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Use these links to rapidly review the document TABLE OF CONTENTS ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K Commission file number 1-4121 DEERE & COMPANY (Exact name of registrant as specified in its charter) Delaware (State of incorporation) 36-2382580 (IRS Employer Identification No.) One John Deere Place, Moline, Illinois (Address of principal executive offices) 61265 (Zip Code) (309) 765-8000 (Telephone Number) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT Title of each class Name of each exchange on which registered Common stock, $1 par value New York Stock Exchange 8 1 / 2 % Debentures Due 2022 New York Stock Exchange 6.55% Debentures Due 2028 New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will (Mark one) ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 28, 2018 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

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Page 1: UNITEDSTATESd18rn0p25nwr6d.cloudfront.net/CIK-0000315189/14f... · 2019 with net income attributable to Deere & Company forecast to be about $3.6 billion. Agriculture & Turf. The

UsetheselinkstorapidlyreviewthedocumentTABLEOFCONTENTSITEM15.EXHIBITSANDFINANCIALSTATEMENTSCHEDULES.

TableofContents

UNITEDSTATESSECURITIESANDEXCHANGECOMMISSION

WASHINGTON,D.C.20549

FORM10-K

Commissionfilenumber1-4121

DEERE&COMPANY(Exactnameofregistrantasspecifiedinitscharter)

Delaware(Stateofincorporation)

36-2382580(IRSEmployerIdentificationNo.)

OneJohnDeerePlace,Moline,Illinois(Addressofprincipalexecutiveoffices)

61265(ZipCode)

(309)765-8000(TelephoneNumber)

SECURITIESREGISTEREDPURSUANTTOSECTION12(b)OFTHEACT

Titleofeachclass NameofeachexchangeonwhichregisteredCommonstock,$1parvalue NewYorkStockExchange81/2%DebenturesDue2022 NewYorkStockExchange6.55%DebenturesDue2028 NewYorkStockExchange

SECURITIESREGISTEREDPURSUANTTOSECTION12(g)OFTHEACT:NONE

Indicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YesýNoo

IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.YesoNoý

Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesýNoo

IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofRegulationS-T(§232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).YesýNoo

IndicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoItem405ofRegulationS-K(§229.405ofthischapter)isnotcontainedherein,andwill

(Markone)

ý ANNUALREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934

ForthefiscalyearendedOctober28,2018

or

o TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934

Forthetransitionperiodfromto

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notbecontained,tothebestofregistrant'sknowledge,indefinitiveproxyorinformationstatementsincorporatedbyreferenceinPartIIIofthisForm10-KoranyamendmenttothisForm10-K.ý

Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompany,oranemerginggrowthcompany.Seethedefinitionsof"largeacceleratedfiler,""acceleratedfiler,""smallerreportingcompany,"and"emerginggrowthcompany"inRule12b-2oftheExchangeAct.(Checkone):

Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.o

Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheAct).YesoNoý

Theaggregatequotedmarketpriceofvotingstockofregistrantheldbynon-affiliatesatApril27,2018was$44,528,411,767.AtNovember30,2018,318,570,788sharesofcommonstock,$1parvalue,oftheregistrantwereoutstanding.DocumentsIncorporatedbyReference.PortionsoftheproxystatementfortheannualmeetingofstockholderstobeheldonFebruary27,2019areincorporatedbyreferenceintoPartIIIofthisForm10-K.

Largeacceleratedfilerý Acceleratedfilero Non-acceleratedfilero SmallerreportingcompanyoEmerginggrowthcompanyo

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TableofContents

TABLEOFCONTENTS

1

PagePARTI ITEM1.

BUSINESS 2

ITEM1A.

RISKFACTORS 9

ITEM1B.

UNRESOLVEDSTAFFCOMMENTS 15

ITEM2.

PROPERTIES 15

ITEM3.

LEGALPROCEEDINGS 15

ITEM4.

MINESAFETYDISCLOSURES 15

PARTII ITEM5.

MARKETFORREGISTRANT'SCOMMONEQUITY,RELATEDSTOCKHOLDERMATTERSANDISSUERPURCHASESOFEQUITYSECURITIES

16

ITEM6.

SELECTEDFINANCIALDATA 16

ITEM7.

MANAGEMENT'SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONS

16

ITEM7A.

QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK 16

ITEM8.

FINANCIALSTATEMENTSANDSUPPLEMENTARYDATA 16

ITEM9.

CHANGESINANDDISAGREEMENTSWITHACCOUNTANTSONACCOUNTINGANDFINANCIALDISCLOSURE

17

ITEM9A.

CONTROLSANDPROCEDURES 17

ITEM9B.

OTHERINFORMATION 17

PARTIII ITEM10.

DIRECTORS,EXECUTIVEOFFICERSANDCORPORATEGOVERNANCE 17

ITEM11.

EXECUTIVECOMPENSATION 17

ITEM12.

SECURITYOWNERSHIPOFCERTAINBENEFICIALOWNERSANDMANAGEMENTANDRELATEDSTOCKHOLDERMATTERS

17

ITEM13.

CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONS,ANDDIRECTORINDEPENDENCE

18

ITEM14.

PRINCIPALACCOUNTANTFEESANDSERVICES 18

PARTIV ITEM15.

EXHIBITSANDFINANCIALSTATEMENTSCHEDULES 19

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ITEM1.BUSINESS.

ThisAnnualReportonForm10-Kcontainsforward-lookingstatementsthataresubjecttorisksanduncertainties.AllstatementsotherthanstatementsofhistoricalfactincludedinthisAnnualReportonForm10-Kareforward-lookingstatements.Forward-lookingstatementsgiveourcurrentexpectationsandprojectionsrelatingtoourfinancialcondition,resultsofoperations,plans,objectives,futureperformanceandbusiness.Allforward-lookingstatementsaresubjecttorisksanduncertaintiesthatmaycauseactualresultstodiffermateriallyfromthosethatweexpected.Importantfactorsthatcouldcauseactualresultstodiffermateriallyfromourexpectations,orcautionarystatements,andotherimportantinformationaboutforward-lookingstatementsaredisclosedunderItem1A,"RiskFactors"andItem7,"Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations–SafeHarborStatement"inthisAnnualReportonForm10-K.

Products

Deere&Company(theCompany)anditssubsidiaries(collectively,JohnDeere)haveoperationsthatarecategorizedintothreemajorbusinesssegments.

Theagricultureandturfsegmentprimarilymanufacturesanddistributesafulllineofagricultureandturfequipmentandrelatedserviceparts,including:large,medium,andutilitytractors;tractorloaders;combines,cottonpickers,cottonstrippers,andsugarcaneharvesters;harvestingfront-endequipment;sugarcaneloadersandpull-behindscrapers;tillage,seedingandapplicationequipment,includingsprayers,nutrientmanagementandsoilpreparationmachinery;hayandforageequipment,includingself-propelledforageharvestersandattachments,balersandmowers;turfandutilityequipment,includingridinglawnequipmentandwalk-behindmowers,golfcourseequipment,utilityvehicles,andcommercialmowingequipment,alongwithabroadlineofassociatedimplements;integratedagriculturalmanagementsystemstechnologyandsolutions;andotheroutdoorpowerproducts.

Theconstructionandforestrysegmentprimarilymanufacturesanddistributesabroadrangeofmachinesandservicepartsusedinconstruction,earthmoving,roadbuilding,materialhandlingandtimberharvesting,including:backhoeloaders;crawlerdozersandloaders;four-wheel-driveloaders;excavators;motorgraders;articulateddumptrucks;landscapeloaders;skid-steerloaders;millingmachines;recyclers;slipformpavers;surfaceminers;asphaltpavers;compactors;tandemandstaticrollers;mobilecrushersandscreens;mobileandstationaryasphaltplants;logskidders;fellerbunchers;logloaders;logforwarders;logharvestersandrelatedloggingattachments.

Theproductsandservicesproducedbythesegmentsabovearemarketedprimarilythroughindependentretaildealernetworksandmajorretailoutlets.

ThefinancialservicessegmentprimarilyfinancessalesandleasesbyJohnDeeredealersofnewandusedagricultureandturfequipmentandconstructionandforestryequipment.Inaddition,thefinancialservicessegmentprovideswholesalefinancingtodealersoftheforegoingequipment,financesretailrevolvingchargeaccountsandoffersextendedequipmentwarranties.

JohnDeere'sworldwideagricultureandturfoperationsandconstructionandforestryoperationsaresometimescollectivelyreferredtoasthe"equipmentoperations."Thefinancialservicessegmentissometimesreferredtoasthe"financialservicesoperations."

Additionalinformationispresentedinthediscussionofbusinesssegmentandgeographicarearesultsonpage21.TheJohnDeereenterprisehasmanufacturedagriculturalmachinerysince1837.ThepresentCompanywasincorporatedunderthelawsofDelawarein1958.

TheCompany'sinternetaddressishttp://www.JohnDeere.com.Throughthataddress,theCompany'sAnnualReportonForm10-K,quarterlyreportsonForm10-Q,currentreportsonForm8-KandamendmentstothosereportsareavailablefreeofchargeassoonasreasonablypracticableaftertheyarefiledwiththeUnitedStatesSecuritiesandExchangeCommission(SecuritiesandExchangeCommissionorCommission).TheinformationcontainedontheCompany'swebsiteisnotincludedin,norincorporatedbyreferenceinto,thisannualreportonForm10-K.

MarketConditionsandOutlook

TheCompany'sequipmentsalesareprojectedtoincreasebyabout7percentforfiscal2019comparedwith2018.IncludedwillbeafullyearofWirtgensalesin2019versus10monthsin2018,addingabout2percenttothecompany'ssalesintheyearahead.Foreign-currencyratesareexpectedtohaveanunfavorabletranslationeffectonequipmentsalesofabout2percentfortheyear.Netsalesandrevenuesareexpectedtoincreasebyabout7percentforfiscal2019withnetincomeattributabletoDeere&Companyforecasttobeabout$3.6billion.

Agriculture&Turf.TheCompany'sworldwidesalesofagricultureandturfequipmentareforecasttobeupabout3percentforfiscal-year2019,includinganegativecurrency-translationeffectof2percent.IndustrysalesofagriculturalequipmentintheU.S.andCanadaareforecasttobeaboutthesametoup5percent,helpedbyreplacementdemandforlargeequipmentandcontinueddemandforsmalltractors.Full-yearindustrysalesintheEU28membernationsareforecasttobeaboutthesameasaresultofdroughtconditionsinkeymarkets.SouthAmericanindustrysalesoftractorsandcombinesareprojectedtobeaboutthesametoup5percentbenefitingfromstrengthinBrazil.Asiansalesareforecasttobeaboutthesametodownslightly.IndustrysalesofturfandutilityequipmentintheU.S.andCanadaareexpectedtobeaboutthesametoup5percentfor2019.

2

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Construction&Forestry.TheCompany'sworldwidesalesofconstructionandforestryequipmentareanticipatedtobeupabout15percentfor2019,withforeign-currencyrateshavinganunfavorabletranslationeffectof2percent.TheforecastincludesafullyearofWirtgensales,versus10monthsinfiscal2018,withthetwoadditionalmonthsaddingabout5percenttodivisionsalesfortheyear.TheoutlookreflectscontinuedgrowthinU.S.housingdemandaswellastransportationinvestmentandeconomicgrowthworldwide.Inforestry,globalindustrysalesareexpectedtobeupabout10percentmainlyasaresultofimproveddemandthroughouttheworld,ledbytheU.S.

FinancialServices.Fiscal-year2019netincomeattributabletotheCompanyforthefinancialservicesoperationsisprojectedtobeapproximately$630million.Excludingthe2018benefitoftaxreform,resultsareexpectedtobenefitfromahigheraverageportfolio,partiallyoffsetbyhighersellingandadministrativeexpenses,ahigherprovisionforcreditlosses,andless-favorablefinancingspreads.Financialservicesnetincomefor2018of$942millionincludedataxbenefitrelatedtotaxreformof$341million.Excludingthetaxbenefit,netincomefor2018wouldhavebeen$601million.

2018ConsolidatedResultsComparedwith2017

Forfiscal2018,worldwidenetincomeattributabletotheCompanywas$2.368billion,or$7.24pershare,comparedwith$2.159billion,or$6.68pershare,in2017.Affecting2018netincomewereincreasestotheprovisionforincometaxesof$704millionduetotheenactmentofU.S.taxreformlegislationonDecember22,2017(taxreform).Worldwidenetsalesandrevenuesincreased26percentto$37.358billionin2018,comparedwith$29.738billionin2017.Netsalesofworldwideequipmentoperationsincreased29percentinfiscal2018to$33.351billion,comparedwith$25.885billionlastyear.TheCompany'sacquisitionoftheWirtgenGroup(seeNote4)inDecember2017added12percenttonetsalesfortheyear.Salesincludedpricerealizationof1percent,whilecurrencytranslationdidnothaveamaterialeffectfortheyear.EquipmentnetsalesintheUnitedStatesandCanadaincreasedby25percentforfiscal2018,withWirtgenadding4percent.OutsideoftheU.S.andCanada,netsalesrose34percentfortheyear,withWirtgenadding22percent.Currencytranslationhadnomaterialeffectfortheyear.

Worldwideequipmentoperationshadanoperatingprofitof$3.684billioninfiscal2018,comparedwith$2.859billioninfiscal2017.TheWirtgenGroup,whoseresultsareincludedintheseamounts,hadoperatingprofitof$116millionforfiscal2018.ExcludingtheWirtgenGroupresults,theincreasewasprimarilydrivenbyhighershipmentvolumes,pricerealization,andlowerwarrantycosts,partiallyoffsetbyhigherproductioncostsandresearchanddevelopmentexpenses.Additionally,fiscal2017includedanimpairmentchargeforinternationalconstructionandforestryoperationsandagainonthesaleofSiteOneLandscapesSupply,Inc.(SiteOne).

NetincomeoftheCompany'sequipmentoperationswas$1.404billionforfiscal2018,comparedwith$1.707billioninfiscal2017.Inadditiontotheoperatingfactorsmentionedabove,incometaxadjustmentsrelatedtotaxreformhadanunfavorableimpactof$1.045billionforfiscal2018.

ThefinancialservicesoperationsreportednetincomeattributabletotheCompanyof$942.0millionforfiscal2018comparedwith$476.9millioninfiscal2017.Theincreasewaslargelyduetoahigheraverageportfolio,alowerprovisionforcreditlosses,andlowerlossesonleaseresidualvalues,partiallyoffsetbyless-favorablefinancingspreads.Additionally,incometaxadjustmentsrelatedtotaxreformhadafavorableeffectof$341.2millionforfiscal2018.

Thecostofsalestonetsalesratiofor2018and2017was76.7percent.Pricerealizationandlowerwarrantyclaimswereoffsetbyhigherproductioncosts.

Additionalinformationonfiscal2018resultsispresentedonpages20–22.

EQUIPMENTOPERATIONS

AgricultureandTurf

TheJohnDeereagricultureandturfsegmentmanufacturesanddistributesafulllineofagricultureandturfequipmentandrelatedserviceparts.Thesegmentconsolidatesallmarketsintofourgeographicalcustomerfocusareastofacilitatedeepcustomerunderstandinganddeliverworld-classcustomerservice.Thesegment'soperationsareconsolidatedintofiveproductplatforms–cropharvesting(combines,cottonpickers,cottonstrippers,andsugarcaneharvesters,relatedharvestingfront-endequipment,sugarcaneloadersandpull-behindscrapers);turfandutility(utilityvehicles,ridinglawnequipment,walk-behindmowers,commercialmowingequipment,golfcourseequipment,implementsformowing,tilling,snowanddebrishandling,aeratingandmanyotherresidential,commercial,golfandsportsturfcareapplicationsandotheroutdoorpowerproducts);hayandforage(self-propelledforageharvestersandattachments,balersandmowers);cropcare(tillage,seedingandapplicationequipment,includingsprayers,nutrientmanagementandsoilpreparationmachinery);andtractors(loadersandlarge,mediumandutilitytractorsandrelatedattachments).JohnDeerealsopurchasescertainproductsfromothermanufacturersforresale.

Thesegmentalsoprovidesintegratedprecisionagriculturetechnologiesacrossitsportfoliooflargeequipment.JohnDeerehasdevelopedaleadingapproachtoprecisionagriculturetechnologythroughadvancedcommunicationsandtelematics,onboardsensorsandcomputers,andpreciseglobalnavigationsatellitesystemstechnologytoenablefarmerstobettercontrolinputcostsandyields,improvesoilconservation,minimizechemicaluse,andtogatherinformation.JohnDeere'sadvancedtelematicssystemsremotelyconnectagriculturalequipmentowners,businessmanagersanddealerstoagriculturalequipmentinthefield,providingreal-timealertsandinformationaboutequipmentlocation,utilization,performanceandmaintenancetoimproveproductivityandefficiency.

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InadditiontotheJohnDeerebrand,theagricultureandturfsegmentpurchasesandsellsavarietyofequipmentattachmentsundertheFrontier,KemperandGreenSystemsbrandnames.ThesegmentalsomanufacturesandsellssprayersundertheHagieandMazzottibrandnames,plantersandcultivatorsundertheMonosembrandname,sprayersandplantersunderthePLAbrandname,carbonfibersprayerboomsundertheKingAgrobrandname,andwalk-behindmowersandscarifiersinselectEuropeancountriesundertheSABObrandname.JohnDeeremanufacturesitsagricultureandturfequipmentforsaleprimarilythroughindependentretaildealernetworks,andalsobuildsturfproductsforsalebymassretailers,includingTheHomeDepotandLowe's.

Salesofagriculturalequipmentareaffectedbytotalfarmcashreceipts,whichreflectlevelsoffarmcommodityprices,acreageplanted,cropyieldsandgovernmentpolicies,includingglobaltradepoliciesandtheamountandtimingofgovernmentpayments.Salesarealsoinfluencedbygeneraleconomicconditions,farmlandprices,farmers'debtlevelsandaccesstofinancing,interestandexchangerates,agriculturaltrends,includingtheproductionofanddemandforrenewablefuels,laboravailabilityandcosts,energycosts,taxpoliciesandotherinputcostsassociatedwithfarming.Otherimportantfactorsaffectingnewagriculturalequipmentsalesarethevalueandlevelofusedequipment,includingtractors,harvestingequipment,self-propelledsprayers,hayandforageequipmentandseedingequipment.Weatherandclimaticconditionscanalsoaffectbuyingdecisionsofagriculturalequipmentpurchasers.

Innovationsinmachineryandtechnologyalsoinfluenceagriculturalequipmentpurchasing.Forexample,larger,moreproductiveequipmentiswellacceptedwherefarmersarestrivingformoreefficiencyintheiroperations.Large,cost-efficient,highly-mechanizedagriculturaloperationsaccountforanimportantshareofworldwidefarmoutput.Thelarge-sizeagriculturalequipmentusedonsuchfarmshasbeenparticularlyimportanttoJohnDeere.Alargeproportionoftheequipmentoperations'totalagriculturalequipmentsalesintheU.S.andCanada,andasignificantproportionofsalesinmanycountriesoutsidetheU.S.andCanada,arecomprisedoftractorsover100horsepower,self-propelledcombines,self-propelledcottonpickers,self-propelledforageharvesters,self-propelledsprayersandseedingequipment.However,smalltractorsareanincreasinglyimportantpartofourglobaltractorbusiness.Further,JohnDeereoffersanumberofharvestingsolutionstosupportdevelopmentofthemechanizedharvestingofgrain,oilseeds,cotton,sugarandbiomass.

Retailsalesoflawnandgardentractors,compactutilitytractors,residentialandcommercialmowers,utilityvehicles,andgolfandturfequipmentareinfluencedbyweatherconditions,consumerspendingpatternsandgeneraleconomicconditions.

Seasonality.Seasonalpatternsinretaildemandforagriculturalequipmentresultinsubstantialvariationsinthevolumeandmixofproductssoldtoretailcustomersduringtheyear.Seasonaldemandmustbeestimatedinadvance,andequipmentmustbemanufacturedinanticipationofsuchdemandinordertoachieveefficientutilizationofmanpowerandfacilitiesthroughouttheyear.Forcertainequipment,JohnDeereoffersearlyorderdiscountstoretailcustomers.Productionschedulesarebased,inpart,ontheseearlyorderprograms.Thesegmentincurssubstantialseasonalvariationincashflowstofinanceproductionandinventoryofagriculturalequipment.Thesegmentalsoincurscoststofinancesalestodealersinadvanceofseasonaldemand.Newcombineandcottonharvestingequipmenthasbeensoldunderearlyorderprogramswithwaiversofretailfinancechargesavailabletocustomerswhotakedeliveryofmachinesduringoff-seasonperiods.InAustralia,CanadaandtheU.S.,therearetypicallyseveralusedequipmenttrade-intransactionsaspartofmostnewagriculturalequipmentsales.Toprovidesupporttoitsdealersfortheseusedequipmenttrade-ins,JohnDeereprovidesdealersinthesecountrieswithpoolsoffunds,awardedtodealersasapercentageofthedealercostforeligiblenewequipmentsales.Dealerscanusethesefundstodefraythecostsofcarryingormarketingusedequipmentinventoryortoprovidefinancingincentivestocustomerspurchasingtheusedequipment.

Retaildemandforturfandutilityequipmentisnormallyhigherinthesecondandthirdfiscalquarters.JohnDeerehaspursuedastrategyofbuildingandshippingsuchequipmentasclosetoretaildemandaspossible.Consequently,toincreaseassetturnoverandreducetheaverageleveloffieldinventoriesthroughtheyear,productionandshipmentschedulesoftheseproductlinesarenormallyproportionatelyhigherinthesecondandthirdfiscalquartersofeachyear,correspondingcloselytotheseasonalpatternofretailsales.

ConstructionandForestry

JohnDeere'sconstructionandforestryequipmentincludesabroadrangeofbackhoeloaders,crawlerdozersandloaders,four-wheel-driveloaders,excavators,motorgraders,articulateddumptrucks,landscapeloaders,skid-steerloaders,millingmachines,pavers,compactors,rollers,crushers,screens,asphaltplants,logskidders,logfellerbunchers,logloaders,logforwarders,logharvestersandavarietyofattachments.JohnDeereprovidesabroadlineofconstructionequipmentandthemostcompletelineofforestrymachinesandattachmentsavailableintheworld.JohnDeerealsomanufacturesanddistributesroadbuildingequipmentthroughitswholly-ownedsubsidiariesoftheWirtgenGroup.TheconstructionandforestrymachinesaredistributedundertheJohnDeerebrandname,exceptfortheWirtgenGroupproducts,whicharemanufacturedanddistributedundersixbrandnames:Wirtgen,Vögele,Hamm,Kleeman,Benninghoven,andCiber.ForestryattachmentsaredistributedundertheJohnDeereandWaratahbrandnames.Inadditiontotheequipmentmanufacturedbytheconstructionandforestrysegment,JohnDeerepurchasescertainproductsfromothermanufacturersforresale.Thesegmentalsoprovidescomprehensivefleetmanagementtelematicssolutionsdesignedtoimprovecustomerproductivityandefficiencythroughaccesstofleetlocation,utilizationandmaintenanceinformation.

Theprevailinglevelsofresidential,commercialandpublicconstructionandtheconditionoftheforestryproductsindustryinfluenceretailsalesofJohnDeereconstruction,earthmoving,roadbuilding,materialhandlingandforestryequipment.Generaleconomicconditions,thelevelofinterestrates,theavailabilityofcreditandcertaincommoditypricessuchasthoseapplicabletopulp,paperandsawlogsalsoinfluencesales.

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JohnDeerelicensesBellEquipmentLimited(Bell)tomanufactureandsellcertainJohnDeere-designedconstructionequipmentinspecifiedterritoriesofAfrica.BellisalsothedistributorofcertainJohnDeere-manufacturedconstructionequipmentundertheBellbrandandforestryequipmentundertheJohnDeerebrandincertainterritoriesofAfrica.

JohnDeereandHitachiConstructionMachineryCo.(Hitachi)haveajointventureforthemanufactureofhydraulicexcavatorsandtrackedforestryequipmentintheU.S.,CanadaandBrazil.JohnDeeredistributesHitachibrandsofconstructionandminingequipmentinNorth,CentralandSouthAmerica.

Thesegmenthasanumberofinitiativesintherent-to-rent,orshort-termrental,marketforconstruction,earthmoving,roadbuildingandmaterialhandlingequipment.TheseincludespeciallydesignedrentalprogramsforJohnDeeredealersandexpandedcooperationwithmajor,nationalequipmentrentalcompanies.

JohnDeerealsoownsNortrax,Inc.whichinturnownsNortraxCanadaInc.whichinturnownsNortraxQuebecInc.(collectivelycalledNortrax).NortraxisanauthorizedJohnDeeredealerforconstruction,earthmoving,materialhandlingandforestryequipmentinavarietyofmarketsintheU.S.andCanada.JohnDeerealsoownsretailforestrysalesoperationsinAustralia,Brazil,Finland,Ireland,NewZealand,Norway,SwedenandtheUnitedKingdom.Inaddition,inmanymarketsworldwide(mostsignificantlyintheEU,IndiaandAustralia),theWirtgenGroupsellsitsproductsprimarilythroughcompany-ownedsalesandservicesubsidiaries.

Competition

Theequipmentoperationssellproductsandservicesintoavarietyofhighlycompetitiveglobalandregionalmarkets.Theprincipalcompetitivefactorsinallmarketsincludeproductperformance,innovationandquality,distribution,customerserviceandprice.InNorthAmericaandmanyotherpartsoftheworld,JohnDeere'sbrandrecognitionisacompetitivefactor.

Thecompetitiveenvironmentfortheagricultureandturfsegmentincludessomeglobalcompetitors,includingAGCOCorporation,CLAASKGaAmbH,CNHGlobalN.V.,KubotaTractorCorporation,Mahindra,andTheToroCompanyandmanyregionalandlocalcompetitors.Thesecompetitorshavevaryingnumbersofproductlinescompetingwiththesegment'sproductsandeachhasvaryingdegreesofregionalfocus.Animportantpartofthecompetitionwithintheagriculturalequipmentindustryduringthepastdecadehascomefromavarietyofshort-lineandspecialtymanufacturers,aswellasindigenousregionalcompetitors,withdifferingmanufacturingandmarketingmethods.Becauseofindustryconditions,includingthemergerofcertainlargeintegratedcompetitorsandtheemergenceandexpandingglobalcapabilityofmanycompetitors,particularlyinemergingandhighpotentialmarketssuchasBrazil,ChinaandIndiawhereJohnDeereseekstoincreasemarketshare,theagriculturalequipmentbusinesscontinuestoundergosignificantchangeandisbecomingevenmorecompetitive.Thesegment'sturfequipmentissoldprimarilyinthehighlycompetitiveNorthAmericanandWesternEuropeanmarkets.

GlobalcompetitorsoftheconstructionandforestrysegmentincludeCaterpillarInc.,CNHGlobalN.V.,DoosanInfracoreCo.,Ltd.anditssubsidiaryDoosanBobcatInc.,FayatGroup,KomatsuLtd.,KubotaTractorCorporation,PonssePlc,Terex,TigercatIndustriesInc.,VolvoConstructionEquipment(partofVolvoGroupAB)andXCMG.TheconstructionbusinessoperatesinhighlycompetitivemarketsinNorthandSouthAmericaandotherglobalmarkets,includingChinaandRussia.Theforestryandroadconstructionbusinessesoperateglobally.Thesegmentmanufacturesover90percentofthetypesofconstructionequipmentusedintheU.S.andCanada,includingconstruction,forestry,earthmoving,roadbuilding,andmaterialhandlingequipment.

Manufacturing

ManufacturingPlants.IntheU.S.andCanada,theequipmentoperationsownandoperate21factorylocationsandleaseandoperateanothertwolocations,whichcontainapproximately29.1millionsquarefeetoffloorspace.Ofthese23factories,13aredevotedprimarilytoagricultureandturfequipment,fourtoconstructionandforestryequipment,onetoengines,twotoengineandcomponentremanufacturing,twotohydraulicandpowertraincomponents,andonetoelectroniccomponents.OutsidetheU.S.andCanada,theequipmentoperationsownorleaseandoperate:agricultureandturfequipmentfactoriesinArgentina,Brazil,China,France,Germany,India,Israel,Italy,Mexico,theNetherlands,RussiaandSpain;constructionequipmentfactoriesinBrazil,ChinaandGermany;engine,engine/powertrain,hydraulic,orelectroniccomponentfactoriesinArgentina,China,France,IndiaandMexico;roadbuildingequipmentfactoriesinBrazil,China,GermanyandIndia;andforestryequipmentfactoriesinFinlandandNewZealand.ThesefactoriesandmanufacturingoperationsoutsidetheU.S.andCanadacontainapproximately27millionsquarefeetoffloorspace.Theenginefactoriesreferredtoabovemanufacturenon-road,heavydutydieselengines.

Theequipmentoperationsalsohavefinancialinterestsinothermanufacturingorganizations,whichincludeagriculturalequipmentmanufacturersintheU.S.,BellinSouthAfrica,theHitachijointventurethatbuildshydraulicexcavatorsandtrackedforestryequipmentintheU.S.,CanadaandBrazil,andventuresthatmanufacturetransaxlesandtransmissionsusedincertainagricultureandturfsegmentproducts.

JohnDeere'sfacilitiesarewellmaintained,ingoodoperatingconditionandsuitablefortheirpresentpurposes.Thesefacilities,togetherwithbothshort-termandlong-termplannedcapitalexpenditures,areexpectedtomeetJohnDeere'smanufacturingneedsintheforeseeablefuture.

ExistingcapacityissufficienttosatisfyJohnDeere'scurrentexpectationsforretailmarketdemand.Theequipmentoperations'manufacturingstrategyinvolvestheimplementationofappropriatelevelsoftechnologyandautomationtoallowmanufacturingprocessestoremainprofitableatvaryingproductionlevels.Operationsarealsodesignedtobeflexibleenoughtoaccommodatetheproductdesignchangesrequiredtomeetmarketconditionsandchangingcustomerrequirements.Commonmanufacturingfacilities

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andtechniquesareemployedintheproductionofcomponentsforagricultureandturfequipmentandconstructionandforestryequipment.

Inordertoutilizemanufacturingfacilitiesandtechnologymoreeffectively,theequipmentoperationspursuecontinuousimprovementsinmanufacturingprocesses.Theseincludestepstostreamlinemanufacturingprocessesandenhanceresponsivenesstocustomers.JohnDeerehasimplementedflexibleassemblylinesthatcanaccommodateawiderproductmixanddeliverproductsinlinewithdealerandcustomerdemand.Additionally,considerableeffortisbeingdirectedtomanufacturingcostreductionthroughprocessimprovementandimprovementsinproductdesign,advancedmanufacturingtechnology,supplymanagementandlogistics,andenvironment,health,andsafetymanagementsystemsaswellascompensationincentivesrelatedtoproductivityandorganizationalstructure.JohnDeerehasexperiencedvolatilityinthepriceofmanyrawmaterials.JohnDeerehasrespondedtocostpressuresbyimplementingthecost-reductionmeasuresdescribedaboveandbyincreasingprices.Significantcostincreases,iftheyoccur,couldhaveanadverseeffectontheCompany'soperatingresults.Theequipmentoperationsalsopursueexternalsalesofselectedpartsandcomponentsthatcanbemanufacturedandsuppliedtothirdpartiesonacompetitivebasis,includingengines,powertraincomponentsandelectroniccomponents.

Patents,Trademarks,andTradeSecrets

JohnDeereownsasignificantnumberofpatents,tradesecrets,licensesandtrademarksrelatedtoJohnDeereproductsandservices,andexpectsthenumbertogrowasJohnDeerecontinuestopursuetechnologicalinnovations.JohnDeere'spolicyistofurtheritscompetitivepositionbyfilingpatentapplicationsintheU.S.andinternationallytoprotecttechnologyandimprovementsconsideredimportanttothebusiness.JohnDeerebelievesthat,intheaggregate,therightsunderthesepatentsandlicensesaregenerallyimportanttoitsoperationsandcompetitiveposition,butdoesnotregardanyofitsbusinessesasbeingdependentuponanysinglepatentorgroupofpatents.However,certainJohnDeeretrademarks,whichcontributetoJohnDeere'sidentityandtherecognitionofitsproductsandservices,includingbutnotlimitedtothe"JohnDeere"mark,theleapingdeerlogo,the"NothingRunsLikeaDeere"slogan,theprefix"JD"associatedwithmanyproducts,andthegreenandyellowequipmentcolors,areanintegralpartofJohnDeere'sbusiness,andtheirlosscouldhaveamaterialadverseeffectontheCompany.ForadditionalinformationseeRiskFactor–ThepotentiallossofJohnDeereintellectualpropertythroughtradesecrettheft,infringementofpatents,trademarkcounterfeiting,orotherlossofrightstoexclusiveuseofJohnDeereintellectualpropertymayhaveamaterialadverseeffectontheCompany.InfringementoftheintellectualpropertyrightsofothersbyDeeremayalsohaveamaterialadverseeffectontheCompany.

Marketing

IntheU.S.andCanada,theequipmentoperationsdistributeequipmentandservicepartsthroughthefollowingfacilities:twoagricultureandturfequipmentsalesandadministrationofficeslocatedinOlathe,KansasandCary,NorthCarolinaandonesalesbranchlocatedinGrimsby,Ontario;oneconstruction,earthmoving,materialhandlingandforestryequipmentsalesandadministrationofficelocatedinMoline,Illinois;andoneroadbuildingequipmentsales,serviceandadministrationofficelocatedinNashville,Tennessee.Inaddition,theequipmentoperationsoperateacentralizedpartsdistributionwarehouseincoordinationwithnineregionalpartsdepotsanddistributioncentersintheU.S.andCanada.

ThroughtheseU.S.andCanadianfacilities,JohnDeeremarketsproductstoapproximately1,981dealerlocations,mostofwhichareindependentlyownedandoperated.Ofthese,approximately1,539sellagriculturalequipment,whileapproximately430sellconstruction,earthmoving,materialhandlingand/orforestryequipment.Nortraxownssomeofthe430dealerlocations.TurfequipmentissoldatmostJohnDeereagriculturalequipmentlocations,afewconstruction,earthmoving,materialhandlingandforestryequipmentlocationsandabout392turf-onlylocations,manyofwhichalsoselldissimilarlinesofnon-JohnDeereproducts.Inaddition,certainlawnandgardenproductlinesaresoldthroughTheHomeDepotandLowe's.

OutsidetheU.S.andCanada,JohnDeereagricultureandturfequipmentissoldtodistributorsanddealersforresaleinover100countries.SalesandadministrativeofficesarelocatedinArgentina,Australia,Brazil,China,France,Germany,India,Italy,Mexico,theNetherlands,Poland,Russia,Singapore,SouthAfrica,Spain,Sweden,Switzerland,Thailand,Turkey,UkraineandtheUnitedKingdomandadministrativeofficeslocatedinGhanaandKenya.AssociatedcompaniesdoingbusinessinChinaalsosellagriculturalequipment.TurfequipmentsalesoutsidetheU.S.andCanadaoccurprimarilyinEuropeandAustralia.Construction,earthmoving,materialhandlingandforestryequipmentissoldtodistributorsanddealersprimarilybysalesofficeslocatedinAustralia,Brazil,China,Finland,NewZealand,Russia,SingaporeandtheUnitedStates.SomeofthesedealersareindependentlyownedwhileJohnDeereownsothers.Roadbuildingequipmentissoldbothdirectlytoendcustomersaswellastoindependentdistributorsanddealersforresale.TheWirtgenGroupoperatescompany-ownedsalesandservicesubsidiariesinAustralia,Austria,Belgium,Brazil,Bulgaria,China,Denmark,Estonia,Finland,France,Georgia,Germany,Hungary,India,Ireland,Italy,Japan,Kazakhstan,Latvia,Lithuania,Malaysia,theNetherlands,Norway,thePhilippines,Poland,Romania,Russia,Serbia,Singapore,SouthAfrica,Sweden,Taiwan,Thailand,Turkey,UkraineandtheUK.

TheequipmentoperationsoperatecentralizedpartsdistributionwarehousesinBrazil,Germany,IndiaandRussiaincoordinationwithregionalpartsdepotsanddistributioncentersinArgentina,Australia,China,Mexico,SouthAfrica,SwedenandtheUnitedKingdom.

JohnDeeremarketsengines,powertrainandelectroniccomponentsworldwidethroughselectsalesbranchesordirectlytoregionalandglobaloriginalequipmentmanufacturersandindependentlyownedenginedistributors.

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RawMaterials

JohnDeerepurchasesrawmaterialsandsomemanufacturedcomponentsandreplacementpartsforitsequipment,enginesandotherproductsfromleadingsuppliersbothdomesticallyandinternationally.Thesematerialsandcomponentsincludeavarietyofsteelproducts,steelandironcastings,forgings,plastics,electronicsandready-to-assemblecomponentsmadetocertainspecifications.JohnDeerealsopurchasesvariousgoodsandservicesusedinproduction,logistics,officesandresearchanddevelopmentprocesses.JohnDeeremaintainsstrategicsourcingmodelstomeetitsproductionneedsandbuilduponlong-termsupplierrelationships.JohnDeereusesavarietyofagreementswithsuppliersintendedtodriveinnovation,ensureavailabilityanddeliveryofindustry-leadingqualityrawmaterialsandcomponents,managecostsonagloballycompetitivebasis,protectJohnDeere'sintellectualpropertyandminimizeothersupply-relatedrisks.SupplychainrisksmonitoredbyJohnDeeretominimizethelikelihoodofthesupplybasecausingbusinessdisruptionincludesupplierfinancialviability,capacity,businesscontinuity,quality,deliveryandweather-relatedeventsincludingnaturaldisasters.Infiscal2018,nosignificantworkstoppagesoccurredduetoshortagesofrawmaterialsorothercommodities,butJohnDeereexperiencedanincreasingnumberofsupplychaindisruptionslinkedtosuppliermaterialandlaborshortages.

BacklogOrders

Thedollaramountofbacklogordersfortheagricultureandturfsegmentbelievedtobefirmwasapproximately$6.5billionatOctober28,2018,comparedwith$5.6billionatOctober29,2017.Theagricultureandturfbacklogisgenerallyhighestinthesecondandthirdquartersduetoseasonalbuyingtrendsintheseindustries.Thedollaramountofbacklogordersfortheconstructionandforestrysegmentbelievedtobefirmwasapproximately$3.0billionatOctober28,2018,comparedwithnosignificantamountofbacklogordersatOctober29,2017.

TradeAccountsandNotesReceivable

Tradeaccountsandnotesreceivableariseprimarilyfromsalesofgoodstoindependentdealers.Mosttradereceivablesoriginatedbytheequipmentoperationsarepurchasedbythefinancialservicesoperations.Theequipmentoperationscompensatethefinancialservicesoperationsatapproximatemarketratesofinterestforthesereceivables.AdditionalinformationappearsinNote12totheConsolidatedFinancialStatements.

FINANCIALSERVICES

U.S.andCanada.ThefinancialservicessegmentprimarilyprovidesandadministersfinancingforretailpurchasesfromJohnDeeredealersofnewequipmentmanufacturedbyJohnDeere'sagricultureandturfandconstructionandforestrysegmentsandusedequipmenttakenintradeforthisequipment.

TheCompanyandJohnDeereConstruction&ForestryCompany(awholly-ownedsubsidiaryoftheCompany)arereferredtoasthe"salescompanies."JohnDeereCapitalCorporation(CapitalCorporation),aU.S.financialservicessubsidiary,generallypurchasesretailinstallmentsalesandloancontracts(retailnotes)fromthesalescompanies.TheseretailnotesareacquiredbythesalescompaniesthroughJohnDeereretaildealersintheU.S.JohnDeereFinancialInc.,aCanadianfinancialservicessubsidiary,purchasesandfinancesretailnotesacquiredbyJohnDeereCanadaULC,theCompany'sCanadiansalesbranch.Thetermsofretailnotesandthebasisonwhichthefinancialservicesoperationsacquireretailnotesfromthesalescompaniesaregovernedbyagreementswiththesalescompanies.Thefinancialservicessegmentalsofinancesandservicesrevolvingchargeaccounts,inmostcasesacquiredfromandofferedthroughmerchantsintheagricultureandturfandconstructionandforestrymarkets(revolvingchargeaccounts).Additionally,thefinancialservicesoperationsprovidewholesalefinancingforinventoriesofJohnDeereagricultureandturfequipmentandconstructionandforestryequipmentownedbydealersofthoseproducts(wholesalenotes).ThevariousfinancingoptionsofferedbythefinancialservicesoperationsaredesignedtoenhancesalesofJohnDeereproductsandgeneratefinancingincomeforthefinancialservicesoperations.IntheU.S.,certainsubsidiariesincludedinthefinancialservicessegmentofferextendedequipmentwarranties.

Retailnotesacquiredbythesalescompaniesareimmediatelysoldtothefinancialservicesoperations.Theequipmentoperationsarethefinancialservicesoperations'majorsourceofbusiness,butmanyretailpurchasersofJohnDeereproductsfinancetheirpurchasesoutsidetheJohnDeereorganizationthroughavarietyofsources,includingcommercialbanksandfinanceandleasingcompanies.

ThefinancialservicesoperationsofferretailleasestoequipmentusersintheU.S.Asmallnumberofleasesareexecutedwithunitsoflocalgovernment.Leasesareusuallywrittenforperiodsoffourmonthstosixtymonths,andtypicallycontainanoptionpermittingthecustomertopurchasetheequipmentattheendoftheleaseterm.RetailleasesarealsoofferedinagenerallysimilarmannertocustomersinCanadathroughJohnDeereFinancialInc.andJohnDeereCanadaULC.

Thefinancialservicesoperations'termsforfinancingequipmentretailsales(otherthansmalleritemsfinancedwithunsecuredrevolvingchargeaccounts)generallyprovideforretentionofasecurityinterestintheequipmentfinanced.Thefinancialservicesoperations'guidelinesforminimumdownpayments,whichvarywiththetypesofequipmentandrepaymentprovisions,aregenerally10percentto30percentofthepurchaseprice.FinancechargesaresometimeswaivedforspecifiedperiodsorreducedoncertainJohnDeereproductssoldorleasedinadvanceoftheseasonofuseorinothersalespromotions.Thefinancialservicesoperationsgenerallyreceivecompensationfromthesalescompaniesatapproximatemarketinterestratesforperiodsduringwhichfinancechargesarewaivedorreducedontheretailnotesorleases.Thecostisaccountedforasadeductioninarrivingatnetsalesbytheequipmentoperations.

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TheCompanyhasanagreementwithCapitalCorporationtomakepaymentstoCapitalCorporationsuchthatitsratioofearningstofixedchargesisnotlessthan1.05to1foranyfiscalquarter.Forfiscal2018and2017,CapitalCorporation'sratioswere1.78to1and1.95to1,respectively,andneverlessthan1.69to1and1.79to1foranyfiscalquarterof2018and2017,respectively.TheCompanyhasalsocommittedtocontinuetoown,directlyorthroughoneormorewholly-ownedsubsidiaries,atleast51percentofthevotingsharesofcapitalstockofCapitalCorporationandtomaintainCapitalCorporation'sconsolidatedtangiblenetworthatnotlessthan$50million.TheCompany'sobligationstomakepaymentstoCapitalCorporationundertheagreementareindependentofwhetherCapitalCorporationisindefaultonitsindebtedness,obligationsorotherliabilities.Further,theCompany'sobligationsundertheagreementarenotmeasuredbytheamountofCapitalCorporation'sindebtedness,obligationsorotherliabilities.TheCompany'sobligationstomakepaymentsunderthisagreementareexpresslystatednottobeaguarantyofanyspecificindebtedness,obligationorliabilityofCapitalCorporationandareenforceableonlybyorinthenameofCapitalCorporation.Nopaymentswererequiredunderthisagreementinfiscal2018or2017.

OutsidetheU.S.andCanada.Thefinancialservicesoperationsalsoofferfinancing,primarilyforJohnDeereproducts,inAustralia,Brazil,China,India,NewZealand,Russia,ThailandandinseveralothercountriesinAfrica,Asia,EuropeandLatinAmerica.Incertainareas,financingisofferedthroughcooperationagreementsorjointventures.Themannerinwhichthefinancialservicesoperationsofferfinancinginthesecountriesisaffectedbyavarietyofcountry-specificlaws,regulationsandcustoms,includingthosegoverningpropertyrightsanddebtorobligations,thataresubjecttochangeandthatmayintroducegreaterrisktothefinancialservicesoperations.

ThefinancialservicesoperationsalsooffertoselectcustomersanddealerscreditenhancedinternationalexportfinancingforthepurchaseofJohnDeereproducts.

Additionalinformationonthefinancialservicesoperationsappearsonpages20–22,24,and26–27.

ENVIRONMENTALMATTERS

JohnDeereissubjecttoawidevarietyoflocal,stateandfederalenvironmentallawsandregulationsintheU.S.,aswellastheenvironmentallawsandregulationsofothercountriesinwhichJohnDeereconductsbusiness.JohnDeerestrivestocomplywithapplicablelawsandregulations.However,failuretocomplywiththeseregulationscouldleadtofinesandotherpenalties.JohnDeereisinvolvedintheevaluationandclean-upofalimitednumberofsitesbutdoesnotexpectthatthesemattersorotherexpensesorliabilitiesJohnDeeremayincurinconnectionwithanynoncompliancewithenvironmentallawsorregulationsorthecleanupofanyadditionalproperties,willhaveamaterialadverseeffectontheconsolidatedfinancialposition,resultsofoperations,cashflowsorcompetitivepositionofJohnDeere.Withrespecttoacquiredpropertiesandbusinessesorpropertiesandbusinessesacquiredinthefuture,JohnDeereconductsduediligenceintopotentialexposuretoenvironmentalliabilities,butcannotbecertainthatithasidentifiedorwillidentifyalladverseenvironmentalconditions.Compliancewiththeselawsandregulationshasadded,andwillcontinuetoadd,tothecostofJohnDeere'sproducts.

TheEuropeanUnionhasissueditsStageVRegulationwhichcomesintoforcein2019and2020fornon-roaddieselenginesacrossvariouspowercategoriesformachinesusedinconstruction,agriculture,materialshandling,industrialuseandgeneratorapplications.ThesestandardscontinuethereductionofparticulateandNOxemissions.Governmentalagenciesthroughouttheworldaresimilarlyenactingmorestringentlawstoreduceoff-roadengineemissions.JohnDeerehasachievedandplanstocontinuetoachievecompliancewiththeseregulationsthroughsignificantinvestmentsinthedevelopmentofnewenginetechnologiesandafter-treatmentsystems.CompliancewithemissionsregulationshasaddedandwillcontinuetoaddtothecostofJohnDeere'sproducts.

Governmentsarealsoimplementinglawsregulatingproductsacrosstheirlifecycle,includingrawmaterialsourcingandthestorage,distribution,sale,use,anddisposalofproductsattheirend-of-life.Theselawsandregulationsincludegreenchemistry,right-to-know,restrictionofhazardoussubstances,andproducttake-backlaws.

EMPLOYEES

AtOctober28,2018,JohnDeerehadapproximately74,000employees,includingapproximately31,000employeesintheU.S.andCanada.JohnDeerealsoretainsconsultants,independentcontractors,andtemporaryandpart-timeworkers.Unionsarecertifiedasbargainingagentsforapproximately85percentofJohnDeere'sU.S.productionandmaintenanceemployees.Approximately9,600ofJohnDeere'sactiveU.S.productionandmaintenanceworkersarecoveredbyacollectivebargainingagreementwiththeUnitedAutoWorkers(UAW),withanexpirationdateofOctober1,2021.

UnionsalsorepresentthemajorityofemployeesatJohnDeeremanufacturingfacilitiesoutsidetheU.S.

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EXECUTIVEOFFICERSOFTHEREGISTRANT

FollowingarethenamesandagesoftheexecutiveofficersoftheCompany,theirpositionswiththeCompanyandsummariesoftheirbackgroundsandbusinessexperience.AllexecutiveofficersareelectedorappointedbytheBoardofDirectorsandholdofficeuntiltheannualmeetingoftheBoardofDirectorsfollowingtheannualmeetingofstockholdersineachyear.

ITEM1A.RISKFACTORS.

ThefollowingrisksareconsideredthemostsignificanttoJohnDeere'sbusinessbaseduponcurrentknowledge,informationandassumptions.ThisdiscussionofriskfactorsshouldbeconsideredcloselyinconjunctionwithManagement'sDiscussionandAnalysisbeginningonpage20,includingtherisksanduncertaintiesdescribedintheSafeHarborStatementonpages22and23,andtheNotestoConsolidatedFinancialStatementsbeginningonpage36.Theseriskfactorsandotherforward-lookingstatementsthatrelatetofutureevents,expectations,trendsandoperatingperiodsinvolvecertainfactorsthataresubjecttochange,andimportantrisksanduncertaintiesthatcouldcauseactualresultstodiffermaterially.Someoftheserisksanduncertaintiescouldaffectparticularlinesofbusiness,whileotherscouldaffectalloftheCompany'sbusinesses.Althougheachriskisdiscussedseparately,manyareinterrelated.TheCompany,exceptasrequiredbylaw,undertakesnoobligationtoupdateorrevisethisriskfactorsdiscussion,whetherasaresultofnewdevelopmentsorotherwise.TherisksdescribedinthisAnnualReportonForm10-Kandthe"SafeHarborStatement"inthisreportarenottheonlyrisksfacedbytheCompany.

International,nationalandregionaltradelaws,regulationsandpolicies(particularlythoserelatedtoorrestrictingglobaltrade)andgovernmentfarmprogramsandpoliciescouldsignificantlyimpairJohnDeere'sprofitabilityandgrowthprospects.

International,nationalandregionallaws,regulationsandpoliciesdirectlyorindirectlyrelatedtoorrestrictingtheimportandexportofJohnDeere'sproducts,servicesandtechnology,includingprotectionistpoliciesinparticularjurisdictionsorforthebenefitoffavoredindustriesorsectors,couldharmJohnDeere'smultinationalbusinessandsubjectJohnDeeretocivilandcriminalsanctionsforviolations.JohnDeere'sprofitabilityandgrowthprospectsaretieddirectlytotheglobalmarketplace.RestrictedaccesstoglobalmarketsimpairsJohnDeere'sabilitytoexportgoodsandservicesfromitsvariousmanufacturinglocationsaroundtheworld,andlimitstheabilitytoaccessrawmaterialsandhighqualitypartsandcomponentsatcompetitivepricesonatimelybasis.Traderestrictions,includingwithdrawalfromormodificationofexistingtradeagreements,negotiationofnewtradeagreements,andimpositionofnew(andretaliatory)tariffsagainstcertaincountriesorcoveringcertainproducts,couldlimitJohnDeere'sabilitytocapitalizeoncurrentandfuturegrowthopportunitiesininternationalmarketsandimpairJohnDeere'sabilitytoexpandthebusinessbyofferingnewtechnologies,productsandservices.Thesetraderestrictions,andchangesin–oruncertaintysurrounding–globaltradepoliciesmayaffectJohnDeere'scompetitiveposition.Furthermore,theabilitytoexportagriculturalandforestrycommoditiesiscriticaltoJohnDeere'sagriculturalandforestrycustomers.Policiesimpactingexchangeratesandcommoditypricesorthoselimiting

9

Name,ageandoffice(atDecember1,2018),andyearelectedtooffice

Principaloccupationduringlastfiveyearsotherthanoffice

oftheCompanycurrentlyheldSamuelR.Allen

65 ChairmanandChiefExecutiveOfficer 2010 Hasheldthispositionforthelastfiveyears

JamesM.Field

55President,WorldwideConstruction&ForestryDivision

2018

2012–2018President,Agriculture&TurfDivision-GlobalHarvesting&TurfPlatforms,AmericasandAustralia

JeanH.Gilles

61SeniorVicePresident,JohnDeerePowerSystems,WorldwidePartsServices,AdvancedTechnology&EngineeringandGlobalSupplyManagementandLogistics

2010

Hasheldthispositionforthelastfiveyears

MarcA.Howze

55SeniorVicePresidentandChiefAdministrativeOfficer

2016

2012–2016VicePresident,GlobalHumanResources&EmployeeCommunications

MaryK.W.Jones

50SeniorVicePresidentandGeneralCounsel

2013

Hasheldthispositionforthelastfiveyears

RajeshKalathur

50SeniorVicePresident,ChiefFinancialOfficerandChiefInformationOfficer

2018

2012–2018SeniorVicePresidentandChiefFinancialOfficer

JohnC.May

49President,WorldwideAgriculture&TurfDivision,GlobalHarvestingandTurfPlatforms,AgSolutionsAmericasandAustralia

2018

2012–2018President,AgriculturalSolutions&ChiefInformationOfficer

CoryJ.Reed

48President,JohnDeereFinancial

2016

2013–2016SeniorVicePresident,IntelligentSolutionsGroup;2012–2013SeniorVicePresident,GlobalMarketingServices

MarkwartvonPentz

55President,WorldwideAgriculture&TurfDivisionGlobalTractorandHay&ForagePlatforms,Europe,CIS,Asia,Africa

2018

2012–2018President,Agriculture&TurfDivision-Europe,Asia,Africa,andGlobalTractorPlatform

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theexportorimportofcommoditiescouldhaveamaterialadverseeffectontheinternationalflowofagriculturalandothercommoditiesthatmayresultinacorrespondingnegativeeffectonthedemandforagriculturalandforestryequipmentinmanyareasoftheworld.JohnDeere'sagriculturalequipmentsalescouldbeespeciallyharmedbysuchpoliciesbecausefarmincomestronglyinfluencessalesofagriculturalequipmentaroundtheworld,includingsalesmadepursuanttotheUnitedStates-Mexico-CanadaAgreement,whichwasagreedonSeptember30,2018andwhichisdesignedtoreplacetheNorthAmericanFreeTradeAgreement.Furthermore,traderestrictionscouldimpedethoseindevelopingcountriesfromachievingahigherstandardofliving,whichcouldnegativelyimpactJohnDeere'sfuturegrowthopportunitiesarisingfromincreasingglobaldemandforfood,fuelandinfrastructure.Additionally,changesingovernmentfarmprogramsandpolicies,includingdirectpaymentandothersubsidies,cansignificantlyinfluencedemandforagriculturalequipment.Furthermore,sanctionsandexportcontrolsimposedbytheU.S.andothergovernmentsrestrictingorprohibitingtransactionswithcertainpersons,includingfinancialinstitutions,tocertaincountries,orinvolvingcertainproductsexposeJohnDeeretopotentialcriminalandcivilsanctions.Embargoesandsanctionslawsarechangingrapidlyforcertaingeographies,includingwithrespecttoRussia,Iran,andVenezuela.AlthoughJohnDeerehasacomplianceprograminplacedesignedtoreducethelikelihoodofpotentialviolationsofimportandexportlawsandsanctions,violationsoftheselawsorsanctionscouldhaveanadverseeffectonJohnDeere'sreputation,business,resultsofoperationsandfinancialcondition.

Changesingovernmentbanking,monetaryandfiscalpoliciescouldhaveanegativeeffectonJohnDeere.

PoliciesoftheU.S.andothergovernmentsregardingbanking,monetaryandfiscalpoliciesintendedtopromoteormaintainliquidity,stabilizefinancialmarketsand/oraddresslocaldeficitorstructuraleconomicissuesmaynotbeeffectiveandcouldhaveamaterialimpactonJohnDeere'scustomersandmarkets.JohnDeere'soperationsandresultscouldalsobeimpactedbyfinancialregulatoryreformthatcouldhaveanadverseeffectonthefinancialservicessegmentandonJohnDeere'scustomersbylimitingtheirabilitytoenterintohedgingtransactionsortofinancepurchasesofJohnDeereproducts.GovernmentpoliciesonspendingcanalsoaffectJohnDeere,especiallytheconstructionandforestrysegmentduetotheimpactofgovernmentspendingoninfrastructuredevelopment.TheDodd-FrankWallStreetReformandConsumerProtectionActanditsregulationsimpose,ormayimpose,additionalreporting,stresstesting,leverage,liquidity,capitalrequirementsandothersupervisoryandfinancialstandardsandrestrictionsthatincreaseregulatorycompliancecostsforJohnDeereandJohnDeere'sfinancialservicesoperationsandcouldadverselyaffectJohnDeereanditsfinancialservicessegment'sfundingactivities,liquidity,structure(includingrelationshipswithaffiliates),operationsandperformance.Moreover,JohnDeere'soperations,includingthoseoutsideoftheUnitedStates,mayalsobeimpactedbynon-U.S.regulatoryreformsbeingimplementedtofurtherregulatenon-U.S.financialinstitutionsandmarkets.

Changesintaxrates,taxlegislation,orexposuretoadditionaltaxliabilitiescouldhaveanegativeeffectonJohnDeere.

JohnDeereissubjecttoincometaxesintheU.S.andnumerousforeignjurisdictions.TheCompany'sdomesticandinternationaltaxliabilitiesaredependentuponthelocationofearningsamongthesedifferentjurisdictions.Taxratesinvariousjurisdictionsmaybesubjecttosignificantchange.JohnDeere'seffectivetaxratescouldbeaffectedbychangesinthemixofearningsincountrieswithdifferingstatutorytaxrates,changesinthevaluationofdeferredtaxassetsandliabilities,orchangesintaxlawsortheirinterpretation.IftheCompany'seffectivetaxratesweretoincrease,oriftheultimatedeterminationofourtaxesowedisforanamountinexcessofamountspreviouslyaccrued,JohnDeere'soperatingresults,cashflowsandfinancialconditioncouldbeadverselyaffected.

Changingworldwidedemandforfoodanddifferentformsofbio-energycouldhaveaneffectonthepriceoffarmcommoditiesandconsequentlythedemandforcertainJohnDeereequipmentandcouldalsoresultinhigherresearchanddevelopmentcostsrelatedtochangingmachinefuelrequirements.

Changingworldwidedemandforfarmoutputstomeettheworld'sgrowingfoodandbio-energydemands,driveninpartbygovernmentpoliciesandagrowingworldpopulation,arelikelytoresultinfluctuatingagriculturalcommodityprices,whichdirectlyaffectsalesofagriculturalequipment.Lowerfarmcommoditypricesdirectlyaffectfarmincomes,whichcouldnegativelyaffectsalesofagriculturalequipment.WhilehighercommoditypricesbenefitJohnDeere'scrop-producingagriculturalequipmentcustomers,highercommoditypricesalsocouldresultingreaterfeedcostsforlivestockandpoultryproducerswhichinturnmayresultinlowerlevelsofequipmentpurchasedbythesecustomers.Furthermore,changingbio-fueldemandsmaycausefarmerstochangethetypesorquantitiesofthecropstheyraise,withcorrespondingchangesinequipmentdemands.Finally,changesingovernmentalpoliciesregulatingbio-fuelutilizationcouldaffectdemandforJohnDeere'sdiesel-fueledequipmentandresultinhigherresearchanddevelopmentcostsrelatedtoequipmentfuelstandards.

AsJohnDeereseekstoexpanditsbusinessglobally,growthopportunitiesmaybeimpactedbygreaterpolitical,economicandsocialuncertaintyandthecontinuingandacceleratingglobalizationofbusinessescouldsignificantlychangethedynamicsofJohnDeere'scompetition,customerbaseandproductofferings.

JohnDeere'seffortstogrowitsbusinessesdependtoalargeextentuponaccesstoadditionalgeographicmarkets,including,butnotlimitedto,Brazil,China,IndiaandRussia,anditssuccessindevelopingmarketshareandoperatingprofitablyinsuchmarkets.Insomecases,thesecountrieshavegreaterpoliticalandeconomicvolatility,greatervulnerabilitytoinfrastructureandlabordisruptionsanddifferinglocalcustomerproductpreferencesandrequirementsthanJohnDeere'sothermarkets.OperatingandseekingtoexpandbusinessinanumberofdifferentregionsandcountriesexposesJohnDeeretomultipleandpotentiallyconflictingculturalpractices,businesspracticesandlegalandregulatoryrequirementsthataresubjecttochange,includingthoserelatedtotariffsandtradebarriers,investments,propertyownershiprights,taxation,sanctionsrequirements,repatriationofearningsandadvancedtechnologies.Expandingbusinessoperationsgloballyalsoincreasesexposuretocurrencyfluctuationswhichcanmateriallyaffectthe

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Company'sfinancialresults.AstheseemerginggeographicmarketsbecomemoreimportanttoJohnDeere,itscompetitorsarealsoseekingtoexpandtheirproductioncapacitiesandsalesinthesesamemarkets.WhileJohnDeeremaintainsapositivecorporateimageanditsbrandsarewidelyrecognizedandvaluedinitstraditionalmarkets,thebrandsarelesswellknowninsomeemergingmarketswhichcouldimpedeJohnDeere'seffortstosuccessfullycompeteinthesemarkets.AlthoughJohnDeereistakingmeasurestoadapttothesechangingcircumstances,JohnDeere'sreputationand/orbusinessresultscouldbenegativelyaffectedshouldtheseeffortsproveunsuccessful.

JohnDeereoperatesinhighlycompetitivemarkets.

JohnDeereoperatesinavarietyofhighlycompetitiveglobalandregionalmarkets.JohnDeerecompetesworldwidewithanumberofothermanufacturersanddistributorsthatproduceandsellsimilarproducts.JohnDeerecompetesonthebasisofproductperformance,innovationandquality,distribution,customerserviceandprice.Aggressivepricingorotherstrategiespursuedbycompetitors,unanticipatedproductormanufacturingdelaysorJohnDeere'sfailuretopriceitsproductscompetitivelycouldadverselyaffectJohnDeere'sbusiness,resultsofoperationsandfinancialcondition.

JohnDeere'sbusinessresultsdependlargelyonitsabilitytounderstanditscustomers'specificpreferencesandrequirements,andtodevelop,manufactureandmarketproductsthatmeetcustomerdemand.

JohnDeere'sabilitytomatchnewproductofferingstodiverseglobalcustomers'anticipatedpreferencesfordifferenttypesandsizesofequipmentandvariousequipmentfeaturesandfunctionality,ataffordableprices,iscriticaltoitssuccess.ThisrequiresathoroughunderstandingofJohnDeere'sexistingandpotentialcustomersonaglobalbasis,particularlyinpotentiallyhigh-growthandemergingmarkets,includingBrazil,China,IndiaandRussia.FailuretodeliverqualityproductsthatmeetcustomerneedsatcompetitivepricesaheadofcompetitorscouldhaveasignificantadverseeffectonJohnDeere'sbusiness.

NegativeeconomicconditionsandoutlookcanmateriallyweakendemandforJohnDeere'sequipmentandservices,limitaccesstofundingandresultinhigherfundingcosts.

ThedemandforJohnDeere'sproductsandservicescanbesignificantlyreducedinaneconomicenvironmentcharacterizedbyhighunemployment,cautiousconsumerspending,lowercorporateearnings,U.S.budgetissuesandlowerbusinessinvestment.NegativeoruncertaineconomicconditionscausingJohnDeere'scustomerstolackconfidenceinthegeneraleconomicoutlookcansignificantlyreducetheirlikelihoodofpurchasingJohnDeere'sequipment.Sustainednegativeeconomicconditionsandoutlookaffecthousingstartsandotherconstructionwhichdampensdemandforcertainconstructionequipment.JohnDeere'sturfoperationsanditsconstructionandforestrybusinessaredependentonconstructionactivityandgeneraleconomicconditions.DecreasesinconstructionactivityandhousingstartscouldhaveamaterialadverseeffectonJohnDeere'sresultsofoperations.Ifnegativeeconomicconditionsaffecttheoverallfarmeconomy,therecouldbeasimilareffectonJohnDeere'sagriculturalequipmentsales.Inaddition,uncertainornegativeoutlookwithrespecttoongoingU.S.budgetissuesaswellasgeneraleconomicconditionsandoutlookcancausesignificantchangesinmarketliquidityconditions.Suchchangescouldimpactaccesstofundingandassociatedfundingcosts,whichcouldreducetheCompany'searningsandcashflows.Additionally,theCompany'sinvestmentmanagementactivitiescouldbeadverselyaffectedbychangesintheequityandbondmarkets,whichwouldnegativelyaffectearnings.

Inaddition,demandforJohnDeere'sproductsandservicescanbesignificantlyreducedbyconcernsregardingthediverseeconomicandpoliticalcircumstancesoftheindividualcountriesintheeurozone,thedebtburdenofcertaineurozonecountriesandtheirabilitytomeetfuturefinancialobligations,uncertaintyrelatedtotheanticipatedwithdrawaloftheUnitedKingdomfromtheEuropeanUnion,theriskthatoneormoreotherEuropeanUnioncountriescouldcomeunderincreasingpressuretoleavetheEuropeanUnion,orthelongtermstabilityoftheeuroasasinglecommoncurrency.Persistentdisparitywithrespecttothewidelyvaryingeconomicconditionswithintheindividualcountriesintheeurozone,anditsimplicationsfortheeuroaswellasmarketperceptionsconcerningtheseandrelatedissues,couldadverselyaffectthevalueoftheCompany'seuro-denominatedassetsandobligations,haveanadverseeffectondemandforJohnDeere'sproductsandservicesintheeurozoneandhaveanadverseeffectonfinancialmarketsinEuropeandglobally.Morespecifically,itcouldaffecttheabilityofJohnDeere'scustomers,suppliersandlenderstofinancetheirrespectivebusinesses,toaccessliquidityatacceptablefinancingcosts,ifatall,andtheavailabilityofsuppliesandmaterialsandonthedemandforJohnDeere'sproducts.

TheCompany'sconsolidatedfinancialresultsarereportedinU.S.dollarswhilecertainassetsandotherreporteditemsaredenominatedinthecurrenciesofothercountries,creatingcurrencyexchangeandtranslationrisk.

JohnDeereoperatesinmanyareasoftheworld,involvingtransactionsdenominatedinavarietyofcurrencies.JohnDeereissubjecttocurrencyexchangerisktotheextentthatitscostsaredenominatedincurrenciesotherthanthoseinwhichJohnDeereearnsrevenues.

Additionally,thereportingcurrencyfortheCompany'sconsolidatedfinancialstatementsistheU.S.dollar.CertainofJohnDeere'sassets,liabilities,expensesandrevenuesaredenominatedinothercountries'currencies.Thoseassets,liabilities,expensesandrevenuesaretranslatedintoU.S.dollarsattheapplicableexchangeratestopreparetheCompany'sconsolidatedfinancialstatements.Therefore,increasesordecreasesinexchangeratesbetweentheU.S.dollarandthoseothercurrenciesaffectthevalueofthoseitemsasreflectedintheCompany'sconsolidatedfinancialstatements,eveniftheirvalueremainsunchangedintheiroriginalcurrency.SubstantialfluctuationsinthevalueoftheU.S.dollarcouldhaveasignificantimpactonJohnDeere'sresults.

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BecausethefinancialservicessegmentprovidesfinancingforasignificantportionofJohnDeere'ssalesworldwide,JohnDeere'soperationsandfinancialresultscouldbeimpactedmateriallyshouldnegativeeconomicconditionsaffectthefinancialindustry.

Negativeeconomicconditionscanhaveanadverseeffectonthefinancialindustryinwhichthefinancialservicessegmentoperates.ThefinancialservicessegmentprovidesfinancingforasignificantportionofJohnDeere'ssalesworldwide.Thefinancialservicessegmentisexposedtotheriskthatcustomersandotherswilldefaultoncontractualobligations.Thefinancialservicessegmentmayexperiencecreditlossesthatexceeditsexpectationsandadverselyaffectitsfinancialconditionandresultsofoperations.Thefinancialservicessegment'sinabilitytoaccessfundsatcost-effectiveratestosupportitsfinancingactivitiescouldhaveamaterialadverseeffectonJohnDeere'sbusiness.Thefinancialservicessegment'sliquidityandongoingprofitabilitydependlargelyontimelyaccesstocapitalinordertomeetfuturecashflowrequirementsandtofundoperationsandcostsassociatedwithengagingindiversifiedfundingactivities.Additionally,negativemarketconditionscouldreducecustomerconfidencelevels,resultingindeclinesincreditapplicationsandincreasesindelinquenciesanddefaultrates,whichcouldmateriallyimpactthefinancialservicessegment'swrite-offsandprovisionforcreditlosses.Thefinancialservicessegmentmayalsoexperienceresidualvaluelossesthatexceeditsexpectationscausedbylowerpricingforusedequipmentandhigherthanexpectedequipmentreturnsatleasematurity.

JohnDeere'sequipmentoperationsandfinancialservicessegmentsaresubjecttointerestraterisks.Changesininterestratescanreducedemandforequipment,adverselyaffectinterestmarginsandlimittheabilitytoaccesscapitalmarketswhileincreasingborrowingcosts.

Risinginterestratescouldhaveadampeningeffectonoveralleconomicactivityand/orthefinancialconditionofJohnDeere'scustomers,eitherorbothofwhichcouldnegativelyaffectcustomerdemandforJohnDeereequipmentandcustomers'abilitytorepayobligationstoJohnDeere.Inaddition,creditmarketdislocationscouldhaveanimpactonfundingcostswhichareveryimportanttoJohnDeere'sfinancialservicessegmentbecausesuchcostsaffectthesegment'sabilitytooffercustomerscompetitivefinancingrates.WhiletheCompanystrivestomatchtheinterestratecharacteristicsofourfinancialassetsandliabilities,changinginterestratescouldhaveanadverseeffectontheCompany'snetinterestratemargin–thedifferencebetweentheyieldtheCompanyearnsonitsassetsandtheinterestratestheCompanypaysforfunding,whichcouldinturnaffecttheCompany'snetinterestincomeandearnings.Actionsbycreditratingagencies,suchasdowngradesornegativechangestoratingsoutlooks,canaffecttheavailabilityandcostoffundingfortheCompanyandcanincreasetheCompany'scostofcapitalandhurtitscompetitiveposition.

ThepotentiallossofJohnDeereintellectualpropertythroughtradesecrettheft,infringementofpatents,trademarkcounterfeiting,orotherlossofrightstoexclusiveuseofJohnDeereintellectualpropertymayhaveamaterialadverseeffectontheCompany.InfringementoftheintellectualpropertyrightsofothersbyDeeremayalsohaveamaterialadverseeffectontheCompany.

JohnDeerereliesonacombinationofpatents,trademarks,tradesecretlaws,andconfidentialityagreementstoprotectourintellectualpropertyrights.Inparticular,weheavilyrelyoncertainJohnDeeretrademarks,whichcontributetoJohnDeere'sidentityandtherecognitionofitsproductsandservices,includingbutnotlimitedtothe"JohnDeere"mark,theleapingdeerlogo,the"NothingRunsLikeaDeere"slogan,theprefix"JD"associatedwithmanyproducts,andthegreenandyellowequipmentcolors.Thesetrademarks,aswellasthemanypatentsusedinourproducts,areintegraltotheJohnDeerebusiness,andtheirlosscouldhaveamaterialadverseeffectontheCompany.

Additionally,thirdpartiesmayinitiatelitigationtochallengethevalidityofourpatentsorallegethatweinfringetheirpatents.Wemayincursubstantialcostsifourcompetitorsorotherthirdpartiesinitiatesuchlitigation,orifweinitiateanyproceedingstoprotectourproprietaryrights.Iftheoutcomeofanysuchlitigationisunfavorabletous,ourbusinesscouldbeadverselyaffected.Similarly,disputesmayariseregardingwhetherourproductsortechnologiesinfringetheproprietaryrightsofothers.Anysuchinfringementcouldcausethirdparties,includingourcompetitors,tobringclaimsagainstus,resultinginsignificantcosts,possibledamagesandsubstantialuncertainty.

JohnDeereissubjecttoextensiveanti-corruptionlawsandregulations.

JohnDeere'sglobaloperationsmustcomplywithallapplicableanti-corruptionlaws,includingtheU.S.ForeignCorruptPracticesActandtheUKBriberyAct.Theseanti-corruptionlawsgenerallyprohibitcompaniesandtheirintermediariesfrommakingimproperpaymentsorprovidinganythingofvaluetoimproperlyinfluencegovernmentofficialsorprivateindividualsforthepurposeofobtainingorretainingabusinessadvantageregardlessofwhetherthosepracticesarelegalorculturallyexpectedinaparticularjurisdiction.AlthoughJohnDeerehasacomplianceprograminplacedesignedtoreducethelikelihoodofpotentialviolationsofsuchlaws,violationsoftheselawscouldresultincriminalorcivilsanctionsandhaveanadverseeffectonJohnDeere'sreputation,businessandresultsofoperationsandfinancialcondition.

JohnDeere'sbusinessmaybedirectlyandindirectlyaffectedbyunfavorableweatherconditionsornaturaldisastersthatreduceagriculturalproductionanddemandforagricultureandturfequipment.

Poororunusualweatherconditions,particularlyduringtheplantingandearlygrowingseason,cansignificantlyaffectthepurchasingdecisionsofJohnDeere'scustomers,particularlythepurchasersofagricultureandturfequipment.Thetimingandquantityofrainfallaretwoofthemostimportantfactorsinagriculturalproduction.Insufficientlevelsofrainpreventfarmersfromplantingnewcropsandmaycausegrowingcropstodieorresultinloweryields.Excessiverainorfloodingcanpreventplantingfromoccurringatoptimaltimes,andmaycausecroplossthroughincreaseddiseaseormoldgrowth.Temperaturesoutsidenormalrangescanalsocausecropfailureordecreasedyields,andmayalsoaffectdiseaseincidence.Temperatureaffectstherateofgrowth,cropmaturityandcropquality.Naturalcalamitiessuchasregionalfloods,hurricanesorotherstorms,anddroughtscanhavesignificantnegativeeffectson

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agriculturalandlivestockproduction.Theresultingnegativeimpactonfarmincomecanstronglyaffectdemandforagriculturalequipment.Salesofturfequipment,particularlyduringtheimportantspringsellingseason,canbedramaticallyimpactedbyweather.Adverseweatherconditionsinaparticulargeographicregionmayadverselyaffectsalesofsometurfequipment.Droughtconditionscanadverselyaffectsalesofcertainmowingequipmentandunusuallyrainyweathercansimilarlycauselowersalesvolumes.

Changesintheavailabilityandpriceofcertainrawmaterials,componentsandwholegoodscouldresultinproductiondisruptionsorincreasedcostsandlowerprofitsonsalesofJohnDeereproducts.

JohnDeererequiresaccesstovariousrawmaterials,componentsandwholegoodsatcompetitivepricestomanufactureanddistributeitsproducts.Changesintheavailabilityandpriceoftheserawmaterials,componentsandwholegoods,whichhavefluctuatedsignificantlyinthepastandaremorelikelytofluctuateduringtimesofeconomicvolatility,regulatoryinstabilityorchangeincustomtariffs,cansignificantlyincreasethecostsofproductionwhichcouldhaveamaterialnegativeeffectontheprofitabilityofthebusiness,particularlyifJohnDeere,duetopricingconsiderationsorotherfactors,isunabletorecovertheincreasedcostsfromitscustomers.JohnDeerereliesonsupplierstoacquirerawmaterials,componentsandwholegoodsrequiredtomanufactureitsproducts.CertaincomponentsandpartsusedinJohnDeere'sproductsareavailablefromasinglesupplierandcannotbealternativelysourcedquickly.Supplychaindisruptionsduetosupplierfinancialdistress,capacityconstraints,laborshortages,businesscontinuity,quality,deliveryordisruptionsduetoweather-relatedornaturaldisastereventscouldaffectJohnDeere'soperationsandprofitability.

JohnDeere'soperations,suppliersandcustomersaresubjecttoandaffectedbyincreasinglyrigorousenvironmental,healthandsafetylawsandregulationsoffederal,stateandlocalauthoritiesintheU.S.andvariousregulatoryauthoritieswithjurisdictionoverJohnDeere'sinternationaloperations.Inaddition,privatecivillitigationonthesesubjectshasincreased,primarilyintheU.S.

Enforcementactionsarisingfromviolationsofenvironmental,healthandsafetylawsorregulationscanleadtoinvestigationanddefensecosts,andresultinsignificantfinesorpenalties.Inaddition,newormorestringentrequirementsofgovernmentalauthoritiescouldpreventorrestrictJohnDeere'soperations,orthoseofoursuppliersandcustomers,requiresignificantexpenditurestoachievecomplianceand/orgiverisetocivilorcriminalliability.Therecanbenoassurancethatviolationsofsuchlegislationand/orregulations,orprivatecivilclaimsfordamagestopropertyorpersonalinjuryarisingfromtheenvironmental,healthorsafetyimpactsofJohnDeere'soperations,orthoseofoursuppliersandcustomers,wouldnothaveconsequencesthatresultinamaterialadverseeffectonJohnDeere'sbusiness,financialconditionorresultsofoperations.

IncreasinglystringentengineemissionregulationscouldimpactJohnDeere'sabilitytomanufactureanddistributecertainenginesorequipment,whichcouldnegativelyaffectbusinessresults.

JohnDeere'sequipmentoperationsmustmeetincreasinglystringentengineemissionreductionregulationsthroughouttheworld,includingtheEuropeanUnion'sStageVstandard.Inaddition,governmentalagenciesthroughouttheworldareenactingmorestringentlawsandregulationstoreduceoff-roadengineemissions.TheselawsandregulationsareapplicabletoenginesmanufacturedbyJohnDeere,includingthoseusedinJohnDeereagricultureandconstructionandforestryequipment.JohnDeerehasincurredandcontinuestoincursubstantialresearchanddevelopmentcostsrelatedtotheimplementationofthesemorerigorouslawsandregulations.WhileJohnDeerehasdevelopedandisexecutingcomprehensiveplanstomeettheserequirements,theseplansaresubjecttomanyvariablesthatcoulddelayorotherwiseaffectJohnDeere'sabilitytomanufactureanddistributecertainequipmentorengines,whichcouldnegativelyimpactbusinessresults.

JohnDeeremayincurincreasedcostsduetonewormorestringentgreenhousegasemissionstandardsdesignedtoaddressclimatechangeandcouldbefurtherimpactedbyphysicaleffectsattributedtoclimatechangeonitsfacilities,suppliersandcustomers.

Thereisglobalscientificconsensusthatemissionsofgreenhousegases(GHG)continuetoalterthecompositionofEarth'satmosphereinwaysthatareaffectingandareexpectedtocontinuetoaffecttheglobalclimate.Theseconsiderationsmayleadtointernational,national,regionalorlocallegislativeorregulatoryresponsesinthefuture.Variousstakeholders,includinglegislatorsandregulators,shareholdersandnon-governmentalorganizations,aswellascompaniesinmanybusinesssectors,includingJohnDeere,areconsideringwaystoreduceGHGemissions.TheregulationofGHGemissionsfromcertainstationaryormobilesourcescouldresultinadditionalcoststoJohnDeereintheformoftaxesoremissionallowances,facilitiesimprovementsandenergycosts,whichwouldincreaseJohnDeere'soperatingcoststhroughhigherutility,transportationandmaterialscosts.Increasedinputcosts,suchasfuelandfertilizer,andcompliance-relatedcostscouldalsoimpactcustomeroperationsanddemandforJohnDeereequipment.BecausetheimpactofanyfutureGHGlegislative,regulatoryorproductstandardrequirementsonJohnDeere'sglobalbusinessesandproductsisdependentonthetiminganddesignofmandatesorstandards,JohnDeereisunabletopredictitspotentialimpactatthistime.

Furthermore,thepotentialphysicalimpactsofclimatechangeonJohnDeere'sfacilities,suppliersandcustomersandthereforeonJohnDeere'soperationsarehighlyuncertainandwillbeparticulartothecircumstancesdevelopinginvariousgeographicalregions.Thesemayincludelong-termchangesintemperaturelevelsandwateravailability.ThesepotentialphysicaleffectsmayadverselyimpactthedemandforJohnDeere'sproductsandthecost,production,salesandfinancialperformanceofJohnDeere'soperations.

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SecuritybreachesandotherdisruptionstoJohnDeere'sinformationtechnologyinfrastructurecouldinterferewithJohnDeere'soperationsandcouldcompromiseJohnDeere'sanditscustomers'andsuppliers'information,exposingJohnDeeretoliabilitythatwouldcauseJohnDeere'sbusinessandreputationtosuffer.

Intheordinarycourseofbusiness,JohnDeerereliesuponinformationtechnologynetworksandsystems,someofwhicharemanagedbythirdparties,toprocess,transmitandstoreelectronicinformation,andtomanageorsupportavarietyofbusinessprocessesandactivities,includingsupplychain,manufacturing,distribution,invoicingandcollectionofpaymentsfromdealersorotherpurchasersofJohnDeereequipmentandfromcustomersofJohnDeere'sfinancialservicesoperations.JohnDeereusesinformationtechnologysystemstorecord,processandsummarizefinancialinformationandresultsofoperationsforinternalreportingpurposesandtocomplywithregulatoryfinancialreporting,legalandtaxrequirements.Additionally,JohnDeerecollectsandstoressensitivedata,includingintellectualproperty,proprietarybusinessinformationandtheproprietarybusinessinformationofJohnDeere'scustomersandsuppliers,aswellaspersonallyidentifiableinformationofJohnDeere'scustomersandemployees,indatacentersandoninformationtechnologynetworks.ThesecureoperationoftheseinformationtechnologynetworksandtheprocessingandmaintenanceofthisinformationiscriticaltoJohnDeere'sbusinessoperationsandstrategy.Despitesecuritymeasuresandbusinesscontinuityplans,JohnDeere'sinformationtechnologynetworksandinfrastructuremaybevulnerabletodamage,disruptionsorshutdownsduetoattacksbycybercriminalsorbreachesduetoemployeeerrorormalfeasanceorotherdisruptionsduringtheprocessofupgradingorreplacingcomputersoftwareorhardware,poweroutages,computerviruses,telecommunicationorutilityfailures,terroristacts,naturaldisastersorothercatastrophicevents.TheoccurrenceofanyoftheseeventscouldcompromiseJohnDeere'snetworks,andtheinformationstoredtherecouldbeaccessed,publiclydisclosed,lostorstolen.Anysuchaccess,disclosureorotherlossofinformationcouldresultinlegalclaimsorproceedings,liabilityorregulatorypenaltiesunderlawsprotectingtheprivacyofpersonalinformation,disruptoperations,anddamageJohnDeere'sreputation,whichcouldadverselyaffectJohnDeere'sbusiness,resultsofoperationsandfinancialcondition.Inaddition,assecuritythreatscontinuetoevolveandincreaseinfrequencyandsophistication,wemayneedtoinvestadditionalresourcestoprotectthesecurityofoursystems.

JohnDeereissubjecttogovernmentallaws,regulationsandotherlegalobligationsrelatedtoprivacyanddataprotection.

Thelegislativeandregulatoryframeworkforprivacyanddataprotectionissuesworldwideisrapidlyevolvingandislikelytoremainuncertainfortheforeseeablefuture.JohnDeerecollectspersonallyidentifiableinformation(PII)andotherdataasintegralpartsofitsbusinessprocessesandactivities.ThisdataissubjecttoavarietyofU.S.andinternationallawsandregulations,includingoversightbyvariousregulatoryorothergovernmentalbodies.Manyforeigncountriesandgovernmentalbodies,includingtheEuropeanUnion,Canada,andotherrelevantjurisdictionswhereweconductbusiness,havelawsandregulationsconcerningthecollectionanduseofPIIandotherdataobtainedfromtheirresidentsorbybusinessesoperatingwithintheirjurisdictionthataremorerestrictivethanthoseintheU.S.Additionally,inMay2016,theEuropeanUnionadoptedtheGeneralDataProtectionRegulationthatimposesmorestringentdataprotectionrequirementsandprovidesforgreaterpenaltiesfornoncompliance.Anyinability,orperceivedinability,toadequatelyaddressprivacyanddataprotectionconcerns,evenifunfounded,orcomplywithapplicablelaws,regulations,policies,industrystandards,contractualobligations,orotherlegalobligations(includingatnewlyacquiredcompanies)couldresultinadditionalcostandliabilitytousorcompanyofficials,damageourreputation,inhibitsales,andotherwiseadverselyaffectourbusiness.

JohnDeere'sabilitytoexecuteitsstrategyisdependentupontheabilitytoattract,trainandretainqualifiedpersonnel.

JohnDeere'scontinuedsuccessdepends,inpart,onitsabilitytoidentify,attract,motivate,trainandretainqualifiedpersonnelinkeyfunctions.Inparticular,JohnDeereisdependentonitsabilitytoidentify,attract,motivate,trainandretainqualifiedpersonnelwiththerequisiteeducation,backgroundandindustryexperience.Failuretoattract,trainandretainqualifiedpersonnel,whetherasaresultofaninsufficientnumberofqualifiedapplicants,difficultyinrecruitingnewpersonnel,ortheallocationofinadequateresourcestotraining,integrationandretentionofqualifiedpersonnel,couldimpairJohnDeere'sabilitytoexecuteitsbusinessstrategyandcouldadverselyaffectJohnDeere'sbusiness.Inaddition,whileJohnDeerestrivestoreducetheimpactofthedepartureofemployees,JohnDeere'soperationsorabilitytoexecuteitsbusinessstrategymaybeimpactedbythelossofpersonnel.

SustainedincreasesinfundingobligationsundertheCompany'spensionplansmayimpairtheCompany'sliquidityorfinancialcondition.

TheCompanymaintainscertaindefinedbenefitpensionplansforcertainemployees,whichimposefundingobligations.TheCompanyusesmanyassumptionsincalculatingitsfuturepaymentobligationsundertheplans.Significantadversechangesincreditormarketconditionscouldresultinactualratesofreturnsonpensioninvestmentsbeinglowerthanexpected.TheCompanymayberequiredtomakesignificantcontributionstoitspensionplansinthefuture.ThesefactorscouldsignificantlyincreasetheCompany'spaymentobligationsundertheplansandadverselyaffectitsbusiness,resultsofoperationsandfinancialcondition.

JohnDeeremaynotrealizealloftheanticipatedbenefitsofouracquisitions,jointventuresordivestitures,orthesebenefitsmaytakelongertorealizethanexpected.

Fromtimetotime,theCompanymakesstrategicacquisitionsanddivestitures–suchasitsacquisitionoftheWirtgenGroup–orparticipatesinjointventures.TransactionsthattheCompanyhasenteredinto,ormayenterintointhefuture,mayinvolvesignificantchallengesandrisks,includingthatthetransactionsdonotadvanceourbusinessstrategy,orfailtoproducesatisfactoryreturnsonourinvestment.TheCompanymayencounterdifficultiesinintegratingacquisitionswithitsoperations,inapplyinginternalcontrolprocessestotheseacquisitions,inmanagingstrategicinvestments,andinassimilatingnewcapabilitiestomeetthefutureneedsoftheCompany'sbusiness.Integratingacquisitionsisoftencostlyandmayrequiresignificantattentionfrommanagement.Furthermore,

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JohnDeeremaynotrealizealloftheanticipatedbenefitsofthesetransactions,ortherealizedbenefitsmaybesignificantlydelayed.Whileourevaluationofanypotentialtransactionincludesbusiness,legal,andfinancialduediligencewiththegoalofidentifyingandevaluatingthematerialrisksinvolved,ourduediligencereviewsmaynotidentifyalloftheissuesnecessarytoaccuratelyestimatethecostandpotentialrisksofaparticulartransaction,includingpotentialexposuretoregulatorysanctionsresultingfromanacquisitiontarget'spreviousactivitiesorcostsassociatedwithanyqualityissueswithanacquisitiontarget'sproductsorservices.

Thereallocationofradiofrequency(RF)spectrumscoulddisruptordegradethereliabilityofJohnDeere'shighprecisionaugmentedGlobalPositioningSystem(GPS)technology,whichcouldimpairJohnDeere'sabilitytodevelopandmarketGPS-basedtechnologysolutionsaswellassignificantlyreduceagriculturalandconstructioncustomers'profitability.

JohnDeere'scurrentandplannedintegratedagriculturalbusinessandequipmentmanagementsystems,aswellasitsfleetmanagementtelematicssolutionsforconstructionequipment,dependupontheuseofRFsignals.Thesesignalsinclude,butarenotlimitedto,GPSsignals,otherGPS-likesatellitesignals,augmentedGPSservicesandotherRFequipmentwhichlinkequipment,operations,owners,dealersandtechnicians.Theseradioservicesdependonfrequencyallocationsgovernedbyinternationalandnationalagencies.Anyinternationalornationalreallocationoffrequencybands,includingfrequencybandssegmentationandbandspectrumsharing,orothermodificationsconcerningtheregulationoffrequencybands,couldsignificantlydisruptordegradetheutilityandreliabilityofJohnDeere'sGPS-basedproducts,whichcouldnegativelyaffectJohnDeere'sabilitytodevelopandmarketGPS-basedtechnologysolutions.ForJohnDeere'sagriculturalcustomers,theinabilitytousehigh-precisionaugmentedGPSsignalsorotherRFsignalscouldresultinlowercropyieldsandhigherequipmentmaintenance,seed,fertilizer,fuelandwagecosts.Forconstructioncustomers,disruptingGPSorRFapplicationscouldresultinhigherfuelandequipmentmaintenancecosts,aswellaslowerconstructiondesignandprojectmanagementefficiencies.Thesecostincreasescouldsignificantlyreducecustomers'profitabilityanddemandforJohnDeereproducts.

ITEM1B.UNRESOLVEDSTAFFCOMMENTS.

None.

ITEM2.PROPERTIES.

See"Manufacturing"inItem1.

TheequipmentoperationsownorleaseelevenfacilitiescomprisedoftwolocationssupportingcentralizedpartsdistributionandnineregionalpartsdepotsanddistributioncentersthroughouttheU.S.andCanada.Thesefacilitiescontainapproximately5.4millionsquarefeetoffloorspace.OutsidetheU.S.andCanada,theequipmentoperationsalsoownorleaseandoccupycentralizedpartsdistributioncentersinBrazil,Germany,IndiaandRussiaandregionalpartsdepotsanddistributioncentersinArgentina,Australia,China,Mexico,SouthAfrica,SwedenandtheUnitedKingdom.Thesefacilitiescontainapproximately3.1millionsquarefeetoffloorspace.JohnDeerealsoownsandleasesfacilitiesforthemanufactureanddistributionofotherbrandsofreplacementpartscontainingapproximately1.3millionsquarefeet.

TheCompany'sadministrativeofficesandresearchfacilities,someofwhichareownedandsomeofwhichareleasedbyJohnDeere,containabout4.3millionsquarefeetoffloorspacegloballyandmiscellaneousotherfacilitiestotal7.1millionsquarefeetglobally.

Overall,JohnDeereownsapproximately68.3millionsquarefeetoffacilitiesandleasesapproximately9.1millionadditionalsquarefeetinvariouslocations.

ITEM3.LEGALPROCEEDINGS.

JohnDeereissubjecttovariousunresolvedlegalactionswhichariseinthenormalcourseofitsbusiness,themostprevalentofwhichrelatetoproductliability(includingasbestos-relatedliability),retailcredit,employment,patent,andtrademarkmatters.Item103oftheSEC'sRegulationS-KrequiresdisclosureofcertainenvironmentalmatterswhenagovernmentalauthorityisapartytotheproceedingsandtheproceedingsinvolvepotentialmonetarysanctionsthatJohnDeerereasonablybelievescouldexceed$100,000.Thefollowingmattersaredisclosedsolelypursuanttothatrequirement:(a)onJuly6,2017,afterself-reportingtotheIowaDepartmentofNaturalResources,theCompanyreceivedaNoticeofViolationallegingthatoneIowafacilitylocationexceededpermittedemissionlimits;theCompanyrespondedandisactivelycooperatingwiththeIowaDepartmentofNaturalResourcestorevisethepermitsandresolvethenotice;(b)onMarch19,2018,theSecretariadeEstadodeMeioAmbienteeDesenvolvimentoSustentávelinMinasGerais,Brazilissuedafineofapproximately$105,000atcurrentexchangeratesagainstJohnDeereEquipamentosdoBrasilinconnectionwithanoilspillthatoccurredafteranApril2016roadwayaccidentinvolvingaCompanytruck;anadministrativedefensehasbeenfiledtocancelthefine;and(c)onOctober3,2018,theProvinciaSantaFeMinisteriodeMedioAmbienteissuedaNoticeofViolationtoIndustriasJohnDeereArgentinainconnectionwithallegedgroundwatercontaminationatthesite;theCompanycontinuestoworkwiththeappropriateauthoritiestoimplementcorrectiveactionstoremediatethesite.TheCompanybelievesthereasonablypossiblerangeoflossesfortheseandotherunresolvedlegalactionswouldnothaveamaterialeffectonitsfinancialstatements.

ITEM4.MINESAFETYDISCLOSURES.

Notapplicable.

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PARTII

ITEM5.MARKETFORREGISTRANT'SCOMMONEQUITY,RELATEDSTOCKHOLDERMATTERSANDISSUERPURCHASESOFEQUITYSECURITIES.

(a) TheCompany'scommonstockislistedontheNewYorkStockExchangeunderthesymbol"DE".SeetheinformationconcerningthenumberofstockholdersandthedataondividendsdeclaredandpaidpershareinNotes29and30totheConsolidatedFinancialStatements.

(b) Notapplicable.

(c) TheCompany'spurchasesofitscommonstockduringthefourthquarterof2018wereasfollows:

ISSUERPURCHASESOFEQUITYSECURITIES

ITEM6.SELECTEDFINANCIALDATA.

FinancialSummary

ITEM7.MANAGEMENT'SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONS.

Seetheinformationunderthecaption"Management'sDiscussionandAnalysis"onpages20–30.

ITEM7A.QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK.

TheCompanyisexposedtoavarietyofmarketrisks,includinginterestratesandcurrencyexchangerates.TheCompanyattemptstoactivelymanagetheserisks.Seetheinformationunder"Management'sDiscussionandAnalysis"beginningonpage20andinNote27totheConsolidatedFinancialStatements.

ITEM8.FINANCIALSTATEMENTSANDSUPPLEMENTARYDATA.

SeetheConsolidatedFinancialStatementsandnotestheretoandsupplementarydataonpages31–73.

16

Period

TotalNumberof

SharesPurchased(2)(thousands)

AveragePricePaidPerShare

TotalNumberofShares

PurchasedasPartofPublicly

AnnouncedPlans

orPrograms(1)(thousands)

MaximumNumberofSharesthatMayYetBePurchasedunder

thePlansorPrograms(1)(millions)

Jul30toAug26 350 $ 142.55 350 20.8

Aug27toSept23 1,575 148.46 1,575 19.0

Sept24toOct28 1,455 151.27 1,455 17.4

Total 3,380 3,380

(1) Duringthefourthquarterof2018,theCompanyhadasharerepurchaseplanthatwasannouncedinDecember2013topurchaseupto$8,000millionofsharesoftheCompany'scommonstock.Themaximumnumberofsharesabovethatmayyetbepurchasedunderthe$8,000millionplanwasbasedontheendofthefourthquarterclosingsharepriceof$133.00pershare.Attheendofthefourthquarterof2018,$2,312millionofcommonstockremainstobepurchasedunderthisplan.

(2) Inthefourthquarterof2018,approximately1thousandshareswerepurchasedfromplanparticipantstopaypayrolltaxesoncertainrestrictedstockawards.Theshareswerevaluedataweighted-averagemarketpriceof$151.27.

(Millionsofdollarsexceptpershareamounts)

October282018

October292017

October302016

November12015

November22014

FortheYearsEnded: Totalnetsalesandrevenues $ 37,358 $ 29,738 $ 26,644 $ 28,863 $ 36,067NetincomeattributabletoDeere&Company $ 2,368 $ 2,159 $ 1,524 $ 1,940 $ 3,162

Netincomepershare–basic $ 7.34 $ 6.76 $ 4.83 $ 5.81 $ 8.71Netincomepershare–diluted $ 7.24 $ 6.68 $ 4.81 $ 5.77 $ 8.63Dividendsdeclaredpershare $ 2.58 $ 2.40 $ 2.40 $ 2.40 $ 2.22

AtYearEnd: Totalassets $ 70,108 $ 65,786 $ 57,918 $ 57,883 $ 61,267Long-termborrowings $ 27,237 $ 25,891 $ 23,703 $ 23,775 $ 24,318

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ITEM9.CHANGESINANDDISAGREEMENTSWITHACCOUNTANTSONACCOUNTINGANDFINANCIALDISCLOSURE.

Notapplicable.

ITEM9A.CONTROLSANDPROCEDURES.

DisclosureControlsandProcedures

TheCompany'sprincipalexecutiveofficeranditsprincipalfinancialofficerhaveconcludedthattheCompany'sdisclosurecontrolsandprocedures(asdefinedinRules13a-15(e)and15d-15(e)oftheSecuritiesExchangeActof1934,asamended(theExchangeAct))wereeffectiveasofOctober28,2018,basedontheevaluationofthesecontrolsandproceduresrequiredbyRule13a-15(b)or15d-15(b)oftheExchangeAct.

Management'sReportonInternalControlOverFinancialReporting

TheCompany'smanagementisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting.TheCompany'sinternalcontrolsystemwasdesignedtoprovidereasonableassuranceregardingthepreparationandfairpresentationofpublishedfinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples.

Allinternalcontrolsystems,nomatterhowwelldesigned,haveinherentlimitations.Therefore,eventhosesystemsdeterminedtobeeffectivecanprovideonlyreasonableassurancewithrespecttofinancialstatementpreparationandpresentationinaccordancewithgenerallyacceptedaccountingprinciples.

U.S.SecuritiesandExchangeCommissionguidanceallowscompaniestoexcludeacquisitionsfrommanagement'sreportoninternalcontroloverfinancialreportingforthefirstyearaftertheacquisitionwhenitisnotpossibletoconductanassessment.InDecember2017,theCompanyacquiredthestockandcertainassetsofsubstantiallyallofthebusinessofWirtgenGroupHoldingGmbH(Wirtgen)(seeNote4).DuetoWirtgen'sglobaloperations,managementhasexcludedWirtgenfromtheannualassessmentoftheeffectivenessofinternalcontroloverfinancialreportingasofOctober28,2018.Wirtgenrepresents9percentofboththeconsolidatedtotalassetsandconsolidatednetsalesandrevenuesofDeere&CompanyasofandfortheyearendedOctober28,2018.

ManagementassessedtheeffectivenessoftheCompany'sinternalcontroloverfinancialreportingasofOctober28,2018,usingthecriteriasetforthinInternalControl–IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.Basedonthatassessment,managementbelievesthat,asofOctober28,2018,theCompany'sinternalcontroloverfinancialreportingwaseffective.

TheCompany'sindependentregisteredpublicaccountingfirmhasissuedanauditreportontheeffectivenessoftheCompany'sinternalcontroloverfinancialreporting.Thatreportisincludedherein.

ITEM9B.OTHERINFORMATION.

Notapplicable.

PARTIII

ITEM10.DIRECTORS,EXECUTIVEOFFICERSANDCORPORATEGOVERNANCE.

TheinformationregardingdirectorsinthedefinitiveproxystatementexpectedtobefilednolaterthanJanuary11,2019(proxystatement),underthecaptions"Item1–ElectionofDirectors"isincorporatedhereinbyreference.TheinformationintheproxystatementrequiredbyItems405,407(d)(4)and407(d)(5)ofRegulationS-Kunderthecaptions"Section16(a)BeneficialOwnershipReportingCompliance"and"CorporateGovernance–BoardCommittees–AuditReviewCommittee"isincorporatedhereinbyreference.InformationregardingexecutiveofficersispresentedinItem1ofthisreportunderthecaption"ExecutiveOfficersoftheRegistrant."

TheCompanyhasadoptedacodeofethicsthatappliestoitsexecutives,includingitsprincipalexecutiveofficer,principalfinancialofficerandprincipalaccountingofficer.ThiscodeofethicsandtheCompany'scorporategovernancepoliciesarepostedontheCompany'swebsiteathttp://www.JohnDeere.com/Governance.TheCompanyintendstosatisfydisclosurerequirementsregardingamendmentstoorwaiversfromitscodeofethicsbypostingsuchinformationonthiswebsite.ThechartersoftheAuditReview,CorporateGovernance,CompensationandFinancecommitteesoftheCompany'sBoardofDirectorsareavailableontheCompany'swebsiteaswell.Thisinformationisalsoavailableinprintfreeofchargetoanypersonwhorequestsit.

ITEM11.EXECUTIVECOMPENSATION.

TheinformationrequiredbyItem402and407(e)(4)and(e)(5)ofRegulationS-Kintheproxystatementunderthecaptions"CompensationofDirectors,""CompensationDiscussion&Analysis,""CompensationCommitteeReport"and"ExecutiveCompensationTables"isincorporatedhereinbyreference.

ITEM12.SECURITYOWNERSHIPOFCERTAINBENEFICIALOWNERSANDMANAGEMENTANDRELATEDSTOCKHOLDERMATTERS.

TheinformationrequiredbyItem201(d)ofRegulationS-Kintheproxystatementunderthecaption"EquityCompensationPlanInformation"isincorporatedhereinbyreference.TheinformationrequiredbyItem403ofRegulationS-Kintheproxystatementunderthecaption"SecurityOwnershipofCertainBeneficialOwnersandManagement"isincorporatedhereinbyreference.

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ITEM13.CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONS,ANDDIRECTORINDEPENDENCE.

TheinformationrequiredbyItem404ofRegulationS-Kintheproxystatementunderthecaption"ReviewandApprovalofRelatedPersonTransactions"isincorporatedhereinbyreference.TheinformationrequiredbyItem407(a)ofRegulationS-Kintheproxystatementunderthecaption"CorporateGovernance–DirectorIndependence"isincorporatedhereinbyreference.

ITEM14.PRINCIPALACCOUNTANTFEESANDSERVICES.

TheinformationrequiredbythisItem14issetforthintheproxystatementunderthecaptions"RatificationofIndependentRegisteredPublicAccountingFirm–FeesPaidtotheIndependentRegisteredPublicAccountingFirm"and"Pre-approvalofServicesbytheIndependentRegisteredPublicAccountingFirm"andincorporatedhereinbyreference.

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PARTIV

ITEM15.EXHIBITSANDFINANCIALSTATEMENTSCHEDULES.

19

Page(1) FinancialStatements

StatementofConsolidatedIncomefortheyearsendedOctober28,2018,October29,2017,andOctober30,2016

31

StatementofConsolidatedComprehensiveIncomefortheyearsendedOctober28,2018,October29,2017,andOctober30,2016

32

ConsolidatedBalanceSheetasofOctober28,2018andOctober29,2017 33

StatementofConsolidatedCashFlowsfortheyearsendedOctober28,2018,October29,2017,andOctober30,2016

34

StatementofChangesinConsolidatedStockholders'EquityfortheyearsendedOctober30,2016,October29,2017,andOctober28,2018

35

NotestoConsolidatedFinancialStatements 36

(3) Exhibits

Seethe"IndextoExhibits"onpages76–78ofthisreport

Certaininstrumentsrelatingtolong-termborrowings,constitutinglessthan10percentofregistrant'stotalassets,arenotfiledasexhibitsherewithpursuanttoItem601(b)4(iii)(A)ofRegulationS-K.RegistrantagreestofilecopiesofsuchinstrumentsuponrequestoftheCommission.

FinancialStatementSchedulesOmitted

ThefollowingschedulesfortheCompanyandconsolidatedsubsidiariesareomittedbecauseoftheabsenceoftheconditionsunderwhichtheyarerequired:I,II,III,IVandV.

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MANAGEMENT'SDISCUSSIONANDANALYSIS

20

RESULTSOFOPERATIONSFORTHEYEARSENDEDOCTOBER28,2018,OCTOBER29,2017,ANDOCTOBER30,2016

OVERVIEW

Organization

Thecompany'sequipmentoperationsgeneraterevenuesandcashprimarilyfromthesaleofequipmenttoJohnDeeredealersanddistributors.Theequipmentoperationsmanufactureanddistributeafulllineofagriculturalequipment;avarietyofcommercialandconsumerequipment;andabroadrangeofequipmentforconstruction,roadbuilding,andforestry.Thecompany'sfinancialservicesprimarilyprovidecreditservices,whichmainlyfinancesalesandleasesofequipmentbyJohnDeeredealersandtradereceivablespurchasedfromtheequipmentoperations.Inaddition,financialservicesoffersextendedequipmentwarranties.Theinformationinthefollowingdiscussionispresentedinaformatthatincludesinformationgroupedasconsolidated,equipmentoperations,andfinancialservices.Thecompanyalsoviewsitsoperationsasconsistingoftwogeographicareas,theU.S.andCanada,andoutsidetheU.S.andCanada.Thecompany'soperatingsegmentsconsistofagricultureandturf,constructionandforestry,andfinancialservices.

TrendsandEconomicConditions

Thecompany'sagricultureandturfequipmentsalesincreased15percentin2018andareforecasttoincreaseabout3percentfor2019.IndustryagriculturalmachinerysalesintheU.S.andCanadafor2019areforecasttobeaboutthesameto5percenthigher,comparedto2018.IndustrysalesintheEuropeanUnion(EU)28membernationsareforecasttobeaboutthesamein2019,whileSouthAmericanindustrysalesareprojectedtobeaboutthesameto5percenthigherfrom2018levels.Asiansalesareforecasttobeaboutthesameordecreaseslightlyin2019.IndustrysalesofturfandutilityequipmentintheU.S.andCanadaareexpectedtobeaboutthesameto5percenthigherfor2019.Thecompany'sconstructionandforestrysalesincreased78percentin2018,withWirtgen(seeNote4)adding53percentfortheyear.Thesegment'ssalesareforecasttoincreaseabout15percentin2019.TheforecastincludesafullyearofWirtgensalescomparedto10monthsin2018.Globalforestryindustrysalesareexpectedtoincreaseabout10percentin2019comparedto2018.Netincomeofthecompany'sfinancialservicesoperationsattributabletoDeere&Companyin2019isexpectedtobeapproximately$630million.

Itemsofconcernincludetheuncertaintyoftheeffectivenessofgovernmentalactionsinrespecttomonetaryandfiscalpolicies,theimpactofsovereigndebt,eurozoneandArgentineissues,capitalmarketdisruptions,tradeagreements,changesindemandandpricingforusedequipment,andgeopoliticalevents.Significantfluctuationsinforeigncurrencyexchangeratesandvolatilityinthepriceofmanycommoditiescouldalsoimpactthecompany'sresults.

Thecompanyconcludedanothersuccessfulyearinwhichtheperformancebenefitedfromafurtherimprovementinmarketconditionsandafavorablecustomerresponsetoitsproducts.Atthesametime,thecompanyhascontinuedtofacecostpressuresforrawmaterials,whicharebeingaddressed

throughpricingandcostmanagement.Thecompany'sperformancehasallowedforsignificantinvestmentsinnewproductsandservices,especiallythosefocusedonprecisiontechnologies,andforprovidingshareholderreturnsthroughdividendpaymentsandsharerepurchases.Thecompanybelievesitremainswellpositionedtocapitalizeonthegrowthintheworld'sagriculturalandconstructionequipmentmarkets.Inaddition,thecompanyisconfidentinthepresentdirectionandbelievesitispositionedtodeliverimprovedoperatingperformanceandvaluetoitscustomersandinvestorsinthefuture.

2018COMPAREDWITH2017

CONSOLIDATEDRESULTS

WorldwidenetincomeattributabletoDeere&Companyin2018was$2,368million,or$7.24persharediluted($7.34basic),comparedwith$2,159million,or$6.68persharediluted($6.76basic),in2017.Affecting2018netincomewereincreasestotheprovisionforincometaxesof$704millionduetotheenactmentofU.S.taxreformlegislationonDecember22,2017(taxreform)(seeNote8).Worldwidenetsalesandrevenuesincreased26percentto$37,358millionin2018,comparedwith$29,738millionin2017.Netsalesoftheworldwideequipmentoperationsrose29percentin2018to$33,351millionfrom$25,885millionlastyear.Thecompany'sacquisitionoftheWirtgenGroupHoldingGmbH(Wirtgen)(seeNote4)inDecember2017added12percenttonetsalesfortheyear.Salesincludedpricerealizationof1percentwithnosignificantcurrencytranslationeffect.EquipmentnetsalesintheUnitedStatesandCanadaincreased25percentfor2018,withWirtgenadding4percent.OutsidetheU.S.andCanada,netsalesincreased34percentfortheyear,withWirtgenadding22percent.Currencytranslationhadnomaterialeffect.

Worldwideequipmentoperationsreportedoperatingprofitof$3,684millionin2018,comparedwith$2,859millionin2017.Wirtgen,whoseresultsareincludedin2018amounts,hadoperatingprofitof$116millionin2018.ExcludingWirtgenresults,theoperatingprofitimprovementwasprimarilydrivenbyhighershipmentvolumes,pricerealization,andlowerwarrantycosts,partiallyoffsetbyhigherproductioncostsandresearchanddevelopmentexpenses.Additionally,resultsin2017includedanimpairmentchargeforinternationalconstructionandforestryoperationsandagainonthesaleofSiteOneLandscapesSupply,Inc.(SiteOne)(seeNote5).

Netincomeofthecompany'sequipmentoperationswas$1,404millionfor2018,comparedwith$1,707millionin2017.Inadditiontotheoperatingfactorsmentionedabove,incometaxadjustmentsrelatedtotaxreformhadanunfavorableimpactof$1,045millionfor2018(seeNote8).

ThefinancialservicesoperationsreportednetincomeattributabletoDeere&Companyin2018of$942million,comparedwith$477millionin2017.Netincomebenefitedfromahigheraverageportfolio,alowerprovisionforcreditlosses,andlowerlossesonleaseresidualvalues,partiallyoffsetbylessfavorablefinancingspreads.Incometaxadjustmentsrelatedtotaxreformhadafavorableeffectof$341millionfor2018.Additionalinformationispresentedinthefollowingdiscussionofthe"WorldwideFinancialServicesOperations."

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Thecostofsalestonetsalesratiofor2018and2017was76.7percent.Pricerealizationandlowerwarrantyclaimswereoffsetbyhigherproductioncosts.

Financeandinterestincomeincreasedin2018duetoalargeraveragecreditportfolioandhigheraverageinterestrates.Otherincomedecreasedin2018primarilyduetothe2017gainsonthesaleoftheremaininginterestinSiteOne(seeNote5),partiallyoffsetbyhigherserviceincomelargelyfromWirtgen(seeNote4).Researchanddevelopmentexpensesincreasedasaresultofnewproductandimprovementinitiatives,andacquisitions.Selling,administrativeandgeneralexpensesincreasedprimarilyduetotheWirtgenacquisitionandacquisitionrelatedcosts,partiallyoffsetbyvoluntaryemployee-separationprogramexpensesin2017andalowerprovisionforcreditlosses.Interestexpenseincreasedin2018duetohigheraverageborrowingratesandhigheraverageborrowings.Otheroperatingexpensesincreasedin2018primarilyduetohigherdepreciationofequipmentonoperatingleases,increasedcostofservices,mainlyfromWirtgen,andacquisitionrelatedcosts,partiallyoffsetbythefavorableeffectofcurrencytranslationandlowerlossesonleaseresidualvalues.

Thecompanyhasseveraldefinedbenefitpensionplansandotherpostretirementbenefit(OPEB)plans,primarilyhealthcareandlifeinsuranceplans.Thecompany'scostsfortheseplansin2018were$353million,comparedwith$347millionin2017.Thelong-termexpectedreturnonplanassets,whichisreflectedinthesecosts,wasanexpectedgainof6.8percentin2018and7.2percentin2017,or$797millionand$807million,respectively.Theactualreturnwasagainof$322millionin2018and$1,563millionin2017.In2019,theexpectedreturnwillbeapproximately6.5percent.Thecompany'scostsundertheseplansin2019areexpectedtodecreaseapproximately$125million.Thecompanymakesanyrequiredcontributionstotheplanassetsunderapplicableregulationsandvoluntarycontributionsfromtimetotimebasedonthecompany'sliquidityandabilitytomaketax-deductiblecontributions.Totalcompanycontributionstotheplanswere$1,426millionin2018and$428millionin2017,whichincludevoluntarycontributionsanddirectbenefitpayments.Thevoluntarycontributionstoplanassetswere$1,305millionin2018,whichincluded$1,300millioncontributionstotheU.S.pensionandOPEBplans,and$301millionin2017.Totalcompanycontributionsin2019areexpectedtobeapproximately$210million,whichareprimarilydirectbenefitpayments.ThecompanyhasnosignificantrequiredcontributionstoU.S.pensionplanassetsin2019underapplicablefundingregulations.Seethediscussionin"CriticalAccountingPolicies"formoreinformationaboutpensionandOPEBbenefitobligations.

BUSINESSSEGMENTANDGEOGRAPHICAREARESULTS

Thefollowingdiscussionrelatestooperatingresultsbyreportablesegmentandgeographicarea.Operatingprofitisincomebeforecertainexternalinterestexpense,certainforeignexchangegainsorlosses,incometaxes,andcorporateexpenses.However,operatingprofitofthefinancialservicessegmentincludestheeffectofinterestexpenseandforeigncurrencyexchangegainsorlosses.

WorldwideAgricultureandTurfOperations

Theagricultureandturfsegmenthadanoperatingprofitof$2,816millionfortheyear,comparedwith$2,513millionin2017.Netsalesincreased15percentin2018duetohighershipmentvolumes,pricerealization,andlowerwarrantyclaims.Currencytranslationdidnothaveasignificanteffectonnetsales.Theoperatingprofitimprovementwasdrivenbyhighershipmentvolumes,pricerealization,andlowerwarrantyrelatedexpenses,partiallyoffsetbyhigherproductioncostsandresearchanddevelopmentexpenses.Operatingprofitin2017includedgainsontheSiteOnesale(seeNote5).

WorldwideConstructionandForestryOperations

Theconstructionandforestrysegmentoperatingprofitwas$868millionin2018,comparedwith$346millionin2017.Wirtgencontributed$116milliontooperatingprofitin2018.Netsalesincreased78percentin2018,withWirtgenadding53percentfortheyear.Netsaleswerealsoaffectedbyhighershipmentvolumesandlowerwarrantyrelatedclaims.Currencytranslationdidnothaveamaterialeffectonnetsales.ExcludingWirtgen,theoperatingprofitimprovementswereprimarilydrivenbyhighershipmentvolumesandlowerwarrantyexpenses,partiallyoffsetbyhigherproductioncosts.Additionally,2017includedanimpairmentchargeforinternationaloperations(seeNote5).

WorldwideFinancialServicesOperations

Theoperatingprofitofthefinancialservicessegmentwas$792millionin2018,comparedwith$715millionin2017.Operatingprofitbenefitedfromahigheraverageportfolio,alowerprovisionforcreditlosses,andlowerlossesonleaseresidualvalues,partiallyoffsetbylessfavorablefinancingspreads.Totalrevenuesofthefinancialservicesoperations,includingintercompanyrevenues,increased12percentin2018.Theaveragebalanceofreceivablesandleasesfinancedwas7percenthigherin2018,comparedwith2017.Interestexpenseincreased40percentin2018asaresultofhigheraverageborrowingratesandhigheraverageborrowings.Thefinancialservicesoperations'ratioofearningstofixedchargeswas1.87to1in2018,comparedwith2.12to1in2017.

EquipmentOperationsinU.S.andCanada

TheequipmentoperationsintheU.S.andCanadahadanoperatingprofitof$2,356millionin2018,comparedwith$1,754millionin2017.Wirtgen,whoseresultsareincludedin2018,hadoperatingprofitof$19million.Theincreasewasdueprimarilytohighershipmentvolumes,pricerealization,andlowerwarrantyexpenses,partiallyoffsetbyhigherproductioncostsandresearchanddevelopmentexpenses.Netsalesincreased25percentin2018dueprimarilytohighershipmentvolumes,withWirtgenadding4percent.Thephysicalvolumeofsales,excludingtheeffectofacquisitions,increased20percent,comparedwith2017.

EquipmentOperationsoutsideU.S.andCanada

TheequipmentoperationsoutsidetheU.S.andCanadaoperatingprofitwas$1,328millionin2018,comparedwith$1,105millionin2017.Wirtgen'soperatingprofitoutsidetheU.S.andCanadawas$97millionin2018.Theincreasewasdueprimarilytohighershipmentvolumes,partiallyoffsetbyhigherproductioncostsandresearchanddevelopmentexpenses.Netsalesincreased34percentin2018,withWirtgenadding22percent,comparedto2017.Theincrease

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wasprimarilytheresultofhighershipmentvolumes.Thephysicalvolumeofsales,excludingtheeffectofacquisitions,increased11percent,comparedwith2017.

MARKETCONDITIONSANDOUTLOOK

Companyequipmentsalesareprojectedtoincreasebyabout7percentforfiscal2019comparedwith2018.IncludedwillbeafullyearofWirtgensalesin2019versus10monthsin2018,addingabout2percenttothecompany'ssalesin2019.Foreigncurrencyratesareexpectedtohaveanunfavorabletranslationeffectonequipmentsalesofabout2percentfortheyear.Netsalesandrevenuesareprojectedtoincreasebyabout7percentforfiscal2019withnetincomeattributabletoDeere&Companyforecasttobeabout$3.6billion.

AgricultureandTurf.Thecompany'sworldwidesalesofagricultureandturfequipmentareforecasttoincreaseabout3percentforfiscalyear2019,includinganegativecurrencytranslationeffectof2percent.IndustrysalesofagriculturalequipmentintheU.S.andCanadaareforecasttobeaboutthesameto5percenthigher,helpedbyreplacementdemandforlargeequipmentandcontinueddemandforsmalltractors.FullyearindustrysalesintheEU28membernationsareforecasttobeaboutthesameasaresultofdroughtconditionsinkeymarkets.SouthAmericanindustrysalesoftractorsandcombinesareprojectedtobeaboutthesameto5percenthigherbenefitingfromstrengthinBrazil.Asiansalesareforecasttobeaboutthesametodownslightly.IndustrysalesofturfandutilityequipmentintheU.S.andCanadaareexpectedtobeaboutthesameto5percenthigherfor2019.

ConstructionandForestry.Thecompany'sworldwidesalesofconstructionandforestryequipmentareanticipatedtoincreaseabout15percentfor2019,withforeigncurrencyrateshavinganunfavorabletranslationeffectof2percent.TheforecastincludesafullyearofWirtgensales,versus10monthsinfiscal2018,withthetwoadditionalmonthsaddingabout5percenttodivisionsalesfortheyear.TheoutlookreflectscontinuedgrowthinU.S.housingdemandaswellastransportationinvestmentandeconomicgrowthworldwide.Inforestry,globalindustrysalesareexpectedtoincreaseabout10percentmainlyasaresultofimproveddemandthroughouttheworld,ledbytheU.S.

FinancialServices.Fiscalyear2019netincomeattributabletoDeere&Companyforthefinancialservicesoperationsisexpectedtobeapproximately$630million.Excludingthe2018benefitfromtaxreform,netincomeisexpectedtobenefitfromahigheraverageportfolio,partiallyoffsetbyhighersellingandadministrativeexpenses,ahigherprovisionforcreditlosses,andlessfavorablefinancingspreads.

SAFEHARBORSTATEMENT

SafeHarborStatementunderthePrivateSecuritiesLitigationReformActof1995:Statementsunder"Overview,""MarketConditionsandOutlook,"andotherforward-lookingstatementshereinthatrelatetofutureevents,expectations,andtrendsinvolvefactorsthataresubjecttochange,andrisksanduncertaintiesthatcouldcauseactualresultstodiffermaterially.Someoftheserisksanduncertaintiescouldaffectparticularlinesofbusiness,whileotherscouldaffectallofthecompany'sbusinesses.

Thecompany'sagriculturalequipmentbusinessissubjecttoanumberofuncertaintiesincludingthefactorsthataffect

farmers'confidenceandfinancialcondition.Thesefactorsincludedemandforagriculturalproducts,worldgrainstocks,weatherconditions,soilconditions,harvestyields,pricesforcommoditiesandlivestock,cropandlivestockproductionexpenses,availabilityoftransportforcrops,traderestrictionsandtariffs,globaltradeagreements(e.g,theNorthAmericanFreeTradeAgreement),theleveloffarmproductexports(includingconcernsaboutgeneticallymodifiedorganisms),thegrowthandsustainabilityofnon-foodusesforsomecrops(includingethanolandbiodieselproduction),realestatevalues,availableacreageforfarming,thelandownershippoliciesofgovernments,changesingovernmentfarmprogramsandpolicies,internationalreactiontosuchprograms,changesinandeffectsofcropinsuranceprograms,changesinenvironmentalregulationsandtheirimpactonfarmingpractices,animaldiseasesandtheireffectsonpoultry,beefandporkconsumptionandprices,andcroppestsanddiseases.

Factorsaffectingtheoutlookforthecompany'sturfandutilityequipmentincludeconsumerconfidence,weatherconditions,customerprofitability,laborsupply,consumerborrowingpatterns,consumerpurchasingpreferences,housingstartsandsupply,infrastructureinvestment,spendingbymunicipalitiesandgolfcourses,andconsumableinputcosts.

Consumerspendingpatterns,realestateandhousingprices,thenumberofhousingstarts,interestratesandthelevelsofpublicandnon-residentialconstructionareimportanttosalesandresultsofthecompany'sconstructionandforestryequipment.Pricesforpulp,paper,lumberandstructuralpanelsareimportanttosalesofforestryequipment.

Allofthecompany'sbusinessesanditsresultsareaffectedbygeneraleconomicconditionsintheglobalmarketsandindustriesinwhichthecompanyoperates;customerconfidenceingeneraleconomicconditions;governmentspendingandtaxing;foreigncurrencyexchangeratesandtheirvolatility,especiallyfluctuationsinthevalueoftheU.S.dollar;interestrates;inflationanddeflationrates;changesinweatherpatterns;thepoliticalandsocialstabilityoftheglobalmarketsinwhichthecompanyoperates;theeffectsof,orresponseto,terrorismandsecuritythreats;warsandotherconflicts;naturaldisasters;andthespreadofmajorepidemics.

Significantchangesinmarketliquidityconditions,changesinthecompany'screditratingsandanyfailuretocomplywithfinancialcovenantsincreditagreementscouldimpactaccesstofundingandfundingcosts,whichcouldreducethecompany'searningsandcashflows.Financialmarketconditionscouldalsonegativelyimpactcustomeraccesstocapitalforpurchasesofthecompany'sproductsandcustomerconfidenceandpurchasedecisions,borrowingandrepaymentpractices,andthenumberandsizeofcustomerloandelinquenciesanddefaults.Adebtcrisis,inEuropeorelsewhere,couldnegativelyimpactcurrencies,globalfinancialmarkets,socialandpoliticalstability,fundingsourcesandcosts,assetandobligationvalues,customers,suppliers,demandforequipment,andcompanyoperationsandresults.Thecompany'sinvestmentmanagementactivitiescouldbeimpairedbychangesintheequity,bondandotherfinancialmarkets,whichwouldnegativelyaffectearnings.

TheanticipatedwithdrawaloftheUnitedKingdomfromtheEuropeanUnionandtheperceptionsastotheimpactofthe

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withdrawalmayadverselyaffectbusinessactivity,politicalstabilityandeconomicconditionsintheUnitedKingdom,theEuropeanUnionandelsewhere.Theeconomicconditionsandoutlookcouldbefurtheradverselyaffectedby(i)theuncertaintyconcerningthetimingandtermsoftheexit,(ii)newormodifiedtradingarrangementsbetweentheUnitedKingdomandothercountries,(iii)theriskthatoneormoreotherEuropeanUnioncountriescouldcomeunderincreasingpressuretoleavetheEuropeanUnion,or(iv)theriskthattheeuroasthesinglecurrencyoftheEurozonecouldceasetoexist.Anyofthesedevelopments,ortheperceptionthatanyofthesedevelopmentsarelikelytooccur,couldaffecteconomicgrowthorbusinessactivityintheUnitedKingdomortheEuropeanUnion,andcouldresultintherelocationofbusinesses,causebusinessinterruptions,leadtoeconomicrecessionordepression,andimpactthestabilityofthefinancialmarkets,availabilityofcredit,currencyexchangerates,interestrates,financialinstitutions,andpolitical,financialandmonetarysystems.Anyofthesedevelopmentscouldaffectourbusinesses,liquidity,resultsofoperationsandfinancialposition.

Additionalfactorsthatcouldmateriallyaffectthecompany'soperations,accesstocapital,expensesandresultsincludechangesin,uncertaintysurroundingandtheimpactofgovernmentaltrade,banking,monetaryandfiscalpolicies,includingfinancialregulatoryreformanditseffectsontheconsumerfinanceindustry,derivatives,fundingcostsandotherareas,andgovernmentalprograms,policies,tariffsandsanctionsinparticularjurisdictionsorforthebenefitofcertainindustriesorsectors;retaliatoryactionstosuchchangesintrade,banking,monetaryandfiscalpolicies;actionsbycentralbanks;actionsbyfinancialandsecuritiesregulators;actionsbyenvironmental,healthandsafetyregulatoryagencies,includingthoserelatedtoengineemissions,carbonandothergreenhousegasemissions,noiseandtheeffectsofclimatechange;changestoGPSradiofrequencybandsortheirpermitteduses;changesinlaborandimmigrationregulations;changestoaccountingstandards;changesintaxrates,estimates,lawsandregulationsandcompanyactionsrelatedthereto;changestoandcompliancewithprivacyregulations;compliancewithU.S.andforeignlawswhenexpandingtonewmarketsandotherwise;andactionsbyotherregulatorybodies.

Otherfactorsthatcouldmateriallyaffectresultsincludeproduction,designandtechnologicalinnovationsanddifficulties,includingcapacityandsupplyconstraintsandprices;thelossoforchallengestointellectualpropertyrightswhetherthroughtheft,infringement,counterfeitingorotherwise;theavailabilityandpricesofstrategicallysourcedmaterials,componentsandwholegoods;delaysordisruptionsinthecompany'ssupplychainorthelossofliquiditybysuppliers;disruptionsofinfrastructuresthatsupportcommunications,operationsordistribution;thefailureofsuppliersorthecompanytocomplywithlaws,regulationsandcompanypolicypertainingtoemployment,humanrights,health,safety,theenvironment,anti-corruption,privacyanddataprotectionandotherethicalbusinesspractices;eventsthatdamagethecompany'sreputationorbrand;significantinvestigations,claims,lawsuitsorotherlegalproceedings;start-upofnewplantsandproducts;thesuccessofnew

productinitiatives;changesincustomerproductpreferencesandsalesmix;gapsorlimitationsinruralbroadbandcoverage,capacityandspeedneededtosupporttechnologysolutions;oilandenergyprices,suppliesandvolatility;theavailabilityandcostoffreight;actionsofcompetitorsinthevariousindustriesinwhichthecompanycompetes,particularlypricediscounting;dealerpracticesespeciallyastolevelsofnewandusedfieldinventories;changesindemandandpricingforusedequipmentandresultingimpactsonleaseresidualvalues;laborrelationsandcontracts;changesintheabilitytoattract,trainandretainqualifiedpersonnel;acquisitionsanddivestituresofbusinesses;greaterthananticipatedtransactioncosts;theintegrationofnewbusinesses;thefailureordelayinclosingorrealizinganticipatedbenefitsofacquisitions,jointventuresordivestitures;theimplementationoforganizationalchanges;thefailuretorealizeanticipatedsavingsorbenefitsofcostreduction,productivity,orefficiencyefforts;difficultiesrelatedtotheconversionandimplementationofenterpriseresourceplanningsystems;securitybreaches,cybersecurityattacks,technologyfailuresandotherdisruptionstothecompany'sandsuppliers'informationtechnologyinfrastructure;changesincompanydeclareddividendsandcommonstockissuancesandrepurchases;changesinthelevelandfundingofemployeeretirementbenefits;changesinmarketvaluesofinvestmentassets,compensation,retirement,discountandmortalityrateswhichimpactretirementbenefitcosts;andsignificantchangesinhealthcarecosts.

TheliquidityandongoingprofitabilityofJohnDeereCapitalCorporationandothercreditsubsidiariesdependlargelyontimelyaccesstocapitalinordertomeetfuturecashflowrequirements,andtofundoperations,costs,andpurchasesofthecompany'sproducts.Ifgeneraleconomicconditionsdeteriorateorcapitalmarketsbecomemorevolatile,fundingcouldbeunavailableorinsufficient.Additionally,customerconfidencelevelsmayresultindeclinesincreditapplicationsandincreasesindelinquenciesanddefaultrates,whichcouldmateriallyimpactwrite-offsandprovisionsforcreditlosses.

Thecompany'soutlookisbaseduponassumptionsrelatingtothefactorsdescribedabove,whicharesometimesbaseduponestimatesanddatapreparedbygovernmentagencies.Suchestimatesanddataareoftenrevised.Thecompany,exceptasrequiredbylaw,undertakesnoobligationtoupdateorreviseitsoutlook,whetherasaresultofnewdevelopmentsorotherwise.Furtherinformationconcerningthecompanyanditsbusinesses,includingfactorsthatcouldmateriallyaffectthecompany'sfinancialresults,isincludedinthecompany'sotherfilingswiththeSEC.

2017COMPAREDWITH2016

CONSOLIDATEDRESULTS

WorldwidenetincomeattributabletoDeere&Companyin2017was$2,159million,or$6.68persharediluted($6.76basic),comparedwith$1,524million,or$4.81persharediluted($4.83basic),in2016.Worldwidenetsalesandrevenuesincreased12percentto$29,738millionin2017,comparedwith$26,644millionin2016.Netsalesoftheworldwideequipmentoperationsrose11percentin2017to$25,885millionfrom$23,387millionin2016.Salesincludedpricerealizationof1percentandafavorablecurrencytranslationeffectof1percent.Equipmentnetsalesinthe

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UnitedStatesandCanadaincreased5percentfor2017.OutsidetheU.S.andCanada,netsalesincreased20percentfortheyear,withafavorablecurrencytranslationeffectof1percentfor2017.

Worldwideequipmentoperationshadanoperatingprofitof$2,859millionin2017,comparedwith$1,908millionin2016.Theoperatingprofitincreasewasprimarilyduetohighershipmentvolumes,againonthesaleoftheremaininginterestinSiteOne(seeNote5),pricerealization,andafavorableproductmix,partiallyoffsetbyincreasesinproductioncosts,selling,administrativeandgeneralexpenses,andwarrantyrelatedexpenses.

Netincomeofthecompany'sequipmentoperationswas$1,707millionfor2017,comparedwith$1,058millionin2016.Theoperatingfactorsmentionedaboveaffectedtheresults.

ThefinancialservicesoperationsreportednetincomeattributabletoDeere&Companyin2017of$477million,comparedwith$468millionin2016.Theincreasewaslargelyduetolowerlossesonleaseresidualvalues,partiallyoffsetbylessfavorablefinancingspreadsandhigherselling,administrativeandgeneralexpenses.Additionalinformationispresentedinthefollowingdiscussionofthe"WorldwideFinancialServicesOperations."

Thecostofsalestonetsalesratiofor2017was76.7percent,comparedwith77.8percentin2016.Theimprovementwasdueprimarilytopricerealizationandafavorableproductmix,partiallyoffsetbyincreasesinproductioncostsandwarrantyrelatedexpenses.

Financeandinterestincomeincreasedin2017duetoalargeraveragecreditportfolioandhigheraverageinterestrates.OtherincomeincreaseddueprimarilytothegainonthesaleoftheremaininginterestinSiteOne(seeNote5).Selling,administrativeandgeneralexpensesincreaseddueprimarilytohigherincentivecompensationexpense,highercommissionspaidtodealersondirectsales,andexpensesrelatedtovoluntaryemployee-separationprograms.Interestexpenseincreasedduetohigheraverageborrowingratesandhigheraverageborrowings.Otheroperatingexpensesincreasedprimarilyduetohigherdepreciationofequipmentonoperatingleases,partiallyoffsetbylowerlossesonleaseresidualvalues.

ThecompanyhasseveraldefinedbenefitpensionplansandOPEBplans.Thecompany'scostsfortheseplansin2017were$347million,comparedwith$312millionin2016.Thelong-termexpectedreturnonplanassets,whichisreflectedinthesecosts,wasanexpectedgainof7.2percentin2017and7.3percentin2016,or$807millionin2017and$810millionin2016.Theactualreturnwasagainof$1,563millionin2017and$645millionin2016.Totalcompanycontributionstotheplanswere$428millionin2017and$127millionin2016,whichincludedirectbenefitpaymentsforunfundedplansandvoluntarycontributionstoplanassetsof$301millionin2017and$3millionin2016.

BUSINESSSEGMENTANDGEOGRAPHICAREARESULTS

WorldwideAgricultureandTurfOperations

Theagricultureandturfsegmenthadanoperatingprofitof$2,513millionfortheyear,comparedwith$1,719millionin

2016.Netsalesincreased9percentin2017duetohighershipmentvolumes,pricerealization,andthefavorableeffectsofcurrencytranslation.Operatingprofitwashigherdueprimarilytoincreasedshipmentvolumes,againonthesaleoftheremaininginterestinSiteOne(seeNote5),pricerealization,andafavorablesalesmix,partiallyoffsetbyincreasesinproductioncosts,selling,administrativeandgeneralexpenses,andwarrantyrelatedexpenses.

WorldwideConstructionandForestryOperations

Theconstructionandforestrysegmenthadanoperatingprofitof$346millionin2017,comparedwith$189millionin2016.Netsalesincreased17percentfortheyearonaccountofhighershipmentvolumes,pricerealization,andthefavorableeffectsofcurrencytranslation.Operatingprofitincreasedmainlyattributabletoimprovedshipmentvolumesandpricerealization,partiallyoffsetbyhigherwarrantyexpenses,increasedselling,administrativeandgeneralexpenses,andhigherproductioncosts.

WorldwideFinancialServicesOperations

Theoperatingprofitofthefinancialservicessegmentwas$715millionin2017,comparedwith$701millionin2016.Theincreasewaslargelyduetolowerlossesonleaseresidualvalues,partiallyoffsetbylessfavorablefinancingspreadsandhigherselling,administrativeandgeneralexpenses.Totalrevenuesofthefinancialservicesoperations,includingintercompanyrevenues,increased9percentin2017.Theaveragebalanceofreceivablesandleasesfinancedwas1percenthigherin2017,comparedwith2016.Interestexpenseincreased25percentin2017asaresultofhigheraverageborrowingrates.Thefinancialservicesoperations'ratioofearningstofixedchargeswas2.12to1in2017,comparedwith2.35to1in2016.

EquipmentOperationsinU.S.andCanada

TheequipmentoperationsintheU.S.andCanadahadanoperatingprofitof$1,754millionin2017,comparedwith$1,328millionin2016.Theincreasewasdueprimarilytohighershipmentvolumes,againonthesaleoftheremaininginterestinSiteOne(seeNote5),afavorablesalesmix,andpricerealization,partiallyoffsetbyincreasesinproductioncosts,selling,administrativeandgeneralexpenses,andwarrantyrelatedexpenses.Netsalesincreased5percentdueprimarilytohighershipmentvolumes.Thephysicalvolumeofsalesincreased5percent,comparedwith2016.

EquipmentOperationsoutsideU.S.andCanada

TheequipmentoperationsoutsidetheU.S.andCanadahadanoperatingprofitof$1,105millionin2017,comparedwith$580millionin2016.Theincreasewasdueprimarilytohighershipmentvolumesandpricerealization,partiallyoffsetbyhigherproductioncostsandincreasedselling,administrativeandgeneralexpenses.Netsalesincreased20percentin2017comparedto2016.Theincreasewasprimarilytheresultofhighershipmentvolumes,pricerealization,andthefavorableeffectsofforeigncurrencytranslation.Thephysicalvolumeofsalesincreased16percent,comparedwith2016.

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CAPITALRESOURCESANDLIQUIDITY

Thediscussionofcapitalresourcesandliquidityhasbeenorganizedtoreviewseparately,whereappropriate,thecompany'sconsolidatedtotals,equipmentoperations,andfinancialservicesoperations.

CONSOLIDATED

Positivecashflowsfromconsolidatedoperatingactivitiesin2018were$1,820million.Thisresultedprimarilyfromnetincomeadjustedfornon-cashprovisionsandanincreaseinaccountspayableandaccruedexpenses,whichwerepartiallyoffsetbyanincreaseininventories,anincreaseinreceivablesrelatedtosales,achangeinnetretirementbenefits(seeNote7),andachangeinaccruedincometaxespayable/receivable.Cashoutflowsfrominvestingactivitieswere$8,154millionin2018,dueprimarilytoacquisitionsofbusinesses,netofcashacquired,of$5,245million(seeNote4),thecostofreceivables(excludingreceivablesrelatedtosales)andcostofequipmentonoperatingleasesacquiredexceedingthecollectionsofreceivablesandtheproceedsfromsalesofequipmentonoperatingleasesby$1,995million,purchasesofpropertyandequipmentof$896million,andpurchasesofmarketablesecuritiesexceedingproceedsfrommaturitiesandsalesby$56million,partiallyoffsetbyproceedsfromsalesofbusinessesandunconsolidatedaffiliates,netofcashsold,of$156million(seeNote4).Cashinflowsfromfinancingactivitieswere$876millionin2018,dueprimarilytoanincreaseinborrowingsof$2,516millionandproceedsfromissuanceofcommonstock(resultingfromtheexerciseofstockoptions)of$217million,partiallyoffsetbyrepurchasesofcommonstockof$958millionanddividendspaidof$806million.Cashandcashequivalentsdecreased$5,431millionduring2018.ThedecreaseincashprimarilyrelatedtotheWirtgenacquisition(seeNote4).

In2018,thecompanymadevoluntarycontributionsof$1,000milliontotheU.S.pensionandOPEBplansthatresultedinataxdeductionapplicabletothe2017taxyear.Thecompanyalsomadeavoluntarycontributionof$300millioninthefourthquarterof2018toitsU.S.OPEBplansthatresultedinataxdeductioninthe2018taxyear.

Overthelastthreeyears,operatingactivitieshaveprovidedanaggregateof$7,790millionincash.Inaddition,increasesinborrowingswere$5,721million,proceedsfromissuanceofcommonstock(resultingfromtheexerciseofstockoptions)were$782million,proceedsfromsalesofbusinessesandunconsolidatedaffiliateswere$351million,andproceedsfrommaturitiesandsalesexceededpurchasesofmarketablesecuritiesby$228million.Theaggregateamountofthesecashflowswasusedmainlytoacquirebusinessesof$5,728million,acquirereceivables(excludingreceivablesrelatedtosales)andequipmentonoperatingleasesthatexceededcollectionsofreceivablesandtheproceedsfromsalesofequipmentonoperatingleasesby$3,500million,paydividendsof$2,331million,purchasepropertyandequipmentof$2,136million,andrepurchasecommonstockof$1,170million.Cashandcashequivalentsdecreased$258millionoverthethree-yearperiod.

Thecompanyhasaccesstomostglobalcapitalmarketsatreasonablecostsandexpectstohavesufficientsourcesof

globalfundingandliquiditytomeetitsfundingneeds.Sourcesofliquidityforthecompanyincludecashandcashequivalents,marketablesecurities,fundsfromoperations,theissuanceofcommercialpaperandtermdebt,thesecuritizationofretailnotes(bothpublicandprivatemarkets),andcommittedanduncommittedbanklinesofcredit.Thecompany'scommercialpaperoutstandingatOctober28,2018andOctober29,2017was$3,857millionand$3,439million,respectively,whilethetotalcashandcashequivalentsandmarketablesecuritiespositionwas$4,394millionand$9,787million,respectively.Theamountofthetotalcashandcashequivalentsandmarketablesecuritiesheldbyforeignsubsidiarieswas$2,433millionand$3,386millionatOctober28,2018andOctober29,2017,respectively.

LinesofCredit.Thecompanyalsohasaccesstobanklinesofcreditwithvariousbanksthroughouttheworld.Worldwidelinesofcredittotaled$8,389millionatOctober28,2018,$3,724millionofwhichwereunused.Forthepurposeofcomputingunusedcreditlines,commercialpaperandshort-termbankborrowings,excludingsecuredborrowingsandthecurrentportionoflong-termborrowings,wereprimarilyconsideredtoconstituteutilization.IncludedinthetotalcreditlinesatOctober28,2018were364-daycreditfacilityagreementsof$1,750million,expiringinApril2019,and$750million,expiringinOctober2019.Inaddition,totalcreditlinesincludedlong-termcreditfacilityagreementsof$2,500million,expiringinApril2021,and$2,500million,expiringinApril2022.ThesecreditagreementsrequireJohnDeereCapitalCorporation(CapitalCorporation)tomaintainitsconsolidatedratioofearningstofixedchargesatnotlessthan1.05to1foreachfiscalquarterandtheratioofseniordebt,excludingsecuritizationindebtedness,tocapitalbase(totalsubordinateddebtandstockholder'sequityexcludingaccumulatedothercomprehensiveincome(loss))atnotmorethan11to1attheendofanyfiscalquarter.Thecreditagreementsalsorequiretheequipmentoperationstomaintainaratiooftotaldebttototalcapital(totaldebtandstockholders'equityexcludingaccumulatedothercomprehensiveincome(loss))of65percentorlessattheendofeachfiscalquarter.Underthisprovision,thecompany'sexcessequitycapacityandretainedearningsbalancefreeofrestrictionatOctober28,2018was$12,368million.Alternativelyunderthisprovision,theequipmentoperationshadthecapacitytoincuradditionaldebtof$22,969millionatOctober28,2018.Alloftheserequirementsofthecreditagreementshavebeenmetduringtheperiodsincludedintheconsolidatedfinancialstatements.

DebtRatings.Toaccesspublicdebtcapitalmarkets,thecompanyreliesoncreditratingagenciestoassignshort-termandlong-termcreditratingstothecompany'ssecuritiesasanindicatorofcreditqualityforfixedincomeinvestors.Asecurityratingisnotarecommendationbytheratingagencytobuy,sell,orholdcompanysecurities.Acreditratingagencymaychangeorwithdrawcompanyratingsbasedonitsassessmentofthecompany'scurrentandfutureabilitytomeetinterestandprincipalrepaymentobligations.Eachagency'sratingshouldbeevaluatedindependentlyofanyotherrating.Lowercreditratingsgenerallyresultinhigherborrowingcosts,includingcostsofderivativetransactions,andreducedaccesstodebtcapitalmarkets.

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Theseniorlong-termandshort-termdebtratingsandoutlookcurrentlyassignedtounsecuredcompanysecuritiesbytheratingagenciesengagedbythecompanyareasfollows:

Tradeaccountsandnotesreceivableprimarilyarisefromsalesofgoodstoindependentdealers.Tradereceivablesincreasedby$1,079millionin2018dueprimarilytohighershipmentvolumesandtheWirtgenacquisition.TheratiooftradeaccountsandnotesreceivableatOctober28,2018andOctober29,2017tofiscalyearnetsaleswas15percentinboth2018and2017.Totalworldwideagricultureandturfreceivablesincreased$219millionandconstructionandforestryreceivablesincreased$860million.Thecollectionperiodfortradereceivablesaverageslessthan12months.Thepercentageoftradereceivablesoutstandingforaperiodexceeding12monthswas2percentatOctober28,2018and1percentatOctober29,2017.

Deere&Company'sstockholders'equitywas$11,288millionatOctober28,2018,comparedwith$9,557millionatOctober29,2017.Theincreaseof$1,731millionresultedfromnetincomeattributabletoDeere&Companyof$2,368million,achangeintheretirementbenefitsadjustmentof$1,052million,andanincreaseincommonstockof$194million,whichwerepartiallyoffsetbyanincreaseintreasurystockof$851million,dividendsdeclaredof$834million,andachangeinthecumulativetranslationadjustmentof$195million.

EQUIPMENTOPERATIONS

Thecompany'sequipmentbusinessesarecapitalintensiveandaresubjecttoseasonalvariationsinfinancingrequirementsforinventoriesandcertainreceivablesfromdealers.Theequipmentoperationssellasignificantportionoftheirtradereceivablestofinancialservices.Totheextentnecessary,fundsprovidedfromoperationsaresupplementedbyexternalfinancingsources.

Cashprovidedbyoperatingactivitiesoftheequipmentoperationsduring2018,includingintercompanycashflows,was$3,279milliondueprimarilytonetincomeadjustedfornon-cashprovisions,anincreaseinaccountspayableandaccruedexpenses,andachangeinaccruedincometaxespayable/receivable,partiallyoffsetbyachangeinnetretirementbenefits(seeNote7),anincreaseininventories,andanincreaseintradereceivablesandEquipmentOperations'financingreceivables.

Overthelastthreeyears,theseoperatingactivities,includingintercompanycashflows,haveprovidedanaggregateof$8,629millionincash.

Tradereceivablesheldbytheequipmentoperationsincreasedby$497millionduring2018.Theequipmentoperationssellasignificantportionoftheirtradereceivablestofinancialservices(seepreviousconsolidateddiscussion).

Inventoriesincreasedby$2,245millionin2018dueprimarilytotheWirtgenacquisitionandhigherproductionvolumes,partiallyoffsetbytheeffectofforeigncurrencytranslation.Mostoftheseinventoriesarevaluedonthelast-in,first-out

Senior

Long-Term Short-Term Outlook

FitchRatings A F1 StableMoody'sInvestorsService,Inc. A2 Prime-1 Stable

Standard&Poor's A A-1 Stable

(LIFO)method.Theratiosofinventoriesonafirst-in,first-out(FIFO)basis(seeNote15),whichapproximatescurrentcost,tofiscalyearcostofsaleswere30percentand27percentatOctober28,2018andOctober29,2017,respectively.

Totalinterest-bearingdebtoftheequipmentoperationswas$6,224millionattheendof2018,comparedwith$5,866millionattheendof2017and$4,814millionattheendof2016.Theratiooftotaldebttototalcapital(totalinterest-bearingdebtandstockholders'equity)attheendof2018,2017,and2016was36percent,38percent,and42percent,respectively.

Propertyandequipmentcashexpendituresfortheequipmentoperationsin2018were$893million,comparedwith$591millionin2017.Capitalexpendituresin2019areestimatedtobe$1,150million.

InDecember2017,thecompanyacquiredWirtgenforacashpurchasepriceof$5,136million,excludingcashacquired.Theacquisitionandtransactionexpenseswerefinancedfromacombinationofcashandnewdebtfinancing,whichconsistedofmedium-termnotes,including€850millionissuedinSeptember2017(seeNote4).

FINANCIALSERVICES

Thefinancialservicesoperationsrelyontheirabilitytoraisesubstantialamountsoffundstofinancetheirreceivableandleaseportfolios.Theirprimarysourcesoffundsforthispurposeareacombinationofcommercialpaper,termdebt,securitizationofretailnotes,equitycapital,andborrowingsfromDeere&Company.

Thecashprovidedbyoperatingandfinancingactivitieswasusedforinvestingactivities.Cashflowsfromthefinancialservices'operatingactivities,includingintercompanycashflows,were$1,643millionin2018.Cashusedbyinvestingactivitiestotaled$4,839millionin2018dueprimarilytothecostofreceivables(excludingtradeandwholesale)andcostofequipmentonoperatingleasesacquiredexceedingcollectionsofthesereceivablesandtheproceedsfromsalesofequipmentonoperatingleasesby$3,472million,anincreaseintradereceivablesandwholesalenotesof$1,222million,andpurchasesofmarketablesecuritiesexceedingproceedsfrommaturitiesandsalesby$68million.Cashprovidedbyfinancingactivitiestotaled$2,767millionin2018,representingprimarilyanincreaseinexternalborrowingsof$2,515millionandanincreaseinborrowingsfromDeere&Companyof$748million,partiallyoffsetbydividendspaidtoDeere&Companyof$464million.Cashandcashequivalentsdecreased$457million.

Overthelastthreeyears,theoperatingactivities,includingintercompanycashflows,haveprovided$5,380millionincash.Inaddition,anincreaseintotalborrowingsof$4,083millionandacapitalinvestmentfromDeere&Companyof$49millionprovidedcashinflows.Theseamountshavebeenusedmainlytofundreceivables(excludingtradeandwholesale)andequipmentonoperatingleaseacquisitions,whichexceededcollectionsandtheproceedsfromsalesofequipmentonoperatingleases,by$7,264million,paydividendstoDeere&Companyof$1,391million,fundanincreaseintradereceivablesandwholesalenotesof$1,110million,andpurchase$104millionofmarketablesecuritiesinexcessofmaturitiesandsales.Cashandcashequivalentsdecreased$553millionoverthethree-yearperiod.

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Receivablesandequipmentonoperatingleasesincreasedby$2,987millionin2018,comparedwith2017.Totalacquisitionvolumesofreceivables(excludingtradeandwholesalenotes)andcostofequipmentonoperatingleasesincreased11percentin2018,comparedwith2017.Thevolumesoffinancingleases,retailnotes,revolvingchargeaccounts,andoperatingleasesincreasedapproximately29percent,14percent,4percent,and4percent,respectively.During2018,theamountoftradereceivablesandwholesalenotesincreased17percentand12percent,respectively.AtOctober28,2018andOctober29,2017,netreceivablesandleasesadministered,whichincludereceivablesadministeredbutnotowned,were$42,985millionand$40,001million,respectively.

Totalexternalinterest-bearingdebtofthefinancialservicesoperationswas$36,033millionattheendof2018,comparedwith$34,179millionattheendof2017and$30,797millionattheendof2016.Totalexternalborrowingshavechangedgenerallycorrespondingwiththelevelofthereceivableandleaseportfolio,thelevelofcashandcashequivalents,thechangeinpayablesowedtoDeere&Company,andthechangeininvestmentfromDeere&Company.Thefinancialservicesoperations'ratiooftotalinterest-bearingdebttototalstockholder'sequitywas7.5to1attheendof2018,and7.6to1attheendof2017and2016.

TheCapitalCorporationhasarevolvingcreditagreementtoutilizebankconduitfacilitiestosecuritizeretailnotes(seeNote13).AtOctober28,2018,thefacilityhadatotalcapacity,or"financinglimit,"ofupto$3,500millionofsecuredfinancingsatanytime.ThefacilitywasrenewedinNovember2018withacapacityof$3,500million.Afteratwo-yearrevolvingperiod,unlessthebanksandCapitalCorporationagreetorenew,CapitalCorporationwouldliquidatethesecuredborrowingsovertimeaspaymentsontheretailnotesarecollected.AtOctober28,2018,$1,364millionofshort-termsecuritizationborrowingswasoutstandingundertheagreement.

During2018,thefinancialservicesoperationsissued$2,601millionandretired$2,838millionofretailnotesecuritizationborrowings.During2018,thefinancialservicesoperationsalsoissued$8,139millionandretired$6,082millionoflong-termborrowings,whichwereprimarilymedium-termnotes.

OFF-BALANCE-SHEETARRANGEMENTS

AtOctober28,2018,thecompanyhadapproximately$357millionofguaranteesissuedprimarilytobanksoutsidetheU.S.andCanadarelatedtothird-partyreceivablesfortheretailfinancingofJohnDeereandWirtgenequipment.TheincreasefromOctober29,2017primarilyrelatestotheWirtgenacquisition.Thecompanymayrecoveraportionofanyrequiredpaymentsincurredundertheseagreementsfromrepossessionoftheequipmentcollateralizingthereceivables.ThemaximumremainingtermofthereceivablesguaranteedatOctober28,2018wasapproximatelysevenyears.

AGGREGATECONTRACTUALOBLIGATIONS

Thepaymentscheduleforthecompany'scontractualobligationsatOctober28,2018inmillionsofdollarsisasfollows:

Theprevioustabledoesnotincludeunrecognizedtaxbenefitliabilitiesofapproximately$279millionatOctober28,2018,sincethetimingoffuturepaymentsisnotreasonablyestimableatthistime(seeNote8).ForadditionalinformationregardingpensionandOPEBobligations,short-termborrowings,long-termborrowings,andleaseobligations,seeNotes7,18,20,and21,respectively.

CRITICALACCOUNTINGPOLICIES

Thepreparationofthecompany'sconsolidatedfinancialstatementsinconformitywithaccountingprinciplesgenerallyacceptedintheU.S.requiresmanagementtomakeestimatesandassumptionsthataffectreportedamountsofassets,liabilities,revenues,andexpenses.Changesintheseestimatesandassumptionscouldhaveasignificanteffectonthefinancialstatements.Theaccountingpoliciesbelowarethosemanagementbelievesarethemostcriticaltothepreparationofthecompany'sfinancialstatementsandrequirethemostdifficult,subjective,orcomplexjudgments.Thecompany'sotheraccountingpoliciesaredescribedintheNotestotheConsolidatedFinancialStatements.

SalesIncentives

Atthetimeasaletoadealerisrecognized,thecompanyrecordsanestimateofthefuturesalesincentivecostsforallowancesandfinancingprogramsthatwillbeduewhenthedealersellstheequipmenttoaretailcustomer.Theestimateisbasedonhistoricaldata,announcedincentiveprograms,fieldinventorylevels,andretailsalesvolumes.Thefinalcostoftheseprogramsandtheamountofaccrualrequiredforaspecificsalearefullydeterminedwhenthedealersellstheequipmenttotheretailcustomer.Thisisduetonumerousprogramsavailableatanyparticulartimeandnewprograms

Total

Lessthan1year

2&3years

4&5years

Morethan5years

On-balance-sheet Debt* Equipmentoperations**

$ 6,252$ 1,470$ 594$ 1,687$ 2,501

Financialservices** 36,462 11,756 13,473 7,392 3,841Total 42,714 13,226 14,067 9,079 6,342

Interestrelatingtodebt***

5,328 1,059 1,592 898 1,779

Accountspayable 3,360 3,243 85 29 3Capitalleases 30 11 15 3 1Off-balance-sheet Purchaseobligations 2,937 2,889 21 22 5Operatingleases 383 110 143 84 46Total $54,752$20,538$15,923$10,115$ 8,176

* Principalpayments.** Paymentsrelatedtosecuritizationborrowingsof$3,963millionclassified

asshort-termonthebalancesheetrelatedtothesecuritizationofretailnotesareincludedinthistablebasedontheexpectedpaymentschedule(seeNote18).

*** Includesprojectedpaymentsrelatedtointerestrateswaps.

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thatmaybeannouncedafterthecompanyrecordsthesale.Changesinthemixandtypesofprogramsaffecttheseestimates,whicharereviewedquarterly.

ThesalesincentiveaccrualsatOctober28,2018,October29,2017,andOctober30,2016were$1,850million,$1,581million,and$1,391million,respectively.Theincreasesin2018and2017wererelatedprimarilytohighersalesvolumes.

Theestimationofthesalesincentiveaccrualisimpactedbymanyassumptions.Oneofthekeyassumptionsisthehistoricalpercentofsalesincentivecoststoretailsalesfromdealers.Overthelastfivefiscalyears,thispercenthasvariedbyanaverageofapproximatelyplusorminus1.1percent,comparedtotheaveragesalesincentivecoststoretailsalespercentduringthatperiod.Holdingotherassumptionsconstant,ifthisestimatedcostexperiencepercentweretoincreaseordecrease1.1percent,thesalesincentiveaccrualatOctober28,2018wouldincreaseordecreasebyapproximately$90million.

ProductWarranties

Atthetimeasaleisrecognized,thecompanyrecordstheestimatedfuturewarrantycosts.Thecompanygenerallydeterminesitstotalwarrantyliabilitybyapplyinghistoricalclaimsrateexperiencetotheestimatedamountofequipmentthathasbeensoldandisstillunderwarrantybasedondealerinventoriesandretailsales.Thehistoricalclaimsrateisprimarilydeterminedbyareviewoffive-yearclaimscostsandconsiderationofcurrentqualitydevelopments.Variancesinclaimsexperienceandthetypeofwarrantyprogramsaffecttheseestimates,whicharereviewedquarterly.

Theproductwarrantyaccruals,excludingextendedwarrantyunamortizedpremiums,atOctober28,2018,October29,2017,andOctober30,2016were$1,146million,$1,007million,and$779million,respectively.Theincreasesin2018and2017weredueprimarilytohighersalesvolumes.

Estimatesusedtodeterminetheproductwarrantyaccrualsaresignificantlyaffectedbythehistoricalpercentofwarrantyclaimscoststosales.Overthelastfivefiscalyears,thispercenthasvariedbyanaverageofapproximatelyplusorminus.13percent,comparedtotheaveragewarrantycoststosalespercentduringthatperiod.Holdingotherassumptionsconstant,ifthisestimatedcostexperiencepercentweretoincreaseordecrease.13percent,thewarrantyaccrualatOctober28,2018wouldincreaseordecreasebyapproximately$50million.

PostretirementBenefitObligations

Pensionandotherpostretirementbenefit(OPEB),primarilyhealthcareandlifeinsuranceplans,obligationsarebasedonvariousassumptionsusedbythecompany'sactuariesincalculatingtheseamounts.Theseassumptionsincludediscountrates,healthcarecosttrendrates,expectedreturnonplanassets,compensationincreases,retirementrates,mortalityrates,andotherfactors.Actualresultsthatdifferfromtheassumptionsandchangesinassumptionsaffectfutureexpensesandobligations.

Thepensionassets,netofpensionliabilities,recognizedonthebalancesheetatOctober28,2018were$494million.Thepensionliabilities,netofpensionassets,recognizedonthebalancesheetatOctober29,2017andOctober30,2016were$1,073million,and$1,949million,respectively.Theincreasein

pensionnetassetsin2018wasdueprimarilytoincreasesindiscountratesandcontributionstoaU.S.pensionplan(seeNote7),partiallyoffsetbyinterestontheliabilities.Thedecreaseinpensionnetliabilitiesin2017wasdueprimarilytothereturnonplanassets,partiallyoffsetbyinterestontheliabilitiesandservicecost.TheOPEBliabilities,netofOPEBassets,atOctober28,2018,October29,2017,andOctober30,2016were$4,753million,$5,623million,and$6,065million,respectively.ThedecreaseinOPEBnetliabilitiesin2018wasdueprimarilytoincreasesindiscountratesandcontributionstotheU.S.OPEBplans(seeNote7).ThedecreaseinOPEBnetliabilitiesin2017wasdueprimarilytoacontributiontoaU.S.OPEBplan.

Theeffectofhypotheticalchangestoselectedassumptionsonthecompany'smajorU.S.retirementbenefitplanswouldbeasfollowsinmillionsofdollars:

Goodwill

Goodwillisnotamortizedandistestedforimpairmentannuallyandwheneventsorcircumstanceschangesuchthatitismorelikelythannotthatthefairvalueofareportingunitisreducedbelowitscarryingamount.Theendofthefiscalthirdquarteristheannualmeasurementdate.Totestforgoodwillimpairment,thecarryingvalueofeachreportingunitiscomparedwithitsfairvalue.Ifthecarryingvalueofthegoodwillisconsideredimpaired,alossismeasuredastheexcessofthereportingunit'scarryingvalueoverthefairvalue,withalimitofthegoodwillallocatedtothatreportingunit.

Anestimateofthefairvalueofthereportingunitisdeterminedthroughacombinationofcomparablemarketvaluesforsimilarbusinessesanddiscountedcashflows.Theseestimatescanchangesignificantlybasedonsuchfactorsasthereportingunit'sfinancialperformance,economicconditions,interestrates,growthrates,pricing,changesinbusinessstrategies,andcompetition.

Basedonthistesting,thecompanyhasnotidentifiedareportingunitforwhichthegoodwillwasimpairedin2018,2017,or2016.Forallreportingunits,exceptfortherecentlyacquiredWirtgenreportingunit(seeNote4),a10percentdecreaseintheestimatedfairvaluewouldhavehadnoeffectonthecarryingvalueofgoodwillattheannualmeasurementdatein2018.TheWirtgenreportingunitexceededacquisitionprojectionsin2018andexpectstomeetfutureprojections.

October28,2018 2019

AssumptionsPercentageChange

Increase(Decrease)PBO/APBO*

Increase(Decrease)Expense

Pension Discountrate** +/-.5 $ (608)/691 $ (38)/44Expectedreturnonassets +/-.5 (55)/55

OPEB Discountrate** +/-.5 (289)/319 (7)/14Expectedreturnonassets +/-.5 (3)/3

Healthcarecosttrendrate** +/-1.0 625/(495) 84/(44)

* Projectedbenefitobligation(PBO)forpensionplansandaccumulatedpostretirementbenefitobligation(APBO)forOPEBplans.

** Pretaximpactonservicecost,interestcost,andamortizationofgainsorlosses.

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AllowanceforCreditLosses

Theallowanceforcreditlossesrepresentsanestimateofthelossesinherentinthecompany'sreceivableportfolio.Theleveloftheallowanceisbasedonmanyquantitativeandqualitativefactors,includinghistoricalnetlossexperiencebyproductcategory,portfolioduration,delinquencytrends,economicconditionsinthecompany'smajormarketsandgeographies,andcreditriskquality.Thecompanyhasanestablishedprocesstocalculatearangeofpossibleoutcomesanddeterminetheadequacyoftheallowance.Theadequacyoftheallowanceisassessedquarterly.Differentassumptionsorchangesineconomicconditionswouldresultinchangestotheallowanceforcreditlossesandtheprovisionforcreditlosses.

ThetotalallowanceforcreditlossesatOctober28,2018,October29,2017,andOctober30,2016was$248million,$243million,and$226million,respectively.Theallowanceincreasesin2018and2017weredueprimarilytogrowthinthereceivableportfolio.

Theassumptionsusedinevaluatingthecompany'sexposuretocreditlossesinvolveestimatesandsignificantjudgment.Thehistoricallossexperienceonthereceivableportfoliorepresentsonefactorusedindeterminingtheallowanceforcreditlosses.Comparedtotheaveragelossexperienceoverthelastfivefiscalyears,thispercenthasvariedbyanaverageofapproximatelyplusorminus.06percent,comparedtotheaveragelossexperiencepercentduringthatperiod.Holdingotherfactorsconstant,ifthisestimatedlossexperienceonthereceivableportfolioweretoincreaseordecrease.06percent,theallowanceforcreditlossesatOctober28,2018wouldincreaseordecreasebyapproximately$21million.

OperatingLeaseResidualValues

Thecarryingvalueofequipmentonoperatingleasesisaffectedbytheestimatedfairvaluesoftheequipmentattheendofthelease(residualvalues).Uponterminationofthelease,theequipmentiseitherpurchasedbythelesseeorsoldtoathirdparty,inwhichcasethecompanymayrecordagainoralossforthedifferencebetweentheestimatedresidualvalueandthesaleprice.Theresidualvaluesaredependentoncurrenteconomicconditionsandarereviewedwheneventsorcircumstancesnecessitateanevaluation.Changesinresidualvalueassumptionswouldaffecttheamountofdepreciationexpenseandtheamountofinvestmentinequipmentonoperatingleases.

ThetotaloperatingleaseresidualvaluesatOctober28,2018,October29,2017,andOctober30,2016were$5,089million,$4,679million,and$4,347million,respectively.Thechangesin2018and2017weredueprimarilytotheincreasinglevelsofoperatingleases.

Estimatesusedindeterminingendofleasemarketvaluesforequipmentonoperatingleasessignificantlyimpacttheamountandtimingofdepreciationexpense.Hypothetically,iffuturemarketvaluesforthisequipmentweretodecrease10percentfromthecompany'spresentestimates,thetotaleffectwouldbetoincreasethecompany'sannualdepreciationforequipmentonoperatingleasesbyapproximately$185million.

IncomeTaxes

Thecompany'sincometaxprovision,deferredincometaxassetsandliabilities,andliabilitiesforuncertaintaxbenefitsrepresentthecompany'sbestestimateofcurrentandfutureincometaxestobepaid.Theannualtaxrateisbasedonincometaxlaws,statutorytaxrates,taxableincomelevels,andtaxplanningopportunitiesavailableinvariousjurisdictionswherethecompanyoperates.Thesetaxlawsarecomplex,andrequiresignificantjudgmenttodeterminetheconsolidatedprovisionforincometaxes.Changesintaxlaws,regulations,statutorytaxrates,andestimatesofthecompany'sfuturetaxableincomelevelscouldresultinactualrealizationofdeferredtaxesbeingmateriallydifferentfromamountsprovidedforintheconsolidatedfinancialstatements.

Deferredincometaxesrepresenttemporarydifferencesbetweenthetaxandthefinancialreportingbasisofassetsandliabilities,whichwillresultintaxableordeductibleamountsinthefuture.Deferredtaxassetsalsoincludelosscarryforwardsandtaxcredits.Theseassetsareregularlyassessedforthelikelihoodofrecoverabilityfromestimatedfuturetaxableincome,reversalofdeferredtaxliabilities,andtaxplanningstrategies.Totheextentthecompanydeterminesthatitismorelikelythannotadeferredincometaxassetwillnotberealized,avaluationallowanceisestablished.Therecoverabilityanalysisofthedeferredincometaxassetsandtherelatedvaluationallowancesrequiressignificantjudgmentandreliesonestimates.

Uncertaintaxpositionsaredeterminedbasedonwhetheritismorelikelythannotthetaxpositionswillbesustainedbasedonthetechnicalmeritsoftheposition.Forthosepositionsthatmeetthemorelikelythannotcriteria,anestimateofthelargestamountoftaxbenefitthatisgreaterthan50percentlikelytoberealizeduponultimatesettlementwiththerelatedtaxauthorityisrecognized.Theultimateresolutionofthetaxpositioncouldtakemanyyearsandresultinapaymentthatissignificantlydifferentfromtheoriginalestimate.

Taxreformincludedadditionalrequirementseffectiveforthecompanyin2019.Thoseprovisionsincludeataxonglobalintangiblelow-taxedincome(GILTI),ataxdeterminedbybaseerosionandanti-abusetaxbenefits(BEAT)fromcertainpaymentsbetweenaU.S.corporationandforeignsubsidiaries,alimitationofcertainexecutivecompensation,adeductionforforeignderivedintangibleincome(FDII),andinterestexpenselimitations.Thesenewprovisionsrequireinterpretationandwilluseestimatestodeterminetheliabilityandbenefits.Thecompany'saccountingpolicyelectionistotreatthetaxesdueonfutureU.S.inclusionsintaxableincomeunderGILTIasaperiodcostwhenincurred.

Aprovisionforforeignwithholdingtaxeshasnotbeenrecordedonundistributedprofitsofthecompany'snon-U.S.subsidiariesthataredeterminedtobeindefinitelyreinvestedoutsidetheU.S.Ifmanagementintentionschangeinthefuture,theremaybeasignificantimpactontheprovisionforincometaxesintheperiodthechangeoccurs.Forfurtherinformationonincometaxes,seeNote8totheconsolidatedfinancialstatements.

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FINANCIALINSTRUMENTMARKETRISKINFORMATION

Thecompanyisnaturallyexposedtovariousinterestrateandforeigncurrencyrisks.Asaresult,thecompanyentersintoderivativetransactionstomanagecertainoftheseexposuresthatariseinthenormalcourseofbusinessandnotforthepurposeofcreatingspeculativepositionsortrading.Thecompany'sfinancialservicesoperationsmanagetherelationshipofthetypesandamountsoftheirfundingsourcestotheirreceivableandleaseportfolioinanefforttodiminishriskduetointerestrateandforeigncurrencyfluctuationswhilerespondingtofavorablefinancingopportunities.Inaddition,thecompanyhasinterestrateexposureatcertainequipmentoperationsunitsforbelowmarketretailfinancingprogramsthatareusedassalesincentivesandareofferedforextendedperiods.Accordingly,fromtimetotime,theseoperationsenterintointerestrateswapagreementstomanagetheirinterestrateexposure.Thecompanyalsohasforeigncurrencyexposuresatsomeofitsforeignanddomesticoperationsrelatedtobuying,selling,andfinancingincurrenciesotherthanthefunctionalcurrencies.Thecompanyhasenteredintoagreementsrelatedtothemanagementoftheseforeigncurrencytransactionrisks.

InterestRateRisk

Quarterly,thecompanyusesacombinationofcashflowmodelstoassessthesensitivityofitsfinancialinstrumentswithinterestrateexposuretochangesinmarketinterestrates.Themodelscalculatetheeffectofadjustinginterestratesasfollows:cashflowsforfinancingreceivablesarediscountedatthecurrentprevailingrateforeachreceivableportfolio,cashflowsformarketablesecuritiesareprimarilydiscountedattheapplicablebenchmarkyieldcurveplusmarketcreditspreads,cashflowsforunsecuredborrowingsarediscountedattheapplicablebenchmarkyieldcurveplus

marketcreditspreadsforsimilarlyratedborrowers,cashflowsforsecuritizedborrowingsarediscountedattheswapyieldcurveplusamarketcreditspreadforsimilarlyratedborrowers,andcashflowsforinterestrateswapsareprojectedanddiscountedusingforwardratesfromtheswapyieldcurveattherepricingdates.Thenetlossinthesefinancialinstruments'fairvalueswhichwouldbecausedbydecreasingtheinterestratesby10percentfromthemarketratesatOctober28,2018wouldhavebeenapproximately$21million.Thenetlossfromincreasingtheinterestratesby10percentatOctober29,2017wouldhavebeenapproximately$4million.

ForeignCurrencyRisk

Intheequipmentoperations,thecompany'spracticeistohedgesignificantcurrencyexposures.Worldwideforeigncurrencyexposuresarereviewedquarterly.Basedontheequipmentoperations'anticipatedandcommittedforeigncurrencycashinflows,outflows,andhedgingpolicyforthenexttwelvemonths,thecompanyestimatesthatahypothetical10percentstrengtheningoftheU.S.dollarrelativetoothercurrenciesthrough2019woulddecreasethe2019expectednetcashinflowsbyapproximately$55million.AtOctober29,2017,ahypothetical10percentstrengtheningoftheU.S.dollarundersimilarassumptionsandcalculationsindicatedapotential$78millionadverseeffectonthe2018netcashinflows.

Inthefinancialservicesoperations,thecompany'spolicyistohedgetheforeigncurrencyriskifthecurrencyoftheborrowingsdoesnotmatchthecurrencyofthereceivableportfolio.Asaresult,ahypothetical10percentadversechangeinthevalueoftheU.S.dollarrelativetoallotherforeigncurrencieswouldnothaveamaterialeffectonthefinancialservicescashflows.

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DEERE&COMPANYSTATEMENTOFCONSOLIDATEDINCOMEFortheYearsEndedOctober28,2018,October29,2017,andOctober30,2016(Inmillionsofdollars)

Thenotestoconsolidatedfinancialstatementsareanintegralpartofthisstatement.

31

2018 2017 2016 NetSalesandRevenues Netsales $ 33,350.7 $ 25,885.1 $ 23,387.3Financeandinterestincome 3,106.6 2,731.5 2,511.2Otherincome 900.4 1,121.1 745.5

Total 37,357.7 29,737.7 26,644.0

CostsandExpenses Costofsales 25,571.2 19,866.2 18,196.1Researchanddevelopmentexpenses 1,657.6 1,372.5 1,393.7Selling,administrativeandgeneralexpenses 3,455.5 3,097.8 2,791.2Interestexpense 1,203.6 899.5 763.7Otheroperatingexpenses 1,399.1 1,347.9 1,275.3

Total 33,287.0 26,583.9 24,420.0

IncomeofConsolidatedGroupbeforeIncomeTaxes 4,070.7 3,153.8 2,224.0Provisionforincometaxes 1,726.9 971.1 700.1

IncomeofConsolidatedGroup 2,343.8 2,182.7 1,523.9Equityinincome(loss)ofunconsolidatedaffiliates 26.8 (23.5) (2.4)

NetIncome 2,370.6 2,159.2 1,521.5Less:Netincome(loss)attributabletononcontrollinginterests 2.2 .1 (2.4)

NetIncomeAttributabletoDeere&Company $ 2,368.4 $ 2,159.1 $ 1,523.9

PerShareData Basic $ 7.34 $ 6.76 $ 4.83Diluted $ 7.24 $ 6.68 $ 4.81Dividendsdeclared $ 2.58 $ 2.40 $ 2.40

AverageSharesOutstanding Basic 322.6 319.5 315.2Diluted 327.3 323.3 316.6

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DEERE&COMPANYSTATEMENTOFCONSOLIDATEDCOMPREHENSIVEINCOMEFortheYearsEndedOctober28,2018,October29,2017,andOctober30,2016(Inmillionsofdollars)

Thenotestoconsolidatedfinancialstatementsareanintegralpartofthisstatement.

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2018 2017 2016 NetIncome $ 2,370.6 $ 2,159.2 $ 1,521.5OtherComprehensiveIncome(Loss),NetofIncomeTaxes Retirementbenefitsadjustment 1,052.4 828.8 (907.6)Cumulativetranslationadjustment (195.4) 230.6 9.0Unrealizedgainonderivatives 9.1 3.7 2.9Unrealizedlossoninvestments (13.3) (.6) (.9)

OtherComprehensiveIncome(Loss),NetofIncomeTaxes 852.8 1,062.5 (896.6)ComprehensiveIncomeofConsolidatedGroup 3,223.4 3,221.7 624.9Less:Comprehensiveincome(loss)attributabletononcontrollinginterests 2.1 .3 (2.4)ComprehensiveIncomeAttributabletoDeere&Company $ 3,221.3 $ 3,221.4 $ 627.3

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DEERE&COMPANYCONSOLIDATEDBALANCESHEETAsofOctober28,2018andOctober29,2017(Inmillionsofdollarsexceptpershareamounts)

Thenotestoconsolidatedfinancialstatementsareanintegralpartofthisstatement.

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2018 2017 ASSETS Cashandcashequivalents $ 3,904.0 $ 9,334.9Marketablesecurities 490.1 451.6Receivablesfromunconsolidatedaffiliates 21.7 35.9Tradeaccountsandnotesreceivable–net 5,004.3 3,924.9Financingreceivables–net 27,054.1 25,104.1Financingreceivablessecuritized–net 4,021.4 4,158.8Otherreceivables 1,735.5 1,200.0Equipmentonoperatingleases–net 7,165.4 6,593.7Inventories 6,148.9 3,904.1Propertyandequipment–net 5,867.5 5,067.7Investmentsinunconsolidatedaffiliates 207.3 182.5Goodwill 3,100.7 1,033.3Otherintangibleassets–net 1,562.4 218.0Retirementbenefits 1,298.3 538.2Deferredincometaxes 808.0 2,415.0Otherassets 1,718.4 1,623.6TotalAssets $ 70,108.0 $ 65,786.3LIABILITIESANDSTOCKHOLDERS'EQUITY

LIABILITIES Short-termborrowings $ 11,061.4 $ 10,035.3Short-termsecuritizationborrowings 3,957.3 4,118.7Payablestounconsolidatedaffiliates 128.9 121.9Accountspayableandaccruedexpenses 10,111.0 8,417.0Deferredincometaxes 555.8 209.7Long-termborrowings 27,237.4 25,891.3Retirementbenefitsandotherliabilities 5,751.0 7,417.9

Totalliabilities 58,802.8 56,211.8

Commitmentsandcontingencies(Note22) Redeemablenoncontrollinginterest(Note4) 14.0 14.0

STOCKHOLDERS'EQUITY Commonstock,$1parvalue(authorized–1,200,000,000shares;issued–536,431,204sharesin2018and2017),atpaid-inamount 4,474.2 4,280.5

Commonstockintreasury,217,975,806sharesin2018and214,589,902sharesin2017,atcost (16,311.8) (15,460.8)Retainedearnings 27,553.0 25,301.3Accumulatedothercomprehensiveincome(loss) (4,427.6) (4,563.7)TotalDeere&Companystockholders'equity 11,287.8 9,557.3Noncontrollinginterests 3.4 3.2Totalstockholders'equity 11,291.2 9,560.5

TotalLiabilitiesandStockholders'Equity $ 70,108.0 $ 65,786.3

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DEERE&COMPANYSTATEMENTOFCONSOLIDATEDCASHFLOWSFortheYearsEndedOctober28,2018,October29,2017,andOctober30,2016(Inmillionsofdollars)

Thenotestoconsolidatedfinancialstatementsareanintegralpartofthisstatement.

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2018 2017 2016 CashFlowsfromOperatingActivities Netincome $ 2,370.6 $ 2,159.2 $ 1,521.5Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities: Provisionforcreditlosses 90.8 98.3 94.3Provisionfordepreciationandamortization 1,927.1 1,715.5 1,559.8Impairmentcharges 39.8 85.1Share-basedcompensationexpense 83.8 68.1 70.6Gainonsaleofaffiliatesandinvestments (25.1) (375.1) (74.5)Undistributedearningsofunconsolidatedaffiliates (26.3) (14.4) (1.9)Provisionfordeferredincometaxes 1,479.9 100.1 282.7Changesinassetsandliabilities: Trade,notesandfinancingreceivablesrelatedtosales (1,531.1) (838.9) 335.2Inventories (1,772.3) (1,305.3) (106.1)Accountspayableandaccruedexpenses 722.3 968.0 (155.2)Accruedincometaxespayable/receivable (466.2) (84.2) 7.0Retirementbenefits (1,026.1) (31.9) 238.6

Other (7.1) (299.4) (87.4)Netcashprovidedbyoperatingactivities 1,820.3 2,199.8 3,769.7

CashFlowsfromInvestingActivities Collectionsofreceivables(excludingreceivablesrelatedtosales) 15,589.3 14,671.1 14,611.4Proceedsfrommaturitiesandsalesofmarketablesecurities 76.6 404.2 169.4Proceedsfromsalesofequipmentonoperatingleases 1,482.7 1,440.8 1,256.2Proceedsfromsalesofbusinessesandunconsolidatedaffiliates,netofcashsold 155.6 113.9 81.1Costofreceivablesacquired(excludingreceivablesrelatedtosales) (17,013.3) (15,221.8) (13,954.5)Acquisitionsofbusinesses,netofcashacquired (5,245.0) (284.2) (198.5)Purchasesofmarketablesecurities (132.8) (118.0) (171.2)Purchasesofpropertyandequipment (896.4) (594.9) (644.4)Costofequipmentonoperatingleasesacquired (2,053.7) (1,997.4) (2,310.7)Other (117.4) (58.0) (16.0)

Netcashusedforinvestingactivities (8,154.4) (1,644.3) (1,177.2)

CashFlowsfromFinancingActivities Increase(decrease)intotalshort-termborrowings 473.2 1,310.6 (1,213.6)Proceedsfromlong-termborrowings 8,287.8 8,702.2 5,070.7Paymentsoflong-termborrowings (6,245.3) (5,397.0) (5,267.6)Proceedsfromissuanceofcommonstock 216.9 528.7 36.0Repurchasesofcommonstock (957.9) (6.2) (205.4)Dividendspaid (805.8) (764.0) (761.3)Other (92.5) (87.8) (64.7)

Netcashprovidedby(usedfor)financingactivities 876.4 4,286.5 (2,405.9)EffectofExchangeRateChangesonCashandCashEquivalents 26.8 157.1 (13.0)NetIncrease(Decrease)inCashandCashEquivalents (5,430.9) 4,999.1 173.6CashandCashEquivalentsatBeginningofYear 9,334.9 4,335.8 4,162.2CashandCashEquivalentsatEndofYear $ 3,904.0 $ 9,334.9 $ 4,335.8

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DEERE&COMPANYSTATEMENTOFCHANGESINCONSOLIDATEDSTOCKHOLDERS'EQUITYFortheYearsEndedOctober30,2016,October29,2017,andOctober28,2018(Inmillionsofdollars)

Thenotestoconsolidatedfinancialstatementsareanintegralpartofthisstatement.

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TotalStockholders'Equity Deere&CompanyStockholders

TotalStockholders'

Equity CommonStock

TreasuryStock

RetainedEarnings

AccumulatedOther

ComprehensiveIncome(Loss)

NoncontrollingInterests

RedeemableNoncontrolling

Interest BalanceNovember1,2015 $ 6,757.6 $ 3,825.6 $(15,497.6) $23,144.8 $ (4,729.4) $ 14.2

Netincome(loss) 1,521.5 1,523.9 (2.4) Othercomprehensiveloss (896.6) (896.6) Repurchasesofcommonstock (205.4) (205.4) Treasurysharesreissued 25.9 25.9 Dividendsdeclared (758.0) (757.1) (.9) Acquisition(Note4) $ 14.0Stockoptionsandother 85.8 86.2 (.3) (.1) BalanceOctober30,2016 6,530.8 3,911.8 (15,677.1) 23,911.3 (5,626.0) 10.8 14.0

Netincome 2,159.2 2,159.1 .1 Othercomprehensiveincome 1,062.5 1,062.3 .2 Repurchasesofcommonstock (6.2) (6.2) Treasurysharesreissued 222.5 222.5 Dividendsdeclared (770.4) (769.2) (1.2) Stockoptionsandother 362.1 368.7 .1 (6.7) BalanceOctober29,2017 9,560.5 4,280.5 (15,460.8) 25,301.3 (4,563.7) 3.2 14.0

Netincome 2,369.4 2,368.4 1.0 1.2Othercomprehensiveincome(loss) 852.8 852.9 (.1)

Repurchasesofcommonstock (957.9) (957.9) Treasurysharesreissued 106.9 106.9 Dividendsdeclared (835.8) (833.8) (2.0) (1.2)Acquisition(Note4) 1.1 1.1 Stockoptionsandother 194.2 193.7 .3 .2 ASUNo.2018-02adoption* 716.8 (716.8) BalanceOctober28,2018 $ 11,291.2 $ 4,474.2 $(16,311.8) $27,553.0 $ (4,427.6) $ 3.4 $ 14.0*SeeNote3.

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1.ORGANIZATIONANDCONSOLIDATION

StructureofOperations

Theinformationinthenotesandrelatedcommentaryarepresentedinaformatthatincludesdatagroupedasfollows:

EquipmentOperations–Includesthecompany'sagricultureandturfoperationsandconstructionandforestryoperationswithfinancialservicesreflectedontheequitybasis.

FinancialServices–Includesprimarilythecompany'sfinancingoperations.

Consolidated–Representstheconsolidationoftheequipmentoperationsandfinancialservices.Referencesto"Deere&Company"or"thecompany"refertotheentireenterprise.

PrinciplesofConsolidation

TheconsolidatedfinancialstatementsrepresentprimarilytheconsolidationofallcompaniesinwhichDeere&Companyhasacontrollinginterest.Certainvariableinterestentities(VIEs)areconsolidatedsincethecompanyistheprimarybeneficiary.TheprimarybeneficiaryhasboththepowertodirecttheactivitiesthatmostsignificantlyimpacttheVIEs'economicperformanceandtheobligationtoabsorblossesortherighttoreceivebenefitsthatcouldpotentiallybesignificanttotheVIEs.Deere&Companyrecordsitsinvestmentineachunconsolidatedaffiliatedcompany(generally20to50percentownership)atitsrelatedequityinthenetassetsofsuchaffiliate(seeNote10).Otherinvestments(lessthan20percentownership)arerecordedatcost.

FiscalYear

Thecompanyusesa52/53weekfiscalyearendingonthelastSundayinthereportingperiod.Thefiscalyearendsfor2018,2017,and2016wereOctober28,2018,October29,2017,andOctober30,2016,respectively.Allfiscalyearscontained52weeks.

VariableInterestEntities

ThecompanyconsolidatescertainVIEsrelatedtoretailnotesecuritizations(seeNote13).

ThecompanyalsohasaninterestinajointventurethatmanufacturesconstructionequipmentinBrazilforlocalandoverseasmarkets.ThejointventureisaVIE,butthecompanyisnottheprimarybeneficiary.Therefore,theentity'sfinancialresultsarenotfullyconsolidatedinthecompany'sconsolidatedfinancialstatements,butareincludedontheequitybasis.ThemaximumexposuretolossesatOctober28,2018inmillionsofdollarsfollows:

October2018Receivablesfromunconsolidatedaffiliates $ 2Loanguarantee 25Total $ 27

2.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES

Thefollowingaresignificantaccountingpoliciesinadditiontothoseincludedinothernotestotheconsolidatedfinancialstatements.

UseofEstimatesinFinancialStatements

ThepreparationoffinancialstatementsinconformitywithaccountingprinciplesgenerallyacceptedintheU.S.requiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsandrelateddisclosures.Actualresultscoulddifferfromthoseestimates.

RevenueRecognition

Salesofequipmentandservicepartsarerecordedwhenthesalespriceisdeterminableandtherisksandrewardsofownershiparetransferredtoindependentpartiesbasedonthesalesagreementsineffect.IntheU.S.andmostinternationallocations,thistransferoccursprimarilywhengoodsareshipped.InCanadaandsomeotherinternationallocations,certaingoodsareshippedtodealersonaconsignmentbasisunderwhichtherisksandrewardsofownershiparenottransferredtothedealer.Accordingly,intheselocations,salesarenotrecordeduntilaretailcustomerhaspurchasedthegoods.Inallcases,whenasaleisrecordedbythecompany,nosignificantuncertaintyexistssurroundingthepurchaser'sobligationtopay.Norightofreturnexistsonsalesofequipment.Inselectinstances,equipmentistransferredtoacustomerorafinancialinstitutionwithasignificantresidualvalueguaranteeorwithanobligationtorepurchasetheequipmentforaspecifiedamount,whichisexercisableatthecustomer'soption.Thosearrangementsareaccountedforasleases.Whentheoperatingleasecriteriaaremet,nosaleisrecordedatthetimeoftheequipmenttransferandthedifferencebetweensalepriceandthespecifiedamountisrecognizedasrevenueonastraight-linebasisuntilthecustomer'soptionexpires.Servicepartsandcertainattachmentsreturnsareestimableandaccruedatthetimeasaleisrecognized.Thecompanymakesappropriateprovisionsbasedonexperienceforcostssuchasdoubtfulreceivables,salesincentives,andproductwarranty.

Financingrevenueisrecordedoverthelivesofrelatedreceivablesusingtheinterestmethod.Extendedwarrantypremiumsrecordedinotherincomearegenerallyrecognizedinproportiontothecostsexpectedtobeincurredoverthecontractperiod.Deferredcostsontheoriginationoffinancingreceivablesarerecognizedasareductioninfinancerevenueovertheexpectedlivesofthereceivablesusingtheinterestmethod.Incomeanddeferredcostsontheoriginationofoperatingleasesarerecognizedonastraight-linebasisoverthescheduledleasetermsinfinancerevenue.

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SalesIncentives

Atthetimeasaleisrecognized,thecompanyrecordsanestimateofthefuturesalesincentivecostsforallowancesandfinancingprogramsthatwillbeduewhenadealersellstheequipmenttoaretailcustomer.Theestimateisbasedonhistoricaldata,announcedincentiveprograms,fieldinventorylevels,andretailsalesvolumes.

ProductWarranties

Atthetimeasaleisrecognized,thecompanyrecordstheestimatedfuturewarrantycosts.Thesecostsareusuallyestimatedbasedonhistoricalwarrantyclaimsandconsiderationofcurrentqualitydevelopments(seeNote22).

SalesTaxes

Thecompanycollectsandremitstaxesassessedbydifferentgovernmentalauthoritiesthatarebothimposedonandconcurrentwithrevenueproducingtransactionsbetweenthecompanyanditscustomers.Thesetaxesmayincludesales,use,value-added,andsomeexcisetaxes.Thecompanyreportsthecollectionofthesetaxesonanetbasis(excludedfromrevenues).

ShippingandHandlingCosts

Shippingandhandlingcostsrelatedtothesalesofthecompany'sequipmentareincludedincostofsales.

AdvertisingCosts

Advertisingcostsarechargedtoexpenseasincurred.Thisexpensewas$188millionin2018,$169millionin2017,and$169millionin2016.

DepreciationandAmortization

Propertyandequipment,capitalizedsoftware,andotherintangibleassetsaregenerallystatedatcostlessaccumulateddepreciationoramortization.Theseassetsaredepreciatedovertheirestimatedusefullivesgenerallyusingthestraight-linemethod.Equipmentonoperatingleasesisdepreciatedoverthetermsoftheleasesusingthestraight-linemethod.Propertyandequipmentexpendituresfornewandrevisedproducts,increasedcapacity,andthereplacementormajorrenewalofsignificantitemsarecapitalized.Expendituresformaintenance,repairs,andminorrenewalsaregenerallychargedtoexpenseasincurred.

SecuritizationofReceivables

Certainfinancingreceivablesareperiodicallytransferredtospecialpurposeentities(SPEs)insecuritizationtransactions(seeNote13).Thesesecuritizationsqualifyascollateralforsecuredborrowingsandnogainsorlossesarerecognizedatthetimeofsecuritization.Thereceivablesremainonthebalancesheetandareclassifiedas"Financingreceivablessecuritized–net."Thecompanyrecognizesfinanceincomeoverthelivesofthesereceivablesusingtheinterestmethod.

ReceivablesandAllowances

Allfinancingandtradereceivablesarereportedonthebalancesheetatoutstandingprincipaladjustedforanycharge-offs,theallowanceforcreditlosses,andanydeferredfeesorcostsonoriginatedfinancingreceivables.Allowancesforcreditlossesaremaintainedinamountsconsideredtobeappropriateinrelationtothereceivablesoutstandingbasedoncollectionexperience,economicconditionsinthecompany'smajormarketsandgeographies,andcreditriskquality.Receivables

arewritten-offtotheallowancewhentheaccountisconsidereduncollectible(seeNote12).

ImpairmentofLong-LivedAssets,Goodwill,andOtherIntangibleAssets

Thecompanyevaluatesthecarryingvalueoflong-livedassets(includingequipmentonoperatingleases,propertyandequipment,goodwill,andotherintangibleassets)wheneventsorcircumstanceswarrantsuchareview.Goodwillandintangibleassetswithindefinitelivesaretestedforimpairmentannuallyattheendofthethirdquarterofeachfiscalyear,andmoreoftenifeventsorcircumstancesindicateareductioninthefairvaluebelowthecarryingvalue.Goodwillisallocatedandreviewedforimpairmentbyreportingunits,whichconsistprimarilyoftheoperatingsegmentsandcertainotherreportingunits.Goodwillisallocatedtothereportingunitinwhichthebusinessthatcreatedthegoodwillresides.Totestforgoodwillimpairment,thecarryingvalueofeachreportingunitiscomparedwithitsfairvalue.Ifthecarryingvalueofthegoodwillisconsideredimpaired,theimpairmentismeasuredastheexcessofthereportingunit'scarryingvalueoverthefairvalue,withalimitofthegoodwillallocatedtothatreportingunit.Ifthecarryingvalueofthelong-livedassetisconsideredimpaired,alossisrecognizedbasedontheamountbywhichthecarryingvalueexceedsthefairvalueoftheasset(seeNotes5and26).

DerivativeFinancialInstruments

Itisthecompany'spolicythatderivativetransactionsareexecutedonlytomanageexposuresarisinginthenormalcourseofbusinessandnotforthepurposeofcreatingspeculativepositionsortrading.Thecompany'sfinancialservicesoperationsmanagetherelationshipofthetypesandamountsoftheirfundingsourcestotheirreceivableandleaseportfolioinanefforttodiminishriskduetointerestrateandforeigncurrencyfluctuations,whilerespondingtofavorablefinancingopportunities.Thecompanyalsohasforeigncurrencyexposuresatsomeofitsforeignanddomesticoperationsrelatedtobuying,selling,andfinancingincurrenciesotherthanthefunctionalcurrencies.Inaddition,thecompanyhasinterestrateexposureatcertainequipmentoperationsunitsforbelowmarketretailfinancingprogramsthatareusedassalesincentivesandareofferedforextendedperiods.

Allderivativesarerecordedatfairvalueonthebalancesheet.Cashcollateralreceivedorpaidisnotoffsetagainstthederivativefairvaluesonthebalancesheet.Eachderivativeisdesignatedaseitheracashflowhedgeorafairvaluehedgeorremainsundesignated.Changesinthefairvalueofderivativesthataredesignatedandeffectiveascashflowhedgesarerecordedinothercomprehensiveincome(OCI)andreclassifiedtotheincomestatementwhentheeffectsoftheitembeinghedgedarerecognizedintheincomestatement.Changesinthefairvalueofderivativesthataredesignatedandeffectiveasfairvaluehedgesarerecognizedcurrentlyinnetincome.Thesechangesareoffsetinnetincometotheextentthehedgewaseffectivebyfairvaluechangesrelatedtotheriskbeinghedgedonthehedgeditem.Changesinthefairvalueofundesignatedhedgesarerecognizedcurrentlyintheincomestatement.Allineffectivechangesinderivativefairvaluesarerecognizedcurrentlyinnetincome.

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Alldesignatedhedgesareformallydocumentedastotherelationshipwiththehedgeditemaswellastherisk-managementstrategy.Bothatinceptionandonanongoingbasisthehedginginstrumentisassessedastoitseffectiveness.Ifandwhenaderivativeisdeterminednottobehighlyeffectiveasahedge,theunderlyinghedgedtransactionisnolongerlikelytooccur,thehedgedesignationisremoved,orthederivativeisterminated,thehedgeaccountingdiscussedaboveisdiscontinued(seeNote27).

ForeignCurrencyTranslation

Thefunctionalcurrenciesformostofthecompany'sforeignoperationsaretheirrespectivelocalcurrencies.TheassetsandliabilitiesoftheseoperationsaretranslatedintoU.S.dollarsattheendoftheperiodexchangerates.Therevenuesandexpensesaretranslatedatweighted-averageratesfortheperiod.ThegainsorlossesfromthesetranslationsarerecordedinOCI.Gainsorlossesfromtransactionsdenominatedinacurrencyotherthanthefunctionalcurrencyofthesubsidiaryinvolvedandforeignexchangeforwardcontractsareincludedinnetincome.Thepretaxnetlossforforeignexchangein2018,2017,and2016was$8million,$62million,and$38million,respectively.

3.NEWACCOUNTINGSTANDARDS

NewAccountingStandardsAdopted

Inthefirstquarterof2018,thecompanyearlyadoptedFinancialAccountingStandardsBoard(FASB)AccountingStandardUpdate(ASU)No.2017-07,ImprovingthePresentationofNetPeriodicPensionCostandNetPeriodicPostretirementBenefitCost,whichamendsAccountingStandardsCodification(ASC)715,Compensation–RetirementBenefits.ThisASUrequiredthatemployersreportonlytheservicecostcomponentofthetotaldefinedbenefitpensionandOPEBcostinthesameincomestatementlinesascompensationfortheparticipatingemployees.Theothercomponentsofthesebenefitcostsarereportedoutsideofoperatingprofitintheincomestatementlineotheroperatingexpenses.TheASUwasadoptedonaretrospectivebasisthatincreasedoperatingprofitinfiscalyears2018,2017,and2016by$15million,$31million,and$20million,respectively.Theincomestatementlinechangesforfiscalyears2017and2016werecostofsalesdecreased$67millionand$53million,researchanddevelopmentexpensesincreased$5millionand$5million,selling,administrativeandgeneralexpensesincreased$31millionand$28million,andotheroperatingexpensesincreased$31millionand$20million,respectively.Inaddition,onlytheservicecostcomponentofthebenefitcostsiseligibleforcapitalization,whichwasadoptedbeginningthefirstquarterof2018.

Inthefirstquarterof2018,thecompanyadoptedASUNo.2016-07,SimplifyingtheTransitiontotheEquityMethodofAccounting,whichamendsASC323,Investments–EquityMethodandJointVentures,whichdidnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

InMarch2018,theFASBissuedASUNo.2018-05,AmendmentstoSECParagraphsPursuanttoSECStaffAccountingBulletinNo.118,whichamendsASC740,IncomeTaxes.ThisASUincorporatesSECStaffAccountingBulletinNo.118,whichwasalsoissuedinDecember2017,intotheASC.TheASUprovidesguidanceonwhentorecordand

discloseprovisionalamountsrelatedtotaxreform.Inaddition,theASUallowsforameasurementperioduptooneyearaftertheenactmentdateoftaxreformtocompletetherelatedaccountingrequirementsandwaseffectivewhenissued.Thecompanywillcompletetheadjustmentsrelatedtotaxreformwithintheallowedperiod.Theeffectsoftaxreformonthecompany'sconsolidatedfinancialstatementsareoutlinedinNote8.

InFebruary2018,theFASBissuedASUNo.2018-02,ReclassificationofCertainTaxEffectsfromAccumulatedOtherComprehensiveIncome,whichamendsASC220,IncomeStatement–ReportingComprehensiveIncome.Includedintheprovisionsoftaxreformisareductionofthecorporateincometaxratefrom35percentto21percent.AccountingprinciplesgenerallyacceptedintheU.S.requirethatdeferredtaxesareremeasuredtothenewcorporatetaxrateintheperiodlegislationisenacted.Thedeferredtaxadjustmentisrecordedintheprovisionforincometaxes,includingitemsforwhichthetaxeffectswereoriginallyrecordedinOCI.ThistreatmentresultsintheitemsinOCInotreflectingtheappropriatetaxrate,whicharereferredtoasstrandedtaxeffects.ThisASUallowsareclassificationfromaccumulatedOCItoretainedearningsforstrandedtaxeffectsresultingfromtaxreform.ThecompanyearlyadoptedthisASUinthefourthquarterof2018.ThestrandedtaxeffectsreclassifiedfromOCItoretainedearningswere$717million.

NewAccountingStandardstobeAdopted

InMay2014,theFASBissuedASUNo.2014-09,RevenuefromContractswithCustomers(Topic606),whichsupersedestherevenuerecognitionrequirementsinASC605,RevenueRecognition.ThisASUisbasedontheprinciplethatrevenueisrecognizedtodepictthetransferofgoodsorservicestocustomersinanamountthatreflectstheconsiderationtowhichtheentityexpectstobeentitledinexchangeforthosegoodsorservices.TheASUalsorequiresadditionaldisclosureaboutthenature,amount,timing,anduncertaintyofrevenue.TheFASBissuedseveralamendmentsclarifyingvariousaspectsoftheASU,includingrevenuetransactionsthatinvolveathirdparty,goodsorservicesthatareimmaterialinthecontextofthecontract,andlicensingarrangements.ThecompanywilladopttheASUeffectivethefirstquarteroffiscalyear2019usingamodified-retrospectiveapproach.TheASUrequiresthatagrossassetandliabilityratherthananetliabilityberecordedforthevalueofestimatedservicepartsreturnsandtherelatedrefundliability.Thegrossassetwillberecordedinotherassetsfortheinventoryvalueofestimatedpartsreturnsandthegrossliabilitywillberecordedinaccountspayableandaccruedexpensesfortheestimateddealerrefund.Theestimatedincreaseinotherassetsandaccountspayableandaccruedexpenseswillbeapproximately$110million.Inaddition,certainrevenuedisclosureswillbeexpandedtoincludecontractliabilitiesanddisaggregatedrevenuebygeographicregionsandmajorproductandserviceslines.Theadoptionwillnothaveothermaterialeffectsonthecompany'sconsolidatedfinancialstatements.

InJanuary2016,theFASBissuedASUNo.2016-01,RecognitionandMeasurementofFinancialAssetsandFinancialLiabilities,whichamendsASC825-10,FinancialInstruments–Overall.ThisASUchangesthetreatmentforavailable-for-saleequityinvestmentsbyrecognizingunrealized

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fairvaluechangesdirectlyinnetincomeandnolongerinothercomprehensiveincome.Theeffectivedatewillbethefirstquarteroffiscalyear2019.TheASUwillbeadoptedwithacumulative-effectadjustmenttothebalancesheet.Theavailable-for-saleequitiesbalanceatOctober28,2018is$46millionwithanunrealizedgainof$10million.Asaresult,theadoptionwillnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

InFebruary2016,theFASBissuedASUNo.2016-02,Leases(Topic842),whichsupersedesASC840,Leases.TheASU'sprimarychangeistherequirementforlesseeentitiestorecognizealeaseliabilityforpaymentsandarightofuseassetduringthetermofoperatingleasearrangements.TheASUdoesnotsignificantlychangethelessee'srecognition,measurement,andpresentationofexpensesandcashflowsfromthepreviousaccountingstandard.Lessors'accountingundertheASCislargelyunchangedfromthepreviousaccountingstandard.InJuly2018,theFASBissuedASUNo.2018-10,CodificationImprovementstoTopic842,LeasesandASUNo.2018-11,Leases:TargetedImprovements.BothASUsamendASC842,Leases.TheprovisionsimpactingthecompanyintheseASUsareanoptionthatwillnotrequirepriorperiodstoberestatedattheadoptiondateandanoptionforlessors,ifcertaincriteriaaremet,toavoidseparatingtheleaseandnonleasecomponents(suchaspreventativemaintenanceservices)inanagreement.InDecember2018,theFASBissuedASUNo.2018-20,Narrow-ScopeImprovementsforLessors.ThisASUprovidesanelectionforlessorstoexcludesalesandrelatedtaxesfromconsiderationinthecontract,requireslessorstoexcludefromrevenueandexpenselessorcostspaiddirectlytoathirdpartybylessees,andclarifieslessors'accountingforvariablepaymentsrelatedtobothleaseandnonleasecomponents.Theeffectivedatewillbethefirstquarteroffiscalyear2020,withearlyadoptionpermitted.ThecompanyisevaluatingthepotentialeffectsontheconsolidatedfinancialstatementsandplanstoadopttheASUusingthemodified-retrospectiveapproachthatwillnotrequirepriorperiodstoberestated.

InJune2016,theFASBissuedASUNo.2016-13,MeasurementofCreditLossesonFinancialInstruments,whichestablishesASC326,FinancialInstruments–CreditLosses.TheASUrevisesthemeasurementofcreditlossesforfinancialassetsmeasuredatamortizedcostfromanincurredlossmethodologytoanexpectedlossmethodology.TheASUaffectstradereceivables,debtsecurities,netinvestmentinleases,andmostotherfinancialassetsthatrepresentarighttoreceivecash.Additionaldisclosuresaboutsignificantestimatesandcreditqualityarealsorequired.InNovember2018,theFASBissuedASUNo.2018-19,CodificationImprovementstoTopic326,FinancialInstruments–CreditLosses.ThisASUclarifiesthatreceivablesfromoperatingleasesareaccountedforusingtheleaseguidanceandnotasfinancialinstruments.Theeffectivedatewillbethefirstquarteroffiscalyear2021,withearlyadoptionpermittedbeginninginfiscalyear2020.TheASUwillbeadoptedusingamodified-retrospectiveapproach.Thecompanyisevaluatingthepotentialeffectsontheconsolidatedfinancialstatements.

InAugust2016,theFASBissuedASUNo.2016-15,ClassificationofCertainCashReceiptsandCashPayments,whichamendsASC230,StatementofCashFlows.ThisASU

providesguidanceonthestatementofcashflowspresentationofcertaintransactionswherediversityinpracticeexists.Theeffectivedatewillbethefirstquarteroffiscalyear2019andwillbeadoptedusingaretrospectivetransitionapproach.Theadoptionwillnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

InOctober2016,theFASBissuedASUNo.2016-16,Intra-EntityTransfersofAssetsOtherThanInventory,whichamendsASC740,IncomeTaxes.ThisASUrequiresthattheincometaxconsequencesofanintra-entityassettransferotherthaninventoryarerecognizedatthetimeofthetransfer.Theeffectivedatewillbethefirstquarteroffiscalyear2019.TheASUwillbeadoptedusingamodified-retrospectivetransitionapproach.Theadoptionwillnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

InNovember2016,theFASBissuedASUNo.2016-18,RestrictedCash,whichamendsASC230,StatementofCashFlows.ThisASUrequiresthatastatementofcashflowsexplainthechangeduringthereportingperiodinthetotalofcash,cashequivalents,andrestrictedcashorrestrictedcashequivalents.Theeffectivedatewillbethefirstquarteroffiscalyear2019andwillbeadoptedusingaretrospectivetransitionapproach.Theadoptionwillnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

InJanuary2017,theFASBissuedASUNo.2017-01,ClarifyingtheDefinitionofaBusiness,whichamendsASC805,BusinessCombinations.ThisASUprovidesfurtherguidanceonthedefinitionofabusinesstodeterminewhethertransactionsshouldbeaccountedforasacquisitionsofassetsorbusinesses.Theeffectivedatewillbethefirstquarteroffiscalyear2019.TheASUwillbeadoptedonaprospectivebasisandwillnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

InMarch2017,theFASBissuedASUNo.2017-08,PremiumAmortizationonPurchasedCallableDebtSecurities,whichamendsASC310-20,Receivables–NonrefundableFeesandOtherCosts.ThisASUreducestheamortizationperiodforcertaincallabledebtsecuritiesheldatapremiumtotheearliestcalldate.Thetreatmentofsecuritiesheldatadiscountisunchanged.Theeffectivedateisthefirstquarteroffiscalyear2020,withearlyadoptionpermitted.Theadoptionwillnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

InMay2017,theFASBissuedASUNo.2017-09,ScopeofModificationAccounting,whichamendsASC718,Compensation–StockCompensation.ThisASUprovidesguidanceaboutwhichchangestothetermsofashare-basedpaymentawardshouldbeaccountedforasamodification.Achangetoanawardshouldbeaccountedforasamodificationunlessthefairvalueofthemodifiedawardisthesameastheoriginalaward,thevestingconditionsdonotchange,andtheclassificationasanequityorliabilityinstrumentdoesnotchange.TheASUwillbeadoptedonaprospectivebasis.Theeffectivedateisthefirstquarteroffiscalyear2019.Theadoptionwillnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

InAugust2017,theFASBissuedASUNo.2017-12,TargetedImprovementstoAccountingforHedgingActivities,whichamendsASC815,DerivativesandHedging.Thepurposeof

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thisASUistobetteralignacompany'sriskmanagementactivitiesandfinancialreportingforhedgingrelationships,simplifythehedgeaccountingrequirements,andimprovethedisclosuresofhedgingarrangements.Theeffectivedateisfiscalyear2020,withearlyadoptionpermitted.ThecompanywilladopttheASUinthefirstquarteroffiscalyear2019andtheadoptionwillnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

InJune2018,theFASBissuedASUNo.2018-07,ImprovementstoNonemployeeShare-BasedPaymentAccounting,whichamendsASC718,Compensation–StockCompensation.ThisASUrequiresthatmostoftheguidancerelatedtostockcompensationgrantedtoemployeesbefollowedfornon-employees,includingthemeasurementdate,valuationapproach,andperformanceconditions.Theexpenseisrecognizedinthesameperiodasthoughcashwerepaidforthegoodorservice.Theeffectivedateisthefirstquarteroffiscalyear2020,withearlyadoptionpermitted,includingininterimperiods.TheASUwillbeadoptedusingamodified-retrospectivetransitionapproach.Theadoptionwillnothaveamaterialeffectontheconsolidatedfinancialstatements.

InAugust2018,theFASBissuedASUNo.2018-13,DisclosureFramework–ChangestotheDisclosureRequirementsforFairValueMeasurement,whichamendsASC820,FairValueMeasurement.ThisASUmodifiesthedisclosurerequirementsforfairvaluemeasurementsbyremoving,modifying,oraddingcertaindisclosures.Theeffectivedateisthefirstquarteroffiscalyear2021,withearlyadoptionpermittedfortheremoveddisclosuresanddelayedadoptionuntilfiscalyear2021permittedforthenewdisclosures.Theremovedandmodifieddisclosureswillbeadoptedonaretrospectivebasisandthenewdisclosureswillbeadoptedonaprospectivebasis.ThecompanywillearlyadopttheASUinthefirstquarteroffiscalyear2019.Theadoptionwillnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

InAugust2018,theFASBissuedASUNo.2018-14,DisclosureFramework–ChangestotheDisclosureRequirementsforDefinedBenefitPlans,whichamendsASC715-20,Compensation–RetirementBenefits–DefinedBenefitPlans–General.ThisASUmodifiesthedisclosurerequirementsforemployersthatsponsordefinedbenefitpensionorotherpostretirementplansbyremovingandaddingcertaindisclosuresfortheseplans.Theeliminateddisclosuresinclude(a)theamountsinaccumulatedOCIexpectedtoberecognizedinnetperiodicbenefitcostsoverthenextfiscalyearand(b)theeffectsofaone-percentage-pointchangeinassumedhealthcarecosttrendratesonthenetperiodicbenefitcostsandthebenefitobligationforpostretirementhealthcarebenefits.Thenewdisclosuresincludetheinterestcreditingratesforcashbalanceplans,andanexplanationofsignificantgainsandlossesrelatedtochangesinbenefitobligations.Theeffectivedateisfiscalyear2021,withearlyadoptionpermitted.ThecompanywillearlyadopttheASUinfiscalyear2019.Theadoptionwillnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

InAugust2018,theFASBissuedASUNo.2018-15,Customer'sAccountingforImplementationCostsIncurredinaCloud

ComputingArrangementThatIsaServiceContract,whichamendsASC350-40,Intangibles–GoodwillandOther–Internal-UseSoftware.ThisASUrequirescustomersinahostingarrangementthatisaservicecontracttoevaluatetheimplementationcostsofthehostingarrangementusingtheguidancetodevelopinternal-usesoftware.Theprojectdevelopmentstagedeterminestheimplementationcoststhatarecapitalizedorexpensed.Capitalizedimplementationcostsareamortizedoverthetermoftheservicearrangementandarepresentedinthesameincomestatementlineitemastheservicecontractcosts.Theeffectivedatewillbethefirstquarteroffiscalyear2021,withearlyadoptionpermitted.ThecompanywilladopttheASUonaprospectivebasis.Thecompanyisevaluatingthepotentialeffectsonthecompany'sconsolidatedfinancialstatements.

InOctober2018,theFASBissuedASUNo.2018-16,InclusionoftheSecuredOvernightFinancingRate(SOFR)OvernightIndexSwap(OIS)RateasaBenchmarkInterestRateforHedgeAccountingPurposes,whichamendsASC815,DerivativesandHedging.ThisASUaddstheOISratebasedonSOFRtothelistofpermissiblebenchmarkratesforhedgeaccountingpurposes.ThecompanywillearlyadopttheASUinthefirstquarteroffiscalyear2019.Theadoptionwillnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

4.ACQUISITIONSANDDISPOSITIONS

Acquisitions

PLA

OnSeptember26,2018,thecompanyacquiredPLA,aprivately-heldmanufacturerofsprayers,planters,andspecialtyproductsforagriculture.PLAisbasedinArgentina,withmanufacturingfacilitiesinLasRosas,ArgentinaandCanoas,Brazil.Thetotalcashpurchasepricebeforethefinaladjustment,netofcashacquiredof$1million,was$74millionwith$4millionretainedbythecompanyasescrowtosecureindemnityobligations.Inadditiontothecashpurchaseprice,thecompanyassumed$30millionofliabilities.Thepreliminaryassetandliabilityfairvaluesattheacquisitiondateinmillionsofdollarsfollow:

Theidentifiedintangibleassetswereprimarilyrelatedtotechnology,trademarks,andcustomerrelationships.Thegoodwillisnotexpectedtobedeductiblefortaxpurposes.

September2018Tradeaccountsandnotesreceivable $ 6Otherreceivables 14Inventories 19Propertyandequipment 1Goodwill 43Otherintangibleassets 21Totalassets $ 104

Short-termborrowings $ 8Accountspayableandaccruedexpenses 17Deferredincometaxes 5Totalliabilities $ 30

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KingAgro

InMarch2018,thecompanyacquiredKingAgro,aprivatelyheldmanufacturerofcarbonfibertechnologyproductswithheadquartersinValencia,SpainandaproductionfacilityinCampana,Argentina.Thetotalcashpurchaseprice,netofcashacquiredof$3million,was$40million,excludingaloantoKingAgroof$4millionthatwasforgivenontheacquisitiondate.Inadditiontothecashpurchaseprice,thecompanyassumed$11millionofliabilities.Theassetandliabilityfairvaluesattheacquisitiondateinmillionsofdollarsfollow:

Theidentifiableintangibleswereprimarilyrelatedtotradenameandtechnology,whichhaveaweighted-averageamortizationperiodoftenyears.Thegoodwillisnotexpectedtobedeductiblefortaxpurposes.

Wirtgen

InDecember2017,thecompanyacquiredWirtgen,whichwasaprivately-heldinternationalcompanyandistheleadingmanufacturerworldwideofroadconstructionequipment.HeadquarteredinGermany,Wirtgenhassixbrandsacrosstheroadconstructionsectorspanningprocessing,mixing,paving,compaction,andrehabilitation.Wirtgensellsproductsinmorethan100countriesandhadapproximately8,200employeesattheacquisitiondate.

Thetotalcashpurchaseprice,netofcashacquiredof$191million,was$5,136million,aportionofwhichisheldinescrowtosecurecertainindemnityobligationsofWirtgen.Inadditiontothecashpurchaseprice,thecompanyassumed$1,641millioninliabilities,whichrepresentedsubstantiallyallofWirtgen'sliabilities.Thecompanyfinancedtheacquisitionandassociatedtransactionexpensesfromacombinationofcashandnewdebtfinancing,whichconsistedofmedium-termnotes,including€850millionissuedinSeptember2017.The

March2018Tradeaccountsandnotesreceivable $ 2Otherreceivables 2Inventories 5Propertyandequipment 5Goodwill 28Otherintangibleassets 13Totalassets $ 55

Short-termborrowings $ 2Accountspayableandaccruedexpenses 4Deferredincometaxes 4Long-termborrowings 1Totalliabilities $ 11

assetandliabilityfairvaluesattheacquisitiondateinmillionsofdollarsfollow:

Theidentifiableintangibleassets'fairvaluesinmillionsofdollarsandweighted-averageusefullivesinyearsfollows:

Thegoodwillisnotdeductiblefortaxpurposes.

Wirtgen'sresultsareincorporatedinthecompany'sconsolidatedfinancialstatementsusingaone-monthlagperiodandareincludedintheconstructionandforestrysegment.Thenetsalesandrevenuesandoperatingprofitincludedinthecompany'sstatementofconsolidatedincomein2018was$3,181millionand$116million,respectively.During2018,thecompanyrecognized$56millionofacquisitionrelatedcosts,whichwererecorded$30millioninselling,administrativeandgeneralexpensesand$26millioninotheroperatingexpenses.

Theunauditedproformaconsolidatednetsalesandrevenuesandnetincomearepreparedasiftheacquisitionclosedatthebeginningoffiscalyear2017andfollowinmillionsofdollars:

December2017Receivablesfromunconsolidatedaffiliates $ 5Tradeaccountsandnotesreceivable 449Financingreceivables 43Financingreceivablessecuritized 125Otherreceivables 98Inventories 1,536Propertyandequipment 752Investmentsinunconsolidatedaffiliates 19Goodwill 2,068Otherintangibleassets 1,442Deferredincometaxes 26Otherassets 215Totalassets $ 6,778

Short-termborrowings $ 285Short-termsecuritizationborrowings 127Accountspayableandaccruedexpenses 719Deferredincometaxes 430Long-termborrowings 50Retirementbenefitsandotherliabilities 30Totalliabilities $ 1,641

Noncontrollinginterests $ 1

Weighted-Average

UsefulLivesFairValues

Customerlistsandrelationships 16 $ 519Technology,patents,trademarks,andother 19 $ 923

2018 2017Netsalesandrevenues $ 37,822 $ 32,946NetincomeattributabletoDeere&Company $ 2,637 $ 2,272

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Theproformaamountshavebeencalculatedusingpoliciesconsistentwiththecompany'saccountingpoliciesandincludetheadditionalexpensefromtheamortizationfromtheallocatedpurchasepriceadjustments.Theproformaresultsexcludeacquisitionrelatedcostsincurredinbothyearsandassumethemedium-termnotesusedtofundtheacquisitionwereissuedinfiscalyear2016attheinterestrateoftheactualnotes.Inaddition,theproformaresultsfortheyearendedOctober29,2017includenonrecurringpretaxexpensesof$291millionforthehighercostbasisfromtheinventoryfairvalueadjustmentand$84millionfortheamortizationofidentifiableintangibleassets.Anticipatedsynergiesorotherexpectedbenefitsoftheacquisitionarenotincludedintheproformaresults.Asaresult,theunauditedproformafinancialinformationmaynotbeindicativeoftheresultsforfutureoperationsortheresultsiftheacquisitionclosedatthebeginningoffiscalyear2017.

BlueRiver

InSeptember2017,thecompanyacquiredBlueRiverTechnology(BlueRiver),whichisbasedinSunnyvale,Californiaforanacquisitioncostofapproximately$284million,netofcashacquiredof$4millionand$21millionfundedtoescrowforpost-acquisitionexpenses.BlueRiverhasdesignedandintegratedcomputervisionandmachinelearningtechnologytooptimizetheuseoffarminputs.Machinelearningtechnologiescouldeventuallybeappliedtoawiderangeofthecompany'sproducts.Theassetandliabilityfairvaluesattheacquisitiondateinmillionsofdollarsfollow:

Theidentifiableintangibleswereprimarilyrelatedtoin-processresearchanddevelopment,whichwillnotbeamortizeduntiltheresearchanddevelopmenteffortsarecompleteorend.

Thegoodwillisnotdeductiblefortaxpurposes.BlueRiverisincludedinthecompany'sagricultureandturfoperatingsegment.

Hagie

InMarch2016,thecompanyacquiredan80percentinterestinHagieManufacturingCompany,LLC,theU.S.marketleaderinhigh-clearancesprayerslocatedinClarion,Iowa,foracostofapproximately$53million,netofcashacquiredof

September2017Tradeaccountsandnotesreceivable $ 1Propertyandequipment 2Goodwill 193Otherintangibleassets 125Totalassets $ 321

Accountspayableandaccruedexpenses $ 1Deferredincometaxes 36Totalliabilities $ 37

$3million.Theassetandliabilityfairvaluesattheacquisitiondateinmillionsofdollarsfollow:

Theidentifiableintangibleswereprimarilyrelatedtotechnology,tradenameandcustomerrelationships,whichhaveaweightedaverageamortizationperiodofeightyears.Thegoodwillisdeductiblefortaxpurposes.Ifcertaineventsoccur,theminorityinterestholderhastherighttoexerciseaputoptionthatwouldrequirethecompanytopurchasetheholder'smembershipinterest.Thecompanyalsohasacalloptionexercisableafteracertainperiodoftime.Theputandcalloptionscannotbeseparatedfromthenoncontrollinginterest.Duetotheredemptionfeatures,theminorityinterestholder'svalueisclassifiedasaredeemablenoncontrollinginterestinthecompany'sconsolidatedbalancesheet.

Monosem

InFebruary2016,thecompanyacquiredMonosemforacostofapproximately$146million,netofcashacquiredof$20million.Monosem,withfourfacilitiesinFranceandtwointheU.S.,istheEuropeanmarketleaderinprecisionplanters.Theassetandliabilityfairvaluesattheacquisitiondateinmillionsofdollarsfollow:

Theidentifiableintangibleswereprimarilyrelatedtotradename,customerrelationshipsandtechnology,whichhaveaweightedaverageamortizationperiodofnineyears.Thegoodwillisnotdeductiblefortaxpurposes.

Fortheacquisitions,thegoodwillwastheresultoffuturecashflowsandrelatedfairvalueexceedingthefairvalueoftheidentifiedassetsandliabilities.FortheacquisitionsotherthanWirtgen,theresultsoftheseoperationshavebeenincludedinthecompany'sconsolidatedfinancialstatementsintheagricultureandturfoperatingsegmentandtheproformaresultsofoperationsasiftheseacquisitionshadoccurredatthebeginningofthecurrentorcomparativefiscalyearwouldnotdiffersignificantlyfromthereportedresults.

March2016Tradeaccountsandnotesreceivable $ 2Inventories 33Propertyandequipment 17Goodwill 33Otherintangibleassets 22Otherassets 3Totalassets $ 110

Accountspayableandaccruedexpenses,andTotalliabilities $ 43

Redeemablenoncontrollinginterest $ 14

February2016 Tradeaccountsandnotesreceivable $ 5

Otherreceivables 2Inventories 29Propertyandequipment 24Goodwill 62Otherintangibleassets 42Otherassets 23Totalassets $ 187

Accountspayableandaccruedexpenses $ 22

Deferredincometaxes 19Totalliabilities $ 41

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Dispositions

InMay2018,thecompanysoldconstructionandforestryretaillocationsinMichigan,Minnesota,andWisconsin.Atthetimeofthesale,totalassetswere$74millionandliabilitieswereapproximately$2million.Theassetsconsistedoftradeaccountsandnotesreceivable–netof$3million,inventoryof$52million,propertyandequipment–netof$11million,andgoodwillof$8million.Theliabilitiesconsistedof$2millionofaccountspayableandaccruedexpenses.Thetotalproceedsfromthesalewillbeapproximately$84million,with$67millionreceivedin2018.Theremainingsalespriceisduebasedonstandardpaymenttermsofnewequipmentsalestoindependentdealersorrefinancedwholesaleterms.Apretaxgainof$12millionwasrecordedinotherincomeintheconstructionandforestrysegment.

InNovember2017,thecompanysolditsconstructionandforestryretaillocationsinFlorida.Atthetimeofthesale,totalassetswere$93millionandliabilitieswere$1million.Theassetsconsistedofinventoryof$61million,propertyandequipment–netof$21million,goodwillof$10million,and$1millionofotherassets.Theliabilitiesconsistedof$1millionofaccountspayableandaccruedexpenses.Thetotalproceedsfromthesalewillbeapproximately$105million,with$89millionreceivedin2018.Theremainingsalespriceisduebasedonstandardpaymenttermsofnewequipmentsalestoindependentdealersorrefinancedwholesaleterms.Apretaxgainof$13millionwasrecordedinotherincomeintheconstructionandforestrysegment.

Fortheretaillocationdispositions,thecompanysellsequipment,serviceparts,andprovidesotherservicestothepurchasersasindependentdealers.

5.SPECIALITEMS

Impairments

Inthefourthquarterof2017,thecompanyrecordedanon-cashchargeof$40millionpretaxinequityinlossofunconsolidatedaffiliatesforanotherthantemporarydeclineinvalueofaninvestmentinaninternationalconstructionequipmentmanufacturerwitha$14millionincometaxbenefitrecordedintheprovisionforincometaxes(seeNote26).

Inthefourthquarterof2016,thecompanyrecordedanon-cashchargeincostofsalesfortheimpairmentoflong-livedassetsof$13millionpretaxandafter-tax.Theassetsarepartofthecompany'sconstructionandforestryoperationsinChina.Theimpairmentistheresultofadeclineinforecastedfinancialperformancethatindicateditwasprobablethefuturecashflowswouldnotcoverthecarryingamountofassetsusedtomanufactureconstructionequipmentinthatcountry.Inaddition,thecompanyrecordedanon-cashchargeof$12million,pretaxandafter-tax,inequityinlossofunconsolidatedaffiliatesforanotherthantemporarydeclineinvalueofaninvestmentinaconstructionequipmentjointventureinBrazil(seeNote26).

In2016,thecompanyrecordednon-cashchargesinotheroperatingexpensesofapproximately$31millionpretaxfortheimpairmentofequipmentonoperatingleasesandapproximately$29millionpretaxonmaturedoperatingleaseinventoryrecordedinotherassets.Theimpairmentwastheresultoflowerestimatedvaluesofusedagricultureandconstructionequipmentthanoriginallyestimatedwiththeprobableeffectthatthefuturecashflowswouldnotcover

thecarryingamountofthenetassets.Theassetsarepartofthefinancialservicesoperations(seeNote26).

VoluntaryEmployee-SeparationPrograms

Duringthefourthquarterof2016,thecompanyannouncedvoluntaryemployee-separationprogramsaspartofitsefforttoreduceoperatingcosts.Theprogramsprovidedforcashpaymentsbasedonpreviousyearsofservice.Theexpensewasrecordedintheperiodtheemployeesacceptedtheseparationoffer.Theprograms'totalpretaxexpenseswere$113million,ofwhich$11millionwasrecordedinthefourthquarterof2016and$102millionin2017.Thetotal2017expenseswereallocatedapproximately30percentcostofsales,16percentresearchanddevelopment,and54percentselling,administrativeandgeneral.Inaddition,theexpenseswereallocated75percenttoagricultureandturfoperations,17percenttotheconstructionandforestryoperations,and8percenttothefinancialservicesoperations.Savingsfromtheseprogramswereestimatedtobeapproximately$70millionin2017.

SaleofInvestmentinUnconsolidatedAffiliate

InDecember2016,thecompanysoldapproximately38percentofitsinterestinSiteOneLandscapeSupply,Inc.(SiteOne)resultingingrossproceedsof$114millionandagainof$105millionpretaxor$66millionafter-tax.InApril2017,thecompanysoldanadditional68percentofitsthenremaininginterestinSiteOneresultingingrossproceedsof$184millionandagainof$176millionpretaxor$111millionafter-tax.InJuly2017,thecompanysolditsremaininginterestinSiteOneresultingingrossproceedsof$98millionandagainof$94millionpretaxor$59millionafter-tax.Thegainswererecordedinotherincomeintheagricultureandturfoperatingsegment.

AftertheDecember2016sale,thecompanyretainedapproximatelya15percentownershipinterestinSiteOneandapproximatelya5percentownershipinterestaftertheAprilsale.PriortoApril2017,thecompany'srepresentationontheSiteOneboardofdirectorsallowedthecompanytoexercisesignificantinfluence,andtherefore,theinvestmentinSiteOnewasaccountedforusingtheequitymethod.InMarch2017,thecompanyreduceditsrepresentationontheSiteOneboardofdirectors.Asaresult,beginningApril2017theinvestmentinSiteOnewasrecordedasanavailable-for-salesecurityandpresentedinmarketablesecurities.

InMay2016,thecompanyreceivedadistributionof$60millionfromSiteOnethatreducedthecompany'sinvestmentinunconsolidatedaffiliates.Thedistributionincluded$4millionofareturnoninvestment,whichisshowninthestatementofconsolidatedcashflowsinundistributedearningsofunconsolidatedaffiliatesinnetcashprovidedbyoperatingactivitiesand$56millionofareturnofinvestmentshowninothercashflowsfrominvestingactivities.InMay2016,thecompanyalsosoldapproximately30percentofitsinterestinSiteOneinaninitialpublicofferingandterminatedaserviceagreementresultingingrossproceedsofapproximately$81millionwithatotalgainof$75millionpretaxor$47millionafter-tax.Thegainwasrecordedinotherincomeintheagricultureandturfoperatingsegment.Thecompanyretainedapproximatelya24percentownershipinterestinSiteOneaftertheMay2016sale.

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6.CASHFLOWINFORMATION

Forpurposesofthestatementofconsolidatedcashflows,thecompanyconsidersinvestmentswithpurchasedmaturitiesofthreemonthsorlesstobecashequivalents.Substantiallyallofthecompany'sshort-termborrowings,excludingthecurrentmaturitiesoflong-termborrowings,matureormayrequirepaymentwithinthreemonthsorless.

Theequipmentoperationssellasignificantportionoftheirtradereceivablestofinancialservices.Theseintercompanycashflowsareeliminatedintheconsolidatedcashflows.

Allcashflowsfromthechangesintradeaccountsandnotesreceivable(seeNote12)areclassifiedasoperatingactivitiesinthestatementofconsolidatedcashflowsasthesereceivablesarisefromsalestothecompany'scustomers.Cashflowsfromfinancingreceivablesthatarerelatedtosalestothecompany'scustomers(seeNote12)arealsoincludedinoperatingactivities.Theremainingfinancingreceivablesarerelatedtothefinancingofequipmentsoldbyindependentdealersandareincludedininvestingactivities.

Thecompanyhadthefollowingnon-cashoperatingandinvestingactivitiesthatwerenotincludedinthestatementofconsolidatedcashflows.Thecompanytransferredinventorytoequipmentonoperatingleasesof$855million,$801million,and$685millionin2018,2017,and2016,respectively.Thecompanyalsohadaccountspayablerelatedtopurchasesofpropertyandequipmentof$183million,$108million,and$114millionatOctober28,2018,October29,2017,andOctober30,2016,respectively.

Cashpaymentsforinterestandincometaxesconsistedofthefollowinginmillionsofdollars:

2018 2017 2016 Interest: Equipmentoperations $ 581 $ 506 $ 442Financialservices 926 665 524Intercompanyeliminations (331) (268) (240)

Consolidated $ 1,176 $ 903 $ 726Incometaxes: Equipmentoperations $ 625 $ 898 $ 314Financialservices 387 92 (26)Intercompanyeliminations (300) (9) 104

Consolidated $ 712 $ 981 $ 392

7.PENSIONANDOTHERPOSTRETIREMENTBENEFITS

Thecompanyhasseveraldefinedbenefitpensionplansandotherpostretirementbenefit(OPEB)plans,primarilyhealthcareandlifeinsuranceplans,coveringitsU.S.employeesandemployeesincertainforeigncountries.ThecompanyusesanOctober31measurementdatefortheseplans.

Thecomponentsofnetperiodicpensioncostandtheassumptionsrelatedtothecostconsistedofthefollowinginmillionsofdollarsandinpercents:

ThecomponentsofnetperiodicOPEBcostandtheassumptionsrelatedtothecostconsistedofthefollowinginmillionsofdollarsandinpercents:

ThespotyieldcurveapproachisusedtoestimatetheserviceandinterestcostcomponentsofthenetperiodicpensionandOPEBcostsbyapplyingthespecificspotratesalongtheyieldcurveusedtodeterminethebenefitplanobligationstorelevantprojectedcashoutflows.ThecomponentsofnetperiodicpensionandOPEBcostexcludingtheservicecomponentareincludedinthelineitemotheroperatingexpensesintheStatementofConsolidatedIncome.

2018 2017 2016Pensions Servicecost $ 293 $ 274 $ 254Interestcost 390 361 391Expectedreturnonplanassets (775) (790) (775)Amortizationofactuarialloss 226 247 211Amortizationofpriorservicecost 12 12 16Otherpostemploymentbenefits 2Settlements/curtailments 8 2 11Netcost $ 154 $ 106 $ 110

Weighted-averageassumptions Discountrates–servicecost 3.5% 3.5% 4.3%Discountrates–interestcost 3.2% 3.0% 3.4%Rateofcompensationincrease 3.8% 3.8% 3.8%Expectedlong-termratesofreturn 6.9% 7.3% 7.3%

2018 2017 2016 OPEB Servicecost $ 45 $ 42 $ 38Interestcost 191 194 204Expectedreturnonplanassets (22) (17) (35)Amortizationofactuarialloss 62 99 73Amortizationofpriorservicecredit (77) (77) (78)

Netcost $ 199 $ 241 $ 202Weighted-averageassumptions

Discountrates–servicecost 4.3% 4.7% 5.0%Discountrates–interestcost 3.3% 3.2% 3.5%Expectedlong-termratesofreturn 5.7% 6.3% 6.6%

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Thepreviouspensioncostinnetincomeandotherchangesinplanassetsandbenefitobligationsinothercomprehensiveincomeinmillionsofdollarswereasfollows:

ThepreviousOPEBcostinnetincomeandotherchangesinplanassetsandbenefitobligationsinothercomprehensiveincomeinmillionsofdollarswereasfollows:

2018 2017 2016 Pensions Netcost $ 154 $ 106 $ 110Retirementbenefitadjustmentsincludedinothercomprehensive(income)loss: Netactuarial(gain)loss (553) (702) 1,140Priorservicecost 1Amortizationofactuarialloss (226) (247) (211)Amortizationofpriorservicecost (12) (12) (16)

Settlements/curtailments (8) (2) (14)Total(gain)lossrecognizedinothercomprehensive(income)loss (799) (963) 900

Totalrecognizedincomprehensive(income)loss $ (645) $ (857) $ 1,010

2018 2017 2016OPEB Netcost $ 199 $ 241 $ 202Retirementbenefitadjustmentsincludedinothercomprehensive(income)loss: Netactuarial(gain)loss (608) (309) 496Priorservicecost(credit) 5 (3)Amortizationofactuarialloss (62) (99) (73)Amortizationofpriorservicecredit 77 77 78Total(gain)lossrecognizedinothercomprehensive(income)loss (588) (331) 498

Totalrecognizedincomprehensive(income)loss $ (389) $ (90) $ 700

Thebenefitplanobligations,fundedstatus,andtheassumptionsrelatedtotheobligationsatOctober28,2018andOctober29,2017,respectively,inmillionsofdollarsfollow:

In2018,thecompanymadevoluntarycontributionsof$870milliontoaU.S.pensionplanand$430milliontoitsU.S.OPEBplans.

Themortalityassumptionsforthe2018and2017benefitplanobligationsreflectthemostrecenttablesissuedbytheSocietyofActuariesatthattime.

TheamountsrecognizedatOctober28,2018andOctober29,2017,respectively,inmillionsofdollarsconsistofthefollowing:

Pensions OPEB2018 2017 2018 2017

Changeinbenefitobligations

Beginningofyearbalance $ (13,166) $ (13,086) $(6,162) $(6,500)Servicecost (293) (274) (45) (42)Interestcost (390) (361) (191) (194)Actuarialgain(loss) 1,012 (35) 624 280Amendments (5) Benefitspaid 711 704 317 312Healthcaresubsidies (12) (9)Settlements/curtailments 2 Acquisition* (29) Foreignexchangeandother 47 (116) 2 (9)

Endofyearbalance (12,108) (13,166) (5,472) (6,162)Changeinplanassets(fairvalue)

Beginningofyearbalance 12,093 11,137 539 435Actualreturnonplanassets 316 1,517 6 46

Employercontribution 938 62 488 366Benefitspaid (711) (704) (317) (312)Settlements (2) Foreignexchangeandother (34) 83 3 4

Endofyearbalance 12,602 12,093 719 539Fundedstatus $ 494 $ (1,073) $(4,753) $(5,623)

Weighted-averageassumptions

Discountrates 4.1% 3.6% 4.5% 3.7%Rateofcompensationincrease 3.8% 3.8%

* SeeNote4.

Pensions OPEB2018 2017 2018 2017

Amountsrecognizedinbalancesheet

Noncurrentasset $1,298 $ 538 Currentliability (36) (40) $ (34) $ (63)Noncurrentliability (768) (1,571) (4,719) (5,560)Total $ 494 $(1,073) $(4,753) $(5,623)

Amountsrecognizedinaccumulatedothercomprehensiveincome–pretax

Netactuarialloss $3,571 $ 4,358 $ 787 $ 1,457Priorservicecost(credit) 43 55 (100) (182)Total $3,614 $ 4,413 $ 687 $ 1,275

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ThetotalaccumulatedbenefitobligationsforallpensionplansatOctober28,2018andOctober29,2017,were$11,485millionand$12,416million,respectively.

Theaccumulatedbenefitobligationsandfairvalueofplanassetsforpensionplanswithaccumulatedbenefitobligationsinexcessofplanassetswere$1,710millionand$1,015million,respectively,atOctober28,2018and$8,234millionand$7,345million,respectively,atOctober29,2017.Theprojectedbenefitobligationsandfairvalueofplanassetsforpensionplanswithprojectedbenefitobligationsinexcessofplanassetswere$1,833millionand$1,029million,respectively,atOctober28,2018and$9,059millionand$7,448million,respectively,atOctober29,2017.

Theamountsinaccumulatedothercomprehensiveincomethatareexpectedtobeamortizedasnetexpense(income)andreportedoutsideofincomefromoperationsduringfiscal2019inmillionsofdollarsfollow:

Actuarialgainsandlossesarerecordedinaccumulatedothercomprehensiveincome(loss).Totheextentunamortizedgainsandlossesexceed10%ofthehigherofthemarket-relatedvalueofassetsorthebenefitobligation,theexcessisamortizedasacomponentofnetperiodiccostovertheremainingserviceperiodoftheactiveparticipants.Forplansinwhichalloralmostalloftheplan'sparticipantsareinactive,theamortizationperiodistheremaininglifeexpectancyoftheinactiveparticipants.

Thecompanyexpectstocontributeapproximately$70milliontoitspensionplansandapproximately$140milliontoitsOPEBplansin2019,whichareprimarilydirectbenefitpayments.

Thebenefitsexpectedtobepaidfromthebenefitplans,whichreflectexpectedfutureyearsofservice,areasfollowsinmillionsofdollars:

Theannualratesofincreaseinthepercapitacostofcoveredhealthcarebenefits(thehealthcarecosttrendrates)usedtodetermineaccumulatedpostretirementbenefitobligationswerebasedonthetrendsformedicalandprescriptiondrugclaimsforpre-andpost-65agegroupsduetotheeffectsofMedicare.Forthe2018actuarialvaluation,theweighted-averagecompositetrendratesfortheseobligationswereassumedtobean8.9percentincreasefrom2018to

Pensions OPEBNetactuarialloss $ 141 $ 20Priorservicecost(credit) 12 (72)Total $ 153 $ (52)

Pensions OPEB*2019 $ 712 $ 3202020 743 3342021 703 3392022 699 3452023 693 3452024to2028 3,465 1,729

* NetofprescriptiondruggroupbenefitsubsidyunderMedicarePartD.

2019,graduallydecreasingto4.8percentfrom2024to2025andallfutureyears.The2017obligationsandthecostin2018assumedan8.9percentincreasefrom2017to2018,graduallydecreasingto4.8percentfrom2024to2025andallfutureyears.Anincreaseofonepercentagepointintheassumedhealthcarecosttrendratewouldincreasetheaccumulatedpostretirementbenefitobligationsby$644millionandtheaggregateofserviceandinterestcostcomponentofnetperiodicOPEBcostfortheyearby$33million.Adecreaseofonepercentagepointwoulddecreasetheobligationsby$511millionandthecostby$26million.

ThediscountrateassumptionsusedtodeterminethepensionandOPEBobligationsforallperiodspresentedwerebasedonhypotheticalAAyieldcurvesrepresentedbyaseriesofannualizedindividualdiscountrates.Thesediscountratesrepresenttheratesatwhichthecompany'sbenefitobligationscouldeffectivelybesettledattheOctober31measurementdates.

FairvaluemeasurementlevelsinthefollowingtablesaredefinedinNote26.

ThefairvaluesofthepensionplanassetsatOctober28,2018followinmillionsofdollars:

Total Level1 Level2Cashandshort-terminvestments $ 868 $ 377 $ 491Equity:

U.S.equitysecurities 1,495 1,466 29Internationalequitysecurities 1,143 1,136 7

FixedIncome: Governmentandagencysecurities 764 500 264

Corporatedebtsecurities 1,626 1,626Mortgage-backedsecurities 53 53

Realestate 76 72 4Derivativecontracts–assets* 102 3 99Derivativecontracts–liabilities** (115) (40) (75)Receivables,payables,andother (9) (10) 1Securitieslendingcollateral 561 561Securitieslendingliability (561) (561)Securitiessoldshort (333) (330) (3)

TotalofLevel1andLevel2assets 5,670 $ 3,174 $ 2,496

Investmentsatnetassetvalue: Short-terminvestments 219 U.S.equityfunds 1,526 Internationalequityfunds 802 Corporatedebtfunds 28 Fixedincomefunds 1,262 Realestate 654 Hedgefunds 724 Privateequity/venturecapital 1,680 Otherinvestments 37

Totalnetassets $12,602

* Includescontractsforinterestratesof$48million,foreigncurrencyof$47million,andotherof$7million.

** Includescontractsforinterestratesof$49million,foreigncurrencyof$28million,equityof$29million,andotherof$9million.

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ThefairvaluesofthehealthcareassetsatOctober28,2018followinmillionsofdollars:

ThefairvaluesofthepensionplanassetsatOctober29,2017followinmillionsofdollars:

(continued)

Total Level1 Level2Cashandshort-terminvestments $ 78 $ 73 $ 5Equity:

U.S.equitysecuritiesandfunds 54 54

Internationalequitysecurities 10 10 FixedIncome:

Governmentandagencysecurities 57 53 4Corporatedebtsecurities 29 29Mortgage-backedsecurities 11 11

Realestate 1 1 Foreigncurrencyderivativecontracts–assets 1 1

Equityderivativecontracts–liabilities (1) (1) Securitieslendingcollateral 24 24Securitieslendingliability (24) (24)Securitiessoldshort (3) (3)

TotalofLevel1andLevel2assets 237 $ 187 $ 50

Investmentsatnetassetvalue: Short-terminvestments 2 U.S.equityfunds 220 Internationalequityfunds 146 Fixedincomefunds 83 Realestatefunds 7 Hedgefunds 7 Privateequity/venturecapital 17

Totalnetassets $ 719

Total Level1 Level2Cashandshort-terminvestments $ 618 $ 349 $ 269Equity:

U.S.equitysecurities 1,871 1,850 21Internationalequitysecurities 1,551 1,541 10

FixedIncome: Governmentandagencysecurities 483 241 242Corporatedebtsecurities 1,285 1,285Mortgage-backedsecurities 42 42

Realestate 103 101 2Derivativecontracts–assets* 159 28 131Derivativecontracts–liabilities** (76) (2) (74)Receivables,payables,andother 1 1 Securitieslendingcollateral 420 420Securitieslendingliability (420) (420)Securitiessoldshort (379) (375) (4)

TotalofLevel1andLevel2assets $5,658 $3,734 $1,924

* Includescontractsforinterestratesof$79million,foreigncurrencyof$49million,equityof$27million,andotherof$4million.

** Includescontractsforinterestratesof$48million,foreigncurrencyof$26million,andotherof$2million.

ThefairvaluesofthehealthcareassetsatOctober29,2017followinmillionsofdollars:

Investmentsatnetassetvalueintheprecedingtablesaremeasuredatfairvalueusingthenetassetvaluepersharepracticalexpedient,andtherefore,arenotclassifiedinthefairvaluehierarchy.

Fairvaluesaredeterminedasfollows:

CashandShort-TermInvestments–Includesaccountsthatarevaluedbasedontheaccountvalue,whichapproximatesfairvalue,andinvestmentfundsthatarevaluedbasedonaconstantfundnetassetvalue(NAV)oronthefund'sNAVbasedonthefairvalueoftheunderlyingsecurities.Alsoincludedaresecuritiesthatarevaluedusingamarketapproach(matrixpricingmodel)inwhichallsignificantinputsareobservableorcanbederivedfromorcorroboratedbyobservablemarketdata.

Total Level1 Level2Investmentsatnetassetvalue: Short-terminvestments $ 203 U.S.equityfunds 1,704 Internationalequityfunds 921 Corporatedebtfunds 28 Fixedincomefunds 772 Realestate 567 Hedgefunds 651 Privateequity/venturecapital 1,560

Otherinvestments 29 Totalnetassets $12,093

Total Level1 Level2Cashandshort-terminvestments $ 30 $ 28 $ 2Equity:

U.S.equitysecuritiesandfunds 42 42

Internationalequitysecurities 9 9 FixedIncome:

Governmentandagencysecurities 40 37 3Corporatedebtsecurities 21 21Mortgage-backedsecurities 10 10

Realestate 1 1 Interestratederivativecontracts–assets 1 1Securitieslendingcollateral 25 25Securitieslendingliability (25) (25)Securitiessoldshort (2) (2)

TotalofLevel1andLevel2assets 152 $ 115 $ 37

Investmentsatnetassetvalue: Short-terminvestments 1 U.S.equityfunds 164 Internationalequityfunds 117 Fixedincomefunds 87 Realestatefunds 4 Hedgefunds 4 Privateequity/venturecapital 10

Totalnetassets $ 539

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EquitySecuritiesandFunds–Thevaluesaredeterminedprimarilybyclosingpricesintheactivemarketinwhichtheequityinvestmenttrades,orthefund'sNAV,basedonthefairvalueoftheunderlyingsecurities.

FixedIncomeSecuritiesandFunds–Thesecuritiesarevaluedusingeitheramarketapproach(matrixpricingmodel)inwhichallsignificantinputsareobservableorcanbederivedfromorcorroboratedbyobservablemarketdatasuchasinterestrates,yieldcurves,volatilities,creditrisk,andprepaymentspeeds,ortheyarevaluedusingtheclosingpricesintheactivemarketinwhichthefixedincomeinvestmenttrades.Fixedincomefundsarevaluedusingthefund'sNAV,basedonthefairvalueoftheunderlyingsecurities.

RealEstate,VentureCapital,PrivateEquity,HedgeFunds,andOther–Theinvestmentsthatarestructuredaslimitedpartnershipsarevaluedatestimatedfairvaluebasedontheirproportionateshareofthelimitedpartnership'sfairvaluethatisdeterminedbytherespectivegeneralpartner.TheseinvestmentsarevaluedusingacombinationofNAV,anincomeapproach(primarilyestimatedcashflowsdiscountedovertheexpectedholdingperiod),ormarketapproach(primarilythevaluationofsimilarsecuritiesandproperties).Realestateinvestmenttrustsareprimarilyvaluedattheclosingpricesintheactivemarketsinwhichtheinvestmenttrades.RealestatefundsandotherinvestmentsareprimarilyvaluedatNAV,basedonthefairvalueoftheunderlyingsecurities.

InterestRate,ForeignCurrency,andOtherDerivativeInstruments–Thederivativesarevaluedusingeitheranincomeapproach(discountedcashflow)usingmarketobservableinputs,includingswapcurvesandbothforwardandspotexchangerates,oramarketapproach(closingpricesintheactivemarketinwhichthederivativeinstrumenttrades).

Theprimaryinvestmentobjectiveforthepensionandhealthcareplansassetsistomaximizethegrowthoftheseassetstosupporttheprojectedobligationstothebeneficiariesoveralongperiodoftime,andtodosoinamannerthatisconsistentwiththecompany'srisktolerance.Theassetallocationpolicyisthemostimportantdecisioninmanagingtheassetsanditisreviewedregularly.Theassetallocationpolicyconsidersthecompany'slong-termassetclassrisk/returnexpectationssincetheobligationsarelong-terminnature.Thecurrenttargetallocationsforpensionassetsareapproximately42percentforequitysecurities,34percentfordebtsecurities,6percentforrealestate,and18percentforotherinvestments.Thetargetallocationsforhealthcareassetsareapproximately57percentforequitysecurities,30percentfordebtsecurities,1percentforrealestate,and12percentforotherinvestments.Theallocationpercentagesaboveincludetheeffectsofcombiningderivativeswithotherinvestmentstomanageassetallocationsandexposurestointerestratesandforeigncurrencyexchange.Theassetsarewelldiversifiedandaremanagedbyprofessionalinvestmentfirmsaswellasbyinvestmentprofessionalswhoarecompanyemployees.Asaresultofthecompany'sdiversifiedinvestmentpolicy,therewerenosignificantconcentrationsofrisk.

Theexpectedlong-termrateofreturnonplanassetsreflectsmanagement'sexpectationsoflong-termaverageratesof

returnonfundsinvestedtoprovideforbenefitsincludedintheprojectedbenefitobligations.Amarketrelatedvalueofplanassetsisusedtocalculatetheexpectedreturnonassets.Themarketrelatedvaluerecognizeschangesinthefairvalueofpensionplanassetssystematicallyoverafive-yearperiod.Themarketrelatedvalueofthehealthcareplanassetsequalsfairvalue.Theexpectedreturnisbasedontheoutlookforinflationandforreturnsinmultipleassetclasses,whilealsoconsideringhistoricalreturns,assetallocation,andinvestmentstrategy.Thecompany'sapproachhasemphasizedthelong-termnatureofthereturnestimatesuchthatthereturnassumptionisnotchangedsignificantlyunlesstherearefundamentalchangesincapitalmarketsthataffectthecompany'sexpectationsforreturnsoveranextendedperiodoftime(i.e.,10to20years).Theaverageannualreturnofthecompany'sU.S.pensionfundwasapproximately9.2percentduringthepasttenyearsandapproximately8.2percentduringthepast20years.Sincereturnpremiumsoverinflationandtotalreturnsformajorassetclassesvarywidelyevenoverten-yearperiods,recenthistoryisnotnecessarilyindicativeoflong-termfutureexpectedreturns.Thecompany'ssystematicmethodologyfordeterminingthelong-termrateofreturnforthecompany'sinvestmentstrategiessupportsitslong-termexpectedreturnassumptions.

ThecompanyhascreatedcertainVoluntaryEmployees'BeneficiaryAssociationtrusts(VEBAs)forthefundingofpostretirementhealthcarebenefits.ThefutureexpectedassetreturnsfortheseVEBAsarelowerthantheexpectedreturnontheotherpensionandhealthcareplanassetsduetoinvestmentinahigherproportionofliquidsecurities.TheseassetsareinadditiontotheotherpostretirementhealthcareplanassetsthathavebeenfundedunderSection401(h)oftheU.S.InternalRevenueCodeandmaintainedinaseparateaccountinthecompany'spensionplantrust.

ThecompanyhasdefinedcontributionplansrelatedtoemployeeinvestmentandsavingsplansprimarilyintheU.S.Thecompany'scontributionsandcostsundertheseplanswere$206millionin2018,$188millionin2017,and$193millionin2016.Thecontributionratevariesprimarilybasedonthecompany'sperformanceintheprioryearandemployeeparticipationintheplans.

8.INCOMETAXES

OnDecember22,2017,theU.S.governmentenactedtaxreform.Theprimaryprovisionsoftaxreformaffectingthecompanyin2018wereareductiontothecorporateincometaxratefrom35percentto21percentandatransitionfromaworldwidecorporatetaxsystemtoaprimarilyterritorialtaxsystem.ThereductioninthecorporateincometaxraterequiredthecompanytoremeasureitsU.S.netdeferredtaxassetstothenewcorporatetaxrateandthetransitiontoaterritorialtaxsystemrequirespaymentofaone-timetaxonthedeemedrepatriationofundistributedandpreviouslyuntaxednon-U.S.earnings.Undercurrenttaxlaw,thecompanyplanstopaythedeemedearningsrepatriationtax(repatriationtax)in2019withanexpectedU.S.incometaxoverpayment.

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Theincometaxexpense(benefit)forthenetdeferredtaxassetremeasurementandtherepatriationtaxin2018inmillionsofdollarsfollow:

IncludedintheEquipmentOperations'repatriationtaxamountisanaccrualofapproximately$63millionforforeignwithholdingtaxesonearningsofsubsidiariesoutsidetheU.S.thatwerepreviouslyexpectedtobeindefinitelyreinvestedoutsidetheU.S.Theprovisionforincometaxeswasalsoaffectedprimarilybythelowercorporateincometaxrateoncurrentyearincome.

The21percentcorporateincometaxratewaseffectiveJanuary1,2018.Basedonthecompany'sOctoberfiscalyearend,theU.S.statutoryincometaxrateforfiscalyear2018wasapproximately23.3percent.

The2018repatriationtaxexpenseisbasedoninterpretationsofexistinglaws,regulations,andcertainassumptions.Furtherregulatoryguidanceisexpected,whichcouldaffecttherecordedexpense.Thecompanycontinuestoanalyzetherepatriationtaxprovisions,andmonitorlegislativeandregulatorydevelopments.

Theprovisionforincometaxesbytaxingjurisdictionandbysignificantcomponentconsistedofthefollowinginmillionsofdollars:

Baseduponthelocationofthecompany'soperations,theconsolidatedincomebeforeincometaxesintheU.S.in2018,2017,and2016was$2,275million,$1,607million,and$967million,respectively,andinforeigncountrieswas$1,796million,$1,547million,and$1,257million,respectively.CertainforeignoperationsarebranchesorpartnershipsofDeere&CompanyandaresubjecttoU.S.aswellasforeignincometaxregulations.Thepretaxincomebylocationandtheprecedinganalysisoftheincometaxprovisionbytaxingjurisdictionarenotdirectlyrelated.

EquipmentOperations

FinancialServices Total

Netdeferredtaxassetremeasurement $ 768 $ (354) $ 414

Deemedearningsrepatriationtax 277 13 290Totaldiscretetaxexpense(benefit) $ 1,045 $ (341) $ 704

2018 2017 2016 Current: U.S.: Federal $ (268) $ 360 $ 51State 123 48 26

Foreign 392 463 340Totalcurrent 247 871 417

Deferred: U.S.: Federal 1,233 59 297State (40) 7 11

Foreign 287 34 (25)Totaldeferred 1,480 100 283

Provisionforincometaxes $ 1,727 $ 971 $ 700

Acomparisonofthestatutoryandeffectiveincometaxprovisionandreasonsforrelateddifferencesinmillionsofdollarsfollow:

AtOctober28,2018,accumulatedearningsincertainsubsidiariesoutsidetheU.S.totaled$2,559million,whichweresubjecttotherepatriationtax.NoprovisionforforeignwithholdingtaxeshasbeenmadebecauseitisexpectedthattheseearningswillremainindefinitelyreinvestedoutsidetheU.S.Determinationoftheamountofaforeignwithholdingtaxliabilityontheseunremittedearningsisnotpracticable.

Anadditional$4,270millionofearningsinsubsidiariesoutsidetheU.S.,whichwerepreviouslyexpectedtobereinvestedoutsidetheU.S.,werealsosubjecttotherepatriationtax.Inthefourthquarterof2018,thecompanyrevieweditsglobalfundingrequirementsanddeterminedthoseearningswouldnolongerbeindefinitelyreinvested.AlthoughtheearningswillnotbesubjecttoU.S.incometaxwhenrepatriatedtotheU.S.,inthefourthquarterof2018anaccrualof$63millionwasrecordedforforeignwithholdingtaxes.

Deferredincometaxesarisebecausetherearecertainitemsthataretreateddifferentlyforfinancialaccountingthanforincometaxreportingpurposes.Ananalysisofthedeferred

2018 2017 2016 U.S.federalincometaxprovisionattheU.S.statutoryrate(2018–23.3percent,2017and2016–35percent) $ 950 $ 1,104 $ 778

Increase(decrease)resultingfrom: Netdeferredtaxassetremeasurement 414

Deemedearningsrepatriationtax 290 Othereffectsoftaxreform 42 Differencesintaxabilityofforeignearnings (92) (83) (107)

Valuationallowanceondeferredtaxes 50 89 79

Researchandbusinesstaxcredits (43) (63) (57)Stateandlocalincometaxes,netoffederalincometaxbenefit 59 37 26

Excesstaxbenefitsonequitycompensation (49) (30)

Taxratesonforeignearnings 44 (84) (27)Unrecognizedtaxbenefits 30 9 11Nondeductibleimpairmentcharges 4Other-net 32 (8) (7)Provisionforincometaxes $ 1,727 $ 971 $ 700

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incometaxassetsandliabilitiesatOctober28,2018andOctober29,2017inmillionsofdollarsfollows:

Deere&CompanyfilesaconsolidatedfederalincometaxreturnintheU.S.,whichincludesthewholly-ownedfinancialservicessubsidiaries.Thesesubsidiariesaccountforincometaxesgenerallyasiftheyfiledseparateincometaxreturns,withamodificationforrealizabilityofcertaintaxbenefits.

AtOctober28,2018,taxlossandtaxcreditcarryforwardsof$713millionwereavailablewith$289millionexpiringfrom2019through2038and$424millionwithanindefinitecarryforwardperiod.

AreconciliationofthetotalamountsofunrecognizedtaxbenefitsatOctober28,2018,October29,2017,andOctober30,2016inmillionsofdollarsfollows:

2018 2017DeferredTax

Assets

DeferredTax

Liabilities

DeferredTax

Assets

DeferredTax

LiabilitiesOPEBliabilities $ 984 $ 2,011 Leasetransactions $ 850 $ 933Taxlossandtaxcreditcarryforwards 713 677

Accrualforsalesallowances 464 680

Taxoverbookdepreciation 357 569Goodwillandotherintangibleassets 458 130

Pensionliability–net 45 420 Allowanceforcreditlosses 115 107 Accrualforemployeebenefits 72 141

Share-basedcompensation 58 116 Deferredcompensation 35 59 Undistributedforeignearnings 6 21

Foreignunrealizedlosses 10 7 Otheritems 346 261 432 172Lessvaluationallowances (658) (620) Deferredincometaxassetsandliabilities $ 2,184 $ 1,932 $ 4,030 $ 1,825

2018 2017 2016 Beginningofyearbalance $ 221 $ 198 $ 229Increasestotaxpositionstakenduringthecurrentyear 36 35 14

Increasestotaxpositionstakenduringprioryears 62 13 11

Decreasestotaxpositionstakenduringprioryears (39) (17) (36)

Decreasesduetolapseofstatuteoflimitations (15) (11) (7)

Acquisitions* 31 Settlements (5) (1) (5)Foreignexchange (12) 4 (8)Endofyearbalance $ 279 $ 221 $ 198

* SeeNote4.

TheamountofunrecognizedtaxbenefitsatOctober28,2018andOctober29,2017thatwouldaffecttheeffectivetaxrateifthetaxbenefitswererecognizedwas$128millionand$86million,respectively.Theremainingliabilitywasrelatedtotaxpositionsforwhichthereareoffsettingtaxreceivables,ortheuncertaintywasonlyrelatedtotiming.Thecompanyexpectsthatanyreasonablypossiblechangeintheamountsofunrecognizedtaxbenefitsinthenexttwelvemonthswouldnotbesignificant.

Thecompanyfilesitstaxreturnsaccordingtothetaxlawsofthejurisdictionsinwhichitoperates,whichincludestheU.S.federaljurisdictionandvariousstateandforeignjurisdictions.TheU.S.InternalRevenueService(IRS)hascompletedtheexaminationofthecompany'sfederalincometaxreturnsforperiodspriorto2015.Theyears2008through2014returnsaresubjecttofinalapprovalonlimitedissues,ofwhichthetaxeffectsarerecorded.Theyears2015,2016,and2017federalincometaxreturnarecurrentlyunderexamination.Variousstateandforeignincometaxreturns,includingmajortaxjurisdictionsinArgentina,Australia,Brazil,Canada,China,Finland,France,Germany,India,Mexico,Russia,Singapore,andSpainalsoremainsubjecttoexaminationbytaxingauthorities.

Thecompany'spolicyistorecognizeinterestrelatedtoincometaxesininterestexpenseandinterestincomeandrecognizepenaltiesinselling,administrativeandgeneralexpenses.During2018,2017,and2016,thetotalamountofexpensefrominterestandpenaltieswas$23million,$6million,andnoneandtheinterestincomewas$12million,$6million,andnone,respectively.AtOctober28,2018andOctober29,2017,theliabilityforaccruedinterestandpenaltiestotaled$90millionand$66million,respectively,andtherewasnoreceivableforinterestateitheryear-end.

Thecompanywillbesubjecttoadditionalrequirementsoftaxreformbeginningin2019.Thoseprovisionsincludeataxonglobalintangiblelow-taxedincome(GILTI),ataxdeterminedbybaseerosionandanti-abusetaxbenefits(BEAT)fromcertainpaymentsbetweenaU.S.corporationandforeignsubsidiaries,alimitationofcertainexecutivecompensation,adeductionforforeignderivedintangibleincome(FDII),andinterestexpenselimitations.Throughthepreliminaryreviewoftheseprovisions,thecompanydoesnotexpecttheneteffecttobesignificantforthe2019provisionforincometaxes.

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9.OTHERINCOMEANDOTHEROPERATINGEXPENSES

Themajorcomponentsofotherincomeandotheroperatingexpensesconsistedofthefollowinginmillionsofdollars:

10.UNCONSOLIDATEDAFFILIATEDCOMPANIES

UnconsolidatedaffiliatedcompaniesarecompaniesinwhichDeere&Companygenerallyowns20percentto50percentoftheoutstandingvotingshares.Deere&Companydoesnotcontrolthesecompaniesandaccountsforitsinvestmentsinthemontheequitybasis.TheinvestmentsinthesecompaniesprimarilyconsistofBellEquipmentLimited(31percentownership),Deere-HitachiConstructionMachineryCorporation(50percentownership),andDeere-HitachiMaquinasdeConstrucaodoBrasilS.A.(50percentownership).In2017,thecompanysolditsinterestinSiteOne(seeNote5).Theunconsolidatedaffiliatedcompaniesprimarilymanufactureormarketequipment.Deere&Company'sshareoftheincomeorlossofthesecompaniesisreportedintheconsolidatedincomestatementunder"Equityinincome(loss)ofunconsolidatedaffiliates."Theinvestmentinthesecompaniesisreportedintheconsolidatedbalancesheetunder"Investmentsinunconsolidatedaffiliates."

Combinedfinancialinformationoftheunconsolidatedaffiliatedcompaniesinmillionsofdollarsfollows:

2018 2017 2016 Otherincome Revenuesfromservices $ 347 $ 288 $ 270Insurancepremiumsandfeesearned** 217 211 195

SiteOneinvestmentgains* 375 75Investmentincome 14 17 16Other 322 230 190Total $ 900 $ 1,121 $ 746

Otheroperatingexpenses Depreciationofequipmentonoperatingleases $ 928 $ 853 $ 742

Insuranceclaimsandexpenses** 175 187 188Costofservices 211 168 162Other 85 140 183Total $ 1,399 $ 1,348 $ 1,275

* SeeNote5.** Primarilyrelatedtoextendedwarranties(seeNote22).

Operations 2018 2017 2016 Sales $ 2,313 $ 2,638 $ 3,206Netincome 91 7 30Deere&Company'sequityinnetincome(loss) 27 (24) (2)

FinancialPosition 2018 2017 Totalassets $ 1,648 $ 1,488Totalexternalborrowings 453 451Totalnetassets 620 542Deere&Company'sshareofthenetassets 207 182

ConsolidatedretainedearningsatOctober28,2018includeundistributedearningsoftheunconsolidatedaffiliatesof$152million.Dividendsfromunconsolidatedaffiliateswere$12millionin2018,$4millionin2017,and$64millionin2016(seeNote5).

Intheordinarycourseofbusiness,thecompanypurchasesandsellscomponentsandfinishedgoodstotheunconsolidatedaffiliatedcompanies.Transactionswithunconsolidatedaffiliatedcompaniesreportedinthestatementofconsolidatedincomeinmillionsofdollarsfollow:

11.MARKETABLESECURITIES

Allmarketablesecuritiesareclassifiedasavailable-for-sale,withunrealizedgainsandlossesshownasacomponentofstockholders'equity.Realizedgainsorlossesfromthesalesofmarketablesecuritiesarebasedonthespecificidentificationmethod.

TheamortizedcostandfairvalueofmarketablesecuritiesatOctober28,2018andOctober29,2017inmillionsofdollarsfollow:

2018 2017 2016 Netsales $ 161 $ 84 $ 45Purchases 1,682 1,331 1,016

Amortized

Cost

GrossUnrealizedGains

GrossUnrealizedLosses

FairValue

2018 Equityfund $ 36 $ 10 $ 46U.S.governmentdebtsecurities 113 1 $ 3 111

Municipaldebtsecurities 49 3 46

Corporatedebtsecurities 143 1 4 140

Internationaldebtsecurities 11 1 10

Mortgage-backedsecurities* 144 7 137

Marketablesecurities $ 496 $ 12 $ 18 $ 490

2017 Equityfund $ 37 $ 11 $ 48Fixedincomefund 15 15

U.S.governmentdebtsecurities 76 1 77

Municipaldebtsecurities 39 1 $ 1 39

Corporatedebtsecurities 133 3 1 135

Internationaldebtsecurities 22 2 20

Mortgage-backedsecurities* 119 1 2 118

Marketablesecurities $ 441 $ 17 $ 6 $ 452

* PrimarilyissuedbyU.S.governmentsponsoredenterprises.

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ThecontractualmaturitiesofdebtsecuritiesatOctober28,2018inmillionsofdollarsfollow:

Actualmaturitiesmaydifferfromcontractualmaturitiesbecausesomesecuritiesmaybecalledorprepaid.Becauseofthepotentialforprepaymentonmortgage-backedsecurities,theyarenotcategorizedbycontractualmaturity.Proceedsfromthesalesofavailable-for-salesecuritieswere$40millionin2018,$403millionin2017,and$62millionin2016.Realizedgainswerenotsignificantin2018and2016andwere$275millionin2017(seeNote5).Realizedlosses,theincrease(decrease)innetunrealizedgainsorlosses,andunrealizedlossesthathavebeencontinuousforovertwelvemonthswerenotsignificantin2018,2017,and2016.UnrealizedlossesatOctober28,2018andOctober29,2017wereprimarilytheresultofanincreaseininterestratesandwerenotrecognizedinincomeduetotheabilityandintenttoholdtomaturity.Therewerenosignificantimpairmentwrite-downsintheperiodsreported.

12.RECEIVABLES

TradeAccountsandNotesReceivable

TradeaccountsandnotesreceivableatOctober28,2018andOctober29,2017inmillionsofdollarsfollows:

Theallowanceforcreditlossesontradeaccountsandnotesreceivablewas$70million,$56million,and$50million,respectively,withaprovisionforcreditlossof$37million,$11million,and$11millioninfiscalyears2018,2017,and2016,

Amortized

Cost FairValue

Dueinoneyearorless $ 24 $ 23Dueafteronethroughfiveyears 117 115Dueafterfivethrough10years 99 96Dueafter10years 76 73Mortgage-backedsecurities 144 137Debtsecurities $ 460 $ 444

2018 2017 Tradeaccountsandnotes: Agricultureandturf $ 3,210 $ 2,991Constructionandforestry 1,794 934

Tradeaccountsandnotesreceivable–net $ 5,004 $ 3,925

respectively.Thenetwrite-offswere$16million,$3million,and$7millioninfiscalyears2018,2017,and2016,respectively.Currencytranslationimpactedtheallowanceforcreditlossesby$7million,$2million,and$(5)millioninfiscalyears2018,2017,and2016,respectively.

Theequipmentoperationssellasignificantportionoftheirtradereceivablestofinancialservicesandprovidecompensationtotheseoperationsatapproximatemarketratesofinterest.

Tradeaccountsandnotesreceivableprimarilyarisefromsalesofgoodstoindependentdealers.Underthetermsofthesalestodealers,interestisprimarilychargedtodealersonoutstandingbalances,fromtheearlierofthedatewhengoodsaresoldtoretailcustomersbythedealerortheexpirationofcertaininterest-freeperiodsgrantedatthetimeofthesaletothedealer,untilpaymentisreceivedbythecompany.Dealerscannotcancelpurchasesaftertheequipmentisshippedandareresponsibleforpaymenteveniftheequipmentisnotsoldtoretailcustomers.Theinterest-freeperiodsaredeterminedbasedonthetypeofequipmentsoldandthetimeofyearofthesale.Theseperiodsrangefromonetotwelvemonthsformostequipment.Interest-freeperiodsmaynotbeextended.Interestchargedmaynotbeforgivenandthepastdueinterestratesexceedmarketrates.Thecompanyevaluatesandassessesdealersonanongoingbasisastotheircreditworthinessandgenerallyretainsasecurityinterestinthegoodsassociatedwiththetradereceivables.Incertainjurisdictions,thecompanyisobligatedtorepurchasegoodssoldtoadealeruponcancellationorterminationofthedealer'scontractforsuchcausesaschangeinownershipandcloseoutofthebusiness.

Tradeaccountsandnotesreceivableincludereceivablesfromsalestocertainretailcustomerswithpaymenttermslessthantwelvemonths.Thecustomercannotcancelpurchasesorreturntheequipmentafterdelivery.Thecompanyevaluatesandassessesretailcustomersatthetimeofpurchaseastotheircreditworthinessandgenerallyretainsasecurityinterestinthegoodsassociatedwiththereceivables.

Tradeaccountsandnotesreceivablehavesignificantconcentrationsofcreditriskintheagricultureandturfsectorandconstructionandforestrysectorasshownintheprevioustable.Onageographicbasis,thereisnotadisproportionateconcentrationofcreditriskinanyarea.

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FinancingReceivables

FinancingreceivablesatOctober28,2018andOctober29,2017inmillionsofdollarsfollow:

The2017amountsinthetableaboveforwholesalenotesandrevolvingchargeaccountswereadjustedtobecomparablewith2018byseparatelypresentingtheunearnedfinanceincome.Intheprioryear,thesebalanceswereshownnetofunearnedfinanceincome.Thetotalfinancingreceivables–netbalancedidnotchange.TheresidualvaluesforinvestmentsinfinancingleasesatOctober28,2018andOctober29,2017totaled$294millionand$244million,respectively.

Financingreceivableshavesignificantconcentrationsofcreditriskintheagricultureandturfsectorandconstructionandforestrysectorasshownintheprevioustable.Onageographicbasis,thereisnotadisproportionateconcentrationofcreditriskinanyarea.Thecompanygenerallyretainsascollateralasecurityinterestintheequipmentassociatedwithretailnotes,wholesalenotes,andfinancingleases.

FinancingreceivablesatOctober28,2018andOctober29,2017relatedtothecompany'ssalesofequipmentthatwere

2018 2017 Unrestricted/Securitized Unrestricted/Securitized

Retailnotes: Agricultureandturf $ 15,885 $ 3,441$15,200 $ 3,651Constructionandforestry 2,776 675 2,297 599Total 18,661 4,116 17,497 4,250

Wholesalenotes 4,009 3,665 Revolvingchargeaccounts 3,907 3,676

Financingleases(directandsales-type) 1,948 1,613 Totalfinancingreceivables 28,525 4,116 26,451 4,250

Less: Unearnedfinanceincome: Retailnotes 1,069 84 972 78Wholesalenotes 10 12 Revolvingchargeaccounts 45 47

Financingleases 179 142 Total 1,303 84 1,173 78

Allowanceforcreditlosses 168 10 174 13

Financingreceivables–net $ 27,054 $ 4,022$25,104 $ 4,159

includedinthetableaboveconsistedofthefollowinginmillionsofdollars:

Financingreceivableinstallments,includingunearnedfinanceincome,atOctober28,2018andOctober29,2017arescheduledasfollowsinmillionsofdollars:

Themaximumtermsforretailnotesaregenerallysevenyearsforagricultureandturfequipmentandfiveyearsforconstructionandforestryequipment.Themaximumtermforfinancingleasesisgenerallysixyears,whiletheaveragetermforwholesalenotesislessthantwelvemonths.

AtOctober28,2018andOctober29,2017,worldwidefinancingreceivablesadministered,whichincludefinancingreceivablesadministeredbutnotowned,totaled$31,082millionand$29,273million,respectively.

Pastduebalancesoffinancingreceivablesstillaccruingfinanceincomerepresentthetotalbalanceheld(principalplusaccruedinterest)withanypaymentamounts30daysormorepastthecontractualpaymentduedate.Non-performingfinancingreceivablesrepresentloansforwhichthecompanyhasceasedaccruingfinanceincome.Thesereceivablesaregenerally120daysdelinquentandtheestimateduncollectibleamount,afterchargingthedealer'swithholdingaccount,hasbeenwrittenofftotheallowanceforcreditlosses.Financeincomefornon-performingreceivablesisrecognizedonacashbasis.Accrualoffinanceincomeisgenerallyresumedwhenthereceivablebecomescontractuallycurrentandcollectionsarereasonablyassured.

2018 2017 Unrestricted/Securitized Unrestricted

Retailnotes*: Agricultureandturf $ 2,312 $ 2,099Constructionandforestry 441 $ 77 368Total 2,753 77 2,467

Wholesalenotes 4,009 3,665Sales-typeleases 878 763

Total 7,640 77 6,895Less: Unearnedfinanceincome: Retailnotes 261 1 231Wholesalenotes 10 12Sales-typeleases 68 53Total 339 1 296

Financingreceivablesrelatedtothecompany'ssalesofequipment $ 7,301 $ 76 $ 6,599

* Theseretailnotesgenerallyarisefromsalesofequipmentbycompany-owneddealersorthroughdirectsales.

2018 2017Unrestricted/Securitized Unrestricted/Securitized

Dueinmonths: 0–12 $ 14,658 $ 1,922 $ 13,293 $ 2,02713–24 5,355 1,160 5,059 1,25625–36 3,911 652 3,708 67237–48 2,663 315 2,518 24349–60 1,480 65 1,398 50Thereafter 458 2 475 2

Total $ 28,525 $ 4,116 $ 26,451 $ 4,250

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Anageanalysisofpastduefinancingreceivablesthatarestillaccruinginterestandnon-performingfinancingreceivablesatOctober28,2018andOctober29,2017followsinmillionsofdollars:

(continued)

30-59DaysPastDue

60-89DaysPastDue

90Daysor

GreaterPastDue

TotalPastDue

2018 RetailNotes: Agricultureandturf $ 133 $ 74 $ 63 $ 270Constructionandforestry 79 45 52 176

Other: Agricultureandturf 36 16 8 60Constructionandforestry 18 5 3 26

Total $ 266 $ 140 $ 126 $ 532

Total

PastDue

TotalNon-

Performing Current

TotalFinancingReceivables

RetailNotes: Agricultureandturf $ 270 $ 201 $ 17,836 $ 18,307

Constructionandforestry 176 40 3,101 3,317

Other: Agricultureandturf 60 15 8,274 8,349

Constructionandforestry 26 3 1,252 1,281Total $ 532 $ 259 $ 30,463 31,254

Lessallowanceforcreditlosses 178Totalfinancingreceivables–net $ 31,076

30-59DaysPastDue

60-89DaysPastDue

90DaysorGreaterPastDue

TotalPastDue

2017 RetailNotes: Agricultureandturf $ 118 $ 54 $ 49 $ 221Constructionandforestry 75 33 39 147

Other: Agricultureandturf 27 14 7 48Constructionandforestry 11 6 2 19

Total $ 231 $ 107 $ 97 $ 435

Ananalysisoftheallowanceforcreditlossesandinvestmentinfinancingreceivablesfollowsinmillionsofdollars:

Past-dueamountsover30daysrepresented1.70percentand1.48percentofthereceivablesfinancedatOctober28,2018

TotalPastDue

TotalNon-

Performing Current

TotalFinancingReceivables

RetailNotes: Agricultureandturf $ 221 $ 173 $ 17,508 $ 17,902

Constructionandforestry 147 30 2,618 2,795

Other: Agricultureandturf 48 12 7,610 7,670

Constructionandforestry 19 5 1,059 1,083Total $ 435 $ 220 $ 28,795 29,450

Lessallowanceforcreditlosses 187Totalfinancingreceivables–net $ 29,263

RetailNotes

RevolvingChargeAccounts Other Total

2018 Allowance: Beginningofyearbalance $ 121 $ 40 $ 26 $ 187Provision 14 38 2 54Write-offs (33) (55) (6) (94)Recoveries 17 20 1 38Translationadjustments (6) (1) (7)

Endofyearbalance* $ 113 $ 43 $ 22 $ 178Financingreceivables: Endofyearbalance $21,624 $ 3,862 $5,768 $31,254Balanceindividuallyevaluated $ 122 $ 2 $ 12 $ 136

2017 Allowance: Beginningofyearbalance $ 113 $ 40 $ 23 $ 176Provision 46 33 9 88Write-offs (56) (53) (7) (116)Recoveries 20 20 1 41Translationadjustments (2) (2)

Endofyearbalance* $ 121 $ 40 $ 26 $ 187Financingreceivables: Endofyearbalance $20,697 $ 3,629 $5,124 $29,450Balanceindividuallyevaluated $ 86 $ 3 $ 20 $ 109

2016 Allowance: Beginningofyearbalance $ 95 $ 40 $ 22 $ 157Provision 43 36 5 84Write-offs (43) (55) (5) (103)Recoveries 11 19 1 31Translationadjustments 7 7

Endofyearbalance* $ 113 $ 40 $ 23 $ 176Financingreceivables: Endofyearbalance $20,682 $ 3,135 $5,188 $29,005Balanceindividuallyevaluated $ 108 $ 8 $ 20 $ 136

* Individualallowanceswerenotsignificant.

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andOctober29,2017,respectively.Theallowanceforcreditlossesrepresented.57percentand.64percentoffinancingreceivablesoutstandingatOctober28,2018andOctober29,2017,respectively.Inaddition,atOctober28,2018andOctober29,2017,thecompany'sfinancialservicesoperationshad$156millionand$155million,respectively,ofdepositsprimarilywithheldfromdealersandmerchantsavailableforpotentialcreditlosses.

Financingreceivablesareconsideredimpairedwhenitisprobablethecompanywillbeunabletocollectallamountsdueaccordingtothecontractualterms.Receivablesreviewedforimpairmentgenerallyincludethosethatarepastdue,haveprovidedbankruptcynotification,orrequiresignificantcollectionefforts.Receivablesthatareimpairedaregenerallyclassifiedasnon-performing.

AnanalysisoftheimpairedfinancingreceivablesatOctober28,2018andOctober29,2017followsinmillionsofdollars:

Atroubleddebtrestructuringisgenerallythemodificationofdebtinwhichacreditorgrantsaconcessionitwouldnototherwiseconsidertoadebtorthatisexperiencingfinancialdifficulties.Thesemodificationsmayincludeareductionofthestatedinterestrate,anextensionofthematuritydates,areductionofthefaceamountormaturityamountofthedebt,orareductionofaccruedinterest.During2018,2017,and2016,thecompanyidentified587,474,and167financingreceivablecontracts,primarilyretailnotes,astroubleddebtrestructuringswithaggregatebalancesof$34million,$16million,and$19millionpre-modificationand$34million,$15million,and$18millionpost-modification,respectively.In2017,therewere$3millionoftroubleddebtrestructuringsthatsubsequentlydefaultedandwerewrittenoff.In2018and2016,therewerenosignificanttroubleddebtrestructurings

RecordedInvestment

UnpaidPrincipalBalance

SpecificAllowance

AverageRecordedInvestment

2018* Receivableswithspecificallowance** $ 28 $ 27 $ 10 $ 30

Receivableswithoutaspecificallowance** 37 35 41

Total $ 65 $ 62 $ 10 $ 71

Agricultureandturf $ 50 $ 48 $ 9 $ 54

Constructionandforestry $ 15 $ 14 $ 1 $ 17

2017* Receivableswithspecificallowance** $ 36 $ 33 $ 10 $ 30

Receivableswithoutaspecificallowance*** 28 27 24

Total $ 64 $ 60 $ 10 $ 54

Agricultureandturf $ 49 $ 46 $ 10 $ 38

Constructionandforestry $ 15 $ 14 $ 16

* Financeincomerecognizedwasnotmaterial.** Primarilyretailnotes.*** Primarilyretailnotesandwholesalereceivables.

thatsubsequentlydefaultedandwerewrittenoff.AtOctober28,2018,thecompanyhadcommitmentstolendapproximately$10milliontoborrowerswhoseaccountsweremodifiedintroubleddebtrestructurings.

OtherReceivables

OtherreceivablesatOctober28,2018andOctober29,2017consistedofthefollowinginmillionsofdollars:

13.SECURITIZATIONOFFINANCINGRECEIVABLES

Thecompany,asapartofitsoverallfundingstrategy,periodicallytransferscertainfinancingreceivables(retailnotes)intoVIEsthatareSPEs,ornon-VIEbankingoperations,aspartofitsasset-backedsecuritiesprograms(securitizations).Thestructureofthesetransactionsissuchthatthetransferoftheretailnotesdidnotmeettheaccountingcriteriaforsalesofreceivables,andis,therefore,accountedforasasecuredborrowing.SPEsutilizedinsecuritizationsofretailnotesdifferfromotherentitiesincludedinthecompany'sconsolidatedstatementsbecausetheassetstheyholdarelegallyisolated.UseoftheassetsheldbytheSPEsorthenon-VIEsisrestrictedbytermsofthedocumentsgoverningthesecuritizationtransactions.

Inthesesecuritizations,theretailnotesaretransferredtocertainSPEsortonon-VIEbankingoperations,whichinturnissuedebttoinvestors.Thedebtsecuritiesissuedtothethirdpartyinvestorsresultinsecuredborrowings,whicharerecordedas"Short-termsecuritizationborrowings"ontheconsolidatedbalancesheet.Thesecuritizedretailnotesarerecordedas"Financingreceivablessecuritized–net"onthebalancesheet.Thetotalrestrictedassetsonthebalancesheetrelatedtothesesecuritizationsincludethefinancingreceivablessecuritizedlessanallowanceforcreditlosses,andotherassetsprimarilyrepresentingrestrictedcash.ForthosesecuritizationsinwhichretailnotesaretransferredintoSPEs,theSPEssupportingthesecuredborrowingsareconsolidatedunlessthecompanydoesnothaveboththepowertodirecttheactivitiesthatmostsignificantlyimpacttheSPEs'economicperformanceandtheobligationtoabsorblossesortherighttoreceivebenefitsthatcouldpotentiallybesignificanttotheSPEs.NoadditionalsupporttotheseSPEsbeyondwhatwaspreviouslycontractuallyrequiredhasbeenprovidedduringthereportingperiods.

Incertainsecuritizations,thecompanyconsolidatestheSPEssinceithasboththepowertodirecttheactivitiesthatmostsignificantlyimpacttheSPEs'economicperformancethroughitsroleasservicerofallthereceivablesheldbytheSPEs,andtheobligationthroughvariableinterestsintheSPEstoabsorblossesorreceivebenefitsthatcouldpotentiallybesignificanttotheSPEs.Therestrictedassets(retailnotessecuritized,allowanceforcreditlosses,andotherassets)oftheconsolidatedSPEstotaled$2,593millionand$2,631millionatOctober28,2018andOctober29,2017,respectively.Theliabilities(short-termsecuritizationborrowingsandaccrued

2018 2017 Taxesreceivable $ 1,370 $ 876Other 366 324Otherreceivables $ 1,736 $ 1,200

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interest)oftheseSPEstotaled$2,520millionand$2,571millionatOctober28,2018andOctober29,2017,respectively.ThecreditholdersoftheseSPEsdonothavelegalrecoursetothecompany'sgeneralcredit.

Incertainsecuritizations,thecompanytransfersretailnotestonon-VIEbankingoperations,whicharenotconsolidatedsincethecompanydoesnothaveacontrollinginterestintheentities.Thecompany'scarryingvaluesandinterestsrelatedtothesecuritizationswiththeunconsolidatednon-VIEswererestrictedassets(retailnotessecuritized,allowanceforcreditlossesandotherassets)of$504millionand$478millionatOctober28,2018andOctober29,2017,respectively.Theliabilities(short-termsecuritizationborrowingsandaccruedinterest)were$475millionand$454millionatOctober28,2018andOctober29,2017,respectively.

Incertainsecuritizations,thecompanytransfersretailnotesintobank-sponsored,multi-seller,commercialpaperconduits,whichareSPEsthatarenotconsolidated.Thecompanydoesnotserviceasignificantportionoftheconduits'receivables,andtherefore,doesnothavethepowertodirecttheactivitiesthatmostsignificantlyimpacttheconduits'economicperformance.Theseconduitsprovideafundingsourcetothecompany(aswellasothertransferorsintotheconduit)astheyfundtheretailnotesthroughtheissuanceofcommercialpaper.Thecompany'scarryingvaluesandvariableinterestrelatedtotheseconduitswererestrictedassets(retailnotessecuritized,allowanceforcreditlosses,andotherassets)of$1,033millionand$1,155millionatOctober28,2018andOctober29,2017,respectively.Theliabilities(short-termsecuritizationborrowingsandaccruedinterest)relatedtotheseconduitswere$965millionand$1,096millionatOctober28,2018andOctober29,2017,respectively.

Thecompany'scarryingamountoftheliabilitiestotheunconsolidatedconduits,comparedtothemaximumexposuretolossrelatedtotheseconduits,whichwouldonlybeincurredintheeventofacompletelossontherestrictedassets,wasasfollowsatOctober28inmillionsofdollars:

ThetotalassetsofunconsolidatedVIEsrelatedtosecuritizationswereapproximately$35billionatOctober28,2018.

ThecomponentsofconsolidatedrestrictedassetsrelatedtosecuredborrowingsinsecuritizationtransactionsatOctober28,2018andOctober29,2017wereasfollowsinmillionsofdollars:

2018 Carryingvalueofliabilities $ 965Maximumexposuretoloss 1,033

2018 2017 Financingreceivablessecuritized(retailnotes) $ 4,032 $ 4,172Allowanceforcreditlosses (10) (13)Otherassets 108 105Totalrestrictedsecuritizedassets $ 4,130 $ 4,264

ThecomponentsofconsolidatedsecuredborrowingsandotherliabilitiesrelatedtosecuritizationsatOctober28,2018andOctober29,2017wereasfollowsinmillionsofdollars:

Thesecuredborrowingsrelatedtotheserestrictedsecuritizedretailnotesareobligationsthatarepayableastheretailnotesareliquidated.Repaymentofthesecuredborrowingsdependsprimarilyoncashflowsgeneratedbytherestrictedassets.Duetothecompany'sshort-termcreditrating,cashcollectionsfromtheserestrictedassetsarenotrequiredtobeplacedintoasegregatedcollectionaccountuntilimmediatelypriortothetimepaymentisrequiredtothesecuredcreditors.AtOctober28,2018,themaximumremainingtermofallsecuritizedretailnoteswasapproximatelysixyears.

14.EQUIPMENTONOPERATINGLEASES

OperatingleasesariseprimarilyfromtheleasingofJohnDeereequipmenttoretailcustomers.Initialleasetermsgenerallyrangefrom12to60months.NetequipmentonoperatingleasesatOctober28,2018andOctober29,2017consistedofthefollowinginmillionsofdollars:

Theequipmentisdepreciatedonastraight-linebasisoverthetermofthelease.Theaccumulateddepreciationonthisequipmentwas$1,515millionand$1,315millionatOctober28,2018andOctober29,2017,respectively.Thecorrespondingdepreciationexpensewas$928millionin2018,$853millionin2017,and$742millionin2016.

Futurepaymentstobereceivedonoperatingleasestotaled$2,309millionatOctober28,2018andarescheduledinmillionsofdollarsasfollows:2019–$980,2020–$688,2021–$400,2022–$198,and2023–$43.AtOctober28,2018andOctober29,2017,thecompany'sfinancialservicesoperationshad$34millionand$52million,respectively,ofdepositswithheldfromdealersavailableforpotentiallossesonresidualvalues.

2018 2017 Short-termsecuritizationborrowings $ 3,957 $ 4,119Accruedinterestonborrowings 3 2Totalliabilitiesrelatedtorestrictedsecuritizedassets $ 3,960 $ 4,121

2018 2017 Equipmentonoperatingleases: Agricultureandturf $ 5,682 $ 5,385Constructionandforestry 1,483 1,209

Equipmentonoperatingleases–net $ 7,165 $ 6,594

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15.INVENTORIES

AmajorityofinventoryownedbyDeere&CompanyanditsU.S.equipmentsubsidiariesarevaluedatcost,onthe"last-in,first-out"(LIFO)basis.Remaininginventoriesaregenerallyvaluedatthelowerofcost,onthe"first-in,first-out"(FIFO)basis,ornetrealizablevalue.ThevalueofgrossinventoriesontheLIFObasisatOctober28,2018andOctober29,2017represented54percentand61percent,respectively,ofworldwidegrossinventoriesatFIFOvalue.IfallinventorieshadbeenvaluedonaFIFObasis,estimatedinventoriesbymajorclassificationatOctober28,2018andOctober29,2017inmillionsofdollarswouldhavebeenasfollows:

16.PROPERTYANDDEPRECIATION

AsummaryofpropertyandequipmentatOctober28,2018andOctober29,2017inmillionsofdollarsfollows:

Totalpropertyandequipmentadditionsin2018,2017,and2016were$985million,$602million,and$674millionanddepreciationwas$754million,$726million,and$701million,respectively.Capitalizedinterestwas$4million,$3million,and$3millioninthesameperiods,respectively.Thecostofleasedpropertyandequipmentundercapitalleasesof$52millionand$40millionandaccumulateddepreciationof$22millionand$15millionatOctober28,2018andOctober29,2017,respectively,isincludedinpropertyandequipment.

Capitalizedsoftwarehasanestimatedusefullifeofthreeyears.Theamountsoftotalcapitalizedsoftwarecosts,

2018 2017 Rawmaterialsandsupplies $ 2,233 $ 1,688Work-in-process 776 495Finishedgoodsandparts 4,777 3,182TotalFIFOvalue 7,786 5,365

LessadjustmenttoLIFOvalue 1,637 1,461Inventories $ 6,149 $ 3,904

UsefulLives*(Years) 2018 2017

EquipmentOperations Land $ 283 $ 122Buildingsandbuildingequipment 23 3,848 3,396Machineryandequipment 11 5,570 5,378Dies,patterns,tools,etc. 8 1,564 1,647Allother 5 1,032 942Constructioninprogress 619 358Totalatcost 12,916 11,843

Lessaccumulateddepreciation 7,095 6,826Total 5,821 5,017

FinancialServices Land 4 4Buildingsandbuildingequipment 26 74 74Allother 6 34 38Totalatcost 112 116

Lessaccumulateddepreciation 65 65Total 47 51

Propertyandequipment-net $5,868 $5,068

* Weighted-averages

includingpurchasedandinternallydevelopedsoftware,classifiedas"OtherAssets"atOctober28,2018andOctober29,2017were$1,207millionand$1,078million,lessaccumulatedamortizationof$910millionand$826million,respectively.Capitalizedinterestonsoftwarewas$3millionand$1millionatOctober28,2018andOctober29,2017,respectively.Amortizationofthesesoftwarecostsin2018,2017,and2016was$145million,$118million,and$102million,respectively.

Thecostofcompliancewithforeseeableenvironmentalrequirementshasbeenaccruedanddidnothaveamaterialeffectonthecompany'sconsolidatedfinancialstatements.

17.GOODWILLANDOTHERINTANGIBLEASSETS–NET

Thechangesinamountsofgoodwillbyoperatingsegmentswereasfollowsinmillionsofdollars:

Therewerenoaccumulatedimpairmentlossesinthereportedperiods.

Thecomponentsofotherintangibleassetsareasfollowsinmillionsofdollars:

Otherintangibleassetsarestatedatcostlessaccumulatedamortization.Theamortizationofotherintangibleassetsin2018,2017,and2016was$100million,$18million,and$15million,respectively.

Theestimatedamortizationexpenseforthenextfiveyearsisasfollowsinmillionsofdollars:2019–$117,2020–$105,2021–$101,2022–$100,and2023–$98.

AgricultureandTurf

Constructionand

Forestry TotalGoodwillatOctober30,2016 $ 323 $ 493 $ 816Acquisitions* 193 193Translationadjustmentsandother 5 19 24

GoodwillatOctober29,2017 521 512 1,033Acquisitions* 71 2,068 2,139Divestitures* (18) (18)Translationadjustments (9) (44) (53)GoodwillatOctober28,2018 $ 583 $ 2,518 $3,101

* SeeNote4.

UsefulLives*(Years) 2018 2017

Amortizedintangibleassets: Customerlistsandrelationships 16 $ 542 $ 42Technology,patents,trademarks,andother 18 1,080 139Totalatcost 1,622 181

Lessaccumulatedamortization** 183 86Total 1,439 95

Unamortizedintangibleassets: In-processresearchanddevelopment*** 123 123

Otherintangibleassets-net $1,562 $218

* Weighted-averages** Accumulatedamortizationat2018and2017forcustomerlistsand

relationshipswas$46millionand$17millionandtechnology,patents,trademarks,andotherwas$137millionand$69million,respectively.

*** SeeNote4.

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18.TOTALSHORT-TERMBORROWINGS

Totalshort-termborrowingsatOctober28,2018andOctober29,2017consistedofthefollowinginmillionsofdollars:

Theshort-termsecuritizationborrowingsaresecuredbyfinancingreceivables(retailnotes)onthebalancesheet(seeNote13).Althoughthesesecuritizationborrowingsareclassifiedasshort-termsincepaymentisrequirediftheretailnotesareliquidatedearly,thepaymentschedulefortheseborrowings,whicharenetofdebtacquisitioncosts,atOctober28,2018basedontheexpectedliquidationoftheretailnotesinmillionsofdollarsisasfollows:2019–$2,161,2020–$1,076,2021–$546,2022–$168,2023–$11,and2024–$1.

Theweighted-averageinterestratesontotalshort-termborrowings,excludingcurrentmaturitiesoflong-termborrowings,atOctober28,2018andOctober29,2017were3.0percentand1.8percent,respectively.

LinesofcreditavailablefromU.S.andforeignbankswere$8,389millionatOctober28,2018.AtOctober28,2018,$3,724millionoftheseworldwidelinesofcreditwereunused.Forthepurposeofcomputingtheunusedcreditlines,commercialpaper,andshort-termbankborrowings,excludingsecuredborrowingsandthecurrentportionoflong-termborrowings,wereprimarilyconsideredtoconstituteutilization.IncludedinthetotalcreditlinesatOctober28,2018were364-daycreditfacilityagreementsof$1,750million,expiring

2018 2017 EquipmentOperations Notespayabletobanks $ 464 $ 221Long-termborrowingsduewithinoneyear 970 154Total 1,434 375

FinancialServices Commercialpaper 3,857 3,439Notespayabletobanks 344 157Long-termborrowingsduewithinoneyear* 5,427 6,064Total 9,628 9,660

Short-termborrowings 11,062 10,035Short-termsecuritizationborrowings EquipmentOperations 75 FinancialServices 3,882 4,119Total 3,957 4,119

Totalshort-termborrowings $ 15,019 $ 14,154

* Includesunamortizedfairvalueadjustmentsrelatedtointerestrateswaps.

inApril2019,and$750million,expiringinOctober2019.Inaddition,totalcreditlinesincludedlong-termcreditfacilityagreementsof$2,500million,expiringinApril2021,and$2,500million,expiringinApril2022.Theagreementsaremutuallyextendableandtheannualfacilityfeesarenotsignificant.ThesecreditagreementsrequireCapitalCorporationtomaintainitsconsolidatedratioofearningstofixedchargesatnotlessthan1.05to1foreachfiscalquarterandtheratioofseniordebt,excludingsecuritizationindebtedness,tocapitalbase(totalsubordinateddebtandstockholder'sequityexcludingaccumulatedothercomprehensiveincome(loss))atnotmorethan11to1attheendofanyfiscalquarter.Thecreditagreementsalsorequiretheequipmentoperationstomaintainaratiooftotaldebttototalcapital(totaldebtandstockholders'equityexcludingaccumulatedothercomprehensiveincome(loss))of65percentorlessattheendofeachfiscalquarter.Underthisprovision,thecompany'sexcessequitycapacityandretainedearningsbalancefreeofrestrictionatOctober28,2018was$12,368million.Alternativelyunderthisprovision,theequipmentoperationshadthecapacitytoincuradditionaldebtof$22,969millionatOctober28,2018.Alloftheserequirementsofthecreditagreementshavebeenmetduringtheperiodsincludedintheconsolidatedfinancialstatements.

Deere&CompanyhasanagreementwithCapitalCorporationpursuanttowhichithasagreedtocontinuetoown,directlyorthroughoneormorewholly-ownedsubsidiaries,atleast51percentofthevotingsharesofcapitalstockofCapitalCorporationandtomaintainCapitalCorporation'sconsolidatedtangiblenetworthatnotlessthan$50million.ThisagreementalsoobligatesDeere&CompanytomakepaymentstoCapitalCorporationsuchthatitsconsolidatedratioofearningstofixedchargesisnotlessthan1.05to1foreachfiscalquarter.Deere&Company'sobligationstomakepaymentstoCapitalCorporationundertheagreementareindependentofwhetherCapitalCorporationisindefaultonitsindebtedness,obligationsorotherliabilities.Further,Deere&Company'sobligationsundertheagreementarenotmeasuredbytheamountofCapitalCorporation'sindebtedness,obligationsorotherliabilities.Deere&Company'sobligationstomakepaymentsunderthisagreementareexpresslystatednottobeaguarantyofanyspecificindebtedness,obligationorliabilityofCapitalCorporationandareenforceableonlybyorinthenameofCapitalCorporation.Nopaymentswererequiredunderthisagreementduringtheperiodsincludedintheconsolidatedfinancialstatements.

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19.ACCOUNTSPAYABLEANDACCRUEDEXPENSES

AccountspayableandaccruedexpensesatOctober28,2018andOctober29,2017consistedofthefollowinginmillionsofdollars:

2018 2017 EquipmentOperations Accountspayable: Tradepayables $ 2,465 $ 2,069Dividendspayable 223 194Other 243 164

Accruedexpenses: Dealersalesdiscounts 1,801 1,559Productwarranties 1,146 1,007Employeebenefits 1,038 861Accruedtaxes 836 503Unearnedrevenue 665 520Other 965 841Total 9,382 7,718

FinancialServices Accountspayable: Depositswithheldfromdealersandmerchants 190 207

Other 239 275Accruedexpenses: Unearnedrevenue 885 797Accruedinterest 163 148Employeebenefits 63 55Other 516 345Total 2,056 1,827

Eliminations* 1,327 1,128Accountspayableandaccruedexpenses $10,111 $ 8,417

* Primarilytradereceivablevaluationaccountswhicharereclassifiedasaccruedexpensesbytheequipmentoperationsasaresultoftheirtradereceivablesbeingsoldtofinancialservices.

20.LONG-TERMBORROWINGS

Long-termborrowingsatOctober28,2018andOctober29,2017consistedofthefollowinginmillionsofdollars:

Theapproximateprincipalamountsoftheequipmentoperations'long-termborrowingsmaturingineachofthenextfiveyearsinmillionsofdollarsareasfollows:2019–$970,2020–$536,2021–$25,2022–$1,108,and2023–$571.Theapproximateprincipalamountsofthefinancialservices'long-termborrowingsmaturingineachofthenextfiveyearsinmillionsofdollarsareasfollows:2019–$5,430,2020–$6,185,2021–$5,699,2022–$3,567,and2023–$3,654.

21.LEASES

AtOctober28,2018,futureminimumleasepaymentsundercapitalleasesamountedto$30millionasfollows:2019–$11,2020–$9,2021–$6,2022–$2,2023–$1,andlateryears$1.Totalrentalexpenseforoperatingleaseswas$167millionin2018,$167millionin2017,and$185millionin2016.AtOctober28,2018,futureminimumleasepaymentsunderoperatingleasesamountedto$383millionasfollows:2019–$110,2020–$83,2021–$60,2022–$50,2023–$34,andlateryears$46.

2018 2017 EquipmentOperations U.S.dollarnotesanddebentures: 4.375%notesdue2019 $ 7508-1/2%debenturesdue2022 $ 105 1052.60%notesdue2022 1,000 1,0006.55%debenturesdue2028 200 2005.375%notesdue2029 500 5008.10%debenturesdue2030 250 2507.125%notesdue2031 300 3003.90%notesdue2042 1,250 1,250

Euronotes: Medium-termnotesdue2020–2023:(€850principal)Averageinterestratesof.4%-2018,.3%-2017 967 990

Othernotes 159 166Lessdebtissuancecosts 17 20

Total 4,714 5,491FinancialServices Notesanddebentures: Medium-termnotesdue2019–2028:(principal$21,221-2018,$18,678-2017)Averageinterestratesof2.8%-2018,2.0%-2017 20,865* 18,601*

2.75%seniornotedue2022:($500principal)Swapped$500tovariableinterestrateof3.5%–2018,2.0%–2017 489* 502*

Othernotes 1,215 1,339Lessdebtissuancecosts 46 42

Total 22,523 20,400Long-termborrowings** $ 27,237 $ 25,891

* Includesunamortizedfairvalueadjustmentsrelatedtointerestrateswaps.

** Allinterestratesareasofyearend.

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22.COMMITMENTSANDCONTINGENCIES

Thecompanygenerallydeterminesitstotalwarrantyliabilitybyapplyinghistoricalclaimsrateexperiencetotheestimatedamountofequipmentthathasbeensoldandisstillunderwarrantybasedondealerinventoriesandretailsales.Thehistoricalclaimsrateisprimarilydeterminedbyareviewoffive-yearclaimscostsandcurrentqualitydevelopments.

Thepremiumsforextendedwarrantiesareprimarilyrecognizedinincomeinproportiontothecostsexpectedtobeincurredoverthecontractperiod.Theunamortizedextendedwarrantypremiums(deferredrevenue)includedinthefollowingtabletotaled$506millionand$461millionatOctober28,2018andOctober29,2017,respectively.

Areconciliationofthechangesinthewarrantyliabilityandunearnedpremiumsinmillionsofdollarsfollows:

AtOctober28,2018,thecompanyhadapproximately$357millionofguaranteesissuedprimarilytobanksoutsidetheU.S.andCanadarelatedtothird-partyreceivablesfortheretailfinancingofJohnDeereandWirtgenequipment.TheincreasefromOctober29,2017primarilyrelatestotheWirtgenacquisition.Thecompanymayrecoveraportionofanyrequiredpaymentsincurredundertheseagreementsfromrepossessionoftheequipmentcollateralizingthereceivables.AtOctober28,2018,thecompanyrecordedaliabilityofapproximately$14millionundertheseagreements.ThemaximumremainingtermofthereceivablesguaranteedatOctober28,2018wasapproximatelysevenyears.

AtOctober28,2018,thecompanyhadcommitmentsofapproximately$289millionfortheconstructionandacquisitionofpropertyandequipment.AlsoatOctober28,2018,thecompanyhadrestrictedassetsof$111million,classifiedas"OtherAssets".SeeNote13foradditionalrestrictedassetsassociatedwithborrowingsrelatedtosecuritizations.

Thecompanyalsohadothermiscellaneouscontingentliabilitiestotalingapproximately$155millionatOctober28,2018.Theaccruedliabilityforthesecontingencieswasapproximately$20millionatOctober28,2018.

Thecompanyissubjecttovariousunresolvedlegalactionswhichariseinthenormalcourseofitsbusiness,themostprevalentofwhichrelatetoproductliability(includingasbestosrelatedliability),retailcredit,employment,patent,andtrademarkmatters.Thecompanybelievesthereasonably

WarrantyLiability/UnearnedPremiums2018 2017

Beginningofyearbalance $1,468 $1,226Payments (907) (743)Amortizationofpremiumsreceived (217) (207)Accrualsforwarranties 978 959Premiumsreceived 270 224Acquisition* 80 Foreignexchange (20) 9Endofyearbalance $1,652 $1,468

* SeeNote4.

possiblerangeoflossesfortheseunresolvedlegalactionswouldnothaveamaterialeffectonitsfinancialstatements.

23.CAPITALSTOCK

Changesinthecommonstockaccountinmillionswereasfollows:

Thenumberofcommonsharesthecompanyisauthorizedtoissueis1,200million.Thenumberofauthorizedpreferredshares,noneofwhichhasbeenissued,isninemillion.

TheBoardofDirectorsatitsmeetinginDecember2013authorizedtherepurchaseofupto$8,000millionofcommonstock(60.2millionsharesbasedonthefiscalyearendclosingcommonstockpriceof$133.00pershare).Attheendofthefiscalyear,thisrepurchaseprogramhad$2,312million(17.4millionsharesatthesameprice)remainingtoberepurchased.Repurchasesofthecompany'scommonstockunderthisplanwillbemadefromtimetotime,atthecompany'sdiscretion,intheopenmarket.

AreconciliationofbasicanddilutednetincomepershareattributabletoDeere&Companyfollowsinmillions,exceptpershareamounts:

Allstockoptionsoutstandingwereincludedinthecomputationduring2018,2017,and2016,except.4millionin2018,.2millionin2017,and9.9millionin2016thathadanantidilutiveeffectunderthetreasurystockmethod.

24.STOCKOPTIONANDRESTRICTEDSTOCKAWARDS

Thecompanyissuesstockoptionsandrestrictedstockawardstokeyemployeesunderplansapprovedbystockholders.Restrictedstockisalsoissuedtononemployeedirectorsfortheirservicesasdirectorsunderaplanapprovedbystockholders.Optionsareawardedwiththeexerciseprice

Numberof

SharesIssued Amount BalanceatNovember1,2015 536.4 $ 3,826Stockoptionsandother 86BalanceatOctober30,2016 536.4 3,912Stockoptionsandother 369BalanceatOctober29,2017 536.4 4,281Stockoptionsandother 193BalanceatOctober28,2018 536.4 $ 4,474

2018 2017 2016

NetincomeattributabletoDeere&Company $2,368.4 $2,159.1 $1,523.9

Lessincomeallocabletoparticipatingsecurities .4 .6 .7

Incomeallocabletocommonstock $2,368.0 $2,158.5 $1,523.2Averagesharesoutstanding 322.6 319.5 315.2Basicpershare $ 7.34 $ 6.76 $ 4.83Averagesharesoutstanding 322.6 319.5 315.2Effectofdilutivestockoptions 4.7 3.8 1.4Totalpotentialsharesoutstanding 327.3 323.3 316.6

Dilutedpershare $ 7.24 $ 6.68 $ 4.81

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equaltothemarketpriceandbecomeexercisableinonetothreeyearsaftergrant.Optionsexpiretenyearsafterthedateofgrant.Restrictedstockawardsgenerallyvestafterthreeyears.Thecompensationcostforstockoptions,servicebasedrestrictedstockunits,andmarket/servicebasedrestrictedstockunits,whichisbasedonthefairvalueatthegrantdate,isrecognizedonastraight-linebasisovertherequisiteperiodtheemployeeisrequiredtorenderservice.Thecompensationcostforperformance/servicebasedunits,whichisbasedonthefairvalueatthegrantdate,isrecognizedovertheemployees'requisiteserviceperiodandperiodicallyadjustedfortheprobablenumberofsharestobeawarded.AccordingtotheseplansatOctober28,2018,thecompanyisauthorizedtograntanadditional10.0millionsharesrelatedtostockoptionsorrestrictedstock.

Thefairvalueofeachoptionawardwasestimatedonthedateofgrantusingabinomiallatticeoptionvaluationmodel.Expectedvolatilitiesarebasedonimpliedvolatilitiesfromtradedcalloptionsonthecompany'sstock.Theexpectedvolatilitiesareconstructedfromthefollowingthreecomponents:thestartingimpliedvolatilityofshort-termcalloptionstradedwithinafewdaysofthevaluationdate;thepredictedimpliedvolatilityoflong-termcalloptions;andthetrendinimpliedvolatilitiesoverthespanofthecalloptions'timetomaturity.Thecompanyuseshistoricaldatatoestimateoptionexercisebehaviorandemployeeterminationwithinthevaluationmodel.Theexpectedtermofoptionsgrantedisderivedfromtheoutputoftheoptionvaluationmodelandrepresentstheperiodoftimethatoptionsgrantedareexpectedtobeoutstanding.Therisk-freeratesutilizedforperiodsthroughoutthecontractuallifeoftheoptionsarebasedonU.S.Treasurysecurityyieldsatthetimeofgrant.

Theassumptionsusedforthebinomiallatticemodeltodeterminethefairvalueofoptionsfollow:

StockoptionactivityatOctober28,2018andchangesduring2018inmillionsofdollarsandsharesfollow:

2018 2017 2016

Risk-freeinterestrate 1.69%–2.7% .88%–2.5% .23%–2.3%

Expecteddividends 1.6% 2.4% 2.8%

Expectedvolatility 22.3%–23.0%

24.0%–24.8%

25.2%–29.0%

Weighted-averagevolatility 22.8% 24.5% 26.5%

Expectedterm(inyears) 7.9–8.6 7.8–8.6 7.0–8.6

SharesExercisePrice*

RemainingContractual

Term(Years)

AggregateIntrinsicValue

Outstandingatbeginningofyear 11.2 $ 81.39

Granted .5 151.95 Exercised (2.9) 75.62 Outstandingatendofyear 8.8 87.08 5.80 $ 413.6

Exercisableatendofyear 7.0 82.92 5.26 349.4

* Weighted-averages

Theweighted-averagegrant-datefairvaluesofoptionsgrantedduring2018,2017,and2016were$39.11,$24.46,and$16.88,respectively.Thetotalintrinsicvaluesofoptionsexercisedduring2018,2017,and2016were$229million,$225million,and$23million,respectively.During2018,2017,and2016,cashreceivedfromstockoptionexerciseswas$217million,$529million,and$36millionwithtaxbenefitsof$54million,$83million,and$8million,respectively.

Thecompanygranted415thousand,579thousand,and255thousandrestrictedstockunitstoemployeesandnonemployeedirectorsin2018,2017,and2016,ofwhich330thousand,465thousand,and113thousandaresubjecttoservicebasedonlyconditions,85thousand,57thousand,and71thousandaresubjecttoperformance/servicebasedconditions,andnone,57thousand,and71thousandaresubjecttomarket/servicebasedconditions,respectively.Theservicebasedonlyunitsawardoneshareofcommonstockforeachunitattheendofthevestingperiodandincludedividendequivalentpayments.

Theperformance/servicebasedunitsaresubjecttoaperformancemetricbasedonthecompany'scompoundannualrevenuegrowthrate,comparedtoabenchmarkgroupofcompaniesoverthevestingperiod.Themarket/servicebasedunitsaresubjecttoamarketrelatedmetricbasedontotalshareholderreturn,comparedtothesamebenchmarkgroupofcompaniesoverthevestingperiod.Theperformance/servicebasedunitsandthemarket/servicebasedunitsbothawardcommonstockinarangeofzeroto200percentforeachunitgrantedbasedonthelevelofthemetricachievedanddonotincludedividendequivalentpaymentsoverthevestingperiod.Theweighted-averagefairvaluesoftheservicebasedonlyunitsatthegrantdatesduring2018,2017,and2016were$151.67,$101.03,and$79.84perunit,respectively,basedonthemarketpriceofashareofunderlyingcommonstock.Thefairvalueoftheperformance/servicebasedunitsatthegrantdateduring2018,2017,and2016were$145.33,$93.86,and$72.93perunit,respectively,basedonthemarketpriceofashareofunderlyingcommonstockexcludingdividends.Thefairvalueofthemarket/servicebasedunitsatthegrantdateduring2017and2016were$129.70and$103.66perunit,respectively,basedonalatticevaluationmodelexcludingdividends.

Thecompany'srestrictedsharesatOctober28,2018andchangesduring2018inmillionsofsharesfollow:

SharesGrant-DateFairValue*

Servicebasedonly Nonvestedatbeginningofyear .7 $ 95.90Granted .3 151.67Vested (.1) 91.92Nonvestedatendofyear .9 117.47

Performance/serviceandmarket/servicebased

Nonvestedatbeginningofyear .4 $ 98.46Granted .1 145.33Vested (.2) 113.97Nonvestedatendofyear .3 110.56

* Weighted-averages

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During2018,2017,and2016,thetotalshare-basedcompensationexpensewas$84million,$68million,and$71million,respectively,withrecognizedincometaxbenefitsof$20million,$25million,and$26million,respectively.AtOctober28,2018,therewas$47millionoftotalunrecognizedcompensationcostfromshare-basedcompensationarrangementsgrantedundertheplans,whichisrelatedtorestrictedsharesandoptions.Thiscompensationisexpectedtoberecognizedoveraweighted-averageperiodofapproximatelytwoyears.Thetotalgrant-datefairvaluesofstockoptionsandrestrictedsharesvestedduring2018,2017,and2016were$63million,$72million,and$69million,respectively.

Thecompanycurrentlyusessharesthathavebeenrepurchasedthroughitsstockrepurchaseprogramstosatisfyshareoptionexercises.Atfiscalyearend,thecompanyhad218millionsharesintreasurystockand17millionsharesremainingtoberepurchasedunderitscurrentpubliclyannouncedrepurchaseprogram(seeNote23).

25.OTHERCOMPREHENSIVEINCOMEITEMS

Theafter-taxchangesinaccumulatedothercomprehensiveincomeatNovember1,2015,October30,2016,October29,2017,andOctober28,2018inmillionsofdollarsfollow:

RetirementBenefitsAdjustment

CumulativeTranslationAdjustment

UnrealizedGain(Loss)

onDerivatives

UnrealizedGain(Loss)

onInvestments

TotalAccumulated

OtherComprehensive

Income(Loss)

2015 $ (3,501) $ (1,238) $ (2) $ 12 $ (4,729)PeriodChange (908) 9 3 (1) (897)2016 (4,409) (1,229) 1 11 (5,626)PeriodChange 829 230 4 (1) 1,0622017 (3,580) (999) 5 10 (4,564)PeriodChange 1,052 (195) 9 (13) 853ASUNo.2018-02* (709) (10) 1 1 (717)2018 $ (3,237) $ (1,204) $ 15 $ (2) $ (4,428)

* SeeNote3.

Followingareamountsrecordedinandreclassificationsoutofothercomprehensiveincome(loss),andtheincometaxeffects,inmillionsofdollars:

BeforeTax

Amount

Tax(Expense)Credit

AfterTax

Amount2018 Cumulativetranslationadjustment $ (188) $ (7) $ (195)Unrealizedgain(loss)onderivatives: Unrealizedhedginggain(loss) 18 (4) 14Reclassificationofrealized(gain)lossto: Interestratecontracts–Interestexpense (5) 1 (4)

Foreignexchangecontracts–Otheroperatingexpenses (1) (1)

Netunrealizedgain(loss)onderivatives 12 (3) 9

Unrealizedgain(loss)oninvestments: Unrealizedholdinggain(loss) (17) 5 (12)Reclassificationofrealized(gain)loss–Otherincome (1) (1)

Netunrealizedgain(loss)oninvestments (18) 5 (13)

Retirementbenefitsadjustment: Pensions Netactuarialgain(loss) 553 (128) 425Reclassificationthroughamortizationofactuarial(gain)lossandpriorservice(credit)costtootheroperatingexpenses:* Actuarial(gain)loss 226 (63) 163

Priorservice(credit)cost 12 (4) 8

Settlements/curtailments 8 (2) 6OPEB Netactuarialgain(loss)andpriorservicecredit(cost) 603 (142) 461

Reclassificationthroughamortizationofactuarial(gain)lossandpriorservice(credit)costtootheroperatingexpenses:* Actuarial(gain)loss 62 (17) 45

Priorservice(credit)cost (77) 21 (56)

Netunrealizedgain(loss)onretirementbenefitsadjustment 1,387 (335) 1,052

Totalothercomprehensiveincome(loss) $1,193 $ (340) $ 853

* TheseaccumulatedothercomprehensiveincomeamountsareincludedinnetperiodicpensionandOPEBcosts.SeeNote7foradditionaldetail.

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BeforeTax

Amount

Tax(Expense)Credit

AfterTax

Amount2017 Cumulativetranslationadjustment $ 232 $ (2) $ 230Unrealizedgain(loss)onderivatives: Unrealizedhedginggain(loss) 3 (1) 2Reclassificationofrealized(gain)lossto: Interestratecontracts–Interestexpense 2 (1) 1

Foreignexchangecontracts–Otheroperatingexpenses 1 1

Netunrealizedgain(loss)onderivatives 6 (2) 4

Unrealizedgain(loss)oninvestments: Unrealizedholdinggain(loss) 274 (101) 173Reclassificationofrealized(gain)loss–Otherincome (275) 101 (174)

Netunrealizedgain(loss)oninvestments (1) (1)

Retirementbenefitsadjustment: Pensions Netactuarialgain(loss) 702 (248) 454Reclassificationthroughamortizationofactuarial(gain)lossandpriorservice(credit)costtootheroperatingexpenses:* Actuarial(gain)loss 247 (89) 158

Priorservice(credit)cost 12 (4) 8

Settlements/curtailments 2 (1) 1OPEB Netactuarialgain(loss) 309 (115) 194Reclassificationthroughamortizationofactuarial(gain)lossandpriorservice(credit)costtootheroperatingexpenses:* Actuarial(gain)loss 99 (36) 63

Priorservice(credit)cost (77) 28 (49)

Netunrealizedgain(loss)onretirementbenefitsadjustment 1,294 (465) 829

Totalothercomprehensiveincome(loss) $1,531 $ (469) $1,062

* TheseaccumulatedothercomprehensiveincomeamountsareincludedinnetperiodicpensionandOPEBcosts.SeeNote7foradditionaldetail.

Thenoncontrollinginterests'comprehensiveincome(loss)was$2.1millionin2018,$.3millionin2017,and$(2.4)millionin2016,whichconsistedofnetincome(loss)of$2.2millionin2018,$.1millionin2017,and$(2.4)millionin2016andcumulativetranslationadjustmentsof$(.1)millionin2018,$.2millionin2017,andnonein2016.

26.FAIRVALUEMEASUREMENTS

Fairvalueisdefinedasthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.Todeterminefairvalue,thecompanyusesvariousmethodsincludingmarketand

BeforeTax

Amount

Tax(Expense)Credit

AfterTax

Amount2016 Cumulativetranslationadjustment $ 8 $ 1 $ 9Unrealizedgain(loss)onderivatives: Unrealizedhedginggain(loss) (2) 1 (1)Reclassificationofrealized(gain)lossto: Interestratecontracts–Interestexpense 7 (2) 5

Foreignexchangecontracts–Otheroperatingexpenses (1) (1)

Netunrealizedgain(loss)onderivatives 4 (1) 3

Unrealizedgain(loss)oninvestments: Unrealizedholdinggain(loss) 2 2Reclassificationofrealized(gain)loss–Otherincome (4) 1 (3)

Netunrealizedgain(loss)oninvestments (2) 1 (1)

Retirementbenefitsadjustment: Pensions Netactuarialgain(loss)andpriorservicecredit(cost) (1,141) 397 (744)

Reclassificationthroughamortizationofactuarial(gain)lossandpriorservice(credit)costtootheroperatingexpenses:* Actuarial(gain)loss 211 (77) 134

Priorservice(credit)cost 16 (6) 10

Settlements/curtailments 14 (4) 10OPEB Netactuarialgain(loss)andpriorservicecredit(cost) (493) 178 (315)

Reclassificationthroughamortizationofactuarial(gain)lossandpriorservice(credit)costtootheroperatingexpenses:* Actuarial(gain)loss 73 (27) 46

Priorservice(credit)cost (78) 29 (49)

Netunrealizedgain(loss)onretirementbenefitsadjustment (1,398) 490 (908)

Totalothercomprehensiveincome(loss) $(1,388) $ 491 $ (897)

* TheseaccumulatedothercomprehensiveincomeamountsareincludedinnetperiodicpensionandOPEBcosts.SeeNote7foradditionaldetail.

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incomeapproaches.Thecompanyutilizesvaluationmodelsandtechniquesthatmaximizetheuseofobservableinputs.Themodelsareindustry-standardmodelsthatconsidervariousassumptionsincludingtimevaluesandyieldcurvesaswellasother

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economicmeasures.Thesevaluationtechniquesareconsistentlyapplied.

Level1measurementsconsistofquotedpricesinactivemarketsforidenticalassetsorliabilities.Level2measurementsincludesignificantotherobservableinputssuchasquotedpricesforsimilarassetsorliabilitiesinactivemarkets;identicalassetsorliabilitiesininactivemarkets;observableinputssuchasinterestratesandyieldcurves;andothermarket-corroboratedinputs.Level3measurementsincludesignificantunobservableinputs.

ThefairvaluesoffinancialinstrumentsthatdonotapproximatethecarryingvaluesatOctober28,2018andOctober29,2017inmillionsofdollarsfollow:

Fairvaluesofthefinancingreceivablesthatwereissuedlong-termwerebasedonthediscountedvaluesoftheirrelatedcashflowsatinterestratescurrentlybeingofferedbythecompanyforsimilarfinancingreceivables.Thefairvaluesoftheremainingfinancingreceivablesapproximatedthecarryingamounts.

Fairvaluesoflong-termborrowingsandshort-termsecuritizationborrowingswerebasedoncurrentmarketquotesforidenticalorsimilarborrowingsandcreditrisk,oronthe

2018 2017

CarryingValue

FairValue*

CarryingValue

FairValue*

Financingreceivables–net: Equipmentoperations** $ 93 $ 91

Financialservices 26,961 26,722 $ 25,104 $ 24,946Total $ 27,054 $ 26,813 $ 25,104 $ 24,946

Financingreceivablessecuritized–net: Equipmentoperations** $ 76 $ 73

Financialservices 3,946 3,895 $ 4,159 $ 4,130Total $ 4,022 $ 3,968 $ 4,159 $ 4,130

Short-termsecuritizationborrowings: Equipmentoperations** $ 75 $ 75

Financialservices 3,882 3,870 $ 4,119 $ 4,118Total $ 3,957 $ 3,945 $ 4,119 $ 4,118

Long-termborrowingsduewithinoneyear: Equipmentoperations** $ 970 $ 979 $ 154 $ 154

Financialservices 5,427 5,411 6,064 6,079Total $ 6,397 $ 6,390 $ 6,218 $ 6,233

Long-termborrowings: Equipmentoperations** $ 4,714 $ 4,948 $ 5,491 $ 6,026

Financialservices 22,523 22,590 20,400 20,606Total $ 27,237 $ 27,538 $ 25,891 $ 26,632

* FairvaluemeasurementsabovewereLevel3forallfinancingreceivables,Level3forequipmentoperationsshort-termsecuritizationborrowings,andLevel2forallotherborrowings.

** SeeNote4.

discountedvaluesoftheirrelatedcashflowsatcurrentmarketinterestrates.Certainlong-termborrowingshavebeenswappedtocurrentvariableinterestrates.Thecarryingvaluesoftheselong-termborrowingsincludedadjustmentsrelatedtofairvaluehedges.

AssetsandliabilitiesmeasuredatOctober28,2018andOctober29,2017atfairvalueonarecurringbasisinmillionsofdollarsfollow:

Fairvalue,recurringLevel3measurementsfromavailable-for-salemarketablesecuritiesatOctober28,2018,October29,2017,andOctober30,2016inmillionsofdollarsfollow:

2018* 2017*Marketablesecurities

Equityfund $ 46 $ 48Fixedincomefund 15U.S.governmentdebtsecurities 111 77Municipaldebtsecurities 46 39Corporatedebtsecurities 140 135Internationaldebtsecurities 10 20Mortgage-backedsecurities** 137 118

Totalmarketablesecurities 490 452Otherassets Derivatives: Interestratecontracts 80 116Foreignexchangecontracts 83 108Cross-currencyinterestratecontracts 5 11

Totalassets*** $ 658 $ 687Accountspayableandaccruedexpenses Derivatives: Interestratecontracts $ 350 $ 131Foreignexchangecontracts 49 26Cross-currencyinterestratecontracts 1

Totalliabilities $ 399 $ 158

* AllmeasurementsabovewereLevel2measurementsexceptforLevel1measurementsoftheequityfundof$46millionand$48millionatOctober28,2018andOctober29,2017,respectively,thefixedincomefundof$15millionatOctober29,2017,andU.S.governmentdebtsecuritiesof$44millionand$44millionatOctober28,2018andOctober29,2017,respectively.Inaddition,$8millionand$17millionoftheinternationaldebtsecuritieswereLevel3measurementsatOctober28,2018andOctober29,2017,respectively.TherewerenotransfersbetweenLevel1andLevel2during2018and2017.

** PrimarilyissuedbyU.S.governmentsponsoredenterprises.*** Excludedfromthistablewerecashequivalents,whichwerecarriedat

costthatapproximatesfairvalue.Thecashequivalentsconsistprimarilyofmoneymarketfundsandtimedeposits.

2018 2017 2016Beginningofyearbalance $ 17 $ 28 $ 29Purchases 25Principalpayments (9) (13) (22)Changeinunrealizedgain(loss) 1 2 (4)Other (1) Endofyearbalance $ 8 $ 17 $ 28

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Fairvalue,nonrecurringmeasurementsfromimpairmentsatOctober28,2018andOctober29,2017inmillionsofdollarsfollow:

Thefollowingisadescriptionofthevaluationmethodologiesthecompanyusestomeasurecertainfinancialinstrumentsonthebalancesheetatfairvalue:

MarketableSecurities–Theportfolioofinvestments,exceptfortheLevel3measurementinternationaldebtsecurities,isprimarilyvaluedonamarketapproach(matrixpricingmodel)inwhichallsignificantinputsareobservableorcanbederivedfromorcorroboratedbyobservablemarketdatasuchasinterestrates,yieldcurves,volatilities,creditrisk,andprepaymentspeeds.Fundsareprimarilyvaluedusingthefund'snetassetvalue,basedonthefairvalueoftheunderlyingsecurities.TheLevel3measurementinternationaldebtsecuritiesareprimarilyvaluedusinganincomeapproachbasedondiscountedcashflowsusingyieldcurvesderivedfromlimited,observablemarketdata.

Derivatives–Thecompany'sderivativefinancialinstrumentsconsistofinterestrateswapsandcaps,foreigncurrencyfutures,forwardsandswaps,andcross-currencyinterestrateswaps.Theportfolioisvaluedbasedonanincomeapproach(discountedcashflow)usingmarketobservableinputs,includingswapcurvesandbothforwardandspotexchangeratesforcurrencies.

FinancingReceivables–Specificreserveimpairmentsarebasedonthefairvalueofthecollateral,whichismeasuredusingamarketapproach(appraisalvaluesorrealizablevalues).Inputsincludeaselectionofrealizablevalues(seeNote12).

EquipmentonOperatingLeases-Net–Theimpairmentsarebasedonanincomeapproach(discountedcashflow),usingthecontractualpayments,plusanestimateofequipmentsalepriceatleasematurity.Inputsincluderealizedsalesvalues(seeNote5).

PropertyandEquipment-Net–Theimpairmentsaremeasuredatthelowerofthecarryingamount,orfairvalue.Thevaluationswerebasedonacostapproach.Theinputsincludereplacementcostestimatesadjustedforphysicaldeteriorationandeconomicobsolescence(seeNote5).

InvestmentinUnconsolidatedAffiliates–Otherthantemporaryimpairmentsforinvestmentsaremeasuredasthedifference

FairValue* Losses*2018 2017 2018 2017 2016

Equipmentonoperatingleases–net $ 31Propertyandequipment–net $ 13Investmentsinunconsolidatedaffiliates $ 28 $ 40 $ 12

Otherassets $ 29

* FairvalueatOctober29,2017wasaLevel1measurement.SeefinancingreceivableswithspecificallowancesinNote12thatwerenotsignificant.SeeNote5forimpairments.

betweentheimpliedfairvalueandthecarryingvalueoftheinvestments.Thefairvalueforpubliclytradedentitiesisthesharepricemultipliedbythesharesowned(seeNote5).

OtherAssets–Theimpairmentsaremeasuredatthefairvalueofthematuredoperatingleaseinventory.Thevaluationswerebasedonamarketapproach.Theinputsincludesalesofcomparableassets(seeNote5).

27.DERIVATIVEINSTRUMENTS

CashFlowHedges

Certaininterestrateandcross-currencyinterestratecontracts(swaps)weredesignatedashedgesoffuturecashflowsfromborrowings.Thetotalnotionalamountsofthereceive-variable/pay-fixedinterestratecontractsatOctober28,2018andOctober29,2017were$3,050millionand$1,700million,respectively.Thetotalnotionalamountsofthecross-currencyinterestratecontractswerenoneand$22millionatOctober28,2018andOctober29,2017,respectively.TheeffectiveportionsofthefairvaluegainsorlossesonthesecashflowhedgeswererecordedinOCIandsubsequentlyreclassifiedintointerestexpenseorotheroperatingexpenses(foreignexchange)inthesameperiodsduringwhichthehedgedtransactionsaffectedearnings.Theseamountsoffsettheeffectsofinterestrateorforeigncurrencyexchangeratechangesontherelatedborrowings.Anyineffectiveportionsofthegainsorlossesonallcashflowinterestratecontractsdesignatedascashflowhedgeswererecognizedcurrentlyininterestexpenseorotheroperatingexpenses(foreignexchange)andwerenotmaterialduringanyyearspresented.Thecashflowsfromthesecontractswererecordedinoperatingactivitiesinthestatementofconsolidatedcashflows.

TheamountofgainrecordedinOCIatOctober28,2018thatisexpectedtobereclassifiedtointerestexpenseorotheroperatingexpensesinthenexttwelvemonthsifinterestratesorexchangeratesremainunchangedisapproximately$10millionafter-tax.Thesecontractsmatureinupto26months.TherewerenogainsorlossesreclassifiedfromOCItoearningsbasedontheprobabilitythattheoriginalforecastedtransactionwouldnotoccur.

FairValueHedges

Certaininterestratecontracts(swaps)weredesignatedasfairvaluehedgesofborrowings.Thetotalnotionalamountsofthereceive-fixed/pay-variableinterestratecontractsatOctober28,2018andOctober29,2017were$8,479millionand$8,661million,respectively.Theeffectiveportionsofthefairvaluegainsorlossesonthesecontractswereoffsetbyfairvaluegainsorlossesonthehedgeditems(fixed-rateborrowings).Anyineffectiveportionsofthegainsorlosseswererecognizedcurrentlyininterestexpense.Theineffectiveportionswerelossesof$2millioninboth2018and2016,andagainof$3millionin2017.Thecashflowsfromthesecontractswererecordedinoperatingactivitiesinthestatementofconsolidatedcashflows.

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Thegains(losses)onthesecontractsandtheunderlyingborrowingsrecordedininterestexpensefollowinmillionsofdollars:

DerivativesNotDesignatedasHedgingInstruments

Thecompanyhascertaininterestratecontracts(swapsandcaps),foreignexchangecontracts(futures,forwardsandswaps),andcross-currencyinterestratecontracts(swaps),whichwerenotformallydesignatedashedges.Thesederivativeswereheldaseconomichedgesforunderlyinginterestrateorforeigncurrencyexposuresprimarilyforcertainborrowings,purchasesorsalesofinventory,andbelowmarketretailfinancingprograms.ThetotalnotionalamountsoftheinterestrateswapsatOctober28,2018andOctober29,2017were$8,075millionand$6,757million,theforeignexchangecontractswere$6,842millionand$8,499million,andthecross-currencyinterestratecontractswere$81millionand$66million,respectively.Theincreaseinthetotalnotionalamountofinterestrateswapsprimarilyrelatestotheequipmentoperation'seconomichedgeofannouncedretailfinancingprograms.ThedecreaseinthetotalnotionalamountsofforeignexchangecontractsprimarilyrelatestotheWirtgenacquisition,whichclosedinDecember2017(seeNote4).AtOctober28,2018andOctober29,2017,therewerealso$66millionand$253million,respectively,ofinterestratecapspurchasedandthesameamountssoldatthesamecappedinterestratetofacilitateborrowingsthroughsecuritizationofretailnotes.Thefairvaluegainsorlossesfromtheinterestratecontractswererecognizedcurrentlyininterestexpenseandthegainsorlossesfromforeignexchangecontractsincostofsalesorotheroperatingexpenses,generallyoffsettingovertimetheexpensesontheexposuresbeinghedged.Thecashflowsfromthesenon-designatedcontractswererecordedinoperatingactivitiesinthestatementofconsolidatedcashflows.

2018 2017 2016Interestratecontracts* $ (294) $ (284) $ 7Borrowings** 292 287 (9)

* Includeschangesinfairvaluesofinterestratecontractsexcludingnetaccruedinterestincomeof$11million,$79million,and$146millionduring2018,2017,and2016,respectively.

** Includesadjustmentsforfairvaluesofhedgedborrowingsexcludingaccruedinterestexpenseof$246million,$243million,and$290millionduring2018,2017,and2016,respectively.

FairvaluesofderivativeinstrumentsintheconsolidatedbalancesheetatOctober28,2018andOctober29,2017inmillionsofdollarsfollow:

Theclassificationandgains(losses)includingaccruedinterestexpenserelatedtoderivativeinstrumentsonthestatementofconsolidatedincomeconsistedofthefollowinginmillionsofdollars:

CounterpartyRiskandCollateral

Derivativeinstrumentsaresubjecttosignificantconcentrationsofcreditrisktothebankingsector.Thecompanymanagesindividualcounterpartyexposurebysettinglimitsthatconsider

2018 2017OtherAssets Designatedashedginginstruments: Interestratecontracts $ 29 $ 74Cross-currencyinterestratecontracts 5Totaldesignated 29 79

Notdesignatedashedginginstruments: Interestratecontracts 51 42Foreignexchangecontracts 83 108Cross-currencyinterestratecontracts 5 6Totalnotdesignated 139 156

Totalderivativeassets $ 168 $ 235AccountsPayableandAccruedExpenses Designatedashedginginstruments: Interestratecontracts $ 321 $ 112Totaldesignated 321 112

Notdesignatedashedginginstruments: Interestratecontracts 29 19Foreignexchangecontracts 49 26Cross-currencyinterestratecontracts 1Totalnotdesignated 78 46

Totalderivativeliabilities $ 399 $ 158

2018 2017 2016FairValueHedges Interestratecontracts–Interestexpense $ (283) $(205) $ 153

CashFlowHedges RecognizedinOCI (EffectivePortion): Interestratecontracts–OCI(pretax)* 17 4 (3)Foreignexchangecontracts–OCI(pretax)* 2 (1) 1

ReclassifiedfromOCI (EffectivePortion): Interestratecontracts–Interestexpense* 5 (2) (7)Foreignexchangecontracts–Otherexpense* 1 (1) 1

RecognizedDirectlyinIncome (IneffectivePortion) ** ** **

NotDesignatedasHedges Interestratecontracts–Netsales $ 3 Interestratecontracts–Interestexpense* (4) $ 11 $ (1)Foreignexchangecontracts–Costofsales (24) (12) (15)Foreignexchangecontracts–Otherexpense* 195 (106) 74Totalnotdesignated $ 170 $(107) $ 58

* Includesinterestandforeignexchangegains(losses)fromcross-currencyinterestratecontracts.

** Theamountsarenotsignificant.

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thecreditratingofthecounterparty,thecreditdefaultswapspreadofthecounterparty,andotherfinancialcommitmentsandexposuresbetweenthecompanyandthecounterpartybanks.AllinterestratederivativesaretransactedunderInternationalSwapsandDerivativesAssociation(ISDA)documentation.Someoftheseagreementsincludecreditsupportprovisions.Eachmasteragreementpermitsthenetsettlementofamountsowedintheeventofdefaultortermination.

Certainofthecompany'sderivativeagreementscontaincreditsupportprovisionsthatmayrequirethecompanytopostcollateralbasedonthesizeofthenetliabilitypositionsandcreditratings.Theaggregatefairvalueofallderivativeswithcredit-risk-relatedcontingentfeaturesthatwereinanetliabilitypositionatOctober28,2018andOctober29,2017,was$350millionand$132million,respectively.Inaccordancewiththelimitsestablishedintheseagreements,thecompanyposted$59millionincashcollateralatOctober28,2018.NocashcollateralwaspostedatOctober29,2017.

Derivativesarerecordedwithoutoffsettingfornettingarrangementsorcollateral.TheimpactonthederivativeassetsandliabilitiesrelatedtonettingarrangementsandanycollateralpaidatOctober28,2018andOctober29,2017inmillionsofdollarsfollows:

28.SEGMENTANDGEOGRAPHICAREADATA

Thecompany'soperationsarepresentlyorganizedandreportedinthreemajorbusinesssegmentsdescribedasfollows:

Theagricultureandturfsegmentprimarilymanufacturesanddistributesafulllineofagricultureandturfequipmentandrelatedserviceparts,includinglarge,mediumandutilitytractors;tractorloaders;combines,cottonpickers,cottonstrippers,andsugarcaneharvesters;harvestingfront-endequipment;sugarcaneloadersandpull-behindscrapers;tillage,seedingandapplicationequipment,includingsprayers,nutrientmanagementandsoilpreparationmachinery;hayandforageequipment,includingself-propelledforageharvestersandattachments,balersandmowers;turfandutilityequipment,includingridinglawnequipmentandwalk-behindmowers,golfcourseequipment,utilityvehicles,andcommercialmowingequipment,alongwithabroadlineofassociatedimplements;integratedagriculturalmanagementsystemstechnologyandsolutions;andotheroutdoorpowerproducts.

GrossAmountsRecognized

NettingArrangements

CollateralPaid

NetAmount

2018 Assets $ 168 $ (65) $ 103Liabilities 399 (65) $ (59) 2752017 Assets $ 235 $ (65) $ 170Liabilities 158 (65) 93

Theconstructionandforestrysegmentprimarilymanufacturesanddistributesabroadrangeofmachinesandservicepartsusedinconstruction,earthmoving,roadbuilding,materialhandling,andtimberharvesting,includingbackhoeloaders;crawlerdozersandloaders;four-wheel-driveloaders;excavators;motorgraders;articulateddumptrucks;landscapeloaders;skid-steerloaders;millingmachines;recyclers;slipformpavers;surfaceminers;asphaltpavers;compactors;tandemandstaticrollers;mobilecrushersandscreens;mobileandstationaryasphaltplants;logskidders;fellerbunchers;logloaders;logforwarders;logharvesters;andrelatedloggingattachments.

Theproductsandservicesproducedbythesegmentsabovearemarketedprimarilythroughindependentretaildealernetworksandmajorretailoutlets.

ThefinancialservicessegmentprimarilyfinancessalesandleasesbyJohnDeeredealersofnewandusedagricultureandturfequipmentandconstructionandforestryequipment.Inaddition,thefinancialservicessegmentprovideswholesalefinancingtodealersoftheforegoingequipment,financesretailrevolvingchargeaccounts,andoffersextendedequipmentwarranties.

Becauseofintegratedmanufacturingoperationsandcommonadministrativeandmarketingsupport,asubstantialnumberofallocationsmustbemadetodetermineoperatingsegmentandgeographicareadata.Intersegmentsalesandrevenuesrepresentsalesofcomponentsandfinancecharges,whicharegenerallybasedonmarketprices.

InformationrelatingtooperationsbyoperatingsegmentinmillionsofdollarsfollowsfortheyearsendedOctober28,2018,October29,2017,andOctober30,2016.Inadditiontothefollowingunaffiliatedsalesandrevenuesbysegment,intersegmentsalesandrevenuesin2018,2017,and2016wereasfollows:agricultureandturfnetsalesof$47million,$39million,and$31million,constructionandforestrynetsalesofnone,$1million,and$1million,andfinancialservicesrevenuesof$308million,$244million,and$225million,respectively.

(continued)

OPERATINGSEGMENTS 2018 2017 2016Netsalesandrevenues Unaffiliatedcustomers: Agricultureandturfnetsales $23,191 $20,167 $18,487Constructionandforestrynetsales 10,160 5,718 4,900Totalnetsales 33,351 25,885 23,387

Financialservicesrevenues 3,252 2,935 2,694Otherrevenues* 755 918 563Total $37,358 $29,738 $26,644

* Otherrevenuesareprimarilytheequipmentoperations'revenuesforfinanceandinterestincome,andotherincomeasdisclosedinNote31,netofcertainintercompanyeliminations.

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OPERATINGSEGMENTS 2018 2017 2016Operatingprofit Agricultureandturf $ 2,816 $ 2,513 $1,719Constructionandforestry 868 346 189Financialservices* 792 715 701Totaloperatingprofit** 4,476 3,574 2,609

Interestincome 80 55 48Interestexpense (298) (264) (251)Foreignexchangegains(losses)fromequipmentoperations'financingactivities 36 (12) (12)

PensionandOPEBcosts,excludingservicecostcomponent (15) (31) (20)

Corporateexpenses–net (182) (192) (153)Incometaxes (1,727) (971) (700)Total (2,106) (1,415) (1,088)

Netincome 2,370 2,159 1,521Less:Netincome(loss)attributabletononcontrollinginterests 2 (3)

NetincomeattributabletoDeere&Company $ 2,368 $ 2,159 $1,524

* Operatingprofitofthefinancialservicesbusinesssegmentincludestheeffectofitsinterestexpenseandforeignexchangegainsorlosses.

** Fiscalyear2017and2016amountswererestatedfortheadoptionofASUNo.2017-07,ImprovingthePresentationofNetPeriodicPensionCostandNetPeriodicPostretirementBenefitCost.SeeNote3.

Interestincome* Agricultureandturf $ 14 $ 16 $ 12Constructionandforestry 33 1 1Financialservices 1,998 1,771 1,650Corporate 80 55 48Intercompany (331) (268) (240)Total $ 1,794 $ 1,575 $1,471

* Doesnotincludefinancerentalincomeforequipmentonoperatingleases.

Interestexpense Agricultureandturf $ 229 $ 182 $ 173Constructionandforestry 71 53 44Financialservices 937 669 536Corporate 298 264 251Intercompany (331) (268) (240)Total $ 1,204 $ 900 $ 764

Depreciation*andamortizationexpense

Agricultureandturf $ 723 $ 695 $ 667Constructionandforestry 251 145 136Financialservices 953 876 757Total $ 1,927 $ 1,716 $1,560

* Includesdepreciationforequipmentonoperatingleases.

Equityinincome(loss)ofunconsolidatedaffiliates

Agricultureandturf $ 6 $ 2 $ 9Constructionandforestry 19 (27) (13)Financialservices 2 1 2Total $ 27 $ (24) $ (2)

Thecompanyviewsandhashistoricallydiscloseditsoperationsasconsistingoftwogeographicareas,theU.S.andCanada,andoutsidetheU.S.andCanada,shownbelowinmillionsofdollars.Noindividualforeigncountry'snetsalesandrevenueswerematerialfordisclosurepurposes.

(continued)

OPERATINGSEGMENTS 2018 2017 2016Identifiableoperatingassets Agricultureandturf $10,161 $ 9,359 $ 8,405Constructionandforestry 9,855 3,212 3,017Financialservices 45,720 42,596 40,837Corporate* 4,372 10,619 5,659Total $70,108 $65,786 $57,918

* Corporateassetsareprimarilytheequipmentoperations'retirementbenefits,deferredincometaxassets,marketablesecurities,andcashandcashequivalentsasdisclosedinNote31,netofcertainintercompanyeliminations.

Capitaladditions Agricultureandturf $ 675 $ 485 $ 556Constructionandforestry 308 114 115Financialservices 2 3 3Total $ 985 $ 602 $ 674

Investmentsinunconsolidatedaffiliates

Agricultureandturf $ 26 $ 25 $ 56Constructionandforestry 166 143 165Financialservices 15 14 12Total $ 207 $ 182 $ 233

GEOGRAPHICAREAS 2018 2017 2016Netsalesandrevenues Unaffiliatedcustomers: U.S.andCanada: Equipmentoperationsnetsales(88%)* $18,847 $15,031 $14,376

Financialservicesrevenues(79%)* 2,785 2,526 2,366Total 21,632 17,557 16,742

OutsideU.S.andCanada: Equipmentoperationsnetsales 14,504 10,854 9,011Financialservicesrevenues 467 409 328Total 14,971 11,263 9,339

Otherrevenues 755 918 563Total $37,358 $29,738 $26,644

* ThepercentagesindicatetheapproximateproportionofeachamountthatrelatestotheU.S.onlyandarebaseduponathree-yearaveragefor2018,2017,and2016.

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29.SUPPLEMENTALINFORMATION(UNAUDITED)

The$1parvaluecommonstockofDeere&CompanyislistedontheNewYorkStockExchangeunderthesymbol"DE".AtOctober28,2018,therewere20,559holdersofrecordofthecompany's$1parvaluecommonstock.

GEOGRAPHICAREAS 2018 2017 2016Operatingprofit* U.S.andCanada: Equipmentoperations $2,356 $ 1,754 $ 1,328Financialservices 604 515 543Total 2,960 2,269 1,871

OutsideU.S.andCanada: Equipmentoperations 1,328 1,105 580Financialservices 188 200 158Total 1,516 1,305 738

Total $4,476 $ 3,574 $ 2,609

* Fiscalyear2017and2016amountswererestatedfortheadoptionofFASBASUNo.2017-07,ImprovingthePresentationofNetPeriodicPensionCostandNetPeriodicPostretirementBenefitCost.SeeNote3.

Propertyandequipment U.S. $3,031 $ 2,976 $ 3,077Germany 1,164 598 569Othercountries 1,673 1,494 1,525Total $5,868 $ 5,068 $ 5,171

Quarterlyinformationwithrespecttonetsalesandrevenuesandearningsisshowninthefollowingschedule.Thecompany'sfiscalyearendsinOctoberanditsinterimperiods(quarters)endinJanuary,April,andJuly.Suchinformationisshowninmillionsofdollarsexceptforpershareamounts.

30.SUBSEQUENTEVENTS

Aquarterlydividendof$.76persharewasdeclaredattheBoardofDirectorsmeetingonDecember5,2018,payableonFebruary1,2019tostockholdersofrecordonDecember31,2018.Thenewquarterlyraterepresentsanincreaseof7centspershareoverthepreviouslevel,orapproximately10percent.

InNovember2018,thecompany'sfinancialservicesoperationsenteredintoaretailnotesecuritizationusingitsbankconduitfacilitythatresultedinsecuritizationborrowingsofapproximately$1,245million.

FirstQuarter

SecondQuarter

ThirdQuarter

FourthQuarter

2018 Netsalesandrevenues $ 6,913 $10,720 $10,309 $ 9,416Netsales 5,974 9,747 9,287 8,343Grossprofit 1,269 2,414 2,134 1,962Incomebeforeincometaxes 518 1,384 1,190 979Netincome(loss)attributabletoDeere&Company (535) 1,208 910 785

Persharedata: Basic (1.66) 3.73 2.81 2.45Diluted (1.66) 3.67 2.78 2.42Dividendsdeclared .60 .60 .69 .69Dividendspaid .60 .60 .60 .69

2017* Netsalesandrevenues $ 5,625 $ 8,287 $ 7,808 $ 8,018Netsales 4,698 7,260 6,833 7,094Grossprofit** 916 1,832 1,585 1,686Incomebeforeincometaxes 328 1,169 890 767NetincomeattributabletoDeere&Company 199 808 642 510

Persharedata: Basic .63 2.53 2.00 1.59Diluted .62 2.50 1.97 1.57Dividendsdeclared .60 .60 .60 .60Dividendspaid .60 .60 .60 .60

Netincomepershareforeachquartermustbecomputedindependently.Asaresult,theirsummaynotequalthetotalnetincomepersharefortheyear.

* SeeNote5for"SpecialItems."** AmountsrestatedfortheadoptionofASUNo.2017-07,Improvingthe

PresentationofNetPeriodicPensionCostandNetPeriodicPostretirementBenefitCost.SeeNote3.

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INCOMESTATEMENTFortheYearsEndedOctober28,2018,October29,2017,andOctober30,2016(Inmillionsofdollars)

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EQUIPMENTOPERATIONS* FINANCIALSERVICES 2018 2017 2016 2018 2017 2016 NetSalesandRevenues Netsales $ 33,350.7 $ 25,885.1 $ 23,387.3 Financeandinterestincome 126.3 71.7 61.1 $ 3,311.4 $ 2,928.2 $ 2,690.1Otherincome 874.5 1,065.0 653.7 248.6 250.9 229.0Total 34,351.5 27,021.8 24,102.1 3,560.0 3,179.1 2,919.1

CostsandExpenses Costofsales 25,573.0 19,867.9 18,198.0 Researchanddevelopmentexpenses 1,657.6 1,372.5 1,393.7 Selling,administrativeandgeneralexpenses 2,934.9 2,555.0 2,282.6 527.9 549.2 515.9Interestexpense 297.8 263.7 250.5 936.6 669.2 536.5InterestcompensationtoFinancialServices 299.8 234.5 216.6 Otheroperatingexpenses 315.4 295.2 243.8 1,297.8 1,239.9 1,159.6Total 31,078.5 24,588.8 22,585.2 2,762.3 2,458.3 2,212.0

IncomeofConsolidatedGroupbeforeIncomeTaxes 3,273.0 2,433.0 1,516.9 797.7 720.8 707.1Provision(credit)forincometaxes 1,869.2 726.0 459.0 (142.3) 245.1 241.1IncomeofConsolidatedGroup 1,403.8 1,707.0 1,057.9 940.0 475.7 466.0

EquityinIncome(Loss)ofUnconsolidatedSubsidiariesandAffiliates FinancialServices 942.0 476.9 467.6 2.0 1.2 1.6Other 24.8 (24.7) (4.0) Total 966.8 452.2 463.6 2.0 1.2 1.6

NetIncome 2,370.6 2,159.2 1,521.5 942.0 476.9 467.6

Less:Netincome(loss)attributabletononcontrollinginterests 2.2 .1 (2.4) NetIncomeAttributabletoDeere&Company $ 2,368.4 $ 2,159.1 $ 1,523.9 $ 942.0 $ 476.9 $ 467.6

* Deere&CompanywithFinancialServicesontheequitybasis.

Thesupplementalconsolidatingdataispresentedforinformationalpurposes.The"EquipmentOperations"reflectthebasisofconsolidationdescribedinNote1totheconsolidatedfinancialstatements.Theconsolidatedgroupdatainthe"EquipmentOperations"incomestatementreflecttheresultsoftheagricultureandturfoperationsandconstructionandforestryoperations.Transactionsbetweenthe"EquipmentOperations"and"FinancialServices"havebeeneliminatedtoarriveattheconsolidatedfinancialstatements.

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BALANCESHEETAsofOctober28,2018andOctober29,2017(Inmillionsofdollarsexceptpershareamounts)

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EQUIPMENTOPERATIONS* FINANCIALSERVICES 2018 2017 2018 2017 ASSETS Cashandcashequivalents $ 3,194.8 $ 8,168.4 $ 709.2 $ 1,166.5Marketablesecurities 8.2 20.2 481.9 431.4Receivablesfromunconsolidatedsubsidiariesandaffiliates 1,700.4 1,032.1 Tradeaccountsandnotesreceivable–net 1,373.7 876.3 4,906.4 4,134.1Financingreceivables–net 93.1 26,961.0 25,104.1Financingreceivablessecuritized–net 76.1 3,945.3 4,158.8Otherreceivables 1,009.7 1,045.6 775.7 195.5Equipmentonoperatingleases–net 7,165.4 6,593.7Inventories 6,148.9 3,904.1 Propertyandequipment–net 5,820.6 5,017.3 46.9 50.4Investmentsinunconsolidatedsubsidiariesandaffiliates 5,231.2 4,812.3 15.2 13.8Goodwill 3,100.7 1,033.3 Otherintangibleassets–net 1,562.4 218.0 Retirementbenefits 1,241.5 538.1 56.8 16.9Deferredincometaxes 1,502.6 3,098.8 69.4 79.8Otherassets 1,132.8 973.9 587.1 651.4TotalAssets $ 33,196.7 $ 30,738.4 $ 45,720.3 $ 42,596.4LIABILITIESANDSTOCKHOLDERS'EQUITY

LIABILITIES Short-termborrowings $ 1,434.0 $ 375.5 $ 9,627.4 $ 9,659.8Short-termsecuritizationborrowings 75.6 3,881.7 4,118.7Payablestounconsolidatedsubsidiariesandaffiliates 128.9 121.9 1,678.7 996.2Accountspayableandaccruedexpenses 9,382.5 7,718.1 2,055.7 1,827.1Deferredincometaxes 496.8 115.6 823.0 857.7Long-termborrowings 4,713.9 5,490.9 22,523.5 20,400.4Retirementbenefitsandotherliabilities 5,659.8 7,341.9 91.2 92.9

Totalliabilities 21,891.5 21,163.9 40,681.2 37,952.8Commitmentsandcontingencies(Note22) Redeemablenoncontrollinginterest(Note4) 14.0 14.0

STOCKHOLDERS'EQUITY Commonstock,$1parvalue(authorized–1,200,000,000shares;issued–536,431,204sharesin2018and2017),atpaid-inamount 4,474.2 4,280.5 2,099.5 2,099.1

Commonstockintreasury,217,975,806sharesin2018and214,589,902sharesin2017,atcost (16,311.8) (15,460.8)

Retainedearnings 27,553.0 25,301.3 3,257.2 2,782.0Accumulatedothercomprehensiveincome(loss) (4,427.6) (4,563.7) (317.6) (237.5)TotalDeere&Companystockholders'equity 11,287.8 9,557.3 5,039.1 4,643.6Noncontrollinginterests 3.4 3.2

Totalstockholders'equity 11,291.2 9,560.5 5,039.1 4,643.6TotalLiabilitiesandStockholders'Equity $ 33,196.7 $ 30,738.4 $ 45,720.3 $ 42,596.4

* Deere&CompanywithFinancialServicesontheequitybasis.

Thesupplementalconsolidatingdataispresentedforinformationalpurposes.The"EquipmentOperations"reflectthebasisofconsolidationdescribedinNote1totheconsolidatedfinancialstatements.Transactionsbetweenthe"EquipmentOperations"and"FinancialServices"havebeeneliminatedtoarriveattheconsolidatedfinancialstatements.

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STATEMENTOFCASHFLOWSFortheYearsEndedOctober28,2018,October29,2017,andOctober30,2016(Inmillionsofdollars)

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EQUIPMENTOPERATIONS* FINANCIALSERVICES 2018 2017 2016 2018 2017 2016 CashFlowsfromOperatingActivities Netincome $ 2,370.6 $ 2,159.2 $ 1,521.5 $ 942.0 $ 476.9 $ 467.6Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities: Provisionforcreditlosses 39.4 9.9 8.2 51.4 88.4 86.1Provisionfordepreciationandamortization 974.4 839.3 803.4 1,077.3 984.3 846.7Impairmentcharges 39.8 25.4 59.7Gainonsaleofaffiliatesandinvestments (25.1) (375.1) (74.5) Undistributedearningsofunconsolidatedsubsidiariesandaffiliates (502.8) (125.0) 94.0 (1.8) (1.1) (1.5)

Provision(credit)fordeferredincometaxes 1,503.7 (6.7) 13.2 (23.8) 106.8 269.5Changesinassetsandliabilities: TradereceivablesandEquipmentOperations'financingreceivables (239.1) (243.9) (175.3)

Inventories (917.2) (504.3) 578.4 Accountspayableandaccruedexpenses 792.6 946.2 (169.6) 120.0 93.9 40.6Accruedincometaxespayable/receivable 102.8 (122.7) 18.2 (569.0) 38.5 (11.2)Retirementbenefits (984.8) (39.2) 232.4 (41.3) 7.3 6.2

Other 164.4 (139.5) 36.5 88.0 81.5 97.1Netcashprovidedbyoperatingactivities 3,278.9 2,438.0 2,911.8 1,642.8 1,876.5 1,860.8

CashFlowsfromInvestingActivities Collectionsofreceivables(excludingtradeandwholesale) 17,032.3 15,963.2 15,831.4Proceedsfrommaturitiesandsalesofmarketablesecurities 11.4 297.9 81.9 65.2 106.3 87.5Proceedsfromsalesofequipmentonoperatingleases 1,482.7 1,440.8 1,256.2Proceedsfromsalesofbusinessesandunconsolidatedaffiliates,netofcashsold 155.6 113.9 81.1

Costofreceivablesacquired(excludingtradeandwholesale) (18,777.6) (16,799.9) (15,168.2)Acquisitionsofbusinesses,netofcashacquired (5,245.0) (284.2) (198.5) Purchasesofmarketablesecurities (59.4) (132.8) (118.0) (111.8)Purchasesofpropertyandequipment (893.0) (591.4) (641.8) (3.4) (3.5) (2.6)Costofequipmentonoperatingleasesacquired (3,209.3) (3,079.8) (3,235.7)IncreaseininvestmentinFinancialServices (.4) (20.0) (28.2) Decrease(increase)intradeandwholesalereceivables (1,222.4) (379.9) 492.5Other 17.7 (32.7) (55.2) (73.5) (26.5) 24.6

Netcashusedforinvestingactivities (5,953.7) (516.5) (820.1) (4,838.8) (2,897.3) (826.1)CashFlowsfromFinancingActivities Increase(decrease)intotalshort-termborrowings 16.1 64.5 (207.2) 457.1 1,246.1 (1,006.4)Changeinintercompanyreceivables/payables (748.0) 2,142.0 (756.0) 748.0 (2,142.0) 756.0Proceedsfromlong-termborrowings 148.5 1,107.0 173.4 8,139.3 7,595.2 4,897.3Paymentsoflong-termborrowings (163.4) (66.3) (72.8) (6,081.9) (5,330.7) (5,194.8)Proceedsfromissuanceofcommonstock 216.9 528.7 36.0 Repurchasesofcommonstock (957.9) (6.2) (205.4) CapitalinvestmentfromEquipmentOperations .4 20.0 28.2Dividendspaid (805.8) (764.0) (761.3) (463.7) (365.2) (562.1)Other (60.0) (54.4) (36.7) (32.5) (33.4) (28.0)

Netcashprovidedby(usedfor)financingactivities (2,353.6) 2,951.3 (1,830.0) 2,766.7 990.0 (1,109.8)EffectofExchangeRateChangesonCashandCashEquivalents 54.8 155.1 (21.2) (28.0) 2.0 8.2

NetIncrease(Decrease)inCashandCashEquivalents (4,973.6) 5,027.9 240.5 (457.3) (28.8) (66.9)CashandCashEquivalentsatBeginningofYear 8,168.4 3,140.5 2,900.0 1,166.5 1,195.3 1,262.2CashandCashEquivalentsatEndofYear $ 3,194.8 $ 8,168.4 $ 3,140.5 $ 709.2 $ 1,166.5 $ 1,195.3

* Deere&CompanywithFinancialServicesontheequitybasis.

Thesupplementalconsolidatingdataispresentedforinformationalpurposes.The"EquipmentOperations"reflectthebasisofconsolidationdescribedinNote1totheconsolidatedfinancialstatements.Transactionsbetweenthe"EquipmentOperations"and"FinancialServices"havebeeneliminatedtoarriveattheconsolidatedfinancialstatements.

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DEERE&COMPANYSELECTEDFINANCIALDATA(Dollarsinmillionsexceptpershareamounts)

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2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Netsalesandrevenues $37,358 $ 29,738 $ 26,644 $ 28,863 $ 36,067 $ 37,795 $ 36,157 $ 32,013 $ 26,005 $23,112Netsales 33,351 25,885 23,387 25,775 32,961 34,998 33,501 29,466 23,573 20,756Financeandinterestincome 3,107 2,732 2,511 2,381 2,282 2,115 1,981 1,923 1,825 1,842Researchanddevelopmentexpenses** 1,658 1,373 1,394 1,410 1,437 1,445 1,409 1,192 1,005 965Selling,administrativeandgeneralexpenses** 3,456 3,098 2,791 2,868 3,266 3,558 3,369 3,143 2,926 2,753Interestexpense 1,204 900 764 680 664 741 783 759 811 1,042Netincome* 2,368 2,159 1,524 1,940 3,162 3,537 3,065 2,800 1,865 873Returnonnetsales 7.1% 8.3% 6.5% 7.5% 9.6% 10.1% 9.1% 9.5% 7.9% 4.2%ReturnonbeginningDeere&Companystockholders'equity 24.8% 33.1% 22.6% 21.4% 30.8% 51.7% 45.1% 44.5% 38.7% 13.4%

Comprehensiveincome(loss)* 3,221 3,221 627 994 2,072 5,416 2,171 2,502 2,079 (1,333)Netincomepershare–basic* $ 7.34 $ 6.76 $ 4.83 $ 5.81 $ 8.71 $ 9.18 $ 7.72 $ 6.71 $ 4.40 $ 2.07–diluted* 7.24 6.68 4.81 5.77 8.63 9.09 7.63 6.63 4.35 2.06Dividendsdeclaredpershare 2.58 2.40 2.40 2.40 2.22 1.99 1.79 1.52 1.16 1.12Dividendspaidpershare 2.49 2.40 2.40 2.40 2.13 1.94 1.74 1.41 1.14 1.12Averagenumberofcommonsharesoutstanding(inmillions)–basic 322.6 319.5 315.2 333.6 363.0 385.3 397.1 417.4 424.0 422.8–diluted 327.3 323.3 316.6 336.0 366.1 389.2 401.5 422.4 428.6 424.4

Totalassets $70,108 $ 65,786 $ 57,918 $ 57,883 $ 61,267 $ 59,454 $ 56,193 $ 48,146 $ 43,186 $41,023Tradeaccountsandnotesreceivable–net 5,004 3,925 3,011 3,051 3,278 3,758 3,799 3,295 3,464 2,617Financingreceivables–net 27,054 25,104 23,702 24,809 27,422 25,633 22,159 19,924 17,682 15,255Financingreceivablessecuritized–net 4,022 4,159 5,127 4,835 4,602 4,153 3,618 2,905 2,238 3,108Equipmentonoperatingleases–net 7,165 6,594 5,902 4,970 4,016 3,152 2,528 2,150 1,936 1,733Inventories 6,149 3,904 3,341 3,817 4,210 4,935 5,170 4,371 3,063 2,397Propertyandequipment–net 5,868 5,068 5,171 5,181 5,578 5,467 5,012 4,352 3,791 4,532Short-termborrowings: Equipmentoperations 1,434 375 249 464 434 1,080 425 529 85 490Financialservices 9,628 9,660 6,662 7,961 7,584 7,707 5,966 6,307 5,239 3,535Total 11,062 10,035 6,911 8,425 8,018 8,787 6,391 6,836 5,324 4,025

Short-termsecuritizationborrowings: Equipmentoperations 75 Financialservices 3,882 4,119 4,998 4,585 4,553 4,103 3,569 2,773 2,204 3,126Total 3,957 4,119 4,998 4,585 4,553 4,103 3,569 2,773 2,204 3,126

Long-termborrowings: Equipmentoperations 4,714 5,491 4,565 4,439 4,619 4,845 5,418 3,155 3,316 3,058Financialservices 22,523 20,400 19,138 19,336 19,699 16,673 16,970 13,764 13,424 14,232Total 27,237 25,891 23,703 23,775 24,318 21,518 22,388 16,919 16,740 17,290

TotalDeere&Companystockholders'equity 11,288 9,557 6,520 6,743 9,063 10,266 6,842 6,800 6,290 4,819

Bookvaluepershare* $ 35.45 $ 29.70 $ 20.71 $ 21.29 $ 26.23 $ 27.46 $ 17.64 $ 16.75 $ 14.90 $ 11.39Capitalexpenditures $ 969 $ 586 $ 668 $ 655 $ 1,004 $ 1,132 $ 1,360 $ 1,050 $ 795 $ 767Numberofemployees(atyearend) 74,413 60,476 56,767 57,180 59,623 67,044 66,859 61,278 55,650 51,262

* AttributabletoDeere&Company.** RestatedbalancesforadoptionofASUNo.2017-07,ImprovingthePresentationofNetPeriodicPensionCostandNetPeriodicPostretirementBenefitCost.See

Note3.

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REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM

TothestockholdersandtheBoardofDirectorsofDeere&Company:

OpinionontheFinancialStatements

WehaveauditedtheaccompanyingconsolidatedbalancesheetsofDeere&Companyandsubsidiaries(the"Company")asofOctober28,2018andOctober29,2017,therelatedstatementsofconsolidatedincome,consolidatedcomprehensiveincome,changesinconsolidatedstockholders'equity,andconsolidatedcashflowsforeachofthethreeyearsintheperiodendedOctober28,2018,andtherelatednotes(collectivelyreferredtoasthe"financialstatements".)Inouropinion,thefinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionoftheCompanyasofOctober28,2018,andOctober29,2017,andtheresultsofitsoperationsanditscashflowsforeachofthethreeyearsintheperiodendedOctober28,2018,inconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.

Wehavealsoaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB),theCompany'sinternalcontroloverfinancialreportingasofOctober28,2018,basedoncriteriaestablishedinInternalControl–IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommissionandourreportdatedDecember17,2018,expressedanunqualifiedopinionontheCompany'sinternalcontroloverfinancialreporting.

BasisforOpinion

ThesefinancialstatementsaretheresponsibilityoftheCompany'smanagement.OurresponsibilityistoexpressanopinionontheCompany'sfinancialstatementsbasedonouraudits.WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeU.S.federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.

WeconductedourauditsinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement,whetherduetoerrororfraud.Ourauditsincludedperformingprocedurestoassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetoerrororfraud,andperformingproceduresthatrespondtothoserisks.Suchproceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosuresinthefinancialstatements.Ourauditsalsoincludedevaluatingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethatourauditsprovideareasonablebasisforouropinion.

/s/DELOITTE&TOUCHELLPChicago,IllinoisDecember17,2018

WehaveservedastheCompany'sauditorsince1910.

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REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM

TothestockholdersandtheBoardofDirectorsofDeere&Company:

OpiniononInternalControloverFinancialReporting

WehaveauditedtheinternalcontroloverfinancialreportingofDeere&Companyandsubsidiaries(the"Company")asofOctober28,2018,basedoncriteriaestablishedinInternalControl–IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(COSO).Inouropinion,theCompanymaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofOctober28,2018,basedoncriteriaestablishedinInternalControl–IntegratedFramework(2013)issuedbyCOSO.

Wehavealsoaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB),theconsolidatedfinancialstatementsasofandfortheyearendedOctober28,2018,oftheCompanyandourreportdatedDecember17,2018,expressedanunqualifiedopiniononthosefinancialstatements.

AsdescribedinManagement'sReportonInternalControlOverFinancialReporting,managementexcludedfromitsassessmenttheinternalcontroloverfinancialreportingattheacquiredentitiesandassetsofWirtgenGroupHoldingGmbH("Wirtgen"),whichwasacquiredinDecember2017andwhosefinancialstatementsconstitute9percentofbothtotalassetsandnetsalesandrevenuesoftheconsolidatedfinancialstatementamountsasofandfortheyearendedOctober28,2018.Accordingly,ourauditdidnotincludetheinternalcontroloverfinancialreportingatWirtgen.

BasisforOpinion

TheCompany'smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreportingandforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreporting,includedintheaccompanyingManagement'sReportonInternalControloverFinancialReporting.OurresponsibilityistoexpressanopinionontheCompany'sinternalcontroloverfinancialreportingbasedonouraudit.WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeU.S.federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.

WeconductedourauditinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditincludedobtaininganunderstandingofinternalcontroloverfinancialreporting,assessingtheriskthatamaterialweaknessexists,testingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolbasedontheassessedrisk,andperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditprovidesareasonablebasisforouropinion.

DefinitionandLimitationsofInternalControloverFinancialReporting

Acompany'sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Acompany'sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(2)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany'sassetsthatcouldhaveamaterialeffectonthefinancialstatements.

Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.

/s/DELOITTE&TOUCHELLPChicago,IllinoisDecember17,2018

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IndextoExhibits

2.1 ShareandAssetSaleandPurchaseAgreement,datedMay31,2017,betweenDeere&CompanyandWirtgenGroupHoldingGmbH(Exhibit2.1toForm8-KofregistrantdatedJune1,2017*)

2.2 AccessionAgreementtotheShareandAssetSaleandPurchaseAgreement,datedNovember24,2017,betweenWirtgenGroupHoldingGmbHasSeller,Deere&CompanyasPurchaser,andPurchaser'sNominees:JohnDeereGmbH&Co.KG,JohnDeereConstruction&ForestryCompany,JohnDeereAsia(Singapore)PrivateLimited,JohnDeereHoldingS.àr.L.,JohnDeereIndiaPrivateLimited,JohnDeere-LanzVerwaltungs-GmbH,JohnDeereProprietaryLimited,WMTGmbH,andJohnDeereTechnologiesS.C.S.

2.3 FirstAmendmenttotheShareandAssetSaleandPurchaseAgreement,datedNovember24,2017,betweenDeere&CompanyandWirtgenGroupHoldingGmbH**

2.4 SecondAmendmenttotheShareandAssetSaleandPurchaseAgreement,datedDecember1,2017,betweenWirtgenGroupHoldingGmbHasSeller,Deere&CompanyasPurchaser,andPurchaser'sNominees:JohnDeereGmbH&Co.KG,JohnDeereConstruction&ForestryCompany,JohnDeereAsia(Singapore)PrivateLimited,JohnDeereHoldingS.àr.L.,JohnDeereIndiaPrivateLimited,JohnDeere-LanzVerwaltungs-GmbH,JohnDeereProprietaryLimited,WMTGmbH,andJohnDeereTechnologiesS.C.S.**

3.1 Certificateofincorporation,asamended(Exhibit3.1toForm8-KofregistrantdatedFebruary26,2010,SecuritiesandExchangeCommissionFileNumber1-4121*)

3.2 CertificateofDesignationPreferencesandRightsofSeriesAParticipatingPreferredStock(Exhibit3.2toForm10-KofregistrantfortheyearendedOctober31,1998,SecuritiesandExchangeCommissionFileNumber1-4121*)

3.3 Bylaws,asamended(Exhibit3.1toForm8-KofregistrantdatedSeptember1,2016,SecuritiesandExchangeCommissionFileNumber1-4121*)

4.1 Formofcommonstockcertificate(Exhibit4.6toForm10-KofregistrantfortheyearendedOctober31,1998,SecuritiesandExchangeCommissionFileNumber1-4121*)

4.2 IndenturedatedasofSeptember25,2008betweentheregistrantandTheBankofNewYorkMellon,asTrustee(Exhibit4.1totheregistrationstatementonFormS-3ASRno.333-153704,filedSeptember26,2008,SecuritiesandExchangeCommissionfilenumber1-4121*)

4.3 TermsandConditionsoftheEuroMediumTermNotes,publishedonFebruary2,2017,applicabletotheU.S.$3,000,000,000EuroMediumTermNoteProgrammeofregistrant,JohnDeereCapitalCorporation,JohnDeereBankS.A.,andJohnDeereCashManagementS.A.(Exhibit4.3toForm10-KofregistrantfortheyearendedOctober29,2017,SecuritiesandExchangeCommissionFileNumber1-4121*)

Certaininstrumentsrelatingtolong-termdebtconstitutinglessthan10%oftheregistrant'stotalassets,arenotfiledasexhibitsherewithpursuanttoItem601(b)(4)(iii)(A)ofRegulationS-K.TheregistrantwillfilecopiesofsuchinstrumentsuponrequestoftheCommission.

10.1 AgreementasamendedNovember1,1994betweenregistrantandJohnDeereCapitalCorporationconcerningagriculturalretailnotes(Exhibit10.1toForm10-KofregistrantfortheyearendedOctober31,1998,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.2 AgreementasamendedNovember1,1994betweenregistrantandJohnDeereCapitalCorporationrelatingtolawnandgroundscareretailnotes(Exhibit10.2toForm10-KofregistrantfortheyearendedOctober31,1998,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.3 AgreementasamendedNovember1,1994betweenJohnDeereConstructionEquipmentCompany,awholly-ownedsubsidiaryofregistrantandJohnDeereCapitalCorporationconcerningconstructionretailnotes(Exhibit10.3toForm10-KofregistrantfortheyearendedOctober31,1998,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.4 AgreementdatedJuly14,1997betweentheJohnDeereConstructionEquipmentCompanyandJohnDeereCapitalCorporationconcerningconstructionretailnotes(Exhibit10.4toForm10-KofregistrantfortheyearendedOctober31,2003,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.5 AgreementdatedNovember1,2003betweenregistrantandJohnDeereCapitalCorporationrelatingtofixedchargesratio,ownershipandminimumnetworthofJohnDeereCapitalCorporation(Exhibit10.5toForm10-KofregistrantfortheyearendedOctober31,2003,SecuritiesandExchangeCommissionFileNumber1-4121*)

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10.6 Deere&CompanyVoluntaryDeferredCompensationPlanasamendedJanuary2014(Exhibit10.6toForm10-KofregistrantfortheyearendedOctober31,2014,SecuritiesandExchangeCommissionFileNumber1-4121*)

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10.7 JohnDeereShort-TermIncentiveBonusPlanasamendedFebruary25,2015(AppendixEtoProxyStatementofregistrantfiledJanuary14,2015Securities,andExchangeCommissionFileNumber1-4121*)

10.8 JohnDeereLong-TermIncentiveCashPlan(AppendixCtoProxyStatementofregistrantfiledJanuary12,2018,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.9 JohnDeereOmnibusEquityandIncentivePlanasamendedFebruary25,2015(AppendixDtoProxyStatementofregistrantfiledJanuary14,2015,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.10 FormofTermsandConditionsforJohnDeereNonqualifiedStockOptionGrant(Exhibit10.10toForm10-KofregistrantfortheyearendedOctober31,2010,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.11 FormofJohnDeereRestrictedandPerformanceStockUnitGrantforEmployees(Exhibit10.11toForm10-KoftheregistrantfortheyearendedOctober31,2012,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.12 FormofJohnDeereRestrictedStockUnitGrantforDirectors(Exhibit10.13toForm10-KoftheregistrantfortheyearendedOctober31,2008,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.13 FormofNonemployeeDirectorRestrictedStockGrant(Exhibit10.13toForm10-KofregistrantfortheyearendedOctober31,2004,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.14 JohnDeereDefinedContributionRestorationPlan,asamendedOctober2016(Exhibit10.14toForm10-KofregistrantfortheyearendedOctober29,2017,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.15 JohnDeereSupplementalPensionBenefitPlan,asamendedOctober2014(Exhibit10.15toForm10-KofregistrantfortheyearendedOctober31,2014,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.16 JohnDeereSeniorSupplementaryPensionBenefitPlanasamendedOctober2014(Exhibit10.16toForm10-KofregistrantfortheyearendedOctober31,2014,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.17 JohnDeereERISASupplementaryPensionBenefitPlanasamendedDecember2011(Exhibit10.17toForm10-KofregistrantfortheyearendedOctober31,2014,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.18 NonemployeeDirectorStockOwnershipPlan(AppendixAtoProxyStatementofregistrantfiledonJanuary13,2012,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.19 Deere&CompanyNonemployeeDirectorDeferredCompensationPlan,asamendedOctober2016(Exhibit10.19toForm10-KofregistrantfortheyearendedOctober29,2017,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.20 ChangeinControlSeveranceProgram,effectiveAugust26,2009(Exhibit10toForm8-KofregistrantdatedAugust26,2009,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.21 ExecutiveIncentiveAwardRecoupmentPolicy(Exhibit10.9toForm10-QofregistrantforthequarterendedJanuary31,2008,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.22 AssetPurchaseAgreementdatedOctober29,2001betweenregistrantandDeereCapital,Inc.concerningthesaleoftradereceivables(Exhibit10.19toForm10-KofregistrantfortheyearendedOctober31,2001,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.23 AssetPurchaseAgreementdatedOctober29,2001betweenJohnDeereConstruction&ForestryCompanyandDeereCapital,Inc.concerningthesaleoftradereceivables(Exhibit10.20toForm10-KofregistrantfortheyearendedOctober31,2001,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.24 FactoringAgreementdatedSeptember20,2002betweenJohnDeereBankS.A.(assuccessorininteresttoJohnDeereFinanceS.A.)andJohnDeereVertrieb,abranchofDeere&Company,concerningthesaleoftradereceivables(Exhibit10.21toForm10-KofregistrantfortheyearendedOctober31,2002,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.25 ReceivablesPurchaseAgreementdatedAugust23,2002betweenJohnDeereBankS.A.(assuccessorininteresttoJohnDeereFinanceS.A.)andJohnDeereLimited(Scotland)concerningthesaleoftradereceivables(Exhibit10.22toForm10-KofregistrantfortheyearendedOctober31,2002,SecuritiesandExchangeCommissionFileNumber1-4121*)

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10.26 JointVentureAgreementdatedMay16,1988betweenregistrantandHitachiConstructionMachineryCo.,Ltd((Exhibit10.26toForm10-KofregistrantfortheyearendedOctober31,2005,SecuritiesandExchangeCommissionFileNumber1-4121*)

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10.27 MarketingProfitSharingAgreementdatedJanuary1,2002betweenJohnDeereConstructionandForestryEquipmentCompany(alsoknownasJohnDeereConstruction&ForestryCompany)andHitachiConstructionMachineryHoldingU.S.A.Corporation(Exhibit10.27toForm10-KofregistrantfortheyearendedOctober31,2005,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.28 IntegratedMarketingAgreementdatedOctober16,2001betweenregistrantandHitachiConstructionMachineryCo.Ltd.(Exhibit10.28toForm10-KofregistrantfortheyearendedOctober31,2005,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.29 2021CreditAgreementamongtheregistrant,JohnDeereCapitalCorporation,JohnDeereBankS.A.,variousfinancialinstitutions,JPMorganChaseBank,N.A.,asadministrativeagent,Citibank,N.A.andDeutscheBankSecuritiesInc.,asdocumentationagents,andBankofAmerica,N.A.,assyndicationagent,datedFebruary17,2017(Exhibit10.1toform10-QofregistrantforthequarterendedJanuary29,2017,SecuritiesandExchangeCommissionFileNumber1-4121*)

10.30 2022CreditAgreementamongtheregistrant,JohnDeereCapitalCorporation,JohnDeereBankS.A.,variousfinancialinstitutions,JPMorganChaseBank,N.A.,asadministrativeagent,Citibank,N.A.andDeutscheBankSecuritiesInc.,asdocumentationagents,andBankofAmerica,N.A.,assyndicationagent,datedFebruary17,2017(Exhibit10.2toform10-QofregistrantforthequarterendedJanuary29,2017,SecuritiesandExchangeCommissionFileNumber1-4121*)

21. Subsidiaries

23. ConsentofDeloitte&ToucheLLP

24. PowerofAttorney(includedonsignaturepage)

31.1 Rule13a-14(a)/15d-14(a)Certification

31.2 Rule13a-14(a)/15d-14(a)Certification

32 Section1350Certifications

101 InteractiveDataFile

* Incorporatedbyreference.CopiesoftheseexhibitsareavailablefromtheCompanyuponrequest.** ScheduleshavebeenomittedpursuanttoItem601(b)(2)ofRegulationS-K.Deereherebyundertakestofurnishsupplemental

copiesofanyoftheomittedschedulesuponrequestbytheU.S.SecuritiesandExchangeCommission.

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SIGNATURES

PursuanttotherequirementsofSection13or15(d)oftheSecuritiesExchangeActof1934,theregistranthasdulycausedthisreporttobesignedonitsbehalfbytheundersigned,thereuntodulyauthorized.

Date:December17,2018

PursuanttotherequirementsoftheSecuritiesExchangeActof1934,thisreporthasbeensignedbelowbythefollowingpersonsonbehalfoftheregistrantandinthecapacitiesandonthedateindicated.

EachpersonsigningbelowalsoherebyappointsSamuelR.Allen,RajeshKalathurandToddE.Davies,andeachofthemsingly,hisorherlawfulattorney-in-factwithfullpowertoexecuteandfileanyandallamendmentstothisreporttogetherwithexhibitstheretoandgenerallytodoallsuchthingsassuchattorney-in-factmaydeemappropriatetoenableDeere&CompanytocomplywiththeprovisionsoftheSecuritiesExchangeActof1934andallrequirementsoftheSecuritiesandExchangeCommission.

79

DEERE&COMPANY

By: /s/SamuelR.Allen

SamuelR.AllenChairmanandChiefExecutiveOfficer(PrincipalExecutiveOfficer)

Signature Title Date

) /s/SamuelR.Allen

SamuelR.Allen

Chairman,ChiefExecutiveOfficerandDirector(PrincipalExecutiveOfficer)

)))

December17,2018

) ) /s/VanceD.Coffman

VanceD.Coffman

Director )))

) ) /s/AlanC.Heuberger

AlanC.Heuberger

Director )))

) ) /s/CharlesO.Holliday,Jr.

CharlesO.Holliday,Jr.

Director )))

) /s/DipakC.Jain

DipakC.Jain

Director )))

) ) /s/MichaelO.Johanns

MichaelO.Johanns

Director )))

) ) /s/ClaytonM.Jones

ClaytonM.Jones

Director )))

) )

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80

/s/RajeshKalathur SeniorVicePresident, )

RajeshKalathur ChiefFinancialOfficerandChiefInformationOfficer(PrincipalFinancialOfficerandPrincipalAccountingOfficer)

)))

) /s/GregoryR.Page

GregoryR.Page

Director )))

) ) /s/SherryM.Smith

SherryM.Smith

Director )))

) ) /s/DmitriL.Stockton

DmitriL.Stockton

Director )))

) ) /s/SheilaG.Talton

SheilaG.Talton

Director )))

) )

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Exhibit21

DEERE&COMPANYANDCONSOLIDATEDSUBSIDIARIES

SUBSIDIARIESOFTHEREGISTRANT

AsofOctober28,2018

SubsidiarycompaniesofDeere&Companyarelistedbelow.Exceptwhereotherwiseindicated,100percentofthevotingsecuritiesofthecompaniesnamedisowneddirectlyorindirectlybyDeere&Company.

Nameofsubsidiary

Organizedunderthelawsof

Subsidiariesincludedinconsolidatedfinancialstatements*

BancoJohnDeereS.A. Brazil ChamberlainHoldingsLimited Australia DeereCapital,Inc. Nevada DeereCredit,Inc. Delaware DeereCreditServices,Inc. Delaware DeereReceivablesLLC Nevada FarmPlanCorporation Delaware FPCReceivables,Inc. Nevada HammAG Germany IndustriasJohnDeereArgentinaS.A. Argentina JohnDeere(China)InvestmentCo.,Ltd. China JohnDeere(Jiamusi)AgriculturalMachineryCo.,Ltd. China JohnDeere(Ningbo)AgriculturalMachineryCo.,Ltd. China JohnDeere(Tianjin)InternationalTradingCo.,Ltd. China JohnDeereAgriculturalHoldings,Inc. Delaware JohnDeereAsia(Singapore)PrivateLimited Singapore JohnDeereBankS.A. Luxembourg JohnDeereBrasilLtda. Brazil JohnDeereCanadaULC Canada JohnDeereCapitalCorporation Delaware JohnDeereCashManagementS.A. Luxembourg JohnDeereConstruction&ForestryCompany Delaware JohnDeereElectronicSolutions,Inc. NorthDakota JohnDeereFinancial,f.s.b. Federal JohnDeereFinancialInc. Canada JohnDeereFinancialLimited Australia JohnDeereFinancialMexico,S.A.deC.V.SOFOM,ENR Mexico JohnDeereFinancialServices,Inc. Delaware JohnDeereForestryGroupLLC Illinois JohnDeereFundingCorporation Nevada JohnDeereGmbH&Co.KG Germany JohnDeereIbericaS.A. Spain JohnDeereIndiaPrivateLimited India JohnDeereInternationalGmbH Switzerland JohnDeere-LanzVerwaltungsGmbH Germany JohnDeereLeasingCompany Delaware JohnDeereLimited Australia JohnDeereLimited UnitedKingdom JohnDeerePolskaSp.zo.o. Poland JohnDeereReceivables,Inc. Nevada JohnDeereRus.LimitedLiabilityCompany Russia JohnDeere,S.A.deC.V. Mexico JohnDeereFrance France JohnDeereSharedServices,Inc. Delaware

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Nameofsubsidiary

Organizedunderthelawsof

JohnDeereThibodaux,Inc. Louisiana JohnDeereWarranty,Inc. Vermont JosephVögeleAktiengesellschaft Germany MotoresJohnDeereS.A.deC.V. Mexico Nortrax,Inc. Delaware WaratahForestryEquipmentCanadaLtd. Canada WirtgenGmbH Germany WirtgenRoadTechnologiesGmbH Germany

*Onehundred-eightyconsolidatedsubsidiariesandforty-fourunconsolidatedaffiliates,whosenamesareomitted,consideredintheaggregateasasinglesubsidiary,wouldnotconstituteasignificantsubsidiary.

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Exhibit21

DEERE&COMPANYANDCONSOLIDATEDSUBSIDIARIESSUBSIDIARIESOFTHEREGISTRANTAsofOctober28,2018

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Exhibit23

CONSENTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRM

WeconsenttotheincorporationbyreferenceinRegistrationStatementNos.333-165069,333-62669,333-132013,333-140980,333-140981and333-202299onFormS-8andinRegistrationStatementNo.333-218760onFormS-3ofourreportdatedDecember17,2018,relatingtotheconsolidatedfinancialstatementsofDeere&Companyandsubsidiaries("Deere&Company"),andtheeffectivenessofDeere&Company'sinternalcontroloverfinancialreporting,appearinginthisAnnualReportonForm10-KofDeere&CompanyfortheyearendedOctober28,2018.

/s/DELOITTE&TOUCHELLPChicago,Illinois

December17,2018

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Exhibit23

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Exhibit31.1

CERTIFICATIONS

I,SamuelR.Allen,certifythat:

1. IhavereviewedthisannualreportonForm10-KofDeere&Company;

2. Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatementsmade,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;

3. Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancialcondition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;

4. Theregistrant'sothercertifyingofficer(s)andIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantandhave:

(a)Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,toensurethatmaterialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularlyduringtheperiodinwhichthisreportisbeingprepared;

(b)Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples;

(c)Evaluatedtheeffectivenessoftheregistrant'sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and

(d)Disclosedinthisreportanychangeintheregistrant'sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant'smostrecentfiscalquarter(theregistrant'sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant'sinternalcontroloverfinancialreporting;and

5. Theregistrant'sothercertifyingofficer(s)andIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant'sauditorsandtheauditcommitteeoftheregistrant'sboardofdirectors(orpersonsperformingtheequivalentfunctions):

(a)Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelytoadverselyaffecttheregistrant'sabilitytorecord,process,summarizeandreportfinancialinformation;and

(b)Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant'sinternalcontroloverfinancialreporting.

Date:December17,2018 By: /s/SamuelR.Allen

SamuelR.AllenChairmanandChiefExecutiveOfficer(PrincipalExecutiveOfficer)

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Exhibit31.1

CERTIFICATIONS

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Exhibit31.2

CERTIFICATIONS

I,RajeshKalathur,certifythat:

1. IhavereviewedthisannualreportonForm10-KofDeere&Company;

2. Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatementsmade,inlightofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;

3. Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancialcondition,resultsofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;

4. Theregistrant'sothercertifyingofficer(s)andIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantandhave:

(a)Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,toensurethatmaterialinformationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularlyduringtheperiodinwhichthisreportisbeingprepared;

(b)Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,toprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples;

(c)Evaluatedtheeffectivenessoftheregistrant'sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthedisclosurecontrolsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and

(d)Disclosedinthisreportanychangeintheregistrant'sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant'smostrecentfiscalquarter(theregistrant'sfourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant'sinternalcontroloverfinancialreporting;and

5. Theregistrant'sothercertifyingofficer(s)andIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant'sauditorsandtheauditcommitteeoftheregistrant'sboardofdirectors(orpersonsperformingtheequivalentfunctions):

(a)Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelytoadverselyaffecttheregistrant'sabilitytorecord,process,summarizeandreportfinancialinformation;and

(b)Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant'sinternalcontroloverfinancialreporting.

Date:December17,2018 By: /s/RajeshKalathur

RajeshKalathurSeniorVicePresident,ChiefFinancialOfficerandChiefInformationOfficer(PrincipalFinancialOfficerandPrincipalAccountingOfficer)

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Exhibit31.2

CERTIFICATIONS

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Exhibit32

STATEMENTPURSUANTTO18U.S.C.SECTION1350

ASREQUIREDBYSECTION906OFTHESARBANES-OXLEYACTOF2002

InconnectionwiththeAnnualReportofDeere&Company(the"Company")onForm10-KfortheperiodendingOctober28,2018,asfiledwiththeSecuritiesandExchangeCommissiononthedatehereof(the"Report"),theundersignedherebycertifythattothebestofourknowledge:

1. TheReportfullycomplieswiththerequirementsofSection13(a)or15(d)oftheSecuritiesExchangeActof1934;and

2. TheinformationcontainedintheReportfairlypresents,inallmaterialrespects,thefinancialconditionandresultsofoperationsoftheCompany.

AsignedoriginalofthiswrittenstatementrequiredbySection906hasbeenprovidedtoDeere&CompanyandwillberetainedbyDeere&CompanyandfurnishedtotheSecuritiesandExchangeCommissionoritsstaffuponrequest.

December17,2018

/s/SamuelR.Allen

SamuelR.Allen

ChairmanandChiefExecutiveOfficer(PrincipalExecutiveOfficer)

December17,2018

/s/RajeshKalathur

RajeshKalathur

SeniorVicePresident,ChiefFinancialOfficerandChiefInformationOfficer(PrincipalFinancialOfficerandPrincipalAccountingOfficer)

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Exhibit32

STATEMENTPURSUANTTO18U.S.C.SECTION1350ASREQUIREDBYSECTION906OFTHESARBANES-OXLEYACTOF2002


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