DERIVATIVE INSTRUMENTS

12 Months Ended

Nov. 02, 2025

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

NOTE 20. DERIVATIVE INSTRUMENTS

Our outstanding derivative transactions are with both unrelated external counterparties and John Deere. For derivative transactions with John Deere, we utilize a centralized hedging structure in which John Deere enters into a derivative transaction with an unrelated external counterparty and simultaneously enters into a derivative transaction with us. Except for collateral provisions, the terms of the transaction between John Deere and us are identical to the terms of the transaction between John Deere and its unrelated external counterparty. Derivative asset and liability positions for transactions with John Deere are recorded in “Receivables from John Deere” and “Other payables to John Deere,” respectively. Derivative asset and liability positions for transactions with unrelated external counterparty banks are recorded in “Other assets” and “Accounts payable and accrued expenses,” respectively.

The fair values of our derivative instruments and the associated notional amounts were as follows:

	November 2, 2025						October 27, 2024
			Fair Value						Fair Value
	Notional		Asset		Liability		Notional		Asset		Liability
Cash flow hedges:
Interest rate contracts - swaps	$	2,675.0			$	20.9	$	2,875.0	$	2.9	$	20.0
Fair value hedges:
Interest rate contracts - swaps		10,929.0	$	150.5		219.1		15,033.9		107.8		445.2
Cross-currency interest rate contracts		1,558.0		91.4		10.6		974.5		30.4
Not designated as hedging instruments:
Interest rate contracts - swaps		7,073.2		17.6		20.2		5,907.0		25.9		15.0
Foreign currency exchange contracts		1,554.1		5.0		5.5		1,707.8		27.7		.8
Cross-currency interest rate contracts		131.9		2.3		5.7		157.8		16.5		.2
Interest rate caps - sold		1,650.8				2.6		1,469.1				8.8
Interest rate caps - purchased		1,650.8		2.6				1,469.1		8.8

The amounts recorded in the consolidated balance sheets at November 2, 2025 and October 27, 2024 related to borrowings and fair value hedges are presented in the table below. Fair value hedging adjustments are included in the carrying amount of the hedged items.

			Cumulative
	Carrying		Fair Value
	Amount of		Hedging
2025	Hedged Items		Amounts
Current maturities of long-term external borrowings	$	2,891.2	$	(29.2)
Long-term external borrowings		24,089.0		(201.1)
2024
Current maturities of long-term external borrowings	$	1,781.8	$	7.3
Long-term external borrowings		24,222.6		(562.4)

The above table includes carrying amounts of current maturities of long-term external borrowings of $2,544.2 and $1,781.8 and long-term external borrowings of $11,963.1 and $8,625.8 at November 2, 2025 and October 27, 2024, respectively, for hedged items that are in discontinued hedge relationships. Also included are cumulative fair value hedging amounts on discontinued hedge relationships of current maturities of long-term external borrowings of $(29.5) and $7.3 and long-term external borrowings of $(184.7) and $(227.3) at November 2, 2025 and October 27, 2024, respectively. At October 27, 2024, long-term external borrowings with a carrying amount of $597.9 were in both active and discontinued hedging relationships as a result of hedging activities associated with reference rate reform.

The classification and gains (losses), including accrued interest expense, related to derivative instruments on the statements of consolidated income consisted of the following:

	2025		2024		2023
Fair value hedges:
Interest rate contracts - Interest expense *	$	99.9	$	212.4	$	(518.7)
Cash flow hedges:
Recognized in OCI:
Interest rate contracts - OCI (pretax)	$	.6	$	(9.7)	$	25.4
Reclassified from OCI:
Interest rate contracts - Interest expense		(18.2)		74.0		65.9
Not designated as hedges:
Interest rate contracts - Interest expense *	$	(12.0)	$	(7.1)	$	27.3
Foreign currency exchange contracts – Administrative and operating expenses *		59.7		(102.9)		19.1
Total not designated	$	47.7	$	(110.0)	$	46.4

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

Included in the table above are interest expense and administrative and operating expense amounts we incurred on derivatives transacted with John Deere. The amounts we recognized on these affiliate party transactions were gains (losses) of $58.7, $297.0, and $(437.1) during 2025, 2024, and 2023, respectively.

The amount of loss recorded in OCI related to cash flow hedges at November 2, 2025 that is expected to be reclassified to interest expense in the next twelve months if interest rates remain unchanged is $6.6 after-tax. No gains or losses were reclassified from OCI to earnings based on the probability that the original forecasted transaction would not occur.

Counterparty Risk and Collateral

Derivative instruments are subject to significant concentrations of credit risk in the banking sector. We manage individual unrelated external counterparty exposure by setting limits that consider the credit rating of the unrelated external counterparty, the credit default swap spread of the counterparty, and other financial commitments and exposures between us and the unrelated external counterparty banks. All interest rate derivatives are transacted under International Swaps and Derivatives Association (ISDA) documentation. Each master agreement permits the net settlement of amounts owed in the event of default or termination. None of our derivative agreements contain credit-risk-related contingent features.

We have ISDA agreements with John Deere that permit the net settlement of amounts owed between counterparties in the event of early termination. In addition, we have a loss sharing agreement with John Deere in which we have agreed to absorb any losses and expenses John Deere incurs if an unrelated external counterparty fails to meet its obligations on a derivative transaction that John Deere entered into to manage our exposures. The loss sharing agreement did not increase the maximum amount of loss that we would incur, after considering collateral received and netting arrangements, as of November 2, 2025 and October 27, 2024.

Derivatives are recorded without offsetting for netting arrangements or collateral. The impact on the derivative assets and liabilities for external derivatives and those with John Deere related to netting arrangements and any collateral received or paid at November 2, 2025 and October 27, 2024 were as follows:

2025
Derivatives:	Gross Amounts Recognized		Netting Arrangements		Collateral	Net Amount
Assets
External	$	5.0	$	(1.6)		$	3.4
John Deere		264.4		(237.3)			27.1
Liabilities
External		5.5		(1.6)			3.9
John Deere		279.1		(237.3)			41.8

2024
Derivatives:	Gross Amounts Recognized		Netting Arrangements		Collateral	Net Amount
Assets
External	$	27.7	$	(.1)		$	27.6
John Deere		192.3		(151.2)			41.1
Liabilities
External		.8		(.1)			.7
John Deere		489.2		(151.2)			338.0