirements in securitized borrowing arrangements and serves as a credit enhancement. The restricted cash is used to satisfy payment deficiencies, if any, in the required payments on secured borrowings. The balance of restricted cash is contractually stipulated and is either a fixed amount as determined by the initial balance of the financing receivables securitized or a fixed percentage of the outstanding balance of the securitized financing receivables. The restriction is removed either after all secured borrowing payments are made or proportionally as these receivables are collected and borrowing obligations reduced. For those securitizations in which retail notes are transferred into SPEs, the SPEs supporting the secured borrowings are consolidated unless the Company does not have both the power to direct the activities that most significantly impact the SPEs’ economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the SPEs. No additional support to these SPEs beyond what was previously contractually required has been provided during the reporting periods.

In certain securitizations, the Company consolidates the SPEs since it has both the power to direct the activities that most significantly impact the SPEs’ economic performance through its role as servicer of all the receivables held by the SPEs and the obligation through variable interests in the SPEs to absorb losses or receive benefits that could potentially be significant to the SPEs. The restricted assets (retail notes securitized, allowance for credit losses, and other assets) of the consolidated SPEs totaled ~~$2,425~~$2,649 million, ~~$2,898~~$3,094 million, and ~~$2,490~~$2,425 million at January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020,~~January 31, 2021, respectively. The liabilities (short-term securitization borrowings and accrued interest) of these SPEs totaled ~~$2,403~~$2,575 million, ~~$2,856~~$3,024 million, and ~~$2,442~~$2,403 million at January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020,~~January 31, 2021, respectively. The credit holders of these SPEs do not have legal recourse to the Company’s general credit.

~~In certain securitizations,~~The Company has a revolving warehouse facility to utilize bank conduit facilities to securitize retail notes, described further in the following paragraphs. The facility was renewed in November 2021 with an expiration in November 2022 and a reduction of the total capacity or “financing limit” from $2,000 million to $1,000 million. As a result of the reduced capacity, the Company ~~transfers~~repurchased $511 million of outstanding short-term securitization borrowings in November 2021, in addition to the normal payments collected on the retail notes. At the end of the contractual revolving period, unless the banks and the Company agree to renew, the Company would liquidate the secured borrowings over time as payments on the retail notes ~~to non-VIE banking operations, which~~ are ~~not consolidated since~~collected.

Through the Company does not have a controlling interest in the entities. The Company’s carrying values and interests related to the securitizations with the unconsolidated non-VIEs were restricted assets (retail notes securitized, allowance for credit losses, and other assets) of $481 million, $576 million, and $638 million at January 31, 2021, November 1, 2020, and February 2, 2020, respectively. The liabilities (short-term securitization borrowings and accrued interest) were $471 million, $554 million, and $609 million at January 31, 2021, November 1, 2020, and February 2, 2020, respectively.

~~In certain securitizations,~~revolving warehouse facility, the Company transfers retail notes into bank-sponsored, multi-seller, commercial paper conduits, which are SPEs that are not consolidated. The Company does not service a significant portion of the conduits’ receivables, and therefore, does not have the power to direct the activities that most significantly impact the conduits’ economic performance. These conduits provide a funding source to the Company (as well as other transferors into the conduit) as they fund the retail notes through the issuance of commercial paper. The Company’s carrying values and variable interest related to these conduits were restricted assets (retail notes securitized, allowance for credit losses, and other assets) of ~~$1,120~~$767 million, ~~$1,327~~$1,176 million, and ~~$1,441~~$1,120 million at January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020,~~January 31, 2021, respectively. The liabilities (short-term securitization borrowings and accrued interest) related to these conduits were ~~$1,097~~$720 million, ~~$1,275~~$1,113 million, and ~~$1,370~~$1,097 million at January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020,~~January 31, 2021, respectively.

1917

The Company’s carrying amount of the liabilities to the unconsolidated conduits, compared to the maximum exposure to loss related to these conduits, which would only be incurred in the event of a complete loss on the restricted assets, was as follows in millions of dollars:


January 31, 2021


January 30, 2022

Carrying value of liabilities

$
1,097

$
720

Maximum exposure to loss

1,120

767

The total assets of the unconsolidated ~~VIEs~~conduits related to securitizations were ~~approximately $37~~$14 billion at January 30, 2022.
In addition, through the revolving warehouse facility, the Company transfers retail notes to banks, which may elect to fund the retail notes through the use of their own funding sources. These non-VIE banking operations are not consolidated since the Company does not have a controlling interest in them. The Company’s carrying values and interests related to the securitizations with the unconsolidated non-VIEs were restricted assets (retail notes securitized, allowance for credit losses, and other assets) of $200 million, $496 million, and $481 million at January 30, 2022, October 31, ~~2021.~~2021, and January 31, 2021, respectively. The liabilities (short-term securitization borrowings and accrued interest) were $188 million, $470 million, and $471 million at January 30, 2022, October 31, 2021, and January 31, 2021, respectively.
The components of consolidated restricted assets related to secured borrowings in securitization transactions follow in millions of dollars:


January 31

November 1

February 2


January 30

October 31

January 31

2021

2020

2020

2022

2021

2021

Financing receivables securitized (retail notes)

$
3,946

$
4,716

$
4,487

$
3,526

$
4,673

$
3,946

Allowance for credit losses

(15)

(13)

(9)

(10)

(14)

(15)

Other assets

95

98

91

100

107

95

Total restricted securitized assets

$
4,026

$
4,801

$
4,569

$
3,616

$
4,766

$
4,026

The components of consolidated secured borrowings and other liabilities related to securitizations follow in millions of dollars:


January 31

November 1

February 2


January 30

October 31

January 31

2021

2020

2020

2022

2021

2021

Short-term securitization borrowings

$
3,969

$
4,682

$
4,416

$
3,482

$
4,605

$
3,969

Accrued interest on borrowings

2

3

5

1

2

2

Total liabilities related to restricted securitized assets

$
3,971

$
4,685

$
4,421

$
3,483

$
4,607

$
3,971

The secured borrowings related to these restricted securitized retail notes are obligations that are payable as the retail notes are liquidated. Repayment of the secured borrowings depends primarily on cash flows generated by the restricted assets. Due to the Company’s short-term credit rating, cash collections from these restricted assets are not required to be placed into a segregated collection account until immediately prior to the time payment is required to the secured creditors. At January ~~31, 2021,~~30, 2022, the maximum remaining term of all securitized retail notes was approximately six years.

~~(13)~~(11) Inventories
Most inventories owned by Deere & Company and its U.S. equipment subsidiaries ~~and certain foreign equipment subsidiaries~~ are valued at cost on the “last-in, first-out” (LIFO) ~~method.~~basis. If all of the Company’s inventories had been valued on a “first-in, first-out” (FIFO) ~~method,~~basis, estimated inventories by major classification in millions of dollars would have been as follows:


January 31

November 1

February 2


January 30

October 31

January 31

2021

2020

2020

2022

2021

2021

Raw materials and supplies

$
2,303

$
1,995

$
2,311

$
4,034

$
3,524

$
2,303

Work-in-process

839

648

818

1,460

994

839

Finished goods and parts

4,485

4,006

4,946

4,790

4,373

4,485

Total FIFO value

7,627

6,649

8,075

10,284

8,891

7,627

Less adjustment to LIFO value

1,671

1,650

1,593

2,349

2,110

1,671

Inventories

$
5,956

$
4,999

$
6,482

$
7,935

$
6,781

$
5,956

~~(14)~~(12) Goodwill and Other Intangible Assets-Net
The changes in amounts of goodwill by operating segment were as follows in millions of dollars:

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Total

Goodwill at November 3, 2019

$
310

$
264

$
2,343

$
2,917

Translation adjustments and other

(2)

(1)

31

28

Goodwill at February 2, 2020

$
308

$
263

$
2,374

$
2,945

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Total

Goodwill at November 1, 2020

$
333

$
268

$
2,480

$
3,081

$
333

$
268

$
2,480

$
3,081

Acquisition

12

12

12

12

Translation adjustments and other

12

(1)

90

101

12

(1)

90

101

Goodwill at January 31, 2021

$
357

$
267

$
2,570

$
3,194

$
357

$
267

$
2,570

$
3,194

Goodwill at October 31, 2021

$
542

$
265

$
2,484

$
3,291

Acquisition

7

7

4

18

Translation adjustments and other

(5)

(2)

(110)

(117)

Goodwill at January 30, 2022

$
544

$
270

$
2,378

$
3,192

There were 0 accumulated goodwill impairment losses in the reported periods.
The components of other intangible assets were as follows in millions of dollars:


January 31

November 1

February 2


January 30

October 31

January 31

2021

2020

2020

2022

2021

2021

Amortized intangible assets:

Customer lists and relationships

$
553

$
535

$
517

$
526

$
542

$
553

Technology, patents, trademarks, and other

1,099

1,056

1,013

1,066

1,104

1,099

Total at cost

1,652

1,591

1,530

1,592

1,646

1,652

Less accumulated amortization *

433

387

304

Total

1,219

1,204

1,226

Less accumulated amortization:

Customer lists and relationships

156

151

128

Technology, patents, trademarks, and other

350

343

305

Total accumulated amortization

506

494

433

Amortized intangible assets

1,086

1,152

1,219

Unamortized intangible assets:

In-process research and development

123

123

123

123

123

123

Other intangible assets – net

$
1,342

$
1,327

$
1,349

$
1,209

$
1,275

$
1,342

*  Accumulated amortization at January 31, 2021, November 1, 2020, and February 2, 2020 for customer lists and relationships totaled $128 million, $113 million, and $86 million and technology, patents, trademarks, and other totaled $305 million, $274 million, and $218 million, respectively.
The amortization of other intangible assets in the first quarter of 2022 and 2021 ~~and 2020~~ was ~~$34~~$28 million and ~~$25~~$34 million, respectively. The estimated amortization expense for the next five years is as follows in millions of dollars: remainder of ~~2021 – $82,~~ 2022 – ~~$109,~~$84, 2023 – ~~$107,~~$110, 2024 – ~~$103,~~$106, 2025 – ~~$100,~~$102, 2026 – $99, and ~~2026~~2027 – $98.

~~(15)~~~~Leases~~
~~Lessee~~
~~Lessee operating and finance lease right of use assets and liabilities follow in millions of dollars:~~

January 31

November 1

February 2

2021

2020

2020

Operating leases:

Other assets

$
327

$
324

$
376

Accounts payable and accrued expenses

315

305

361

Finance leases:

Property and equipment – net

$
57

$
63

$
37

Short-term borrowings

20

21

12

Long-term borrowings

36

39

23

Total finance lease liabilities

$
56

$
60

$
35

2119

~~Right~~(13)Total Short-Term Borrowings
Total short-term borrowings were as follows in millions of dollars:

January 30

October 31

January 31


2022

2021

2021

Equipment Operations







Notes payable to banks

$
401

$
273

$
183

Finance lease obligations due within one year

23

23

20

Long-term borrowings due within one year

1,092

1,213

191

Total

1,516

1,509

394

Financial Services

Commercial paper

2,135

2,230

1,346

Notes payable to banks

118

63

143

Long-term borrowings due within one year

7,221

7,117

7,341

Total

9,474

9,410

8,830

Short-term borrowings

10,990

10,919

9,224

Short-term securitization borrowings







Equipment Operations

8

10

17

Financial Services

3,474

4,595

3,952

Total

3,482

4,605

3,969

Total short-term borrowings

$
14,472

$
15,524

$
13,193

(14)Long-Term Borrowings
Long-term borrowings were as follows in millions of dollars. The financial services medium-term notes include fair value adjustments to interest rate swaps.

January 30

October 31

January 31


2022

2021

2021

Equipment Operations







U.S. dollar notes and debentures:

2.60% notes due 2022

$
1,000

2.75% notes due 2025

$
700

$
700

700

6.55% debentures due 2028

200

200

200

5.375% notes due 2029

500

500

500

3.10% notes due 2030

700

700

700

8.10% debentures due 2030

250

250

250

7.125% notes due 2031

300

300

300

3.90% notes due 2042

1,250

1,250

1,250

2.875% notes due 2049

500

500

500

3.75% notes due 2050

850

850

850

Euro notes:

.5% notes due 2023 (€500 principal)

557

584

606

1.375% notes due 2024 (€800 principal)

891

934

970

1.85% notes due 2028 (€600 principal)

669

701

727

2.20% notes due 2032 (€600 principal)

669

701

727

1.65% notes due 2039 (€650 principal)

724

759

788

Finance lease obligations and other notes

52

40

131

Less debt issuance costs and debt discounts

(52)

(54)

(60)

Total

8,760

8,915

10,139

Financial Services






Notes and debentures:

Medium-term notes: (principal as of: January 30, 2022 - $22,896, October 31, 2021 - $22,647, January 31, 2021 - $20,978)

22,947

22,899

21,549

Other notes

1,194

1,138

1,141

Less debt issuance costs and debt discounts

(63)

(64)

(57)

Total

24,078

23,973

22,633

Long-term borrowings

$
32,838

$
32,888

$
32,772

(15)Leases
Lessee
Operating and finance lease right of use assets ~~obtained in exchange for lease~~and liabilities follow in millions of dollars:

Three Months Ended

January 30

October 31

January 31

January 31, 2021

February 2, 2020

2022

2021

2021

Operating leases

$
22

$
16

Finance leases

2

9

Operating leases:

Other assets

$
276

$
291

$
327

Accounts payable and accrued expenses

267

279

315

Finance leases:

Property and equipment – net

$
65

$
71

$
57

Short-term borrowings

23

23

20

Long-term borrowings

32

38

36

Total finance lease liabilities

$
55

$
61

$
56

Lessor
The Company leases equipment manufactured or sold by the Company and a limited amount of ~~non-Deere~~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 sheet, while operating leases are reported in “Equipment on operating leases – net.”
Lease revenues earned by the Company were as follows in millions of dollars:

Three Months Ended

Three Months Ended

January 31, 2021

February 2, 2020

January 30, 2022

January 31, 2021

Sales-type and direct finance lease revenues

$
36

$
36

$
39

$
36

Operating lease revenues

363

374

336

363

Variable lease revenues

6

5

7

6

Total lease revenues

$
405

$
415

$
382

$
405

Due to the significant, negative effects of COVID, the Company provided short-term relief to lessees during 2020, and to a much lesser extent in 2021. The relief, which included payment deferrals of three months or less, was provided in regional programs and on a case-by-case basis with customers that were generally current in their payment obligations. The operating leases granted relief represented approximately 3 percent of the Company’s operating lease portfolio at January 31, 2021.
(16) Commitments and Contingencies
The Company generally 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 primarily determined by a review of five-year claims costs and current quality developments.
The premiums for extended warranties are ~~primarily~~ recognized in income in proportion to the costs expected to be incurred over the contract period. These unamortized extended warranty premiums (deferred revenue) included in the following table totaled ~~$656~~$781 million and ~~$588~~$656 million at January 30, 2022 and January 31, 2021, ~~and February 2, 2020,~~ respectively.
A reconciliation of the changes in the warranty liability and unearned premiums in millions of dollars follows:

Three Months Ended

Three Months Ended

January 31

February 2

January 30

January 31

2021

2020

2022

2021

Beginning of period balance

$
1,743

$
1,800


$
2,086

$
1,743

Payments

(215)

(230)

(193)

(215)

Amortization of premiums received

(63)

(59)

(66)

(63)

Accruals for warranties

247

222

181

247

Premiums received

73

65

83

73

Foreign exchange

18

(6)

(27)

18

End of period balance

$
1,803

$
1,792

$
2,064

$
1,803

At January ~~31, 2021,~~30, 2022, the Company had ~~approximately $398~~$374 million of guarantees issued primarily 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 January ~~31, 2021,~~30, 2022, the Company had accrued losses of ~~approximately $18~~$5 million under these agreements. The maximum remaining term of the receivables guaranteed at January ~~31, 2021~~30, 2022 was approximately ~~seven~~six years.

At January ~~31, 2021,~~30, 2022, the Company had commitments of ~~approximately $167~~$323 million for the construction and acquisition of property and equipment. Also, at January ~~31, 2021,~~30, 2022, the Company had restricted assets of ~~$72~~$64 million, ~~primarily~~classified as ~~collateral for borrowings and restricted other~~“Other assets.” See Note 1210 for additional restricted assets associated with borrowings related to securitizations.

The Company also had other miscellaneous contingent liabilities totaling approximately ~~$55~~$85 million at January ~~31, 2021.~~30, 2022. The accrued liability for these contingencies was not material at January ~~31, 2021.~~30, 2022.

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, and trademark 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

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To determine fair value, the Company uses various methods, including market and income approaches. The Company utilizes valuation models and techniques that maximize the use of observable inputs. The models are industry-standard models that consider various assumptions, including time values and yield curves as well as other economic measures. These valuation techniques are consistently applied.

Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2 measurements include significant other observable inputs, such as quoted prices for similar assets or liabilities in active markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yield curves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs.

2322

The fair values of financial instruments that do not approximate the carrying values were as follows in millions of ~~dollars follow:~~dollars. Long-term borrowings exclude finance lease liabilities (see Note 15).

January 31, 2021

November 1, 2020

February 2, 2020

January 30, 2022

October 31, 2021

January 31, 2021

Carrying
Value

Fair
Value *

Carrying
Value

Fair
Value *

Carrying
Value

Fair
Value *

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value

Financing receivables – net:




Equipment operations

$
103

$
100

$
105

$
103

$
130

$
123

$
56

$
48

$
73

$
68

$
103

$
100

Financial services

29,335

29,591

29,645

29,838

27,164

27,177

33,135

32,985

33,726

33,650

29,335

29,591

Total

$
29,438

$
29,691

$
29,750

$
29,941

$
27,294

$
27,300

$
33,191

$
33,033

$
33,799

$
33,718

$
29,438

$
29,691

Financing receivables
securitized – net:

Equipment operations

$
18

$
17

$
26

$
26

$
42

$
40

$
9

$
9

$
10

$
10

$
18

$
17

Financial services

3,913

4,002

4,677

4,773

4,436

4,464

3,507

3,521

4,649

4,694

3,913

4,002

Total

$
3,931

$
4,019

$
4,703

$
4,799

$
4,478

$
4,504

$
3,516

$
3,530

$
4,659

$
4,704

$
3,931

$
4,019

Short-term securitization borrowings:

Equipment operations

$
17

$
17

$
26

$
26

$
42

$
42

$
8

$
9

$
10

$
10

$
17

$
17

Financial services

3,952

3,986

4,656

4,698

4,374

4,403

3,474

3,459

4,595

4,600

3,952

3,986

Total

$
3,969

$
4,003

$
4,682

$
4,724

$
4,416

$
4,445

$
3,482

$
3,468

$
4,605

$
4,610

$
3,969

$
4,003

Long-term borrowings due within one year: **

Long-term borrowings due within one year:

Equipment operations

$
191

$
198

$
79

$
78

$
567

$
567

$
1,092

$
1,096

$
1,213

$
1,222

$
191

$
198

Financial services

7,341

7,424

6,870

6,936

6,638

6,650

7,221

7,226

7,117

7,142

7,341

7,424

Total

$
7,532

$
7,622

$
6,949

$
7,014

$
7,205

$
7,217

$
8,313

$
8,322

$
8,330

$
8,364

$
7,532

$
7,622

Long-term borrowings: **

Long-term borrowings:

Equipment operations

$
10,103

$
11,813

$
10,085

$
11,837

$
5,544

$
6,403

$
8,728

$
9,724

$
8,877

$
10,244

$
10,103

$
11,813

Financial services

22,633

23,219

22,610

23,170

24,908

25,299

24,078

24,119

23,973

24,262

22,633

23,219

Total

$
32,736

$
35,032

$
32,695

$
35,007

$
30,452

$
31,702

$
32,806

$
33,843

$
32,850

$
34,506

$
32,736

$
35,032

* Fair value measurements above were Level 3 for all financing receivables, Level 3 for equipment operations short-term securitization borrowings, and Level 2 for all other borrowings.
**~~Excludes finance lease liabilities (see Note 15).~~
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.

2423

Assets and liabilities measured at fair value on a recurring basis in millions of dollars ~~follow*:~~


January 31

November 1

February 2

2021

2020

2020

Level 1:

Marketable securities

International equity securities

$
2

$
2

$
3

U.S. equity fund

70

62

62

U.S. government debt securities

60

55

52

Total Level 1 marketable securities

132

119

117

Level 2:

Marketable securities

U.S. government debt securities

119

113

87

Municipal debt securities

71

68

62

Corporate debt securities

197

188

173

International debt securities

8

2

4

Mortgage-backed securities**

140

147

165

Total Level 2 marketable securities

535

518

491

Other assets

Derivatives:

Interest rate contracts

568

669

443

Foreign exchange contracts

34

48

37

Cross-currency interest rate contracts

3

8

1

Total Level 2 other assets

605

725

481

Accounts payable and accrued expenses

Derivatives:

Interest rate contracts

97

88

57

Foreign exchange contracts

76

26

40

Cross-currency interest rate contracts

2

1

4

Total Level 2 accounts payable and accrued expenses

175

115

101

Level 3:

Marketable securities

International debt securities

4

1

*~~Excluded from this table were~~follow, excluding the Company’s cash equivalents, which were carried at cost that approximates fair ~~value. The cash equivalents consist~~value and consisted primarily of money market funds and time deposits.
*


January 30

October 31

January 31

2022

2021

2021

Level 1:

Marketable securities

International equity securities

$
2

$
2

$
2

U.S. equity fund

72

75

70

U.S. government debt securities

63

59

60

Total Level 1 marketable securities

137

136

132

Level 2:

Marketable securities

U.S. government debt securities

138

139

119

Municipal debt securities

74

73

71

Corporate debt securities

229

224

197

International debt securities

2

2

8

Mortgage-backed securities*

155

154

140

Total Level 2 marketable securities

598

592

535

Other assets

Derivatives:

Interest rate contracts

184

239

568

Foreign exchange contracts

91

31

34

Cross-currency interest rate contracts

24

5

3

Total Level 2 other assets

299

275

605

Accounts payable and accrued expenses

Derivatives:

Interest rate contracts

212

132

97

Foreign exchange contracts

64

94

76

Cross-currency interest rate contracts

2

2

Total Level 2 accounts payable and accrued expenses

276

228

175

*  Primarily issued by U.S. government sponsored enterprises.
The contractual maturities of debt securities at January ~~31, 2021~~30, 2022 in millions of dollars are shown below. Actual maturities may differ from ~~those scheduled as a result of prepayments by the issuers.~~contractual maturities because some securities may be called or prepaid. 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

$
21

$
22

Due after one through five years

89

94

Due after five through 10 years

117

124

Due after 10 years

203

215

Mortgage-backed securities

134

140

Debt securities

$
564

$
595

~~Fair value, recurring Level 3 measurements from available-for-sale marketable securities in millions of dollars follow:~~


Three Months Ended

Amortized

Fair

January 31

February 2

Cost

Value

2021

2020

Beginning of period balance

$
4

$
1

Principal payments

Other

(4)

End of period balance

$
1

Due in one year or less

$
29

$
29

Due after one through five years

87

88

Due after five through 10 years

161

159

Due after 10 years

231

230

Mortgage-backed securities

158

155

Debt securities

$
666

$
661

Fair value, nonrecurring Level 3 measurements from impairments, ~~in millions of dollars follow:~~

Fair Value *

Losses

Three Months Ended

January 31

November 1

February 2

January 31

February 2


2021

2020

2020

2021

2020

Other receivables

$
1

Equipment on operating leases – net

$
371

Property and equipment – net

$
41

$
135

$
44

Investments in unconsolidated affiliates

$
19

Other assets

$
1

$
59

$
6

*~~Financing~~excluding financing receivables with specific allowances which were not ~~significant.~~significant, were as follows in millions of dollars. Property and equipment – net and Other assets fair value for October 31, 2021 represents the fair value assessment at January 31, 2021.

Fair Value

Losses

Three Months Ended

January 30

October 31

January 31

January 30

January 31


2022

2021

2021

2022

2021

Property and equipment – net

$
41

$
41

$
44

Other assets

$
1

$
1

$
6

The following is a description of the valuation methodologies the Company uses to measure certain ~~financial instruments on the~~ balance sheet items at fair value:

Marketable ~~Securities~~securities – The portfolio of investments ~~except for the Level 3 measurement international debt securities,~~ is primarily 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 primarily valued using the fund’s net asset value, based on the fair value of the underlying securities. ~~The Level 3 measurement international debt securities are primarily valued using an income approach based on discounted cash flows using yield curves derived from limited, observable market data.~~

Derivatives – The Company’s derivative financial instruments consist of interest rate ~~swaps and caps,~~contracts (swaps), foreign currency ~~futures,~~exchange contracts (futures, forwards, and ~~swaps,~~swaps), and cross-currency interest rate ~~swaps.~~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~~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). Inputs include a selection of realizable values.

~~Other Receivables – The impairment was based on the expected realization of value-added tax receivables related to a closed factory operation.~~

~~Equipment on Operating Leases - Net – The impairments are based on an income approach (discounted cash flow), using the contractual payments, plus an estimate of return rates~~Property and equipment ~~sale price at lease maturity. Inputs include realized sales values.~~

~~Property and Equipment~~ - ~~Net~~net – ~~The impairments~~Impairments are ~~measured at the~~recognized if fair value is lower ofthan the carrying ~~amount, or fair value.~~amount. The valuations were based on cost and market approaches. The inputs include replacement cost estimates adjusted for physical deterioration and economic obsolescence or quoted prices when ~~available.~~available (see Note 20).

Investment in Unconsolidated Affiliates – Other than temporary impairments for investments are measured as the difference between the implied fair value and the carrying value of the investments or the estimated realization amount.

Other ~~Assets~~assets – The impairments were measured at the fair value of the ~~matured operating lease inventory or the~~ right of use operating lease asset. ~~The inputs for matured operating lease inventory include sales of comparable assets.~~

(18) Derivative Instruments

It is the Company’s policy that derivative transactions are executed only to manage exposures arising in the normal course of business and not for the purpose of creating speculative positions or trading. The Company’s 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 ~~exposure~~and foreign currency exposures at certain equipment operations units for ~~below market retail financing programs that are used as~~ sales ~~incentives and are offered for extended periods.~~incentive programs.

All derivatives are recorded at fair value on the balance sheet. Cash collateral received or paid is not offset against the derivative fair values on the balance sheet. The cash flows from these contracts were recorded in operating activities in the statement 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 January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020~~January 31, 2021 were ~~$2,350~~$2,700 million, ~~$1,550~~$2,700 million, and ~~$2,900~~$2,350 million, respectively. Fair value gains or losses on cash flow hedges were recorded in ~~OCI~~other comprehensive income (OCI) and are subsequently reclassified into interest expense in the same periods during which the hedged transactions affected earnings. These amounts offset the effects of interest rate changes on the related borrowings. ~~The cash flows from these contracts were recorded in operating activities in the statement of consolidated cash flows.~~

The amount of loss recorded in OCI at January ~~31, 2021~~30, 2022 that is expected to be reclassified to interest expense or other operating expenses in the next twelve months if interest rates or exchange rates remain unchanged is ~~approximately $6~~$4 million after-tax. ~~There were 0~~NaN 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 January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and February 2, 2020 were $8,333 million, $7,239 million, and $9,424 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.

2725

January 31, 2021 were $8,307 million, $8,043 million, and $8,333 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 in millions of dollars follow:

Cumulative Increase (Decrease) of Fair

Cumulative Increase (Decrease) of Fair

Value Hedging Adjustments Included in

Value Hedging Adjustments Included in

the Carrying Amount

the Carrying Amount

Carrying

Active

Carrying

Active

Amount of

Hedging

Discontinued

Amount of

Hedging

Discontinued

Hedged Item

Relationships

Relationships

Total

Hedged Item

Relationships

Relationships

Total

January 31, 2021

Long-term borrowings due within one year*

$
159

$
2

$
1

$
3

January 30, 2022

Long-term borrowings due within one year

$
185

$
2

$
8

$
10

Long-term borrowings

8,713

435

137

572

8,147

(130)

181

51

November 1, 2020

Long-term borrowings due within one year*

$
155

$
2

$
3

$
5

October 31, 2021

Long-term borrowings due within one year

$
189

$
3

$
(2)

$
1

Long-term borrowings

7,725

543

122

665

8,070

29

223

252

February 2, 2020

Long-term borrowings due within one year*

$
220

$
(1)

$
(5)

$
(6)

January 31, 2021

Long-term borrowings due within one year

$
159

$
2

$
1

$
3

Long-term borrowings

9,521

379

(21)

358

8,713

435

137

572

*~~Presented~~Long-term borrowings due within one year are presented in short-term ~~borrowings~~borrowings.
Derivatives not designated as hedging instruments
The Company has certain interest rate contracts ~~(swaps and caps)~~(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, primarily for certain borrowings, purchases or sales of inventory, and ~~below market retail financing~~sales incentive programs. The total notional amounts of these interest rate swaps at January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020~~January 31, 2021 were ~~$8,801~~$10,210 million, ~~$8,514~~$10,848 million, and ~~$9,102~~$8,801 million, the foreign exchange contracts were ~~$5,478~~$7,864 million, ~~$4,903~~$7,584 million, and ~~$5,249~~$5,478 million, and the cross-currency interest rate contracts were ~~$145~~$303 million, ~~$113~~$238 million, and ~~$102~~$145 million, respectively. The fair value gains or losses from derivatives not designated as hedging instruments were recorded in the ~~interest rate contracts were recognized currently in interest expense or net sales and the gains or losses from foreign exchange contracts in cost~~statement of ~~sales or other operating expenses,~~consolidated income, generally offsetting over time the ~~expenses~~exposure on the ~~exposures being hedged. The cash flows from these non-designated contracts were recorded in operating activities in the statement of consolidated cash flows.~~hedged item.

2826

Fair values of derivative instruments in the condensed consolidated balance sheet in millions of dollars follow:


January 31

November 1

February 2


January 30

October 31

January 31

Other Assets

2021

2020

2020

2022

2021

2021

Designated as hedging instruments:

Interest rate contracts

$
491

$
586

$
409

$
102

$
166

$
491

Total designated

491

586

409

Not designated as hedging instruments:

Interest rate contracts

77

83

34

82

73

77

Foreign exchange contracts

34

48

37

91

31

34

Cross-currency interest rate contracts

3

8

1

24

5

3

Total not designated

114

139

72

197

109

114

Total derivative assets

$
605

$
725

$
481

$
299

$
275

$
605

Accounts Payable and Accrued Expenses

Designated as hedging instruments:

Interest rate contracts

$
31

$
14

$
17

$
185

$
99

$
31

Total designated

31

14

17

Not designated as hedging instruments:

Interest rate contracts

66

74

40

27

33

66

Foreign exchange contracts

76

26

40

64

94

76

Cross-currency interest rate contracts

2

1

4

2

2

Total not designated

144

101

84

91

129

144

Total derivative liabilities

$
175

$
115

$
101

$
276

$
228

$
175

The classification and gains (losses) including accrued interest expense related to derivative instruments on the statement of consolidated income consisted of the following in millions of dollars:

Three Months Ended

Three Months Ended

January 31

February 2

January 30

January 31

2021

2020

2022

2021

Fair Value Hedges:










Interest rate contracts - Interest expense

$
(55)

$
96

$
(141)

$
(55)

Cash Flow Hedges:

Recognized in OCI

Interest rate contracts - OCI (pretax)

(2)

15

Reclassified from OCI

Interest rate contracts - Interest expense

(5)

(2)

(2)

(5)

Not Designated as Hedges:

Interest rate contracts - Net sales

$
(4)

$
13

Interest rate contracts - Interest expense *

$
(4)

2

(1)

$
(4)

Foreign exchange contracts - Cost of sales

(52)

11

(1)

(52)

Foreign exchange contracts - Other operating *

(126)

(1)

Foreign exchange contracts - Other operating expenses *

147

(126)

Total not designated

$
(182)

$
8

$
158

$
(182)

* Includes interest and foreign exchange gains (losses) from cross-currency interest rate contracts.

2927

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 January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020,~~January 31, 2021 was ~~$99~~$213 million, ~~$89~~$135 million, and ~~$60~~$99 million, respectively. In accordance with the limits established in these agreements, the Company posted 0$18 million of cash collateral at January 30, 2022. The Company posted 0 cash collateral in accordance with the limits established in those agreements at either October 31, 2021 ~~November 1, 2020, and February 2, 2020.~~or January 31, 2021. In addition, the Company paid $8 million of collateral either in cash or pledged securities that was outstanding at ~~both~~January 30, 2022, October 31, 2021, and January 31, 2021 ~~and November 1, 2020~~ 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

Gross Amounts

Netting

January 31, 2021

Recognized

Arrangements

Collateral

Net Amount

January 30, 2022

Recognized

Arrangements

Collateral

Net Amount

Assets

$
605

$
(106)

$
(186)

$
313

$
299

$
(91)

$
208

Liabilities

175

(106)

69

276

(91)

$
(19)

166

Gross Amounts

Netting

Gross Amounts

Netting

November 1, 2020

Recognized

Arrangements

Collateral

Net Amount

October 31, 2021

Recognized

Arrangements

Collateral

Net Amount

Assets

$
725

$
(93)

$
(274)

$
358

$
275

$
(105)

$
170

Liabilities

115

(93)

22

228

(105)

$
(5)

118


Gross Amounts

Netting





Gross Amounts

Netting




February 2, 2020

Recognized

Arrangements

Collateral

Net Amount

January 31, 2021

Recognized

Arrangements

Collateral

Net Amount

Assets

$
481

$
(60)

$
(26)

$
395

$
605

$
(106)

$
(186)

$
313

Liabilities

101

(60)

41

175

(106)

69

(19) Stock Option and Restricted Stock Awards
In December ~~2020,~~2021, the Company granted stock options to employees for the purchase of ~~269~~197 thousand shares of common stock at an exercise price of ~~$254.83~~$343.94 per share and a binomial lattice model fair value of ~~$62.73~~$89.20 per share at the grant date. At January ~~31, 2021,~~30, 2022, options for ~~3.2~~2.6 million shares were outstanding with a weighted-average exercise price of ~~$122.01~~$145.37 per share. The Company also granted ~~205~~154 thousand restricted stock units to employees in the first three months of ~~2021,~~2022, of which ~~158~~117 thousand are subject to service based only conditions and 4737 thousand are subject to performance/service based conditions. The weighted-average fair value of the service based only units at the grant date was ~~$254.71~~$344.11 per unit based on the market price of a share of underlying common stock. The fair value of the performance/service based units at the grant date was ~~$245.73~~$331.47 per unit based on the market price of a share of underlying common stock excluding dividends. At January ~~31, 2021,~~30, 2022, the Company was authorized to grant awards for an additional ~~17.7~~17.1 million shares under the equity incentive plan.

(20) Special Items
On November 17, 2021, employees represented by the UAW approved a new collective bargaining agreement. The agreement, which has a term of six years, covers the wages, hours, benefits, and other terms and conditions of employment for the Company’s UAW-represented employees at 14 U.S. facilities. The labor agreement includes 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

3028

~~(20)~~ S~~pecial Items~~contract. The lump sum payment was expensed in the first quarter of 2022. The Company remeasured the U.S. hourly pension plan as of November 30, 2021 due to the new collective bargaining agreement. See Note 7 for more information on the U.S. hourly plan remeasurement.
During the first quarter of 2021, the fixed assets in an asphalt plant factory in Germany were impaired by $38 million, pretax and after-tax. The Company also continued to assess its manufacturing locations, resulting in additional long-lived asset impairments of $12 million pretax. The impairments were the result of a decline in forecasted financial performance that indicated it was probable future cash flows would not cover the carrying amount of the net assets. These impairments were offset by a favorable indirect tax ruling in Brazil of $58 million pretax.

Three Months Ended

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Total

2022 Expense:

UAW ratification bonus – Cost of sales

$
53

$
9

$
28

$
90

January 31, 2021

Expense (benefit):

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Total

2021 Expense (benefit):

Long-lived asset impairments – Cost of sales

$
5

$
3

$
42

$
50

$
5

$
3

$
42

$
50

Brazil indirect tax – Cost of sales

(53)

(5)

(58)

(53)

(5)

(58)

Total expense (benefit)

$
(48)

$
3

$
37

$
(8)

$
(48)

$
3

$
37

$
(8)

Quarter over quarter change

$
101

$
6

$
(9)

$
98

See Note 17 for fair value measurement information.
~~Employee-Separation Programs~~
~~During the first quarter of 2020,~~(21) Subsequent Events
On February 7, 2022, the Company ~~announced~~acquired a ~~broad voluntary employee-separation program~~majority ownership in Kreisel Electric, Inc. (Kreisel), a battery technology provider based in Austria. The transaction includes an option to purchase the remaining ownership interest in Kreisel in 2027. The initial cash outlay was €239 million, consisting of €221 million in consideration for the ~~U.S. salaried workforce that continues~~acquired equity interests and €18 million to reduce the ~~efforts~~option price. The payment was financed from cash on hand, and will primarily be allocated to ~~create~~intangible assets and goodwill. Kreisel will be allocated amongst the Company’s production and precision agriculture, small agriculture and turf, and construction and forestry segments.
On February 23, 2022, the Company’s Board of Directors declared a ~~more efficient organization structure and reduce operating costs. The program provided for cash payments based~~quarterly dividend of $1.05 per share payable May 9, 2022, to stockholders of record on years of service. The expense was recorded primarily in the period in which the employees irrevocably accepted the separation offer. The payments for the program were also substantially made in the first quarter of 2020. Included in the total pretax expense is a non-cash charge of $21 million resulting from a curtailment in certain OPEB plans (see Note 8), which was recorded outside of operating profit in “~~Other operating expense.~~”

Three Months Ended

February 2, 2020

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Financial Services

Total

Cost of sales

$
19

$
11

$
9

$
39

Research and development expenses

6

7

3

16

Selling, administrative and general expenses

17

18

12

$
3

50

Total operating profit impact

$
42

$
36

$
24

$
3

105

Other operating expenses

22

Total expense

$
127

March 31, 2022.

3129

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview
Organization
The Company’s equipment operations generate revenues and cash primarily from the sale of equipment to John Deere dealers and distributors. The equipment operations manufacture and distribute a full line of agricultural equipment; a variety of commercial and consumer equipment; and a broad range of equipment for construction, roadbuilding, and forestry. The Company’s financial services primarily provide credit services, which mainly finance sales and leases of equipment by John Deere dealers and trade receivables purchased from the equipment operations. In addition, financial services offers extended equipment warranties. The information in the following discussion is presented in a format that includes information grouped as consolidated, equipment operations, and financial services. The Company also views its operations as consisting of two geographic areas: the U.S. and Canada and outside the U.S. and Canada. The Company’s operating segments consist of production and precision agriculture, small agriculture and turf, construction and forestry, and financial services.
Trends and Economic Conditions for Fiscal Year 2022
Industry sales of large agricultural machinery in the U.S. and Canada are ~~forecast~~forecasted to be up ~~15 to~~ 20 percent in 2021. Industry sales in Europe are forecast to be up about 5 percent in 2021. In South America, industry sales of tractors and combines are projected to be up about 10 percent in 2021. Asian sales are forecast to be down slightly in 2021.percent. Industry sales of turf and utility equipment in the U.S. and Canada are expected to be upflat. Industry sales of agricultural machinery in Europe are forecasted to be about 5 percent ~~in 2021. Construction~~higher. In South America, industry sales of tractors and combines are projected to increase 5 to 10 percent. Asia industry sales of agricultural machinery are forecasted to be flat. Construction equipment industry sales in the U.S. and Canada for ~~2021~~2022 are expected to increase ~~about~~ 5 to 10 percent, while compact construction equipment industry sales in the U.S. and Canada are ~~expected~~anticipated to ~~increase~~be flat to up about ~~10 percent in 2021. In forestry,~~5 percent. Forestry global industry equipment sales are expected to be 10 to 15 percent higher. Global industry roadbuilding equipment sales are forecasted to be up 5 to 10 ~~percent higher. The~~percent. Net income for the Company’s financial services operations ~~are~~is expected to ~~benefit from income earned from~~be slightly lower than fiscal year 2021 due to a higher ~~average portfolio,~~provision for credit losses, lower ~~losses~~gains on operating lease residual values, and ~~favorable financing spreads.~~higher selling, general, and administrative expenses. These factors are expected to be partially offset by income earned on a higher average portfolio.
Items of concern include global and regional political conditions, economic and trade policies, uncertainty of the effectiveness of governmental and private sector actions to address ~~COVID, trade agreements,~~ the ~~uncertainty of the results of monetary and fiscal policies, the impact of elevated levels of sovereign and state debt,~~ongoing pandemic, capital market disruptions, changes in demand and pricing for new and used equipment, ~~geopolitical events,~~ and the other items discussed in the “Safe Harbor Statement” below. Significant fluctuations in foreign currency exchange rates, ~~and~~ volatility in the price of many commodities, and supply chain disruptions could also impact the Company’s results. ~~The future financial effects of COVID are unknown due to many factors. As a result, predicting the Company’s forecasted financial performance is subject to many assumptions.~~
The Company’s ~~results reflect strong~~first quarter performance ~~across its product lines~~was noteworthy given production issues following the delayed ratification of the UAW contract in late November as well as persistent challenges posed by the supply chain and ~~improving conditions in the farm~~pandemic. These factors contributed to higher production costs. Demand for agriculture and construction ~~sectors.~~equipment is expected to continue to benefit from strong fundamentals. The ~~smart industrial operating strategy is making a significant impact on~~Company continues to work closely with key suppliers to manage through the dynamic environment and enable the Company’s ~~results. The Company’s recent actions are improving efficiencies~~dealers and ~~targeting resources and investments on areas that have the greatest impact. As the Company increases factory~~customers to deliver food production and ~~serves customers, the Company is mindful of the continuing challenges associated with the global pandemic.~~critical infrastructure. The Company remains committed, above all else, to safeguarding the health and well-being of its employees.
~~COVID Effects and Actions~~2022 Compared with 2021

Three Months Ended

Deere & Company

January 30

January 31

(In millions of dollars, except per share amounts)

2022

2021

Net sales and revenues

$
9,569

$
9,112

Net income attributable to Deere & Company

903

1,224

Diluted earnings per share

2.92

3.87

~~The effects of COVID and the related actions of governments and other authorities to contain COVID continue to affect the Company’s operations, results, cash flows, and forecasts.~~
The U.S. government and many other governments in countries where the Company operates have designated the Company an essential critical infrastructure business. This designation allows the Company to operate in support of its customers to the extent possible.
The Company’s first priority in addressing the effects of COVID continues to be the health, safety, and overall welfare of its employees. The Company effectively activated previously established business continuity plans and proactively implemented health and safety measures at its operations around the world.
~~The Company maintained the broadened supply base and increased inventory levels of certain essential materials and components in~~In the first quarter of 2022, the Company incurred UAW ratification bonus costs of $90 million. See Note 20 for more information on special items impacting both periods.

Three Months Ended

Equipment Operations

January 30

January 31

(In millions of dollars)

2022

2021

% Change

Worldwide:

Net sales

$
8,531

$
8,051

+6

Operating profit

939

1,380

-32

Net income

672

1,020

-34

Price realization

+7

Currency translation

-2

U.S. and Canada:

Net sales

4,818

4,529

+6

Price realization

+7

Outside U.S. and Canada:

Net sales

3,713

3,522

+5

Price realization

+8

Currency translation

-4

The discussion of net sales and operating profit is included in the Business Segment Results below.

Three Months Ended

Deere & Company

January 30

January 31

(In millions of dollars)

2022

2021

% Change

Cost of sales to net sales

78.5%

72.1%

Other income

$
238

$
227

+5

Research and development expenses

402

366

+10

Selling, administrative and general expenses

781

769

+2

Other operating expenses

311

373

-17

Provision for income taxes

250

308

-19

The cost of sales ratio increased due to ~~support~~higher production costs, partially offset by price realization. Research and development expenses were higher due to continued focus on developing and incorporating technology solutions. Other operating expenses decreased primarily as a result of reduced depreciation of equipment on operating leases and lower retirement benefit costs (see Note 7). The provision for income taxes was lower as a result of reduced pretax income.

Business Segment Results

Three Months Ended

Production and Precision Agriculture

January 30

January 31

(In millions of dollars)

2022

2021

% Change

Net sales

$
3,356

$
3,069

+9

Operating profit

296

643

-54

Operating margin

8.8%

21.0%

Production and precision agriculture sales for the ~~expected demand for equipment~~quarter increased due to price realization and higher shipment volumes. Operating profit declined primarily due to higher production costs and an unfavorable sales mix. These items were partially offset by price realization and higher shipment volumes. Affecting the most recent quarter was the UAW contract ratification bonus, while the prior period was affected by a favorable indirect tax ruling in ~~2021 and to address potential supplier issues throughout COVID.~~Brazil.

~~The Company continued to work closely with distribution channel and equipment user customers in the first quarter~~

in connection with short-term payment relief on obligations owed to the Company. Financing receivables and operating leases granted relief since the beginning of the pandemic and remaining outstanding at January 31, 2021 represented about 4 percent and 3 percent of the portfolio balances, respectively. The trade receivable balance granted relief and remaining outstanding at January 31, 2021 was not material. Additional information is presented in Notes 4, 11, and 15.

~~2021 Compared with 2020~~

~~The following table provides the net income attributable to Deere & Company in millions of dollars and diluted earnings per share in dollars:~~


	Three Months Ended				Three Months Ended
	January 31		February 2
	2021		2020
Net income attributable to Deere & Company	$	1,224	$	517
Diluted earnings per share		3.87		1.63
Small Agriculture and Turf					January 30		January 31
(In millions of dollars)					2022		2021		% Change
Net sales					$	2,631	$	2,515	+5
Operating profit						371		469	-21
Operating margin						14.1%		18.6%

InSmall agriculture and turf sales for the ~~first~~ quarter ~~of 2021, the Company recorded impairments totaling $50 million pretax~~improved as price realization more than offset lower shipment volumes. Operating profit decreased primarily due to ~~certain long-lived assets.~~higher production costs and lower sales / unfavorable sales mix. These ~~impairments~~items were partially offset by ~~a favorable indirect tax ruling in Brazil of $58 million pretax. In the first quarter of 2020, total voluntary employee-separation program (VSEP) expense recognized was $127 million pretax.~~price realization.

The worldwide net sales and revenues, and the impact of price realization and the effect of currency translation, for worldwide, U.S. and Canada, and outside U.S. and Canada in millions of dollars follows:

Three Months Ended

January 31

February 2

2021

2020

% Change

Worldwide net sales and revenues

$
9,112

$
7,631

+19

Worldwide equipment operations net sales

8,051

6,530

+23

Price realization

+6

Currency translation

+1

U.S. and Canada equipment operations net sales

4,529

3,750

+21

Price realization

+5

Outside U.S. and Canada equipment operations net sales

3,522

2,780

+27

Price realization

+7

Currency translation

+1

~~The Company’s equipment operations operating profit and net income and financial services operations net income follow in millions of dollars:~~

Three Months Ended

January 31

February 2

2021

2020

% Change

Equipment operations operating profit

$
1,380

$
466

+196

Equipment operations net income

1,020

380

+168

Financial services net income

204

137

+49

~~The discussion on net sales and operating profit are included in the Business Segment Results below.~~

~~The cost of sales to net sales ratio and other significant statement of consolidated income changes follow in millions of dollars:~~

Three Months Ended

January 31

February 2

2021

2020

% Change

Cost of sales to net sales

72.1%

77.7%

Research and development expenses

$
366

$
425

-14

Selling, administrative and general expenses

769

809

-5

Other operating expenses

373

415

-10

The cost of sales ratio improved due to price realization and the VSEP costs recorded in the first quarter of 2020. Research and development expenses declined due to the timing of research initiatives and the VSEP costs recorded last year. Selling, administrative and general expenses decreased primarily as a result of VSEP costs recorded in the same period last year. Other operating expenses decreased primarily as a result of lower losses on operating lease residual values, reduced depreciation of equipment on operating leases, and a curtailment loss in certain OPEB plans recorded in the same period last year (see Note 8).
~~Business Segment Results~~
~~Production and Precision Agriculture.~~ ~~The production and precision agriculture segment results in millions of dollars follow:~~

Three Months Ended

January 31

February 2


2021

2020

% Change

Net sales

$
3,069

$
2,507

+22

Operating profit

643

218

+195

Operating margin

21.0%

8.7%

Production and precision agriculture sales for the quarter increased due to higher shipment volumes and price realization, partially offset by the unfavorable effects of currency translation. Operating profit rose primarily due to price realization, higher shipment volumes / sales mix, and a favorable indirect tax ruling in Brazil. These items were partially offset by unfavorable effects of foreign-currency exchange. The prior period was affected by voluntary employee-separation expenses.

~~Small Agriculture and Turf.~~ ~~The small agriculture and turf segment results in millions of dollars follow:~~

Three Months Ended

January 31

February 2


2021

2020

% Change

Net sales

$
2,515

$
1,979

+27

Operating profit

469

155

+203

Operating margin

18.6%

7.8%

Small agriculture and turf sales for the quarter increased due to higher shipment volumes, price realization, and the favorable effects of currency translation. Operating profit increased primarily due to higher shipment volumes / sales mix and price realization. Results for the prior period were affected by voluntary employee-separation expenses.

~~Construction and Forestry.~~ ~~The construction and forestry segment results in millions of dollars follow:~~


	Three Months Ended					Three Months Ended
	January 31		February 2
	2021		2020		% Change
Construction and Forestry						January 30		January 31
(In millions of dollars)						2022		2021		% Change
Net sales	$	2,467	$	2,044	+21	$	2,544	$	2,467	+3
Operating profit		268		93	+188		272		268	+1
Operating margin		10.9%		4.5%			10.7%		10.9%

Construction and forestry sales moved higher for the quarter primarily due to ~~higher shipment volumes,~~ price realization and ~~the favorable effects of currency translation. Additionally, the Wirtgen operation’s~~higher shipment volumes. Last year Wirtgen’s one-month reporting lag was eliminated resulting in four months of Wirtgen activity in the ~~quarter.~~first quarter of 2021, which increased “Net sales” by $270 million. Operating profit ~~increased~~was higher mainly due to ~~higher shipment volumes / sales mix and~~ price ~~realization. The increase in profit was~~realization, partially offset by ~~impairments of long-lived assets and~~ higher production ~~costs.~~costs and lower sales / unfavorable sales mix. The current period was impacted by the UAW contract ratification bonus. Results last year ~~also~~ included ~~voluntary employee-separation costs.~~impairment of long-lived assets.

~~Financial Services.~~ ~~The financial services segment revenue, interest expense, and operating profit in millions of dollars:~~


	Three Months Ended					Three Months Ended
	January 31		February 2
	2021		2020		% Change
Revenue (including intercompany revenue)	$	934	$	998	-6
Financial Services						January 30		January 31
(In millions of dollars)						2022		2021		% Change
Revenue (including intercompany)						$	916	$	934	-2
Interest expense		188		275	-32		158		188	-16
Operating profit		258		179	+44
Net income							231		204	+13

~~Operating profit increased due to favorable financing spreads, lower losses on operating lease residual values, and a lower provision for credit losses. The~~While the average balance of receivables and leases financed was 16 percent higher in the first three months of ~~2021,~~2022, compared with the same period last ~~year.~~year, revenue decreased due to lower average interest rates. Interest expense decreased 3216 percent in the first quarter of ~~2021 primarily~~2022 as a result of lower average borrowing rates.

~~Safe Harbor Statement~~

~~Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:~~ ~~Statements under “Overview~~” and other forward-looking statements herein that relate to future events, expectations, and trends involve factors that are subject to change, and risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect particular lines of business, while others could affect all of the Company’s businesses.

The Company’s agricultural equipment businesses are subject to a number of uncertainties including the factors that affect farmers’ confidence and financial condition. These factors include demand for agricultural products, world grain stocks, weather conditions, soil conditions, harvest yields, prices for commodities and livestock, crop and livestock production expenses, availability of transport for crops, trade restrictions and tariffs (e.g., China), global trade agreements, the level of farm product exports (including concerns about genetically modified organisms), the growth and sustainability of non-food uses for some crops (including ethanol and biodiesel production), real estate values, available acreage for farming, the land ownership policies of governments, changes in government farm programs and policies, international reaction to such programs, changes in and effects of crop insurance programs, changes in environmental regulations and their impact on farming practices, animal diseases (e.g., African swine fever) and their effects on poultry, beef and pork consumption and prices and on livestock feed demand, and crop pests and diseases and the impact of the COVID pandemic on the agricultural industry including demand for, and production and exports of, agricultural products, and commodity prices.

The production and precision agriculture business is dependent on agricultural conditions, and relies on hardware and software, guidance, connectivity and digital solutions, and automation and machine intelligence. Many factors contribute to the Company’s precision agriculture sales and results, including the impact to customers’ profitability or sustainability outcomes; the rate of adoption and use by customers; availability of technological innovations; speed of research and development; effectiveness of partnerships with third-parties; and the dealer channel’s ability to support and service precision technology solutions.

Factors affecting the outlook for the Company’s small agriculture and turf equipment include agricultural conditions, consumer confidence, weather conditions, customer profitability, labor supply, consumer borrowing patterns, consumer purchasing preferences, housing starts and supply, infrastructure investment, spending by municipalities and golf courses, and consumable input costs.

Consumer spending patterns, real estate and housing prices, the number of housing starts, interest rates, commodity prices such as oil and gas, the levels of public and non-residential construction, and investment in infrastructure affect sales and results of the Company’s construction and forestry equipment. Prices for pulp, paper, lumber and structural panels affect sales of forestry equipment.

Many of the factors affecting production and precision agriculture, small agriculture and turf, and construction and forestry segments, have been and may continue to be impacted by global economic conditions, including those resulting from the COVID pandemic and responses to the pandemic taken by governments and other authorities.

All of the Company’s businesses and its results are affected by general economic conditions in the global markets and industries in which the Company operates; customer confidence in general economic conditions; government spending and taxing; foreign currency exchange rates and their volatility, especially fluctuations in the value of the U.S. dollar; interest rates (including the availability of IBOR reference rates); inflation and deflation rates; changes in weather patterns; the political and social stability of the global markets in which the Company operates; the effects of, or response to, terrorism and security threats; wars and other conflicts; natural disasters; and the spread of major epidemics (including the COVID pandemic) and government and industry responses to epidemics such as travel restrictions and extended shut down of businesses.

Uncertainties related to the magnitude and duration of the COVID pandemic may significantly adversely affect the Company’s business and outlook. These uncertainties include: the duration and impact of any resurgence in COVID cases in any country, state, or region; the emergence, contagiousness, and threat of new and different strains of COVID; prolonged reduction or closure of the Company’s operations, or a delayed recovery in our operations; additional closures as mandated or otherwise made necessary by governmental authorities; disruptions in the supply chain and a prolonged delay in resumption of operations by one or more key suppliers, or the failure of any key suppliers; the Company’s ability to meet commitments to customers on a timely basis as a result of Net income increased costs and supply challenges; the ability to receive goods on a timely basis and at anticipated costs; increased logistics costs; delays in the Company’s strategic initiatives as a result of reduced spending on research and development; additional operating costs due to ~~remote working arrangements, adherence to social distancing guidelines~~income earned on higher average portfolio balances and ~~other~~

~~COVID-related challenges; increased risk of cyber attacks~~improvement on network connections used in remote working arrangements; increased privacy-related risks due to processing health-related personal information; legal claims related to personal protective equipment designed, made, or provided by the Company or alleged exposure to COVID on Company premises; absence of employees due to illness; the impact of the pandemic on the Company’s customers and dealers, and their delays in their plans to invest in new equipment; requests by the Company’s customers or dealers for payment deferrals and contract modifications; the impact of disruptions in the global capital markets and/or declines in the Company’s financial performance, outlook or credit ratings, which could impact the Company’s ability to obtain funding in the future; and the impact of the pandemic on demand for our products and services as discussed above. It is unclear when a sustained economic recovery could occur and what a recovery may look like. All of these factors could materially and adversely affect our business, liquidity, results of operations and financial position.

Significant changes in market liquidity conditions, changes in the Company’s credit ratings and any failure to comply with financial covenants in credit agreements could impact access to funding and funding costs, which could reduce the Company’s earnings and cash flows. Financial market conditions could also negatively impact customer access to capital for purchases of the Company’s products and customer confidence and purchase decisions, borrowing and repayment practices, and the number and size of customer loan delinquencies and defaults. A debt crisis, in Europe or elsewhere, could negatively impact currencies, global financial markets, social and political stability, funding sources and costs, asset and obligation values, customers, suppliers, demand for equipment, and Company operations and results. The Company’s investment management activities could be impaired by changes in the equity, bond and other financial markets, which would negatively affect earnings.

The withdrawal of the United Kingdom from the European Union and the perceptions as to the impact of the withdrawal may adversely affect business activity, political stability and economic conditions in the United Kingdom, the European Union and elsewhere. The economic conditions and outlook could be further adversely affected by (i) uncertainty regarding any new or modified trade arrangements between the United Kingdom and the European Union and/or other countries, (ii) the risk that one or more other European Union countries could come under increasing pressure to leave the European Union, or (iii) the risk that the euro as the single currency of the Eurozone could cease to exist. Any of these developments, or the perception that any of these developments are likely to occur, could affect economic growth or business activity in the United Kingdom or the European Union, and could result in the relocation of businesses, cause business interruptions, lead to economic recession or depression, and impact the stability of the financial markets, availability of credit, currency exchange rates, interest rates, financial institutions, and political, financial and monetary systems. Any of these developments could affect our businesses, liquidity, results of operations and financial position.

Additional factors that could materially affect the Company’s operations, access to capital, expenses and results include changes in, uncertainty surrounding and the impact of governmental trade, banking, monetary and fiscal policies, including financial regulatory reform and its effects on the consumer finance industry, derivatives, funding costs and other areas; governmental programs, policies, and tariffs for the benefit of certain industries or sectors; sanctions in particular jurisdictions; retaliatory actions to such changes in trade, banking, monetary and fiscal policies; actions by central banks; actions by financial and securities regulators; actions by environmental, health and safety regulatory agencies, including those related to engine emissions, carbon and other greenhouse gas emissions, noise and the effects of climate change; changes to GPS radio frequency bands or their permitted uses; changes in labor and immigration regulations; changes to accounting standards; changes in tax rates, estimates, laws and regulations and Company actions related thereto; changes to and compliance with privacy regulations; changes to and compliance with economic sanctions and export controls laws and regulations; compliance with U.S. and foreign laws when expanding to new markets and otherwise; and actions by other regulatory bodies.

Other factors that could materially affect results include production, design and technological innovations and difficulties, including capacity and supply constraints and prices; the loss of or challenges to intellectual property rights whether through theft, infringement, counterfeiting or otherwise; the availability and prices of strategically sourced materials, components and whole goods; delays or disruptions in the Company’s supply chain or the loss of liquidity by suppliers; disruptions of infrastructures that support communications, operations or distribution; the failure of customers, dealers, suppliers or the Company to comply with laws, regulations and Company policy pertaining to employment, human rights, health, safety, the environment, sanctions, export controls, anti-corruption, privacy and data protection and other ethical business practices; events that damage the Company’s reputation or brand; significant investigations, claims, lawsuits or other legal proceedings; start-up of new plants and products; the success of new product initiatives or business strategies; changes in customer product preferences and sales mix; gaps or limitations in rural broadband coverage, capacity and speed needed to support technology solutions; oil and energy prices, supplies and volatility; the availability and cost of freight; actions of competitors in the various industries in which the Company competes, particularly price discounting; dealer practices especially as to levels of

~~new and used field inventories; changes in demand and pricing for used equipment and resulting impacts on~~operating lease residual values; labor relations and contracts; changes in the ability to attract, develop, engage, and retain qualified personnel; acquisitions and divestitures of businesses; greater than anticipated transaction costs; the integration of new businesses; the failure or delay in closing or realizing anticipated benefits of acquisitions, joint ventures or divestitures; the inability to deliver precision technology and agricultural solutions to customers; the implementation of the smart industrial operating strategy and other organizational changes; the failure to realize anticipated savings or benefits of cost reduction, productivity, or efficiency efforts; difficulties related to the conversion and implementation of enterprise resource planning systems; security breaches, cybersecurity attacks, technology failures and other disruptions to the Company’s and suppliers’ information technology infrastructure; changes in Company declared dividends and common stock issuances and repurchases; changes in the level and funding of employee retirement benefits; changes in market values of investment assets, compensation, retirement, discount and mortality rates which impact retirement benefit costs; and significant changes in health care costs.

The liquidity and ongoing profitability of John Deere Capital Corporation and other credit subsidiaries depend largely on timely access to capital in order to meet future cash flow requirements, and to fund operations, costs, and purchases of the Company’s products. If general economic conditions deteriorate or capital markets become more volatile, including as a result of the COVID pandemic, funding could be unavailable or insufficient. Additionally, customer confidence levels may result in declines in credit applications and increases in delinquencies and default rates, which could materially impact write-offs and provisions for credit losses.

The Company’s forward-looking statements are based upon assumptions relating to the factors described above, which are sometimes based upon estimates and data prepared by government agencies. Such estimates and data are often revised. The Company, except as required by law, undertakes no obligation to update or revise its forward-looking statements, whether as a result of new developments or otherwise. 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 the Company’s most recent annual report on Form 10-K and quarterly reports on Form 10-Q).

values.

Critical Accounting ~~Policies~~Estimates

See the Company’s critical accounting ~~policies~~estimates discussed in the Management’s Discussion and Analysis of the most ~~recent~~recently filed annual report ~~filed~~ on Form 10-K. There have been no material changes to these ~~policies, other than as described below related to the allowance for credit losses, as a result of the adoption of ASU No. 2016-13 during the first quarter of 2021.~~policies.

The Company utilizes loss forecast models, which are selected based on the size and credit risk of the underlying pool of receivables, to estimate expected credit losses. Transition matrix models are used for large and complex customer receivable pools, while weighted average remaining maturity models are used for smaller and less complex customer receivable pools. Expected credit losses on wholesale receivables are based on historical loss rates, adjusted for current economic conditions. The modeled expected credit losses are adjusted based on reasonable and supportable forecasts, which may include economic indicators such as commodity prices, industry equipment sales, unemployment rates, and housing starts. Management reviews each model’s output quarterly, and qualitative adjustments are incorporated as necessary. While the Company believes its allowance is sufficient to provide for losses over the life of its existing receivable portfolio, different assumptions or changes in economic conditions would result in changes to the allowance for credit losses and the provision for credit losses.34

CAPITAL RESOURCES AND LIQUIDITY

The discussion of capital resources and liquidity has been organized to review separately, where appropriate, the Company’s consolidated totals, equipment operations, and financial services operations.

Consolidated

Cash outflows from consolidated operating activities in the first three months of 2022 were $2,553 million. This resulted mainly from a working capital change and a $1,000 million voluntary contribution to a U.S. OPEB plan. These were partially offset by net income adjusted for non-cash provisions. Cash inflows from investing activities were $648 million in the first three months of this year. The primary driver was collections of receivables (excluding receivables related to sales) and proceeds from sales of equipment on operating leases exceeding the cost of receivables and equipment on operating leases acquired, partially offset by purchases of property and equipment. Cash outflows from financing activities were $1,577 million in the first three months of 2022. Cash, cash equivalents, and restricted cash decreased $3,556 million during the first three months of this year.
In February 2022, the Company acquired majority ownership in Kreisel Electric, Inc., a battery technology provider based in Austria. The initial cash outlay was €239 million, which was financed from cash on hand (see Note 21). Additional cash requirements anticipated in the remainder of 2022 include the dissolution of the joint venture agreement between the Company and Hitachi Construction Machinery Co., Ltd. (Hitachi). In connection with the termination, the Company will purchase all of Hitachi’s shares in the relevant joint venture manufacturing entities and receive certain intellectual property rights. The initial cash consideration consists of $275 million for the shares and an intellectual property license. The transaction is expected to close in the second quarter of 2022, subject to the receipt of certain required regulatory approvals and satisfaction of certain other customary closing conditions. This consideration will be paid out of cash on hand.
Positive cash flows from consolidated operating activities in the first three months of 2021 were $143 million. This resulted primarily from net income adjusted for non-cash provisions ~~and a change in accrued income taxes payable / receivable, which were~~ partially offset by ~~a seasonal increase~~changes in ~~inventories and receivables related to sales and a~~

~~decrease in accounts payable and accrued expenses.~~working capital. Cash inflows from investing activities were $579 million in the first three months of ~~this year, primarily~~2021, largely due to collections of receivables (excluding receivables related to sales) and proceeds from sales of equipment on operating leases exceeding the cost of receivables and equipment on operating leases ~~acquired by $865 million,~~acquired. This was partially offset by purchases of property and ~~equipment of $154 million and a change in collateral on derivatives - net of $88 million.~~equipment. Negative cash flows from financing activities were $933 million in the first three months of 2021 primarily due to a decrease in borrowings of $379 million, repurchases of common stock of $352 million, and dividends paid of $242 million, partially offset by proceeds from issuance of common stock of $71 million (resulting from the exercise of stock options).2021. Cash, cash equivalents, and restricted cash decreased $108 million during the first three months of ~~this year.~~

Negative cash flows from consolidated operating activities in the first three months of 2020 were $508 million. This resulted primarily from a decrease in accounts payable and accrued expenses, a seasonal increase in inventories, and a change in accrued income taxes payable / receivable, which were partially offset by net income adjusted for non-cash provisions and a decrease in receivables related to sales. Cash inflows from investing activities were $1,026 million in the first three months of 2020, primarily due to collections of receivables (excluding receivables related to sales) and proceeds from sales of equipment on operating leases exceeding the cost of receivables and equipment on operating leases acquired by $1,270 million, partially offset by purchases of property and equipment of $271 million. Negative cash flows from financing activities were $763 million in the first three months of 2020 primarily due to a decrease in borrowings of $422 million, dividends paid of $242 million, and repurchases of common stock of $114 million, partially offset by proceeds from issuance of common stock of $53 million (resulting from the exercise of stock options). Cash, cash equivalents, and restricted cash decreased $246 million during the first three months of 2020.2021.

The Company has access to most global markets at a reasonable cost and expects to have sufficient sources of global funding and liquidity to meet its funding ~~needs.~~needs in the short term and long term. 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 committed and uncommitted bank lines of credit. The Company’s commercial paper outstanding at January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020~~January 31, 2021 was ~~$1,346~~$2,135 million, ~~$1,238~~$2,230 million, and ~~$2,149~~$1,346 million, respectively, while the total cash, cash equivalents, and marketable securities position was ~~$7,629~~$5,207 million, ~~$7,707~~$8,745 million, and ~~$4,211~~$7,629 million, respectively. The total cash, cash equivalents, and marketable securities held by foreign subsidiaries was ~~$4,956~~$3,047 million, ~~$5,010~~$5,817 million, and ~~$2,572~~$4,956 million at January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020,~~January 31, 2021, respectively. During the first quarter of 2022, the Company’s foreign subsidiaries returned $3,500 million of cash and cash equivalents to the U.S.

Lines of Credit. The Company also has access to bank lines of credit with various banks throughout the world. Worldwide lines of credit totaled ~~$8,326~~$8,519 million at January ~~31, 2021, $6,654~~30, 2022, $5,865 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 primarily considered to constitute utilization. Included in the total credit lines at January ~~31, 2021~~30, 2022 was a 364-day credit facility agreement of $3,000 million, expiring in fiscal April ~~2021.~~2022. In addition, total credit lines included long-term credit facility agreements of $2,500 million, expiring in fiscal April ~~2024,~~2025, and $2,500 million, expiring in fiscal ~~April 2025.~~March 2026. The Company expects to extend the terms of these credit facilities. These credit agreements require John Deere Capital Corporation (Capital Corporation) to maintain its consolidated ratio of earnings to fixed charges at not less than 1.05 to 1 for each fiscal quarter and the ratio of senior debt, excluding securitization indebtedness, to capital base (total subordinated debt and stockholder’s equity excluding accumulated other comprehensive income (loss)) at not more than 11 to 1 at the end of any fiscal quarter. The credit agreements also require the equipment operations to maintain a ratio of total debt to total capital (total debt and stockholders’ equity excluding accumulated other comprehensive income (loss)) of 65 percent or less at the end of each fiscal quarter. Under this provision, the Company’s excess equity capacity and retained earnings balance free of restriction at January ~~31, 2021~~30, 2022 was ~~$13,514~~$15,452 million. Alternatively under this provision, the equipment operations had the capacity to incur additional debt of ~~$25,098~~$28,697 million at January ~~31, 2021.~~30, 2022. All of these requirements of 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 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 Company 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 ~~debt~~ 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	Stable
Standard & Poor’s	A	A-1	Stable

Trade Accounts and Notes Receivable. Trade accounts and notes receivable primarily arise from sales of goods to independent dealers. Trade receivables increased ~~$866~~$647 million during the first three months of ~~2021, primarily~~2022, mostly due to a seasonal increase. These receivables decreased ~~$323~~$182 million, compared to a year ago. The ratios of ~~worldwide~~ trade accounts and notes receivable to the last 12 months’ net sales were 12 percent at January 30, 2022, compared to 11 percent at October 31, 2021 and 15 percent at January 31, ~~2021, compared to 13 percent at November 1, 2020 and 16 percent at February 2, 2020.~~2021. Production and precision agriculture trade receivables decreased ~~$46~~$218 million, small agriculture and turf trade receivables ~~increased $154~~decreased $220 million, and construction and forestry trade receivables ~~decreased $431~~increased $256 million, compared to a year ago. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 1 percent, 1 percent, and 3 percent at January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020.~~

~~Deere & Company stockholders’ equity was $14,083 million at~~ January 31, 2021, compared with $12,937 million at November 1, 2020 and $11,926 million at February 2, 2020. The increase of $1,146 million during the first three months of 2021 resulted primarily from net income attributable to Deere & Company of $1,224 million, a change in the cumulative translation adjustment of $396 million, a change in the retirement benefits adjustment of $63 million, and an increase in common stock of $47 million, partially offset by an increase in treasury stock of $312 million and dividends declared of $239 million.respectively.

Equipment Operations

The Company’s equipment businesses are capital intensive and are subject to seasonal variations in financing requirements for inventories and certain receivables from dealers. The equipment operations sell a significant portion of their trade receivables to financial services. ~~To the extent necessary, funds~~Funds provided from operations are supplemented by external financing ~~sources.~~sources as needed.

Cash used for operating activities of the equipment operations, including intercompany cash flows, in the first three months of 2022 was $2,488 million. This resulted largely from a change in working capital and a $1,000 million voluntary contribution to a U.S. OPEB plan exceeding cash inflows from net income adjusted for non-cash provisions. Cash, cash equivalents, and restricted cash decreased $3,592 million in the first three months of 2022.

Cash provided by operating activities of the equipment operations, including intercompany cash flows, in the first three months of 2021 was $348 million. ~~This resulted primarily from cash~~Cash inflows from net income adjusted for non-cash provisions ~~a change~~were partially offset by changes in accrued income taxes payable / receivable, and a decrease in trade and financing receivables held by the equipment operations. Partially offsetting these operating cash inflows were cash outflows from a seasonal increase in inventories and a decrease in accounts payable and accrued expenses.working capital. Cash, cash equivalents, and restricted cash decreased $71 million in the first three months of 2021.

Cash used for operating activities of the equipment operations, including intercompany cash flows, in the first three months of 2020 was $380 million. This resulted primarily from a decrease in accounts payable and accrued expenses, a seasonal increase in inventories, and a change in accrued income taxes payable / receivable. Partially offsetting these operating cash outflows were cash inflows from net income adjusted for non-cash provisions and a decrease in trade and financing receivables held by the equipment operations. Cash, cash equivalents, and restricted cash decreased $313 million in the first three months of 2020.

Trade receivables held by the equipment operations decreased ~~$113~~$159 million during the first three months of ~~2021~~2022 and ~~decreased $215~~increased $96 million from a year ago. The equipment operations sell a significant portion of their trade receivables to financial services. See the previous consolidated discussion of trade receivables.

Inventories increased by ~~$957~~$1,154 million during the first three months, primarily due to a seasonal ~~increase and the effect of foreign currency translation.~~increase. Inventories ~~decreased $526~~increased $1,979 million, compared to a year ago, ~~primarily~~ due to higher forecasted shipment volumes and a raw material build-up related to the UAW work stoppage, partially offset by the effect of foreign currency translation. A majority of these inventories are valued on the last-in, first-out (LIFO) method. The ratios of inventories on a first-in, first-out (FIFO) basis (see Note 13), which approximates current cost, to the last 12 months’ cost of sales were 31 percent at January 31, 2021, compared to 28 percent at November 1, 2020 and 31 percent at February 2, 2020.

Total interest-bearing debt, excluding finance lease liabilities, of the equipment operations was $10,229 million at January 30, 2022, compared with $10,373 million at October 31, 2021 and $10,494 million at January 31, ~~2021, compared with $10,382 million at November 1, 2020 and $6,521 million at February 2, 2020.~~2021. The ratios of debt to total capital (total interest-bearing debt and stockholders’ equity) were 4336 percent, 4536 percent, and 3543 percent at January 30, 2022, October 31, 2021, ~~November 1, 2020,~~ and ~~February 2, 2020,~~January 31, 2021, respectively.

Property and equipment cash expenditures for the equipment operations in the first three months of ~~2021~~2022 were ~~$154~~$193 million, compared with ~~$271~~$154 million in the same period last year. Capital expenditures for the equipment operations in ~~2021~~2022 are estimated to be approximately ~~$900~~$1,175 million.

Financial Services

The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios. Their primary sources of funds for this purpose are a combination of commercial paper, term debt, securitization of retail notes, equity capital, and borrowings from Deere & Company.

During the first three months of 2022 and 2021, the cash provided by operating and investing activities was used for financing activities. Cash, ~~flows provided by operating activities, including intercompany~~ cash ~~flows, were $420~~equivalents, and restricted cash increased $36 million in the first three months of ~~2021. Cash provided by investing activities totaled $270 million in the first three months of 2021 primarily due to the collection of receivables (excluding trade~~2022 and wholesale) and proceeds from sales of equipment on operating leases exceeding the cost of receivables and equipment on operating leases acquired by $909 million, partially offset by an increase in trade and wholesale receivables of $523 million and a change in collateral on derivatives - net of $88 million. Cash used for financing activities totaled $747 million, resulting primarily from a decrease in external borrowings of $339 million, a decrease in borrowings from Deere & Company of $264 million, and dividends paid to Deere & Company of $135 million. Cash, cash equivalents, and restricted cash decreased $37 million in the first three months of 2021.

During the first three months of 2020, the cash provided by operating and investing activities was used for financing activities. Cash flows provided by operating activities, including intercompany cash flows, were $446 million in the first three months of 2020. Cash provided by investing activities totaled $857 million in the first three months of 2020 primarily due to the collection of receivables (excluding trade and wholesale) and proceeds from sales of equipment on operating leases exceeding the cost of receivables and equipment on operating leases acquired by $1,244 million, partially offset by an increase in trade and wholesale receivables of $382 million. Cash used for financing activities totaled $1,232 million, resulting primarily from a decrease in borrowings from Deere & Company of $572 million, a decrease in external borrowings of $526 million, and dividends paid to Deere & Company of $125 million. Cash, cash equivalents, and restricted cash increased $67 million in the first three months of 2020.

Receivables and leases held by the financial services operations consist of retail notes originated in connection with ~~retail sales~~financing of new and used equipment, ~~by dealers of John Deere products, retail notes from non-Deere equipment customers,~~operating leases, trade receivables, ~~wholesale notes,~~ revolving charge accounts, ~~credit enhanced international export financing generally involving John Deere products,~~ sales-type and direct financing leases, and ~~operating leases. Total~~wholesale notes. Trade and financing receivables and equipment on operating leases decreased ~~$238~~$1,149 million during the first quarter of ~~2021~~2022, primarily due to seasonal payments, and increased ~~$808~~$2,490 million in the past 12 months. ~~Acquisition~~Total acquisition volumes of receivables (excluding trade and wholesale) and leases were 143 percent higher in the first three months of ~~2021,~~2022, compared with the same period last year, as volumes of operating and finance leases, retail notes, and revolving charge accounts ~~and sales-type and direct financing leases~~ were higher ~~while volumes of operating leases were lower. The amount of total trade receivables and wholesale notes increased~~ compared to ~~November 1, 2020 and decreased compared to February 2, 2020.~~January 31, 2021.

Total external interest-bearing debt of the financial services operations was $37,026 million at January 30, 2022, compared with $37,978 million at October 31, 2021 and $35,415 million at January 31, ~~2021, compared with $35,556 million at November 1, 2020 and $38,343 million at February 2, 2020.~~2021. Total external borrowings have generally changed corresponding with the level of receivable and lease portfolio, the level of cash and cash equivalents, the change in payables owed to Deere & Company, and the change in investment from Deere & Company. The financial services operations’ ratio of interest-bearing debt to stockholder’s equity was 7.4 to 1 at January 30, 2022, compared with 7.8 to 1 at October 31, 2021 and 7.6 to 1 at January 31, ~~2021, compared with 7.8 to 1 at November 1, 2020 and 7.8 to 1 at February 2, 2020.~~2021.

Capital Corporation has a revolving ~~credit agreement~~warehouse facility to utilize bank conduit facilities to securitize retail notes (see Note ~~12)~~10). ~~During November 2020, the agreement~~The facility was renewed in November 2021 with an expiration in November 2022 and a reduction of the total capacity or “financing ~~limit,” of~~limit” from $2,000 million to $1,000 million. As a result of ~~secured financings at any time. After a two-year revolving period, unless~~ the ~~banks and Capital Corporation agree~~reduced capacity, the Company repurchased $511 million of outstanding short-term securitization borrowings in November 2021, in addition to ~~renew, Capital Corporation would liquidate~~ the ~~secured borrowings over time as~~normal payments collected on the retail ~~notes are collected. At January 31, 2021, $1,550 million of secured short-term borrowings were outstanding under the agreement.~~notes.

In the first three months of ~~2021,~~2022, the financial services operations retired ~~$706~~$1,123 million of retail note securitization borrowings, which are presented in “Increase (decrease) in total short-term borrowings.” In addition, during the first three months of ~~2021,~~2022, the financial services operations issued ~~$1,757~~$2,335 million and retired ~~$1,421~~$1,816 million of long-term borrowings, which were primarily medium-term notes.

Safe Harbor Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements under “Overview” and other forward-looking statements herein that relate to future events, expectations, and trends involve factors that are subject to change, and assumptions, risks, and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect particular lines of business, while others could affect all of the Company’s businesses.

The Company’s agricultural equipment businesses are subject to a number of uncertainties, including certain factors that affect farmers’ confidence and financial condition. These factors include demand for agricultural products; world grain stocks; weather conditions and the effects of climate change; soil conditions; harvest yields; prices for commodities and livestock; crop and livestock production expenses; availability of transport for crops (including as a result of reduced state and local transportation budgets); trade restrictions and tariffs (e.g., China); global trade agreements; the level of farm product exports (including concerns about genetically modified organisms); the growth and sustainability of non-food uses for some crops (including ethanol and biodiesel production); real estate values; available acreage for farming; land ownership policies of governments; changes in government farm programs and policies; international reaction to such programs; changes in and effects of crop insurance programs; changes in environmental regulations and their impact on farming practices; animal diseases (e.g., African swine fever) and their effects on poultry, beef, and pork consumption and prices and on livestock feed demand; crop pests and diseases; and the impact of the COVID pandemic on the agricultural industry including demand for, and production and exports of, agricultural products, and commodity prices.
The production and precision agriculture business is dependent on agricultural conditions, and relies in part on hardware and software, guidance, connectivity and digital solutions, and automation and machine intelligence. Many factors contribute to the Company’s precision agriculture sales and results, including the impact to customers’ profitability and/or sustainability outcomes; the rate of adoption and use by customers; availability of technological innovations; speed of research and development; effectiveness of partnerships with third parties; and the dealer channel’s ability to support and service precision technology solutions.
Factors affecting the Company’s small agriculture and turf equipment operations include agricultural conditions; consumer confidence; weather conditions and the effects of climate change; customer profitability; labor supply;

4237

consumer borrowing patterns; consumer purchasing preferences; housing starts and supply; infrastructure investment; spending by municipalities and golf courses; and consumable input costs.

Factors affecting the Company’s construction and forestry equipment operations include consumer spending patterns; real estate and housing prices; the number of housing starts; interest rates; commodity prices such as oil and gas; the levels of public and non-residential construction; and investment in infrastructure. Prices for pulp, paper, lumber, and structural panels affect sales of forestry equipment.

Many of the factors affecting the production and precision agriculture, small agriculture and turf, and construction and forestry segments have been and may continue to be impacted by global economic conditions, including those resulting from the COVID pandemic and responses to the pandemic taken by governments and other authorities.

All of the Company’s businesses and its results are affected by general economic conditions in the global markets and industries in which the Company operates; customer confidence in general economic conditions; government spending and taxing; foreign currency exchange rates and their volatility, especially fluctuations in the value of the U.S. dollar; interest rates (including the availability of interbank overnight rate reference rates); inflation and deflation rates; changes in weather and climate patterns; the political and social stability of the global markets in which the Company operates; the effects of, or response to, terrorism and security threats; wars and other conflicts; natural disasters; and the spread of major epidemics or pandemics (including the COVID pandemic) and government and industry responses to such epidemics or pandemics, such as travel restrictions and extended shut downs of businesses.

Continued uncertainties related to the magnitude, duration, and persistent effects of the COVID pandemic may significantly adversely affect the Company’s business and outlook. These uncertainties include, among other things: the duration and impact of the resurgence in COVID cases in any country, state, or region; the emergence, contagiousness, and threat of new and different strains of virus; the availability, acceptance, and effectiveness of vaccines; additional closures as mandated or otherwise made necessary by governmental authorities; disruptions in the supply chain, including those caused by industry capacity constraints, material availability, and global logistics delays and constraints arising from, among other things, the transportation capacity of ocean shipping containers, and continued disruptions in the operations of one or more key suppliers, or the failure of any key suppliers; an increasingly competitive labor market due to a sustained labor shortage or increased turnover caused by the COVID pandemic; the Company’s ability to meet commitments to customers on a timely basis as a result of increased costs and supply and transportation challenges; increased logistics costs; additional operating costs due to continued remote working arrangements and other COVID~~Dividends~~-related challenges; increased risk of cyber-attacks on network connections used in remote working arrangements; increased privacy-related risks due to processing health-related personal information; legal claims related to personal protective equipment designed, made, or provided by the Company or alleged exposure to COVID on Company premises; absence of employees due to illness; and the impact of the pandemic on the Company’s customers and dealers. The sustainability of the economic recovery from the pandemic remains unclear and significant volatility could continue for a prolonged period. These factors, and others that are currently unknown or considered immaterial, could materially and adversely affect our business, liquidity, results of operations, and financial position.
Significant changes in market liquidity conditions, changes in the Company’s credit ratings, and any failure to comply with financial covenants in credit agreements could impact access to funding and funding costs, which could reduce the Company’s earnings and cash flows. Financial market conditions could also negatively impact customer access to capital for purchases of the Company’s products and customer confidence and purchase decisions, financing and repayment practices, and the number and size of customer delinquencies and defaults. A debt crisis in Europe, Latin America, or elsewhere could negatively impact currencies, global financial markets, social and political stability, funding sources and costs, asset and obligation values, customers, suppliers, demand for equipment, and Company operations and results. The Company’s investment management activities could be impaired by changes in the equity, bond, and other financial markets, which would negatively affect earnings.
Additional factors that could materially affect the Company’s operations, access to capital, expenses, and results include changes in, uncertainty surrounding, and the impact of governmental trade, banking, monetary, and fiscal policies, including financial regulatory reform and its effects on the consumer finance industry, derivatives, funding costs, and other areas; the potential default of the U.S. federal government if Congress fails to pass a 2022 budget resolution; governmental programs, policies, and tariffs for the benefit of certain industries or sectors; sanctions in particular jurisdictions, including those imposed in connection with the military confrontation between Russia and Ukraine; retaliatory actions to such changes in trade, banking, monetary, and fiscal policies; actions by central banks; actions by financial and securities regulators; actions by environmental, health, and safety regulatory agencies, including those related to engine emissions, carbon and other greenhouse gas emissions, noise, and the effects of climate change; changes to GPS radio frequency bands or their permitted uses; changes in labor and immigration regulations; changes to accounting standards; changes in tax rates, estimates, laws, and regulations and Company actions related thereto; changes to and compliance with privacy, banking, and other regulations; changes

to and compliance with economic sanctions and export controls laws and regulations; compliance with U.S. and foreign laws when expanding to new markets and otherwise; and actions by other regulatory bodies.

Other factors that could materially affect the Company’s results include security breaches, cybersecurity attacks, technology failures, and other disruptions to the information technology infrastructure of the Company and its suppliers and dealers; security breaches with respect to the Company’s products; production, design, and technological innovations and difficulties, including capacity and supply constraints and prices; the loss of or challenges to intellectual property rights, whether through theft, infringement, counterfeiting, or otherwise; the availability and prices of strategically sourced materials, components, and whole goods; delays or disruptions in the Company’s supply chain or the loss of liquidity by suppliers; disruptions of infrastructures that support communications, operations, or distribution; the failure of customers, dealers, suppliers, or the Company to comply with laws, regulations, and Company policy pertaining to employment, human rights, health, safety, the environment, sanctions, export controls, anti-corruption, privacy and data protection, and other ethical business practices;introduction of legislation that could affect the Company’s business model and intellectual property, such as right to repair or right to modify; events that damage the Company’s reputation or brand; significant investigations, claims, lawsuits, or other legal proceedings; start-up of new plants and products; the success of new product initiatives or business strategies; changes in customer product preferences and sales mix; gaps or limitations in rural broadband coverage, capacity, and speed needed to support technology solutions; oil and energy prices, supplies, and volatility; the availability and cost of freight; actions of competitors in the various industries in which the Company competes, particularly price discounting; dealer practices, especially as to levels of new and used field inventories; changes in demand and pricing for used equipment and resulting impacts on lease residual values; labor relations and contracts, including work stoppages and other disruptions; changes in the ability to attract, develop, engage, and retain qualified personnel; acquisitions and divestitures of businesses; greater-than-anticipated transaction costs; the integration of new businesses; the failure or delay in closing or realizing anticipated benefits of acquisitions, joint ventures, or divestitures; the inability to deliver precision technology and agricultural solutions to customers; the implementation of the smart industrial operating model and other organizational changes; the failure to realize anticipated savings or benefits of cost reduction, productivity, or efficiency efforts; difficulties related to the conversion and implementation of enterprise resource planning systems; changes in Company-declared dividends and common stock issuances and repurchases; changes in the level and funding of employee retirement benefits; changes in market values of investment assets, compensation, retirement, discount, and mortality rates which impact retirement benefit costs; and significant changes in health care costs.
The liquidity and ongoing profitability of John Deere Capital Corporation and the Company’s ~~Board~~other financial services subsidiaries depend largely on timely access to capital in order to meet future cash flow requirements, and to fund operations, costs, and purchases of ~~Directors at~~the Company’s products. If general economic conditions deteriorate or capital markets become more volatile, funding could be unavailable or insufficient. Additionally, customer confidence levels may result in declines in credit applications and increases in delinquencies and default rates, which could materially impact write-offs and provisions for credit losses.
The Company’s forward-looking statements are based upon assumptions relating to the factors described above, which are sometimes based upon estimates and data prepared by government agencies. Such estimates and data are often revised. The Company, except as required by law, undertakes no obligation to update or revise its ~~meeting~~forward-looking statements, whether as a result of new developments or otherwise. 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 the Company’s most recent annual report on ~~February 24, 2021 declared a~~Form 10-K and the Company’s subsequent quarterly ~~dividend of $.90 per share payable May 10, 2021, to stockholders of record~~reports on ~~March 31, 2021.~~Form 10-Q).

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 distributing equipment, service parts, and technology solutions to dealers and ~~end users.~~retail customers. Financial services primarily 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 ~~different~~separate performance metrics. The supplemental consolidating data is also used by management due to these differences.

4339

DEERE & COMPANY
DEERE & COMPANY

DEERE & COMPANY

SUPPLEMENTAL CONSOLIDATING DATA
SUPPLEMENTAL CONSOLIDATING DATA

SUPPLEMENTAL CONSOLIDATING DATA

STATEMENT OF INCOME

For the Three Months Ended January 31, 2021 and February 2, 2020

STATEMENTS OF INCOME
STATEMENTS OF INCOME

For the Three Months Ended January 30, 2022 and January 31, 2021
For the Three Months Ended January 30, 2022 and January 31, 2021

(In millions of dollars) Unaudited
(In millions of dollars) Unaudited

(In millions of dollars) Unaudited

EQUIPMENT

FINANCIAL

EQUIPMENT OPERATIONS¹

FINANCIAL SERVICES

ELIMINATIONS

CONSOLIDATED

OPERATIONS¹

SERVICES

ELIMINATIONS

CONSOLIDATED

2021

2020

2021

2020

2021

2020

2021

2020

2022

2021

2022

2021

2022

2021

2022

2021

Net Sales and Revenues































Net sales

$
8,051

$
6,530

$
8,051

$
6,530

$
8,531

$
8,051

$
8,531

$
8,051

Finance and interest income

32

27

$
862

$
936

$
(60)

$
(67)

834

896
²

34

32

$
829

$
862

$
(63)

$
(60)

800

834
²

Other income

220

209

72

62

(65)

(66)

227

205
³

217

220

87

72

(66)

(65)

238

227
³

Total

8,303

6,766

934

998

(125)

(133)

9,112

7,631

8,782

8,303

916

934

(129)

(125)

9,569

9,112

Costs and Expenses

Cost of sales

5,806

5,078

(1)

(1)

5,805

5,077
⁴

6,696

5,806

(1)

(1)

6,695

5,805
⁴

Research and development expenses

366

425

366

425

402

366

402

366

Selling, administrative and general expenses

653

672

117

138

(1)

(1)

769

809
⁴

657

653

126

117

(2)

(1)

781

769
⁴

Interest expense

95

63

188

275

(12)

(2)

271

336
⁵

90

95

158

188

(19)

(12)

229

271
⁵

Interest compensation to Financial Services

48

64

(48)

(64)

⁵

44

48

(44)

(48)

⁵

Other operating expenses

67

72

369

408

(63)

(65)

373

415
⁶

39

67

335

369

(63)

(63)

311

373
⁶

Total

7,035

6,374

674

821

(125)

(133)

7,584

7,062

7,928

7,035

619

674

(129)

(125)

8,418

7,584

Income before Income Taxes

1,268

392

260

177

1,528

569

854

1,268

297

260

1,151

1,528

Provision for income taxes

252

9

56

41

308

50

182

252

68

56

250

308

Income after Income Taxes

1,016

383

204

136

1,220

519

672

1,016

229

204

901

1,220

Equity in income (loss) of unconsolidated affiliates

4

(2)

1

4

(1)

Equity in income of unconsolidated affiliates

1

4

2

3

4

Net Income

1,020

381

204

137

1,224

518

673

1,020

231

204

904

1,224

Less: Net income attributable to noncontrolling interests

1

1

1

1

Net Income Attributable to Deere & Company

$
1,020

$
380

$
204

$
137

$
1,224

$
517

$
672

$
1,020

$
231

$
204

$
903

$
1,224

¹ 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.
² Elimination of financial services’ interest income earned from equipment operations.
³ Elimination of equipment operations’ margin from inventory transferred to equipment on operating leases (see Note 2)3).
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.

4440


DEERE & COMPANY	DEERE & COMPANY																											DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA (Continued)	SUPPLEMENTAL CONSOLIDATING DATA (Continued)																											SUPPLEMENTAL CONSOLIDATING DATA (Continued)
CONDENSED BALANCE SHEET
CONDENSED BALANCE SHEETS																												CONDENSED BALANCE SHEETS
(In millions of dollars) Unaudited	(In millions of dollars) Unaudited																											(In millions of dollars) Unaudited
																													EQUIPMENT						FINANCIAL
		EQUIPMENT OPERATIONS¹						FINANCIAL SERVICES							ELIMINATIONS						CONSOLIDATED								OPERATIONS¹						SERVICES						ELIMINATIONS						CONSOLIDATED
		Jan 31		Nov 1		Feb 2		Jan 31			Nov 1		Feb 2		Jan 31		Nov 1		Feb 2		Jan 31		Nov 1		Feb 2				Jan 30		Oct 31		Jan 31		Jan 30		Oct 31		Jan 31		Jan 30		Oct 31		Jan 31		Jan 30		Oct 31		Jan 31
		2021		2020		2020		2021			2020		2020		2021		2020		2020		2021		2020		2020				2022		2021		2021		2022		2021		2021		2022		2021		2021		2022		2021		2021
Assets
Cash and cash equivalents		$	6,074	$	6,145	$	2,862	$	888		$	921	$	740							$	6,962	$	7,066	$	3,602			$	3,596	$	7,188	$	6,074	$	876	$	829	$	888							$	4,472	$	8,017	$	6,962
Marketable securities			8		7		4		659			634		605								667		641		609				2		3		8		733		725		659								735		728		667
Receivables from unconsolidated affiliates			5,151		5,290		1,425								$	(5,123)	$	(5,259)	$	(1,387)		28		31		38	⁷			5,340		5,591		5,151							$	(5,307)	$	(5,564)	$	(5,123)		33		27		28	⁷
Trade accounts and notes receivable – net			900		1,013		1,115		5,341			4,238		5,707		(1,204)		(1,080)		(1,462)		5,037		4,171		5,360	⁸			996		1,155		900		4,843		3,895		5,341		(984)		(842)		(1,204)		4,855		4,208		5,037	⁸
Financing receivables – net			103		106		130		29,335			29,644		27,164								29,438		29,750		27,294				56		73		103		33,135		33,726		29,335								33,191		33,799		29,438
Financing receivables securitized – net			18		26		42		3,913			4,677		4,436								3,931		4,703		4,478				9		10		18		3,507		4,649		3,913								3,516		4,659		3,931
Other receivables			1,010		1,117		1,252		151			151		131		(20)		(48)		(16)		1,141		1,220		1,367	⁸			1,785		1,602		1,010		153		159		151		(35)		(23)		(20)		1,903		1,738		1,141	⁸
Equipment on operating leases – net									7,030			7,298		7,504								7,030		7,298		7,504										6,624		6,988		7,030								6,624		6,988		7,030
Inventories			5,956		4,999		6,482															5,956		4,999		6,482				7,935		6,781		5,956														7,935		6,781		5,956
Property and equipment – net			5,703		5,778		5,857		38			39		43								5,741		5,817		5,900				5,629		5,783		5,703		36		37		38								5,665		5,820		5,741
Investments in unconsolidated affiliates			157		174		200		21			19		17								178		193		217				153		153		157		23		22		21								176		175		178
Goodwill			3,194		3,081		2,945															3,194		3,081		2,945				3,192		3,291		3,194														3,192		3,291		3,194
Other intangible assets – net			1,342		1,327		1,349															1,342		1,327		1,349				1,209		1,275		1,342														1,209		1,275		1,342
Retirement benefits			903		859		871		60			59		58		(57)		(55)		(29)		906		863		900	⁹			3,095		3,539		903		65		64		60		(2)		(2)		(57)		3,158		3,601		906	⁹
Deferred income taxes			1,797		1,763		1,821		51			45		56		(292)		(309)		(463)		1,556		1,499		1,414	¹⁰			1,095		1,215		1,797		50		53		51		(222)		(231)		(292)		923		1,037		1,556	¹⁰
Other assets			1,485		1,439		1,546		891			994		818		(3)		(1)		(2)		2,373		2,432		2,362				1,577		1,493		1,485		454		477		891		(4)				(3)		2,027		1,970		2,373
Total Assets		$	33,801	$	33,124	$	27,901	$	48,378		$	48,719	$	47,279	$	(6,699)	$	(6,752)	$	(3,359)	$	75,480	$	75,091	$	71,821			$	35,669	$	39,152	$	33,801	$	50,499	$	51,624	$	48,378	$	(6,554)	$	(6,662)	$	(6,699)	$	79,614	$	84,114	$	75,480

Liabilities and Stockholders’ Equity

Liabilities
Short-term borrowings		$	394	$	292	$	947	$	8,830		$	8,290	$	9,061							$	9,224	$	8,582	$	10,008			$	1,516	$	1,509	$	394	$	9,474	$	9,410	$	8,830							$	10,990	$	10,919	$	9,224
Short-term securitization borrowings			17		26		42		3,952			4,656		4,374								3,969		4,682		4,416				8		10		17		3,474		4,595		3,952								3,482		4,605		3,969
Payables to unconsolidated affiliates			119		104		146		5,123			5,260		1,387	$	(5,123)	$	(5,259)	$	(1,386)		119		105		147	⁷			172		143		119		5,307		5,564		5,123	$	(5,307)	$	(5,564)	$	(5,123)		172		143		119	⁷
Accounts payable and accrued expenses			8,672		9,114		8,325		1,959			2,127		1,786		(1,227)		(1,129)		(1,481)		9,404		10,112		8,630	⁸			9,532		11,055		8,672		1,970		2,015		1,959		(1,023)		(865)		(1,227)		10,479		12,205		9,404	⁸
Deferred income taxes			394		385		408		430			443		546		(292)		(309)		(463)		532		519		491	¹⁰			425		438		394		353		369		430		(222)		(231)		(292)		556		576		532	¹⁰
Long-term borrowings			10,139		10,124		5,567		22,633			22,610		24,908								32,772		32,734		30,475				8,760		8,915		10,139		24,078		23,973		22,633								32,838		32,888		32,772
Retirement benefits and other liabilities			5,325		5,366		5,639		106			102		100		(57)		(55)		(29)		5,374		5,413		5,710	⁹			3,182		4,239		5,325		109		107		106		(2)		(2)		(57)		3,289		4,344		5,374	⁹
Total liabilities			25,060		25,411		21,074		43,033			43,488		42,162		(6,699)		(6,752)		(3,359)		61,394		62,147		59,877				23,595		26,309		25,060		44,765		46,033		43,033		(6,554)		(6,662)		(6,699)		61,806		65,680		61,394
										��
Commitments and contingencies (Note 16)
Redeemable noncontrolling interest							14																			14

Stockholders’ Equity
Total Deere & Company stockholders’ equity			14,083		12,937		11,926		5,345			5,231		5,117		(5,345)		(5,231)		(5,117)		14,083		12,937		11,926	¹¹			17,804		18,431		14,083		5,734		5,591		5,345		(5,734)		(5,591)		(5,345)		17,804		18,431		14,083	¹¹
Noncontrolling interests			3		7		4															3		7		4				4		3		3														4		3		3
Financial Services’ equity			(5,345)		(5,231)		(5,117)									5,345		5,231		5,117							¹¹			(5,734)		(5,591)		(5,345)								5,734		5,591		5,345							¹¹
Adjusted total stockholders’ equity			8,741		7,713		6,813		5,345			5,231		5,117								14,086		12,944		11,930				12,074		12,843		8,741		5,734		5,591		5,345								17,808		18,434		14,086
Total Liabilities and Stockholders’ Equity		$	33,801	$	33,124	$	27,901	$	48,378		$	48,719	$	47,279	$	(6,699)	$	(6,752)	$	(3,359)	$	75,480	$	75,091	$	71,821			$	35,669	$	39,152	$	33,801	$	50,499	$	51,624	$	48,378	$	(6,554)	$	(6,662)	$	(6,699)	$	79,614	$	84,114	$	75,480

¹ 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.

⁷ Elimination of receivables / payables between equipment operations and financial services.

⁸ ~~Reclassification~~Primarily reclassification of sales incentive accruals on receivables sold to financial services.

⁹ Reclassification of net pension assets / liabilities.

¹⁰ Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions.

¹¹ Elimination of financial services’ equity.

4541


DEERE & COMPANY	DEERE & COMPANY																		DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA (Continued)	SUPPLEMENTAL CONSOLIDATING DATA (Continued)																		SUPPLEMENTAL CONSOLIDATING DATA (Continued)
STATEMENT OF CASH FLOWS
For the Three Months Ended January 31, 2021 and February 2, 2020
STATEMENTS OF CASH FLOWS																			STATEMENTS OF CASH FLOWS
For the Three Months Ended January 30, 2022 and January 31, 2021																			For the Three Months Ended January 30, 2022 and January 31, 2021
(In millions of dollars) Unaudited	(In millions of dollars) Unaudited																		(In millions of dollars) Unaudited
																				EQUIPMENT				FINANCIAL
		EQUIPMENT OPERATIONS¹				FINANCIAL SERVICES				ELIMINATIONS				CONSOLIDATED						OPERATIONS¹				SERVICES				ELIMINATIONS				CONSOLIDATED
		2021		2020		2021		2020		2021		2020		2021		2020				2022		2021		2022		2021		2022		2021		2022		2021
Cash Flows from Operating Activities
Net income		$	1,020	$	381	$	204	$	137					$	1,224	$	518			$	673	$	1,020	$	231	$	204					$	904	$	1,224
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision (credit) for credit losses			(2)		1		(3)		14						(5)		15				(2)		(2)		2		(3)								(5)
Provision for depreciation and amortization			279		261		294		311	$	(35)	$	(34)		538		538	¹²			257		279		266		294	$	(37)	$	(35)		486		538	¹²
Impairment charges			50												50								50												50
Share-based compensation expense											15		19		15		19	¹³											18		15		18		15	¹³
Undistributed earnings of unconsolidated affiliates			154		126		(1)		(1)		(135)		(125)		18			¹⁴			42		154		(2)		(1)		(42)		(135)		(2)		18	¹⁴
Credit for deferred income taxes			(27)		(7)		(11)		(22)						(38)		(29)
Provision (credit) for deferred income taxes																					223		(27)		(13)		(11)						210		(38)
Changes in assets and liabilities:
Trade, notes, and financing receivables related to sales			156		312						(253)		(242)		(97)		70	^{15, 17, 18}			158		156						(264)		(253)		(106)		(97)	^{15, 17, 18}
Inventories			(842)		(530)						(84)		(112)		(926)		(642)	¹⁶			(1,277)		(842)						(20)		(84)		(1,297)		(926)	¹⁶
Accounts payable and accrued expenses			(529)		(1,058)		(53)		(19)		(123)		(57)		(705)		(1,134)	¹⁷			(1,346)		(529)		(66)		(53)		(142)		(123)		(1,554)		(705)	¹⁷
Accrued income taxes payable/receivable			173		(43)		(43)		(10)						130		(53)				(192)		173		8		(43)						(184)		130
Retirement benefits			(16)		30		2		6						(14)		36				(1,012)		(16)		2		2						(1,010)		(14)
Other			(68)		147		31		30		(10)		(23)		(47)		154	^{12, 13, 16}			(12)		(68)		(17)		31		11		(10)		(18)		(47)	^{12, 13, 16}
Net cash provided by (used for) operating activities			348		(380)		420		446		(625)		(574)		143		(508)				(2,488)		348		411		420		(476)		(625)		(2,553)		143

Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)							6,416		6,056		(417)		(392)		5,999		5,664	¹⁵							6,845		6,416		(410)		(417)		6,435		5,999	¹⁵
Proceeds from maturities and sales of marketable securities							20		18						20		18								21		20						21		20
Proceeds from sales of equipment on operating leases							460		426						460		426								479		460						479		460
Cost of receivables acquired (excluding receivables related to sales)							(5,559)		(4,569)		259		266		(5,300)		(4,303)	¹⁵							(5,719)		(5,559)		116		259		(5,603)		(5,300)	¹⁵
Acquisitions of businesses, net of cash acquired			(19)												(19)						(24)		(19)										(24)		(19)
Purchases of marketable securities							(39)		(34)						(39)		(34)								(48)		(39)						(48)		(39)
Purchases of property and equipment			(154)		(271)										(154)		(271)				(193)		(154)										(193)		(154)
Cost of equipment on operating leases acquired							(408)		(669)		114		152		(294)		(517)	¹⁶							(419)		(408)		28		114		(391)		(294)	¹⁶
Increase in trade and wholesale receivables							(523)		(382)		523		382					¹⁵							(684)		(523)		684		523					¹⁵
Collateral on derivatives – net							(88)		26						(88)		26				4				(17)		(88)						(13)		(88)
Other			(8)		(9)		(9)		(15)		11		41		(6)		17	¹⁸			(22)		(8)		(9)		(9)		16		11		(15)		(6)	¹⁸
Net cash provided by (used for) investing activities			(181)		(280)		270		857		490		449		579		1,026				(235)		(181)		449		270		434		490		648		579

Cash Flows from Financing Activities
Increase (decrease) in total short-term borrowings			(20)		20		(675)		(493)						(695)		(473)				123		(20)		(1,141)		(675)						(1,018)		(695)
Change in intercompany receivables/payables			264		572		(264)		(572)												150		264		(150)		(264)
Proceeds from long-term borrowings					167		1,757		1,535						1,757		1,702				18				2,335		1,757						2,353		1,757
Payments of long-term borrowings			(20)		(83)		(1,421)		(1,568)						(1,441)		(1,651)				(124)		(20)		(1,816)		(1,421)						(1,940)		(1,441)
Proceeds from issuance of common stock			71		53										71		53				11		71										11		71
Repurchases of common stock			(352)		(114)										(352)		(114)				(623)		(352)										(623)		(352)
Dividends paid			(242)		(242)		(135)		(125)		135		125		(242)		(242)	¹⁴			(327)		(242)		(42)		(135)		42		135		(327)		(242)	¹⁴
Other			(22)		(29)		(9)		(9)						(31)		(38)				(22)		(22)		(11)		(9)						(33)		(31)
Net cash provided by (used for) financing activities			(321)		344		(747)		(1,232)		135		125		(933)		(763)
Net cash used for financing activities																					(794)		(321)		(825)		(747)		42		135		(1,577)		(933)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash			83		3		20		(4)						103		(1)				(75)		83		1		20						(74)		103

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash			(71)		(313)		(37)		67						(108)		(246)				(3,592)		(71)		36		(37)						(3,556)		(108)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period			6,156		3,196		1,016		760						7,172		3,956				7,200		6,156		925		1,016						8,125		7,172
Cash, Cash Equivalents, and Restricted Cash at End of Period		$	6,085	$	2,883	$	979	$	827					$	7,064	$	3,710			$	3,608	$	6,085	$	961	$	979					$	4,569	$	7,064

¹² Elimination of depreciation on leases related to inventory transferred to equipment on operating leases (see Note 2)3).

¹³ Reclassification of share-based compensation expense.

¹⁴ Elimination of dividends from financial services to the equipment operations, which are included in the equipment operations net cash provided by operating ~~activities, and capital investments in financial services from the equipment operations.~~activities.

¹⁵ Primarily reclassification of receivables related to the sale of equipment.

¹⁶ Reclassification of direct lease agreements with ~~direct~~retail customers.

¹⁷ Reclassification of sales incentive accruals on receivables sold to financial services.

¹⁸ 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.

4642

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See the Company’s most ~~recent~~recently filed annual ~~report filed~~ 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 January ~~31, 2021,~~30, 2022, based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Exchange Act. During the first quarter of 2022, 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
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, and trademark matters. Item 103 of the SEC’s Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions that John Deere reasonably believes could exceed $300,000. The following matter is disclosed solely pursuant to that requirement: on October 3, 2018, the Provincia Santa Fe Ministerio de Medio Ambiente of Argentina issued a Notice of Violation to Industrias John Deere Argentina in connection with alleged groundwater contamination at the site; the Company worked with the appropriate authorities to implement corrective actions to remediate the site. On December 16, 2019, the Provincia Santa Fe Ministerio de Medio Ambiente issued a Notice of Fine. ~~The current amount of the fine is approximately $296,000.~~ ~~The Company has filed an appeal with the Provincia Santa Fe Ministerio de Medio Ambiente.~~ The Company believes the reasonably possible range of losses for ~~this and other~~these unresolved legal actions would not have a material effect on its consolidated financial statements.

Item 1A. Risk Factors
See the Company’s most ~~recent~~recently filed annual report ~~filed~~ 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 “Safe Harbor Statement” 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.

4743

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The Company’s purchases of its common stock during the first quarter of ~~2021~~2022 were as follows:






Total Number of







Total Number of


Shares Purchased as

Maximum Number of

Shares Purchased as

Maximum Number of

Total Number of

Part of Publicly

Shares that May Yet Be

Total Number of

Part of Publicly

Shares that May Yet Be

Shares

Announced Plans or

Purchased under the

Shares

Announced Plans or

Purchased under the

Purchased (2)

Average Price

Programs (1)

Plans or Programs (1)

Purchased (2)

Average Price

Programs (1)

Plans or Programs (1)

Period

(thousands)

Paid Per Share

(thousands)

(millions)

(thousands)

Paid Per Share

(thousands)

(millions)

Nov 2 to Nov 29

369

$
251.45

369

28.6

Nov 30 to Dec 27

336

257.00

297

28.3

Dec 28 to Jan 31

587

294.36

587

27.7

Nov 1 to Nov 28

616

$
354.70

616

15.0

Nov 29 to Dec 26

666

350.83

627

14.4

Dec 27 to Jan 30

459

371.69

459

13.9

Total

1,292

1,253

1,741

1,702

(1) ~~During the first quarter of 2021, the~~The Company ~~had~~has a share repurchase plan that was announced in December ~~2013~~2019 to purchase up to $8,000 million of shares of the Company’s common stock. In December 2019, the Company announced an additional share repurchase plan authorizing the purchase of up to $8,000 million of shares of the Company’s common stock. The share repurchases under the December 2013 plan were completed in January 2021. The maximum number of shares that may yet be purchased under the December 2019 plan was based on the end of the first quarter closing share price of ~~$288.80~~$373.79 per share. At the end of the first quarter of ~~2021, $7,997~~2022, $5,202 million of common stock remains to be purchased under the plan.
(2) In the first quarter of ~~2021, approximately~~2022, 39 thousand shares were purchased from plan participants at a market price to pay payroll taxes on certain restricted stock awards. The shares were valued at a weighted-average market price of ~~$255.80.~~$358.36.

Item 3. Defaults Upon Senior Securities
None.

Item 4. Mine Safety Disclosures
Not applicable.

Item 5. Other Information
~~Not applicable.~~Disclosure Pursuant to Section 13(r) of the Exchange Act.
Under Section 13(r) of the Exchange Act, the Company is required to disclose in its periodic reports if it or any of its affiliates knowingly conducted transactions or dealings with entities or individuals designated pursuant to certain executive orders issued by the U.S. government. On March 2, 2021, the U.S. Secretary of State designated the Russian Federal Security Service (FSB) as a blocked party under Executive Order 13382. On the same day, the U.S. Department of the Treasury’s Office of Foreign Assets Control updated General License No. 1B to authorize certain transactions and activities with the FSB related to the importation, distribution, or use of certain information technology products in the Russian Federation. In the ordinary course of business, including during the three-month period ended January 30, 2022, certain of the Company’s subsidiaries requested and/or received legally required administrative notifications with the FSB in connection with the importation and/or use of certain of the Company’s products in the Russian Federation, as authorized by General License No. 1B. Neither the Company nor its subsidiaries made any payments, nor did they receive gross revenues or net profits, in connection with these activities. The Company expects that certain of its subsidiaries will continue to engage with the FSB in activities necessary to conduct business in the Russian Federation in accordance with applicable U.S. laws and regulations so long as it remains lawful to do so.

4844

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 file copies of such instruments 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*)

31.1
Rule 13a-14(a)/15d-14(a) Certification

31.2
Rule 13a-14(a)/15d-14(a) Certification

32
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

104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Incorporated by reference. ~~Copies of these exhibits are available from the Company upon request.~~

4945

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DEERE & COMPANY

Date:
February ~~25, 2021~~24, 2022

By:
/s/ Ryan D. Campbell

Ryan D. Campbell
Senior Vice President and Chief Financial Officer

(Principal Financial Officer and
Principal Accounting Officer)

5046


ITEM 1. FINANCIAL STATEMENTS
DEERE & COMPANY
STATEMENT OF CONSOLIDATED INCOME
For the Three Months Ended January 31, 2021 and February 2, 2020
(In millions of dollars and shares except per share amounts) Unaudited
	2021		2020
Net Sales and Revenues
Net sales	$	8,051	$	6,530
Finance and interest income		834		896
Other income		227		205
Total		9,112		7,631

Costs and Expenses
Cost of sales		5,805		5,077
Research and development expenses		366		425
Selling, administrative and general expenses		769		809
Interest expense		271		336
Other operating expenses		373		415
Total		7,584		7,062

Income of Consolidated Group before Income Taxes		1,528		569
Provision for income taxes		308		50

Income of Consolidated Group		1,220		519
Equity in income (loss) of unconsolidated affiliates		4		(1)

Net Income		1,224		518
Less: Net income attributable to noncontrolling interests				1
Net Income Attributable to Deere & Company	$	1,224	$	517

Per Share Data
Basic	$	3.90	$	1.65
Diluted	$	3.87	$	1.63

Average Shares Outstanding
Basic		313.5		313.5
Diluted		316.1		317.2


DEERE & COMPANY
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME
For the Three Months Ended January 31, 2021 and February 2, 2020
(In millions of dollars) Unaudited
	2021		2020

Net Income	$	1,224	$	518

Other Comprehensive Income (Loss), Net of Income Taxes
Retirement benefits adjustment		63		230
Cumulative translation adjustment		396		43
Unrealized gain on derivatives		4
Unrealized gain (loss) on debt securities		(2)		5
Other Comprehensive Income (Loss), Net of Income Taxes		461		278

Comprehensive Income of Consolidated Group		1,685		796
Less: Comprehensive income attributable to noncontrolling interests				1
Comprehensive Income Attributable to Deere & Company	$	1,685	$	795


DEERE & COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions of dollars) Unaudited
	January 31		November 1		February 2
	2021		2020		2020
Assets
Cash and cash equivalents	$	6,962	$	7,066	$	3,602
Marketable securities		667		641		609
Receivables from unconsolidated affiliates		28		31		38
Trade accounts and notes receivable – net		5,037		4,171		5,360
Financing receivables – net		29,438		29,750		27,294
Financing receivables securitized – net		3,931		4,703		4,478
Other receivables		1,141		1,220		1,367
Equipment on operating leases – net		7,030		7,298		7,504
Inventories		5,956		4,999		6,482
Property and equipment – net		5,741		5,817		5,900
Investments in unconsolidated affiliates		178		193		217
Goodwill		3,194		3,081		2,945
Other intangible assets – net		1,342		1,327		1,349
Retirement benefits		906		863		900
Deferred income taxes		1,556		1,499		1,414
Other assets		2,373		2,432		2,362
Total Assets	$	75,480	$	75,091	$	71,821

Liabilities and Stockholders’ Equity

Liabilities
Short-term borrowings	$	9,224	$	8,582	$	10,008
Short-term securitization borrowings		3,969		4,682		4,416
Payables to unconsolidated affiliates		119		105		147
Accounts payable and accrued expenses		9,404		10,112		8,630
Deferred income taxes		532		519		491
Long-term borrowings		32,772		32,734		30,475
Retirement benefits and other liabilities		5,374		5,413		5,710
Total liabilities		61,394		62,147		59,877

Commitments and contingencies (Note 16)
Redeemable noncontrolling interest						14

Stockholders’ Equity
Common stock, $1 par value (issued shares at January 31, 2021 – 536,431,204)		4,942		4,895		4,675
Common stock in treasury		(18,377)		(18,065)		(17,549)
Retained earnings		32,596		31,646		30,129
Accumulated other comprehensive income (loss)		(5,078)		(5,539)		(5,329)
Total Deere & Company stockholders’ equity		14,083		12,937		11,926
Noncontrolling interests		3		7		4
Total stockholders’ equity		14,086		12,944		11,930
Total Liabilities and Stockholders’ Equity	$	75,480	$	75,091	$	71,821


DEERE & COMPANY
STATEMENT OF CONSOLIDATED CASH FLOWS
For the Three Months Ended January 31, 2021 and February 2, 2020
(In millions of dollars) Unaudited
	2021		2020
Cash Flows from Operating Activities
Net income	$	1,224	$	518
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision (credit) for credit losses		(5)		15
Provision for depreciation and amortization		538		538
Impairment charges		50
Share-based compensation expense		15		19
Undistributed earnings of unconsolidated affiliates		18
Credit for deferred income taxes		(38)		(29)
Changes in assets and liabilities:
Trade, notes, and financing receivables related to sales		(97)		70
Inventories		(926)		(642)
Accounts payable and accrued expenses		(705)		(1,134)
Accrued income taxes payable/receivable		130		(53)
Retirement benefits		(14)		36
Other		(47)		154
Net cash provided by (used for) operating activities		143		(508)

Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)		5,999		5,664
Proceeds from maturities and sales of marketable securities		20		18
Proceeds from sales of equipment on operating leases		460		426
Cost of receivables acquired (excluding receivables related to sales)		(5,300)		(4,303)
Acquisitions of businesses, net of cash acquired		(19)
Purchases of marketable securities		(39)		(34)
Purchases of property and equipment		(154)		(271)
Cost of equipment on operating leases acquired		(294)		(517)
Collateral on derivatives - net		(88)		26
Other		(6)		17
Net cash provided by investing activities		579		1,026

Cash Flows from Financing Activities
Decrease in total short-term borrowings		(695)		(473)
Proceeds from long-term borrowings		1,757		1,702
Payments of long-term borrowings		(1,441)		(1,651)
Proceeds from issuance of common stock		71		53
Repurchases of common stock		(352)		(114)
Dividends paid		(242)		(242)
Other		(31)		(38)
Net cash used for financing activities		(933)		(763)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash		103		(1)

Net Decrease in Cash, Cash Equivalents, and Restricted Cash		(108)		(246)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period		7,172		3,956
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	7,064	$	3,710


DEERE & COMPANY
STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY
For the Three Months Ended January 31, 2021 and February 2, 2020
(In millions of dollars) Unaudited
			Total Stockholders’ Equity
			Deere & Company Stockholders
									Accumulated
	Total								Other				Redeemable
	Stockholders’		Common		Treasury		Retained		Comprehensive		Noncontrolling		Noncontrolling
	Equity		Stock		Stock		Earnings		Income (Loss)		Interests		Interest

Balance November 3, 2019	$	11,417	$	4,642	$	(17,474)	$	29,852	$	(5,607)	$	4	$	14
Net income		517						517						1
Other comprehensive income		278								278
Repurchases of common stock		(114)				(114)
Treasury shares reissued		39				39
Dividends declared		(239)						(239)						(1)
Stock options and other		32		33				(1)
Balance February 2, 2020	$	11,930	$	4,675	$	(17,549)	$	30,129	$	(5,329)	$	4	$	14


Balance November 1, 2020	$	12,944	$	4,895	$	(18,065)	$	31,646	$	(5,539)	$	7
ASU No. 2016-13 adoption*		(35)						(35)
Net income		1,224						1,224
Other comprehensive income		461								461
Repurchases of common stock		(352)				(352)
Treasury shares reissued		40				40
Dividends declared		(239)						(239)
Stock options and other		43		47								(4)
Balance January 31, 2021	$	14,086	$	4,942	$	(18,377)	$	32,596	$	(5,078)	$	3
* See Note 3


	November 1		Cumulative Effect		November 2
	2020		from Adoption		2020
Assets
Trade accounts and note receivable - net	$	4,171	$	2	$	4,173
Financing receivables - net		29,750		(27)		29,723
Financing receivables securitized - net		4,703		(4)		4,699
Deferred income taxes		1,499		1		1,500

Liabilities
Accounts payable and accrued expenses	$	10,112	$	14	$	10,126
Deferred income taxes		519		(7)		512

Stockholders’ equity
Retained earnings	$	31,646	$	(35)	$	31,611


~~No. 2018-15~~	Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which amends ASC 350-40, Intangibles – Goodwill and Other – Internal-Use Software
~~No. 2019-04~~	~~Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~
~~No. 2021-01~~	~~Reference Rate Reform (Topic 848): Scope~~


~~No. 2019-12~~	~~Simplifying the Accounting for Income Taxes, which amends ASC 740, Income Taxes~~
~~No. 2020-08~~	~~Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs~~


	Three Months Ended January 31, 2021										Three Months Ended January 30, 2022
	Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total		Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total
Primary geographical markets:
Primary geographic markets:
United States	$	1,608	$	1,424	$	1,202	$	598	$	4,832	$	1,608	$	1,438	$	1,260	$	573	$	4,879
Canada		112		79		188		154		533		139		122		332		152		745
Western Europe		449		486		439		24		1,398		467		532		358		26		1,383
Central Europe and CIS		161		84		178		9		432		202		126		195		11		534
Latin America		513		77		170		59		819		776		104		228		68		1,176
Asia, Africa, Australia, New Zealand, and Middle East		304		401		353		40		1,098		241		352		219		40		852
Total	$	3,147	$	2,551	$	2,530	$	884	$	9,112	$	3,433	$	2,674	$	2,592	$	870	$	9,569

Major product lines:
Production Agriculture	$	3,011							$	3,011
Small Agriculture			$	1,812						1,812
Production agriculture											$	3,283							$	3,283
Small agriculture													$	1,932						1,932
Turf				651						651				627						627
Construction					$	887				887					$	1,175				1,175
Compact Construction						346				346
Compact construction																321				321
Roadbuilding						910				910						692				692
Forestry						290				290						305				305
Financial Products		16		10		7	$	884		917
Financial products												12		11		5	$	870		898
Other		120		78		90				288		138		104		94				336
Total	$	3,147	$	2,551	$	2,530	$	884	$	9,112	$	3,433	$	2,674	$	2,592	$	870	$	9,569

Timing of revenue recognition:
Revenue recognized at a point in time	$	3,105	$	2,535	$	2,500	$	24	$	8,164
Revenue recognized over time		42		16		30		860		948
Revenue recognized:
At a point in time											$	3,396	$	2,654	$	2,570	$	24	$	8,644
Over time												37		20		22		846		925
Total	$	3,147	$	2,551	$	2,530	$	884	$	9,112	$	3,433	$	2,674	$	2,592	$	870	$	9,569


	Three Months Ended February 2, 2020										Three Months Ended January 31, 2021
	Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total		Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total
Primary geographical markets:
Primary geographic markets:
United States	$	1,433	$	1,067	$	1,020	$	643	$	4,163	$	1,608	$	1,424	$	1,202	$	598	$	4,832
Canada		75		63		172		156		466		112		79		188		154		533
Western Europe		365		413		339		22		1,139		449		486		439		24		1,398
Central Europe and CIS		131		89		159		10		389		161		84		178		9		432
Latin America		383		72		159		66		680		513		77		170		59		819
Asia, Africa, Australia, New Zealand, and Middle East		189		315		256		34		794		304		401		353		40		1,098
Total	$	2,576	$	2,019	$	2,105	$	931	$	7,631	$	3,147	$	2,551	$	2,530	$	884	$	9,112

Major product lines:
Production Agriculture	$	2,425							$	2,425
Small Agriculture			$	1,479						1,479
Production agriculture											$	3,011							$	3,011
Small agriculture													$	1,812						1,812
Turf				468						468				651						651
Construction					$	841				841					$	887				887
Compact Construction						288				288
Compact construction																346				346
Roadbuilding						605				605						910				910
Forestry						274				274						290				290
Financial Products		18		9		7	$	931		965
Financial products												16		10		7	$	884		917
Other		133		63		90				286		120		78		90				288
Total	$	2,576	$	2,019	$	2,105	$	931	$	7,631	$	3,147	$	2,551	$	2,530	$	884	$	9,112

Timing of revenue recognition:
Revenue recognized at a point in time	$	2,536	$	2,004	$	2,079	$	26	$	6,645
Revenue recognized over time		40		15		26		905		986
Revenue recognized:
At a point in time											$	3,105	$	2,535	$	2,500	$	24	$	8,164
Over time												42		16		30		860		948
Total	$	2,576	$	2,019	$	2,105	$	931	$	7,631	$	3,147	$	2,551	$	2,530	$	884	$	9,112


									Total
					Unrealized		Unrealized		Accumulated
	Retirement		Cumulative		Gain (Loss)		Gain (Loss)		Other
	Benefits		Translation		on		on		Comprehensive
	Adjustment		Adjustment		Derivatives		Debt Securities		Income (Loss)
Balance November 3, 2019	$	(3,915)	$	(1,651)	$	(60)	$	19	$	(5,607)
Other comprehensive income (loss) items before reclassification		186		43		(1)		5		233
Amounts reclassified from accumulated other comprehensive income		44				1				45
Net current period other comprehensive income (loss)		230		43				5		278
Balance February 2, 2020	$	(3,685)	$	(1,608)	$	(60)	$	24	$	(5,329)

Balance November 1, 2020	$	(3,918)	$	(1,596)	$	(58)	$	33	$	(5,539)
Other comprehensive income (loss) items before reclassification		(1)		396				(2)		393
Amounts reclassified from accumulated other comprehensive income		64				4				68
Net current period other comprehensive income (loss)		63		396		4		(2)		461
Balance January 31, 2021	$	(3,855)	$	(1,200)	$	(54)	$	31	$	(5,078)


	Before		Tax		After		Before		Tax		After
	Tax		(Expense)		Tax		Tax		(Expense)		Tax
Three Months Ended January 31, 2021	Amount		Credit		Amount
Three Months Ended January 30, 2022							Amount		Credit		Amount
Cumulative translation adjustment	$	394	$	2	$	396	$	(264)	$	(3)	$	(267)
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)								15		(3)		12
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest expense		5		(1)		4		2				2
Net unrealized gain (loss) on derivatives		5		(1)		4		17		(3)		14
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)		(3)		1		(2)		(19)		4		(15)
Net unrealized gain (loss) on debt securities		(3)		1		(2)		(19)		4		(15)
Retirement benefits adjustment:
Net actuarial gain (loss)		(1)				(1)		(500)		120		(380)
Reclassification to other operating expenses through amortization of: *
Reclassification to other operating expenses through amortization of:
Actuarial (gain) loss		70		(17)		53		40		(10)		30
Prior service (credit) cost		2		(1)		1		6		(2)		4
Settlements		13		(3)		10		1				1
Net unrealized gain (loss) on retirement benefits adjustment		84		(21)		63		(453)		108		(345)
Total other comprehensive income (loss)	$	480	$	(19)	$	461	$	(719)	$	106	$	(613)


	Year of Origination																January 30, 2022
	2021		2020		2019		2018		2017		Prior		Revolving Charge Accounts		Total		2022		2021		2020		2019		2018		Prior Years		Revolving Charge Accounts		Total
Customer receivables:
Retail customer receivables:
Agriculture and turf
Current	$	2,531	$	9,427	$	5,129	$	2,817	$	1,400	$	686	$	2,564	$	24,554	$	2,492	$	11,580	$	5,988	$	3,038	$	1,440	$	761	$	2,634	$	27,933
30-59 days past due		4		65		49		30		13		7		27		195		5		82		52		30		15		6		25		215
60-89 days past due				20		17		11		5		3		5		61		1		23		18		10		5		3		5		65
90+ days past due						1										1				1												1
Non-performing				40		78		57		36		46		7		264		1		33		58		52		31		36		6		217
Construction and forestry
Current		737		2,251		1,276		573		164		39		77		5,117		764		2,795		1,376		615		204		49		81		5,884
30-59 days past due		5		53		32		17		6		1		3		117		8		68		35		21		6		2		3		143
60-89 days past due		1		15		16		7		3		1		1		44				30		17		7		3		1		1		59
90+ days past due				9		13		5		4		2				33				2		3		3		1		8				17
Non-performing				26		34		26		14		8		1		109				33		48		37		14		7		1		140
Total customer receivables	$	3,278	$	11,906	$	6,645	$	3,543	$	1,645	$	793	$	2,685	$	30,495
Total retail customer receivables																	$	3,271	$	14,647	$	7,595	$	3,813	$	1,719	$	873	$	2,756	$	34,674


	October 31, 2021
	2021		2020		2019		2018		2017		Prior Years		Revolving Charge Accounts		Total
Retail customer receivables:
Agriculture and turf
Current	$	12,877	$	6,676	$	3,463	$	1,738	$	728	$	211	$	3,704	$	29,397
30-59 days past due		43		53		29		16		7		3		14		165
60-89 days past due		16		23		12		6		3		1		4		65
90+ days past due				1												1
Non-performing		23		57		53		32		17		23		7		212
Construction and forestry
Current		3,122		1,575		754		273		57		7		92		5,880
30-59 days past due		50		40		27		7		4		1		3		132
60-89 days past due		15		11		9		6		1				1		43
90+ days past due		1		2		3		3		4		2				15
Non-performing		26		56		39		17		7		3				148
Total retail customer receivables	$	16,173	$	8,494	$	4,389	$	2,098	$	828	$	251	$	3,825	$	36,058


	November 1, 2020						February 2, 2020
Customer receivables:	Retail Notes & Financing Leases		Revolving Charge Accounts		Total		Retail Notes & Financing Leases		Revolving Charge Accounts		Total
Agriculture and turf
Current	$	21,597	$	3,787	$	25,384	$	19,455	$	2,578	$	22,033
30-59 days past due		135		13		148		162		53		215
60-89 days past due		64		4		68		71		15		86
90+ days past due		2				2		4				4
Non-performing		263		6		269		301		6		307
Construction and forestry
Current		4,859		88		4,947		4,362		75		4,437
30-59 days past due		111		2		113		121		4		125
60-89 days past due		55		1		56		46		1		47
90+ days past due		14				14		19				19
Non-performing		106		1		107		156		1		157
Total customer receivables	$	27,206	$	3,902	$	31,108	$	24,697	$	2,733	$	27,430


	January 31, 2021
	2021		2020		2019		2018		2017		Prior Years		Revolving Charge Accounts		Total
Retail customer receivables:
Agriculture and turf
Current	$	2,531	$	9,427	$	5,129	$	2,817	$	1,400	$	686	$	2,564	$	24,554
30-59 days past due		4		65		49		30		13		7		27		195
60-89 days past due				20		17		11		5		3		5		61
90+ days past due						1										1
Non-performing				40		78		57		36		46		7		264
Construction and forestry
Current		737		2,251		1,276		573		164		39		77		5,117
30-59 days past due		5		53		32		17		6		1		3		117
60-89 days past due		1		15		16		7		3		1		1		44
90+ days past due				9		13		5		4		2				33
Non-performing				26		34		26		14		8		1		109
Total retail customer receivables	$	3,278	$	11,906	$	6,645	$	3,543	$	1,645	$	793	$	2,685	$	30,495


	Three Months Ended January 31, 2021								Three Months Ended January 30, 2022
	Retail Notes		Revolving						Retail Notes		Revolving
	& Financing		Charge		Wholesale				& Financing		Charge		Wholesale
	Leases		Accounts		Receivables		Total		Leases		Accounts		Receivables		Total
Allowance:
Beginning of period balance	$	133	$	43	$	8	$	184	$	138	$	21	$	7	$	166
ASU No. 2016-13 adoption		44		(13)				31
Provision (credit)		5		(10)		(1)		(6)		13		(9)		(2)		2
Write-offs		(8)		(5)				(13)		(17)		(5)				(22)
Recoveries		5		9				14		4		8				12
Translation adjustments		1						1
End of period balance	$	180	$	24	$	7	$	211	$	138	$	15	$	5	$	158

Financing receivables:
End of period balance	$	27,810	$	2,685	$	3,085	$	33,580	$	31,918	$	2,756	$	2,191	$	36,865


	January 31, 2021		January 30, 2022
Carrying value of liabilities	$	1,097	$	720
Maximum exposure to loss		1,120		767


	Amortized		Fair
	Cost		Value
Due in one year or less	$	21	$	22
Due after one through five years		89		94
Due after five through 10 years		117		124
Due after 10 years		203		215
Mortgage-backed securities		134		140
Debt securities	$	564	$	595


	Fair Value *					Losses
						Three Months Ended
	January 31		November 1		February 2	January 31		February 2
	2021		2020		2020	2021		2020
Other receivables			$	1
Equipment on operating leases – net			$	371
Property and equipment – net	$	41	$	135		$	44
Investments in unconsolidated affiliates			$	19
Other assets	$	1	$	59		$	6


	Fair Value					Losses
						Three Months Ended
	January 30	October 31		January 31		January 30	January 31
	2022	2021		2021		2022	2021
Property and equipment – net		$	41	$	41		$	44
Other assets		$	1	$	1		$	6


			Cumulative Increase (Decrease) of Fair								Cumulative Increase (Decrease) of Fair
			Value Hedging Adjustments Included in								Value Hedging Adjustments Included in
			the Carrying Amount								the Carrying Amount
	Carrying		Active						Carrying		Active
	Amount of		Hedging		Discontinued				Amount of		Hedging		Discontinued
	Hedged Item		Relationships		Relationships		Total		Hedged Item		Relationships		Relationships		Total
January 31, 2021
Long-term borrowings due within one year*	$	159	$	2	$	1	$	3
January 30, 2022
Long-term borrowings due within one year									$	185	$	2	$	8	$	10
Long-term borrowings		8,713		435		137		572		8,147		(130)		181		51

November 1, 2020
Long-term borrowings due within one year*	$	155	$	2	$	3	$	5
October 31, 2021
Long-term borrowings due within one year									$	189	$	3	$	(2)	$	1
Long-term borrowings		7,725		543		122		665		8,070		29		223		252

February 2, 2020
Long-term borrowings due within one year*	$	220	$	(1)	$	(5)	$	(6)
January 31, 2021
Long-term borrowings due within one year									$	159	$	2	$	1	$	3
Long-term borrowings		9,521		379		(21)		358		8,713		435		137		572


	Gross Amounts		Netting						Gross Amounts		Netting
January 31, 2021	Recognized		Arrangements		Collateral		Net Amount
January 30, 2022									Recognized		Arrangements		Collateral		Net Amount
Assets	$	605	$	(106)	$	(186)	$	313	$	299	$	(91)			$	208
Liabilities		175		(106)				69		276		(91)	$	(19)		166


	Three Months Ended
Equipment Operations	January 30		January 31
(In millions of dollars)	2022		2021		% Change
Worldwide:
Net sales	$	8,531	$	8,051	+6
Operating profit		939		1,380	-32
Net income		672		1,020	-34
Price realization					+7
Currency translation					-2

U.S. and Canada:
Net sales		4,818		4,529	+6
Price realization					+7

Outside U.S. and Canada:
Net sales		3,713		3,522	+5
Price realization					+8
Currency translation					-4


	Three Months Ended
Production and Precision Agriculture	January 30		January 31
(In millions of dollars)	2022		2021		% Change
Net sales	$	3,356	$	3,069	+9
Operating profit		296		643	-54
Operating margin		8.8%		21.0%


				Total Number of					Total Number of
				Shares Purchased as	Maximum Number of				Shares Purchased as	Maximum Number of
	Total Number of			Part of Publicly	Shares that May Yet Be	Total Number of			Part of Publicly	Shares that May Yet Be
	Shares			Announced Plans or	Purchased under the	Shares			Announced Plans or	Purchased under the
	Purchased (2)	Average Price		Programs (1)	Plans or Programs (1)	Purchased (2)	Average Price		Programs (1)	Plans or Programs (1)
Period	(thousands)	Paid Per Share		(thousands)	(millions)	(thousands)	Paid Per Share		(thousands)	(millions)
Nov 2 to Nov 29	369	$	251.45	369	28.6
Nov 30 to Dec 27	336		257.00	297	28.3
Dec 28 to Jan 31	587		294.36	587	27.7
Nov 1 to Nov 28						616	$	354.70	616	15.0
Nov 29 to Dec 26						666		350.83	627	14.4
Dec 27 to Jan 30						459		371.69	459	13.9
Total	1,292			1,253		1,741			1,702



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*)

31.1		Rule 13a-14(a)/15d-14(a) Certification

31.2		Rule 13a-14(a)/15d-14(a) Certification

32		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

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


		DEERE & COMPANY


Date:	February ~~25, 2021~~24, 2022	By:	/s/ Ryan D. Campbell
			Ryan D. Campbell Senior Vice President and Chief Financial Officer
			(Principal Financial Officer and Principal Accounting Officer)