0000315189de:ConstructionAndForestryIndustryMemberus-gaap:CommercialPortfolioSegmentMemberus-gaap:FinancialAssetPastDueMember2021-08-01

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 30,~~July 31, 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
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 30,~~July 31, 2022, ~~306,784,327~~301,819,630 shares of common stock, $1 par value, of the registrant were outstanding.

PART I. FINANCIAL INFORMATION

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


ITEM 1. FINANCIAL STATEMENTS
DEERE & COMPANY
STATEMENTS OF CONSOLIDATED INCOME
For the Three and Nine Months Ended July 31, 2022 and August 1, 2021
(In millions of dollars and shares except per share amounts) Unaudited
	Three Months Ended				Nine Months Ended
	2022		2021		2022		2021
Net Sales and Revenues
Net sales	$	13,000	$	10,413	$	33,565	$	29,461
Finance and interest income		846		825		2,441		2,468
Other income		256		289		1,035		768
Total		14,102		11,527		37,041		32,697

Costs and Expenses
Cost of sales		9,511		7,574		25,124		21,307
Research and development expenses		481		394		1,336		1,137
Selling, administrative and general expenses		959		841		2,672		2,448
Interest expense		296		244		713		783
Other operating expenses		316		324		954		1,033
Total		11,563		9,377		30,799		26,708

Income of Consolidated Group before Income Taxes		2,539		2,150		6,242		5,989
Provision for income taxes		654		491		1,364		1,328

Income of Consolidated Group		1,885		1,659		4,878		4,661
Equity in income of unconsolidated affiliates				8		8		21

Net Income		1,885		1,667		4,886		4,682
Less: Net income attributable to noncontrolling interests		1				1		2
Net Income Attributable to Deere & Company	$	1,884	$	1,667	$	4,885	$	4,680

Per Share Data
Basic	$	6.20	$	5.36	$	15.97	$	14.98
Diluted	$	6.16	$	5.32	$	15.88	$	14.86
Dividends declared	$	1.13	$	.90	$	3.23	$	2.56
Dividends paid	$	1.05	$	.90	$	3.15	$	2.42

Average Shares Outstanding
Basic		304.1		311.0		305.8		312.4
Diluted		305.7		313.4		307.7		314.9

See Condensed Notes to Interim Consolidated Financial Statements.

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


DEERE & COMPANY
STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
For the Three and Nine Months Ended July 31, 2022 and August 1, 2021
(In millions of dollars) Unaudited
	Three Months Ended				Nine Months Ended
	2022		2021		2022		2021

Net Income	$	1,885	$	1,667	$	4,886	$	4,682

Other Comprehensive Income (Loss), Net of Income Taxes
Retirement benefits adjustment		79		54		(137)		208
Cumulative translation adjustment		(269)		(114)		(784)		319
Unrealized gain (loss) on derivatives		(1)		1		41		8
Unrealized gain (loss) on debt securities		6		8		(57)		(7)
Other Comprehensive Income (Loss), Net of Income Taxes		(185)		(51)		(937)		528

Comprehensive Income of Consolidated Group		1,700		1,616		3,949		5,210
Less: Comprehensive income (loss) attributable to noncontrolling interests		(3)				(8)		2
Comprehensive Income Attributable to Deere & Company	$	1,703	$	1,616	$	3,957	$	5,208

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		July 31		October 31		August 1
	2022		2021		2021		2022		2021		2021
Assets
Cash and cash equivalents	$	4,472	$	8,017	$	6,962	$	4,359	$	8,017	$	7,519
Marketable securities		735		728		667		719		728		688
Receivables from unconsolidated affiliates		33		27		28
Trade accounts and notes receivable – net		4,855		4,208		5,037		6,696		4,208		5,268
Financing receivables – net		33,191		33,799		29,438		35,056		33,799		31,449
Financing receivables securitized – net		3,516		4,659		3,931		5,141		4,659		5,401
Other receivables		1,903		1,738		1,141		1,999		1,765		1,702
Equipment on operating leases – net		6,624		6,988		7,030		6,554		6,988		6,982
Inventories		7,935		6,781		5,956		9,121		6,781		6,410
Property and equipment – net		5,665		5,820		5,741		5,666		5,820		5,649
Investments in unconsolidated affiliates		176		175		178
Goodwill		3,192		3,291		3,194		3,754		3,291		3,148
Other intangible assets – net		1,209		1,275		1,342		1,281		1,275		1,267
Retirement benefits		3,158		3,601		906		3,125		3,601		990
Deferred income taxes		923		1,037		1,556		1,110		1,037		1,767
Other assets		2,027		1,970		2,373		2,236		2,145		2,448
Total Assets	$	79,614	$	84,114	$	75,480	$	86,817	$	84,114	$	80,688

Liabilities and Stockholders’ Equity

Liabilities
Short-term borrowings	$	10,990	$	10,919	$	9,224	$	14,176	$	10,919	$	10,404
Short-term securitization borrowings		3,482		4,605		3,969		4,920		4,605		5,277
Payables to unconsolidated affiliates		172		143		119
Accounts payable and accrued expenses		10,479		12,205		9,404		12,986		12,348		11,207
Deferred income taxes		556		576		532		561		576		515
Long-term borrowings		32,838		32,888		32,772		32,132		32,888		32,280
Retirement benefits and other liabilities		3,289		4,344		5,374		2,911		4,344		5,272
Total liabilities		61,806		65,680		61,394		67,686		65,680		64,955

Commitments and contingencies (Note 16)
Commitments and contingencies (Note 15)
Redeemable noncontrolling interest (Note 19)								95

Stockholders’ Equity
Common stock, $1 par value (issued shares at January 30, 2022 – 536,431,204)		5,066		5,054		4,942
Common stock, $1 par value (issued shares at July 31, 2022 – 536,431,204)								5,139		5,054		5,031
Common stock in treasury		(21,139)		(20,533)		(18,377)		(22,976)		(20,533)		(19,780)
Retained earnings		37,029		36,449		32,596		40,346		36,449		35,491
Accumulated other comprehensive income (loss)		(3,152)		(2,539)		(5,078)		(3,476)		(2,539)		(5,011)
Total Deere & Company stockholders’ equity		17,804		18,431		14,083		19,033		18,431		15,731
Noncontrolling interests		4		3		3		3		3		2
Total stockholders’ equity		17,808		18,434		14,086		19,036		18,434		15,733
Total Liabilities and Stockholders’ Equity	$	79,614	$	84,114	$	75,480	$	86,817	$	84,114	$	80,688

See Condensed Notes to Interim Consolidated Financial Statements.

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


DEERE & COMPANY
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Nine Months Ended July 31, 2022 and August 1, 2021
(In millions of dollars) Unaudited
	2022		2021
Cash Flows from Operating Activities
Net income	$	4,886	$	4,682
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for credit losses		62		(17)
Provision for depreciation and amortization		1,443		1,569
Impairment charges		81		50
Share-based compensation expense		64		64
Gain on remeasurement of previously held equity investment		(326)
Undistributed earnings of unconsolidated affiliates		(1)		4
Credit for deferred income taxes		(6)		(271)
Changes in assets and liabilities:
Trade, notes, and financing receivables related to sales		(2,357)		(444)
Inventories		(2,526)		(1,817)
Accounts payable and accrued expenses		(15)		742
Accrued income taxes payable/receivable		82		34
Retirement benefits		(1,014)		13
Other		45		(295)
Net cash provided by operating activities		418		4,314

Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)		15,774		14,480
Proceeds from sales of equipment on operating leases		1,501		1,510
Cost of receivables acquired (excluding receivables related to sales)		(18,578)		(17,161)
Acquisitions of businesses, net of cash acquired		(488)		(19)
Purchases of property and equipment		(596)		(492)
Cost of equipment on operating leases acquired		(1,717)		(1,210)
Collateral on derivatives – net		(193)		(189)
Other		(133)		(21)
Net cash used for investing activities		(4,430)		(3,102)

Cash Flows from Financing Activities
Increase in total short-term borrowings		4,267		929
Proceeds from long-term borrowings		6,281		5,877
Payments of long-term borrowings		(6,578)		(5,172)
Proceeds from issuance of common stock		55		136
Repurchases of common stock		(2,477)		(1,780)
Dividends paid		(971)		(761)
Other		(62)		(80)
Net cash provided by (used for) financing activities		515		(851)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash		(143)		106

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash		(3,640)		467
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period		8,125		7,172
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	4,485	$	7,639

Components of cash, cash equivalents, and restricted cash
Cash and cash equivalents	$	4,359	$	7,519
Restricted cash (Other assets)		126		120
Total cash, cash equivalents, and restricted cash	$	4,485	$	7,639

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


DEERE & COMPANY
STATEMENTS OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY
For the Three and Nine Months Ended July 31, 2022 and August 1, 2021
(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

Three Months Ended August 1, 2021
Balance May 2, 2021	$	15,096	$	4,999	$	(19,052)	$	34,105	$	(4,960)	$	4
Net income		1,667						1,667
Other comprehensive loss		(51)								(51)
Repurchases of common stock		(736)				(736)
Treasury shares reissued		8				8
Dividends declared		(282)						(280)				(2)
Stock options and other		31		32				(1)
Balance August 1, 2021	$	15,733	$	5,031	$	(19,780)	$	35,491	$	(5,011)	$	2

Nine Months Ended August 1, 2021
Balance November 1, 2020	$	12,944	$	4,895	$	(18,065)	$	31,646	$	(5,539)	$	7
ASU No. 2016-13 adoption		(35)						(35)
Net income		4,682						4,680				2
Other comprehensive income		528								528
Repurchases of common stock		(1,780)				(1,780)
Treasury shares reissued		65				65
Dividends declared		(802)						(800)				(2)
Stock options and other		131		136								(5)
Balance August 1, 2021	$	15,733	$	5,031	$	(19,780)	$	35,491	$	(5,011)	$	2

Three Months Ended July 31, 2022
Balance May 1, 2022	$	18,907	$	5,117	$	(21,727)	$	38,805	$	(3,291)	$	3	$	99
Net income		1,884						1,884						1
Other comprehensive loss		(185)								(185)				(4)
Repurchases of common stock		(1,251)				(1,251)
Treasury shares reissued		2				2
Dividends declared		(343)						(343)
Stock options and other		22		22										(1)
Balance July 31, 2022	$	19,036	$	5,139	$	(22,976)	$	40,346	$	(3,476)	$	3	$	95

Nine Months Ended July 31, 2022
Balance October 31, 2021	$	18,434	$	5,054	$	(20,533)	$	36,449	$	(2,539)	$	3
Acquisitions (see Note 19)													$	105
Net income (loss)		4,887						4,885				2		(1)
Other comprehensive loss		(937)								(937)				(9)
Repurchases of common stock		(2,477)				(2,477)
Treasury shares reissued		34				34
Dividends declared		(990)						(988)				(2)
Stock options and other		85		85
Balance July 31, 2022	$	19,036	$	5,139	$	(22,976)	$	40,346	$	(3,476)	$	3	$	95

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.~~Deere & Company has been developing innovative solutions to help our customers become more profitable for 185 years. References to ~~“Deere~~Deere & ~~Company”~~Company, John Deere, Deere, or ~~“the Company” refer to~~ the ~~entire enterprise.~~

~~Equipment Operations –~~ ~~Represents~~Company include our consolidated subsidiaries, including our consolidated variable interest entities (VIEs). The Company is managed through the ~~enterprise without financial services, while including the Company’s~~following operating segments: production and precision agriculture ~~operations,~~(PPA), small agriculture and turf ~~operations,~~(SAT), construction and forestry ~~operations,~~(CF), and ~~other corporate assets, liabilities, revenues,~~financial services (FS). References to agriculture and ~~expenses not reflected within financial services.~~

~~Financial Services –~~ ~~Represents the Company’s financing operations.~~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~~third quarter ends for fiscal year 2022 and 2021 were ~~January 30,~~July 31, 2022 and ~~January 31,~~August 1, 2021, respectively. Both third quarters contained 13 weeks, while both year-to-date periods contained 1339 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 fiscal year 2021, the operating results of the Wirtgen Group (Wirtgen) were incorporated into the Company’s consolidated financial statements onusing a one-month ~~lag.~~lag period. The reporting lag was eliminated resulting in ~~four months~~one additional month of ~~Wirtgen’s~~Wirtgen activity in both the first quarter and the year-to-date period of 2021. The effect was an increase to ~~“Net sales”~~Net sales of $270 million, which the Company considers immaterial to construction and forestry’s annual ~~net~~Net sales.

~~Variable Interest Entities~~As a result of recent acquisitions (see Note 19), the Company updated the presentation on the consolidated balance sheet to remove the following lines: Receivables from unconsolidated affiliates, Investments in unconsolidated affiliates, and Payables to unconsolidated affiliates. These balances are now immaterial to the Company’s consolidated balance sheet and have been reclassified into Other receivables, Other assets, and Accounts payable and accrued expenses, respectively.

The Company consolidates certain ~~variable interest entities (VIEs)~~VIEs related to retail note securitizations (see Note ~~10)~~9).

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 $14 million, $9 million, and $7 million at January 30, 2022, October 31, 2021, and 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 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 the disclosures are adequate to present fairly the financial position, results of operations, and cash flows at the dates and for the periods presented. It is suggested these interim consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto appearing in the Company’s latest ~~annual report~~Annual Report on Form 10-K. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year.

Use of Estimates in Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts and related disclosures. Actual results could differ from those estimates.

~~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

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 ~~Company’s net sales~~dealer contract in Canada was changed for goods delivered after November 1, 2021, resulting in transfer of control and ~~revenues by primary geographic market, major product line, and timing of~~ revenue recognition upon delivery. For certain goods delivered to Canadian dealers prior to November 1, 2021, the dealer consignment terms already in ~~millions~~place remain in effect. As of ~~dollars follow:~~July 31, 2022 and October 31, 2021, the remaining consigned inventory was $26 million and $150 million, respectively.

Three Months Ended January 30, 2022

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Financial Services

Total

Primary geographic markets:





United States

$
1,608

$
1,438

$
1,260

$
573

$
4,879

Canada

139

122

332

152

745

Western Europe

467

532

358

26

1,383

Central Europe and CIS

202

126

195

11

534

Latin America

776

104

228

68

1,176

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

241

352

219

40

852

Total

$
3,433

$
2,674

$
2,592

$
870

$
9,569

Major product lines:





Production agriculture

$
3,283

$
3,283

Small agriculture

$
1,932

1,932

Turf

627

627

Construction

$
1,175

1,175

Compact construction

321

321

Roadbuilding

692

692

Forestry

305

305

Financial products

12

11

5

$
870

898

Other

138

104

94

336

Total

$
3,433

$
2,674

$
2,592

$
870

$
9,569

Revenue recognized:





At a point in time

$
3,396

$
2,654

$
2,570

$
24

$
8,644

Over time

37

20

22

846

925

Total

$
3,433

$
2,674

$
2,592

$
870

$
9,569

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 being evaluated and at this point are not expected to have a material impact on the Company’s financial statements.

Three Months Ended January 31, 2021

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Financial Services

Total

Primary geographic markets:





United States

$
1,608

$
1,424

$
1,202

$
598

$
4,832

Canada

112

79

188

154

533

Western Europe

449

486

439

24

1,398

Central Europe and CIS

161

84

178

9

432

Latin America

513

77

170

59

819

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

304

401

353

40

1,098

Total

$
3,147

$
2,551

$
2,530

$
884

$
9,112

Major product lines:





Production agriculture

$
3,011

$
3,011

Small agriculture

$
1,812

1,812

Turf

651

651

Construction

$
887

887

Compact construction

346

346

Roadbuilding

910

910

Forestry

290

290

Financial products

16

10

7

$
884

917

Other

120

78

90

288

Total

$
3,147

$
2,551

$
2,530

$
884

$
9,112

Revenue recognized:





At a point in time

$
3,105

$
2,535

$
2,500

$
24

$
8,164

Over time

42

16

30

860

948

Total

$
3,147

$
2,551

$
2,530

$
884

$
9,112

~~Following is a description of the Company’s major product lines:~~

~~Production agriculture~~ – Includes net sales of large and certain mid-size tractors and associated attachments, combines, cotton pickers, cotton strippers, 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~~ ~~– 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~~ – 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~~ – Includes finance and interest income primarily from retail notes related to sales of John Deere equipment to retail customers, wholesale financing to dealers of John Deere equipment, and revolving charge accounts; income from retail leases of John Deere equipment; and revenue from extended warranties.

~~Other~~ – Includes sales of 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 owned dealerships and service centers, gains on disposition of property and businesses, trademark licensing revenue, and other miscellaneous revenue 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 $1,348 million, $1,344 million, and $1,169 million at January 30, 2022, October 31, 2021, and 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, $265 million and $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 amount of unsatisfied performance obligations for contracts with an original duration greater than one year is $1,056 million at January 30, 2022. The estimated revenue to be recognized by fiscal year in millions of dollars follows: remainder of ~~2022~~ ~~- $219,~~ ~~2023~~ ~~- $297,~~ ~~2024~~ ~~- $232,~~ ~~2025~~ ~~- $143,~~ ~~2026~~ ~~- $72,~~ ~~2027~~ ~~- $40 and~~ ~~later years~~ - $53. As permitted, the Company elected only to disclose remaining performance obligations with an original contract duration greater than one year. The contracts with an expected duration of one year or less are generally for sales of equipment, service parts, repair services, and certain telematics services.

107

~~(5)~~(3) Revenue Recognition

The Company’s Net sales and revenues by primary geographic market, major product line, and timing of revenue recognition in millions of dollars follow:


	Three Months Ended July 31, 2022
	Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total
Primary geographic markets:
United States	$	2,904	$	2,177	$	1,789	$	602	$	7,472
Canada		451		185		288		149		1,073
Western Europe		645		646		380		25		1,696
Central Europe and CIS		348		109		111		14		582
Latin America		1,327		155		459		77		2,018
Asia, Africa, Australia, New Zealand, and Middle East		510		419		296		36		1,261
Total	$	6,185	$	3,691	$	3,323	$	903	$	14,102

Major product lines:
Production agriculture	$	6,019							$	6,019
Small agriculture			$	2,705						2,705
Turf				842						842
Construction					$	1,506				1,506
Compact construction						460				460
Roadbuilding						910				910
Forestry						316				316
Financial products		17		15		6	$	903		941
Other		149		129		125				403
Total	$	6,185	$	3,691	$	3,323	$	903	$	14,102

Revenue recognized:
At a point in time	$	6,154	$	3,672	$	3,303	$	27	$	13,156
Over time		31		19		20		876		946
Total	$	6,185	$	3,691	$	3,323	$	903	$	14,102


	Nine Months Ended July 31, 2022
	Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total
Primary geographic markets:
United States	$	6,946	$	5,718	$	5,157	$	1,744	$	19,565
Canada		899		468		975		450		2,792
Western Europe		1,648		1,836		1,202		76		4,762
Central Europe and CIS		954		386		452		36		1,828
Latin America		3,229		393		1,020		218		4,860
Asia, Africa, Australia, New Zealand, and Middle East		1,118		1,170		833		113		3,234
Total	$	14,794	$	9,971	$	9,639	$	2,637	$	37,041

Major product lines:
Production agriculture	$	14,333							$	14,333
Small agriculture			$	7,305						7,305
Turf				2,286						2,286
Construction					$	4,198				4,198
Compact construction						1,208				1,208
Roadbuilding						2,619				2,619
Forestry						946				946
Financial products		39		35		17	$	2,637		2,728
Other		422		345		651				1,418
Total	$	14,794	$	9,971	$	9,639	$	2,637	$	37,041

Revenue recognized:
At a point in time	$	14,694	$	9,919	$	9,580	$	77	$	34,270
Over time		100		52		59		2,560		2,771
Total	$	14,794	$	9,971	$	9,639	$	2,637	$	37,041


	Three Months Ended August 1, 2021
	Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total
Primary geographic markets:
United States	$	1,995	$	1,753	$	1,559	$	605	$	5,912
Canada		253		153		285		162		853
Western Europe		566		679		455		27		1,727
Central Europe and CIS		398		117		241		10		766
Latin America		758		125		227		60		1,170
Asia, Africa, Australia, New Zealand, and Middle East		368		385		308		38		1,099
Total	$	4,338	$	3,212	$	3,075	$	902	$	11,527

Major product lines:
Production agriculture	$	4,179							$	4,179
Small agriculture			$	2,355						2,355
Turf				719						719
Construction					$	1,283				1,283
Compact construction						398				398
Roadbuilding						948				948
Forestry						342				342
Financial products		13		12		5	$	902		932
Other		146		126		99				371
Total	$	4,338	$	3,212	$	3,075	$	902	$	11,527

Revenue recognized:
At a point in time	$	4,293	$	3,191	$	3,052	$	27	$	10,563
Over time		45		21		23		875		964
Total	$	4,338	$	3,212	$	3,075	$	902	$	11,527


	Nine Months Ended August 1, 2021
	Production & Precision Ag		Small Ag & Turf		Construction & Forestry		Financial Services		Total
Primary geographic markets:
United States	$	5,814	$	5,014	$	4,242	$	1,812	$	16,882
Canada		617		376		793		469		2,255
Western Europe		1,604		1,903		1,408		77		4,992
Central Europe and CIS		1,090		361		628		28		2,107
Latin America		1,971		305		617		179		3,072
Asia, Africa, Australia, New Zealand, and Middle East		991		1,230		1,054		114		3,389
Total	$	12,087	$	9,189	$	8,742	$	2,679	$	32,697

Major product lines:
Production agriculture	$	11,656							$	11,656
Small agriculture			$	6,583						6,583
Turf				2,268						2,268
Construction					$	3,402				3,402
Compact construction						1,140				1,140
Roadbuilding						2,924				2,924
Forestry						975				975
Financial products		41		32		17	$	2,679		2,769
Other		390		306		284				980
Total	$	12,087	$	9,189	$	8,742	$	2,679	$	32,697

Revenue recognized:
At a point in time	$	11,960	$	9,137	$	8,666	$	77	$	29,840
Over time		127		52		76		2,602		2,857
Total	$	12,087	$	9,189	$	8,742	$	2,679	$	32,697

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 sheets. The deferred revenue received, but not recognized in revenue, including extended warranty premiums also shown in Note 15, was $1,424 million, $1,344 million, and $1,259 million at July 31, 2022, October 31, 2021, and August 1, 2021, respectively. The contract liability is reduced as the revenue is recognized. During the three months ended July 31, 2022 and August 1, 2021, $93 million and $108 million, respectively, of revenue was recognized from deferred revenue that was recorded as a contract liability at the beginning of the respective fiscal year. During the nine months ended July 31, 2022 and August 1, 2021, $488 million and $442 million, respectively, of revenue was recognized from deferred revenue that was recorded as a contract liability at the beginning of the respective fiscal year.

The amount of unsatisfied performance obligations for contracts with an original duration greater than one year is $1,167 million at July 31, 2022. The estimated revenue to be recognized by fiscal year follows in millions of dollars: remainder of 2022 - $104, 2023 - $337, 2024 - $283, 2025 - $196, 2026 - $109, 2027 - $60 and later years - $78. As permitted, the Company elected only to disclose remaining performance obligations with an original contract duration greater than one year. The contracts with an expected duration of one year or less are generally for sales of equipment, service parts, repair services, and certain telematics services.

(4) Other Comprehensive Income Items

The after-tax components of accumulated other comprehensive income (loss) in millions of dollars follow:


	January 30		October 31		January 31		July 31		October 31		August 1
	2022		2021		2021		2022		2021		2021
Retirement benefits adjustment	$	(1,379)	$	(1,034)	$	(3,855)	$	(1,171)	$	(1,034)	$	(3,710)
Cumulative translation adjustment		(1,745)		(1,478)		(1,200)		(2,262)		(1,478)		(1,277)
Unrealized loss on derivatives		(28)		(42)		(54)		(1)		(42)		(50)
Unrealized gain on debt securities				15		31
Unrealized gain (loss) on debt securities								(42)		15		26
Total accumulated other comprehensive income (loss)	$	(3,152)	$	(2,539)	$	(5,078)	$	(3,476)	$	(2,539)	$	(5,011)

Following are amounts recorded in and reclassifications out of other comprehensive income (loss), and the income tax effects, in millions of dollars. Retirement benefits adjustment reclassifications for actuarial ~~gain (loss),~~(gain) loss, prior service (credit) cost, and ~~settlements~~settlements/curtailment are included in net periodic pension and other postretirement benefit costs (see Note 7)6).


	Before		Tax		After		Before		Tax		After
	Tax		(Expense)		Tax		Tax		(Expense)		Tax
Three Months Ended January 30, 2022	Amount		Credit		Amount
Three Months Ended July 31, 2022							Amount		Credit		Amount
Cumulative translation adjustment	$	(264)	$	(3)	$	(267)	$	(267)	$	(2)	$	(269)
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)		15		(3)		12		1				1
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest expense		2				2		(3)		1		(2)
Net unrealized gain (loss) on derivatives		17		(3)		14		(2)		1		(1)
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)		(19)		4		(15)		6		(1)		5
Reclassification of realized (gain) loss – Other income								1				1
Net unrealized gain (loss) on debt securities		(19)		4		(15)		7		(1)		6
Retirement benefits adjustment:
Net actuarial gain (loss)		(500)		120		(380)		34		(9)		25
Reclassification to other operating expenses through amortization of:
Reclassification to Other operating expenses through amortization of:
Actuarial (gain) loss		40		(10)		30		27		(7)		20
Prior service (credit) cost		6		(2)		4		8		(2)		6
Settlements		1				1
Settlements/curtailment								36		(8)		28
Net unrealized gain (loss) on retirement benefits adjustment		(453)		108		(345)		105		(26)		79
Total other comprehensive income (loss)	$	(719)	$	106	$	(613)	$	(157)	$	(28)	$	(185)

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


	Before		Tax		After
	Tax		(Expense)		Tax
Nine Months Ended July 31, 2022	Amount		Credit		Amount
Cumulative translation adjustment	$	(774)	$	(10)	$	(784)
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)		52		(11)		41
Net unrealized gain (loss) on derivatives		52		(11)		41
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)		(74)		16		(58)
Reclassification of realized (gain) loss – Other income		1				1
Net unrealized gain (loss) on debt securities		(73)		16		(57)
Retirement benefits adjustment:
Net actuarial gain (loss) and prior service (cost)		(338)		81		(257)
Reclassification to Other operating expenses through amortization of:
Actuarial (gain) loss		94		(24)		70
Prior service (credit) cost		22		(6)		16
Settlements/curtailment		44		(10)		34
Net unrealized gain (loss) on retirement benefits adjustment		(178)		41		(137)
Total other comprehensive income (loss)	$	(973)	$	36	$	(937)


	Before		Tax		After
	Tax		(Expense)		Tax
Three Months Ended August 1, 2021	Amount		Credit		Amount
Cumulative translation adjustment	$	(112)	$	(2)	$	(114)
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)		(1)				(1)
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest expense		3		(1)		2
Net unrealized gain (loss) on derivatives		2		(1)		1
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)		11		(3)		8
Net unrealized gain (loss) on debt securities		11		(3)		8
Retirement benefits adjustment:
Net actuarial gain (loss)		(5)		1		(4)
Reclassification to Other operating expenses through amortization of:
Actuarial (gain) loss		71		(17)		54
Prior service (credit) cost		1				1
Settlements		4		(1)		3
Net unrealized gain (loss) on retirement benefits adjustment		71		(17)		54
Total other comprehensive income (loss)	$	(28)	$	(23)	$	(51)


	Before		Tax		After
	Tax		(Expense)		Tax
Nine Months Ended August 1, 2021	Amount		Credit		Amount
Cumulative translation adjustment	$	319			$	319
Unrealized gain (loss) on derivatives:
Unrealized hedging gain (loss)		(1)				(1)
Reclassification of realized (gain) loss to:
Interest rate contracts – Interest expense		11	$	(2)		9
Net unrealized gain (loss) on derivatives		10		(2)		8
Unrealized gain (loss) on debt securities:
Unrealized holding gain (loss)		(6)		(1)		(7)
Net unrealized gain (loss) on debt securities		(6)		(1)		(7)
Retirement benefits adjustment:
Net actuarial gain (loss)		35		(8)		27
Reclassification to Other operating expenses through amortization of:
Actuarial (gain) loss		213		(53)		160
Prior service (credit) cost		5		(1)		4
Settlements		22		(5)		17
Net unrealized gain (loss) on retirement benefits adjustment		275		(67)		208
Total other comprehensive income (loss)	$	598	$	(70)	$	528

~~(6)~~(5) Earnings Per Share

A reconciliation of basic and diluted net income per share attributable to Deere & Company follows in millions, except per share amounts:


	Three Months Ended				Three Months Ended				Nine Months Ended
	January 30		January 31		July 31		August 1		July 31		August 1
	2022		2021		2022		2021		2022		2021
Net income attributable to Deere & Company	$	903	$	1,224	$	1,884	$	1,667	$	4,885	$	4,680
Average shares outstanding		307.4		313.5		304.1		311.0		305.8		312.4
Basic per share	$	2.94	$	3.90	$	6.20	$	5.36	$	15.97	$	14.98

Average shares outstanding		307.4		313.5		304.1		311.0		305.8		312.4
Effect of dilutive share-based compensation		2.0		2.6		1.6		2.4		1.9		2.5
Total potential shares outstanding		309.4		316.1		305.7		313.4		307.7		314.9
Diluted per share	$	2.92	$	3.87	$	6.16	$	5.32	$	15.88	$	14.86

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

~~(7)~~(6) 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 components of net periodic pension cost consisted of the following in millions of dollars:

Three Months Ended

January 30

January 31

2022

2021

Service cost

$
85

$
85

Interest cost

77

69

Expected return on plan assets

(182)

(200)

Amortization of actuarial loss

39

63

Amortization of prior service cost

7

3

Settlements

1

13

Net cost

$
27

$
33


	Three Months Ended				Nine Months Ended
	July 31		August 1		July 31		August 1
	2022		2021		2022		2021
Service cost	$	86	$	83	$	265	$	251
Interest cost		85		69		242		207
Expected return on plan assets		(182)		(199)		(544)		(599)
Amortization of actuarial loss		31		64		107		192
Amortization of prior service cost		9		2		25		8
Settlements/curtailment		36		4		44		22
Net cost	$	65	$	23	$	139	$	81

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


	Three Months Ended				Three Months Ended				Nine Months Ended
	January 30		January 31		July 31		August 1		July 31		August 1
	2022		2021		2022		2021		2022		2021
Service cost	$	12	$	12	$	11	$	12	$	34	$	36
Interest cost		26		26		25		25		74		76
Expected return on plan assets		(28)		(19)		(28)		(19)		(83)		(58)
Amortization of actuarial loss		1		7
Amortization of actuarial (gain) loss						(4)		7		(13)		21
Amortization of prior service credit		(1)		(1)		(1)		(1)		(3)		(3)
Net cost	$	10	$	25	$	3	$	24	$	9	$	72

The components of net periodic pension and OPEB costs excluding the service cost component are included in the line item ~~“Other~~Other operating ~~expenses”~~expenses in the ~~statement~~statements 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 2022, the Company remeasured the U.S. hourly pension plan due to the new collective bargaining agreement, which decreased the plan’s funded status by approximately $495 million and will increase pension expense in 2022 by nearly $80 ~~million. For the first quarter of 2022, the remeasurement increased pension expense by $14~~ million with $6$35 million negatively impacting operating ~~profit.~~profit in 2022.

During the third quarter of 122022, the Company remeasured the U.S. hourly pension plan when 10 percent of active, eligible employees elected to freeze their defined benefit pension plan benefit for an enhanced defined contribution benefit. The remeasurement resulted in a $34 million curtailment loss, while the impact to the plan’s funded status was not material.

During the first ~~three~~nine months of 2022, the Company contributed ~~$18~~$67 million to its pension plans and ~~$1,051~~$1,109 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 ~~$70~~$16 million to its pension plans and ~~$86~~$28 million to its OPEB plans during the remainder of ~~fiscal year~~ 2022. ~~These~~The remaining pension and OPEB contributions are primarily ~~include~~ direct benefit payments from Company funds.

~~(8)~~(7) Segment Reporting

Worldwide ~~net~~Net sales and revenues, operating profit, and identifiable assets by segment were as follows in millions of ~~dollars.~~ dollars:


	Three Months Ended					Nine Months Ended
	July 31		August 1		%	July 31		August 1		%
	2022		2021		Change	2022		2021		Change
Net sales and revenues:
Production & precision ag net sales	$	6,096	$	4,250	+43	$	14,568	$	11,848	+23
Small ag & turf net sales		3,635		3,147	+16		9,836		9,051	+9
Construction & forestry net sales		3,269		3,016	+8		9,161		8,562	+7
Financial services revenues		903		902			2,637		2,679	-2
Other revenues		199		212	-6		839		557	+51
Total net sales and revenues	$	14,102	$	11,527	+22	$	37,041	$	32,697	+13
Operating profit:
Production & precision ag	$	1,293	$	906	+43	$	2,646	$	2,557	+3
Small ag & turf		552		583	-5		1,443		1,699	-15
Construction & forestry		514		463	+11		1,599		1,220	+31
Financial services		287		291	-1		864		844	+2
Total operating profit		2,646		2,243	+18		6,552		6,320	+4
Reconciling items		(108)		(85)	+27		(303)		(312)	-3
Income taxes		(654)		(491)	+33		(1,364)		(1,328)	+3
Net income attributable to Deere & Company	$	1,884	$	1,667	+13	$	4,885	$	4,680	+4

Intersegment sales and revenues:
Production & precision ag net sales	$	5	$	8	-38	$	15	$	21	-29
Small ag & turf net sales		2		2			8		9	-11
Construction & forestry net sales
Financial services revenues		81		61	+33		214		172	+24

Operating profit is income from continuing operations before reconciling items and income taxes. Operating profit of the financial services segment includes the effect of interest expense and foreign exchange gains and losses. Reconciling items to net income are primarily corporate expenses, certain external interest ~~expenses,~~expense, certain foreign exchange gains and losses, pension and 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		July 31		October 31		August 1
	2022		2021		2021		2022		2021		2021
Identifiable assets:
Production & precision ag	$	7,683	$	7,021	$	6,330	$	8,728	$	7,021	$	6,910
Small ag & turf		4,260		3,959		3,510		4,361		3,959		3,643
Construction & forestry		6,358		6,457		6,341		6,824		6,457		6,378
Financial services		50,499		51,624		48,378		56,008		51,624		51,647
Corporate		10,814		15,053		10,921		10,896		15,053		12,110
Total assets	$	79,614	$	84,114	$	75,480	$	86,817	$	84,114	$	80,688

~~(9)~~(8) Financing Receivables

The Company monitors the credit quality of financing receivables based on delinquency status. Past due balances of financing receivables still accruing finance income represent the total balance held (principal plus accrued interest) with any payment amounts 30 days or more past the contractual payment due date. Non-performing financing receivables represent receivables for which the Company has ceased accruing finance income. The Company ceases accruing finance income when these receivables are generally 90 days delinquent. Generally, when receivables are 120 days delinquent the estimated uncollectible amount from the customer is written off to the allowance for credit losses. Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is generally resumed when the receivable becomes contractually current and collections are reasonably assured.

~~The credit quality analysis of retail notes, financing leases, and revolving charge accounts (collectively, retail customer receivables) by year of origination was as follows in millions of dollars:~~

January 30, 2022

2022

2021

2020

2019

2018

Prior Years

Revolving Charge Accounts

Total

Retail customer receivables:

























Agriculture and turf

Current

$
2,492

$
11,580

$
5,988

$
3,038

$
1,440

$
761

$
2,634

$
27,933

30-59 days past due

5

82

52

30

15

6

25

215

60-89 days past due

1

23

18

10

5

3

5

65

90+ days past due

1

1

Non-performing

1

33

58

52

31

36

6

217

Construction and forestry

Current

764

2,795

1,376

615

204

49

81

5,884

30-59 days past due

8

68

35

21

6

2

3

143

60-89 days past due

30

17

7

3

1

1

59

90+ days past due

2

3

3

1

8

17

Non-performing

33

48

37

14

7

1

140

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

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:


	July 31, 2022
	2022		2021		2020		2019		2018		Prior Years		Revolving Charge Accounts		Total
Retail customer receivables:
Agriculture and turf
Current	$	9,161	$	9,169	$	4,713	$	2,234	$	935	$	378	$	3,962	$	30,552
30-59 days past due		40		70		38		23		8		4		18		201
60-89 days past due		15		24		15		7		3		1		5		70
90+ days past due
Non-performing		17		62		48		37		19		27		7		217
Construction and forestry
Current		2,336		2,249		1,004		382		106		20		102		6,199
30-59 days past due		47		54		26		12		4		1		3		147
60-89 days past due		14		14		12		4		1				1		46
90+ days past due				11		3		1				3				18
Non-performing		13		63		49		25		9		4		1		164
Total retail customer receivables	$	11,643	$	11,716	$	5,908	$	2,725	$	1,085	$	438	$	4,099	$	37,614


	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


	August 1, 2021
	2021		2020		2019		2018		2017		Prior Years		Revolving Charge Accounts		Total
Retail customer receivables:
Agriculture and turf
Current	$	9,159	$	7,516	$	3,938	$	2,053	$	910	$	317	$	3,658	$	27,551
30-59 days past due		38		54		35		19		7		3		13		169
60-89 days past due		14		28		15		6		3		1		4		71
90+ days past due				1												1
Non-performing		12		58		63		42		22		30		6		233
Construction and forestry
Current		2,327		1,845		938		357		84		13		86		5,650
30-59 days past due		35		44		26		9		4		1		3		122
60-89 days past due		13		19		10		5		1		1		1		50
90+ days past due		4		2		9		5		6		2				28
Non-performing		12		47		41		19		8		4		1		132
Total retail customer receivables	$	11,614	$	9,614	$	5,075	$	2,515	$	1,045	$	372	$	3,772	$	34,007

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:


	January 30, 2022																July 31, 2022
	2022		2021		2020		2019		2018		Prior Years		Revolving		Total		2022		2021		2020		2019		2018		Prior Years		Revolving		Total
Wholesale receivables:
Agriculture and turf
Current	$	101	$	244	$	56	$	11	$	7	$	2	$	1,426	$	1,847	$	289	$	99	$	34	$	6	$	1	$	1	$	2,022	$	2,452
30+ days past due
Non-performing								7								7								1								1
Construction and forestry
Current		5		38		4		3				1		285		336		11		32		3		1				1		283		331
30+ days past due												1				1												1				1
Non-performing
Total wholesale receivables	$	106	$	282	$	60	$	21	$	7	$	4	$	1,711	$	2,191	$	300	$	131	$	37	$	8	$	1	$	3	$	2,305	$	2,785


	October 31, 2021																October 31, 2021
	2021		2020		2019		2018		2017		Prior Years		Revolving		Total		2021		2020		2019		2018		2017		Prior Years		Revolving		Total
Wholesale receivables:
Agriculture and turf
Current	$	346	$	80	$	22	$	9	$	3			$	1,696	$	2,156	$	346	$	80	$	22	$	9	$	3			$	1,696	$	2,156
30+ days past due
Non-performing						12										12						12										12
Construction and forestry
Current		41		7		7				1	$	1		340		397		41		7		7				1	$	1		340		397
30+ days past due												1				1												1				1
Non-performing
Total wholesale receivables	$	387	$	87	$	41	$	9	$	4	$	2	$	2,036	$	2,566	$	387	$	87	$	41	$	9	$	4	$	2	$	2,036	$	2,566


	January 31, 2021																August 1, 2021
	2021		2020		2019		2018		2017		Prior Years		Revolving		Total		2021		2020		2019		2018		2017		Prior Years		Revolving		Total
Wholesale receivables:
Agriculture and turf
Current	$	78	$	226	$	67	$	18	$	8	$	1	$	2,297	$	2,695	$	263	$	110	$	38	$	13	$	3	$	1	$	2,256	$	2,684
30+ days past due
Non-performing						35										35						18										18
Construction and forestry
Current		3		11		20		2		1		2		315		354		8		8		8		1		1		1		287		314
30+ days past due												1				1												1				1
Non-performing
Total wholesale receivables	$	81	$	237	$	122	$	20	$	9	$	4	$	2,612	$	3,085	$	271	$	118	$	64	$	14	$	4	$	3	$	2,543	$	3,017

1516

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 30, 2022								Retail Notes		Revolving
	Retail Notes		Revolving						& Financing		Charge		Wholesale
	& Financing		Charge		Wholesale				Leases		Accounts		Receivables		Total
	Leases		Accounts		Receivables		Total
Three Months Ended July 31, 2022
Allowance:
Beginning of period balance	$	138	$	21	$	7	$	166	$	168	$	17	$	5	$	190
Provision (credit)		13		(9)		(2)		2		14		3		(1)		16
Write-offs		(17)		(5)				(22)		(12)		(10)				(22)
Recoveries		4		8				12		8		7				15
Translation adjustments										3						3
End of period balance	$	138	$	15	$	5	$	158	$	181	$	17	$	4	$	202

Nine Months Ended July 31, 2022
Allowance:
Beginning of period balance									$	138	$	21	$	7	$	166
Provision (credit)										66		(4)		(3)		59
Write-offs										(47)		(22)				(69)
Recoveries										17		22				39
Translation adjustments										7						7
End of period balance									$	181	$	17	$	4	$	202
Financing receivables:
End of period balance	$	31,918	$	2,756	$	2,191	$	36,865	$	33,515	$	4,099	$	2,785	$	40,399


	Three Months Ended January 31, 2021								Retail Notes		Revolving
	Retail Notes		Revolving						& Financing		Charge		Wholesale
	& Financing		Charge		Wholesale				Leases		Accounts		Receivables		Total
Three Months Ended August 1, 2021
Allowance:
Beginning of period balance									$	152	$	19	$	7	$	178
Provision										3						3
Write-offs										(14)		(9)				(23)
Recoveries										8		8				16
End of period balance									$	149	$	18	$	7	$	174
	Leases		Accounts		Receivables		Total
Nine Months Ended August 1, 2021
Allowance:
Beginning of period balance	$	133	$	43	$	8	$	184	$	133	$	43	$	8	$	184
ASU No. 2016-13 adoption		44		(13)				31		44		(13)				31
Provision (credit)		5		(10)		(1)		(6)		(9)		(16)		(1)		(26)
Write-offs		(8)		(5)				(13)		(38)		(23)				(61)
Recoveries		5		9				14		17		27				44
Translation adjustments		1						1		2						2
End of period balance	$	180	$	24	$	7	$	211	$	149	$	18	$	7	$	174

Financing receivables:
End of period balance	$	27,810	$	2,685	$	3,085	$	33,580	$	30,235	$	3,772	$	3,017	$	37,024

The allowance for credit losses ~~on financing receivables decreased~~increased in the third quarter and the first ~~quarter~~nine months of 2022 ~~led by a decrease~~mainly due to higher reserves related to the events in Russia / Ukraine and higher portfolio balances. As part of the ~~revolving charge accounts. This portfolio is benefiting from favorable agricultural market conditions driven by higher~~allowance setting process, the Company continues to monitor the economy, including potential impacts of inflation, commodity prices, and ~~net farm income, which is contributing~~interest rates on portfolio performance and adjustments to ~~stronger payment performance.~~the allowance are incorporated, as necessary.

A troubled debt restructuring is 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,~~date, a reduction of the face amount or maturity amount of the debt, or a reduction of accrued interest. During the first ~~three~~nine months of 2022, the Company identified ~~108~~230 receivable contracts, primarily retail notes, as troubled debt restructurings with aggregate balances of $5$10 million pre-modification and $4$9 million post-modification. During the first ~~three~~nine months of 2021, ~~there were 98~~the Company identified 304 receivable contracts, primarily retail notes, ~~identified~~ as troubled debt

restructurings with aggregate balances of $5$12 million pre-modification and ~~post-modification~~.$10 million post-modification. During these same periods, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At ~~January 30,~~July 31, 2022, the Company had 0no commitments to lend to borrowers whose accounts were modified in troubled debt restructurings.

~~(10)~~(9) Securitization of Financing Receivables

As a part of its overall funding strategy, the Company periodically transfers certain financing receivables (retail notes) into VIEs that are special purpose entities (SPEs), or non-VIE banking operations, as part of its asset-backed securities programs (securitizations). The structure of these transactions is such that the transfer of the retail notes does not meet the accounting criteria for sales of receivables, and is, therefore, accounted for as a secured borrowing. SPEs utilized in securitizations of retail notes differ from other entities included in the Company’s consolidated statements because the assets they hold are legally isolated. Use of the assets held by the SPEs or the non-VIEs is restricted by terms of the documents governing the securitization transactions.

~~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 provide funding directly to the Company.~~ The ~~funding provided by these third-parties results in~~components of consolidated restricted assets, secured borrowings, ~~which~~and other liabilities related to secured borrowings in securitization transactions were as follows in millions of dollars:


	July 31		October 31		August 1
	2022		2021		2021
Financing receivables securitized (retail notes)	$	5,156	$	4,673	$	5,421
Allowance for credit losses		(15)		(14)		(20)
Other assets (primarily restricted cash)		136		107		113
Total restricted securitized assets	$	5,277	$	4,766	$	5,514

Short-term securitization borrowings	$	4,920	$	4,605	$	5,277
Accrued interest on borrowings		4		2		2
Total liabilities related to restricted securitized assets	$	4,924	$	4,607	$	5,279

(10)Inventories

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


	July 31		October 31		August 1
	2022		2021		2021
Raw materials and supplies	$	4,508	$	3,524	$	2,895
Work-in-process		1,621		994		1,124
Finished goods and parts		5,434		4,373		4,176
Total FIFO value		11,563		8,891		8,195
Less adjustment to LIFO value		2,442		2,110		1,785
Inventories	$	9,121	$	6,781	$	6,410

(11)Goodwill and Other Intangible Assets–Net

The ~~securitized retail notes are recorded~~changes in amounts of goodwill by operating segments were as ~~“Financing receivables securitized – net” on~~follows in millions of dollars:


	Production &		Small Ag		Construction
	Precision Ag		& Turf		& Forestry		Total
Goodwill at November 1, 2020	$	333	$	268	$	2,480	$	3,081
Acquisition		12						12
Translation adjustments		13		(3)		45		55
Goodwill at August 1, 2021	$	358	$	265	$	2,525	$	3,148

Goodwill at October 31, 2021	$	542	$	265	$	2,484	$	3,291
Acquisitions		132		69		597		798
Translation adjustments		(23)		(11)		(301)		(335)
Goodwill at July 31, 2022	$	651	$	323	$	2,780	$	3,754

There were no accumulated goodwill impairment losses in the ~~balance sheet.~~ reported periods.

The ~~total restricted~~components of other intangible assets onwere as follows in millions of dollars:


	July 31		October 31		August 1
	2022		2021		2021
Amortized intangible assets:
Customer lists and relationships	$	507	$	542	$	545
Technology, patents, trademarks, and other		1,320		1,104		1,080
Total at cost		1,827		1,646		1,625
Less accumulated amortization:
Customer lists and relationships		162		151		144
Technology, patents, trademarks, and other		384		343		337
Total accumulated amortization		546		494		481
Amortized intangible assets, net		1,281		1,152		1,144
Unamortized intangible assets:
In-process research and development				123		123
Other intangible assets – net	$	1,281	$	1,275	$	1,267

In September 2017, the ~~balance sheet~~Company acquired Blue River Technology’s in-process research and development related to ~~these securitizations include~~machine learning technology to optimize the ~~financing receivables securitized, less an allowance for credit losses,~~use of farm inputs. Those research 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 thedevelopment 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 $2,649 million, $3,094 million, and $2,425 million at January 30, 2022, October 31, 2021, and January 31, 2021, respectively. The liabilities (short-term securitization borrowings and accrued interest) of these SPEs totaled $2,575 million, $3,024 million, and $2,403 million at January 30, 2022, October 31, 2021, and January 31, 2021, respectively. The credit holders of these SPEs do not have legal recourse to the Company’s general credit.

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 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 bankswere completed, and the Company ~~agree to renew,~~started amortizing the ~~Company would liquidate~~acquired technology in the ~~secured borrowings over time as payments on~~second quarter of 2022.

The amortization of other intangible assets in the ~~retail notes are collected.~~

~~Through~~third quarter and the 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 portionfirst nine months 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 $767 million, $1,1762022 was $42 million and ~~$1,120~~$104 million, ~~at January 30, 2022, October 31,~~and for 2021 was $27 million and ~~January 31, 2021,~~$89 million, respectively. The ~~liabilities (short-term securitization~~estimated amortization expense for the next five years is as follows in millions of dollars: remainder of 2022 – $62, 2023 – $164, 2024 – $160, 2025 – $133, 2026 – $113, and 2027 – $112.

(12)Short-Term Borrowings

Short-term borrowings ~~and accrued interest) related to these conduits~~ were ~~$720 million, $1,113 million, and $1,097 million at January 30, 2022, October 31, 2021, and January 31, 2021, respectively.~~as follows in millions of dollars:


	July 31		October 31		August 1
	2022		2021		2021
Commercial paper	$	6,035	$	2,230	$	1,882
Notes payable to banks		427		336		133
Finance lease obligations due within one year		21		23		23
Long-term borrowings due within one year		7,693		8,330		8,366
Short-term borrowings	$	14,176	$	10,919	$	10,404

1719

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 30, 2022

Carrying value of liabilities

$
720

Maximum exposure to loss

767

~~The total assets of the unconsolidated conduits related to securitizations were $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, 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 30

October 31

January 31

2022

2021

2021

Financing receivables securitized (retail notes)

$
3,526

$
4,673

$
3,946

Allowance for credit losses

(10)

(14)

(15)

Other assets

100

107

95

Total restricted securitized assets

$
3,616

$
4,766

$
4,026

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

January 30

October 31

January 31

2022

2021

2021

Short-term securitization borrowings

$
3,482

$
4,605

$
3,969

Accrued interest on borrowings

1

2

2

Total liabilities related to restricted securitized assets

$
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 30, 2022, the maximum remaining term of all securitized retail notes was approximately six years.

~~(11)~~~~Inventories~~

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

January 30

October 31

January 31

2022

2021

2021

Raw materials and supplies

$
4,034

$
3,524

$
2,303

Work-in-process

1,460

994

839

Finished goods and parts

4,790

4,373

4,485

Total FIFO value

10,284

8,891

7,627

Less adjustment to LIFO value

2,349

2,110

1,671

Inventories

$
7,935

$
6,781

$
5,956

~~(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 1, 2020

$
333

$
268

$
2,480

$
3,081

Acquisition

12

12

Translation adjustments and other

12

(1)

90

101

Goodwill at January 31, 2021

$
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 30

October 31

January 31

2022

2021

2021

Amortized intangible assets:

Customer lists and relationships

$
526

$
542

$
553

Technology, patents, trademarks, and other

1,066

1,104

1,099

Total at cost

1,592

1,646

1,652

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

Other intangible assets – net

$
1,209

$
1,275

$
1,342

The amortization of other intangible assets in the first quarter of 2022 and 2021 was $28 million and $34 million, respectively. The estimated amortization expense for the next five years is as follows in millions of dollars: remainder of 2022 – $84, 2023 – $110, 2024 – $106, 2025 – $102, 2026 – $99, and 2027 – $98.

(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~~dollars:


	July 31		October 31		August 1
	2022		2021		2021
Underwritten term debt
U.S. dollar notes and debentures:
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)		510		584		594
1.375% notes due 2024 (€800 principal)		816		934		951
1.85% notes due 2028 (€600 principal)		612		701		713
2.20% notes due 2032 (€600 principal)		612		701		713
1.65% notes due 2039 (€650 principal)		663		759		773
Serial issuances
Medium-term notes (principal as of: July 31, 2022 - $22,983, October 31, 2021 - $22,647, August 1, 2021 - $21,892)		22,593		22,899		22,346
Other notes and finance lease obligations		1,191		1,178		1,059
Less debt issuance costs and debt discounts		(115)		(118)		(119)
Long-term borrowings	$	32,132	$	32,888	$	32,280

Medium-term notes ~~include~~serially due 2023 through 2032 are primarily offered by prospectus and issued at fixed and variable rates. These notes are presented in the table above with fair value adjustments related to interest rate swaps. All outstanding notes and debentures are senior unsecured borrowings and generally rank equally with each other.

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

In April 2022, the Company issued $600 million of sustainability-linked medium-term notes with an initial interest rate of 3.35 percent, which are due in 2029. This transaction supports the Company’s commitment to environmental sustainability. Failure to meet the stated sustainability performance target will result in a 25-basis point increase to the interest rate payable on the 2029 notes from and including April 2026.

(14)Leases - Lessor

The Company leases equipment manufactured or sold by the Company and a limited amount of non-John Deere equipment to retail customers through sales-type, direct financing, and operating leases. Sales-type and direct financing leases are reported in Financing receivables - net on the consolidated balance sheets, while operating leases are reported in Equipment on operating leases - net.

Lease revenues earned by the Company were as follows in millions of dollars:


	Three Months Ended				Nine Months Ended
	July 31, 2022		August 1, 2021		July 31, 2022		August 1, 2021
Sales-type and direct finance lease revenues	$	39	$	37	$	113	$	107
Operating lease revenues		326		359		991		1,079
Variable lease revenues		6		8		20		23
Total lease revenues	$	371	$	404	$	1,124	$	1,209

Variable lease revenues reported above primarily relate to separately invoiced property taxes on leased equipment in certain markets, late fees, and excess use and damage fees. Excess use and damage fees are reported in other income on the statements of consolidated income. Excess use and damage fees were $1 million and $2 million for the third quarter and first nine months ended July 31, 2022, respectively, compared with $2 million and $5 million for the same periods last year, respectively.

(15)~~Leases~~

~~Lessee~~

~~Operating and finance lease right of use assets and liabilities follow in millions of dollars:~~

January 30

October 31

January 31

2022

2021

2021

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-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

January 30, 2022

January 31, 2021

Sales-type and direct finance lease revenues

$
39

$
36

Operating lease revenues

336

363

Variable lease revenues

7

6

Total lease revenues

$
382

$
405

~~(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 ~~$781~~$839 million and ~~$656~~$709 million at ~~January 30,~~July 31, 2022 and ~~January 31,~~August 1, 2021, respectively.

A reconciliation of the changes in the warranty liability and unearned premiums was as follows in millions of ~~dollars follows:~~dollars:


	Three Months Ended				Three Months Ended				Nine Months Ended
	January 30		January 31		July 31		August 1		July 31		August 1
	2022		2021		2022		2021		2022		2021
Beginning of period balance	$	2,086	$	1,743	$	2,095	$	1,876	$	2,086	$	1,743
Payments		(193)		(215)		(240)		(209)		(657)		(626)
Amortization of premiums received		(66)		(63)		(70)		(66)		(200)		(193)
Accruals for warranties		181		247		358		299		762		794
Premiums received		83		73		103		96		277		258
Foreign exchange		(27)		18		(10)		(2)		(32)		18
End of period balance	$	2,064	$	1,803	$	2,236	$	1,994	$	2,236	$	1,994

At ~~January 30,~~July 31, 2022, the Company had ~~$374~~approximately $330 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 30,~~July 31, 2022, the Company had accrued losses of $5$4 million under these agreements. The maximum remaining term of the receivables guaranteed at ~~January 30,~~July 31, 2022 was approximately six years.

At ~~January 30,~~July 31, 2022, the Company had commitments of ~~$323~~$468 million for the construction and acquisition of property and equipment. Also, at ~~January 30,~~July 31, 2022, the Company had restricted assets of ~~$64~~$77 million, classified as ~~“Other~~Other assets.” See Note 109 for additional restricted assets associated with borrowings related to securitizations.

The Company also had other miscellaneous contingent liabilities totaling approximately ~~$85~~$90 million at ~~January 30,~~July 31, 2022. The accrued liability for these contingencies was not material at ~~January 30,~~July 31, 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, trademark, and ~~trademark~~antitrust matters. The Company believes the reasonably possible range of losses for these unresolved legal actions would not have a material effect on its consolidated financial statements.

~~(17)~~(16) 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.

2221

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

January 30, 2022

October 31, 2021

January 31, 2021

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value

Financing receivables – net:


Equipment operations

$
56

$
48

$
73

$
68

$
103

$
100

Financial services

33,135

32,985

33,726

33,650

29,335

29,591

Total

$
33,191

$
33,033

$
33,799

$
33,718

$
29,438

$
29,691

Financing receivables
securitized – net:

Equipment operations

$
9

$
9

$
10

$
10

$
18

$
17

Financial services

3,507

3,521

4,649

4,694

3,913

4,002

Total

$
3,516

$
3,530

$
4,659

$
4,704

$
3,931

$
4,019

Short-term securitization borrowings:

Equipment operations

$
8

$
9

$
10

$
10

$
17

$
17

Financial services

3,474

3,459

4,595

4,600

3,952

3,986

Total

$
3,482

$
3,468

$
4,605

$
4,610

$
3,969

$
4,003

Long-term borrowings due within one year:

Equipment operations

$
1,092

$
1,096

$
1,213

$
1,222

$
191

$
198

Financial services

7,221

7,226

7,117

7,142

7,341

7,424

Total

$
8,313

$
8,322

$
8,330

$
8,364

$
7,532

$
7,622

Long-term borrowings:

Equipment operations

$
8,728

$
9,724

$
8,877

$
10,244

$
10,103

$
11,813

Financial services

24,078

24,119

23,973

24,262

22,633

23,219

Total

$
32,806

$
33,843

$
32,850

$
34,506

$
32,736

$
35,032


	July 31, 2022				October 31, 2021				August 1, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Financing receivables – net	$	35,056	$	34,158	$	33,799	$	33,718	$	31,449	$	31,515
Financing receivables securitized – net		5,141		4,990		4,659		4,704		5,401		5,467
Short-term securitization borrowings		4,920		4,862		4,605		4,610		5,277		5,302
Long-term borrowings due within one year		7,693		7,608		8,330		8,364		8,366		8,440
Long-term borrowings		32,101		31,741		32,850		34,506		32,238		34,345

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.

Fair values of the financing receivables that were issued long-term were based on the discounted values of their related cash flows at interest rates currently being offered by the Company for similar financing receivables. The fair values of the remaining financing receivables approximated the carrying amounts.

Fair values of long-term borrowings and short-term securitization borrowings were based on current market quotes for identical or similar borrowings and credit risk, or on the discounted values of their related cash flows at current market interest rates. Certain long-term borrowings have been swapped to current variable interest rates. The carrying values of these long-term borrowings included adjustments related to fair value hedges.

Assets and liabilities measured at fair value on a recurring basis in millions of dollars follow, excluding the Company’s cash equivalents, which were carried at cost that approximates fair value and consisted primarily of money market funds and time deposits.


	July 31		October 31		August 1
	2022		2021		2021
Level 1:
Marketable securities
International equity securities	$	2	$	2	$	3
U.S. equity fund		75		75		74
U.S. government debt securities		63		59		60
Total Level 1 marketable securities		140		136		137

Level 2:
Marketable securities
U.S. government debt securities		134		139		124
Municipal debt securities		70		73		71
Corporate debt securities		213		224		217
International debt securities		1		2		3
Mortgage-backed securities		161		154		136
Total Level 2 marketable securities		579		592		551
Other assets
Derivatives		280		275		432
Accounts payable and accrued expenses
Derivatives		667		228		152
				��
Level 3:
Accounts payable and accrued expenses – Deferred consideration		252

2322

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 30,~~July 31, 2022 in millions of dollars are shown below. Actual maturities may differ from 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. Mortgage-backed securities were primarily issued by U.S. government-sponsored enterprises. Unrealized losses of debt securities at July 31, 2022 were not recognized in income due to the ability and intent to hold to maturity.


	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	29	$	29	$	23	$	23
Due after one through five years		87		88		98		95
Due after five through 10 years		161		159		189		175
Due after 10 years		231		230		211		188
Mortgage-backed securities		158		155		176		161
Debt securities	$	666	$	661	$	697	$	642

Fair value, nonrecurring Level 3 measurements from impairments, excluding financing receivables with specific allowances which were not significant, were as follows in millions of dollars. Property and equipment – net and Other assets fair ~~value~~values for October 31, 2021 ~~represents~~represent the fair value ~~assessment~~assessments at January 31, 2021.


	Fair Value					Losses			Fair Value					Losses
						Three Months Ended								Three Months Ended			Nine Months Ended
	January 30	October 31		January 31		January 30	January 31		July 31		October 31		August 1	July 31		August 1	July 31		August 1
	2022	2021		2021		2022	2021		2022		2021		2021	2022		2021	2022		2021
Inventories									$	13				$	4		$	12
Property and equipment – net		$	41	$	41		$	44			$	41					$	41	$	44
Other intangible assets – net																	$	28
Other assets		$	1	$	1		$	6			$	1							$	6

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

Marketable securities – The portfolio of investments 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.

Derivatives – The Company’s derivative financial instruments consist of interest rate contracts (swaps), foreign currency exchange contracts (futures, forwards, and swaps), and cross-currency interest rate contracts (swaps). The portfolio is valued based on an income approach (discounted cash flow) using market observable inputs, including swap curves and both forward and spot exchange rates for currencies.

Financing receivables – Specific reserve impairments are based on the fair value of the collateral, which is measured using a market approach (appraisal values or realizable values). Inputs include a selection of realizable values.

Inventories – The service parts inventory impairment was based on net realizable value, less reasonably predictable selling and disposal costs.

Property and equipment -– net – ~~Impairments are recognized if fair value is lower than the carrying 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 (see Note 20).~~obsolescence.

Other intangible assets – net – The Company considered external valuations based on the Company’s probability weighted cash flow analysis.

Other assets – The impairments were measured at the fair value of the right of use operating lease asset.

~~(18)~~(17) 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 and foreign currency exposures ~~at certain equipment operations units~~ for sales 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~~are recorded in operating activities in the ~~statement~~statements of consolidated cash flows. Each derivative is designated as a cash flow hedge, a fair value hedge, or remains undesignated. All designated hedges are formally documented as to the relationship with the hedged item as well as the risk-management strategy. Both at inception and on an ongoing basis the hedging instrument is assessed as to its effectiveness. If and when a derivative is determined not to be highly effective as a hedge, the underlying hedged transaction is no longer likely to occur, the hedge designation is removed, or the derivative is terminated, hedge accounting is discontinued.

Cash Flow Hedges

Certain interest rate contracts (swaps) were designated as hedges of future cash flows from borrowings. The total notional amounts of the receive-variable/pay-fixed interest rate contracts at ~~January 30,~~July 31, 2022, October 31, 2021, and ~~January 31,~~August 1, 2021 were ~~$2,700~~$2,350 million, $2,700 million, and ~~$2,350~~$1,750 million, respectively. Fair value gains or losses on cash flow hedges were recorded in other comprehensive income (OCI) and are subsequently reclassified into interest expense in the same periods during which the hedged transactions ~~affected~~affects earnings. These amounts offset the effects of interest rate changes on the related borrowings.

The amount of ~~loss~~gain recorded in OCI at ~~January 30,~~July 31, 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 $4approximately $31 million after-tax. ~~NaN~~No gains or losses were reclassified from OCI to earnings based on the probability that the original forecasted transaction would not occur.

Fair Value Hedges

Certain interest rate contracts (swaps) were designated as fair value hedges of borrowings. The total notional amounts of the receive-fixed/pay-variable interest rate contracts at ~~January 30,~~July 31, 2022, October 31, 2021, and

~~January 31,~~ August 1, 2021 were ~~$8,307~~$8,303 million, $8,043 million, and ~~$8,333~~$8,658 million, respectively. The fair value gains or losses on these contracts were generally offset by fair value gains or losses on the hedged items (fixed-rate borrowings) with both items recorded in interest expense.

The amounts recorded in the consolidated balance sheet related to borrowings designated in fair value hedging relationships were as follows in millions of ~~dollars follow:~~dollars. Fair value hedging adjustments are included in the carrying amount of the hedged item.


	Active Hedging Relationships				Discontinued Hedging Relationships
	Carrying Amount		Cumulative Fair Value		Carrying Amount of		Cumulative Fair Value
	of Hedged Item		Hedging Amount		Formerly Hedged Item		Hedging Amount
July 31, 2022
Short-term borrowings					$	2,605	$	5
Long-term borrowings	$	7,835	$	(430)		5,728		39

October 31, 2021
Short-term borrowings	$	191	$	3	$	1,997	$	(2)
Long-term borrowings		7,847		29		6,287		223
								��
August 1, 2021
Short-term borrowings	$	189	$	4	$	1,898	$	(1)
Long-term borrowings		8,698		263		5,831		190

Cumulative Increase (Decrease) of Fair

Value Hedging Adjustments Included in

the Carrying Amount

Carrying

Active

Amount of

Hedging

Discontinued

Hedged Item

Relationships

Relationships

Total

January 30, 2022

Long-term borrowings due within one year

$
185

$
2

$
8

$
10

Long-term borrowings

8,147

(130)

181

51

October 31, 2021

Long-term borrowings due within one year

$
189

$
3

$
(2)

$
1

Long-term borrowings

8,070

29

223

252

January 31, 2021

Long-term borrowings due within one year

$
159

$
2

$
1

$
3

Long-term borrowings

8,713

435

137

572

~~Long-term borrowings due within one year are presented in short-term borrowings.~~

Derivatives ~~not designated~~Not Designated as ~~hedging instruments~~Hedging Instruments

The Company has certain interest rate contracts (swaps), foreign currency exchange contracts (futures, forwards, and swaps), and cross-currency interest rate contracts (swaps), which were not formally designated as hedges. These derivatives were held as economic hedges for underlying interest rate or foreign currency exposures, primarily for certain borrowings, purchases or sales of inventory, and sales incentive programs. The total notional amounts of these interest rate swaps at ~~January 30,~~July 31, 2022, October 31, 2021, and ~~January 31,~~August 1, 2021 were ~~$10,210~~$9,880 million, $10,848 million, and ~~$8,801~~$9,195 million, the foreign exchange contracts were ~~$7,864~~$7,457 million, $7,584 million, and ~~$5,478~~$6,328 million, and the cross-currency interest rate contracts were ~~$303~~$276 million, $238 million, and ~~$145~~$197 million, respectively. The fair value gains or losses from derivatives not designated as hedging instruments were recorded in the ~~statement~~statements of consolidated income, generally offsetting over time the exposure on the hedged item.

2624

Fair values of derivative instruments in the condensed consolidated balance ~~sheet~~sheets were as follows in millions of ~~dollars follow:~~dollars:


	January 30		October 31		January 31		July 31		October 31		August 1
Other Assets	2022		2021		2021		2022		2021		2021
Designated as hedging instruments:
Interest rate contracts	$	102	$	166	$	491	$	82	$	166	$	332

Not designated as hedging instruments:
Interest rate contracts		82		73		77		163		73		57
Foreign exchange contracts		91		31		34		30		31		41
Cross-currency interest rate contracts		24		5		3		5		5		2
Total not designated		197		109		114		198		109		100

Total derivative assets	$	299	$	275	$	605	$	280	$	275	$	432

Accounts Payable and Accrued Expenses
Designated as hedging instruments:
Interest rate contracts	$	185	$	99	$	31	$	434	$	99	$	40

Not designated as hedging instruments:
Interest rate contracts		27		33		66		79		33		43
Foreign exchange contracts		64		94		76		149		94		67
Cross-currency interest rate contracts				2		2		5		2		2
Total not designated		91		129		144		233		129		112

Total derivative liabilities	$	276	$	228	$	175	$	667	$	228	$	152

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				Nine Months Ended
	January 30		January 31		July 31		August 1		July 31		August 1
	2022		2021		2022		2021		2022		2021
Fair Value Hedges:
Interest rate contracts - Interest expense	$	(141)	$	(55)	$	149	$	146	$	(507)	$	(79)

Cash Flow Hedges:
Recognized in OCI
Interest rate contracts - OCI (pretax)		15			$	1	$	(1)	$	52	$	(1)

Reclassified from OCI
Interest rate contracts - Interest expense		(2)		(5)		3		(3)				(11)

Not Designated as Hedges:
Interest rate contracts - Net sales	$	13					$	(2)	$	44	$	3
Interest rate contracts - Interest expense *		(1)	$	(4)	$	(18)		(2)		41		(6)
Foreign exchange contracts - Net sales						(1)				(2)
Foreign exchange contracts - Cost of sales		(1)		(52)		(29)		(7)		(109)		(107)
Foreign exchange contracts - Other operating expenses *		147		(126)		(20)		(5)		153		(209)
Total not designated	$	158	$	(182)	$	(68)	$	(16)	$	127	$	(319)

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

Counterparty Risk and Collateral

Derivative instruments are subject to significant concentrations of credit risk to the banking sector. The Company manages individual counterparty exposure by setting limits that consider the credit rating of the counterparty, the credit default swap spread of the counterparty, and other financial commitments and exposures between the Company and the counterparty banks. All interest rate derivatives are transacted under International Swaps and Derivatives Association (ISDA) documentation. Some of these agreements include credit support provisions. Each master agreement permits the net settlement of amounts owed in the event of default or termination.

Certain of the Company’s derivative agreements contain credit support provisions that may require the Company to post collateral based on the size of the net liability positions and credit ratings. The aggregate fair value of all derivatives with

credit-risk-related contingent features that were in a net liability position at ~~January 30,~~July 31, 2022, October 31, 2021, and ~~January 31,~~August 1, 2021, was ~~$213~~$518 million, $135 million, and ~~$99~~$87 million, respectively. In accordance with the limits established in these agreements, the Company posted ~~$18~~$238 million of cash collateral at ~~January 30,~~July 31, 2022. The Company posted 0no cash collateral in accordance with the limits established in those agreements at either October 31, 2021 or ~~January 31,~~August 1, 2021. In addition, the Company paid $8 million of ~~collateral either in~~ cash ~~or pledged securities~~collateral that was outstanding at ~~January 30,~~July 31, 2022, October 31, 2021, and ~~January 31,~~August 1, 2021 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 was as follows in millions of ~~dollars follows:~~dollars:

Gross Amounts

Netting

January 30, 2022

Recognized

Arrangements

Collateral

Net Amount

Assets

$
299

$
(91)

$
208

Liabilities

276

(91)

$
(19)

166

Gross Amounts

Netting

October 31, 2021

Recognized

Arrangements

Collateral

Net Amount

Assets

$
275

$
(105)

$
170

Liabilities

228

(105)

$
(5)

118


	Gross Amounts		Netting						Gross Amounts		Netting
January 31, 2021	Recognized		Arrangements		Collateral		Net Amount
July 31, 2022									Recognized		Arrangements		Collateral		Net Amount
Assets	$	605	$	(106)	$	(186)	$	313	$	280	$	(125)	$	(40)	$	115
Liabilities		175		(106)				69		667		(125)		(238)		304


	Gross Amounts		Netting
October 31, 2021	Recognized		Arrangements		Collateral		Net Amount
Assets	$	275	$	(105)			$	170
Liabilities		228		(105)	$	(5)		118


	Gross Amounts		Netting
August 1, 2021	Recognized		Arrangements		Collateral		Net Amount
Assets	$	432	$	(94)	$	(88)	$	250
Liabilities		152		(94)		(2)		56

~~(19)~~(18) Stock Option and Restricted Stock Awards

In December 2021, the Company granted stock options to employees for the purchase of 197 thousand shares of common stock at an exercise price of $343.94 per share and a binomial lattice model fair value of $89.20 per share at the grant date. At ~~January 30,~~July 31, 2022, options for ~~2.6~~2.1 million shares were outstanding with a weighted-average exercise price of ~~$145.37~~$152.12 per share. The Company also granted ~~154~~165 thousand restricted stock units to employees and non-employee directors in the first ~~three~~nine months of 2022, of which ~~117~~128 thousand are subject to ~~service based~~service-based only conditions and 37 thousand are subject to performance/~~service based~~service-based conditions. The weighted-average fair value of the ~~service based~~service-based only units at the grant date was ~~$344.11~~$346.46 per unit based on the market price of a share of underlying common stock. The fair value of the performance/~~service based~~service-based units at the grant date was $331.47 per unit based on the market price of a share of underlying common stock excluding dividends. At ~~January 30,~~July 31, 2022, the Company was authorized to grant ~~awards for~~ an additional ~~17.1~~17.3 million shares under the equity incentive plan.

(19) Acquisitions

Kreisel Acquisition

On February 7, 2022, the Company acquired majority ownership in Kreisel Electric Inc. (Kreisel), a pioneer in the development of immersion-cooled battery technology. The Austrian company manufactures high-density, high-durability electric battery modules and packs for high-performance and off-highway applications and has created a battery-buffered, high-powered charging infrastructure platform.

The transaction includes a call option to purchase the remaining ownership interest in Kreisel in 2027. The minority interest holders also have a put option that would require the Company to purchase the holder’s ownership interest in 2027. The put and call options cannot be separated from the noncontrolling interest. Due to the redemption features, the minority interest is classified as redeemable noncontrolling interest in the Company’s consolidated balance sheets.

The total cash purchase price was $276 million, consisting of $253 million for the acquired equity interests, $21 million to reduce the option price, and customary working capital adjustments, net of cash acquired. The preliminary fair values assigned

to the assets and liabilities of the acquired entity in millions of dollars, which is based on information as of the acquisition date and available at July 31, 2022 follows:


	February 7
	2022
Trade accounts and notes receivable	$	2
Other receivables		11
Inventories		11
Property and equipment		11
Goodwill		218
Other intangible assets		178
Other assets		6
Total assets	$	437

Accounts payable and accrued expenses	$	27
Deferred income taxes		38

Redeemable noncontrolling interest	$	96

The identifiable intangible assets were related to technology, trade name, and customer relationships with a weighted average amortization period of 12 years. The goodwill is not deductible for income tax purposes. Kreisel will be allocated amongst the Company’s production and precision agriculture, small agriculture and turf, and construction and forestry segments.

Acquisition of Excavator Factories

On February 28, 2022, the Company acquired full ownership of three former Deere-Hitachi joint venture factories and began new license and supply agreements with Hitachi Construction Machinery (Hitachi). The two companies also ended their joint venture manufacturing and marketing agreements. The former joint venture factories will continue to manufacture Deere-branded construction excavators and forestry equipment. Through a new supply agreement with Hitachi, Deere will continue to offer a full portfolio of excavators. Deere’s marketing arrangement for Hitachi-branded construction excavators and mining equipment in the Americas has ended with Hitachi assuming distribution and support of these products. John Deere dealers may continue to support their existing field population of Hitachi-branded excavators.

With the completion of this acquisition, the Company now has complete control over its excavator design, product, and feature updates, making it possible to more rapidly respond to customer requirements and integrate excavators with other construction products in the John Deere product portfolio. The Company can leverage technology developed for other product lines and production systems across the enterprise and extend those advanced solutions to Deere-designed excavators, strengthening the entire product portfolio.

The total invested capital follows:


	February 28
	2022
Cash consideration for factories	$	205
Cash consideration for license agreement		70
Deferred consideration		271
Total purchase price consideration		546
Less: Cash obtained		(187)
Less: Settlement of intercompany balances		(113)
Net purchase price consideration		246
Fair value of previously held equity investment		444
Total invested capital	$	690

The total purchase price consideration includes deferred consideration that will be paid as the Company purchases Deere-branded excavators, components, and service parts from Hitachi under the new supply agreement with a duration that ranges from 5 to 30 years. The deferred consideration represents the price increases under the new supply arrangement. Excluding inflation adjustments, the price increases for products to be acquired by the Company from Hitachi are as much as 27 percent higher than the prior supply arrangement. At July 31, 2022, the net present value of the deferred consideration was approximately $252 million, subject to changes in market conditions, developments in the Company’s product offerings, and sourcing changes. The Company financed the acquisition and associated transaction expenses from cash on hand. The fair value of the previously held equity investment created a non-cash gain of $326 million (pretax and after-tax), which was recorded in Other income and included in the construction and forestry segment’s operating profit.

Prior to the acquisition, the Company purchased Deere and Hitachi-branded excavators, components, and parts from the Deere-Hitachi joint venture factories for sale to John Deere dealers. These purchases were included in Cost of sales, while the sales to John Deere dealers were included in Net sales. Cost of sales also included profit-sharing payments to Hitachi in accordance with the previous marketing agreements. Following the acquisition, Net sales will only include the sale of Deere-branded excavators to John Deere dealers, while Cost of sales will reflect market pricing to purchase and manufacture excavators, as well as the related components and service parts.

The preliminary fair values assigned to the assets and liabilities of the acquired factories in millions of dollars, which are based on information as of the acquisition date and available at July 31, 2022, follows:


	February 28
	2022
Other receivables	$	29
Inventories		286
Property and equipment		182
Goodwill		527
Other intangible assets		70
Deferred income taxes		56
Total assets	$	1,150

Accounts payable and accrued expenses	$	297
Long-term borrowings		163
Total liabilities	$	460

The identifiable intangible assets were related to technology with a 10-year amortization period. The goodwill is not deductible for income tax purposes. The excavator factories will be reported in the Company’s construction and forestry segment.

Other Acquisitions

In the first nine months of the year, the Company acquired AgriSync Inc. (AgriSync), a technology service provider; an 80 percent stake in both SureFire Ag Systems, Inc. and SureFire Electronics, LLC (together SureFire), which design and manufacture liquid fertilizer application and spray tendering systems; a 40 percent equity method investment in GUSS Automation LLC (GUSS Automation), a pioneer in semi-autonomous orchard and vineyard sprayers; and LGT, LLC (Light), which specializes in depth sensing and camera-based perception for autonomous vehicles. The combined cost of the acquisitions was $124 million, net of cash acquired of $3 million. The preliminary asset and liability fair values at the respective acquisition dates follow in millions of dollars:


	July 31
	2022
Trade accounts and notes receivable	$	8
Inventories		8
Property and equipment		4
Goodwill		53
Other intangible assets		21
Other assets		50
Total assets	$	144

Accounts payable and accrued expenses	$	6
Deferred income taxes		5
Total liabilities	$	11

Redeemable noncontrolling interest	$	9

The identifiable intangible assets were related to trade name, technology, and customer relationships with a weighted average amortization period of 7 years. AgriSync will be allocated amongst the Company’s production and precision agriculture, small agriculture and turf, and construction and forestry segments, while SureFire and Light will be allocated to the production and precision agriculture segment. GUSS Automation will be assigned to the small agriculture and turf segment.

For all acquisitions, the goodwill was the result of future cash flows and related fair value exceeding the fair value of the identified assets and liabilities. Presenting the pro forma results of operations as if these acquisitions had occurred at the beginning of the current or comparative fiscal year would not differ significantly from the reported results.

(20) Special Items

2022 Special Items

Impact of Events in Russia / Ukraine

The events in Russia / Ukraine have resulted in the Company suspending shipments of machines and service parts to Russia. The Company manufactures and markets equipment in Russia / Ukraine, and provides financial services in Russia. As of July 31, 2022, the Company’s net exposure in Russia / Ukraine was approximately $436 million. Net sales from the Company’s Russian operations represented 2 percent of consolidated annual Net sales from 2017 to 2021. The Ukraine operations were not material to the consolidated financial statements.

The suspension of shipments to Russia will reduce forecasted revenue for the region, which makes it probable future cash flows will not cover the carrying value of certain assets. The accounting consequences during the second quarter of 2022 were impairments of most long-lived assets, an increase in reserves of certain financial assets, and an accrual for various contractual uncertainties. No significant reserves were established on trade receivables or complete goods inventory, as the Company continues to experience strong payment performance and requires prepayment of existing inventories. During the third quarter of 2022, the Company initiated a voluntary employee-separation program, updated reserves on assets, and reassessed accruals for contractual uncertainties. The Russian government has imposed certain restrictions on companies’ abilities to repatriate or remit cash from their Russian-based operations to locations outside of Russia. Cash in excess of what is required to fund operations in Russia has been reclassified as restricted and recorded in Other assets. The Company continues to closely monitor all financial risks to its operations in the region. A summary of the reserves, impairments, voluntary-separation costs, and contingent liabilities recorded in the first nine months of 2022 follows in millions of dollars:


	Nine Months Ended July 31, 2022
	PPA		SAT		CF		FS		Total
2022 Expense:
Inventory reserve – Cost of sales	$	8			$	4			$	12
Fixed asset impairment – Cost of sales		30				11				41
Intangible asset impairment – Cost of sales						28				28
Allowance for credit losses – Financing receivables – SA&G expenses							$	32		32
Voluntary-separation program – Cost of sales		1								1
Voluntary-separation program – SA&G expenses		3				4		1		8
Contingent liabilities – Other operating expenses		3	$	1		1				5
Total Russia/Ukraine events pretax expense	$	45	$	1	$	48	$	33		127

Net tax impact										(8)
Total Russia/Ukraine events after-tax expense									$	119

Gain on Previously Held Equity Investment

On February 28, 2022, the Company acquired full ownership of three former Deere-Hitachi joint venture factories and began new license and supply agreements with Hitachi. The fair value of the previous equity investment resulted in a non-cash gain of $326 million (pretax and after-tax; see Note 19).

UAW Collective Bargaining Agreement

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 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 6 for more information on the U.S. hourly plan remeasurement.

2829

~~contract. The lump sum payment was expensed in~~2021 Special Items

In the ~~first~~third quarter of ~~2022. The~~2021, 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.~~

sold a closed factory that previously produced small agricultural equipment in China, resulting in a $27 million pretax gain. 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.

Production & Precision Ag

Small Ag & Turf

Construction & Forestry

Total

2022 Expense:

UAW ratification bonus – Cost of sales

$
53

$
9

$
28

$
90

2021 Expense (benefit):

Long-lived asset impairments – Cost of sales

$
5

$
3

$
42

$
50

Brazil indirect tax – Cost of sales

(53)

(5)

(58)

Total expense (benefit)

$
(48)

$
3

$
37

$
(8)

Quarter over quarter change

$
101

$
6

$
(9)

$
98

See Note 1716 for fair value measurement information.

~~(21)~~ S~~ubsequent Events~~

~~On February 7, 2022,~~The following table summarizes the ~~Company acquired a majority ownership~~operating profit impact, in ~~Kreisel Electric, Inc. (Kreisel), a battery technology provider based in Austria. The transaction includes an option to purchase~~millions of dollars, of the ~~remaining ownership interest in Kreisel in 2027. The initial cash outlay was €239 million, consisting of €221 million in consideration~~special items recorded for the ~~acquired equity interests~~three months and ~~€18 million to reduce the option price. The payment was financed from cash on hand,~~nine months ended July 31, 2022 and will primarily be allocated to 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.August 1, 2021:

~~On February 23, 2022, the Company’s Board of Directors declared a quarterly dividend of $1.05 per share payable May 9, 2022, to stockholders of record on March 31, 2022.~~


	Three Months										Nine Months
	PPA		SAT		CF		FS		Total		PPA		SAT		CF		FS		Total
2022 Expense (benefit):
Gain on remeasurement of equity investment – Other income (see Note 19)															$	(326)			$	(326)
Total Russia/Ukraine events pretax expense	$	(1)			$	1	$	7	$	7	$	45	$	1		48	$	33		127
UAW ratification bonus – Cost of sales												53		9		28				90
Total expense (benefit)		(1)				1		7		7		98		10		(250)		33		(109)

2021 Expense (benefit):
Gain on sale – Other income			$	(27)						(27)				(27)						(27)
Long-lived asset impairments – Cost of sales												5		3		42				50
Brazil indirect tax – Cost of sales												(53)				(5)				(58)
Total expense (benefit)				(27)						(27)		(48)		(24)		37				(35)

Period over period change	$	(1)	$	27	$	1	$	7	$	34	$	146	$	34	$	(287)	$	33	$	(74)

2930

~~Item~~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~~Company generates net sales primarily from the sale of equipment to John Deere dealers and distributors. The ~~equipment operations manufacture~~Company manufactures and ~~distribute~~distributes a full line of agricultural equipment; a variety of commercial and consumer equipment; and a broad range of equipment for construction, roadbuilding, and forestry. These operations are managed through the production and precision agriculture, small agriculture and turf, and construction and forestry operating segments. The Company’s financial services segment primarily ~~provide~~provides 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.dealers.

Trends and Economic Conditions for Fiscal Year 2022

Industry sales of large agricultural machinery in the U.S. and Canada are ~~forecasted~~expected to be up 20about 15 percent. Industry sales of ~~turf~~small agriculture and ~~utility~~turf equipment in the U.S. and Canada are expected to be flat. Industry sales of agricultural machinery in Europe are ~~forecasted~~forecast to be ~~about 5 percent higher.~~flat. In South America, industry sales of tractors and combines are projected to ~~increase 5~~be up about 10 to 1015 percent. Asia industry sales of agricultural machinery are ~~forecasted~~forecast to be ~~flat.~~down moderately. Construction equipment industry sales in the U.S. and Canada ~~for 2022~~ are expected to increase ~~5 to~~about 10 percent, while compact construction equipment industry sales in the U.S. and Canada are anticipated to be flat to ~~up about~~down 5 percent. Forestry global industry equipment sales are expected to be 10flat to ~~15 percent higher.~~down 5 percent. Global ~~industry~~ roadbuilding equipment industry sales are forecasted to be flat to up 5 ~~to 10~~ percent. Net income for the Company’s financial services operations is expected to be slightly lower than fiscal year 2021 due to a higher provision for credit losses, ~~lower gains on operating lease residual values,~~less-favorable financing spreads, and higher selling, ~~general,~~administrative, and ~~administrative~~general 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~~inflationary pressures, the ongoing pandemic, capital market disruptions, changes in demand and pricing for new and used equipment, and the other items discussed in the ~~“Safe Harbor Statement”~~“Forward-Looking Statements” below. Significant fluctuations in foreign currency exchange rates, volatility in the ~~price~~prices of many commodities, and supply chain disruptions could also impact the Company’s results.

The Company’s ~~first~~third quarter ~~performance was noteworthy given production issues following the delayed ratification of the UAW contract in late November as well as persistent challenges posed by the~~results reflect increased factory output and shipments to customers while supply chain pressures endure. Also during the third quarter, the Company experienced higher costs and ~~pandemic. These factors contributed to higher~~ production ~~costs. Demand for agriculture and construction equipment is expected to continue to benefit~~inefficiencies from ~~strong fundamentals.~~these supply chain pressures. The Company ~~continues~~is confident favorable conditions will continue into fiscal year 2023 based on strong underlying fundamentals and customer responses to ~~work closely with key~~early-order programs. The Company’s factories and suppliers ~~to manage~~are also preparing for higher levels of customer demand in 2023. Additionally, the Company believes the smart industrial operating model and recently announced leap ambitions will create value for customers through the ~~dynamic environment~~Company’s advanced technologies and ~~enable~~solutions.

Impact of Events in Russia / Ukraine

The events in Russia / Ukraine have impacted the ~~Company’s dealers and customers to deliver food production and critical infrastructure. The Company remains committed, above all else, to safeguarding the health~~safety, welfare, and well-being of ~~its employees.~~

~~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

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~~Company’s employees 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

region. The ~~cost~~Company’s top priority is to support and maintain close communication with its affected teams, providing necessary resources when possible. The Company has suspended shipments of ~~sales ratio increased due~~machines and service parts to ~~higher production costs, partially offset by price realization. Research~~Russia. These events are impacting business continuity, liquidity, 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 costsasset values for the Company’s operations in Russia / Ukraine (see Note 7)20). ~~The provision for income taxes was lower as a result of reduced pretax income.~~

2022 Compared with 2021


	Three Months Ended					Nine Months Ended
Deere & Company	July 31		August 1		%	July 31		August 1		%
(In millions of dollars, except per share amounts)	2022		2021		Change	2022		2021		Change
Net sales and revenues	$	14,102	$	11,527	+22	$	37,041	$	32,697	+13
Net income attributable to Deere & Company		1,884		1,667	+13		4,885		4,680	+4
Diluted earnings per share		6.16		5.32			15.88		14.86

Results for the third quarter and year-to-date periods of 2022 and 2021 were impacted by special items. More information on these special items is provided in Note 20. The discussion on Net sales and operating profit is included in the Business Segment Results below.

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%


	Three Months Ended					Nine Months Ended
Deere & Company	July 31		August 1		%	July 31		August 1		%
(In millions of dollars)	2022		2021		Change	2022		2021		Change
Cost of sales to net sales		73.2%		72.7%			74.9%		72.3%

Other income	$	256	$	289	-11	$	1,035	$	768	+35
Research and development expenses		481		394	+22		1,336		1,137	+18
Selling, administrative and general expenses		959		841	+14		2,672		2,448	+9
Other operating expenses		316		324	-2		954		1,033	-8
Provision for income taxes		654		491	+33		1,364		1,328	+3

~~Production~~The cost of sales to net sales ratio increased in the third quarter and ~~precision agriculture sales for~~ the ~~quarter increased due to price realization and higher shipment volumes. Operating profit declined~~first nine months of fiscal 2022 primarily due to higher production costs ~~and an unfavorable sales mix. These items were~~ partially offset by price ~~realization and higher shipment volumes. Affecting~~realization. Other income decreased in the ~~most recent~~third quarter ~~was the UAW contract ratification bonus, while the~~due to a prior period ~~was affected by~~gain on sale of a ~~favorable indirect tax ruling~~closed factory in ~~Brazil.~~

China. Other income increased in the first nine months due to a non-cash gain on the remeasurement of the previously held equity investment in the Deere-Hitachi joint venture. Research and development expenses were higher for both periods due to continued focus on developing and incorporating technology solutions. Selling, administrative, and general expenses increased in the third quarter and the first nine months primarily due to a higher provision for credit losses, including higher reserves due to the events in Russia / Ukraine, as well as a higher merit pay increase due to inflationary conditions. Other operating expenses decreased in the third quarter and the first nine months primarily due to lower depreciation of equipment on operating leases, while lower retirement benefit costs impacted the first nine months. The provision for income taxes increased in the third quarter due to higher pretax income and unfavorable discrete income-tax adjustments.

Three Months Ended

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%

Business Segment Results


	Three Months Ended					Nine Months Ended
Production and Precision Agriculture	July 31		August 1		%	July 31		August 1		%
(In millions of dollars)	2022		2021		Change	2022		2021		Change
Net sales	$	6,096	$	4,250	+43	$	14,568	$	11,848	+23
Operating profit		1,293		906	+43		2,646		2,557	+3
Operating margin		21.2%		21.3%			18.2%		21.6%
Price realization					+15					+12
Currency translation					-4					-2

~~Small~~Production and precision agriculture ~~and turf~~ sales increased for the quarter ~~improved as~~due to higher shipment volumes and price realization, ~~more than~~partially offset ~~lower shipment volumes.~~by the unfavorable impact of currency translation. Operating profit ~~decreased~~rose primarily due to price realization and higher ~~production costs and lower sales~~shipment volumes / ~~unfavorable~~ sales mix. These items were partially offset by higher production costs, higher selling, administrative, and general expenses, increased research and development expenses, and the unfavorable effects of foreign currency exchange.

Sales for the first nine months increased mainly as a result of higher shipment volumes and price realization. Operating profit for the first nine months increased primarily resulting from price realization, higher sales volume / mix, and the favorable effects of foreign currency exchange. Partially offsetting these factors were higher production costs, higher research and development and selling, administrative, and general expenses, the UAW contract ratification bonus, and the impact of impairments related to events in Russia / Ukraine. The prior year was also impacted by a favorable indirect tax ruling in Brazil.


	Three Months Ended					Three Months Ended					Nine Months Ended
Construction and Forestry	January 30		January 31
Small Agriculture and Turf						July 31		August 1		%	July 31		August 1		%
(In millions of dollars)	2022		2021		% Change	2022		2021		Change	2022		2021		Change
Net sales	$	2,544	$	2,467	+3	$	3,635	$	3,147	+16	$	9,836	$	9,051	+9
Operating profit		272		268	+1		552		583	-5		1,443		1,699	-15
Operating margin		10.7%		10.9%			15.2%		18.5%			14.7%		18.8%
Price realization										+10					+8
Currency translation										-5					-3

Small agriculture and turf sales for the quarter increased due to higher shipment volumes and price realization partially offset by the unfavorable impact of currency translation. Operating profit decreased primarily due to higher production costs, higher selling, administrative, and general expenses, increased research and development expenses, and the unfavorable effects of foreign currency exchange. These items were partially offset by price realization and higher sales volumes. Results for the prior period included a gain on the sale of a closed factory in China that had produced small agricultural equipment.

Sales for the first nine months increased mainly as a result of price realization and higher shipment volumes, partially offset by the unfavorable impact of currency translation. Operating profit for the first nine months decreased primarily resulting from higher production costs and higher selling, administrative, and general and research and development expenses. Partially offsetting these factors was price realization. Results for the prior period included a gain on the sale of a closed factory in China that had produced small agricultural equipment.


	Three Months Ended					Nine Months Ended
Construction and Forestry	July 31		August 1		%	July 31		August 1		%
(In millions of dollars)	2022		2021		Change	2022		2021		Change
Net sales	$	3,269	$	3,016	+8	$	9,161	$	8,562	+7
Operating profit		514		463	+11		1,599		1,220	+31
Operating margin		15.7%		15.4%			17.5%		14.2%
Price realization					+10					+9
Currency translation					-4					-3

Construction and forestry sales moved higher for the quarter primarily due to price realization and higher shipment volumes. Last year Wirtgen’s one-month reporting lag was eliminated resulting in four months of Wirtgen activity in the first quarter of 2021, which increased “Net sales” by $270 million.realization. Operating profit ~~was higher mainly~~increased due to price realization, partially offset by higher production costs.

The segment’s nine-month sales also increased due to price realization partially offset by the unfavorable impact of currency translation. The first nine-month’s operating profit moved higher mainly due to price realization and a non-cash gain on the remeasurement of the previously held equity investment in the Deere-Hitachi joint venture, partially offset by higher production costs and ~~lower sales /~~ unfavorable ~~sales~~product mix. ~~The current period was impacted by the UAW contract ratification bonus. Results last year included impairment of long-lived assets.~~

Three Months Ended

Financial Services

January 30

January 31

(In millions of dollars)

2022

2021

% Change

Revenue (including intercompany)

$
916

$
934

-2

Interest expense

158

188

-16

Net income

231

204

+13


	Three Months Ended					Nine Months Ended
Financial Services	July 31		August 1		%	July 31		August 1		%
(In millions of dollars)	2022		2021		Change	2022		2021		Change
Revenue (including intercompany)	$	984	$	963	+2	$	2,851	$	2,851
Interest expense		223		169	+32		493		539	-9
Net income		209		227	-8		649		654	-1

While the average balance of receivables financed increased 9 percent in the third quarter and ~~leases financed was 6~~8 percent ~~higher~~ in the first ~~three~~nine months of 2022 compared with the same ~~period~~periods last year, revenues increased 2 percent in the third quarter and were unchanged in the first nine months. Lower operating lease revenue ~~decreased~~partially offset the higher average receivable balances in both periods. Interest expense increased in the third quarter due to ~~lower~~higher average ~~interest rates.~~borrowing rates and higher average borrowings. Interest expense decreased ~~16 percent~~ in the first ~~quarter~~nine months of 2022 primarily as a result of ~~lower~~non-designated derivative gains, partially offset by higher average ~~borrowing rates.~~borrowings. Net income ~~increased~~decreased for the quarter mainly due to unfavorable discrete income-tax adjustments, a higher provision for credit losses, and lower gains on operating lease residual values. These items were partially offset by income earned on a higher average portfolio. Results for the first nine months decreased slightly due to a higher provision for credit losses, partially offset by income earned on higher average portfolio ~~balances and improvement on operating lease residual values.~~balances.

Critical Accounting Estimates

See the Company’s critical accounting estimates discussed in ~~the~~ Management’s Discussion and Analysis of the most recently filed ~~annual report~~Annual Report on Form 10-K. There have been no material changes to these ~~policies.~~estimates.

CAPITAL RESOURCES AND LIQUIDITY

~~The discussion~~Sources of ~~capital resources~~Liquidity, including Key Metrics 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 partially offset by changes in working capital. Cash inflows from investing activities were $579 million in the first three months of 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. This was partially offset by purchases of property and equipment. Negative cash flows from financing activities were $933 million in the first three months of 2021. Cash, cash equivalents, and restricted cash decreased $108 million during the first three months of 2021.Balance Sheet Data

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 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,~~Company operates in multiple industries, which have different funding requirements. The production and ~~January 31, 2021 was $2,135 million, $2,230 million,~~precision agriculture, small agriculture and ~~$1,346 million, respectively, while~~turf, and construction and forestry segments are capital intensive and are subject to seasonal variations in financing requirements for inventories and certain receivables from dealers. The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios. The key metrics are provided in the ~~total~~following table, in millions of dollars:


	July 31		October 31		August 1
	2022		2021		2021
Cash, cash equivalents, and marketable securities	$	5,078	$	8,745	$	8,207

Trade accounts and notes receivable – net		6,696		4,208		5,268
Ratio to prior 12 month’s net sales		15%		11%		14%

Inventories		9,121		6,781		6,410
Ratio to prior 12 month’s cost of sales		28%		23%		23%

Unused credit lines		1,957		5,770		6,131

Financial Services:
Ratio of interest-bearing debt to stockholder’s equity		8.2 to 1		7.8 to 1		7.6 to 1

Due to the uncertainties around the COVID-19 pandemic, the Company temporarily increased its cash, cash equivalents, and marketable securities ~~position was $5,207~~target beginning in March 2020. The reduction in unused credit lines compared to both prior periods relates to an increase in commercial paper outstanding to fund growth in the receivable portfolio. The Company expects to generate excess operating cash flows in 2022, as evidenced by the common stock dividend increase declared on May 25, 2022, and $2,477 million ~~$8,745~~of share repurchases during the first nine months of 2022. As the underlying fundamentals remain strong in the Company’s operating segments, the Company expects to generate long-term cash flows.

There have been no material changes to the contractual and other cash requirements identified in the Company’s most recently issued Annual Report on Form 10-K.

Cash Flows


	Nine Months Ended
	July 31, 2022		August 1, 2021
Net cash provided by operating activities	$	418	$	4,314
Net cash used for investing activities		(4,430)		(3,102)
Net cash provided by (used for) financing activities		515		(851)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(143)		106
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	(3,640)	$	467

Cash inflows from operating activities in the first nine months of 2022 were $418 million. This resulted mainly from net income adjusted for non-cash provisions, partially offset by a working capital change and a $1,000 million voluntary contribution to a U.S. OPEB plan. Cash outflows from investing activities were $4,430 million in the first nine months of 2022. The primary drivers were growth in the retail customer receivable portfolio; purchases of property and ~~$7,629~~equipment; acquisitions of businesses, net of cash acquired; and a change in collateral on derivatives – net. Cash inflows from financing activities were $515 million ~~respectively.~~in the first nine months of 2022, as higher external borrowings of $3,970 million were mainly offset by repurchases of common stock and dividends paid. Cash, cash equivalents, and restricted cash decreased $3,640 million during the first nine months of this year as the Company lowered its targeted cash balance, as previously noted.

Cash and Marketable Securities Held by Foreign Subsidiaries. The total cash and cash equivalents and marketable securities held by foreign subsidiaries was ~~$3,047~~$2,713 million, $5,817 million, and ~~$4,956~~$5,690 million at ~~January 30,~~July 31, 2022, October 31, 2021, and ~~January 31,~~August 1, 2021, respectively. During the first ~~quarter~~nine months of 2022, the Company’s foreign subsidiaries returned ~~$3,500~~$4,460 million of cash and cash equivalents to the U.S.

Trade Accounts and Notes Receivable. Trade accounts and notes receivable primarily arise from sales of goods to dealers. Trade receivables increased $2,488 million during the first nine months of 2022, primarily due to a seasonal increase and higher overall demand, partially offset by the effect of foreign currency translation. These receivables increased $1,428 million, compared to a year ago, primarily due to higher overall demand partially offset by the effect of foreign currency translation. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 1 percent at July 31, 2022, 1 percent at October 31, 2021, and 2 percent at August 1, 2021.

Financing Receivables and Equipment on Operating Leases. These receivables and leases primarily consist of retail notes originated in connection with financing of new and used equipment, operating leases, revolving charge accounts, sales-type and direct financing leases, and wholesale notes. Financing receivables and equipment on operating leases increased $1,305 million during the first nine months of 2022 and increased $2,919 million in the past 12 months primarily due to higher equipment sales. Total acquisition volumes of financing receivables and equipment on operating leases were 2 percent higher in the first nine months of 2022, compared with the same period last year, as volumes of revolving charge accounts, retail notes, and operating leases were higher, while volumes of financing leases and wholesale notes were lower.

Inventories. Inventories increased by $2,340 million during the first nine months of 2022 and increased by $2,711 million compared to a year ago. The higher levels in both periods are due to increased overall demand and the impact of supply chain disruptions, partially offset by foreign currency translation.

Property and Equipment. Property and equipment cash expenditures in the first nine months of 2022 were $596 million, compared with $492 million in the same period last year. Capital expenditures in 2022 are estimated to be approximately $1,100 million.

Borrowings. Total external borrowings have changed generally corresponding with the level of the receivable and the lease portfolio, as well as the level of cash and cash equivalents.

John Deere Capital Corporation (Capital Corporation), a U.S. financial services subsidiary, has a revolving warehouse facility to utilize bank conduit facilities to securitize retail notes (see Note 9). The facility was renewed in November 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, Capital Corporation repurchased $511 million of outstanding short-term securitization borrowings in November 2021, in addition to the normal payments collected on the retail notes. At July 31, 2022, $891 million of securitization borrowings was outstanding under the facility. At the end of the contractual revolving period, unless the banks and Capital Corporation agree to renew, Capital Corporation would liquidate the secured borrowings over time as payments on the retail notes are collected.

In the first nine months of 2022, the Company issued $2,669 million and retired $2,343 million of retail note securitization borrowings, which are presented in Increase in total short-term borrowings on the statements of consolidated cash flows. In April 2022, the Company issued $600 million of sustainability-linked medium-term notes with an initial interest rate of 3.35 percent, which are due in 2029. This transaction supports the Company’s commitment to environmental sustainability by linking financing to the achievement of its ambitious and comprehensive environmental, social, and governance (ESG) targets. Failure to meet the stated sustainability performance target will result in a 25-basis point increase to the interest rate payable on the 2029 notes from and including April 2026.

Lines of Credit. The Company also has access to bank lines of credit with various banks throughout the world. Worldwide lines of credit totaled ~~$8,519~~$8,427 million at ~~January 30,~~July 31, 2022, ~~$5,865~~$1,957 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 30,~~July 31, 2022 was a 364-day credit facility agreement of $3,000 million expiring in ~~fiscal April 2022.~~the second quarter of 2023. In addition, total credit lines included long-term credit facility agreements of $2,500 million expiring in ~~fiscal April 2025,~~the second quarter of 2026 and $2,500 million expiring in ~~fiscal March 2026. The Company expects to extend~~ the ~~terms~~second quarter of ~~these credit facilities.~~2027. These credit agreements require ~~John Deere~~ Capital Corporation ~~(Capital Corporation)~~and other parts of the Company to maintain ~~its consolidated ratio of earnings to fixed charges at not less than 1.05 to 1 for each fiscal quarter~~certain performance metrics 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 30, 2022 was $15,452 million. Alternatively under this provision, the equipment operations had the capacity to incur additional debt of $28,697 million at January 30, 2022.liquidity targets. All of these ~~requirements of the~~ credit ~~agreements~~agreement requirements 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~~

Subsequent Events

On August 16, 2022, the U.S. federal government enacted the Inflation Reduction Act of ~~goods to independent dealers. Trade receivables increased $647 million during the first three months of 2022, mostly due to~~2022. The bill contains numerous tax provisions, including a seasonal increase. These receivables decreased $182 million, compared to a year ago. The ratios of 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. Production and precision agriculture trade receivables decreased $218 million, small agriculture and turf trade receivables decreased $220 million, and construction and forestry trade receivables increased $256 million, compared to a year ago.corporate minimum tax. 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, and January 31, 2021, 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. Funds provided from operations are supplemented by external financing sources as needed.

~~Cash used for operating activities~~Company has not yet completed its analysis of the ~~equipment operations,~~newly enacted tax legislation. At this point, however, this legislation is not expected to have a material impact on the Company’s financial statements.

On August 31, 2022, the Company’s Board of Directors declared a quarterly dividend of $1.13 per share payable November 8, 2022 to stockholders of record on September 30, 2022.

Forward-Looking Statements

Certain statements contained herein, including ~~intercompany cash flows,~~ in the ~~first three months of 2022 was $2,488 million. This resulted largely from a change~~section entitled “Overview” relating to future events, expectations, and trends constitute “forward-looking statements” as defined 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. Cash inflows from net income adjusted for non-cash provisions were partially offset by changes in working capital. Cash, cash equivalents, and restricted cash decreased $71 million in the first three months of 2021.

Trade receivables held by the equipment operations decreased $159 million during the first three months of 2022 and 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 $1,154 million during the first three months, primarily due to a seasonal increase. Inventories increased $1,979 million, compared to a year ago, 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.

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. The ratios of debt to total capital (total interest-bearing debt and stockholders’ equity) were 36 percent, 36 percent, and 43 percent at January 30, 2022, October 31, 2021, and January 31, 2021, respectively.

Property and equipment cash expenditures for the equipment operations in the first three months of 2022 were $193 million, compared with $154 million in the same period last year. Capital expenditures for the equipment operations in 2022 are estimated to be approximately $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, cash equivalents, and restricted cash increased $36 million in the first three months of 2022 and decreased $37 million in the first three months of 2021.

Receivables and leases held by the financial services operations consist of retail notes originated in connection with financing of new and used equipment, operating leases, trade receivables, revolving charge accounts, sales-type and direct financing leases, and wholesale notes. Trade and financing receivables and equipment on operating leases decreased $1,149 million during the first quarter of 2022, primarily due to seasonal payments, and increased $2,490 million in the past 12 months. Total acquisition volumes of receivables (excluding trade and wholesale) and leases were 3 percent higher in the first three months of 2022, compared with the same period last year, as volumes of operating and finance leases, retail notes, and revolving charge accounts were higher compared to 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. 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.

Capital Corporation has a revolving warehouse facility to utilize bank conduit facilities to securitize retail notes (see Note 10). 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 repurchased $511 million of outstanding short-term securitization borrowings in November 2021, in addition to the normal payments collected on the retail notes.

In the first three months of 2022, the financial services operations retired $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 2022, the financial services operations issued $2,335 million and retired $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~~”1995 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~~all lines of ~~business,~~the Company’s operations generally while others could more heavily affect ~~all~~a particular line of business.

Forward-looking statements are based on currently available information and current assumptions, expectations, and projections about future events and should not be relied upon. Except as required by law, the Company expressly disclaims any obligation to update or revise its forward-looking statements. 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 ~~businesses.~~

~~The Company’s agricultural equipment businesses are subject to a number of uncertainties, including certain factors that affect farmers’ confidence~~most recent Annual Report on Form 10-K 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 impactsubsequent Quarterly Reports 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;Form 10-Q).

3738

~~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~~Affecting All Lines 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.Business

All of the Company’s businesses and ~~its~~their results are affected by general ~~economic~~global macroeconomic conditions, including but not limited to inflation, including rising costs for materials used in our production, slower growth or recession, higher interest rates and currency fluctuations which could adversely affect the U.S. dollar and customer confidence, and customer access to capital and overall demand for our products; delays or disruptions in the ~~global markets and industries in which the Company operates; customer confidence in general economic conditions;~~Company’s supply chain, including work stoppages or disputes by suppliers with their unionized labor; shipping delays; 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;~~conflicts, including the current military conflict between Russia and Ukraine; natural disasters; and the spread of major epidemics or pandemics (including the ~~COVID~~COVID-19 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-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~~COVID-19 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 our access to or terms of future 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, and demand for ~~equipment, and Company operations and results.~~equipment. 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,~~financial condition, 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 orand 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;~~regulations (including those in place for Russia); and compliance with evolving U.S. and foreign laws when expanding to new markets and ~~otherwise; and actions by other regulatory bodies.~~otherwise.

Other factors that could materially affect the Company’s results and operations 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;~~rights; 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 so-called right to repair or right to ~~modify;~~modify legislation; 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 or failure of new product initiatives or business strategies; changes in ~~customer~~ product preferences, sales mix, and ~~sales mix;~~take rates of products and life cycle solutions; 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; the inability to deliver precision technology and agricultural solutions to customers; 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;~~acquired businesses.

Production & Precision Agriculture and Small Agriculture & Turf Operations

The Company’s agricultural equipment operations 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; soil conditions; harvest yields; prices for commodities and livestock; availability and cost of fertilizer; availability of transport for crops; the ~~failure~~ growth and sustainability of non-food uses for some crops (including ethanol and biodiesel production); real estate values; available acreage for farming; changes in government farm programs and policies; changes in and effects of crop insurance programs; changes in environmental regulations and their impact on farming practices; animal diseases and their effects on poultry, beef, and pork consumption and prices on livestock feed demand; and crop pests and diseases.

Production and Precision Agriculture Operations

The production and precision agriculture operations rely 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 ~~delay in closing or realizing anticipated benefits~~sustainability outcomes;

availability of ~~acquisitions, joint ventures, or divestitures;~~technological innovations; speed of research and development; effectiveness of partnerships with third parties; and the ~~inability~~dealer channel’s ability to ~~deliver~~support and service precision technology solutions.

Small Agriculture and ~~agricultural solutions to customers;~~Turf Equipment

Factors affecting the ~~implementation~~Company’s small agriculture and turf equipment operations include customer profitability; consumer purchasing preferences; housing starts and supply; infrastructure investment; spending by municipalities and golf courses; and consumable input costs.

Construction and Forestry

Factors affecting the Company’s construction and forestry equipment operations include real estate and housing prices; the number of housing starts; commodity prices such as oil and gas; the ~~smart industrial operating model~~levels of public and ~~other organizational changes; the failure to realize anticipated savings or benefits~~non-residential construction; and investment in infrastructure. Prices for pulp, paper, lumber, and structural panels affect sales 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.forestry equipment.

John Deere Financial

The liquidity and ongoing profitability of John Deere Capital Corporation and the Company’s 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 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 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 the Company’s subsequent quarterly reports on Form 10-Q).

Supplemental Consolidating Information

The supplemental consolidating data presented on the subsequent pages is presented for informational purposes. The equipment operations ~~represents~~represent the enterprise without financial services. The equipment operations ~~includes~~include 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”~~equipment operations and ~~“financial services”~~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~~selling equipment, service parts, and technology solutions to dealers and 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~~These two businesses are capitalized differently and have separate performance metrics. The supplemental consolidating data is also used by management due to these differences.

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DEERE & COMPANY	DEERE & COMPANY																		DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA	SUPPLEMENTAL CONSOLIDATING DATA																		SUPPLEMENTAL CONSOLIDATING DATA
STATEMENTS OF INCOME	STATEMENTS OF INCOME																		STATEMENTS OF INCOME
For the Three Months Ended January 30, 2022 and January 31, 2021
For the Three Months Ended July 31, 2022 and August 1, 2021																			For the Three Months Ended July 31, 2022 and August 1, 2021
(In millions of dollars) Unaudited	(In millions of dollars) Unaudited																		(In millions of dollars) Unaudited
		EQUIPMENT				FINANCIAL														EQUIPMENT				FINANCIAL
		OPERATIONS¹				SERVICES				ELIMINATIONS				CONSOLIDATED						OPERATIONS				SERVICES				ELIMINATIONS				CONSOLIDATED
		2022		2021		2022		2021		2022		2021		2022		2021				2022		2021		2022		2021		2022		2021		2022		2021
Net Sales and Revenues
Net sales		$	8,531	$	8,051									$	8,531	$	8,051			$	13,000	$	10,413									$	13,000	$	10,413
Finance and interest income			34		32	$	829	$	862	$	(63)	$	(60)		800		834	²			60		33	$	905	$	867	$	(119)	$	(75)		846		825	¹
Other income			217		220		87		72		(66)		(65)		238		227	³			228		263		79		96		(51)		(70)		256		289	²
Total			8,782		8,303		916		934		(129)		(125)		9,569		9,112				13,288		10,709		984		963		(170)		(145)		14,102		11,527

Costs and Expenses
Cost of sales			6,696		5,806						(1)		(1)		6,695		5,805	⁴			9,512		7,574						(1)				9,511		7,574	³
Research and development expenses			402		366										402		366				481		394										481		394
Selling, administrative and general expenses			657		653		126		117		(2)		(1)		781		769	⁴			805		702		156		141		(2)		(2)		959		841	³
Interest expense			90		95		158		188		(19)		(12)		229		271	⁵			109		92		223		169		(36)		(17)		296		244	⁴
Interest compensation to Financial Services			44		48						(44)		(48)					⁵			83		58						(83)		(58)					⁴
Other operating expenses			39		67		335		369		(63)		(63)		311		373	⁶			47		32		317		360		(48)		(68)		316		324	⁵
Total			7,928		7,035		619		674		(129)		(125)		8,418		7,584				11,037		8,852		696		670		(170)		(145)		11,563		9,377

Income before Income Taxes			854		1,268		297		260						1,151		1,528				2,251		1,857		288		293						2,539		2,150
Provision for income taxes			182		252		68		56						250		308				574		425		80		66						654		491

Income after Income Taxes			672		1,016		229		204						901		1,220				1,677		1,432		208		227						1,885		1,659
Equity in income of unconsolidated affiliates			1		4		2								3		4
Equity in income (loss) of unconsolidated affiliates																					(1)		8		1										8

Net Income			673		1,020		231		204						904		1,224				1,676		1,440		209		227						1,885		1,667
Less: Net income attributable to noncontrolling interests			1												1						1												1
Net Income Attributable to Deere & Company		$	672	$	1,020	$	231	$	204					$	903	$	1,224			$	1,675	$	1,440	$	209	$	227					$	1,884	$	1,667
																					��

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.

³² Elimination of equipment operations’ margin from inventory transferred to equipment on operating ~~leases (see Note 3).~~leases.

⁴³ Elimination of intercompany service fees.

⁵⁴ Elimination of equipment operations’ interest expense to financial services.

⁶⁵ Elimination of financial services’ lease depreciation expense related to inventory transferred to equipment on operating leases.

4041

DEERE & COMPANY

SUPPLEMENTAL CONSOLIDATING DATA (Continued)

CONDENSED BALANCE SHEETS

(In millions of dollars) Unaudited

EQUIPMENT

FINANCIAL

OPERATIONS¹

SERVICES

ELIMINATIONS

CONSOLIDATED

Jan 30

Oct 31

Jan 31

Jan 30

Oct 31

Jan 31

Jan 30

Oct 31

Jan 31

Jan 30

Oct 31

Jan 31

2022

2021

2021

2022

2021

2021

2022

2021

2021

2022

2021

2021

Assets



































Cash and cash equivalents

$
3,596

$
7,188

$
6,074

$
876

$
829

$
888

$
4,472

$
8,017

$
6,962

Marketable securities

2

3

8

733

725

659

735

728

667

Receivables from unconsolidated affiliates

5,340

5,591

5,151

$
(5,307)

$
(5,564)

$
(5,123)

33

27

28
⁷

Trade accounts and notes receivable – net

996

1,155

900

4,843

3,895

5,341

(984)

(842)

(1,204)

4,855

4,208

5,037
⁸

Financing receivables – net

56

73

103

33,135

33,726

29,335

33,191

33,799

29,438

Financing receivables securitized – net

9

10

18

3,507

4,649

3,913

3,516

4,659

3,931

Other receivables

1,785

1,602

1,010

153

159

151

(35)

(23)

(20)

1,903

1,738

1,141
⁸

Equipment on operating leases – net

6,624

6,988

7,030

6,624

6,988

7,030

Inventories

7,935

6,781

5,956

7,935

6,781

5,956

Property and equipment – net

5,629

5,783

5,703

36

37

38

5,665

5,820

5,741

Investments in unconsolidated affiliates

153

153

157

23

22

21

176

175

178

Goodwill

3,192

3,291

3,194

3,192

3,291

3,194

Other intangible assets – net

1,209

1,275

1,342

1,209

1,275

1,342

Retirement benefits

3,095

3,539

903

65

64

60

(2)

(2)

(57)

3,158

3,601

906
⁹

Deferred income taxes

1,095

1,215

1,797

50

53

51

(222)

(231)

(292)

923

1,037

1,556
¹⁰

Other assets

1,577

1,493

1,485

454

477

891

(4)

(3)

2,027

1,970

2,373

Total Assets

$
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

$
1,516

$
1,509

$
394

$
9,474

$
9,410

$
8,830

$
10,990

$
10,919

$
9,224

Short-term securitization borrowings

8

10

17

3,474

4,595

3,952

3,482

4,605

3,969

Payables to unconsolidated affiliates

172

143

119

5,307

5,564

5,123

$
(5,307)

$
(5,564)

$
(5,123)

172

143

119
⁷

Accounts payable and accrued expenses

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

425

438

394

353

369

430

(222)

(231)

(292)

556

576

532
¹⁰

Long-term borrowings

8,760

8,915

10,139

24,078

23,973

22,633

32,838

32,888

32,772

Retirement benefits and other liabilities

3,182

4,239

5,325

109

107

106

(2)

(2)

(57)

3,289

4,344

5,374
⁹

Total liabilities

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)

Stockholders’ Equity

Total Deere & Company stockholders’ equity

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

4

3

3

4

3

3

Financial Services’ equity

(5,734)

(5,591)

(5,345)

5,734

5,591

5,345

¹¹

Adjusted total stockholders’ equity

12,074

12,843

8,741

5,734

5,591

5,345

17,808

18,434

14,086

Total Liabilities and Stockholders’ Equity

$
35,669

$
39,152

$
33,801

$
50,499

$
51,624

$
48,378

$
(6,554)

$
(6,662)

$
(6,699)

$
79,614

$
84,114

$
75,480


DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
STATEMENTS OF INCOME
For the Nine Months Ended July 31, 2022 and August 1, 2021
(In millions of dollars) Unaudited
	EQUIPMENT				FINANCIAL
	OPERATIONS				SERVICES				ELIMINATIONS				CONSOLIDATED
	2022		2021		2022		2021		2022		2021		2022		2021
Net Sales and Revenues
Net sales	$	33,565	$	29,461									$	33,565	$	29,461
Finance and interest income		131		95	$	2,580	$	2,582	$	(270)	$	(209)		2,441		2,468	¹
Other income		1,028		712		271		269		(264)		(213)		1,035		768	²
Total		34,724		30,268		2,851		2,851		(534)		(422)		37,041		32,697

Costs and Expenses
Cost of sales		25,126		21,309						(2)		(2)		25,124		21,307	³
Research and development expenses		1,336		1,137										1,336		1,137
Selling, administrative and general expenses		2,215		2,089		463		365		(6)		(6)		2,672		2,448	³
Interest expense		297		287		493		539		(77)		(43)		713		783	⁴
Interest compensation to Financial Services		189		166						(189)		(166)					⁴
Other operating expenses		186		140		1,028		1,098		(260)		(205)		954		1,033	⁵
Total		29,349		25,128		1,984		2,002		(534)		(422)		30,799		26,708

Income before Income Taxes		5,375		5,140		867		849						6,242		5,989
Provision for income taxes		1,142		1,130		222		198						1,364		1,328

Income after Income Taxes		4,233		4,010		645		651						4,878		4,661
Equity in income of unconsolidated affiliates		4		18		4		3						8		21

Net Income		4,237		4,028		649		654						4,886		4,682
Less: Net income attributable to noncontrolling interests		1		2										1		2
Net Income Attributable to Deere & Company	$	4,236	$	4,026	$	649	$	654					$	4,885	$	4,680

¹ Elimination of financial services’ interest income earned from equipment operations.

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

³ Elimination of intercompany service fees.

⁴ Elimination of equipment operations’ interest expense to financial services.

⁵ Elimination of financial services’ lease depreciation expense related to inventory transferred to equipment on operating leases.


DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
CONDENSED BALANCE SHEETS
(In millions of dollars) Unaudited
	EQUIPMENT						FINANCIAL
	OPERATIONS						SERVICES						ELIMINATIONS						CONSOLIDATED
	Jul 31		Oct 31		Aug 1		Jul 31		Oct 31		Aug 1		Jul 31		Oct 31		Aug 1		Jul 31		Oct 31		Aug 1
	2022		2021		2021		2022		2021		2021		2022		2021		2021		2022		2021		2021
Assets
Cash and cash equivalents	$	3,540	$	7,188	$	6,638	$	819	$	829	$	881							$	4,359	$	8,017	$	7,519
Marketable securities		2		3		3		717		725		685								719		728		688
Receivables from Financial Services		5,055		5,564		5,913							$	(5,055)	$	(5,564)	$	(5,913)							⁶
Trade accounts and notes receivable – net		1,342		1,155		1,127		6,738		3,895		5,319		(1,384)		(842)		(1,178)		6,696		4,208		5,268	⁷
Financing receivables – net		45		73		89		35,011		33,726		31,360								35,056		33,799		31,449
Financing receivables securitized – net		2		10		13		5,139		4,649		5,388								5,141		4,659		5,401
Other receivables		1,676		1,629		1,545		371		159		171		(48)		(23)		(14)		1,999		1,765		1,702	⁷
Equipment on operating leases – net								6,554		6,988		6,982								6,554		6,988		6,982
Inventories		9,121		6,781		6,410														9,121		6,781		6,410
Property and equipment – net		5,630		5,783		5,612		36		37		37								5,666		5,820		5,649
Goodwill		3,754		3,291		3,148														3,754		3,291		3,148
Other intangible assets – net		1,281		1,275		1,267														1,281		1,275		1,267
Retirement benefits		3,062		3,539		986		65		64		63		(2)		(2)		(59)		3,125		3,601		990	⁸
Deferred income taxes		1,248		1,215		1,959		48		53		59		(186)		(231)		(251)		1,110		1,037		1,767	⁹
Other assets		1,727		1,646		1,747		510		499		702		(1)				(1)		2,236		2,145		2,448
Total Assets	$	37,485	$	39,152	$	36,457	$	56,008	$	51,624	$	51,647	$	(6,676)	$	(6,662)	$	(7,416)	$	86,817	$	84,114	$	80,688

Liabilities and Stockholders’ Equity

Liabilities
Short-term borrowings	$	471	$	1,509	$	1,376	$	13,705	$	9,410	$	9,028							$	14,176	$	10,919	$	10,404
Short-term securitization borrowings		2		10		12		4,918		4,595		5,265								4,920		4,605		5,277
Payables to Equipment Operations								5,055		5,564		5,913	$	(5,055)	$	(5,564)	$	(5,913)							⁶
Accounts payable and accrued expenses		11,925		11,198		10,484		2,494		2,015		1,916		(1,433)		(865)		(1,193)		12,986		12,348		11,207	⁷
Deferred income taxes		436		438		371		311		369		395		(186)		(231)		(251)		561		576		515	⁹
Long-term borrowings		8,481		8,915		8,982		23,651		23,973		23,298								32,132		32,888		32,280
Retirement benefits and other liabilities		2,799		4,239		5,219		114		107		112		(2)		(2)		(59)		2,911		4,344		5,272	⁸
Total liabilities		24,114		26,309		26,444		50,248		46,033		45,927		(6,676)		(6,662)		(7,416)		67,686		65,680		64,955

Commitments and contingencies (Note 15)
Redeemable noncontrolling interest (Note 19)		95																		95

Stockholders’ Equity
Total Deere & Company stockholders’ equity		19,033		18,431		15,731		5,760		5,591		5,720		(5,760)		(5,591)		(5,720)		19,033		18,431		15,731	¹⁰
Noncontrolling interests		3		3		2														3		3		2
Financial Services’ equity		(5,760)		(5,591)		(5,720)								5,760		5,591		5,720							¹⁰
Adjusted total stockholders’ equity		13,276		12,843		10,013		5,760		5,591		5,720								19,036		18,434		15,733
Total Liabilities and Stockholders’ Equity	$	37,485	$	39,152	$	36,457	$	56,008	$	51,624	$	51,647	$	(6,676)	$	(6,662)	$	(7,416)	$	86,817	$	84,114	$	80,688

⁷⁶ Elimination of receivables / payables between equipment operations and financial services.

⁸⁷ Primarily reclassification of sales incentive accruals on receivables sold to financial services.

⁹⁸ Reclassification of net pension assets / liabilities.

¹⁰⁹ Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions.

¹¹¹⁰ Elimination of financial services’ equity.

4143


DEERE & COMPANY	DEERE & COMPANY																		DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA (Continued)	SUPPLEMENTAL CONSOLIDATING DATA (Continued)																		SUPPLEMENTAL CONSOLIDATING DATA (Continued)
STATEMENTS OF CASH FLOWS	STATEMENTS OF CASH FLOWS																		STATEMENTS OF CASH FLOWS
For the Three Months Ended January 30, 2022 and January 31, 2021
For the Nine Months Ended July 31, 2022 and August 1, 2021																			For the Nine Months Ended July 31, 2022 and August 1, 2021
(In millions of dollars) Unaudited	(In millions of dollars) Unaudited
		EQUIPMENT				FINANCIAL														EQUIPMENT				FINANCIAL
		OPERATIONS¹				SERVICES				ELIMINATIONS				CONSOLIDATED						OPERATIONS				SERVICES				ELIMINATIONS				CONSOLIDATED
		2022		2021		2022		2021		2022		2021		2022		2021				2022		2021		2022		2021		2022		2021		2022		2021
Cash Flows from Operating Activities
Net income		$	673	$	1,020	$	231	$	204					$	904	$	1,224			$	4,237	$	4,028	$	649	$	654					$	4,886	$	4,682
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for credit losses			(2)		(2)		2		(3)								(5)						5		62		(22)						62		(17)
Provision for depreciation and amortization			257		279		266		294	$	(37)	$	(35)		486		538	¹²			806		803		790		866	$	(153)	$	(100)		1,443		1,569	¹¹
Impairment charges					50												50				81		50										81		50
Share-based compensation expense											18		15		18		15	¹³											64		64		64		64	¹²
Gain on remeasurement of previously held equity investment																					(326)												(326)
Undistributed earnings of unconsolidated affiliates			42		154		(2)		(1)		(42)		(135)		(2)		18	¹⁴			370		246		(3)		(2)		(368)		(240)		(1)		4	¹³
Provision (credit) for deferred income taxes			223		(27)		(13)		(11)						210		(38)				44		(218)		(50)		(53)						(6)		(271)
Changes in assets and liabilities:
Trade, notes, and financing receivables related to sales			158		156						(264)		(253)		(106)		(97)	^{15, 17, 18}			(215)		(73)						(2,142)		(371)		(2,357)		(444)	^{14, 16, 17}
Inventories			(1,277)		(842)						(20)		(84)		(1,297)		(926)	¹⁶			(2,415)		(1,367)						(111)		(450)		(2,526)		(1,817)	¹⁵
Accounts payable and accrued expenses			(1,346)		(529)		(66)		(53)		(142)		(123)		(1,554)		(705)	¹⁷			491		860		36		(20)		(542)		(98)		(15)		742	¹⁶
Accrued income taxes payable/receivable			(192)		173		8		(43)						(184)		130				52		43		30		(9)						82		34
Retirement benefits			(1,012)		(16)		2		2						(1,010)		(14)				(1,020)		8		6		5						(1,014)		13
Other			(12)		(68)		(17)		31		11		(10)		(18)		(47)	^{12, 13, 16}			101		(200)		(105)		26		49		(121)		45		(295)	^{11, 12, 15}
Net cash provided by (used for) operating activities			(2,488)		348		411		420		(476)		(625)		(2,553)		143
Net cash provided by operating activities																					2,206		4,185		1,415		1,445		(3,203)		(1,316)		418		4,314

Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)							6,845		6,416		(410)		(417)		6,435		5,999	¹⁵							16,927		15,704		(1,153)		(1,224)		15,774		14,480	¹⁴
Proceeds from maturities and sales of marketable securities							21		20						21		20
Proceeds from sales of equipment on operating leases							479		460						479		460								1,501		1,510						1,501		1,510
Cost of receivables acquired (excluding receivables related to sales)							(5,719)		(5,559)		116		259		(5,603)		(5,300)	¹⁵							(19,069)		(18,349)		491		1,188		(18,578)		(17,161)	¹⁴
Acquisitions of businesses, net of cash acquired			(24)		(19)										(24)		(19)				(488)		(19)										(488)		(19)
Purchases of marketable securities							(48)		(39)						(48)		(39)
Purchases of property and equipment			(193)		(154)										(193)		(154)				(595)		(491)		(1)		(1)						(596)		(492)
Cost of equipment on operating leases acquired							(419)		(408)		28		114		(391)		(294)	¹⁶							(1,868)		(1,818)		151		608		(1,717)		(1,210)	¹⁵
Increase in trade and wholesale receivables							(684)		(523)		684		523					¹⁵							(3,318)		(481)		3,318		481					¹⁴
Collateral on derivatives – net			4				(17)		(88)						(13)		(88)				5		(4)		(198)		(185)						(193)		(189)
Other			(22)		(8)		(9)		(9)		16		11		(15)		(6)	¹⁸			(87)		(10)		(74)		(42)		28		31		(133)		(21)	^{13, 17}
Net cash provided by (used for) investing activities			(235)		(181)		449		270		434		490		648		579
Net cash used for investing activities																					(1,165)		(524)		(6,100)		(3,662)		2,835		1,084		(4,430)		(3,102)

Cash Flows from Financing Activities
Increase (decrease) in total short-term borrowings			123		(20)		(1,141)		(675)						(1,018)		(695)				58		(93)		4,209		1,022						4,267		929
Change in intercompany receivables/payables			150		264		(150)		(264)												70		(624)		(70)		624
Proceeds from long-term borrowings			18				2,335		1,757						2,353		1,757				137				6,144		5,877						6,281		5,877
Payments of long-term borrowings			(124)		(20)		(1,816)		(1,421)						(1,940)		(1,441)				(1,372)		(71)		(5,206)		(5,101)						(6,578)		(5,172)
Proceeds from issuance of common stock			11		71										11		71				55		136										55		136
Repurchases of common stock			(623)		(352)										(623)		(352)				(2,477)		(1,780)										(2,477)		(1,780)
Dividends paid			(327)		(242)		(42)		(135)		42		135		(327)		(242)	¹⁴			(971)		(761)		(368)		(240)		368		240		(971)		(761)	¹³
Other			(22)		(22)		(11)		(9)						(33)		(31)				(39)		(50)		(23)		(22)				(8)		(62)		(80)	¹³
Net cash used for financing activities			(794)		(321)		(825)		(747)		42		135		(1,577)		(933)
Net cash provided by (used for) financing activities																					(4,539)		(3,243)		4,686		2,160		368		232		515		(851)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash			(75)		83		1		20						(74)		103				(148)		77		5		29						(143)		106

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash			(3,592)		(71)		36		(37)						(3,556)		(108)				(3,646)		495		6		(28)						(3,640)		467
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period			7,200		6,156		925		1,016						8,125		7,172				7,200		6,156		925		1,016						8,125		7,172
Cash, Cash Equivalents, and Restricted Cash at End of Period		$	3,608	$	6,085	$	961	$	979					$	4,569	$	7,064			$	3,554	$	6,651	$	931	$	988					$	4,485	$	7,639

Components of cash, cash equivalents, and restricted cash
Cash and cash equivalents																				$	3,540	$	6,638	$	819	$	881					$	4,359	$	7,519
Restricted cash (Other assets)																					14		13		112		107						126		120
Total cash, cash equivalents, and restricted cash																				$	3,554	$	6,651	$	931	$	988					$	4,485	$	7,639

¹²¹¹ Elimination of depreciation on leases related to inventory transferred to equipment on operating ~~leases (see Note 3).~~leases.

¹³¹² Reclassification of share-based compensation expense.

¹⁴¹³ Elimination of dividends from financial services to the equipment operations, which are included in the equipment ~~operations net cash provided by~~operations’ operating ~~activities.~~activities, and capital investments in financial services from the equipment operations.

¹⁵¹⁴ Primarily reclassification of receivables related to the sale of equipment.

¹⁶¹⁵ Reclassification of direct lease agreements with retail customers.

¹⁷¹⁶ Reclassification of sales incentive accruals on receivables sold to financial services.

¹⁸¹⁷ Elimination and reclassification of the effects of financial ~~services~~services’ partial financing of the construction and forestry retail locations sales and subsequent collection of those amounts.

4244

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See the Company’s most recently filed ~~annual~~Annual Report on Form 10-K (Part II, Item 7A). There has been no material change in this information.

Item 4. CONTROLS AND PROCEDURES

The Company’s principal executive officer and its principal financial officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) were effective as of ~~January 30,~~July 31, 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~~third 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

Item 1A. Risk Factors

See the Company’s most recently filed ~~annual report~~Annual Report on Form 10-K (Part I, Item 1A). There has been no material change in this information. The risks described in the ~~annual report~~Annual Report on Form 10-K, and the ~~“Safe Harbor Statement”~~“Forward-Looking Statements” in this report, are not the only risks faced by the Company. Additional risks and uncertainties may also materially affect the Company’s business, financial condition, or operating results. One should not consider the risk factors to be a complete discussion of risks, uncertainties, and assumptions.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The Company’s purchases of its common stock during the ~~first~~third quarter of 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	Average Price		Programs (1)	Plans or Programs (1)
Period	(thousands)	Paid Per Share		(thousands)	(millions)	(thousands)	Paid Per Share		(thousands)	(millions)
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
May 2 to May 29						611	$	360.10	611	12.8
May 30 to Jun 26						1,309		337.72	1,309	11.5
Jun 27 to Jul 31						1,933		304.62	1,933	9.8
Total	1,741			1,702		3,853			3,853

(1)

The Company has a share repurchase plan that was announced in December 2019 to purchase up to $8,000 million of shares of the Company’s common stock. The maximum number of shares that may yet be purchased under ~~the December 2019~~this plan was based on the end of the ~~first~~third quarter closing share price of ~~$373.79~~$343.18 per share. At the end of the ~~first~~third quarter of 2022, ~~$5,202~~$3,348 million of common stock ~~remains~~remained to be purchased under the plan.

~~(2)~~

In the first quarter of 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 $358.36.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~Disclosure Pursuant to Section 13(r) of the Exchange Act.~~Not applicable.

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.

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.

4546

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 24,~~September 1, 2022	By:	/s/ ~~Ryan D. Campbell~~Rajesh Kalathur
			~~Ryan D. Campbell~~Rajesh Kalathur ~~Senior Vice~~ President, John Deere Financial and Chief Financial Officer
			(Principal Financial ~~Officer and~~Officer) ~~Principal Accounting Officer)~~

4647


	January 30, 2022
Carrying value of liabilities	$	720
Maximum exposure to loss		767


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

October 31, 2021
Long-term borrowings due within one year	$	189	$	3	$	(2)	$	1
Long-term borrowings		8,070		29		223		252

January 31, 2021
Long-term borrowings due within one year	$	159	$	2	$	1	$	3
Long-term borrowings		8,713		435		137		572


	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