Deere DE · USD

27. SEGMENT DATAOur operations are organized and reported in four business segments: Production & Precision Agriculture, Small Agriculture & Turf, Construction & Forestry, and Financial Services. This presentation is consistent with how the chief operating decision maker, our Chief Executive Officer (CEO), who also serves as the Chairman of the Board, assesses the performance of the segments and makes decisions regarding resource allocations. Each segment has a group president responsible for managing financial performance and executing strategic initiatives. ●Production & Precision Agriculture – PPA segment defines, develops, and delivers global equipment and technology solutions to unlock customer value for production-scale growers of large grains, small grains, cotton, and sugarcane. The segment’s primary products include four-wheel-drive (4WD), track, and row crop tractors; harvesters; cotton pickers and strippers; sugarcane harvesters and loaders; soil preparation, tillage, seeding, application, crop care equipment; and related attachments and service parts.●Small Agriculture & Turf – SAT segment defines, develops, and delivers global equipment and technology solutions to unlock customer value for dairy and livestock producers, high-value and small acreage crop producers, and turf and utility customers. The segment’s primary products include specialty, utility, and compact tractors; as well as self-propelled forage harvesters and attachments; hay and forage equipment; rotary mowers; utility vehicles; riding and commercial lawn equipment; golf course equipment; utility vehicles; and related attachments and service parts. ●Construction & Forestry – CF segment defines, develops, and delivers a broad range of machines and technology solutions organized along the earthmoving, forestry, and roadbuilding production systems. The segment’s primary products include backhoe loaders, crawler dozers and loaders, four-wheel-drive and compact wheel loaders, excavators, skid-steer loaders, motor graders, milling machines, pavers, rollers, log harvesters, and related attachments and service parts. The products and services produced by the segments above are primarily marketed through independent retail dealer networks and major retail outlets. For roadbuilding products in certain markets outside the U.S. and Canada, the products are sold through company-owned sales and service subsidiaries.

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20. COMMITMENTS AND CONTINGENCIESA 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:​​​​​​​​​​ ​ ​ ​2025 ​ ​ ​2024 Beginning of year balance $1,426 $1,610 Warranty claims paid​ (1,330)​ (1,327)​New product warranty accruals​ 1,148 ​ 1,157 ​Foreign exchange​ 15 ​ (14)​End of year balance $1,259 $1,426 ​​​The costs for extended warranty programs are recognized as incurred. See Note 9 for extended warranty claim costs.In certain international markets, we provide guarantees to banks for the retail financing of John Deere equipment. At the end of 2025, the notional value of these guarantees was $135. We may repossess the equipment collateralizing the receivables. At November 2, 2025, the accrued losses under these agreements were not material. We also had guarantees to a VIE (see Note 1) totaling $157 at the end of 2025. We also had other miscellaneous contingent liabilities and guarantees totaling approximately $100 at November 2, 2025. The accrued liability for these contingencies was $25 at November 2, 2025.At November 2, 2025, we had commitments of approximately $415 for the construction and acquisition of property and equipment. Also, at November 2, 2025, we had restricted assets of $323, classified as “Other assets,” which includes restricted cash.We have commitments to extend credit to customers. The commitments are in the form of lines of credit and other pre-approved credit arrangements. We have the right to cancel or amend the terms of these commitments at any time. These commitments are not expected to be fully drawn upon; therefore, the total commitment amounts likely do not represent a future cash requirement. The commitments to extend credit at November 2, 2025, were: ●$13.3 billion to John Deere dealers●$34.2 billion to retail customersWe are subject to various unresolved legal actions. The total accrued losses on unresolved legal matters were approximately $175 as of November 2, 2025 (see Note 4 “Litigation Accrual” item). The accrual is based on management’s best estimate of probable losses as the outcome of litigation is inherently uncertain.

8. INCOME TAXESWe are subject to income taxes in a number of jurisdictions. We determine our income tax provision using the asset and liability method. The provision for income taxes by taxing jurisdiction and by significant component consisted of the following:​​​​​​​​​​​​​ 2025 ​2024 ​2023 Current:​​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​​​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​​​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​​U.S.:​​​​​​​​​​Federal​$400 ​$ 1,253​$ 1,803​State​ 103​ 257​ 386​Foreign​ 1,044​ 878​ 1,472​Total current​ 1,547​ 2,388​ 3,661​Deferred:​​​​​​​​​​U.S.:​​​​​​​​​​Federal​ (107)​ (326)​ (485)​State​ (10)​ (29)​ (65)​Foreign​ (171)​ 61​ (240)​Total deferred​ (288)​ (294)​ (790)​Provision for income taxes​$ 1,259​$ 2,094​$ 2,871​​Based upon the location of our operations, the consolidated income before income taxes in the U.S. in 2025, 2024, and 2023 was $2.7 billion, $5.9 billion, and $7.8 billion, respectively, and in foreign countries was $3.6 billion, $3.3 billion, and $5.2 billion, respectively. Certain foreign operations are branches or partnerships of Deere & Company and are subject to U.S. as well as foreign income tax regulations. The pretax income by location and the preceding analysis of the income tax provision by taxing jurisdiction are not directly related.A comparison of the statutory and effective income tax provision and reasons for related differences follow:​​​​​​​​​​​​​ ​2025 ​2024 ​2023 U.S. federal income tax provision at the U.S. statutory rate (21%)​$ 1,314​$ 1,933​$ 2,734​State and local taxes, net of federal effect​​ 76​​ 179​​ 266​Other impacts of Tax Cuts and Jobs Act of 2017​​ 41​​ (60)​​ (58)​Rate differential on foreign subsidiaries​ 238​ 89​ 142​Research and business tax credits​ (131)​ (99)​ (107)​Excess tax benefits on equity compensation​​ (37)​​ (35)​​ (49)​Valuation allowances​ 12​ (46)​ 9​Unrecognized tax benefits​​ (34)​ 70​ 4​Differences in taxability of foreign earnings​​ (93)​​ (43)​​ (85)​Other – net​ (127)​​ 106​​ 15​Provision for income taxes​$ 1,259​$ 2,094​$ 2,871​​At November 2, 2025, undistributed profits of subsidiaries outside the U.S. of approximately $8.2 billion are considered indefinitely reinvested. Determination of the amount of a foreign withholding tax liability on these unremitted earnings is not practicable.Deferred income taxes arise because there are certain items that are treated differently for financial accounting than for income tax reporting purposes.

22. SHARE-BASED COMPENSATIONWe grant restricted stock units (RSU) and stock options (collectively, equity incentive awards) to certain employees. RSUs are also granted to nonemployee directors for their services as directors. RSUs consist of service-based, performance/service-based, and market/service-based awards.The Long-Term Incentive Cash granted to certain employees is accounted for as share-based compensation. This incentive includes a performance metric based, in part, on the price of our shares. We are authorized to grant shares for equity incentive awards. The outstanding shares authorized were 13.7 million at November 2, 2025. We currently use shares that have been repurchased through our stock repurchase program to satisfy share option exercises and RSU conversions. The stock awards vesting periods and the dividend equivalents earned during the vesting period follow:​​​​​​​​​Vesting​Dividend​​​Period​Equivalents​Stock options​1-3 years​Not included​Service-based RSUs​1-3 years​Included​Performance/service-based RSUs​3 years​Not included​Market/service-based RSUs​3 years​Not included​​Stock options expire ten years from the grant date. Performance/service-based awards are subject to a performance metric based on our compound annual revenue growth rate, compared to a benchmark group of companies. Market/service-based awards are subject to a market related metric based on total shareholder return, compared to a benchmark group of companies. The performance/service-based units and market/service-based units award common stock in a range of zero to 200% for each unit granted based on the level of the metric achieved.The fair value of stock options and RSUs is determined using our closing price on the grant date. The fair value of the market/service-based RSUs is determined using a Monte Carlo model. Awards are expensed over the shorter of the award vesting period or the employee’s retirement eligibility period. The performance/service-based units’ expense is adjusted quarterly for the probable number of shares to be awarded. We recognize the effect of award forfeitures as an adjustment to compensation expense in the period the forfeiture occurs.The assumptions used in determining the fair value of the market/service-based RSUs granted in 2025 and 2024 using the Monte Carlo valuation model follow:​​​​​​​​​2025​2024​Expected volatility of the Company's stock​28.22% ​27.93% ​Risk-free interest rate​4.05% ​4.

24. LEASESWe are both a lessee and a lessor. We lease for our own use warehouse facilities, office space, production equipment, information technology equipment, and vehicles. The financial services operations lease equipment produced or sold by us and a limited amount of other equipment to retail customers. We determine if an arrangement is or contains a lease at the contract inception.LesseeThe amounts of the lease liability and right of use asset are determined at lease commencement and are based on the present value of the lease payments over the lease term. The lease payments are discounted using our incremental borrowing rate since the rate implicit in the lease is not readily determinable. We determine the incremental borrowing rate for each lease based on the lease term and the economic environment of the country where the asset will be used, adjusted as if the borrowings were collateralized. Leases with contractual periods greater than one year and that do not meet the finance lease criteria are classified as operating leases.We have elected to combine lease and nonlease components, such as maintenance and utilities costs included in a lease contract, for all asset classes. Leases with an initial term of one year or less are expensed on a straight-line basis over the lease term and recorded in short-term lease expense. Variable lease expense includes warehouse facilities leases with payments based on utilization exceeding contractual minimum amounts and leases with payments indexed to inflation when the index changes after lease commencement.

3. ACQUISITIONS AND DISPOSITIONSDuring the presented periods, we completed acquisitions to support our Smart Industrial Operating Model and Leap Ambitions, which focus on advancing our capabilities in technology.Acquisitions2025 AcquisitionsIn 2025, we acquired several small-scale businesses to advance the capabilities of our existing technology offerings, providing customers with a more comprehensive set of tools to generate and use data to make decisions that aim at improving profitability, efficiency, and sustainability. In addition, we acquired the remaining ownership interest of an equity method investment (see Note 25 for fair value measurement information). The combined purchase price consideration for these acquisitions was $115, consisting of $101 cash, net of cash acquired, and $14 loan forgiven. The businesses were assigned to the PPA, SAT, and CF segments. Most of the purchase price for these acquisitions was allocated to goodwill and intangible assets.2023 AcquisitionsIn 2023, we acquired SparkAI Inc. (Spark AI) and Smart Apply, Inc. (Smart Apply) to accelerate the integration of smart technology innovation in our products. The combined cost of these acquisitions was $82, net of cash acquired of $2. Spark AI was assigned to the PPA segment, while Smart Apply was assigned to the SAT segment. Most of the purchase price for these acquisitions was allocated to goodwill.Dispositions2025 DispositionIn 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 (loss) of unconsolidated affiliates” (see Note 1).

Cybersecurity is an integral part of our overall risk management program. We take a comprehensive approach by incorporating industry best practices to guide and evaluate our cybersecurity strategy and posture, involving key stakeholders in oversight and decision making, and assessing the program regularly within a dynamically changing environment. We leverage a multifaceted approach to cybersecurity including measures designed to prevent, detect, and respond to cyberthreats while monitoring and adapting to the evolving threat and technology landscapes. Risk Management and StrategyOur cybersecurity program is designed to identify, protect, detect, respond to, and recover from cybersecurity threats and incidents with the goal of protecting the confidentiality, integrity, and availability of our critical systems and information. We use a risk-based, multi-layered information security strategy to assess, identify, and manage risks from cybersecurity threats. Our Cybersecurity Team meets frequently to monitor, assess, and address cybersecurity threats and incidents. We also work with third parties to assess the maturity of our cybersecurity program, leveraging the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF). We also utilize third-party service providers as a normal part of our business operations. We have established processes to support the Company in identifying and managing cybersecurity risks associated with the use of third parties, which include the completion of due diligence before engaging with a third-party, controls for response to mitigate any significant risks, and assessments and reviews throughout the relationship. Monitoring such risks and threats is integrated into our overall risk management program. Also, as part of the program, we periodically conduct cybersecurity awareness training including phishing simulations as well as e-learning for employees. We maintain cybersecurity policies, standards, and procedures, which include a cyber incident response plan. These policies and procedures are regularly evaluated and refined with strategies and protocols designed to adapt to changing regulations and emerging security risks. Regular exercises, tests, incident simulations, and system assessments are conducted to discover and address potential vulnerabilities and improve decision-making, prioritization, monitoring, and overall response effectiveness.