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SPECIAL ITEMS | 6 Months Ended
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Apr. 30, 2023
SPECIAL ITEMS |
SPECIAL ITEMS | (21)Special Items ​ 2023 Financial Services Financing Incentives Correction In the second quarter of 2023, the Company corrected the accounting treatment for financing incentives offered to John Deere dealers, which impacted the timing of expense recognition and the presentation of incentive costs in the consolidated financial statements. The cumulative effect of this correction, $173 million pretax ($135 million after-tax), was recorded in the second quarter of 2023. Prior period results for Deere & Company were not restated, as the adjustment is considered immaterial to the Company’s financial statements. 2022 Impact of Events in Russia / Ukraine In the second quarter of 2022, the Company suspended shipments of machines and service parts to Russia. The suspension of shipments to Russia reduced actual and forecasted revenue for the region, which made it probable future cash flows will not cover the carrying value of certain assets. The accounting consequences during the second quarter of 2022 were impairments of most long-lived assets, an increase in reserves of certain financial assets, and an accrual for various contractual uncertainties. Gain on Previously Held Equity Investment In the second quarter of 2022, the Company acquired full ownership of three former Deere-Hitachi joint venture factories and began new license and supply agreements with Hitachi Construction Machinery Co., Ltd. The fair value of the previous equity investment resulted in a non-cash gain of $326 million (pretax and after-tax). UAW Collective Bargaining Agreement In the first quarter of 2022, employees represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) approved a new collective bargaining agreement. The labor agreement included a lump sum ratification bonus payment of $8,500 per eligible employee, totaling $90 million, and an immediate wage increase of 10 percent plus further wage increases over the term of the contract. The lump sum payment was expensed in the first quarter of 2022. ​ The following table summarizes the operating profit impact, in millions of dollars, of the special items recorded for the three months and six months ended April 30, 2023 and May 1, 2022:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months | ​ | Six Months | ​
​ | ​ | PPA |  | SAT |  | CF |  | FS |  | Total | ​ | PPA | ​ | SAT |  | CF |  | FS |  | Total | ​
2023 Expense: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Financing incentive – SA&G expense | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 173 | ​ | $ | 173 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 173 | ​ | $ | 173 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2022 Expense (benefit): | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Gain on remeasurement of equity investment – Other income | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | (326) | ​ | ​ | ​ | ​ | ​ | (326) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | (326) | ​ | ​ | ​ | ​ | ​ | (326) | ​
Total Russia/Ukraine events expense | ​ | $ | 46 | ​ | $ | 1 | ​ | ​ | 47 | ​ | ​ | 26 | ​ | ​ | 120 | ​ | $ | 46 | ​ | $ | 1 | ​ | ​ | 47 | ​ | ​ | 26 | ​ | ​ | 120 | ​
UAW ratification bonus – Cost of sales | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 53 | ​ | ​ | 9 | ​ | ​ | 28 | ​ | ​ | ​ | ​ | ​ | 90 | ​
Total 2022 expense (benefit) | ​ | ​ | 46 | ​ | ​ | 1 | ​ | ​ | (279) | ​ | ​ | 26 | ​ | ​ | (206) | ​ | ​ | 99 | ​ | ​ | 10 | ​ | ​ | (251) | ​ | ​ | 26 | ​ | ​ | (116) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Period over period change | ​ | $ | (46) | ​ | $ | (1) | ​ | $ | 279 | ​ | $ | 147 | ​ | $ | 379 | ​ | $ | (99) | ​ | $ | (10) | ​ | $ | 251 | ​ | $ | 147 | ​ | $ | 289 | ​
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