LEASES

12 Months Ended

Nov. 02, 2025

LEASES

LEASES

24. LEASES

We are both a lessee and a lessor. We lease for our own use warehouse facilities, office space, production equipment, information technology equipment, and vehicles. The financial services operations lease equipment produced or sold by us and a limited amount of other equipment to retail customers. We determine if an arrangement is or contains a lease at the contract inception.

Lessee

The amounts of the lease liability and right of use asset are determined at lease commencement and are based on the present value of the lease payments over the lease term. The lease payments are discounted using our incremental borrowing rate since the rate implicit in the lease is not readily determinable. We determine the incremental borrowing rate for each lease based on the lease term and the economic environment of the country where the asset will be used, adjusted as if the borrowings were collateralized. Leases with contractual periods greater than one year and that do not meet the finance lease criteria are classified as operating leases.

We have elected to combine lease and nonlease components, such as maintenance and utilities costs included in a lease contract, for all asset classes. Leases with an initial term of one year or less are expensed on a straight-line basis over the lease term and recorded in short-term lease expense. Variable lease expense includes warehouse facilities leases with payments based on utilization exceeding contractual minimum amounts and leases with payments indexed to inflation when the index changes after lease commencement.

The lease expense by type consisted of the following:

	2025		2024		2023
Operating lease expense	$	144	$	133	$	129
Short-term lease expense		29		38		49
Variable lease expense		65		72		80
Finance lease:
Depreciation expense		40		34		28
Interest on lease liabilities		5		4		2
Total lease expense	$	283	$	281	$	288

Operating and finance lease right of use assets and lease liabilities follow:

		2025		2024
Operating leases:
Other assets	$	317	$	274
Accounts payable and accrued expenses		314		270
Finance leases:
Property and equipment — net	$	96	$	89
Short-term borrowings		39		33
Long-term borrowings		73		72
Total finance lease liabilities	$	112	$	105

The weighted-average remaining lease terms in years and discount rates follow:

	2025	2024
Weighted-average remaining lease terms:
Operating leases	6	7
Finance leases	4	4
Weighted-average discount rates:
Operating leases	4.2%	3.5%
Finance leases	4.3%	4.3%

Lease payment amounts in each of the next five years at November 2, 2025, follow:

	Operating		Finance
Due in:	Leases		Leases
2026	$	110	$	44
2027		72		32
2028		57		22
2029		41		12
2030		28		5
Later years		37		6
Total lease payments		345		121
Less: imputed interest		(31)		(9)
Total lease liabilities	$	314	$	112

Cash paid for amounts included in the measurement of lease liabilities follows:

		2025		2024		2023
Operating cash flows for operating leases	$	138	$	129	$	132
Operating cash flows for finance leases		5		4		2
Financing cash flows for finance leases		40		36		31

Right of use assets obtained in exchange for lease liabilities follow:

		2025		2024
Operating leases	$	168	$	75
Finance leases		47		67

Lessor

We lease equipment manufactured or sold by us through John Deere Financial. Sales-type and direct financing leases are reported in “Financing receivables ‒ net.” Operating leases are reported in “Equipment on operating leases ‒ net.”

At the end of the majority of leases, the lessee has the option to purchase the underlying equipment for the contractual residual value or return it to the dealer. If the equipment is returned to the dealer, the dealer also has the option to purchase the equipment or return it to us for remarketing.

We estimate the residual values for operating leases at lease inception based on several factors, including lease term, expected hours of usage, historical wholesale sale prices, return experience, intended use of the equipment, market dynamics and trends, and dealer residual guarantees. We review residual value estimates during the lease term and test the carrying value of our operating lease assets for impairment when events or circumstances necessitate. The depreciation is adjusted on a straight-line basis over the remaining lease term if residual value estimates change.

Lease agreements include usage limits and specifications on machine condition, which allow us to assess lessees for excess use or damages to the underlying equipment.

We have elected to combine lease and nonlease components. The nonlease components relate to preventative maintenance and extended warranty agreements financed by the retail customer. We have also elected to report consideration related to sales and value added taxes net of the related tax expense. Property taxes on leased assets are recorded on a gross basis in “Finance and interest income” and “Other operating expenses.” Variable lease revenues relate to property taxes on leased assets in certain markets and late fees.

Lease revenues earned by us follow:

		2025		2024		2023
Sales-type and direct finance lease revenues	$	184	$	190	$	165
Operating lease revenues		1,472		1,403		1,312
Variable lease revenues		20		17		16
Total lease revenues	$	1,676	$	1,610	$	1,493

At the time of accepting a lease that qualifies as a sales-type or direct financing lease, we record the gross amount of lease payments receivable, estimated residual value of the leased equipment, and unearned finance income. The unearned finance income is recognized as revenue over the lease term using the interest method.

Sales-type and direct financing lease receivables by market follow:

		2025		2024
Agriculture and turf	$	1,020	$	1,022
Construction and forestry		996		1,034
Total		2,016		2,056
Guaranteed residual values		867		921
Unguaranteed residual values		40		55
Less: unearned finance income		(330)		(307)
Financing lease receivables	$	2,593	$	2,725

Scheduled payments, including guaranteed residual values, on sales-type and direct financing lease receivables at November 2, 2025, follow:

Due in:	2025
2026	$	1,385
2027		628
2028		424
2029		230
2030		176
Later years		40
Total	$	2,883

Lease payments from operating leases are recorded as income on a straight-line method over the lease terms. Operating lease assets are recorded at cost and depreciated to their estimated residual value on a straight-line method over the terms of the leases. The corresponding depreciation expense was $925 in 2025, $874 in 2024, and $853 in 2023.

The cost of equipment on operating leases by market and residual values follows:

		2025		2024
Agriculture and turf	$	8,177	$	7,875
Construction and forestry		1,093		1,142
Total		9,270		9,017
Less: accumulated depreciation		(1,670)		(1,566)
Equipment on operating leases – net	$	7,600	$	7,451
Operating lease residual values	$	5,339	$	5,227
First-loss residual value guarantees		1,443		1,393

Lease payments for operating leases are scheduled as follows:

Due in:	2025
2026	$	1,155
2027		867
2028		527
2029		255
2030		62
Later years		7
Total	$	2,873