DE 10-K & 10-Q changes, risk factors and insider trading

The following risks are considered material to our business based upon current knowledge, information, and assumptions. This discussion of risk factors should be considered closely in conjunction with the MD&A, including the risks and uncertainties described in the Forward-Looking Statements, and the Notes to Consolidated Financial Statements. These risk factors and other forward-looking statements relate to future events, expectations, trends, and operating periods. They involve certain factors that are subject to change and important risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties could affect particular lines of business, while others could affect all our businesses. Although the risks are organized by headings and each risk is discussed separately, many are interrelated. The risks described in this Annual Report on Form 10-K and the Forward-Looking Statements in this report are not the only risks we face.

Our success largely depends on the vitality of the agricultural industry. Historically, the agricultural industry has been cyclical and subject to a variety of economic and other factors. Sales of agricultural equipment, in turn, are also cyclical and generally reflect the economic health of the agricultural industry. The economic health of the agricultural industry is affected by numerous factors, including farm income, international trade, farmland values, and debt levelslevels, and financing costs,costs. allIn ofaddition, whichfarm areincome is influenced by the levels of commodity and protein prices, world grain stocks, acreage available and planted, crop yields, agricultural product demand, soil conditions, farm input costs, government policies,policies and support. Changes in government subsidies.farm programs and policies can influence demand for agricultural equipment as well as create unequal competition for multinational companies relative to domestic companies. Downturns in the agricultural industry due to these and other factors, which could vary by market, have resulted in decreases in demand for agricultural equipment, adversely affecting our business and financial performance.

The demand for our products and services depends on the fundamentals in the markets in which we operate and can be significantly reduced in an economic environment characterized by high unemployment, high interest rates, cautious consumer spending, inflation, lower corporate earnings, and lower business investment.investment, all of which affect farmers’ income and sentiment. In fiscal year 2024,2025, unfavorable market conditions resulted in lower sales volumes, highergreater reliance on sales discounts,incentives, higherand elevated receivable write offs, and a higher provision for credit losses.write-offs. We expect certain of these conditions to persist in fiscal year 2025.2026. Changes in interestthe rateseconomic environment and the agricultural market business cycle are driven by factors outside of our control, and as a result we cannot reasonably foresee when these conditions will fully subside.

Sustained general negative economic conditions and outlook could also affect construction and housing starts,activities, and energy prices and demand, and other construction, which dampenscould decrease demand for certain construction equipment. Our turf operations and our construction and forestryturf segments are dependent on construction activityequipment and have also been affected by recent adverse economic conditions. Decreases in construction activity and housing startscould have had a material adverse effect on our financial results.

Uncertain or negative outlook with respect to pervasive U.S. fiscal issues as well as general economic conditions and outlook, such as market volatilityvolatility, inflation, or interest rate changes, have caused and could continue to cause significant changes in market liquidity conditions. Such changes could impact access to funding and associated funding costs, which could reduce our earnings and cash flows.

Efforts to grow our businesses depend in part upon access to and developing and maintaining market share and profitability in additional geographic markets, including, but not limited to, Argentina, Brazil, CIS, China, India, and South Africa. Particularly, we have invested significant resources to grow our operations in Brazil, and in 2024, we built a research and development center in Indaiatuba. We may not realize the benefits from our investment in Brazil or in other regions and may be unable to grow our market share for a variety of reasons. For example, some countries where we operate have greater political and economic volatility and greater infrastructure vulnerability than others. There are various risks associated with our global footprint, including, but not limited to, the following:

We may be affected by changingChanging worldwide demand for food and different forms of renewable energy,energy which couldcan impact the price of farm commodities and consequently the demand for our equipment. This could result in higher research and development costs related to changing machine fuel requirements.

Changing worldwide demand for farm outputs to meet the world’s growing food and renewable energy demands, driven in part by government policies, including those related to climate change, and a growing world population, areis likely to result in fluctuating agricultural commodity prices, which directly affect sales of agricultural equipment. Lower agricultural commodity prices directly affect farm incomes, which negatively affect sales of agricultural equipment and result in higher credit losses. While higher commodity prices benefit our crop-producing agricultural equipment customers, they could result in greater feed costs for livestock and poultry producers, which in turn may result in lower levels of equipment purchased by these customers. In addition, changing energy demands may cause farmers to change the types or quantities of the crops they raise, with corresponding changes in equipment demands. Finally, changes in governmental policies regulating fuel utilization, including biofuel, affect commodity demand and commodity prices, demand for our diesel-fueled equipment, and result in higher research and development costs related to equipment fuel standards.

Changes in the availability and price of certain raw materials, components, and whole goods have resulted and could result in disruptions to the supply chain causing production disruptions, increased costs, and lower profits onfrom sales of our products.

WePast have experienced changes in the availability and prices of raw materials, components, whole goods, and freight over the past several years, especially in fiscal years 2021 and 2022. Globalglobal logistics network challenges have resulted in delays, shortages of key manufacturing components, increased order backlogs, increased transportation costs, and production inefficiencies from a higher number of partially completed machines in inventory, which in the past have increased our overall production and overhead costs. Increases in such costs have hadadversely an adverse effect onaffected our business operations. While we have seen stabilization in the supply chain and inflation, we anticipate potential future fluctuations due to continued geopolitical and economic uncertainty, and regulatory and policy instability, including import tariffs and trade agreements. The latter have the potential to significantly increase production and logistics costs and have a material negative effect on the profitability of the business, particularly if we are unable to recover the increased costs due to market considerations or other factors.

While we conduct due diligence on our suppliers and require their compliance with various policies and contractual covenants, we do not control our suppliers’ business practices. Accordingly, we cannot guarantee that our due diligence efforts will reveal that they follow ethical business practices such as fair wage practices and compliance with environmental, safety, labor, human rights, material sourcing, and other laws. A lack of compliance could lead us to seek alternative suppliers, which could increase our costs and result in delayed delivery of our products, product shortages, or other disruptions of our operations. If our suppliers or retail partners fail to comply with applicable laws, regulations, safety codes, employment practices, human rights standards, quality standards, environmental standards, production practices, or other obligations, norms, identification and reporting requirements, or ethical standards, our reputation and brand could be harmed, and we could be exposed to litigation, investigations, enforcement actions, monetary liability and additional costs that could have a material adverse effect on our business, financial condition, and results of operations.

The occurrence of one or more unexpected events, including war, lack of available natural resources, acts of terrorism, epidemics and pandemics (such as the COVID pandemic),pandemics, civil unrest, fires, tornadoes, tsunamis, hurricanes, earthquakes, temperatures outside of normal ranges, floods, and other forms of severe or unusual weather in the United States or in other countries in which we operate, or in which our suppliers are located, have adversely affected and could in the future adversely affect our operations and financial performance. Such events have caused and could cause complete or partial closure of one or more of our manufacturing facilities or distribution centers, temporary or long-term disruptions in the supply of component products from some local and international suppliers, and disruption and delay in the transport of products to dealers, end-users, and distribution centers. Most recently, Hurricane Helene in the U.S. closed operations at our Augusta, Georgia and Greenville, Tennessee facilities temporarily. Existing insurance coverage may not provide protection from all the costs that may arise from such events.

The potential physical impacts of weather conditions or climate change on our facilities, suppliers, and customers, and therefore on our operations,business, are highly uncertain and will be particularspecific to the circumstances developing in various geographic regions. These potential physical effects may adversely affect the demand for our products and the cost, production, sales, and financial performance of our operations.

While central banks began cutting their policy interest rates in the latter part of fiscal year 2024, interest rates remain above recent norms. High interest rates can have a dampening effect on overall economic activity and/or the financial condition of our customers, either or both of which can negatively affect customer demand for our equipment and customers’ ability to repay their obligations to us. While we strive to match the interest rate characteristics of our financial assets and liabilities, changing interest rates have had an adverse effect onaffected our financing spreads—the difference between the yield we earn on our assets and the interest rates we pay for funding—which hashave affected our earnings.

Negative economic conditions have an adverse effect on the financial industry in which the financial services segment operates. The financial services segment provides financing for a significant portion of our sales worldwide. The financial services segment is vulnerable to customers and others defaulting on contractual obligations, and has experienced, and may continue to experience write-offs and credit losses that, in some cases, exceed our expectations and adversely affect our financial condition and results of operations as a result of elevated delinquencies. The financialallowance servicesfor segment’scredit inabilitylosses on retail notes and financing lease receivables increased in 2025 primarily due to accesshigher fundsexpected atlosses cost-effectiveon ratesagriculture and turf customer accounts as a result of elevated delinquencies and a decline in market conditions. We occasionally grant contractual modifications to supportcustomers experiencing financial difficulties. There is no guarantee that customers experiencing financial difficulty will be able to satisfy their obligations in accordance with original or modified terms. As a result, our financingallowance activitiesfor couldcredit havelosses amay material adverse effect on our business. The financial services segment’s liquidity and ongoing profitability depend largely on timely accesscontinue to capitalincrease to meetin future cash flow requirements and to fund operations and costs associated with engaging in diversified funding activities. The financial services segment may also experience residual value losses that exceed our expectations caused by lower pricing for used equipment and higher-than-expected equipment returns at lease maturity.periods.

STRATEGYSTRATEGIC RISKS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to promote understanding of our financial condition and results of operations. The MD&A is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and the accompanying Notes to Consolidated Financial Statements. All amounts are presented in millions of U.S. dollars, unless otherwise specified. For comparison of 20232024 to 20222023 results, refer to the “Management’s Discussion and Analysis” section of our 20232024 Form 10-K.10-K, which is hereby incorporated by reference.

Deere & Company is a global leader in the production of agricultural, turf, construction, and forestry equipment and solutions. John Deere Financial provides financing for John Deere equipment, parts, services, and other inputs customers need to run their operations. Our operations are managed through the productionProduction and& precisionPrecision agricultureAgriculture (PPA), smallSmall agricultureAgriculture and& turfTurf (SAT), constructionConstruction and& forestryForestry (CF), and financialFinancial servicesServices (FS) operating segments. References to “equipment operations” include PPA, SAT, and CF, while references to “agriculture and turf” include both PPA and SAT.

Agricultural Market Business Cycle – The agricultural market is affected by various factors including commodity prices, acreage planted, crop yields, government policies, and governmentuncertainty policies.in macroeconomic trends. These factors affect farmers’ income and sentiment which may result in varying demand for our equipment. In 2024,2025, we experienced the following effects due to unfavorable market conditions: lower sales volumes, greater reliance on sales incentives, and elevated receivable write-offs.

Changes in interest rates and the agricultural market business cycle and global trade policies are driven by factors outside of our control, and as a result we cannot reasonably foresee when these conditions will fully subside.

An explanation of the cost of sales to net sales ratio and other significant statementstatements of consolidated income changes follows:

The equipment operations segment results were impacted by incremental tariffs in 2025. The cost of additional tariffs was included in the “Production Costs” and “Other” categories. Each equipment operations segment experienced lower shipment volumes partially offset by price realization during 2024.2025. RisingEconomic globaluncertainty, grain stocks, lowerlow commodity prices, elevated interest rates,rates in the first half of the year, and thehigher effect ofused inventory managementlevels contributed to lower shipment volumes for large and small agriculture. Declines in housing starts, decreasesDecreases in rental purchases, lower levels of multi-family and commercial real estate construction, trade uncertainty, and elevated interest rates in the effectfirst half of inventorythe management contributed to lower shipment volumes for construction equipment.year

duecontributed to moderatinglower marketshipment conditions.volumes for construction equipment. Current period results were impacted by special items (see Note 4).

Small Agriculture and& Turf Operations

Construction and& Forestry Operations

Sales volumes decreased 15 percent15% in the U.S. and Canada and 8were percentroughly flat outside the U.S. and Canada. Price realization wasdecreased about flat3% in the U.S. and Canada drivendue byto moderatingincremental marketincentive conditionsprograms deployed to address pressures from the competitive environment and was flat outside the U.S. and Canada.

Cash, Cash EquivalentsEquivalents, and Marketable Securities

Cash inflows from operating activities were $9.2$7.5 billion in 2024,2025, driven by net income adjusted for non-cash provisions and lowera inventoriesdecrease andin receivables fromrelated ato decline in sales. These items weresales, partially offset by aan decreaseother inpostretirement vendorbenefit payables(OPEB) and a reduction in dealer sales incentive accruals.contribution.

Cash outflows from financinginvesting activities were $2.7$2.1 billion in 2024,2025. asThe repurchasesprimary drivers were purchases of common stockproperty and dividendsequipment paidand wereinvestments in equipment on operating leases, partially offset by highercollections borrowings.of receivables from unconsolidated affiliates.

Cash returned to shareholders decreased $3.0$2.8 billion in 20242025 as we managed cash flows through the declining business cycle in accordance with our use-of-cash priorities.priorities by decreasing share repurchases.

To access public debt capital markets, we rely on credit rating agencies to assign short-term and long-term credit ratings to our debt securities as an indicator of credit quality for fixed income investors. A security rating is not a recommendation by the rating agency to buy, sell, or hold our securities. A credit rating agency may change or withdraw ratings based on its assessment of our current and future ability to meet interest and principal repayment obligations. Each agency’s rating should be evaluated independently of any other rating. Lower credit ratings generally result in higher borrowing costs, including costs of derivative transactions, reduced access to debt capital markets, and may adversely impact our liquidity.

Borrowings – As of OctoberNovember 27,2, 2024,2025, we had $17.6$17.2 billion of payments due on borrowings and securitization borrowings in the next year, along with interest payments of $2.5$2.3 billion. The securitization borrowing payments are based on the expected liquidation of the retail notes. See Notes 12 and 19 for additional borrowing details. These payments will likely be replaced with new borrowings to finance the receivable and lease portfolio, which is expected to be lower in 2025.2026.

Purchase Obligations – As of OctoberNovember 27,2, 2024,2025, our outstanding purchase obligations were $3.2$6.1 billion, with $2.8$4.5 billion payable within one year. These purchase obligations are noncancelable.

Share repurchases will be considered as a means of deploying excess cash to shareholders,shareholders once the previously mentioned requirements are met.

A key assumption of the retail sales incentive accrual is the predictive value of the historical percentpercentage of retail sales incentive costs to retail sales. Over the last five fiscal years, this percent has varied by an average of 1.0 percent.1.0%. Holding other assumptions constant, a 1.0 percent1.0% change would have modified the sales incentive accrual by about $135.$106.

A standard warranty is provided as an assurance that our equipment will function as intended. The standard warranty period varies by productproduct, region, and region.component.

The historical claims rate is determined by a review of five-year claims costs. The estimated population is based on dealer inventories and retail sales. These estimates are reviewed quarterly. Adjustments are also made for current quality developments.

Product warranty accrual estimates are affected by the historical percent of warranty claims costs as a percentage of gross sales. Over the last five fiscal years, the percent has varied plus or minus .09 percent.0.14%. Holding all other assumptions constant, if this estimated cost experience percent would have increased or decreased .09 percent,0.14%, the warranty accrual at OctoberNovember 27,2, 20242025, would have changed by approximately $50.$70.

The pension and OPEB defined benefit plan obligations (defined benefit) and expenses require the use of estimates. The main estimate is the present value of the projected future benefit payments. These future benefit payments extend several decades.

The increase in the 20242025 pension and OPEB net benefit was due to an increase in the expected long-term rates of return on pension plan assets and the Canadian pension settlement charge recognized in 2023 (see Note 7).assets.

Large agriculture sales are expected to remain subdued in North America and to soften in South America resulting in decreased sales volume for PPA in 2026 compared to 2025. SAT and CF sales are expected to improve in 2026. Our overall net sales are expected to increase in 2026 compared to 2025, with the anticipated decline in PPA sales more than offset by improvements in CF and SAT.

Agricultural Market Business Cycle. The agricultural market is affected by various factors including commodity prices, acreage planted, crop yields, government policies, and uncertainty in macroeconomic trends. These factors affect farmers’ income and sentiment which may result in varying demand for our equipment. In 2026, we may experience the following effects due to unfavorable large agriculture market conditions: lower sales volumes, higher sales incentives, and elevated receivable write-offs.

Incremental import tariffs adversely affected the cost of our products and components beginning in 2025 and continue to do so in 2026. The direct impact of these incremental tariffs incurred was $372$502 in the first sixnine months of 2026, net of the tariff recovery described below, and approximately $95$300 in the first sixnine months of 2025. These amounts exclude the impact of tariffs on our suppliers and market demand.

On February 20, 2026, the Supreme Court of the United States issued a decision invalidating tariffs imposed pursuant to the International Emergency Economic Powers ActAct. (IEEPA).We On April 20, 2026, the U.S. Customs and Border Protection (CBP) launched a system to process IEEPArecorded tariff refund claims. Based on the eligibility parameters established by the CBP for the initial phase of the refund process, we prepared and filed a refund claimrecoveries in the amountthird quarter and first nine months of $272,2026 whichof has$110 beenand accepted$382, by the CBP. We recorded a recovery for this initial amountrespectively, as we concluded the refundrefunds isare probable and reasonably estimable. As of August 2, 2026, approximately 80% of the recorded tariff recoveries have been received. The recovery was allocated 20%, 30%,25%, and 50%55% to PPA, SAT, and CF, respectively, decreasing cost of sales. Trade policies continue to evolve, causing uncertainty in the agriculture and construction industries. We arecontinue activelyto takingpursue stepsopportunities to mitigate potential impacts on our business, to the extent possible, including adjusting sourcing strategies, pursuingseeking product exemptions, and identifying cost reduction opportunities.

Legal Proceeding – On January 15, 2025, the Federal Trade Commission (FTC), along with the Attorneys General of the States of Illinois and Minnesota filed a lawsuit against us in the United States District Court for the Northern District of Illinois Western Division. The Attorneys General of the States of Arizona, Michigan, and Wisconsin joined the lawsuit. TheOn lawsuitJuly alleges8, monopolization2026, andwe unfairentered competition in violation of the federal and state antitrust laws. Plaintiffs seekinto a permanent injunction and other equitable relief to allow owners of our equipment, as well as independent repair providers, access to our repair tools and any other repair resources available to authorized John Deere dealers. We are in discussionssettlement with the FTC and plaintiff states withto respectresolve all claims contained in the lawsuit. As part of that settlement, we have agreed, among other items, to aprovide potentialcertain resolution.repair At this stage, we are unableresources to estimatefarmers and independent repair providers on “fair and reasonable terms” (as defined by the potentialsettlement). impactWe onhave also agreed to provide regular reporting to the FTC and submit to the FTC’s oversight of our business.compliance with the settlement.

Net sales and revenues increased 5% and 8%7% for the quarter and year-to-date periods, respectively, primarily due to higher sales volumes andvolumes, the positive effects of foreign currency translation.translation, and favorable price realization. Net income decreasedincreased $31$90 in the secondthird quarter primarily due to thefavorable impactprice realization of lower PPA shipment volumes of $313$286 ($402 pretax), increased production costs of $122 ($157 pretax) from higher material costs, and higher warranty expenses of $64 ($82$403 pretax), partially offset by theunfavorable impacttax impacts of higher$114 shipmentand volumesincreased forproduction CFcosts of $148$89 ($191 pretax) and SAT of $79 ($101$126 pretax), favorableprimarily pricefrom realizationhigher ofmaterial $131 ($169 pretax), and the favorable impact of foreign currency exchange of $107 ($138 pretax).costs. Results for the first sixnine months were also affected by favorable discretespecial tax items in the prior period (see Note 22) of $163. The discussion of net sales and operating profit is included in the Business Segment Results below.

An explanation of the cost of sales to net sales ratio and other significant statementstatements of consolidated income changes follows:

Production & Precision Agriculture sales decreased for the quarter as a result of lower shipment volumes (primarily in the U.S., Canada,Brazil and BrazilEurope), partially offset by favorable price realization and the positive effects of foreign currency translation (primarily the EuroBrazilian real and BrazilianAustralian realdollar). Operating profit decreased primarily due to lower shipment volumes / sales mix and higher production costs from an increase in material and freight costs, partially offset by favorable price realization and the favorable effects of foreign currency exchange.

SecondThird Quarter 2026 Compared to SecondThird Quarter 2025

Sales for the first sixnine months decreased as a result of lower shipment volumes (primarily in the U.S., Canada, and Brazil, offset by EuropeBrazil), partially offset by the positive effects of foreign currency translation (primarily the EuroBrazilian real and Brazilian realEuro). Operating profit decreased for the first sixnine months primarily due to lower shipment volumes / sales mix and higher production costs, fromdriven primarily by an increase in material costscosts, andpartially higheroffset tariffs.by favorable price realization.

First SixNine Months 2026 Compared to First SixNine Months 2025

Small Agriculture & Turf sales increased for the quarter as a result of higher shipment volumes (primarily in the U.S. and Europe) and thefavorable positiveprice effects of foreign currency translation (primarily the Euro).realization. Operating profit increased due to higher shipment volumes / sales mix and favorable price realization.realization, partially offset by higher production costs from increased material costs.

SecondThird Quarter 2026 Compared to SecondThird Quarter 2025

Sales for the first sixnine months increased as a result of higher shipment volumes (primarily in the U.S., Europe, and India) and thefavorable positiveprice effects of foreign currency translation (primarily the Euro).realization. Operating profit for the first sixnine months increased due to higher shipment volumes / sales mix and favorable price realization, partially offset by higher production costs,costs drivendue by higher tariffs andto an increase in material costs.

First SixNine Months 2026 Compared to First SixNine Months 2025

Construction & Forestry sales increased for the quarter primarily as a result of higher shipment volumes (primarily in the U.S.) and thefavorable positiveprice effects of foreign currency translation (primarily the Euro).realization. Operating profit increased due to higher shipment volumes and favorable price realization, partially offset by higher productionselling, costs, driven by an increase in material costsadministrative and highergeneral tariffs.and research and development expenses.

SecondThird Quarter 2026 Compared to SecondThird Quarter 2025

Sales for the first sixnine months increased due to higher shipment volumes (primarily in the U.S.) and thefavorable positiveprice effects of foreign currency translation (primarily the Euro).realization. Operating profit increased due to higher shipment volumes / sales mix and favorable price realization, partially offset by higher tariffsproduction costs from increased material costs and anhigher increaseselling, inadministrative materialand costs.general and research and development expenses.

First SixNine Months 2026 Compared to First SixNine Months 2025

Revenue decreased for theboth first six months decreasedperiods primarily due to thea deconsolidationlower ofaverage Banco John Deere S.A. (BJD) in the second quarter of 2025.portfolio. The average balance of receivables and leases financed was 1%2% lower in the secondthird quarter of 2026 and 2% lower in the first sixnine months of 2026 compared with the same periods last year. Interest expense decreased as a result of lower average borrowing rates and lower average borrowings.

Net income for theboth quarterperiods increased primarily due to favorable financing spreads and favorable derivative valuation adjustments,spreads, partially offset by the impact of a lower average portfolio. Net income in the first sixnine months was also impacted by a lower provision for credit losses and the prior period benefiting from a special item (see Note 22)., lower provision for credit losses, and favorable derivative valuation adjustments.

We closely monitor our cash requirements. Based on the available sources of liquidity, we expect to meet our funding needs in the short term (next 12 months) and long term (beyond 12 months). We are forecasting operating cash flows from equipment operations in 2026 to remain flat compared with 2025 driven by an offsetting decrease in net income adjusted for non-cash provisions, and higher cash flows generated from higherincreased accounts payable and accrued expenses and inventory reductions.expenses.

Cash inflows from consolidated operating activities in the first sixnine months of 2026 were $1,042.$3,250. This resulted mainly from net income adjusted for non-cash provisions, partially offset by an increase in receivables related to sales, an increase in inventories, and a decrease in accrued employee profit-sharing incentives, and an OPEB contribution.benefits. Cash inflowsoutflows from investing activities were $93$825 in the first sixnine months of this year. The primary drivers were collections of receivables (excluding receivables related to sales) exceeding the cost of receivables acquired, partially offset by purchases of property and equipment and the acquisition of Tenna LLC (see Note 21)., partially offset by collections of receivables (excluding receivables related to sales) exceeding the cost of receivables acquired. Cash outflows from financing activities were $1,627$1,828 in the first sixnine months of 2026, primarily due to cash returned to shareholders and lower external borrowings.shareholders. Cash returned to shareholders was $1,378$2,013 in the first sixnine months of 2026. Cash, cash equivalents, and restricted cash decreasedincreased $398$617 during the first sixnine months of 2026.

Trade Accounts and Notes Receivable. Trade accounts and notes receivable arise from sales of goods to customers. Trade receivables increased $2,254$2,406 during the first sixnine months of 2026, primarily due to a seasonal increase and higher sales volumes. These receivables increased $823$1,620 compared to a year ago due to higher sales volumes. The percentage of total worldwide trade receivables outstanding for periods exceeding 12 months was 1% at MayAugust 3,2, 2026, 3% at November 2, 2025, and 7%3% at AprilJuly 27, 2025.

Financing Receivables and Equipment on Operating Leases. Financing receivables and equipment on operating leases consist of retail notes originated in connection with financing of new and used equipment, operating leases, revolving charge accounts, sales-type and direct financing leases, and wholesale notes. Financing receivables and equipment on operating leases decreased $2,476$2,430 during the first sixnine months of 2026 and decreased $1,600$2,814 in the past 12 months. The decrease for both periods was due to lower agriculture and turf retail customer receivables reflecting reduced demand in recent years and lower wholesale receivables driven by lower dealer inventory levels.receivables. Total acquisition volumes of financing receivables and equipment on operating leases were 12%8% higher in the first sixnine months of 2026, compared with the same period last year, as volumes of wholesale notes,notes and revolving charge accounts were higher compared to the same period last year.

Inventories. Inventories increased by $782$405 during the first sixnine months of 2026 primarily due to a seasonal increase,increase and increased by $318$98 compared to a year ago. A majority of these inventories are valued at cost on the “last-in, first-out” (LIFO) method.

Property and Equipment. Property and equipment cash expenditures in the first sixnine months of 2026 were $451$716 compared with $555$852 in the same period last year. Capital expenditures in 2026 are estimated to be approximately $1,400.$1.3 billion.

Accounts Payable and Accrued Expenses. Accounts payable and accrued expenses decreased by $256$241 in the first sixnine months of 2026, primarily due to a decrease in accrued expenses associated with employee benefits and dealer sales incentives, partially offset by an increase in trade payables.payables and derivative liabilities. Accounts payable and accrued expenses increased $308$86 compared to a year ago due to an increase in trade payables,payables and accrued expenses for warranty liabilities, partially offset by a decrease in accrued expenses associated with accrued taxes and employee benefits.

Borrowings. Total external borrowings decreased by $114$100 in the first sixnine months of 2026 and decreased $2,499$2,810 compared to a year ago, generally corresponding with the level of the receivable and lease portfolio, as well as other working capital requirements.

John Deere Capital Corporation (Capital Corporation), a U.S. financial services subsidiary, has a revolving warehouse facility to utilize bank conduit facilities to securitize retail notes (see Note 10). The facility was renewed in November 2025, with an expiration in November 2026, and total capacity or “financing limit” of $2,500. At MayAugust 3,2, 2026, $1,738$1,818 of securitization borrowings were outstanding under the facility. At the end of the contractual revolving period, unless the banks and Capital Corporation agree to renew, Capital Corporation would liquidate the secured borrowings over time as payments on the retail notes are collected.

In the first sixnine months of 2026, the financial services operations issued $1,439$2,525 and retired $2,108$3,027 of retail note securitization borrowings, which are presented in “Net proceeds (payments) in short-term borrowings (original maturities three months or less).”

Worldwide lines of credit totaled $12.7$12.6 billion at MayAugust 3,2, 2026, consisting primarily of:

At MayAugust 3,2, 2026, $5,947$5,201 of these worldwide lines of credit were unused. For the purpose of computing unused credit lines, commercial paper and short-term bank borrowings were considered to constitute utilization. These credit agreements require Capital Corporation and other parts of our business to maintain certain performance metrics and liquidity targets. All requirements in the credit agreements have been met during the periods included in the financial statements.

Debt Ratings. To access public debt capital markets, we rely on credit rating agencies to assign short-term and long-term credit ratings to our debt securities as an indicator of credit quality for fixed income investors. A security rating is not a recommendation by the rating agency to buy, sell, or hold our securities. A credit rating agency may change or withdraw ratings based on its assessment of our current and future ability to meet interest and principal repayment obligations. Each agency’s rating should be evaluated independently of any other rating. Lower credit ratings generally result in higher borrowing costs, including costs of derivative transactions, reduced access to debt capital markets, and may adversely impact our liquidity. The senior long-term and short-term debt ratings and outlook currently assigned to our unsecured company securities by the rating agencies engaged by us are as follows:

Forward-looking statements are based on information currently available informationto us and our current assumptions, expectations, and projections about future events and should not be relied upon. Except as required by law, we expressly disclaim any obligation to update or revise our 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: