Attached files
| file | filename |
|---|---|
| 8-K - 8-K - DEERE & CO | de-20210820x8k.htm |
| EX-99.3 - EX-99.3 - DEERE & CO | de-20210820xex99d3.htm |
| EX-99.1 - EX-99.1 - DEERE & CO | de-20210820xex99d1.htm |
Exhibit 99.2
(Furnished herewith)
DEERE & COMPANY
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 13 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.
| | Equipment | Production & | Small Ag | Construction | ||||||||||||||||||||
For the Nine Months Ended | | Operations | Precision Ag | & Turf | & Forestry | ||||||||||||||||||||
| | August 1 | August 2 | August 1 | August 2 | August 1 | August 2 | August 1 | August 2 | ||||||||||||||||
Dollars in millions |
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
Net Sales | | $ | 29,461 | | $ | 22,612 | | $ | 11,848 | | $ | 9,161 | | $ | 9,051 | | $ | 6,966 | | $ | 8,562 | | $ | 6,485 | |
Net Sales - excluding Wirtgen | | | | | | 20,466 | | | | | | 9,161 | | | | | | 6,966 | | | | | | 4,339 | |
Average Identifiable Assets* | | | | | | | | | | | | | | | | | | | | | | | | | |
With Inventories at LIFO | | $ | 16,496 | | $ | 16,930 | | $ | 6,518 | | $ | 6,341 | | $ | 3,558 | | $ | 3,619 | | $ | 6,420 | | $ | 6,970 | |
With Inventories at LIFO - excluding Wirtgen | | | | | | 12,916 | | | | | | 6,341 | | | | | | 3,619 | | | | | | 2,956 | |
With Inventories at Standard Cost | | | 17,877 | | | 18,349 | | | 7,205 | | | 7,049 | | | 3,988 | | | 4,063 | | | 6,684 | | | 7,237 | |
With Inventories at Standard Cost - excluding Wirtgen | | | | | | 14,335 | | | | | | 7,049 | | | | | | 4,063 | | | | | | 3,223 | |
Operating Profit | | $ | 5,476 | | $ | 2,503 | | $ | 2,557 | | $ | 1,391 | | $ | 1,699 | | $ | 718 | | $ | 1,220 | | $ | 394 | |
Operating Profit - excluding Wirtgen | | | | | | 2,336 | | | | | | 1,391 | | | | | | 718 | | | | | | 227 | |
Percent of Net Sales** | |
| 18.6 | % |
| 11.4 | % |
| 21.6 | % |
| 15.2 | % |
| 18.8 | % |
| 10.3 | % |
| 14.2 | % |
| 5.2 | % |
Operating Return on Assets** | | | | | | | | | | | | | | | | | | | | | | | | | |
With Inventories at LIFO | |
| 33.2 | % |
| 18.1 | % |
| 39.2 | % |
| 21.9 | % |
| 47.8 | % |
| 19.8 | % |
| 19.0 | % |
| 7.7 | % |
With Inventories at Standard Cost | |
| 30.6 | % |
| 16.3 | % |
| 35.5 | % |
| 19.7 | % |
| 42.6 | % |
| 17.7 | % |
| 18.3 | % |
| 7.0 | % |
SVA Cost of Assets** | | $ | (1,609) | | $ | (1,290) | | $ | (648) | | $ | (634) | | $ | (359) | | $ | (366) | | $ | (602) | | $ | (290) | |
SVA** | | | 3,867 | | | 1,046 | | | 1,909 | | | 757 | | | 1,340 | | | 352 | | | 618 | | | (63) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Financial | | | | | | | | | | | | | | | | | | | |||||
For the Nine Months Ended | | Services | | | | | | | | | | | | | | | | | | | |||||
| | August 1 | August 2 | | | | | | | | | | | | | | | | | | | ||||
Dollars in millions | | 2021 | 2020 | | | | | | | | | | | | | | | | | | | ||||
Net Income Attributable to Deere & Company | | $ | 654 | | $ | 381 | | | | | | | | | | | | | | | | | | | |
Average Equity | | | 5,468 | | | 5,076 | | | | | | | | | | | | | | | | | | | |
Return on Equity | |
| 12.0 | % |
| 7.5 | % | | | | | | | | | | | | | | | | | | |
Operating Profit | | $ | 844 | | $ | 498 | | | | | | | | | | | | | | | | | | | |
Cost of Equity | | | (531) | | | (501) | | | | | | | | | | | | | | | | | | | |
SVA | | | 313 | | | (3) | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
* At the beginning of fiscal year 2021, the company reclassified goodwill from the Equipment Operations segments’ identifiable assets to corporate assets. Operating return on assets (OROA) and SVA exclude the impact of goodwill. Prior period information has been recast for a consistent presentation. ** Beginning in fiscal year 2021, the results and assets related to the Wirtgen Group (Wirtgen) are included in the calculation of OROA and SVA. Due to integration efforts, the 2020 information did not include Wirtgen’s results and assets. Prior period information was not recast for this change, which is consistent with the company’s internal presentation. | |||||||||||||||||||||||||
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