Deere & Co. (DE) 2020年年度報告「NYSE」.pdf

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1、Deere&CompanyOne John Deere Place,Moline,Illinois 61265(309)765-8000www.JohnD2020 Annual ReportDEERE&COMPANY 2020 ANNUAL REPORTAnnual_Report_Cover_and_Back_Production_V1.indd 1Annual_Report_Cover_and_Back_Production_V1.indd 112/16/20 12:55 PM12/16/20 12:55 PMDespite the ongoing challenges associated

2、 with the pandemic,John Deere delivered a year of solid performance.The company moved with speed and innovation to keep people safe,operations running,and customers served.Net sales and revenues were$35.54 billion,and net income was$2.75 billion,the sixth-best in company history.Customers responded

3、favorably to the companys equipment and precision solutions.Deere also delivered solid returns to investors.NET SALES&REVENUES$35.54 BILLION DOWN 9%SHAREHOLDER VALUE ADDED*$1.56 BILLION UP 3%NET INCOME*(attributable to Deere&Company)$2.75 BILLION DOWN 15%The amounts shown in the charts above represe

4、nt millions of dollars.*SVA,referred to throughout this report,is a non-GAAP financial measure.See page 16 for details.*Net income in 2019 was positively affected by$68 million and in 2018 was negatively affected by$704 million due to discrete income tax adjustments related to U.S.tax reform.Adjuste

5、d net income was$3,185 million in 2019 and$3,072 million in 2018.Adjusted EPS was$9.94 and$9.39 for the respective periods.Adjusted net income and adjusted EPS are non-GAAP measures.$37,358$1,860$2,368201820182018201920192019202020202020$39,258$1,515$3,253$35,540$1,556$2,751Annual_Report_Overall_Lay

6、out_Production_V9.indd 2Annual_Report_Overall_Layout_Production_V9.indd 212/28/20 1:14 PM12/28/20 1:14 PMIn any number of ways,2020 was a remarkable year,one in which John Deere met the twin challenges of a global health crisis and a sharp economic downturn with a good deal of success.Among our acco

7、mplishments,we kept our operations running,employees safe and on the job,and customers served.We launched important new products featuring the latest technology and advanced features.And we introduced a new business model that could prove transformative.Not least,Deere delivered strong financial per

8、formance and solid returns for investors.While the coronavirus-related recession caused a slowdownin the general economy,demand for agricultural equipmentheld up well,especially for smaller models.By years end,the company had achieved sales and earnings near itsoriginal forecast,developed well befor

9、e the pandemicstruck.Profitability,measured by operating return on sales,was the best since 2014,even counting more than$500 million in charges for employee separation and asset impairment.Those actions will help our performance in the future but weighed on the years results.Deeres net income for fi

10、scal 2020 was$2.75 billion,down 15 percent from the prior year.Net sales and revenues declined 9 percent,to$35.54 billion.Adjusted for the charges noted above,earnings would have been on a par with 2019 levels.Despite the unsettled conditions,Deere maintained a strong financial condition,ending the

11、year with a cash balance of over$7 billion.Our equipment operations carried moderate debt while the financial-services business remained conservatively capitalized.Confronting Pandemic,Deere Delivers Year of Solid Achievement CHAIRMAN&CEO LETTERChairman and CEO John May is shown with a diesel-powere

12、d Gator XUV crossover series utility vehicle at Deeres demonstration site in Coal Valley,Illinois.3Annual_Report_Overall_Layout_Production_V9.indd 3Annual_Report_Overall_Layout_Production_V9.indd 312/28/20 1:14 PM12/28/20 1:14 PMThe companys financial performance allowed it to make further investmen

13、ts in technology-enabled products and services and growth-oriented projects.For the year,Deere devoted$2.4 billion to research and development and capital expenditures.Additionally,$1.7 billion was returned to investors through dividends and share repurchases.The investment community responded posit

14、ively to the companys performance,driving the value of Deere stock to record levels.Shareholders realized a total return of over 30 percent in 2020 compared with about 10 percent for the broad market.AG&TURF PROFITS MOVE HIGHERDespite lower sales,operating profit for our largest business Ag&Turf jum

15、ped 18 percent to$2.97 billion.The division benefited from lower costs and the continued adoption of precision technologies.In addition,sales rose for many models of small tractors and turf products.Though battered by a slower economy,our Construction&Forestry(C&F)operations remained solidly profita

16、ble.From last years record levels,sales declined by 20 percent and operating profit by about half.Still,the divisions operating margin of nearly 7 percent,or almost 9 percent after adjusting for special items,was quite respectable in light of the conditions.Helping C&F were strong sales of skid stee

17、r loaders and other compact equipment.Deeres financial-services unit again made a substantial contribution to company earnings while providing competitive financing to our global customers.As has been true for several years,more than half of the new equipment sold by our dealers in 2020 was financed

18、 by the company.Credit quality remained strong and the loan and lease portfolio held steady at about$46 billion.Net income for financial services was up 5 percent.SKILLFULLY MANAGING THE PANDEMICDeeres number-one achievement in 2020 did not concern the products we sold or the dollars we earned but t

19、he lives and livelihoods we safeguarded during the pandemic.Many other companies had little choice but to close their doors or otherwise suspend operations.However,John Deere employees redoubled their efforts to make sure our factories and parts centers kept running and that our dealers and customer

20、s had the products and services needed to maintain their operations.In our facilities,we took decisive steps to do employee screening,reorganize production lines,promote social distancing and the use of personal protective equipment,and ensure clean,healthful conditions.“Deeres number-one achievemen

21、t in 2020 did not concern the products we sold or the dollars we earned but the lives and livelihoods we safeguarded during the pandemic.”CHAIRMAN&CEO LETTERUnless indicated otherwise,all capitalized names of products and services are trademarks or service marks of Deere&Company.4Annual_Report_Overa

22、ll_Layout_Production_V9.indd 4Annual_Report_Overall_Layout_Production_V9.indd 412/29/20 2:41 PM12/29/20 2:41 PMOur dealer channel remained operational and continued to serve customers,making wide use of our unique digital tools.Remote diagnostic sessions between customers and dealers more than doubl

23、ed during the year.By working closely with suppliers,we were able to mitigate shortages of parts and components and avoid widespread factory interruptions.TRENDS SUPPORTIVE OF GROWTH,NEW STRATEGY Deeres record of performance has provided a solid foundation for the company to capitalize on a handful

24、of powerful trends,which are showing impressive resilience.Global consumption of grain and oilseeds has risen without interruption for more than two decades and last year outstripped production for the first time since the early 2010s.Urbanization,a potent trend in fast-growing emerging markets,poin

25、ts to a greater need for roads,bridges,buildings,and the equipment to construct and maintain them.These promising factors set the stage for the companys bold new operating plan taking effect in 2021,which intensifies our focus on technology,speed,and efficiency.Deeres smart industrial strategy,we be

26、lieve,could revolutionize agriculture and construction by accelerating the integration of technology with our legacy of manufacturing excellence.The strategy aims to deliver intelligent,connected machines and applications that unlock value for customers and do so in a sustainable,profitable manner.T

27、he all-new X Series combines are our most advanced ever.The technology-rich machines average 45 percent more harvesting capacity across all crops,all while using 20 percent less fuel.The X9 1100 can harvest up to 30 acres of wheat per hour and up to 7,200 bushels of corn per hour.A full suite of new

28、 front-end equipment is also available with the new models.5Annual_Report_Overall_Layout_Production_V9.indd 5Annual_Report_Overall_Layout_Production_V9.indd 512/28/20 11:00 AM12/28/20 11:00 AMAs the centerpiece of our smart industrial effort,company operations were reorganized around production syst

29、ems,representing the way customers work.This compares with the previous structure of being aligned by product platforms or geographies.Production-system teams assess all the steps needed to accomplish a job on the farm or work site by a particular customer segment,such as corn and soybean farmers or

30、 roadbuilders.The teams then develop a comprehensive set of products and services that can best meet the needs of those customers.In addition,operations for technology development our“tech stack”were consolidated under a chief technology officer.The move leverages our ability to rapidly develop adva

31、nced technologies and bring new products to market.As well,our customer support and aftermarket capabilities were combined into a new lifecycle-solutions unit.This aligns with our goal of supporting customers over the lifetime of our products,and it will help drive growth in parts sales and service

32、for the company and its dealers.To ensure the effective execution of our plans,we introduced a leaner,more agile organizational structure that we believe can meet customer needs and adapt to changing market conditions with unmatched speed and effectiveness.The redesign process led to fewer personnel

33、 layers,wider management spans,and more diversity in the leadership ranks.By adopting a more disciplined approach for capital allocation another tenet of our smart industrial effort Deere will direct investment and research dollars to the businesses and product lines most aligned with its strategy.T

34、he companys smart industrial plan holds the key to delivering differentiated value to our customers,sustaining our leadership in precision technologies,and providing more rewarding career opportunities for employees.Plus,it is designed to help the company achieve higher levels of growth and more con

35、sistent financial performance.SETTING THE PACE IN INNOVATION A Deere hallmark,product innovation earned further recognition in 2020.A noted group of U.S.agricultural and biological engineers recognized six of our new products for innovation.These included our high-capacity X9 combine and new CH950 s

36、ugarcane harvester.The breakthrough cane harvester produced in Brazil can almost double user productivity.The John Deere 8RX tractor was honored at the 2020 Consumer Electronics Show for its advanced features and digital capabilities.Further,the 8RX was saluted for innovative design by two leading i

37、nternational design agencies.Deeres most-advanced combine,introduced during the year,offers unsurpassed comfort,efficiency,and productivity.The two new X9 models deliver an average of 45 percent more harvesting capacity with no sacrifice in grain quality and less fuel use.The machines are the compan

38、ys first entries in the Class 10 and 11 categories suited for large production farmers.CHAIRMAN&CEO LETTERJose Martinez,a UAW Moline Seeding Group factory worker,assembles a protective face shield.The company produced more than 400,000 face shields to help protect employees,medical professionals,dea

39、lers,and business partners.6Annual_Report_Overall_Layout_Production_V9.indd 6Annual_Report_Overall_Layout_Production_V9.indd 612/28/20 11:00 AM12/28/20 11:00 AMPrecision agriculture made additional strides in 2020 as more customers embraced its productivity-enhancing and sustainability benefits.Sale

40、s rates continued to grow for popular features that automatically guide machines in the field and equipment that plants seeds and applies chemicals with exceptional accuracy.Our precision capabilities were further extended during the year to the application of liquid fertilizer.The John Deere Operat

41、ions Center continued to gain users,ending the year with more than 230 million acres of production data worldwide.New or updated construction equipment included a line of mid-sized backhoes that offer improved comfort and performance as well as an upgraded motor grader with more advanced features.Ou

42、r large hybrid loader,which has set standards in performance and efficiency,marked its fifth year on the market recording 1 million hours of customer use.Our Wirtgen roadbuilding unit introduced two large milling machines and made further improvements to its highly regarded cold-milling process that

43、 reduces the time,cost,and environmental impact of roadbuilding.PLA 120J/125J sprayers combine PLAs innovative product design with a John Deere engine,cab,and advanced precision ag technology to help growers boost spraying accuracy and productivity.New 700/750L crawlers offer a SmartGrade ready incl

44、uding Slope Control option that assists operators in grading surfaces.This new feature helps to quickly and accurately achieve the desired grade,resulting in higher productivity and reduced operating costs.Wirtgens new W 220 Fi and W 250 Fi cold-milling machines are setting new standards for milling

45、 performance and machine efficiency.The Mill Assist standard assistance system provides the optimal balance between performance and operating costs.This not only improves milling performance but also reduces fuel,water,and CO2 emissions.“Deeres smart industrial strategy,we believe,could revolutioniz

46、e agriculture and construction by accelerating the integration of technology with our legacy of manufacturing excellence.”7Annual_Report_Overall_Layout_Production_V9.indd 7Annual_Report_Overall_Layout_Production_V9.indd 712/28/20 11:00 AM12/28/20 11:00 AMRESPONSIBLE CITIZENSHIP A DEERE TRADITIONWher

47、ever we operate,Deere is committed to sharing with others and being a responsible corporate citizen.During the year,the company and its foundation made charitable contributions of approximately$37 million.These focused on empowering smallholder farmers,helping local communities grow,and providing qu

48、ality educational opportunities.In 2020,the foundation provided additional support for local food banks and coronavirus relief.In line with the companys commitment to a fairer,more equitable society,we co-founded a coalition dedicated to heirs property rights and made a major donation to the NAACP.A

49、s in past years,Deere employees supported their communities through extensive volunteer efforts,logging some 120,000 volunteer hours in 2020.The total moves the company closer to its goal of reaching 1 million volunteer hours for the period 2017 through 2022.Well-known for its record of responsible

50、citizenship,Deere earned further accolades in 2020.The company again appeared in prominent listings of best employers and was recognized for having one of the worlds top-100 brands.For a third year,Deere was honored for social innovation by the American Innovation Index Awards,recognizing U.S.compan

51、ies whose activities and products benefit society.In addition,Deere was named for a 13th time to a well-known listing of the worlds most ethical companies.YEAR AHEAD HOLDS PROMISE,CHALLENGE Looking ahead,we believe 2021 holds exciting promise.Crop prices and farmer confidence are on the rebound,lead

52、ing to better demand for farm machinery.Markets for construction and forestry equipment are showing signs of improvement as well.In addition,company performance is expected to benefit from a more efficient organizational structure and tightly-focused business lineup.At the same time,the coronavirus

53、pandemic still poses a serious threat that could slow our recent progress.It serves as a sobering reminder that we must continue making the health,safety,and well-being of our employees and others a top priority.As a final word,it is fitting we pay tribute to the dedicated employees of John Deere an

54、d our many dealers and suppliers throughout the world.Without their tireless efforts and many sacrifices,the achievements that made 2020 such a memorable year would not have been possible.To them all,we express our sincere and heartfelt thanks.On behalf of the John Deere team,Chairman&Chief Executiv

55、e OfficerDecember 17,2020CHAIRMAN&CEO LETTERIn 2020,Deere saw significant demand for small ag and turf products.Annual_Report_Overall_Layout_Production_V9.indd 8Annual_Report_Overall_Layout_Production_V9.indd 812/28/20 11:00 AM12/28/20 11:00 AMA production system is how our customers get work done.T

56、his includes both the jobs they perform and the decisions they make to produce an output.These in turn create the system a complete cycle where each step informs the next in which our customers operate.By aligning our business with key production systems,we can deliver solutions that will help custo

57、mers become more productive.It will also empower them to make better decisions and minimize inputs.This alignment allows us to identify the largest opportunities to help our customers save on expenses,increase productivity,and become more sustainable.In 2020,John Deere introduced the Smart Industria

58、l Operating Model with the aim of making our company more efficient and responsive.We believe the new operating model will unlock value for customers and help them become more profitable and sustainable.We also believe it will revolutionize agriculture through the rapid introduction of new technolog

59、ies.And it will help us deliver sustainable outcomes for our customers,employees,dealers,suppliers,shareholders,and the communities we serve.Three essential building blocks comprise the new operating model:Production Systems,Tech Stack,and Lifecycle Solutions.Think of our technology stack as the ful

60、l set of components required to deliver solutions to our customers.It comprises hardware and devices,embedded software,connectivity,data platforms,and applications that allow our next generation of smart machines to collaborate with other machines across our portfolio.Customers can extract data from

61、 one step in the production system in order to make the next step more effective.And as a result,they can potentially achieve increased productivity,greater profitability,and enhanced environmental outcomes throughout the full production system.When customers buy from John Deere,they expect to be su

62、pported the entire time they own that product the full lifecycle.This is increasingly important as our machines continue to become more connected and technologically advanced.We must provide both reactive and proactive customer support,easy access to parts,value-added services and performance upgrad

63、es to our customers regardless of when they purchased their equipment.Our new integrated support team will enhance the value created by our equipment and technology over the full lifecycle.A SMARTER WAY TO DO BUSINESSPRODUCTIONSYSTEMSTECHSTACKLIFECYCLESOLUTIONS9Annual_Report_Overall_Layout_Productio

64、n_V9.indd 9Annual_Report_Overall_Layout_Production_V9.indd 912/28/20 11:00 AM12/28/20 11:00 AMWe conduct business essential to life.Running for the people who trust us and the planet that sustains us,we create intelligent,connected machines that enable lives to leap forward.Wherever we operate,John

65、Deere is committed to being a responsible corporate citizen.John Deere uses two metrics that uphold our longstanding belief that citizenship is essential to our higher purpose.These two metricsone based on philanthropy and the other on volunteerismempower John Deere and our employees to help the liv

66、es of those we serve leap forward.In 2020,the company and its foundation made charitable contributions of approximately$37 million,helping improve lives throughout the world.These contributions focused on helping local communities grow,providing quality educational opportunities,and empowering small

67、holder farmers in developing markets such as southeast Asia and sub-Saharan Africa.Deere employees support their communities through extensive volunteering.By logging 120,000 volunteer hours in 2020,employees moved closer to the goal of 1 million volunteer hours for the period 2017 through 2022.Help

68、ing Secure Food for a Growing WorldFor nearly two centuries,John Deere has worked to tackle the global challenges of food security and economic empowerment.At the epicenter of global food insecurity are hundreds of millions of smallholder farmers in Africa and Asia.Because of the vital importance an

69、d vulnerability of the worlds smallholder farmers,John Deere invests in programs such as Rayuwa in northern Nigeria with partners like PYXERA Global.Much as we create a stack of technologies to unlock value in our customers operations,we create a stack of programs for those we serve through our citi

70、zenship programs that they can use to enrich their lives.Three vital programs include agronomic training,youth education,and volunteering.Taken together,these programs help create the opportunity for more profitable farms in the near term and for more prosperous farm families in the long term.They a

71、lso create meaningful volunteer opportunities for Deere employees.WE RUN SO LIFE CAN LEAP FORWARDIn Nigeria,the Rayuwa programs core objective is to increase farmer profitability.In its pursuit,Rayuwa creates new opportunities for women farmers,like Rahila Samaila,to thrive.10Annual_Report_Overall_L

72、ayout_Production_V9.indd 10Annual_Report_Overall_Layout_Production_V9.indd 1012/29/20 2:44 PM12/29/20 2:44 PMOPERATING PROFIT AND SHAREHOLDER VALUE ADDEDBUSINESS HIGHLIGHTSFinancial ServicesSVA*$73 MM$70 MM$37 MM$746 MM202020192018$694 MM$792 MMAgriculture&TurfSVA*$1,594 MM$1,469 MM$1,083 MM$2,969 M

73、M202020192018$2,506 MM$2,816 MMConstruction&Forestry SVA*-$111 MM$321 MM$395 MM$590 MM202020192018$1,215 MM$868 MMEquipment OperationsSVA*$1,483 MM$1,790 MM$1,478 MM$3,559 MM202020192018OPERATING PROFITOPERATING PROFITOPERATING PROFITOPERATING PROFIT$3,721 MM$3,684 MMCH9506 AWARDSPRECISION AGCES 202

74、0GREENHOUSE GAS REDUCTIONL-SERIES18.0-LITER ENGINEUP 18%Ag&Turf division operating profit rises to$2.97 billion,up 18%compared to 2019 Ag&Turf division launches the CH950,a game-changing two-row sugarcane harvester for the global sugarcane market.American Society of Agricultural and Biological Engin

75、eers(ASABE)presents six awards to Deere for innovations in engineering and technology for products ranging from the X9 combine to a new ExactRate liquid fertilizer system.Customers continue to adopt precision ag technologies at accelerating rates globally.Deere now has over 230 million engaged acres

76、 of production data globally.The Consumer Electronics Show honors the Deere 8RX tractor in the Tech for a Better World category of its 2020 Innovation Awards,which recognize outstanding product design and engineering in consumer technology products.Consistent with Deeres goal of reducing the environ

77、mental impact of its operations,Greenhouse Gas Emissions declined 17%compared with baseline year 2017.$1.56 BEnterprise SVA totals$1.56 billion,versus$1.52 billion in 2019 Construction&Forestry division introduces new L-Series 4WD Loaders,which incorporate many customer-driven improvements to boost

78、productivity.$566 MNet income for Financial Services rises to$566 million compared to$539 million in 2019Deere Power Systems announces new 18.0-liter diesel engine,the most powerful engine in its lineup,offering maximum power over 650 kW(870 hp).11Annual_Report_Overall_Layout_Production_V9.indd 11An

79、nual_Report_Overall_Layout_Production_V9.indd 1112/28/20 11:32 AM12/28/20 11:32 AMJohn C.May(23)Chairman&Chief Executive OfficerRyan D.Campbell(13)Senior Vice President and Chief Financial OfficerJahmy J.Hindman(24)Chief Technology OfficerMarc A.Howze(19)Group President,Lifecycle Solutions&Chief Adm

80、inistrative OfficerMary K.W.Jones(23)Senior Vice President,General Counsel and Worldwide Public AffairsRajesh Kalathur(24)President,John Deere Financial,and Chief Information OfficerCory J.Reed(22)President,Worldwide Agriculture&Turf Division,Production&Precision Ag,Sales&Marketing Regions of the Am

81、ericas and AustraliaJohn H.Stone(17)President,Worldwide Construction&Forestry and Power SystemsMarkwart von Pentz(30)President,Worldwide Agriculture&Turf Division,Small Ag&Turf,Sales&Marketing Regions of Europe,CIS,Asia and AfricaFrom left to right,top to bottom:John C.May,Ryan D.Campbell,Jahmy J.Hi

82、ndman,Marc A.Howze,Mary K.W.Jones,Rajesh Kalathur,Cory J.Reed,John H.Stone,Markwart von Pentz.Titles and years of service(in parentheses)as of January 1,2021LEADERSHIP TEAM12Annual_Report_Overall_Layout_Production_V9.indd 12Annual_Report_Overall_Layout_Production_V9.indd 1212/28/20 11:01 AM12/28/20

83、11:01 AMJohn C.May(1)Chairman&Chief Executive Officer,Deere&CompanyTamara A.Erwin(Effective May 1,2020)Executive Vice President and Group Chief Executive Officer,Verizon Business GroupCommunications,information and entertainment products and servicesAlan C.Heuberger(4)Senior Manager,BMGI Private inv

84、estment managementCharles O.Holliday,Jr.(11)Chairman,Royal Dutch Shell plc Oil and natural gas exploration,refining,and product salesDipak C.Jain(18)President(Europe),China Europe International Business School International graduate business schoolMichael O.Johanns(5)Retired U.S.Senator from Nebrask

85、a and former U.S.Secretary of AgricultureClayton M.Jones(13)Retired Chairman and Chief Executive Officer,Rockwell Collins,Inc.Aviation electronics and communicationsGregory R.Page(7)Chairman,Corteva,Inc.Agricultural seeds,crop protection products,and digital solutionsSherry M.Smith(9)Former Executiv

86、e Vice President and Chief Financial Officer,Supervalu Inc.Retail and wholesale grocery and retail general merchandise productsDmitri L.Stockton(5)Retired Special Advisor to Chairman and Retired Senior Vice President,General Electric Company Power and water,aviation,oil and gas,healthcare,appliances

87、 and lighting,energy management,transportation,and financial servicesFormer Chairman,President,and Chief Executive Officer,GE Asset Management Inc.Global investmentsSheila G.Talton(5)President and Chief Executive Officer,Gray Matter Analytics Healthcare analytics for healthcare providers,payers,and

88、pharma companiesBOARD OF DIRECTORSFrom left to right,top to bottom:John C.May,Tamara A.Erwin,Alan C.Heuberger,Charles O.Holliday,Jr.,Dipak C.Jain,Michael O.Johanns,Clayton M.Jones,Gregory R.Page,Sherry M.Smith,Dmitri L.Stockton,Sheila G.Talton.Figures in parentheses represent complete years of board

89、 service through January 1,202113Annual_Report_Overall_Layout_Production_V9.indd 13Annual_Report_Overall_Layout_Production_V9.indd 1312/28/20 11:27 AM12/28/20 11:27 AMThroughout the pandemic,Deere employees have made an extraordinary effort to support coworkers,customers,and communities.The followin

90、g examples show just some of the ways our employees made a difference.INNOVATING IN THE BATTLE AGAINST COVID-19Deere engineers around the world turned their creative energies toward helping keep employees,health care workers,and others safe.The engineers launched the COVID-19 Innovations Center webs

91、ite to share how Deere was developing personal protective equipment(PPE).Open-source files of these innovations were made available on the site.Ramakant Mishra(left)from John Deere Sirhind Works helps distribute food to the local Sirhind,India,community.In the wake of COVID-19,Deere and its employee

92、s worked with local food banks in our home communities in India,Brazil,and Mexico to deliver food to those in need.2.In a collaborative effort,production,maintenance,and salaried employees built and distributed 405,000 face shields to help frontline healthcare workers in 35 states,including 49 Veter

93、ans Affairs(VA)facilities.Danielle Pitzl(shown here),a nurse from the Fargo,North Dakota VA Healthcare System,dons a face shield.4.Deere engineer Andrew Jarvie used a 3D printer to make a small,plastic tool that allows a user to“grasp”a door handle with an angled hook without touching the handle.3.I

94、n Deere factories,assembly carts are used to move materials,and each cart may be touched by more than 100 employees a day.Manufacturing engineer Jason Sherron(shown here)developed Personal Use Safety Handles(PUSH),which allow employees to slide their own PUSH handles over factory assembly cart handl

95、es to move the cart.1.1324Annual_Report_Overall_Layout_Production_V9.indd 14Annual_Report_Overall_Layout_Production_V9.indd 1412/28/20 11:01 AM12/28/20 11:01 AM7-YEAR CUMULATIVE TOTAL RETURNDeere Compared To S&P 500 Index And S&P 500 Construction&Heavy Trucks IndexCopyright 2020 Standard&Poors,a div

96、ision of S&P Global.All rights reserved.SHAREHOLDER INFORMATIONANNUAL MEETINGAs part of our precautions regarding the coronavirus and to support the health and well-being of our shareholders,the 2021 Annual Meeting of Shareholders(the“Annual Meeting”)will be held exclusively online.There will not be

97、 a physical location for the Annual Meeting,and you will not be able to attend the meeting in person.To be admitted to the Annual Meeting at www.virtualshareholder- must enter the control number on your proxy card,voting instruction form,or Notice of Internet Availability.TRANSFER AGENT®ISTRARSen

98、d all correspondence,including address changes and certificates for transfer,as well as inquiries concerning lost,stolen,or destroyed stock certificates or dividend checks,to:Deere&Company c/o Broadridge Corporate Issuer Solutions,Inc.P.O.Box 1342 Brentwood,NY 11717Phone toll-free:800-268-7369(insid

99、e U.S.,U.S.territories,and Canada).From outside the U.S.,U.S.territories,and Canada,call:720-399-2074 Hearing impaired:855-627-5080Email: REINVESTMENT&DIRECT PURCHASE PLANInvestors may purchase initial Deere&Company shares and automatically reinvest dividends through the Broadridge Direct Stock Purc

100、hase Plan.Optional monthly cash investments may be made automatically through electronic debits.For inquiries about existing reinvestment accounts,call 800-268-7369 or write to:Deere&Company Broadridge Corporate Issuer Solutions,Inc.P.O.Box 1342 Brentwood,NY 11717SHAREHOLDER RELATIONSDeere&Company w

101、elcomes your comments:Deere&Company Shareholder Relations Department One John Deere Place Moline,IL 61265-8098 Phone:(309)765-4491 Fax:(309)765-4663 www.JohnD INVESTOR RELATIONSSecurities analysts,portfolio managers,and representatives of financial institutions may contact:Deere Investor Relations D

102、eere&Company One John Deere Place Moline,IL 61265-8098 Phone:309-765-4491 Email:DeereIRJohnD www.JohnD EXCHANGESDeere&Company common stock is listed on the New York Stock Exchange under the ticker symbol DE.FORM 10-KThe annual report on Form 10-K filed with the Securities and Exchange Commission is

103、available online or upon written request to Deere&Company Shareholder Relations.AUDITORSDeloitte&Touche LLP Chicago,IllinoisThe graph compares the cumulative total returns of Deere&Company,the S&P 500 Construction&Heavy Trucks Index,and the S&P 500 Stock Index over a seven-year period.It assumes$100

104、 was invested on October 25,2013 and that dividends were reinvested.Deere&Company stock price at November 1,2020 was$225.91.The Standard&Poors 500 Construction&Heavy Trucks Index is made up of Caterpillar(CAT),Cummins(CMI),Paccar(PCAR),and Wabtec(WAB).The stock performance shown in the graph is not

105、intended to forecast and does not necessarily indicate future price performance.$250$200$150$350$300$100$50$020132014201520162017201820192020 2013 2014 2015 2016 2017 2018 2019 2020Deere&Company$100.00$105.00$98.44$113.31$176.89$179.63$242.46$316.70 S&P Con&Heavy Trucks$100.00$117.99$87.22$103.62$16

106、0.10$139.49$170.08$199.18S&P 500$100.00$117.27$123.37$128.93$159.40$171.11$195.62$214.62Deere&CompanyS&P Construction&Heavy TrucksS&P 50015Annual_Report_Overall_Layout_Production_V9.indd 15Annual_Report_Overall_Layout_Production_V9.indd 1512/28/20 11:01 AM12/28/20 11:01 AM*On December 1,2017,the Com

107、pany acquired the stock and certain assets of substantially all of Wirtgen Group Holding GmbHs operations(Roadbuilding),the leading manufacturer worldwide of roadbuilding equipment.Roadbuilding is included in the construction and forestry segment and is excluded from the metrics above.*The 2018 SVA

108、was adjusted for certain effects of U.S.Tax Reform legislation enacted on December 22,2017,due to the significant discrete income tax benefit in 2018.SVA for 2019 and 2020 is calculated with unadjusted U.S.GAAP information.DEERE EQUIPMENT OPERATIONS*$MM unless indicated otherwise 2018 2019 2020Net s

109、ales 33,351 34,886 31,272Net sales excluding Roadbuilding 30,324 31,693 28,348Operating profit 3,684 3,721 3,559Operating profit excluding Roadbuilding 3,568 3,378 3,289Average Assets With inventories at standard cost 20,959 22,139 20,984With inventories at standard cost excluding Roadbuilding 14,82

110、5 15,838 15,046With inventories at LIFO 19,701 20,761 19,567With inventories at LIFO excluding Roadbuilding 13,566 14,460 13,629Operating Return on Assets(OROA)OROA%LIFO 26.3%23.4%24.1%Asset turns(std cost excluding Roadbuilding)2.05 2.00 1.88Operating margin%excluding Roadbuilding 11.77%10.67%11.60

111、%OROA%standard cost excluding Roadbuilding 24.1%21.3%21.9%Average assets std cost excluding Roadbuilding 14,825 15,838 15,046Operating profit excluding Roadbuilding 3,568 3,378 3,289Cost of assets-1,778-1,900-1,806SVA 1,790 1,478 1,483 AG&TURF$MM unless indicated otherwise 2018 2019 2020Net sales 23

112、,191 23,666 22,325Operating profit 2,816 2,506 2,969Average Assets With inventories at standard cost 11,233 11,860 11,455With inventories at LIFO 10,219 10,748 10,305Operating Return on Assets(OROA)OROA%LIFO 27.6%23.3%28.8%Asset turns(standard cost)2.06 2.00 1.95Operating margin%12.14%10.59%13.30%OR

113、OA%standard cost 25.1%21.1%25.9%Average assets standard cost 11,233 11,860 11,455Operating profit 2,816 2,506 2,969Cost of assets-1,347-1,423-1,375SVA 1,469 1,083 1,594 CONSTRUCTION&FORESTRY*$MM unless indicated otherwise 2018 2019 2020Net sales 10,160 11,220 8,947Net sales excluding Roadbuilding 7,

114、133 8,027 6,023Operating profit 868 1,215 590Operating profit excluding Roadbuilding 752 872 320Average Assets With inventories at standard cost 9,726 10,279 9,529With inventories at standard cost excluding Wirtgen 3,592 3,978 3,591With inventories at LIFO 9,482 10,013 9,529With inventories at LIFO

115、excluding Roadbuilding 3,347 3,712 3,324Operating Return on Assets(OROA)OROA%LIFO 22.5%23.5%9.6%Asset turns(std cost excluding Roadbuilding)1.99 2.02 1.68Operating margin%excluding Roadbuilding 10.54%10.86%5.31%OROA%standard cost excluding Roadbuilding 20.9%21.9%8.9%Average assets std cost excluding

116、 Roadbuilding 3,592 3,978 3,591Operating profit excluding Roadbuilding 752 872 320Cost of assets-431-477-431SVA 321 395-111 FINANCIAL SERVICES*$MM unless indicated otherwise 2018 2019 2020Net income attributable to Deere&Company 942 539 566Net income attributable to Deere&Company tax adjusted 530 Av

117、erage equity 4,832 5,040 5,099Average equity tax adjusted 4,793 Return on equity%10.7%11.1%Return on equity%tax adjusted 11.1%Operating profit*792 694 746Average equity 4,793 5,040 5,099Cost of equity-722-657-673SVA 70 37 73Financial Services SVA is calculated on a pretax basis.Shareholder Value Add

118、ed(SVA)essentially,the difference between operating profit and the pretax cost of capital is a metric used by John Deere to evaluate business results and measure sustainable performance.To arrive at SVA,each equipment segment is assessed a pretax cost of assets generally 12%of average identifiable o

119、perating assets with inventory at standard cost(believed to more closely approximate the current cost of inventory and the companys related investment).The financial services segment is assessed a cost of average equity approximately 13%pretax(15%in 2018).The amount of SVA is determined by deducting

120、 the asset or equity charge from operating profit.Additional information on these metrics and their relationship to amounts presented in accordance with U.S.GAAP can be found at our website,www.JohnD totals may vary due to rounding.17 Managements Discussion and Analysis 32 Reports of Management and

121、Independent Registered Public Accounting Firm 35 Consolidated Financial Statements 40 Notes to Consolidated Financial Statements 77 Selected Financial Data Table of ContentsTo create and grow SVA,Deere equipment operations are targeting an operating return on average operating assets(OROA)of 20%at m

122、id-cycle sales volumes and equally ambitious returns at other points in the cycle,with higher returns goals for incentive compensation targets.(For purposes of this calculation,operating assets are average identifiable assets during the year with inventories valued at standard cost.)SVA:FOCUSING ON

123、GROWTH AND SUSTAINABLE PERFORMANCE16Annual_Report_Overall_Layout_Production_V9.indd 16Annual_Report_Overall_Layout_Production_V9.indd 1612/28/20 11:01 AM12/28/20 11:01 AMMANAGEMENTS DISCUSSION AND ANALYSIS MANAGEMENTS DISCUSSION AND ANALYSIS 17 RESULTS OF OPERATIONS FOR THE YEARS ENDED NOVEMBER 1,20

124、20,NOVEMBER 3,2019,AND OCTOBER 28,2018 RESULTS OF OPERATIONS FOR THE YEARS ENDED NOVEMBER 1,2020,NOVEMBER 3,2019,AND OCTOBER 28,2018 OVERVIEW Organization OVERVIEW Organization The companys equipment operations generate revenues and cash primarily from the sale of equipment to John Deere dealers and

125、 distributors.The equipment operations manufacture and distribute a full line of agricultural equipment;a variety of commercial and consumer equipment;and a broad range of equipment for construction,roadbuilding,and forestry.The companys financial services primarily provide credit services,which mai

126、nly finance sales and leases of equipment by John Deere dealers and trade receivables purchased from the equipment operations.In addition,financial services offers extended equipment warranties.The information in the following discussion is presented in a format that includes information grouped as

127、consolidated,equipment operations,and financial services.The equipment operations represents the enterprise without financial services.The equipment operations includes the companys agriculture and turf operations,construction and forestry operations,and other corporate assets,liabilities,revenues a

128、nd expenses not reflected within financial services.The company also views its operations as consisting of two geographic areas,the U.S.and Canada,and outside the U.S.and Canada.The companys operating segments consist of agriculture and turf,construction and forestry,and financial services.Trends an

129、d Economic Conditions Trends and Economic Conditions The companys agriculture and turf equipment sales decreased 6 percent in 2020.Industry agricultural machinery sales in the U.S.and Canada for 2021 are forecast to increase 5 to 10 percent,compared to 2020.Industry sales in Europe are forecast to b

130、e about the same to 5 percent higher,and South American industry sales of tractors and combines are forecast to be about 5 percent higher in 2021.Asian sales are also forecast to be slightly lower.Industry sales of turf and utility equipment in the U.S.and Canada are expected to be about the same to

131、 5 percent higher.The companys construction and forestry sales decreased 20 percent in 2020.On an industry basis,North American construction equipment sales are expected to be down about 5 percent with sales of compact equipment up about 5 percent.Global forestry industry sales are expected to be ab

132、out the same to about 5 percent higher than 2020 sales.Items of concern include uncertainty of the effectiveness of governmental and private sector actions to address COVID,trade agreements,the uncertainty of the results of monetary and fiscal policies,the impact of elevated levels of sovereign and

133、state debt,capital market disruptions,changes in demand and pricing for new and used equipment,and geopolitical events.Significant fluctuations in foreign currency exchange rates and volatility in the price of many commodities could also impact the companys results.The future financial effects of CO

134、VID are unknown due to many factors.As a result,predicting the companys forecasted financial performance is difficult and subject to many assumptions.In the face of the ongoing challenges associated with managing the global pandemic,the company was able to complete a successful year and is positione

135、d to continue providing differentiated solutions for customers.The company expects to benefit from improving conditions in the farm economy and stabilization in construction and forestry markets.In addition,the manufacturing location and product reviews that started in 2020 as part of the companys t

136、ransition to an updated strategy will continue in 2021.COVID Effects and Actions COVID Effects and Actions During 2020,the effects of COVID and the related actions of governments and other authorities to contain COVID,have affected the companys operations,results,cash flows,and forecasts.The U.S.gov

137、ernment and many other governments in countries where the company operates have designated the company an essential critical infrastructure business.This designation allows the company to operate in support of its customers to the extent possible.The companys first priority in addressing the effects

138、 of COVID continues to be the health,safety,and overall welfare of its employees.The company effectively activated previously established business continuity plans and proactively implemented health and safety measures at its operations around the world.The economic effects of COVID have reduced cus

139、tomer demand for some of the companys products and services,particularly construction and forestry equipment(see Note 6),which resulted in lower shipment volumes.During most of 2020,all of the companys factories have operated,some at reduced capacity due to component shortages or lower demand.During

140、 the year,the company broadened the supply base and increased the inventory level of certain essential materials and components to address potential supplier issues.The measures taken beginning in the second quarter to aggressively decrease operational and selling,administrative and general expenses

141、 have been effective.Additional information is presented in“Business Segment and Geographic Area Results.”In addition,the companys actions taken in the second quarter to increase borrowings,along with significant cash generated from operations,provided a strong financial position(see Note 20 for add

142、itional information on long-term borrowings).Cash and cash equivalents were$7,066 million at November 1,2020 and the companys revolving credit facilities were undrawn.The companys share repurchase programs were suspended in the second quarter and all of the third quarter.These programs were reinstat

143、ed in the fourth quarter with$487 million of shares repurchased.Additional information is presented in“Capital Resources and Liquidity.”The company continued to work closely with distribution channel and equipment user customers during 2020,and,as necessary,provided short-term payment relief on obli

144、gations owed to the company.The payment relief provided on balances of trade receivables,financing receivables,and operating lease payments outstanding at November 1,2020 was about 2 percent,4 percent,18 and 4 percent of the portfolio balances,respectively.Additional information is presented in Note

145、s 13 and 25.2020 COMPARED WITH 2019 2020 COMPARED WITH 2019 CONSOLIDATED RESULTS CONSOLIDATED RESULTS The following table provides the net income attributable to Deere&Company in millions of dollars as well as diluted and basic earnings per share in dollars:2020 2019 2020 2019 Net income attributabl

146、e to Deere&Company.$2,751$3,253 Diluted earnings per share.8.69 10.15 Basic earnings per share.8.77 10.28 Net income in 2020 was negatively affected by impairment charges and employee-separation costs of$458 million after-tax(see Notes 4 and 5).Annual savings from the separation programs are estimat

147、ed to be approximately$250 million,of which$85 million was realized in 2020.In 2019,the similar charges were$82 million.In addition,the provision for income taxes was adversely affected by non-deductible impairments and charges in 2020 and less favorably affected by discrete adjustments in 2020 than

148、 in 2019.The worldwide net sales and revenues,price realization,and the effect of currency translation for worldwide,U.S.and Canada,and outside U.S.and Canada in millions of dollars follows:2020 2020 20192019%Change%Change Worldwide net sales and revenues$35,540$39,258 -9 Worldwide equipment operati

149、ons net sales.31,272 34,886 -10 Price realization.+3 Currency translation(unfavorable)-2 U.S.and Canada equipment operations net sales.17,954 20,264 -11 Price realization.+3 Outside U.S.and Canada equipment operations net sales.13,318 14,622 -9 Price realization.+4 Currency translation(unfavorable)-

150、4 The companys equipment operations operating profit and net income and financial services operations net income follow in millions of dollars:2020 2020 2019 2019%Change%Change Equipment operations operating profit$3,559$3,721 -4 Equipment operations net income*2,185 2,714 -19 Financial services net

151、 income.566 539 +5 *Includes equity income(loss)from unconsolidated affiliates.The discussion on net sales and operating profit is included in the Business Segment and Geographic Area Results below.The equipment operations provision for income taxes and net income were adversely affected by non-dedu

152、ctible impairments and charges in 2020 and was less favorably affected by discrete adjustments to the provision for income taxes in 2020 than in 2019.Financial services segment net income increased compared to 2019 mainly due to lower impairments and reduced losses on operating lease residual values

153、 and income earned on a higher average portfolio,partially offset by a higher provision for credit losses,employee-separation expenses,and unfavorable financing spreads.Additional information is presented in the following discussion of the“Worldwide Financial Services Operations.”The cost of sales t

154、o net sales ratio and other significant statement of consolidated income changes not previously discussed in millions of dollars follow:2020 2019%Change2020 2019%Change Cost of sales to net sales.75.7%76.8%Finance and interest income.$3,450$3,493 -1 Other income.818 879 -7 Research and development e

155、xpenses 1,644 1,783 -8 Selling,administrative and general expenses.3,477 3,551 -2 Interest expense.1,247 1,466 -15 Other operating expenses.1,612 1,578 +2 The cost of sales to net sales ratio decreased compared to 2019 mainly due to price realization,improved production costs,and lower warranty expe

156、nses,partially offset by impairments,employee-separation expenses(see Note 5),and the unfavorable effects of foreign currency exchange.Finance and interest income decreased slightly in 2020 due to lower average interest rates,largely offset by a higher average credit portfolio.Other income declined

157、primarily due to lower service income compared to 2019.Research and development expenses decreased compared to 2019 as a result of targeted project reductions related to COVID spending adjustments.Selling,administrative and general expenses decreased primarily due to spending reductions and the favo

158、rable effects of currency translation,mostly offset by employee-separation expenses(see Note 5)and an increase in the provision for credit losses.Interest expense decreased in 2020 due to lower average borrowing rates,partially offset by higher average borrowings.Other operating expenses increased c

159、ompared to 2019 largely due to increased depreciation of equipment on operating leases,employee-separation expenses(see Note 5),and a loss on sale of a business(see Note 4).These items were mostly offset by lower impairments and reduced losses on operating lease residual values and reduced service r

160、elated expenses.The company has several funded and unfunded defined benefit pension plans and other postretirement benefit(OPEB)plans,primarily health care and life insurance plans.The companys costs for these plans in 2020 were$341 million,compared with$235 million in 2019.The long-term expected re

161、turn on plan assets,which is reflected in these costs,was an expected gain of 6.4 percent in 2020 and 6.5 percent in 2019,or$869 million and$838 million,respectively.The actual return was a gain of$1,177 million in 2020 and$2,163 million in 2019.In 2021,the expected return will be approximately 5.9

162、percent.The companys costs under these plans in 2021 are expected to decrease approximately$150 million.19 The company makes any required contributions to the plan assets under applicable regulations and voluntary contributions after evaluating the companys liquidity position and ability to make tax

163、-deductible contributions.Total company contributions to the plans were$951 million in 2020 and$518 million in 2019,which included voluntary contributions and direct benefit payments.The voluntary contributions to plan assets were$700 million in 2020 to a U.S.OPEB plan,and$306 million in 2019,which

164、included$300 million to the same U.S.OPEB plan.Total company contributions in 2021 are expected to be approximately$950 million.The anticipated contributions include a voluntary U.S.OPEB plan contribution of$700 million.The remaining contributions primarily include direct benefit payments from compa

165、ny funds.The company has no significant required contributions to U.S.pension plan assets in 2021 under applicable funding regulations.See the discussion in“Critical Accounting Policies”for more information about pension and OPEB benefit obligations.BUSINESS SEGMENT AND GEOGRAPHIC AREA RESULTS BUSIN

166、ESS SEGMENT AND GEOGRAPHIC AREA RESULTS The following discussion relates to operating results by reportable segment and geographic area.Operating profit is income before corporate expenses,certain external interest expense,certain foreign exchange gains or losses,and income taxes.However,the financi

167、al services segment operating profit includes the effect of interest expense and foreign currency exchange gains or losses.Worldwide Agriculture and Turf Operations Worldwide Agriculture and Turf Operations The agriculture and turf segment results in millions of dollars follow:20202020 20192019%Chan

168、ge%Change Net sales.$22,325$23,666 -6 Operating profit.2,969 2,506 +18 Operating margin.13.3%10.6%Segment sales decreased due to lower shipment volumes and the unfavorable effects of currency translation,partially offset by price realization.Operating profit increased largely due to price realizatio

169、n,reduced selling,administrative and general expenses,lower research and development expenses,lower warranty expenses,and improved production costs.These items were partially offset by lower sales volumes/mix,employee-separation expenses,impairments,and the unfavorable effects of currency exchange.W

170、orldwide Construction and Forestry Operations Worldwide Construction and Forestry Operations The construction and forestry segment results in millions of dollars follow:2020 2020 2019 2019%Change%Change Net sales.$8,947$11,220 -20 Operating profit.590 1,215 -51 Operating margin.6.6%10.8%Segment sale

171、s decreased in 2020 primarily due to lower shipment volumes and the unfavorable effect of currency translation,partially offset by price realization.Operating profit declined mainly due to lower sales volume/mix,employee-separation expenses,impairments,and the unfavorable effects of currency exchang

172、e.The operating profit decrease was partially offset by price realization,lower research and development expenses,reduced selling,administrative and general expenses,and improved production costs.Worldwide Financial Services Operations Worldwide Financial Services Operations The financial services s

173、egment revenue,interest expense,and operating profit in millions of dollars follow:2020 2020 2019 2019%Change%Change Revenue(including intercompany revenue).$3,867$3,969 -3 Interest expense.942 1,234 -24 Operating profit.746 694 +7 Operating profit in 2020 increased mainly due to lower impairments a

174、nd reduced losses on operating lease residual values and income earned on a higher average portfolio,partially offset by a higher provision for credit losses,employee-separation expenses,and unfavorable financing spreads.The average balance of receivables and leases financed was 2 percent higher in

175、2020,compared with 2019.Interest expense decreased in 2020 as a result of lower average borrowing rates,partially offset by higher average borrowings.20 Equipment Operations in U.S.and Canada Equipment Operations in U.S.and Canada The equipment operations in the U.S.and Canada results in millions of

176、 dollars follow:2020 2020 2019 2019%Change%Change Net sales.$17,954$20,264 -11 Operating profit.2,194 2,335 -6 Operating margin.12.2%11.5%The operating profit decrease was due primarily to lower sales volume/mix and employee-separation expenses,partially offset by price realization,lower research an

177、d development costs,reduced selling,general and administrative expenses,improved production costs,and lower warranty expenses.Net sales decreased in 2020 due primarily to lower sales volumes,partially offset by price realization.The physical volume of sales decreased 14 percent compared with 2019.Eq

178、uipment Operations outside U.S.and Canada Equipment Operations outside U.S.and Canada The equipment operations outside the U.S.and Canada results in millions of dollars follow:2020 2020 2019 2019%Change%Change Net sales.$13,318$14,622 -9 Operating profit.1,365 1,386 -2 Operating margin.10.2%9.5%Oper

179、ating profit decreased primarily due to lower sales volume/mix,impairments,employee-separation expenses,and the unfavorable effects of currency exchange,largely offset by price realization,reduced selling,general and administrative expenses,lower research and development costs,improved production co

180、sts,and lower warranty expenses.The net sales decrease in 2020 compared to 2019 was primarily the result of lower sales volume and the unfavorable effects of currency translation,partially offset by price realization.The physical volume of sales decreased 9 percent compared with 2019.MARKET CONDITIO

181、NS Agriculture and Turf.MARKET CONDITIONS Agriculture and Turf.Industry sales of agricultural equipment in the U.S.and Canada are forecast to increase 5 to 10 percent driven by gains in larger models.Full year industry sales in Europe are forecast to be about the same as 2020 to 5 percent higher.In

182、South America,industry sales of tractors and combines are forecast to be about 5 percent higher while Asian sales are expected to be slightly lower than 2020.Industry sales of turf and utility equipment in the U.S.and Canada are expected to be about the same to 5 percent higher for 2021.Construction

183、 and Forestry.Construction and Forestry.Full year 2021 North American construction equipment industry sales are expected to be down about 5 percent with sales of compact equipment up about 5 percent.Global forestry industry sales are forecast to be about the same to 5 percent higher in 2021.Financia

184、l Services.Financial Services.Results for the full year 2021 are expected to benefit from favorable financing spreads,lower losses on operating lease residual values,and income earned on a higher average portfolio,partially offset by a higher provision for credit losses.SAFE HARBOR STATEMENT SAFE HA

185、RBOR STATEMENT Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:Statements under“Overview,”“Market Conditions,”and other forward-looking statements herein that relate to future events,expectations,and trends involve factors that are subject to change,and risks and unc

186、ertainties 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 companys businesses.The companys agricultural equipment business is subject to a number of uncertainties including the

187、factors that affect farmers 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 production expenses,availability of transport for crops,t

188、rade restrictions and tariffs(e.g.,China),global trade agreements,the level of farm product exports(including concerns about genetically modified organisms),the growth and sustainability of non-food uses for some crops(including ethanol and biodiesel production),real estate values,available acreage

189、for farming,the land ownership policies of governments,changes in government farm programs and policies,international reaction to such programs,changes in and effects of crop insurance programs,changes in environmental regulations and their impact on farming practices,animal diseases(e.g.,African sw

190、ine fever)and their effects on poultry,beef and pork consumption and prices and on livestock feed demand,and crop pests and diseases and the impact of the COVID pandemic on the agricultural industry including demand for,and production and exports of,agricultural products,and commodity prices.Factors

191、 affecting the outlook for the companys turf and utility equipment include consumer confidence,weather conditions,customer profitability,labor supply,consumer borrowing patterns,consumer purchasing preferences,housing starts and supply,infrastructure investment,spending by municipalities and golf co

192、urses,and consumable input costs.Many of these factors have been and may continue to be impacted by global economic effects,including the downturn resulting from the COVID pandemic and responses to the pandemic taken by governments and other authorities.Consumer spending patterns,real estate and hou

193、sing prices,the number of housing starts,interest rates,commodity prices such as oil and gas,the levels of public and non-residential construction,and investment in infrastructure are important to sales and results of the companys construction and forestry equipment.Prices for pulp,paper,lumber and

194、structural panels are important to sales of forestry equipment.Many of these factors affecting the outlook for the companys construction and forestry equipment have been and may continue to be impacted by global economic effects,including the downturn resulting from the COVID pandemic and responses

195、to the pandemic taken by governments and other authorities.21 All of the companys businesses and its results are affected by general economic conditions in the global markets and industries in which the company operates;customer confidence in general economic conditions;government spending and taxin

196、g;foreign currency exchange rates and their volatility,especially fluctuations in the value of the U.S.dollar;interest rates(including the availability of IBOR reference rates);inflation and deflation rates;changes in weather patterns;the political and social stability of the global markets in which

197、 the company operates;the effects of,or response to,terrorism and security threats;wars and other conflicts;natural disasters;and the spread of major epidemics(including the COVID pandemic)and government and industry responses to epidemics such as travel restrictions and extended shut down of busine

198、sses.Uncertainties related to the magnitude and duration of the COVID pandemic may significantly adversely affect the companys business and outlook.These uncertainties include:the duration and impact of the resurgence in COVID cases in any country,state,or region;prolonged reduction or closure of th

199、e companys operations,or a delayed recovery in our operations;additional closures as mandated or otherwise made necessary by governmental authorities;disruptions in the supply chain and a prolonged delay in resumption of operations by one or more key suppliers,or the failure of any key suppliers;the

200、 companys ability to meet commitments to customers on a timely basis as a result of increased costs and supply challenges;the ability to receive goods on a timely basis and at anticipated costs;increased logistics costs;delays in the companys strategic initiatives as a result of reduced spending on

201、research and development;additional operating costs due to remote working arrangements,adherence to social distancing guidelines and other COVID-related challenges;increased risk of cyber attacks on network connections used in remote working arrangements;increased privacy-related risks due to proces

202、sing health-related personal information;legal claims related to personal protective equipment designed,made,or provided by the company or alleged exposure to COVID on company premises;absence of employees due to illness;the impact of the pandemic on the companys customers and dealers,and their dela

203、ys in their plans to invest in new equipment;requests by the companys customers or dealers for payment deferrals and contract modifications;the impact of disruptions in the global capital markets and/or continued declines in the companys financial performance,outlook or credit ratings,which could im

204、pact the companys ability to obtain funding in the future;and the impact of the pandemic on demand for our products and services as discussed above.It is unclear when a sustained economic recovery could occur and what a recovery may look like.All of these factors could materially and adversely affec

205、t our business,liquidity,results of operations and financial position.Significant changes in market liquidity conditions,changes in the companys credit ratings and any failure to comply with financial covenants in credit agreements could impact access to funding and funding costs,which could reduce

206、the companys earnings and cash flows.Financial market conditions could also negatively impact customer access to capital for purchases of the companys products and customer confidence and purchase decisions,borrowing and repayment practices,and the number and size of customer loan delinquencies and

207、defaults.A debt crisis,in Europe or elsewhere,could negatively impact currencies,global financial markets,social and political stability,funding sources and costs,asset and obligation values,customers,suppliers,demand for equipment,and company operations and results.The companys investment managemen

208、t activities could be impaired by changes in the equity,bond and other financial markets,which would negatively affect earnings.The withdrawal of the United Kingdom from the European Union and the perceptions as to the impact of the withdrawal may adversely affect business activity,political stabili

209、ty and economic conditions in the United Kingdom,the European Union and elsewhere.The economic conditions and outlook could be further adversely affected by(i)uncertainty regarding any new or modified trade arrangements between the United Kingdom and the European Union and/or other countries,(ii)the

210、 risk that one or more other European Union countries could come under increasing pressure to leave the European Union,or(iii)the risk that the euro as the single currency of the Eurozone could cease to exist.Any of these developments,or the perception that any of these developments are likely to oc

211、cur,could affect economic growth 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 e

212、xchange rates,interest rates,financial institutions,and political,financial and monetary systems.Any of these developments could affect our businesses,liquidity,results of operations and financial position.Additional factors that could materially affect the companys operations,access to capital,expe

213、nses and results include changes in,uncertainty surrounding and the impact of governmental trade,banking,monetary and fiscal policies,including financial regulatory reform and its effects on the consumer finance industry,derivatives,funding costs and other areas;governmental programs,policies,and ta

214、riffs for the benefit of certain industries or sectors;sanctions in particular jurisdictions;retaliatory actions to such changes in trade,banking,monetary and fiscal policies;actions by central banks;actions by financial and securities regulators;actions by environmental,health and safety regulatory

215、 agencies,including those related to engine emissions,carbon and other greenhouse gas emissions,noise and the effects of climate change;changes to GPS radio frequency bands or their permitted uses;changes in labor and immigration regulations;changes to accounting standards;changes in tax rates,estim

216、ates,laws and regulations and company actions related thereto;changes to and compliance with privacy regulations;changes to and compliance with economic sanctions and export controls laws and regulations;compliance with U.S.and foreign laws when expanding to new markets and otherwise;and actions by

217、other regulatory bodies.22 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 through theft,infringement,cou

218、nterfeiting or otherwise;the availability and prices of strategically sourced materials,components and whole goods;delays or disruptions in the companys supply chain or the loss of liquidity by suppliers;disruptions of infrastructures that support communications,operations or distribution;the failur

219、e of customers,dealers,suppliers or the company to comply with laws,regulations and company policy pertaining to employment,human rights,health,safety,the environment,sanctions,export controls,anti-corruption,privacy and data protection and other ethical business practices;events that damage the com

220、panys reputation or brand;significant investigations,claims,lawsuits or other legal proceedings;start-up of new plants and products;the success of new product initiatives;changes in customer product preferences and sales mix;gaps or limitations in rural broadband coverage,capacity and speed needed t

221、o support technology solutions;oil and energy prices,supplies and volatility;the availability and cost of freight;actions of competitors in the various industries in which the company competes,particularly price discounting;dealer practices especially as to levels of new and used field inventories;c

222、hanges in demand and pricing for used equipment and resulting impacts on lease residual values;labor relations and contracts;changes in the ability to attract,train and retain qualified personnel;acquisitions and divestitures of businesses;greater than anticipated transaction costs;the integration o

223、f new businesses;the failure or delay in closing or realizing anticipated benefits of acquisitions,joint ventures or divestitures;the implementation of organizational changes;the failure to realize anticipated savings or benefits of cost reduction,productivity,or efficiency efforts;difficulties rela

224、ted to the conversion and implementation of enterprise resource planning systems;security breaches,cybersecurity attacks,technology failures and other disruptions to the companys and suppliers information technology infrastructure;changes in company declared dividends and common stock issuances and

225、repurchases;changes in the level and funding of employee retirement benefits;changes in market values of investment assets,compensation,retirement,discount and mortality rates which impact retirement benefit costs;and significant changes in health care costs.The liquidity and ongoing profitability o

226、f John Deere Capital Corporation and other credit subsidiaries depend largely on timely access to capital in order to meet future cash flow requirements,and to fund operations,costs,and purchases of the companys products.If general economic conditions deteriorate or capital markets become more volat

227、ile,including as a result of the COVID pandemic,funding could be unavailable or insufficient.Additionally,customer confidence levels may result in declines in credit applications and increases in delinquencies and default rates,which could materially impact write-offs and provisions for credit losse

228、s.The companys forward-looking statements are based upon assumptions relating to the factors described above,which are sometimes based upon estimates and data prepared by government agencies.Such estimates and data are often revised.The company,except as required by law,undertakes no obligation to u

229、pdate or revise its forward-looking statements,whether as a result of new developments or otherwise.Further information concerning the company and its businesses,including factors that could materially affect the companys financial results,is included in the companys other filings with the SEC(inclu

230、ding,but not limited to,the factors discussed in Item 1A.Risk Factors of this annual report on Form 10-K and subsequent quarterly reports on Form 10-Q).2019 COMPARED WITH 2018 2019 COMPARED WITH 2018 The comparison of the 2019 results with 2018 can be found under the heading“2019 Compared With 2018”

231、in the“Managements Discussion and Analysis”section of the companys 2019 Form 10-K,which comparison is incorporated by reference herein.CAPITAL RESOURCES AND LIQUIDITY CAPITAL RESOURCES AND LIQUIDITY The discussion of capital resources and liquidity has been organized to review separately,where appro

232、priate,the companys consolidated totals,equipment operations,and financial services operations.CONSOLIDATED CONSOLIDATED Positive cash flows from consolidated operating activities in 2020 were$7,483 million.This resulted primarily from net income adjusted for non-cash provisions,a decrease in receiv

233、ables related to sales,and a decrease in inventories,which were partially offset by a change in net retirement benefits(see Note 8).Cash outflows from investing activities were$3,319 million in 2020,due primarily to the cost of receivables(excluding receivables related to sales)and cost of equipment

234、 on operating leases acquired exceeding the collections of receivables and the proceeds from sales of equipment on operating leases by$2,637 million,purchases of property and equipment of$820 million,acquisition of businesses,net of cash acquired,of$66 million(see Note 4),and purchases of marketable

235、 securities exceeding proceeds from maturities and sales by$37 million,partially offset by a change in collateral on derivatives net of$268 million.Cash outflows from financing activities were$980 million in 2020,due primarily to dividends paid of$956 million and repurchases of common stock of$750 m

236、illion,partially offset by an increase in borrowings of$528 million and proceeds from the issuance of common stock(resulting from the exercise of stock options)of$331 million.Cash,cash equivalents,and restricted cash increased$3,216 million during 2020.The increase in cash was primarily to provide a

237、dded liquidity due to the financial uncertainty created by COVID.Over the last three years,operating activities have provided an aggregate of$12,717 million in cash.Cash inflows were also provided by increases in borrowings of$5,687 million,proceeds from issuance of common stock(resulting from the e

238、xercise of stock options)of$726 million,a change in collateral on derivatives 23 net of$268 million,and proceeds from sales of businesses and unconsolidated affiliates of$249 million.The aggregate amount of these cash inflows was used mainly to acquire receivables(excluding receivables related to sa

239、les)and equipment on operating leases that exceeded collections of receivables and the proceeds from sales of equipment on operating leases by$7,480 million,acquire businesses of$5,311 million,repurchase common stock of$2,961 million,purchase property and equipment of$2,836 million,and pay dividends

240、 of$2,705 million.Cash,cash equivalents,and restricted cash decreased$2,295 million over the three-year period.The company has access to most global capital markets at reasonable costs and expects to have sufficient sources of global funding and liquidity to meet its funding needs.Sources of liquidi

241、ty for the company include cash and cash equivalents,marketable securities,funds from operations,the issuance of commercial paper and term debt,the securitization of retail notes(both public and private markets),and committed and uncommitted bank lines of credit.The companys commercial paper outstan

242、ding at November 1,2020 and November 3,2019 was$1,238 million and$2,698 million,respectively,while the total cash and cash equivalents and marketable securities position was$7,707 million and$4,438 million,respectively.The amount of the total cash and cash equivalents and marketable securities held

243、by foreign subsidiaries was$5,010 million and$2,731 million at November 1,2020 and November 3,2019,respectively.Lines of Credit.The company also has access to bank lines of credit with various banks throughout the world.Worldwide lines of credit totaled$8,413 million at November 1,2020,$6,801 millio

244、n of which were unused.For the purpose of computing the unused credit lines,commercial paper,and short-term bank borrowings,excluding secured borrowings and the current portion of long-term borrowings,were primarily considered to constitute utilization.Included in the total credit lines at November

245、1,2020 was a 364-day credit facility agreement of$3,000 million,expiring in fiscal April 2021.In addition,total credit lines included long-term credit facility agreements of$2,500 million,expiring in fiscal April 2024,and$2,500 million,expiring in fiscal April 2025.The agreements are mutually extend

246、able and the annual facility fees are not significant.These credit agreements require John Deere Capital Corporation(Capital Corporation)to maintain its consolidated ratio of earnings to fixed charges at not less than 1.05 to 1 for each fiscal quarter and the ratio of senior debt,excluding securitiz

247、ation indebtedness,to capital base(total subordinated debt and stockholders equity 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 ca

248、pital(total debt and stockholders equity excluding accumulated other comprehensive income(loss)of 65 percent or less at the end of each fiscal quarter.Under this provision,the companys excess equity capacity and retained earnings balance free of restriction at November 1,2020 was$12,892 million.Alte

249、rnatively under this provision,the equipment operations had the capacity to incur additional debt of$23,942 million at November 1,2020.All of these credit agreement requirements have been met during the periods included in the consolidated financial statements.Debt Ratings.To access public debt capi

250、tal markets,the company relies on credit rating agencies to assign short-term and long-term credit ratings to the companys securities as an indicator of credit quality for fixed income investors.A security rating is not a recommendation by the rating agency to buy,sell,or hold company securities.A c

251、redit rating agency may change or withdraw company ratings based on its assessment of the companys current and future ability to meet interest and principal repayment obligations.Each agencys rating should be evaluated independently of any other rating.Lower credit ratings generally result in higher

252、 borrowing costs,including costs of derivative transactions,and reduced access to debt capital markets.The senior long-term and short-term debt ratings and outlook currently assigned to unsecured company securities by the rating agencies engaged by the company are as follows:Senior Long-Term Short-T

253、erm Outlook Fitch Ratings.A F1 Stable Moodys Investors Service,Inc.A2 Prime-1 Stable Standard&Poors.A A-1 Stable Trade accounts and notes receivable primarily arise from sales of goods to independent dealers.Trade receivables decreased by$1,059 million in 2020 due primarily to lower shipment volumes

254、.The ratio of trade accounts and notes receivable at November 1,2020 and November 3,2019 to fiscal year net sales was 13 percent in 2020 and 15 percent in 2019.Total worldwide agriculture and turf receivables decreased$343 million and construction and forestry receivables decreased$716 million.The c

255、ollection period for trade receivables averages less than 12 months.The percentage of trade receivables outstanding for a period exceeding 12 months was 3 percent at both November 1,2020 and November 3,2019.Deere&Companys stockholders equity was$12,937 million at November 1,2020,compared with$11,413

256、 million at November 3,2019.The increase of$1,524 million resulted from net income attributable to Deere&Company of$2,751 million,an increase in common stock of$253 million,and a change in the cumulative translation adjustment of$55 million,which was partially offset by dividends declared of$955 mil

257、lion and an increase in treasury stock of$591 million.EQUIPMENT OPERATIONS EQUIPMENT OPERATIONS The companys equipment businesses are capital intensive and are subject to seasonal variations in financing requirements for inventories and certain receivables from dealers.The equipment operations sell

258、a significant portion of their trade receivables to financial services.To the extent necessary,funds provided from operations are supplemented by external financing sources.Cash provided by operating activities of the equipment operations during 2020,including intercompany cash flows,was$4,760 milli

259、on due primarily to net income adjusted for non-cash provisions,a decrease in inventories,and a decrease in trade,notes 24 and financing receivables related to sales,partially offset by a change in net retirement benefits(see Note 8)and a decrease in accounts payable and accrued expenses.Over the la

260、st three years,these operating activities,including intercompany cash flows,have provided an aggregate of$11,241 million in cash.Trade receivables held by the equipment operations decreased by$469 million during 2020.The equipment operations sell a significant portion of their trade receivables to f

261、inancial services(see previous consolidated discussion).Inventories decreased by$976 million in 2020 due primarily to a planned reduction based on the uncertainty related to COVID and other macroeconomic issues.A majority of these inventories are valued on the last-in,first-out(LIFO)method.The ratio

262、s of inventories on a first-in,first-out(FIFO)basis(see Note 15),which approximates current cost,to fiscal year cost of sales were 28 percent and 29 percent at November 1,2020 and November 3,2019,respectively.Total interest-bearing debt,excluding finance lease liabilities,of the equipment operations

263、 was$10,382 million at the end of 2020,compared with$6,446 million at the end of 2019 and$6,223 million at the end of 2018.The ratio of total debt to total capital(total interest-bearing debt and Deere&Companys stockholders equity)at the end of 2020,2019,and 2018 was 45 percent,36 percent,and 36 per

264、cent,respectively.In 2020,the equipment operations issued three tranches of notes in the U.S.with aggregate principal totaling$2,250 million that are due from 2025 to 2050.The equipment operations also issued Euro notes with aggregate principal totaling 2,000 million(approximately$2,170 million base

265、d on the exchange rate at the issue date)that are due from 2024 to 2032(see Note 20).In 2020,the equipment operations issued commercial paper in the U.S.with aggregate principal totaling$466 million,of which$448 million had an original term greater than 90 days.This commercial paper was repaid in 20

266、20 and is presented in“Increase(decrease)in total short-term borrowings”in the statement of consolidated cash flows.Property and equipment cash expenditures for the equipment operations in 2020 were$816 million,compared with$1,118 million in 2019.Capital expenditures in 2021 are estimated to be$900

267、million.FINANCIAL SERVICES FINANCIAL SERVICES The financial services operations rely on their ability to raise substantial amounts of funds to finance their receivable and lease portfolios.Their primary sources of funds for this purpose are a combination of commercial paper,term debt,securitization

268、of retail notes,equity capital,and borrowings from Deere&Company.The cash provided by operating activities was used for investing and financing activities.Cash flows from the financial services operating activities,including intercompany cash flows,were$1,976 million in 2020.Cash used by investing a

269、ctivities totaled$1,216 million in 2020 due primarily to the cost of receivables(excluding trade and wholesale)and cost of equipment on operating leases acquired exceeding collections of these receivables and the proceeds from sales of equipment on operating leases by$3,414 million,and purchases of

270、marketable securities exceeding proceeds from maturities and sales by$33 million.Partially offsetting the use of cash was a decrease in trade receivables and wholesale notes of$1,999 million and a change in collateral on derivatives net of$274 million.Cash used for financing activities totaled$460 m

271、illion in 2020,resulting primarily from a decrease in external borrowings of$3,274 million and dividends paid to Deere&Company of$386 million,partially offset by an increase in borrowings from Deere&Company of$3,207 million.Cash,cash equivalents,and restricted cash increased$256 million.Over the las

272、t three years,the operating activities,including intercompany cash flows,have provided$6,036 million in cash.In addition,an increase in total borrowings of$5,916 million and a change in collateral on derivatives net of$274 million provided cash inflows.These amounts have been used mainly to fund rec

273、eivables(excluding trade and wholesale)and equipment on operating lease acquisitions,which exceeded collections and the proceeds from sales of equipment on operating leases,by$10,615 million,pay dividends to Deere&Company of$1,277 million,purchase$161 million of marketable securities in excess of ma

274、turities and sales,and fund an increase in trade and wholesale receivables of$158 million.Cash,cash equivalents,and restricted cash decreased$277 million over the three-year period.Receivables and equipment on operating leases decreased by$332 million in 2020,compared with 2019.Total acquisition vol

275、umes of receivables(excluding trade and wholesale)and cost of equipment on operating leases increased 2 percent in 2020,compared with 2019.The volume of retail notes increased approximately 9 percent.The volume of revolving charge accounts remained about the same.The volumes of operating leases and

276、financing leases decreased 18 percent and 5 percent,respectively.During 2020,the wholesale notes and trade receivables portfolios decreased 25 percent and 17 percent,respectively.Total external interest-bearing debt of the financial services operations was$35,556 million at the end of 2020,compared

277、with$38,888 million at the end of 2019 and$36,033 million at the end of 2018.Total external borrowings have changed generally corresponding with the level of the receivable and lease portfolio,the level of cash and cash equivalents,the change in payables owed to Deere&Company,and the change in inves

278、tment from Deere&Company.The financial services operations ratio of total interest-bearing debt to total stockholders equity was 7.8 to 1 at the end of 2020,8.0 to 1 at the end of 2019,and 7.5 to 1 at the end of 2018.The Capital Corporation has a revolving credit agreement to utilize bank conduit fa

279、cilities to securitize retail notes(see Note 14).At November 1,2020,the facility had a total capacity,or“financing limit,”of up to$3,500 million of secured financings at any time.The facility was renewed in November 2020 with a capacity of$2,000 million.After a two-year revolving period,unless the b

280、anks and Capital Corporation agree to renew,Capital Corporation would liquidate the secured borrowings over time as payments on the 25 retail notes are collected.At November 1,2020,$1,802 million of short-term securitization borrowings was outstanding under the agreement.During 2020,the financial se

281、rvices operations issued$3,274 million and retired$2,895 million of retail note securitization borrowings.During 2020,the financial services operations also issued$4,685 million and retired$6,776 million of long-term borrowings,which were primarily medium-term notes.OFF-BALANCE-SHEET ARRANGEMENTS OF

282、F-BALANCE-SHEET ARRANGEMENTS At November 1,2020,the company had approximately$380 million of guarantees issued primarily to banks outside the U.S.and Canada related to third-party receivables for the retail financing of John Deere equipment.The company may recover a portion of any required payments

283、incurred under these agreements from repossession of the equipment collateralizing the receivables.The maximum remaining term of the receivables guaranteed at November 1,2020 was approximately seven years.AGGREGATE CONTRACTUAL OBLIGATIONS AGGREGATE CONTRACTUAL OBLIGATIONS The payment schedule for th

284、e companys contractual obligations at November 1,2020 in millions of dollars is as follows:Less More than 2&3 4&5 than Total 1 year years years 5 years On-balance-sheet On-balance-sheet Debt*Equipment operations*$10,441$292$1,804$1,635$6,710 Financial services*34,948 10,634 14,215 5,444 4,655 Total.

285、45,389 10,926 16,019 7,079 11,365 Interest relating to debt*5,937 951 1,231 781 2,974 Accounts payable.3,022 2,933 63 24 2 Operating leases.323 90 126 66 41 Finance leases.62 22 30 8 2 Off-balance-sheet Off-balance-sheet Purchase obligations.2,708 2,640 61 5 2 TotalTotal.$57,441$17,562$17,530$7,963$

286、14,386 *Principal payments.*Payments related to securitization borrowings of$4,687 million classified as short-term on the balance sheet related to the securitization of retail notes are included in this table based on the expected payment schedule(see Note 18).*Includes projected payments related t

287、o interest rate swaps.The previous table does not include unrecognized tax benefit liabilities of approximately$668 million at November 1,2020,since the timing of future payments is not reasonably estimable at this time(see Note 9).For additional information regarding pension and OPEB obligations,sh

288、ort-term borrowings,long-term borrowings,and lease obligations,see Notes 8,18,20,and 25,respectively.CRITICAL ACCOUNTING POLICIES CRITICAL ACCOUNTING POLICIES The preparation of the companys consolidated financial statements in conformity with accounting principles generally accepted in the U.S.requ

289、ires management to make estimates and assumptions that affect reported amounts of assets,liabilities,revenues,and expenses.Changes in these estimates and assumptions could have a significant effect on the financial statements.The accounting policies below are those management believes are the most c

290、ritical to the preparation of the companys financial statements and require the most difficult,subjective,or complex judgments.The companys other accounting policies are described in the Notes to the Consolidated Financial Statements.Sales Incentives Sales Incentives At the time a sale to a dealer i

291、s recognized,the company records an estimate of the future sales incentive costs as a reduction to the sales price.These incentives may be based on a dealers purchase volume,or on retail sales incentive programs for allowances and financing programs that will be due when the dealer sells the equipme

292、nt to a retail customer.The estimated cost of these programs is based on historical data,announced and expected incentive programs,field inventory levels,and forecasted sales volumes.The final cost of these programs is determined at the end of the measurement period for volume-based incentives or wh

293、en the dealer sells the equipment to the retail customer.This is due to numerous programs available at any particular time and new programs that may be announced after the company records the equipment sale.Changes in the mix and types of programs affect these estimates,which are reviewed quarterly.

294、The sales incentive accruals at November 1,2020,November 3,2019,and October 28,2018 were$1,718 million,$2,033 million,and$1,850 million,respectively.The total accrual is recorded$1,109 million,$1,443 million,and$1,297 million in trade accounts and notes receivable net,and$609 million,$590 million,an

295、d$553 million in accounts payable and accrued expenses at November 1,2020,November 3,2019,and October 28,2018,respectively.The decrease in 2020 primarily resulted from lower sales volume and the increase in 2019 primarily related to higher sales volume.The estimation of the retail sales incentive ac

296、crual is impacted by many assumptions.One of the key assumptions is the predictive value of the historical percent of retail sales incentive costs to retail sales from dealers.Over the last five fiscal years,this percent has varied by an average of approximately plus or minus.6 percent,compared to t

297、he average retail sales incentive costs to retail sales percent during that period.Holding other assumptions constant,if this estimated retail incentive cost experience percent were to increase or decrease.6 percent,the sales incentive accrual at November 1,2020 would increase or decrease by approxi

298、mately$42 million.Product Warranties Product Warranties At the time a sale is recognized,the company records the estimated future warranty costs.The company generally determines its total warranty liability by applying historical claims rate experience to the estimated amount of equipment that has b

299、een sold and is still under warranty based on dealer inventories and retail sales.The historical claims rate is primarily determined by a review of five-year claims costs and consideration of current quality developments.Variances in claims experience and the type of warranty programs affect these e

300、stimates,which are reviewed quarterly.The product warranty accruals,excluding extended warranty unamortized premiums,at November 1,2020,November 3,2019,and October 28,2018 were$1,105 million,$1,218 million,and$1,146 26 million,respectively.The decrease in 2020 primarily related to lower sales volume

301、 and the increase in 2019 was related primarily to higher sales volume.Estimates used to determine the product warranty accruals are significantly affected by the historical percent of warranty claims costs to sales.Over the last five fiscal years,this percent has varied by an average of approximate

302、ly plus or minus.07 percent,compared to the average warranty costs to sales percent during that period.Holding other assumptions constant,if this estimated cost experience percent were to increase or decrease.07 percent,the warranty accrual at November 1,2020 would increase or decrease by approximat

303、ely$27 million.Postretirement Benefit Obligations Postretirement Benefit Obligations Pension and other postretirement benefit,primarily health care and life insurance plans,obligations are based on various assumptions used by the companys actuaries in calculating these amounts.These assumptions incl

304、ude discount rates,health care cost trend rates,expected return on plan assets,compensation increases,retirement rates,mortality rates,and other factors.Actual results that differ from the assumptions and changes in assumptions affect future expenses and obligations.The pension liabilities,net of pe

305、nsion assets,recognized on the balance sheet at November 1,2020 and November 3,2019 were$447 million and$226 million,respectively.The pension assets,net of pension liabilities,recognized on the balance sheet at October 28,2018 were$494 million.The increases in pension net liabilities in 2020 and 201

306、9 were due primarily to decreases in discount rates and interest on the liabilities,largely offset by the return on plan assets.The OPEB liabilities,net of OPEB assets,at November 1,2020,November 3,2019,and October 28,2018 were$3,892 million,$4,686 million,and$4,753 million,respectively.The decrease

307、 in OPEB net liabilities in 2020 was due primarily to contributions to a U.S.OPEB plan.The decrease in OPEB net liabilities in 2019 was due primarily to contributions to a U.S.OPEB plan,a decrease in health care trend rates,and company contributions for benefit payments,mostly offset by decreases in

308、 discount rates.The effect of hypothetical changes to selected assumptions on the companys major U.S.retirement benefit plans would be as follows in millions of dollars:November 1,2020 November 1,2020 2021 2021 Increase Increase Percentage (Decrease)(Decrease)Assumptions Change PBO/APBO*Expense Pens

309、ion Pension Discount rate*.+/-.5$(840)/972$(37)/43 Expected return on assets +/-.5 (59)/59 OPEB OPEB Discount rate*.+/-.5 (304)/336 3/(3)Expected return on assets +/-.5 (7)/7 Health care cost trend rate*.+/-1.0 577/(482)54/(33)*Projected benefit obligation(PBO)for pension plans and accumulated postr

310、etirement benefit obligation(APBO)for OPEB plans.*Pretax impact on service cost,interest cost,and amortization of gains or losses.GoodwillGoodwill Goodwill is not amortized and is tested for impairment annually and when events or circumstances change such that it is more likely than not that the fai

311、r value of a reporting unit is reduced below its carrying amount.The end of the fiscal third quarter is the annual measurement date.To test for goodwill impairment,the carrying value of each reporting unit is compared with its fair value.If the carrying value of the goodwill is considered impaired,a

312、 loss is measured as the excess of the reporting units carrying value over the fair value,with a limit of the goodwill allocated to that reporting unit.An estimate of the fair value of the reporting unit is determined through a combination of comparable market values for similar businesses and disco

313、unted cash flows.These estimates can change significantly based on such factors as the reporting units financial performance,economic conditions,interest rates,growth rates,pricing,changes in business strategies,and competition.Based on this testing,the company has not identified a reporting unit fo

314、r which the goodwill was impaired in 2020,2019,or 2018.For all reporting units,a 10 percent decrease in the estimated fair value would have had no effect on the carrying value of goodwill at the annual measurement date in 2020.Allowance for Credit Losses Allowance for Credit Losses The allowance for

315、 credit losses represents an estimate of the losses inherent in the companys receivable portfolio.The level of the allowance is based on many quantitative and qualitative factors,including historical net loss experience by finance product category,portfolio duration,delinquency trends,economic condi

316、tions in the companys major markets and geographies,commodity price trends,and credit risk quality.The company has an established process to calculate a range of possible outcomes and determine the adequacy of the allowance.The adequacy of the allowance is assessed quarterly by finance product categ

317、ory.Different assumptions or changes in economic conditions would result in changes to the allowance for credit losses and the provision for credit losses.The total allowance for credit losses at November 1,2020,November 3,2019,and October 28,2018 was$223 million,$222 million,and$248 million,respect

318、ively.The allowance was about the same in 2020 compared to 2019 with an increase in the financing receivable allowance largely offset by a decrease in the allowance for trade accounts and notes receivable(see Note 13).The allowance decrease in 2019 was mainly due to improvement in credit loss experi

319、ence in certain foreign markets.The assumptions used in evaluating the companys exposure to credit losses involve estimates and significant judgment.The historical loss experience on the receivable portfolio represents one factor used in determining the allowance for credit losses.Compared to the av

320、erage loss experience over the last five fiscal years,this percent has varied by an average of approximately plus or minus.02 percent,compared to the average loss experience percent during that period.Holding other factors constant,if this estimated loss experience on the receivable portfolio were t

321、o increase or decrease.02 percent,the allowance for credit losses at 27 November 1,2020 would increase or decrease by approximately$9 million.Operating Lease Residual Values Operating Lease Residual Values The carrying value of equipment on operating leases is affected by the estimated fair values o

322、f the equipment at the end of the lease(residual values).Upon termination of the lease,the equipment is either purchased by the lessee or sold to a third party,in which case the company may record a gain or a loss for the difference between the estimated residual value and the sale price.The estimat

323、ed residual values are based on several factors,including lease term,expected hours of usage,historical wholesale sales prices,return experience,intended equipment use,market dynamics and trends,and dealer residual guarantees.The company reviews residual value estimates during the lease term and tes

324、ts carrying value of its operating leases when events or circumstances necessitate.Changes in residual value assumptions would affect the amount of depreciation expense and the amount of investment in equipment on operating leases.The total operating lease residual values at November 1,2020,November

325、 3,2019,and October 28,2018 were$5,254 million,$5,259 million,and$5,089 million,respectively.The minor decrease in 2020 primarily related to a lower average operating lease portfolio and the increase in 2019 was due primarily to increasing levels of operating leases.Estimates used in determining end

326、 of lease market values for equipment on operating leases significantly impact the amount and timing of depreciation expense.Hypothetically,if future market values for this equipment were to decrease 10 percent from the companys present estimates,the total effect would be to increase the companys an

327、nual depreciation for equipment on operating leases by approximately$175 million.Income Taxes Income Taxes The companys income tax provision,deferred income tax assets and liabilities,and liabilities for uncertain tax benefits represent the companys best estimate of current and future income taxes t

328、o be paid.The annual tax rate is based on income tax laws,statutory tax rates,taxable income levels,and tax planning opportunities available in various jurisdictions where the company operates.These tax laws are complex,and require significant judgment to determine the consolidated provision for inc

329、ome taxes.Changes in tax laws,regulations,statutory tax rates,and estimates of the companys future taxable income levels could result in actual realization of deferred taxes being materially different from amounts provided for in the consolidated financial statements.Deferred income taxes represent

330、temporary differences between the tax and the financial reporting basis of assets and liabilities,which will result in taxable or deductible amounts in the future.Deferred tax assets also include loss carryforwards and tax credits.These assets are regularly assessed for the likelihood of recoverabil

331、ity from estimated future taxable income,reversal of deferred tax liabilities,and tax planning strategies.To the extent the company determines that it is more likely than not a deferred income tax asset will not be realized,a valuation allowance is established.The recoverability analysis of the defe

332、rred income tax assets and the related valuation allowances requires significant judgment and relies on estimates.Uncertain tax positions are determined based on whether it is more likely than not the tax positions will be sustained based on the technical merits of the position.For those positions t

333、hat meet the more likely than not criteria,an estimate of the largest amount of tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the related tax authority is recognized.The ultimate resolution of the tax position could take many years and result in a payment that is significantly different from the original estimate.Tax reform(see Note 9)included addi