Good morning and welcome to the Deere second quarter earnings conference call. (Operator Instructions) I would now like to turn the call over to Ms. Marie Ziegler, Vice President, Investor Relations. Please go ahead.

Good morning. Also on today’s call are Mike Mack, our Chief Financial Officer; as well as Susan [Carliss] and [Justin Maravic] from Deere’s IR staff. Today we’ll take a closer look at Deere’s second quarter earnings, then spend a few minutes talking about our markets and where at this time we see things headed for the second half of the year. After that, we’ll respond to your questions. Please note that slides are available to complement the call this morning and they can be accessed on our website at www.johndeere.com. First though, a reminder -- this call is being broadcast live on the Internet and recorded for future transmission and use by Deere and Thomson Reuters. Any other use, recording, or transmission of any portion of this copyrighted broadcast without the express written consent of Deere is strictly prohibited. Participants in the call, including the Q&A session, agree that their likeness and remarks in all media may be stored and used as part of the earnings call. This call includes forward-looking comments concerning the company’s projections, plans, and objectives for the future that are subject to important risks and uncertainties. Actual results might differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially is contained in the company’s most recent Form 8-K and periodic reports filed with the Securities and Exchange Commission. The company, except as required by law, undertakes no obligation to update or revise its forward-looking information. The call and accompanying materials are not an offer to sell or a solicitation of offers to buy any of the company’s securities. This call also may include financial measures that are not in conformance with accounting principles generally accepted in the United States of America, or GAAP. Additional information concerning these measures, including reconciliations to comparable GAAP measures, is posted on our website at www.johndeere.com/financialreports, under other financial information. Call participants should consider other information on risks and uncertainties and non-GAAP measures in addition to the information presented on the call. And now, for a closer look at the second quarter, here is Susan.

Thank you, Marie. John Deere today reported another quarter of solidly profitable performance and did so in the face of market conditions that are extremely difficult, to say the least. Nevertheless, our agricultural equipment operations in the United States and Canada continued to perform on a strong pace. Our credit operation maintained competitive access to the credit markets and the company overall further strengthened its liquidity position. Also, Deere continued to show real discipline on costs and assets, reducing general and administrative expenses and slashing factory production by more than 50% in some cases in response to a weakening retail environment. Finally, volatile exchange rates had a significant negative impact on our results as well. Beginning on slide three, last month we announced the combination of the agricultural and commercial and consumer equipment divisions into one, the new agriculture and turf division. The anticipated annual savings related to this new organizational structure is in the range of about $50 million, beginning in 2010. While that number is meaningful, the most powerful impact will be in the scale advantage and cost reduction opportunities this combination provides. The AG and turf division will leverage common processes, standards, and resources not only to save money but also to respond more quickly to competitive challenges and bring solutions to market in a more timely manner. The division will align sales channels and the global footprint to ensure John Deere is distinctively customer focused and globally competitive. Today’s second quarter results are presented as they traditionally have been for each of the three equipment divisions. Starting in the third quarter, however, equipment results will be reported for the new combined agriculture and turf division and, as in the past, for the construction and forestry division. Also beginning with today’s announcement, our financial forecast for the…

Thank you, Susan. We are now ready to being the Q&A portion of the call. The Operator will instruct us on the polling procedure. As a reminder, as usual, in consideration of others please limit yourself to one question and a related follow-up. If you have additional questions, you are welcome to get back into the queue and we will get to you as time permits. Operator.

(Operator Instructions) Our first question comes from Andrew Casey and please state your company name.

Good morning. Wachovia Securities. A question on the back-half guidance -- how many production shut-down days are you anticipating?

In our north -- I don’t have a combined corporate number. In our North American AG manufacturing in the third and fourth quarters, we’d be looking at probably a combination of somewhere around 20% of available days. That’s what the forecast anticipates. In Europe, it would be a number in the 30s and it’s -- construction doesn’t have a very high number. It’s a little misleading there so I am not going to share but they would obviously have a fair number of low or slow production.

And Marie, could you remind me what for North American AG and Europe, what were the comparables for second half of last year?

In North America, it would have been a very low single digit and -- oh, maybe -- I’m just eyeballing it here but probably not even 20% in Europe. And then again there would have been a higher number in construction and forestry but the numbers are not really comparable to what we have gone over with AG.

Okay. Thank you very much.

Our next question comes from Robert Wertheimer.

I wanted to ask I guess about construction and forestry, whether you think you’ve got -- I mean, the margin was obviously kind of soft. Have you got the structural cost where you want it and you just need to wait for a market recovery? It’s obviously been a very steep down cycle and I am wondering whether that cost position is where you want it to be.

Well, we have executed according to our plan throughout this downturn but clearly with the sales outlook we’ve got, we are operating at very, very low levels and operating frankly below what we would have anticipated as we were doing our financial planning. I think they have executed quite well, responded very rapidly and followed the plan, which I should point out at this time, we’ve done similar things in the other division, in terms of planning. Mike, do you want to chime in?

Well, I’ll just comment -- you know, think about it; sales are down 55% in the quarter, production down 62%. I think incremental margins of 32% in that environment actually are pretty good. Remember Susan’s comment at the outset that the field inventories for Deere -- or excuse me, for the industry, ex Deere are twice what Deere's are. We’ve had I think very good execution there. They are maintaining their quality in their factories. The safety numbers are as good as they have ever been. I was just in one of these factories for a review. I thought the morale was very good. I think they are managing it, given the circumstances, as well as they can.

I’m actually not critiquing the performance at all -- it’s more a question of you know, your goal has been to cover cost of capital through the down cycle. Do you have to sort of let go of that goal, given how this down cycle is, I guess we would all agree, abnormally steep? And so you are just willing to sort of ride out the lower margin than you might have expected a couple of years ago, or do you want to -- I know this is a tricky question, take further cost out?

I think the cost structure is appropriate. We have sized this. We talked about trough and peak but probably are anticipating a trough more that wasn’t as severe as this. I don’t think this is the kind of thing that we would anticipate on a recurring basis, and it’s -- so it’s an extraordinary level right now and I think we are at an appropriate level with regard to cost structure and capacity.

That was helpful. Thank you.

Our next question comes from Henry Kirn.

Good morning, guys. It’s UBS. How much pricing discipline are you seeing in the AG markets globally? Is anybody cutting prices to start to unload some of the excess inventories?

You know, what I can cite is that our price guidance has not changed from what it was for the full year last quarter, which is six points. So I would say that I can only speak on behalf of Deere, that you see really no change in direction there.

Okay, and for some of the credit headwinds in Central Europe and the CIS, would you consider using Deere credit to, or are you using Deere credit, to fill in the gap? And who much more appetite for risk do you have to put on your own balance sheet?

Do you want me to --

Go ahead, Marie -- take the first shot.

We have used a variety of techniques in those parts of the world. We have worked with local banks, we’ve used [XM] financing and at this point we would not anticipate making any changes.

Yeah, I think that’s right.

Okay. Thanks a lot.

Our next question comes from Eli Lustgarten.

Good morning. Two quick questions -- one, can you talk about what’s going on in large tractor demand? Like if you were sold out through the summer, would you [begin the year for the 8000 and 9000] tractor series. Now we have row crops going down. It sounds like most of the backlog is being [inaudible] and actively somewhat of a void as we go into the first part of 2010. Is that sort of what we are seeing at this point?

Well, I don’t want to address 2010. It’s way too early for us to be looking there but it is true that we have seen a little bit of softening in large tractors now -- not so much on the four-wheel drive but as Susan comment, the smaller the tractor, frankly, the softer the market. But even it the upper end of the 8000s, we’ve seen a little bit of weakness. What is difficult for us to measure, Eli, is that we are ourselves in the middle of a product transition and that will affect our fourth quarter so for us, it is somewhat hard to judge how much of it is just the natural result of a product transition. We haven’t officially introduced the product yet and we won’t until the summer. We’ve had good early order indications and we would have fairly light shipping schedules anyway in the fourth quarter, as we are making the transition to this new product. So it’s hard for us to really assess that upper end of the market. But it feels maybe just a little weaker than it did a quarter ago and that’s reflected in our guidance.

Just as a follow-up, can you talk a little bit more about the construction and forestry business? I guess right now the expectation is to keep production levels about where they are for at least the rest of the year. And it’s a two-part question -- one, what would it take for you to begin to raise production schedules? Or are we going to go into 2010 at similar levels, at least for the first part? And really the more important question, we knew in February if you listen to [Casey & Holland’s] forecast of shutting [inaudible] first half of the year and [inaudible], that that market was a lot weaker. What finally hit that you finally brought it down that much? I mean, it’s probably a big surprise how far down you brought the second quarter versus the year. Were you just late to realizing how weak this market was or was it a supply skew? Can you give us some idea what happened there?

Well, Eli, I guess I would challenge your assumption that we were late to recognize that we’ve been running with much lower levels of inventory than our competition, which we’ve talked about really ad nauseum for the last couple of yeas and that continues, and our guidance for the year last quarter was down 24, which was pretty significant. What has changed at the margin really is not the North American outlet per se but what we are seeing from our forestry business, which has just really softened even further into -- or we saw further softening yet in this quarter. So I think that we are following right along with what we are seeing in the market.

Yeah, I would comment as well that I think this division has been anything but late to recognize that. I track this and we do as a group, of course, on the inventory and receivables every month and this division has a very close grip on that. What’s happened, I think, in the last few months as expectations of the market have continuously shifted in terms of retail sales estimates in a negative direction. But I think they’ve been extremely responsive with regard to setting production schedules and managing the asset side of it.

[You had] schedule levels that we see now will go through the rest of the year and into 2010, is that the expectation at this point?

Well first of all, this is our best estimate of the market as we see it right now and that’s reflecting our production schedules and our inventory, our further inventory reductions. You’ll recall that we are going -- targeting to end the year with $325 million less in the field inventory and company-owned inventories. The other observation I would make is because you are lowering inventories this year, if the market stays flat and the retail environment stays flat and we choose not to make further reductions in inventory, that actually would allow us to see an increase in production in 2010. Again, I would want to stay away from a forecast of 2010 as part -- it’s really premature but all those things being equal, you would have that ability to -- for a little bit of upside in production. But time will tell.

Thank you.

Our next question comes from David Raso.

I wanted to discuss the balance sheet -- the net debt to cap on the equipment company, obviously trended down sequential and it’s fairly low. Thinking about the inventory reduction and the production schedules for the rest of the year, you could very well end the year in a net cash position. You temporarily are holding off on share repo. The question is when do you expect to return to the share repurchase program?

As in the past, we really haven’t indicated when we would repurchase shares ahead of time and probably will still with that as the methodology right now. We are -- I think -- first of all, I am going to agree that as the year progresses and we reduce inventories, we are likely to generate more cash and equipment operations, and I think in this current environment, actually that’s a very favorable thing. But I probably won’t be able to give you more illumination with regard to share repurchase today.

Has anything especially changed to how you view the balance sheet? Because the discussion initially about holding off on share repo was related to the credit markets. If we assume that you --

Yeah, I think it’s early for anybody in this economy to declare victory relative to the global recession and so we tend to be relatively conservative with managing those risks. And so it’s really the environment more than anything else.

At a minimum, if you look at the last three years before this year, you were doing $1 billion to $1.7 billion of share repo. If you do get more comfortable and go back into the share repurchase program, are those type of range how I should be thinking about it, at least, in your appetite for share repurchase as you get more comfortable?

Well again, I’m just not going to be able to help you very much on this particular question today.

Thank you, David. Next.

Thank you. Our next question comes from Alex Blanton. Alexander Blanton - Ingalls & Snyder: Marie, you mentioned that the impact of inventory reduction versus last year’s inventory increase was $60 million. Was that the figure?

Yeah, in the AG business. Alexander Blanton - Ingalls & Snyder: In the AG business -- only in the AG business?

Well, that’s the only number that we actually had calculated out, yes. Alexander Blanton - Ingalls & Snyder: Okay, because if you look at the inventory as a whole, the change this year was a reduction of 286 and last year was an increase of 282, so --

Alex, for the -- let me anticipate your question. Alexander Blanton - Ingalls & Snyder: That doesn’t -- that is more than you are looking at with the $60 million, right?

For the full company, the impact would be about 80. Alexander Blanton - Ingalls & Snyder: Eighty -- okay. That still seems a little bit light when you look at the total inventory change year over year, adding the increase this year, the increase last year, and the reduction this year is 568, so $80 million is something like 15% of that.

That’s exactly how we value an inventory change, at a 15% incremental margin. Alexander Blanton - Ingalls & Snyder: A 15%, okay. Good to have that figure. And we can look for that same effect in the second half as you reduce inventories even more, is that correct?

That would be fair. Alexander Blanton - Ingalls & Snyder: Okay. Thank you very much.

Thank you, Alex. Next.

Thank you. Our next question comes from Meredith Taylor.

Good morning. Well, what I have is really a follow-up on Eli’s question -- you know, I’m hoping we can dig into your outlook for North American AG flat to down 5%. You know, this is a somewhat different view of the market than your peers and I certainly understand you are not going to comment on your competitors’ outlook but I am hoping that you can maybe give us some detail, if possible, on how you are looking at the market for combines, large tractors, and then under 100-horsepower tractors.

Well, combines, we actually see up, so we probably have a more positive view than I believe our competitors do. That may have something to do again with our difference in fiscal year cut-off versus they are on a calendar year but we would see combines actually up a low, for the industry, a low double-digit. And big tractors for the industry, we would see up a little bit, a low single digit, and then again row crop tractors on down, down single digit all the way to, you know, you could look at declines of almost up to 25% in some of the smaller horsepower categories. That’s our view of the industry on a fiscal year basis.

Okay, that’s helpful. And then you’ve indicated that the risk remains to the downside with this $1.1 billion of guidance -- is there any additional color that you might be willing to give around where the areas of vulnerability are that would potentially imply this downside risk?

The $1.1 billion is our best estimate as of this time. However, obviously our previous estimate was $1.5 billion. There’s a lot of uncertainty, we feel, in terms of how things develop for the economy over the course of the year. The economic fundamentals do seem to slide -- even yesterday, housing came in a little lighter, I think, than was expected. So we just felt it was prudent to give our guidance with that caveat.

Okay, that’s helpful. Thank you.

Thank you, Meredith. Next.

Thank you. Our next question comes from Jerry Revich.

Good morning. Marie, can you please help us reconcile your comments on few cancellations in U.S. and Canada with rising inventories and declining retail sales for row crop tractors? Are your dealers taking deliveries of tractors despite customer cancellations? Or is there another dynamic there?

No, we are looking at a very marginal change in the upper end of the row crop market, first of all. We have had no cancellations to speak of -- just you get in any period, you get a handful here and there, so we continue to see very normal levels of activity. We are a little quieter in terms of getting some new retail activity. As you’ll recall last time, although we had been ordered out really effectively through July, we were in a quiet period -- we had stopped taking orders on the old product. We were making the transition to the new models. People haven’t yet seen the new models, so I think we are just a little more cautious in that upper end, but there’s been no cancellation activity to speak of.

Maybe just to add a little color there -- on the used equipment pricing on the tractor side, it’s still holding up really quite well at this stage.

Yes, turns on both tractors and combines are the highest they have been at this time of the year in five years, so they are very good.

Okay, and I’m wondering if you can talk about AG equipment orders in the quarter -- Marie, you alluded to it. I’m wondering if perhaps you can comment on where book-to-bill this quarter stacked up versus the prior year quarter.

Well again, there’s really no change on the row crop tractor side because we closed on the old model. In terms of combines, we continue to look at about a 95% coverage ratio on retail orders.

Which is consistent with last year?

I don’t know where we -- I don’t recall where we would have been last year. We hadn’t opened our -- I’m sure it would be very similar. We hadn’t opened the early order book until July, so I can’t imagine it’s significantly different but it is higher --

Much better than typical.

Okay. Thank you.

The other thing is, is remember we have additional capacity available to us this year that we didn’t last year and it’s approximately 30% came into play for us in the month of March this second quarter.

Okay. Thank you.

Thank you.

Thank you. Our next question comes from Andrew Obin.

So in terms of the pricing outlook, I am just a little bit confused because you kept it at 6%. But I would imagine that A, the mix has changed, and B, construction and forestry pricing is perhaps weaker than it was, so does it mean that AG pricing has actually gotten better? Or it’s just a methodology?

Well, I would say that we had anticipated the market conditions fairly well in the construction side of the business and in the commercial and consumer, and so we have not had to make significant changes in the outlook.

No, but I’m just talking about the math, given the tonnage that you are taking down in construction, right?

The tonnage would not relate to the price realizations. The price realization is done taking a look, comparing prices this year versus last year and it’s done on the sales basis of 2008 is how we apply the math.

Okay, so it’s just the methodology. The second question is what are you hearing about dealers’ ability to carry inventory, and particularly is the [inaudible] on inventory, given the higher cost of [floor] financing? Because we’ve been hearing that it’s been a constraint for the distribution channel.

Well you know, we do provide floor plan terms for our dealers to help them with their used inventories in some cases. In other cases, they have pool funds that they can apply to it and then of course they can always get a line of credit from our credit operations. Our inventories, we again have managed very, very well. We are quite pleased with the turnover that we have seen on the used side. Inventories on the construction side have been more problematic, generally speaking, than the used side. But again for Deere, our dealers are doing a very good job of managing those inventories. They are very proactive with them. Mike, go ahead.

This I think is a good example of the advantage of having John Deere Credit as part of our enterprise. The access we’ve had to the capital markets for funding have allowed us to continue to provide the good wholesale credit funding capability for our dealers so I think our experience in the channel in this regard might be different than some others.

I appreciate the comment. Thank you very much.

Thank you, Andrew. Next.

Thank you. Our next question comes from Charlie Rentschler.

My first question has to do with the forecast of prices up six points -- could you kind of parse that for us? You’ve got the new line of tractors coming out, which I assume bears on that, as tractors probably have more emissions control kind of stuff on it and would have higher prices. Can you --

Charlie, we have not made announcements on the new products, new price realization. Obviously that would factor into what we have got in our guidance but we have not made any public commentary on it.

Okay. Well, my other question had to do with merging consumer and commercial into AG equipment, the new AG and turf. I don’t understand the rationale for that. You’ve got almost 90% of the sales, if the three equipment businesses now into that one reporting segment -- I mean, why not just go to a single reporting segment?

Charlie --

Another issue, I was wondering how you take -- you motivate your employees on SVA and you take a negative SVA business and merge it with a positive, and how does that -- how do you work that out with the people’s pay and the morale?

Well, first of all, Charlie -- when you talk about them being different businesses, in the commercial and consumer equipment business, if you strip out landscape, 70% of their sales were going through the [agular], so they are really -- the distribution channel is very similar. As we merge the divisions, you’ll recall that we are offering voluntary separations. This will allow us to change the cost structure as we eliminate some redundancies that are unique in the division, so we feel very positively about this. Now, that is an ancillary benefit. We feel that as we effectively work together and merge this market together, we have a better opportunity at serving customer needs that really stand the AG and the CNCE product line. Mike.

First of all, your 90% number there is overshoot. It’s not anywhere near that large. But I think there have been changes in the dealer consolidation that’s occurred over the last say 10 or 15 years. It didn’t always have this large of a mix of the CNCE products going through AG combination dealers. Back 12 years ago or so, it was probably closer to 50-50 but the consolidations that have occurred resulted in this large part of the volume now going through the AG combination dealers, so it’s just a tremendous benefit on the marketing and sales side in terms of leveraging dealer development and order fulfillment, and basically to help us get economies of scale and reduced costs that make this a pretty attractive thing to do.

Thank you, Charlie. Next -- Charlie, we need to move on to the next question. Thank you.

Thank you. Our next question comes from Ann Duignan.

I wanted to just take a step back and just talk a little bit about your outlook for farm cash receipt, particularly for 2010. I note that you have a significant recovery forecasted for the livestock sector and I’m wondering if you could just walk me through the logic there. I mean, the livestock sector, as you noted, is just devastated right now and very long cycles there and I’m not sure that I would be forecasting quite a significant recovery going forward. So I’m just curious what you have embedded in your 2010 outlook there.

Generally speaking, we expect that this will be a year of, at least in the first part of the year, of reduction in herd sizes. We expect pricing that will clearly help the pricing outlook. We do see the producers -- we actually thought, and we use an outside service, as you know, for a lot of our economic insight, but they actually though pork producers would turn profitable even in the very near term. Now obviously that’s been delayed a big as we have seen pork prices adjust because of the concerns related to the H1N1, although there’s, as you know, no relation. So we see pork producers returning to profitability as we move later into the year and with the adjustments that have been made in the beef herd size, the potential for people to improve profitability. That’s our view at this time.

And that actually --

And that will help support prices.

Right, but that leads me to kind of my second question -- if that indeed is the case, then it will put downward pressure on consumption of crops for the livestock sector next year, and also ethanol is in a pretty precarious situation. So I am curious then on the crop side, how do you reconcile the fact that we are going to consume those crops from both the feed sector and maybe even the ethanol sector, because --

Well, our assumption, which is that the 2009/10 crop will use 4.1 billion bushels of corn to meet the renewable fuel standards and that’s up from the 3.65 billion of bushels this year. That’s in the assumption. We actually would see -- you also have some improvement in the pricing environment in the market, which also helps support that cash receipts number.

Okay. You didn’t really answer how much you are expecting to be consumed by feed, but I can go through that offline.

But you know, that’s a plus number in the number too. I would have to dig it out for you.

Okay, that’s fine. I’ll take it offline. Thanks.

Thank you.

Thank you. Our next question comes from Mark Koznarek.

Good morning. A question -- would you guys be able to step back and review for us across the entire company what has been done in total with regard to cost reduction actions? Where do we stand in staffing today relative to peak levels that might have been whenever that was in ’08, and other cost reductions like Welland -- I don’t know if there’s other fixed cost reductions going out but help us understand how much that is down. And then how much of that is fixed cost reduction that is likely to be permanent rather than volume related reductions that will recover when volumes recover some day?

I think the place to start would be Welland, which we said is an ongoing benefit of about $50 million, in terms of cost savings from that. And right now our current estimate would be another 50 as a result of the merger of the AG and CNCE division. In terms of flexibility, probably the most significant thing that we’ve done in headcount is that as we were ramping up in ’06, ’07, ’08 as we’ve used temporary workers to a much larger fashion on the salary side, and so we have the ability as we move down to move those -- to reduce those costs. That’s partly what you see flowing through our SA&G numbers, as you see that flowing down. In addition, I think you are aware, painful though they are, we’ve had lay-off announcements at several factories. I don’t have an actual headcount number for you at my fingertips.

Well, as I recall, Welland was about 800 people and I think the sum of the lay-offs, if you put them all together, it’s about 1,000.

A thousand across the entire corporation, is that what you mean?

That’s what I am looking at North America -- I’m not sure about what we have overseas.

I don’t have a number. I’m sorry.

Okay. I’m just -- you know, with volume down 19% this year, I’m just wondering whether overall for the company we have reductions of anywhere close to that, or are the reductions much more modest than that?

I’m sorry -- again, we have had a broad use of contingent employees that gives us flexibility and that does not get picked up in the headcount numbers and I do not have a way of helping you on that.

Okay. I’ll follow-up offline. Thank you.

Thank you, Mark. Next.

Thank you. Jamie Cook, your line is open and please state your company name.

Good morning. First question, just a follow-up on the FX side, I don’t know if I missed this but what are we forecasting the impact of FX translation on operating income for ’09? And then I guess just my second question -- sort of longer, sort of bigger picture here -- as I look at your cash receipt forecast for 2010, your commodity price forecast, and I guess I look at that and you are one of the few companies I would say within my group that aren’t honing in materially on CapEx. You know, we’re still I think assuming we are spending more than D&A, so I’m just trying to think about one, has there been any changes in where we are spending CapEx relative to where we were last time? If you could just help me out there.

First of all, your first question had to do with currency and translation, transactions -- no, actually, we did not provide you with a forecast for the full year and we actually did not do this in the first quarter either, because of the variability that we had encountered earlier in the year. We have elected not to provide specific guidance. You do know that in the first quarter it was approximately $150 million and in the second quarter, it was $150 million. And then it remains to be seen ultimately what happens with exchange rates as we move through the year. Regarding your second question, the $800 million spent, you do recall, of course, that we are going to be subject to tier -- interim, excuse me, tier four emissions regulations which impact off-road industry starting in 2011 and actually last year, we were ramping up our engineering resources to make sure that we are able to meet. I think we have the technologies. We are doing very well as we are moving closer to the launch date. But the spend you are seeing is directly and indirectly related to interim tier four. We are also tying all of our new product development, new features that will roll out with those machines and so it’s all happening at the same time as the interim tier four engine emission launch occurs. So you’ve got really a sort of a double-whammy, so to speak.

Okay, thanks. I’ll get back in queue.

Thank you, Jamie. I have time for one more question.

Thank you. Our last question comes from Bill Selesky.

Good morning. I just had a quick question, Marie, on stimulus spending and its effect in the construction and forestry business. I know a little is going to be spent in 2009 but do you have any anecdotal evidence from any dealers as to whether they are more positive, less positive on this potential benefit going forward?

In terms of our view of the rate of spend on the stimulus, we actually had a fairly cautious outlook, which I believe is similar to many others in terms of how fast that money could actually flow into the marketplace. Really what’s changed, if you will, in the last three months is that because many states and local governments are hitting spending caps, some of them have mandatory balance budget requirements, we are seeing pull-back where state and local governments have some discretion to slow that spending. So that has made, if you will, for a little bit more cautious outlook in terms of the rate of spend. Time will tell, as we move into 2010.

Okay, great. That’s helpful. Thank you.

Actually, we actually have time for one more. Do we have anyone left in queue?

Thank you. Daniel Dowd, your line is open and please state your company name.

Okay, so you’ve guided for your AG and turf revenues to be down 14%. Can you break out what the actual AG revenue you think is now going to be down?

Actually, that will not be possible. We have already converted our forecasting to a combined -- for the combined division so I do not actually have separate forecasts. We do not as a company have separate forecasts.

Okay, so as I look at the way in which you have adjusted your end market agriculture forecast down, it seems like as I do the back-of-the-envelope math that that didn’t come down as much as your AG revenue adjustment likely was. Is that correct or not?

I’m really not -- I would only be able to speculate, so I am not -- I am going to not be able to because I do not have an AG forecast. I just have a combined division forecast.

Okay. Well then let me turn to one other issue -- obviously the 73% decrementals in the AG business, pretty shocking. I mean, clearly you mentioned that big chunks of it were due to fixed cost absorption and yet you are also saying that the decremental for the AG and turf business is going to be 25% to 30%. What’s going to be so very different about the manufacturing operations in the back half of the year compared to the kinds of things that happened in Q2?

When you -- as you start to rapidly adjust your production schedules, you just get some -- you get some inefficiencies as you slam on the brakes and those inefficiencies will diminish as you adjust to the new operating levels as we move forward through the second half of the year. You will also get some relief on the raw materials side, you know, the implied guidance is flat in the third quarter and then down in the fourth quarter, so you will get some help there as well.

Were there any specific manufacturing hiccups at particular locations or anything that caused such an extraordinary decremental?

No, it is not that. Susan in her opening comments talked about the fact that we had a lot of -- the tonnage is only down 6% in the quarter but while you had one unit in particular up double-digits, you had a lot of units that were down 20% to 40% and a couple that were down even more than that. So when you make -- when you adjust to that kind of a production outlook and we are doing it very rapidly in that initial period, you just get some inefficiencies as you are slamming on the brakes that do -- you are able to better manage as you go through the rest of the year.

Okay. Thank you.

Thanks to all of you for participating in today’s call. Susan, Justin, and I will be available the rest of the day to answer your calls afterward, so thank you.

Thank you. That concludes today’s conference. You may disconnect at this time.