Deere & Co. · Risk factors

Prior heading: Our financial results largely depend upon the agricultural market business cycle, as well as general economic conditions and outlook. Negative conditions in the agricultural industry and general economy cause weakened demand for our equipment and services, limit access to funding, and result in higher funding costs.

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 factors; consequently, sales of agricultural equipment, in turn, equipment are also cyclical and generally reflect the economic health of the agricultural industry. industry. The economic health of the agricultural industry is affected by numerous factors, including farm income, international trade, farmland values, and debt levels levels, and financing costs, all of which are costs. In addition, farm income 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, higher greater reliance on sales discounts, higher receivable write offs, incentives, and a higher provision for credit losses. elevated receivable write-offs. We expect certain of these conditions to persist in fiscal year 2025. 2026. Changes in interest rates the economic 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 dampens could decrease demand for certain construction equipment. Our turf operations and our construction and forestry segments are dependent on construction activity and have also been affected by recent adverse economic conditions. Decreases in construction activity turf equipment and housing starts could 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 volatility volatility, 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.

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Prior heading: We may face risks associated with international, national, and regional trade laws, regulations, and policies, and government farm programs and policies which could significantly impair our profitability and growth prospects.

International, national, and regional laws, regulations, and policies directly or indirectly related to or restricting the import and export of our products, services, and technology, or those of our customers, customers or suppliers, or for the benefit of favored industries or sectors, could harm have harmed our global business. We are subject to various trade regulatory risks including, but not limited to, the following: The imposition of tariffs and retaliatory tariffs has impacted, and we expect will continue to impact, the sourcing of parts and components, the cost and profitability of manufacturing operations, and our ability to ship, import, and export our products. During fiscal year 2025, new tariffs were imposed in the U.S. for imports from a broad range of countries and materials. Several countries also implemented or proposed retaliatory tariffs on imports from the U.S., as well as other barriers to trade. As a net exporter of agriculture and turf equipment from the U.S., these trade policies impact us. Nearly 80% of our domestic sales are assembled in the U.S., with the remaining products imported primarily from Europe, Mexico, India, and Japan. During fiscal year 2025, incremental import tariffs adversely affected the cost of our products and components and may continue to do so in 2026. In addition, retaliatory tariffs by regions outside the U.S., currently in effect or adopted in the future, may impact the prices of our exported products and the profit realized from these exports. The direct impact of incremental tariffs incurred by us in 2025 was approximately $600, excluding the impact of tariffs on our suppliers and market demand. On November 5, 2025, the United States Supreme Court heard oral arguments on tariffs imposed under the International Emergency Economic Powers Act (IEEPA). The court may provide tariff relief and the potential recovery of amounts previously paid. We are monitoring developments in this case and its impact on our future financial statements and business. Changing U.S. export controls and sanctions on various foreign countries and on various parties could affect our ability to manufacture our products in foreign jurisdictions, collect receivables, provide aftermarket warranty support for our equipment and sell products, and could otherwise impact our reputation and business. Restricted access to global markets could impair our ability to export goods and services from various manufacturing locations around the world. Restricted access could world and limit the ability to access raw materials and high-quality parts and components at competitive prices on a timely basis. For example, expanding export controls or limits on foreign investment can impact global supply of key materials and components, and actions taken within the US-China trade conflict can impact business in China, as well as sales, import/exports, and/or business engagement with Chinese entities globally. Trade restrictions, negotiation of new trade agreements, non-tariff trade barriers, local content requirements, and imposition of new or retaliatory tariffs against certain countries or covering certain products, including developments in U.S.-China trade relations, have limited, and could continue to limit, our ability to capitalize on current and future growth opportunities in international markets. These trade restrictions, and changes in, or uncertainty surrounding global trade policies, may affect our competitive position. basis. Trade restrictions could impede those in developing countries from achieving a higher standard of living, which could negatively impact our future growth opportunities arising from increasing global demand for food, fuel, and infrastructure. Policies impacting exchange rates and commodity prices, or those limiting the export or import of commodities, could have a material adverse effect on the international flow of agricultural and other commodities that may result in a corresponding negative effect on the demand for agricultural and forestry equipment in many areas of the world. Our agricultural equipment sales could be harmed by such policies because farm income influences sales of agricultural equipment around the world. Changes in government farm programs and policies can influence demand for agricultural equipment as well as create unequal competition for multinational companies relative If our business partners were to domestic companies.incur regulatory or judicial action, it could impact our ability to operate certain solutions abroad, or our connectivity to rural farmers.

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Prior heading: We may be unable to manage increasing political, economic, and social uncertainty in certain regions of the world, which could significantly change the dynamics of our competition, customer base, and product offerings globally.

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: In some cases, these countries have greater political and economic volatility, greater vulnerability to infrastructure and labor disruptions, political instability, including war or armed conflict, changes in government policies, expropriation, nationalization, and differing customer product preferences other political, economic, or social developments, increased tariffs, trade barriers, trade agreements, and requirements than our other markets. Having business operations in various regions restrictions on international trade, supply chain disruptions, including, as a result of natural disasters, transportation disruptions, and countries exposes us to geopolitical events, multiple and potentially conflicting business practices and legal laws, regulations, and regulatory requirements policies that are subject to change. These practices and legal requirements are often complex and difficult to navigate, including those related to tariffs change, along with the complexity and trade regulations, investments, property ownership rights, taxation, repatriation cost of earnings, and advanced technologies. Expanding business operations globally also increases exposure to compliance, currency fluctuations, fluctuations which can materially affect our financial results. In Argentina, the government has certain capital and value of our foreign currency controls revenues, expenses, and cash flows, inadequate intellectual property protections in foreign jurisdictions that restrict could result in the unauthorized use or infringement of our ability to access U.S. dollars intellectual property, adverse consumer sentiment for non-local products, local labor market conditions, and remit earnings from lack of brand recognition in our Argentine operations, leaving us exposed emerging markets. The occurrence of one or more of these events has, from time to long-term currency fluctuations. While our brands are widely recognized time, impacted, and may in the future impact, our traditional markets, they are less known business in some emerging markets, which could impede a variety of ways, including reducing demand for our efforts products, increasing costs, limiting our ability to successfully compete operate in these markets. Changing U.S. export controls and sanctions on various foreign countries and on various parties could affect certain jurisdictions, disrupting our ability to collect receivables, provide aftermarket warranty support for our equipment, deliver products to customers on time and sell products, at competitive prices, subjecting us to fines, penalties, and could otherwise impact sanctions, harming our reputation and business. Market uncertainty and volatility in various geographies have been magnified as a result competitive position, devaluation of potential shifts in U.S. and foreign trade, economic, and other policies following the 2024 U.S. presidential and congressional elections. Geopolitical tensions, including the Russia/Ukraine war assets, and impacting our financials. Please also refer to the conflict risk factors in the Middle East, have also exacerbated market volatility “Legal and affected agricultural global production Regulatory Compliance Risks” section below that address our legal and demand levels.regulatory risks associated with our international operations.

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Prior heading: We may be affected by changing worldwide demand for food and different forms of renewable energy, which could 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, are is 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. losses. While higher commodity prices benefit our crop-producing agricultural equipment customers, they could result in greater feed costs for livestock dairy and poultry livestock producers, which in turn may result in lower levels of equipment purchased by these those customers. International buyers can also change the source of imported agricultural products, such as corn and soy, from the U.S. to other countries, impacting the profitability of our customers and demand for our equipment. In addition, changing energy demands demand may cause farmers to change the types or quantities of the crops they raise, with corresponding changes in equipment demands. Finally, The growing demand for biofuels has led to a corresponding increased demand for agriculturally based feedstocks used in their production, such as corn in the U.S. and Europe and sugar cane in Brazil. This increased demand may increase the demand for agricultural equipment to be used in the production of such crops. However, the economic feasibility of biofuels can be impacted by the price of oil. As the price of oil falls, biofuels become a less attractive alternative energy source, and as a result, there is uncertainty with respect to any benefits we may realize with respect to our investments related to renewable energy. Furthermore, 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.

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Prior heading: Rationalization or restructuring of manufacturing facilities, and plant expansions and updates at our manufacturing facilities may cause capacity constraints, inventory fluctuations, and other issues.

The rationalization or restructuring of our manufacturing facilities, including relocating production or closing facilities, may result in requires significant investment and places temporary constraints on our ability to produce the quantity of products necessary to fill orders orders, and thereby complete sales in a timely manner. manner. In addition, decisions regarding the rationalization, restructuring or relocation of facilities, such as the recently announced shifting of production of skid steer loaders and compact track loaders from our Dubuque, Iowa factory to Ramos, Mexico, and any similar actions we may undertake in the future, actions, could also subject us to additional or new tariffs, reputational risks, and other issues relating to the importation of products, fines, products. In 2024, we shifted production of small-frame skid steer loaders and reputational risks. Finally, compact track loaders to Mexico. As a result, these products became subject to additional tariffs on imports from Mexico in 2025. Even though we are taking actions to qualify for an exemption under the expansion and reconfiguration of existing manufacturing facilities, as well as new or expanded United States-Mexico-Canada Agreement (USMCA) to mitigate the elevated costs, there is no guarantee that we will be able to obtain such qualification. Furthermore, our manufacturing operations processes are dependent on water. Increasing competition for water resources, regulatory restrictions on water, and environmental changes can lead to water scarcity. Any significant reduction in emerging markets, such as Brazil, water availability could disrupt our manufacturing processes, increase the risk of production delays, as well as require significant investments.our operational costs, and limit our ability to meet customer demand.

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Prior heading: We may be unable to accurately forecast customer demand for products and services, and to adequately manage inventory, which could adversely affect our operating results.

To ensure adequate inventory supply, we must forecast inventory needs and expenses and place orders sufficiently in advance with suppliers and contract manufacturers. These forecasts are based on estimates of future demand for products and services. Failure to accurately forecast our needs may result results in unmet market demand, parts shortages, manufacturing delays or inefficiencies, increased costs, or excess inventory, such as what we experienced in fiscal year 2022 due to supply chain disruptions. inventory. Our ability to accurately forecast demand could be affected by many factors, including changes in customer demand for our products and services, used equipment inventory outstanding, changes in demand for the products and services of competitors, unanticipated changes in agricultural and general market conditions, and the weakening of economic conditions or customer confidence in future economic conditions. In 2025, elevated used inventory levels in late model-year machines impacted demand for our products in North America resulting in lower price realization and actions to reduce our inventory level. If the forecasts used to manage inventory are not accurate, we may experience excess inventory levels, shortage of available products, or reduced manufacturing efficiencies.

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Prior heading: 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 on sales of our products.

We require access to various raw materials, components, and whole goods at competitive prices to manufacture Our business relies on a complex global supply chain, and distribute any disruptions can impact our products. operations. We 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. Global years. Past global 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 had an adverse effect on adversely affected our business operations. While we have seen stabilization operations. We anticipate fluctuations in the our supply chain and inflation, we anticipate potential future fluctuations due to continued ongoing geopolitical and economic uncertainty, and regulatory and policy instability, including import tariffs and trade agreements. For example, certain of our products, including motors, batteries, and other components, rely on rare earth minerals for their manufacturing, of which a significant majority are sourced from China. The latter inability to obtain export permits for rare earth minerals could have a detrimental effect on our business. These complications have the potential to significantly increase production and logistics costs, including additional research and development costs for designing alternative solutions, and therefore would have a material negative detrimental effect on the profitability of the business, particularly if we are unable business. Rapid changes and growing complexity in trade policies may also affect the ability of customs brokers and logistics providers to recover timely process imported products, which could result in delays, higher logistics costs, and production disruptions. The financial stability of our suppliers can also impact the increased costs continuity of our supply chain. A number of our suppliers are facing higher prices due to market considerations inflation, increased tariffs or other factors. We rely on otherwise. If one or more of our suppliers continue to acquire encounter financial hardships, delivery setbacks, or other performance-related difficulties, we may be unable to fulfill our obligations to customers. Furthermore, if any of the raw materials, components, and whole goods required materials critical to manufacture their products. our manufacturing become unavailable to our suppliers, or are only accessible at significantly higher costs, including due to increased tariffs or trade restrictions, or are affected by quality problems or defects, our ability to deliver certain products on schedule or within budget could be compromised. Significant disruptions to the supply chain resulting from shortages of raw materials, components, and whole goods have and could continue to adversely affect our ability to meet commitments to our customers. Work Examples of such disruptions include: work interruption or union strikes by employees of suppliers could also contribute to disruptions within our supply chain. In addition, certain materials and components used in our products are acquired from a suppliers, reliance on single supplier source suppliers, or suppliers that are proprietary in nature and that cannot be alternatively sourced expeditiously. replaced expeditiously, and natural disasters, pandemics, or other unforeseen events can disrupt the flow of materials. Furthermore, if our customers are unwilling to accept price increases for our products, or if we are unable to offset the increases in costs, raw material costs or shortages could have a material adverse effect on our operational or financial results.

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Prior heading: Unexpected events have increased and may in the future increase our cost of doing business or disrupt our 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 weather in the United States or unusual weather 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 particular specific 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.

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Prior heading: Changes in interest rates or market liquidity conditions, as well as changes in government banking, monetary and fiscal policies, could adversely affect our financials and our earnings and/or cash flows.

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 dampen 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 our customers’ ability to repay their obligations to us. High interest rates also increase the cost of carrying inventory for our dealers and the cost of financing for end customers. Interest rates in the U.S. have decreased and Brazil remained elevated in 2025. Higher rates and volatility in rates impact us in several ways, primarily affecting the demand for our products, financing spreads for the financial services operations, the value of our investments, and the financial health of our dealers. The markets for our agriculture, turf, and construction products were negatively impacted in 2025 by elevated interest rates and their effect on borrowing costs for our customers. While we strive to match the interest rate characteristics of our financial assets and liabilities, changing interest rates have had an adverse effect on affected our financing spreads—the difference between the yield we earn on our assets and the interest rates we pay for funding—which has have affected our earnings. In addition, actions by credit rating agencies, such as downgrades or negative changes to ratings outlooks, can affect the availability and cost of funding for us and can increase our costs of capital and hurt our competitive position. Moreover, policies of the U.S. and other governments regarding banking, monetary, and fiscal policies intended to promote or maintain liquidity, stabilize financial markets, and/or address local deficit or structural economic issues have a material impact on our customers and markets. Our operations and results could also be affected by financial regulatory reform that could, among other things, have an adverse effect on the financial services segment and on our customers by limiting their ability to enter hedging transactions or to finance purchases of our products. Government policies on spending can also affect us, especially the CF segment, due to the impact of government spending on infrastructure development. Our operations, including those outside of the U.S., may also be affected by non-U.S. regulatory reforms being implemented to further regulate non-U.S. financial institutions and markets.

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Prior heading: Because the financial services segment provides financing for a significant portion of our sales worldwide, negative economic conditions in the financial industry could materially impact our operations and financial results.

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 allowance for credit losses on retail notes and financing lease receivables increased in 2025 primarily due to higher expected losses on agriculture and turf customer accounts as a result of elevated delinquencies and a decline in market conditions. We occasionally grant contractual modifications to customers 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 allowance for credit losses may continue to increase in future periods. The financial services segment’s inability to access funds at cost-effective rates to support our financing activities could have a material adverse effect on our business. The financial services segment’s liquidity and ongoing profitability depend largely on timely access to capital to meet 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.

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Prior heading: We may not realize the anticipated benefits of our Smart Industrial Operating Model and Leap Ambitions.

Failure to realize the anticipated benefits of our Smart Industrial Operating Model and related business strategies in production systems, precision technologies, and aftermarket support, as well as failure to have selected a business strategy that aligns with our customer customers’ needs and market trends, could have an adverse effect on our operational and financial results. results. Several factors could impact our ability to successfully execute execute, and to benefit from, our Smart Industrial Operating Model, including, among other things: Failure our inability to accurately assess market opportunities and the technology required to address such opportunities; Failure to develop opportunities, falling behind in developing and introduce introducing new technologies or lack of adoption technologies, customers not seeing the value proposition of such the technologies by and deciding not to adopt them, our customers; Failure inability to holistically provide lifecycle solutions; Failure solutions, inability to fully monetize technology-based solutions, being unable to optimize our capital allocation in connection with the Smart Industrial Operating Model; Model, and The the adoption of new regulations or policies supporting and/or subsidizing outputs that are inconsistent with our strategy, such as policies that have the effect of encouraging or supporting the use of conventional sources of energy. Similarly, we may not realize the anticipated benefits of our Leap Ambitions and related goals within the expected timelines, or at all. As part of our Leap Ambitions, we adopted various goals we expect to achieve by 2026 or 2030, but these goals certain financial and their timelines might be modified or updated. We operational goals, which were refined in December 2025. In the future, we may again modify these goals, abandon them or not be able unable to achieve these goals them for a variety of reasons, some of which may be beyond our control. Examples of such reasons include: Our the evolution of our business strategy, our business model, and our business needs; our estimates and assumptions related to efficiency of our products and the adoption of precision technology may not be accurate; Certain materials, such as quality battery cells, may become unavailable or too costly; Customers accurate; in particular, we have experienced slower than expected customer adoption of some of our precision technology solutions, and SaaS subscription services; customers may not embrace understand the value proposition of the Solutions as a Service license model; various SaaS subscription models; the time required to build the capabilities and The infrastructure required to achieve support our goals, such as sufficient charging stations or fuel availability, may become too costly or SaaS business, which has delayed the timing of realization of the expected benefits; and dealers may not be developed on the expected timelines.able to effectively establish relationships with customers, maintain those customer relationships, and provide SaaS solutions and support to our customers.

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Prior heading: If we are unable to remain competitive and relevant, including by delivering precision technology solutions to our customers, our business, results of operations, and financial condition could be adversely affected.

We design and manufacture products that incorporate advanced technologies. Many of our products and services are highly engineered and involve sophisticated technologies with related complex manufacturing and systems integration processes. We invest substantial amounts in research and development efforts to pursue advancements in a wide range of technologies, products, and services aimed at meeting the ever-evolving product, and service needs of our customers. Our ability to realize the anticipated benefits of our investments in technology and product design depends on a variety of factors, including: the usefulness and competitiveness of our offerings relative to our peers, access to radio frequency (RF) spectrum and satellite functionality which enables connectivity for equipment, operations, owners, dealers, and technicians, meeting development, production, certification, and regulatory approval schedules, adequate intellectual property protections in relevant jurisdictions and our ability to protect our intellectual property, achieving cost and production efficiencies, availability and quality of product parts and materials, both from our suppliers and internally produced, availability of test equipment, development of complex software, hiring and training of qualified personnel, training our dealers and their technicians, identification of emerging technological trends, compliance requirements regarding data privacy and artificial intelligence, and customer acceptance and the pace of adoption of our products and technologies, which with respect to some of our solutions and subscription models, has been slower than we expected. We compete on product performance, innovation and innovation, quality, distribution, sustainability, customer service, and price. Aggressive pricing or other strategies of competitors, unanticipated product or manufacturing delays, our failure to deliver quality products that meet customer needs, or our failure to price products competitively competitively, adversely affects affect our business, results of operations, and financial condition. condition. To remain competitive, we need to have a thorough understanding of our existing and potential customers on a global basis, particularly in growth markets such as Argentina and Brazil. In addition, if Brazil. If we are unable to remain relevant and effectively develop and deliver technology that customers can easily adopt and utilize, customer adoption rates could reduce, customers may not adopt our technology which would adversely impacting impact our business operations and future financial performance. Therefore, our ability to deliver precision technology and expand value-driven solutions is critical to our business success. If we fail to stay ahead of both traditional success. In addition, artificial intelligence technologies have rapidly developed, and non-traditional competitors in our business may be adversely affected if we cannot successfully integrate the technology space, it may hinder our ability to adapt or identify strategic partnerships within our industries in a timely manner. This could result in increased costs and delays in delivering value to our customers, ultimately affecting our competitive position and financial condition. Furthermore, into our approach to precision technology involves hardware and software, guidance, connectivity and digital solutions, automation and machine intelligence, internal business processes, products, and autonomy. We may make significant investments services in research and development, connectivity solutions, digital security for precision technology solutions, and conduct dealer a timely, cost-effective, compliant, and employee training. responsible manner. These investments may not produce solutions that provide the desired results for customers’ profitability or sustainability outcomes, impacting our competitive position.

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Prior heading: Our business may suffer if our equipment fails to perform as expected.

If our equipment does not perform as expected, From time to time, we may receive have received warranty claims and may have had to perform post-sales repairs or recalls. We recalls due to our equipment not performing as expected. In such cases, we may also be subject to face regulatory requirements and penalties that will can impact our ability to develop, market, and sell equipment. This These circumstances may result in product delivery delays. It could also lead delays and claims related to product liability, breach of warranty, and consumer protection claims. These protection. The costs associated with these claims and warranty expenses could be significant. As a manufacturer of equipment, we We must manage the cost and risk associated with product warranties, post-sale repairs and recalls, regulatory penalties, and product liability, breach of warranty, and consumer protection claims with respect to our products. In addition We may also be subject to post-sale repairs or recalls initiated by us for various reasons, investigations into relating to our products by government regulators which may compel us to initiate product recalls or may result in negative public perceptions about the safety of our products, even if we disagree with the regulator’s determination. Such post-sale repairs or recalls, whether voluntary or involuntary, could result in significant expense, supply chain complications, and may harm our brand, business, prospects, financial condition, and operating results.

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Prior heading: We may not realize anticipated benefits of acquisitions, joint ventures, and divestitures, or these benefits may take longer to realize than expected.

From time to time, we make strategic acquisitions and divestitures and participate in joint ventures. Acquisitions and joint ventures we have entered into, or may enter into in the future, may involve significant challenges and risks, including that the acquisitions or joint ventures do not advance our business strategy, or fail to produce satisfactory returns on investment. Other risks include: We may encounter difficulties integrating acquisitions with our operations, applying internal control processes to these acquisitions, including acquisitions (including those related to cybersecurity, cybersecurity), managing strategic investments, assimilating new capabilities to meet the future needs of our businesses, and/or combining business cultures; We face regulatory or compliance exposure until appropriate processes and controls are put in place; Integrating acquisitions is often costly implemented; integration costs and may require significant attention from management and personnel; We may not failing to realize all the anticipated benefits of acquisitions or joint ventures, or the realized benefits being significantly delayed, including because the technologies or products acquired may not be significantly delayed; for example, our joint venture with Bradesco in Brazil complementary or compatible with respect to Banco John Deere S.A. our business strategy or product portfolio, may not have the expected result of reducing broaden our incremental risk as we aim market position, product portfolio or footprint, or enhance our ability to grow in the Brazilian market; deliver value to our customers; and Due due diligence evaluations of potential transactions include not identifying all of the business, legal, compliance, and financial reviews with the goal of identifying and evaluating the material risks involved. These due diligence reviews may not identify all of the issues necessary to accurately estimate the cost and potential risks impact of a particular acquisition or joint venture, including potential exposure to regulatory sanctions resulting from an acquisition target’s or joint venture partner’s previous activities or costs associated with any quality issues with an acquisition target’s or joint venture’s products or services. We may also decide to divest businesses and terminate joint ventures before their stated expiration. Divestitures of businesses or dissolutions of joint ventures may involve significant challenges and risks, including failure to advance our business strategy, costs and disruptions to us, and negative effects on our product offerings, which may adversely affect our business, results of operations, and financial condition. Divestitures of businesses and dissolutions of joint ventures may result in ongoing financial or legal involvement in the divested business through indemnifications or other financial arrangements, such as retained liabilities, which could affect our future financial results.services.

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Prior heading: Our ability to attract, develop, engage, and retain qualified employees could affect our ability to execute our strategy.

Our continued success depends, in part, on our ability to identify and attract qualified candidates with the requisite education, background, and experience, as well as our ability to develop, engage, and retain qualified employees. Failure to attract, develop, engage, and retain qualified employees, whether as a result of an insufficient number of qualified applicants, difficulty in recruiting new employees, perceived or actual erosion of our culture, or inadequate resources to train, integrate, and retain qualified employees, could impair our ability to execute our business strategy and could adversely affect our business, results of operations, and financial condition. In addition, our culture and our values have been important contributors to our success to date and we believe promote a sense of pride and fulfillment in our employees. Failure to preserve our culture or focus on our values could negatively affect our ability to retain and recruit talent. While we strive to reduce the impact of the departure of employees, our operations or ability to execute our business strategy may be affected by the loss of employees, such as including in connection with the reduction in workforce we conducted reductions in fiscal year 2024. This reduction workforce. Reductions may adversely affect us as a result of decreased employee morale, the loss of institutional knowledge held by departing employees, knowledge, the allocation of resources to reorganize and reassign job roles and responsibilities, and the increased risk of litigation from former employees. In addition, we may not realize the expected cost savings from the reduction in workforce. We may also conduct other workforce reductions in the future, if deemed appropriate for our business.employees.

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Prior heading: Disputes with labor unions may adversely affect our ability to operate in our facilities as well as impact our financial results.

Many of our production and maintenance employees are represented by labor unions under various collective bargaining agreements with different expiration dates. There is no certainty that we will successfully negotiate new agreements with these unions that extend beyond the current expiration dates, or that these new agreements will be on terms that will allow us to be competitive. Our failure to successfully renegotiate labor agreements as they expire has has, from time to time led, and could in the future lead, to work stoppages or other disputes with labor unions. Certain of our labor agreements expire as early as 2025. Disruptions to our manufacturing and parts-distribution facilities through various forms of labor disputes could adversely affect us. Any strike, work stoppage, or other dispute with a labor union distracts management from operating the business, may displace employees from ordinary job positions to fill in vacant positions, may affect our reputation, and could materially adversely affect our business, results of operations, and financial condition. In addition, additional employees may choose to join or seek recognition for forming a labor union. If additional employees organize in the future, such employees may threaten and/or engage in work stoppages or organize campaigns. The outcomes from such actions may affect our reputation, and could adversely affect our business, results of operations, and financial condition.

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Prior heading: Security breaches and other disruptions to our information technology infrastructure could interfere with our operations and could compromise our information as well as information of our employees, customers, suppliers, and/or dealers, exposing us to liability that could cause our business and reputation to suffer.

In the ordinary course of business, we We rely upon information technology networks and systems, some of which are managed by third parties, to process, transmit, and store electronic information and to manage or support a variety of products within our portfolio, business processes and activities, including supporting our customers’ operations, products and solutions, supply chain, manufacturing, distribution, invoicing, and collection of payments from dealers and other purchasers of our equipment and from customers of the financial services segment. and dealers. We use information technology systems to record, process, and summarize financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal, and tax requirements. Additionally, we collect and store confidential data, including intellectual property, proprietary business information, and the proprietary business information of our customers, suppliers, and dealers, as well as personal data of our customers and employees in data centers, which are often owned by third parties and maintained on their information technology networks. In particular, the John Deere Operations Center™, our digital management system that allows customers to access farm and jobsite information through their devices, stores substantial volumes of data at the edge and within cloud environments. This data is used to assist and support our customers’ operations and machines, and to enhance and develop our product offerings, including the development of machine learning, large language models and SaaS products. The secure operation of these information technology networks, and the processing and maintenance of this information, are critical to our business operations and strategy. Despite security measures, including exercises, tests, incident simulations, and system assessments measures designed to discover and address potential vulnerabilities, our information technology networks and infrastructure have been and may continue to be vulnerable to to: (i) intrusion, (ii) exfiltration of data, (iii) damage, disruptions, (iv) disruptions or shutdowns due to attacks by cyber criminals, criminals or foreign state actors, (v) employees’, suppliers’, or dealers’ error or malfeasance, (vi) supply chain compromise, (vii) disruptions during the process of upgrading or replacing computer software or hardware, (viii) power and systems outages, (ix) computer viruses, (x) ransomware or other malware, (xi) telecommunication or utility failures, (xii) terrorist acts, (xiii) natural disasters, or (xiv) and other events. events. Our reliance on cloud-based systems owned by third parties creates particular risks. Because we do not control the underlying infrastructure, we depend on the security and reliability of third-party providers, and any outage, misconfiguration, or loss of data could compromise the integrity of our and our customers’ operations and impair the execution of our business strategy and the achievement of our goals. Although we have not suffered any significant cyber incidents that have resulted in material business impact, we have from time to time been, and expect to continue to be, the target of malicious cyber threat actors. The occurrence of any significant event could compromise our networks, and the information stored there could be accessed, obtained, publicly disclosed, lost, altered, misused, or stolen. Any such access, acquisition, disclosure, alteration, misuse, or other loss of information could result in legal claims or proceedings, government investigations, liability or regulatory penalties, disruption or shut down of our operations, disruption or shut down of our dealers’ and customers’ operations, and damage to our reputation, which could adversely affect our business, results of operations, and financial condition. Furthermore, as security threats continue to evolve and increase in frequency and sophistication, we may need to invest additional resources to enhance information security.

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Prior heading: Technical or regulatory limitations may impact our ability to effectively implement automation, autonomy, and artificial intelligence solutions.

We utilize and intend to expand our use of automation and machine learning in some many of our products, including consumer-facing features, and we leverage generative artificial intelligence in our business processes. For example, the we use automation software, digital tools, applications, and analytics utilized in John Deere’s products are designed to improve customer decision-making, such as the automation package on the S7 Series Combines and the computer vision and machine learning technology that enables our See & Spray™ targeted spraying solution. solution. In addition, we maintain the John Deere Operations Center™, which stores substantial volumes of data with respect to our customers’ operations and that we use to support our customers and to develop or enhance our product offerings. While we believe the use of these emerging technologies can present significant benefits, it they also creates create risks and challenges as the use of artificial intelligence is a novel business model without an established track record. challenges. Data sourcing, technology, integration and process issues, programmed bias in decision-making algorithms, concerns over intellectual property, reputational implications if use becomes controversial, system security concerns, and or the protection of privacy could impair the adoption and acceptance of autonomous machine solutions. solutions. Additionally, if we are unable to match or surpass the advances of artificial intelligence that our competitors implement for their products or for internal operations, our competitive position could be impacted. Furthermore, any confidential information that we input into is disclosed to a third-party generative artificial intelligence platform could be leaked or disclosed to others, including sensitive information that is used to train the third parties’ model. Additionally, if the data used to train the solution or the content, analyses, or recommendations that the machine learning and intelligence applications assist in producing is deemed to be inaccurate, incomplete, biased or questionable, our brand and reputation may be harmed harmed, and we may be subject to legal liability claims. The development of our own artificial intelligence applications may will require additional investment in the development of proprietary systems, models, or datasets, which are often complex, may be costly and could impact the results of our operations. Developing, testing, and deploying these technologies may also increase the cost profile of our products due to the level of investment needed to enable such initiatives.initiatives. In addition, there is no guarantee that we will be able to develop such applications and execute on the longer-term aspects of our business strategy.

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Prior heading: Our global operations are subject to complex and changing laws and regulations, the violation of which could expose us to potential liabilities, increased costs, and other adverse effects.

We are subject to numerous international, federal, state, and local laws and laws, regulations, and executive orders; many of which are complex, frequently changing, and subject to varying interpretations. interpretations. These laws laws, regulations, and regulations executive orders cover a variety of subjects, including advertising, anti-money laundering, antitrust, autonomy systems, consumer finance, environmental, climate-related, health and safety, foreign exchange controls and cash repatriation restrictions, foreign ownership and investment, import/export and trade, human rights, labor and employment, product liability reporting, cybersecurity, data privacy, telematics, encryption, artificial intelligence, telecommunications, and telecommunications. drones. Changes to existing laws and laws, regulations, or executive orders, and enforcement priorities, changes to how they are interpreted, or the implementation of new, more stringent laws or laws, regulations, and executive orders, could adversely affect our business by increasing compliance costs, limiting our ability to offer a product or service, requiring changes to our business practices, or otherwise making our products and services less attractive to customers. Failure to comply with these laws laws, regulations, and regulations executive orders could result in fines and penalties. penalties. For example, in the U.S., we could lose government contracts and be subject to penalties if we fail to comply with executive orders. In addition, we must comply with the U.S. Foreign Corrupt Practices Act (FCPA) and all applicable foreign anti-bribery and anti-corruption laws. These laws generally prohibit companies and their intermediaries from making improper payments or providing anything of value to improperly influence government officials or private individuals for the purpose of obtaining or retaining a business advantage, regardless of whether those practices are culturally expected in a particular jurisdiction. Although we have a compliance program in place designed to reduce the likelihood of potential violations of these laws and regulations, our employees, contractors, or agents have violated, and in the future could violate such laws and regulations or our policies and procedures. Violations of these laws and regulations have resulted in, resulted, and could result in the future, in criminal or civil sanctions and may have a material adverse effect on our reputation, business, results of operations, and financial condition. In fiscal year 2024, we agreed to pay approximately $10.0 million to the Commission to resolve charges that the Company violated the FCPA arising out of improper payments by our wholly-owned subsidiary, Wirtgen Thailand.condition.

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Prior heading: Governmental actions designed to address climate change based on the emergence of new technologies and business models in connection with the transition to a lower-carbon economy could adversely affect John Deere and our customers.

There is global scientific consensus that greenhouse gas (GHG) emissions continue to alter the composition of Earth’s atmosphere in ways that are affecting and are expected to continue to affect the global climate. These Climate change considerations have led to new international, national, regional, and local legislative and regulatory responses. Various stakeholders, including legislators and regulators, shareholders, and non-governmental organizations, as well as companies in many business sectors, including us, are continuing to look for ways to reduce GHG greenhouse gas (GHG) emissions. The regulation of GHG emissions from certain stationary or mobile sources or the imposition of carbon pricing mechanisms could result in additional costs to us in the form of taxes or emission allowances, required facilities improvements, research and development investments, and increased energy costs. These results would increase our operating costs through higher utility, transportation, and materials cost material costs and could prevent us from selling products into certain markets. Increased input costs, such as fuel and fertilizer, and compliance-related costs could also affect customer operations and demand for our equipment. Regulators in Europe and the U.S. have also focused efforts on increasing disclosures by companies related to climate change and mitigation efforts. These disclosure rules increase compliance burdens and associated regulatory costs. On the other hand, conflicting views on environmental topics, including GHG emissions reduction goals or other commitments addressing certain climate issues, are becoming increasingly subject to scrutiny from private sectors and governmental authorities. These conflicting views may impact our business and reputation. Further, our financial services segment is subject to additional international and national regulations relating to climate and environmental risk, which are continually evolving and could affect the financing operations and climate-risk processes developed by the segment.

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Prior heading: Legal proceedings, disputes and government inquiries and investigations could harm our business, financial condition, reputation, and brand.

We routinely are a party to claims and legal actions and the subject of government inquiries and investigations, the most prevalent of which relate to antitrust (including class action litigation), product liability (including asbestos related asbestos-related liability), employment, patent, trademark, and antitrust matters. trademark. The defense of lawsuits and government inquiries and investigations has have resulted and may will continue to result in expenditures of significant financial resources and the diversion of management’s time and attention away from business operations. operations. Adverse decisions in one or more of these claims, actions, inquiries, or investigations could require us to pay substantial damages, fines, or sanctions, undertake actions to modify our business model or services, initiate recall campaigns, or take other costly actions. It is therefore possible that legal judgments or investigations could give rise to expenses that are not covered, or not fully covered, by our insurance programs and could affect our financial position and results. We are currently subject to a consolidated multidistrict class action lawsuit in the Northern District of Illinois alleging that we have engaged in attempted monopolization, exclusionary conduct, and restraint of the market for repair services for John Deere brand agricultural equipment by limiting repair resources only to our authorized technicians or independent authorized John Deere dealers. In addition, the Federal Trade Commission (FTC) is investigating whether we have violated laws in connection with and the repair Attorneys General of John Deere brand agricultural equipment, as well as our information security practices and statements as they relate to the risk States of unauthorized access to our computer systems, products, Arizona, Illinois, Michigan, Minnesota, and services. We are fully cooperating with Wisconsin filed a lawsuit against us in the FTC. We are currently unable to predict United States District Court for the outcome Northern District of these matters. Illinois Western Division alleging similar claims. See Item 3 Legal Proceedings. The development and resolution of these matters could have a material adverse effect on our business, operations, and financial results.

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