EXHIBIT 99.2

 

Deere & Company

Other Financial Information

 

For the Three Months Ended January 31,

 

Equipment Operations

 

Agricultural Equipment

 

Commercial and Consumer
Equipment

 

Construction and Forestry

 

Dollars in millions

 

2006

 

2005

 

2006

 

2005

 

2006

 

2005

 

2006

 

2005

 

Net Sales

 

$

3,691

 

$

3,526

 

$

1,894

 

$

2,010

 

$

628

 

$

523

 

$

1,169

 

$

993

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Identifiable Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With Inventories at LIFO

 

$

7,240

 

$

6,867

 

$

3,525

 

$

3,397

 

$

1,570

 

$

1,448

 

$

2,145

 

$

2,022

 

With Inventories at Standard Cost

 

$

8,326

 

$

7,919

 

$

4,238

 

$

4,095

 

$

1,775

 

$

1,643

 

$

2,313

 

$

2,181

 

Operating Profit (Loss)

 

$

261

 

$

262

 

$

106

 

$

163

 

$

19

 

$

(2

)

$

136

 

$

101

 

Percent of Net Sales

 

7.1

%

7.4

%

5.6

%

8.1

%

3.0

%

(.4

)%

11.6

%

10.2

%

Operating Return on Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With Inventories at LIFO

 

3.6

%

3.8

%

3.0

%

4.8

%

1.2

%

(.1

)%

6.3

%

5.0

%

With Inventories at Standard Cost

 

3.1

%

3.3

%

2.5

%

4.0

%

1.1

%

(.1

)%

5.9

%

4.6

%

SVA Cost of Assets

 

$

(250

)

$

(238

)

$

(127

)

$

(123

)

$

(53

)

$

(49

)

$

(70

)

$

(66

)

SVA

 

$

11

 

$

24

 

$

(21

)

$

40

 

$

(34

)

$

(51

)

$

66

 

$

35

 

 

For the Three Months Ended January 31,

 

Financial Services

 

Dollars in millions

 

2006

 

2005

 

Net Income

 

$

97

 

$

88

 

 

 

 

 

 

 

Average Equity

 

$

2,438

 

$

2,155

 

Return on Equity

 

4.0

%

4.1

%

Operating Profit

 

$

129

 

$

126

 

Change in Allowance for Doubtful Receivables

 

$

(1

)

$

(11

)

SVA Income

 

$

128

 

$

115

 

Average Equity Continuing Operations

 

$

2,301

 

$

2,046

 

Average Allowance for Doubtful Receivables

 

$

145

 

$

156

 

SVA Average Equity

 

$

2,446

 

$

2,202

 

Cost of Equity

 

$

(110

)

$

(99

)

SVA Continuing Operations

 

$

18

 

$

16

 

SVA Discontinued Operations

 

$

0

 

$

6

 

SVA Total

 

$

18

 

$

22

 

 

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, 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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