John Deere 2013 Annual Report Download - page 14

14
TABLE OF CONTENTS
Management’s Discussion
and Analysis ........................... 15
Reports of Management
and Independent Registered
Public Accounting Firm ........... 26
Consolidated Financial
Statements ........................... 27
Notes to Consolidated
Financial Statements ............. 32
Selected Financial Data .......... 61
FINANCIAL REVIEW
Deere Equipment Operations, to create and grow SVA,
are targeting an operating return on average operating
assets (OROA) of 20% at mid-cycle sales volumes and
equally ambitious returns at other points in the cycle.
(For purposes of this calculation, operating assets
are average identiable assets during the year with
inventories valued at standard cost.)
DEERE EQUIPMENT OPERATIONS
$MM unless indicated 2011 2012 2013
Net Sales 29,466 33,501 34,998
Operating Prot 3,839 4,397 5,058
Average Assets
With Inventories @ Std Cost 12,875 14,965 15,924
With Inventories @ LIFO 11,516 13,594 14,569
OROA % @ LIFO 33.3 32.3 34.7
Asset Turns (Std Cost) 2.29 2.24 2.20
Operating Margin % x 13.03 x 13.12 x 14.45
OROA % @ Standard Cost 29.8 29.4 31.8
$MM 2011 2012 2013
Average Assets @ Std Cost 12,875 14,965 15,924
Operating Prot 3,839 4,397 5,058
Cost of Assets -1,545 -1,795 -1,911
SVA 2,294 2,602 3,147
AGRICULTURE & TURF
$MM unless indicated 2011 2012 2013
Net Sales 24,094 27,123 29,132
Operating Prot 3,447 3,921 4,680
Average Assets
With Inventories @ Std Cost 10,017 11,564 12,211
With Inventories @ LIFO 8,867 10,422 11,103
OROA % @ LIFO 38.9 37.6 42.2
Asset Turns (Std Cost) 2.41 2.35 2.39
Operating Margin % x 14.31 x 14.46 x 16.06
OROA % @ Standard Cost 34.4 33.9 38.3
$MM 2011 2012 2013
Average Assets @ Std Cost 10,017 11,564 12,211
Operating Prot 3,447 3,921 4,680
Cost of Assets -1,202 -1,387 -1,465
SVA 2,245 2,534 3,215
CONSTRUCTION & FORESTRY
$MM unless indicated 2011 2012 2013
Net Sales 5,372 6,378 5,866
Operating Prot 392 476 378
Average Assets
With Inventories @ Std Cost 2,858 3,401 3,713
With Inventories @ LIFO 2,649 3,172 3,466
OROA % @ LIFO 14.8 15.0 10.9
Asset Turns (Std Cost) 1.88 1.88 1.58
Operating Margin % x 7.30 x 7.46 x 6.44
OROA % @ Standard Cost 13.7 14.0 10.2
$MM 2011 2012 2013
Average Assets @ Std Cost 2,858 3,401 3,713
Operating Prot 392 476 378
Cost of Assets -343 -408 -446
SVA 49 68 -68
The Financial Services SVA metric is calculated on a
pretax basis.
FINANCIAL SERVICES
$MM unless indicated 2011 2012 2013
Net Income Attributable
to Deere & Company 471 460 565
Average Equity 3,194 3,470 4,073
ROE % 14.7 13.3 13.9
$MM 2011 2012 2013
Operating Prot 725 712 870
Average Equity 3,194 3,470 4,073
Operating Prot 725 712 870
Cost of Equity -492 -538 -627
SVA 233 174 243
SVA: FOCUSING ON GROWTH AND SUSTAINABLE PERFORMANCE
Shareholder Value Added (SVA) – essentially, the difference between operating prot
and pretax cost of capital – is a metric used by John Deere to evaluate business results
and measure sustainable performance.
To arrive at SVA, each equipment segment is assessed a pretax cost of assets –
generally 12% of average identiable operating assets with inventory at standard
cost (believed to more closely approximate the current cost of inventory and the
company’s related investment). The nancial services segment is assessed a cost of
average equity – approximately 15% pretax.
The amount of SVA is determined by deducting the asset or equity charge from
operating prot.
Additional information on these metrics and their relationship to amounts presented
in accordance with U.S. GAAP can be found at our website, www.JohnDeere.com.
Note: Some totals may vary due to rounding.