Deere Reports Net Income of $1.065 Billion for Fourth Quarter, $5.027 Billion for Fiscal Year

"This past year brought its share of challenges and uncertainty, but thanks to the structural improvements we've made and the diverse customer segments and geographies we serve, we were able to achieve our best results yet for this point in the cycle," said John May, chairman and CEO of John Deere. "Our continued commitment to delivering customer value and focusing on operational efficiency enabled us to remain resilient and demonstrate the strength of our business."

Company Outlook & Summary

Net income attributable to Deere & Company for fiscal 2026 is forecasted to be in a range of $4.00 billion to $4.75 billion.

"Looking ahead, we believe 2026 will mark the bottom of the large ag cycle," May stated. "While ongoing margin pressures from tariffs and persistent challenges in the large ag sector remain, our commitment to inventory management and cost control, coupled with expected growth in small agriculture & turf and construction & forestry, positions us to effectively manage the business and seize emerging opportunities as market conditions begin to recover."

Financial Services net income for the quarter was higher due to favorable financing spreads, special items described in Note 2, and a lower provision for credit losses.

FORWARD-LOOKING STATEMENTS
Certain statements contained herein, including in the section entitled "Company Outlook & Summary," "Industry Outlook for Fiscal 2026," "Deere Segment Outlook for Fiscal 2026," and "Condensed Notes to Consolidated Financial Statements" relating to future events, expectations, and trends constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 and involve factors that are subject to change, assumptions, risks, and uncertainties that could cause actual results to differ materially. 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:

• the agricultural business cycle, which can be unpredictable and is affected by factors such as farm income, international trade, world grain stocks, crop yields, available farm acres, soil conditions, prices for commodities and livestock, input costs, governmental farm programs, availability of transport for crops as well as adverse macroeconomic conditions, including unemployment, inflation, interest rate volatility, changes in consumer practices due to slower economic growth or a recession, and regional or global liquidity constraints
• the uncertainty of government policies and actions with respect to the global trade environment including increased and proposed tariffs announced by the U.S. government, and retaliatory trade regulations
• political, economic, and social instability in the geographies in which the company operates, including the ongoing war between Russia and Ukraine and the conflicts in the Middle East
• worldwide demand for food and different forms of renewable energy impacting the price of farm commodities and consequently the demand for the company's equipment
• rationalization, restructuring, relocation, expansion and/or reconfiguration of manufacturing and warehouse facilities
• accurately forecasting customer demand for products and services and adequately managing inventory
• uncertainty of the company's ability to sell products domestically or internationally, manage increased costs of production, absorb or pass on increased pricing, and accurately predict financial results and industry trends
• availability and price of raw materials, components, and whole goods
• delays or disruptions in the company's supply chain
• changes in climate patterns, unfavorable weather events, and natural disasters
• suppliers' and manufacturers' business practices and compliance with laws applicable to topics such as human rights, safety, environmental, and fair wages
• higher interest rates and currency fluctuations which could adversely affect the U.S. dollar, customer confidence, access to capital, and demand for the company's products and solutions
• ability to adapt in highly competitive markets, including understanding and meeting customers' changing expectations for products and solutions, including delivery and utilization of precision technology
• the ability to execute business strategies, including the company's Smart Industrial Operating Model and Leap Ambitions
• dealer practices and their ability to manage new and used inventory, distribute the company's products, and to provide support and service for precision technology solutions
• the ability to realize anticipated benefits of acquisitions and joint ventures, including challenges with successfully integrating operations and internal control processes
• negative claims or publicity that damage the company's reputation or brand
• the ability to attract, develop, engage, and retain qualified employees
• the impact of workforce reductions on company culture, employee retention and morale, and institutional knowledge
• labor relations and contracts, including work stoppages and other disruptions
• security breaches, cybersecurity attacks, technology failures, and other disruptions to the company's information technology infrastructure and products
• leveraging artificial intelligence and machine learning within the company's business processes
• changes to existing laws and regulations, including the implementation of new, more stringent laws, as well as compliance with a variety of U.S., foreign and international laws, regulations, and policies relating to, but not limited to the following: advertising, anti-bribery and anti-corruption, anti-money laundering, antitrust, consumer finance, cybersecurity, data privacy, encryption, environmental (including climate change and engine emissions), farming, foreign exchange controls and cash repatriation restrictions, foreign ownership and investment, health and safety, human rights, import / export and trade, labor and employment, tariffs, product liability, tax, telematics, and telecommunications
• governmental and other actions designed to address climate change in connection with a transition to a lower-carbon economy
• warranty claims, post-sales repairs or recalls, product liability litigation, and regulatory investigations because of the deficient operation of the company's products
• investigations, claims, lawsuits, or other legal proceedings, including the lawsuit filed by the Federal Trade Commission (FTC) and the Attorneys General of the States of Arizona, Illinois, Michigan, Minnesota, and Wisconsin alleging that the company unlawfully withheld self-repair capabilities from farmers and independent repair providers
• loss of or challenges to intellectual property rights

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

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

(1)   Acquisitions

In 2025, the company acquired several small-scale businesses to advance the capabilities of the company's existing technology offerings, providing customers with a more comprehensive set of tools to generate and use data to make decisions aimed at improving profitability, efficiency, and sustainability. In addition, the company acquired the remaining ownership interest of an equity method investment. The combined purchase price consideration for these acquisitions was $115 million, consisting of $101 million cash, net of cash acquired, and $14 million loan forgiven. The businesses were assigned to the Production & Precision Agriculture (PPA), Small Agriculture & Turf (SAT), and Construction & Forestry (CF) segments. Most of the purchase price for these acquisitions was allocated to goodwill and intangible assets.

(2)   Special Items

Litigation Accrual

In the fourth quarter of 2025, the company increased the total accrued losses on unresolved legal matters in connection with a consolidated multidistrict class action antitrust lawsuit by $95 million pretax ($75 million after-tax) which was included in "Selling, administrative and general expenses."

Impairment of Intangible Assets

In the third quarter of 2025, the company recorded a non-cash impairment charge of $61 million pretax ($49 million after-tax), primarily related to the trade name and customer relationship assets of external overseas battery operations. Of this amount, $53 million was recorded in "Selling, administrative and general expenses" and $8 million in "Cost of sales." This is presented in "Impairments and other adjustments" in the statements of consolidated cash flows. The impairment resulted from slowing external demand for batteries, which indicated that it is probable future cash flows would not cover the carrying value of the assets.

Discrete Tax Items

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

Banco John Deere S.A.

In 2024, the company entered into an agreement with a Brazilian bank, Banco Bradesco S.A. (Bradesco), for Bradesco to invest and become 50% owner of the company's wholly-owned subsidiary in Brazil, Banco John Deere S.A. (BJD). BJD finances retail and wholesale loans for agricultural, construction, and forestry equipment. The transaction is intended to reduce the company's incremental risk as it continues to grow in the Brazilian market. The company deconsolidated BJD upon completion of the transaction in February 2025. The company accounts for its investment in BJD using the equity method of accounting and results of its operations are reported in "Equity in income (loss) of unconsolidated affiliates" within the Financial Services segment. The company reports investments in unconsolidated affiliates and receivables from unconsolidated affiliates in "Other assets" and "Other receivables," respectively.

BJD was reclassified as held for sale in 2024, resulting in a net loss of $59 million pretax and after-tax due to the establishment of a $97 million valuation allowance on the assets held for sale and a $38 million reversal of allowance for credit losses. In the first quarter of 2025, a gain of $32 million pretax and after-tax was recorded in "Selling, administrative and general expenses" related to a decrease in valuation allowance. The valuation allowance changes are presented in "Impairments and other adjustments" in the statements of consolidated cash flows. No significant gain or loss was recognized upon completion of the transaction. The equity interest in BJD was valued at $362 million at the deconsolidation date.

Legal Settlements

The company reached legal settlements concerning patent infringement claims. As a result of these settlements, in the fourth quarter of 2024, the company recognized a total of $57 million pretax gain ($45 million after-tax) in "Other Income," providing a benefit of $17 million to PPA and $40 million to CF. These settlements resolve the disputes without any admission of liability by the parties involved. The company believes that these settlements enhance its ability to protect its intellectual property and reinforce its commitment to innovation and technological advancement.

Impairment of Investment in Unconsolidated Affiliate

In the fourth quarter of 2024, the company recorded a non-cash charge of $28 million pretax and after-tax in "Equity in income (loss) of unconsolidated affiliates" for an other than temporary decline in value of an investment recorded in SAT. This is presented in "Impairments and other adjustments" in the statements of consolidated cash flows.

Employee-Separation Programs

In the third quarter of 2024, the company implemented employee-separation programs for the company's salaried workforce in several geographic areas, including the United States, Europe, Asia, and Latin America. The programs' main purpose was to help meet the company's strategic priorities while reducing overlap and redundancy in roles and responsibilities. The programs were largely involuntary in nature with the expense recorded when management committed to a plan, the plan was communicated to the employees, and the employees were not required to provide service beyond the legal notification period. For the limited voluntary employee-separation programs, the expense was recorded in the period in which the employee irrevocably accepted a separation offer.

The programs' pretax expenses recorded for the periods ended October 27, 2024, by operating segment were as follows in millions of dollars:

Summary of 2025 and 2024 Special Items

The following table summarizes the operating profit impact, in millions of dollars, of the special items recorded for the three months and fiscal years ended November 2, 2025, and October 27, 2024: