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EX-99.3 - EX-99.3 - DEERE & COa09-34111_1ex99d3.htm
EX-99.1 - EX-99.1 - DEERE & COa09-34111_1ex99d1.htm

 

 

Deere & Company

Exhibit 99.2

 

Other Financial Information

(Furnished herwith)

 

 

For the Twelve Months Ended October 31,

 

 

Equipment Operations

 

Agriculture and Turf

 

Construction and Forestry

 

Dollars in millions

 

 

2009

 

2008

 

 

2009

 

2008

 

 

2009

 

2008

 

 

Net Sales

 

 

$

20,756

 

$

25,803

 

 

$

18,122

 

$

20,985

 

 

$

2,634

 

$

4,818

 

 

Average Identifiable Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With Inventories at LIFO

 

 

$

9,647

 

$

9,652

 

 

$

7,397

 

$

7,196

 

 

$

2,250

 

$

2,456

 

 

With Inventories at Standard Cost

 

 

$

10,950

 

$

10,812

 

 

$

8,500

 

$

8,171

 

 

$

2,450

 

$

2,641

 

 

Operating Profit

 

 

$

1,365

 

$

2,927

 

 

$

1,448

 

$

2,461

 

 

$

(83

)

$

466

 

 

Percent of Net Sales

 

 

6.6

%

11.3

%

 

8.0

%

11.7

%

 

-3.2

%

9.7

%

 

Operating Return on Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With Inventories at LIFO

 

 

14.1

%

30.3

%

 

19.6

%

34.2

%

 

-3.7

%

19.0

%

 

With Inventories at Standard Cost

 

 

12.5

%

27.1

%

 

17.0

%

30.1

%

 

-3.4

%

17.6

%

 

SVA Cost of Assets

 

 

$

(1,301

)

$

(1,284

)

 

$

(1,007

)

$

(967

)

 

$

(294

)

$

(317

)

 

SVA

 

 

$

64

 

$

1,643

 

 

$

441

 

$

1,494

 

 

$

(377

)

$

149

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Twelve Months Ended October 31,

 

 

Financial Services

 

 

 

 

 

 

 

 

 

 

 

Dollars in millions

 

 

2009

 

2008

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

$

203

 

$

337

 

 

 

 

 

 

 

 

 

 

 

 

Average Equity

 

 

$

2,732

 

$

2,355

 

 

 

 

 

 

 

 

 

 

 

 

Return on Equity

 

 

7.4

%

14.3

%

 

 

 

 

 

 

 

 

 

 

 

Operating Profit

 

 

$

242

 

$

493

 

 

 

 

 

 

 

 

 

 

 

 

Change in Allowance for Doubtful Receivables

 

 

$

68

 

$

(4

)

 

 

 

 

 

 

 

 

 

 

 

SVA Income

 

 

$

310

 

$

489

 

 

 

 

 

 

 

 

 

 

 

 

Average Equity

 

 

$

2,732

 

$

2,355

 

 

 

 

 

 

 

 

 

 

 

 

Average Allowance for Doubtful Receivables

 

 

$

195

 

$

183

 

 

 

 

 

 

 

 

 

 

 

 

SVA Average Equity

 

 

$

2,927

 

$

2,538

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Equity

 

 

$

(458

)

$

(430

)

 

 

 

 

 

 

 

 

 

 

 

SVA

 

 

$

(148

)

$

59

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company evaluates its business results on the basis of accounting principles generally accepted in the United States.  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 generally 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.

 

 

 

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