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UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended April 29, 2018

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ____ to ____

Commission file no: 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 PlaceMoline, Illinois 61265

(Address of principal executive offices)Telephone Number: (309) 765-8000

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, ifany, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 ofthis chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and postsuch files).Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, asmaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “acceleratedfiler,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer X Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transitionperiod for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of theExchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No X

At April 29, 2018, 324,284,554 shares of common stock, $1 par value, of the registrant were outstanding.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS DEERE & COMPANY STATEMENT OF CONSOLIDATED INCOME For the Three Months Ended April 29, 2018 and April 30, 2017 (In millions of dollars and shares except per share amounts) Unaudited 2018 2017 Net Sales and Revenues Net sales $ 9,747.0 $ 7,259.8 Finance and interest income 753.9 665.0 Other income 219.1 362.2

Total 10,720.0 8,287.0 Costs and Expenses Cost of sales 7,333.3 5,427.7 Research and development expenses 415.2 325.4 Selling, administrative and general expenses 939.2 783.6 Interest expense 303.7 226.9 Other operating expenses 344.9 354.1

Total 9,336.3 7,117.7 Income of Consolidated Group before Income Taxes 1,383.7 1,169.3 Provision for income taxes 177.1 365.8 Income of Consolidated Group 1,206.6 803.5 Equity in income of unconsolidated affiliates 3.1 4.8 Net Income 1,209.7 808.3

Less: Net income (loss) attributable to noncontrolling interests 1.4 (.2) Net Income Attributable to Deere & Company $ 1,208.3 $ 808.5 Per Share Data Basic $ 3.73 $ 2.53 Diluted $ 3.67 $ 2.50 Average Shares Outstanding Basic 324.2 319.2 Diluted 329.2 323.0

See Condensed Notes to Interim Consolidated Financial Statements.

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DEERE & COMPANY STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME For the Three Months Ended April 29, 2018 and April 30, 2017 (In millions of dollars) Unaudited 2018 2017 Net Income $ 1,209.7 $ 808.3 Other Comprehensive Income (Loss), Net of Income Taxes

Retirement benefits adjustment 118.9 33.6 Cumulative translation adjustment 1.6 16.7 Unrealized gain on derivatives 4.9 Unrealized gain (loss) on investments (9.3) 58.7

Other Comprehensive Income (Loss), Net of Income Taxes 116.1 109.0 Comprehensive Income of Consolidated Group 1,325.8 917.3 Less: Comprehensive income (loss) attributable to noncontrolling interests 1.7 (.2) Comprehensive Income Attributable to Deere & Company $ 1,324.1 $ 917.5


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DEERE & COMPANY STATEMENT OF CONSOLIDATED INCOME For the Six Months Ended April 29, 2018 and April 30, 2017 (In millions of dollars and shares except per share amounts) Unaudited 2018 2017 Net Sales and Revenues Net sales $ 15,721.0 $ 11,957.7 Finance and interest income 1,476.8 1,320.5 Other income 435.7 634.0

Total 17,633.5 13,912.2 Costs and Expenses Cost of sales 12,037.8 9,209.2 Research and development expenses 772.0 637.5 Selling, administrative and general expenses 1,644.3 1,451.0 Interest expense 590.0 434.9 Other operating expenses 687.8 682.3

Total 15,731.9 12,414.9 Income of Consolidated Group before Income Taxes 1,901.6 1,497.3 Provision for income taxes 1,234.7 495.1 Income of Consolidated Group 666.9 1,002.2 Equity in income of unconsolidated affiliates 8.0 4.5 Net Income 674.9 1,006.7

Less: Net income (loss) attributable to noncontrolling interests 1.7 (.8) Net Income Attributable to Deere & Company $ 673.2 $ 1,007.5 Per Share Data Basic $ 2.08 $ 3.17 Diluted $ 2.05 $ 3.14 Average Shares Outstanding Basic 323.4 317.9 Diluted 328.4 321.3


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DEERE & COMPANY STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME For the Six Months Ended April 29, 2018 and April 30, 2017 (In millions of dollars) Unaudited 2018 2017 Net Income $ 674.9 $ 1,006.7 Other Comprehensive Income (Loss), Net of Income Taxes

Retirement benefits adjustment 165.2 76.6 Cumulative translation adjustment 224.9 (1.0) Unrealized gain on derivatives 10.3 2.0 Unrealized gain (loss) on investments (9.5) 52.9

Other Comprehensive Income (Loss), Net of Income Taxes 390.9 130.5 Comprehensive Income of Consolidated Group 1,065.8 1,137.2 Less: Comprehensive income (loss) attributable to noncontrolling interests 2.1 (.8) Comprehensive Income Attributable to Deere & Company $ 1,063.7 $ 1,138.0


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DEERE & COMPANY CONDENSED CONSOLIDATED BALANCE SHEET (In millions of dollars) Unaudited April 29 October 29 April 30 2018 2017 2017 Assets Cash and cash equivalents $ 4,201.4 $ 9,334.9 $ 4,525.8 Marketable securities 479.3 451.6 546.3 Receivables from unconsolidated affiliates 34.3 35.9 34.9 Trade accounts and notes receivable – net 6,511.1 3,924.9 4,482.3 Financing receivables – net 24,275.5 25,104.1 23,301.1 Financing receivables securitized – net 4,436.3 4,158.8 4,281.8 Other receivables 1,398.2 1,200.0 931.3 Equipment on operating leases – net 6,723.1 6,593.7 5,923.9 Inventories 6,888.9 3,904.1 4,114.8 Property and equipment – net 5,742.9 5,067.7 4,959.9 Investments in unconsolidated affiliates 202.1 182.5 215.7 Goodwill 3,188.7 1,033.3 806.2 Other intangible assets – net 1,692.2 218.0 90.8 Retirement benefits 617.9 538.2 176.2 Deferred income taxes 1,718.5 2,415.0 3,041.9 Other assets 1,762.6 1,623.6 1,535.9 Total Assets $ 69,873.0 $ 65,786.3 $ 58,968.8 Liabilities and Stockholders’ Equity Liabilities Short-term borrowings $ 10,894.6 $ 10,035.3 $ 7,963.6 Short-term securitization borrowings 4,401.1 4,118.7 4,224.6 Payables to unconsolidated affiliates 145.7 121.9 101.6 Accounts payable and accrued expenses 9,789.6 8,417.0 7,215.9 Deferred income taxes 562.7 209.7 169.0 Long-term borrowings 26,278.6 25,891.3 23,253.1 Retirement benefits and other liabilities 7,366.1 7,417.9 8,333.2

Total liabilities 59,438.4 56,211.8 51,261.0

Commitments and contingencies (Note 14) Redeemable noncontrolling interest 14.6 14.0 14.0 Stockholders’ Equity Common stock, $1 par value (issued shares at

April 29, 2018 – 536,431,204) 4,423.4 4,280.5 4,165.4 Common stock in treasury (15,425.9) (15,460.8) (15,521.0) Retained earnings 25,586.0 25,301.3 24,535.8 Accumulated other comprehensive income (loss) (4,173.2) (4,563.7) (5,495.5) Total Deere & Company stockholders’ equity 10,410.3 9,557.3 7,684.7 Noncontrolling interests 9.7 3.2 9.1

Total stockholders’ equity 10,420.0 9,560.5 7,693.8 Total Liabilities and Stockholders’ Equity $ 69,873.0 $ 65,786.3 $ 58,968.8


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DEERE & COMPANY STATEMENT OF CONSOLIDATED CASH FLOWS For the Six Months Ended April 29, 2018 and April 30, 2017 (In millions of dollars) Unaudited 2018 2017 Cash Flows from Operating Activities Net income $ 674.9 $ 1,006.7 Adjustments to reconcile net income to net cash used for operating activities:

Provision for credit losses 26.8 32.6 Provision for depreciation and amortization 950.8 843.1 Share-based compensation expense 39.8 32.3 Gain on sale of affiliates and investments (13.2) (281.4) Undistributed earnings of unconsolidated affiliates (4.5) (3.1) Provision (credit) for deferred income taxes 604.3 (100.4) Changes in assets and liabilities:

Trade, notes and financing receivables related to sales (2,094.1) (989.5) Inventories (1,796.8) (1,090.4) Accounts payable and accrued expenses 306.9 103.6 Accrued income taxes payable/receivable 153.0 195.1 Retirement benefits 67.6 115.6

Other (137.2) (27.9) Net cash used for operating activities (1,221.7) (163.7)

Cash Flows from Investing Activities Collections of receivables (excluding receivables related to sales) 8,780.9 8,228.0 Proceeds from maturities and sales of marketable securities 23.8 41.3 Proceeds from sales of equipment on operating leases 748.6 786.4 Proceeds from sales of businesses and unconsolidated affiliates, net of cash sold 55.0 113.9 Cost of receivables acquired (excluding receivables related to sales) (8,181.2) (7,628.6) Acquisitions of businesses, net of cash acquired (5,171.1) Purchases of marketable securities (62.8) (43.7) Purchases of property and equipment (352.2) (253.0) Cost of equipment on operating leases acquired (926.5) (925.1) Other (67.5) (18.7)

Net cash provided by (used for) investing activities (5,153.0) 300.5

Cash Flows from Financing Activities Increase in total short-term borrowings 199.1 183.1 Proceeds from long-term borrowings 4,077.7 2,661.6 Payments of long-term borrowings (2,888.7) (2,742.2) Proceeds from issuance of common stock 198.6 383.6 Repurchases of common stock (60.6) (6.2) Dividends paid (386.9) (379.5) Other (43.9) (39.7)

Net cash provided by financing activities 1,095.3 60.7

Effect of Exchange Rate Changes on Cash and Cash Equivalents 145.9 (7.5) Net Increase (Decrease) in Cash and Cash Equivalents (5,133.5) 190.0 Cash and Cash Equivalents at Beginning of Period 9,334.9 4,335.8 Cash and Cash Equivalents at End of Period $ 4,201.4 $ 4,525.8


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DEERE & COMPANY STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY For the Six Months Ended April 29, 2018 and April 30, 2017 (In millions of dollars) Unaudited Total Stockholders’ Equity Deere & Company Stockholders Accumulated Total Other Redeemable Stockholders’ Common Treasury Retained Comprehensive Noncontrolling Noncontrolling Equity Stock Stock Earnings Income (Loss) Interests Interest Balance October 30, 2016 $ 6,530.8 $ 3,911.8 $ (15,677.1) $ 23,911.3 $ (5,626.0) $ 10.8 $ 14.0 Net income (loss) 1,006.7 1,007.5 (.8) Other comprehensive income 130.5 130.5 Repurchases of common stock (6.2) (6.2) Treasury shares reissued 162.3 162.3 Dividends declared (383.6) (382.9) (.7) Stock options and other 253.3 253.6 (.1) (.2) Balance April 30, 2017 $ 7,693.8 $ 4,165.4 $ (15,521.0) $ 24,535.8 $ (5,495.5) $ 9.1 $ 14.0 Balance October 29, 2017 $ 9,560.5 $ 4,280.5 $ (15,460.8) $ 25,301.3 $ (4,563.7) $ 3.2 $ 14.0 Net income 674.3 673.2 1.1 .6 Other comprehensive income 390.9 390.5 .4 Repurchases of common stock (60.6) (60.6) Treasury shares reissued 95.5 95.5 Dividends declared (392.2) (389.5) (2.7) Acquisitions (Note 18) 7.5 7.5 Stock options and other 144.1 142.9 1.0 .2 Balance April 29, 2018 $ 10,420.0 $ 4,423.4 $ (15,425.9) $ 25,586.0 $ (4,173.2) $ 9.7 $ 14.6


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Condensed Notes to Interim Consolidated Financial Statements (Unaudited)

(1) The information in the notes and related commentary are presented in a format which includes data grouped asfollows:

Equipment Operations – Includes the Company’s agriculture and turf operations and construction and forestryoperations with financial services reflected on the equity basis. On December 1, 2017, the Company acquired thestock and certain assets of substantially all of the business of Wirtgen Group Holding GmbH (Wirtgen). Wirtgenresults are included in the construction and forestry operations (see Note 18).

Financial Services – Includes primarily the Company’s financing operations.

Consolidated – Represents the consolidation of the equipment operations and financial services. References to"Deere & Company" or "the Company" refer to the entire enterprise.

The Company uses a 52/53 week fiscal year with quarters ending on the last Sunday in the reporting period. Thesecond quarter ends for fiscal year 2018 and 2017 were April 29, 2018 and April 30, 2017, respectively. Both periodscontained 13 weeks.

(2) The interim consolidated financial statements of Deere & Company have been prepared by the Company, without

audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Certaininformation and footnote disclosures normally included in annual financial statements prepared in accordance withaccounting principles generally accepted in the U.S. have been condensed or omitted as permitted by such rules andregulations. All adjustments, consisting of normal recurring adjustments, have been included. Management believesthat the disclosures are adequate to present fairly the financial position, results of operations, and cash flows at thedates and for the periods presented. It is suggested that these interim consolidated financial statements be read inconjunction with the consolidated financial statements and the notes thereto appearing in the Company’s latestannual report on Form 10-K. Results for interim periods are not necessarily indicative of those to be expected for thefiscal year.

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S.requires management to make estimates and assumptions that affect the reported amounts and related disclosures.Actual results could differ from those estimates.

Cash Flow Information

All cash flows from the changes in trade accounts and notes receivable are classified as operating activities in thestatement of consolidated cash flows as these receivables arise from sales to the Company’s customers. Cash flowsfrom financing receivables that are related to sales to the Company’s customers are also included in operatingactivities. The remaining financing receivables are related to the financing of equipment sold by independent dealersand are included in investing activities.

The Company had the following non-cash operating and investing activities that were not included in the statementof consolidated cash flows. The Company transferred inventory to equipment on operating leases of approximately$357 million and $319 million in the first six months of 2018 and 2017, respectively. The Company also hadaccounts payable related to purchases of property and equipment of approximately $42 million and $32 million atApril 29, 2018 and April 30, 2017, respectively.

(3) New accounting standards adopted are as follows:

In the first quarter of 2018, the Company early adopted Financial Accounting Standards Board (FASB) AccountingStandard Update (ASU) No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net PeriodicPostretirement Benefit Cost, which amends Accounting Standards Codification (ASC) 715, Compensation –Retirement Benefits. This ASU required that employers report only the service cost component of the total definedbenefit pension and postretirement benefit cost in the same income statement lines as compensation for theparticipating employees. The other components of these benefit costs are reported outside of operating profit in theincome statement line other operating expenses. The ASU was adopted on a retrospective basis that increasedoperating profit in the second quarter and first six months of 2018 by $4 million and $12 million, respectively, andsecond quarter and first six months of 2017 by $7 million and $14 million, respectively. The income statement linechanges for the second quarter and first six months of 2017 were cost of sales decreased $17 million and $32 million,research and development expenses increased $1 million and $2 million, selling, administrative and general expensesincreased $9

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million and $16 million, and other operating expenses increased $7 million and $14 million, respectively. In addition,only the service cost component of the benefit costs is eligible for capitalization, which was adopted beginning thefirst quarter of 2018.

In the third quarter of 2017, the Company early adopted ASU No. 2016-09, Improvements to Employee Share-BasedPayment Accounting, which amends ASC 718, Compensation – Stock Compensation. This ASU changes thetreatment of share based payment transactions by recognizing the impact of excess tax benefits or deficiencies relatedto exercised or vested awards in income tax expense in the period of exercise or vesting, instead of common stock.As required, this change was reflected for all periods in fiscal year 2017. Net income increased in the second quarterand first six months of fiscal year 2017 by approximately $6 million and $11 million, respectively. The ASU alsomodified the presentation of excess tax benefits in the statement of consolidated cash flows by including that amountwith other income tax cash flows as an operating activity and no longer presented separately as a financing activity.This change was recognized through a retrospective application that increased net cash flow provided by operatingactivities by approximately $11 million for the first six months of fiscal year 2017. The ASU also requires that cashpaid by an employer when directly withholding shares for tax withholding purposes should be presented as afinancing activity in the statement of consolidated cash flows, which is the Company’s existing presentation. TheCompany will continue to recognize the impact of share-based payment award forfeitures as the forfeitures occur.

In the first quarter of 2018, the Company adopted ASU No. 2016-07, Simplifying the Transition to the EquityMethod of Accounting, which amends ASC 323, Investments – Equity Method and Joint Ventures, which did nothave a material effect on the Company’s consolidated financial statements.

In March 2018, the FASB issued ASU No. 2018-05, Amendments to SEC Paragraphs Pursuant to SEC StaffAccounting Bulletin No. 118, which amends ASC 740, Income Taxes. In December 2017, the U.S. governmentenacted new tax legislation (tax reform). This ASU incorporates SEC Staff Accounting Bulletin No. 118, which wasalso issued in December 2017, into the ASC. The ASU provides guidance on when to record and disclose provisionalamounts related to tax reform. In addition, the ASU allows for a measurement period up to one year after theenactment date of tax reform to complete the related accounting requirements and was effective when issued. TheCompany will complete the adjustments related to tax reform within the allowed period. The effects of tax reform onthe Company’s consolidated financial statements are outlined in Note 8.

New accounting standards to be adopted are as follows:

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), whichsupersedes the revenue recognition requirements in ASC 605, Revenue Recognition. This ASU is based on theprinciple that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflectsthe consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU alsorequires additional disclosure about the nature, amount, timing, and uncertainty of revenue. The FASB issued severalamendments clarifying various aspects of the ASU, including revenue transactions that involve a third party, goodsor services that are immaterial in the context of the contract, and licensing arrangements. The Company will adoptthe ASU effective the first quarter of fiscal year 2019 using a modified retrospective method. The Company’sevaluation of the ASU is largely complete, with the exception of the Wirtgen acquisition (see Note 18). The ASUrequires that a gross asset and liability rather than a net liability be recorded for the value of estimated service partsreturns and the related refund liability. The gross asset will be recorded in other assets and the gross liability will berecorded in accounts payable and accrued expenses. In addition, certain revenue disclosures will be expanded. At thispoint of the evaluation, the Company has not identified an item that will have a material effect on the Company’sconsolidated financial statements. The Company continues to evaluate the ASU’s potential effects on theconsolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets andFinancial Liabilities, which amends ASC 825-10, Financial Instruments - Overall. This ASU changes the treatmentfor available-for-sale equity investments by recognizing unrealized fair value changes directly in net income and nolonger in Other Comprehensive Income (OCI). The effective date will be the first quarter of fiscal year 2019. Earlyadoption of the provisions affecting the Company is not permitted. The ASU will be adopted with a cumulative-effect adjustment to the balance sheet in the year of adoption. The Company is evaluating the potential effects on theconsolidated financial statements.

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In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes ASC 840, Leases. TheASU’s primary change is the requirement for lessee entities to recognize a lease liability for payments and a right ofuse asset during the term of operating lease arrangements. The ASU does not significantly change the lessee’srecognition, measurement, and presentation of expenses and cash flows from the previous accounting standard.Lessors’ accounting under the ASC is largely unchanged from the previous accounting standard. The ASU currentlyrequires that lessees and lessors use a modified retrospective transition approach. In January 2018, the FASB issuedan exposure draft to provide for an adoption option that would not require earlier periods to be restated at theadoption date. The effective date will be the first quarter of fiscal year 2020 with early adoption permitted. TheCompany is evaluating the potential adoption options and the effects on the consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, whichestablishes ASC 326, Financial Instruments - Credit Losses. The ASU revises the measurement of credit losses forfinancial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. TheASU affects trade receivables, debt securities, net investment in leases, and most other financial assets that representa right to receive cash. Additional disclosures about significant estimates and credit quality are also required. Theeffective date will be the first quarter of fiscal year 2021, with early adoption permitted beginning in fiscal year 2020.The ASU will be adopted using a modified-retrospective approach. The Company is evaluating the potential effectson the consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments,which amends ASC 230, Statement of Cash Flows. This ASU provides guidance on the statement of cash flowspresentation of certain transactions where diversity in practice exists. The effective date will be the first quarter offiscal year 2019, with early adoption permitted. The ASU will be adopted using a retrospective transition approach.The adoption will not have a material effect on the Company’s consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, whichamends ASC 740, Income Taxes. This ASU requires that the income tax consequences of an intra-entity assettransfer other than inventory are recognized at the time of the transfer. The effective date will be the first quarter offiscal year 2019. The ASU will be adopted using a modified-retrospective transition approach. The adoption will nothave a material effect on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, which amends ASC 230, Statement ofCash Flows. This ASU requires that a statement of cash flows explain the change during the reporting period in thetotal of cash, cash equivalents, and restricted cash or restricted cash equivalents. The effective date will be the firstquarter of fiscal year 2019, with early adoption permitted, and will be adopted using a retrospective transitionapproach. The adoption will not have a material effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, Clarifying the Definition of a Business, which amends ASC805, Business Combinations. This ASU provides further guidance on the definition of a business to determinewhether transactions should be accounted for as acquisitions of assets or businesses. The effective date will be thefirst quarter of fiscal year 2019, with early adoption permitted in certain cases. The ASU will be adopted on aprospective basis and will not have a material effect on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08, Premium Amortization on Purchased Callable Debt Securities,which amends ASC 310-20, Receivables – Nonrefundable Fees and Other Costs. This ASU reduces the amortizationperiod for certain callable debt securities held at a premium to the earliest call date. The treatment of securities heldat a discount is unchanged. The effective date is the first quarter of fiscal year 2020, with early adoption permitted.The adoption will not have a material effect on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting, which amends ASC 718,Compensation – Stock Compensation. This ASU provides guidance about which changes to the terms of a share-based payment award should be accounted for as a modification. A change to an award should be accounted for as amodification unless the fair value of the modified award is the same as the original award, the vesting conditions donot change, and the classification as an equity or liability instrument does not change. The ASU will be adopted on aprospective basis. The effective date is the first quarter of fiscal year

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2019, with early adoption permitted. The adoption will not have a material effect on the Company’s consolidatedfinancial statements.

In August 2017, the FASB issued ASU No. 2017-12, Targeted Improvements to Accounting for Hedging Activities,which amends ASC 815, Derivatives and Hedging. The purpose of this ASU is to better align a company’s riskmanagement activities and financial reporting for hedging relationships, simplify the hedge accounting requirements,and improve the disclosures of hedging arrangements. The effective date is fiscal year 2020, with early adoptionpermitted. The Company is evaluating the potential effects on the consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from AccumulatedOther Comprehensive Income, which amends ASC 220, Income Statement – Reporting Comprehensive Income.Included in the provisions of tax reform is a reduction of the corporate income tax rate from 35 percent to 21 percent.Accounting principles generally accepted in the U.S. require that deferred taxes are remeasured to the new corporatetax rate in the period legislation is enacted. The deferred tax adjustment is recorded in the provision for income taxes,including items for which the tax effects were originally recorded in OCI. This treatment results in the items in OCInot reflecting the appropriate tax rate, which are referred to as stranded tax effects. This ASU allows areclassification from accumulated OCI to retained earnings for stranded tax effects resulting from tax reform. Theeffective date is fiscal year 2020, with early adoption permitted, including in interim periods. The ASU can beadopted at the beginning of an interim or annual period or retrospectively to each period affected by tax reform. TheCompany is evaluating the potential effects of the ASU on the consolidated financial statements.

(4) The after-tax changes in accumulated other comprehensive income (loss) in millions of dollars follow:

Total Unrealized Unrealized Accumulated Retirement Cumulative Gain (Loss) Gain (Loss) Other Benefits Translation on on Comprehensive Adjustment Adjustment Derivatives Investments Income (Loss)

Balance October 30, 2016 $ (4,409) $ (1,229) $ 1 $ 11 $ (5,626) Other comprehensive income

(loss) items beforereclassification (13) (1) 165 151

Amounts reclassified fromaccumulated othercomprehensive income 89 2 (112) (21)

Net current period othercomprehensive income (loss) 76 (1) 2 53 130

Balance April 30, 2017 $ (4,333) $ (1,230) $ 3 $ 64 $ (5,496) Balance October 29, 2017 $ (3,580) $ (999) $ 5 $ 10 $ (4,564) Other comprehensive income

(loss) items beforereclassification 81 225 11 (9) 308

Amounts reclassified fromaccumulated othercomprehensive income 84 (1) 83

Net current period othercomprehensive income (loss) 165 225 10 (9) 391

Balance April 29, 2018 $ (3,415) $ (774) $ 15 $ 1 $ (4,173)

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Following are amounts recorded in and reclassifications out of other comprehensive income (loss), and the incometax effects, in millions of dollars:

Before Tax After Tax (Expense) Tax

Three Months Ended April 29, 2018 Amount Credit Amount Cumulative translation adjustment $ 1 $ 1 Unrealized gain (loss) on derivatives:

Unrealized hedging gain (loss) $ 7 (1) 6 Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense (1) (1) Net unrealized gain (loss) on derivatives 6 (1) 5

Unrealized gain (loss) on investments: Unrealized holding gain (loss) (11) 2 (9) Reclassification of realized (gain) loss – Other income (1) 1 Net unrealized gain (loss) on investments (12) 3 (9)

Retirement benefits adjustment: Pensions

Net actuarial gain (loss) 39 (9) 30 Reclassification through amortization of actuarial (gain) loss and

prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 54 (14) 40 Prior service (credit) cost 3 (1) 2 Settlements/curtailments 6 (2) 4

Health care and life insurance Net actuarial gain (loss) 60 (14) 46 Reclassification through amortization of actuarial (gain) loss and

prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 15 (4) 11 Prior service (credit) cost (19) 5 (14)

Net unrealized gain (loss) on retirement benefits adjustments 158 (39) 119 Total other comprehensive income (loss) $ 152 $ (36) $ 116

* These accumulated other comprehensive income amounts are components of net periodic pension andpostretirement costs. See Note 7 for additional detail.

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Six Months Ended April 29, 2018 Amount Credit Amount Cumulative translation adjustment $ 225 $ 225 Unrealized gain (loss) on derivatives:

Unrealized hedging gain (loss) 15 $ (4) 11 Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense (1) (1) Net unrealized gain (loss) on derivatives 14 (4) 10

Unrealized gain (loss) on investments: Unrealized holding gain (loss) (11) 2 (9) Reclassification of realized (gain) loss – Other income (1) 1 Net unrealized gain (loss) on investments (12) 3 (9)


Net actuarial gain (loss) 46 (11) 35 Reclassification through amortization of actuarial (gain) loss and

prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 115 (34) 81 Prior service (credit) cost 6 (2) 4 Settlements/curtailments 6 (2) 4

Health care and life insurance Net actuarial gain (loss) 60 (14) 46 Reclassification through amortization of actuarial (gain) loss and




14


Three Months Ended April 30, 2017 Amount Credit Amount Cumulative translation adjustment $ 17 $ 17 Unrealized gain (loss) on derivatives:

Unrealized hedging gain (loss) (4) $ 2 (2) Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense 1 (1) Foreign exchange contracts – Other operating expenses 3 (1) 2

Net unrealized gain (loss) on derivatives Unrealized gain (loss) on investments:

Unrealized holding gain (loss) 269 (99) 170 Reclassification of realized (gain) loss – Other income (176) 65 (111) Net unrealized gain (loss) on investments 93 (34) 59


Net actuarial gain (loss) (8) 3 (5) Reclassification through amortization of actuarial (gain) loss and

prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 61 (22) 39 Prior service (credit) cost 3 (1) 2 Settlements/curtailments 1 1

Health care and life insurance Net actuarial gain (loss) (10) 3 (7) Reclassification through amortization of actuarial (gain) loss and




In the second quarter of 2018 and 2017, the noncontrolling interests’ comprehensive income (loss) was $1.7 millionand $(.2) million, respectively, which consisted of net income (loss) of $1.4 million and $(.2) million and cumulativetranslation adjustments of $.3 million and none, respectively.

15


Six Months Ended April 30, 2017 Amount Credit Amount Cumulative translation adjustment $ (1) $ (1) Unrealized gain (loss) on derivatives:

Unrealized hedging gain (loss) Reclassification of realized (gain) loss to:

Interest rate contracts – Interest expense 1 1 Foreign exchange contracts – Other operating expenses 2 $ (1) 1

Net unrealized gain (loss) on derivatives 3 (1) 2 Unrealized gain (loss) on investments:

Unrealized holding gain (loss) 262 (97) 165 Reclassification of realized (gain) loss – Other income (178) 66 (112) Net unrealized gain (loss) on investments 84 (31) 53


Net actuarial gain (loss) (9) 3 (6) Reclassification through amortization of actuarial (gain) loss and

prior service (credit) cost to other operating expenses: * Actuarial (gain) loss 121 (44) 77 Prior service (credit) cost 6 (2) 4 Settlements/curtailments 1 1

Health care and life insurance Net actuarial gain (loss) (10) 3 (7) Reclassification through amortization of actuarial (gain) loss and



* These accumulated other comprehensive income amounts are included in net periodic pension andpostretirement costs. See Note 7 for additional detail.

In the first six months of 2018 and 2017, the noncontrolling interests’ comprehensive income (loss) was $2.1 millionand $(.8) million, respectively, which consisted of net income (loss) of $1.7 million and $(.8) million and cumulativetranslation adjustments of $.4 million and none, respectively.

(5) Dividends declared and paid on a per share basis were as follows:

Three Months Ended Six Months Ended April 29 April 30 April 29 April 30 2018 2017 2018 2017

Dividends declared $ .60 $ .60 $ 1.20 $ 1.20 Dividends paid $ .60 $ .60 $ 1.20 $ 1.20

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(6) A reconciliation of basic and diluted net income per share attributable to Deere & Company follows in millions,

except per share amounts:


Net income attributable to Deere & Company $ 1,208.3 $ 808.5 $ 673.2 $ 1,007.5 Less income allocable to participating securities .2 .2 .1 .3 Income allocable to common stock $ 1,208.1 $ 808.3 $ 673.1 $ 1,007.2 Average shares outstanding 324.2 319.2 323.4 317.9 Basic per share $ 3.73 $ 2.53 $ 2.08 $ 3.17 Average shares outstanding 324.2 319.2 323.4 317.9 Effect of dilutive share-based compensation 5.0 3.8 5.0 3.4

Total potential shares outstanding 329.2 323.0 328.4 321.3 Diluted per share $ 3.67 $ 2.50 $ 2.05 $ 3.14

During the second quarter and first six months of 2018, .5 million shares and .3 million shares, respectively, wereexcluded from the computation because the incremental shares would have been antidilutive. During the secondquarter and first six months of 2017, .7 million shares and .5 million shares, respectively, were excluded in the aboveper share computation.

(7) The Company has several defined benefit pension plans and defined postretirement health care and life insurance

plans covering many of its U.S. employees and employees in certain foreign countries.

The worldwide components of net periodic pension cost consisted of the following in millions of dollars:


Service cost $ 76 $ 67 $ 148 $ 135 Interest cost 97 90 195 180 Expected return on plan assets (194) (197) (388) (394) Amortization of actuarial loss 54 61 115 121 Amortization of prior service cost 3 3 6 6 Settlements/curtailments 6 1 6 1

Net cost $ 42 $ 25 $ 82 $ 49

The worldwide components of net periodic postretirement benefits cost (health care and life insurance) consisted ofthe following in millions of dollars:


Service cost $ 11 $ 11 $ 22 $ 21 Interest cost 48 49 96 98 Expected return on plan assets (6) (5) (11) (9) Amortization of actuarial loss 15 24 31 49 Amortization of prior service credit (19) (19) (38) (38)

Net cost $ 49 $ 60 $ 100 $ 121

The components of net periodic pension and postretirement benefits cost excluding the service cost component areincluded in the line item other operating expenses in the Statement of Consolidated Income.

In the second quarter, a committee of the Company’s Board of Directors approved a voluntary $1,000 millioncontribution to its U.S. pension and postretirement benefit plans. During the first six months of 2018, the Companycontributed approximately $86 million to its pension plans, which included a $50 million voluntary contribution to aU.S. plan, and $31 million to its other postretirement benefit plans. The Company presently anticipates contributingan additional $851 million to its pension plans and $138 million to its other postretirement benefit plans during theremainder of fiscal year 2018. The anticipated total contributions

17

include voluntary contributions of $820 million to a U.S. pension plan and $130 million to a U.S. postretirementbenefit plan, which will increase plan assets. The other contributions primarily include payments from Companyfunds to make direct payments to plan participants.

(8) On December 22, 2017, the U.S. government enacted tax reform. The primary provisions of tax reform expected to

impact the Company in fiscal year 2018 are a reduction to the corporate income tax rate from 35 percent to 21 percentand a transition from a worldwide corporate tax system to a territorial tax system. The reduction in the corporateincome tax rate requires the Company to remeasure its net deferred tax assets to the new corporate tax rate and thetransition to a territorial tax system requires payment of a one-time tax on deemed repatriation of undistributed andpreviously untaxed non-U.S. earnings. The Company currently plans to pay the deemed repatriation tax over an eightyear period, as allowed by tax reform.

In December 2017, the SEC issued a staff accounting bulletin that allows for a measurement period up to one yearafter the enactment date of tax reform to complete the related accounting requirements. The tax reform measurementperiod adjustments and the effects on the results of the second quarter and first six months of 2018 in millions ofdollars follow:

Three Months Ended

April 29, 2018 Six Months Ended

April 29, 2018

EquipmentOperations

FinancialServices Total

EquipmentOperations

FinancialServices Total

Net deferred tax asset remeasurement $ (158) $ (19) $ (177) $ 853 $ (314) $ 539 Deemed earnings repatriation tax (49) 52 3 179 85 264

Total discrete tax expense (benefit) $ (207) $ 33 $ (174) $ 1,032 $ (229) $ 803

The second quarter measurement period benefit on the net deferred tax assets primarily results from the planned,voluntary $1,000 million contribution to U.S. pension and other postretirement benefit plans, which results in a taxdeduction applicable to the 2017 tax year. The Company received authorization for this contribution in the secondquarter (see Note 7). The provision for income taxes was also affected by other tax reform items, primarily the lowercorporate income tax rate on current year income.

The 21 percent corporate income tax rate is effective January 1, 2018. Based on the Company’s October fiscal yearend, the U.S. statutory income tax rate for fiscal year 2018 will be approximately 23.3 percent.

The first six months of 2018 tax expense is provisional as outlined below and may change during the remainingmeasurement period. The Company completed a preliminary assessment of earnings that could be repatriated basedon reinvestment needs of non-U.S. operations and earnings available for repatriation. The estimated withholding taxthat would be incurred from the repatriation of those earnings is included in the first six months of 2018 provisionalincome tax expense. The Company continues to analyze the provisions of tax reform addressing the net deferred taxasset remeasurement and the calculations, and the deemed earnings repatriation tax, including the determination ofundistributed non-U.S. earnings. In addition, the Company is evaluating actions, including repatriating additionalnon-U.S. earnings and other actions that could affect the Company’s 2017 U.S. taxable income. The Company alsocontinues to prepare its 2017 U.S. income tax returns, undergo income tax audits, and monitor potential legislativeaction and regulatory interpretations of tax reform.

Based on the effective date of certain provisions, the Company will be subject to additional requirements of taxreform beginning in fiscal year 2019. Those provisions include a tax on global intangible low-taxed income (GILTI),a tax determined by base erosion and anti-abuse tax benefits (BEAT) from certain payments between a U.S.corporation and foreign subsidiaries, a limitation of certain executive compensation, a deduction for foreign derivedintangible income (FDII), and interest expense limitations. The Company has not completed its analysis of thoseprovisions and the estimated effects. The Company also has not determined its accounting policy to treat the taxesdue on GILTI as a period cost or include them in the determination of deferred taxes.

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The Company’s unrecognized tax benefits at April 29, 2018 were $421 million, compared to $221 million at October29, 2017. The increase is primarily due to a review of the timing of deduction for certain U.S. expenses and the effectof a lower U.S. corporate tax rate. These positions remain under review. The liability at April 29, 2018, October 29,2017, and April 30, 2017 consisted of approximately $157 million, $86 million, and $79 million, respectively, whichwould affect the effective tax rate if the tax benefits were recognized. The remaining liability was related to taxpositions for which there are offsetting tax receivables, or the uncertainty was only related to timing. Based on theongoing review of tax accounting methods affecting the timing of certain U.S. tax deductions, the Company believesa reduction of unrecognized tax benefits of approximately $160 million, with a positive impact on the effective taxrate of approximately $55 million, in the next 12 months is reasonably possible.

(9) Worldwide net sales and revenues, operating profit, and identifiable assets by segment in millions of dollars follow:

Three Months Ended Six Months Ended April 29 April 30 % April 29 April 30 % 2018 2017 Change 2018 2017 Change

Net sales and revenues: Agriculture and turf $ 7,049 $ 5,794 +22 $ 11,292 $ 9,392 +20 Construction and forestry 2,698 1,466 +84 4,429 2,566 +73

Total net sales 9,747 7,260 +34 15,721 11,958 +31 Financial services 795 716 +11 1,572 1,412 +11 Other revenues 178 311 -43 340 542 -37

Total net sales and revenues $ 10,720 $ 8,287 +29 $ 17,633 $ 13,912 +27 Operating profit: *

Agriculture and turf $ 1,056 $ 1,009 +5 $ 1,443 $ 1,227 +18 Construction and forestry 259 111 +133 291 148 +97 Financial services 179 158 +13 396 325 +22

Total operating profit 1,494 1,278 +17 2,130 1,700 +25 Reconciling items ** (109) (104) +5 (222) (198) +12 Income taxes (177) (366) -52 (1,235) (495) +149

Net income attributable to Deere & Company $ 1,208 $ 808 +50 $ 673 $ 1,007 -33

Intersegment sales and revenues: Agriculture and turf net sales $ 15 $ 10 +50 $ 24 $ 17 +41 Construction and forestry net sales Financial services 82 62 +32 145 111 +31

Equipment operations outside the U.S. and Canada:

Net sales $ 4,295 $ 2,968 +45 $ 6,804 $ 4,860 +40 Operating profit 534 391 +37 680 467 +46

April 29 October 29 2018 2017

Identifiable assets: Agriculture and turf $ 10,603 $ 9,359 +13 Construction and forestry 10,471 3,212 +226 Financial services 44,278 42,596 +4 Corporate 4,521 10,619 -57

Total assets $ 69,873 $ 65,786 +6

* Operating profit is income from continuing operations before corporate expenses, certain external interestexpense, certain foreign exchange gains and losses, and income taxes. Operating profit of the financial servicessegment includes the effect of interest expense and foreign exchange gains and losses.

** Reconciling items are primarily corporate expenses, certain external interest expense, certain foreign exchangegains and losses, pension and postretirement benefit costs excluding the service cost component, and net incomeattributable to noncontrolling interests.

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(10) Past due balances of financing receivables still accruing finance income represent the total balance held (principal

plus accrued interest) with any payment amounts 30 days or more past the contractual payment due date. Non-performing financing receivables represent loans for which the Company has ceased accruing finance income. Thesereceivables are generally 120 days delinquent and the estimated uncollectible amount, after charging the dealer’swithholding account, if any, has been written off to the allowance for credit losses. Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is generally resumed when thereceivable becomes contractually current and collections are reasonably assured.

An age analysis of past due financing receivables that are still accruing interest and non-performing financingreceivables in millions of dollars follows:

April 29, 2018 90 Days 30-59 Days 60-89 Days or Greater Total Past Due Past Due Past Due Past Due

Retail Notes: Agriculture and turf $ 117 $ 58 $ 44 $ 219 Construction and forestry 97 44 36 177

Other: Agriculture and turf 32 16 28 76 Construction and forestry 11 4 2 17

Total $ 257 $ 122 $ 110 $ 489

Total Total Total Financing Past Due Non-Performing Current Receivables Retail Notes:

Agriculture and turf $ 219 $ 171 $ 17,014 $ 17,404 Construction and forestry 177 42 2,899 3,118

Other: Agriculture and turf 76 16 7,072 7,164 Construction and forestry 17 4 1,192 1,213

Total $ 489 $ 233 $ 28,177 28,899 Less allowance for credit losses 187 Total financing receivables – net $ 28,712

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October 29, 2017 90 Days 30-59 Days 60-89 Days or Greater Total Past Due Past Due Past Due Past Due



Total $ 231 $ 107 $ 97 $ 435 Total Total Total Financing Past Due Non-Performing Current Receivables Retail Notes:

Agriculture and turf $ 221 $ 173 $ 17,508 $ 17,902 Construction and forestry 147 30 2,618 2,795

Other: Agriculture and turf 48 12 7,610 7,670 Construction and forestry 19 5 1,059 1,083


April 30, 2017 90 Days 30-59 Days 60-89 Days or Greater Total Past Due Past Due Past Due Past Due



Total $ 249 $ 135 $ 127 $ 511 Total Total Total Financing Past Due Non-Performing Current Receivables

Retail Notes: Agriculture and turf $ 260 $ 159 $ 16,838 $ 17,257 Construction and forestry 157 31 2,563 2,751

Other: Agriculture and turf 76 10 6,692 6,778 Construction and forestry 18 4 952 974


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An analysis of the allowance for credit losses and investment in financing receivables in millions of dollars duringthe periods follows:

Three Months Ended April 29, 2018 Revolving Retail Charge Notes Accounts Other Total

Allowance: Beginning of period balance $ 123 $ 40 $ 27 $ 190

Provision 5 9 2 16 Write-offs (7) (15) (1) (23) Recoveries 4 6 10 Translation adjustments (5) (1) (6)

End of period balance * $ 120 $ 40 $ 27 $ 187 Six Months Ended April 29, 2018 Allowance: Beginning of period balance $ 121 $ 40 $ 26 $ 187

Provision 5 9 4 18 Write-offs (14) (20) (3) (37) Recoveries 10 11 21 Translation adjustments (2) (2)

End of period balance * $ 120 $ 40 $ 27 $ 187 Financing receivables: End of period balance $ 20,522 $ 3,205 $ 5,172 $ 28,899 Balance individually evaluated ** $ 120 $ 1 $ 15 $ 136

Three Months Ended April 30, 2017 Revolving Retail Charge Notes Accounts Other Total

Allowance: Beginning of period balance $ 111 $ 41 $ 23 $ 175

Provision 10 15 1 26 Write-offs (15) (18) (1) (34) Recoveries 5 5 10

End of period balance * $ 111 $ 43 $ 23 $ 177 Six Months Ended April 30, 2017 Allowance: Beginning of period balance $ 113 $ 40 $ 23 $ 176

Provision 18 13 2 33 Write-offs (27) (20) (3) (50) Recoveries 7 10 1 18

End of period balance * $ 111 $ 43 $ 23 $ 177 Financing receivables: End of period balance $ 20,008 $ 3,036 $ 4,716 $ 27,760 Balance individually evaluated ** $ 148 $ 4 $ 17 $ 169

* Individual allowances were not significant.

** Remainder is collectively evaluated.

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Financing receivables are considered impaired when it is probable the Company will be unable to collect all amountsdue according to the contractual terms. Receivables reviewed for impairment generally include those that are eitherpast due, or have provided bankruptcy notification, or require significant collection efforts. Receivables that areimpaired are generally classified as non-performing.

An analysis of the impaired financing receivables in millions of dollars follows:

Unpaid Average Recorded Principal Specific Recorded Investment Balance Allowance Investment

April 29, 2018* Receivables with specific allowance ** $ 33 $ 31 $ 10 $ 34 Receivables without a specific allowance ** 41 40 43 Total $ 74 $ 71 $ 10 $ 77

Agriculture and turf $ 52 $ 51 $ 9 $ 54 Construction and forestry $ 22 $ 20 $ 1 $ 23

October 29, 2017* Receivables with specific allowance ** $ 36 $ 33 $ 10 $ 30 Receivables without a specific allowance *** 28 27 24 Total $ 64 $ 60 $ 10 $ 54

Agriculture and turf $ 49 $ 46 $ 10 $ 38 Construction and forestry $ 15 $ 14 $ 16

April 30, 2017* Receivables with specific allowance ** $ 23 $ 22 $ 9 $ 26 Receivables without a specific allowance *** 27 24 28 Total $ 50 $ 46 $ 9 $ 54

Agriculture and turf $ 28 $ 26 $ 8 $ 32 Construction and forestry $ 22 $ 20 $ 1 $ 22

* Finance income recognized was not material.

** Primarily retail notes.

*** Primarily retail notes and wholesale receivables.

A troubled debt restructuring is generally the modification of debt in which a creditor grants a concession it wouldnot otherwise consider to a debtor that is experiencing financial difficulties. These modifications may include areduction of the stated interest rate, an extension of the maturity dates, a reduction of the face amount or maturityamount of the debt, or a reduction of accrued interest. During the first six months of 2018, the Companyidentified 253 financing receivable contracts, primarily retail notes, as troubled debt restructurings with aggregatebalances of $13 million pre-modification and $13 million post-modification. During the first six months of 2017,there were 226 financing receivable contracts, primarily retail notes, identified as troubled debt restructurings withaggregate balances of $5 million pre-modification and $4 million post-modification. During these same periods,there were no significant troubled debt restructurings that subsequently defaulted and were written off. At April 29,2018, the Company had commitments to lend approximately $8 million to borrowers whose accounts were modifiedin troubled debt restructurings.

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(11) Securitization of financing receivables:

The Company, as a part of its overall funding strategy, periodically transfers certain financing receivables (retailnotes) into variable interest entities (VIEs) that are special purpose entities (SPEs), or non-VIE banking operations,as part of its asset-backed securities programs (securitizations). The structure of these transactions is such that thetransfer of the retail notes did not meet the accounting criteria for sales of receivables, and is, therefore, accountedfor as a secured borrowing. SPEs utilized in securitizations of retail notes differ from other entities included in theCompany’s consolidated statements because the assets they hold are legally isolated. Use of the assets held by theSPEs or the non-VIEs is restricted by terms of the documents governing the securitization transactions.

In these securitizations, the retail notes are transferred to certain SPEs or to non-VIE banking operations, which inturn issue debt to investors. The debt securities issued to the third party investors resulted in secured borrowings,which are recorded as “Short-term securitization borrowings” on the balance sheet. The securitized retail notes arerecorded as “Financing receivables securitized – net” on the balance sheet. The total restricted assets on theconsolidated balance sheet related to these securitizations include the financing receivables securitized less anallowance for credit losses, and other assets primarily representing restricted cash. For those securitizations in whichretail notes are transferred into SPEs, the SPEs supporting the secured borrowings are consolidated unless theCompany does not have both the power to direct the activities that most significantly impact the SPEs’ economicperformance and the obligation to absorb losses or the right to receive benefits that could potentially be significant tothe SPEs. No additional support to these SPEs beyond what was previously contractually required has been providedduring the reporting periods.

In certain securitizations, the Company consolidates the SPEs since it has both the power to direct the activities thatmost significantly impact the SPEs’ economic performance through its role as servicer of all the receivables held bythe SPEs and the obligation through variable interests in the SPEs to absorb losses or receive benefits that couldpotentially be significant to the SPEs. The restricted assets (retail notes securitized, allowance for credit losses, andother assets) of the consolidated SPEs totaled $2,489 million, $2,631 million, and $2,589 million at April 29, 2018,October 29, 2017, and April 30, 2017, respectively. The liabilities (short-term securitization borrowings and accruedinterest) of these SPEs totaled $2,438 million, $2,571 million, and $2,522 million at April 29, 2018, October 29,2017, and April 30, 2017, respectively. The credit holders of these SPEs do not have legal recourse to the Company’sgeneral credit.

In certain securitizations, the Company transfers retail notes to non-VIE banking operations, which are notconsolidated since the Company does not have a controlling interest in the entities. The Company’s carrying valuesand interests related to the securitizations with the unconsolidated non-VIEs were restricted assets (retail notessecuritized, allowance for credit losses, and other assets) of $686 million, $478 million, and $413 million at April 29,2018, October 29, 2017, and April 30, 2017, respectively. The liabilities (short-term securitization borrowings andaccrued interest) were $656 million, $454 million, and $390 million at April 29, 2018, October 29, 2017, and April30, 2017, respectively.

In certain securitizations, the Company transfers retail notes into bank-sponsored, multi-seller, commercial paperconduits, which are SPEs that are not consolidated. The Company does not service a significant portion of theconduits’ receivables, and therefore, does not have the power to direct the activities that most significantly impact theconduits’ economic performance. These conduits provide a funding source to the Company (as well as othertransferors into the conduit) as they fund the retail notes through the issuance of commercial paper. The Company’scarrying values and variable interest related to these conduits were restricted assets (retail notes securitized,allowance for credit losses, and other assets) of $1,383 million, $1,155 million, and $1,395 million at April 29, 2018,October 29, 2017, and April 30, 2017, respectively. The liabilities (short-term securitization borrowings and accruedinterest) related to these conduits were $1,310 million, $1,096 million, and $1,315 million at April 29, 2018, October29, 2017, and April 30, 2017, respectively.

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The Company’s carrying amount of the liabilities to the unconsolidated conduits, compared to the maximumexposure to loss related to these conduits, which would only be incurred in the event of a complete loss on therestricted assets, was as follows in millions of dollars:

April 29, 2018 Carrying value of liabilities $ 1,310 Maximum exposure to loss 1,383

The total assets of unconsolidated VIEs related to securitizations were approximately $36 billion at April 29, 2018.

The components of consolidated restricted assets related to secured borrowings in securitization transactions followin millions of dollars:

April 29 October 29 April 30 2018 2017 2017

Financing receivables securitized (retail notes) $ 4,450 $ 4,172 $ 4,295 Allowance for credit losses (14) (13) (13) Other assets 122 105 115 Total restricted securitized assets $ 4,558 $ 4,264 $ 4,397

The components of consolidated secured borrowings and other liabilities related to securitizations follow in millionsof dollars:


Short-term securitization borrowings $ 4,401 $ 4,119 $ 4,225 Accrued interest on borrowings 3 2 2 Total liabilities related to restricted securitized assets $ 4,404 $ 4,121 $ 4,227

The secured borrowings related to these restricted securitized retail notes are obligations that are payable as the retailnotes are liquidated. Repayment of the secured borrowings depends primarily on cash flows generated by therestricted assets. Due to the Company’s short-term credit rating, cash collections from these restricted assets are notrequired to be placed into a segregated collection account until immediately prior to the time payment is required tothe secured creditors. At April 29, 2018, the maximum remaining term of all securitized retail notes wasapproximately seven years.

(12) Most inventories owned by Deere & Company and its U.S. equipment subsidiaries and certain foreign equipment

subsidiaries are valued at cost on the “last-in, first-out” (LIFO) method. If all of the Company’s inventories had beenvalued on a “first-in, first-out” (FIFO) method, estimated inventories by major classification in millions of dollarswould have been as follows:


Raw materials and supplies $ 2,231 $ 1,688 $ 1,559 Work-in-process 900 495 531 Finished goods and parts 5,208 3,182 3,421 Total FIFO value 8,339 5,365 5,511 Less adjustment to LIFO value 1,450 1,461 1,396 Inventories $ 6,889 $ 3,904 $ 4,115

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(13) The changes in amounts of goodwill by operating segments were as follows in millions of dollars:

Agriculture Construction and Turf and Forestry Total

Goodwill at October 30, 2016 $ 323 $ 493 $ 816 Translation adjustments and other (10) (10) Goodwill at April 30, 2017 $ 313 $ 493 $ 806 Goodwill at October 29, 2017 $ 521 $ 512 $ 1,033 Acquisitions * 25 2,060 2,085 Divestitures ** (10) (10) Translation adjustments 5 76 81 Goodwill at April 29, 2018 $ 551 $ 2,638 $ 3,189

* See Note 18.

** See Note 19.

There were no accumulated impairment losses in the reported periods.

The components of other intangible assets were as follows in millions of dollars:

Useful Lives * April 29 October 29 April 30 (Years) 2018 2017 2017

Amortized intangible assets: Customer lists and relationships 16 $ 590 $ 42 $ 39 Technology, patents, trademarks, and other 18 1,109 139 129

Total at cost 1,699 181 168 Less accumulated amortization ** 130 86 77

Total 1,569 95 91 Unamortized intangible assets: In-process research and development 123 123 Other intangible assets – net $ 1,692 $ 218 $ 91

* Weighted-averages

** Accumulated amortization at April 29, 2018, October 29, 2017, and April 30, 2017 for customer lists andrelationships totaled $30 million, $17 million, and $15 million and technology, patents, trademarks, and othertotaled $100 million, $69 million, and $62 million, respectively.

The amortization of other intangible assets in the second quarter and the first six months of 2018 was $31 million and$44 million and for 2017 was $4 million and $9 million, respectively. The estimated amortization expense for thenext five years is as follows in millions of dollars: remainder of 2018 – $61, 2019 – $121, 2020 – $109, 2021 – $104,and 2022 – $104.

(14) Commitments and contingencies:

The Company generally determines its total warranty liability by applying historical claims rate experience tothe estimated amount of equipment that has been sold and is still under warranty based on dealer inventories andretail sales. The historical claims rate is primarily determined by a review of five-year claims costs and currentquality developments.

The premiums for extended warranties are primarily recognized in income in proportion to the costs expected to beincurred over the contract period. These unamortized extended warranty premiums (deferred revenue) included in thefollowing table totaled $475 million and $444 million at April 29, 2018 and April 30, 2017, respectively.

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A reconciliation of the changes in the warranty liability and unearned premiums in millions of dollars follows:


Beginning of period balance $ 1,550 $ 1,285 $ 1,468 $ 1,226 Payments (213) (167) (430) (332) Amortization of premiums received (57) (54) (113) (97) Accruals for warranties 260 238 453 470 Premiums received 65 55 126 95 Acquisitions * 80 Foreign exchange (14) 8 7 3 End of period balance $ 1,591 $ 1,365 $ 1,591 $ 1,365

* See Note 18.

At April 29, 2018, the Company had approximately $447 million of guarantees issued primarily to banks outside theU.S. and Canada related to third-party receivables for the retail financing of John Deere and Wirtgen equipment. Theincrease from October 29, 2017 primarily relates to the Wirtgen acquisition. The Company may recover a portion ofany required payments incurred under these agreements from repossession of the equipment collateralizing thereceivables. At April 29, 2018, the Company had accrued losses of approximately $16 million under theseagreements. The maximum remaining term of the receivables guaranteed at April 29, 2018 was approximately eightyears.

At April 29, 2018, the Company had commitments of approximately $328 million for the construction andacquisition of property and equipment. The increase from October 29, 2017 primarily relates to the Wirtgenacquisition. Also, at April 29, 2018, the Company had restricted assets of $123 million, primarily as collateral forborrowings and restricted other assets. See Note 11 for additional restricted assets associated with borrowings relatedto securitizations.

The Company also had other miscellaneous contingent liabilities totaling approximately $85 million at April 29,2018. The accrued liability for these contingencies was not material at April 29, 2018.

The Company is subject to various unresolved legal actions which arise in the normal course of its business, the mostprevalent of which relate to product liability (including asbestos-related liability), retail credit, employment, patent,and trademark matters. The Company believes the reasonably possible range of losses for these unresolved legalactions would not have a material effect on its consolidated financial statements.

(15) Fa ir value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date. To determine fair value, the Company uses variousmethods including market and income approaches. The Company utilizes valuation models and techniques thatmaximize the use of observable inputs. The models are industry-standard models that consider various assumptionsincluding time values and yield curves as well as other economic measures. These valuation techniques areconsistently applied.

Level 1 measurements consist of quoted prices in active markets for identical assets or liabilities. Level 2measurements include significant other observable inputs such as quoted prices for similar assets or liabilities inactive markets; identical assets or liabilities in inactive markets; observable inputs such as interest rates and yieldcurves; and other market-corroborated inputs. Level 3 measurements include significant unobservable inputs.

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The fair values of financial instruments that do not approximate the carrying values in millions of dollars follow:

April 29, 2018 October 29, 2017 April 30, 2017

Carrying

Value Fair

Value * Carrying

Value Fair

Value * Carrying

Value Fair

Value * Financing receivables – net:

Equipment operations ** $ 76 $ 74 Financial services 24,200 23,997 $ 25,104 $ 24,946 $ 23,301 $ 23,141

Total $ 24,276 $ 24,071 $ 25,104 $ 24,946 $ 23,301 $ 23,141 Financing receivables

securitized – net: Equipment operations ** $ 113 $ 110 Financial services 4,323 4,273 $ 4,159 $ 4,130 $ 4,282 $ 4,253

Total $ 4,436 $ 4,383 $ 4,159 $ 4,130 $ 4,282 $ 4,253 Short-term securitization

borrowings: Equipment operations ** $ 113 $ 113 Financial services 4,288 4,274 $ 4,119 $ 4,118 $ 4,225 $ 4,225

Total $ 4,401 $ 4,387 $ 4,119 $ 4,118 $ 4,225 $ 4,225 Long-term borrowings due

within one year: Equipment operations ** $ 274 $ 273 $ 154 $ 154 $ 120 $ 119 Financial services 6,566 6,559 6,064 6,079 5,339 5,345

Total $ 6,840 $ 6,832 $ 6,218 $ 6,233 $ 5,459 $ 5,464 Long-term borrowings:

Equipment operations ** $ 5,537 $ 5,850 $ 5,491 $ 6,026 $ 4,520 $ 5,020 Financial services 20,742 20,769 20,400 20,606 18,733 18,864

Total $ 26,279 $ 26,619 $ 25,891 $ 26,632 $ 23,253 $ 23,884

* Fair value measurements above were Level 3 for all financing receivables, Level 3 for equipment operationsshort-term securitization borrowings, and Level 2 for all other borrowings.

** See Note 18.

Fair values of the financing receivables that were issued long-term were based on the discounted values of theirrelated cash flows at interest rates currently being offered by the Company for similar financing receivables. The fairvalues of the remaining financing receivables approximated the carrying amounts.

Fair values of long-term borrowings and short-term securitization borrowings were based on current market quotesfor identical or similar borrowings and credit risk, or on the discounted values of their related cash flows at currentmarket interest rates. Certain long-term borrowings have been swapped to current variable interest rates. Thecarrying values of these long-term borrowings included adjustments related to fair value hedges.

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Assets and liabilities measured at fair value on a recurring basis in millions of dollars follow:

April 29 October 29 April 30 2018* 2017* 2017*

Marketable securities Equity fund $ 46 $ 48 $ 135 Fixed income fund 14 15 15 U.S. government debt securities 86 77 79 Municipal debt securities 46 39 39 Corporate debt securities 137 135 132 International debt securities 17 20 28 Mortgage-backed securities ** 133 118 118

Total marketable securities 479 452 546 Other assets

Derivatives: Interest rate contracts 87 116 142 Foreign exchange contracts 101 108 60 Cross-currency interest rate contracts 6 11 14

Total assets *** $ 673 $ 687 $ 762 Accounts payable and accrued expenses

Derivatives: Interest rate contracts $ 341 $ 131 $ 79 Foreign exchange contracts 28 26 50 Cross-currency interest rate contracts 2 1 2

Total liabilities $ 371 $ 158 $ 131

* All measurements above were Level 2 measurements except for Level 1 measurements of the equity fund of$46 million, $48 million, and $135 million at April 29, 2018, October 29, 2017, and April 30, 2017,respectively; the fixed income fund of $14 million, $15 million, and $15 million at April 29, 2018, October 29,2017, and April 30, 2017, respectively; and U.S. government debt securities of $42 million, $44 million, and$46 million at April 29, 2018, October 29, 2017, and April 30, 2017, respectively. In addition, $14 million, $17million, and $23 million of the international debt securities were Level 3 measurements at April 29, 2018,October 29, 2017, and April 30, 2017, respectively. There were no transfers between Level 1 and Level 2 duringthe first six months of 2018 or 2017.

** Primarily issued by U.S. government sponsored enterprises.

*** Excluded from this table were the Company’s cash equivalents, which were carried at cost that approximatesfair value. The cash equivalents consist primarily of money market funds that were Level 1 measurements.

The contractual maturities of debt securities at April 29, 2018 in millions of dollars are shown below. Actualmaturities may differ from those scheduled as a result of prepayments by the issuers. Because of the potential forprepayment on mortgage-backed securities, they are not categorized by contractual maturity.

Amortized Fair Cost Value

Due in one year or less $ 29 $ 28 Due after one through five years 107 105 Due after five through 10 years 95 91 Due after 10 years 62 62 Mortgage-backed securities 139 133 Debt securities $ 432 $ 419

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Fair value, recurring Level 3 measurements from available-for-sale marketable securities in millions of dollarsfollow:


Beginning of period balance $ 15 $ 23 $ 17 $ 28 Principal payments (1) (1) (3) (6) Change in unrealized gain 1 1 End of period balance $ 14 $ 23 $ 14 $ 23 Fair value, nonrecurring Level 1 measurements from impairments in millions of dollars follow:

Fair Value * Losses Three Months Ended Six Months Ended April 29 October 29 April 30 April 29 April 30 April 29 April 30 2018 2017 2017 2018 2017 2018 2017

Investments inunconsolidatedaffiliates $ 28

* See financing receivables with specific allowances in Note 10. Losses were not significant.

The following is a description of the valuation methodologies the Company uses to measure certain financialinstruments on the balance sheet at fair value:

Marketable Securities – The portfolio of investments, except for the Level 3 measurement international debtsecurities, is primarily valued on a market approach (matrix pricing model) in which all significant inputs areobservable or can be derived from or corroborated by observable market data such as interest rates, yield curves,volatilities, credit risk, and prepayment speeds. Funds are primarily valued using the fund’s net asset value, based onthe fair value of the underlying securities. The Level 3 measurement international debt securities are primarily valuedusing an income approach based on discounted cash flows using yield curves derived from limited, observablemarket data.

Derivatives – The Company’s derivative financial instruments consist of interest rate swaps and caps, foreigncurrency futures, forwards and swaps, and cross-currency interest rate swaps. The portfolio is valued based on anincome approach (discounted cash flow) using market observable inputs, including swap curves and both forwardand spot exchange rates for currencies.

Financing Receivables – Specific reserve impairments are based on the fair value of the collateral, which is measuredusing a market approach (appraisal values or realizable values). Inputs include a selection of realizable values.

Investment in Unconsolidated Affiliates – Other than temporary impairments for investments are measured as thedifference between the implied fair value and the carrying value of the investments. The fair value for publicly tradedentities is the share price multiplied by the shares owned.

(16) It is the Company’s policy that derivative transactions are executed only to manage exposures arising in the normal

course of business and not for the purpose of creating speculative positions or trading. The Company’s financialservices operations manage the relationship of the types and amounts of their funding sources to their receivable andlease portfolio in an effort to diminish risk due to interest rate and foreign currency fluctuations, while responding tofavorable financing opportunities. The Company also has foreign currency exposures at some of its foreign anddomestic operations related to buying, selling, and financing in currencies other than the functional currencies.

All derivatives are recorded at fair value on the balance sheet. Cash collateral received or paid is not offset againstthe derivative fair values on the balance sheet. Each derivative is designated as a cash flow hedge, a fair value hedge,or remains undesignated. All designated hedges are formally documented as to the relationship with the hedged itemas well as the risk-management strategy. Both at inception and on an ongoing basis the hedging instrument isassessed as to its effectiveness. If and when a derivative is determined not to be highly effective as a hedge, or theunderlying hedged transaction is no longer likely to occur, or the hedge designation is removed, or the derivative isterminated, hedge accounting is discontinued.

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Any past or future changes in the derivative’s fair value, which will not be effective as an offset to the income effectsof the item being hedged, are recognized currently in the income statement.

Cash flow hedges

Certain interest rate and cross-currency interest rate contracts (swaps) were designated as hedges of future cash flowsfrom borrowings. The total notional amounts of the receive-variable/pay-fixed interest rate contracts at April 29,2018, October 29, 2017, and April 30, 2017 were $1,800 million, $1,700 million, and $1,600 million, respectively.The total notional amounts of the cross-currency interest rate contracts at April 29, 2018, October 29, 2017, and April30, 2017 were $11 million, $22 million, and $32 million, respectively. The effective portions of the fair value gainsor losses on these cash flow hedges were recorded in OCI and subsequently reclassified into interest expense or otheroperating expenses (foreign exchange) in the same periods during which the hedged transactions affected earnings.These amounts offset the effects of interest rate or foreign currency exchange rate changes on the related borrowings.Any ineffective portions of the gains or losses on all cash flow interest rate contracts designated as cash flow hedgeswere recognized currently in interest expense or other operating expenses (foreign exchange) and were not materialduring any periods presented. The cash flows from these contracts were recorded in operating activities in thestatement of consolidated cash flows.

The amount of gain recorded in OCI at April 29, 2018 that is expected to be reclassified to interest expense or otheroperating expenses in the next twelve months if interest rates or exchange rates remain unchanged is approximately$9 million after-tax. These contracts mature in up to 26 months. There were no gains or losses reclassified from OCIto earnings based on the probability that the original forecasted transaction would not occur.

Fair value hedges

Certain interest rate contracts (swaps) were designated as fair value hedges of borrowings. The total notionalamounts of the receive-fixed/pay-variable interest rate contracts at April 29, 2018, October 29, 2017, and April 30,2017 were $8,421 million, $8,661 million, and $7,605 million, respectively. The effective portions of the fair valuegains or losses on these contracts were offset by fair value gains or losses on the hedged items (fixed-rateborrowings). Any ineffective portions of the gains or losses were recognized currently in interest expense. Theineffective portions were a loss of $2 million and none during the second quarter of 2018 and 2017, respectively, anda loss of $3 million and a gain of $2 million during the first six months of 2018 and 2017, respectively. The cashflows from these contracts were recorded in operating activities in the statement of consolidated cash flows.

The gains (losses) on these contracts and the underlying borrowings recorded in interest expense follow in millionsof dollars:


Interest rate contracts * $ (123) $ 32 $ (271) $ (202) Borrowings ** 121 (32) 268 204

* Includes changes in fair values of interest rate contracts excluding net accrued interest income of $5 million and$22 million during the second quarter of 2018 and 2017, respectively, and $17 million and $48 million during thefirst six months of 2018 and 2017, respectively.

** Includes adjustments for fair values of hedged borrowings excluding accrued interest expense of $64 millionand $61 million during the second quarter of 2018 and 2017, respectively, and $127 million and $126 millionduring the first six months of 2018 and 2017, respectively.

Derivatives not designated as hedging instruments

The Company has certain interest rate contracts (swaps and caps), foreign exchange contracts (futures, forwards, andswaps), and cross-currency interest rate contracts (swaps), which were not formally designated as hedges. Thesederivatives were held as economic hedges for underlying interest rate or foreign currency exposures, primarily forcertain borrowings and purchases or sales of inventory. The total notional amounts of these interest rate swaps atApril 29, 2018, October 29, 2017, and April 30, 2017 were $7,189 million, $6,757 million, and $5,783 million, theforeign exchange contracts were $6,791 million, $8,499 million, and $4,600 million, and the cross-currency interestrate contracts were $92 million, $66 million, and $76 million,

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respectively. The increase in the total notional amounts of foreign exchange contracts at October 29, 2017 primarilyrelates to the Wirtgen acquisition (see Note 18). At April 29, 2018, October 29, 2017, and April 30, 2017, there werealso $123 million, $253 million, and $366 million, respectively, of interest rate caps purchased and the same amountssold at the same capped interest rate to facilitate borrowings through securitization of retail notes. The fair valuegains or losses from the interest rate contracts were recognized currently in interest expense and the gains or lossesfrom foreign exchange contracts in cost of sales or other operating expenses, generally offsetting over time theexpenses on the exposures being hedged. The cash flows from these non-designated contracts were recorded inoperating activities in the statement of consolidated cash flows.

Fair values of derivative instruments in the condensed consolidated balance sheet in millions of dollars follow:

April 29 October 29 April 30 Other Assets 2018 2017 2017 Designated as hedging instruments: Interest rate contracts $ 34 $ 74 $ 116 Cross-currency interest rate contracts 3 5 7

Total designated 37 79 123 Not designated as hedging instruments: Interest rate contracts 53 42 26 Foreign exchange contracts 101 108 60 Cross-currency interest rate contracts 3 6 7

Total not designated 157 156 93 Total derivative assets $ 194 $ 235 $ 216 Accounts Payable and Accrued Expenses Designated as hedging instruments: Interest rate contracts $ 316 $ 112 $ 64

Total designated 316 112 64 Not designated as hedging instruments: Interest rate contracts 25 19 15 Foreign exchange contracts 28 26 50 Cross-currency interest rate contracts 2 1 2

Total not designated 55 46 67 Total derivative liabilities $ 371 $ 158 $ 131

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The classification and gains (losses) including accrued interest expense related to derivative instruments on thestatement of consolidated income consisted of the following in millions of dollars:

Expense or Three Months Ended Six Months Ended OCI April 29 April 30 April 29 April 30 Classification 2018 2017 2018 2017

Fair Value Hedges: Interest rate contracts Interest $ (118) $ 54 $ (254) $ (154)

Cash Flow Hedges : Recognized in OCI

(Effective Portion): Interest rate contracts OCI (pretax) * 6 (1) 14 2 Foreign exchange contracts OCI (pretax) * 1 (3) 1 (2)

Reclassified from OCI

(Effective Portion): Interest rate contracts Interest * 1 (1) 1 (1) Foreign exchange contracts Other operating * (3) (2)

Recognized Directly in Income

(Ineffective Portion) ** ** ** **

Not Designated as Hedges: Interest rate contracts Interest * $ (5) $ (4) Foreign exchange contracts Cost of sales 36 28 $ (12) $ (12) Foreign exchange contracts Other operating * 164 15 (52) (13)

Total not designated $ 195 $ 39 $ (64) $ (25)

* Includes interest and foreign exchange gains (losses) from cross-currency interest rate contracts.

** The amounts are not significant.

Counterparty Risk and Collateral

Derivative instruments are subject to significant concentrations of credit risk to the banking sector. The Companymanages individual counterparty exposure by setting limits that consider the credit rating of the counterparty, thecredit default swap spread of the counterparty, and other financial commitments and exposures between theCompany and the counterparty banks. All interest rate derivatives are transacted under International Swaps andDerivatives Association (ISDA) documentation. Some of these agreements include credit support provisions. Eachmaster agreement permits the net settlement of amounts owed in the event of default or termination.

Certain of the Company’s derivative agreements contain credit support provisions that may require the Company topost collateral based on the size of the net liability positions and credit ratings. The aggregate fair value of allderivatives with credit-risk-related contingent features that were in a net liability position at April 29, 2018, October29, 2017, and April 30, 2017, was $344 million, $132 million, and $81 million, respectively. In accordance with thelimits established in these agreements, the Company posted $32 million in cash collateral at April 29, 2018. No cashcollateral was posted or received at either October 29, 2017 or April 30, 2017.

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Derivatives are recorded without offsetting for netting arrangements or collateral. The impact on the derivative assetsand liabilities related to netting arrangements and any collateral received or paid in millions of dollars follows:

Gross Amounts Netting Cash Collateral April 29, 2018 Recognized Arrangements Received/Paid Net Amount Assets $ 194 $ (74) $ 120 Liabilities 371 (74) $ (32) 265

Gross Amounts Netting Cash Collateral October 29, 2017 Recognized Arrangements Received/Paid Net Amount Assets $ 235 $ (65) $ 170 Liabilities 158 (65) 93

Gross Amounts Netting Cash Collateral April 30, 2017 Recognized Arrangements Received/Paid Net Amount Assets $ 216 $ (54) $ 162 Liabilities 131 (54) 77

(17) In December 2017, the Company granted stock options to employees for the purchase of 476 thousand shares of

common stock at an exercise price of $151.95 per share and a binomial lattice model fair value of $39.11 per share atthe grant date. At April 29, 2018, options for 9.1 million shares were outstanding with a weighted-average exerciseprice of $86.73 per share. The Company also granted 403 thousand restricted stock units to employees and non-employee directors in the first six months of 2018, of which 318 thousand are subject to service based onlyconditions and 85 thousand are subject to performance/service based conditions. The weighted-average fair value ofthe service based only units at the grant date was $152.07 per unit based on the market price of a share of underlyingcommon stock. The weighted-average fair value of the performance/service based units at the grant date was $145.33per unit based on the market price of a share of underlying common stock excluding dividends. At April 29, 2018,the Company was authorized to grant an additional 10.0 million shares related to stock option and restricted stockawards.

(18) On December 1, 2017, the Company acquired Wirtgen, which was a privately-held international company and is the

leading manufacturer worldwide of road construction equipment. Headquartered in Germany, Wirtgen has six brandsacross the road construction sector spanning processing, mixing, paving, compaction, and rehabilitation. Wirtgensells products in more than 100 countries and had approximately 8,200 employees at the acquisition date.

The total cash purchase price, net of cash acquired of $197 million, was $5,130 million, a portion of which is held inescrow to secure certain indemnity obligations of Wirtgen. In addition to the cash purchase price, the Companyassumed $1,717 million in liabilities, which represented substantially all of Wirtgen’s liabilities. The Companyfinanced the acquisition and associated transaction expenses from a combination of cash and new debt financing,which consisted of medium-term notes, including €850 million issued in September 2017.

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The preliminary fair values assigned to the assets and liabilities of the acquired entity in millions of dollars, which isbased on information as of the acquisition date and available at April 29, 2018 follows:

Trade accounts and notes receivable $ 457 Financing receivables 43 Financing receivables securitized 125 Other receivables 100 Inventories 1,538 Property and equipment 757 Goodwill 2,060 Other intangible assets 1,458 Deferred income taxes 96 Other assets 221

Total assets $ 6,855 Short-term borrowings $ 285 Short-term securitization borrowings 127 Accounts payable and accrued expenses 725 Deferred income taxes 502 Long-term borrowings 50 Retirement benefits and other liabilities 28

Total liabilities $ 1,717 Noncontrolling interests $ 8

During the second quarter of 2018, measurement period adjustments decreased the total assets by $8 million, totalliabilities by $7 million, and noncontrolling interests by $1 million. The Company continues to review the fair valueof the assets and liabilities acquired, which may be updated during the measurement period. The identifiable intangible assets’ preliminary fair values in millions of dollars and weighted-average useful lives inyears follows:

Weighted-Average

Useful Lives Preliminary Fair Values

Customer lists and relationships 16 $ 534 Technology, patents, trademarks, and other 19 $ 924 The goodwill was the result of future cash flows and related fair value of Wirtgen exceeding the fair value of theidentified assets and liabilities. The goodwill is not expected to be deductible for income tax purposes and is includedin the construction and forestry segment.

Wirtgen’s results were included in the Company’s consolidated financial statements beginning on the acquisitiondate. The results are incorporated using a 30-day lag period and are included in the construction and forestrysegment. The net sales and revenues and operating profit (loss) included in the Company’s statement of consolidatedincome in the second quarter of 2018 and first six months of 2018 were $873 million and $1,127 million, and $41million and $(51) million, respectively. The Company also recognized $3 million of acquisition related costs in thesecond quarter of 2018, which were recorded in selling, administrative and general expenses. In the first six monthsof 2018, the Company recognized $53 million of acquisition related costs, which were recorded $27 million inselling, administrative and general expenses and $26 million in other operating expenses.

The unaudited pro forma consolidated net sales and revenues and net income are prepared as if the acquisition closedat the beginning of fiscal year 2017 and follow in millions of dollars:


Net sales and revenues $ 10,720 $ 9,045 $ 18,098 $ 15,253 Net income attributable to Deere & Company $ 1,310 $ 837 $ 877 $ 942

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The pro forma amounts have been calculated using policies consistent with the Company’s accounting policies andinclude the additional expense from the amortization from the allocated purchase price adjustments. The pro formaresults exclude acquisition related costs incurred in both periods and assume the medium-term notes used to fund theacquisition were issued in fiscal year 2016 at the interest rate of the actual notes. In addition, the pro forma results forthe second quarter and six months ended April 30, 2017 include nonrecurring pretax expenses of $102 million and$264 million, for the higher cost basis from the inventory fair value adjustment and $21 million and $42 million forthe amortization of identifiable intangible assets. Anticipated synergies or other expected benefits of the acquisitionare not included in the pro forma results. As a result, the unaudited pro forma financial information may not beindicative of the results for future operations or the results if the acquisition closed at the beginning of fiscal year2017.

In March 2018, the Company acquired King Agro, a privately held manufacturer of carbon fiber technology productswith headquarters in Valencia, Spain and a production facility in Campana, Argentina. The total cash purchase price,net of cash acquired of $3 million, was $41 million, excluding a loan to King Agro of $4 million that was forgiven onthe acquisition date. In addition to the cash purchase price, the Company assumed $11 million of liabilities. Thepreliminary asset and liability fair values are as follows:

Trade accounts and notes receivable $ 4 Other receivables 3 Inventories 6 Property and equipment 5 Goodwill 25 Other intangible assets 13

Total assets $ 56 Short-term borrowings $ 2 Accounts payable and accrued expenses 4 Deferred income taxes 3 Long-term borrowings 2

Total liabilities $ 11

The identifiable intangibles were primarily related to trade name and technology, which have a weighted-averageamortization period of 10 years.

The goodwill was the result of future cash flows and related fair values of the entity exceeding the fair value of theidentified assets and liabilities, which is not expected to be deducted for tax purposes. The results of King Agro wereincluded in the Company’s consolidated financial statements in the agriculture and turf segment since the date ofacquisition. The pro forma results of operations as if the acquisition had occurred at the beginning of the prior fiscalyear would not differ significantly from the reported results.

(19) In November 2017, the Company sold its construction and forestry retail locations in Florida. At the time of thesale, total assets were $93 million and liabilities were $1 million. The assets consisted of inventory of $61 million,property and equipment – net of $21 million, goodwill of $10 million, and $1 million of other assets. The liabilitiesconsisted of $1 million of accounts payable and accrued expenses. The total proceeds from the sale will beapproximately $105 million, with $55 million received in the first six months of 2018. The remaining sales price isdue based on standard payment terms of new equipment sales to independent dealers. A pretax gain of $13 millionwas recorded in other income in the construction and forestry segment. After the sale, the Company sells equipment,service parts, and provides other services to the purchaser as an independent dealer.

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(20) SUPPLEMENTAL CONSOLIDATING DATA STATEMENT OF INCOME For the Three Months Ended April 29, 2018 and April 30, 2017 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES

2018 2017 2018 2017 Net Sales and Revenues Net sales $ 9,747.0 $ 7,259.8 Finance and interest income 27.8 18.7 $ 812.5 $ 716.4 Other income 202.9 339.6 64.9 61.0

Total 9,977.7 7,618.1 877.4 777.4 Costs and Expenses Cost of sales 7,333.8 5,428.1 Research and development expenses 415.2 325.4 Selling, administrative and general expenses 799.5 644.1 141.5 141.3 Interest expense 78.2 67.0 231.2 169.4 Interest compensation to Financial Services 80.6 60.4 Other operating expenses 66.7 83.2 324.7 307.3

Total 8,774.0 6,608.2 697.4 618.0 Income of Consolidated Group before Income Taxes 1,203.7 1,009.9 180.0 159.4 Provision for income taxes 100.8 309.7 76.3 56.1 Income of Consolidated Group 1,102.9 700.2 103.7 103.3 Equity in Income of Unconsolidated Subsidiaries and Affiliates

Financial Services 104.1 103.5 .4 .2 Other 2.7 4.6

Total 106.8 108.1 .4 .2 Net Income 1,209.7 808.3 104.1 103.5

Less: Net income (loss) attributable to noncontrolling interests 1.4 (.2) Net Income Attributable to Deere & Company $ 1,208.3 $ 808.5 $ 104.1 $ 103.5 * Deere & Company with Financial Services on the equity basis.

The supplemental consolidating data is presented for informational purposes. Transactions between the “Equipment Operations” and “FinancialServices” have been eliminated to arrive at the consolidated financial statements.

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SUPPLEMENTAL CONSOLIDATING DATA (Continued) STATEMENT OF INCOME For the Six Months Ended April 29, 2018 and April 30, 2017 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES

2018 2017 2018 2017 Net Sales and Revenues Net sales $ 15,721.0 $ 11,957.7 Finance and interest income 39.4 40.0 $ 1,589.4 $ 1,403.7 Other income 399.3 597.6 127.7 119.2

Total 16,159.7 12,595.3 1,717.1 1,522.9 Costs and Expenses Cost of sales 12,038.8 9,210.0 Research and development expenses 772.0 637.5 Selling, administrative and general expenses 1,390.2 1,189.3 257.7 264.7 Interest expense 174.2 133.8 425.3 318.1 Interest compensation to Financial Services 142.2 106.1 Other operating expenses 138.9 148.9 635.9 612.5

Total 14,656.3 11,425.6 1,318.9 1,195.3 Income of Consolidated Group before Income Taxes 1,503.4 1,169.7 398.2 327.6 Provision (credit) for income taxes 1,364.7 384.6 (130.0) 110.5 Income of Consolidated Group 138.7 785.1 528.2 217.1 Equity in Income of Unconsolidated Subsidiaries and Affiliates

Financial Services 529.4 217.9 1.2 .8 Other 6.8 3.7

Total 536.2 221.6 1.2 .8 Net Income 674.9 1,006.7 529.4 217.9

Less: Net income (loss) attributable to noncontrolling interests 1.7 (.8) Net Income Attributable to Deere & Company $ 673.2 $ 1,007.5 $ 529.4 $ 217.9 * Deere & Company with Financial Services on the equity basis.

The supplemental consolidating data is presented for informational purposes. Transactions between the “Equipment Operations” and “FinancialServices” have been eliminated to arrive at the consolidated financial statements.

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SUPPLEMENTAL CONSOLIDATING DATA (Continued) CONDENSED BALANCE SHEET (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES April 29 October 29 April 30 April 29 October 29 April 30 2018 2017 2017 2018 2017 2017 Assets Cash and cash equivalents $ 2,988.9 $ 8,168.4 $ 3,343.8 $ 1,212.5 $ 1,166.5 $ 1,182.0 Marketable securities 16.9 20.2 118.1 462.4 431.4 428.2 Receivables from unconsolidated subsidiaries

and affiliates 1,668.0 1,032.1 3,453.0 Trade accounts and notes receivable – net 1,515.9 876.3 742.9 6,436.0 4,134.1 4,867.3 Financing receivables – net 75.7 24,199.8 25,104.1 23,301.1 Financing receivables securitized – net 113.1 4,323.2 4,158.8 4,281.8 Other receivables 1,273.3 1,045.6 801.6 190.1 195.5 136.0 Equipment on operating leases – net 6,723.1 6,593.7 5,923.9 Inventories 6,888.9 3,904.1 4,114.8 Property and equipment – net 5,696.0 5,017.3 4,909.7 46.9 50.4 50.2 Investments in unconsolidated subsidiaries

and affiliates 4,915.9 4,812.3 4,612.2 15.3 13.8 12.5 Goodwill 3,188.7 1,033.3 806.2 Other intangible assets – net 1,692.2 218.0 90.8 Retirement benefits 617.9 538.1 176.2 15.0 16.9 18.9 Deferred income taxes 2,065.5 3,098.8 3,651.1 76.4 79.8 76.3 Other assets 1,186.3 973.9 901.1 577.3 651.4 636.8 Total Assets $ 33,903.2 $ 30,738.4 $ 27,721.5 $ 44,278.0 $ 42,596.4 $ 40,915.0 Liabilities and Stockholders’ Equity Liabilities Short-term borrowings $ 659.1 $ 375.5 $ 276.6 $ 10,235.5 $ 9,659.8 $ 7,687.0 Short-term securitization borrowings 113.2 4,287.9 4,118.7 4,224.6 Payables to unconsolidated subsidiaries

and affiliates 145.7 121.9 101.6 1,633.7 996.2 3,418.1 Accounts payable and accrued expenses 9,265.7 7,718.1 6,765.0 2,030.8 1,827.1 1,587.1 Deferred income taxes 462.9 115.6 89.7 523.2 857.7 764.8 Long-term borrowings 5,536.5 5,490.9 4,520.4 20,742.1 20,400.4 18,732.7 Retirement benefits and other liabilities 7,285.5 7,341.9 8,260.4 95.6 92.9 91.7

Total liabilities 23,468.6 21,163.9 20,013.7 39,548.8 37,952.8 36,506.0 Commitments and contingencies (Note 14) Redeemable noncontrolling interest 14.6 14.0 14.0 Stockholders’ Equity Common stock, $1 par value (issued shares at April

29, 2018 – 536,431,204) 4,423.4 4,280.5 4,165.4 2,099.1 2,099.1 2,079.1 Common stock in treasury (15,425.9) (15,460.8) (15,521.0) Retained earnings 25,586.0 25,301.3 24,535.8 2,872.4 2,782.0 2,608.1 Accumulated other comprehensive income (loss) (4,173.2) (4,563.7) (5,495.5) (242.3) (237.5) (278.2) Total Deere & Company stockholders' equity 10,410.3 9,557.3 7,684.7 4,729.2 4,643.6 4,409.0 Noncontrolling interests 9.7 3.2 9.1

Total stockholders’ equity 10,420.0 9,560.5 7,693.8 4,729.2 4,643.6 4,409.0 Total Liabilities and Stockholders’ Equity $ 33,903.2 $ 30,738.4 $ 27,721.5 $ 44,278.0 $ 42,596.4 $ 40,915.0 * Deere & Company with Financial Services on the equity basis.

The supplemental consolidating data is presented for informational purposes. Transactions between the "Equipment Operations" and "FinancialServices" have been eliminated to arrive at the consolidated financial statements.

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SUPPLEMENTAL CONSOLIDATING DATA (Continued) STATEMENT OF CASH FLOWS For the Six Months Ended April 29, 2018 and April 30, 2017 (In millions of dollars) Unaudited EQUIPMENT OPERATIONS* FINANCIAL SERVICES

2018 2017 2018 2017 Cash Flows from Operating Activities Net income $ 674.9 $ 1,006.7 $ 529.4 $ 217.9 Adjustments to reconcile net income to net cash provided by operating

activities: Provision (credit) for credit losses 9.2 (.2) 17.6 32.8 Provision for depreciation and amortization 483.8 427.0 529.3 476.9 Gain on sale of affiliates and investments (13.2) (281.4) Undistributed earnings of unconsolidated subsidiaries and affiliates (93.8) 59.8 (1.0) (.6) Provision (credit) for deferred income taxes 934.5 (118.8) (330.2) 18.4 Changes in assets and liabilities:

Trade receivables (188.5) (87.7) Inventories (1,439.5) (771.8) Accounts payable and accrued expenses 578.0 200.0 84.2 18.0 Accrued income taxes payable/receivable 147.4 191.5 5.6 3.6 Retirement benefits 62.7 111.0 4.9 4.6

Other (106.1) (49.2) 72.0 104.8 Net cash provided by operating activities 1,049.4 686.9 911.8 876.4

Cash Flows from Investing Activities Collections of receivables (excluding trade and wholesale) 9,486.7 8,833.8 Proceeds from maturities and sales of marketable securities 3.6 7.9 20.2 33.4 Proceeds from sales of equipment on operating leases 748.6 786.4 Proceeds from sales of businesses and unconsolidated affiliates, net of

cash sold 55.0 113.9 Cost of receivables acquired (excluding trade and wholesale) (8,918.8) (8,238.0) Acquisitions of businesses, net of cash acquired (5,171.1) Purchases of marketable securities (62.8) (43.7) Purchases of property and equipment (351.6) (252.2) (.6) (.8) Cost of equipment on operating leases acquired (1,409.3) (1,355.6) Increase in trade and wholesale receivables (2,293.8) (1,012.7) Other 44.2 (18.1) (47.0) (.6)

Net cash used for investing activities (5,419.9) (148.5) (2,476.8) (997.8) Cash Flows from Financing Activities Increase (decrease) in total short-term borrowings (67.1) (7.4) 266.2 190.5 Change in intercompany receivables/payables (641.6) (287.5) 641.6 287.5 Proceeds from long-term borrowings 107.1 19.1 3,970.6 2,642.5 Payments of long-term borrowings (85.3) (24.7) (2,803.4) (2,717.5) Proceeds from issuance of common stock 198.6 383.6 Repurchases of common stock (60.6) (6.2) Dividends paid (386.9) (379.5) (439.1) (280.2) Other (25.5) (25.8) (18.5) (13.9)

Net cash provided by (used for) financing activities (961.3) (328.4) 1,617.4 108.9

Effect of Exchange Rate Changes on Cash and Cash Equivalents 152.3 (6.7) (6.4) (.8) Net Increase (Decrease) in Cash and Cash Equivalents (5,179.5) 203.3 46.0 (13.3) Cash and Cash Equivalents at Beginning of Period 8,168.4 3,140.5 1,166.5 1,195.3 Cash and Cash Equivalents at End of Period $ 2,988.9 $ 3,343.8 $ 1,212.5 $ 1,182.0

* Deere & Company with Financial Services on the equity basis.The supplemental consolidating data is presented for informational purposes. Transactions between the “Equipment Operations” and “FinancialServices” have been eliminated to arrive at the consolidated financial statements.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS

RESULTS OF OPERATIONS

Overview

Organization

The Company’s equipment operations generate revenues and cash primarily from the sale of equipment to John Deeredealers and distributors. The equipment operations manufacture and distribute a full line of agricultural equipment; a varietyof commercial and consumer equipment; and a broad range of equipment for construction, road building, and forestry. TheCompany’s financial services primarily provide credit services, which mainly finance sales and leases of equipment by JohnDeere dealers and trade receivables purchased from the equipment operations. In addition, financial services offers extendedequipment warranties. The information in the following discussion is presented in a format that includes informationgrouped as consolidated, equipment operations, and financial services. The Company also views its operations as consistingof two geographic areas, the U.S. and Canada, and outside the U.S. and Canada. The Company’s operating segments consistof agriculture and turf, construction and forestry, and financial services.

Trends and Economic Conditions

Industry sales of agricultural machinery in the U.S. and Canada are forecast to increase approximately 10 percent for 2018.Industry sales in the European Union (EU) 28 nations are forecast to increase approximately 5 percent. In South America,industry sales of tractors and combines are projected to be about the same or increase about 5 percent. Asian sales areforecast to be in line with 2017. Industry sales of turf and utility equipment in the U.S. and Canada are expected to be aboutthe same or increase 5 percent for 2018. The Company’s agriculture and turf segment sales increased 22 percent in thesecond quarter and 20 percent for the first six months. These sales are forecast to increase about 14 percent for fiscal year2018. Construction equipment markets reflect continued improvement in demand driven by higher housing starts in the U.S.,increased activity in the oil and gas sector, and economic growth worldwide. In forestry, global industry sales are expected tobe up about 10 percent. The Company’s construction and forestry segment sales increased 84 percent in the secondquarter and 73 percent for the first six months, with Wirtgen adding 60 percent and 44 percent for the respective periods.These sales are forecast to increase about 83 percent in 2018, with Wirtgen adding 56 percent to the segment’s sales. Netincome attributable to Deere & Company for the Company’s financial services operations is forecast to be approximately$800 million in 2018, which includes a provisional income tax benefit of $229 million associated with tax reform.

Items of concern include the uncertainty of the effectiveness of governmental actions in respect to monetary and fiscalpolicies, the impact of sovereign debt, eurozone issues, capital market disruptions, trade agreements, labor supply issues,changes in demand and pricing for used equipment, and geopolitical events. Significant fluctuations in foreign currencyexchange rates and volatility in the price of many commodities could also impact the Company’s results.

The Company reported higher second quarter net sales and net income from strengthening demand. Farm machinery sales inboth North and South America are improving and construction equipment sales are continuing to increase sharply. TheCompany made significant progress working with suppliers to increase production, but is experiencing higher raw materialand freight costs. The more durable business model as well as investments in new products and businesses allows theCompany to remain confident in the present direction and believe it will continue to deliver value to customers and investors.

2018 Compared with 2017

Net income attributable to Deere & Company was $1,208 million, or $3.67 per share, for the second quarter of 2018,compared with $808.5 million, or $2.50 per share, for the same period last year. For the first six months of 2018, net incomeattributable to Deere & Company was $673.2 million, or $2.05 per share, compared with $1,007 million, or $3.14 per share,last year. Affecting results for the second quarter and first six months of 2018 were provisional adjustments to the provisionfor income taxes due to tax reform. Second quarter results included a favorable net adjustment to provisional income taxexpense of $174 million, while the first six months reflected an unfavorable net provisional income tax expense of $803million (see Note 8).

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Worldwide net sales and revenues increased 29 percent to $10,720 million for the second quarter this year, compared with$8,287 million a year ago, and increased 27 percent to $17,633 million for the first six months, compared with $13,912million last year. Net sales of the worldwide equipment operations increased 34 percent to $9,747 million for the secondquarter and 31 percent to $15,721 million for the first six months, compared with $7,260 million and $11,958 million for thesame periods last year. The Company’s acquisition of Wirtgen in December 2017 (see Note 18) added 12 percent to net salesfor the quarter and 9 percent for the first six months. Equipment net sales in the U.S. and Canada increased 27 percent for thesecond quarter and 26 percent year to date, with Wirtgen adding 5 percent and 3 percent for the respective periods. Outsidethe U.S. and Canada, net sales increased 45 percent for the second quarter and 40 percent for the first six months, withWirtgen adding 23 percent and 19 percent for both periods. Net sales included a favorable currency translation effect of 7percent for the second quarter and 6 percent for the first six months.

The Company’s equipment operations reported operating profit of $1,315 million for the second quarter of 2018 and $1,734million for the first six months, compared with $1,120 million and $1,375 million, respectively, last year. Wirtgen, whoseresults are included in these amounts, had operating profit of $41 million for the quarter and an operating loss of $51 millionfor the first six months. The Wirtgen year to date operating loss was attributable to the unfavorable effects of purchaseaccounting and acquisition costs. Excluding Wirtgen results, the improvement for both periods was primarily driven byhigher shipment volumes and lower warranty costs, partially offset by higher research and development expenses and higherproduction costs. The corresponding periods of 2017 included a gain on the sale of SiteOne Landscapes Supply, Inc.(SiteOne). Additionally, in the first six months of 2017 Deere incurred expenses associated with a voluntary employee-separation program.

Net income of the Company’s equipment operations was $1,103 million for the second quarter and $139 million for the firstsix months, compared with $700 million and $785 million for the corresponding periods of 2017. In addition to the operatingfactors previously mentioned, the quarter was favorably affected by $207 million and the six month period unfavorablyaffected by $1,032 million due to provisional income tax adjustments related to tax reform.

The Company’s financial services operations reported net income attributable to Deere & Company of $104.1 million for thesecond quarter and $529.4 million for the first six months, compared with $103.5 million and $217.9 million for the sameperiods last year. Results for both periods benefited from a higher average portfolio, lower losses on lease residual values,and a lower provision for credit losses, partially offset by a less favorable financing spread. Additionally, provisional incometax adjustments related to tax reform had an unfavorable effect of $33.2 million for the quarter and a favorable effect of$228.8 million for six months.

Business Segment Results

· Agriculture and Turf. Segment sales increased 22 percent for the quarter and 20 percent for first six months due tohigher shipment volumes and the favorable effects of currency translation. Operating profit was $1,056 million for thequarter and $1,443 million year to date, compared with respective totals of $1,009 million and $1,227 million for thesame periods last year. Results for the quarter were helped by higher shipment volumes, partially offset by higherresearch and development expenses and production costs. For the first six months, results benefited from highershipment volumes and lower warranty related expenses, partially offset by higher research and development expensesand production costs. Prior year periods benefited from gains on the SiteOne sale, while the first six months of last yearwere affected by voluntary employee-separation expenses.

· Construction and Forestry. Segment sales increased 84 percent for the quarter and 73 percent for six months, withWirtgen adding 60 percent and 44 percent for the respective periods. Also helping sales for both periods were highershipment volumes and the favorable effects of currency translation. Operating profit was $259 million for the quarter and$291 million for six months, compared with $111 million and $148 million last year. Wirtgen contributed operatingprofit of $41 million for the quarter and a six month operating loss of $51 million related to the effects of purchaseaccounting and acquisition costs. Excluding Wirtgen, the improvements were primarily driven by higher shipmentvolumes and lower warranty expenses, partially offset by higher production costs. Results for the first six months of lastyear also included voluntary employee-separation costs.

· Financial Services. The operating profit of the financial services segment was $179 million for the second quarter and$396 million for the first six months of 2018, compared with $158 million and $325 million in the same periods last year.Results for both periods benefited from a higher average portfolio, lower losses on lease residual values, and a lowerprovision for credit losses, partially offset by a less favorable financing spread. Total financial services revenues,including intercompany revenues, increased 13 percent to $877 million in the current quarter from $777 million in thesecond quarter of 2017 and increased 13 percent to $1,717 million in the first six months of 2018 compared to $1,523million last year. The average balance of receivables and leases financed

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was 8 percent higher in the second quarter and 7 percent higher in the first six months of 2018, compared with the sameperiods last year. Interest expense increased 36 percent in the second quarter and 34 percent in the first six months of2018 primarily as a result of higher average borrowing rates and higher average borrowings. The financial services’consolidated ratio of earnings to fixed charges was 1.79 to 1 for the second quarter this year, compared with 1.98 to 1 inthe same period last year. The ratio was 1.95 to 1 for the first six months this year, compared to 2.08 to 1 for the sameperiod last year.

The cost of sales to net sales ratios for the second quarter and first six months of 2018 were 75.2 percent and 76.6 percent,respectively, compared to 74.8 percent and 77.0 percent for the same periods last year. The increase in the second quarterwas primarily driven by the unfavorable effects of purchase accounting related to Wirtgen (see Note 18) and higherproduction costs, partially offset by lower warranty costs. The improvement in the first six months was primarily due tolower warranty costs and the expenses incurred in 2017 associated with a voluntary employee-separation program, partiallyoffset by higher production costs and the unfavorable effects of purchase accounting related to Wirtgen.

Other income decreased in the second quarter and first six months of 2018 primarily due to the gains on the sale of a partialinterest in SiteOne in 2017. Research and development expenses increased in both periods primarily as a result of spendingto support new products and the impact of acquisitions. Selling, administrative and general expenses increased in the secondquarter primarily due to the Wirtgen acquisition. These expenses increased in the first six months mainly due to the Wirtgenacquisition and acquisition related costs, and higher incentive compensation expenses, partially offset by voluntaryemployee-separation program expenses in 2017. Other operating expenses decreased in the second quarter primarily due tothe favorable effect of currency translation and lower losses on lease residual values, partially offset by higher depreciationon operating leases. Other operating expenses increased in the first six months primarily due to higher depreciation onoperating leases and acquisition related costs, partially offset by the favorable effect of currency translation and lower losseson lease residual values.

Market Conditions and Outlook

Company equipment sales are projected to increase by about 30 percent for fiscal 2018 and by about 35 percent for the thirdquarter compared with the same periods of 2017. Of these amounts, Wirtgen is expected to add about 12 percent to Deeresales for the full year and about 18 percent for the third quarter. Also included in the forecast is a positive foreign currencytranslation effect of about 1 percent for the year and third quarter. Net sales and revenues are expected to increase by about26 percent for fiscal 2018 with net income attributable to Deere & Company forecast to be about $2,300 million. TheCompany’s net income forecast includes $803 million of provisional income tax expense associated with tax reform,representing discrete items for the remeasurement of the Company’s net deferred tax assets to the new U.S. corporate taxrate and a one-time deemed earnings repatriation tax. The current outlook for net income compares with previous guidanceof $2,100 million, which included $977 million of provisional income tax expense.

· Agriculture and Turf. The Company’s worldwide sales of agriculture and turf equipment are forecast to increase byabout 14 percent for fiscal year 2018, including a positive currency translation effect of about 1 percent. Industry salesfor agricultural equipment in the U.S. and Canada are forecast to be up about 10 percent for 2018, led by higherdemand for large equipment. Full year industry sales in the EU28 member nations are forecast to be up about 5percent due to favorable conditions in the dairy and livestock sectors. South American industry sales of tractors andcombines are projected to be flat to up 5 percent benefiting from strength in Brazil. Asian sales are forecast to be inline with last year. Industry sales of turf and utility equipment in the U.S. and Canada are expected to be flat to up 5percent for 2018 .

· Construction and Forestry. The Company’s worldwide sales of construction and forestry equipment are anticipatedto be up about 83 percent for 2018, including a positive currency translation effect of about 1 percent. Wirtgen isexpected to add about 56 percent to the division’s sales for the year. The outlook reflects continued improvement indemand driven by higher housing starts in the U.S., increased activity in the oil and gas sector, and economic growthworldwide. In forestry, global industry sales are expected to be up about 10 percent mainly as a result of improveddemand throughout the world, led by North America.

· Financial Services. Fiscal year 2018 net income attributable to Deere & Company for the financial services segmentis expected to be approximately $800 million, including a provisional income tax benefit of $229 million associatedwith tax reform. Results are expected to benefit from a higher average portfolio and lower losses on lease residualvalues, partially offset by less favorable financing spreads and increased selling, administrative and general expenses.The financial services net income outlook provided in the first quarter was $840 million. This forecast included aprovisional tax benefit estimate of $262 million for remeasurement

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of the segment’s net deferred tax liability to the new U.S. corporate tax rate and a one-time deemed earningsrepatriation tax.

Safe Harbor Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements under “Overview,” “MarketConditions and Outlook,” and other forward-looking statements herein that relate to future events, expectations, and trendsinvolve factors that are subject to change, and risks and uncertainties that could cause actual results to differ materially.Some of these risks and uncertainties could affect particular lines of business, while others could affect all of the Company’sbusinesses.

The Company’s agricultural equipment business is subject to a number of uncertainties including the factors that affectfarmers’ confidence and financial condition. These factors include demand for agricultural products, world grain stocks,weather conditions, soil conditions, harvest yields, prices for commodities and livestock, crop and livestock productionexpenses, availability of transport for crops, the growth and sustainability of non-food uses for some crops (including ethanoland biodiesel production), real estate values, available acreage for farming, the land ownership policies of governments,changes in government farm programs and policies, international reaction to such programs, changes in environmentalregulations and their impact on farming practices; changes in and effects of crop insurance programs, global tradeagreements (including the North American Free Trade Agreement and the Trans-Pacific Partnership), trade restrictions andtariffs, animal diseases and their effects on poultry, beef and pork consumption and prices, crop pests and diseases, and thelevel of farm product exports (including concerns about genetically modified organisms).

Factors affecting the outlook for the Company’s turf and utility equipment include consumer confidence, weather conditions,customer profitability, labor supply, consumer borrowing patterns, consumer purchasing preferences, housing starts andsupply, infrastructure investment, spending by municipalities and golf courses, and consumable input costs.

Consumer spending patterns, real estate and housing prices, the number of housing starts, interest rates and the levels ofpublic and non-residential construction are important to sales and results of the Company’s construction and forestryequipment. Prices for pulp, paper, lumber, and structural panels are important to sales of forestry equipment.

All of the Company’s businesses and its results are affected by general economic conditions in the global markets andindustries in which the Company operates; customer confidence in general economic conditions; government spending andtaxing; foreign currency exchange rates and their volatility, especially fluctuations in the value of the U.S. dollar; interestrates; inflation and deflation rates; changes in weather patterns; the political and social stability of the global markets inwhich the Company operates; the effects of, or response to, terrorism and security threats; wars and other conflicts; naturaldisasters; and the spread of major epidemics.

Significant changes in market liquidity conditions, changes in the Company’s credit ratings and any failure to comply withfinancial covenants in credit agreements could impact access to funding and funding costs, which could reduce theCompany’s earnings and cash flows. Financial market conditions could also negatively impact customer access to capital forpurchases of the Company’s products and customer confidence and purchase decisions, borrowing and repayment practices,and the number and size of customer loan delinquencies and defaults. A debt crisis, in Europe or elsewhere, could negativelyimpact currencies, global financial markets, social and political stability, funding sources and costs, asset and obligationvalues, customers, suppliers, demand for equipment, and Company operations and results. The Company’s investmentmanagement activities could be impaired by changes in the equity, bond, and other financial markets, which wouldnegatively affect earnings.

The anticipated withdrawal of the United Kingdom from the European Union and the perceptions as to the impact of thewithdrawal may adversely affect business activity, political stability, and economic conditions in the United Kingdom, theEuropean Union, and elsewhere. The economic conditions and outlook could be further adversely affected by (i) theuncertainty concerning the timing and terms of the exit, (ii) new or modified trading arrangements between the UnitedKingdom and other countries, (iii) the risk that one or more other European Union countries could come under increasingpressure to leave the European Union, or (iv) the risk that the euro as the single currency of the Eurozone could cease toexist. Any of these developments, or the perception that any of these developments are likely to occur, could affect economicgrowth or business activity in the United Kingdom or the European Union, and could result in the relocation of businesses,cause business interruptions, lead to economic recession or depression, and impact the stability of the financial markets,availability of credit, currency exchange rates, interest rates, financial institutions, and political, financial, and monetarysystems. Any of these developments could affect our businesses, liquidity, results of operations, and financial position.

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Additional factors that could materially affect the Company’s operations, access to capital, expenses, and results includechanges in, uncertainty surrounding and the impact of governmental trade, banking, monetary and fiscal policies, includingfinancial regulatory reform and its effects on the consumer finance industry, derivatives, funding costs and other areas, andgovernmental programs, policies, tariffs, and sanctions in particular jurisdictions or for the benefit of certain industries orsectors; retaliatory actions to such changes in trade, banking, monetary and fiscal policies; actions by central banks; actionsby financial and securities regulators; actions by environmental, health and safety regulatory agencies, including thoserelated to engine emissions, carbon, and other greenhouse gas emissions, noise, and the effects of climate change; changes toGPS radio frequency bands or their permitted uses; changes in labor and immigration regulations; changes to accountingstandards; changes in tax rates, estimates, laws and regulations and Company actions related thereto; changes to andcompliance with privacy regulations; compliance with U.S. and foreign laws when expanding to new markets and otherwise;and actions by other regulatory bodies.

Other factors that could materially affect results include production, design, and technological innovations and difficulties,including capacity and supply constraints and prices; the loss of or challenges to intellectual property rights whether throughtheft, infringement, counterfeiting or otherwise; the availability and prices of strategically sourced materials, components,and whole goods; delays or disruptions in the Company’s supply chain or the loss of liquidity by suppliers; disruptions ofinfrastructures that support communications, operations or distribution; the failure of suppliers or the Company to complywith laws, regulations, and Company policy pertaining to employment, human rights, health, safety, the environment, anti-corruption, privacy and data protection, and other ethical business practices; events that damage the Company’s reputation orbrand; significant investigations, claims, lawsuits or other legal proceedings; start-up of new plants and products; the successof new product initiatives; changes in customer product preferences and sales mix; gaps or limitations in rural broadbandcoverage, capacity and speed needed to support technology solutions; oil and energy prices, supplies, and volatility; theavailability and cost of freight; actions of competitors in the various industries in which the Company competes, particularlyprice discounting; dealer practices especially as to levels of new and used field inventories; changes in demand and pricingfor used equipment and resulting impacts on lease residual values; labor relations and contracts; changes in the ability toattract, train, and retain qualified personnel; acquisitions and divestitures of businesses; greater than anticipated transactioncosts; the integration of new businesses; the failure or delay in closing or realizing anticipated benefits of acquisitions, jointventures or divestitures; the implementation of organizational changes; the failure to realize anticipated savings or benefits ofcost reduction, productivity, or efficiency efforts; difficulties related to the conversion and implementation of enterpriseresource planning systems; security breaches, cybersecurity attacks, technology failures and other disruptions to theCompany’s and suppliers’ information technology infrastructure; changes in Company declared dividends and commonstock issuances and repurchases; changes in the level and funding of employee retirement benefits; changes in market valuesof investment assets, compensation, retirement, discount, and mortality rates which impact retirement benefit costs; andsignificant changes in health care costs.

The liquidity and ongoing profitability of John Deere Capital Corporation and other credit subsidiaries depend largely ontimely access to capital in order to meet future cash flow requirements, and to fund operations, costs, and purchases of theCompany’s products. If general economic conditions deteriorate or capital markets become more volatile, funding could beunavailable or insufficient. Additionally, customer confidence levels may result in declines in credit applications andincreases in delinquencies and default rates, which could materially impact write-offs and provisions for credit losses.

The Company’s outlook is based upon assumptions relating to the factors described above, which are sometimes based uponestimates and data prepared by government agencies. Such estimates and data are often revised. The Company, except asrequired by law, undertakes no obligation to update or revise its outlook, whether as a result of new developments orotherwise. Further information concerning the Company and its businesses, including factors that could materially affect theCompany’s financial results, is included in the Company’s other filings with the SEC (including, but not limited to, thefactors discussed in Item 1A. Risk Factors of the Company’s most recent annual report on Form 10-K and quarterly reportson Form 10-Q).

Critical Accounting Policies

See the Company’s critical accounting policies discussed in the Management’s Discussion and Analysis of the most recentannual report filed on Form 10-K. There have been no material changes to these policies.

CAPITAL RESOURCES AND LIQUIDITY

The discussion of capital resources and liquidity has been organized to review separately, where appropriate, the Company’sconsolidated totals, equipment operations, and financial services operations.

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Consolidated

Negative cash flows from consolidated operating activities in the first six months of 2018 were $1,222 million. This cashoutflow resulted primarily from a seasonal increase in inventories and trade receivables, along with an increase in overalldemand, partially offset by net income adjusted for non-cash provisions, an increase in accounts payable and accruedexpenses, a change in accrued income taxes payable/receivable, and a change in net retirement benefits. Cash outflows frominvesting activities were $5,153 million in the first six months of 2018, primarily due to acquisitions of businesses, net ofcash acquired, of $5,171 million (see Note 18), purchases of property and equipment of $352 million, and purchases ofmarketable securities exceeding proceeds from maturities and sales by $39 million. Partially offsetting these cash outflowswere cash inflows from the collections of receivables (excluding receivables related to sales) and proceeds from sales ofequipment on operating leases exceeding the cost of receivables and equipment on operating leases acquired by $422 millionand the proceeds from the sales of businesses and affiliates, net of cash sold, of $55 million. Positive cash flows fromfinancing activities were $1,095 million in the first six months of 2018 primarily due to an increase in borrowings of $1,388million and proceeds from issuance of common stock of $199 million (resulting from the exercise of stock options), partiallyoffset by dividends paid of $387 million and repurchases of common stock of $61 million. Cash and cash equivalentsdecreased $5,134 million during the first six months this year.

In the second quarter of 2018, a committee of the Company’s Board of Directors approved a voluntary $1,000 millioncontribution to its U.S. pension and postretirement plans in 2018. The Company contributed $50 million of the voluntaryamount to its plans in the second quarter with the remainder anticipated during the third quarter. These voluntarycontributions will result in a tax deduction applicable to the 2017 tax year.

Negative cash flows from consolidated operating activities in the first six months of 2017 were $164 million. The cashoutflows resulted primarily from an increase in inventories due to higher overall demand and a seasonal increase inreceivables related to sales, which were partially offset by net income adjusted for non-cash provisions, a change in accruedincome taxes payable/receivable, a change in net retirement benefits, and an increase in accounts payable and accruedexpenses. Cash inflows from investing activities were $301 million in the first six months of 2017, primarily due tocollections of receivables (excluding receivables related to sales) and proceeds from sales of equipment on operating leasesexceeding the cost of receivables and equipment on operating leases acquired by $461 million and proceeds from the sales ofbusinesses and unconsolidated affiliates, net of cash sold, of $114 million. Partially offsetting these cash inflows were cashoutflows from purchases of property and equipment of $253 million. Positive cash flows from financing activities were $61million in the first six months of 2017 primarily due to proceeds from issuance of common stock of $384 million (resultingfrom the exercise of stock options) and an increase in borrowings of $103 million, partially offset by dividends paid of $380million. Cash and cash equivalents increased $190 million during the first six months of 2017.

The Company has access to most global markets at a reasonable cost and expects to have sufficient sources of global fundingand liquidity to meet its funding needs. Sources of liquidity for the Company include cash and cash equivalents, marketablesecurities, funds from operations, the issuance of commercial paper and term debt, the securitization of retail notes (bothpublic and private markets), and committed and uncommitted bank lines of credit. The Company’s commercial paperoutstanding at April 29, 2018, October 30, 2017, and April 30, 2017 was $3,481 million, $3,439 million, and $2,302 million,respectively, while the total cash and cash equivalents and marketable securities position was $4,681 million, $9,787 million,and $5,072 million, respectively. The decrease of $5,106 million during the first six months of 2018 is primarily due to theWirtgen acquisition (see Note 18). The total cash and cash equivalents and marketable securities held by foreignsubsidiaries, in which earnings are considered indefinitely reinvested, was $1,137 million, $3,386 million, and $2,177million at April 29, 2018, October 30, 2017, and April 30, 2017, respectively.

Lines of Credit . The Company also has access to bank lines of credit with various banks throughout the world. Worldwidelines of credit totaled $8,073 million at April 29, 2018, $4,019 million of which were unused. For the purpose of computingunused credit lines, commercial paper and short-term bank borrowings, excluding secured borrowings and the currentportion of long-term borrowings, were primarily considered to constitute utilization. Included in the total credit lines at April29, 2018 were 364-day credit facility agreements of $750 million expiring in October 2018, and $1,750 million expiring inApril 2019. In addition, total credit lines included long-term credit facility agreements of $2,500 million expiring in April2021 and $2,500 million expiring in April 2022. These credit agreements require John Deere Capital Corporation (CapitalCorporation) to maintain its consolidated ratio of earnings to fixed charges at not less than 1.05 to 1 for each fiscal quarterand the ratio of senior debt, excluding securitization indebtedness, to capital base (total subordinated debt and stockholder’sequity excluding accumulated other comprehensive income (loss)) at not more than 11 to 1 at the end of any fiscal quarter.The credit agreements also require the equipment operations to maintain a ratio of total debt to total capital (total debt andstockholders’ equity excluding accumulated other comprehensive income (loss)) of 65 percent or less at the end of eachfiscal

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quarter. Under this provision, the Company’s excess equity capacity and retained earnings balance free of restriction at April29, 2018 was $11,196 million. Alternatively under this provision, the equipment operations had the capacity to incuradditional debt of $20,793 million at April 29, 2018. All of these requirements of the credit agreement have been met duringthe periods included in the financial statements.

Debt Ratings . To access public debt capital markets, the Company relies on credit rating agencies to assign short-term andlong-term credit ratings to the Company’s securities as an indicator of credit quality for fixed income investors. A securityrating is not a recommendation by the rating agency to buy, sell or hold Company securities. A credit rating agency maychange or withdraw Company ratings based on its assessment of the Company’s current and future ability to meet interestand principal repayment obligations. Each agency’s rating should be evaluated independently of any other rating. Lowercredit ratings generally result in higher borrowing costs, including costs of derivative transactions, and reduced access todebt capital markets. The senior long-term and short-term debt ratings and outlook currently assigned to unsecured Companydebt securities by the rating agencies engaged by the Company are as follows:

Senior Long-Term Short-Term Outlook Fitch Ratings A F1 Stable Moody’s Investors Service, Inc. A2 Prime-1 Stable Standard & Poor’s A A-1 Stable

Trade accounts and notes receivable primarily arise from sales of goods to independent dealers. Trade receivablesincreased $2,586 million during the first six months of 2018, primarily due to the Wirtgen acquisition, a seasonal increase,higher shipment volumes, and currency translation. These receivables increased $2,029 million, compared to a year ago,primarily due to the Wirtgen acquisition, higher shipment volumes, and currency translation. The ratios of worldwide tradeaccounts and notes receivable to the last 12 months’ net sales were 22 percent at April 29, 2018, compared to 15 percent atOctober 30, 2017 and 19 percent at April 30, 2017. Agriculture and turf trade receivables increased $1,073 million andconstruction and forestry trade receivables increased $956 million, compared to a year ago. The percentage of totalworldwide trade receivables outstanding for periods exceeding 12 months was 1 percent at April 29, 2018, 1 percent atOctober 30, 2017, and 2 percent at April 30, 2017.

Deere & Company stockholders’ equity was $10,410 million at April 29, 2018, compared with $9,557 million at October 30, 2017 and $7,685 million at April 30, 2017. The increase of $853 million during the first six months of 2018 resultedprimarily from net income attributable to Deere & Company of $673 million, a change in the cumulative translationadjustment of $225 million, a change in the retirement benefits adjustment of $165 million, an increase in common stock of$143 million, and a decrease in treasury stock of $35 million, partially offset by dividends declared of $390 million.

Equipment Operations

The Company’s equipment businesses are capital intensive and are subject to seasonal variations in financing requirementsfor inventories and certain receivables from dealers. The equipment operations sell a significant portion of their tradereceivables to financial services. To the extent necessary, funds provided from operations are supplemented by externalfinancing sources.

Cash provided by operating activities of the equipment operations, including intercompany cash flows, in the first six monthsof 2018 was $1,049 million. This resulted primarily from cash inflows from net income adjusted for non-cash provisions, anincrease in accounts payable and accrued expenses, a change in accrued income taxes payable/receivable, and a change innet retirement benefits. Partially offsetting these operating cash inflows were cash outflows from a seasonal increase ininventories and trade receivables, along with an increase in overall demand. Cash and cash equivalents decreased $5,180million in the first six months of 2018, primarily due to the Wirtgen acquisition of $5,130 million (see Note 18).

Cash provided by operating activities of the equipment operations, including intercompany cash flows, in the first six monthsof 2017 was $687 million. This resulted primarily from cash inflows from net income adjusted for non-cash provisions, anincrease in accounts payable and accrued expenses, a change in accrued income taxes payable/receivable, and a change innet retirement benefits. Partially offsetting these operating cash inflows were cash outflows from an increase in inventoriesand a seasonal increase in trade receivables. Cash and cash equivalents increased $203 million in the first six months of2017.

Trade receivables held by the equipment operations increased $640 million during the first six months and increased $773million from a year ago. The increase in both periods was due primarily to the Wirtgen acquisition. The

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equipment operations sell a significant portion of their trade receivables to financial services. See the previous consolidateddiscussion of trade receivables.

Inventories increased by $2,985 million during the first six months, primarily due to the Wirtgen acquisition and a seasonalincrease. Inventories increased by $2,774 million compared to a year ago, primarily due to the Wirtgen acquisition andhigher production volumes based on increased demand. Most of these inventories are valued on the last-in, first-out (LIFO)method. The ratios of inventories on a first-in, first-out (FIFO) basis (see Note 12), which approximates current cost, to thelast 12 months’ cost of sales were 37 percent at April 29, 2018, compared to 27 percent at October 30, 2017 and 30 percentat April 30, 2017.

Total interest-bearing debt of the equipment operations was $6,309 million at April 29, 2018, compared with $5,866 millionat October 30, 2017 and $4,797 million at April 30, 2017. The ratios of debt to total capital (total interest-bearing debt andstockholders’ equity) were 38 percent, 38 percent, and 38 percent at April 29, 2018, October 30, 2017, and April 30, 2017,respectively.

Property and equipment cash expenditures for the equipment operations in the first six months of 2018 were $352 million,compared with $252 million in the same period last year. Capital expenditures for the equipment operations in 2018 areestimated to be approximately $925 million.

Financial Services

The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable andlease portfolios. Their primary sources of funds for this purpose are a combination of commercial paper, term debt,securitization of retail notes, equity capital, and borrowings from Deere & Company.

During the first six months of 2018, the cash provided by operating activities and financing activities was used primarily toincrease trade and wholesale receivables. Cash flows provided by operating activities, including intercompany cash flows,were $912 million in the first six months. Cash used for investing activities totaled $2,477 million in the first six months of2018 primarily due to an increase in trade and wholesale receivables of $2,294 million and the cost of receivables (excludingtrade and wholesale) and equipment on operating leases acquired exceeding the collection of these receivables and proceedsfrom sales of equipment on operating leases by $93 million. Cash provided by financing activities totaled $1,617 million,resulting primarily from an increase in external borrowings of $1,433 million and an increase in borrowings from Deere &Company of $642 million, partially offset by dividends paid to Deere & Company of $439 million. Cash and cashequivalents increased $46 million in the first six months of 2018.

During the first six months of 2017, the cash provided by operating activities was used primarily to increase leases and tradeand wholesale receivables. Cash flows provided by operating activities, including intercompany cash flows, were $876million in the first six months of 2017. Cash used for investing activities totaled $998 million in the first six months of 2017primarily due to an increase in trade and wholesale receivables of $1,013 million, partially offset by the collection ofreceivables (excluding trade and wholesale) and proceeds from sales of equipment on operating leases exceeding the cost ofthese receivables and equipment on operating leases acquired by $27 million. Cash provided by financing activities totaled$109 million, resulting primarily from an increase in borrowings from Deere & Company of $288 million and an increase inexternal borrowings of $116 million, partially offset by dividends paid to Deere & Company of $280 million. Cash and cashequivalents decreased $13 million in the first six months of 2017.

Receivables and leases held by the financial services operations consist of retail notes originated in connection with retailsales of new and used equipment by dealers of John Deere products, retail notes from non-Deere equipment customers, tradereceivables, wholesale notes, revolving charge accounts, credit enhanced international export financing generally involvingJohn Deere products, and financing and operating leases. Total receivables and leases increased $1,691 million during thefirst six months of 2018 and increased $3,308 million in the past 12 months. Acquisition volumes of receivables (excludingtrade and wholesale) and leases were 8 percent higher in the first six months of 2018, compared with the same period lastyear, as volumes of retail notes, revolving charge accounts, financing leases, and operating leases were all higher. Theamount of total trade receivables and wholesale notes increased compared to both October 30, 2017 and April 30, 2017.Total receivables and leases administered by the financial services operations, which include receivables administered butnot owned, amounted to $41,691 million at April 29, 2018, compared with $40,001 million at October 30, 2017 and $38,389million at April 30, 2017. At April 29, 2018, the unpaid balance of all receivables administered, but not owned, was $9million, compared with $10 million at October 30, 2017 and $15 million at April 30, 2017.

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Total external interest-bearing debt of the financial services operations was $35,266 million at April 29, 2018, comparedwith $34,179 million at October 30, 2017 and $30,644 million at April 30, 2017. Total external borrowings have changedgenerally corresponding with the level of receivable and lease portfolio, the level of cash and cash equivalents, the change inpayables owed to Deere & Company, and the change in investment from Deere & Company. The financial servicesoperations’ ratio of interest-bearing debt to stockholder’s equity was 7.8 to 1 at April 29, 2018, compared with 7.6 to 1 atOctober 30, 2017 and 7.7 to 1 at April 30, 2017.

Capital Corporation has a revolving credit agreement to utilize bank conduit facilities to securitize retail notes (see Note 11).At April 29, 2018, this facility had a total capacity, or “financing limit,” of $3,500 million of secured financings at any time.After a two-year revolving period, unless the banks and Capital Corporation agree to renew, Capital Corporation wouldliquidate the secured borrowings over time as payments on the retail notes are collected. At April 29, 2018, $1,851 million ofsecured short-term borrowings was outstanding under the agreement.

In the first six months of 2018, the financial services operations issued $1,739 million and retired $1,570 million of retailnote securitization borrowings. In addition, during the first six months of 2018, the financial services operations issued$3,971 million and retired $2,803 million of long-term borrowings, which were primarily medium-term notes.

Dividends and Other Events

The Company’s Board of Directors at its meeting on May 30, 2018 declared a quarterly dividend of $.69 per share payableAugust 1, 2018, to stockholders of record on June 29, 2018.

In May 2018, the Company sold seven construction and forestry retail locations in Michigan, Minnesota, and Wisconsin. Atthe time of the sale, total assets were approximately $90 million and liabilities were approximately $2 million. The totalproceeds from the sale will be approximately $99 million, with $39 million received on the closing date. The remaining salesprice is due based on standard payment terms of new equipment sales to independent dealers. A pretax gain of approximately$11 million will be recorded in other income in the construction and forestry segment. After the sale, the Company sellsequipment, service parts, and provides other services to the purchaser as an independent dealer. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See the Company’s most recent annual report filed on Form 10-K (Part II, Item 7A). There has been no material change inthis information. Item 4. CONTROLS AND PROCEDURES

The Company’s principal executive officer and its principal financial officer have concluded that the Company’s disclosurecontrols and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended(the Exchange Act)) were effective as of April 29, 2018, based on the evaluation of these controls and procedures requiredby Rule 13a-15(b) or 15d-15(b) of the Exchange Act. During the second quarter, there were no changes that have materiallyaffected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is subject to various unresolved legal actions which arise in the normal course of its business, themost prevalent of which relate to product liability (including asbestos-related liability), retail credit,employment, patent, and trademark matters. Item 103 of the SEC’s Regulation S-K requires disclosure of certainenvironmental matters when a governmental authority is a party to the proceedings and the proceedings involvepotential monetary sanctions that the Company reasonably believes could exceed $100,000. The followingmatters are disclosed solely pursuant to that requirement: (a) on July 6, 2017, after self-reporting to the IowaDepartment of Natural Resources, the Company received a Notice of Violation alleging that one Iowa facilitylocation exceeded permitted emission limits. The Company responded and is actively cooperating with the IowaDepartment of Natural Resources to revise the permits and resolve the notice; and (b) on March 19, 2018, theSecretaria de Estado de Meio Ambiente e Desenvolvimento Sustentável in Minas Gerais, Brazil issued a fine ofapproximately $110,000 at current exchange rates against John Deere Equipamentos do Brasil in connectionwith an oil spill that occurred after an April 2016 roadway accident involving a Company truck. Anadministrative defense has been filed to cancel the fine. The Company believes the reasonably possible range oflosses for these and other unresolved legal actions would not have a material effect on its financial statements.

Item 1A. Risk Factors

See the Company’s most recent annual report filed on Form 10-K (Part I, Item 1A). There has been no materialchange in this information. The risks described in the annual report on Form 10-K, and the “Safe HarborStatement” in this report, are not the only risks faced by the Company. Additional risks and uncertainties mayalso materially affect the Company’s business, financial condition or operating results. One should not considerthe risk factors to be a complete discussion of risks, uncertainties, and assumptions.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company’s purchases of its common stock during the second quarter of 2018 were as follows:

Total Number of Shares Purchased as Maximum Number of Total Number of Part of Publicly Shares that May Yet Be Shares Announced Plans or Purchased under the Purchased Average Price Programs (1) Plans or Programs (1)

Period (thousands) Paid Per Share (thousands) (millions) Jan 29 to Feb 25 23.7 Feb 26 to Mar 25 23.7 Mar 26 to Apr 29 342 $ 148.62 342 23.3

Total 342 342

(1) During the second quarter of 2018, the Company had a share repurchase plan that was announced inDecember 2013 to purchase up to $8,000 million of shares of the Company’s common stock. The maximumnumber of shares that may yet be purchased under these plans was based on the end of the second quarterclosing share price of $137.56 per share. At the end of the second quarter of 2018, $3,209 million ofcommon stock remained to be purchased under the plans.

Item 3. Defaults Upon Senior Securities

None. Item 4. Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

Change in Control Program

On May 29, 2018, the Compensation Committee of the Board of Directors (the “Committee”) of the Companyadopted amendments to the Company’s Change in Control Severance Program (the “Program”). The adoption ofthe amendments to the Program and corresponding changes to existing terms result from the Committee’sroutine review of the Company’s executive compensation program and were approved after consultation andreview with the Company’s independent compensation consultant.

The amendments to the Program, among other things, changed certain benefits to be paid under the Program andchanged corresponding definitions. Specifically, the amendments to the Program made the following changes,among other things:

· A reduction in the severance multiplier for Tier 1 Participants from 3x to 2x; and

· A reduction in the continuation of welfare benefits (including health, life and disability insurance) for Tier 1executives from 3 years to 2 years.

Following the amendments, the Chief Executive Officer of the Company would continue to receive severancebenefits under the Program, including (i) base salary plus target bonus multiplied by 3 and (ii) continuation ofwelfare benefits (including health, life and disability insurance) for 3 years.

The amendments took effect immediately on May 29, 2018. The foregoing description of the Program isqualified in its entirety by reference to the Amended and Restated Change in Control Severance Program filed asan exhibit hereto.

Item 6. Exhibits

Certain instruments relating to long-term borrowings constituting less than 10% of the registrant’s total assetsare not filed as exhibits herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. The registrant will filecopies of such instruments upon request of the Commission.

3.1 Certificate of Incorporation, as amended (Exhibit 3.1 to Form 8-K of registrant dated February 26,2010*)

3.2 Bylaws as amended (Exhibit 3.1 to Form 8-K of registrant dated September 1, 2016*) 10.1 Amended and Restated Change in Control Severance Program of Deere & Company 12 Computation of ratio of earnings to fixed charges 31.1 Rule 13a-14(a)/15d-14(a) Certification 31.2 Rule 13a-14(a)/15d-14(a) Certification 32 Section 1350 Certifications 101 Interactive Data File * Incorporated by reference. Copies of these exhibits are available from the Company upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

DEERE & COMPANY Date: May 31, 2018 By: /s/ R. Kalathur

R. Kalathur Senior Vice President and Chief Financial Officer

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Exhibit 10.1

AMENDED & RESTATEDCHANGE IN CONTROL SEVERANCE PROGRAM

OF DEERE & COMPANY

Effective as of 29 May 2018

TABLE OF CONTENTS

1. Purpose1

2. Definitions1

3. Eligibility6

4. Severance Benefits7

5. Form and Timing of Severance Benefits10

6. Excise Tax11

7. The Company’s Payment Obligation12

8. Covenants and Release of the Participants12

9. Funding13

10. Administration13

11. Claims Procedure13

12. Legal Fees14

13. Successors and Assignment14

14. Miscellaneous15

15. Effect on Prior Agreements16

- i -

AMENDED & RESTATEDCHANGE IN CONTROL SEVERANCE PROGRAM

OF DEERE & COMPANY

1. Purpose

The purposes of the Program are (i) to provide Participants with severancepayments and benefits in the event of a Qualifying Termination, (ii) to assure the Companythat it will have the continued dedication of the Participants and the availability of their adviceand counsel notwithstanding the possibility, threat, or occurrence of a Change in Control ofthe Company, and (iii) to provide an additional incentive for the Participants to remain in theemploy of the Company. The Program is intended to be a “top-hat” plan for a select groupof management or highly compensated employees of the Company, but is not intended tomeet the qualification requirements of Section 401 of the Internal Revenue Code of 1986, asamended (the “ Code ”).

2. Definitions

Whenever used in the Program, the following terms shall have the meaningsset forth below and, when the meaning is intended, the initial letter of the word is capitalized:

(a) “ Administrator ” means the Company’s Senior Vice President andChief Administrative Officer or such other person designated by the Committee.

(b) “ Base Salary ” means a Participant’s annual rate of salary, excludingamounts received under incentive or other bonus plans, whether or not deferred.

(c) “ Beneficial Owner ” shall have the meaning ascribed to such termin Rule 13d‑3 of the General Rules and Regulations under the Exchange Act.

(d) “ Board ” means the Board of Directors of the Company.

(e) “ Bonus ” means the target bonus amount for a Participant for the fiscalyear in which the Effective Date of Termination occurs pursuant to the John Deere Short -Term Incentive Bonus Plan or any successor plan or arrangement thereto. The Bonus willbe determined (i) for the CEO and for Tier 1 Participants by the Committee and (ii) for Tier 2Participants in accordance with the terms and procedures of the Deere Short -Term IncentiveBonus Plan or any successor plan or arrangement thereto. For purposes of the Program,the term “Bonus” shall not include any payments made pursuant to the Company’s Long-Term Incentive Cash Plan, Long-Term Incentive Plan or any successor plans orarrangements thereto.

(f) “ Cause ” means (i) a Participant’s willful and continued failure tosubstantially perform his duties with the Company (other than any such failure resulting fromDisability or occurring after issuance by a Participant of a Notice of Termination for GoodReason), after a written demand for substantial performance is delivered to

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such Participant that specifically identifies the manner in which the Company believes thatsuch Participant has willfully failed to substantially perform his duties, and after suchParticipant has failed to resume substantial performance of his duties on a continuous basiswithin thirty (30) calendar days of receiving such demand; (ii) a Participant’s willfullyengaging in conduct (other than conduct covered under (i) above) which is demonstrably andmaterially injurious to the Company, monetarily or otherwise; or (iii) a Participant’s havingbeen convicted of, or having entered a plea of nolocontendereto, a felony. For purposes ofthis definition, no act, or failure to act, on a Participant’s part shall be deemed “willful” unlessdone, or omitted to be done, by a Participant not in good faith and without reasonable beliefthat the action or omission was in the best interests of the Company.

(g) “ CEO ” means the Chief Executive Officer of the Company.

(h) “ Change in Control ” means a change in control of a nature that wouldbe required to be reported in response to Schedule 14A of Regulation 14A promulgatedunder the Exchange Act whether or not the Company is then subject to such reportingrequirement, provided that, without limitation, such a Change in Control shall be deemed tohave occurred if:

(i) any “person” (as defined in Sections 13(d) and 14(d) of the ExchangeAct) (other than a Participant or group of Participants, the Company or a subsidiary,any employee benefit plan of the Company including its trustee, or any corporation orsimilar entity which becomes the Beneficial Owner of securities of the Company inconnection with a transaction excepted from the provisions of clause (iii) below) is orbecomes the “beneficial owner” (as defined in Rule 13(d‑3) under the Exchange Act),directly or indirectly, of securities of the Company (not including the securitiesbeneficially owned or any securities acquired directly from the Company) representingthirty percent (30%) or more of the combined Voting Power of the Company’s thenoutstanding securities;

(ii) the following individuals shall cease to constitute a majority of theBoard: individuals who on the Participation Date constitute the Board and any newdirector(s) whose appointment or election by the Board or nomination for election bythe Company’s stockholders was approved by a vote of at least two-thirds (2/3) of thedirectors then still in office who either were directors on the Participation Date orwhose appointment or election or nomination for election was previously so approvedbut excluding, for this purpose, any such new director whose initial assumption ofoffice occurs as a result of an actual or threatened election contest with respect to theelection or removal of directors or other actual or threatened solicitation of proxies orconsents by or on behalf of a person other than the Board;

(iii) there is consummated a merger, consolidation or similar businesscombination transaction of the Company (including, for the avoidance of doubt, anybusiness combination structured as a forward or reverse triangular merger involvingany direct or indirect subsidiary of the Company) with any other

2

company, other than a merger, consolidation or similar business combinationtransaction which would result in the voting securities of the Company outstandingimmediately prior thereto continuing to represent (either by remaining outstanding orby being converted into voting securities of the surviving entity or any parent thereof)at least sixty percent (60%) of the combined Voting Power of the voting securities ofthe Company or such surviving entity or parent thereof outstanding immediately aftersuch merger, consolidation or similar business combination transaction; or

(iv) the stockholders of the Company approve a plan of complete liquidationof the Company or there is consummated an agreement for the sale or disposition bythe Company of all or substantially all of the Company’s assets.

(i) “ CIC Agreement ” means a change in control agreement entered intobetween the Company and an executive or other employee.

(j) “ Code ” means the United States Internal Revenue Code of 1986, asamended, and any successors thereto.

(k) “ Committee ” means the Compensation Committee of the Board or anyother committee of the Board appointed by the Board to perform the functions of theCompensation Committee.

(l) “ Company ” means Deere & Company, a Delaware corporation, or anysuccessor thereto as provided in Section 13(a) herein.

(m) “ Disability ” means complete and permanent inability by reason ofillness or accident to perform the duties of the occupation at which a Participant wasemployed when such disability commenced.

(n) “Divestiture ” means a transaction in which (x) the entity that employs aParticipant is sold, spun-off or otherwise disposed of by the Company with the result thatsuch entity is no longer a 409A Affiliate, or (y) the business unit or division in which theParticipant is employed is spun-off as a separate entity that is not a 409A Affiliate or is soldor otherwise transferred to a third party that is not a 409A Affiliate.

(o) “ Effective Date of Termination ” means the date on which a QualifyingTermination occurs which triggers the payment of Severance Benefits hereunder.

(p) “ Employment ” means a Participant’s employment with the Companyor any of its 409A Affiliates.

(q) “ ERISA ” means the Employee Retirement Income Security Act of1974, as amended.

3

(r) “ Exchange Act ” means the United States Securities Exchange Act of

1934, as amended.

(s) “ Good Reason ” means, without a Participant’s express writtenconsent, the occurrence of any one or more of the following:

(i) The assignment of a Participant to duties materially inconsistent withsuch Participant’s authorities, duties, responsibilities, and status (including offices andreporting requirements) as an employee of the Company, or a reduction or alterationin the nature or status of a Participant’s authorities, duties, or responsibilities from thegreater of (i) those in effect on the Participation Date; (ii) those in effect during thefiscal year immediately preceding the year of the Change in Control; or (iii) those ineffect immediately preceding the Change in Control;

(ii) The Company’s requiring a Participant to be based at a location which isat least fifty (50) miles further from the current primary residence than is suchresidence from the Company’s current headquarters, except for required travel on theCompany’s business to an extent substantially consistent with such Participant’sbusiness obligations as of the Participation Date;

(iii) A reduction by the Company in a Participant’s Base Salary as in effecton the Participation Date or as the same shall be increased from time to time;

(iv) A material reduction in a Participant’s level of participation in any of theCompany’s short- and/or long-term incentive compensation plans, or employeebenefit or retirement plans, policies, practices, or arrangements in which suchParticipant participates from the levels in place during the fiscal year immediatelypreceding the Change in Control; provided, however, that reductions in the levels ofparticipation in any such plans shall not be deemed to be “Good Reason” if aParticipant’s reduced level of participation in each such program remains substantiallyconsistent with the average level of participation of other executives who havepositions commensurate with such Participant’s position;

(v) The failure of the Company to obtain a satisfactory agreement from anysuccessor to the Company to assume and agree to perform the obligations under theProgram, as contemplated in 13(a) herein; or

(vi) Any involuntary termination of a Participant’s Employment that is noteffected pursuant to a Notice of Termination.

The existence of Good Reason shall not be affected by a Participant’stemporary incapacity due to physical or mental illness not constituting a Disability. AParticipant’s continued employment shall not constitute a waiver of such Participant’srights with respect to any circumstance constituting Good Reason.

4

(t) “ Multiplier ” shall mean (i) three (3) in the case of the CEO, (ii) two (2) in

the case of a Tier 1 Participant and (ii) one and one-half (1.5) in the case of a Tier 2Participant.

(u) “ Notice of Termination ” shall mean a written notice which shall indicatethe specific termination provision in the Program relied upon, and shall set forth inreasonable detail the facts and circumstances claimed to provide a basis for termination of aParticipant’s Employment under the provision so indicated.

(v) “ Participant ” means the CEO and each person who is designated to bea Tier 1 Participant or Tier 2 Participant under the Program.

(w) “ Participation Date ” means, with respect to each Participant, the datespecified by the Committee or the Administrator as provided in Section 3(a) as of which suchindividual becomes a Participant in the Program. If (i) a Participant who is designated a Tier1 Participant is subsequently designated as the CEO, (ii) a Participant who is designated aTier 2 Participant is subsequently designated a Tier 1 Participant, (iii) or if a Tier 1 Participantis subsequently designated in accordance with Section 3(c) a Tier 2 Participant, then fromand after the effective date of such later designation, the Participant’s Participation Date willbe such effective date.

(x) “ Payment Date ” shall have the meaning ascribed to such term inSection 5(a) herein.

(y) “ Person ” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” asprovided in Section 13(d).

(z) “Post-Divestiture Employer ” means, in the case of a Participant whoseemployment is with an entity, business unit or division that is the subject of a Divestiture andwho immediately following the Divestiture continues to be employed with such entity,business unit or division, the Participant’s employer immediately following the Divestiture(including all entities that are considered to be a single employer with such party under thedefault provisions in Treasury Regulations Section 1.409A‑1(h)).

(aa) “ Potential Change in Control ” of the Company means the happening ofany of the following:

(i) the entering into an agreement by the Company, the consummation ofwhich would result in a Change in Control of the Company as defined in Section 2(g)hereof; or

(ii) the acquisition of beneficial ownership, directly or indirectly, by anyentity, person or group (other than a Participant or group of Participants, the Companyor a subsidiary, or any employee benefit plan of the Company including its trustee) ofsecurities of the Company representing fifteen percent (15%) or more of the combinedvoting power of the Company’s outstanding securities and the adoption by the Boardof a resolution to the effect that a

5

Potential Change in Control of the Company has occurred for purposes of theProgram.

(bb) “ Program ” means this Change in Control Severance Program ofDeere & Company and its Subsidiaries, as subsequently amended from time to time.

(cc) “ Release ” shall have the meaning ascribed to such term in Section 8herein.

(dd) “ Release Deadline ” shall have the meaning ascribed to such term inSection 8 herein.

(ee) “ Qualifying Termination ” means any of the events described inSection 4(b) herein, the occurrence of which triggers the payment of Severance Benefitshereunder.

(ff) “ SEC ” means the United States Securities and Exchange Commission.

(gg) “ Severance Benefits ” means the payment of severance compensationas provided in Section 4(d) herein.

(hh) “ Subsidiary ” means any corporation or other entity of which ownershipinterests having ordinary Voting Power to elect a majority of the board of directors or otherpersons performing similar functions are at the time directly or indirectly owned by theCompany.

(ii) “ Tier 1 Participant ” means each person who is designated by theCommittee as a Tier 1 Participant.

(jj) “ Tier 2 Participant ” means each person who is designated by theAdministrator as a Tier 2 Participant.

(kk) “ Voting Power ” of a corporation or other entity means the combinedvoting power of the then-outstanding voting securities of such corporation or other entityentitled to vote generally in the election of directors.

(ll) “ 409A Affiliate ” means any corporation that is included in a controlledgroup of corporations (within the meaning of Section 414(b) of the Code) that includes theCompany and any trade or business (whether or not incorporated) that is under commoncontrol with the Company (within the meaning of Section 414(c) of the Code).

3. Eligibility

(a) Designation of Participants . The CEO shall be a Participant in thePlan. Tier 1 Participants shall be designated in writing from time to time by the Committee inits discretion. Tier 2 Participants shall be designated in writing from time

6

to time by the Committee or the Administrator. At the time an individual is designated as aParticipant, the Committee or the Administrator, as the case may be, shall specify suchindividual’s Participation Date (which may, but need not, be the date of the Committee or theAdministrator action designating the individual as a Participant). The books and records ofthe Company shall be definitive for purposes of determining whether and as of when anindividual has been designated as a Participant.

(b) Participation Exclusive . Unless and until an individual has beendesignated as a Participant and the relevant Participation Date has occurred, such individualshall have no rights under the Program, regardless of whether any other individual with asimilar position, rate of compensation or responsibilities has become a Participant. Noindividual shall become a Participant while such individual is party to an effective CICAgreement, and in no event may any individual have entitlements under both the Programand a CIC Agreement.

(c) Termination of Participation . The Committee, with respect to Tier 1Participants (including, for this purpose, a Tier 1 Participant who is being converted to a Tier2 Participant), and the Committee or the Administrator, with respect to Tier 2 Participants,may provide notice to a Participant at any time that such Participant shall cease to be aParticipant. Any such termination or reduction of Participant status shall become effective onthe earliest anniversary of the relevant Participant’s Participation Date that is at least six (6)months from the date of the notice of termination or reduction of Participant status, provided,however, that no such termination or reduction of Participant status shall be effective prior tothe second anniversary of the Participant’s Participation Date; provided, further, that nonotice of termination or reduction of Participant status shall be given within six (6) months following a Potential Change in Control; and provided, further, that following a Change inControl, no such termination or reduction of Participant status shall be given effect until thelater of (i) twenty-four (24) months after the month in which the Change in Control occurs or(ii) if a Participant experiences a Qualifying Termination before the end of such twenty-four(24) month period, until all obligations of the Company under the Program have been fulfilledand all benefits required under the Program have been paid or provided to the Participant.

4. Severance Benefits

(a) Right to Severance Benefits . Subject to Section 8, a Participant shall beentitled to receive from the Company the Severance Benefits described in Section 4(d) if aQualifying Termination of such Participant has occurred. A Participant shall not be entitled toreceive Severance Benefits if he or she is terminated for Cause, or if his or her Employmentends due to death or Disability or due to a voluntary termination of Employment withoutGood Reason. An individual who has ceased to be a Participant in the Program inaccordance with Section 3(c) shall not be entitled to any Severance Benefits under theProgram in connection with his or her termination of Employment for any reason, even ifsuch termination of Employment would have qualified as a Qualifying Termination had theindividual been a Participant at the time of his or her termination of Employment. NoSeverance Benefits shall be payable

7

under the Program to any individual if the Program has been terminated as to such individualin accordance with Section 14(d) at the time of such individual’s termination of Employment.

(b) Qualifying Termination . Subject to Section 8, the occurrence of anyone or more of the following events shall trigger the payment of Severance Benefits to a Participant under the Program:

(i) An involuntary termination of a Participant’s Employment for reasonsother than Cause within six (6) months preceding or within twenty‑four (24) calendarmonths following a Change in Control of the Company; any such involuntarytermination shall be pursuant to a Notice of Termination (specifying the Effective Dateof Termination which shall be not less than five (5) days from the date of the Notice ofTermination) delivered to such Participant by the Company; or

(ii) A Participant’s voluntary termination of Employment for Good Reasonwithin twenty-four (24) calendar months following a Change in Control of theCompany pursuant to a Notice of Termination delivered to the Company by suchParticipant.

For purposes of the Program, a Participant’s Employment will be considered to haveterminated upon (and only upon) such Participant’s “separation from service” from theCompany and its 409A Affiliates as determined under the default provisions in TreasuryRegulation Section 1.409A‑1(h).

(c) Divestitures . Without limiting the generality of the foregoingSection 4(b), if the entity, business unit or division that employs a Participant is the subject ofa Divestiture, the Participant will be considered to have experienced an involuntarytermination of Employment as of the date such entity ceases to be a 409A Affiliate or suchbusiness unit or division is sold or transferred, regardless of whether the Participant isconsidered to have experienced a termination of Employment with the Company and itsaffiliates for any other purpose; provided, however, that if a Divestiture occurs within six (6)months preceding or within twenty‑four (24) months following a Change in Control of theCompany, then the Divestiture itself will not be considered to cause a termination of theParticipant’s employment, and whether the Participant experiences a Qualifying Terminationfollowing such Divesture will be determined by reference to the Participant’s employmentwith the Post-Divestiture Employer (so that, for example, an involuntary termination of theParticipant’s employment with the Post-Divestiture Employer for reasons other than Causewithin 24 calendar months following a Change in Control of the Company will trigger thepayment of Severance Benefits). Nothing in this Agreement is intended to conflict with 18U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowedby such section.

8

(d) Description of Severance Benefits . Subject to Section 8, in the event a

Participant becomes entitled to receive Severance Benefits, the Company shall pay orprovide to the Participant all of the following:

(i) An amount equal to the product of (x) the sum of the Participant’s BaseSalary in effect at the Effective Date of Termination (without regard to any decreasestherein which constitute Good Reason) plus his Bonus and (y) the Multiplier.

(ii) An amount equal to his unpaid Base Salary, accrued vacation pay, andearned but not taken vacation pay through the Effective Date of Termination.

(iii) An amount equal to his Bonus multiplied by a fraction, the numerator ofwhich is the number of days he was employed by the Company in the then-existingfiscal year through the Effective Date of Termination, and the denominator of which isthree hundred sixty-five (365) less, in the case of a Participant who beganEmployment after the beginning of the fiscal year, the number of days from thebeginning of the fiscal year to the date he commenced Employment.

(iv) A continuation of the welfare benefits of health care, life and accidentaldeath and dismemberment, and disability insurance coverage for (A) three (3) fullyears after the Effective Date of Termination for the CEO, (B) two (2) full years afterthe Effective Date of Termination for Tier 1 Participants, (C) and eighteen (18)months after the Effective Date of Termination for Tier 2 Participants; provided,however, that the Participant shall pay (or promptly reimburse the Company for thecost of) any portion of the premiums for such coverage that results in taxable incometo the Participant attributable to the first six (6) months following the Effective Date ofTermination in excess of $5,000, and in such case, the Company shall repay theParticipant the amount of such payment or reimbursement at the time provided inSection 5(a) for the payment of Severance Benefits. These benefits shall be providedto the Participant at the same premium cost, and at the same coverage level, as ineffect as of his Effective Date of Termination. However, in the event the premium costand/or level of coverage shall change for all employees of the Company, or formanagement employees with respect to supplemental benefits, the cost and/orcoverage level, likewise, shall change for the Participant in a corresponding manner. The continuation of these welfare benefits shall be discontinued prior to the end ofthe three (3) year, two (2) year, or eighteen (18) month period, as applicable, to theextent such Participant has available substantially similar benefits at a comparablecost from a subsequent employer, as determined by the Committee.

(v) In a single payment, an amount in cash equal to the amount of theCompany’s employer contributions made on behalf of the Participant under all definedcontribution plans of the Company for the plan year immediately

9

preceding the Effective Date of Termination (or, if higher, for the plan yearimmediately prior to the Change in Control).

(e) Other Benefits . Compensation which has been deferred under theCompany’s nonqualified deferred compensation plans, increased with applicable notionalinterest and adjusted for applicable notional gains and losses, shall be distributed pursuantto the terms of the applicable plan. In addition, the Participant’s benefits, if any, under theJohn Deere Supplemental Pension Benefit Plan, the John Deere Senior SupplementaryPension Benefit Plan and any other nonqualified defined benefit pension plan will becalculated and distributed pursuant to the terms of the applicable plan.

(f) Termination for Disability . Following a Change in Control of theCompany, if a Participant’s Employment is terminated due to Disability, such Participant shallreceive his Base Salary through the date of termination, at which point in time suchParticipant’s benefits shall be determined in accordance with the Company’s disability,retirement, insurance, and other applicable plans and programs then in effect. In the event aParticipant’s Employment is terminated due to Disability, such Participant shall not beentitled to the Severance Benefits described in Section 4(d).

(g) Termination for Death . Following a Change in Control of theCompany, if a Participant’s Employment is terminated by reason of the Participant’s death,such Participant’s benefits shall be determined in accordance with the Company’sretirement, survivor’s benefits, insurance, and other applicable programs of the Companythen in effect. In the event a Participant’s Employment is terminated by reason of his death,such Participant shall not be entitled to the Severance Benefits described in Section 4(d).

(h) Termination for Cause, or Other Than for Good Reason . Following aChange in Control of the Company, if a Participant’s Employment is terminated either (i) bythe Company for Cause; or (ii) by such Participant (other than for Good Reason), theCompany shall pay such Participant his full Base Salary and accrued vacation through thedate of termination, at the rate then in effect, plus all other amounts to which such Participantis entitled under any compensation and benefit plans of the Company, at the time suchpayments are due, and the Company shall have no further obligations to such Participantunder the Program.

(i) Notice of Termination . Any termination of Employment by a Participantfor Good Reason shall be communicated by a Notice of Termination.

5. Form and Timing of Severance Benefits

(a) Form and Timing of Severance Benefits . The Severance Benefitsdescribed in Section 4(d) (other than those described in Section 4(d)(iv)) herein shall be paidin cash to such Participant in a single lump sum 185 days following the

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Effective Date of Termination (or if such date is not a business day, the next business day)(the “ Payment Date ”).

(b) Withholding of Taxes . The Company shall be entitled to withhold fromany amounts payable under the Program all taxes as legally shall be required (including,without limitation, any United States federal taxes and any other state, city, or local taxes).

6. Excise Tax

(a) Excise Tax . Subject to the last sentence of this Section 6(a), in theevent that a Participant becomes entitled to Severance Benefits or any other payment orbenefit under the Program, or under any other agreement with or plan of the Company (inthe aggregate, the “ Total Payments ”), if all or any part of the Total Payments will be subjectto the tax (the “ Excise Tax ”) imposed by Section 4999 of the Code (or any similar tax thatmay hereafter be imposed), and if such Participant would receive a greater net after-taxamount if the Total Payments paid to such Participant were reduced to avoid the impositionof the Excise Tax, then the Total Payments paid to such Participant shall be reduced, suchthat the value of the aggregate payments that such Participant receives shall be one dollar($1) less than the maximum amount which such Participant may receive without becomingsubject to the Excise Tax, or which the Company may pay without loss of deduction underSection 280G(a) of the Code. The reductions, if applicable, required by this Section 6(a)shall be made only from the following amounts in the following order: first, from the lumpsum payment contemplated by Section 5(a); and then, to the extent necessary, from otheramounts payable to the Participant that do not constitute deferred compensation forpurposes of Section 409A of the Code.

(b) Tax Computation . All calculations done pursuant to Section 6(a), shallbe made and determined reasonably and in good faith by the auditing firm which served asthe Company’s independent auditors immediately prior to the Change in Control, and allsuch calculations made reasonably and in good faith shall be final and binding on theCompany and such Participant, even if such calculations are subsequently challenged orrevised by a court or applicable regulatory authority. For purposes of the calculations donepursuant to Section 6(a), a Participant shall be deemed to pay federal income taxes at thehighest marginal rate of federal income taxation in the calendar year in which the PaymentDate occurs and state and local income taxes at the highest marginal rate of taxation in thestate and locality of such Participant’s residence on the Payment Date, net of the maximumreduction in federal income taxes which could be obtained from deduction of such state andlocal taxes.

(c) Expenses . All of the fees and expenses of the accounting firm inperforming the calculations referred to in Sections 6(a) and 6(b) above shall be borne solelyby the Company.

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7. The Company’s Payment Obligation

(a) Payment Obligations Absolute . Subject to Section 8, the Company’sobligation to pay or provide the Severance Benefits provided for herein shall be absolute andunconditional, and shall not be affected by any circumstances, including, without limitation,any offset, counterclaim, recoupment, defense, or other right which the Company may haveagainst a Participant or anyone else. All amounts payable by the Company hereunder shallbe paid without notice or demand. Each and every payment made hereunder by theCompany shall be final, and the Company shall not seek to recover all or any part of suchpayment from a Participant or from whomsoever may be entitled thereto, for any reasonswhatsoever.

Notwithstanding anything else herein to the contrary, however, if the Company(or any subsidiary or affiliate of the Company) is obligated by law to pay to a Participantseverance pay, a termination indemnity, notice pay, or the like (but excluding for this purposeaccrued and unused vacation pay), or is obligated by law to provide to a Participant advancenotice of separation (“ Notice Period ”), then any Severance Benefits hereunder shall bereduced by the amount of any such severance pay, termination indemnity, notice pay or thelike, as applicable, and by the amount of any compensation received during any NoticePeriod.

A Participant shall not be obligated to seek other employment in mitigation ofthe amounts payable or arrangements made under any provision of the Program, and theobtaining of any such other employment shall in no event effect any reduction of theCompany’s obligations to make the payments and arrangements required to be made underthe Program, except to the extent provided in Section 4(d)(iv) herein.

(b) Contractual Rights to Benefits . Subject to Sections 3 and 14(d), theProgram establishes and vests in a Participant a contractual right to the benefits to which heor she is entitled hereunder. However, nothing herein contained shall require or be deemedto prohibit the Company to segregate, earmark, or otherwise set aside any funds or otherassets, in trust or otherwise, to provide for any payments to be made or required hereunder.

8. Covenants and Release of the Participants . Notwithstanding any otherprovision of the Program, a Participant’s entitlement to Severance Benefits shall beconditioned on the Participant’s executing a Restrictive Covenant and Release Agreement(the “ Release ”), substantially in the form attached hereto as Exhibit A, within sixty (60) daysafter the Participant’s Qualifying Termination (the “ Release Deadline ”) and such Releaseremaining in effect and becoming irrevocable after the expiration of any statutory period inwhich the Participant is permitted to revoke a release. If the Participant fails to execute anddeliver the Release by the Release Deadline, or if the Participant thereafter effectivelyrevokes the Release, the Company shall be under no obligation to make any furtherpayments or provide any further benefits to the Participant, and the Participant shall promptlyrepay

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the Company any payments made to the Participant and the Company’s direct cost for anybenefits provided to the Participant pursuant to the Program.

9. Funding

Benefits payable under the Program shall be unfunded, as that term is used inSections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA, with respect to unfundedplans maintained primarily for the purpose of providing deferred compensation to a selectgroup of management or highly compensated employees, and the Administrator shalladminister the Program in a manner that will ensure that benefits are unfunded and thatParticipants will not be considered to have received a taxable economic benefit prior to thetime at which benefits are actually payable hereunder. Accordingly, the Company shall notbe required to segregate or earmark any of its assets for the benefit of Participants or theirspouses or other beneficiaries, and each such person shall have only a contractual rightagainst the Company for benefits hereunder. The Company may from time to time establisha trust and deposit with the trustee thereof funds to be held in trust for the payment ofbenefits hereunder; provided, that the use of such funds for such purpose shall be subject tothe claims of the Company’s general creditors as set forth in the agreement establishing anysuch trust. The rights and interests of a Participant under the Program shall not be subject inany manner to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance bya Participant or any person claiming under or through a Participant, nor shall they be subjectto the debts, contracts, liabilities or torts of a Participant or anyone else prior to payment. The Administrator may from time to time appoint an investment manager or managers forthe funds held in any such trust.

10. Administration

The Program shall be operated under the direction of the Committee andadministered by the Administrator. Subject to Section 6(b), the calculation of all benefitspayable under the Program shall be performed by the Administrator, subject to the review ofthe Committee. The Administrator shall have sole and complete discretionary authority andcontrol to manage the operation and administration of the Plan, including but not limited to,the interpretation of all Plan provisions, determination of the amount of benefits payable toany Participant, spouse, heirs or estate, all legal and factual determinations, and constructionof disputed or ambiguous term, and all such determinations shall be binding on all parties. Notwithstanding the preceding sentence, all determinations of eligibility for participation andbenefits under the Program as a Tier 1 Participant shall be made by the Committee. TheAdministrator may delegate responsibilities under the Plan. With respect to any instancewhere the Plan is administered relative to the Administrator, the Chief Executive Officer ofthe Company shall act as Administrator.

11. Claims Procedure

All claims for benefits under the Program shall be determined under the claimsprocedure in effect under the Company’s tax-qualified defined benefit pension

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plan on the date that such claims are submitted, except that the Administrator shall makeinitial determinations with respect to claims hereunder and the Committee shall decideappeals of such determinations.

In the event that any dispute under the provisions of the Program is notresolved to the satisfaction of the affected Participant through the Program’s claimsprocedures described in the preceding paragraph, any dispute or controversy arising underor in connection with the Program may, at the sole election of the affected Participant, besettled by arbitration, conducted before a panel of three (3) arbitrators sitting in a locationselected by the Participant within fifty (50) miles from the location of his employment with theCompany, in accordance with the rules of the American Arbitration Association then in effect.

Judgment may be entered on the award of the arbitrator in any court havingproper jurisdiction. All expenses of such arbitration, including the fees and expenses of thecounsel for a Participant, shall be borne by the Company. If applicable, payment orreimbursement of the Participant’s reasonable attorneys’ fees and expenses shall be madenot later than December 31 of the calendar year following the year in which they areincurred.

12. Legal Fees .

To the extent permitted by law, the Company shall pay all reasonable legalfees, costs of litigation or arbitration, prejudgment interest, and other expenses incurred ingood faith by a Participant as a result of:

(a) the Company’s refusal to provide the Severance Benefits to which aParticipant becomes entitled under the Program, or

(b) the Company’s contesting the validity, enforceability, or interpretation ofthe Program, or

(c) any conflict between the parties pertaining to the Program.

If applicable, payment or reimbursement of the Participant’s reasonableattorneys’ fees and expenses shall be made not later than December 31 of the calendaryear following the year in which they are incurred.

13. Successors and Assignment

(a) Successors to the Company . The Company will require any successor(whether direct or indirect, by purchase, merger, consolidation, a similar businesscombination transaction or otherwise) of all or substantially all of the business and/or assetsof the Company and its affiliates thereof to expressly assume and agree to perform theCompany’s obligations under the Program in the same manner and to the same extent thatthe Company would be required to perform them if no such succession had taken place.Assuming that such transaction otherwise constitutes a

14

st

st

Change in Control, the date on which any such succession becomes effective shall bedeemed to be the date of the Change in Control.

(b) Divestitures . In the event of a Divestiture, the Company may, but shallnot be obligated to, assign its obligations under the Program with respect to any Participantwho immediately following such Divestiture will be employed by the entity that owns thedivested entity, business unit or division to the Participant’s Post‑Divestiture Employer or anyof its affiliates. Upon the effectiveness of the agreement by such Post-Divestiture Employeror one of its affiliates to perform such obligations, the Company shall have no furtherobligations under the Program to such Participant.

(c) Assignment by a Participant . The Program shall inure to the benefit ofand be enforceable by a Participant’s personal or legal representatives, executors,administrators, successors, heirs, distributees, devisees, and legatees. If a Participant dieswhile any amount would still be payable to him or her hereunder had he or she continued tolive, all such amounts, unless otherwise provided herein, shall be paid in accordance with theterms of the Program to such Participant’s beneficiary. If a Participant has not named abeneficiary, then such amounts shall be paid to such Participant’s devisee, legatee, or otherdesignee, or if there is no such designee, to such Participant’s estate.

14. Miscellaneous

(a) Employment Status . Except as may be provided under any otheragreement between a Participant and the Company or one of its 409A Affiliates, aParticipant’s Employment is “at will,” and may be terminated by either the Participant or theParticipant’s employer at any time, subject to applicable law.

(b) Beneficiaries . The primary and/or contingent beneficiaries designatedby a Participant pursuant to Company-provided life insurance benefits shall be the personsor entities who or which are the Beneficiaries of any Severance Benefits owing to suchParticipant under the Program.

(c) Severability . In the event any provision of the Program shall be heldillegal or invalid for any reason, the illegality or invalidity shall not affect the remaining partsof the Program, and the Program shall be construed and enforced as if the illegal or invalidprovision had not been included. Further, the captions of the Program are not part of theprovisions hereof and shall have no force and effect.

(d) Amend, Modify or Terminate . Subject to the restrictions and limitationsset forth in this Section 14(d), the Board (or any committee of the Board to whom the Boarddelegates it authority hereunder) may amend, modify or terminate the Program at any time inwhole or in part without prior notice to, or without the consent of, any Participant or otherperson. Notwithstanding the previous sentence, without the express written consent of anaffected Participant, (i) the Board may not amend, modify or terminate the Program in anyrespect for a Participant for whom a Qualifying

15

Separation has occurred or (ii) amend, modify or terminate the Program in a manner that isadverse to the Participant in any material respect during the twenty-four month periodfollowing a Change in Control or the six month period following a Potential Change inControl. In addition, any amendment, modification or termination of the Program that wouldbe precluded under the previous sentence without the express written consent of an affectedParticipant on or after a Change in Control shall not be given effect without the expresswritten consent of the affected Participant if it is adopted within six months prior to theoccurrence of a Potential Change in Control or a Change in Control. Nothing in thisSection 14(d) shall preclude a termination or reduction of a Participant’s status in theProgram in accordance with Section 3(c).

(e) Applicable Law . TO THE EXTENT NOT PREEMPTED BY THE LAWSOF THE UNITED STATES OR ANY OTHER LAW MANDATORILY APPLYING TO APARTICIPANT’S EMPLOYMENT, THE LAWS OF THE STATE OF ILLINOIS SHALL BETHE CONTROLLING LAW IN ALL MATTERS RELATING TO THE PROGRAM.

15. Effect on Prior Agreements .

By virtue of a Participant’s participation in the Program, the Participant and theCompany acknowledge that: (a) the Program supersedes all prior written or oral agreementsbetween them, including, but not limited to, any Change in Control Agreement or SeveranceProtection Agreement which a Participant and the Company may have entered into; and (b)as of the Participation Date, any and all such prior agreements are null and void.

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EXHIBIT A

RESTRICTIVE COVENANT AND RELEASE AGREEMENT

This Restrictive Covenant and Release Agreement (this “ Agreement ”) is entered into bythe undersigned effective as of [INSERT DATE] (“ Effective Date ”).

In consideration of the severance benefits to be provided to me under the Change inControl Severance Program of Deere & Company (the “ Severance Program ”), I agree asfollows:

1. Return of Property . All Company files, access keys and codes, deskkeys, ID badges, computers, records, manuals, electronic devices, computer programs, papers,electronically stored information or documents, telephones and credit cards, and any otherproperty of the Deere & Company or any of its affiliates (the “ Company ”) in my possessionmust be returned no later than the Effective Date.

2. Non-Disclosure and Non-Solicitations Covenants .

(a) Disclosure of Information . As a result of my employment with theCompany, I had access to and knowledge of certain confidential and proprietary information ofthe Company. I shall not, in whole or in part, disclose such information to any person, firm,corporation, association, or other entity for any reason or purpose whatsoever, nor shall I makeuse of any such information for my own purposes.

(b) Covenants Regarding Other Employees . For a period beginning on thedate of my Qualifying Termination (as defined in the Severance Program) and ending two (2)years following the payment of the lump sum severance benefits provided for in Section 4(c) ofthe Severance Program, I agree not to:

(i) attempt to induce any employee of the Company to (i) terminate his or heremployment with the Company, or (ii) accept employment with any competitor of theCompany; or

(ii) interfere in a similar manner with the business of the Company.

3. General Release and Waiver of Claims .

(a) Release. In consideration of the payments and benefits provided to meunder the Severance Program and after consultation with counsel, I and each of my respectiveheirs, executors, administrators, representatives, agents, insurers, successors and assigns(collectively, the “Releasors”) hereby irrevocably and unconditionally release and foreverdischarge the Company, its subsidiaries and affiliates and each of their respective officers,employees, directors, shareholders and

1 PURSUANT TO SECTION 8 OF PROGRAM, THE EFFECTIVE DATE SHOULD BE NO MORE THAN 60 DAYSFOLLOWING DATE OF QUALIFYING TERMINATION.

1

1

agents (“ Releasees ”) from any and all claims, actions, causes of action, rights, judgments,obligations, damages, demands, accountings or liabilities of whatever kind or character(collectively, “ Claims ”), including, without limitation, any Claims under any federal, state, localor foreign law, that the Releasors may have, or in the future may possess, arising out of (i) myemployment relationship with and service as an employee, officer or director of the Company orany subsidiaries or affiliated companies and the termination of such relationship or service, and(ii) any event, condition, circumstance or obligation that occurred, existed or arose on or prior tothe date hereof; provided, however, that I does not release, discharge or waive any rights to(i) payments and benefits provided under the Severance Program that are contingent upon myexecution of this Agreement and (ii) any indemnification rights I may have in accordance withthe Company’s governance instruments or under any director and officer liability insurancemaintained by the Company with respect to liabilities arising as a result of my service as anofficer and employee of the Company. This Section 3(a) does not apply to any Claims that theReleasors may have as of the date I sign this Agreement arising under the Federal AgeDiscrimination in Employment Act of 1967, as amended, and the applicable rules andregulations promulgated thereunder (“ ADEA ”). Claims arising under ADEA are addressed inSection 3(b) of this Agreement.

(b) Specific Release of ADEA Claims . In further consideration of thepayments and benefits provided to me under the Severance Program, the Releasors herebyunconditionally release and forever discharge the Releasees from any and all Claims arisingunder ADEA that the Releasors may have as of the date I sign this Agreement. By signing thisAgreement, I hereby acknowledge and confirm the following: (i) I was advised by the Companyin connection with my termination to consult with an attorney of my choice prior to signing thisAgreement and to have such attorney explain to me the terms of this Agreement, including,without limitation, the terms relating to my release of claims arising under ADEA, and I have infact consulted with an attorney; (ii) I was given a period of not fewer than 21 days to considerthe terms of this Agreement and to consult with an attorney of my choosing with respect thereto;(iii) I knowingly and voluntarily accept the terms of this Agreement; and (iv) I am providing thisrelease and discharge only in exchange for consideration in addition to anything of value towhich I am already entitled. I also understand that I have seven days following the date onwhich I sign this Agreement within which to revoke the release contained in this paragraph, byproviding the Company with a written notice of my revocation of the release and waivercontained in this paragraph.

(c) No Assignment . I represent and warrant that I have not assigned any ofthe Claims being released under this Agreement. The Company may assign this Agreement, inwhole or in part, to any affiliated company or subsidiary of, or any successor in interest to, theCompany.

4. Proceedings .

(a) General Agreement Relating to Proceedings . I have not filed, and exceptas provided in Sections 4(b) and 4(c), I agree not to initiate or cause to be initiated on mybehalf, any complaint, charge, claim or proceeding against the

2

Releasees before any local, state or federal agency, court or other body relating to myemployment or the termination of my employment, other than with respect to the obligations ofthe Company to me under the Severance Program (each, individually, a “ Proceeding ”), andagree not to participate voluntarily in any Proceeding. I waive any right I may have to benefit inany manner from any relief (whether monetary or otherwise) arising out of any Proceeding.

(b) Proceedings Under ADEA . Section 4(a) shall not preclude me from filingany complaint, charge, claim or proceeding challenging the validity of my waiver of Claimsarising under ADEA (the ADEA waiver is set forth in Section 3(b) of this Agreement). However,both the Company and I confirm our belief that my waiver of claims under ADEA is valid andenforceable, and my intention is that all claims under ADEA will be waived.

(c) Certain Administrative Proceedings . In addition, Section 4(a) shall notpreclude me from filing a charge with or participating in any administrative investigation orproceeding by the Equal Employment Opportunity Commission or another Fair EmploymentPractices agency. I am, however, waiving my right to recover money in connection with anysuch charge or investigation. I am also waiving my right to recover money in connection with acharge filed by any other entity or individual, or by any federal, state or local agency.

5. Remedies . In the event I initiate or voluntarily participate in anyProceeding in violation of this Agreement, or if I fail to abide by any of the terms of thisAgreement or if I revoke the ADEA release contained in paragraph 3(b) within the seven-dayperiod provided under paragraph 3(b), the Company shall be under no obligation to make anyfurther payments or provide any further benefits to me, and I shall promptly repay the Companyany payments made to me and the Company’s direct cost for any benefits provided to mepursuant to the Severance Program, without waiving the release granted herein. I acknowledgeand agree that the remedy at law available to the Company for breach of any of my obligationsunder paragraphs 2, 3 and 4 herein would be inadequate and that damages flowing from such abreach may not readily be susceptible to measurement in monetary terms. Accordingly, Iacknowledge, consent and agree that, in addition to any other rights or remedies that theCompany may have at law or in equity, the Company shall be entitled to seek a temporaryrestraining order or a preliminary or permanent injunction, or both, without bond or othersecurity, restraining me from breaching my obligations under paragraphs 2, 3 and 4 herein. Such injunctive relief in any court shall be available to the Company, in lieu of, or prior to orpending determination in, any arbitration proceeding.

I understand that by entering into this Agreement I shall be limiting the availabilityof certain remedies that I may have against the Company and limiting also my ability to pursuecertain claims against the Company.

6. Severability Clause . If any provision or part of this Agreement is found tobe invalid or unenforceable, only that particular provision or part, and not the entire Agreement,shall be inoperative.

3

7. GOVERNING LAW AND FORUM . I acknowledge that this agreement has

been executed, in whole or in part, in Illinois. Accordingly, I agree that this Agreement and allmatters or issues arising out of or relating to my employment with the Company shall begoverned by the laws of the State of Illinois applicable to contracts entered into and performedentirely therein. Any action to enforce this Agreement shall be brought solely in the state orfederal courts located in the Moline, Illinois.

I ACKNOWLEDGE THAT I HAVE READ THIS AGREEMENT AND THAT I FULLYKNOW, UNDERSTAND AND APPRECIATE ITS CONTENTS, AND THAT I HEREBYEXECUTE THE SAME AND MAKE THIS AGREEMENT AND THE COVENANTS ANDRELEASE PROVIDED FOR HEREIN VOLUNTARILY AND OF MY OWN FREE WILL.

THE EXECUTIVE

[Insert name of Executive]

Dated:

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EXHIBIT 12

EXHIBIT 12

DEERE & COMPANY AND CONSOLIDATED SUBSIDIARIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(In millions of dollars)

Six Months Ended Years Ended April 29 April 30 October 29 October 30 November 1 November 2 October 27 2018 2017 2017 2016 2015 2014 2013 Earnings:

Income of consolidated group beforeincome taxes $ 1,901.6 $ 1,497.3 $ 3,153.8 $ 2,224.0 $ 2,780.1 $ 4,797.4 $ 5,483.4

Dividends received fromunconsolidated affiliates 4.7 3.2 3.6 8.3 1.3 .6 9.9

Fixed charges excluding unamortizedcapitalized interest 595.1 439.0 909.7 771.9 687.8 669.3 749.0

Total earnings $ 2,501.4 $ 1,939.5 $ 4,067.1 $ 3,004.2 $ 3,469.2 $ 5,467.3 $ 6,242.3 Fixed charges:

Interest expense of consolidatedgroup including capitalized interest $ 593.2 $ 436.8 $ 903.4 $ 769.0 $ 687.4 $ 670.2 $ 754.8

Portion of rental charges deemed tobe interest 5.1 4.1 10.2 8.2 7.8 5.3 7.7

Total fixed charges $ 598.3 $ 440.9 $ 913.6 $ 777.2 $ 695.2 $ 675.5 $ 762.5 Ratio of earnings to fixed charges 4.18 4.40 4.45 3.87 4.99 8.09 8.19

The computation of the ratio of earnings to fixed charges is based on applicable amounts of the Company and its consolidated subsidiaries plusdividends received from unconsolidated affiliates. “Earnings” consist of income before income taxes, the cumulative effect of changes inaccounting, discontinued operations, and fixed charges excluding unamortized capitalized interest. “Fixed charges” consist of interest onindebtedness, amortization of debt discount and expense, interest related to uncertain tax positions, an estimated amount of rental expense that isdeemed to be representative of the interest factor, and capitalized interest.

The Company has not issued preferred stock. Therefore, the ratios of earnings to combined fixed charges and preferred stock dividends are thesame as the ratios presented above.

Exhibit 31.1

Exhibit 31.1

CERTIFICATIONS

I, S. R. Allen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Deere & Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a materialfact necessary to make the statements made, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly presentin all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, theperiods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (asdefined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reportingto be designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this reportour conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurredduring the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annualreport) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control overfinancial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, andreport financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant rolein the registrant’s internal control over financial reporting.

Date: May 31, 2018 By: /s/ S. R. Allen S. R. Allen Chairman and Chief Executive Officer

Exhibit 31.2

Exhibit 31.2

CERTIFICATIONS

I, R. Kalathur, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Deere & Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a materialfact necessary to make the statements made, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly presentin all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, theperiods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (asdefined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reportingto be designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this reportour conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurredduring the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annualreport) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control overfinancial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, andreport financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant rolein the registrant’s internal control over financial reporting.

Date: May 31, 2018 By: /s/ R. Kalathur R. Kalathur Senior Vice President and Chief Financial Officer

EXHIBIT 32

EXHIBIT 32

STATEMENT PURSUANT TO18 U.S.C. SECTION 1350

AS REQUIRED BYSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Deere & Company (the “Company”) on Form 10-Q for the period ending April 29,2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifythat to the best of our knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results ofoperations of the Company.

May 31, 2018 /s/ S. R. Allen Chairman and Chief Executive Officer S. R. Allen May 31, 2018 /s/ R. Kalathur Senior Vice President and Chief Financial Officer R. Kalathur

A signed original of this written statement required by Section 906 has been provided to Deere & Company and will be retainedby Deere & Company and furnished to the Securities and Exchange Commission or its staff upon request.

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