EX-99.2 3 a05-14902_1ex99d2.htm EX-99.2

Exhibit 99.2

 

Deere & Company

Other Financial Information

 

 

 

 

Equipment Operations

 

Agricultural
Equipment

 

Commercial and Consumer
Equipment

 

Construction and
Forestry

 

For the Nine Months Ended July 31,
Dollars in millions

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

2005

 

2004

 

Net Sales

 

$

14,916

 

$

13,061

 

$

8,171

 

$

7,053

 

$

2,839

 

$

2,997

 

$

3,906

 

$

3,011

 

Average Identifiable Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With Inventories at LIFO

 

$

7,321

 

$

6,491

 

$

3,671

 

$

3,128

 

$

1,574

 

$

1,531

 

$

2,076

 

$

1,832

 

With Inventories at Standard Cost

 

$

8,383

 

$

7,487

 

$

4,359

 

$

3,758

 

$

1,787

 

$

1,744

 

$

2,237

 

$

1,985

 

Operating Profit

 

$

1,618

 

$

1,456

 

$

913

 

$

805

 

$

193

 

$

258

 

$

512

 

$

393

 

Percent of Net Sales

 

10.8

%

11.1

%

11.2

%

11.4

%

6.8

%

8.6

%

13.1

%

13.1

%

Operating Return on Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With Inventories at LIFO

 

22.1

%

22.4

%

24.9

%

25.7

%

12.3

%

16.9

%

24.7

%

21.5

%

With Inventories at Standard Cost

 

19.3

%

19.4

%

20.9

%

21.4

%

10.8

%

14.8

%

22.9

%

19.8

%

SVA Cost of Assets

 

$

(754

)

$

(674

)

$

(392

)

$

(338

)

$

(161

)

$

(157

)

$

(201

)

$

(179

)

SVA

 

$

864

 

$

782

 

$

521

 

$

467

 

$

32

 

$

101

 

$

311

 

$

214

 

 

For the Nine Months Ended July 31,
Dollars in millions

 

Financial Services

 

 

The Company evaluates its business results on the basis of generally accepted accounting principles.  In addition, it uses a metric referred to as Shareholder Value Added (SVA), which management believes is an appropriate measure for the performance of its businesses.  SVA is, in effect, the pretax profit left over after subtracting the cost of enterprise capital.  The Company is aiming for a sustained creation of SVA and is using this metric for various performance goals.  Certain compensation is also determined on the basis of performance using this measure.  For purposes of determining SVA, each of the equipment segments is assessed a pretax cost of assets, which on an annual basis is 12 percent of the segment’s average identifiable operating assets during the applicable period with inventory at standard cost.  Management believes that valuing inventories at standard cost more closely approximates the current cost of inventory and the Company’s investment in the asset.  Financial Services is assessed a pretax cost of equity, which on an annual basis is approximately 18 percent of its average equity during the period excluding the allowance for doubtful receivables.  The cost of assets or equity, as applicable, is deducted from the operating profit or added to the operating loss of the equipment segments or Financial Services to determine the amount of SVA.  For this purpose, the operating profit of Financial Services is net income before income taxes and changes to the allowance for doubtful receivables.  The average equity and operating profit of Financial Services is adjusted for the allowance for doubtful receivables in order to more closely reflect credit losses on a write-off basis.

 

2005

 

2004

 

 

Net Income

 

$

253

 

$

221

 

 

Average Equity

 

$

2,193

 

$

2,283

 

 

Return on Equity

 

11.5

%

9.7

%

 

Operating Profit

 

$

390

 

$

336

 

 

Change in Allowance for Doubtful Receivables

 

$

(14

)

$

(2

)

 

SVA Income

 

$

376

 

$

334

 

 

Average Equity

 

$

2,193

 

$

2,283

 

 

Average Allowance for Doubtful Receivables

 

$

151

 

$

166

 

 

SVA Average Equity

 

$

2,344

 

$

2,449

 

 

Cost of Equity

 

$

(315

)

$

(325

)

 

SVA

 

$

61

 

$

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21