Deere & Company DE Form 10-Q filing Q2 FY2025

Item 1.FINANCIAL STATEMENTS

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See Condensed Notes to Interim Consolidated Financial Statements.

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See Condensed Notes to Interim Consolidated Financial Statements.

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See Condensed Notes to Interim Consolidated Financial Statements.

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See Condensed Notes to Interim Consolidated Financial Statements.

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See Condensed Notes to Interim Consolidated Financial Statements.

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Condensed Notes to Interim Consolidated Financial Statements (Unaudited)

**(1)**Organization and Consolidation

Deere & Company has been developing innovative solutions to help its customers become more profitable for more than 185 years. References to “Deere & Company,” “John Deere,” “we,” “us,” or “our” include our consolidated subsidiaries. We manage our business through the following operating segments: production and precision agriculture (PPA), small agriculture and turf (SAT), construction and forestry (CF), and financial services (John Deere Financial or FS). References to “agriculture and turf” include both PPA and SAT.

We use a 52/53 week fiscal year with quarters ending on the last Sunday in the reporting period. The second quarter ends for fiscal years 2025 and 2024 were April 27, 2025 and April 28, 2024, respectively. Both quarters contained 13 weeks, while both year-to-date periods contained 26 weeks. Fiscal year 2025 will contain 53 weeks, with the additional week occurring in the fourth quarter. Unless otherwise stated, references to particular years, quarters, or months refer to our fiscal years generally ending in October and the associated periods in those fiscal years.

All amounts are presented in millions of dollars, unless otherwise specified. Certain prior period amounts have been reclassified to conform to current period presentation.

Variable Interest Entity

We have a 50% ownership interest in Banco John Deere S.A. (BJD), an equity method investment that finances retail and wholesale loans for agricultural, construction, and forestry equipment in Brazil. This investment was established in February 2025 through the sale of 50% ownership of a former subsidiary (see Note 20). BJD is a variable interest entity (VIE) as we provide funding and are exposed to losses that are disproportionate to our voting rights. However, we are not the primary beneficiary of the VIE because the power over significant activities, including the strategic plan, budget, credit policies, and funding guidelines, is shared among equity holders through an equally represented board of directors.

Financial results of BJD are reported in “Equity in income of unconsolidated affiliates.” The related investment in unconsolidated affiliates is included in “Other assets” on the condensed consolidated balance sheets, while short-term and long-term funding is recorded in receivables from unconsolidated affiliates and included in “Other receivables.”

Our carrying value of receivables from and investments in BJD and maximum exposure to loss at April 27, 2025 follows:

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Guarantees primarily include BJD debt related to government funding that existed prior to the deconsolidation of BJD, and no contractual liability is recorded by us on our condensed consolidated balance sheets. The maximum exposure to loss is not an indication of our expected loss exposure.

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**(2)**Summary of Significant Accounting Policies and New Accounting PROnouncements

Quarterly Financial Statements

The interim consolidated financial statements of Deere & Company have been prepared by us, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted as permitted by such rules and regulations. All normal recurring adjustments have been included. Management believes the disclosures are adequate to present fairly the financial position, results of operations, and cash flows at the dates and for the periods presented. It is suggested these interim consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto appearing in our latest Annual Report on Form 10-K. Results for interim periods are not necessarily indicative of those to be expected for the fiscal year.

Use of Estimates in Financial Statements

Certain accounting policies require management to make estimates and assumptions in determining the amounts reflected in the financial statements and related disclosures. Actual results could differ from those estimates.

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New Accounting Pronouncements Adopted

We closely monitor all Accounting Standard Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) and other authoritative guidance. We adopted the following standards in 2025, none of which had a material effect on our consolidated financial statements.

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No. 2023-05 — Business Combinations – Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement ​

No. 2022-03 — Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ​

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Accounting Pronouncements to be Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which expands disclosures about specific expense categories presented on the face of the income statement. In January 2025, the FASB issued ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), which clarifies the effective date of ASU 2024-03. The ASU will be effective for us beginning with our annual reporting for fiscal year 2028 and interim periods thereafter. We are assessing the effect of ASU 2024-03 on our related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and cash taxes paid both in the U.S. and foreign jurisdictions. The ASU will be effective for us beginning with our annual reporting for fiscal year 2026. We are assessing the effect of this update on our related disclosures.

We will also adopt the following standards in future periods, none of which are expected to have a material effect on our consolidated financial statements.

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No. 2024-04 — Debt – Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments ​

No. 2023-07 — Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ​

No. 2023-06 — Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative ​

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**(3)**Revenue Recognition

Our net sales and revenues by primary geographic market, major product line, and timing of revenue recognition follow:

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We invoice in advance of recognizing the revenue of certain products and services. These relate to extended warranty premiums, advance payments for future equipment sales, and subscription and service revenue related to precision guidance, telematic services, and other information enabled solutions. These advanced customer payments are presented as deferred revenue, a contract liability, in “Accounts payable and accrued expenses.” The deferred revenue received, but not recognized in revenue was $2,089, $1,923, and $1,911 at April 27, 2025, October 27, 2024, and April 28, 2024, respectively. The contract liability is reduced as the revenue is recognized. Revenue recognized from deferred revenue that was recorded as a contract liability at the beginning of the fiscal year was $176 and $128 during the three months and $373 and $358 during the six months ended April 27, 2025 and April 28, 2024, respectively.

The amount of unsatisfied performance obligations for contracts with an original duration greater than one year was $1,774 at April 27, 2025. The estimated revenue to be recognized by fiscal year follows: remainder of 2025 – $289, 2026 – $478, 2027 – $383, 2028 – $262, 2029 – $162, 2030 – $116, and later years – $84. As permitted, we elected only to disclose remaining performance obligations with an original contract duration greater than one year. The contracts with an expected duration of one year or less are for sales to dealers and retail customers for equipment, service parts, repair services, and certain telematics services.

**(4)**Other Comprehensive Income Items

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

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The following tables reflect amounts recorded in other comprehensive income (loss), as well as reclassifications out of other comprehensive income (loss).

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**(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:

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**(6)**Pension and Other Postretirement Benefits

We have several funded and unfunded defined benefit pension plans and other postretirement benefit (OPEB) plans. These plans cover U.S. employees and certain foreign employees. The components of net periodic pension and OPEB (benefit) cost consisted of the following:

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The components of net periodic pension and OPEB (benefit) cost excluding the service cost component are included in the line item “Other operating expenses.”

During the first six months of 2025, we contributed and expect to contribute the following amounts to our pension and OPEB plans:

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**(7)**Segment DATA

Information relating to operations by operating segment follows:

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Operating profit for PPA, SAT, and CF is income from continuing operations before corporate expenses, certain external interest expenses, certain foreign exchange gains and losses, and income taxes. Operating profit of financial services includes the effect of interest expense and foreign exchange gains and losses. Reconciling items to net income are primarily corporate expenses, certain interest income and expenses, certain foreign exchange gains and losses, pension and OPEB benefit (cost) amounts excluding the service cost component, and net income attributable to noncontrolling interests.

Identifiable operating assets were as follows:

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**(8)**Financing Receivables

We monitor the credit quality of financing receivables based on delinquency status, defined as follows:

• Past due balances represent any payments 30 days or more past the due date.
• Non-performing financing receivables represent receivables for which we have stopped accruing finance income. This generally occurs when receivables are 90 days delinquent.
• Write-offs generally occur when receivables are 120 days delinquent. In these situations, the estimated uncollectible amount is written off to the allowance for credit losses.

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

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The credit quality and aging analysis of wholesale receivables was as follows:

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An analysis of the allowance for credit losses and investment in financing receivables follows:

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The allowance for credit losses increased in the second quarter and first six months of 2025, primarily due to higher expected losses on agriculture and turf customer accounts as a result of elevated delinquencies and a decline in market conditions.

Modifications

We occasionally grant contractual modifications to customers experiencing financial difficulties. Before offering a modification, we evaluate the ability of the customer to meet the modified payment terms. Modifications offered include payment deferrals, term extensions, or a combination thereof. Finance charges continue to accrue during the deferral or extension period with the exception of modifications related to bankruptcy proceedings. Our allowance for credit losses incorporates historical loss information, including the effects of loan modifications with customers. Therefore, additional adjustments to the allowance are generally not recorded upon modification of a loan.

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The ending amortized cost of financing receivables modified with borrowers experiencing financial difficulty were as follows:

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The financial effects of payment deferrals with borrowers experiencing financial difficulty resulted in a weighted average payment deferral of 8 months to the modified contracts. Term extensions provided to borrowers experiencing financial difficulty added a weighted average of 11 months to the modified contracts. Additionally, modifications with a combination of both payment deferrals and term extensions resulted in a weighted average payment deferral of 5 months and a weighted average term extension of 8 months.

We continue to monitor the performance of financing receivables that are modified with borrowers experiencing financial difficulty. The ending amortized cost and performance of financing receivables modified during the prior twelve months ended April 27, 2025 and April 28, 2024 were as follows:

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• In accordance with the adoption date of the accounting modification guidance, this period includes receivables modified during the prior six months.

Defaults and subsequent write-offs of loans modified in the prior twelve months were not significant during the three months or the six months ended April 27, 2025. In addition, at April 27, 2025, commitments to provide additional financing to these customers were not significant.

(9)  Securitization of Financing Receivables

Our funding strategy includes receivable securitizations, which allows us to receive cash for financing receivables immediately. While these securitization programs are administered in various forms, they are accomplished in the following basic steps:

1. We transfer financing receivables into a bankruptcy-remote special purpose entity (SPE).

2. The SPE issues debt to investors. The debt is secured by the financing receivables.

3. Investors are paid back based on cash receipts from the financing receivables.

As part of step 1, these receivables are legally isolated from the claims of our general creditors. This ensures cash receipts from the financing receivables are accessible to pay back securitization program investors. The structure of these transactions does not meet the accounting criteria for a sale of receivables. As a result, they are accounted for as a secured borrowing. The receivables and borrowings remain on our balance sheet and are separately reported as “Financing receivables securitized – net” and “Short-term securitization borrowings,” respectively.

The components of securitization programs were as follows:

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**(10)**Inventories

A majority of inventories owned by us are valued at cost on the “last-in, first-out” (LIFO) basis. If all inventories valued on a LIFO basis had been valued on a “first-in, first-out” (FIFO) basis, the estimated inventories by major classification would have been as follows:

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**(11)**Goodwill and Other Intangible Assets – Net

The changes in amounts of goodwill by operating segments were as follows. There were no accumulated goodwill impairment losses.

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The components of other intangible assets were as follows:

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The amortization of other intangible assets in the second quarter and the first six months of 2025 was $37 and $78, and for the second quarter and the first six months of 2024 was $41 and $83, respectively. The estimated amortization expense for the next five years is as follows: remainder of 2025 – $73, 2026 – $135, 2027 – $128, 2028 – $92, 2029 – $77, and 2030 – $74.

**(12)**Short-Term Borrowings

Short-term borrowings were as follows:

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**(13)**Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

Amounts are presented net of eliminations, which primarily consist of dealer sales incentives with a right of set-off against trade receivables of $2,059 at April 27, 2025, $2,121 at October 27, 2024, and $2,650 at April 28, 2024. Other eliminations were made for accrued taxes and other accrued expenses.

**(14)**Long-Term Borrowings

Long-term borrowings consisted of:

Medium-term notes due through 2034 are primarily offered by prospectus and issued at fixed and variable rates. The principal balances of the medium-term notes were $34,241, $37,141, and $34,002, at April 27, 2025, October 27, 2024, and April 28, 2024, respectively. All outstanding notes and debentures are senior unsecured borrowings and rank equally with each other.

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**(15)**Leases – Lessor

We lease equipment manufactured or sold by us through John Deere Financial. Sales-type and direct financing leases are reported in “Financing receivables – net.” Operating leases are reported in “Equipment on operating leases – net.”

Lease revenues earned by us follow:

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**(16)**Commitments and Contingencies

A standard warranty is provided as assurance that the equipment will function as intended. The standard warranty period varies by product and region. At the time a sale is recognized, we record an estimate of future warranty costs based on historical claims rate experience and estimated population under warranty.

The reconciliation of the changes in the warranty liability follows:

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The costs for extended warranty programs are recognized as incurred.

In certain international markets, we provide guarantees to banks for the retail financing of John Deere equipment. As of April 27, 2025, the notional value of these guarantees was $123. We may repossess the equipment collateralizing the receivables. At April 27, 2025, the accrued losses under these agreements were not material. We also had guarantees to a VIE (see Note 1) totaling $156 as of April 27, 2025.

We also had other miscellaneous contingent liabilities and guarantees totaling approximately $125 at April 27, 2025. The accrued liability for these contingencies was $25 at April 27, 2025.

At April 27, 2025, we had commitments of approximately $505 for the construction and acquisition of property and equipment. Also, at April 27, 2025, we had restricted assets of $250, classified as “Other assets.”

We are subject to various unresolved legal actions. The accrued losses on these matters were not material at April 27, 2025. We believe the reasonably possible range of losses for these unresolved legal actions would not have a material effect on our consolidated financial statements. The most prevalent legal claims relate to product liability (including asbestos-related liability), antitrust matters (including class action litigation), employment, patent, and trademark.

**(17)**FAIR VALUE MEASUREMENTS

The fair values of financial instruments that do not approximate the carrying values were as follows. Long-term borrowings exclude finance lease liabilities.

Fair value measurements above were Level 3 for receivables and Level 2 for all borrowings.

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Fair values of the financing receivables and receivables from unconsolidated affiliates that were issued long-term were based on the discounted values of their related cash flows at interest rates currently being offered by us for similar financing receivables or at current market interest rates. The fair values of the remaining 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.

Assets and liabilities measured at fair value on a recurring basis follow, excluding our cash equivalents, which were carried at a cost that approximates fair value and consisted of money market funds and time deposits.

The mortgage-backed securities are primarily issued by U.S. government-sponsored enterprises.

The contractual maturities of available-for-sale debt securities at April 27, 2025 follow:

Actual maturities may differ from contractual maturities because some securities may be called or prepaid. Mortgage-backed securities contain prepayment provisions and are not categorized by contractual maturity.

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Fair value, nonrecurring Level 3 measurements from impairments and other adjustments were as follows:

• The gain on “Assets held for sale” recorded in the first quarter of 2025 represents a reversal of prior period valuation allowance loss, not in excess of cumulative valuation allowance recorded on “Assets held for sale.”

The following is a description of the valuation methodologies we use to measure certain financial instruments on the balance sheets at fair value:

Marketable securities – The portfolio of investments is valued on a market approach (matrix pricing model) in which all significant inputs are observable or can be derived from or corroborated by observable market data such as interest rates, yield curves, volatilities, credit risk, and prepayment speeds. Funds are valued using the fund’s net asset value, based on the fair value of the underlying securities. International debt securities are valued using quoted prices for identical assets in inactive markets.

Derivatives – Our 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.

Deferred consideration – The total purchase price consideration for three former Deere-Hitachi joint venture factories acquired in 2022 included supply agreement price increases beyond inflation adjustments. This deferred consideration will be paid as we purchase Deere-branded excavators, components, and service parts from Hitachi under the agreement with a duration that ranges from 5 to 30 years after the acquisition date. The deferred consideration balance is reduced as purchases are made and valued on a discounted cash flow approach using market rates.

Other assets (Investments in unconsolidated affiliates) – Other than temporary impairments of investments are measured as the difference between the implied fair value and the carrying value of the investments. The estimated fair value for privately held entities is determined by an income approach (discounted cash flows), which includes inputs such as interest rates and margins.

Assets held for sale – The disposal group was measured at the lower of the carrying amount or fair value less cost to sell. Fair value was based on the probable sale price. The inputs included estimates of the final sale price (see Note 20).

**(18)**Derivative Instruments

Fair values of our derivative instruments and the associated notional amounts are presented below. Assets are recorded in “Other assets,” while liabilities are recorded in “Accounts payable and accrued expenses.”

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The amounts recorded in the consolidated balance sheets related to borrowings designated in fair value hedging relationships are presented in the table below. Fair value hedging adjustments are included in the carrying amount of the hedged item. The carrying amount of the hedged item and formerly hedged item includes long-term borrowings of $399, $598, and $598 at April 27, 2025, October 27, 2024, and April 28, 2024, respectively, that are in active hedging relationships and also had discontinued hedging relationships.

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The classification and gains (losses), including accrued interest expense, related to derivative instruments on the statements of consolidated income consisted of the following:

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In April 2025, we entered into a cross-currency interest rate swap as a designated net investment hedge to reduce the foreign currency exposure from investments in foreign subsidiaries. Changes in fair value of the derivative attributable to changes in the spot rate are recorded in “Cumulative translation adjustment” within “Other comprehensive income” (OCI) to offset changes in the value of the net investments being hedged. Effectiveness is assessed using the spot method. The periodic cash settlement of the pay-fixed rate, receive-fixed rate cross-currency swap is recorded in “Interest expense.”

Certain of our derivative agreements contain credit support provisions that may require us to post collateral based on the size of the net liability positions and credit ratings. The aggregate fair value of all derivatives with credit-risk-related contingent features that were in a net liability position at April 27, 2025, October 27, 2024, and April 28, 2024, was $507, $562, and $967, respectively. In accordance with the limits established in these agreements, we posted $221, $245, and $562 of cash collateral at April 27, 2025, October 27, 2024, and April 28, 2024, respectively. In addition, we paid $8 of collateral that was outstanding at April 27, 2025, October 27, 2024, and April 28, 2024 to participate in an international futures market to hedge currency exposure, not included in the table below.

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Derivatives are recorded without offsetting for netting arrangements or collateral. The impact on the derivative assets and liabilities related to netting arrangements and collateral follows:

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**(19)**Share-Based Awards

We are authorized to grant shares for equity incentive awards. The outstanding shares authorized were 13.7 million at April 27, 2025. During the six months ended April 27, 2025, we granted stock options to employees for the purchase of 169 thousand shares of common stock at a weighted-average exercise price of $448.18 per share and a weighted-average binomial lattice model fair value of $116.35 per share at the grant date. At April 27, 2025, options for 1.2 million shares were outstanding with a weighted-average exercise price of $309.62 per share.

During the six months ended April 27, 2025, the restricted stock units (RSUs) granted in thousands of shares and the weighted-average grant date fair values, using the closing price of our common stock on the grant date in dollars, follow:

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**(20)**Disposition

In February 2025, we completed a transaction with Banco Bradesco S.A. (Bradesco), for Bradesco to invest and become a 50% owner of our wholly-owned subsidiary in Brazil, BJD. Bradesco contributed capital directly to BJD. The transaction resulted in the deconsolidation of BJD in the second quarter of 2025. BJD finances retail and wholesale loans for agricultural, construction, and forestry equipment and was included in our financial services segment. BJD was a part of our Brazil operations which is considered an integrated single foreign entity.

We retained a 50% equity interest in BJD, which was valued at the deconsolidation date at $362 based on the completed transaction with Bradesco and its amount of contributed capital. We are accounting for our investment in BJD using the equity method of accounting and results of its operations are reported in “Equity in income of unconsolidated affiliates.” The related investment in unconsolidated affiliates and receivables from unconsolidated affiliates are reported in “Other assets” and “Other receivables,” respectively, on the condensed consolidated balance sheets.

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The major classes of the total assets and liabilities of BJD at the time of deconsolidation were as follows:

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At the time of deconsolidation in February 2025, the additional gain or loss was not significant. BJD was reclassified as held for sale in the third quarter of 2024.

Statements of Consolidated Cash Flows – Our noncash transactions as a result of BJD deconsolidation in February 2025 include the following items: derecognition of the above total assets (excluding cash and cash equivalents) and total liabilities, and the recognition of the investment in unconsolidated affiliates and receivables from unconsolidated affiliates (BJD intercompany payables above). The decrease in cash and cash equivalents resulting from deconsolidation of BJD was recorded in investing activities – “Other” in the statements of consolidated cash flows.

**(21)**Special ItemS

Discrete Tax Items

In the first quarter of 2025, we recorded favorable net discrete tax items primarily due to tax benefits of $110 related to the realization of foreign net operating losses from the consolidation of certain subsidiaries and $53 from an adjustment to an uncertain tax position of a foreign subsidiary.

Banco John Deere S.A.

In February 2025, we completed the transaction with Bradesco (see Note 20) for the sale of 50% ownership in BJD. BJD was included in our financial services segment and was reclassified as held for sale in the third quarter of 2024. In the first quarter of 2025, a pretax and after-tax gain (reversal of previous losses) of $32 was recorded in “Selling, administrative and general expenses” and presented in “Impairments and other adjustments” in the statements of consolidated income and consolidated cash flows, respectively.

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**(22)**Subsequent EventS

In May 2025, we entered into a retail note securitization transaction, resulting in $369 of secured borrowings.

On May 28, 2025, a quarterly dividend of $1.62 per share was declared at the Board of Directors meeting, payable on August 8, 2025, to stockholders of record on June 30, 2025.

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Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

All amounts are presented in millions of 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 input costs customers need to run their operations. Our operations are managed through the production and precision agriculture (PPA), small agriculture and turf (SAT), construction and 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 2025

Agriculture and Turf

Construction and Forestry

Company Trends

Customers seek to improve profitability, productivity, and sustainability through integrating technology into their operations. Deeper integration of technology into equipment is a persistent market trend. These technologies are incorporated into products within each of our operating segments. We expect this trend to persist for the foreseeable future. Our Smart Industrial Operating Model and Leap Ambitions are intended to capitalize on this market trend. Engaged acres are an indicator we use to understand customer utilization of our technology. We continue to invest in a Solutions as a Service business model to increase technology adoption and utilization by our customers. Solutions as a Service products did not represent a significant percentage of our revenues in the periods presented.

Company Outlook for 2025

Agriculture and turf and construction equipment sales volumes during the remainder of 2025 are expected to continue to be lower than the prior year due to reduced demand.

Agriculture and Turf Outlook for 2025

• Demand for large agricultural equipment in the U.S. and Canada is expected to decline due to high interest rates, elevated used inventory levels, and market uncertainty. Stable crop prices and the impact of U.S. government subsidies on farm incomes are expected to partially mitigate this decline.
• We expect small agricultural equipment sales to be down from 2024 levels in the U.S. and Canada. Strong profitability is anticipated to continue in the small agricultural sector as dairy and livestock prices remain elevated and certain high value crops return to profitability; however, this is projected to be more than offset by restrained demand in the turf and compact utility tractor markets amid economic uncertainty and high interest rates.
• Industry demand in Europe is forecasted to be down slightly. Farm fundamentals are improving, given strong dairy and livestock margins. Additionally, commodity prices and input costs have steadied along with an improving interest rate environment. This is projected to be offset by below-average yields in key markets.
• Demand in South America is expected to be roughly flat. In Brazil, profitability from recovered corn and soybean crop yields, as well as high margins in coffee production, are expected to have a positive impact on

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sales. However, record crop production is likely to reduce commodity prices, and high interest rates continue to temper demand for equipment.

• Industry sales in Asia are forecasted to be flat as the outlook for tractor sales in India improves.

Construction and Forestry Outlook for 2025

• Construction equipment industry sales are forecasted to be down in the U.S. and Canada from 2024 levels. The decline is due to projections for single-family housing starts to moderate given macro uncertainty and high mortgage rates, while rental sales continue to soften and elevated interest rates continue to reduce multi-family and commercial real estate markets. These unfavorable factors are projected to be partially offset by high levels of U.S. government infrastructure spending.
• Global forestry markets are expected to be flat to down as global market conditions remain challenged.
• Global roadbuilding markets are forecasted to be generally flat, supported by strong end-market demand worldwide, along with improving sentiment throughout Europe.

Financial Services Outlook for 2025

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Net Income ​ Up ​

• Prior and current period special items ​ Favorable ​

• Selling, administrative and general expenses ​ Favorable ​

(–) Financing spreads ​ Unfavorable ​

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 lower demand for equipment. In 2025, we expect to continue experiencing the following effects due to unfavorable market conditions: lower sales volumes, higher sales incentives, and elevated receivable write-offs and expected credit losses.

Global Trade Policies. In the second quarter of 2025, new tariffs were imposed in the U.S. for imports from a broad range of countries. Certain countries also implemented or proposed retaliatory tariffs on imports from the U.S. Trade policies are rapidly evolving causing uncertainty in the agriculture and construction industries.

Trade policies impact us in various ways. We are a net exporter of agriculture and turf equipment from the U.S. Nearly 80% of our domestic sales are assembled in the U.S., with the remaining products imported primarily from Europe, Mexico, India, and Japan. The current effective incremental tariffs have adversely affected the cost of components. Uncertainties surrounding trade policies may also result in supply chain disruptions and could impact the availability of raw materials and components. In addition, retaliatory tariffs by regions outside the U.S., currently in effect or adopted in the future, may impact the prices of our exported products and the profit realized from these exports. The direct impact of incremental tariffs incurred by us was approximately $95 in the second quarter of 2025, excluding the impact of tariffs on our suppliers and market demand. We are actively taking steps to limit potential impacts on our business.

Interest Rates. While interest rates in the U.S. decreased in the fourth quarter of 2024, they remain elevated. High rates impact us in several ways, primarily affecting the demand for our products and financing spreads for the financial services operations. The markets for our agriculture, turf, and construction products are negatively impacted by elevated interest rates and their effect on borrowing costs for our customers.

Changes in the agricultural market business cycle, global trade policies, and interest rates are driven by factors outside of our control, and as a result we cannot reasonably foresee when these conditions will fully 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. The lawsuit alleges monopolization and unfair competition in violation of the federal and state antitrust laws. Plaintiffs seek a permanent injunction and other equitable relief to allow owners of our equipment, as well as independent repair providers, access to our repair tools and any other repair resources available to authorized John Deere dealers. At this stage, we are unable to estimate the potential impact on our business.

Other Items of Concern and Uncertainties – Other items that could impact our results are:

• global and regional political conditions, including the ongoing war between Russia and Ukraine, the conflict between India and Pakistan, and the conflicts in the Middle East
• shifts in energy, economic, tax and trade policies, and positions on government subsidies of farming
• capital market disruptions

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• foreign currency and capital control policies
• right to repair regulations and legislation
• weather conditions
• marketplace adoption and monetization of technologies we have invested in
• our ability to strengthen our digital capabilities, automation, autonomy, and alternative power technologies
• 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
• slower economic growth

Consolidated Results – 2025 Compared with 2024

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Net sales and revenues decreased for both the quarter and year-to-date periods primarily due to lower sales volumes. Net income and diluted EPS decreased primarily due to lower sales volumes and the unfavorable effects of foreign currency exchange, partially offset by lower production costs and discrete tax items in the first quarter of 2025 (see Note 21). The discussion of net sales and operating profit is included in the Business Segment Results below.

An explanation of the cost of sales to net sales ratio and other significant statement of consolidated income changes follows:

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Business Segment Results – 2025 Compared with 2024

The equipment operations segment results were impacted by incremental tariffs in 2025. The tariff costs were included in production costs and other items, and were offset by cost reductions in the same categories.

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Production and precision agriculture sales decreased for the quarter as a result of lower U.S. shipment volumes driven mainly by higher interest rates and used inventory levels. Operating profit decreased primarily due to lower shipment volumes / sales mix and unfavorable effects of foreign currency exchange. This was partially offset by decreased production costs from lower material costs and employee profit-sharing incentives, and price realization.

Production & Precision Agriculture Operating Profit

Second Quarter 2025 Compared to Second Quarter 2024

Sales for the first six months decreased as a result of lower shipment volumes (primarily in the U.S. and Europe). Operating profit for the first six months decreased due to lower shipment volumes / sales mix driven by higher interest rates and used inventory levels, partially offset by decreased production costs from lower material costs and employee profit-sharing incentives, and price realization.

Production & Precision Agriculture Operating Profit

First Six Months 2025 Compared to First Six Months 2024

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Small agriculture and turf sales decreased for the quarter as a result of lower shipment volumes (primarily in the U.S., offset by India) driven mainly by economic uncertainties and higher interest rates, partially offset by price realization in the U.S. and Canada. Operating profit remained steady as favorable factors including lower production costs from lower material costs, lower warranty expenses, and price realization were offset by lower shipment volumes / sales mix.

Small Agriculture & Turf Operating Profit

Second Quarter 2025 Compared to Second Quarter 2024

Sales for the first six months decreased as a result of lower shipment volumes (primarily in the U.S. and Europe) driven mainly by economic uncertainties and higher interest rates. Operating profit for the first six months decreased primarily as a result of lower shipment volumes / sales mix, partially offset by decreased production costs driven by lower material costs, and price realization.

Small Agriculture & Turf Operating Profit

First Six Months 2025 Compared to First Six Months 2024

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Construction and forestry sales decreased for the quarter due to lower shipment volumes (primarily in the U.S. and Brazil) driven by economic uncertainties and elevated interest rates. Operating profit decreased primarily due to lower shipment volumes / sales mix and unfavorable price realization due to pressures from the competitive environment.

Construction & Forestry Operating Profit

Second Quarter 2025 Compared to Second Quarter 2024

Sales for the first six months decreased due to lower worldwide shipment volumes due to planned underproduction in the first quarter, economic uncertainties, and higher interest rates. Operating profit decreased primarily due to lower shipment volumes / sales mix and unfavorable price realization due to pressures from the competitive environment.

Construction & Forestry Operating Profit

First Six Months 2025 Compared to First Six Months 2024

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The average balance of receivables and leases financed was 6% lower in the second quarter of 2025 and 4% lower in the first six months of 2025 compared with the same periods last year, primarily due to the deconsolidation of BJD in 2025 (see Note 20). Excluding the impact of BJD, revenue was flat in the second quarter of 2025 and increased slightly in the first six months of 2025.

Financial services net income in the second quarter of 2025 was flat compared with the same period last year due to less favorable financing spreads and a higher provision for credit losses, offset by lower selling, administrative, and general expenses and a reduction in derivative valuation adjustments. Excluding the impact of the BJD special item in 2025 (see Note 21), net income decreased in the first six months of 2025 due to a higher provision for credit losses and lower financing spreads, partially offset by lower selling, administrative, and general expenses and a reduction in 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 – 2025 Compared with 2024

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 lower operating cash flows from equipment operations in 2025 compared with 2024 driven by a decrease in net income adjusted for non-cash provisions.

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 portfolio. In the second quarter of 2025, the BJD business was deconsolidated (see Note 20). BJD assets and liabilities were reclassified to held for sale in the third quarter of 2024 and maintained that classification until the deconsolidation; they are not included within balances at year-end 2024.

Key metrics are provided in the following table:

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The decrease in unused credit lines during the first six months of 2025 relates to an increase in commercial paper outstanding partially offset by an increase in bank lines of credit. The increase in unused credit lines compared to a year ago was due to a decrease in commercial paper outstanding and an increase in bank lines of credit.

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.

Cash Flows

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Cash inflows from consolidated operating activities in the first six months of 2025 were $568. 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, employee profit-sharing incentives, an OPEB contribution, and a reduction in dealer sales incentive accruals. Cash inflows from investing activities were $779 in the first six months of this year. The primary drivers were collections of receivables (excluding receivables related to sales) exceeding the cost of receivables acquired, partially offset by purchases of property and equipment. Cash outflows from financing activities were $821 in the first six months of 2025, as cash returned to shareholders was partially offset by higher external borrowings. Cash returned to shareholders was $1,681 in the first six months of 2025. Cash, cash equivalents, and restricted cash increased $546 during the first six months of 2025.

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 $1,422 during the first six months of 2025, primarily due to a seasonal increase. These receivables decreased $2,132 compared to a year ago due to lower sales volumes. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 7% at April 27, 2025, 6% at October 27, 2024, and 2% at April 28, 2024.

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 $2,353 during the first six months of 2025, primarily due to lower retail customer receivables, seasonal payments, and a decline in wholesale notes. Financing receivables and equipment on operating leases decreased $1,375 in the past 12 months due to the sale of 50% ownership in BJD and deconsolidation of related receivables in the second quarter of 2025 (see Note 20). Excluding the related BJD receivables from April 28, 2024 balances, financing receivables and equipment on operating leases increased $1,589 due to higher retail customer receivables and wholesale notes. Total acquisition volumes of financing receivables and equipment on operating leases were 17% lower in the first six months of 2025, compared with the same period last year excluding BJD receivables, as volumes of wholesale notes, retail notes, operating leases, and financing leases were lower, while revolving charge accounts were higher compared to the same period last year.

Inventories. Inventories increased by $777 during the first six months of 2025 primarily due to a seasonal increase, and decreased by $573 compared to a year ago due to lower forecasted shipment volumes. A majority of these inventories are valued on the last-in, first out (LIFO) method.

Property and Equipment. Property and equipment cash expenditures in the first six months of 2025 were $555 compared with $719 in the same period last year. Capital expenditures in 2025 are estimated to be approximately $1,430.

Accounts Payable and Accrued Expenses. Accounts payable and accrued expenses decreased by $1,198 in the first six months of 2025, primarily due to a decrease in accrued expenses associated with employee benefits and dealer sales discounts. Accounts payable and accrued expenses decreased $1,264 compared to a year ago due to a decrease in accrued expenses associated with derivative liabilities, employee benefits, and warranty liabilities, and a decrease in accounts payable associated with trade payables.

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Borrowings. Total external borrowings increased by $1,128 in the first six months of 2025 and increased $684 compared to a year ago, which contributed to higher cash, cash equivalents, and restricted cash balances. The change in borrowings compared to a year ago was also impacted by the sale of 50% ownership in BJD and deconsolidation of related borrowings in the second quarter of 2025 (see Note 20). BJD borrowings at year-end were included in “Liabilities held for sale.”

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 has an expiration in November 2025 and total capacity or “financing limit” of $2,500. At April 27, 2025, $1,643 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.

In the first six months of 2025, the financial services operations issued $1,480 and retired $2,351 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 have access to bank lines of credit with various banks throughout the world.

Worldwide lines of credit totaled $11.9 billion at April 27, 2025, consisting primarily of:

• a 364-day credit facility agreement of $5.0 billion expiring in the second quarter of 2026
• a credit facility agreement of $3.25 billion expiring in the second quarter of 2028
• a credit facility agreement of $3.25 billion expiring in the second quarter of 2030

At April 27, 2025, $4,866 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 unsecured company securities by the rating agencies engaged by us are as follows:

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​ ​ 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 ​

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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 and precision agriculture operations, small agriculture and turf operations, construction and forestry operations, and other corporate assets, liabilities, revenues, and expenses not reflected within financial services. Transactions between the equipment operations and financial services have been eliminated to arrive at the consolidated financial statements.

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.

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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.

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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.

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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 net pension assets / liabilities.

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

10 Elimination of financial services’ equity.

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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.

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