John DeereOther Financial Information 2006 2nd

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Information about John DeereOther Financial Information 2006 2nd
Finance

Published on February 24, 2009

Author: finance11

Source: slideshare.net

Deere & Company Other Financial Information Commercial and Consumer For the Six Months Ended April 30, Equipment Operations Agricultural Equipment Construction and Forestry Equipment Dollars in millions 2006 2005 2006 2005 2006 2005 2006 2005 $ 9,720 $ 9,546 $ 4,962 $ 5,302 $ 1,948 $ 1,758 $ 2,810 $ 2,486 Net Sales Average Identifiable Assets $ 7,573 $ 7,212 $ 3,686 $ 3,620 $ 1,662 $ 1,544 $ 2,225 $ 2,048 With Inventories at LIFO $ 8,659 $ 8,277 $ 4,410 $ 4,316 $ 1,855 $ 1,752 $ 2,394 $ 2,209 With Inventories at Standard Cost $ 1,047 $ 1,118 $ 491 $ 651 $ 146 $ 133 $ 410 $ 334 Operating Profit 10.8% 11.7% 9.9% 12.3% 7.5% 7.6% 14.6% 13.4% Percent of Net Sales Operating Return on Assets 13.8% 15.5% 13.3% 18.0% 8.8% 8.6% 18.4% 16.3% With Inventories at LIFO 12.1% 13.5% 11.1% 15.1% 7.9% 7.6% 17.1% 15.1% With Inventories at Standard Cost $ (520) $ (496) $ (265) $ (258) $ (111) $ (105) $ (144) $ (133) SVA Cost of Assets $ 527 $ 622 $ 226 $ 393 $ 35 $ 28 $ 266 $ 201 SVA The Company evaluates its business results on the basis of generally accepted For the Six Months Ended April 30, Financial Services accounting principles. In addition, it uses a metric referred to as Shareholder Dollars in millions 2006 2005 Value Added (SVA), which management believes is an appropriate measure for $ 406 $ 163 Net Income the performance of its businesses. SVA is, in effect, the pretax profit left over $ 2,420 $ 2,172 Average Equity after subtracting the cost of enterprise capital. The Company is aiming for a 16.8% 7.5% Return on Equity sustained creation of SVA and is using this metric for various performance $ 254 $ 235 Operating Profit goals. Certain compensation is also determined on the basis of performance $ 3 $ (12) Change in Allowance for Doubtful Receivables 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 $ 257 $ 223 SVA Income percent of the segment’s average identifiable operating assets during the $ 2,342 $ 2,061 Average Equity Continuing Operations applicable period with inventory at standard cost. Management believes that $ 146 $ 152 Average Allowance for Doubtful Receivables valuing inventories at standard cost more closely approximates the current cost $ 2,488 $ 2,213 SVA Average Equity of inventory and the Company’s investment in the asset. Financial Services is $ (223) $ (200) Cost of Equity assessed a pretax cost of equity, which on an annual basis is approximately 18 $ 34 $ 23 percent of its average equity during the period excluding the allowance for SVA Continuing Operations doubtful receivables. The cost of assets or equity, as applicable, is deducted $ 7 SVA Discontinued Operations from the operating profit or added to the operating loss of the equipment $ 34 $ 30 SVA Total 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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