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EX-99.3 - EX-99.3 - DEERE & COa18-5956_1ex99d3.htm
EX-99.1 - EX-99.1 - DEERE & COa18-5956_1ex99d1.htm
8-K - 8-K - DEERE & COa18-5956_18k.htm

 

 

Deere & Company

Other Financial Information

Exhibit 99.2

(Furnished herewith)

 

For the Three Months Ended

 

 

Equipment Operations*

 

Agriculture and Turf

 

Construction and Forestry*

 

 

 

January 28

 

January 29

 

 

January 28

 

January 29

 

 

January 28

 

January 29

 

Dollars in millions

 

 

2018

 

2017**

 

 

2018

 

2017**

 

 

2018

 

2017**

 

Net Sales

 

 

$

5,974

 

$

4,698

 

 

$

4,243

 

$

3,598

 

 

$

1,731

 

$

1,100

 

Net Sales - excluding Wirtgen

 

 

$

5,719

 

$

4,698

 

 

$

4,243

 

$

3,598

 

 

$

1,476

 

$

1,100

 

Average Identifiable Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With Inventories at LIFO

 

 

$

17,558

 

$

11,596

 

 

$

9,937

 

$

8,591

 

 

$

7,621

 

$

3,005

 

With Inventories at LIFO - excluding Wirtgen

 

 

$

13,112

 

$

11,596

 

 

$

9,937

 

$

8,591

 

 

$

3,175

 

$

3,005

 

With Inventories at Standard Cost

 

 

$

18,837

 

$

12,870

 

 

$

10,970

 

$

9,627

 

 

$

7,867

 

$

3,243

 

With Inventories at Standard Cost - excluding Wirtgen

 

 

$

14,391

 

$

12,870

 

 

$

10,970

 

$

9,627

 

 

$

3,421

 

$

3,243

 

Operating Profit (Loss)

 

 

$

419

 

$

255

 

 

$

387

 

$

218

 

 

$

32

 

$

37

 

Operating Profit (Loss) - excluding Wirtgen

 

 

$

511

 

$

255

 

 

$

387

 

$

218

 

 

$

124

 

$

37

 

Percent of Net Sales - excluding Wirtgen

 

 

8.9

 %

5.4

 %

 

9.1

 %

6.1

 %

 

8.4

 %

3.4

%

Operating Return on Assets - excluding Wirtgen

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With Inventories at LIFO - excluding Wirtgen

 

 

3.9

 %

2.2

 %

 

3.9

 %

2.5

 %

 

3.9

 %

1.2

%

With Inventories at Standard Cost - excluding Wirtgen

 

 

3.6

 %

2.0

 %

 

3.5

 %

2.3

 %

 

3.6

 %

1.1

%

SVA Cost of Assets - excluding Wirtgen

 

 

$

(432

)

$

(387

)

 

$

(329

)

$

(289

)

 

$

(103

)

$

(98)

 

SVA - excluding Wirtgen

 

 

$

79

 

$

(132

)

 

$

58

 

$

(71

)

 

$

21

 

$

(61)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

Financial Services

 

 

 

 

 

 

 

 

 

 

 

Dollars in millions

 

 

January 28
2018***

 

January 29
2017**

 

 

 

 

 

 

 

 

 

 

 

Net Income Attributable to Deere & Company

 

 

$

425

 

$

114

 

 

 

 

 

 

 

 

 

 

 

Net Income Attributable to Deere & Company - Tax Adjusted

 

 

$

147

 

$

114

 

 

 

 

 

 

 

 

 

 

 

Average Equity

 

 

$

4,791

 

$

4,442

 

 

 

 

 

 

 

 

 

 

 

Average Equity - Tax Adjusted

 

 

$

4,721

 

$

4,442

 

 

 

 

 

 

 

 

 

 

 

Return on Equity - Tax Adjusted

 

 

3.1

 %

2.6

 %

 

 

 

 

 

 

 

 

 

 

Operating Profit

 

 

$

217

 

$

167

 

 

 

 

 

 

 

 

 

 

 

Average Equity - Tax Adjusted

 

 

$

4,721

 

$

4,442

 

 

 

 

 

 

 

 

 

 

 

Cost of Equity

 

 

$

(174

)

$

(163

)

 

 

 

 

 

 

 

 

 

 

SVA

 

 

$

43

 

$

4

 

 

 

 

 

 

 

 

 

 

 

 

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 approximately 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. The Financial Services segment is assessed an annual pretax cost of approximately 15 percent of the segment’s average equity. The cost of assets or equity, as applicable, is deducted from the operating profit or added to the operating loss of each segment to determine the amount of SVA.

 

* On December 1, 2017, the Company acquired the stock and certain assets of substantially all of Wirtgen Group Holding GmbH’s operations (Wirtgen), the leading manufacturer worldwide of road construction equipment. Wirtgen is included in the construction and forestry segment. Wirtgen is excluded from the metrics above in order to provide comparability to the Company’s performance in prior periods.

 

** During the first quarter of fiscal 2018, the Company adopted ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The ASU requires that employers report only the service cost component of the total defined benefit pension and postretirement benefit cost in Operating Profit. The ASU was adopted on a retrospective basis for the presentation of Operating Profit and on a prospective basis for the capitalization of only the service cost. Operating Profit amounts reported for fiscal 2017 have been restated accordingly.

 

*** On December 22, 2017, the U.S. government enacted new tax legislation (Tax Act). The primary provisions of the Tax Act expected to impact the Company in fiscal year 2018 are a reduction to the U.S. federal income tax rate from 35 percent to 21 percent and a transition from a worldwide corporate tax system to a territorial tax system. As the Financial Services segment SVA is based on average equity, the “Tax Adjusted” amounts remove the effects of the discrete income tax benefit and the lower corporate tax rate provided in the Tax Act for comparability to the prior period.

 

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