Deere & Company

Other Financial Information

	Equipment Operations						Agricultural Equipment						Commercial and Consumer Equipment						Construction and Forestry
For the Twelve Months Ended October 31 Dollars in millions	2004			2003			2004			2003*			2004			2003			2004			2003
Net Sales	$	17,673		$	13,349		$	9,717		$	7,390		$	3,742		$	3,231		$	4,214		$	2,728
Average Identifiable Assets
With Inventories at LIFO	$	6,482		$	5,965		$	3,128		$	3,028		$	1,491		$	1,486		$	1,863		$	1,451
With Inventories at Standard Cost	$	7,477		$	6,925		$	3,755		$	3,624		$	1,707		$	1,694		$	2,015		$	1,607
Operating Profit	$	1,905		$	708		$	1,072		$	329		$	246		$	227		$	587		$	152
Percent of Net Sales	10.8		%	5.3		%	11.0		%	4.5		%	6.6		%	7.0		%	13.9		%	5.6		%
Operating Return on Assets
With Inventories at LIFO	29.4		%	11.9		%	34.3		%	10.9		%	16.5		%	15.3		%	31.5		%	10.5		%
With Inventories at Standard Cost	25.5		%	10.2		%	28.5		%	9.1		%	14.4		%	13.4		%	29.1		%	9.5		%
SVA Cost of Assets	$	(897	)	$	(831	)	$	(450	)	$	(435	)	$	(205	)	$	(203	)	$	(242	)	$	(193	)
SVA	$	1,008		$	(123	)	$	622		$	(106	)	$	41		$	24		$	345		$	(41	)

For the Twelve Months Ended October 31 Dollars in millions		Financial Services						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 to 19 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 and changes to the allowance for doubtful receivables. 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. To create SVA using metrics relevant to their daily operations, the Company’s equipment segments are targeting an annual operating return on operating assets (OROA) of 20 percent at mid-cycle sales volumes, and other returns at other points in the cycle. For purposes of this OROA calculation, operating assets consist of average identifiable assets during the applicable period with inventory at standard cost.
		2004			2003
Net Income		$	309		$	330
Average Equity		$	2,265		$	2,177
Return on Equity		13.6		%	15.2		%
Operating Profit		$	471		$	504
Change in Allowance for Doubtful Receivables		$	(8	)	$	17
SVA Income		$	463		$	521
Average Equity		$	2,265		$	2,177
Average Allowance for Doubtful Receivables		$	165		$	160
SVA Average Equity		$	2,430		$	2,337
Cost of Equity		$	(430	)	$	(431	)
SVA		$	33		$	90


*	Agricultural equipment operations for 2003 were restated for the addition of the other equipment operations (special technologies group).