Deere Reports Second Quarter Net Income of $2.860 Billion

• 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 /CNW/ -- 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.

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

Jen Hartmann, Director, Public Relations, [email protected]