Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
All amounts are presented in millions of U.S. dollars unless otherwise specified.
Overview
Organization
Deere & Company is a global leader in the production of agricultural, turf, construction, and forestry equipment and solutions. John Deere Financial provides financing for John Deere equipment, parts, services, and other inputs customers need to run their operations. Our operations are managed through the Production & Precision Agriculture (PPA), Small Agriculture & Turf (SAT), Construction & Forestry (CF), and Financial Services operating segments. References to “equipment operations” include PPA, SAT, and CF, while references to “agriculture and turf” include both PPA and SAT.
Trends and Economic Conditions
Industry Sales Outlook for Fiscal Year 2026 (in units)
Agriculture and Turf
Construction and Forestry
Company Trends
Our Leap Ambitions, a set of focused goals designed to guide the implementation of our Smart Industrial Operating Model, feature multi-year financial and operational goals, emphasizing the use of our differentiated equipment and service solutions, including automation, autonomy, digitalization, lifecycle solutions, and Solutions as a Service (SaaS).
Deeper integration of technology into equipment to enable customers to do more with less remains a persistent market trend. Customers seek to improve profitability, productivity, and sustainability by selecting our equipment and technology solutions. These technologies are incorporated into customer operations across the varied production systems that we serve. While we continue to benefit from the adoption of these technologies, revenue from SaaS products did not represent a significant percentage of our revenues in the periods presented.
Company Outlook for 2026
Large agriculture sales are expected to remain subdued in North America and to soften in South America resulting in decreased sales volume for PPA in 2026 compared to 2025. SAT and CF sales are expected to improve in 2026. Our overall net sales are expected to increase in 2026 compared to 2025, with the anticipated decline in PPA sales more than offset by improvements in CF and SAT.
Agriculture and Turf Industry Outlook for 2026
●
T1Demand in the U.S. and Canada for large agriculture equipment is expected to decrease compared to 2025 levels as elevated farm input costs, commodity price volatility, and ongoing market uncertainty continue to pressure demand for equipment.
●
We expect small agriculture and turf equipment sales to be flat to up slightly in the U.S. and Canada. Solid margins in the dairy and livestock sector and steady demand in residential and commercial mowing continue to support the outlook.
●
In Europe, the industry is forecasted to be flat. While elevated input costs and challenging weather conditions are pressuring crop farming margins, favorable dairy market margins are expected to continue to provide ongoing support to overall industry demand.
31
●
Demand in South America is expected to decrease. Elevated production costs and high interest rates are pressuring farm profitability and impacting equipment demand.
●
Industry sales in Asia are forecasted to be roughly flat, mainly driven by stable end market demand.
Construction and Forestry Industry Outlook for 2026
●
T2Industry sales in the U.S. and Canada for construction and compact construction equipment are projected to be higher compared to 2025. Favorable industry fundamentals are supported by infrastructure, data center, and energy-related projects, as well as continued investment in rental fleets.
●
Global forestry markets are expected to decrease due to continued pressure from subdued residential construction demand and lower log and lumber prices.
●
Global roadbuilding markets are forecasted to be up compared to 2025 driven by increased road construction investment across multiple geographies.
Financial Services Outlook for 2026
Net Income
Down
(–) Average portfolio
Unfavorable
(–) Prior period special items
Unfavorable
+ Financing spreads
Favorable
+ Provision for credit losses
Favorable
Additional Trends
Agricultural Market Business Cycle. The agricultural market is affected by various factors including commodity prices, acreage planted, crop yields, government policies, and uncertainty in macroeconomic trends. These factors affect farmers’ income and sentiment which may result in varying demand for our equipment. T3In 2026, we may experience the following effects due to unfavorable large agriculture market conditions: lower sales volumes, higher sales incentives, and elevated receivable write-offs.
Global Trade Policies. In 2025, new tariffs were imposed in the U.S. for imports from a broad range of countries and on certain materials. Several countries also implemented retaliatory tariffs on imports from the U.S. and introduced additional trade barriers.
T4Incremental import tariffs adversely affected the cost of our products and components beginning in 2025 and continue to do so in 2026. The direct impact of these incremental tariffs incurred was $502 in the first nine months of 2026, net of the tariff recovery described below, and approximately $300 in the first nine months of 2025. These amounts exclude the impact of tariffs on our suppliers and market demand.
On February 20, 2026, the Supreme Court of the United States issued a decision invalidating tariffs imposed pursuant to the International Emergency Economic Powers Act. We recorded tariff recoveries in the third quarter and first nine months of 2026 of $110 and $382, respectively, as we concluded the refunds are probable and reasonably estimable. As of August 2, 2026, approximately 80% of the recorded tariff recoveries have been received. The recovery was allocated 20%, 25%, and 55% to PPA, SAT, and CF, respectively, decreasing cost of sales. Trade policies continue to evolve, causing uncertainty in the agriculture and construction industries. We continue to pursue opportunities to mitigate impacts on our business, to the extent possible, including adjusting sourcing strategies, seeking product exemptions, and identifying cost reduction opportunities.
Changes in the agricultural market business cycle and global trade policies are driven by factors outside of our control, and as a result, we cannot reasonably foresee when these conditions may subside.
Legal Proceeding – On January 15, 2025, the Federal Trade Commission (FTC), along with the Attorneys General of the States of Illinois and Minnesota filed a lawsuit against us in the United States District Court for the Northern District of Illinois Western Division. The Attorneys General of the States of Arizona, Michigan, and Wisconsin joined the lawsuit. On July 8, 2026, T5we entered into a settlement with the FTC and plaintiff states to resolve all claims contained in the lawsuit. As part of that settlement, we have agreed, among other items, to provide certain repair resources to farmers and independent repair providers on “fair and reasonable terms” (as defined by the settlement). We have also agreed to provide regular reporting to the FTC and submit to the FTC’s oversight of our compliance with the settlement.
Other Items of Concern and Uncertainties – Other items that could impact our results are:
●
slower economic growth and inflation
●
global and regional political conditions
●
shifts in energy, including positions with respect to biofuels, positions on government subsidies of farming, and changes in energy prices
●
input costs, including the availability and price of fertilizers as a result of the conflict in the Middle East
32
●
capital market disruptions
●
foreign currency and capital control policies
●
right to repair and agriculture data privacy regulations and legislation
●
weather conditions
●
marketplace pace of adoption and monetization of technologies we have invested in
●
T6our ability to strengthen our digital capabilities, artificial intelligence, automation, and autonomy
●
changes in demand and pricing for new and used equipment
●
delays or disruptions in our supply chain
●
significant fluctuations in foreign currency exchange rates
●
volatility in the prices of many commodities
Consolidated Results – 2026 Compared with 2025
Three Months Ended
Nine Months Ended
Deere & Company
August 2
July 27
%
August 2
July 27
%
(In millions of dollars, except per share amounts)
2026
2025
Change
2026
2025
Change
Net sales and revenues
$
12,608
$
12,018
+5
$
35,589
$
33,290
+7
Net income attributable to Deere & Company
1,379
1,289
+7
3,808
3,962
-4
Diluted earnings per share
5.10
4.75
14.06
14.57
Net sales and revenues increased 5% and 7% for the quarter and year-to-date periods, respectively, primarily due to higher sales volumes, the positive effects of foreign currency translation, and favorable price realization. Net income increased $90 in the third quarter primarily due to favorable price realization of $286 ($403 pretax), partially offset by unfavorable tax impacts of $114 and increased production costs of $89 ($126 pretax), primarily from higher material costs. Results for the first nine months were also affected by favorable special tax items in the prior period (see Note 22) of $163.
An explanation of the cost of sales to net sales ratio and other significant statements of consolidated income changes follows:
Three Months Ended
Nine Months Ended
August 2
July 27
%
August 2
July 27
%
Deere & Company
2026
2025
Change
2026
2025
Change
Cost of sales to net sales
72.2%
73.1%
73.1%
71.3%
• Material costs
Unfavorable
Unfavorable
• Tariffs, net of recoveries
Favorable
Unfavorable
• Production efficiencies
Favorable
Favorable
Higher material costs driven by inflationary pressures. Incremental tariffs affected all periods. The favorable tariff impact for the quarter was due to recognition of recoveries (see Global Trade Policies section in Additional Trends). Production efficiencies had a favorable impact resulting from increased manufacturing volumes for CF and SAT.
Other income
$
256
$
235
+9
$
799
$
719
+11
Higher for both periods due to income earned from extended warranty premiums.
Research and development expenses
567
556
+2
1,704
1,631
+4
Increased due to continued focus on developing and deploying technology solutions.
Interest expense
710
794
-11
2,141
2,408
-11
Decreased for both periods primarily due to lower average borrowing rates and lower average borrowings.
Other operating expenses
290
281
+3
846
817
+4
Increased for both periods due to higher depreciation of equipment on operating leases.
Provision for income taxes
529
339
+56
1,243
905
+37
Higher for both periods primarily due to current year unfavorable discrete items and the first nine months were impacted by a prior period special tax item (see Note 22).
33
Business Segment Results – 2026 compared with 2025
The tariff impact was primarily included in the “Production Costs” category below.
Three Months Ended
Nine Months Ended
August 2
July 27
%
August 2
July 27
%
Production & Precision Agriculture
2026
2025
Change
2026
2025
Change
Net sales
$
3,998
$
4,273
-6
$
11,664
$
12,571
-7
Operating profit
527
580
-9
1,372
2,066
-34
Operating margin
13.2%
13.6%
11.8%
16.4%
Price realization
+3
+1
Currency translation impact on Net sales
+2
+3
Production & Precision Agriculture sales decreased for the quarter as a result of lower shipment volumes (primarily in Brazil and Europe), partially offset by favorable price realization and the positive effects of foreign currency translation (primarily the Brazilian real and Australian dollar). Operating profit decreased primarily due to lower shipment volumes / sales mix and higher production costs from an increase in material costs, partially offset by favorable price realization and the effects of foreign currency exchange.
Production & Precision Agriculture Operating Profit
Third Quarter 2026 Compared to Third Quarter 2025
Sales for the first nine months decreased as a result of lower shipment volumes (primarily in the U.S., Canada, and Brazil), partially offset by the positive effects of foreign currency translation (primarily the Brazilian real and Euro). Operating profit decreased for the first nine months primarily due to lower shipment volumes and higher production costs, driven primarily by an increase in material costs, partially offset by favorable price realization.
Production & Precision Agriculture Operating Profit
First Nine Months 2026 Compared to First Nine Months 2025
34
Three Months Ended
Nine Months Ended
August 2
July 27
%
August 2
July 27
%
Small Agriculture & Turf
2026
2025
Change
2026
2025
Change
Net sales
$
3,383
$
3,025
+12
$
9,036
$
7,767
+16
Operating profit
622
485
+28
1,538
1,182
+30
Operating margin
18.4%
16.0%
17.0%
15.2%
Price realization
+2
+2
Currency translation impact on Net sales
-1
+1
Small Agriculture & Turf sales increased for the quarter as a result of higher shipment volumes (primarily in the U.S.) and favorable price realization. Operating profit increased due to higher shipment volumes / sales mix and favorable price realization, partially offset by higher production costs from increased material costs.
Small Agriculture & Turf Operating Profit
Third Quarter 2026 Compared to Third Quarter 2025
Sales for the first nine months increased as a result of higher shipment volumes (primarily in the U.S., Europe, and India) and favorable price realization. Operating profit for the first nine months increased due to higher shipment volumes / sales mix and favorable price realization, partially offset by higher production costs due to an increase in material costs.
Small Agriculture & Turf Operating Profit
First Nine Months 2026 Compared to First Nine Months 2025
35
Three Months Ended
Nine Months Ended
August 2
July 27
%
August 2
July 27
%
Construction & Forestry
2026
2025
Change
2026
2025
Change
Net sales
$
3,618
$
3,059
+18
$
10,079
$
8,000
+26
Operating profit
436
237
+84
1,134
681
+67
Operating margin
12.1%
7.7%
11.3%
8.5%
Price realization
+8
+4
Currency translation impact on Net sales
+1
+2
Construction & Forestry sales increased for the quarter primarily as a result of higher shipment volumes (primarily in the U.S.) and favorable price realization. Operating profit increased due to favorable price realization, partially offset by higher selling, administrative and general and research and development expenses.
Construction & Forestry Operating Profit
Third Quarter 2026 Compared to Third Quarter 2025
Sales for the first nine months increased due to higher shipment volumes (primarily in the U.S.) and favorable price realization. Operating profit increased due to higher shipment volumes / sales mix and favorable price realization, partially offset by higher production costs from increased material costs and higher selling, administrative and general and research and development expenses.
Construction & Forestry Operating Profit
First Nine Months 2026 Compared to First Nine Months 2025
36
Three Months Ended
Nine Months Ended
August 2
July 27
%
August 2
July 27
%
Financial Services
2026
2025
Change
2026
2025
Change
Revenue (including intercompany)
$
1,505
$
1,544
-3
$
4,501
$
4,618
-3
Interest expense
661
720
-8
1,973
2,206
-11
Net income
219
205
+7
653
597
+9
Revenue decreased for both periods primarily due to a lower average portfolio. The average balance of receivables and leases financed was 2% lower in the third quarter of 2026 and 2% lower in the first nine months of 2026 compared with the same periods last year. Interest expense decreased as a result of lower average borrowing rates and lower average borrowings.
Net income for both periods increased primarily due to favorable financing spreads, partially offset by the impact of a lower average portfolio. Net income in the first nine months was also impacted by the prior period benefiting from a special item (see Note 22), lower provision for credit losses, and favorable derivative valuation adjustments.
Critical Accounting Estimates
See our critical accounting estimates discussed in the Management’s Discussion and Analysis of the most recently filed Annual Report on Form 10-K. There have been no material changes to these policies.
Capital Resources and Liquidity – 2026 Compared with 2025
We have access to global markets at a reasonable cost. Sources of liquidity include:
●
cash, cash equivalents, and marketable securities on hand
●
funds from operations
●
the issuance of commercial paper and term debt
●
the securitization of retail notes
●
bank lines of credit
We closely monitor our cash requirements. Based on the available sources of liquidity, we expect to meet our funding needs in the short term (next 12 months) and long term (beyond 12 months). We are forecasting operating cash flows from equipment operations in 2026 to remain flat compared with 2025 driven by an offsetting decrease in net income adjusted for non-cash provisions, and higher cash flows generated from increased accounts payable and accrued expenses.
We operate in multiple industries, which have unique funding requirements. The equipment operations are capital intensive. Historically, these operations have been subject to seasonal variations in financing requirements for inventories and receivables from dealers.
The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios.
Key metrics are provided in the following table:
August 2
November 2
July 27
2026
2025
2025
Cash, cash equivalents, and marketable securities
$
10,278
$
9,687
$
9,987
Trade accounts and notes receivable – net
7,723
5,317
6,103
Ratio to prior 12 month’s net sales
19%
14%
16%
Inventories
7,811
7,406
7,713
Ratio to prior 12 month’s cost of sales
26%
26%
29%
Unused credit lines
5,201
7,268
6,150
Financial Services:
Ratio of interest-bearing debt to stockholder’s equity
8.6 to 1
8.4 to 1
8.6 to 1
There have been no material changes to the contractual obligations and other cash requirements identified in our most recently filed Annual Report on Form 10-K.
37
Cash Flows
Nine Months Ended
August 2, 2026
July 27, 2025
Net cash provided by operating activities
$
3,250
$
3,464
Net cash used for investing activities
(825)
(801)
Net cash used for financing activities
(1,828)
(1,557)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
20
108
Net increase (decrease) in cash, cash equivalents, and restricted cash
$
617
$
1,214
Cash inflows from consolidated operating activities in the first nine months of 2026 were $3,250. This resulted mainly from net income adjusted for non-cash provisions, partially offset by an increase in receivables related to sales, an increase in inventories, and a decrease in accrued employee benefits. Cash outflows from investing activities were $825 in the first nine months of this year. The primary drivers were purchases of property and equipment and the acquisition of Tenna LLC (see Note 21), partially offset by collections of receivables (excluding receivables related to sales) exceeding the cost of receivables acquired. Cash outflows from financing activities were $1,828 in the first nine months of 2026, primarily due to cash returned to shareholders. Cash returned to shareholders was $2,013 in the first nine months of 2026. Cash, cash equivalents, and restricted cash increased $617 during the first nine months of 2026.
Key Metrics and Balance Sheet Changes
Trade Accounts and Notes Receivable. Trade accounts and notes receivable arise from sales of goods to customers. Trade receivables increased $2,406 during the first nine months of 2026, primarily due to a seasonal increase and higher sales volumes. These receivables increased $1,620 compared to a year ago due to higher sales volumes. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 1% at August 2, 2026, 3% at November 2, 2025, and 3% at July 27, 2025.
Financing Receivables and Equipment on Operating Leases. Financing receivables and equipment on operating leases consist of retail notes originated in connection with financing of new and used equipment, operating leases, revolving charge accounts, sales-type and direct financing leases, and wholesale notes. Financing receivables and equipment on operating leases decreased $2,430 during the first nine months of 2026 and decreased $2,814 in the past 12 months. The decrease for both periods was due to lower agriculture and turf retail customer receivables reflecting reduced demand in recent years and lower wholesale receivables. Total acquisition volumes of financing receivables and equipment on operating leases were 8% higher in the first nine months of 2026, compared with the same period last year, as volumes of wholesale notes and revolving charge accounts were higher compared to the same period last year.
Inventories. Inventories increased by $405 during the first nine months of 2026 primarily due to a seasonal increase and increased by $98 compared to a year ago. A majority of these inventories are valued at cost on the “last-in, first-out” (LIFO) method.
Property and Equipment. Property and equipment cash expenditures in the first nine months of 2026 were $716 compared with $852 in the same period last year. T7Capital expenditures in 2026 are estimated to be approximately $1.3 billion.
Accounts Payable and Accrued Expenses. Accounts payable and accrued expenses decreased by $241 in the first nine months of 2026, primarily due to a decrease in accrued expenses associated with employee benefits and dealer sales incentives, partially offset by an increase in trade payables and derivative liabilities. Accounts payable and accrued expenses increased $86 compared to a year ago due to an increase in trade payables and accrued expenses for warranty liabilities, partially offset by a decrease in accrued expenses associated with accrued taxes and employee benefits.
Borrowings. Total external borrowings decreased by $100 in the first nine months of 2026 and decreased $2,810 compared to a year ago, generally corresponding with the level of the receivable and lease portfolio, as well as other working capital requirements.
John Deere Capital Corporation (Capital Corporation), a U.S. financial services subsidiary, has a revolving warehouse facility to utilize bank conduit facilities to securitize retail notes (see Note 10). The facility was renewed in November 2025, with an expiration in November 2026, and total capacity or “financing limit” of $2,500. At August 2, 2026, $1,818 of securitization borrowings were 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.
38
In the first nine months of 2026, the financial services operations issued $2,525 and retired $3,027 of retail note securitization borrowings, which are presented in “Net proceeds (payments) in short-term borrowings (original maturities three months or less).”
Lines of Credit. We also have access to bank lines of credit with various banks throughout the world.
Worldwide lines of credit totaled $12.6 billion at August 2, 2026, consisting primarily of:
●
a 364-day credit facility agreement of $5.5 billion expiring in the second quarter of 2027
●
a credit facility agreement of $3.25 billion expiring in the second quarter of 2029
●
a credit facility agreement of $3.25 billion expiring in the second quarter of 2031
At August 2, 2026, $5,201 of these worldwide lines of credit were unused. For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings were considered to constitute utilization. These credit agreements require Capital Corporation and other parts of our business to maintain certain performance metrics and liquidity targets. All requirements in the credit agreements have been met during the periods included in the financial statements.
Debt Ratings. To access public debt capital markets, we rely on credit rating agencies to assign short-term and long-term credit ratings to our debt securities as an indicator of credit quality for fixed income investors. A security rating is not a recommendation by the rating agency to buy, sell, or hold our securities. A credit rating agency may change or withdraw ratings based on its assessment of our 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, reduced access to debt capital markets, and may adversely impact our liquidity. The senior long-term and short-term debt ratings and outlook currently assigned to our unsecured securities by the rating agencies engaged by us are as follows:
Senior
Long-Term
Short-Term
Outlook
Fitch Ratings
A+
F1
Stable
Moody’s Investors Service, Inc.
A1
Prime-1
Stable
Standard & Poor’s
A
A-1
Stable
FORWARD-LOOKING STATEMENTS
Certain statements contained herein, including in the sections entitled “Overview,” “Trends and Economic Conditions,” and “Condensed Notes to Interim Consolidated Financial Statements” relating to future events, expectations, and trends constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 and involve factors that are subject to change, assumptions, risks, and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect all lines of our operations generally while others could more heavily affect a particular line of business.
Forward-looking statements are based on information currently available to us and our current assumptions, expectations, and projections about future events and should not be relied upon. Except as required by law, we expressly disclaim any obligation to update or revise our forward-looking statements. Many factors, risks, and uncertainties could cause actual results to differ materially from these forward-looking statements. Among these factors are risks related to:
●
the agricultural business cycle, which can be unpredictable and is affected by factors such as farm income, international trade, world grain stocks, crop yields, available farm acres, soil conditions, prices for commodities and livestock, input costs including the availability and price of fertilizer, government farm programs, and availability of transport for crops
●
construction and forestry activity, which is affected by factors such as housing starts and supply, real estate and housing prices, levels of residential and non-residential construction, public and private infrastructure development, and government policies and regulations
●
macroeconomic conditions, including unemployment, inflation, interest rate volatility, energy price increases resulting from geopolitical conflicts, changes in consumer sentiment and practices due to slower economic growth or a recession, and regional or global liquidity constraints
●
the uncertainty of government policies and actions with respect to the global trade environment, including increased and contested tariffs announced by the U.S. government and retaliatory trade regulations
●
political, economic, and social instability in the geographies in which we operate
●
worldwide demand for food and different forms of renewable energy impacting the price of farm commodities and the resulting impacts on the demand for our equipment
●
rationalization, restructuring, relocation, expansion, and/or reconfiguration of manufacturing and warehouse facilities
39
●
accurately forecasting customer demand for products and services, and adequately managing inventory
●
selling products domestically or internationally, managing increased costs of production, absorbing or passing on increased expenses, as well as accurately predicting financial results and industry trends
●
availability and price of raw materials, components, and whole goods
●
delays or disruptions in our supply chain, including those arising from geopolitical conflicts
●
changes in climate patterns, unfavorable weather events, and natural disasters
●
suppliers’ and manufacturers’ business practices and compliance with applicable laws such as human rights, safety, environmental, and fair wages
●
higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for our products and solutions
●
attracting, developing, engaging, and retaining qualified employees
●
adapting in highly competitive markets, including understanding and meeting customers’ changing expectations for products and solutions, including delivery and utilization of precision technology
●
realizing the anticipated benefits of our Smart Industrial Operating Model, achieving our Leap Ambitions, and executing our related business strategies in production systems, precision technologies, and aftermarket support
●
our dealer network’s development and implementation of successful sales plans, management of new and used inventory, distribution of our products, and support and service for our precision technology solutions
●
achieving anticipated benefits of acquisitions and joint ventures, including challenges with successfully integrating operations and internal control processes
●
negative claims or publicity that damage our reputation or brand
●
the impact of workforce reductions on our culture, employee retention and morale, and institutional knowledge
●
labor relations and contracts, including work stoppages and other disruptions
●
security breaches, cybersecurity attacks, technology failures, and other disruptions to our information technology infrastructure and products
●
leveraging artificial intelligence and machine learning within our business processes
●
changes to existing laws and regulations, including the implementation of new, more stringent laws, as well as compliance with a variety of U.S., foreign, and international laws, regulations, and policies relating to, but not limited to the following: advertising, anti-bribery and anti-corruption, anti-money laundering, antitrust, consumer finance, cybersecurity, data privacy, encryption, environment (including climate change and engine emissions), farming, foreign exchange controls and cash repatriation restrictions, foreign ownership and investment, health and safety, human rights, import / export and trade, labor and employment, product liability, right-to-repair, tariffs, tax, telematics, and telecommunications
●
governmental and other actions designed to address climate change in connection with a transition to a lower-carbon economy
●
warranty claims, post-sales repairs or recalls, product liability litigation, and regulatory investigations because of the deficient operation of our products
●
investigations, claims, lawsuits, or other legal proceedings
●
loss of or challenges to intellectual property rights
Further information concerning us and our businesses, including factors that could materially affect our financial results, is included in our other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. “Risk Factors” of our most recent Annual Report on Form 10-K and this Quarterly Report on Form 10-Q). There also may be other factors that we cannot anticipate or that are not described herein because we do not currently perceive them to be material.
40
SUPPLEMENTAL CONSOLIDATING DATA
The supplemental consolidating data presented on the subsequent pages is presented for informational purposes. Equipment operations represent the enterprise without Financial Services. Equipment operations include Production & Precision Agriculture operations, Small Agriculture & Turf operations, Construction & Forestry operations, and other corporate assets, liabilities, revenues, and expenses not reflected within Financial Services. Transactions between the equipment operations and Financial Services have been eliminated to arrive at the consolidated financial statements.
Equipment operations and Financial Services participate in different industries. Equipment operations primarily generate earnings and cash flows by manufacturing and selling equipment, service parts, and technology solutions to dealers and retail customers. Financial Services finance sales and leases by dealers of new and used equipment that is largely manufactured by equipment operations. Those earnings and cash flows generally are the difference between the finance income received from customer payments less interest expense, and depreciation on equipment subject to an operating lease. The two businesses are capitalized differently and have separate performance metrics. The supplemental consolidating data is also used by management due to these differences.
41
DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA
STATEMENTS OF INCOME
For the Three Months Ended August 2, 2026 and July 27, 2025
Unaudited
EQUIPMENT
FINANCIAL
OPERATIONS
SERVICES
ELIMINATIONS
CONSOLIDATED
2026
2025
2026
2025
2026
2025
2026
2025
Net Sales and Revenues
Net sales
$
10,999
$
10,357
$
10,999
$
10,357
Finance and interest income
149
133
$
1,383
$
1,433
$
(179)
$
(140)
1,353
1,426
1
Other income
191
190
122
111
(57)
(66)
256
235
2, 3, 4
Total
11,339
10,680
1,505
1,544
(236)
(206)
12,608
12,018
Costs and Expenses
Cost of sales
7,950
7,578
(11)
(8)
7,939
7,570
4
Research and development expenses
567
556
567
556
Selling, administrative and general expenses
988
999
234
220
(2)
(2)
1,220
1,217
4
Interest expense
99
102
661
720
(50)
(28)
710
794
1
Interest compensation to Financial Services
129
112
(129)
(112)
1
Other operating expenses
(23)
(8)
357
345
(44)
(56)
290
281
3, 4, 5
Total
9,710
9,339
1,252
1,285
(236)
(206)
10,726
10,418
Income before Income Taxes
1,629
1,341
253
259
1,882
1,600
Provision for income taxes
472
274
57
65
529
339
Income after Income Taxes
1,157
1,067
196
194
1,353
1,261
Equity in income (loss) of unconsolidated affiliates
1
(1)
23
11
24
10
Net Income
1,158
1,066
219
205
1,377
1,271
Less: Net loss attributable to noncontrolling interests
(2)
(18)
(2)
(18)
Net Income Attributable to Deere & Company
$
1,160
$
1,084
$
219
$
205
$
1,379
$
1,289
1 Elimination of intercompany interest income and expense.
2 Elimination of equipment operations’ margin from inventory transferred to equipment on operating leases.
3 Elimination of income and expenses between equipment operations and Financial Services related to intercompany guarantees of investments in certain international markets.
4 Elimination of intercompany service revenues and fees.
5 Elimination of Financial Services’ lease depreciation expense related to inventory transferred to equipment on operating leases.
42
DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
STATEMENTS OF INCOME
For the Nine Months Ended August 2, 2026 and July 27, 2025
Unaudited
EQUIPMENT
FINANCIAL
OPERATIONS
SERVICES
ELIMINATIONS
CONSOLIDATED
2026
2025
2026
2025
2026
2025
2026
2025
Net Sales and Revenues
Net sales
$
30,779
$
28,338
$
30,779
$
28,338
Finance and interest income
379
351
$
4,093
$
4,268
$
(461)
$
(386)
4,011
4,233
1
Other income
616
580
408
350
(225)
(211)
799
719
2, 3, 4
Total
31,774
29,269
4,501
4,618
(686)
(597)
35,589
33,290
Costs and Expenses
Cost of sales
22,518
20,239
(32)
(24)
22,486
20,215
4
Research and development expenses
1,704
1,631
1,704
1,631
Selling, administrative and general expenses
2,775
2,761
632
632
(6)
(6)
3,401
3,387
4
Interest expense
294
282
1,973
2,206
(126)
(80)
2,141
2,408
1
Interest compensation to Financial Services
334
306
(334)
(306)
1
Other operating expenses
(59)
(47)
1,093
1,045
(188)
(181)
846
817
3, 4, 5
Total
27,566
25,172
3,698
3,883
(686)
(597)
30,578
28,458
Income before Income Taxes
4,208
4,097
803
735
5,011
4,832
Provision for income taxes
1,059
752
184
153
1,243
905
Income after Income Taxes
3,149
3,345
619
582
3,768
3,927
Equity in income (loss) of unconsolidated affiliates
(4)
34
15
34
11
Net Income
3,149
3,341
653
597
3,802
3,938
Less: Net loss attributable to noncontrolling interests
(6)
(24)
(6)
(24)
Net Income Attributable to Deere & Company
$
3,155
$
3,365
$
653
$
597
$
3,808
$
3,962
1 Elimination of intercompany interest income and expense.
2 Elimination of equipment operations’ margin from inventory transferred to equipment on operating leases.
3 Elimination of income and expenses between equipment operations and Financial Services related to intercompany guarantees of investments in certain international markets.
4 Elimination of intercompany service revenues and fees.
5 Elimination of Financial Services’ lease depreciation expense related to inventory transferred to equipment on operating leases.
43
DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
CONDENSED BALANCE SHEETS
Unaudited
EQUIPMENT
FINANCIAL
OPERATIONS
SERVICES
ELIMINATIONS
CONSOLIDATED
Aug 2
Nov 2
Jul 27
Aug 2
Nov 2
Jul 27
Aug 2
Nov 2
Jul 27
Aug 2
Nov 2
Jul 27
2026
2025
2025
2026
2025
2025
2026
2025
2025
2026
2025
2025
Assets
Cash and cash equivalents
$
6,607
$
6,340
$
6,641
$
2,321
$
1,936
$
1,939
$
8,928
$
8,276
$
8,580
Marketable securities
155
217
240
1,195
1,194
1,167
1,350
1,411
1,407
Receivables from Financial Services
5,364
4,649
3,649
$
(5,364)
$
(4,649)
$
(3,649)
6
Trade accounts and notes receivable – net
1,472
1,316
1,335
8,442
5,900
7,064
(2,191)
(1,899)
(2,296)
7,723
5,317
6,103
7
Financing receivables – net
106
88
84
42,754
44,487
43,846
42,860
44,575
43,930
Financing receivables securitized – net
2
1
1
6,314
6,830
7,947
6,316
6,831
7,948
Other receivables
1,926
1,809
2,013
594
658
867
(54)
(64)
(54)
2,466
2,403
2,826
8
Equipment on operating leases – net
7,400
7,600
7,512
7,400
7,600
7,512
Inventories
7,811
7,406
7,713
7,811
7,406
7,713
Property and equipment – net
7,975
8,047
7,680
31
32
33
8,006
8,079
7,713
Goodwill
4,466
4,188
4,209
4,466
4,188
4,209
Other intangible assets – net
940
892
926
940
892
926
Retirement benefits
3,439
3,181
3,092
104
94
92
(2)
(2)
(2)
3,541
3,273
3,182
Deferred income taxes
2,487
2,507
2,471
47
46
44
(191)
(269)
(306)
2,343
2,284
2,209
9
Other assets
2,371
2,218
2,357
1,098
1,244
1,211
(12)
(1)
(9)
3,457
3,461
3,559
Total Assets
$
45,121
$
42,859
$
42,411
$
70,300
$
70,021
$
71,722
$
(7,814)
$
(6,884)
$
(6,316)
$
107,607
$
105,996
$
107,817
Liabilities and Stockholders’ Equity
Liabilities
Short-term borrowings
$
417
$
414
$
461
$
16,698
$
13,382
$
14,146
$
17,115
$
13,796
$
14,607
Short-term securitization borrowings
1
1
6,094
6,595
7,610
6,095
6,596
7,610
Payables to equipment operations
5,364
4,649
3,649
$
(5,364)
$
(4,649)
$
(3,649)
6
Accounts payable and accrued expenses
12,796
12,757
12,795
3,129
3,116
3,146
(2,257)
(1,964)
(2,359)
13,668
13,909
13,582
7, 8
Deferred income taxes
326
347
393
276
356
402
(191)
(269)
(306)
411
434
489
9
Long-term borrowings
8,907
8,756
8,789
31,719
34,788
35,640
40,626
43,544
44,429
Retirement benefits and other liabilities
1,586
1,646
1,767
67
66
71
(2)
(2)
(2)
1,651
1,710
1,836
Total liabilities
24,033
23,921
24,205
63,347
62,952
64,664
(7,814)
(6,884)
(6,316)
79,566
79,989
82,553
Commitments and contingencies (Note 17)
Redeemable noncontrolling interest
44
51
84
44
51
84
Stockholders’ Equity
Total Deere & Company stockholders’ equity
27,990
25,950
25,175
6,953
7,069
7,058
(6,953)
(7,069)
(7,058)
27,990
25,950
25,175
10
Noncontrolling interests
7
6
5
7
6
5
Financial Services’ equity
(6,953)
(7,069)
(7,058)
6,953
7,069
7,058
10
Adjusted total stockholders’ equity
21,044
18,887
18,122
6,953
7,069
7,058
27,997
25,956
25,180
Total Liabilities and Stockholders’ Equity
$
45,121
$
42,859
$
42,411
$
70,300
$
70,021
$
71,722
$
(7,814)
$
(6,884)
$
(6,316)
$
107,607
$
105,996
$
107,817
6 Elimination of receivables / payables between equipment operations and Financial Services.
7 Primarily reclassification of sales incentive accruals on receivables sold to Financial Services.
8 Reclassification of other receivables / payables.
9 Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions.
10 Elimination of Financial Services’ equity.
44
DEERE & COMPANY
SUPPLEMENTAL CONSOLIDATING DATA (Continued)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended August 2, 2026 and July 27, 2025
Unaudited
EQUIPMENT
FINANCIAL
OPERATIONS
SERVICES
ELIMINATIONS
CONSOLIDATED
2026
2025
2026
2025
2026
2025
2026
2025
Cash Flows from Operating Activities
Net income
$
3,149
$
3,341
$
653
$
597
$
3,802
$
3,938
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for credit losses
(1)
18
206
240
205
258
Depreciation and amortization
1,042
965
821
804
$
(76)
$
(101)
1,787
1,668
11
Impairments and other adjustments
61
(32)
29
Share-based compensation expense
116
104
116
104
12
Distributed earnings of Financial Services
794
1,066
(794)
(1,066)
13
Provision (credit) for deferred income taxes
20
(242)
(81)
140
(61)
(102)
Changes in assets and liabilities:
Receivables related to sales
(123)
(66)
(1,129)
(428)
(1,252)
(494)
14, 16
Inventories
(330)
(423)
(113)
(103)
(443)
(526)
15
Accounts payable and accrued expenses
61
(646)
(34)
69
(293)
(140)
(266)
(717)
16
Accrued income taxes payable/receivable
(99)
(89)
(20)
(58)
(119)
(147)
Retirement benefits
(359)
(770)
(8)
(43)
(367)
(813)
Other
(142)
123
71
182
(81)
(39)
(152)
266
11, 12, 15
Net cash provided by operating activities
4,012
3,338
1,608
1,899
(2,370)
(1,773)
3,250
3,464
Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)
20,261
20,178
(339)
(466)
19,922
19,712
14
Proceeds from maturities and sales of marketable securities
108
27
281
332
389
359
Proceeds from sales of equipment on operating leases
1,479
1,408
1,479
1,408
Cost of receivables acquired (excluding receivables related to sales)
(19,351)
(19,189)
212
227
(19,139)
(18,962)
14
Acquisitions of businesses, net of cash acquired
(455)
(89)
(455)
(89)
Purchases of marketable securities
(42)
(133)
(319)
(465)
(361)
(598)
Purchases of property and equipment
(714)
(851)
(2)
(1)
(716)
(852)
Cost of equipment on operating leases acquired
(2,086)
(2,148)
153
139
(1,933)
(2,009)
15
Increase in investment in Financial Services
(5)
5
17
Increase in trade and wholesale receivables
(1,550)
(807)
1,550
807
14
Collections of receivables from unconsolidated affiliates
189
197
145
197
334
Collateral on derivatives – net
1
4
(64)
123
(63)
127
Other
(72)
(75)
(73)
(156)
(145)
(231)
Net cash used for investing activities
(1,179)
(928)
(1,227)
(580)
1,581
707
(825)
(801)
Cash Flows from Financing Activities
Net proceeds (payments) in short-term borrowings (original maturities three months or less)
18
294
3,187
(2,354)
3,205
(2,060)
Change in intercompany receivables/payables
(735)
(660)
735
660
Proceeds from borrowings issued (original maturities greater than three months)
430
2,188
4,943
8,519
5,373
10,707
Payments of borrowings (original maturities greater than three months)
(262)
(863)
(8,076)
(6,880)
(8,338)
(7,743)
Repurchases of common stock
(697)
(1,136)
(697)
(1,136)
Capital investment from Equipment Operations
5
(5)
17
Dividends paid
(1,316)
(1,282)
(794)
(1,066)
794
1,066
(1,316)
(1,282)
13
Other
(27)
(25)
(28)
(18)
(55)
(43)
Net cash used for financing activities
(2,589)
(1,484)
(28)
(1,139)
789
1,066
(1,828)
(1,557)
Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash
22
96
(2)
12
20
108
Net Increase in Cash, Cash Equivalents, and Restricted Cash
266
1,022
351
192
617
1,214
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period
6,364
5,643
2,169
1,990
8,533
7,633
Cash, Cash Equivalents, and Restricted Cash at End of Period
$
6,630
$
6,665
$
2,520
$
2,182
$
9,150
$
8,847
11 Elimination of depreciation on leases related to inventory transferred to equipment on operating leases.
12 Reclassification of share-based compensation expense.
13 Elimination of dividends from Financial Services to the equipment operations, which are included in the equipment operations operating activities.
14 Primarily reclassification of receivables related to the sale of equipment.
15 Reclassification of direct lease agreements with retail customers.
16 Reclassification of sales incentive accruals on receivables sold to Financial Services.
17 Elimination of change in investment from equipment operations to Financial Services.
45
Mentions · how they’re counted
| Category | Underlined | Word counter | Model’s count |
|---|---|---|---|
| AI AI, artificial intelligence, generative AI, machine learning, large language model, LLM | 3 | 3 | 2 |
| Layoffs layoffs, RIF, headcount reduction, workforce optimization, restructuring | 1 | — | 0 |
| Recession recession, downturn, contraction, slowdown | 1 | 1 | 1 |
| Tariffs tariff, trade war, trade barriers, trade restrictions, trade policy | 16 | 16 | 8 |
| Buybacks share repurchase, buyback program | 0 | — | 0 |
Underlines use the same word lists the scores use. AI, recession and tariffs follow Palanor’s word counter, so those counts match it exactly on the same text. Layoffs and buybacks use the terms the model was given. The model’s count is an estimate by meaning, not by string, so it can differ from the underlines.
Source: SEC EDGAR · public domain · Highlights by Palanor