EX-99.2 3 a07-14146_1ex99d2.htm EX-99.2

Exhibit 99.2
(Furnished herewith)

Deere & Company
Other Financial Information

 

For the Six Months Ended April 30,

 

Equipment
Operations

 

Agricultural
Equipment

 

Commercial
and
Consumer
Equipment

 

Construction
and
Forestry

 

Dollars in millions

 

2007

 

2006

 

2007

 

2006

 

2007

 

2006

 

2007

 

2006

 

Net Sales

 

$

10,081

 

$

9,720

 

$

5,579

 

$

4,962

 

$

1,959

 

$

1,948

 

$

2,543

 

$

2,810

 

Average Identifiable Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With Inventories at LIFO

 

$

7,823

 

$

7,573

 

$

3,861

 

$

3,686

 

$

1,584

 

$

1,662

 

$

2,378

 

$

2,225

 

With Inventories at Standard Cost

 

$

8,925

 

$

8,659

 

$

4,599

 

$

4,410

 

$

1,777

 

$

1,855

 

$

2,549

 

$

2,394

 

Operating Profit

 

$

1,099

 

$

1,047

 

$

624

 

$

491

 

$

188

 

$

146

 

$

287

 

$

410

 

Percent of Net Sales

 

10.9

%

10.8

%

11.2

%

9.9

%

9.6

%

7.5

%

11.3

%

14.6

%

Operating Return on Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With Inventories at LIFO

 

14.0

%

13.8

%

16.2

%

13.3

%

11.9

%

8.8

%

12.1

%

18.4

%

With Inventories at Standard Cost

 

12.3

%

12.1

%

13.6

%

11.1

%

10.6

%

7.9

%

11.3

%

17.1

%

SVA Cost of Assets

 

$

(531

)

$

(520

)

$

(275

)

$

(265

)

$

(103

)

$

(111

)

$

(153

)

$

(144

)

SVA

 

$

568

 

$

527

 

$

349

 

$

226

 

$

85

 

$

35

 

$

134

 

$

266

 

 

 

For the Six Months Ended April 30,

 

Financial Services

 

Dollars in millions

 

2007

 

2006

 

Net Income

 

$

175

 

$

406

 

Average Equity

 

$

2,573

 

$

2,420

 

Return on Equity

 

6.8

%

16.8

%

Operating Profit

 

$

265

 

$

254

 

Change in Allowance for Doubtful Receivables

 

$

5

 

$

3

 

SVA Income

 

$

270

 

$

257

 

Average Equity Continuing Operations

 

$

2,573

 

$

2,342

 

Average Allowance for Doubtful Receivables

 

$

163

 

$

146

 

SVA Average Equity

 

$

2,736

 

$

2,488

 

Cost of Equity

 

$

(244

)

$

(223

)

SVA Continuing Operations

 

$

26

 

$

34

 

 

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 approximately 11-12 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, changes to the allowance for doubtful receivables and discontinued operations.  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.

 

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