For the Twelve Months Ended October 31,

Equipment Operations

Agriculture and Turf

Construction and Forestry

Dollars in millions

2011

2010

2011

2010

2011

2010

Net Sales

$

29,466

$

23,573

$

24,094

$

19,868

$

5,372

$

3,705

Average Identifiable Assets

   With Inventories at LIFO

$

11,516

$

9,196

$

8,867

$

7,035

$

2,649

$

2,161

   With Inventories at Standard Cost

$

12,875

$

10,494

$

10,017

$

8,138

$

2,858

$

2,356

Operating Profit

$

3,839

$

2,909

$

3,447

$

2,790

$

392

$

119

   Percent of Net Sales

13.0

%

12.3

%

14.3

%

14.0

%

7.3

%

3.2

%

Operating Return on Assets

   With Inventories at LIFO

33.3

%

31.6

%

38.9

%

39.7

%

14.8

%

5.5

%

   With Inventories at Standard Cost

29.8

%

27.7

%

34.4

%

34.3

%

13.7

%

5.1

%

SVA Cost of Assets

$

(1,545

)

$

(1,259

)

$

(1,202

)

$

(977

)

$

(343

)

$

(282

)

SVA

$

2,294

$

1,650

$

2,245

$

1,813

$

49

$

(163

)

For the Twelve Months Ended October 31,

Financial Services

Dollars in millions

2011

2010

Net Income Attributable to Deere & Company

$

471

$

373

Average Equity

$

3,194

$

3,064

Return on Equity

14.7

%

12.2

%

Operating Profit

$

725

$

499

Change in Allowance for Doubtful Receivables

$

$

(14

)

SVA Income

$

725

$

485

Average Equity

$

3,194

$

3,064

Average Allowance for Doubtful Receivables

$

$

232

SVA Average Equity

$

3,194

$

3,296

Cost of Equity

$

(492

)

$

(421

)

SVA

$

233

$

64

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.  Financial Services is assessed an annual pretax cost of average equity of approximately 15 percent.  In 2010, the average equity excluded the effect of the allowance for doubtful receivables.  In 2011, the change in allowance for doubtful receivables is no longer an adjustment.  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 in 2011 and net income before income taxes and changes to the allowance for doubtful receivables in 2010.