narrative.md

Published August 30, 2026

# Deere & Company (DE) — Business, Risks, and Management's Discussion

Deere & Company uses a 52/53-week fiscal year ending on the last Sunday of the reporting
period, which generally falls near the end of October, with an additional week included in
the fourth fiscal quarter every five or six years to realign the fiscal quarters with the
calendar. Fiscal 2025 contained 53 weeks against 52 weeks in fiscal 2024 and fiscal 2023,
and ended November 2, 2025 versus October 27, 2024. The fiscal 2026 third quarter ended
August 2, 2026, and is compared against the quarter ended July 27, 2025. All dollar figures
below are as the company reports them, in millions of U.S. dollars unless stated otherwise.

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## Business

*From the fiscal 2025 Annual Report on Form 10-K, accession 0001104659-25-122321.*

Deere & Company — John Deere — is a global manufacturer of agricultural, turf,
construction, and forestry equipment, sold alongside precision-technology solutions,
service parts, and a captive financing arm. The company runs four reporting segments:
Production & Precision Agriculture (PPA), Small Agriculture & Turf (SAT), Construction &
Forestry (CF), and Financial Services (FS). PPA, SAT, and CF together are referred to as
the "equipment operations"; PPA and SAT together are "agriculture and turf."

In fiscal 2025 the equipment operations split as follows: PPA generated $17,311 of net
sales, or 45% of equipment operations net sales; SAT generated $10,224, or 26%; and CF
generated $11,382, or 29%.

**Production & Precision Agriculture.** Equipment and technology for production-scale
growers of large grains (corn and soy), small grains, cotton, and sugarcane. Products
include four-wheel-drive/track and row-crop tractors, combines and harvesters, cotton
pickers and strippers, sugarcane harvesters and loaders, tillage, seeding, application
(including sprayers) and soil-preparation machinery, plus attachments and service parts.
Selected non-Deere brands in the segment include Hagie, Mazzotti, Monosem, and King Agro.

**Small Agriculture & Turf.** Equipment for dairy and livestock producers, high-value and
small-acre crop producers, and turf and utility customers: specialty, utility and compact
tractors; hay and forage equipment including self-propelled forage harvesters, balers and
mowers; riding lawn equipment, commercial mowing and golf-course equipment; utility
vehicles and turf-care implements. Distribution is primarily through independent dealers,
but the segment also builds turf products sold by The Home Depot and Lowe's. Turf sales
outside North America are concentrated in Western Europe and Australia. Selected brands
include Frontier, Kemper, GreenSystem, Smart Apply, GUSS, A&I, and Sunbelt Outdoor
Products.

**Construction & Forestry.** Excavators, motor graders, crawler dozers and loaders, wheel
loaders, backhoes and articulated dump trucks; compact equipment (skid steers, compact
excavators, compact wheel loaders, compact track loaders); Wirtgen Group roadbuilding
products (milling machines, recyclers, slipform pavers, surface miners, asphalt pavers,
compactors, rollers, mobile crushers and screens, asphalt plants) under the Wirtgen,
Vögele, Hamm, Kleemann, Benninghoven and Ciber brands; and forestry machines — skidders,
feller bunchers, forwarders, knuckleboom loaders, harvesters and swing machines — with
Waratah attachments. Deere owns retail forestry sales operations in Australia, Brazil,
Finland, Ireland, New Zealand, Norway, Sweden and the United Kingdom, and Wirtgen sells
largely through company-owned sales and service subsidiaries worldwide.

**Financial Services.** John Deere Financial finances retail purchases of new and used
equipment from Deere dealers, funds revolving charge accounts acquired from third-party
merchants, provides wholesale financing to dealers for their inventories, writes retail
leases (typically under one year to seven years, usually with a purchase option at
maturity), and offers extended equipment warranties in the U.S. and Canada. John Deere
Capital Corporation is the principal U.S. financing subsidiary; John Deere Financial Inc.
serves Canada. Deere has agreed to maintain Capital Corporation's ratio of earnings to
fixed charges at no less than 1.05 to 1 over any four consecutive fiscal quarters, to own
at least 51% of its voting shares, and to keep its consolidated tangible net worth at not
less than $50 million. At November 2, 2025 Deere indirectly owned 100% of Capital
Corporation's voting shares and its consolidated tangible net worth was $5,929.8; no
support payments
were required in fiscal 2025 or 2024. Outside the U.S. and Canada, financing is offered in
Argentina, Australia, India, Mexico, New Zealand and other countries, in some markets
through cooperation agreements or joint ventures — in the second quarter of fiscal 2025
Banco Bradesco S.A. invested to become a 50% owner of Deere's Brazilian subsidiary Banco
John Deere S.A.

**Strategy — the Smart Industrial Operating Model and Leap Ambitions.** Deere organizes
its strategy around three pillars: *production systems* (aligning products around the
sequence of steps customers execute to grow a crop or complete a project), the *technology
stack* (hardware and devices, embedded software, connectivity, data platforms and
applications, spanning digital capability, automation, machine learning and autonomy), and
*lifecycle solutions* (aftermarket parts, service, precision upgrades and ownership
support across the life of a machine). The John Deere Operations Center is the digital
management system through which customers and dealers access machine and agronomic data;
PPA technology is being extended into other segments, for example the CF SmartDetect
obstacle-detection tool and Operations Center access for roadbuilding customers. The Leap
Ambitions, introduced in 2022, were refined in December 2025 into multi-year financial and
operational goals emphasizing automation, autonomy, digitalization, lifecycle solutions
and Solutions as a Service (SaaS). Deere states that revenue from SaaS products did not
represent a significant percentage of revenues in 2025.

**Distribution and scale.** In the U.S. and Canada Deere markets through approximately
2,050 independent dealer locations — roughly 1,600 selling agricultural equipment, about
450 selling construction, earthmoving, material handling, roadbuilding, compact
construction and/or forestry equipment, about 100 roadbuilding-only locations and about
260 turf-only locations. Outside the U.S. and Canada, agriculture and turf equipment is
sold to distributors and dealers in over 100 countries. Centralized parts distribution
warehouses operate in the U.S., Brazil and Germany.

**Competition.** In agriculture and turf, competitors include AGCO, CLAAS, CNH Industrial,
Kubota and The Toro Company, plus short-line and specialty manufacturers and, increasingly,
technology-focused entrants. In construction and forestry, competitors include Caterpillar,
CNH Industrial, Doosan/Doosan Bobcat, Fayat, GOMACO, Hitachi Construction Machinery,
Komatsu, Kubota, LGMG, Liugong, Ponsse, SANY, SDLG, Terex, Tigercat, Volvo Construction
Equipment and XCMG.

**Backlog.** At November 2, 2025 backlog orders were approximately $4.0 billion for PPA and
$1.9 billion for SAT, against $5.2 billion and $2.1 billion respectively a year earlier —
a decline the company attributes to weaker demand. CF backlog was approximately $3.8
billion at November 2, 2025 versus $2.2 billion a year earlier, as planned production
levels rise in line with retail demand. Agriculture and turf backlog is generally highest
in the second and third fiscal quarters on seasonal buying patterns.

Deere employed 73,146 people at fiscal year-end 2025, down from 75,847 a year earlier.

---

## Risk factors

*From the fiscal 2025 Form 10-K, accession 0001104659-25-122321. Condensed to the
substantive risks; boilerplate omitted.*

**The agricultural business cycle.** Deere's results depend heavily on the vitality of
agriculture, which is cyclical and driven by farm income, commodity and protein prices,
world grain stocks, planted acreage, crop yields, farmland values, debt levels, financing
costs and government farm policy. In fiscal 2025 unfavorable conditions produced lower
sales volumes, greater reliance on sales incentives, and elevated receivable write-offs;
the company expects certain of these conditions to persist into fiscal 2026 and says it
cannot foresee when they will fully subside. Weak general economic conditions can
separately depress construction, housing and turf demand.

**Trade policy and tariffs.** Nearly 80% of Deere's domestic sales are assembled in the
U.S., with the remainder imported primarily from Europe, Mexico, India and Japan; the
company is a net exporter of agriculture and turf equipment from the U.S. During fiscal
2025 new U.S. tariffs were imposed on imports from a broad range of countries and
materials and several countries implemented or proposed retaliatory tariffs. The direct
impact of incremental tariffs incurred in fiscal 2025 was approximately $600, excluding
effects on suppliers and on market demand. Export controls, sanctions and restricted market
access are additional exposures.

**International operations.** Growth depends in part on Argentina, Brazil, the CIS, China,
India and South Africa, including a research and development center built in Indaiatuba,
Brazil in 2024. Exposures include political and economic instability, trade barriers,
supply-chain disruption, conflicting and changing regulation, currency movements, weaker
intellectual-property protection, adverse sentiment toward non-local products, and local
labor conditions.

**Food, fuel and commodity demand.** Fluctuating agricultural commodity prices directly
affect equipment sales and credit losses. Higher commodity prices help crop producers but
raise feed costs for dairy and livestock customers. Biofuel demand supports feedstock
crops, but its economics weaken when oil prices fall, and changing fuel policy raises
research and development costs tied to engine and fuel standards.

**Manufacturing, inventory and supply chain.** Rationalizing, restructuring or relocating
plants constrains output and can create new tariff and reputational exposure — Deere
shifted small-frame skid steer and compact track loader production to Mexico in 2024, and
those products became subject to additional tariffs on Mexican imports in 2025; the company
is pursuing a USMCA exemption with no guarantee of qualifying. Manufacturing also depends
on water availability. Demand forecasting is a named risk: in 2025 elevated used inventory
in late-model machines depressed North American demand, producing lower price realization
and inventory-reduction actions. Supply exposures include raw-material and component
availability and price, freight, single-source and proprietary suppliers, supplier
financial distress, and rare earth minerals used in motors, batteries and other components
that are sourced in significant majority from China.

**Financial risks.** Interest-rate levels affect equipment demand, dealer inventory carrying
costs, customer borrowing costs, financing spreads, investment values and dealer financial
health; rates fell in the U.S. and remained elevated in Brazil during 2025. Rating-agency
downgrades would raise funding costs. Because Financial Services funds a significant
portion of worldwide sales, the segment is exposed to customer default, write-offs and
credit losses — the allowance for credit losses on retail notes and financing lease
receivables increased in 2025 on higher expected losses in agriculture and turf accounts
amid elevated delinquencies — as well as to residual-value losses at lease maturity and to
continued access to funding. Tax-rate and tax-legislation changes are a further exposure.

**Strategic execution.** Deere may not realize the anticipated benefits of the Smart
Industrial Operating Model or the Leap Ambitions, whether through misjudged market
opportunities, falling behind on new technology, customers declining to adopt it, inability
to deliver lifecycle solutions or to monetize technology-based offerings, or misallocated
capital. The company discloses that it has experienced slower-than-expected customer
adoption of some precision-technology solutions and SaaS subscription services, that
customers may not understand the SaaS value proposition, and that the time required to
build SaaS capabilities and infrastructure has delayed realization of expected benefits.
Product and technology introductions carry warranty, recall, post-sale repair and product
liability risk. Acquisitions, joint ventures and divestitures may not deliver, or may be
delayed.

**Dealer channel.** Deere depends on independent dealers to generate demand, to carry and
manage inventory, and to service increasingly technical machines; high dealer inventory has
caused dealers to postpone purchases, and a shortage of specialized technicians can
overburden servicing capacity. Loss of dealers can impair coverage, receivable collection
and new sales.

**Reputation and brand.** Negative publicity — including social-media campaigns concerning
the company's approach to diversity and inclusion, customers' right to repair (including
the Memorandum of Understanding with the American Farm Bureau Federation), workforce
reductions and production relocation — can damage the brand regardless of accuracy.

**Talent and labor.** Attracting, developing and retaining qualified employees is tied to
strategy execution, and workforce reductions carry morale, institutional-knowledge and
litigation costs. Many production and maintenance employees are represented by unions under
collective bargaining agreements with varied expiration dates; failed renegotiation can
lead to work stoppages.

**Cybersecurity and digital.** Deere relies on information technology networks — some
managed by third parties — and stores confidential and personal data, notably the
substantial volumes held at the edge and in cloud environments by the John Deere Operations
Center. The company states it has not suffered any significant cyber incident resulting in
material business impact but has been, and expects to continue to be, targeted by malicious
threat actors. Additional exposures: unauthorized remote control or manipulation of
connected products; technical and regulatory limits on automation, autonomy and artificial
intelligence (including data sourcing, algorithmic bias, intellectual-property and privacy
concerns, and leakage of confidential information to third-party generative AI platforms);
and disruption or obsolescence of technology systems.

**Legal and regulatory.** Deere is subject to complex and changing laws worldwide covering
antitrust, autonomy systems, consumer finance, environmental and climate matters, trade,
labor, product liability reporting, cybersecurity, data privacy, artificial intelligence
and more, plus the U.S. Foreign Corrupt Practices Act and foreign anti-bribery laws; the
company discloses that employees, contractors or agents have violated such laws or its own
policies in the past. Climate-related legislation, carbon pricing and disclosure rules
could raise operating and compliance costs, while conflicting stakeholder views on
environmental topics create their own exposure. On litigation, Deere is subject to a
consolidated multidistrict class action in the Northern District of Illinois alleging
attempted monopolization and restraint of the repair-services market for John Deere
agricultural equipment, and to a parallel suit brought by the Federal Trade Commission and
several state attorneys general (see Current quarter for the settlement of the latter).
Loss or infringement of intellectual property — including the "John Deere" mark, the
leaping deer logo, the "Nothing Runs Like a Deere" slogan and the green-and-yellow color
combination — is a named risk.

---

## Management's discussion and analysis — fiscal 2025

*From the fiscal 2025 Form 10-K, accession 0001104659-25-122321.*

**Results.** Net sales and revenues were $45,684 in fiscal 2025 against $51,716 in fiscal
2024. Net sales (equipment operations) were $38,917 versus $44,759. Net income attributable
to Deere & Company was $5,027 against $7,100, and diluted earnings per share $18.50 against
$25.62. Management attributes the decline to lower sales volumes driven by declining market
conditions, and states it continues to focus on structural profitability while investing in
customer-facing solutions. These full-year comparatives are not week-for-week: fiscal 2025
contained 53 weeks against 52 in fiscal 2024, and the additional week fell in the fourth
quarter. Deere does not quantify what the extra week contributed. The third quarters of
fiscal 2026 and fiscal 2025 each contained 13 weeks and both nine-month periods contained
39 weeks, so the quarterly and nine-month comparisons in the Current quarter section below
are unaffected.

**Cost and expense drivers.** The cost of sales to net sales ratio rose to 72.4% from
68.8%, on higher tariffs and higher overhead from production inefficiencies associated with
lower volumes, partially offset by reduced material costs and lower employee
profit-sharing incentives. Other income fell 15% to $1,019 on lower license revenues,
reduced investment income and the absence of prior-year legal settlements, partly offset by
higher extended-warranty premiums earned. Selling, administrative and general expenses fell
4% to $4,663 on lower profit-sharing, the favorable effect of the Banco John Deere
deconsolidation and the absence of prior-year employee separation costs, partly offset by
an increase in accrued losses on unresolved legal matters. Interest expense fell 5% to
$3,170 on lower average borrowing rates and lower average borrowings. Other operating
expenses fell 11% to $1,124 on higher pension benefits and foreign exchange gains, partly
offset by higher depreciation of equipment on operating leases. The provision for income
taxes fell 40% to $1,259 on lower pretax income and favorable tax special items.

**Segment results, fiscal 2025 versus fiscal 2024.**

| Segment | Net sales / revenue | Prior year | Change | Operating profit | Prior year | Operating margin |
|---|---|---|---|---|---|---|
| Production & Precision Agriculture | $17,311 | $20,834 | -17% | $2,671 | $4,514 | 15.4% (from 21.7%) |
| Small Agriculture & Turf | $10,224 | $10,969 | -7% | $1,207 | $1,627 | 11.8% (from 14.8%) |
| Construction & Forestry | $11,382 | $12,956 | -12% | $1,028 | $2,009 | 9.0% (from 15.5%) |
| Financial Services (revenue incl. intercompany) | $6,289 | $6,493 | -3% | net income $890 | net income $696 | — |

In PPA, sales volumes fell 30% in the U.S. and Canada, partly offset by a 22% increase in
Brazil; price realization was up 1% in the U.S. and Canada and up 4% in Brazil on strong
demand from higher grower production, while price realization elsewhere fell slightly. In
SAT, volumes fell 17% in the U.S. and Canada, offset in part by increases of 26% in India
and 5% in Europe. In CF, volumes fell 15% in the U.S. and Canada and were roughly flat
elsewhere, and price realization fell 3% in the U.S. and Canada because of incremental
incentive programs deployed against competitive pressure. Each equipment segment carried
incremental tariff cost, reported within "Production Costs" and "Other." Special items in
2025 comprised a $95 litigation accrual (PPA $47, SAT $24, CF $24), a $61 impairment (PPA
$28, SAT $17, CF $16) and a $(32) Banco John Deere measurement benefit in Financial
Services. Financial Services net income rose 28% to $890 on special items, lower selling,
administrative and general expenses, favorable financing spreads and a lower provision for
credit losses, even as the average balance of receivables and leases financed fell 5%,
primarily on the Banco John Deere deconsolidation.

**Fiscal 2026 outlook as given in the 10-K.** Large agriculture sales in North America were
expected to remain subdued; small agriculture & turf and construction & forestry sales were
expected to improve. U.S. and Canadian large-ag demand was expected to decrease further
amid challenging row-crop farm fundamentals that pressure short-term liquidity, with an
improving but still constraining used-equipment market, partly offset by strong crop yields
and consumption, recent U.S. trade agreements, biofuel demand and government subsidies.
Small agriculture and turf in the U.S. and Canada was seen flat to up slightly; Europe flat
to up slightly; South America flat; Asia down slightly. In construction and forestry, U.S.
and Canadian earthmoving and compact construction were projected flat to slightly higher —
supported by employment levels, construction backlogs, U.S. infrastructure spending,
declining interest rates, rental-fleet investment and data center construction starts —
with global forestry flat and global roadbuilding flat at strong levels. Financial Services
net income was forecast down.

**Liquidity and cash requirements at November 2, 2025.** Payments due on borrowings and
securitization borrowings within one year were $17.2 billion, plus $2.3 billion of interest
payments; Deere expects these to be replaced with new borrowings to finance a receivable
and lease portfolio it expects to be lower in 2026. Noncancelable purchase obligations were
$6.1 billion, of which $4.5 billion was payable within one year. Capital expenditures of
$1.4 billion were planned for 2026, with pension and OPEB contributions of approximately
$250 million. Share repurchases were described as being considered once those requirements
are met.

**Critical accounting estimates.** Sales incentives, product warranties, postretirement
benefit obligations, allowance for credit losses, operating lease residual values, and
income taxes. On sales incentives, the historical percentage of retail sales incentive
costs to retail sales has varied by an average of 1.0% over the last five fiscal years; a
1.0% change, holding other assumptions constant, would have moved the sales incentive
accrual by about $106.

**Market risk.** A 10% move in interest rates from market rates at November 2, 2025 would
have changed the fair value of interest-rate-exposed financial instruments by approximately
$150 (versus $75 at October 27, 2024). A hypothetical 10% strengthening of the U.S. dollar
through 2026 was estimated to reduce 2026 expected net cash inflows by approximately $100.

**Legal proceeding as reported in the 10-K.** On January 15, 2025 the FTC, together with the
Attorneys General of Illinois and Minnesota — later joined by Arizona, Michigan and
Wisconsin — sued Deere in the U.S. District Court for the Northern District of Illinois,
Western Division, alleging monopolization and unfair competition under federal and state
antitrust law and seeking a permanent injunction and equitable relief giving equipment
owners and independent repair providers access to Deere's repair tools and resources. At
the time of the 10-K, Deere described itself as in preliminary discussions with the FTC
about a potential resolution and unable to estimate the potential impact.

---

## Current quarter — third quarter of fiscal 2026

*From the Form 10-Q for the quarter ended August 2, 2026, accession 0001104659-26-102213,
except where the quarterly earnings release of August 20, 2026 (Form 8-K, accession
0001104659-26-098904) is cited for material the 10-Q does not contain.*

**Consolidated results.** For the three months ended August 2, 2026, net sales and revenues
were $12,608, up 5% from $12,018 in the year-earlier quarter. Net income attributable to
Deere & Company for the quarter was $1,379, up 7% from $1,289, and diluted earnings per
share were $5.10 against $4.75. For the nine months ended August 2, 2026 — a cumulative
figure, not a quarterly one — net sales and revenues were $35,589, up 7% from $33,290, while
net income attributable to Deere & Company was $3,808, down 4% from $3,962, and nine-month
diluted earnings per share were $14.06 against $14.57. The earnings release adds that net
sales (equipment operations) were $10,999 for the quarter and $30,779 for the nine months,
against $10,357 and $28,338 in the comparable prior-year periods.

The quarterly increase in revenue came from higher sales volumes, favorable foreign
currency translation and favorable price realization. Net income for the quarter rose $90
on favorable price realization of $286 ($403 pretax), partly offset by unfavorable tax
impacts of $114 and increased production costs of $89 ($126 pretax), primarily higher
material costs. The nine-month comparison was additionally affected by $163 of favorable
special tax items recorded in the prior-year period.

**Cost and expense lines.** Cost of sales to net sales was 72.2% for the quarter versus
73.1% a year earlier, but 73.1% for the nine months versus 71.3%. Material costs were
unfavorable in both periods on inflationary pressure; tariffs net of recoveries were
favorable for the quarter (because of recognized recoveries) but unfavorable for the nine
months; production efficiencies were favorable in both periods on higher CF and SAT
manufacturing volumes. Other income was $256 for the quarter (+9%) and $799 for nine months
(+11%) on extended-warranty premium income. Research and development expense was $567 for
the quarter (+2%) and $1,704 for nine months (+4%), reflecting continued technology
investment. Interest expense fell 11% in both periods, to $710 and $2,141, on lower average
borrowing rates and lower average borrowings. Other operating expenses were $290 and $846
(+3% and +4%) on higher depreciation of equipment on operating leases. The provision for
income taxes was $529 for the quarter (+56%) and $1,243 for nine months (+37%), on
unfavorable current-year discrete items and, for the nine months, the prior-period special
tax item.

**Segment results.**

| Segment | Q3 FY26 net sales | Q3 FY25 | Change | Q3 FY26 operating profit | Q3 FY25 | Q3 margin (prior) |
|---|---|---|---|---|---|---|
| Production & Precision Agriculture | $3,998 | $4,273 | -6% | $527 | $580 | 13.2% (13.6%) |
| Small Agriculture & Turf | $3,383 | $3,025 | +12% | $622 | $485 | 18.4% (16.0%) |
| Construction & Forestry | $3,618 | $3,059 | +18% | $436 | $237 | 12.1% (7.7%) |

On a nine-month basis, PPA net sales were $11,664 (-7%) with operating profit of $1,372
(-34%) and an 11.8% margin against 16.4%; SAT net sales were $9,036 (+16%) with operating
profit of $1,538 (+30%) and a 17.0% margin against 15.2%; and CF net sales were $10,079
(+26%) with operating profit of $1,134 (+67%) and an 11.3% margin against 8.5%.

PPA's quarterly sales decline came from lower shipment volumes, primarily in Brazil and
Europe, partly offset by price realization of +3% for the quarter and favorable currency
translation of +2% (primarily the Brazilian real and Australian dollar); operating profit
fell on volume/mix and higher material costs. SAT's quarterly gain came from higher
shipment volumes, primarily in the U.S., plus +2% price realization, with currency
translation a 1-point drag; operating profit rose on volume/mix and price, offset in part
by higher material costs. CF's quarterly gain came from higher shipment volumes, primarily
in the U.S., and +8% price realization; operating profit rose on price realization, partly
offset by higher selling, administrative and general and research and development expense.

Financial Services revenue including intercompany was $1,505 for the quarter (-3%) and
$4,501 for nine months (-3%), on a lower average portfolio — the average balance of
receivables and leases financed was 2% lower in both the quarter and the nine months.
Segment interest expense was $661 for the quarter (-8%) and $1,973 for nine months (-11%).
Financial Services segment operating profit — which for this segment includes interest
income and interest expense — was $271 for the quarter against $266 a year earlier, and
$823 for the nine months against $740, bringing operating profit across all four segments
to $1,856 for the quarter and $4,867 for the nine months. Segment net income was $219 for
the quarter (+7%) and $653 for nine months (+9%), on
favorable financing spreads offset in part by the smaller portfolio; the nine-month figure
also reflects the prior period's special item, a lower provision for credit losses and
favorable derivative valuation adjustments.

**Tariffs and the IEEPA decision.** On February 20, 2026 the Supreme Court of the United
States issued a decision invalidating tariffs imposed under the International Emergency
Economic Powers Act. Deere recorded tariff recoveries of $110 in the third quarter and $382
in the first nine months of 2026, having concluded the refunds are probable and reasonably
estimable; approximately 80% of the recorded recoveries had been received as of August 2,
2026. The recovery was allocated 20% to PPA, 25% to SAT and 55% to CF, reducing cost of
sales. Net of that recovery, the direct impact of incremental import tariffs was $502 in
the first nine months of 2026, against approximately $300 in the first nine months of 2025;
both figures exclude the effect of tariffs on suppliers and on market demand. Deere says it
continues to adjust sourcing strategies, seek product exemptions and identify cost
reductions.

**FTC litigation settled.** On July 8, 2026 Deere entered into a settlement with the FTC
and the plaintiff states resolving all claims in the January 2025 lawsuit. Deere agreed,
among other items, to provide certain repair resources to farmers and independent repair
providers on "fair and reasonable terms" as defined by the settlement, to provide regular
reporting to the FTC, and to submit to FTC oversight of its compliance.

**Acquisitions.** In fiscal 2026 Deere completed several acquisitions intended to advance
its technology offerings, including the February 2026 acquisition of Tenna LLC, a U.S.
construction technology company providing mixed-fleet equipment operations and asset
tracking. Tenna was acquired for a purchase price of $439, net of $1 of cash acquired, and
was assigned to the CF segment; the allocation recorded $286 of goodwill (deductible for
income tax purposes) and $137 of other intangible assets covering customer relationships,
technology and trade name, amortized over a weighted average 10 years. Deere also acquired
other small-scale businesses assigned to PPA, SAT and CF for a combined purchase price of
$16, with most of that price allocated to other intangible assets.

**Outlook.** Deere's Form 10-Q states that large agriculture sales are expected to remain
subdued in North America and to soften in South America, producing decreased PPA sales
volume in fiscal 2026 against 2025, while SAT and CF sales are expected to improve — with
overall net sales expected to increase in 2026 as the PPA decline is more than offset. By
industry: U.S. and Canadian large-agriculture demand is expected to decrease on elevated
farm input costs, commodity price volatility and market uncertainty; small agriculture and
turf in the U.S. and Canada flat to up slightly; Europe flat; South America down on
elevated production costs and high interest rates; Asia roughly flat. U.S. and Canadian
construction and compact construction industry sales are projected higher on
infrastructure, data center and energy-related projects and rental-fleet investment; global
forestry is expected to decrease on subdued residential construction and lower log and
lumber prices; global roadbuilding is forecast up on increased road construction investment
across multiple geographies. Financial Services net income is expected to be down, with an
unfavorable average portfolio and prior-period special items outweighing favorable
financing spreads and provision for credit losses. In 2026 Deere says it may again see
lower sales volumes, higher sales incentives and elevated receivable write-offs from
unfavorable large-agriculture conditions.

The August 20, 2026 earnings release, which the 10-Q does not duplicate, puts quantified
guidance behind that outlook: full-year fiscal 2026 net income attributable to Deere &
Company is forecast in a range of $4.75 billion to $5.00 billion. The release's industry
outlook for fiscal 2026 is U.S. and Canada large ag down 15 to 20%, small ag and turf flat
to up 5%, Europe flat, South America tractors and combines down 15 to 20%, and Asia flat;
in construction and forestry, U.S. and Canada construction equipment up 5 to 10%, compact
construction equipment up about 5%, global forestry down about 10% and global roadbuilding
up about 10%. Deere's own segment outlook is PPA net sales down about 10% (currency
translation +2.5%, price realization about +1.0%), SAT up about 15% (+0.5%, about +1.5%),
CF up about 20% (+1.5%, about +3.0%), and Financial Services net income of approximately
$870 million. In that release chairman and chief executive officer John C. May attributed
the quarter to disciplined execution, stable U.S. market conditions and management of softer
conditions in Brazil and Europe, and said the company continues to believe 2026 will mark
the bottom of the current agricultural equipment cycle, citing early order program trends,
improving used-equipment inventories and increasing customer adoption of advanced
technologies.

**Cash flows and balance sheet, first nine months of fiscal 2026.** Operating activities
provided $3,250 (against $3,464 a year earlier), investing activities used $825 (against
$801), and financing activities used $1,828 (against $1,557), leaving cash, cash
equivalents and restricted cash up $617. Investing outflows were driven by purchases of
property and equipment and the Tenna acquisition, partly offset by collections of
receivables exceeding the cost of receivables acquired. Financing outflows were driven by
cash returned to shareholders, which totaled $2,013 for the nine months. Property and
equipment cash expenditures were $716 million for the nine months against $852 million a
year earlier, and full-year 2026 capital expenditures are now estimated at approximately
$1.3 billion.

At August 2, 2026, cash, cash equivalents and marketable securities were $10,278 (against
$9,687 at November 2, 2025 and $9,987 at July 27, 2025). Trade accounts and notes
receivable net were $7,723, up $2,406 over the nine months on seasonality and higher sales
volumes and up $1,620 year over year; the share of worldwide trade receivables outstanding
beyond 12 months improved to 1%, from 3% at both November 2, 2025 and July 27, 2025.
Inventories were $7,811, up $405 over the nine months and up $98 year over year, at 26% of
prior twelve months' cost of sales. Financing receivables and equipment on operating leases
fell $2,430 over the nine months and $2,814 over twelve months on lower agriculture and turf
retail customer receivables and lower wholesale receivables, even though total acquisition
volumes of financing receivables and operating-lease equipment ran 8% higher than a year
earlier. Accounts payable and accrued expenses fell $241 over the nine months. Total
external borrowings fell $100 over the nine months and $2,810 over twelve months. Financial
Services' ratio of interest-bearing debt to stockholder's equity was 8.6 to 1, against 8.4
to 1 at November 2, 2025.

Worldwide lines of credit totaled $12.6 billion at August 2, 2026 — a 364-day facility of
$5.5 billion expiring in the second quarter of 2027, a $3.25 billion facility expiring in
the second quarter of 2029 and a $3.25 billion facility expiring in the second quarter of
2031 — of which $5,201 million was unused, against $7,268 million unused at November 2,
2025. Capital Corporation's revolving warehouse securitization facility was renewed in
November 2025 with a $2,500 financing limit and a November 2026 expiration; $1,818 of
securitization borrowings were outstanding under it at August 2, 2026. During the nine months the financial services
operations issued $2,525 and retired $3,027 of retail note securitization borrowings. Deere
is forecasting equipment operations' operating cash flow in 2026 to be flat against 2025.
At August 2, 2026 the company had commitments of approximately $580 million for the
construction and acquisition of property and equipment.

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## Subsequent events

*From the subsequent-events note of the Form 10-Q for the quarter ended August 2, 2026,
accession 0001104659-26-102213.*

On August 26, 2026 — after the close of the third fiscal quarter and one day before the
10-Q was filed — the Board of Directors declared a quarterly dividend of $1.62 per share,
payable on November 9, 2026 to stockholders of record on September 30, 2026. This is the
only subsequent event disclosed in the filing; the note reports no post-quarter
acquisitions, divestitures, financings or litigation outcomes.