Deere & Co. · Risk factors

Prior heading: International, national, and regional trade laws, regulations, and policies (particularly those related to or restricting global trade) and government farm programs and policies could significantly impair John Deere’s profitability and growth prospects.

International, national, and regional laws, regulations, and policies directly or indirectly related to or restricting the import and export of John Deere’s our products, services, and technology, or those of our customers, including protectionist policies in particular jurisdictions, or for the benefit of favored industries or sectors, could harm John Deere’s our global business. John Deere’s profitability and growth prospects We are tied directly subject to various regulatory risks including, but not limited to, the global marketplace. following: Restricted access to global markets impairs John Deere’s could impair our ability to export goods and services from its various manufacturing locations around the world and limits world. Restricted access could limit the ability to access raw materials and high-quality parts and components at competitive prices on a timely basis. Trade restrictions, including withdrawal from For example, expanding export controls or modification limits on foreign investment can impact global supply of existing key materials and components, and actions taken within the US-China trade agreements, 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 relations, export control and sanctions against Russia, have limited, and could continue to limit, John Deere’s our ability to capitalize on current and future growth opportunities in international markets and impair John Deere’s ability to expand the business. markets. These trade restrictions, and changes in, or uncertainty surrounding, surrounding global trade policies, may affect John Deere’s our competitive position. position. 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 prices, or those limiting the export or import of commodities 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. John Deere’s Our agricultural equipment sales could be especially harmed by such policies because farm income strongly influences sales of agricultural equipment around the world. Furthermore, trade restrictions could impede those in developing countries from achieving a higher standard of living, which could negatively impact John Deere’s future growth opportunities arising from increasing global demand for food, fuel, and infrastructure. Additionally, changes world. Changes in government farm programs and policies, including direct payment and other subsidies, policies can significantly influence demand for agricultural equipment as well as create unequal competition for multinational companies relative to domestic companies.

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Prior heading: Greater political, economic, and social uncertainty and the evolving globalization of businesses could significantly change the dynamics of John Deere’s competition, customer base, and product offerings and impact John Deere’s growth opportunities globally.

John Deere’s efforts Efforts to grow its our businesses depend in part upon access to and developing market share and profitability in additional geographic markets, including, but not limited to, Argentina, Brazil, China, India, and South Africa, and its success in developing market share and operating profitably in such markets. Africa. 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, and differing local customer product preferences and requirements than John Deere’s our other markets. In fiscal year 2023, as a result of the war in Ukraine, we suspended shipments of machines and service parts to Russia. The suspension of shipments to Russia reduced actual and forecasted revenue for the region and resulted in impairments of most long-lived assets, among other impacts. In addition, we initiated a voluntary separation program for employees in Russia in the third quarter of fiscal year 2022. Having business operations in various regions and countries exposes John Deere us to multiple and potentially conflicting business practices, practices and legal and regulatory requirements that are subject to change change. These practices and legal requirements are often complex and difficult to navigate, including those related to tariffs and trade regulations, investments, property ownership rights, taxation, repatriation of earnings, and advanced technologies. technologies. Expanding business operations globally also increases exposure to currency fluctuations, which can materially affect the Company’s our financial results. results. While John Deere maintains we maintain a positive corporate image and its our brands are widely recognized and valued in its our traditional markets, the brands are less known in some emerging markets, which could impede John Deere’s our efforts to successfully compete in these markets. In addition, changing Changing U.S. export controls and sanctions on China, as well as other restrictions affecting transactions involving China various foreign countries and Chinese parties, on various parties could affect John Deere’s our ability to collect receivables, provide aftermarket warranty support for John Deere our equipment, sell products, and otherwise impact John Deere’s our reputation and business.

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Prior heading: Negative economic conditions and outlook can materially weaken demand for John Deere’s equipment and services, limit access to funding, and result in higher funding costs.

The demand for John Deere’s 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, rising high interest rates, cautious consumer spending, changes in consumer practices due to a possible recession, inflation, lower corporate earnings, and lower business investment. Negative or uncertain economic conditions that cause John Deere’s our customers to lack confidence in the general economic outlook can significantly reduce their likelihood of purchasing John Deere’s equipment. The COVID pandemic, geopolitical instability, including the conflict between Russia and Ukraine, and other global events have significantly increased economic and demand uncertainty. Some of the results of these events include supply chain challenges, inflation, high interest rates, foreign currency exchange volatility, and volatility in global capital markets. Supply chain challenges, including delays caused by shortages of raw materials, shipping containers and labor, have increased production costs and reduced our profit margins. Additionally, the cost of raw materials used in John Deere’s products and the cost of freight have increased due to heightened inflation. equipment. These adverse economic events have adversely affected and may continue to adversely affect John Deere’s our operations. Sustained general negative economic conditions and outlook also affect housing starts, energy prices and demand, and other construction, which dampens demand for certain construction equipment. John Deere’s Our turf operations and its our construction and forestry segments are dependent on construction activity and have also been affected by recent adverse economic conditions. In fiscal 2022, supply constraints, shortage of turf inventory, and softening customer demand have affected our production and sales of consumer products within these segments. Decreases in construction activity and housing starts could have a material adverse effect on John Deere’s results of operations. our financial results. If negative economic conditions affect the overall farm economy, there could be a similar effect on John Deere’s our agricultural equipment sales. In addition, uncertain Uncertain or negative outlook with respect to pervasive U.S. fiscal issues as well as general economic conditions and outlook, such as market volatility and continued continuing interest rate increases by the Federal Reserve, 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 the Company’s our earnings and cash flows. Additionally, the Company’s investment management activities could be adversely affected by changes in the equity and bond markets, including the recent volatility of the United Kingdom’s bond market, which would negatively affect earnings.flows.

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Prior heading: John Deere may not realize the anticipated benefits of its Smart Industrial operating model and Leap Ambitions.

John Deere’s failure Failure to realize the anticipated benefits of its our Smart Industrial operating model Operating Model and related business strategies in production systems, precision technologies, and aftermarket support could adversely affect the Company’s results of our operations and financial condition. Several factors could impact John Deere’s our ability to successfully execute the our Smart Industrial operating model, Operating Model, including, among other things, failure things: Failure to accurately assess market opportunity opportunities and the technology required to address such opportunity; failure opportunities; Failure to develop and introduce new technologies or lack of adoption of such technologies by John Deere’s customers; and failure our customers; Failure to holistically execute provide lifecycle solutions. In addition, if the Company is unable solutions; and Failure to optimize its our capital allocation in connection with the operating model, it may not be able to realize the full benefits, which could have an adverse effect on the Company’s financial condition or results of operations. Smart Industrial Operating Model. Similarly, John Deere we may not realize the anticipated benefits of its our Leap Ambitions and related goals in within the expected timeline, timelines, or at all. As part of its our Leap Ambitions framework, John Deere we adopted various goals that it expects we expect to achieve by 2026 or 2030, as applicable. John Deere 2030. We may not be able to achieve these goals for a number of variety reasons, some of which may be out of its beyond our control. For example, John Deere’s Examples include: Our estimates and assumptions related to efficiency of our products and the adoption of precision technology may not be accurate; certain accurate; Certain materials, such as quality battery cells, cells and cameras, may become unavailable or too costly; or costly; The infrastructure required to achieve our goals, such as sufficient charging stations, stations or fuel availability, may become too costly or may not occur be developed on the expected timeline. timeline; and The actual or perceived failure to achieve our Leap Ambitions could negatively impact our ability to execute the Smart Industrial operating model, and could harm our reputation and our business.Operating Model.

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

From time to time, John Deere makes we make strategic acquisitions and divestitures and participates participate in joint ventures. In an effort to enhance its Smart Industrial operating model by adding technology and talent, during fiscal year 2022, the Company acquired majority ownership in Kreisel Electric Inc., which designs and manufactures high-durability battery packs and high-powered charging stations; a 40 percent equity method investment in GUSS Automation LLC, a producer of semi-autonomous orchard and vineyard sprayers; and LGT, LLC (Light), which specializes in depth sensing and camera-based perception for autonomous vehicles. Acquisitions and joint ventures that John Deere has we have entered, or may enter in the future, may involve significant challenges and risks, including that the acquisitions or joint ventures do not advance John Deere’s our business strategy strategy, or fail to produce satisfactory returns on investment. John Deere Other risks include: We may encounter difficulties in integrating acquisitions with its our operations, applying internal control processes to these acquisitions, managing strategic investments, and assimilating new capabilities to meet the future needs of John Deere’s businesses. our businesses, and/or combining business cultures; We may choose not to fully integrate businesses and may face regulatory or compliance exposure until appropriate processes and controls are put in place; Integrating acquisitions is often costly and may require significant attention from management. Furthermore, John Deere management and personnel; We may not realize all the anticipated benefits of acquisitions or joint ventures, or the realized benefits may be significantly delayed. While our evaluation delayed; and Due diligence evaluations of any potential transaction includes transactions include business, legal, and financial due diligence reviews with the goal of identifying and evaluating the material risks involved, these involved. These due diligence reviews may not identify all of the issues necessary to accurately estimate the cost and potential risks 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 target’s or joint venture’s products or services. John Deere We may also decide to divest businesses if it determines any such divestiture is in the best interests of its shareholders, our shareholders and joint ventures may be terminated at or before their stated expiration, such as the joint venture between the Company expiration. For example, in March and Hitachi, which October 2023, we sold our financial services and roadbuilding businesses in Russia following the Company agreed to voluntarily terminate outbreak of the war in fiscal 2021. Ukraine. Divestitures of businesses or dissolutions of joint ventures may involve significant challenges and risks, including failure to advance our business strategy, costs or disruptions to John Deere, us, and negative effects on John Deere’s our product offerings, which may adversely affect John Deere’s our business, results of operations, and financial condition. Divestitures of businesses or 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 the Company’s our future financial results.

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Prior heading: John Deere’s ability to understand its customers’ specific preferences and requirements, and to develop, manufacture, and market products that meet customer demand, could significantly affect its business results.

John Deere’s Our ability to match new product offerings to diverse global customers’ anticipated preferences for different types and sizes of equipment and various equipment features and functionality, at affordable prices, is critical to its our success. This requires a thorough understanding of John Deere’s our existing and potential customers on a global basis, particularly in growth markets such as Argentina, Brazil, and India. Failure to deliver quality products that meet customer needs at competitive prices ahead of competitors could have a significant an adverse effect on John Deere’s our business. Customer In addition, customer preferences in the markets served by John Deere could change we serve are changing as a result of ongoing social and regulatory focus on sustainability as these markets transition to less carbon-intensive business models. Ongoing social and regulatory focus on sustainability and the impact of policies and consumer preferences on the construction, forestry, and agriculture industries mean that change is imminent. As regulations and social pressure drive change, John Deere we must be proactive in monitoring continue to proactively monitor trends and developing develop alternatives and enhancements that elevate and complement our product offerings. For example, the Company even though we plan to offer electric, hybrid-electric, and battery electric equipment solutions, we may be unable to keep up with the rising demand for electric agriculture, turf, and construction equipment. The development of alternative farming techniques, carbon sequestration technologies, and new low-carbon biofuels, could change biofuels are changing farmers’ business models and equipment needs. If John Deere fails we fail to properly continue to develop or invest in new emerging technologies to meet changing customer demands, John Deere we will be at risk of losing potential sources of revenue, which could affect the Company’s our future financial results.

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Prior heading: If John Deere is unable to deliver precision technology and agricultural solutions to its customers, it could affect its business, results of operations, and financial condition.

John Deere’s Our approach to precision technology involves hardware and software, guidance, connectivity and digital solutions, automation and machine intelligence, and autonomy. Customers continue to adopt technology integrated in our portfolio of “smart” machines, systems, and solutions. We expect this trend to persist for the foreseeable future. To create and maintain a competitive differentiation through precision technology solutions, John Deere needs differentiation, we need to successfully develop and introduce new precision technology solutions that improve profitability and sustainability for customers through the production systems. John Deere our customers. We may make significant investments in research and development, connectivity solutions, data digital security for precision technology solutions, and dealer and employee training. These investments may not produce solutions that provide the desired results for customers’ profitability or sustainability outcomes. We utilize automation and machine learning and intelligence in some of our products. While the use of these emerging technologies can present significant benefits, it also creates risks and challenges. Data sourcing, technology, integration and process issues, program bias into decision-making algorithms, security problems, and the protection of privacy could impair the adoption and acceptance of autonomous machine solutions. If John Deere the output from these solutions is deemed to be inaccurate or questionable, our brand and reputation may be harmed and we may be subject to legal liability claims. Automation and machine learning and intelligence may also become the subject of local, state, federal, and foreign regulatory efforts limiting the features and capabilities of the technology. If we are not able to deliver precision technology solutions with differentiated features and functionality, or these solutions are not effective, customers may not adopt technology solutions, which could have a material adverse effect on the Company’s our reputation and business.

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Prior heading: Changes to or reallocation of radio frequency (RF) bands could disrupt or degrade the reliability of John Deere’s high precision augmented Global Positioning System (GPS) or other RF technology, which could impair John Deere’s ability to develop and market GPS- and RF-based technology solutions as well as significantly reduce agricultural and construction customers’ profitability.

John Deere’s Our current and planned integrated agricultural business and equipment management systems, as well as its our fleet management telematics solutions for construction equipment, depend upon the use of RF signals. These signals include, but are not limited to, GPS signals, other GPS-like satellite signals, augmented GPS services, and other RF technologies that link equipment, operations, owners, dealers, and technicians. These radio services depend on frequency allocations governed by international and national government agencies. Any international or national reallocation of frequency bands, including frequency bands segmentation and band spectrum sharing, or other modifications concerning the regulation of frequency bands, could significantly disrupt or degrade the utility and reliability of John Deere’s our GPS-based products, which could negatively affect John Deere’s our ability to develop and market GPS-based technology solutions. For John Deere’s agricultural customers, solutions. In addition, disruptions with GPS signals or the inability failure of telecommunications network operators to use high-precision augmented supply the bandwidth we need to support our products could interfere with the speed, availability, and usability of our equipment and services. If these GPS signals or other RF signals become unavailable, our customers could be unable to use their equipment indefinitely. For our agricultural customers, this could result in lower crop yields yields, decreased operational efficiency, and higher equipment maintenance, seed, fertilizer, fuel, and wage costs. For construction customers, disrupting GPS or RF applications this could result in higher fuel and equipment maintenance costs, as well as lower construction design and project management efficiencies. These cost increases could significantly reduce customers’ profitability profitability, sustainability, and demand for John Deere products.our products. As a result, our sales and revenue could significantly decrease, which would have a material adverse effect on our results of operations and our business.

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Prior heading: John Deere’s ability to adapt in highly competitive markets could affect its business, results of operations, and financial condition.

John Deere operates We compete in a variety of highly competitive global and regional markets. John Deere competes worldwide markets with a number of other manufacturers and distributors that produce and sell similar products. In addition, John Deere’s our industry is attracting non-traditional competitors, including technology-focused companies and start-up ventures. John Deere competes We compete on the basis of product performance, innovation and quality, distribution, sustainability, customer service, and price. Aggressive pricing or other strategies pursued by of competitors, unanticipated product or manufacturing delays, or John Deere’s our failure to price its products competitively could adversely affect its our business, results of operations, and financial condition.

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Prior heading: John Deere relies on a network of independent dealers to manage the distribution of its products. If dealers are unsuccessful with their sales and business operations, it could have an adverse effect on overall sales and revenue.

John Deere relies We rely on the capability of its our dealers to develop and implement effective sales plans to create demand among purchasers for the equipment and related products and services that the dealers purchase from John Deere. us. If John Deere’s our dealers are not successful unsuccessful in these endeavors, then John Deere we will be unable to grow its our sales and revenue, which would have an adverse effect on its our financial condition. condition. In addition, the dealer channel’s ability to support and service precision technology solutions and emerging power solutions may affect customers’ acceptance and adoption rates of these products. products. The unavailability of specialized technicians to service our equipment may result in overburdening dealers’ servicing capacity. Dealers may have trouble funding their day-to-day cash flow needs and paying their obligations due to adverse business conditions resulting from negative economic effects or other factors. Dealers may exit or John Deere we may seek to terminate relationships with certain dealers if they are unable to meet customer needs. The unplanned loss of any John Deere of our dealers could lead to inadequate market coverage, negative customer impressions of John Deere, impressions, and may adversely impact John Deere’s our ability to collect receivables that are associated with that dealer.

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Prior heading: Unfavorable weather conditions or natural calamities that reduce agricultural production and demand for agriculture and turf equipment could directly and indirectly affect John Deere’s business.

Poor or unusual weather conditions, particularly during the planting and early growing season, can significantly affect the The purchasing decisions of John Deere’s our customers, particularly the purchasers of agriculture and turf equipment. The timing and quantity of rainfall are two of the most important factors in agricultural production. equipment, can be significantly affected by poor or unusual weather conditions. Such conditions include: Insufficient levels of rain rain, which prevent farmers from planting new crops and may cause growing crops to die or result in lower yields. yields; Excessive rain or flooding can prevent planting from occurring at optimal times and may cause crop loss through increased disease or mold growth. Temperature affects the rate of growth, maturity, and quality of crops. growth; Temperatures outside normal ranges ranges, which can also cause crop failure or decreased yields and may also affect disease incidence. incidence; Natural calamities disasters such as regional floods, hurricanes or other storms, droughts, diseases, wildfires, and pests, either as a physical effect of climate change or otherwise, which have had had, and could in the future have have, significant negative effects on agricultural and livestock production. The resulting negative impact on farm income can strongly affect demand for agricultural equipment and the financial condition and credit risk of John Deere’s dealers and customers. production; Adverse weather conditions in a particular geographic region, particularly during the important spring selling season, may adversely affect sales of some turf equipment. season; and Drought conditions can adversely affect sales of certain mowing equipment and unusually rainy weather can similarly cause lower sales volumes.volume. Each of these conditions could have a negative impact on farm income which can affect demand for agricultural equipment and the financial condition and credit risk of our dealers and customers.

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Prior heading: Governmental actions designed to address climate change and the emergence of new technologies and business models in connection with the transition to a lower-carbon economy could adversely affect John Deere and its 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 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 John Deere, us, are continuing to look for ways to reduce 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 John Deere us in the form of taxes or emission allowances, required facilities improvements, and increased energy costs, which costs. These results would increase John Deere’s our operating costs through higher utility, transportation, and materials costs. cost 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 John Deere equipment. John Deere’s our equipment. Further, our financial services segment is subject to additional international and national European regulations relating to climate and environmental risk, which are continually evolving and could affect the lending financing operations and climate-risk processes developed by John Deere’s financial services. the segment. Regulators in Europe and the U.S. have also focused efforts on increased disclosure related to climate change and mitigation efforts. The EU recently adopted the European Sustainability Reporting Standards (ESRS) and the Corporate Sustainability Reporting Directive (CSRD) that will impose disclosure of the risks and opportunities arising from social and environmental issues, and on the impact of companies’ activities on people and the environment. The CSRD will need to be transposed into Member State law before it becomes effective, which is expected to occur in 2024. Similarly, the State of California recently passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act that will impose broad climate-related disclosure obligations on certain companies doing business in California, including us, starting in 2026. The SEC has included in its regulatory agenda potential rulemaking on climate change disclosures that, if adopted, could significantly increase compliance burdens and associated regulatory costs and complexity.

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Prior heading: Increasingly stringent engine emission regulations or bans on internal combustion engines could impact John Deere’s ability to manufacture and distribute certain engines or equipment, which could negatively affect business results.

John Deere’s Our equipment operations must meet increasingly stringent engine emission reduction regulations throughout the world, including the European Union’s Stage V standard standard, which limits the amount of harmful certain substances in exhaust gases that off-road engines can emit into the environment. In addition, governmental Governmental agencies throughout the world are enacting more stringent laws and regulations to reduce off-road engine emissions. These laws and regulations are applicable to engines manufactured by John Deere, we manufacture, including those used in John Deere agriculture and construction and forestry equipment. John Deere has incurred CF equipment. We have incurred, and continues continue to incur incur, substantial research and development costs related to the implementation of these more rigorous laws and regulations. While John Deere has we have developed and is are executing comprehensive plans to meet these requirements, these plans are subject to many variables that could delay or otherwise affect John Deere’s our ability to manufacture and distribute certain equipment or engines, which could negatively impact business results. Additionally, in certain locations governments have banned banned, or may in the future ban ban, internal combustion engines for some types of products completely. To the extent these bans affect products manufactured and sold by John Deere, us, our business, results of operations, and financial condition could be negatively affected.

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Prior heading: Changes in government banking, monetary, and fiscal policies could have a negative effect on John Deere.

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 may not be effective and could have a material impact on John Deere’s our customers and markets. John Deere’s Central bank policy interest rates continued to increase in fiscal year 2023. Most of our retail receivables are fixed rate, while wholesale financing receivables are variable rate. We have both fixed and variable rate borrowings. Historically, rising interest rates impact our borrowings sooner than the benefit is realized from the financing receivable and equipment on operating lease portfolios. 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 John Deere’s our customers by limiting their ability to enter into hedging transactions or to finance purchases of John Deere our products. Government policies on spending can also affect John Deere, us, especially the construction and forestry CF segment, due to the impact of government spending on infrastructure development. John Deere’s Our operations, including those outside of the United States, 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: The Company’s consolidated financial results are reported in U.S. dollars while certain assets and other reported items are denominated in the currencies of other countries, creating currency exchange and translation risk.

John Deere operates in many areas of the world, involving We are a global company with transactions denominated in a variety of currencies. John Deere is We are subject to currency exchange risk to the extent that its our costs are denominated in currencies other than those in which John Deere earns we earn our revenues. Additionally, the reporting currency for the Company’s our consolidated financial statements is the U.S. dollar. Certain of John Deere’s our assets, liabilities, expenses, and revenues are denominated in other countries’ currencies, which are then translated into U.S. dollars at the applicable exchange rates in the Company’s and reported in our consolidated financial statements. Therefore, fluctuations in foreign exchange rates affect the value of those items as reflected in the Company’s our consolidated financial statements, even if their value remains unchanged in their the original currencies. While the use of currency hedging instruments may provide us with some protection from adverse fluctuations in currency exchange rates, by utilizing these instruments we potentially forego any benefits that may result from favorable fluctuations in such rates.rates. In Argentina, we have employed mechanisms to convert Argentine pesos into U.S. dollars to the extent possible. These mechanisms are short-term in nature, leaving us exposed to long-term currency fluctuations.

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Prior heading: Because John Deere’s equipment operations and financial services segment are subject to interest rate risks, changes in interest rates can reduce demand for equipment, adversely affect interest margins, and limit access to capital markets while increasing borrowing costs.

Central bank policy interest rates continued to increase in fiscal year 2023. Rising interest rates could have a dampening effect on overall economic activity and/or the financial condition of John Deere’s our customers, either or both of which could negatively affect customer demand for John Deere our equipment and customers’ ability to repay their obligations to John Deere. In response to increasing inflation, the U.S. Federal Reserve began to raise interest rates in March 2022 for the first time in over three years, and has signaled it expects to make additional rate increases. us. Rising interest rates could may cause credit market dislocations, which could have an that can impact on funding costs, which are important to can affect the financial services segment because such costs affect the segment’s ability to offer customers competitive financing rates. While the Company strives we strive to match the interest rate characteristics of its our financial assets and liabilities, changing interest rates could have had an adverse effect on the Company’s our net interest rate margin—the difference between the yield the Company earns we earn on its our assets and the interest rates the Company pays we pay for funding, which could in turn affect the Company’s has affected our net interest income and 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 the Company us and can increase the Company’s cost our costs of capital and hurt its our competitive position. Further, due to the cessation of the London Interbank Offered Rate (“LIBOR”), the Company has entered into financial transactions such as credit agreements, receivables, derivatives, and notes that use the Secured Overnight Financing Rate (“SOFR”) or the Sterling Overnight Index Average (“SONIA”) as interest rate benchmarks. SOFR and SONIA are calculated differently from LIBOR and have inherent differences, which could give rise to uncertainties, including the limited historical data and volatility in the benchmark rates. The full effects of the transition to SOFR, SONIA, or other rates remain uncertain.position.

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Prior heading: Sustained increases in funding obligations under the Company’s pension plans may impair the Company’s liquidity or financial condition.

The Company maintains We maintain certain defined benefit pension plans for certain employees, which impose funding obligations. The Company uses many We use various assumptions in calculating its our future payment obligations under these plans. Significant adverse changes in credit or market conditions could result in actual rates of return on pension investments being lower than expected. The Company Regulatory changes could cause a deterioration in the statutory funded status of our plans. We may be required to make significant contributions to its our pension plans in the future. These factors could significantly increase the Company’s our payment obligations under the plans and adversely affect its our business, results of operations, and financial condition.

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Prior heading: The inability to accurately forecast customer demand for products and services, and to adequately manage inventory, could adversely affect our operating results.

To ensure adequate inventory supply, John Deere 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 particular products and services. Failure to accurately forecast our needs may result in unmet market demand, parts shortages, manufacturing delays, increased costs, or excess inventory. In response to recent fiscal year 2022, supply chain constraints, John Deere has worked with suppliers to ensure optimum disruptions resulted in higher inventory levels. John Deere’s Although production schedules in fiscal year 2023 were more aligned with the customers’ seasonal use of our products, marking a return to historical seasonal production patterns, our ability to accurately forecast demand in the future could be affected by many factors, including changes in customer demand for John Deere’s our products and services, changes in demand for the products and services of competitors, unanticipated changes in general market conditions, and the weakening of economic conditions or customer confidence in future economic conditions. If the forecasts used to manage inventory are not accurate, John Deere has in the past and we may in the future 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 continue to result in significant disruptions to the supply chain causing production disruptions, increased costs, and lower profits on sales of John Deere products.

John Deere requires We require access to various raw materials, components, and whole goods at competitive prices to manufacture and distribute its our products. The price and availability of these materials have varied significantly in the last 24 months 36 months. For example, in fiscal year 2022, supply chain disruptions impacted many aspects of our business, including receiving past due deliveries from suppliers, parts availability, increased production costs, and are expected to continue higher inventory levels. We experienced supply chain improvements in fiscal year 2023 with a return to fluctuate normal in the second half of the fiscal year. While we have seen stabilization in the supply chain and some commodity pricing improvements, we anticipate potential fluctuations due to inflation, 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 John Deere is we are unable to recover the increased costs due to market considerations or other factors. John Deere relies on suppliers to acquire raw materials, components, and whole goods required to manufacture its products. Significant disruptions to the supply chain resulting from shortages of raw materials, components, and whole goods has and could continue to adversely affect John Deere’s ability to meet commitments to customers. During fiscal 2022, the supply chain challenges in combination with demand for John Deere’s products resulted in a heavier back-end loaded year for industry retail orders. As the result of the COVID pandemic, geopolitical instability, and other global events, John Deere has We have experienced changes in the availability and prices of these raw materials, components, whole goods, and freight. Global freight over the past several years, especially in fiscal years 2021 and 2022.Global logistics network challenges include shortages of shipping containers, ocean freight capacity constraints, international port delays, trucking and chassis shortages, and railway and airfreight capacity, which 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 increased the Company’s our overall production and overhead costs. Increases in such costs have had an adverse effect on John Deere’s our business operations. In an effort We rely on our suppliers to mitigate raw material shortages and supply chain constraints, John Deere has increased acquire the list price of its products raw materials, components, and worked with suppliers to ensure optimum inventory levels. However, if customers are unwilling whole goods required to accept price increases in John Deere products or John Deere is unable manufacture their products. Significant disruptions to offset the increase in costs, raw material supply chain resulting from shortages could have an adverse effect on John Deere’s operations. Continued or increased fluctuations in costs of materials or inflation generally raw materials, components, and continued supply chain challenges could whole goods have a material adverse effect on the Company’s results of operations and financial condition. Certain could continue to adversely affect our ability to meet commitments to our customers. In addition, certain materials and components used in John Deere’s our products are acquired from a single supplier or are proprietary in nature and cannot be alternatively sourced expeditiously. As discussed under Item 1, “Business - Construction and Forestry,” the Company agreed to voluntarily terminate its joint venture agreement with Hitachi in a transaction that closed in the first half of fiscal 2022. In connection with this termination, John Deere Construction & Forestry Company, a wholly-owned subsidiary of the Company, has entered into a supply agreement with Hitachi pursuant to which Hitachi will continue to provide John Deere-branded excavators, components, and service parts. Any delay or failure by Hitachi Furthermore, if our customers are unwilling to deliver these supplies, accept price increases for our products, or failure by Hitachi if we are unable to produce such supplies offset the increases in a manner that meets John Deere’s quality and quantity requirements, costs, raw material costs or shortages could adversely affect John Deere’s business, results of operations, cash flow, and financial condition have a material adverse effect on our operational or its ability to meet commitments to its customers.financial results.

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Prior heading: Disputes with labor unions have adversely affected John Deere’s ability to operate its facilities as well as its financial results.

Many of John Deere’s our production and maintenance employees are represented by labor unions under various collective bargaining agreements with different expiration dates. The Our failure of John Deere to successfully renegotiate labor agreements as they expire has from time to time led, and could in the future lead, to work stoppages or other disputes with labor unions. Disruptions to John Deere’s manufacturing and parts-distribution facilities, through various forms of labor disputes, adversely affect the Company. On October 14, 2021, For example, the UAW initiated a labor strike affecting more than 10,000 workers at 14 John Deere facilities across the U.S. The strike ended after a new collective bargaining agreement was approved on November 17, 2021. The UAW strike that had an adverse effect on John Deere’s our results of operations in the first quarter of fiscal 2022 because of reduced production productions and shipments. Certain of our labor agreements expire as early as 2024. 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 John Deere’s our reputation, and could materially adversely affect the Company’s our business, results of operations, and financial condition.

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Prior heading: John Deere’s ability to attract, develop, engage, and retain qualified employees could affect its ability to execute its strategy.

John Deere’s Our continued success depends, in part, on its our ability to identify and attract qualified candidates with the requisite education, background, and experience as well as its 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, or inadequate resources to train, integrate, and retain qualified employees, could impair John Deere’s our ability to execute its our business strategy and could adversely affect John Deere’s business. our business, results of operations, and financial condition. In addition, while John Deere strives we strive to reduce the impact of the departure of employees, John Deere’s our operations or ability to execute its our business strategy and meet its our business objectives may be affected by the loss of employees, particularly when departures involve larger numbers of employees, such as those John Deere we could experience if a surge occurs in the number of employees voluntarily leaving their jobs. Higher rates of employee separations may adversely affect John Deere us through decreased employee morale, the loss of knowledge of departing employees, and the devotion of resources to recruiting and onboarding new employees.

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Prior heading: Security breaches and other disruptions to John Deere’s information technology infrastructure could interfere with John Deere’s operations and could compromise the information of John Deere as well as its customers, suppliers, and/or dealers, exposing John Deere to liability that could cause John Deere’s business and reputation to suffer.

In the ordinary course of business, John Deere relies 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 business processes and activities, including supply chain, manufacturing, distribution, invoicing, and collection of payments from dealers and other purchasers of John Deere our equipment and from customers of the financial services segment. John Deere uses 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. requirements. Additionally, John Deere collects we collect and stores store sensitive data, including intellectual property, proprietary business information, and the proprietary business information of John Deere’s our customers, suppliers, and dealers, as well as personally identifiable information of John Deere’s our customers and employees, employees in data centers, centers which are often owned by third parties, parties and on information technology networks. The secure operation of these information technology networks and the processing and maintenance of this information is critical to John Deere’s our business operations and strategy. strategy. Despite security measures, including a vulnerability disclosure program, and business continuity plans, John Deere’s our information technology networks and infrastructure have been and may be vulnerable to intrusion, damage, disruptions, or shutdowns due to attacks by cyber criminals, employee, supplier, employees’, suppliers’, or dealer dealers’ error or malfeasance, supply chain compromise, disruptions during the process of upgrading or replacing computer software or hardware, power outages, computer viruses, ransomware or other malware, telecommunication or utility failures, terrorist acts, natural disasters, or other events. Although John Deere has we have not suffered any significant cyber incidents that resulted in material business impact, we have from time to time been the target of malicious cyber threat actors. The occurrence of any significant event could compromise John Deere’s our networks, and the information stored there could be accessed, obtained, publicly disclosed, lost, altered, misused, or stolen. Any such access, disclosure, alteration, misuse misuse, or other loss of information could result in legal claims or proceedings, government investigations, liability or regulatory penalties, disruption to John Deere’s or shut down of our operations, and damage to John Deere’s our reputation, which could adversely affect John Deere’s our business, results of operations, and financial condition. In addition, Furthermore, as security threats continue to evolve and increase in frequency and sophistication, John Deere we may need to invest additional resources to protect information security.

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Prior heading: Security breaches with respect to John Deere’s products could interfere with the business of John Deere, its dealers, and/or customers, exposing John Deere to liability that would cause its business and reputation to suffer.

Some of John Deere’s our products include connectivity hardware and software typically used for remote system updates. While John Deere has we have implemented security measures intended to protect against unauthorized remote access to its these products, third party security researchers and malicious threat actors, actors have reportedly attempted, and may attempt in the future, to gain unauthorized access to such products in order to gain control of the products, change the products’ functionality, user interface, or performance characteristics, interfere with the products’ operations, or gain access to data stored in or generated by the products or to systems to which they connect. In addition, reports of unauthorized access to John Deere’s our products, systems, and data, regardless of their veracity, reliability, may result in the perception that the products, systems, or data are vulnerable to malicious or unauthorized modifications. Any unauthorized access to or control of John Deere our products or systems, any loss of data, or any perception that products, systems, or data are vulnerable could result in legal claims or proceedings against John Deere, us, government investigations, liability liability, or regulatory penalties, which could adversely affect John Deere’s our business, results of operations, and financial condition.

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Prior heading: The potential loss of John Deere intellectual property through trade secret theft, infringement of patents, trademark counterfeitings, or other loss of rights to exclusive use of John Deere intellectual property, could have a material adverse effect on the Company. Infringement of the intellectual property rights of others by John Deere could also have a material adverse effect on the Company.

John Deere relies on We protect our intellectual property with a combination of patents, trademarks, copyrights, trade secret laws, and confidentiality agreements to protect its intellectual property rights. John Deere legal agreements. We heavily relies rely on certain trademarks that contribute to John Deere’s protect our identity and the customer recognition of its our products and services, including including, but not limited to to, the “John Deere” mark, the leaping deer logo, the “Nothing Runs Like a Deere” slogan, the prefix “JD” associated with many products, and the green and yellow color combination. These trademarks, as well as the many patents that protect innovations used in our products, are integral to the John Deere our business, and their loss could have a material adverse effect on the Company. us. Additionally, third parties may initiate litigation legal proceedings to challenge the validity of John Deere’s patents our intellectual property or allege that John Deere infringes we infringe on their patents or proprietary rights. John Deere intellectual property. We may incur substantial costs if its competitors or other third parties initiate such litigation, legal proceedings, or if John Deere initiates any we initiate legal proceedings to protect its proprietary rights. or enforce our intellectual property. If the outcome of any such litigation legal proceedings is unfavorable to John Deere, us, our business could be adversely affected.

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

John Deere’s global operations We are subject to numerous international, federal, state, and local laws and regulations, many of which are complex, frequently changing, and subject to varying interpretations. These laws and regulations cover a broad spectrum variety of subject areas, subjects, including advertising; anti–money laundering; antitrust; advertising, anti-money laundering, antitrust, consumer finance; finance, environmental, climate-related, health, health and safety; safety, foreign exchange controls and cash repatriation restrictions; restrictions, foreign ownership and investment; investment, import/export and trade; trade, human rights, labor, labor and employment; employment, product liability; and telematics and liability reporting, cybersecurity, data privacy privacy, telematics, and connectivity. connectivity. These laws may vary substantially within the different markets in which John Deere operates. we operate. Compliance with these laws and regulations is costly expensive and may further increase the cost of conducting John Deere’s our global operations. In addition, John Deere we must comply with the U.S. Foreign Corrupt Practices Act and all applicable foreign anti-corruption laws, including the U.K. Bribery Act, which Act. 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 John Deere has we have a compliance program in place designed to reduce the likelihood of potential violations of such these laws and regulations, there can be no assurance that John Deere’s our employees, contractors, or agents will not violate such laws and regulations or John Deere’s our policies and procedures. Violations of these laws and regulations could result in criminal or civil sanctions and have a material adverse effect on John Deere’s our reputation, business, results of operations, and financial condition. Changes to existing laws and regulations regulations, or changes to how they are interpreted interpreted, or the implementation of new, more stringent laws or regulations regulations, could adversely affect John Deere’s our business by increasing compliance costs, limiting John Deere’s our ability to offer a product or service, requiring changes to John Deere’s our business practices, or otherwise making John Deere’s our products and services less attractive to customers. For example, so-called “right to repair” legislation proposals in certain states and at the federal level in the U.S. could require John Deere to provide access to the software code embedded in its products, which, among other harmful consequences, could result in product safety issues, compromise engine emissions and performance controls, adversely affect the protection of John Deere’s intellectual property rights, and discourage innovation and investments in research and development. Legislative and regulatory changes changes, and other actions that could potentially affect John Deere’s our business may be announced with little or no advance notice and John Deere we may not be able to effectively mitigate all adverse effects from such measures.

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Prior heading: Legal proceedings and disputes in which John Deere is, and may in the future, be involved could harm the Company’s business, financial condition, reputation, and brand.

John Deere is subject to We routinely are a variety of legal proceedings party to claims and legal compliance risks around the world. John Deere faces risks of exposure actions incidental to various types our business. These include claims for personal injury or property by users of our equipment, environmental, health, and safety claims, lawsuits, disputes with distributors, vendors and government inquires or investigations in the ordinary course of business. The uncertainty associated others with substantial unresolved claims respect to commercial matters, and lawsuits may harm John Deere’s business, financial condition, reputation, disputes with taxing and brand. other governmental authorities regarding the conduct of our business. The defense of lawsuits and government inquiries or investigations has resulted and may result in the expenditures of significant financial resources and the diversion of management’s time and attention away from business operations. Such legal proceedings may also affect our assessment and estimates of loss contingencies recorded as a reserve and require us to make payments exceeding our reserves. In addition to the ordinary course of business proceedings, John Deere is operations. We are currently subject to a series of antitrust consolidated multidistrict class action lawsuits lawsuit in the Northern District of Illinois alleging that it is unlawfully monopolizing we have engaged in attempted monopolization, exclusionary conduct, and restraint of the market for repair services for its John Deere brand agricultural equipment. If these lawsuits result in adverse findings for equipment by limiting repair resources only to our authorized technicians or independent authorized John Deere, Deere dealers. In addition, the Federal Trade Commission (FTC) is investigating whether we could be exposed have violated laws in connection with the repair of John Deere brand agriculture equipment, as well as our information security practices and statements as they relate to damages the risk of unauthorized access to our computer systems, products, and may be required services. We are fully cooperating with the FTC. We are currently unable to implement actions impacting predict the outcome of these matters. The development and resolution of these matters could have a material adverse effect on our business model.business, operations, and financial results.

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Prior heading: John Deere’s reputation and brand could be damaged by negative publicity.

John Deere’s Our brand has worldwide recognition and significantly contributes to the success of its our business. John Deere’s Our reputation is critical to growing its our customer base. John Deere’s Our brand depends on the ability to maintain a positive customer perception of the business, including the core values of integrity, quality, innovation, and commitment. Negative claims or publicity involving John Deere, its us, our products or services, its our culture and values, our stance on environmental, social, and governance topics, customer data, or any of its our key employees or suppliers, could damage John Deere’s our reputation and brand image, regardless of whether such claims are accurate. Damage In addition, our stance on environmental, social, and governance topics damage to John Deere’s our reputation could adversely impact the ability to attract new and maintain existing customers, employees, dealers, and business relationships. relationships. For example, we have been the subject of negative media articles relating to our customers’ right to maintain and safely repair their equipment. Additionally, negative or inaccurate postings, articles, or comments on social media and the internet about John Deere us could generate negative publicity that could damage the reputation of the brand or John Deere. our brand. Further, adverse publicity about regulatory or legal action against John Deere, us, or legal proceedings initiated by John Deere, us, could also damage the our reputation and brand image, undermine customer confidence, and reduce long-term demand for equipment, even if the regulatory or legal action is unfounded or not material to John Deere’s our operations. If the reputation, culture culture, or image of John Deere’s our brands are damaged, or John Deere receives we receive negative publicity, then the Company’s our sales, financial condition, and results of operations could be materially and adversely affected.

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