Deere Reports Second Quarter Net Income of $2.860 Billion

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May 19, 2023, 06:45 ET

Sound execution contributes to net sales gain of 34% and higher earnings.
Results benefit from healthy demand for farm and construction equipment and improved operating environment.
Full-year net income forecast increased to $9.25 billion to $9.50 billion with cash flow from equipment operations expected to be $10.00 billion to $10.50 billion.

MOLINE, Ill., May 19, 2023 /PRNewswire/ -- Deere & Company (NYSE: DE) reported net income of $2.860 billion for the second quarter ended April 30, 2023, or $9.65 per share, compared with net income of $2.098 billion, or $6.81 per share, for the quarter ended May 1, 2022. For the first six months of the year, net income attributable to Deere & Company was $4.819 billion, or $16.18 per share, compared with $3.001 billion, or $9.72 per share, for the same period last year.

Deere Reports Second Quarter Net Income of $2.860 Billion

Worldwide net sales and revenues increased 30 percent, to $17.387 billion, for the second quarter of 2023 and rose 31 percent, to $30.038 billion, for six months. Net sales were $16.079 billion for the quarter and $27.481 billion for six months, compared with $12.034 billion and $20.565 billion last year.

"As shown by the company's outstanding second-quarter results, Deere continues to benefit from favorable market conditions and an improving operating environment," said John C. May, chairman and chief executive officer. "We also are being helped by the sound execution of our business plans by our employees, dealers, and suppliers. They are doing an exceptional job meeting demand for our products and serving customers. Though supply-chain constraints continue to present a challenge, we are seeing further improvement."

Company Outlook & Summary

Net income attributable to Deere & Company for fiscal 2023 is forecast to be in a range of $9.25 billion to $9.50 billion.

"Based on Deere's results to date, it's clear we are well on our way to another year of exceptional achievement," May said. "This is due in no small part to the success of our smart industrial operating model and our ability to provide value to our customers by helping them be more profitable, productive, and sustainable."

Deere & Company	Second Quarter					Year to Date
$ in millions, except per share amounts	2023		2022		% Change	2023		2022		% Change
Net sales and revenues	$	17,387	$	13,370	30 %	$	30,038	$	22,939	31 %
Net income	$	2,860	$	2,098	36 %	$	4,819	$	3,001	61 %
Fully diluted EPS	$	9.65	$	6.81		$	16.18	$	9.72

Results for the presented periods were affected by special items. See Note 1 of the financial statements for further details.

Production & Precision Agriculture	Second Quarter
$ in millions	2023		2022		% Change
Net sales	$	7,822	$	5,117	53 %
Operating profit	$	2,170	$	1,057	105 %
Operating margin		27.7 %		20.7 %

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

Small Agriculture & Turf	Second Quarter
$ in millions	2023		2022		% Change
Net sales	$	4,145	$	3,570	16 %
Operating profit	$	849	$	520	63 %
Operating margin		20.5 %		14.6 %

Small agriculture and turf sales increased for the quarter due to price realization and higher shipment volumes, partially offset by the negative effects of foreign currency translation. Operating profit improved primarily as a result of price realization and improved shipment volumes / mix, partially offset by higher production costs, increased SA&G and R&D expenses, and the unfavorable effects of foreign currency exchange.

Construction & Forestry	Second Quarter
$ in millions	2023		2022		% Change
Net sales	$	4,112	$	3,347	23 %
Operating profit	$	838	$	814	3 %
Operating margin		20.4 %		24.3 %

Construction and forestry sales moved higher for the quarter primarily due to price realization and higher shipment volumes. Operating profit improved due to price realization and improved shipment volumes / mix, partially offset by higher production costs and increased SA&G and R&D expenses. Prior period results benefited from the non-cash gain on the remeasurement of the previously held equity investment in the Deere-Hitachi joint venture.

Financial Services	Second Quarter
$ in millions	2023		2022		% Change
Net income	$	28	$	208	-87 %

Financial services net income for the quarter decreased due to less-favorable financing spreads and a higher provision for credit losses, partially offset by income earned on a higher average portfolio. Additionally impacting the quarter's results was a $135 million after-tax correction of the accounting treatment for financing incentives offered to John Deere dealers, which affected the timing of expense recognition. The accounting correction is unrelated to current market conditions or the credit quality of the financial services portfolio, which remains strong. The allowance for credit losses, excluding the portfolio in Russia, was .40 percent of financing receivables as of April 30, 2023, compared with .42 percent in the prior period.

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

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

Deere Segment Outlook for Fiscal 2023		Currency	Price
$ in millions	Net Sales	Translation	Realization
Production & Precision Ag	Up ~ 20%	0 %	+15 %
Small Ag & Turf	Up ~ 5%	-1 %	+9 %
Construction & Forestry	Up ~ 15%	0 %	+10 %

Financial Services	Net Income	$ 630

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

FORWARD-LOOKING STATEMENTS

Certain statements contained herein, including in the section entitled "Company Outlook & Summary," "Industry Outlook," and "Deere Segment Outlook," relating to future events, expectations, and trends, constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Some of these risks and uncertainties could affect all lines of the company's operations generally while others could more heavily affect a particular line of business.

Forward-looking statements are based on currently available information and current assumptions, expectations, and projections about future events and should not be relied upon. Except as required by law, the company expressly disclaims any obligation to update or revise its forward-looking statements. Many factors, risks, and uncertainties could cause actual results to differ materially from these forward-looking statements. Among these factors are risks related to:

changes in U.S. and international laws, regulations, and policies relating to trade, spending, taxing, banking, monetary, environmental (including climate change and engine emission), and farming policies;
political, economic, and social instability of the geographies in which the company operates;
wars and other conflicts, including the current conflict between Russia and Ukraine;
adverse macroeconomic conditions, including unemployment, inflation, rising interest rates, changes in consumer practices due to slower economic growth or possible recession, and regional or global liquidity constraints;
growth and sustainability of non-food uses for crops (including ethanol and biodiesel production);
the ability to execute business strategies, including the company's Smart Industrial operating model, Leap Ambitions, and mergers and acquisitions;
the ability to understand and meet customers' changing expectations and demand for John Deere products;
changes to governmental communications channels (radio frequency technology);
gaps or limitations in rural broadband coverage, capacity, and speed needed to support technology solutions;
the company's ability to adapt in highly competitive markets;
dealer practices and their ability to manage distribution of John Deere products and support and service precision technology solutions;
changes in climate patterns, unfavorable weather events, and natural disasters;
changes in the company's credit ratings, and failure to comply with financial covenants in credit agreements could impact access to funding;
stress in the banking sector may have adverse impacts on vendors or customers as well as the company's ability to access cash deposits;
availability and price of raw materials, components, and whole goods;
delays or disruptions in the company's supply chain;
the ability to attract, develop, engage, and retain qualified personnel;
security breaches, cybersecurity attacks, technology failures, and other disruptions to the information technology infrastructure of the company and its products;
loss of or challenges to intellectual property rights;
legislation introduced or enacted that could affect the company's business model and intellectual property, such as so-called right to repair or right to modify legislation;
investigations, claims, lawsuits, or other legal proceedings;
events that damage the company's reputation or brand;
world grain stocks, available farm acres, soil conditions, harvest yields, prices for commodities and livestock, input costs, and availability of transport for crops; and
housing starts and supply, real estate and housing prices, levels of public and nonresidential construction, and infrastructure investment.

Further information concerning the company and its businesses, including factors that could materially affect the company's financial results, is included in the company's other filings with the SEC (including, but not limited to, the factors discussed in Item 1A. "Risk Factors" of our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q). There also may be other factors that we cannot anticipate or that are not described herein because we do not currently perceive them to be material.

DEERE & COMPANY SECOND QUARTER 2023 PRESS RELEASE (In millions of dollars) Unaudited
	Three Months Ended					Six Months Ended
	April 30		May 1		%	April 30		May 1		%
	2023		2022		Change	2023		2022		Change
Net sales and revenues:
Production & precision ag net sales	$	7,822	$	5,117	+53	$	13,021	$	8,473	+54
Small ag & turf net sales		4,145		3,570	+16		7,146		6,201	+15
Construction & forestry net sales		4,112		3,347	+23		7,314		5,891	+24
Financial services revenues		1,107		864	+28		2,147		1,734	+24
Other revenues		201		472	-57		410		640	-36
Total net sales and revenues	$	17,387	$	13,370	+30	$	30,038	$	22,939	+31

Operating profit: *
Production & precision ag	$	2,170	$	1,057	+105	$	3,378	$	1,353	+150
Small ag & turf		849		520	+63		1,296		891	+45
Construction & forestry		838		814	+3		1,463		1,085	+35
Financial services		41		279	-85		279		577	-52
Total operating profit		3,898		2,670	+46		6,416		3,906	+64
Reconciling items **		(47)		(111)	-58		(69)		(195)	-65
Income taxes		(991)		(461)	+115		(1,528)		(710)	+115
Net income attributable to Deere & Company	$	2,860	$	2,098	+36	$	4,819	$	3,001	+61


*	Operating profit is income from continuing operations before corporate expenses, certain external interest expense, certain foreign exchange gains and losses, and income taxes. Operating profit of the financial services segment includes the effect of interest expense and foreign exchange gains or losses.
**	Reconciling items are primarily corporate expenses, certain external interest expense, certain foreign exchange gains and losses, pension and postretirement benefit costs excluding the service cost component, equity in income of unconsolidated affiliates, and net income attributable to noncontrolling interests.

DEERE & COMPANY STATEMENTS OF CONSOLIDATED INCOME For the Three and Six Months Ended April 30, 2023 and May 1, 2022 (In millions of dollars and shares except per share amounts) Unaudited
	Three Months Ended				Six Months Ended
	2023		2022		2023		2022
Net Sales and Revenues
Net sales	$	16,079	$	12,034	$	27,481	$	20,565
Finance and interest income		1,079		796		2,073		1,595
Other income		229		540		484		779
Total		17,387		13,370		30,038		22,939

Costs and Expenses
Cost of sales		10,730		8,918		18,663		15,613
Research and development expenses		547		453		1,043		855
Selling, administrative and general expenses		1,330		932		2,283		1,713
Interest expense		569		187		1,049		417
Other operating expenses		363		328		660		638
Total		13,539		10,818		23,698		19,236

Income of Consolidated Group before Income Taxes		3,848		2,552		6,340		3,703
Provision for income taxes		991		461		1,528		710

Income of Consolidated Group		2,857		2,091		4,812		2,993
Equity in income of unconsolidated affiliates		2		6		3		8

Net Income		2,859		2,097		4,815		3,001
Less: Net loss attributable to noncontrolling interests		(1)		(1)		(4)
Net Income Attributable to Deere & Company	$	2,860	$	2,098	$	4,819	$	3,001

Per Share Data
Basic	$	9.69	$	6.85	$	16.26	$	9.78
Diluted		9.65		6.81		16.18		9.72
Dividends declared		1.25		1.05		2.45		2.10
Dividends paid		1.20		1.05		2.33		2.10

Average Shares Outstanding
Basic		295.1		306.2		296.3		306.8
Diluted		296.5		308.1		297.8		308.8

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (In millions of dollars) Unaudited
	April 30		October 30		May 1
	2023		2022		2022
Assets
Cash and cash equivalents	$	5,267	$	4,774	$	3,878
Marketable securities		856		734		682
Trade accounts and notes receivable - net		9,971		6,410		6,258
Financing receivables - net		38,954		36,634		34,085
Financing receivables securitized - net		5,659		5,936		4,073
Other receivables		2,593		2,492		2,306
Equipment on operating leases - net		6,524		6,623		6,465
Inventories		9,713		8,495		9,030
Property and equipment - net		6,288		6,056		5,715
Goodwill		3,963		3,687		3,812
Other intangible assets - net		1,222		1,218		1,352
Retirement benefits		3,519		3,730		3,059
Deferred income taxes		1,308		824		1,104
Other assets		2,510		2,417		2,280
Total Assets	$	98,347	$	90,030	$	84,099

Liabilities and Stockholders' Equity

Liabilities
Short-term borrowings	$	17,109	$	12,592	$	12,413
Short-term securitization borrowings		5,379		5,711		4,006
Accounts payable and accrued expenses		14,716		14,822		12,679
Deferred income taxes		511		495		584
Long-term borrowings		35,611		33,596		32,447
Retirement benefits and other liabilities		2,520		2,457		2,964
Total liabilities		75,846		69,673		65,093

Redeemable noncontrolling interest		102		92		99

Stockholders' Equity
Total Deere & Company stockholders' equity		22,395		20,262		18,904
Noncontrolling interests		4		3		3
Total stockholders' equity		22,399		20,265		18,907
Total Liabilities and Stockholders' Equity	$	98,347	$	90,030	$	84,099

See Condensed Notes to Interim Consolidated Financial Statements.

DEERE & COMPANY STATEMENTS OF CONSOLIDATED CASH FLOWS For the Six Months Ended April 30, 2023 and May 1, 2022 (In millions of dollars) Unaudited
	2023		2022
Cash Flows from Operating Activities
Net income	$	4,815	$	3,001
Adjustments to reconcile net income to net cash used for operating activities:
Provision (credit) for credit losses		(89)		45
Provision for depreciation and amortization		995		933
Impairments and other adjustments		173		77
Share-based compensation expense		54		44
Gain on remeasurement of previously held equity investment				(326)
Provision (credit) for deferred income taxes		(377)		37
Changes in assets and liabilities:
Receivables related to sales		(4,407)		(1,535)
Inventories		(982)		(2,265)
Accounts payable and accrued expenses		(313)		(443)
Accrued income taxes payable/receivable		(96)		(139)
Retirement benefits		(68)		(1,020)
Other		148		(171)
Net cash used for operating activities		(147)		(1,762)

Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)		12,593		11,190
Proceeds from sales of equipment on operating leases		993		1,035
Proceeds from sales of businesses and unconsolidated affiliates, net of cash sold		36
Cost of receivables acquired (excluding receivables related to sales)		(13,451)		(11,971)
Acquisitions of businesses, net of cash acquired		(41)		(473)
Purchases of property and equipment		(584)		(346)
Cost of equipment on operating leases acquired		(1,229)		(1,004)
Collateral on derivatives - net		367		(248)
Other		(178)		(71)
Net cash used for investing activities		(1,494)		(1,888)

Cash Flows from Financing Activities
Increase in total short-term borrowings		3,992		812
Proceeds from long-term borrowings		4,868		4,298
Payments of long-term borrowings		(3,567)		(3,625)
Proceeds from issuance of common stock		30		50
Repurchases of common stock		(2,546)		(1,226)
Dividends paid		(697)		(649)
Other		(63)		(46)
Net cash provided by (used for) financing activities		2,017		(386)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash		70		(110)

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash		446		(4,146)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period		4,941		8,125
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	5,387	$	3,979

See Condensed Notes to Interim Consolidated Financial Statements.

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

(1)	Special Items
	2023
	In the second quarter of 2023, the company corrected the accounting treatment for financing incentives offered to John Deere dealers, which impacted the timing of expense recognition and the presentation of incentive costs in the consolidated financial statements. The cumulative effect of this correction, $173 million pretax ($135 million after-tax), was recorded in the second quarter of 2023. Prior period results for Deere & Company were not restated, as the adjustment is considered immaterial to the company's financial statements.

	2022
	In the second quarter of 2022, the company suspended shipments of machines and service parts to Russia. The suspension of shipments to Russia reduced actual and forecasted revenue for the region, which made it probable future cash flows will not cover the carrying value of certain assets. The accounting consequences during the second quarter of 2022 were impairments of most long-lived assets, an increase in reserves of certain financial assets, and an accrual for various contractual uncertainties.

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

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

	The following table summarizes the operating profit impact, in millions of dollars, of the special items recorded for the three months and six months ended April 30, 2023 and May 1, 2022:

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

2022 Expense (benefit):
Gain on remeasurement of equity investment – Other income					$	(326)				(326)					$	(326)				(326)
Total Russia/Ukraine events expense	$	46	$	1		47		26		120	$	46	$	1		47		26		120
UAW ratification bonus – Cost of Sales												53		9		28				90
Total expense (benefit)		46		1		(279)		26		(206)		99		10		(251)		26		(116)

Period over period change	$	(46)	$	(1)	$	279	$	147	$	379	$	(99)	$	(10)	$	251	$	147	$	289


(2)	The consolidated financial statements represent the consolidation of all Deere & Company's subsidiaries. The supplemental consolidating data is presented for informational purposes. Transactions between the Equipment Operations and Financial Services have been eliminated to arrive at the consolidated financial statements. In the supplemental consolidating data in Note 3 to the financial statements, the "Equipment Operations" represents the enterprise without "Financial Services", which include the company's production and precision agriculture operations, small agriculture and turf operations, and construction and forestry operations, and other corporate assets, liabilities, revenues, and expenses not reflected within "Financial Services."

DEERE & COMPANY (3) SUPPLEMENTAL CONSOLIDATING DATA STATEMENTS OF INCOME For the Three Months Ended April 30, 2023 and May 1, 2022 (In millions of dollars) Unaudited
	EQUIPMENT				FINANCIAL
	OPERATIONS				SERVICES				ELIMINATIONS				CONSOLIDATED
	2023		2022		2023		2022		2023		2022		2023		2022
Net Sales and Revenues
Net sales	$	16,079	$	12,034									$	16,079	$	12,034
Finance and interest income		121		36	$	1,206	$	847	$	(248)	$	(87)		1,079		796	¹
Other income		185		584		91		104		(47)		(148)		229		540	^{2, 3}
Total		16,385		12,654		1,297		951		(295)		(235)		17,387		13,370

Costs and Expenses
Cost of sales		10,737		8,919						(7)		(1)		10,730		8,918	⁴
Research and development expenses		547		453										547		453
Selling, administrative and general expenses		935		753		397		181		(2)		(2)		1,330		932	⁴
Interest expense		103		97		540		112		(74)		(22)		569		187	⁵
Interest compensation to Financial Services		174		62						(174)		(62)					⁵
Other operating expenses		85		99		316		377		(38)		(148)		363		328	^{6, 7}
Total		12,581		10,383		1,253		670		(295)		(235)		13,539		10,818

Income before Income Taxes		3,804		2,271		44		281						3,848		2,552
Provision for income taxes		974		387		17		74						991		461

Income after Income Taxes		2,830		1,884		27		207						2,857		2,091
Equity in income of unconsolidated affiliates		1		5		1		1						2		6

Net Income		2,831		1,889		28		208						2,859		2,097
Less: Net loss attributable to noncontrolling interests		(1)		(1)										(1)		(1)
Net Income Attributable to Deere & Company	$	2,832	$	1,890	$	28	$	208					$	2,860	$	2,098

¹ Elimination of Financial Services' interest income earned from Equipment Operations.

² Elimination of Equipment Operations' margin from inventory transferred to equipment on operating leases.

³ Elimination of Financial Services' income related to intercompany guarantees of investments in certain international markets and intercompany service revenue.

⁴ Elimination of intercompany service fees.

⁵ Elimination of Equipment Operations' interest expense to Financial Services.

⁶ Elimination of Financial Services' lease depreciation expense related to inventory transferred to equipment on operating leases.

⁷ Elimination of Equipment Operations' expense related to intercompany guarantees of investments in certain international markets and intercompany service expenses.

DEERE & COMPANY SUPPLEMENTAL CONSOLIDATING DATA (Continued) STATEMENTS OF INCOME For the Six Months Ended April 30, 2023 and May 1, 2022 (In millions of dollars) Unaudited
	EQUIPMENT				FINANCIAL
	OPERATIONS				SERVICES				ELIMINATIONS				CONSOLIDATED
	2023		2022		2023		2022		2023		2022		2023		2022
Net Sales and Revenues
Net sales	$	27,481	$	20,565									$	27,481	$	20,565
Finance and interest income		234		70	$	2,274	$	1,675	$	(435)	$	(150)		2,073		1,595	¹
Other income		417		801		268		192		(201)		(214)		484		779	^{2, 3}
Total		28,132		21,436		2,542		1,867		(636)		(364)		30,038		22,939

Costs and Expenses
Cost of sales		18,675		15,614						(12)		(1)		18,663		15,613	⁴
Research and development expenses		1,043		855										1,043		855
Selling, administrative and general expenses		1,719		1,410		569		307		(5)		(4)		2,283		1,713	⁴
Interest expense		204		188		983		270		(138)		(41)		1,049		417	⁵
Interest compensation to Financial Services		297		106						(297)		(106)					⁵
Other operating expenses		137		138		707		712		(184)		(212)		660		638	^{6, 7}
Total		22,075		18,311		2,259		1,289		(636)		(364)		23,698		19,236

Income before Income Taxes		6,057		3,125		283		578						6,340		3,703
Provision for income taxes		1,455		568		73		142						1,528		710

Income after Income Taxes		4,602		2,557		210		436						4,812		2,993
Equity in income of unconsolidated affiliates		1		5		2		3						3		8

Net Income		4,603		2,562		212		439						4,815		3,001
Less: Net loss attributable to noncontrolling interests		(4)												(4)
Net Income Attributable to Deere & Company	$	4,607	$	2,562	$	212	$	439					$	4,819	$	3,001

¹ Elimination of Financial Services' interest income earned from Equipment Operations.

² Elimination of Equipment Operations' margin from inventory transferred to equipment on operating leases.

³ Elimination of Financial Services' income related to intercompany guarantees of investments in certain international markets and intercompany service revenue.

⁴ Elimination of Intercompany service fees.

⁵ Elimination of Equipment Operations' interest expense to Financial Services.

⁶ Elimination of Financial Services' lease depreciation expense related to inventory transferred to equipment on operating leases.

⁷ Elimination of Equipment Operations' expense related to intercompany guarantees of investments in certain international markets and intercompany service expense.

DEERE & COMPANY SUPPLEMENTAL CONSOLIDATING DATA (Continued) CONDENSED BALANCE SHEETS (In millions of dollars) Unaudited
	EQUIPMENT						FINANCIAL
	OPERATIONS						SERVICES						ELIMINATIONS						CONSOLIDATED
	Apr 30		Oct 30		May 1		Apr 30		Oct 30		May 1		Apr 30		Oct 30		May 1		Apr 30		Oct 30		May 1
	2023		2022		2022		2023		2022		2022		2023		2022		2022		2023		2022		2022
Assets
Cash and cash equivalents	$	3,587	$	3,767	$	3,167	$	1,680	$	1,007	$	711							$	5,267	$	4,774	$	3,878
Marketable securities		14		61		2		842		673		680								856		734		682
Receivables from Financial Services		5,899		6,569		5,669							$	(5,899)	$	(6,569)	$	(5,669)							⁸
Trade accounts and notes receivable - net		1,562		1,273		1,358		10,422		6,434		6,079		(2,013)		(1,297)		(1,179)		9,971		6,410		6,258	⁹
Financing receivables - net		54		47		49		38,900		36,587		34,036								38,954		36,634		34,085
Financing receivables securitized - net		1				6		5,658		5,936		4,067								5,659		5,936		4,073
Other receivables		2,201		1,670		1,944		481		832		405		(89)		(10)		(43)		2,593		2,492		2,306	⁹
Equipment on operating leases - net								6,524		6,623		6,465								6,524		6,623		6,465
Inventories		9,713		8,495		9,030														9,713		8,495		9,030
Property and equipment - net		6,254		6,021		5,678		34		35		37								6,288		6,056		5,715
Goodwill		3,963		3,687		3,812														3,963		3,687		3,812
Other intangible assets - net		1,222		1,218		1,352														1,222		1,218		1,352
Retirement benefits		3,450		3,666		2,996		69		66		65				(2)		(2)		3,519		3,730		3,059	¹⁰
Deferred income taxes		1,355		940		1,247		59		45		49		(106)		(161)		(192)		1,308		824		1,104	¹¹
Other assets		1,961		1,794		1,767		564		626		516		(15)		(3)		(3)		2,510		2,417		2,280	⁹
Total Assets	$	41,236	$	39,208	$	38,077	$	65,233	$	58,864	$	53,110	$	(8,122)	$	(8,042)	$	(7,088)	$	98,347	$	90,030	$	84,099

Liabilities and Stockholders' Equity

Liabilities
Short-term borrowings	$	1,755	$	1,040	$	1,554	$	15,354	$	11,552	$	10,859							$	17,109	$	12,592	$	12,413
Short-term securitization borrowings						5		5,379		5,711		4,001								5,379		5,711		4,006
Payables to Equipment Operations								5,899		6,569		5,669	$	(5,899)	$	(6,569)	$	(5,669)							⁸
Accounts payable and accrued expenses		13,759		12,962		11,370		3,074		3,170		2,534		(2,117)		(1,310)		(1,225)		14,716		14,822		12,679	⁹
Deferred income taxes		402		380		454		215		276		322		(106)		(161)		(192)		511		495		584	¹¹
Long-term borrowings		7,310		7,917		8,556		28,301		25,679		23,891								35,611		33,596		32,447
Retirement benefits and other liabilities		2,410		2,351		2,855		110		108		111				(2)		(2)		2,520		2,457		2,964	¹⁰
Total liabilities		25,636		24,650		24,794		58,332		53,065		47,387		(8,122)		(8,042)		(7,088)		75,846		69,673		65,093

Redeemable noncontrolling interest		102		92		99														102		92		99

Stockholders' Equity
Total Deere & Company stockholders' equity		22,395		20,262		18,904		6,901		5,799		5,723		(6,901)		(5,799)		(5,723)		22,395		20,262		18,904	¹²
Noncontrolling interests		4		3		3														4		3		3
Financial Services equity		(6,901)		(5,799)		(5,723)								6,901		5,799		5,723							¹²
Adjusted total stockholders' equity		15,498		14,466		13,184		6,901		5,799		5,723								22,399		20,265		18,907
Total Liabilities and Stockholders' Equity	$	41,236	$	39,208	$	38,077	$	65,233	$	58,864	$	53,110	$	(8,122)	$	(8,042)	$	(7,088)	$	98,347	$	90,030	$	84,099

⁸ Elimination of receivables / payables between Equipment Operations and Financial Services.

⁹ Primarily reclassification of sales incentive accruals on receivables sold to Financial Services.

¹⁰ Reclassification of net pension assets / liabilities.

¹¹ Reclassification of deferred tax assets / liabilities in the same taxing jurisdictions.

¹² Elimination of Financial Services' equity.

DEERE & COMPANY SUPPLEMENTAL CONSOLIDATING DATA (Continued) STATEMENTS OF CASH FLOWS For the Six Months Ended April 30, 2023 and May 1, 2022 (In millions of dollars) Unaudited
	EQUIPMENT				FINANCIAL
	OPERATIONS				SERVICES				ELIMINATIONS				CONSOLIDATED
	2023		2022		2023		2022		2023		2022		2023		2022
Cash Flows from Operating Activities
Net income	$	4,603	$	2,562	$	212	$	439					$	4,815	$	3,001
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Provision (credit) for credit losses		4		1		(93)		44						(89)		45
Provision for depreciation and amortization		565		518		500		530	$	(70)	$	(115)		995		933	¹³
Impairments and other adjustments				77		173								173		77
Share-based compensation expense										54		44		54		44	¹⁴
Gain on remeasurement of previously held equity investment				(326)												(326)
Distributed earnings of Financial Services		12		232						(12)		(232)					¹⁵
Provision (credit) for deferred income taxes		(304)		75		(73)		(38)						(377)		37
Changes in assets and liabilities:
Receivables related to sales		(255)		(215)						(4,152)		(1,320)		(4,407)		(1,535)	^{16, 18, 19}
Inventories		(910)		(2,201)						(72)		(64)		(982)		(2,265)	¹⁷
Accounts payable and accrued expenses		161		(99)		243		(7)		(717)		(337)		(313)		(443)	¹⁸
Accrued income taxes payable/receivable		(97)		(144)		1		5						(96)		(139)
Retirement benefits		(67)		(1,024)		(1)		4						(68)		(1,020)
Other		54		(102)		103		(117)		(9)		48		148		(171)	^{13, 14, 17}
Net cash provided by (used for) operating activities		3,766		(646)		1,065		860		(4,978)		(1,976)		(147)		(1,762)

Cash Flows from Investing Activities
Collections of receivables (excluding receivables related to sales)						13,169		12,004		(576)		(814)		12,593		11,190	¹⁶
Proceeds from sales of equipment on operating leases						993		1,035						993		1,035
Proceeds from sales of businesses and unconsolidated affiliates, net of cash sold						36								36
Cost of receivables acquired (excluding receivables related to sales)						(13,584)		(12,260)		133		289		(13,451)		(11,971)	¹⁶
Acquisitions of businesses, net of cash acquired		(41)		(473)										(41)		(473)
Purchases of property and equipment		(583)		(345)		(1)		(1)						(584)		(346)
Cost of equipment on operating leases acquired						(1,327)		(1,090)		98		86		(1,229)		(1,004)	¹⁷
Increase in investment in Financial Services		(799)								799							²⁰
Increase in trade and wholesale receivables						(5,310)		(2,159)		5,310		2,159					¹⁶
Collateral on derivatives – net				6		367		(254)						367		(248)
Other		(37)		(46)		(142)		(49)		1		24		(178)		(71)	¹⁹
Net cash used for investing activities		(1,460)		(858)		(5,799)		(2,774)		5,765		1,744		(1,494)		(1,888)

Cash Flows from Financing Activities
Increase (decrease) in total short-term borrowings		(225)		128		4,217		684						3,992		812
Change in intercompany receivables/payables		932		(424)		(932)		424
Proceeds from long-term borrowings		41		55		4,827		4,243						4,868		4,298
Payments of long-term borrowings		(47)		(308)		(3,520)		(3,317)						(3,567)		(3,625)
Proceeds from issuance of common stock		30		50										30		50
Repurchases of common stock		(2,546)		(1,226)										(2,546)		(1,226)
Capital Investment from Equipment Operations						799				(799)							²⁰
Dividends paid		(697)		(649)		(12)		(232)		12		232		(697)		(649)	¹⁵
Other		(35)		(27)		(28)		(19)						(63)		(46)
Net cash provided by (used for) financing activities		(2,547)		(2,401)		5,351		1,783		(787)		232		2,017		(386)

Effect of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash		62		(113)		8		3						70		(110)

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash		(179)		(4,018)		625		(128)						446		(4,146)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period		3,781		7,200		1,160		925						4,941		8,125
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	3,602	$	3,182	$	1,785	$	797					$	5,387	$	3,979

¹³ Elimination of depreciation on leases related to inventory transferred to equipment on operating leases.

¹⁴ Reclassification of share-based compensation expense.

¹⁵ Elimination of dividends from Financial Services to the Equipment Operations, which are included in the Equipment Operations operating activities.

¹⁶ Primarily reclassification of receivables related to the sale of equipment.

¹⁷ Reclassification of direct lease agreements with retail customers.

¹⁸ Reclassification of sales incentive accruals on receivables sold to Financial Services.

¹⁹ Elimination and reclassification of the effects of Financial Services partial financing of the construction and forestry retail locations sales and subsequent collection of those amounts.

²⁰ Elimination of investment from Equipment Operations to Financial Services.

DEERE & COMPANY
OTHER FINANCIAL INFORMATION

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

	Equipment						Production &						Small Ag						Construction
For the Six Months Ended	Operations						Precision Ag						& Turf						& Forestry
	Apr 30			May 1			Apr 30			May 1			Apr 30			May 1			Apr 30			May 1
Dollars in millions	2023			2022			2023			2022			2023			2022			2023			2022
Net Sales	$	27,481		$	20,565		$	13,021		$	8,473		$	7,146		$	6,201		$	7,314		$	5,891
Average Identifiable Assets
With Inventories at LIFO	$	21,303		$	18,846		$	9,317		$	7,933		$	4,774		$	4,296		$	7,212		$	6,617
With Inventories at Standard Cost		23,358			20,449			10,388			8,736			5,321			4,758			7,649			6,955
Operating Profit	$	6,137		$	3,329		$	3,378		$	1,353		$	1,296		$	891		$	1,463		$	1,085
Percent of Net Sales		22.3	%		16.2	%		25.9	%		16.0	%		18.1	%		14.4	%		20.0	%		18.4	%
Operating Return on Assets
With Inventories at LIFO		28.8	%		17.7	%		36.3	%		17.1	%		27.1	%		20.7	%		20.3	%		16.4	%
With Inventories at Standard Cost		26.3	%		16.3	%		32.5	%		15.5	%		24.4	%		18.7	%		19.1	%		15.6	%
SVA Cost of Assets	$	(1,401)		$	(1,227)		$	(623)		$	(525)		$	(319)		$	(285)		$	(459)		$	(417)
SVA		4,736			2,102			2,755			828			977			606			1,004			668

	Financial
For the Six Months Ended	Services
	Apr 30			May 1
Dollars in millions	2023			2022
Net Income Attributable to Deere & Company	$	212		$	439
Average Equity		6,180			5,683
Return on Equity		3.4	%		7.7	%
Operating Profit	$	279		$	577
Cost of Equity		(415)			(377)
SVA		(136)			200

SOURCE Deere & Company

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