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Deere & Company: impact of Russia’s invasion of Ukraine

Deere & Company, one of the world’s leading manufacturers of agricultural machinery, made an assessment of the impact of Russia‘s invasion of Ukraine.

The company offers a portfolio of more than 25 brands to provide a full line of innovative solutions for its customers in a variety of production systems throughout the life cycle of their machines.

Its brands include Wirtgen, Hagie, PLA, Mazzotti, Monosem, A&I Products, Blue River Technology, Harvest Profit, Bear Flag Robotics and Kreisel Electric.

Events in Russia/Ukraine have caused the company to suspend shipments of machines and service parts to Russia.

Deere & Company manufactures and markets equipment in both countries, and provides financial services in Russia.

As of July 31, 2022, the company’s net exposure to Russia/Ukraine was approximately $436 million.

While net sales from the company’s Russian operations accounted for 2% of annual consolidated net sales from 2017 to 2021, the Ukraine operations were not material to the consolidated financial statements.

Deere & Company

The company reported that the suspension of shipments to Russia will reduce expected revenue for the region, making it likely that future cash flows will not cover the carrying value of certain assets.

In the second quarter of 2022, the accounting consequences were the impairment of most long-lived assets, increased reserves on certain financial assets and the accrual of various contractual uncertainties.

No significant reserves were established on trade receivables or whole-asset inventory as the company continues to experience strong payment performance and requires prepayment of existing inventories.

During the third quarter of 2022, Deere & Company initiated a voluntary employee separation program, updated asset reserves and reassessed provisions for contractual uncertainties.

The Russian government has imposed certain restrictions on the ability of companies to repatriate or remit cash from their Russian operations to locations outside of Russia.

The following is a summary of reserves, impairments, voluntary separation costs and contingent liabilities recorded in the first nine months of 2022, in millions of dollars:

 

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