DE

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How DE rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Item 1A Risk Factors, “Strategic Risks— We may not realize the anticipated benefits of our Smart Industrial Operating Model and Leap Ambitions.” Equipment Operations Our equipment operations consist of three of our business segments: PPA, SAT, and CF.
In fiscal year 2025, PPA generated $17,311 net sales, or 45% of equipment operations net sales; SAT generated $10,224 net sales, or 26% of equipment operations net sales; and CF generated $11,382 net sales, or 29% of equipment operations net sales.
Production & Precision Agriculture The PPA segment is committed to meeting the fundamental needs of our customers through a combination of equipment and technology designed to enable our customers to overcome some of their biggest challenges: doing more with less, labor shortages, volatile input costs, and executing jobs in tighter timeframes.
This segment defines, develops, and delivers global equipment and technology solutions for production-scale growers of crops like large grains (such as corn and soy), small grains (such as wheat, oats, and barley), cotton, and sugarcane.
Equipment manufactured and distributed by the segment includes four-wheel-drive (4WD)/track and row crop tractors, harvesters, cotton pickers, cotton strippers, sugarcane harvesters, sugarcane loaders, and related harvesting front-end equipment.
In addition, the segment includes tillage, seeding, and application equipment, including sprayers and nutrient management, and soil preparation machinery, and related attachments and service parts.
We continue to invest in the development and production of advanced technology through integrated agricultural solutions and precision technologies across our portfolio of equipment.
We believe our investments in precision technology will transform our farmers’ equipment into smarter, more efficient machines.
We have developed a production system-level approach that helps us understand how customers operate, focusing on their costs, identifying the opportunities for them to reduce inputs, and to improve productivity, crop yields, and sustainability.
Advancements such as precise global navigation satellite systems technology, advanced connectivity and telematics, on-board sensors and computing power, automation software, digital tools, applications, and analytics provide seamless integration of information designed to improve customer decision-making and job execution.
Our advanced telematics systems remotely connect equipment owners, business managers, and dealers to equipment in the field through the John Deere Operations Center ™, our digital management system that allows customers to access farm and jobsite information through their devices .
This connection provides real-time alerts and information about equipment location, utilization, performance, and maintenance to improve productivity and efficiency, as well as to monitor agronomic job execution.
We are beginning to leverage technology from our PPA segment across other business segments.
For example, cameras, obstacle detection, radars, and machine learning have been applied to our CF Smart Detect™ tool to identify obstacles on jobsites.
In addition, CF roadbuilding customers are now able to access the John Deere Operations Center™, enabling them to view near real-time data and insights to help make informed decisions, streamline maintenance, and track productivity.
In addition to John Deere brand names, the table below provides a list of select PPA products and their associated brand names: PRODUCT BRAND NAME Sprayers Hagie, Mazzotti Planters and Cultivators Monosem Sprayers and Planters PLA Carbon Fiber Sprayer Booms King Agro Technology Harvest Profit, Sentera Aftermarket and Precision Upgrades A & I, Unimil by John Deere, Alternatives by John Deere, Frontier, Surepoint Small Agriculture & Turf SAT is committed to meeting the needs of our customers through defining, developing, and delivering global equipment and technology solutions for dairy and livestock producers, high-value crop and small acre crop producers, and turf and utility customers.
The segment works to provide product leadership while extending integrated agricultural solutions and precision technologies across its portfolio of equipment.
Equipment manufactured and distributed by the segment includes specialty, utility, and compact tractors, hay and forage equipment, including self-propelled forage harvesters and attachments, balers, and mowers; turf and utility equipment, including riding lawn equipment, commercial mowing equipment, golf course equipment, utility vehicles, implements for mowing, tilling, snow and debris handling, aerating, and other residential, commercial, golf, and sports turf care applications; and related attachments and service parts.
SAT equipment is sold primarily through independent retail dealer networks, although the segment also builds turf products for sale by mass retailers, including The Home Depot and Lowe’s.
Our turf equipment is sold primarily in North American, Western European, and Australian markets.
In the small agriculture market, we are developing autonomous solutions, connectivity capabilities, and a path to electrifying our future by delivering a portfolio that helps current customers meet sustainability goals while finding innovative ways to serve new customers and unlock new markets for mechanization at scale.
In addition to John Deere brand names, the table below provides a list of select SAT products and their associated brand names: PRODUCT BRAND NAME Equipment Attachments Frontier, Kemper, GreenSystem, Smart Apply Sprayers GUSS Aftermarket and Precision Updates A&I, Sunbelt Outdoor Products, Alternatives by John Deere, Frontier Agriculture and Turf Operations Business Environment .
Sales of agricultural equipment are affected by total farm cash receipts, which reflect levels of farm commodity and protein prices, world grain stocks, acreage available and planted, crop yields, soil conditions, farm input costs, government policies, including global trade policies, and the amount and timing of government support.
Sales also are influenced by general economic conditions, farmland prices, farmers’ debt levels and access to financing, interest and exchange rates, labor availability and costs, energy costs and related policies, tax policies, policies related to climate change, and other input costs associated with farming.
Other key factors affecting new agricultural equipment sales are the value, age, and level of used equipment, including tractors, harvesting equipment, self-propelled sprayers, hay and forage equipment, and seeding equipment.
Weather and climatic conditions also can affect buying decisions of agricultural equipment purchasers.
We believe innovations in machinery and technology may influence purchases of agricultural equipment, especially when the agricultural environment is challenging.
For example, larger, more productive equipment is well accepted where farmers are striving for more efficiency in their operations to increase profits.
Large, cost-efficient, highly mechanized agricultural operations account for an important share of worldwide farm output.
These customers are increasingly adopting and integrating precision agricultural technologies like guidance, telematics, automation, and data-driven management in their operations.
The large-size agricultural equipment used on such farms has been particularly important to us.
A large proportion of the equipment operations’ total agricultural equipment sales in the U.S. and Canada, as well as in many countries outside the U.S. and Canada, are comprised of (1) tractors over 100 horsepower, (2) self-propelled combines, cotton pickers, forage harvesters, and sprayers, and (3) seeding equipment.
Agricultural trends, including the production of and demand for renewable fuels, including biofuels, can also impact sales.
This growing demand has led to a corresponding increase in the need for agriculturally based feedstocks used in their production, such as corn in the U.S. and Europe and sugar cane in Brazil.
This increased demand may increase the demand for agricultural equipment to be used in the production of such crops.
In addition, policies and market drivers such as federal mandates requiring renewable fuel blending, and global regulations in regions and countries like Europe and Brazil, are expected to increase demand for renewable fuels.
We also rely on the sale of small and mid-size tractors as part of our global business.
Customers use these tractors for small and medium-sized farming and in specialty agricultural industries like dairy, livestock, and high value crops (e.g., orchards and vineyards).
The majority of our mid-size tractors are manufactured and sold in Europe, while the majority of our small tractors are manufactured and sold in India.
Retail sales of lawn and garden tractors, compact utility tractors, residential and commercial mowers, utility vehicles, and golf and turf equipment are influenced by the housing market, weather conditions, consumer spending patterns, and general economic conditions like unemployment, interest rates, and inflation.

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They involve certain factors that are subject to change and important risks and uncertainties that could cause actual results to differ materially.
The risks described in this Annual Report on Form 10-K and the Forward-Looking Statements in this report are not the only risks we face.
OPERATIONAL RISKS Our financial results largely depend upon the agricultural market business cycle, as well as general economic conditions and outlook.
Historically, the agricultural industry has been cyclical and subject to a variety of economic and other factors.
Sales of agricultural equipment, in turn, are also cyclical and generally reflect the economic health of the agricultural industry.
The economic health of the agricultural industry is affected by numerous factors, including farm income, farmland values, and debt levels and financing costs, all of which are influenced by the levels of commodity and protein prices, world grain stocks, acreage available and planted, crop yields, agricultural product demand, soil conditions, farm input costs, government policies, and government subsidies.
Downturns in the agricultural industry due to these and other factors, which could vary by market, have resulted in decreases in demand for agricultural equipment, adversely affecting our performance.
The demand for our products and services depends on the fundamentals in the markets in which we operate and can be significantly reduced in an economic environment characterized by high unemployment, high interest rates, cautious consumer spending, inflation, lower corporate earnings, and lower business investment.
In fiscal year 2024, unfavorable market conditions resulted in lower sales volumes, higher sales discounts, higher receivable write offs, and a higher provision for credit losses.
We expect certain of these conditions to persist in fiscal year 2025.
Changes in interest rates and the agricultural market business cycle are driven by factors outside of our control, and as a result we cannot reasonably foresee when these conditions will fully subside.
Sustained general negative economic conditions and outlook also affect housing starts, energy prices and demand, and other construction, which dampens demand for certain construction equipment.
Our turf operations and our construction and forestry segments are dependent on construction activity and have also been affected by recent adverse economic conditions.
Decreases in construction activity and housing starts have had a material adverse effect on our financial results.
Uncertain or negative outlook with respect to pervasive U.S. fiscal issues as well as general economic conditions and outlook, such as market volatility or interest rate changes, have caused and could continue to cause significant changes in market liquidity conditions.
We may be unable to manage increasing political, economic, and social uncertainty in certain regions of the world, which could significantly change the dynamics of our competition, customer base, and product offerings globally.
Efforts to grow our businesses depend in part upon access to and developing market share and profitability in additional geographic markets, including, but not limited to, Argentina, Brazil, CIS, China, India, and South Africa.
There are various risks associated with our global footprint, including, but not limited to, the following: ● In some cases, these countries have greater political and economic volatility, greater vulnerability to infrastructure and labor disruptions, and differing customer product preferences and requirements than our other markets. ● Having business operations in various regions and countries exposes us to multiple and potentially conflicting business practices and legal and regulatory requirements that are subject to change.
These practices and legal requirements are often complex and difficult to navigate, including those related to tariffs and trade regulations, investments, property ownership rights, taxation, repatriation of earnings, and advanced technologies. ● Expanding business operations globally also increases exposure to currency fluctuations, which can materially affect our financial results.
In Argentina, the government has certain capital and currency controls that restrict our ability to access U.S. dollars and remit earnings from our Argentine operations, leaving us exposed to long-term currency fluctuations. ● While our brands are widely recognized in our traditional markets, they are less known in some emerging markets, which could impede our efforts to successfully compete in these markets. ● Changing U.S. export controls and sanctions on various foreign countries and on various parties could affect our ability to collect receivables, provide aftermarket warranty support for our equipment, and sell products, and could otherwise impact our reputation and business. ● Market uncertainty and volatility in various geographies have been magnified as a result of potential shifts in U.S. and foreign trade, economic, and other policies following the 2024 U.S. presidential and congressional elections. ● Geopolitical tensions, including the Russia/Ukraine war and the conflict in the Middle East, have also exacerbated market volatility and affected agricultural global production and demand levels.
We may be affected by changing worldwide demand for food and different forms of renewable energy, which could impact the price of farm commodities and consequently the demand for our equipment.
Changing worldwide demand for farm outputs to meet the world’s growing food and renewable energy demands, driven in part by government policies, including those related to climate change, and a growing world population, are likely to result in fluctuating agricultural commodity prices, which directly affect sales of agricultural equipment.
While higher commodity prices benefit our crop-producing agricultural equipment customers, they could result in greater feed costs for livestock and poultry producers, which in turn may result in lower levels of equipment purchased by these customers.
In addition, changing energy demands may cause farmers to change the types or quantities of the crops they raise, with corresponding changes in equipment demands.
Finally, changes in governmental policies regulating fuel utilization, including biofuel, affect commodity demand and commodity prices, demand for our diesel-fueled equipment, and result in higher research and development costs related to equipment fuel standards.
Changes in the availability and price of certain raw materials, components, and whole goods have resulted and could result in disruptions to the supply chain causing production disruptions, increased costs, and lower profits on sales of our products.
We require access to various raw materials, components, and whole goods at competitive prices to manufacture and distribute our products.
We have experienced changes in the availability and prices of raw materials, components, whole goods, and freight over the past several years, especially in fiscal years 2021 and 2022.
Global logistics network challenges resulted in delays, shortages of key manufacturing components, increased order backlogs, increased transportation costs, and production inefficiencies from a higher number of partially completed machines in inventory, which increased our overall production and overhead costs.
Increases in such costs have had an adverse effect on our business operations.
While we have seen stabilization in the supply chain and inflation, we anticipate potential future fluctuations due to continued geopolitical and economic uncertainty, and regulatory and policy instability, including import tariffs and trade agreements.
The latter have the potential to significantly increase production and logistics costs and have a material negative effect on the profitability of the business, particularly if we are unable to recover the increased costs due to market considerations or other factors.
We rely on our suppliers to acquire the raw materials, components, and whole goods required to manufacture their products.
Work interruption or union strikes by employees of suppliers could also contribute to disruptions within our supply chain.
In addition, certain materials and components used in our products are acquired from a single supplier or are proprietary in nature and cannot be alternatively sourced expeditiously.
A lack of compliance could lead us to seek alternative suppliers, which could increase our costs and result in delayed delivery of our products, product shortages, or other disruptions of our operations.
If our suppliers or retail partners fail to comply with applicable laws, regulations, safety codes, employment practices, human rights standards, quality standards, environmental standards, production practices, or other obligations, norms, identification and reporting requirements, or ethical standards, our reputation and brand could be harmed, and we could be exposed to litigation, investigations, enforcement actions, monetary liability and additional costs that could have a material adverse effect on our business, financial condition, and results of operations.
Unfavorable weather conditions or natural catastrophes that reduce agricultural production and demand for agriculture and turf equipment could directly and indirectly affect our business.
The purchasing decisions of our customers, particularly the purchasers of agriculture and turf equipment, can be significantly affected by poor or unusual weather conditions.
Such conditions include: ● Insufficient levels of rain, which prevent farmers from planting new crops and may cause growing crops to die or result in lower yields; ● Excessive rain or flooding can prevent planting from occurring at optimal times and may cause crop loss through increased disease or mold growth; ● Temperatures outside normal ranges, which can cause crop failure or decreased yields and may also affect disease incidence; ● Natural disasters such as regional floods, hurricanes or other storms, droughts, diseases, wildfires, and pests, either as a physical effect of climate change or otherwise, which have had, and could in the future have, significant negative effects on agricultural and livestock production; ● Adverse weather conditions in a particular geographic region, particularly during the important spring selling season; and ● Drought conditions can adversely affect sales of certain mowing equipment and can similarly cause lower sales volume.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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